The Blue Eagle and the Sick Chickens

The fundamental axiom of political economics can be expressed as follows: "Bold Leadership = Old Problems - Common Sense + More Money." Since contemporary proof of the preceding statement abounds, we can turn our attention to a historical example of this principle.

On June 16, 1933 the Congress passed yet another of Franklin Roosevelt's schemes to combat the Great Depression. Officially known as the National Industrial Recovery Act (NIRA), the new law gave Roosevelt the authority "... to encourage national industrial recovery, to foster fair competition, and to provide for the construction of certain useful public works, and for other purposes..." Essentially, this meant that Roosevelt now had the power to regulate the economy by setting minimum prices on practically all goods and services produced in the United States. Upon signing the NIRA bill into law, Roosevelt immediately issued Executive Order 6173 which, in turn, created the National Recovery Administration (NRA). The American business community immediately fell in love with the NRA, and for good reason.

Roosevelt had delegated the authority given him by NIRA (the "encourage national industrial recovery" and "foster fair competition" parts) to industry-specific "advisory boards" that were allowed to set their own versions of "fair wages" and "fair prices" that everyone in that industry sector had to "voluntarily " follow or risk going to jail. This meant that prices were artificially high (higher than they would have been in an unregulated market) while wages remained low (since there was a large labor pool of available workers) and business profits were thus assured.

All in all, given that the economy was in the tank, the arrangement pretty well worked to everyone's (except the workers') satisfaction until a fly landed in the ointment. Well, to be accurate, it wasn't a fly: it was a sick chicken.

During the early years of the Great Depression, the Schechter brothers were in the business of supplying chickens to wholesalers in New York City. In particular, they were in the business of supplying kosher chickens to wholesalers. This meant chickens appearing to be unhealthy were not acceptable as this would be a violation of dietary law. Unfortunately, the NRA regulations that were applicable to live (and soon to be dead) poultry required the Schechter brothers to buy all the chickens in a shipment be they alive and healthy or at the door of death's chicken coop. Despite repeated warnings that such "chicken picking" was illegal, the Schechter's persisted in their felonious chicken picking and were soon facing criminal charges for violating the NRA's rules regarding the sales of healthy and diseased poultry. Then, as the old saying goes, it got interesting.

Across the country people were starting to view the NIRA and the NRA for what they were, which was government interference in what had been a free market economy. Not only that, more and more people were simply ignoring the NRA and making their own deals regarding fair prices. The Roosevelt Administration would have none of this unpatriotic free market stuff and decided that the A.L.A. Schechter Poultry Corporation would be made an example of what the NRA could do to impudent scofflaws.

The NRA filed criminal charges and, after a brief trail, the Schechter brothers were found guilty. The brothers appealed the decision, but their conviction was upheld. After a few months of appeals and such, the case wound up in front of the nine justices of the Supreme Court of the United States. As they say in baseball, it was a shutout.

The Supremes, by a vote of 9-0, ruled (in A.L.A. Schechter Poultry Corporation v United States, 295 U.S. 495) that not only were the Schechters off the hook but that both the NILA and NRA were unconstitutional in that they represented an improper delegation of law-making authority. If Congress wanted to delegate some of its authority to the President or, for that matter, to the Schechter's chickens, that was just fine with the court. If the President wanted to delegate that authority to a collection of bureaucrats who would make up laws as they saw fit, that was another story.

Roosevelt. To put it mildly, was furious. He ranted and raved about how his glorious plans to save the nation were being shot down by "nine old men" who lacked his revolutionary insight into the "needs of the people." After a few weeks of oratory he calmed down and devoted his revolutionary insight to getting himself re-elected. No one bothered to rewrite the NIRA and it, along with the NRA and a few other "alphabet agencies," simply died from neglect.

And that is how the once mighty "Blue Eagle" of the NRA had its feathers plucked by a sick chicken.