PAGE TWO
HEPPNER GAZETTE TIMES, HEPPNER, OREGON, THURSDAY, AUG. 15, 1935.
BACKGROUND
OF NEW DEAL DECISIONS
THE COINAGE CLAUSE, NA
TIONAL BANKS, AND A
NATIONAL CURRENCY.
By JAMES H. GILBERT
If a central bank had been in op
eration at the outbreak of the Civil
War the financial position of the
country would have been much
stronger. Following the dissolu
tion of the Second United States
Bank state banks were multiplied
and in certain sections of the coun
try, particularly in the West, regu
lation was ineffective. By 1861
there were 1600 loosely regulated
state banks, each with a note issue
of its own.
In the confused currency situation
It took an expert armed with the
latest copy of the bank-note report
er to tell whether an issue was
genuine of a counterfeit, and if it
was genuine whether it was worth
face value or figty cents on the dol
lar or just worthless.
The unstable currency situation,
coupled with reverses on the battle
field and the prospect that France
and England might take a hand on
the side of the Confederacy, led to
a complete breakdown of the bank
ing and credit situation late in 1861.
February, 1862, saw the issue of
greenbacks and the beginning of
the flat money confusion. Only on
the Pacific Coast did gold and sil
ver remain the standard.
In the midst of the monetary
confusion Secretary Chase came
forward with his proposal for a na
tional banking system. Two ob
jects he had in mind, one tempor
ary, the other destined to be of
far-reaching and permanent im
portance.
In the first place, the Secretary
sought to stimulate the sale of
bonds with which the war was to
be financed. National banks char
tered under the new law were com
pelled to buy a certain amount of
bonds and must back their note is
sues with bonds as collateral secur
ity. The added demand for bonds was
not significant The new banks
came into being slowly and at the
end of the war held only four per
cent of all bonds sold to finance
the struggle. The arrangement had
enabled Secretary Case to sell but
one dollar out of every twenty-five
in the wartime issue.
The second objective proved to
be of permanent importance. Chase
planned through the national banks
to provide a currency uniform in
design and value throughout the
country. In accomplishing this
program new legislation became
necessary and this law gave rise to
one of the fundamental questions of
constitutionality and of federal
functions versus the functions of
the commonwealth governments.
As long as the state banks con
tinued to issue hundreds of va
rieties of state bank notes under
verying regulations no uniformity
could be achieved. No direct prohi
bition of state bank notes could be
expected to meet with the approval
of the courts.
In the case of Augusta Bank vs.
Earle the Supreme Court had de
clared that the right of state banks
to issue notes was a common law
right which could not be taken
away.
Some device had to be found for
leaving this common law right in
tact but making the exercise of the
right unprofitable.
The act of July 13, 1866, imposed
a ten per cent tax on the note issues
of state banks. Since the' prevail
ing rate of interest was only five or
six per cent no state bank could af
ford to issue notes and lend them
while paying a tax of ten per cent.
It was expected that state banks
would cease to issue notes or sur
render state charters and become
national banks. Whichever alter
native were chosen a uniform na
tional currency would result.
But state banks that had found
note Issues profitable would not
forego the privilege without a con
test Veazie Bank, chartered by
the State of Maine, brought suit in
the United States Circuit Court to
recover the tax paid under protest,
alleging that the tax was an uncon
stitutional exercise of power by
Congress.
Salmon P. Chase, Secretary of
War under Lincoln and now Chief
Justice of the Supreme Court de
livered the opinion. In this famous
case the Court expanded the coin
age clause of the Constitution to a
currency clause and made It extend
not only to issues that emanate
from the Federal Government but
to the regulation of any currencies
that may conflict or confuse the
Currency situation.
Congress may authorize the
emission of bills of credit and suit
them to use "by those who see fit
to use them in connection with com
merce." Congress had undertaken
in the exercise of its constitutional
powers to provide a currency for
the whole country and must secure
the full benefits to the country by
appropriate legislation.
"Congress may (therefore) re
strain by suitable enactments the
circulation as money of any notes
not issued under its authority,"
Chase reasoned.
Among these "suitable enact
ments" might be a regulatory tax
which might be levied at any level
deemed necessary to accomplish the
purpose. With the ten per cent tax
on state bank notes in effect, only
national banks continued to issue
notes and for the first time in our
history uniformity in bank curren
cy was achieved,
1.1913. Twelve "banks of banks were
created in as many districts, all na
tional banks were forced to take
membership in the system and a
large measure of control was given
over banking to the Federal Re
serve Board made up entirely of
representatives of the government
More recently the "New Deal"
banking and currency legislation
has extended still further the Con
gressional control of banking oper
ations and welded the entire sys
tem into a nation-wide organization
for the insurance of deposits.
It's a far cry from the coinage
clause to the guarantee of bank de
posits but the Constitution is not
what the Constitution makers
thought it was but what generations
of judges have made it
Is there such a thing as judge
made constitution as well as judge
made law?
Although the currency was uni
form and sound it was soon found
to be Inelastic. It did not adapt it
self to changing needs of business.
There was also a deplorable lack
of cooperation between banks and
the independent treasury estab
lished under the stress of emer
gency failed to function properly
under present day conditions.
To meet these needs the Federal
Reserve System was formulated in
JUDGES AS A SOURCE OF
CONSTITUTIONAL
RIGHTS.
By WAYNE L. MORSE
These are days in which many
people are urging us to go back to
the constitution. But I am afraid
that for the most part they are
uttering an unintelligent cry.
Go back to what eonstitution? Or
to what conception of the constitu
tion? If what is meant is that we should
go back to a conception that the
constitution is static, then I would
say that we are being asked to re
vivify a mummy because that con
stitution has long since been dead.
As the supreme court itself has
said, "The constitution was made
for an undefined and expanding
future."
Thus, it behooves us as intelli
gent citizens to give some thought
to the nature of our constitution
As Corwin points out:
"The constitution contains about
3500 words. Reading time, about
twenty minutes, but hardly two per
cent of this phraseology is of ma
jor significance to the student of
constitutional law. A large pro
portion of the thousands of cases
in which the constitutional law is
embodied stem upwards from the
foundational document in three or
four slight phrases, the due process
clause, commerce clause, the obli
gation of contracts clause."
Unpleasant as the thought is to
the conservative, the truth is that
the federal constitution as a docu
ment does not fix the constitution
al rights of Americans. If you want
to know what the American consti
tution provides and means, you
must read hundreds of constitu
tional law decisions.
And that is not enough. You must
also be able to read the minds of
nine distinguished justices of the
United States supreme court at any
given time, in order to predict as to
what extent and in what way a ma
jority of them may differ with con
stitutional decisions already ren
dered by the court.
This is necessary because consti
tutional law, a3 Corwin points out,
i3 one field in which the doctrine
of stare decisis plays a minor role.
As to the influence of precedent,
especially in the field of constitu
tional law, Justice Cardozo has
written:
"In these days there is a good
deal of discussion whether the rule
of adherence to precedent ought to
be abandoned altogether, j. would
not go so far myself, I think ad
herence to precedent should be the
rule and not the exception. ... I
am ready to concede that the rule
of adherence to precedent though
it ought not to be abandoned ought
to be in some degree relaxed. I
think that when a. rule, after it has
been duly tested by experience has
been found to be inconsistent with
the sense of justice or with the
social welfare, there should be less
hesitation in frank avowal and full
abandonment. We have had to do
this sometimes in the field of con
stitutional law."
There are those who believe that
our constitutional rights depend
more upon the personnel, now and
in the future, of the United States
supreme court than upon the lan
guage of the constitution, or the
decisions in the books.
They cite such cases as the recent
gold clause decision in support of
their position, pointing out that had
there been one more McReynolds
on the court, a significant congress
ional act would have been declared
unconstitutional and the cost to this
country, material and psychological,
would have been stupendous.
They suggest that such clauses
as the due process, commerce, and
contract clauses do not and cannot
have fixed meanings that they are
highly relative terms and the mean
ings given them in any constitu
tional controversy will be deter
mined, to a large extent, by the po
litical, social and economic phil
osophy of the members of the court,
They classify the judges a3 lib
erals and conservatives and they
point to the number of five-to-four
and split decisions on constitution
al questions dealing with great so
cial and economic problems; 'such
as child labor, taxation, commerce,
property vested with a public in
terest, interference with contract.
These critics contend that time
after time the judges seem to, divide
in accordance with their known so
cial and economic views.
Unquestionably, the writings and
decisions of the so-called liberals
on the court show a difference in
emphasis to the social ends and
philosophy from those of the con
servatives. Thus we find Cardozo, in his
book, The Nature of the Judicial
Process, writing with an objectivity
so characteristic of him, "that the
adaptation of rule or principle to
changing combination of events de
mands the creative action of the
judge."
After discussing the influence
which procedent exerts on any
judge, we find him admitting that
subconscious forces influence ju
dicial decisions. His discussion of
this matter is so frank and honest
that I feel justified in quoting from
it at some length:
"Deep below consciousness are
other forces, the likes and dislikes,
the predilections and the prejudices,
the complex of instincts and emo
tions and habits and convictions,
which make the man, whether he
be litigant or judge . . . The great
tides and currents which engulf the
rest of men, do not turn aside in
their course, and pass the judges
by . . . Marshall's own career is a
conspicuous illustration of the fact
that the ideal is beyond the reach
of human faculties to attain. He
gave to the constitution of the Uni
ted States the impress of his own
mind; and the form of our constitu
tional law is what it is, because he
moulded it while it was still plastic
and malleable in the fire of his own
intense convictions."
Cardozo quotes with approval the
words of Theodore Roosevelt to the
effect that "The chief lawmakers in
our country may be, and often are,
the judges, because they are the
final seat of authority. Every time
they interpret contract property,
vested rights, due process of law,
liberty, they necessarily enact into
law parts of a system of social phil
osophy; and as such interpretation
is fundamental, they give direction
to all law-making."
Other members of the court have
written in a similar vein. Thus,
Holmes declared shortly before he
retired:
"I can discover hardly any limit
but the sky to the court's present
power in disallowance of state acts
which may happen to strike a ma
jority of this court as for any rea
son undesirable."
If Holmes is right, then the sky
is the limit for the court in sustain
Ing legislation which may strike
the members as desirable.
In the case of Burns Baking
Company v. Bryan, the majority de
cision written by Pierce Butler de
clared unconstitutional a Nebraska
statute requiring that bread be sold
in pound and a half loaves. Butler
held that the act was unreasonable
and arbitrary.
Brandeis in commenting upon
the decision of the majority char
acterized it as "an exercise of the
powers of a super legislature."
In an even stronger vein, Hughes,
while Governor of New York, wrote
these words, "We are under a con-
st!tution, but the constitution is
what the judges say it is."
But such language should not be
interpreted too literally, nor should
we form the conclusion that con
stitutional decisions of the court
are naught but rationalizations in
legal language of the prejudices
and personal philosophy of the
judges.
The record of the court for fear
less, independent decisions unin
fluenced by waves of popular clam
or stand to its everlasting credit
and the decisions of the court on
constitutional questions have for
the most part been works of art in
moulding the constitution to chang
ing social demands.
Nevertheless, it is well to recog
nize the fictitious features of the oft
repeated maxim that our govern
ment is one of laws and not of men,
because, as the realists point out, a
study of law in action shows our
government to be one of laws and
men.
Oregon Women Plan Own
Extension Work Program
Oregon homemakers who are
Members of home economics exten
sion units are just a bit ahead of
those in most other states in that
they have an active part in deciding
just what projects each group will
carry each year, Mrs. Miriam Birds-
eye of Rogue River, president of
the State Home Economics Exten
sion council, told some 50 members
of that organization at its annual
summer meeting at Oregon State
college August 5 and 6.
She pointed out that instead of
the college handing each county a
cut-and-dried program each year,
representatives of the local units
meet with the state leaders and the
county home demonstration agent
and decide what sort of work in
clothing, cookery, canning, parent
education and other projects will
best meet the needs of that group.
The home economics extension staff
then makes every effort to provide
such a program.
It was voted during the session
that the State Home Economics
Extension council will offer a schol
arship of $25 each year to a senior
or graduate student in home econ
omics at O. S. C. who wishes to bet
ter qualify herself for extension
work. The fund is to be raised by
voluntary contribution of Oregon
homemakers interested, and the
scholarship will be awarded at the
annual spring honor convocation as
soon as sufficient money is avail
able. Counties represented at the meet
ing were Clackamas, Columbia,
Deschutes, Jackson, Josephine,
Lane, Multnomah, Benton, Doug'
les, Linn, Marion and Morrow.
CARD OF THANKS.
We wish to express our deepest
gratitude to all those whose many
kindnesses have helped to sustain
us during our recent loss.
Mrs. W. O. King and Family.
WAS UNABLE TO EAT
NOW FEELS FINE!
Shelvador Refrigerators. More
space for your money. Case Fur
niture Co. 9tf.
Iowa Man Tells of Wonderful Re
lief From Stomach Trouble.
Here is a letter of interest to
many residents of Heppner and vi
cinity. Elza E. Beck, Mt Ayr,
Iowa, writes:
"I have suffered from catarrh of
the stomach for a long time. I was
unable to eat without food souring
on my stomach and my stomach
seemed raw. 1 had severe gas
pains and was constipated. While
I was in the drug store they asked
me to try a bottle of Williams S. L,
K. Formula and after I had taken
just one bottle I could eat almost
anything and did not have those
awful gassy pains and soreness in
my stomach. I ve tried many other
medicines but no other has done the
work as ha3 Williams S.L.K. For
mula, This wonderful medicine is the
prescription of a physician for
stomach, liver and kidney disor
ders, associated with constipation,
sour or gassy stomach, distress af
ter eating, sick headache, neural
gia, rheumatic pain, neuritis, bil
iousness, dyspepsia, heartburn, gen
eral weakness and loss of vitality.
If you suffer, don't wait. See your
druggist today at Patterson & Son.
Satisfaction or your money back.
Breakfasts .
Luncheons .
Dinners. .
..25
. .30
Coach and Tourist Car Passengers
of the
PORTLAND ROSE
Union Pacific now oilers new low-cost meal service for coach
and tourist car passengers of its famous transcontinental train
the Portland Rose. ,
Breakfasts at 25c may include scrambled eggs with two strips of
bacon, rolls or bread, coffee or milk. Luncheons at 30c, dinners
at 35c are equally attractive. Menus are varied daily. The new
economy-meals are served at regular meat hours.
PILLOWS and drinking cups are now furnished FREE In all
coaches on through trains. The PILLOWS are available from the
Porter in charge of the coach. In addition lights in the coaches
will be dimmed at 10 P. M. to provide restful conditions for sleep.
All coaches are fully air-conditioned.
Very Low Fares
Are now in effect in roomy, comfortable, air-conditioned coaches.
Bargain fares also for Tourist and Standard Sleeping Car travel.
For greatest economy cool, clean air
conditioned comfort speed with safe
ty TRAVEL BY TRAIN.
SEE YOUR UNION PACIFIC AGENT
BEFORE MAKING ANY TRAVEL PLANS
UN ID
ou are entitled to
ALL THESE FEATURES
when you buy a low-priced car
w
p 1 . 11 a.'ii.JS'
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and you get them only in
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Compare Chevrolet' $ low delivered price andsyGMA.C.
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I"
YOUR
MODI
M PACIFIC
4-H Club Fair Wool 6 Grain Show
NEXT WEEK END
RESERVE YOUR SEATS NOW!
Reservd seat tickets $1.50 each day now available at Hotel Hepp
ner. Phone of mail orders honored. Other admission prices:
Grandstand $1.00; General 75c; Child's 50c Thursday and Satur
day (School, children free Friday.) Show Starts 1 :30 Each Day.
GRANT COUNTY DAY, FRIDAY
With running of Grant County Derby for $100 purse given
by business men of John Day
PARADE OF OLD WEST, SATURDAY
Many cash and merchandise prizes. Parade to start promptly at
10:00 a. m. Entries to be at M. E. Church corner at 9:00 a. m.
HEPPNER SCHOOL BAND ALL THREE DAYS
Browning Amusement Company With Rides
Dancing Each Evening!
Music by Kaufman's Orchestra
Heppner Invites You