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The Railroad Pension Act of 1934 was declared unconstitutional in Railroad Retirement Board v. Alton Railroad, 295 US 330 (1935). The Act was to establish a compulsory retirement and pension for all rail carriers subject to the Interstate Commerce Act. The Supreme Court declared the act as a violation of the Fifth Amendment due process clause. The Court stated:
That the Act violates the due process clause is shown by the following considerations:
(1) All persons who were in carrier service within one year prior to the passage of the Act (about 146,000) would be entitled under it to pensions, whether reemployed or not. Among them would be those who had been discharged for cause, or had been retired, or had resigned to the other gainful employment, or whose positions had been abolished, or whose employment was temporary....To place such a burden upon the carriers is arbitrary in the last degree, and the claim that such largess would promote efficiency or safety in the future operation of the railroads is without rational support. P. 295 U. S. 348.
The Act violated the due process clause because all persons who were in service would be entitled to benefits without paying into the system along with other arbitrary requirements of the carriers. The Court held that the pension plan was not a proper action to be regulated by the Interstate Commerce Act.
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