IF THE Emergency Banking Act opened Roosevelt's "Hundred Days" the National Industrial Recovery Act closed it. When Congress passed it on June 16, 1933, many thought its proposed stimulation of industry and recuperation of consumer purchasing power were the keys to economic recovery. While the banking and farm bills were important first steps in the New Deal, many believed that "a rise in agricultural prices without corresponding stimulation of industry would be fatal to recovery." (Schlesinger, 87) Between 1929 and 1932, manufacturing production declined by 50% and the total value of finished commodities dropped from $38 billion to $17.5 billion. The central question remained, how should the government stimulate industry? Would it involve a business-government partnership? How would the American people and industry respond to a break from America's traditional "hands-off" economic policy?
It was clear that the old laissez-faire policies weren't working, but neither was government control of industry a viable option. Instead, the Roosevelt brain trust looked to a practice that had become common in the 1920s, whereas trade organizations would provide self-government for each industry. While averse to central controls, there was a movement for industrial coordination from many directions, including the businesses themselves. Industry wanted to protect prices and profits; trade unions to protect labor standards; and liberals sought some form of national planning.
The NIRA was finally signed on June 16, and was divided into two parts:
Title I, "Industrial Recovery" was "to promote the organization of industry for the purpose of cooperative action among trade groups."
Title II, "Public Works and Construction Projects" established the Public Works Administration, headed by Interior Secretary Harold Ickes, and appropriated it $3.3 billion.
But the NRA may have over promised results. Success was elusive as social compulsion (threat of removal of the blue eagle) came up short and enthusiasm faltered by fall. The primary obstacle was the argument over price fixing. Roosevelt wanted to keep prices down and industry wanted price fixing powers. Many felt that price policy was the key to either expanding or constricting the economy-prices had to be high enough to support the labor provisions but low enough for consumers to afford. By 1935 568 out of 700 codes had some form of minimum price provision (Ibid, 125). The NRA had not achieved its goals of re-employment and recovery and had failed to hold companies to their end of the labor provisions. Additionally, the PWA, run by the stingy Ickes, was not approving enough projects at a reasonable pace to channel money (as wages) into the economy.
Administrative shuffling, reversal of price policy and organizational contraction and restraint did not succeed in revitalizing the NRA. Due to expire in June of 1935, Roosevelt hesitantly called on Congress in February to renew the program. Before a judgment could be made, however, the decision was made by the Supreme Court. On May 27, 1935 in A.L.A. Schecter Poultry Corporation v. United States the Court, in a unanimous ruling, abrogated Title I of the NIRA as an "unconstitutional delegation of legislative power to the executive." The NRA, perhaps the program most associated with the New Deal, faded out of existence, to the relief of most, including the Roosevelt Administration.
The legacy of the NIRA is mixed. In 1935 the Research and Planning Division of its review board found that there was no increase in real wages in the previous year, and the increase in retail prices exceeded the gains in wages. The codes were never effectively enforced and economic recovery was stifled. But there were important and long-lasting results, only some of which measurable with financial indicators. During its six years of operation, the PWA would finance 34,508 projects at a cost of over $6 billion, with projects in all but three of the nation's over 3,000 counties, and employed over 500,000 workers in any given year. (Watkins, 145) Additionally, the legislation established a new labor policy and, in the National Labor Relations Board, had a body to enforce it.