<html> <head><style type ="text/css">body { font-family: "Bloomberg Prop Unicode I", Verdana, sans-serif; font-size:125%; letter-spacing: -0.3pt; color: #FF9F0F; background-color: #000000; text-align: left; } p {line-height: 1.25em; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" );} h1, h2, h3 { text-align: left; font-weight: normal; color: #FFFFFF; } h1 { font-size: 130%; } h2 { font-size: 115%; } h3 { font-size: 100%; } #bb-style { font-size: 90%; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" ); } b, strong { font-weight: bold; } i, em { color: #FEC54A; } pre { font-family: "Andale Mono", "Monaco", "Lucida Console"; letter-spacing: -0.3pt; line-height: 1.25em; } table { border: 0; font-size: 90%; width: 100%; margin-left: auto; margin-right: auto; } td, tr { text-align: left; } td.numeric { text-align: right; } a:link { color:#53B2F5; text-decoration: none; } a:visited {color:#53B2F5} a:active {color:#53B2F5} a:hover {color:#53B2F5} </style> </head> <body> <p>By Nikolai Krylov</p>&#xD; &#xD; <p>Fiscal and monetary policy aren't the only ways government affects the economy. In 1937 -- the year we've been <a href="http://www.bloomberg.com/news/2011-06-06/what-paul-krugman-misses-about-1937-redux-echoes.html">discussing</a> <a href="http://www.bloomberg.com/news/2011-06-09/government-is-more-to-blame-for-weak-recovery-than-fading-stimulus-echoes.html">on Echoes</a> <a href="http://www.bloomberg.com/news/2011-06-13/revisiting-fdr-and-unimagined-power-echoes.html">since last week</a> -- the issue nearly everyone was talking about was the audacious legislation that President Franklin D. Roosevelt had proposed in February of that year: his court-packing plan.</p>&#xD; &#xD; <p>Roosevelt's attempt to neutralize the Supreme Court sparked a national outcry and a heated political struggle. Two recent books, "<a href="http://www.amazon.com/Supreme-Power-Franklin-Roosevelt-Court/dp/0393064743">Supreme Power: Franklin Roosevelt vs. The Supreme Court</a>" by Jeff Shesol and "<a href="http://www.amazon.com/Scorpions-Battles-Triumphs-Supreme-Justices/dp/0446580570">Scorpions: The Battles and Triumphs of FDR's Great Supreme Court Justices</a>" by Bloomberg View columnist <a href="http://www.bloomberg.com/view/bios/noah-feldman/#columnist_stories">Noah Feldman</a>, take up this incident.</p>&#xD; &#xD; <p>The Supreme Court had long stood as a bulwark against progressive reform. After FDR took the White House in 1933, it emerged as his most significant adversary. At first, the court upheld some pieces of New Deal legislation, but by 1935 it had begun to strike down one law after another. That year, it found the National Labor Relations Act, a centerpiece of the New Deal, unconstitutional. The following year, 1936, it struck down the Agricultural Adjustment Act. The New Deal was in retreat, but the court hadn't finished yet. That same year, in Morehead v. New York, a 5-4 decision, it also struck down a New York state minimum wage law.</p>&#xD; &#xD; <p>The message was clear: the court would not tolerate increased government intervention in the economy.</p>&#xD; &#xD; <p>Frustrated by the court&#x2019;s stonewalling, Roosevelt hit upon a way to salvage his legislative agenda: he&#x2019;d stuff the court with new justices sympathetic to his politics. In February of 1937, he announced his <a href="http://xroads.virginia.edu/~ma02/volpe/newdeal/court.html">court-packing plan</a>, demanding that Congress pass a law that would allow him to nominate a new Supreme Court justice for every sitting justice older than 70. With six justices over that age, the initiative would allow Roosevelt to expand the court to fifteen justices, giving him the kind of majority in the judiciary that he already had in Congress. All three branches of government would be under FDR&#x2019;s control, and nothing would stand in the way of the New Deal.</p>&#xD; &#xD; <p>The plan backfired. Angry letters attacking it deluged congressional offices. Editorial pages across the nation inveighed against it. The American Bar Association declared its opposition. Every justice on the court, including the three liberals -- Benjamin N. Cardozo, Louis Brandeis and Harlan Fiske Stone -- privately expressed alarm. Republicans, wisely, stayed quiet.</p>&#xD; &#xD; <p>On March 9, the president turned to the people directly, dedicating one of his famous "fireside chats" to the issue. The fight was on.</p>&#xD; &#xD; <p>Then, suddenly, the court backed down. On March 29, 10 months after striking down New York's minimum wage law, the court upheld Washington state's minimum wage law in West Coast v. Parrish, another 5-4 decision. The vote that had changed was Justice Owen Roberts&#x2019;s. Commentators quickly dubbed it &#x201C;the switch in time that saved nine,&#x201D; a capitulation to the president&#x2019;s bullying. The reason for Roberts&#x2019;s change of heart remains a matter of contention. He later insisted that his two votes were actually consistent, and some historians have come to agree with him.</p>&#xD; &#xD; <p>The court&#x2019;s shift in West Coast v. Parrish undermined Roosevelt&#x2019;s case for the court-packing plan. If the court was already giving in to the New Deal, then fundamentally changing its structure was unnecessary. When Justice Willis Van Devanter, one of the four conservatives, announced his retirement, the case for a court-packing plan looked weaker still. By late summer of 1937, the Roosevelt administration abandoned the plan altogether.</p>&#xD; &#xD; <p>And in the end, FDR got his way. Over the course of his four terms in office, he appointed eight new justices to the court, which increasingly accepted both federal and state economic regulation. About two weeks after &#x201C;the switch,&#x201D; the court upheld the Wagner Act in National Labor Relations Board v. Jones &amp; Laughlin Steel Corporation, allowing for increased unionization.</p>&#xD; &#xD; <p>This change in the court&#x2019;s posture increased the regime uncertainty Amity Shlaes <a href="http://www.bloomberg.com/news/2011-06-06/what-paul-krugman-misses-about-1937-redux-echoes.html">wrote about last week</a>.</p>&#xD; &#xD; <p>(Nikolai Krylov is a contributor to the Echoes blog. The opinions expressed are his own.)</p>&#xD; &#xD; <p>To contact the author of this blog post: Nikolai Krylov at nkrylov@cfr.org.</p>&#xD; &#xD; <p>To contact the editor responsible for this blog post: Timothy Lavin at tlavin1@bloomberg.net.</p>&#xD; &#xD; <p>&#xA0;</p> </body> </html>