Why the Supreme Court struck down a law that tried to fix the economy.

History · Published 20 October 2026 Swipe more like this →

In short: In 1933, the U.S. government launched an ambitious plan to regulate industry and end the Great Depression. By 1935, the Supreme Court declared its core unconstitutional. Known as the NIRA, the law created thousands of pages of regulations, but ultimately failed to spark the recovery it promised.

The National Industrial Recovery Act (NIRA) was signed by President Franklin D. Roosevelt on June 16, 1933, as a centerpiece of his New Deal. It aimed to stimulate economic recovery by allowing trade associations to establish codes of fair competition, which were exempted from antitrust laws. These codes regulated wages, working hours, and prices to prevent the severe deflation that had plagued the country since 1929. The Act also established the Public Works Administration (PWA) to fund infrastructure projects and Section 7(a), which protected the right of workers to organize and bargain collectively.

Despite initial optimism, the NIRA faced mounting criticism. The National Recovery Administration (NRA) generated thousands of complex regulations, leading to widespread business frustration. Critics argued the Act promoted harmful monopolies and cartels, which kept prices artificially high and hindered growth. By 1934, support from both the business community and the public had largely evaporated. Furthermore, the administration of the Act was plagued by internal coordination issues between the NRA and the PWA, as well as a cautious approach to spending that kept public works funding from reaching the economy quickly.

The legal end came with the Supreme Court case Schechter Poultry Corp. v. United States. The case involved a poultry code violation, leading to the nickname the "sick chicken case." On May 27, 1935, the Supreme Court unanimously ruled Title I of the NIRA unconstitutional. Chief Justice Charles Evans Hughes argued that the Act provided no clear standards for "fair competition," making the delegation of legislative power to the executive branch unconstitutionally overbroad. The Court also held that the government lacked authority under the Commerce Clause to regulate such local transactions. While the PWA survived due to a severability clause, the NIRA's failure remains a landmark example of the limits of federal economic intervention during the Great Depression.

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