http://fc.mosesbrown.org/~dmacleod/NDandSupremeCourt.html
Schecter, Butler and the Court Packing Plan 
From the very first, the New Dealers were haunted by the fear that the Supreme Court would hold reform legislation unconstitutional. Four member of the bench - James McReynolds, George Sutherland, Willis Van Devanter, and Pierce Butler - were tenacious conservatives. If any one of the remaining five justices joined these four, the whole New Deal program might be impaired. Louis Brandeis, the scholastic Benjamin Cardozo, and the warm, wide-ranging Harlan Fiske Stone seemed safely in the liberal camp, but there were limits as to how great an extension of government power even they would approve. More likely to join the conservatives were the other two justices who occupied middle ground: Chief Justice Charles Evans Hughes and Owen Roberts, at fifty-eight the youngest member of the Court.
If the Court pursued the line of reasoning it had followed for much of the past decade, all was lost. The administration hoped it would be open to a different conception: that the depression constituted, in Justice Brandeis' words, "an emergency more serious than war." Consequently, New Deal lawyers festooned with early legislation with "emergency clauses." When the Court in January , 1934, in a 5-4 decision written by Chief Justice Hughes, upheld a Minnesota moratorium on mortgages, it indicated it might be receptive to such a view of the depression. "While emergency does not create power," Hughes states, "emergency may furnish the occasion for the exercise of power." Two months later, in another 5-4 decision, the Court, speaking through Justice Roberts, sustained a New York law which created a board empowered to set minimum and maximum retail prices for milk. To the horror of the conservatives, Roberts declared: "Neither property rights nor contract rights are absolute." The two decisions, Justice McReynolds wrote James Beck, meant "the end of the Constitution as you and I regarded it. An Alien influence has prevailed."
Both of these cases involved state laws; not until 1935 did a federal statute reach the Court. In January, 1935, the administration paid the price for its sloppy procedures in delegating powers and issuing edicts when the Court, despite a vigorous dissent by Cardozo, invalidated the "hot oil" provisions of the NIRA. Later that spring, Justice Roberts sent a chill through New Dealers when he joined the conservatives to find the Railroad Pension Act unconstitutional in yet another 5-4 decision. The future of the New Deal appeared to rest on the mind of Mr. Justice Roberts, and many feared he was permanently lost.
On Black Monday, May 27, 1935, the guillotine fell. In a unanimous 9-0 decision in the "sick chicken" case, the Court struck down the National Industrial Recovery Act. In 1934, the Schecter brothers, Brooklyn poultry jobbers, had been convicted of violating the NRA's Live Poultry code on several counts, including selling diseased chickens and violating the code's wage and hour stipulations. On two separate grounds, the Court questioned the constitutional basis for the prosecution of the Schecters. The NIRA's sweeping delegation of legislative power, declared Justice Cardozo, was "delegation running riot." Furthermore, the Court found the Schecter's business was in intrastate commerce; hence the federal government had no authority to regulate working conditions in the firm. Not only had the Court destroyed Roosevelt's industrial recovery program but, by its narrow interpretation of the commerce clause, it threatened the remainder of the New Deal.
The major New Deal measure for dealing with the plight of the farmers, the Agricultural Adjustment Act of 1933, attempted to stabilize farm prices by levying a tax on the processing of agricultural commodities with which to pay subsidies to farmers who would agree to reduce the acreage sown to crops. In 1936, in a wretchedly argued opinion, Justice Roberts found that the levy of the tax was not a legitimate use of the taxing power but the "expropriation of money from one group for the benefit of the another." The opinion of the Court also found the AAA unconstitutional as "a statutory plan to regulate and control agricultural production, a matter beyond the powers delegated to the federal government." In a biting dissent, Justice Stone scolded the majority for this "tortured construction of the Constitution." "Courts are not the only agency of government that must be assumed to have capacity to govern."

The Butler decision wreaked havoc with Roosevelt's desire to balance the budget. It deprived the government of anticipated receipts from processing taxes, and the Court ordered the return to processors of $200 million already collected. 
The invalidation of the NRA in Schecter Poultry Corp. v. United States helped the Roosevelt administration to free itself from a mismanaged program that would soon have fallen of its own weight, but the reasoning of that and other opinions seemed to presage invalidation of such fundamental New Deal measures as the National Labor Relations Act, the proposed wage and hour law, and even the Social Security Act. Carter v. Carter Coal Co. deepened the concern. The Court held that Congress lacked power to legislate concerning wages and hours of bituminous coal miners, even though coal mining was a major national industry: [P]rodution is a purely local activity. It follows that none of these essential antecedents of production constitutes a transaction in or forms any part of interstate commerce."
President Roosevelt responded with strong criticism. The Schecter ruling, he said was evidence that the Court was still living "in the horse and buggy age": "[I]t may be the best thing that has happened to the country for a long time . . . because it clarifies the issue." On February 5, 1937, the President launched a direct attack upon the Court. In a special message to Congress he urged the enactment of a bill to create one new judgeship for every judge who was more than seventy years old but had failed to retire. The message spoke of the heavy burden upon the courts, particularly on the Supreme Court which, he asserted, had denied 87 per cent of petitions for hearings on appeal without citing its reasons. He wrote of the "delicate subject" of aged or infirm judges, and of the need for "a constant infusion of new blood." His proposal called for the appointment of as many but no more than six new justices to the Supreme Court and forty-four new judges to the lower federal tribunals.
The President's proposal presented Court packing not as a political ruse but a devotion to a principle: the retirement of aged judges in the interest of efficiency. No one, however, doubted the true purpose. Six of the nine Supreme Court Justices were older than seventy, including all four conservatives. By appointing six new Justices, President Roosevelt would ensure a majority ready to uphold the constitutionality of New Deal legislation. A month later the President addressed the nation more candidly by acknowledging that he hoped "to bring to the decision of social and economic problems younger men who have had personal experience and contact with modern facts and circumstances under which average men have to live and work."
The Court-packing plan was defeated despite the President's landslide victory at the polls only a few months earlier and despite the overwhelming popular support for New Deal legislation. The President's disingenuous explanation made the plan vulnerable to factual criticism. Justice Louis D. Brandeis, widely known as a progressive dissenter from his colleagues' conservative philosophy, joined Chief Justice Charles Evans Hughes in a letter to the Senate Judiciary Committee, demonstrating that the Court was fully abreast of its docket and would be less efficient if converted into a body of fifteen Justices. Although much of the opposition was partisan, the resistance to the Court-packing plan ran much deeper. At its source lay the American people's well-nigh religious attachment to constitutionalism and the Supreme Court, including their intuitive realization that packing the Court in order to reverse the course of its decisions would not only destroy its independence but erode the essence of constitutionalism in the United States.
Roosevelt had counted on conservative opposition and had probably anticipated some of the liberal defections, but he failed to reckon with the power of the Court itself. On March 29, in a 5-4 decision in which Roberts joined the majority, the Court upheld a Washington mimimum-wage law similar to the New York statute it had erased in the Morehead Case. Two weeks later, Roberts joined once more in a series of 5-4 rulings which found the Wagner Act constitutional. These decisions marked a turning point in the history of the Supreme Court. They upset the historic verdict in the Adkins Case and appeared quite contrary to the Court's rulings in the Carter and the Schecter cases.
On May 18, prodded by Senator Borah, Justice Van Devanter announced his retirement from the bench. Since Robert's "conversion" had given Roosevelt a 5-4 court willing to approve New Deal legislation, Van Devanter's departure made possible a 6-3 division. The need for drastic reform no longer seemed pressing. However, it would not be until July 22 that Roosevelt finally conceded defeat and the bill died.
Cox, Archibald: The Court and the Constitution ; Houghton Mifflin Co., 1987, pp 148-150
Leuchtenburg, William: Franklin Roosevelt and the New Deal ; Harper Torchbooks, 1963, pp 143-145, 170-171, 232-237
U.S. History Review Sheet: Chapter 26 <USH26.html>