Argument for Appellee.

312 U.S.

among the States and their prevalence throughout the country would not validate uniform regulation of traffic by Congress.

The Congressional power over intrastate commerce is limited to the regulation of intrastate activities which directly affect interstate commerce. Schechter Poultry Corp. v. United States, 295 U. S. 495, 548; Carter v. Carter Coal Co., 298 U. S. 238, 308.

Conditions in production like those involved here have always been held to affect interstate commerce only indirectly. Their control is therefore subject solely to the reserved powers of the States.

The proposition that every conceivable legislative power is conferred by § 8 of Article I of the Constitution is in direct conflict with the doctrine that the Federal Government is a government of enumerated powers. Moreover, there is no need for a finding that legislative power over every matter of concern to the people of the States and of the Nation is lodged in either the State or Federal Governments, individually or collectively, since the Tenth Amendment expressly stipulates that certain powers are reserved to the people. Kansas v. Colorado, 206 U. S. 46, 89-91.

Administrative expediency can not justify regulation of intrastate matters where the result is to obscure completely the boundaries of national and state power. Schechter Poultry Corp. v. United States, 295 U. S. 495, 507-508; Carter v. Carter Coal Co., 298 U. S. 238, 246, 292, et seq.

The doctrine which permits the regulation of intrastate transactions which are so commingled with interstate transactions that all must be regulated if the latter are to be effectively controlled, is inapplicable.

Although not required to stay its hand until actual movement in interstate commerce begins, Congress may extend its power only to those transactions occurring be

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Argument for Appellee.

fore the commencement of interstate movement whose relationship to interstate commerce is sufficiently close and substantial to justify congressional action.

Failure to conform to the statutory standard of minimum wages and maximum hours in such manufacturing establishments as appellee's does not in such a manner affect interstate commerce, nor constitute such an unfair method of competition, as to be subject to the regulatory power of Congress.

The Government's argument is an indirect attack upon the dual system of government established by the Constitution. Schechter Poultry Corp. v. United States, 295 U. S. 495, 549.

The Government would solve the problem of the division of governmental powers by rendering the Federal Government dominant in all commercial and economic matters.

The power to control the conditions of production in the manner attempted by the Act is the power to impose the standard of living of one section of the country upon another, to discriminate against the industries of one section and in favor of those of another, and to equalize economic conditions by eliminating the economic advantages of more fortunate localities. If Congress may eliminate differentials in labor conditions, it may likewise eliminate other economic differentials which affect conditions in interstate commerce. Kidd v. Pearson, 128 U. S. 1, 21-22.

Cases cited under the Federal Trade Commission Act and under the Sherman Act are inapplicable. In those decisions the condemned practices tended to restrict competition in interstate commerce.

The fact that individual States can not adequately protect the markets which lie outside their borders for the orderly sale of their products does not vest in the national government unqualified power to regulate competition in those interstate markets.

Failure to conform to the statutory standard of minimum wages and maximum hours in such manufacturing establishments as appellee's does not lead to labor disputes which burden and obstruct commerce, nor interfere with the orderly and fair marketing of goods in com

merce.

The Act deprives appellee of liberty and property without due process of law, and of the freedom of contract guaranteed by the Fifth Amendment. It is arbitrary and capricious; and is indefinite as to what persons are subject to its penal provisions.

MR. JUSTICE STONE delivered the opinion of the Court.

The two principal questions raised by the record in this case are, first, whether Congress has constitutional power to prohibit the shipment in interstate commerce of lumber manufactured by employees whose wages are less than a prescribed minimum or whose weekly hours of labor at that wage are greater than a prescribed maximum, and, second, whether it has power to prohibit the employment of workmen in the production of goods "for interstate commerce" at other than prescribed wages and hours. A subsidiary question is whether in connection with such prohibitions Congress can require the employer subject to them to keep records showing the hours worked each day and week by each of his employees including those engaged "in the production and manufacture of goods to-wit, lumber, for 'interstate commerce.'”

Appellee demurred to an indictment found in the district court for southern Georgia charging him with violation of § 15 (a) (1) (2) and (5) of the Fair Labor Standards Act of 1938; 52 Stat. 1060, 29 U. S. C. § 201, et seq. The district court sustained the demurrer and quashed the indictment and the case comes here on direct appeal under § 238 of the Judicial Code as amended, 28

U. S. C. § 345, and § 682, Title 18 U. S. C., 34 Stat. 1246, which authorizes an appeal to this Court when the judgment sustaining the demurrer "is based upon the invalidity or construction of the statute upon which the indictment is founded."

The Fair Labor Standards Act set up a comprehensive legislative scheme for preventing the shipment in interstate commerce of certain products and commodities produced in the United States under labor conditions as respects wages and hours which fail to conform to standards set up by the Act. Its purpose, as we judicially know from the declaration of policy in § 2 (a) of the Act,' and the reports of Congressional committees proposing the legislation, S. Rept. No. 884, 75th Cong. 1st Sess.; H. Rept. No. 1452, 75th Cong. 1st Sess.; H. Rept. No. 2182, 75th Cong. 3d Sess., Conference Report, H. Rept. No. 2738, 75th Cong. 3d Sess., is to exclude from interstate commerce goods produced for the commerce and to prevent their production for interstate commerce, under conditions detrimental to the maintenance of the minimum standards of living necessary for health and general well-being; and to prevent the use of interstate

'Sec. 2. (a) The Congress hereby finds that the existence, in industries engaged in commerce or in the production of goods for commerce, of labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers (1) causes commerce and the channels and instrumentalities of commerce to be used to spread and perpetuate such labor conditions among the workers of the several States; (2) burdens commerce and the free flow of goods in commerce; (3) constitutes an unfair method of competition in commerce; (4) leads to labor disputes burdening and obstructing commerce and the free flow of goods in commerce; and (5) interferes with the orderly and fair marketing of goods in commerce.

Section 3 (b) defines "commerce" as "trade, commerce, transportation, transmission, or communication among the several States or from any State to any place outside thereof."

commerce as the means of competition in the distribution of goods so produced, and as the means of spreading and perpetuating such substandard labor conditions among the workers of the several states. The Act also sets up an administrative procedure whereby those standards may from time to time be modified generally as to industries subject to the Act or within an industry in accordance with specified standards, by an administrator acting in collaboration with "Industry Committees" appointed by him.

Section 15 of the statute prohibits certain specified acts and § 16 (a) punishes willful violation of it by a fine of not more than $10,000 and punishes each conviction after the first by imprisonment of not more than six months or by the specified fine or both. Section 15 (1) makes unlawful the shipment in interstate commerce of any goods "in the production of which any employee was employed in violation of section 6 or section 7," which provide, among other things, that during the first year of operation of the Act a minimum wage of 25 cents per hour shall be paid to employees "engaged in [interstate] commerce or the production of goods for [interstate] commerce," § 6, and that the maximum hours of employment for employees "engaged in commerce or the production of goods for commerce" without increased compensation for overtime, shall be forty-four hours a week. § 7.

Section 15 (a) (2) makes it unlawful to violate the provisions of §§ 6 and 7 including the minimum wage and maximum hour requirements just mentioned for employees engaged in production of goods for commerce. Section 15 (a) (5) makes it unlawful for an employer subject to the Act to violate § 11 (c) which requires him to keep such records of the persons employed by him and of their wages and hours of employment as the administrator shall prescribe by regulation or order.