- [Narrator] During the Great Depression
food prices had collapsed, and this had
a dire effect on many farmers' livelihoods.
The Agricultural Adjustment Act of 1933
was intended to solve this problem.
The act leveled special taxes on
processed agricultural products, such as cotton and wheat.
The new tax revenue was then used to pay farmers
to plant and harvest fewer crops.
Reduced agricultural production would allow prices to rise,
which helped farmers to once again earn a living.
In 1936, the act was challenged in the case
of United States versus Butler.
Hoosac Mills was a failing Massachusetts cotton mill
and Butler was one of its court appointed receivers.
The United States submitted an $81,000 claim
for taxes under the act.
But the receivers asked the Federal District Court
to reject the claim.
The court ordered the mill's receivers to pay the tax,
and the receivers appealed.
The Court of Appeals reversed the District Court's decision,
holding that the power to regulate agriculture
within state borders was solely reserved to the states.
The government petitioned for review,
and the United States Supreme Court granted cert.
The Court considered two questions
regarding the scope of Congress's authority
to tax and spend.
First, it examined whether Congress's power
to tax and spend for the general welfare
was limited to exercising specifically enumerated powers,
or if the authority was broader.
Second, the court also examined whether Congress
could use its taxing and spending power
to regulate local agricultural production,
or in instead the 10th Amendment
reserved that power to the states.
Writing for the court, Justice Owen Roberts held
that the taxing and spending clause
was an independent grant of power to Congress,
giving it broad authority to tax and spend
for the general welfare, and not merely a means
of exercising other enumerated powers.
However, the Court also held that this power
couldn't be used to achieve unconstitutional goals,
such as violating the 10th Amendment.
Questions regarding the scope of Congress's power
to tax and spend had lingered since the nation's founding.
James Madison had argued for limited taxing and spending
power only to be used in support of
Congress's other enumerated powers.
Alexander Hamilton, on the other hand,
supported broader authority to tax and spend
for the general welfare.
Roberts reasoned that Congress's power
to tax and spend as a means of carrying out
enumerated powers is already implied
in the grant of those powers.
If the framers had intended Congress
to tax and spend only in furtherance
of other enumerated powers, then the constitutional language
"to provide for the common defense
"and the general welfare" would be rendered meaningless.
A primary rule of constitutional and statutory construction
is that language shouldn't be interpreted
in a way that renders it meaningless.
In this case, Congress taxed agricultural processing
for the purpose of raising the prices of farm products.
This was clearly related to the general welfare
of the United States, because the collapse in food prices
had forced many farmers out of business across the country.
The act was therefore a valid exercise
of Congress's taxing and spending power.
This holding didn't decide the case, however.
The majority then considered the second question,
whether the 10th Amendment reserved
agricultural regulation solely to the states.
Because the power to regulate agriculture
wasn't specifically granted to Congress,
the Court found that the power was reserved
to the states by the 10th Amendment.
By offering financial incentives to farmers
to reduce their production, Congress sought
to regulate agriculture within the states,
which the Constitution didn't authorize.
The majority ruled that the act was
an unconstitutional intrusion on state authority.
The Court affirmed the decision of the Court of Appeals,
and the act was struck down as unconstitutional.
Justice Stone dissented, joined by
Justices Cardozo and Brandice.
They agreed that the taxing and spending clause
granted Congress a broad power to tax and spend
for the general welfare.
However, the dissenters believed that this power
wasn't limited by the fact that it could impact
areas that were traditionally reserved to the states.
United States versus Butler is not remembered
for striking down the Agricultural Adjustment Act,
because the same taxing provisions were quickly
reenacted by Congress under its Commerce Clause authority
and later upheld by the Supreme Court.
Instead, Butler is a landmark case
because it expressly held that the
taxing and spending clause is a separate grant
of congressional authority, not limited to
supporting Congress's other enumerated powers.
(chalk scratching)