Saturday, June 23, 2012

When the Supreme Court Struck Back at Roosevelt 2/2

English: NRA (National Recovery Administration...
NRA (National Recovery Administration) member: We Do Our Part (Photo credit: Wikipedia)
by Nomad
In the PART ONE, we examined the attempts by Franklin Roosevelt to develop a series of far-reaching social programs to get the American economy back on its feet. One of his many programs was the National Recovery Act, which attempted to restart and reform the industrial sector. Roosevelt sought to standardize manufacturing and labor by drafting a uniform code for all industries. It was a bold initiative.

The Case of Sick Chicken
Under the blanket codes of National Recovery Act (NRA), Brooklyn-based Schechter Poultry was found in violation of the industry codes for the poultry industry. The sixty charges against the retailer were later to be reduced to eighteen, and among those eighteen charges were "the sale to a butcher of an unfit chicken" and the sale of two un-inspected chickens.

The poultry industry in the 1930s had long been corrupted by gangsters and the Schetchers had struggled hard to evade “the rackets.” When the NRA was introduced, Joe Schechter joined in and displayed the blue eagle in his window. He had little interest in following the codes and it wasn’t long before inspectors found him out.

Selling chickens that were below standard at a price below the minimum seemed to Schechter to be a matter of business. And it was not a small amount of poultry. They were charged with selling thousands of pounds of diseased chicken. 
There were good reasons for the codes too. The problem of the sale of diseased poultry was no small matter. Before the passage of the NRA codes, New York had served as a national dumping ground for diseased poultry. Many of the chickens suffered from tuberculosis, communicable to humans. With economic condition as desperate as they were, consumers were willing to settle for less if it price was right. And, it was charged, this price-cutting for potentially dangerous meat drove the prices down on product from companies that actually obeyed by the NRA codes.

Ninety-six percent of the poultry sales in New York originated outside of the state, chiefly from the Midwest and the South. This would later turn out to be a much-discussed point since it would be classified as interstate commerce. 

It certainly was not an accidental violation. Schechter had been warned. Normally retailers that violated the terms of the NRA were warned to remove their poster display and other NRA paraphernalia. If they persisted, they received a telegram with an even sterner warning. The usual procedure of a combination of voluntary compliance, consumer support and warnings about non-compliance had proved to be naive. Eventually the NRA authorities were forced to litigation in court. However, of the 155,502 cases of violation, only 564 reached the courts. One of those cases was Schechter Poultry. 

In the original three-week trial, the Schetchers were found guilty on seventeen counts, given brief jail sentences and fined $7425. Eventually the case was passed on to the Supreme Court, and was seen as a test case of the entire NRA program.

In early May of 1935, the Supreme Court listened to arguments on both sides as the nation watched and waited for the outcome. 

The Decision
On May 27 1935, the Supreme Court rendered its decision and it was unanimous. 

The NRA, they declared, was unconstitutional
It would have to be scrapped.

According to the Commerce Clause (Article I, Section 8, Clause 3), the responsibility to regulate commerce between states belonged solely to either the Congress or to the states themselves. In the case of Schechter, since the Congress shall have power "To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes." According the courts, the Congress did not have, under the constitution, the right to surrender that authority to the president. 

Thus, the court held that the codes of the NRA were in violation of the separation of powers between the legislative and executive branches. In one stroke of the pen, the courts has annihilated the virtually the entire recovery program.
The immediate reaction of critics of the program was jubilation. 

Republican Senator from Delaware Daniel Hastings said that the decision destroyed "most of the New Deal but unfortunately does not end the spending spree. Newspapers- particularly of the Hearst media empire, hailed the court as the "Protector of the Constitution." The Chicago Daily News rejoiced that "the constitutional government had been returned to America." 

Progressive fears that America was going the way of the European fascists were assuaged. The wealthy industrialists could sleep more comfortably that the official encouragement of labor unions had been pushed back.

The Aftermath
When Roosevelt's Attorney General, Homer S. Cummings, heard the news, he reacted as if the decision was little short of a declaration of war. 

Of the Supreme Court, he told Roosevelt,
"They mean to destroy us... We will have to find a way to get rid of the present membership of the Supreme Court."
He recommended abandoning all talk of the NRA and any new incarnation, and simply informing the people that the courts had made all solutions to their blight impossible. The hostility of the judges had essentially blocked their implementation of any program.
Cooler heads in the administration thought that the situation was not at all hopeless. Many of the provisions of the NRA could be adapted and salvaged. In some ways, they said, it was -almost- fortunate because the NRA program, unwieldy and subverted by corporate powers, had not lived up to its original promise.

By some accounts, by May 30, Roosevelt was still fuming. According to the book, Franklin Roosevelt and the Great Constitutional War, when his cabinet members sat down with president
They found him in a belligerent mood. Roosevelt told them that he would not take the Court's action lying down, that he would not stand for it, that country was behind him, not the court. He swore angrily that he would bring the Court into line even if he had to "pack it" or deny it its appellate jurisdiction. The two men listened to him in astonishment.
Additionally he had asked the State Department to investigate the whether judges of the Supreme Court were actually invested with the exclusive authority to decide on the constitutionality of a law. Members of his administration attempted to persuade the president not to make a public display of contempt for the Court’s decision. In fact, Roosevelt admitted to his Secretary of Labor Frances Perkins that the NRA had not been successful.
You know the whole thing has been a mess. It had been an awful headache. Some of the things they have done are pretty wrong."
It was best to wrap up the present NRA, restudy and revise as quickly possible and move on, he told her, adding: 
"Have a history of it written and then it will be over."
On May 31, 1935, four days after the court’s announcement, the president called a press conference in his office to give his assessment of the verdict. The president's mood was surprisingly jovial, given the circumstances. He showed the reporters a stack of telegrams of support from the American people. With his wife sitting behind him, knitting, he told the group of newsmen:
The implications of this decision are much more important than any decision probably since the Dred Scott case...

The big issue is this: does this decision mean that the United States government has no control over any national economic problem? Did it mean that government has no right to try to better the national social condition?”
He pointed out to the reporters the sheer impossibility of trying to solve such a widespread and systematic problem through each of the forty-eight states’ differing regulations. Only through a federalized approach could any substantial change occur. 
Clearly, he noted, the Supreme Court thought otherwise. The judges on the bench believed that self-regulation was the only acceptable approach, despite the fact, the lesson of the Stock Market Crash and the subsequent Depression should have been proof enough that this was not the way forward.
The courts have, he implied, pushed the nation back decades in terms of economic regulation.
“We are the only nation in the world that has not solved that problem. We thought we were solving it, and now it has been thrown straight in our faces and we have been regulated to the horse and buggy definition of interstate commerce.”
Privately, after the initial shock wore off, Roosevelt was ready to work around the obstacle set before him by the court. In fact, he had no reason to feel defeated. The Federal Deposit Insurance Corporation (FDIC) had brought trust back to the banking sector. The Security and Exchange Commission (SEC) had brought some confidence back to stock trading. In 1935, Roosevelt signed the National Labor Relations Act, which gave workers the right to form unions. In the same year, Congress passed the Social Security Act, an automatic pension system funded by a payroll tax on both employees and employers which provided a safety net for the retiring citizens or those that could not easily find employment to help themselves.

In this way, by doing something, and not being afraid of failure, Roosevelt won the love of the average American and the contempt fell on the courts. 

Match and Master
Roosevelt’s re-election was in some doubt. His critics, which included the rich and powerful Hearst media empire, were vicious in their attacks on the president and his policies. At the Democratic National convention held in Madison Square Garden on October 31, 1936, Roosevelt was characteristically defiant:
"These economic royalists complain that we seek to overthrow institutions of America. What they really complain of is that we seek to take away their power.

Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in the hate for me- and I welcome their hatred.

I should like to have it said of my first Administration that in it the forces of selfishness and of lust for power met their match. I should like to have it said of my second Administration that in it these forces met their master.
He spoke about the influence of corporations and the wealthy to set the national agenda.
The American people know from a four-year record that today there is only one entrance to the White House—by the front door. Since March 4, 1933, there has been only one pass-key to the White House. I have carried that key in my pocket. It is there tonight. So long as I am President, it will remain in my pocket.
Those who used to have pass-keys are not happy. Some of them are desperate.

...I prefer to remember this campaign not as bitter but only as hard-fought. There should be no bitterness or hate where the sole thought is the welfare of the United States of America. No man can occupy the office of President without realizing that he is President of all the people.

It is because I have sought to think in terms of the whole Nation that I am confident that today, just as four years ago, the people want more than promises.

Our vision for the future contains more than promises.

This is our answer to those who, silent about their own plans, ask us to state our objectives.
Although there was some doubts going into the campaign, the election of 1936 turned out to be a landslide for Roosevelt. When the votes were counted on election day, Roosevelt carried every state except Maine and Vermont, winning 523 electoral votes to his rival's 8. The Democrats won so many seats in Congress that they outnumbered Republican by four to one.

The voters had clearly understood that the president had fought- despite losing his NRA program- on their behalf. And with the support he had gained from the public, he was returned to the White House and with a majority in Congress.. 

What is more, by 1937, he was ready to turn his reforms on the Supreme Court itself. 

For more on those events, you may continue reading at Franklin Roosevelt's Forgotten War with The Supreme Court

Here are some of Roosevelt's remarks from his Democratic Convention speech. His description of the Republican then could very easily apply to our time.