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May 27

National Industrial Recovery Act Declared Unconstitutional (1935)


On May 27, 1938, the United States Supreme Court declared the National Industrial Recovery Act unconstitutional in Schechter Poultry Corp. v. United States.

The National Industrial Recovery Act (NIRA) was a statute passed as part of the New Deal which authorized the President to regulate industry, permit monopolies in an attempt to stimulate economic recovery, and encourage union organizing. The Act had two main sections. Title I was devoted to industrial recovery, guaranteed trade union rights, permitted the regulation of working standards, and regulated the price of refined petroleum products and their transportation. Title II established the Public Works Administration, outlined the projects and funding opportunities it could engage in, and funded the Act.

After its enactment in 1933, people became displeased with the NIRA very quickly. It became notorious for generating large numbers of regulations which prohibited common business practices. Further, strikes increased and violence between unions and employers was on the rise. President Roosevelt saw a significant loss of political support for both himself and for the New Deal.

The NIRA was set to expire in June 1935, but before that could happen, the U.S. Supreme Court found Title I of the Act unconstitutional on May 27, 1935, in Schechter Poultry Corp. v. United States, 295 U.S. 495 (1935). The Court concluded that the law was void for vagueness because the critical term “fair competition” was not defined anywhere in the Act. Further, the Court found the Act's delegation of authority to the executive branch unconstitutionally overbroad, i.e. it delegated too much power to other branches of government.

The National Industrial Recovery Act was considered a policy failure at the time. Even before the court case, the government was looking at new policies to take the place of the NIRA.