Steward Machine Company v. Davis, 301 U.S. 548 (1937)[1], was a case in which the Supreme Court of the United States upheld the unemployment compensation provisions of the Social Security Act of 1935. The Act established a national taxing structure designed to induce states to adopt laws for funding and payment of unemployment compensation. The decision in Steward signaled the Court’s acceptance of a broad interpretation of Congressional power to influence state laws.
The primary challenges to the Act were that it went beyond the powers granted to the federal government in the Constitution and that it involved coercion of the states in contravention of the Tenth Amendment—calling for a surrender by the states of powers essential to their quasi-sovereign existence.
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