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UC Law Journal

Abstract

On the eve of the United States' entry into World War II, the Roosevelt administration tried to convince the federal judiciary to rein in the prices of defense contracts, using the doctrine of economic duress. In time of war, so the argument went, the nation depends on defense contractors for its very life, and these private firms should not be permitted to exploit public necessity for inordinate gain. This argument, had it succeeded, would have been perhaps the largest expansion of judges' common law power over big business during the twentieth century.

However, the Supreme Court, in the case of United States v. Bethlehem Steel Corp., rejected that argument. The newly appointed Justice Robert H. Jackson, who had authorized the duress theory in his previous post as Attorney General, blasted the decision as "the dirtiest day's work the Court has ever done and a defeat for the Government worse than Pearl Harbor." Justice Felix Frankfurter, dissenting, was equally adamant in support of the duress theory. Thus did Jackson and Frankfurter - two of the greatest legal minds of the New Deal-advocate a radical innovation in the common law to deal with the nascent military-industrial complex.

Surprisingly, scholars have given this remarkable case no serious attention since the Second World War. This Article fills that void. It demonstrates that the U.S. government, desperate to provide for its troops during total war, had no choice but to meet the demands of large contractors. This was because, although the state had the legal power to seize defense plants, it lacked the practical means to do so. Further, this Article explains how the duress theory became a political weapon for New Deal lawyers against big business, how it represented a revolution in the legal understanding of duress and coercion, and how it caused an intense and illuminating controversy among liberal jurists about the true meaning of judicial restraint.

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