1. Lecture 27 The Commerce Power
Part 4: The New Deal- I

2. This lecture
We will cover the first half of the section on the New Deal cases
Pages
Think about how these cases square with those in the Industrial Revolution

3. The New Deal The Stock Market crashes in 1929
Sends the country into the Great Depression
FDR and Democrats win a massive landslide in 1932
FDR has an aggressive agenda to rescue the economy- largely through spending and programs at the federal level
Many of the laws went after big business and sought greater regulation
However, many of the old justices remained on the Supreme Court
There was a 5-4 majority against regulation

4. The Court at the time
However, many of the old justices remained on the Supreme Court
There was a 5-4 majority against regulation
However, Justice Owen Roberts was considered a swing vote
But this meant that the swing vote on the Court was generally opposed to FDR
The Three Musketeers
Brandeis, Stone, Cardozo (usually joined by Hughes)
The Four Horsemen
Van Devanter, McReynolds, Sutherland and Butler

5. The Court rules against FDR
With Democrats holding record margins in Congress, FDR was able to pass an extremely large number of new bills (see Box 7-2, page 441)
One thing that didn’t change was the conservative makeup of the Court
FDR does not get to have an appointment until Justice Van Devanter retires
He is enticed to retire by a bill to give justices full pay after retirement
Only some of the rulings were the 5-4 split
Some were unanimous
Many thought that the justices in the closer cases were writing opinions to justify their personal opposition to New Deal policies
Not every ruling went against FDR
The Gold Clause cases and Emergency Banking Act upheld 5-4

6. The Cases against FDR
The Court starts striking down New Deal laws in 1935
Panama Refining Company v. Ryan (1935)
Hot oil case- 9-0 ruling for improper delegation of powers (not enough specify)
Railroad Retirement Board v. Alton Railroad Company (1935)
Court throws out Railroad Retirement act- 5-4 ruling
Exceeded commerce clause
Humphrey’s Executor v. United States (1935)
FTC removal case- 9-0 ruling FDR could not remove a member
Louisville Bank v. Radford (1935)
9-0 ruling against FDR on property rights
The last two rulings plus the sick chicken case were delivered the same day- Black Monday

7. A.L.A. Schechter Poultry Corporation v. United States (1935)
Background
Involved the National Industrial Recovery Act of 1933 (NIRA)
It would regulate nearly every sector in American industry- trade practices, wages, hours, and other business activities
The President was authorized to draft these codes himself
Once in effect- the codes would be the law violators could go to jail or face fines
We already read the first half- the law delegated too much power to the President without proper guidelines and rules
Some said this regulated intrastate commerce

8. A.L.A. Schechter Poultry Corporation v. United States- II
More Background
This case involved poultry codes- focusing on New York  then the largest market
96% of the chickens sold in New York were out of state chickens
There was bad health and sanitation conditions and it was corrupt
The Live Poultry Code of FDR set maximum hours, a minimum wage, health inspections, compulsory record keeping, and regulations to slaughtering procedures
The company here had bought chickens out of state, but had many violations
Wage and hours, record keeping, slaughter non-compliance, and having conditions unfit for human consumption
They were charged, tried, convicted and sentenced to short jail terms

9. A.L.A. Schechter Poultry Corporation v. United States- III
Question:
Were the NIRA provisions beyond Congress’ power under the Commerce Clause?
Arguments
For Schechter Poultry (overturn the law)
Illegal and unprecedented illegal delegation of power
It exceeds the commerce power- manufacture, mining, farming are not commerce

10. A.L.A. Schechter Poultry Corporation v. United States- IV
Arguments
For the United States (uphold the law)
The slaughtering business is so closely related to interstate commerce it makes no differences which parts are more or less in
This case is analogous to Stafford v. Wallace since the New York market dominates the live poultry market and could determine prices
It would re-introduce unfit poultry into the market by 20%
Congress must take uniform action even if there is only an indirect effect on interstate commerce

11. A.L.A. Schechter Poultry Corporation v. United States- V
Chief Justice Hughes rules for a unanimous Court
Remember the Court ruled against FDR on the delegation issue
Were these transactions made “in” interstate commerce?
While most of the poultry comes from out of state, this law does not have anything to do with the transportation of the chickens- once they got off the trains, it ended
The slaughtering and sales took place intrastate
It was not later sold in interstate commerce
Did the transactions directly affect interstate commerce as to by subject to federal regulation?
The power also allows regulation to protect commerce from injury
Test is the effect of injury to get to regulate

12. A.L.A. Schechter Poultry Corporation v. United States- VI
More from Chief Justice Hughes
Think back to the Shreveport Doctrine- that was intrastate effecting interstate
Not allowed if only indirect effects- these reserved to states
Otherwise, we would have a completely centralized government
He finds this case does not directly effect interstate commerce
Wages and hours are of local effect like any other shops
If it regulates here, it could regulate any shops
Selling the bad chickens should be of local laws

13. A.L.A. Schechter Poultry Corporation v. United States- VII
Justice Cardozo, concurring
Joined by Justice Stone
He preferred a spectrum approach over that of only direct vs. indirect
But he also sees this as indirect

14. More actions against FDR by the Court
More cases go against FDR and the New Deal
Hopkins Savings Association v. Cleary (1935)
Unanimous decision overturns the Home Owners Relief Act
On 10th Amendment grounds
United States v. Butler (1936)
A 6-3 decision that strikes down the Agricultural Adjustment Act
Deals with tax and spending provisions

15. Carter v. Carter Coal Company (1936)
The Bituminous Coal Conservation act of 1935 replaces the NIRA
It would have a commission regulate the coal industry made of all parties
It was paid for by a 15% tax on coal
Carter did not want the company to participate and sued to stop them
One attack was violation of the Commerce Clause
By a 5-4 vote by Justice Sutherland, it was struck down because they said the mining only took place in a single state- the movement of the coal had not yet begun
Production of coal did not have a direct effect

16. More later cases against FDR
More Cases
Ashton v. Cameron County District Court (1936)
5-4 decision overturning the Municipal Bankruptcy Act
On Due Process and 10th Amendment grounds
Morehead v. New York ex rel. Tipaldo (1936)
This was on other grounds- Due Process 14th Amendment
Overturned a New York law establishing a minimum wage- a 5-3 decision (Brandeis recused)
The was in some ways the last straw for FDR
He spoke out publically against the Court after this decision

17. Court packing Plan FDR had enough of these cases
He had won at the time the largest landslide in history
Democrats had 3-1 Congressional majorities
With no vacancies, his plan was to create new seats on the Court
He would appoint an additional justice for any justice over the age of 70
This would mean the Court would expand to 15 members- a 10-5 majority for him
This was always controversial- see the polls on page 452
The Chair of the House Judiciary Committee refused to give it a hearing and it went no where in the Senate
When Roberts switched his votes, the need dissipated
Hughes had privately criticized this

18. Next lecture We will finish up the New Deal Era
The stitch in time that saved nine
Consolidation of the gains
Pages 449,