Necessity & the Law

Not until the Supreme Court finally passes upon its constitutionality will President Roosevelt's recovery program be out of the judicial woods. When that time comes the U.S. may have left the depression far behind and the points at issue may be as dead, for all practical purposes, as the Missouri Compromise of 1820 was in 1857 when the Supreme Court reviewed it in the Dred Scott case.

Last week President Roosevelt won his opening legal skirmish on the National Recovery Act in the District of Columbia Supreme Court. A Texas refiner attacked his executive order prohibiting the interstate shipment of "hot oil," sought to enjoin Secretary of the Interior Ickes from enforcing it. In a free & easy decision which ducked the issue of constitutionality Justice Joseph Winston Cox refused to grant the injunction. Declared he:

"Congress has declared that a great national emergency exists and has invested the President with extraordinary power to meet that emergency. ... It is recognized that necessity confers many rights and privileges that without the necessity might not be conferred. It is said that self-preservation is the first law and this principle, in some degree at least, seems to extend to governments. . . . There is another maxim that 'safety of the people is the supreme law' and all these must be considered in dealing with emergencies. All laws should be read in emergencies in the light of the law of necessity."

The one man in Washington who refuses to recognize the "law of necessity" or any other law that is not in black & white is Comptroller General John Raymond McCarl. With Comptroller McCarl the President's NRA program collided for the first time last week, and came off second best.

A Nebraska Republican, Mr. McCarl went to Washington as Senator Norris' secretary. He managed the famed Congressional campaign of 1918 and was made the first chief of the new General Accounting Office by President Harding on July 1, 1921. By law he holds office for 15 years, is ineligible for reappointment, can be removed only by Congress. Politically independent of the Government. Comptroller McCarl is the supreme keeper of its checkbook and therefore the best-hated man in public service. He interprets the literal law of Congress as to how money should be spent and from his decisions there is no appeal. The legal authority for spending 5-c- is as important to him as a $1,000,000,000 appropriation. A short, florid man, he is personally affable, officially inexorable.

The Federal penitentiary at Atlanta is making 500,000 yd. of duck cloth for the bleaching and shrinking of which the Department of Justice has a contract at 2 5/8-c- per yd. with Delta Finishing Co. of Philadelphia. The finished product the Department of Justice sells to the War Department at a fixed price. With the job about half done, the Delta concern lately informed the Justice Department that it was now operating under an NRA code, that costs had gone up 35%, that it could not complete its contract without more money from the U.S. The Justice Department was agreeable, provided the War Department paid more. Attorney General Cummings put the issue up to Comptroller McCarl who ruled last week:

''There is no existing legal authority for any modification of the contract because of the operation of the National Recovery Act. . . . The contract constitutes an obligation binding on the company and it may not withdraw therefrom without resulting liability to the U.S. for excess costs. . . . You are advised that there is no legal authority now existing to use appropriated public money to pay another price than the price fixed by the contract."

It was promptly announced that President Roosevelt would seek a special law from the next session of Congress to adjust Government contracts to NRA costs and thus get around the McCarl ruling.

Such a circumvention was devised at the White House last week for the Law of 1875 which was holding up about $110,000,000 in bounty payments to planters who had plowed under their cotton (TIME, Aug. 21). That law required the Government to deduct old debts due it by a claimant before paying out any claim. It was adroitly sidestepped by having cotton bounty checks made out to the joint account of debtor farmers and the Governor of the Farm Credit Administration. No farmer could cash his check without the consent of Governor Morgenthau. Governor Morgenthau promised to withhold only about $10,000,000 in payments from those farmers in whose debts private lenders held an interest through Federal Land and Intermediate Credit Banks. Another ''first" last week was a stop-order issued by the Federal Trade Commission under the new Securities Act. Last month the Speculative Investment Trust of Fort Worth, Tex. registered a $250,000 issue with the Commission. Its registration papers were found to be inaccurate and incomplete. It failed to file its advertising prospectus--addressed to "Dear Friends & Backers," promising "Big, Quick Profit Winnings," and adorned with a large NRA Blue Eagle. The concern was ordered not to sell any of its stock, under pain of $5,000 fine and five years imprisonment, until it fully complied with the law.

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