Pivotal New Deal Supreme Court Challenges
Schecter Poultry Corp. v The United States (1933)
Schecter Poultry was alleged by the NIRA (a New Deal program set up by FDR) to have sold unfit chicken to a
butcher. Schecter and the butcher are both based in Brooklyn New York. Schecter did no out of state business.
Schecter Poultry Co. was charged by the federal government which argued that under the National Industrial
Recovery Act Schecter Poultry can be regulated by the federal government which under the NRA set up codes in
cooperation with various industries that set prices ranges, set up minimum wages and maximum hours, abolished
child labor and recognized the rights of unions to organize. Schecter Poultry argued that the NIRA was
unconstitutional because the federal government had no right to regulate intrastate trade.
The Supreme Court citing Gibbons v Ogden as the precedent reversed the lower courts decision in Schecter and
struck down the NIRA as unconstitutional. The Supreme Court thus said reaffirmed the fact that the federal
government may not regulate intrastate trade only interstate trade.
The NIRA was replaced with National Labor Relations Act, NLRA, which created the NLRB, set fair work
standards and with the Fair Labor Standards Act, passing the first minimum wage per hour, 20 cents, maximum
work week, 44 then 40 hours, and banned 16 year olds and younger from factory jobs.
United States v Butler (1933)
Suit was brought by Butler in an attempt to have the Agricultural Adjustment Act declared unconstitutional. The
federal government, which had done little in the 1920s to help farmers, initiated remedial programs with the passage
of the Agricultural Adjustment Act of 1933 which provided payments to farmers in return for agreements to curtail
their acreage or their production of wheat, cotton, rice, tobacco, corn, hogs, and dairy products. Payments were
financed from taxes imposed on processors and these taxes were then sent directly to farmers as reimbursement
NOT to grow food. Butler, a processor, refused to pay the tax and the Federal government brought suit against him.
In his defense Butler claimed that tax may not be used to transfer wealth directly from one person to another.
The Supreme Court agreed with Butler and struck down the Agricultural Adjustment Act of 1933. The next year
Congress passed the Agricultural Adjustment Act of 1934 which taxed processors and then placed the money into
the governments general fund. Then farmers were paid out of the general fund not to grow food. The laws had the
same effect, its just that the later version was done legally.
Which of the following was an immediate result of the Supreme Court decision in Schechter
Poultry Corporation v. United States (1935) and United States v. Butler (1936)?
1.
2.
3.
4.
State governments took over relief agencies
some aspects of the New Deal were declared unconstitutional
Congress was forced to abandon efforts to improve the economy
the constitutional authority of the President was greatly expanded
Correct Answer Number: 2
Explanation: When the Supreme Court struck down several provisions of FDR’s New Deal in the 1935 Schecter
Poultry v. US case and the 1936 US v. Butler decision, they were exercising a check upon the Legislature and the
Executive branches by declaring laws of the Congress and actions of the President unconstitutional. FDR's reaction
to these events was an attempt to "pack the court" with his supports. He first attempted to pass a retirement age for
justices (which would have forced many to step-down) and later attempted to increase the number of justices to 12.
Both tactics failed and the resulting backlash against FDR's attempt to usurp the Court resulted in a loss of support
for The New Deal programs in Congress.
National Labor Relations Board v. Jones & Laughlin Steel Corp.
Citation: 301 U.S. 57 (1937)
Facts
Concepts:
Commerce/Labor
Relations/Unionism
In a proceeding under the National Labor Relations Act of 1935, the National Labor Relations Board
(NLRB) found that the Jones & Laughlin Steel Corporation had violated the act by firing ten union
members because of their union membership. The NLRB demanded the steel company stop discrimination
against union workers; the corporation failed to comply. The Circuit Court of Appeals refused to enforce
the order of the NLRB holding that the order was outside the range of federal power.
Issue
Whether or not the United States Congress’ involvement in labor relations went beyond its means to
regulate interstate commerce, as found in Article I, Section 8, Clause 3 of the Constitution of the United
States.
Opinion
The Supreme Court of the United States ruled 5-4 in favor of the NLRB, stating that Congress has ability to
regulate intrastate matters when they directly burden, threaten, or obstruct interstate commerce. A labor
strike in the steel factory would disrupt the “stream of commerce,” and would have a direct effect on the
flow of interstate commerce. Therefore, Congress has the power to regulate all trade which may upset the
balance between inter and intrastate commerce.
Why do you think that the Court upheld the decision of the NLRB when it had previously overturned
New Deal Challenges?