Why was the National Recovery Administration of the New Deal declared unconstitutional?

Answer 1

The National Recovery Administration (16 June 1933 was the date the National Industrial Recovery Act was passed by Congress and signed by FDR)created codes that set minimum standards of quality for products and services, fair prices for which they would be sold, wages, hours, and conditions under which employees in various industries would work. It also required companies that adopted the codes to bargain collectively with labor unions.

Some critics claimed there was too much government regulation and they compared it to the economies of Fascist Italy and Germany. Others complained that the Blue Eagle Codes went too far. For example, there was a code for the burlesque "industry" that specified how many strippers could undress per performance and the quality of tassels. Others claimed the codes for sanitary standards could not be met, in some industries. Others claimed it was federal interference in intrastate commerce. The Supreme Court declared the NRA unconstitutional.

Answer 2

The National Recovery Administration (NRA) was designed to oversee Roosevelt's "codes of fair competition," a price- and wage-setting program intended to ensure deflation didn't cause collapse of the national economy. The NRA was established under Section 3 of the National Industrial Recovery Act of 1933, as an extension of the Interstate Commerce Clause. Much of the industry it regulated conducted business entirely intrastate, however, which the Supreme Court held was constitutionally under the States' purview.

The Court decided that the NRA and its regulations were unconstitutional in A. L. A. Schechter Poultry Corp. v. US, (1935), a decision that closed the agency.

Explanation

Schechter Poultry Corp. v. US, 295 US 495 (1935)

In Schechter, the US Supreme Court found certain government-imposed regulations of the poultry industry, such as price- and wage-fixing, unconstitutional. The "codes of fair competition" would have allowed the President to dictate pricing and and other competitive aspects of the agribusiness under Section 3 of the National Industrial Recovery Act of 1933, as an extension of the Interstate Commerce Clause.

These laws would apply to certain food producers regardless of size and regardless of whether their business was entirely intrastate, as was the case with A. L. A. Schechter Poultry Corp. The Court's decision limited the government's power to act under the Interstate Commerce Clause, which it held was improperly applied to intrastate commerce. The Supreme Court ruled that the farm regulation was a state's rights issue, and invalidated a portion of the National Industrial Recovery Act of 1933, closing the National Recovery Administration (NRA).

Many of the NRA policies, such as setting minimum wage and restricting work hours, were successfully reenacted under the National Labor Relations Act (aka Wagner Act) passed in July 1935.