1.6.1. New England (1925-1965): Struggling with the Depression


Mortgage moratoriums and social insurance:

In re Opinion of the Justices (Old-Age Pension Opinion) – New Hampshire, 1931 (154 A. 217); In re Opinion of the Justices (Deposit Insurance Opinion) – Massachusetts, 1932 (181 N.E. 833); Howes Bros. Co. v. Massachusetts Unemployment Compensation Commission – Massachusetts, 1936 (5 N.E.2d 720); Waterville Realty Corp. v. City of Eastport – Maine, 1939 (8 A.2d 898)

  • Efforts to relieve Depression-era poverty were not limited to the New Deal.  The states tried a variety of relief measures, many of which attracted constitutional challenges.  Most test cases involved New York laws and Midwestern laws; New England did not play a central part in the legal debate over such measures, but it did produce a few important cases.
  •  Mortgage foreclosures.  During the Depression, many New Englanders were unable to make their mortgage payments and soon faced loss of their homes and businesses through foreclosure.  Legislatures responded by enacting “mortgage moratorium” laws which delayed foreclosure for periods of several years – enough time, lawmakers hoped, for debtors to ride out the Depression. 
  • Banks and other creditors did not want to wait for payment.  They challenged the moratorium laws, claiming that they had a constitutional right to foreclose under the shorter time periods in effect when the mortgages were made.  In Blaisdell v. Home Building & Loan Association (1933), the U.S. Supreme Court upheld Minnesota’s moratorium law and paved the way for additional moratorium laws.  Some states extended the period of the laws even after the Depression abated; the extensions were challenged as being too long.  Some courts, including the Maine court in Waterville Realty, agreed, although they made clear that extensions to meet genuine continuing emergencies would be accepted. 
  • Unemployment compensation.  State unemployment compensation funds and old-age pensions originated in Europe in the late 1800’s and were proposed in the U.S. as early as 1920, but they did not gain traction until the Depression.  Some employers challenged unemployment fund assessments, arguing that the assessments deprived them of property without due process of law, but no significant challenges were mounted in New England. 

  • The challenges faded away after the U.S. Supreme Court upheld Alabama’s law in Carmichael v. Southern Coke & Coal Co. (1936).  In the Howes Bros. case, Massachusetts’s supreme court anticipated the Carmichael decision by rejecting a challenge to the state’s unemployment compensation law.  The court held that the law, which required both employers and workers to contribute part of their earnings to a common fund, was not an illegal tax and did not unfairly discriminate against companies with good employee retention histories.  In the Old-Age Pension Opinion, the New Hampshire supreme court took a more critical view of a proposed old-age assistance law:  it noted that the state constitution strictly limited the scope of government pensions. 

  • Bank insurance.  Many states created precursors of the Federal Deposition Insurance Corporation at the beginning of the Depression, requiring a portion of bank deposits to be set aside for a common insurance fund to protect depositors of banks that failed.  Some courts struck down these laws on the grounds that they unconstitutionally appropriated depositors’ assets, but in the Bank Insurance Opinion, the Massachusetts supreme court upheld its state’s bank insurance law, viewing the deposits as temporary loans rather than irrevocable assessments and suggesting that courts must be particularly sensitive to social needs during times of emergency.

Fair competition codes:

State v. Old Tavern Farm – Maine, 1935 (180 A. 473); Amitrano v. Barbaro – Rhode Island, 1938 (1 A.2d 109); State v. Auclair – Vermont, 1939 (4 A.2d 107); State v. Moore – New Hampshire, 1940 (13 A.2d 143)

  • It was an article of faith among New Deal-era economists that falling prices and rising unemployment were largely due to predatory competitive practices and that those problems could be solved by enacting fair trade practice codes for major industries.   Franklin Roosevelt implemented the theory in the National Industrial Recovery Act, and several New England states followed suit with laws that required industries to enact and enforce their own fair competition codes or that imposed such codes on them. 
  • The laws did not work well, and during their heyday they generated much legal controversy.  Some New England courts were more skeptical of them than others.  In Old Tavern Farm, the Maine supreme court struck down a law requiring milk factories to post security for milk payments owed to farmers, mainly in order to promote price stability.  Even though the U.S. Supreme Court had recently upheld a similar milk price control law in Nebbia v. New York (1934), a majority of Maine’s  justices concluded their state’s law violated equal protection by singling out the milk industry; one dissenter argued they should give the legislature leeway in this area.  In Auclair, Vermont’s supreme court agreed with the Old Tavern dissenter and upheld Vermont’s milk pricing law.
  • Codes limiting barbers’ hours of operation were oddly popular in many states.  In Amitrano and several other cases, New England courts struck down the hours limits as unrelated to public health or safety.   And in Moore, New Hampshire’s supreme court ended on the same note of skeptcism it had sounded at the beginning of the Depression, striking down on substantive due process grounds a law that encouraged use of local licensing in order to limit the supply of truckers.  

“Doubtless the statute before us would be condemned by an earlier generation as a temerarious interference with the rights of property and contract; … with the natural law of supply and demand.  But we must not fail to consider that the police power is the least limitable of the powers of government and that it extends to all the great public needs; that [laws] … to stimulate the production of a vital food product by fixing living stds of prices for the producer, are to be interpreted with that degree of liberality which is essential to the attainment of the end in view; … and that mere novelty is no objection to legislation.” – Justice __ Hudson (dissent), in Old Tavern

“Possibly … the public will suffer some real and appreciable disadvantage if the supply is not limited to the need … But whatever the advance in the scope of the due exercise of the police power, the time has not come when it may be said that legislation may prohibit entrance into a legit field of activity for the reason alone that sufficient in number are already engaged therein to meet the public demand for its product or service.” – Justice __, in Moore


digital file from original item
Campaign sign for Boston mayor James Michael Curley (ca. 1930) - courtesy Library of Congress

“Measures may be enacted to secure some degree of cooperation between banks to the end that general solvency and financial strength may be promoted, particularly in times of panic and general depression.”  - Justice __, in the Bank Insurance Opinion

“[Legislation] in mitigation of a public evil may place the cost on those in connection with whose business the evil arises. …  The contributions are exacted from the plaintiffs as well as from ees to effectuate some regulation of the evils of unemployment, in which both groups are interested and which is a subject within the scope of legislative competency.” – Justice __, in Howes Bros.













Farmer bringing in the milk at the Burlington cooperative milk bottling plant. Burlington

Milk cooperative, Burlington, Vermont (1941) - courtesy Library of Congress


 


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