The first major case heard by the Court under these new laws involved Charles Schenck, an official of the Socialist Party, and as such, responsible for the distribution of pamphlets encouraging draftees to refuse military service. His actions clearly violated the Espionage Act, which made it a felony to "cause, or attempt to cause insubordination, disloyalty, mutiny, or refusal of duty, in the military or naval forces of the United States, or . . . [to] willfully obstruct the recruiting or enlistment service of the United States." 41 But Schenck argued that the law violated his right to freedom of speech, and the Supreme Court agreed to hear his appeal.
With no recent cases to guide it, many expected the Court to draw upon the older understandings of the First Amendment—that is, it would define free speech as protection only from prior restraint and it would defend the conviction of Schenck using the bad tendency test. These forecasts proved only half true. The Court did define free speech as primarily protection from prior restraint, but in the opinion written by Justice Holmes the Court introduced a new test for setting government restrictions on speech.
Holmes began by emphasizing that rights of speech were limited by a certain common sense principle—"the most stringent protection of free speech would not protect a man in falsely shouting fire in a theatre and causing a panic." He followed this pragmatic observation by recommending the test that should be used to separate protected from unprotected speech. If "the words used are used in such circumstances and are of such a nature as to create a clear and present danger that they will bring about . . . substantive evils" they were not subject to constitutional protection. In other words, it was less the words than the circumstances surrounding their utterance that rendered some speech unprotected. Speech must be assessed on a case-by-case, circumstance-by-circumstance evaluation of the particulars surrounding its delivery. Or as Holmes said, "it is a question of proximity and degree." And since rights of speech, like words, drew their meanings from the broader context in which they existed, what was allowable at one moment might not be permissible in the next. "When a nation is at war, many things that might be said in time of peace . . . [were not] protected by any constitutional right."42