A business-oriented U.S. Supreme Court rendered a series of decisions that undermined New Deal programs.

In the spring of 1935, Franklin D. Roosevelt was in the last year of his first term as president of the United States. He had taken office in 1933 and had labored to end the Great Depression, which had begun with the stock market crash of October, 1929. His initiatives had resulted in an unprecedented assertion of presidential power and made inevitable a conflict with the U.S. Supreme Court. Decisions concerning the constitutionality of legislation and executive action are based on nine sitting Supreme Court justices’ interpretation of the U.S. Constitution, a document written in general terms at a time when the complexities of twentieth century governing bodies could not have been imagined. [kw]Black Monday (May 27, 1935)
Black Monday
Supreme Court, U.S.;New Deal legislation
National Industrial Recovery Act (1933)
New Deal
[g]United States;May 27, 1935: Black Monday[08910]
[c]Laws, acts, and legal history;May 27, 1935: Black Monday[08910]
[c]Economics;May 27, 1935: Black Monday[08910]
[c]Government and politics;May 27, 1935: Black Monday[08910]
Roosevelt, Franklin D.
[p]Roosevelt, Franklin D.;New Deal
Hughes, Charles Evans
Brandeis, Louis D.
Butler, Pierce
Cardozo, Benjamin N.
McReynolds, James C.
Roberts, Owen J.
Stone, Harlan Fiske
Sutherland, George
Van Devanter, Willis

President Roosevelt received what he may not have recognized as a portent on January 7, 1935, when the Court ruled unconstitutional the provision of the National Industrial Recovery Act (NIRA) by which the president could prohibit interstate transportation of oil exceeding production quotas. By a vote of eight to one, the Court ruled that the president had usurped legislative power—a violation of the first section of Article I of the Constitution. By May, it began to be clear that the NIRA as a whole was in trouble. As often happens, the Court was considering a case that on the surface seemed to have small and merely local interest: violations of the Live Poultry Code by a Long Island firm that supplied chickens for New York-area kosher markets. The code was part of the National Recovery Administration’s National Recovery Administration code-making authority, through which the Roosevelt administration was striving to pull the nation out of the Great Depression.

While the administration awaited the decision on this matter, the Court, by a five-to-four margin, on May 6 declared the Railroad Retirement Act of 1934 Railroad Retirement Act (1934) a violation of the Fifth Amendment property rights of the railroads, because the law required that the railroads (as well as their employees) contribute to the retirement fund. Retirement, said the Court, had nothing to do with the government’s legal right to regulate interstate commerce. Because the Roosevelt administration was keenly interested in a much larger retirement program that had not yet passed the Senate—the one familiar today as Social Security—the decision on the railroad pension arrangement threatened Social Security even before it could be enacted.

Three weeks later, on Monday, May 27—a day that came to be known as Black Monday—the Court handed down a series of decisions. In the first, and crucial, decision, the Court unanimously declared that President Roosevelt had acted unconstitutionally by removing a Republican appointee, William E. Humphrey, Humphrey, William E. from the Federal Trade Commission Federal Trade Commission (FTC) without cause. From the president’s point of view, the cause was clear enough: Humphrey had been obstructing Roosevelt’s policies at the FTC. In its decision, the Court in effect reversed a 1916 decision that had justified a similar exercise of presidential power.

Next, the Court ruled unanimously that an amendment to the National Bankruptcy Act that aimed at relieving farmers who had defaulted on their mortgages was in violation of the due process clause of the Fifth Amendment. Although not, strictly speaking, a part of Roosevelt’s New Deal, the act had been signed into law the year before. Here again, the Court was hedging the combined legislative power of Congress and the president and making it more difficult for the federal government to deal with the economic crisis.

Finally, in the case of Schechter Poultry Corporation v. United States
Schechter Poultry Corporation v. United States (1935) —the “sick chicken case,” as some had termed it—Chief Justice Charles Evans Hughes read a unanimous decision in favor of the former. The conviction of the Schechter brothers by a lower court for selling diseased poultry was thrown out because the Supreme Court ruled that the applicable federal code was an unconstitutional delegation of legislative power to the executive branch. This decision was significant because it voided hundreds of other NIRA codes. Again, the previously accepted power of government to regulate interstate commerce was abridged. Only activities that the Court considered as having direct effects on interstate commerce could be regulated.

The Court’s decisions on Black Monday dealt a devastating blow to the administration’s recovery program. While opponents of the New Deal rejoiced, many industries that appeared destined to be affected by the decision in the Schechter case had much to worry about. The textile manufacturers of New England, for example, now were stripped of possible government protection from competing southern firms that paid significantly lower wages. More than anything else, it was that aspect of the decision abridging government’s power to regulate interstate commerce that made May 27 Black Monday, for the Court’s narrow interpretation of “interstate” in the interests of local industry suggested that the Court viewed most of what had commonly been regarded as interstate commerce as only indirectly interstate. If all industry was local, because it occurred in a particular locality, the government would be virtually powerless to effect economic recovery nationally.

The Court was acting sincerely as guardian of the Constitution, but its decisions were standing between the New Deal and the economic recovery that everyone wanted but that the federal government alone seemed in a position to promote. A decisive majority in Congress had been willing to accept the NIRA codes, but Hughes argued that the legislative branch had no right to abdicate or transfer to the executive the powers constitutionally vested in Congress.

Of concern also was the matter of emergency powers. The issue had come before the Court in 1934 in Home Building and Loan Association v. Blaisdell, Home Building and Loan Association v. Blaisdell (1934) when the judgment had suggested that emergencies justified enlargement of the government’s ordinary constitutional powers. In the eyes of Roosevelt and his aides, the economic situation in 1935 constituted a national emergency, but the Supreme Court seemed to back away from that opinion in the Black Monday decisions. One possible explanation for this seeming inconsistency is the common background of the Court’s members at the time. The Court—which consisted of Chief Justice Hughes and Associate Justices Louis D. Brandeis, Pierce Butler, Benjamin N. Cardozo, James C. McReynolds, Owen J. Roberts, Harlan Fiske Stone, George Sutherland, and Willis Van Devanter—was split then, as it has often been, between philosophical liberals and conservatives, but the fact that eight of the nine justices had backgrounds in corporate law disposed even relative liberals, such as Brandeis and Stone, to affirm the property rights of business interests. In the eyes of the administration, the Court’s stalwart defense of these property rights was blocking attempts to protect the livelihoods of millions of jobless people, many of whom had already lost all the property they owned.

Far from being discouraged by the Court’s most recent actions, President Roosevelt called a news conference four days later in which he attacked the Court’s “horse-and-buggy definition of interstate commerce.” Shortly thereafter, his administration began to redesign the National Recovery Administration programs to evade similar Supreme Court obstructions of the New Deal in the future. The Court, however, continued to strike at pillars of Roosevelt’s reforms, such as the Agricultural Adjustment Act. Agricultural Adjustment Act (1933) Regarding that legislation, Associate Justice Roberts delivered the Court’s majority decision in January, 1936, again employing the argument that the government was trying to regulate local enterprises that fell under the jurisdiction of the states.

The tide began to turn in 1937. Despite stern popular opposition to Roosevelt’s attempt to “pack” the Court with his own appointees by raising the number of justices, the now more circumspect Court upheld the National Labor Relations Act (the Wagner Act) and the Social Security Act, two of the most vital reforms to emerge from Roosevelt’s second term. In that year, the first of Roosevelt’s nemeses on the Court, Van Devanter, retired. By 1941, the president had named replacements for all but one of the 1935 justices. Black Monday
Supreme Court, U.S.;New Deal legislation
National Industrial Recovery Act (1933)
New Deal

• Cope, Alfred Haines, and Fred Krinsky, eds. Franklin D. Roosevelt and the Supreme Court. Boston: D. C. Heath, 1952. Collection of a variety of relevant writings from the 1930’s, including selections from primary sources.
• Cushman, Barry. Rethinking the New Deal Court: The Structure of a Constitutional Revolution. New York: Oxford University Press, 1998. Scholarly study focuses on the Supreme Court in the period following Roosevelt’s reelection in 1936, but includes discussion of the 1935 Black Monday cases.
• Davis, Kenneth S. FDR: The New Deal Years, 1933-1937—A History. 1986. Reprint. New York: Random House, 1995. Offers a carefully documented and evenhanded account of the series of clashes between President Roosevelt and the U.S. Supreme Court. Part of a multivolume biography.
• Hendel, Samuel. Charles Evans Hughes and the Supreme Court. New York: King’s Crown Press, 1951. Study of the man who, as chief justice, epitomized judicial opposition to New Deal innovations. Contains extended discussion of Black Monday as viewed by Supreme Court justices.
• Jackson, Percival E. Dissent in the Supreme Court: A Chronology. Norman: University of Oklahoma Press, 1969. Discusses the dissenting opinions of Justices Hughes and Cardozo in two of the 1935 cases.
• Leuchtenburg, William. The Supreme Court Reborn: The Constitutional Revolution in the Age of Roosevelt. New York: Oxford University Press, 1995. Focuses primarily on Supreme Court-related developments during Roosevelt’s second term, but includes detailed chapters on the Black Monday railroad pension decision and the Humphrey case.

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Great Depression

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The Hundred Days

Roosevelt Signs the National Industrial Recovery Act

Works Progress Administration Is Established

Supreme Court-Packing Fight