1. Extraordinary conditions, such as an economic crisis, may
call for extraordinary remedies, but they cannot create or enlarge
constitutional power. P. 295 U. S.
2. Congress is not permitted by the Constitution to abdicate, or
to transfer to others, the essential legislative functions with
which it is vested. Art. I, § 1; Art. I, § 8, par. 18. Panama
Refining Co. v. Ryan, 293 U. S. 388
295 U. S.
3. Congress may leave to selected instrumentalities the making
of subordinate rules within prescribed limits, and the
determination of facts to which the policy, as declared by
Congress, is to apply; but it must itself lay down the policies and
establish standards. P. 295 U. S.
4. The delegation of legislative power sought to be made to the
President by § 3 of the National Industrial Recovery Act of June
16, 1933, is unconstitutional (pp. 295 U. S. 529
), and the Act is also unconstitutional, as applied
in this case, because it exceeds the power of Congress to regulate
interstate commerce and invades the power reserved exclusively to
the States (pp. 295 U. S. 542
5. Section 3 of the National Industrial Recovery Act provides
that "codes of fair competition," which shall be the " standards of
fair competition" for the trades and industries to which they
relate, may be approved by the President upon application of
representative associations of the trades or industries to be
affected, or may be prescribed by him on his own motion. Their
Page 295 U. S. 496
are to be enforced by injunctions from the federal courts, and
"any violation of any of their provisions in any transaction in or
affecting interstate commerce" is to be deemed an unfair method of
competition within the meaning of the Federal Trade Commission Act,
and is to be punished as a crime against the United States. Before
approving, the President is to make certain findings as to the
character of the association presenting the code and absence of
design to promote monopoly or oppress small enterprises, and must
find that it will "tend to effectuate the policy of this title."
Codes permitting monopolies or monopolistic practices are
forbidden. The President may "impose such conditions (including
requirements for the making of reports and the keeping of accounts)
for the protection of consumers, competitors, employees and others,
and in the furtherance of the public interest, and may provide such
exceptions and exemptions from the provisions of such code," as he,
in his discretion, deems necessary "to effectuate the policy herein
declared." A code prescribed by him is to have the same effect as
one approved on application.
(1) The statutory plan is not simply one of voluntary effort;
the "codes of fair competition" are meant to be codes of laws. P.
295 U. S.
(2) The meaning of the term "fair competition" (not expressly
defined in the Act) is clearly not the mere antithesis of "unfair
competition," as known to the common law, or of "unfair methods of
competition" under the Federal Trade Commission Act. P.
295 U. S.
(3) In authorizing the President to approve codes which "will
tend to effectuate the policy of this title," § 3 of the Act refers
to the Declaration of Policy in § 1. The purposes declared in § 1
are all directed to the rehabilitation of industry and the
industrial recovery which was the major policy of Congress in
adopting the Act. P. 295 U. S.
(4) That this is the controlling purpose of the code now before
the Court appears both from its repeated declarations to that
effect and from the scope of its requirements. P. 295 U. S.
(5) The authority sought to be conferred by § 3 was not merely
to deal with "unfair competitive practices" which offend against
existing law, or to create administrative machinery for the
application of established principles of law to particular
instances of violation. Rather, the purpose is clearly disclosed to
authorize new and controlling prohibitions through codes of laws
which would embrace what the formulators would propose, and what
Page 295 U. S. 497
would approve or prescribe, as wise and beneficent measures for
the government of trades and industries, in order to bring about
their rehabilitation, correction and improvement, according to the
general declaration of policy in § 1. Codes of laws of this sort
are styled " codes of fair competition." P. 295 U. S.
(6) A delegation of its legislative authority to trade or
industrial associations, empowering them to enact laws for the
rehabilitation and expansion of their trades or industries, would
be utterly inconsistent with the constitutional prerogatives and
duties of Congress. P. 295 U. S.
(7) Congress cannot delegate legislative power to the President
to exercise an unfettered discretion to make whatever laws he
thinks may be needed or advisable for the rehabilitation and
expansion of trade and industry. P. 295 U. S.
(8) The only limits set by the Act to the President's discretion
are that he shall find, first, that the association or group
proposing a code imposes no inequitable restrictions on admission
to membership and is truly representative; second, that the code is
not designed to promote monopolies or to eliminate or oppress small
enterprises and will not operate to discriminate against them, and
third, that it "will tend to effectuate the policy of this title"
-- this last being a mere statement of opinion. These are the only
findings which Congress has made essential in order to put into
operation a legislative code having the aims described in the
"Declaration of Policy." P. 295 U. S.
(9) Under the Act, the President, in approving a code, may
impose his own conditions, adding to or taking from what is
proposed, as "in his discretion" he thinks necessary "to effectuate
the policy" declared by the Act. He has no less liberty when he
prescribes a code on his own motion or on complaint, and he is free
to prescribe one if a code has not been approved. P. 295 U. S.
(10) The acts and reports of the administrative agencies which
the President may create under the Act have no sanction beyond his
will. Their recommendations and findings in no way limit the
authority which § 3 undertakes to vest in him. And this authority
relates to a host of different trades and industries, thus
extending the President's discretion to all the varieties of laws
which he may deem to be beneficial in dealing with the vast array
of commercial activities throughout the country. P. 295 U. S.
(11) Such a sweeping delegation of legislative power finds no
support in decisions of this Court defining and sustaining the
Page 295 U. S. 498
powers granted to the Interstate Commerce Commission, to the
Radio Commission, and to the President when acting under the
"flexible tariff" provisions of the Tariff Act of 1922. P.
295 U. S.
(12) Section 3 of the Recovery Act is without precedent. It
supplies no standards for any trade, industry or activity. It does
not undertake to prescribe rules of conduct to be applied to
particular states of fact determined by appropriate administrative
procedure. Instead, it authorizes the making of codes to prescribe
them. For that legislative undertaking, it sets up no standards,
aside from the statement of the general aims of rehabilitation,
correction and expansion found in § 1. In view of the broad scope
of that declaration, and of the nature of the few restrictions that
are imposed, the discretion of the President in approving or
prescribing codes, and thus enacting laws for the government of
trade and industry throughout the country, is virtually unfettered.
The code-making authority thus sought to be conferred is an
unconstitutional delegation of legislative power. P. 295 U. S.
6. Defendants were engaged in the business of slaughtering
chickens and selling them to retailers. They bought their fowls
from commission men in a market where most of the supply was
shipped in from other States, transported them to their
slaugterhouses, and there held them for slaughter and local sale to
retail dealers and butchers, who in turn sold directly to
consumers. They were indicted for disobeying the requirements of a
"Code of Fair Competition for the Live Poultry Industry of the
Metropolitan Area in and about the City of New York," approved by
the President under § 3 of the National Industrial Recovery Act.
The alleged violations were: failure to observe in their place of
business provisions fixing minimum wages and maximum hours for
employees; permitting customers to select individual chickens from
particular coops and half-coops; sale of an unfit chicken; sales
without compliance with municipal inspection regulations and to
slaughterers and dealers not licensed under such regulations;
making false reports, and failure to make reports relating to range
of daily prices and volume of sales.
(1) When the poultry had reached the defendants'
slaughterhouses, the interstate commerce had ended, and subsequent
transactions in their business, including the matters charged in
the indictment, were transactions in intrastate commerce. P.
295 U. S.
(2) Decisions which deal with a stream of interstate commerce --
where goods come to rest within a State temporarily and are later
to go forward in interstate commerce -- and with the regulation
Page 295 U. S. 499
of transactions involved in that practical continuity of
movement, are inapplicable in this case. P. 295 U. S.
(3) The distinction between intrastate acts that directly affect
interstate commerce, and therefore are subject to federal
regulation, and those that affect it only indirectly, and therefore
remain subject to the power of the States exclusively, is clear in
principle, though the precise line can be drawn only as individual
cases arise. Pp. 295 U.S.
, 295 U. S.
(4) If the commerce clause were construed to reach all
enterprises and transactions which could be said to have an
indirect effect upon interstate commerce, the federal authority
would embrace practically all the activities of the people, and the
authority of the State over its domestic concerns would exist only
by sufferance of the Federal Government. Indeed, on such a theory,
even the development of the State's commercial facilities would be
subject to federal control. P. 295 U. S.
(5) The distinction between direct and indirect effects has long
been clearly recognized in the application of the Anti-Trust Act.
It is fundamental and essential to the maintenance of our
constitutional system. P. 295 U. S.
(6) The Federal Government cannot regulate the wages and hours
of labor of persons employed in the internal commerce of a State.
No justification for such regulation is to be found in the fact
that wages and hours affect costs and prices, and so indirectly
affect interstate commerce, nor in the fact that failure of some
States to regulate wages and hours diverts commerce from the States
that do regulate them. P. 295 U. S.
(7) The provisions of the code which are alleged to have been
violated in this case are not a valid exercise of federal power. P.
295 U. S.
76 F.2d 617, reversed in part; affirmed in part.
CERTIORARI on the petition of defendants in a criminal case to
review the judgment below insofar as it affirmed convictions on a
number of the counts of an indictment and, on the petition of the
Government, to review the same judgment insofar as it reversed
convictions on other counts. The indictment charged violations of a
"Live Poultry Code," and conspiracy to commit them.
Page 295 U. S. 519
MR. CHIEF JUSTICE HUGHES delivered the opinion of the Court.
Petitioners in No. 854 were convicted in the District Court of
the United States for the Eastern District of New York on eighteen
count of an indictment charging violations of what is known a the
"Live Poultry Code," [Footnote
] and on an additional count for conspiracy to commit such
violations. [Footnote 2
demurrer to the indictment and appropriate motions on the trial,
the defendants contended (1) that the Code had been adopted
pursuant to an unconstitutional delegation by Congress of
legislative power; (2) that it attempted to regulate intrastate
transactions which lay outside the authority of Congress, and (3)
that, in certain provisions, it was repugnant to the due process
clause of the Fifth Amendment.
Page 295 U. S. 520
The Circuit Court of Appeals sustained the conviction on the
conspiracy count and on sixteen counts for violation of the Code,
but reversed the conviction on two counts which charged violation
of requirements as to minimum wages and maximum hours of labor, as
these were not deemed to be within the congressional power of
regulation. On the respective applications of the defendants (No.
854) and of the Government (No. 864), this Court granted writs of
certiorari, April 15, 1935.
New York City is the largest live poultry market in the United
States. Ninety-six percent. of the live poultry there marketed
comes from other States. Three-fourths of this amount arrives by
rail and is consigned to commission men or receivers. Most of these
freight shipments (about 75 percent) come in at the Manhattan
Terminal of the New York Central Railroad, and the remainder at one
of the four terminals in New Jersey serving New York City. The
commission men transact by far the greater part of the business on
a commission basis, representing the shippers as agents and
remitting to them the proceeds of sale, less commissions, freight
and handling charges. Otherwise, they buy for their own account.
They sell to slaughterhouse operators, who are also called
The defendants are slaughterhouse operators of the latter class.
A. L. A. Schechter Poultry Corporation and Schechter Live Poultry
Market are corporations conducting wholesale poultry slaughterhouse
markets in Brooklyn, New York City. Joseph Schechter operated the
latter corporation and also guaranteed the credits of the former
corporation which was operated by Martin, Alex and Aaron Schechter.
Defendants ordinarily purchase their live poultry from commission
men at the West Washington Market in New York City or at the
railroad terminals serving the City, but occasionally they purchase
from commission men in Philadelphia. They buy the
Page 295 U. S. 521
poultry for slaughter and resale. After the poultry is trucked
to their slaughterhouse markets in Brooklyn, it is there sold,
usually within twenty-four hours, to retail poultry dealers and
butchers who sell directly to consumers. The poultry purchased from
defendants is immediately slaughtered, prior to delivery, by
in defendants' employ. Defendants do not sell
poultry in interstate commerce.
The "Live Poultry Code" was promulgated under § 3 of the
National Industrial Recovery Act. [Footnote 3
] That section -- the pertinent provisions of
which are set forth in the margin [Footnote 4
] -- authorizes the President to approve "codes
Page 295 U. S. 522
fair competition." Such a code may be approved for a trade or
industry, upon application by one or more trade or industrial
associations or groups, if the President finds (1) that such
associations or groups "impose no inequitable restrictions on
admission to membership therein and are truly representative," and
(2) that such codes are not designed
"to promote monopolies or to eliminate or oppress small
enterprises and will not operate to discriminate
Page 295 U. S. 523
against them, and will tend to effectuate the policy"
of Title I of the Act. Such codes "shall not permit monopolies
or monopolistic practices." As a condition of his approval, the
"impose such conditions (including requirements for the making
of reports and the keeping of accounts) for the protection of
consumers, competitors, employees, and others, and in furtherance
of the public interest, and may provide such exceptions to and
exemptions from the provisions of such code, as the President in
his discretion deems necessary to effectuate the policy herein
Where such a code has not been approved, the President may
prescribe one, either on his own motion or on complaint. Violation
of any provision of a code (so approved or prescribed) "in any
transaction in or affecting interstate or foreign commerce" is made
a misdemeanor punishable by a fine of not more than $500 for each
offense, and each day the violation continues is to be deemed a
The "Live Poultry Code" was approved by the President on April
13, 1934. Its divisions indicate its nature and scope. The Code has
eight articles entitled (1) purposes, (2) definitions, (3) hours,
(4) wages, (5) general labor provisions, (6) administration, (7)
trade practice provisions, and (8) general.
The declared purpose is "To effect the policies of title I of
the National Industrial Recovery Act." The Code is established as
"a code of fair competition for the live poultry industry of the
metropolitan area in and about the City of New York." That area is
described as embracing the five boroughs of New York City, the
counties of Rockland, Westchester, Nassau and Suffolk in the State
of New York, the counties of Hudson and Bergen in the State of New
Jersey, and the county of Fairfield in the State of
The "industry" is defined as including
"every person engaged in the business of selling, purchasing for
Page 295 U. S. 524
transporting, or handling and/or slaughtering live poultry, from
the time such poultry comes into the New York metropolitan area to
the time it is first sold in slaughtered form,"
and such " related branches " as may from time to time be
included by amendment. Employers are styled "members of the
industry," and the term employee is defined to embrace "any and all
persons engaged in the industry, however compensated," except
The Code fixes the number of hours for workdays. It provides
that no employee, with certain exceptions, shall be permitted to
work in excess of forty (40) hours in any one week, and that no
employee, save as stated, "shall be paid in any pay period less
than at the rate of fifty (50) cents per hour." The article
containing " general labor provisions" prohibits the employment of
any person under sixteen years of age, and declares that employees
shall have the right of "collective bargaining," and freedom of
choice with respect to labor organizations, in the terms of § 7(a)
of the Act. The minimum number of employees who shall be employed
by slaughterhouse operators is fixed, the number being graduated
according to the average volume of weekly sales.
Provision is made for administration through an "industry
advisory committee," to be selected by trade associations and
members of the industry, and a "code supervisor," to be appointed,
with the approval of the committee, by agreement between the
Secretary of Agriculture and the Administrator for Industrial
Recovery. The expenses of administration are to be borne by the
members of the industry proportionately upon the basis of volume of
business, or such other factors as the advisory committee may deem
equitable, "subject to the disapproval of the Secretary and/or
The seventh article, containing "trade practice provisions,"
prohibits various practices which are said to constitute
Page 295 U. S. 525
"unfair methods of competition." The final article provides for
verified reports, such as the Secretary or Administrator may
"(1) for the protection of consumers, competitors, employees,
and others, and in furtherance of the public interest, and (2) for
the determination by the Secretary or Administrator of the extent
to which the declared policy of the act is being effectuated by
The members of the industry are also required to keep books and
records which "will clearly reflect all financial transactions of
their respective business and the financial condition thereof," and
to submit weekly reports showing the range of daily prices and
volume of sales for each kind of produce.
The President approved the Code by an executive order in which
he found that the application for his approval had been duly made
in accordance with the provisions of Title I of the National
Industrial Recovery Act, that there had been due notice and
hearings, that the Code constituted "a code of fair competition" as
contemplated by the Act, and complied with its pertinent
provisions, including clauses (1) and (2) of subsection (a) of § 3
of Title I, and that the Code would tend "to effectuate the policy
of Congress as declared in section 1 of Title I." [Footnote 5
Page 295 U. S. 526
The executive order also recited that Secretary of Agriculture
and the Administrator of the National Industrial Recovery Act had
rendered separate reports as to the provisions within their
respective jurisdictions. The Secretary of Agriculture reported
that the provisions of the Code
"establishing standards of fair competition (a) are regulations
of transactions in or affecting the current of interstate and/or
foreign commerce and (b) are reasonable, "
Page 295 U. S. 527
and also that the Code would tend to effectuate the policy
declared in Title I of the Act, as set forth in § 1. The report of
the Administrator for Industrial Recovery dealt with wages, ours of
labor and other labor provisions. [Footnote 6
Of the eighteen counts of the indictment upon which the
defendants were indicted, aside from the count for conspiracy, two
counts charged violation of the minimum wage and maximum hour
provisions of the Code, and ten counts were for violation of the
requirement (found in the "trade practice provisions") of "straight
killing." This requirement was really one of "straight" selling.
The term "straight killing" was defined in the Code as
"the practice of requiring persons purchasing poultry for resale
to accept the run of any half coop, coop, or coops, as purchased by
slaughterhouse operators, except for culls. [Footnote 7
The charges in the ten counts, respectively, were
Page 295 U. S. 528
that the defendants, in selling to retail dealers and butchers,
had permitted "selections of individual chickens taken from
particular coops and half-coops."
Of the other six counts, one charged the sale to a butcher of an
unfit chicken; two counts charged the making of sales without
having the poultry inspected or approved in accordance with
regulations or ordinances of the City of New York; two counts
charged the making of false reports or the failure to make report
relating to the range of daily prices and volume of sales for
certain periods, and the remaining count was for sales to
slaughterers or dealers who were without licenses required by the
ordinances and regulations of the City of New York.
Two preliminary points are stressed by the
Government with respect to the appropriate approach to the
important questions presented. We are told that the provision of
the statute authorizing the adoption of codes must be viewed in the
light of the grave national crisis with which Congress was
confronted. Undoubtedly, the conditions to which power is addressed
are always to be considered when the exercise of power is
challenged. Extraordinary conditions may call for extraordinary
remedies. But the argument necessarily stops short of an attempt to
justify action which lies outside the sphere of constitutional
authority. Extraordinary conditions do not create or enlarge
constitutional power. [Footnote
] The Constitution established a national government with
powers deemed to be adequate, as they have proved to be both in war
and peace, but these powers of the national government are limited
by the constitutional grants. Those who act under these grants are
not at liberty to transcend the
Page 295 U. S. 529
imposed limits because they believe that more or different power
is necessary. Such assertions of extraconstitutional authority were
anticipated and precluded by the explicit terms of the Tenth
"The powers not delegated to the United States by the
Constitution, nor prohibited by it to the States, are reserved to
the States respectively, or to the people."
The further point is urged that the national crisis demanded a
broad and intensive cooperative effort by those engaged in trade
and industry, and that this necessary cooperation was sought to be
fostered by permitting them to initiate the adoption of codes. But
the statutory plan is not simply one for voluntary effort. It does
not seek merely to endow voluntary trade or industrial associations
or groups with privileges or immunities. It involves the coercive
exercise of the lawmaking power. The codes of fair competition
which the state attempts to authorize are codes of laws. If valid,
they place all persons within their reach under the obligation of
positive law, binding equally those who assent and those who do not
assent. Violations of the provisions of the codes are punishable as
Second. The question of the delegation of legislative
We recently had occasion to review the pertinent
decisions and the general principles which govern the determination
of this question. Panama Refining Co. v. Ryan,
293 U. S. 388
Constitution provides that
"All legislative powers herein granted shall be vested in a
Congress of the United States, which shall consist of a Senate and
House of Representatives."
Art I, § 1. And the Congress is authorized "To make all laws
which shall be necessary and proper for carrying into execution"
its general powers. Art. I, 8, par. 18. The Congress is not
permitted to abdicate or to transfer to others the essential
legislative functions with which it is thus vested. We have
repeatedly recognized the necessity of adapting
Page 295 U. S. 530
legislation to complex conditions involving a host of details
with which the national legislature cannot deal directly. We
pointed out in the Panama Company
case that the
Constitution has never been regarded as denying to Congress the
necessary resources of flexibility and practicality which will
enable it to perform its function in laying down policies and
establishing standards while leaving to selected instrumentalities
the making of subordinate rules within prescribed limits, and the
determination of facts to which the policy, as declared by the
legislature, is to apply. But we said that the constant recognition
of the necessity and validity of such provisions, and the wide
range of administrative authority which has been developed by means
of them, cannot be allowed to obscure the limitations of the
authority to delegate, if our constitutional system is to be
p. 298 U. S.
Accordingly, we look to the statute to see whether Congress has
overstepped these limitations -- whether Congress, in authorizing
"codes of fair competition," has itself established the standards
of legal obligation, thus performing its essential legislative
function, or, by the failure to enact such standards, has attempted
to transfer that function to others.
The aspect in which the question is now presented is distinct
from that which was before us in the case of the Panama
There, the subject of the statutory prohibition was
defined. National Industrial Recovery Act, § 9(c). That subject was
the transportation in interstate and foreign commerce of petroleum
and petroleum products which are produced or withdrawn from storage
in excess of the amount permitted by State authority. The question
was with respect to the range of discretion given to the President
in prohibiting that transportation. Id.
pp. 293 U. S. 414
293 U. S. 415
293 U. S. 430
As to the "codes of fair competition," under § 3 of the Act, the
question is more fundamental.
Page 295 U. S. 531
It is whether there is any adequate definition of the subject to
which the codes are to be addressed.
What is meant by "fair competition" as the term is used in the
Act? Does it refer to a category established in the law, and is the
authority to make codes limited accordingly? Or is it used as a
convenient designation for whatever set of laws the formulators of
a code for a particular trade or industry may propose and the
President may approve (subject to certain restrictions), or the
President may himself prescribe, as being wise and beneficent
provisions for the government of the trade or industry in order to
accomplish the broad purposes of rehabilitation, correction and
expansion which are stated in the first section of Title I?
The Act does not define " fair competition." "Unfair
competition," as known to the common law, is a limited concept.
Primarily, and strictly, it relates to the palming off of one's
goods as those of a rival trader. Goodyear Manufacturing Co. v.
Goodyear Rubber Co., 128 U. S. 598
Page 295 U. S. 532
128 U. S. 604
Howe Scale Co. v. Wyckoff, Seaman & Benedict,
198 U. S. 118
198 U. S. 140
Hanover Milling Co. v. Metcalf, 240 U.
, 240 U. S. 413
In recent years, its scope has been extended. It has been held to
apply to misappropriation as well as misrepresentation, to the
selling of another's goods as one's own -- to misappropriation of
what equitably belongs to a competitor. International News
Service v. Associated Press, 248 U. S. 215
248 U. S. 241
248 U. S. 242
Unfairness in competition has been predicated of acts which lie
outside the ordinary course of business and are tainted by fraud,
or coercion, or conduct otherwise prohibited by law. [Footnote 10
248 U. S. 258
But it is evident that, in its widest range, "unfair competition,"
as it has been understood in the law, does not reach the objectives
of the codes which are authorized by the National Industrial
Recovery Act. The codes may, indeed, cover conduct which existing
law condemns, but they are not limited to conduct of that sort. The
Government does not contend that the Act contemplates such a
limitation. It would be opposed both to the declared purposes of
the Act and to its administrative construction.
The Federal Trade Commission Act (§ 5) [Footnote 11
] introduced the expression "unfair
methods of competition," which were declared to be unlawful. That
was an expression new in the law. Debate apparently convinced the
sponsors of the legislation that the words "unfair competition," in
the light of their meaning at common law, were too narrow. We have
sad that the substituted phrase has a broader meaning, that it does
not admit of precise definition, its scope being left to judicial
determination as controversies arise. Federal Trade Comm'n v.
Raladam Co., 283 U. S. 643
283 U. S. 648
283 U. S. 649
Federal Trade Comm'n v. Keppel & Bro., 291 U.
, 291 U. S.
-312. What are
Page 295 U. S. 533
"unfair methods of competition" are thus to be determined in
particular instances, upon evidence, in the light of particular
competitive conditions and of what is found to be a specific and
substantial public interest. Federal Trade Comm'n v. Beech-Nut
Packing Co., 257 U. S. 441
257 U. S. 453
Federal Trade Comm'n v. Klesner, 280 U. S.
, 280 U. S. 27
280 U. S. 28
Federal Trade Comm'n v. Raladam Co., supra; Federal Trade
Comm'n v. Keppel & Bro., supra; Federal Trade Comm'n v. Algoma
Lumber Co., 291 U. S. 67
291 U. S. 73
make this possible, Congress set up a special procedure. A
Commission, a quasi
-judicial body, was created. Provision
was made formal complaint, for notice and hearing, for appropriate
findings of fact supported by adequate evidence, and for judicial
review to give assurance that the action of the Commission is taken
within its statutory authority. Federal Trade Comm'n v. Raladam
Co., supra; Federal Trade Comm'n v. Klesner, supra.
In providing for codes, the National Industrial Recovery Act
dispenses with this administrative procedure and with any
administrative procedure of an analogous character. But the
difference been the code plan of the Recovery Act and the scheme of
the Federal Trade Commission Act lies not only in procedure, but in
Page 295 U. S. 534
matter. We cannot regard the "fair competition" of the codes as
antithetical to the "unfair methods of competition" of the Federal
Trade Commission Act. The "fair competition" of the codes has a
much broader range, and a new significance. The Recovery Act
provides that it shall not be construed to impair the powers of the
Federal Trade Commission, but, when a code is approved, its
provisions are to be the "standards of fair competition" for the
trade or industry concerned, and any violation of such standards in
any transaction in or affecting interstate or foreign commerce is
to be deemed "an unfair method of competition" within the meaning
of the Federal Trade Commission Act. § 3(b).
For a statement of the authorized objectives and content of the
"codes of fair competition," we are referred repeatedly to the
"Declaration of Policy" in section one of Title I of the Recovery
Act. Thus, the approval of a code by the President is conditioned
on his finding that it "will tend to effectuate the policy of this
title." § 3(a). The President is authorized to impose such
"for the protection of consumers, competitors, employees, and
others, and in furtherance of the public interest, and may provide
such exceptions to and exemptions from the provisions of such code
as the President in his discretion deems necessary to effectuate
the policy herein declared."
The "policy herein declared" is manifestly that set
forth in section one. That declaration embraces a broad range of
objectives. Among them we find the elimination of "unfair
competitive practices." But even if this clause were to be taken to
relate to practices which fall under the ban of existing law,
either common law or statute, it is still only one of the
authorized aims described in section one. It is there declared to
be "the policy of Congress" --
"to remove obstructions to the free flow of interstate and
foreign commerce which tend to diminish the amount
Page 295 U. S. 535
thereof, and to provide for the general welfare by promoting the
organization of industry for the purpose of cooperative action
among trade groups, to induce and maintain united action of labor
and management under adequate governmental sanctions and
supervision, to eliminate unfair competitive practices, to promote
the fullest possible utilization of the present productive capacity
of industries, to avoid undue restriction of production (except as
may be temporarily required), to increase the consumption of
industrial and agricultural products by increasing purchasing
power, to reduce and relieve unemployment, to improve standards of
labor, and otherwise to rehabilitate industry and to conserve
natural resources. [Footnote
Under § 3, whatever "may tend to effectuate" these general
purposes may be included in the "codes of fair competition." We
think the conclusion is inescapable that the authority sought to be
conferred by § 3 was not merely to deal with "unfair competitive
practices " which offend against existing law, and could be the
subject of judicial condemnation without further legislation, or to
create administrative machinery for the application of established
principles of law to particular instances of violation. Rather, the
purpose is clearly disclosed to authorize new and controlling
prohibitions through codes of laws which would embrace what the
formulators would propose, and what the President would approve, or
prescribe, as wise and beneficient measures for the government of
trades and industries in order to bring about their rehabilitation,
correction and development, according to the general declaration of
policy in section one. Codes of laws of this sort are styled "codes
of fair competition."
We find no real controversy upon this point, and we must
determine the validity of the Code in question in this aspect. As
the Government candidly says in its
Page 295 U. S. 536
"The words 'policy of this title' clearly refer to the 'policy'
which Congress declared in the section entitled 'Declaration of
Policy' -- § 1. All of the policies there set forth point toward a
single goal -- the rehabilitation of industry and the industrial
recovery which unquestionably was the major policy of Congress in
adopting the National Industrial Recovery Act."
And that this is the controlling purpose of the Code now before
us appears both from its repeated declarations to that effect and
from the scope of its requirements. It will be observed that its
provisions as to the hours and wages of employees and its "general
labor provisions" were placed in separate articles, and these were
not included in the article on "trade practice provisions"
declaring what should be deemed to constitute "unfair methods of
competition." The Secretary of Agriculture thus stated the
objectives of the Live Poultry Code in his report to the President,
which was recited in the executive order of approval:
"That said code will tend to effectuate the declared policy of
title I of the National Industrial Recovery Act as set forth in
section 1 of said act in that the terms and provisions of such code
tend to: (a) remove obstructions to the free flow of interstate and
foreign commerce which tend to diminish the amount thereof; (b) to
provide for the general welfare by promoting the organization of
industry for the purpose of cooperative action among trade groups;
(c) to eliminate unfair competitive practices; (d) to promote the
fullest possible utilization of the present productive capacity of
industries; (e) to avoid undue restriction of production (except a
may be temporarily required); (f) to increase the consumption of
industrial and agricultural products by increasing purchasing
power, and (g) otherwise to rehabilitate industry, and to conserve
natural resources. "
Page 295 U. S. 537
The Government urges that the codes will
"consist of rules of competition deemed fair for each industry
by representative members of that industry -- by the persons most
vitally concerned and most familiar with its problems."
Instances are cited in which Congress has availed itself of such
assistance; as, e.g.,
in the exercise of its authority
over the public domain with respect to the recognition of local
customs or rules of miners as to mining claims, [Footnote 14
] or, in matters of a more or
less technical nature, as in designating the standard height of
drawbar. [Footnote 15
would it be seriously contended that Congress could delegate its
legislative authority to trade or industrial associations or groups
so as to empower them to enact the laws they deem to be wise and
beneficent for the rehabilitation and expansion of their trade or
industries? Could trade or industrial associations or groups be
constituted legislative bodies for that purpose because such
associations or groups are familiar with the problems of their
enterprises? And, could an effort of that sort be made valid by
such a preface of generalities as to permissible aims as we find in
section 1 of title I? The answer is obvious. Such a delegation of
legislative power is unknown to our law, and is utterly consistent
with the constitutional prerogatives and duties of Congress.
The question, then, turns upon the authority which § 3 of the
Recovery Act vests in the President to approve or prescribe. If the
codes have standing as penal statutes, this must be due to the
effect of the executive action. But Congress cannot delegate
legislative power to the President to exercise an unfettered
discretion to make
Page 295 U. S. 538
whatever laws he thinks may be needed or advisable for the
rehabilitation and expansion of trade or industry. See Panama
Refining Co. v. Ryan, supra,
and cases there reviewed.
Accordingly, we turn to the Recovery Act to ascertain what
limits have been set to the exercise of the President's discretion.
the President, as a condition of approval, is
required to find that the trade or industrial associations or
groups which propose a code, "impose no inequitable restrictions on
admission to membership," and are "truly representative." That
condition, however, relates only to the status of the initiators of
the new laws, and not to the permissible scope of such laws.
the President is required to find that the code is
not "designed to promote monopolies or to eliminate or oppress
small enterprises, and will not operate to discriminate against
them." And to this is added a proviso that the code "shall not
permit monopolies or monopolistic practices." But these
restrictions leave virtually untouched the field of policy
envisaged by section one, and, in that wide field of legislative
possibilities, the proponents of a code, refraining from
monopolistic designs, may roam at will, and the President may
approve or disapprove their proposals as he may see fit. That is
the precise effect of the further finding that the President is to
make -- that the code " will tend to effectuate the policy of this
title." While this is called a finding, it is really but a
statement of an opinion as to the general effect upon the promotion
of trade or industry of a scheme of laws. These are the only
findings which Congress has made essential in order to put into
operation a legislative code having the aims described in the
"Declaration of Policy."
Nor is the breadth of the President's discretion left to the
necessary implication of this limited requirement as to his
findings. As already noted, the President, in approving a code, may
impose his own conditions, adding to
Page 295 U. S. 539
or taking from what is proposed as, "in his discretion," he
thinks necessary "to effectuate the policy" declared by the Act. Of
course, he has no less liberty when he prescribes a code on his own
motion or on complaint, and he is free to prescribe one if a code
has not been approved. The Act provides for the creation by the
President of administrative agencies to assist him, but the action
or reports of such agencies, or of his other assistants -- their
recommendations and findings in relation to the making of codes --
have no sanction beyond the will of the President, who may accept,
modify, or reject them as he pleases. Such recommendations or
findings in no way limit the authority which § 3 undertakes to vest
in the President with no other conditions than those there
specified. And this authority relates to a host of different trades
and industries, thus extending the President's discretion to all
the varieties of laws which he my deem to be beneficial in dealing
with the vast array of commercial and industrial activities
throughout the country.
Such a sweeping delegation of legislative power finds no support
in the decisions upon which the Government especially relies. By
the Interstate Commerce Act, Congress has itself provided a code af
laws regulating the activities of the common carriers subject to
the Act in order to assure the performance of their services upon
just and reasonable terms, with adequate facilities and without
unjust discrimination. Congress, from time to time, has elaborated
its requirements as needs have been disclosed. To facilitate the
application of the standards prescribed by the Act, Congress has
provided an expert body. That administrative agency, in dealing
with particular cases, is required to act upon notice and hearing,
and its orders must be supported by findings of fact which, in
turn, are sustained by evidence. Interstate Commerce Comm'n v.
Louisville & Nashville R. Co., 227 U. S.
; Florida v. United States, 282 U.
Page 295 U. S. 540
v. Baltimore & Ohio R. Co., 293 U.
. When the Commission is authorized to issue, for
the construction, extension or abandonment of lines, a certificate
of "public convenience and necessity," or to permit the acquisition
by one carrier of the control of another, if that is found to be
"in the public interest," we have pointed out that these provisions
are not left without standards to guide determination. The
authority conferred has direct relation to the standards prescribed
for the service of common carriers, and can be exercised only upon
findings, based upon evidence, with respect to particular
conditions of transportation. New York Central Securities Co.
v. United States, 287 U. S. 12
287 U. S. 24
298 U. S. 25
Texas & Pacific Railway Co. v. Gulf, Colorado & Santa
Fe Ry. Co., 270 U. S. 266
270 U. S. 273
Chesapeake & Ohio Ry. Co. v. United States,
283 U. S. 35
283 U. S.
Similarly, we have held that the Radio Act of 1927 [Footnote 16
] established standards
to govern radio communications, and, in view of the limited number
of available broadcasting frequencies, Congress authorized
allocation and licenses. The Federal Radio Commission was created
as the licensing authority in order to secure a reasonable equality
of opportunity in radio transmission and reception. The authority
of the Commission to grant licenses "as public convenience,
interest or necessity requires" was limited by the nature of radio
communications and by the scope, character, and quality of the
services to be rendered and the relative advantages to be derived
through distribution of facilities. These standards established by
Congress were to be enforced upon hearing, and evidence, by an
administrative body acting under statutory restrictions adapted to
the particular activity. Federal Radio Comm'n v. Nelson
Brothers Co., 289 U. S. 266
Page 295 U. S. 541
In Hampton & Co. v. United States, 276 U.
, the question related to the "flexible tariff
provision" of the Tariff Act of 1922. [Footnote 17
] We held that Congress had described its
"to secure by law the imposition of customs duties on articles
of imported merchandise which should equal the difference between
the cost of producing in a foreign country the articles in question
and laying them down for sale in the United States, and the cost of
producing and selling like or similar articles in the United
As the differences cost might vary from time to time, provision
was for the investigation and determination of these differences by
the executive branch, so as to make "the adjustments necessary to
conform the duties to the standard underlying that policy and
pp. 276 U. S. 404
276 U. S. 405
The Court found the same principle to be applicable in fixing
customs duties as that which permitted Congress to exercise its
ratemaking power in interstate commerce, "by declaring the rule
which shall prevail in the legislative fixing of rates" and then
remitting "the fixing of such rates" in accordance with its
provisions "to a ratemaking body." Id.,
p. 276 U. S. 409
The Court fully recognized the limitations upon the delegation of
legislative power. Id.
pp. 276 U. S.
To summarize and conclude upon this point: Section 3 of the
Recovery Act is without precedent. It supplies no standards for any
trade, industry or activity. It does not undertake to prescribe
rules of conduct to be applied to particular states of fact
determined by appropriate administrative procedure. Instead of
prescribing rules of conduct, it authorizes the making of codes to
prescribe them. For that legislative undertaking, § 3 sets up no
standards, aside from the statement of the general aims of
rehabilitation, correction and expansion described in section one.
In view of the scope of that broad declaration, and of the
Page 295 U. S. 542
nature of the few restrictions that are imposed, the discretion
of the President in approving or prescribing codes, and thus
enacting laws for the government of trade and industry throughout
the country, is virtually unfettered. We think that the code-making
authority this conferred is an unconstitutional delegation of
Third. The question of the application of the provisions of
the Live Poultry Code to intrastate transactions.
validity of the codes (apart from the question of delegation) rests
upon the commerce clause of the Constitution, § 3(a) is not, in
terms, limited to interstate and foreign commerce. From the
generality of its terms, and from the argument of the Government at
the bar, it would appear that § 3(a) was designed to authorize
codes without that limitation. But, under § 3(f), penalties are
confined to violations of a code provision "in any transaction in
or affecting interstate or foreign commerce." This aspect of the
case presents the question whether the particular provisions of the
Live Poultry Code, which the defendants were convicted for
violating and for having conspired to violate, were within the
regulating power of Congress.
These provisions relate to the hours and wages of those employed
by defendants in their slaughterhouses in Brooklyn, and to the
sales there made to retail dealers and butchers.
(1) Were these transactions "in
" interstate commerce?
Much is made of the fact that almost all the poultry coming to New
York is sent there from other States. But the code provisions, as
here applied, do not concern the transportation of the poultry from
other States to New York, or the transactions of the commission men
or others to whom it is consigned, or the sales made by such
consignees to defendants. When defendants had made their purchases,
whether at the West Washington Market in New York City or at the
Page 295 U. S. 543
terminals serving the City, or elsewhere, the poultry was
trucked to their slaugterhouses in Brooklyn for local disposition.
The interstate transactions in relation to that poultry then ended.
Defendants held the poultry at their slaughterhouse markets for
slaughter and local sale to retail dealers and butchers who, in
turn, sold directly to consumers. Neither the slaughtering nor the
sales by defendants were transactions in interstate commerce.
Brown v. Houston, 114 U. S. 622
114 U. S. 632
114 U. S. 633
Public Utilities Comm'n v. Landon, 249 U.
, 249 U. S. 245
Industrial Association v. States, 268 U. S.
, 268 U. S. 78
268 U. S. 79
Atlantic Coast Line v. Standard Oil Co., 275 U.
, 275 U. S.
The undisputed facts thus afford no warrant for the argument
that the poultry handled by defendants at their slaughterhouse
markets was in a "current
" or "flow
interstate commerce, and was thus subject to congressional
regulation. The mere fact that there may be a constant flow of
commodities into a State does not mean that the flow continues
after the property has arrived, and has become commingled with the
mass of property within the State, and is there held solely for
local disposition and use. So far as the poultry here in question
is concerned, the flow in interstate commerce had ceased. The
poultry had come to a permanent rest within the State. It was not
held, used, or sold by defendants in relation to any further
transactions in interstate commerce, and was not destined for
transportation to other States. Hence, decisions which deal with a
stream of interstate commerce -- where goods come to rest within a
State temporarily and are later to go forward in interstate
commerce -- and with the regulations of transactions involved in
that practical continuity of movement, are not applicable here.
See Swift & Co. v. United States, 196 U.
, 387, 388 [argument of counsel omitted in
electronic version]; Lemke v. Farmers Grain Co.,
258 U. S. 50
258 U. S. 55
Stafford v. Wallace, 258 U. S. 495
258 U. S. 519
Page 295 U. S. 544
Board of Trade v. Olsen,
262 U.S. l, 262 U. S. 35
Tagg Bros. & Moorhead v. United States, 280 U.
, 280 U. S.
(2) Did the defendants' transactions directly "affect
interstate commerce, so as to be subject to federal regulation? The
power of Congress extends not only to the regulation of
transactions which are part of interstate commerce, but to the
protection of that commerce from injury. It matters not that the
injury may be due to the conduct of those engaged in intrastate
operations. Thus, Congress may protect the safety of those employed
in interstate transportation "no matter what may be the source of
the dangers which threaten it." Southern Ry. Co. v. United
States, 222 U. S. 20
222 U. S. 27
said in Second Employers' Liability Cases, 223 U. S.
, 223 U. S. 51
that it is the " effect upon interstate commerce," not "the source
of the injury," which is "the criterion of congressional power." We
have held that, in dealing with common carriers engaged in both
interstate and intrastate commerce, the dominant authority of
Congress necessarily embraces the right to control their intrastate
operations in all matters having such a close and substantial
relation to interstate traffic that the control is essential or
appropriate to secure the freedom of that traffic from interference
or unjust discrimination and to promote the efficiency of the
interstate service. The Shreveport Case, 234 U.
, 234 U. S. 351
234 U. S. 352
Wisconsin Railroad Comm'n v. Chicago, B. & Q. R. Co.,
257 U. S. 563
257 U. S. 588
And combinations and conspiracies to restrain interstate commerce,
or to monopolize any part of it, are nonetheless within the reach
of the Anti-Trust Act because the conspirators seek to attain their
end by means of intrastate activities. Coronado Coal Co. v.
United Mine Workers, 268 U. S. 295
268 U. S. 310
Bedford Cut Stone Co. v. Stone Cutters Assn., 274 U. S.
, 274 U.S.
We recently had occasion, in Local 677 v. United
States, 291 U. S. 293
apply this principle in connection with
Page 295 U. S. 545
the live poultry industry. That was a suit to enjoin a
conspiracy to restrain and monopolize interstate commerce in
violation of the Anti-Trust Act. It was shown that marketmen,
teamsters and slaughterers (shochtim
) had conspired to
burden the free movement of live poultry into the metropolitan area
in and about New York City. Marketmen had organized an association,
had allocated retailers among themselves, and had agreed to
increase prices. To accomplish their objects, large amounts of
money were raised by levies upon poultry sold, men were hired to
obstruct the business dealers who resisted, wholesalers and
retailers were spied upon, and, by violence and other forms of
intimidation, were prevented from freely purchasing live poultry.
Teamsters refused to handle poultry for recalcitrant marketmen, and
members of the shochtim
union refused to slaughter. In
view of the proof of that conspiracy, we said that it was
unnecessary to decide when interstate commerce ended and when
intrastate commerce began. We found that the proved interference by
the conspirators "with the unloading, the transportation, the sales
by marketmen to retailers, the prices charged, and the amount of
profits exacted" operated "substantially and directly to restrain
and burden the untrammeled shipment and movement of the poultry"
while unquestionably it was in interstate commerce. The intrastate
acts of the conspirators were included in the injunction because
that was found to be necessary for the protection of interstate
commerce against the attempted and illegal restraint. Id.
pp. 291 U. S. 297
291 U. S. 299
291 U. S. 300
The instant case is not of that sort. This is not a prosecution
for a conspiracy to restrain or monopolize interstate commerce in
violation of the Anti-Trust Act. Defendants have been convicted not
upon direct charges of injury to interstate commerce or of
interference with persons engaged in that commerce, but of
violations of certain provisions of the Live Poultry Code and of
Page 295 U. S. 546
to commit these violations. Interstate commerce is brought in
only upon the charge that violations of these provisions -- as to
hours and wages of employees and local sales - "affected
In determining how far the federal government may go in
controlling intrastate transactions upon the ground that they
"affect" interstate commerce, there is a necessary and well
established distinction between direct and indirect effects. The
precise line can be drawn only as individual cases arise, but the
distinction is clear in principle. Direct effects are illustrated
by the railroad cases we have cited, as, e.g.,
of failure to use prescribed safety appliances on railroads which
are the highways of both interstate and intrastate commerce, injury
to an employee engaged in interstate transportation by the
negligence of an employee engaged in an intrastate movement, the
fixing of rates for intrastate transportation which unjustly
discriminate against interstate commerce. But where the effect of
intrastate transactions upon interstate commerce is merely
indirect, such transactions remain within the domain of state
power. If the commerce clause were construed to reach all
enterprise and transactions which could be said to have an indirect
effect upon interstate commerce, the federal authority would
embrace practically all the activities of the people, and the
authority of the State over its domestic concerns would exist only
by sufferance of the federal government. Indeed, on such a theory,
even the development of the State's commercial facilities would be
subject to federal control. As we said in the Minnesota Rate
Cases, 230 U. S. 352
230 U. S.
"In the intimacy of commercial relations, much that is done in
the superintendence of local matters may have an indirect bearing
upon interstate commerce. The development of local resources and
the extension of local facilities may have a very important effect
upon communities less favored, and, to an appreciable degree,
Page 295 U. S. 547
alter the course of trade. The freedom of local trade may
stimulate interstate commerce, while restrictive measures within
the police power of the State enacted exclusively with respect to
internal business, as distinguished from interstate traffic, may,
in their reflex or indirect influence, diminish the latter and
reduce the volume of articles transported into or out of the
See also Kidd v. Pearson, 128 U. S.
, 128 U. S. 21
Heisler v. Thomas Collier Co., 260 U.
, 260 U. S. 259
260 U. S.
The distinction between direct and indirect effects has been
clearly recognized in the application of the Anti-Trust Act. Where
a combination or conspiracy is formed, with the intent to restrain
interstate commerce or to monopolize any part of it, the violation
of the statute is clear. Coronado Coal Co. v. United Mine
Workers, 268 U. S. 295
268 U. S. 310
But where that intent is absent, and the objectives are limited to
intrastate activities, the fact that there may be an indirect
effect upon interstate commerce does not subject the parties to the
federal statute, notwithstanding its broad provisions. This
principle has frequently been applied in litigation growing out of
labor disputes. United Mine Workers v. Coronado Coal Co.,
259 U. S. 344
259 U. S. 410
259 U. S. 411
United Leather Workers v. Herkert & Meisel Trunk Co.,
265 U. S. 457
265 U. S.
-467; Industrial Association v. United
States, 268 U. S. 64
268 U. S. 82
Levering & Garrigues Co. v. Morrin, 289 U.
, 289 U. S. 107
289 U. S. 108
In the case last cited, we quoted with approval the rule that had
been stated and applied in Industrial Association v. United
after review of the decisions, as follows:
"The alleged conspiracy and the acts here complained of spent
their intended and direct force upon a local situation -- for
building is as essentially local as mining, manufacturing or
growing crops -- and if, by a resulting diminution of the
commercial demand, interstate trade was curtailed either generally
or in specific instances, that was a fortuitous consequence so
remote and indirect
Page 295 U. S. 548
as plainly to cause it to fall outside the reach of the Sherman
While these decisions related to the application of the federal
statute, and not to its constitutional validity, the distinction
between direct and indirect effects of intrastate transactions upon
interstate commerce must be recognized as a fundamental one,
essential to the maintenance of our constitutional system.
Otherwise, as we have said, there would be virtually no limit to
the federal power, and, for all practical purposes, we should have
a completely centralized government. We must consider the
provisions here in question in the light of this distinction.
The question of chief importance relates to the provisions of
the Code as to the hours and wages of those employed in defendants'
slaughterhouse markets. It is plain that these requirements are
imposed in order to govern the details of defendants' management of
their local business. The persons employed in slaughtering and
selling in local trade are not employed in interstate commerce.
Their hours and wages have no direct relation to interstate
commerce. The question of how many hours these employees should
work and what they should be paid differs in no essential respect
from similar questions in other local businesses which handle
commodities brought into a State and there dealt in as a part of
its internal commerce. This appears from an examination of the
considerations urged by the Government with respect to conditions
in the poultry trade. Thus, the Government argues that hours and
wages affect prices; that slaughterhouse men sell at a small margin
above operating costs; that labor represents 50 to 60 percent of
these costs; that a slaughterhouse operator paying lower wages or
reducing his cost by exacting long hours of work translates his
saving into lower prices; that this results in demands for a
cheaper grade of goods, and that the cutting
Page 295 U. S. 549
of prices brings about a demoralization of the price structure.
Similar conditions may be adduced in relation to other businesses.
The argument of the Government proves too much. If the federal
government may determine the wages and hours of employees in the
internal commerce of a State, because of their relation to cost and
prices and their indirect effect upon interstate commerce, it would
seem that a similar control might be exerted over other elements of
cost also affecting prices, such as the number of employees, rents,
advertising, methods of doing business, etc. All the processes of
production and distribution that enter into cost could likewise be
controlled. If the cost of doing an intrastate business is, in
itself, the permitted object of federal control, the extent of the
regulation of cost would be a question of discretion, and not of
The Government also makes the point that efforts to enact state
legislation establishing high labor standards have been impeded by
the belief that, unless similar action is taken generally, commerce
will be diverted from the States adopting such standards, and that
this fear of diversion has led to demands for federal legislation
on the subject of wages and hours. The apparent implication is that
the federal authority under the commerce clause should be deemed to
extend to the establishment of rules to govern wages and hours in
intrastate trade and industry generally throughout the country,
thus overriding the authority of the States to deal with domestic
problems arising from labor conditions in their internal
It is not the province of the Court to consider the economic
advantages or disadvantage of such a centralized system. It is
sufficient to say that the Federal Constitution does not provide
for it. Our growth and development have called for wide use of the
commerce power of the federal government in its control over the
expanded activities of interstate commerce, and in protecting
Page 295 U. S. 550
commerce from burdens, interferences, and conspiracies to
restrain and monopolize it. But the authority of the federal
government may not be pushed to such an extreme as to destroy the
distinction, which the commerce clause itself establishes, between
commerce "among the several States" and the internal concerns of a
State. The same answer must be made to the contention that is based
upon the serious economic situation which led to the passage of the
Recovery Act -- the fall in prices, the decline in wages and
employment, and the curtailment of the market for commodities.
Stress is laid upon the great importance of maintaining wage
distributions which would provide the necessary stimulus in
starting "the cumulative forces making for expanding commercial
activity." Without in any way disparaging this motive, it is enough
to say that the recuperative efforts of the federal government must
be made in a manner consistent with the authority granted by the
We are of the opinion that the attempt, through the provisions
of the Code, to fix the hours and wages of employees of defendants
in their intrastate business was not a valid exercise of federal
The other violations for which defendants were convicted related
to the making of local sales. Ten counts, for violation of the
provision as to "straight killing" were for permitting customers to
make " selections of individual chickens taken from particular
coops and half coops." Whether or not this practice is good or bad
for the local trade, its effect, if any, upon interstate commerce
was only indirect. The same may be said of violations of the Code
by intrastate transactions consisting of the sale "of an unfit
chicken" and of sales which were not in accord with the ordinances
of the City of New York. The requirement of report as to prices and
volumes of defendants' sales was incident to the effort to control
their intrastate business.
Page 295 U. S. 551
In view of these conclusions, we find it unnecessary to discuss
other questions which have been raised as to the validity of
certain provisions of the Code under the due process clause of the
On both the grounds we have discussed, the attempted delegation
of legislative power, and the attempted regulation of intrastate
transaction which affect interstate commerce only indirectly, we
hold he code provisions here in question to be invalid and that the
judgment of conviction must be reversed.
No. 864 -- reversed. No. 86 -- affirmed.
* Together with No. 864, United States v. A. L. A. Schechter
Poultry Corp. et al.
Certiorari to the Circuit Court of
Appeals for the Second Circuit.
The full title of the Code is "Code of Fair Competition for the
Live Poultry Industry of the Metropolitan Area in and about the
City of New York."
The indictment contained 60 counts, of which 27 counts were
dismissed by the trial court, and on 14 counts, the defendants were
Act of June 16, 1933, c. 90, 48 Stat. 195, 196; 15 U.S.C.
"CODES OF FAIR COMPETITION."
"Sec. 3. (a) Upon the application to the President by one or
more trade or industrial associations or groups, the President may
approve a code or codes of fair competition for the trade or
industry or subdivision thereof, represented by the applicant or
applicants, if the President finds (1) that such associations or
groups impose no inequitable restrictions on admission to
membership therein and are truly representative of such trades or
industries or subdivisions thereof, and (2) that such code or codes
are not designed to promote monopolies or to eliminate or oppress
small enterprises and will not operate to discriminate against
them, and will tend to effectuate the policy of this title:
That such code or codes shall not permit
monopolies or monopolistic practices: Provided further,
That where such code or codes affect the services and welfare of
persons engaged in other steps of the economic process, nothing in
this section shall deprive such persons of the right to be heard
prior to approval by the President of such code or codes. The
President may, as a condition of his approval of any such code,
impose such conditions (including requirements for the making of
reports and the keeping of accounts) for the protection of
consumers, competitors, employees, and others, and in furtherance
of the public interest, and may provide such exceptions to and
exemptions from the provisions of such code as the President in his
discretion deems necessary to effectuate the policy herein
"(b) After the President shall have approved any such code, the
provisions of such code shall be the standards of fair competition
for such trade or industry or subdivision thereof. Any violation of
such standards in any transaction in or affecting interstate or
foreign commerce shall be deemed an unfair method of competition in
commerce within the meaning of the Federal Trade Commission Act, as
amended; but nothing in this title shall be construed to impair the
powers of the Federal Trade Commission under such Act, as
"(c) The several district courts of the United States are hereby
invested with jurisdiction to present and restrain violations of
any code of fair competition approved under this title, and it
shall be the duty of the several district attorneys of the United
States, in their respective districts, under the direction of the
Attorney General, to institute proceedings in equity to prevent and
restrain such violations."
"(d) Upon his own motion, or if complaint is made to the
President that abuses inimical to the public interest and contrary
to the policy herein declared are prevalent in any trade or
industry or subdivision thereof, and if no code of fair competition
therefor has theretofore been approved by the President, the
President, after such public notice and hearing as he shall
specify, may prescribe and approve a code of fair competition for
such trade or industry or subdivision thereof, which shall have the
same effect as a code of fair competition approved by the President
under subsection (a) of this section."
"* * * *"
"(f) When a code of fair competition has been approved or
prescribed by the President under this title, any violation of any
provision thereof in any transaction in or affecting interstate or
foreign commerce shall be a misdemeanor and upon conviction thereof
an offender shall be fined not more than $500 for each offense, and
each day such violation continues shall be deemed a separate
The Executive Order is as follows:
"Approval of Code of Fair Competition for the Live Poultry
Industry of the Metropolitan Area in and about the City of New
the Secretary of Agriculture and the
Administrator of the National Industrial Recovery Act having
rendered their separate reports and recommendations and findings on
the provisions of said code, coming within their respective
jurisdictions, as set forth in the Executive Order No. 6182 of June
26, 1933, as supplemented by Executive Order No. 6207 of July 21,
1933, and Executive Order No. 6345 of October 20, 1933, as amended
by Executive Order No. 6551 of January 8, 1934;"
I, Franklin D. Roosevelt, President of
the United States, pursuant to the authority vested in me by title
I of the National Industrial Recovery Act, approved June 16, 1933,
and otherwise, do hereby find that:"
"1. An application has been duly made, pursuant to and in full
compliance with the provisions of title I of the National
Industrial Recovery Act, approved June 16, 1933, for my approval of
a code of fair competition for the live poultry industry in the
metropolitan area in and about the City of New York; and"
"2. Due notice and opportunity for hearings to interested
parties have been given pursuant to the provisions of the act and
regulations thereunder; and,"
"3. Hearings have been held upon said code, pursuant to such
notice and pursuant to the pertinent provisions of the act and
regulations thereunder; and"
"4. Said code of fair competition constitutes a code of fair
competition, as contemplated by the act, and complies in all
respects with the pertinent provisions of the act, including
clauses (1) and (2) of subsection (a) of section 3 of title I of
the act; and"
"5. It appears, after due consideration, that said code of fair
competition will tend to effectuate the policy of Congress as
declared in section 1 of title I of the act."
I, Franklin D. Roosevelt, President of
the United States, pursuant to the authority vested in me by title
I of the National Industrial Recovery Act, approved June 16, 1933,
and otherwise, do hereby approve said Code of Fair Competition for
the Live Poultry Industry in the Metropolitan Area in and about the
City of New York."
"FRANKLIN D. ROOSEVELT,"
"President of the United States
"The White House, "
April 13, 1934.
The Administrator for Industrial Recovery stated in his report
that the Code had been sponsored by trade associations representing
about 350 wholesale firms, 150 retail shops, and 21 commission
agencies; that these associations represented about 90 percent of
the live poultry industry by numbers and volume of business, and
that the industry, as defined in the Code, supplied the consuming
public with practically all the live poultry coming into the
metropolitan area from forty-one States, and transacted an
aggregate annual business of approximately ninety million dollars.
He further said that about 1610 employees were engaged in the
industry; that it had suffered severely on account of the
prevailing economic conditions and because of unfair methods of
competition and the abuses that had developed as a result of the
"uncontrolled methods of doing business," and that these conditions
had reduced the number of employees by approximately 40 percent. He
added that the report of the Research and Planning Division
indicated that the Code would bring about an increase in wages of
about 20 percent in this industry, and an increase in employment of
The prohibition in the Code (Art. VII, § 14) was as follows:
-- The use, in the wholesale
slaughtering of poultry, of any method of slaughtering other that
'straight killing,' or killing on the basis of official grade.
Purchasers may, however, make selection of a half-coop, coop, or
coops, but shall not have the right to make any selection of
See Ex parte
4 Wall. 2, 71 U. S. 120
71 U. S. 121
Home Building & Loan Assn v. Blaisdell, 290 U.
, 290 U. S.
That section, under the heading "Declaration of Policy," is as
"Section 1. A national emergency productive of widespread
unemployment and disorganization of industry, which burdens
interstate and foreign commerce, affects the public welfare, and
undermines the standards of living of the American people, is
hereby declared to exist. It is hereby declared to be the policy of
Congress to remove obstructions to the free flow of interstate and
foreign commerce which tend to diminish the amount thereof, and to
provide for the general welfare by promoting the organization of
industry for the purpose of cooperative action among trade groups,
to induce and maintain united action of labor and management under
adequate governmental sanctions and supervision, to eliminate
unfair competitive practices, to promote the fullest possible
utilization of the present productive capacity of industries, to
avoid undue restriction of production (except as may be temporarily
required), to increase the consumption of industrial and
agricultural products by increasing purchasing power, to reduce and
relieve unemployment, to improve standards of labor, and otherwise
to rehabilitate industry and to conserve natural resource."
case collected in Nims on Unfair Competition and
Trade-Marks, Chap. I, § 4, p. 19, and Chap. XIX.
Act of September 26, 1914, c. 11, 38 Stat. 717, 719, 720.
The Tariff Act of 1930 (§ 337, 46 Stat. 703), like the Tariff
Act of 1922 (§ 316, 42 Stat. 943), employs the expressions "unfair
methods of competition" and "unfair acts" in the importation of
articles into the United States, and in their sale,
"the effect or tendency of which is to destroy or substantially
injure an industry, efficiently and economically operated in the
United States, or to prevent the establishment of such industry, or
to restrain or monopolize trade and commerce in the United
Provision is made for investigation and findings by the Tariff
Commission, for appeals upon questions of law to the United States
Court of Customs and Patent Appeals, and for ultimate action by the
President when the existence of any " such unfair method or act" is
established to his satisfaction.
See Note 9
Act of July 26, 1866, c. 262, 14 Stat. 251; Jackson v.
Roby, 109 U. S. 440
109 U. S. 441
Erhardt v. Boaro, 113 U. S. 527
113 U. S. 535
Butte City Water Co. v. Baker, 196 U.
, 196 U. S.
Act of March 2, 1893, c.196, 27 Stat. 531; St. Louis, I. M.
& So. Ry. Co. v. Taylor, 210 U. S. 281
210 U. S.
Act of February 23, 1927, c. 169, 44 Stat. 1162, as amended by
the Act of March 28, 1928, c. 263, 45 Stat. 373.
Act of September 21, 1922, c. 356, Title III, § 315, 42 Stat.
MR. JUSTICE CARDOZO, concurring.
The delegated power of legislation which has found expression in
this code is not canalized within banks that keep it from
overflowing. It is unconfined and vagrant, if I may borrow my own
words in an earlier opinion. Panama Refining Co. v. Ryan,
293 U. S. 388
293 U. S.
This court has held that delegation may be unlawful, though the
act to be performed is definite and single, if the necessity, time
and occasion of performance have been left in the end to the
discretion of the delegate. Panama Refining Co. v. Ryan,
I thought that ruling went too far. I pointed out in an
opinion that there had been "no grant to the Executive of any
roving commission to inquire into evils and then, upon discovering
them, do anything he pleases." 293 U.S. at p. 293 U. S. 435
Choice, though within limits, had been given him "as to the
occasion, but none whatever as to the means." Ibid.
in the case before us, is an attempted delegation not confined to
any single act nor to any class or group of acts identified or
described by reference to a standard. Here, in effect, is a roving
commission to inquire into evils and, upon discovery, correct
Page 295 U. S. 552
I have said that there is no standard, definite or even
approximate, to which legislation must conform. Let me make my
meaning more precise. If codes of fair competition are codes
eliminating "unfair" methods of competition ascertained upon
inquiry to prevail in one industry or another, there is no unlawful
delegation of legislative functions when the President is directed
to inquire into such practices and denounce them when discovered.
For many years, a like power has been committed to the Federal
Trade Commission with the approval of this court in a long series
of decisions. Cf. Federal Trade Comm'n v. Keppel &
Bro., 291 U. S. 304
291 U. S. 312
Federal Trade Comm'n v. Raladam Co., 283 U.
, 283 U. S. 648
Federal Trade Comm'n v. Gratz, 253 U.
. Delegation in such circumstances is born of the
necessities of the occasion. The industries of the country are too
many and diverse to make it possible for Congress, in respect of
matters such as these, to legislate directly with adequate
appreciation of varying conditions. Nor is the substance of the
power changed because the President may act at the instance of
trade or industrial associations having special knowledge of the
facts. Their function is strictly advisory; it is the imprimatur of
the President that begets the quality of law. Doty v. Love,
p. 295 U. S. 64
the task that is set before one is that of cleaning house, it is
prudent, as well as usual, to take counsel of the dwellers. But
there is another conception of codes of fair competition, their
significance and function, which leads to very different
consequences, though it is one that is struggling now for
recognition and acceptance. By this other conception, a code is not
to be restricted to the elimination of business practices that
would be characterized by general acceptation as oppressive or
unfair. It is to include whatever ordinances may be desirable or
helpful for the wellbeing or prosperity of the industry
Page 295 U. S. 553
affected. In that view, the function of its adoption is not
merely negative, but positive -- the planning of improvements as
well as the extirpation of abuses. What is fair, as thus conceived,
is not something to be contrasted with what is unfair or fraudulent
or tricky. The extension becomes as wide as the field of industrial
regulation. If that conception shall prevail, anything that
Congress may do within the limits of the commerce clause for the
betterment of business may be done by the President upon the
recommendation of a trade association by calling it a code. This is
delegation running riot. No such plenitude of power is susceptible
of transfer. The statute, however, aims at nothing less, as one can
learn both from its terms and from the administrative practice
under it. Nothing less is aimed at by the code now submitted to our
The code does not confine itself to the suppression of methods
of competition that would be classified as unfair according to
accepted business standards or accepted norm of ethics. It sets up
a comprehensive body of rules to promote the welfare of the
industry, if not the welfare of the nation, without reference to
standards, ethical or commercial, that could be known or predicted
in advance of its adoption. One of the new rules, the source of ten
counts in the indictment, is aimed at an established practice, not
unethical or oppressive, the practice of selective buying. Many
others could be instanced as open to the same objection if the
sections of the code were to be examined one by one. The process of
dissection will not be traced in all its details. Enough at this
time to state what it reveals. Even if the statute itself had fixed
the meaning of fair competition by way of contrast with practices
that are oppressive or unfair, the code outruns the bounds of the
authority conferred. What is excessive is not sporadic or
superficial. It is deep-seated and pervasive.
Page 295 U. S. 554
The licit and illicit sections are so combined and welded as to
be incapable of severance without destructive mutilation.
But there is another objection, far-reaching and incurable,
aside from any defect of unlawful delegation.
If this code had been adopted by Congress itself, and not by the
President, on the advice of an industrial association, it would
even then be void unless authority to adopt it is included in the
grant of power "to regulate commerce with foreign nations a among
the several states." United States Constitution, Art. I, § 8,
I find no authority in that grant for the regulation of wages
and hours of labor in the intrastate transactions that make up the
defendants' business. As to this feature of the case, little can be
added to the opinion of the court. There is a view of causation
that would obliterate the distinction between what is national and
what is local in the activities of commerce. Motion at the outer
rim is communicated perceptibly, though minutely, to recording
instruments at the center. A society such as ours "is an elastic
medium which transmits all tremors throughout its territory; the
only question is of their size." Per Learned Hand, J., in the court
below. The law is not indifferent to considerations of degree.
Activities local in their immediacy do not become interstate and
national because of distant repercussions. What is near and what is
distant may at times be uncertain. Cf. Chicago Board of Trade
v. Olsen, 262 U. S. 1
is no penumbra of uncertainty obscuring judgment here. To find
immediacy or directness here is to find it almost everywhere. If
centripetal forces are to be isolated to the exclusion of the
forces that oppose and counteract them, there will be an end to our
To take from this code the provisions as to wages and the hours
of labor is to destroy it altogether. If a trade or an industry is
so predominantly local as to be exempt
Page 295 U. S. 555
from regulation by the Congress in respect of matters such as
these, there can be no "code" for it at all. This is clear from the
provision of § 7a of the Act, with its explicit disclosure of the
statutory scheme. Wages and the hours of labor are essential
features of the plan, its very bone and sinew. There is no
opportunity in such circumstances for the severance of the infected
parts in the hope of saving the remainder. A code collapses utterly
with bone and sinew gone.
I am authorized to State that MR. JUSTICE STONE joins in this