The Story of the Schechter Poultry Case:

Economist Steven Horwitz has a fascinating post on the history behind the Schechter Poultry case, the 1935 Supreme Court decision that struck down the National Industrial Recovery Act - the most extensive attempt at economic central planning in American history. As I explained in this post, the NIRA established production codes, price controls, and wage controls for nearly the entire nonagricultural economy, in effect establishing a government-enforced cartel for every industry. The NIRA and related New Deal statutes greatly increased unemployment and may have prolonged the Depression by up to seven years. Unlike most of the other controversial Depression-era Supreme Court decisions, which split the justices along ideological lines, Schechter was unanimous. Even liberal justices like Louis Brandeis recognized that Congress had exceeded its authority under Article I of the Constitution and voted to strike NIRA down.

This much I already knew from the research I did for my article on constitutional change in the 1930s. What I did not realize until I read Horwitz's piece is that the Schechter brothers ran afoul of NIRA in large part because their butcher shops followed the Jewish laws of Kashrut. Some of the food preparation practices required by Jewish law violated NIRA regulations; ironically, Horwitz notes, the deviations from Kashrut imposed by the government reduced the quality of the Schechters' product and imposed additional health risks on their customers. As Horwitz also points out, the prosecution of the Schechters and the press coverage thereof had a significant anti-Semitic component. Anti-Semitism was, of course, common in pre-World War II America and was probably exacerbated by the Depression, when many blamed the economic crisis on the supposed machinations of Jewish industrialists and financiers. Horwitz writes that "[c]overage of the case . . . was highly tinged with the standard anti-Semitism of the time, especially because the Schechters were right out of Jewish central casting, being immigrants with their Eastern European cadences and traditional Jewish dress. It was the Jewish rubes of Brooklyn against the high powered WASP lawyers of the northeast corridor." Fortunately, it was the rubes who prevailed in the Supreme Court.

In addition to exemplifying the dangers of expanding government power in times of economic crisis, Schechter also illustrates how economic liberties and limits on government power protect unpopular minority groups.

UPDATE: Historian Eric Rauchway criticizes Horwitz's post here. Horwitz has a compelling response. If anything, the Rauchway post makes the NIRA poultry regulations seem even more repellent, by noting that the people who wrote them were union bosses who had previously used violence to try to drive the Schechters and other competitors out of business. This post relied on by Rauchway for most of his argument is also wrong to suggest that the Court's decision in Schechter was driven by anti-union animus. The opinion was written by moderate Republican Chief Justice Charles Evans Hughes, who had supported pro-union legislation during his term as Governor of New York in the early 1900s. It was also joined by pro-union liberal justices such as Brandeis.

UPDATE #2: Historian, Andrew Cohen, author of the post relied on by Rauchway for much of his evidence writes to point out that he did not mean to suggest that the Schechter decision was based on generalized hostility to unions, but on the justices' distaste for the violent tactics of the particular unionists who wrote the poultry regulations. Fair enough. Even this narrower claim is suspect, however, since the justices surely realized that their decision would have the effect of invalidating the NIRA as a whole, not just in cases where the regulations were written by especially violent unionists. Thus, it is unlikely that their decision was based primarily on the characteristics of these specific unions.