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The Court distinguished between direct effects on interstate commerce, which Congress could lawfully regulate, and indirect, which were matters of purely state law. Though the raising and sale of poultry was an interstate industry, the Court found that the "stream of interstate commerce" had stopped in this case--Schechter's slaughterhouses bought chickens only from intrastate wholesalers and sold to intrastate buyers. Any interstate affect of Schechter was indirect, and therefore beyond federal reach.
Though many considered the NIRA a "dead statute" at this point in the New Deal scheme, the Court used its invalidation as an opportunity to impose limits on congressional power, for fear that it could otherwise reach virtually anything that could be said to "affect" interstate commerce and intrude on many areas of legitimate state power.
Justice Cardozo's concurring opinion clarified that a spectrum approach to direct and indirect effects is preferable to a strict dichotomy. Cardozo felt that in this case, Schechter was simply too small a player to be relevant to interstate commerce.
This narrow reading of the Commerce Clause was later disavowed by the Court, which began to read congressional power more expansively in this area. However, more recent cases such as United States v. LopezUnited States v. Lopez 514 U. 549 ( 1995) was the first modern United States Supreme Court case to set limits to Congress's lawmaking power. History Alfonso Lopez, Jr. carried a handgun and bullets into his high school, Edison High, San Antonio, Texas., 514 U.S. 549 ( 19951995 was a common year starting on Sunday (see link for calendar). It has a Golden number of 1, and was the first year of the International Decade of the World's Indigenous People (1995- 2005): http://www. org/culture/indigenous . Events January events Ja) perhaps signal a growing inclination in the Court to once again impose limits on its scope.