As part of the Agricultural
Adjustment Act, Congress implemented
a tax on agricultural commodities. Then the funds generated from that tax
would be given to farmers who promised to reduce their acreage.
Congress passed the Act in
order to solve the crisis in agricultural commodity prices which was
causing many farmers to go under. This Act took money from the big
agrobusiness and gave it to the little guy.
Congress is generally
authorized to give money to people via the Spending Clause (Article I, Section 8).
The US Supreme Court found the
Act unconstitutional because it attempted to regulate and control
agricultural production, an arena reserved to the States.
The US Supreme Court found
that even though Congress does have the power to levy taxes and spend
money, in this case they were using those powers as a "means to an
unconstitutional end." That violated the 10th Amendment.
The Court found that the
payments to farmers were a form of unlawful and oppressive coercive contracts, and the proceeds were earmarked for
the benefit of farmers complying with the prescribed conditions.
Making the payment of a
government subsidy to a farmer conditional on the reduction of his
planned crops went beyond the powers of the Federal government.
The Court found that this
was not really voluntary, because the farmers couldn't afford to say no.
The Court felt that this
was a way for the Federal government to essentially buy their way into
powers that they couldn't Constitutionally have.
couldn't pass a law making people reduce the amount of land they owned,
so they couldn't give people piles of money if they promised to reduce
In a dissent, it was argued
that the Courts should be concerned with the power to enact Statutes, not
The dissent felt that it was
ridiculous that the Federal government can provide subsidies and seeds to
farmers, and yet has no power to regulate what crops they grow.