FRANKLIN DELANO ROOSEVELT was inaugurated when the Great Depression was in full swing. Many Americans felt as if the country was months—if not days—away from breaking under the weight.

Thirteen million Americans were out of work, industry and the stock market were in free fall, and bank runs had become commonplace. Roosevelt needed ideas. Advisers told him to avoid consulting with industrial or political leaders, blam­ing them for creating the economic downfall to begin with. “Why not go to the universities of the country?” one suggested.

Out of this suggestion, Roos­evelt’s “Brain Trust” was born. The Brain Trust was an informal group of advisers that included Professor Rexford Tugwell and Justice Louis Brandeis. Their ideas would mani­fest in the large-scale expansion of the federal government known as the New Deal. But beyond that, their ideas would fundamentally alter the course of American government.

REXFORD TUGWELL HAD big ideas for fixing the flailing country through federal power—especially agriculture and housing. The rest of the Brain Trust would design agencies to address unemployment, trade, banking, and infrastructure.

Roosevelt wanted to approach the crisis in a military fashion. In his inaugural address, he said he needed “broad Executive power to wage a war against the emergency, as great as the power that would be given to me if we were in fact invaded by a foreign foe.”

This attitude fit perfectly with Tugwell, who once lamented that the first World War ended too soon. “We were on the verge of having an international industrial machine when peace broke. Only the Armi­stice prevented a great experiment in control of production, control of prices, and control of consumption.”

In Roosevelt’s first 100 days in office, he sent 15 bills to Congress that would create several new agen­cies which promised to properly manage the spiraling country. All 15 were passed.

Poster for the National Recovery Administration

This was itself a major shift. Despite Woodrow Wilson’s initial expansion of administrative government, historian Thomas McCraw notes that up until the 1930s, “only two important federal regulatory agencies existed: the Interstate Commerce Commission and the Federal Trade Commission. By the end of the 1930s, a bewildering maze of new government organizations had sprung up as if by magic.”

PERHAPS THE MOST ambitious New Deal program was the National Recovery Administration, or NRA. The NRA was tasked with ensur­ing “fair competition” by writing regulatory codes for hundreds of industries. The Depression had caused mass deflation, which caused prices to drop dramatical­ly for several years in a row. The theory was that the codes would restrict economic output to push up prices, standardize workplace practices and products, and “put people back to work,” as Roosevelt phrased it.

Author Amity Shlaes says the NRA was the end result of “a thousand articles and a thousand trends,” coming from “the trade unions, Stuart Chase, Tugwell, Sta­lin…Henry Ford and Mussolini’s Ital­ian model…”

Roosevelt was taking his “mili­tary approach” metaphor seriously. He put General Hugh Johnson in charge of the NRA, and Johnson dutifully led the agency like a mil­itary division. The NRA even had a militaristic logo, a blue eagle. The choice was telling. Eagles have represented imperial power since the time of the Holy Roman Empire. The eagle grasped a gear in one talon and electric bolts in the other, representing industry and power, with the slogan, “We do our part.”

General Johnson was fully on board with the idea of a govern­ment-planned economy. He was eager to do away with “the murder­ous doctrine of savage and wolfish individualism, looking to dog-eat-dog and devil take the hindmost.” Johnson was ready for economic war, warning, “May God have mercy on the man or group of men who attempt to trifle with this bird.”

He wasn’t alone. Workers and store owners across the country, desperate for help, were excited for this new agency. Many shops put the blue eagle in their storefronts to show support. Many others put it up to avoid harassment or boycotts.

The NRA’s authority was sweep­ing. Amity Shlaes describes how detailed the code was: “NRA code determined the precise components of macaroni; it determined what tailors could and could not sew. In the poultry industry the relevant line of code had barred consumers from picking their own chickens… The idea was to increase efficiency. If smaller businesses died out, that might be for the best anyhow.”

In one year, the NRA generated over 10,000 pages of new laws—more than the federal government had created in its entire existence up to that point.

Louis Brandeis liked the idea of regulating the economy. But from the beginning, he was skeptical of the NRA. His biographer Melvin Urofsky describes an early meeting with General Johnson: “Brandeis laid out his concerns about the NRA, namely, the impossibility of enforcement, the dangers to small businesses, and the innate ineffi­ciency of the big unit. He said that he thought Johnson as capable a man as any, but that he had an impossible job.”

THE AGRICULTURAL ADJUSTMENT ACT (AAA) was formed as the NRA’s agricultural twin. Similar to the NRA, the AAA set production quotas and mandated price floors on crops like wheat and cotton. It also tried a novel idea of paying farmers not to farm, hoping to sta­bilize the flailing industry.

The AAA started with high hopes, but within months of its inception, the brutal results of try­ing to artificially control prices were coming into view. Six million baby pigs were slaughtered and discarded in a year, farmers were paid to send off their pigs to be “tanked,” which killed and rendered the animal into an inedible mush of meat, guts, and bone. Janet Poppendieck describes teams of butchers working “all night to reduce the squealing backlog, and packers experimented with mass electrocution…”

Agricultural Adjustment agents slaughtering and burying government-purchased livestock during the Great Depression
Source: Nebraska State Historical Society

Similarly extreme measures were taken with crops. Trainloads of California oranges were soaked in kerosene to render them inedible. Dairies dumped milk into sewers. Wheat fields were intentionally left unharvested. Cows, sheep, and horses were left to starve.

Roosevelt asked for creative ideas, and Tugwell delivered.

The cruel irony of the AAA was how many Americans were starving too. Millions went undernourished while hogs were slaughtered and wheat fields rotted. In major cities, people dug through trash heaps for food. Entire communities lived on dandelions. One union activist of the time described apple orchards left intentionally to rot while “mil­lions of children…will not eat one apple this winter.”

The tragedy of it all inspired John Steinbeck’s classic novel The Grapes of Wrath. Steinbeck misattributed blame to greedy corporations, when blame really belonged to the AAA. But he was correct when he wrote, “There is a crime here that goes beyond denunciation. There is a sorrow here that weeping cannot symbolize.”

In addition to controlling food prices—and keeping food supplies low—the AAA raised a considerable amount of tax revenue. Tugwell be­lieved that “middlemen,” who took wholesale commodities and turned them around on the market, were inefficient parasites. He wanted government to eventually replace middlemen altogether, but in the meantime, he settled for taxing them to death.

The AAA did work, in a sense. Commodity prices rose. But un­employment remained high, as it would throughout the thirties. Many economists now argue that unem­ployment remained high precisely because of Tugwell and the Brain Trust. By limiting production so drastically, some two million share­croppers and farm laborers were put out of work. “The Depression was refusing to disappear,” Tugwell later wrote of the period.

Tugwell romanticized the power of nationalization during the Great War. The irony is that war-generated demand created a massive expansion of the agricul­tural economy. Janet Poppendieck explains that “[i]nflated wartime prices sent cropland values soar­ing, creating a land boom in many farm areas and fueling an enor­mous expansion of credit at high wartime interest rates.”

But Tugwell remained a true believer in the New Deal philoso­phy, even issuing a fine on his own father, the man whose struggles as a farmer inspired him to set about to change the world in the first place.

Brandeis was skeptical of the AAA. He thought that the most likely outcome was that the agency would result in fewer and fewer farmers owning more and more land, put­ting more farmers out of work. But Roosevelt’s advisers were confident that if the agency were challenged at the Supreme Court, they could still count on “the spiritual father of the New Deal.”

IN 1935, ROOSEVELT started an­other agency, called the Resettle­ment Administration or RA. Unlike the flurry of agencies started in his first 100 days, which were passed by Congress, the RA was created by executive order. Roosevelt was gradually bypassing Congress to achieve his will.

He put Tugwell in charge of the RA, whose mission was mass relocation of citizens. Rurally, his goal was to move 650,000 farmers off “submarginal” farmland and into relief camps. They construct­ed 95 such camps. The camps, which were poorly man­aged, inspired the setting of Steinbeck’s The Grapes of Wrath.

The camps were meant to be temporary. Tugwell hoped to move people into communal farms, which he thought would be far more efficient than private farming. Why not share tools, equipment, and land? This was the ex­periment he had longed for since his junket visit to the Soviet Union.

Rexford Tugwell (left) and President Franklin Delano Roosevelt visit the Greenbelt town in Maryland

Despite his longtime passion for agriculture, Tugwell thought industry was the future. He was much more interested in the RA’s “greenbelt towns” idea: govern­ment-planned-and-managed com­munities near centers of industry. He also saw the construction of these centrally planned cities as a source of temporary employ­ment, like other New Deal public works programs.

Seeds of the idea came from Stuart Chase’s book A New Deal, which expressed interest in “efficiently” planned cities, managed by experts—a vision both Chase and Tugwell had seen versions of in Russia some years before.

The RA’s pilot experiment was the Greenbelt Towns program. The first “Greenbelt” town was located just outside DC, near Ber­wyn, Maryland. The RA planned every detail of Greenbelt, from the buildings and businesses down to the landscaping. This was more ambitious than a communal farm. It was Tugwell’s chance to try out a fully managed city.

The government handpicked the first residents. The RA attempted to create demographic diversity by selecting Greenbelt residents from a variety of income levels and reli­gious beliefs. Blacks, however, were excluded. Roosevelt, visiting the completed site in 1936, remarked, “Although I have seen the blueprints of Greenbelt, the actual sight itself exceeds anything I have dreamed of. I wish everyone in the country could see it.”

DESPITE ITS HEROES’ welcome during its inception, the NRA quickly became controversial. Two years after Congress established the NRA, many congressmen had soured on it and were signaling that they might not renew the act in 1935. Business owners were increasingly regarding it as an out-of-control bureaucracy. Horror stories of its absurd regula­tions kept surfacing, like the New Jersey tailor who was imprisoned for pressing a suit for $0.35 instead of the code-mandated $0.40.

The constitutionality of the NRA was also increasingly being called into question. Despite so many of the NRA’s policies being absurd on their face, the Justice Department believed that everything they were doing was perfectly legal—they just needed the Supreme Court to agree.

So in 1934, in an attempt to legitimize the NRA and their all-en­compassing view of government, the Justice Department took the poultry industry to court.

The government went after poul­try businesses for multiple reasons. First, the poultry industry at the time had a reputation for corruption. Second, contaminated chicken from slaughterhouses and butchers with lax standards was a common cause of tuberculosis. Finally, poultry was an industry Tugwell and others sin­gled out as ideal for nationaliza­tion. Government lawyers planned to prove that an unregulated poultry industry was dangerous to consum­ers, and that only the NRA could protect public health.

The Justice Department’s case was against a family-run slaugh­terhouse in Brooklyn called A. L. A. Schechter, run by a group of Jewish brothers. NRA inspectors visited the Schechter brothers repeatedly throughout the summer of 1934 to look for code violations. It wasn’t hard to find them, given the sheer volume of the regulatory code. The Schech­ters were indicted on 60 counts, in­cluding some criminal charges.

Most of the violations were for codes related to worker hours and pay. But the big charges the DOJ would focus on were violating the “straight killing” code—letting cus­tomers select the chicken of their choice, and knowingly selling an unfit (sick) chicken.

A. L. A. Schechter was a ko­sher business—its unique val­ue-add was its strict adherence to Jewish dietary law in slaugh­tering poultry. This meant that the Schechters’ quality control wasn’t just a matter of good busi­ness. To the devout Schechters, it was an affront to God to sell an unhealthy chicken.

The “Sick Chicken Case,” as it be­came known, quickly went to court.

The Schechter brothers’ odds did not look favorable. They were lower-class, uneducated Jewish immigrants. Worse, the govern­ment viewed them as middlemen who took their cut from customers and producers, exactly the kind of thing Tugwell and other Brain Trusters hated.

Yet ironically, given the Schech­ters’ social status, Amity Shlaes argues that they were probably in favor of the NRA at its outset: “To people like the Schechters, the New Deal sounded good, for the old deal was problematic: their industry had declined steadily since the crash of 1929; by 1933, nearly a thousand of the 2,000 or so jobs in their field in the New York area had evapo­rated…. European immigrants as a collective had experienced life under a random ruler—a czar, a sa­distic regional governor, a Hapsburg emperor. This left people like the Schechters with a natural sympa­thy for the underdog, and the New Deal was a project undertaken in the name of the underdog.”

But now, they were the NRA’s enemies.

The Schechters were also charged with artificially keeping prices low, in violation of the code’s pricing rules. The broth­ers weren’t economists, but they understood the rules of the mar­ket. Shlaes recounts a telling ex­change: “‘Your price is not very stable, is it?’ a prosecutor asked Martin Schechter at one point, seeking to draw out evidence that Schechter was violating the code by undercutting with low prices. ‘The market isn’t stable,’ Schech­ter replied. It might be 15 cents today, the market quotation, and tomorrow 18 cents. ‘We got our prices according to what the mar­ket might be,’ answered Martin.”

The government attorneys be­lieved that the law could dictate the economy. The brothers knew otherwise. The market has its own rules, and they were following them. Low demand required lower prices, and vice versa. At a higher level, the argument didn’t make much economic sense. If the Schechters were keeping prices artificially low, they were lousy middlemen.

The Justice Department attor­neys attempted to paint the Schech­ters as ignorant. They’d make a note to the stenographer any time the defendants used improper En­glish, and pointed out their lack of training in agricultural economics.

When it came to chickens, how­ever, it was NRA inspectors who sounded ignorant. Joseph Schech­ter recalled one inspector could not tell the difference between chickens and roosters.

The major argument, that they “knowingly planned to sell an un­fit chicken,” didn’t really stand up to reality. Once health authorities dug deeper, the closest they found was one “eggbound” chicken—it had eggs lodged inside. Because it took an autopsy to reveal this, it would be hard to prove the Schechters sold it “knowingly.” Their attorney, in closing remarks, asked the jury, “Would you like to be put behind bars for a thing like this?”

Despite the government’s shaky arguments, the district court found the Schechters guilty. They were fined $7,425 (over $100,000 to­day adjusted for inflation). Joseph Schechter was sentenced to three months’ jail time, his brother Alex received two months, and the other brothers were sentenced to one month each. The brothers had nev­er been in any trouble before. They were humiliated. And they still had a business to run. Their appeal to the circuit court was denied. But they fought on and took their case all the way to the Supreme Court.

Fortunately for the Schechters, as their case was coming before the Supreme Court there was a change in national sentiment ris­ing against the NRA. People liked the goals: fair competition, stable prices, wage protection, sanitary food. But the agency’s heavy-hand­ed and punitive enforcement meth­ods were beginning to be exposed.

For example, the NRA prose­cuted a Pennsylvania man for not paying his employees the code rate for building batteries. The man showed NRA officials his annual profits ($2,531), and that he simply could not afford the dictated rate. The math just wasn’t there. The government prosecuted anyhow. His bail was set at $5,000, which he obviously couldn’t afford. He spent weeks in prison before his trial, which he lost.

It was also becoming clear that the NRA code wasn’t pro­tecting small businesses against bigger ones. Just the reverse was happening. Economist Robert Mur­phy describes how “big producers could raise prices without fear of losing market share, because the federal government itself would punish any ‘unpatriotic’ upstarts who dared try to undersell the large firms.” Farmers were becom­ing frustrated at the NRA’s han­dling of setting prices for items they needed to purchase, which was at odds with how the AAA was setting prices for what they sold. Roosevelt’s own administration even found that the NRA wasn’t working as intended. His National Recovery Review Board concluded that the codes benefited large corporations, while squeezing out small businesses.

The Court ruled unanimously in favor of the Schechter brothers and against the constitutionality of the NRA. Justice Hughes wrote, “extraordinary conditions do not cre­ate or enlarge constitutional power.” Justice Cardozo hit the NRA even harder, writing that the NRA was “a roving commission” in search of evils to fix, and a “delegation running riot.” The Schechters were finally vindicated.

Behind the scenes, Brandeis was furious. He had always hat­ed “bigness,” and bigness wasn’t excused just because it was government rather than a private company. After the decision, he found two White House advisers and scolded them: “This is the end of this business of centralization, and I want you to go back and tell the president that we’re not going to let this government centralize everything. It’s come to an end.”

Newspaper headlines agreed. One read, “America Stunned! Roo­sevelt’s Work Killed in 20 Minutes.

BY 1936, POLITICAL realities were setting in for the Roosevelt admin­istration. Rexford Tugwell had be­come a liability. Many in Congress found him far too socialist. The nickname “Rex the Red” caught on. After the DC Circuit Court ruled that the greenbelt project and commu­nal farms were an unconstitutional infringement on state’s rights, they were simply too controversial for the White House, and the RA was folded into another agency.

Tugwell resigned in November 1936. But his defeats kept com­ing. His idea of paying farmers not to farm by taxing middlemen was also found to be unconstitu­tional. The power to issue taxes belonged to Congress. As with the RA, the AAA was going well beyond “the powers delegated to the federal government,” as Jus­tice Roberts wrote in his decision. “The tax, the appropriation of the funds raised, and the direction for their disbursement, are but parts of the plan. They are but means to an unconstitutional end.”

Both the RA and AAA were de­feated as violating the Constitu­tion’s nondelegation doctrine—a principle of the government’s sep­aration of powers. Both were exec­utive agencies but were fundamen­tally acting as legislative bodies.

The agencies that Tugwell dreamed of being able to carry out his ideal of a nation completely controlled by government experts were officially dead.

THE NEW DEAL tested the limits of executive authority. They meant to declare war on a runaway economy, but the enemy in the crosshairs turned out to be the owners of small businesses like the Schechters.

Louis Brandeis’ decision to side with the Schechters against the NRA marked an end to the original Brain Trust. Brandeis was “the spiritual father” of the New Deal but its authoritarian and expansive implemen­tation was not what he envisioned. Bigness is what he opposed. And Roosevelt had brought an unprece­dented bigness to government.

Essayist Louis Menand argued that, “Roosevelt did not override the system, but it was a close call.” Perhaps that is true. But if Roo­sevelt didn’t override the system, he did demonstrate that by cut­ting down America’s separation of powers, you could transform the country away from freedom and toward the “experts.”