Black Monday

The day the Supreme Court struck down three pieces of New Deal legislation, signaling to President Franklin D. Roosevelt that his programs to cope with the Great Depression faced legal jeopardy.

In an attempt to bring order to the chaotic economy, President Franklin D. RooseveltRoosevelt, Franklin D. developed an economic recovery plan called the New Deal, which relied heavily on federal regulation and legislation. He signed numerous statutes, including the National Industrial Recovery ActNational Industrial Recovery Act (NIRA) in 1933 and the Frazier-Lemke Farm Bankruptcy ActFrazier-Lemke Farm Bankruptcy Act in 1934. The NIRA set minimum wages and maximum hours and established a host of fair practice standards for business, created by business and labor leaders with the assistance of government lawyers. These standards, which were to be enforced by the government, affected even intrastate business concerns. The Frazier-Lemke act provided debt relief to bankrupt farmers. In addition, Roosevelt enlarged the role of economic regulatory commissions and sought to control independent commissions by removing members opposed to his New Deal.New DealNew Deal

Although the Supreme Court initially accepted some New Deal programs, on Monday, May 27, 1935, known as Black Monday, it handed down three unanimous decisions striking down major aspects of Roosevelt’s plan.

In Schechter Poultry Corp. v. United States[case]Schechter Poultry Corp. v. United States[Schechter Poultry Corp. v. United States] (1935), the Court held that poultry codes of the NIRA were unenforceable because the Constitution gave the federal government power to regulate only interstate commerce, not commerce within a state. The facts of the case involved local production of kosher chickens, and the government could not demonstrate a reasonable connection of this intrastate activity to interstate commerce. Many similar NIRA codes were thus invalidated. The Roosevelt administration claimed that the Court had too narrowly defined commerce, much as it had in its decision in United States v. E. C. Knight Co. (1895).

In Louisville Joint Stock Land Bank v. Radford[case]Louisville Joint Stock Land Bank v. Radford[Louisville Joint Stock Land Bank v. Radford] (1935), the Court invalidated the Frazier-Lemke act. The Court ruled that the act, which limited the power of owners to foreclose on debtors, transferred the property rights of the owner to the buyer, violating the takings clause of the Fifth Amendment.

In Humphrey’s Executor v. United States[case]Humphrey’s Executor v. United States[Humphrey’s Executor v. United States] (1935), the Court placed limits on presidential power to remove and appoint members of independent regulatory commissions. The court held that Congress had created such commissions to be independent of the executive branch. For the president to interfere with their independence by removing those members who hold opposing views, without congressional warrant, violated the separation of powers.

Supporters of the New Deal roundly criticized the Court for failing to recognize the need for flexibility and experimentation in dealing with the Great Depression. A report by the Brookings Institution at the time, and subsequent scholarly opinion, has suggested that some New Deal programs such as the NIRA were, in fact, seriously flawed. Black Monday caused Roosevelt to try other approaches to bring about economic recovery, including income tax reform, and in 1937 to attempt to pack the Court with justices who favored New Deal programs.

Black Monday Summary