298 U.S. 238 (1936), argued 11, 12 Mar. 1936, decided 18 Mar. 1936 by vote of 5 to 4; Sutherland for the Court, Cardozo, Brandeis, and Stone in dissent, Hughes dissenting in part. The Carter case arose in the vortex of controversy surrounding President Franklin D. Roosevelt's New Deal efforts to curb the disastrous effects of the Depression. The critical issue before the Court involved competing visions of federalism and the appropriate allocation of power between state and federal government. Much New Deal legislation was premised on the belief that the commerce power granted Congress extensive authority to regulate labor relations, commercial activities, agriculture, and the like. The idea was diametrically opposed to the vision of the commerce power embraced by a majority of the Supreme Court. The Carter decision was viewed by many as yet another example of Court intransigence that led ultimately to Roosevelt's unsuccessful court-packing plan.
The Bituminous Coal Conservation Act of 1935 sought to stem overproduction and ruinous competition. Wages were so appalling in the coal industry that labor unrest and strikes, sometimes accompanied by violence, had become endemic. The act created local boards to set minimum prices for coal and also provided for collective bargaining to achieve acceptable wage and hour agreements. Congress based its authority for the law squarely on its ability to regulate interstate commerce.
Justice George Sutherland's majority opinion brushed aside the bare recitation of the direct effect of coal mining on the economy. He drew what was for him a critical distinction. Although Congress's motives might be laudable, the Commerce Clause and the Tenth Amendment worked in tandem to define the appropriate spheres of state and federal governments. Since the powers of Congress are rigidly enumerated in the Constitution, it cannot cede its powers to others. Sutherland acknowledged that such a system was cumbersome, but he argued that the benefits of preserving the boundaries between states and the federal government were central to the integrity of the constitutional system. Congress, in short, had overstepped its constitutional limits. In a sentence reminiscent of a seduction he said, “Every journey to a forbidden end begins with the first step; and the danger of such a step by the government in the direction of taking over the powers of the states is that the end of the journey may find the states so despoiled of their powers, or—what may amount to the same thing—so relieved of the responsibilities which possession of the powers necessarily enjoins, as to reduce them to little more than geographical subdivisions of the national domain” (p. 866). Sutherland also drew on the distinction between items of production and things in commerce. Congress may regulate once goods enter into commerce or when there is a direct effect on commerce. Since he found no direct effect on commerce and since the coal was still in the production phase, only the states could constitutionally regulate coal mining.
Justice Benjamin Cardozo in dissent had a more pragmatic view of the situation. In response to the majority's direct/indirect test he said that “a great principle of constitutional law is not susceptible of comprehensive statement in an adjective” (p. 327).