Challenges to the New Deal

While the New Deal helped millions of American’s, it was not
without challenge. In this lesson we will discuss those challenges
and FDR’s reactions.

I. Challenges to the New Deal

A. What were some of the reasons the New Deal was
challenged?

1. Created a very powerful president that led
Congress, this was a violation of checks and balances.

2. It was a radical departure from Laissez Faire ideals. Created
“big government” – bureaucracy.

3. Some acts appeared interfering and at worst unconstitutional.

4. Heavy debt burden – the United States was engaged in defiict
spending and this was unhealthy for the economy in the long run.

B. How did the Supreme Court respond to New Deal legislation?

1. Schecter Poultry Corp. Vs The United States (The
Sick Chicken Case)

a) Schecter Poultry was
alleged to have sold unfit chicken to a butcher. Schecter and the
butcher are both based in Brooklyn New York. Schecter did no out of
state business. Schecter Poultry Co. was charged by the federal
government which argued that under the National Industrial Recovery
Act Schecter Poultry can be regulated by the federal government which
under the NRA set up codes in cooperation with various industries
that:

(1) set prices
ranges.

(2) set up minimum wages and maximum
hours.

(3) abolished child labor

(4) recognized the rights of unions
to organize

b) Schecter Poultry argued that the
NIRA was unconstitutional because the federal government had no right
to regulate intrastate trade.

c) The Supreme Court citing Gibbons v
Ogden as the precedent reversed the lower courts decision in Schecter
and struck down the NIRA as unconstitutional. The Supreme Court thus
said reaffirmed the fact that the federal government may not regulate
intrastate trade only interstate trade.

d) NIRA replaced with National Labor Relations Act, NLRA, which
created the NLRB, set fair work standards and with the Fair Labor
Standards Act, passing the first minimum wage per hour, 20 cents,
maximum work week, 44 then 40 hours, and banned 16 year olds and
younger from factory jobs.

2. United States v Butler

a) Suit is brought in
attempt to have the Agricultural Adjustment Act declared
unconstitutional. The federal government, which had done little in
the 1920s to help farmers, initiated remedial programs with the
passage of the Agricultural Adjustment Act of 1933 which provided
payments to farmers in return for agreements to curtail their acreage
or their production of wheat, cotton, rice, tobacco, corn, hogs, and
dairy products. Payments were financed from taxes imposed on
processors and these taxes were then sent directly to farmers as
reimbursement NOT to grow food. Butler, a processor, refused to pay
the tax and the Federal government brought suit against him. In his
defense Butler claimed that tax may not be used to transfer wealth
directly from one person to another.

b) The Supreme Court agreed with
Butler and struck down the Agricultural Adjustment Act of 1933. The
next year Congress passed the Agricultural Adjustment Act of 1934
which taxed processors and then placed the money into the governments
general fund. Then farmers were paid out of the general fund not to
grow food. The laws had the same effect, its just that the later
version was done legally.

D. How did Roosevelt respond to the Courts attack on the New Deal?

1. Introduced Constitutional Amendment to enlarge the
size of the court. This is referred to as his “Court packing” scheme.

2. Congress did not pass the amendment. It is regarded as a dark
spot on FDR’s record because it represented an attempt to subvert the
process and alter the system of checks and balances.