The National Recovery Administration (1933-1935)
When Franklin Delano Roosevelt was inaugurated in March 1933, one quarter of the nation’s work force, (representing approximately 13 million workers in the United States), was out of work. This was in the midst of the Great Depression, and even those fortunate enough to have jobs worked under unfavorable conditions. Overproduction in the 1920’s led to inflation, and in 1929 the Wall Street Crash flattened the United States’ economy. This infamous catastrophe resulted in a level of production in 1933 significantly less than what it had been just four years earlier.
The National Industrial Recovery Act of 1933 (NIRA) was signed by newly elected President Franklin D. Roosevelt on June 16, 1933. The new law created the National Recovery Administration (NRA).
The NRA began to work with businesses to establish the mandated codes for fair competition, which were to be exempt from the antitrust laws. Cooperation to this extent among competing businesses would ordinarily be prohibited. Industrial groups first submitted proposed codes to the president for his approval. The president was to approve the codes only if the submitting organization did not restrict membership and was representative of the industry and if the codes themselves promoted the policy of the act. Codes were to neither foster monopolies nor discriminate against small businesses. Once approved, the codes became legally enforceable standards for that trade or industry. Under section 3(c) of the act, federal district courts had jurisdiction over code violations, and U.S. district attorneys were given authority to seek court orders to compel violators to comply with the codes. Section 3(f) provided that any violation affecting interstate or foreign commerce was to be treated as a misdemeanor for which an offender could be fined not more than $500 for each offense; each day during which a violation occurred was to be regarded as a separate offense.
Under Section 7 (a), industry codes were required to include provisions for the protection of labor. Provisions for minimum wages and the right to collective bargaining were to increase workers’ deflated purchasing power, and limits on number of work hours were to increase employment by spreading the available hours of work among more employees. Section 7(a) also provided that an employee must not be required to join a company union or be prevented from joining any other union as a condition of employment.
Section 7(a) was to have such far-reaching consequences that some labor historians have called it the Magna Charta of the labor movement. Nationwide, union membership grew dramatically. The Amalgamated Clothing Workers, for example, doubled its membership from 60,000 to 120,000 between early 1933 and mid-1934. The United Mine Workers of America quadrupled its membership, from 100,000 to 400,000, less than a year after passage of NIRA.
Under the supervision of the NRA, several hundred industry codes were rapidly enacted, but public support soon diminished. The codes tended to increase efficiency and employment, improve wages and hours, prevent price cutting and unfair competition, and encourage collective bargaining. However, they also tended to raise prices and limit production. Businesses found the codes burdensome. More than 540 codes were promulgated, and it was not unusual for one business to be governed by several, or even several dozen, codes. The codes sometimes conflicted with each other, and businesses occasionally had to pay their workers different rates of pay at different times of the day. Moreover, labor was dissatisfied with the activities of the NRA regarding unions. Although it appears that Congress had intended Section 7(a) of NIRA to assist employees in self-organizing and in discouraging company unions, the NRA interpreted the section in a manner that favored neither labor nor management. Thus, although the NRA sought to ensure that the government protected workers from discrimination resulting from union membership, it did not actively seek to prohibit the creation of company unions, nor did it satisfy many in its efforts to protect the right of individuals not to be coerced into joining a union.
In spite of some NRA successes on behalf of labor—it ended child labor in the textile industry—many in the labor community alleged that the NRA’s interpretation of the labor provisions favored employers. Regardless of the NRA’s intentions in any given case, few staff members were available for enforcement, and codes were often easily manipulated or avoided.
Title II of NIRA created the Public Works Administration (PWA) to award $3.3 billion in contracts for the construction of public works. (The government did not directly employ workers on PWA projects, as it did in a laterNew Deal program with a similar name, the Works Progress Administration (WPA).) Secretary of the Interior Harold L. Ickes ran the PWA. Ickes was scrupulously honest in choosing projects and awarding contracts, and he insisted that funds not be wasted. He was successful in that respect, with the result that the benefits of the public works provisions of NIRA were realized too slowly to have much immediate effect on national recovery.
Nevertheless, the PWA did oversee an enormous number and variety of public works projects, including schools, hospitals, post offices, courthouses, roads, bridges, water systems, and waste treatment plants. Its two most prominent projects were the construction of the Triborough Bridge in New York City and the completion of the Boulder (now called the Hoover) Dam on the Colorado River in Arizona. Ultimately the PWA completed more than 34,000 projects around the country.
In spite of the gradual success of the Public Works Administration, the NRA continued to lose the support of the public and its government sponsors. Three weeks before NIRA’s two-year expiration date, the Supreme Court unanimously declared it unconstitutional in Schechter Poultry Corp. v. United States, 295 U.S. 495, 55 S. Ct. 837, 79 L. Ed. 1570. The Court held that the act impermissibly delegated legislative power to the NRA and that the application of the act to commerce within the state of New York exceeded the powers granted to the federal government by the Commerce Clause. (The Commerce Clause gives Congress the power to regulate commerce between states, but not within an individual state.) In response to Schechter and to other decisions invalidating New Deal legislation, Roosevelt delivered a famous speech on May 31, 1935, in which he criticized the Supreme Court for employing “the horse and buggy definition of interstate commerce.” Subsequent New Deal legislation incorporated some elements of NIRA, most notably the labor provisions of Section 7(a), and ultimately survived the scrutiny of the Supreme Court.