When the Supreme Court Stopped Economic Fascism in America

By Ebeling, Richard M. | Freeman, October 2005 | Go to article overview

When the Supreme Court Stopped Economic Fascism in America


Ebeling, Richard M., Freeman


Seventy years ago, on May 27, 1935, the U.S. Supreme Court said no to economic fascism in America. The trend toward bigger and ever-moreintrusive government, unfortunately, was not stopped, but the case nonetheless was a significant event that at that rime prevented the institutionalizing of a Mussolini-type corporarivist system in America.

In a unanimous decision the nine members of the Supreme Court said there were constitutional limits beyond which the federal government could not go in claiming the right to regulate the economic affairs of the citizenry. It was a glorious day in American judicial history, and is worth remembering.

When Franklin Roosevelt ran for president in the autumn of 1932 he did so on a Democratic Party platform that many a classical liberal might have gladly supported and even voted for. The platform said that the federal government was far too big, taxed and spent far too much, and intruded in the affairs of the states to too great an extent. It said government spending had to be cut, taxes reduced, and the federal budget balanced. It called for free trade and a solid goldbacked currency.

But as soon as Roosevelt took office in March 1933 he instituted a series of programs and policies that turned all those promises upside down. In the first four years of FDRs New Deal, taxes were increased,government spending reached heights never seen before in U.S. history, and the federal budget bled red with deficits.The bureaucracy ballooned; public-works projects increasingly dotted the land; and the heavy hand of government was all over industry and agriculture. The United States was taken oflf the gold standard, with the American people compelled to turn in their gold coin and bullion to the government for paper money under the threat of confiscation and imprisonment.

In June 1933 Congress passed the National Industrial Recovery Act (NIRA), after which FI)R created the National Recovery Administration (NRA). Modeled on Mussolini's fascist economic system, it forced virtually all American industry, manufacturing, and retail business into cartels possessing the power to set prices and wages, and to dictate the levels of production. Within a few months over 200 separate pricing and production codes were imposed on the various branches of American business.

The symbol of the NRA was a Blue Eagle that had lightning bolts in one claw and an industrial gear in the other. Every business in the country was asked to have a Blue Eagle sign in its window that declared, "We Do Our Hart," meaning it followed the pricing and production codes. Citizen committees were formed to spy on local merchants and report if they dared to sell at lower prices.

Propaganda rallies in support of the NRA were held across the country. During halftime at football games cheerleaders would form the shape of the Blue Eagle. Government-sponsored parades featured Hollywood stars supporting the NRA. At one of these parades the famous singer Al Jolson was filmed being asked what he thought of the NRA; he replied, "NRA? NRA? Why it's better than my wedding night!" Film shorts produced by Hollywood in support of the NRA were shown in theaters around the country; in one of them child star Shirley Temple danced and sang the praises of big-government regulation of the American economy.

The NRA codes were soon joined by similar controls over farming with the passage of the Agricultural Adjustment Act (AAA). Farmers were given subsidies and government-guaranteed price supports, with Washington determining what crops could be grown and what livestock could be raised. Government ordered some crops to be plowed under and some livestock slaughtered, all in the name of centrally planned farm production and pricing.

Much of the urban youth of America were rounded up and sent off to national forests for regimentation and mock military-style drilling as part of the Civilian Conservation Corps (CCC). …

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