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When a nation is at war, Congress has the duty of removing circumstances that would encourage danger.
The court admits that the character of every act is dependent on the circumstances.
In a time of peace, the defendant's circulation of antiwar leaflets would NOT have caused a "clear and present danger"
During the time Schneck had distributed his materials influencing opposition to the draft, the country was fighting WWI. The court held that Schneck had obstructed the recruiting services of the military in a time of war.
The documents would not have been circulated without the intent to cause an effect, which was to resist the war/draft.
This is not unlike shouting "fire" in a public place.
The free speech does not mean you can say things without taking into account the effect they are intended to have or the reaction they will provoke