United States v. Butler
297 U.S. 1 (1936)

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U.S. Supreme Court

United States v. Butler, 297 U.S. 1 (1936)

United States v. Butler

No. 401

Argued December 9, 10, 1935

Decided January 6, 1936

297 U.S. 1


1. Processors of farm products have a standing to question the constitutionality of the "processing and floor-stock taxes" sought to be laid upon them by the Agricultural Adjustment Act of May 12, 1933, 48 Stat. 31. Massachusetts v. Mellon, 262 U. S. 447, distinguished. P. 297 U. S. 57.

2. A tax, in the general understanding and in the strict constitutional sense, is an exaction for the support of Government; the term does not connote the expropriation of money from one group to be expended for another, as a necessary means in a plan of regulation, such as the plan for regulating agricultural production set up in the Agricultural Adjustment Act. P. 297 U. S. 61.

3. In testing the validity of the "processing tax," it is impossible to wrest it from its setting and treat it apart as a mere excise for raising revenue. P. 297 U. S. 58.

4. From the conclusion that the exaction is not a true tax it does not necessarily follow that the statute is void and the exaction uncollectible if the regulation, of which the exaction is a part, is within any of the powers granted to Congress. P. 297 U. S. 61.

5. The Constitution is the supreme law of the land, ordained and established by the people, and all legislation must conform to the principles it lays down. P. 297 U. S. 62.

6. It is a misconception to say that, in declaring an Act of Congress unconstitutional, the Court assumes a power to overrule or control the action of the people's representatives. P. 297 U. S. 62.

Page 297 U. S. 2

7. When an Act of Congress is appropriately challenged in a Court, it is the duty of the court to compare it with the article of the Constitution which is invoked and decide whether it conforms to that article. P. 297 U. S. 62.

8. All that the court does or can do in such cases is to announce its considered judgment upon the question; it can neither approve nor condemn any legislative policy; it can merely ascertain and declare whether the legislation is in accordance with, or in contravention of, the provisions of the Constitution. P. 297 U. S. 62.

9. The question in such cases is not what powers the Federal Government ought to have, but what powers have, in fact, been given it by the people. P. 297 U. S. 63.

10. Ours is a dual form of government; in every State there are two Governments -- the State and the United States; each State has all governmental powers save such as the people, by the Constitution, have conferred upon the United States, denied to the States, or reserved to themselves. P. 297 U. S. 63.

11. The Government of the United States is a Government of delegated powers; it has only such powers as are expressly conferred upon it by the Constitution and such as are reasonably to be implied from those expressly granted. P. 297 U. S. 63.

12. The Agricultural Adjustment Act does not purport to regulate transactions in interstate or foreign commerce, and the Government in this case does not attempt to sustain it under the commerce clause of the Constitution. P. 297 U. S. 63.

13. In Article I, § 8, cl. 1 of the Constitution, which provides that Congress shall have power

"to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defence and general welfare of the United States,"

the phrase "to provide for the general welfare" is not an independent provision empowering Congress generally to provide for the general welfare, but is a qualification defining and limiting the power "to lay and collect taxes," etc. P. 297 U. S. 64.

14. The power to appropriate money from the Treasury (Constitution, Art. I, § 9, cl. 7) is as broad as the power to tax, and the power to lay taxes to provide for the general welfare of the United States implies the power to appropriate public funds for that purpose. P. 297 U. S. 65.

15. The power to tax and spend is a separate and distinct power; its exercise is not confined to the fields committed to Congress by the other enumerated grants of power, but it is limited by the requirement that it shall be exercised to provide for the general welfare of the United States. P. 297 U. S. 65.

Page 297 U. S. 3

16. The Court is not required in this case to ascertain the scope of the phrase "general welfare of the United States," or to determine whether an appropriation in aid of agriculture falls within it. P. 297 U. S. 68.

17. The plan of the Agricultural Adjustment Act is to increase the prices of certain farm products for the farmer by decreasing the quantities produced; the decrease is to be attained by making payments of money to farmers who, under agreements with the Secretary of Agriculture, reduce their acreage and crops, and the money for this purpose is exacted, as a tax, from those who first process the commodities.


(1) The Act invades the reserved powers of the States. P. 297 U. S. 68.

(2) Regulation and control of agricultural production are beyond the powers delegated to the Federal Government. P. 297 U. S. 68.

(3) The tax, the appropriation of the funds raised, and the direction for their disbursement, are but parts of the plan -- the means to an unconstitutional end. P. 297 U. S. 68.

(4) The power of taxation, which is expressly granted to Congress, may be adopted as a means to carry into operation another power also expressly granted, but not to effectuate an end which is not within the scope of the Constitution. P. 297 U. S. 69.

(5) The regulation of the farmer's activities under the statute, though in form subject to his own will, is, in fact, coercion through economic pressure; his right of choice is illusory. P. 297 U. S. 70.

(6) Even if the farmer's consent were purely voluntary, the Act would stand no better. At best, it is a scheme for purchasing with federal funds submission to federal regulation of a subject reserved to the States. P. 297 U. S. 72.

(7) The right to appropriate and spend money under contracts or proper governmental purposes cannot justify contracts that are not within federal power. P. 297 U. S. 72.

(8) Congress cannot invade state jurisdiction by purchasing the action of individuals any more than by compelling it. P. 297 U. S. 73.

(9) There is an obvious difference between a statute stating the conditions upon which moneys shall be expended and one effective only upon the assumption of a contractual obligation to submit to a regulation which otherwise could not be enforced. P. 297 U. S. 73.

(10) Owing to the supremacy of the United States, if the contracts with farmers contemplated by the Agricultural Adjustment Act were within the federal power to make, the States could not declare them void or prevent compliance with their terms. P. 297 U. S. 74.

(11) Existence of a situation of national concern resulting from similar and widespread local conditions cannot enable Congress

Page 297 U. S. 4

to ignore the constitutional limitations upon its own powers and usurp those reserved to the States. P. 297 U. S. 74.

(12) If the novel view of the General Welfare Clause now advanced in support of the tax were accepted, that clause would not only enable Congress to supplant the States in the regulation of agriculture and of all other industries as well, but would furnish the means whereby all of the other provisions of the Constitution, sedulously framed to define and limit the power of the United States and preserve the powers of the States, could be broken down, the independence of the individual States obliterated, and the United States converted into a central government exercising uncontrolled police power throughout the Union superseding all local control over local concerns. P. 297 U. S. 75.

(13) Congress, being without power to impose the contested exaction, could not lawfully ratify the acts of an executive officer in assessing it. P. 297 U. S. 78.

78 F.2d 1 affirmed.

CERTIORARI, 296 U.S. 561, to review a decree which reversed an order of the District Court (Franklin Process Co. v. Hoosac Mills Corp., 8 F.Supp. 552), directing the receivers of Hoosac Mills, a cotton milling corporation, to pay claims of the United States for processing and floor taxes on cotton, levied under §§ 9 and 16 of the Agricultural Adjustment Act of May 12, 1933. The opinion of this Court begins on p. 297 U. S. 53, post; the dissenting opinion on p. 297 U. S. 78.

Page 297 U. S. 53

Primary Holding
The spending power does not allow Congress to regulate matters clearly reserved to the states by using taxation as a pretext for indirect control.
Congress based its authority for promulgating the Agricultural Adjustment Act of 1933 on a finding that there was a national economic emergency because of the disparity between the prices of agricultural goods and others, which had undermined the purchasing power of farmers. It proposed to collect a tax from entities that processed agricultural products in order to address the ostensible emergency. It then would transfer the resulting revenue to farmers who curtailed production of crops used by the processors. Authority to determine which crops would be affected was granted to the Secretary of Agriculture. He decided that one of the crops should be cotton, and Butler received a tax clam as a receivers of the Hoosal Mills Corp., a cotton processor.



  • Owen Josephus Roberts (Author)
  • Charles Evans Hughes
  • Willis Van Devanter
  • James Clark McReynolds
  • George Sutherland
  • Pierce Butler
  • Louis Dembitz Brandeis
  • Benjamin Nathan Cardozo

Standing may be found because the entire law rather than just the tax provision is being challenged as unconstitutional. Located in Article I, Section 8, the Spending Power of Congress is restricted to situations in which it is being used for the general welfare of the people. Agricultural production historically lies beyond the authority of the federal government to regulate. The argument that compliance is voluntary is illusory, since farmers lose benefits if they do not comply with the law. This shows that Congress was using the Spending Power as an enforcement mechanism to control activity that lies completely within the authority of the states, which is not a constitutional use of it.


  • Harlan Fiske Stone (Author)

Congress does have the authority to tax the processing of agricultural commodities, so it may use its taxing and spending power to regulate agricultural production. It may delegate this power to the Secretary of Agriculture, and its goals fit within the requirement of furthering the public welfare. The limitations articulated by the majority are too challenging to apply consistently.

Case Commentary

Although the spending power has been construed more broadly with time, this case reveals the equally persistent importance of federalism and states' rights. The federal government cannot coerce or manipulate states into making certain decisions in areas that they traditionally control.

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