Addendum to Supply and Demand: The "Sick Chicken" Case of 1935

Click here to read the original Cautious Optimism Facebook post with comments

3 MIN READ - A complimentary addendum from a previous column by the Cautious Optimism Correspondent for Economic Affairs (and other Egghead Stuff).

Last week the Economics Correspondent posted a comment that provoked so much reaction that it seemed a good idea to repost it as a full entry with added color.

The comment concerned Franklin Roosevelt’s National Industrial Recovery Act (NIRA) of 1933 which imposed price and wage controls throughout the United States and promptly reversed an economic recovery that had begun in the spring of that same year.

Leaving aside that the NIRA was one of FDR’s many harmful policies (this one extending the Great Depression by two years alone), it also has historical and political significance.

In 1935 the Supreme Court ruled 9-0 against most of the NIRA’s provisions—striking them down as unconstitutional—in the famous “Sick Chicken” case (details below). 

It was the Sick Chicken ruling that prompted FDR, in a fit of anger, to employ his famous “Supreme Court packing” strategy, although his attempts failed when Congress refused to pass his resolution.

Even the most reliably liberal activist justice Louis Brandeis told one of FDR’s aides "This is the end of this business of centralization, and I want you to go back and tell the president that we're not going to let this government centralize everything."

Considering today’s “conservatives” like John Roberts rule Obamacare as constitutional, such comments about centralization would get Brandeis, an otherwise lionized liberal, branded a white supremacist semi-fascist today.

(Never mind that economic fascism literally 𝘪𝘴 centralization of economic power with the state in the first place. Private property and profit motive still exist, but all production and investment decisions are made by the state, making it odd that the deregulating Trump was forever called “fascist” while Obama was not)

So without further ado, feel free to read the repost of a few brief comments on the NIRA, and try to remember the country this happened in was the United States of America.

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The NIRA established over 400 legal codes that were forced on more than 2 million businesses, imposed artificially high government-fixed prices for tens of thousands of products, and criminalized any reduction of prices below state-mandated levels.

Just three egregious examples of FDR’s National Industrial Recovery Act (NIRA) pricing code enforcements:

1) In one of the famous NIRA cases of the 1930’s:

“A New Jersey tailor named Jack Magid was arrested and sent to jail for the ‘crime’ of pressing a suit of clothes for 35 cents rather than the NRA-inspired ‘Tailor's Code’ of 40 cents.” (Lawrence Reed, 1998)

See New York Times archived 1934 headline at:

https://www.nytimes.com/1934/04/21/archives/tailor-gets-30-days-for-cutting-prices-father-of-four-children.html

…and

2) “In Sidney Hillman’s garment industry the code authority employed enforcement police. They roamed through the garment district like storm troopers. They could enter a man’s factory, send him out, line up his employees, subject them to minute interrogation, take over his books on the instant… [they] went through the district at night, battering down doors with axes looking for men who were committing the crime of sewing together a pair of pants at night.” (John T. Flynn, 1944)

3) And in another famous NIRA enforcement challenge that went to the Supreme Court:

Schechter Poultry Corp. vs United States, or the so-called “Sick Chicken” case—government prosecutors indicted four Jewish chicken slaughterers on 60 counts of violating NIRA codes for mispricing poultry. In an exchange that the press rightfully mocked as ridiculous, government prosecutors argued to the court that:

“The poultry purchaser must come into the market and take all the chickens in a coop. He cannot go and select the choice chickens out of the coop.”

“If he does select the choice chickens out of the coop, as was the custom at one time, it brings down the prices in the sale of the lower-grade poultry, and the sales of the lower-grade poultry in turn bring down the prices of the higher grades.”

…and...

“His customer is not permitted to select the ones he wants. He must put his hand in the coop when he buys from the slaughterhouse and take the first chicken that comes to hand.”

The official “Sick Chicken” case transcript in its full absurdity is available at:

https://lonedissent.org/transcripts/pre-1955/a-l-a-schechter-poultry-corp-v-united-states

Wikipedia also has a good brief summary of the Sick Chicken case at:

https://en.wikipedia.org/wiki/A.L.A._Schechter_Poultry_Corp._v._United_States