II. Agricultural Woes

Highly dependent on activities, such as farming, livestock production, and lumbering, that produced renewable resources, the West suffered severely from the Great Depression. Farm land prices declined precipitously; average per capita income among the agricultural population dropped to below half the non-farm level, which itself had fallen dramatically. Foreclosures escalated. Agricultural prices generally decreased 63 percent between 1929 and 1933, whereas industrial prices dipped by 15 percent.^[9]

The New Deal represented the first federal attempt to help farmers who had been victimized by adverse economic circumstances. In his first hundred days, Roosevelt launched the Agricultural Adjustment Administration (AAA) to oversee government efforts designed to boost prices, stabilize production, and reduce crop surpluses. Over the next seven years a number of laws followed to refine these basic principles, including price support and production controls, crop insurance, disaster relief, and a host of other programs created to resettle poor farmers, improve soil conservation efforts, extend farm credit, establish rural electrification, and distribute surplus food. These legislative efforts built on the price-support and production-adjustment schemes of the original Agricultural Adjustment Act of 1933, which set out to raise farm prices and stabilize the agricultural market through government regulation. The theory of the self-correcting marketplace, most New Dealers believed, could not explain the prevailing economic forces. The plight of western and midwestern farmers required some type of government action. The act attempted to redress fundamental market problems principally by regulating the price of certain commodities, restricting production, and authorizing payment to farmers who agreed not to produce certain agricultural products.^[10]

Farmers throughout the Ninth Circuit's constituent states eagerly participated in programs administered by the AAA. The AAA carefully monitored the extent of this involvement, and the statistics it gathered highlight the importance of the New Deal agricultural reforms for western farmers. By early 1936, in a bid to shore up prices the AAA had signed 127,001 contracts with Montana farmers to regulate crop production. The numbers of contracts in other Ninth Circuit states testified to the widespread impact of the programs: in Arizona, 5,680 contracts; in California, 25,300; in Idaho, 75,259; in Nevada, 1,388; in Oregon, 31,533; and in Washington, 48,301. In the period from 1932 through 1935, the program appeared to be making strong headway in restoring cash income levels for farmers. Nationwide, agricultural income rose by 66 percent in this four-year period, from $4.377 billion to $7.201 billion. The comparative benefit to the western states was greater still: each Ninth Circuit state except Oregon and Washington far outpaced the national average in farm income growth, and these two states were just below average at 60 and 62.5 percent, respectively.^[11]

The AAA worked to control milk production. In California, the milk industry had made a modest recovery by 1935. Income from milk production had risen 11.5 percent in the previous four years, from $65.5 million to $73.0 million. Even this gain was imperiled in early 1935, when the Ninth Circuit considered a challenge to the administration of the AAA milk program in California. Judge Curtis Wilbur's opinion in Berdie v. Kurtz set the tone for the struggle among the Ninth Circuit judges over the New Deal's agricultural programs. In Berdie , the court ruled that the 1933 Agricultural Adjustment Act did not empower the secretary of agriculture to issue licenses regulating intrastate production, sale, or distribution of milk.^[12] Charles Cavanah, a district judge from Idaho who sat on the panel by designation, joined Wilbur's opinion.

Berdie reflected Wilbur's overall disapproval of government regulation and his hostility to the theory that regulations on intrastate activity were acceptable if they had interstate commercial effects. He could not strike down the legislation as an improper restraint on intrastate commerce, however, because the Supreme Court had already sustained regulation of exclusively intrastate activities that burdened interstate commerce. Nor could he invalidate the regulation under the delegation doctrine, which held that delegations of authority by Congress to executive agencies were invalid if they called for the agency to exercise "legislative" power. The explicit nature of the statutory standards blunted such a challenge. Instead, Wilbur interpreted the agency's stat-

utory authority as narrowly as possible, writing that Congress had delegated authority to the secretary only to regulate interstate commerce and that therefore this particular regulation was invalid, since it dealt solely with the Los Angeles milk industry and thus concerned intrastate commerce.^[13]

Wilbur went to some lengths to advance a more overtly free-market political agenda, a position his colleague Francis Garrecht found completely untenable under the prevailing economic circumstances. In a sharply worded dissent, Garrecht took the court's senior judge to task for downplaying the interstate effects of intrastate regulation of the milk industry. The chain of these consequences began with the decrease in income among the general population in Los Angeles that had caused a decline in milk purchases. Between 1929 and 1932, the gross income of California dairy farmers from milk sales dropped by 35.4 percent. As milk producers competed for shrinking markets, the resulting price wars steadily drove dairy farmers out of the milk business. Increasingly desperate, these milk producers shifted to butter and cheese production, a process that in turn had interstate commercial effects. Over 60 percent of the butter and 85 percent of the cheese sold in Los Angeles during the previous four years had been produced outside California. Garrecht thus saw a direct link between regulation of the local milk price and interstate commerce in butter and cheese products. Garrecht was a fervent New Dealer and the first Roosevelt appointee to the Ninth Circuit, but his position fell victim to the court's procedure of drawing a district judge to fill out a panel—in this case, a judge persuaded by Wilbur. Nor did Garrecht have the option of calling for the full court to reverse through en banc reconsideration. It would be six years before Congress authorized a procedure by which all members of the circuit courts of appeals could reconsider the decision of one of its panels. Nevertheless, Garrecht's views of Congress's power to regulate intrastate commerce eventually prevailed, not only on his court but in the Supreme Court as well.^[14]

A more supportive view among the federal judiciary for Roosevelt's agriculture program would not develop for another few years. Nine months after the Ninth Circuit's decision in Berdie , the Supreme Court issued an even more sweeping denunciation of the legality of the Agricultural Adjustment Act. On January 6, 1936, the Court held that the 1933 act exceeded the constitutional authority of Congress to regulate commerce, and it expressly invalidated a processing tax as an improper regulation of agricultural production. A week later the Court struck down the Agricultural Adjustment Act of 1935, which had extensively

modified the 1933 program. Neither decision explicitly addressed the crop-production-control provisions, but the Court's sweeping language on the limits of Congress's power to regulate commerce left the many farmers who had signed contracts in doubt as to their continued legality. The Court's rulings thus sparked widespread discontent in the West. Despite the recognized flaws in the emergency agricultural legislation, farm groups across the country supported the general scheme presented in these Agricultural Adjustment acts.^[15]

The period following the Berdie decision and the Supreme Court's invalidations of Agricultural Adjustment Act taxing provisions offered a great challenge to the New Dealers on the Ninth Circuit. Subordinate to the Supreme Court, the Ninth Circuit had to express its obeisance to precedent. The Court's AAA rulings must have disenchanted such jurists as Garrecht, who had represented many farmer groups before ascending to the bench. The New Dealers on the Ninth Circuit soon demonstrated that the complexity of the agriculture statutes, the uncertainty among the justices as to the constitutionality of other disputed provisions, and their own intellectual talents in distinguishing away unfavorable rulings combined to yield a more pro-administration jurisprudence than their senior judge would countenance. Berdie had demonstrated that despite their numerical edge, the Democratic judges were at times unable to stop the determined opposition of Judge Wilbur to the New Deal. But although the fluidity of the appellate panel process worked to the disadvantage of Garrecht in Berdie , it also weakened the doctrinal hold of Wilbur's position.^[16]

When the Ninth Circuit next considered an appeal involving the AAA, Wilbur was not on the panel, a factor that surely shaped the tenor, if not the outcome, of the decision. In a test case on constitutional aspects of provisions of the 1935 AAA amendments not at issue in the earlier Supreme Court case, a panel composed of Garrecht, Denman, and Haney heard a fruit shipper's appeal from a permanent injunction granted in favor of the United States against shipments of oranges and grapefruit grown by the shipper in California or Arizona. The case provided an ideal vehicle for deciding the constitutional questions, because the shipper, Edwards Fruit Company, stipulated to the facts and rested its sole argument on the unconstitutionality of these AAA amendments. By going beyond the issues directly presented in the case, moreover, Denman's opinion started the erosion of the rule Wilbur had crafted in Berdie .^[17]

Pursuant to the 1935 law, the secretary of agriculture had issued orders limiting the amount of citrus fruits each shipper could transmit

in interstate or foreign commerce in a given week. By establishing prices, the order sought to restore purchasing power to an equivalent of the prewar period of August, 1909, to July, 1914. The statute also directed the secretary to take into account the effect on consumers if prices escalated too rapidly. Edwards Fruit Company's challenge to the constitutional validity of this statutory authorization raised a question with significant commercial consequences. Of the 50,000 growers of oranges and grapefruits in the United States, 36 percent resided in Arizona and California. Together these citrus fruits ranked in national value behind only apples. In California, the farm value of oranges and grapefruits was three times greater than that of any other fruit crop. As the prices for these fruit products fell, so did California's total farm worth. Population growth had not kept pace with the escalating stock of oranges. From 1930 to 1937, the market supply of oranges increased ten times more rapidly than the United States population. Given that 90 percent of California's oranges, then, moved in interstate or foreign commerce, the secretary's order had far-reaching consequences in the citrus industry.^[18]

In assessing the statute under these circumstances, Denman's approach differed significantly from Wilbur's. The two clearly diverged on whether an order affecting intrastate activity could be justified as a regulation of interstate commerce. The question presented in Edwards v. United States —whether Congress could empower the secretary to set prices for goods moving in interstate commerce—was far different from that posed in Berdie —whether the secretary could issue orders regulating intrastate milk production, sales, and distribution. Edwards seemed squarely within Congress's constitutional power to regulate commerce "among the several States." In an elaborate opinion, Denman took judicial notice that such interstate price controls would influence intrastate production. He then proceeded to show that governmental actions affecting intrastate activities were valid exercises of constitutional authority under the Commerce Clause. As Denman put it in Edwards , "The orchards are the springs from which flow the streams of that commerce."^[19]

Partly to justify this seemingly unnecessary analysis and partly to apply the Supreme Court precedents that only months before had signaled what appeared to be a change in the Court's perspective, Denman determined that NLRB v. Jones and Laughlin Steel Corporation , which the Court had decided in April of 1937, overruled Carter v. Carter Coal Company . In Carter , the Court had invalidated a statute that attempted to justify intrastate coal production codes as regulations of interstate commerce. In Jones and Laughlin , the Court upheld a statute permitting

employees not engaged in interstate or foreign commerce to organize for collective bargaining purposes, on the ground that their intrastate actions affected interstate commerce. These opinions seemed irreconcilable, but the Jones and Laughlin Court itself merely said that Carter was "not controlling here," which Denman interpreted to mean that Carter was "not 'determinative' of this question, solely because it is overruled." Although legal scholars have vindicated Denman's reading, Judge Bert Haney was surely correct in his concurrence that Denman need not have gone so far. Haney did agree, however, with Denman's holding that Jones and Laughlin sanctioned congressional regulation, under the Commerce Clause, of "merchandise produced within and carried out of the state or that produced and remaining within it."^[20]

Discussing his opinion in Edwards , Denman later wrote to a friend that one "of the pleasant incidents of a life tenure is that one can put in one page of an opinion citations from Karl Marx, Sutherland, and Van Devanter, and make what at least reads like a logical argument for the constitutional validity of a congressional act." But the Edwards decision did more than string together a few seemingly incongruous references, as Denman well knew. The seed planted there sprouted a year later when the court heard a challenge by a walnut marketer to AAA regulation of the walnut industry in California, Oregon, and Washington. Judge William Healy joined a Denman opinion that upheld the AAA regulations. Using Edwards as the controlling precedent, in this 1938 case Denman extended his analysis of Congress's power to regulate commerce to include, not only the producer of a commodity, but also the intrastate actions of a marketer. His opinion held that Congress could regulate intrastate commerce if that regulation bore a reasonable relation to the prevention of the economic evil of disparate pricing in the interstate walnut trade. Denman's opinion sanctioned the viability of intrastate regulations if they had some interstate effects; it also expressed deference to fact-findings by the secretary regarding the effect of these intrastate regulations on interstate prices. Clifton Mathews, who along with Curtis Wilbur was outnumbered by the New Dealers on the court, dissented without opinion.^[21]

Before the Supreme Court's decision in Jones and Laughlin , which Denman's Edwards opinion extended to the agricultural recovery program, the Supreme Court's invalidation of the Agricultural Adjustment acts had threatened harsh consequences for some western agricultural producers. Much of the federal farm aid during the New Deal flowed westward from Washington. The fifteen million farmers in the western

half of the country received two-thirds of the agricultural benefits disbursed by the government, with the rest going to the fifteen million farmers in the East. Between 1933 and 1938, federal agricultural assistance went overwhelmingly to Ninth Circuit states. Six of the seven Ninth Circuit states ranked among the top eight recipients in total loans and expenditures per farm capita, and the other, Oregon, was thirteenth nationally. The farmers in these states benefited the most because they had lost most at the onset of the Depression: states that suffered the greatest drop in farm income between 1929 and 1932 were granted the highest levels of federal benefits.^[22]

The Ninth Circuit's handling of cases arising out of these agricultural programs offered an early warning of the need for court procedural reforms. As the court gained its sixth and seventh members in 1937, the disparity in judges' views was sufficiently great that panel composition could and did significantly affect the outcome of a case. A majority of two on a panel could theoretically bind the other five members of the court in the announcement of Ninth Circuit law. As Denman's studied avoidance of Wilbur's Berdie opinion revealed, clever judges distinguished away precedents with which they disagreed. Clearly such a system was undesirable, but no solution had as yet been devised. And even as the ideological focus on the court's schisms offers one insight into the development of the Ninth Circuit's politics, sympathy for the New Deal was not the sole driving force in the establishment of a procedure for the entire court to consider a case. As cases arising under the National Industrial Recovery Act demonstrated, even judges sympathetic to the Roosevelt administration sometimes disagreed sharply among themselves.