NIRA Struck Down
Industry
The Supreme Court

The National Industrial Recovery act of June, 1933, authorized businesses to organize their industries by drafting codes which exempt from anti-trust laws but which required government approval.

In May of 1935, in the Supreme Court ruling in the case of Schecter Poultry vs. the United States, the recovery act was deemed unconstitutional. According to the court, the act involved in illegal delegation of legislative power to the executive. It was also said to be an improper invasion by the federal government, of the realm reserved for the states.


On May 27th, 1935 the Supreme Court handed down one of its most dramatic decisions. It was the case of Schecter vs. the United States. In this case, the US government had charged A.L.A. Schechter Poultry Corp with violating codes established under the National Industrial Recovery Act that had created rules regarding the sales of healthy and sick poultry. Schecter had been charged with breaking those rules.

The Supreme Court ruled in favor to Schecter saying that rules established by the NIRA were unconstitutional. Their grounds were twofold; the first that the rulemaking had been an unconstitutional delegation of powers from the Congress to the Executive Branch. Furthermore, they claimed that the commercial activity at question was local in nature and that the ability to regulate local power resided in the states and not in the Federal government. The ruling stated that only if the commerce had direct involvement in interstate commerce could the federal government interfere.

It was the last part of the decision that was most problematic to President Roosevelt and his administration. The decision represented a significant regression in the definition by the court's interpretation of interstate commerce which had expanded steadily since the end of the 19th century. Based on that aspect of the ruling the federal governments' ability to regulate many aspects of the economy would be sharply limited.

May 31st he gave a press briefing in his office on the decision. The briefing was almost entirely off the record. Roosevelt spoke for an hour and a half about the decision and the implications of the decision. The one thing that he allowed to remain on the record was his statement that that as a result of the decision “We have been relegated to the horse and buggy definition of interstate commerce.”

The decision and its implications presented the administration with dilemmas how to change the direction of the court, with a number of ideas coming forth including increasing the number of Justices to appoint more liberal judges or passing a constitutional amendment to give the federal government more power over commerce explicitly. In the end, a combination of fear that Roosevelt would take action to change the court and the march of time changed the court. By the time of his death, FDR had appointed 8 eight of the nine members of the court.