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.

Chicago Tribune
June 16
The Nation
June 28
The New York Times

(click above for full cartoon)
A business-government partnership, it was decided, could provide "codes of fair competition" that would benefit industry, labor and consumers. Business would work with government "to prevent over-production, to prevent unfair wages, and to eliminate improper working conditions." (Schlesinger, 98)

A complex series of events and combination of individuals set the plan in motion and after many drafts, two groups of administration officials came up with separate proposals. Roosevelt had the groups work together and by May 15, a bill was ready for Congress. While the legislation passed the House in a week, it saw tougher times in the Senate. (The National Association of Manufacturers and Chamber of Commerce had a problem with some of the labor provisions.)

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."

The purpose of the NIRA was to put people back to work, raise the purchasing power of labor and elevate labor standards. Most importantly it was to create a unified American front in the domestic war against the Great Depression.
It provided for fair competition along with an anti-trust exemption for businesses and allowed for collective bargaining and labor standards for unions. Most importantly, it established the National Recovery Administration, which was to be headed by General Hugh Johnson. "Roosevelt saw the NRA as "the means for a long-run reform and reorganization of the economy." (Ibid, 104)

Title II, "Public Works and Construction Projects" established the Public Works Administration, headed by Interior Secretary Harold Ickes, and appropriated it $3.3 billion.

Eleanor Roosevelt hanging an
NRA sign: "We Do Our Part"
The NRA opened its doors on June 20, 1933. Its basis was the development of codes for each industry by which it would pledge itself to shorter hours, higher wages, better trade practices and better labor relations. Cooperation would be ensured by the codes, the use of federal licenses (which were never implemented) and a two-year exemption from anti-trust statutes. The problem remained enforcement: despite his enthusiasm for the program, Johnson had questions about the constitutionality of forced cooperation. Instead, he sought a way to implement a voluntary approach to industrial planning based on social compulsion. Using the terminology of war Johnson sought to enforce the codes through public opinion. He created the blue eagle as the symbol of the NRA and employed the slogan, "We Do Our Part." These would be provided to businesses and consumers who pledged compliance with the program and used to stigmatize those who did not. Over two million employers signed up and consumers signed a pledge of their own. The blue eagle was celebrated throughout the country and parades and speeches praised it. The NRA brought a cheerful attitude to the American public for the first time since the 20s.
The industry codes began to surge into Washington: 144 in the second half of July, 546 in August, and even the big industry holdouts like lumber, steel, oil and mining were on board by September (in the auto industry, the lone exception was Henry Ford).

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.

September 30, 1934

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.

Perhaps more important was the impact that the NRA had on the American people. As Arthur Schlesinger points out, while poorly administered and with questionable regulation, the NRA boosted national morale. As the sense of crisis waned, so did the foundation of the NRA. It is perhaps the perfect illustration of the psychological function thesis: the New Deal was not always about success or failure in relation to economic recovery. By uniting the American people and giving hope, the programs could succeed in providing hope and motivation where there was previously none.