A. L. A. Schechter Poultry Corp. v. United States

No. 854

Argued May 2, 3, 1935

Decided May 27, 1935 *

295 U.S. 495

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE SECOND CIRCUIT

Syllabus



1. Extraordinary conditions, such as an economic crisis, may call for

extraordinary remedies, but they cannot create or enlarge constitutional

power.



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.



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.



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. 529 et seq.), 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. 542 et seq.).



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 provisions [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.



Held:



(1) The statutory plan is not simply one of voluntary effort; the "codes

of fair competition" are meant to be codes of laws.



(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.



(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.



(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.



(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 the President [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."



(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.



(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.



(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."



(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.



(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.



(11) Such a sweeping delegation of legislative power finds no support in

decisions of this Court defining and sustaining the [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.



(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.



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.



Held:



(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.



(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 [295 U.S. 499]

of transactions involved in that practical continuity of movement, are

inapplicable in this case.



(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. 544,

546.



(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.



(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.



(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.



(7) The provisions of the code which are alleged to have been violated

in this case are not a valid exercise of federal power. 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. [295 U.S. 519] HUGHES, J., lead opinion



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," and on an additional count for conspiracy to commit such

violations.  By 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. [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

marketmen.



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 [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 schochtim 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.  That section -- the pertinent provisions of

which are set forth in the margin -- authorizes the President to approve

"codes of [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 [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 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 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. 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 separate offense.



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 Connecticut.



The "industry" is defined as including every person engaged in the

business of selling, purchasing for resale, [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 "members."



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 Administrator."



The seventh article, containing "trade practice provisions," prohibits

various practices which are said to constitute [295 U.S. 525] "unfair

methods of competition."  The final article provides for verified

reports, such as the Secretary or Administrator may require, (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 this code. 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." 

[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, [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.



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. The charges

in the ten counts, respectively, were [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.



First.  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.  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 [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 Amendment --



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 crimes.



Second.  The question of the delegation of legislative power.  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.  The 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 [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 maintained.  Id., p. 421.



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 Company.  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. 414, 415, 430.  As to the "codes of fair competition," under  3

of the Act, the question is more fundamental.  [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, [295

U.S. 532] 604; Howe Scale Co. v. Wyckoff, Seaman & Benedict, 198 U.S.

118, 140; Hanover Milling Co. v. Metcalf, 240 U.S. 403, 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, 241, 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.{10}  Id., p. 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){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,

648, 649; Federal Trade Comm'n v. Keppel & Bro., 291 U.S. 304, 310-312. 

What are [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, 453; Federal Trade Comm'n v. Klesner, 280

U.S. 19, 27, 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, 73.  To 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.{12}



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 subject [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 conditions 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. Id.  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

[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.{13}



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 [295 U.S. 536] brief: 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. [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,{14} or, in matters of a more or less

technical nature, as in designating the standard height of drawbar.{15} 

But 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 [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.  First, 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.  Second, 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 [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. 88; Florida v. United States, 282 U.S. 194;

United States [295 U.S. 540] v. Baltimore & Ohio R. Co., 293 U.S. 454. 

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, 24, 25; Texas & Pacific Railway Co.

v. Gulf, Colorado & Santa Fe Ry. Co., 270 U.S. 266, 273; Chesapeake &

Ohio Ry. Co. v. United States, 283 U.S. 35, 42.



Similarly, we have held that the Radio Act of 1927{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. [295 U.S. 541]



In Hampton & Co. v. United States, 276 U.S. 394, the question related to

the "flexible tariff provision" of the Tariff Act of 1922.{17}  We held

that Congress had described its plan 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 States. 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 plan."  Id. pp. 404, 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. 409.  The Court fully recognized the

limitations upon the delegation of legislative power.  Id. pp. 408-411.



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 [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 legislative power.



Third.  The question of the application of the provisions of the Live

Poultry Code to intrastate transactions.  Although the 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 railroad [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, 632, 633;

Public Utilities Comm'n v. Landon, 249 U.S. 236, 245; Industrial

Association v. States, 268 U.S. 64, 78, 79; Atlantic Coast Line v.

Standard Oil Co., 275 U.S. 257, 267.



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" of 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.S. 375, 387,

388 [argument of counsel omitted in electronic version]; Lemke v.

Farmers Grain Co., 258 U.S. 50, 55; Stafford v. Wallace, 258 U.S. 495,

519; Chicago [295 U.S. 544] Board of Trade v. Olsen, 262 U.S. l, 35;

Tagg Bros. & Moorhead v. United States, 280 U.S. 420, 439.



(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, 27.  We said in Second Employers'

Liability Cases, 223 U.S. 1, 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.S. 342, 351, 352; Wisconsin

Railroad Comm'n v. Chicago, B. & Q. R. Co., 257 U.S. 563, 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, 310; Bedford Cut Stone Co. v. Stone Cutters

Assn., 274 U.S. 37, 46.



We recently had occasion, in Local 677 v. United States, 291 U.S. 293,

to apply this principle in connection with [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. 297, 299, 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 conspiracy [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" interstate commerce.



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., the effect 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, 410: 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, [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 State. See also Kidd

v. Pearson, 128 U.S. 1, 21; Heisler v. Thomas Collier Co., 260 U.S. 245,

259, 260.



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, 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, 410, 411;

United Leather Workers v. Herkert & Meisel Trunk Co., 265 U.S. 457,

464-467; Industrial Association v. United States, 268 U.S. 64, 82;

Levering & Garrigues Co. v. Morrin, 289 U.S. 103, 107, 108.  In the case

last cited, we quoted with approval the rule that had been stated and

applied in Industrial Association v. United States, supra, 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 [295 U.S. 548] as plainly to cause it to fall outside the

reach of the Sherman Act.



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 [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 power.



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 commerce.



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 that [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 Constitution.



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 power.



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. [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 Fifth

Amendment.



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. CARDOZO, J., concurring



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, 440.



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, supra.  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.

435.  Choice, though within limits, had been given him "as to the

occasion, but none whatever as to the means."  Ibid.  Here, 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 them. [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, 312; Federal Trade Comm'n v. Raladam Co., 283 U.S. 643,

648; Federal Trade Comm'n v. Gratz, 253 U.S. 421.  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, ante p. 64. 

When 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

[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 scrutiny.



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.  [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, Clause 3.



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.  There 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 federal system.



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 [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 opinion.

Footnotes HUGHES, J., lead opinion (Footnotes)



* 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.



1. 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."



2. The indictment contained 60 counts, of which 27 counts were dismissed

by the trial court, and on 14 counts, the defendants were acquitted.



3. Act of June 16, 1933, c. 90, 48 Stat. 195, 196; 15 U.S.C. 703.



4.



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:  Provided, 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 declared.



(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 amended.



(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 offense.



5. The Executive Order is as follows: EXECUTIVE ORDER



Approval of Code of Fair Competition for the Live Poultry Industry of

the Metropolitan Area in and about the City of New York.



Whereas, 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;



Now, therefore, 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.



Now, therefore, 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.



6. 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 19.2 percent.



7. The prohibition in the Code (Art. VII,  14) was as follows: Straight

Killing. -- 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 particular birds.



8. See Ex parte Milligan, 4 Wall. 2, 120, 121; Home Building & Loan Assn

v. Blaisdell, 290 U.S. 398, 426.



9. That section, under the heading "Declaration of Policy," is as

follows:



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.



10. See case collected in Nims on Unfair Competition and Trade-Marks,

Chap. I,  4, p. 19, and Chap. XIX.



11. Act of September 26, 1914, c. 11, 38 Stat. 717, 719, 720.



12. 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 States. 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.



13. See Note 9.



14. Act of July 26, 1866, c. 262, 14 Stat. 251; Jackson v. Roby, 109

U.S. 440, 441; Erhardt v. Boaro, 113 U.S. 527, 535; Butte City Water Co.

v. Baker, 196 U.S. 119, 126.



15. Act of March 2, 1893, c.196, 27 Stat. 531; St. Louis, I. M. & So.

Ry. Co. v. Taylor, 210 U.S. 281, 286.



16. Act of February 23, 1927, c. 169, 44 Stat. 1162, as amended by the

Act of March 28, 1928, c. 263, 45 Stat. 373.



17. Act of September 21, 1922, c. 356, Title III,  315, 42 Stat. 858,

941.

