Petitioner
A.L.A. Schechter Poultry Corporation
Respondent
United States
Petitioner's Claim
That the code of fair business practice established under the National Industrial Recovery Act of 1933 could not affect its business because the code didnot have the force of law.
Chief Lawyer for Petitioner
Joseph Heller
Chief Lawyer for Respondent
Donald P. Richberg
Justices for the Court
Louis D. Brandeis, Pierce Butler, Benjamin N. Cardozo, Charles Evans Hughes (writing for the Court), James Clark McReynolds, Owen Josephus Roberts, HarlanFiske Stone, George Sutherland, Willis Van Devanter
Justices Dissenting
None
Place
Washington, D.C.
Date of Decision
27 May 1935
Decision
That the federal legislation establishing the National Recovery Administration was unconstitutional in that it delegated too much law-making power to non-governmental individuals.
Significance
The decision overturned the major effort of the first administration of Franklin Roosevelt (1933-1937) to regulate and control the economy during the Great Depression.
The New Deal on Trial
During the "first 100 days" of the administration of Franklin D. Roosevelt, anumber of bills were passed by Congress to deal with the Great Depression. Although separate bills dealt with different aspects of unemployment, banking,agriculture, and other problems, the central piece of legislation dealing with the economy as a whole was the National Industrial Recovery Act. Under that act, the government created the National Recovery Administration, whose function was to regulate the economy to ensure that prices were not cut and thatbusinesses operated at prices that would keep them going. In order to do this, businesses would select, through their business associations, delegates tocode authorities for each type of business. Labor unions and the consuming public would also be represented on these code authorities. The authorities would write specific regulations governing each business, setting prices, wages, and specific conditions for each type of business. The concept was that business could determine a fair code of competition, and at these prices, individual companies would not undercut the rest.
At first, the only sanction against companies not obeying the codes was thatthey would be denied the right to display a "Blue Eagle," a symbol of the National Recovery Administration. However, the codes would have the force of lawand the federal government could extend other punishments to firms not following the codes.
The principles involved seemed to violate several long-standing views of theAmerican economic system. In particular, the legislation allowed private business associations, in agreement with their unions, to create standards that would restrain trade, an apparent violation of the Sherman Anti-Trust Act. Furthermore, the codes would have the force of law, even though they had been prepared by the non-legislative groups collected in the code authorities.
Arguing for the federal government, attorneys working under Donald R. Richberg suggested that extraordinary times required extraordinary measures. In effect, Richberg and his associates were taking the doctrine of implied powers that had been established in McCulloch v. Maryland in 1819 and extendingit greatly to cover the economic crisis of the 1930s.
The Schechter case arose when a particular chicken packing firm on Long Island, New York, violated the code for its industry in several regards. Among themany violations cited were some related to health conditions. However, the firm claimed that it did not need to obey the codes established by the code authority because the codes did not have the force of law.
The Court agreed with the attorneys for the Schechter firm, spelling out a number of objections to the law and finding it unconstitutional. While extraordinary crises called for extraordinary remedies, that did not justify the creation or the enlargement of constitutional powers. Congress could not abdicateor transfer to others its power to legislate. Congress could delegate rule-making, but it must lay down policies and standards and not turn over the creation of policies and standards to others. The "Codes of Competition" were meant, in fact, to be codes of law, and they were designed not merely to ensurecompetition, but to bring about the rehabilitation of the economy. No court rulings had ever justified the delegation of legislative power to the president (who appointed the boards), nor had the courts ever justified turning legislative power over to associations of companies or individuals. The code making authority was therefore unconstitutional. For good measure, the Court alsoruled that the Schechter Company was not truly an interstate business, as itmarketed its product entirely within New York.
With the striking down of the National Recovery Administration, the Rooseveltadministration and Congress turned to more specific pieces of legislation designed to stimulate the economy, to increase employment, and to provide relief and security for employees. In effect, the Court had prevented the federalgovernment from establishing a system of business regulation designed by businesses themselves, and preserving some aspects of a free market.
Related Cases
The National Industrial Recovery Act of 1933
In June of 1933, Congress passed the National Industrial Recovery Act (NIRA),one of the central policy initiatives of President Roosevelt's New Deal. Theact established the National Recovery Administration (NRA), which would operate as a coordinating committee for business and labor. Through the NRA, industrial leaders could create regulatory codes which would be exempt from prosecution on antitrust grounds. These codes would set guidelines in competitivepractices, hours, and wages in various industries.
In addition, the NIRA pumped more than $3 billion into the Public Works Administration (PWA). The PWA and NRA proved popular with the public: the former put men to work in public works and the latter helped ensure fair treatment oflabor.
Administered by Hugh Johnson, the NRA and its Blue Eagle symbol were a fixture of public life for over a year. By 1934, the NRA hit troubled times due toconcerns expressed by senators that the agency's codes amounted to price-fixing. In May of 1935, the Supreme Court struck down the NIRA in A.L.A. Schechter Poultry Corp. v. United States.
Sources
Bacon, Donald C., et al., eds. The Encyclopedia of the United States Congress New York: Simon & Schuster, 1995.
A.L.A. Schechter Poultry Corporation
Respondent
United States
Petitioner's Claim
That the code of fair business practice established under the National Industrial Recovery Act of 1933 could not affect its business because the code didnot have the force of law.
Chief Lawyer for Petitioner
Joseph Heller
Chief Lawyer for Respondent
Donald P. Richberg
Justices for the Court
Louis D. Brandeis, Pierce Butler, Benjamin N. Cardozo, Charles Evans Hughes (writing for the Court), James Clark McReynolds, Owen Josephus Roberts, HarlanFiske Stone, George Sutherland, Willis Van Devanter
Justices Dissenting
None
Place
Washington, D.C.
Date of Decision
27 May 1935
Decision
That the federal legislation establishing the National Recovery Administration was unconstitutional in that it delegated too much law-making power to non-governmental individuals.
Significance
The decision overturned the major effort of the first administration of Franklin Roosevelt (1933-1937) to regulate and control the economy during the Great Depression.
The New Deal on Trial
During the "first 100 days" of the administration of Franklin D. Roosevelt, anumber of bills were passed by Congress to deal with the Great Depression. Although separate bills dealt with different aspects of unemployment, banking,agriculture, and other problems, the central piece of legislation dealing with the economy as a whole was the National Industrial Recovery Act. Under that act, the government created the National Recovery Administration, whose function was to regulate the economy to ensure that prices were not cut and thatbusinesses operated at prices that would keep them going. In order to do this, businesses would select, through their business associations, delegates tocode authorities for each type of business. Labor unions and the consuming public would also be represented on these code authorities. The authorities would write specific regulations governing each business, setting prices, wages, and specific conditions for each type of business. The concept was that business could determine a fair code of competition, and at these prices, individual companies would not undercut the rest.
At first, the only sanction against companies not obeying the codes was thatthey would be denied the right to display a "Blue Eagle," a symbol of the National Recovery Administration. However, the codes would have the force of lawand the federal government could extend other punishments to firms not following the codes.
The principles involved seemed to violate several long-standing views of theAmerican economic system. In particular, the legislation allowed private business associations, in agreement with their unions, to create standards that would restrain trade, an apparent violation of the Sherman Anti-Trust Act. Furthermore, the codes would have the force of law, even though they had been prepared by the non-legislative groups collected in the code authorities.
Arguing for the federal government, attorneys working under Donald R. Richberg suggested that extraordinary times required extraordinary measures. In effect, Richberg and his associates were taking the doctrine of implied powers that had been established in McCulloch v. Maryland in 1819 and extendingit greatly to cover the economic crisis of the 1930s.
The Schechter case arose when a particular chicken packing firm on Long Island, New York, violated the code for its industry in several regards. Among themany violations cited were some related to health conditions. However, the firm claimed that it did not need to obey the codes established by the code authority because the codes did not have the force of law.
The Court agreed with the attorneys for the Schechter firm, spelling out a number of objections to the law and finding it unconstitutional. While extraordinary crises called for extraordinary remedies, that did not justify the creation or the enlargement of constitutional powers. Congress could not abdicateor transfer to others its power to legislate. Congress could delegate rule-making, but it must lay down policies and standards and not turn over the creation of policies and standards to others. The "Codes of Competition" were meant, in fact, to be codes of law, and they were designed not merely to ensurecompetition, but to bring about the rehabilitation of the economy. No court rulings had ever justified the delegation of legislative power to the president (who appointed the boards), nor had the courts ever justified turning legislative power over to associations of companies or individuals. The code making authority was therefore unconstitutional. For good measure, the Court alsoruled that the Schechter Company was not truly an interstate business, as itmarketed its product entirely within New York.
With the striking down of the National Recovery Administration, the Rooseveltadministration and Congress turned to more specific pieces of legislation designed to stimulate the economy, to increase employment, and to provide relief and security for employees. In effect, the Court had prevented the federalgovernment from establishing a system of business regulation designed by businesses themselves, and preserving some aspects of a free market.
Related Cases
- McCulloch v. Maryland, 17 U.S. 316 (1819).
- National Labor Relations Board v. Jones & Laughlin Steel, 301U.S. 1 (1937).
The National Industrial Recovery Act of 1933
In June of 1933, Congress passed the National Industrial Recovery Act (NIRA),one of the central policy initiatives of President Roosevelt's New Deal. Theact established the National Recovery Administration (NRA), which would operate as a coordinating committee for business and labor. Through the NRA, industrial leaders could create regulatory codes which would be exempt from prosecution on antitrust grounds. These codes would set guidelines in competitivepractices, hours, and wages in various industries.
In addition, the NIRA pumped more than $3 billion into the Public Works Administration (PWA). The PWA and NRA proved popular with the public: the former put men to work in public works and the latter helped ensure fair treatment oflabor.
Administered by Hugh Johnson, the NRA and its Blue Eagle symbol were a fixture of public life for over a year. By 1934, the NRA hit troubled times due toconcerns expressed by senators that the agency's codes amounted to price-fixing. In May of 1935, the Supreme Court struck down the NIRA in A.L.A. Schechter Poultry Corp. v. United States.
Sources
Bacon, Donald C., et al., eds. The Encyclopedia of the United States Congress New York: Simon & Schuster, 1995.
Further Readings
- Johnson, Hugh. Blue Eagle, From Egg to Earth. New York: Greenwood Press, 1968 (1935).
- Ohl, John K. Hugh S. Johnson and the New Deal. DeKalb, IL: Northern Illinois University Press, 1985.
- Richberg, D. R. The Rainbow, after the Sunshine of Prosperity, the Deluge of the Depression. Garden City, NY: Doubleday, 1936
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