National Recovery Administration
National Recovery Administration (NRA). The National Recovery Administration was the most ambitious effort ever to enact federal planning of the economy during peacetime. As such, it was the culmination of interest in planning that arose during the Progressive Era and climaxed during World War I when the War Industries Board (WIB) mobilized agriculture, industry, and transportation for the war effort. After the wartime planning ended, the urge to have expert, cooperative management of the economy, rather than competition held in check by antitrust legislation, remained strong. In the private sector it resulted in the creation of management and labor councils in several industries, the rise of organizations dedicated to planned conservation of natural resources, and expressions of admiration for state planning in revolutionary nations, especially Fascist Italy and Soviet Russia. Within the federal government, Herbert Hoover focused his work as secretary of commerce and then as president on fostering voluntary association between industry and government as a way to establish fair and efficient business practices.
Franklin Roosevelt also developed an interest in planning during his government service in World War I and was quick during his 1932 campaign for the presidency to endorse the recovery plan of the president of General Electric, Gerard Swope, to set up trade associations under the direction of the Federal Trade Commission and a national workmen's compensation law to provide a financial cushion for unemployed, disabled, and retired workers. After taking office Roosevelt summoned Swope to Albany for a talk and listened attentively to Rexford Tugwell and others in his "brains trust" who favored measures that would go beyond the self-regulation urged by Swope to outright government coordination of the economy. Out of those discussions arose the design for the National Industrial Recovery Act (NIRA), which was voted into law by Congress on 16 June 1933.
The NIRA and its implementing agency, the NRA, struck a balance between industrial self-regulation and governmental planning in an effort to serve the interests of all parties. The act authorized councils composed of representatives from industry, government, and consumer groups to draw up codes of fair wages and prices for each industry. To foster cooperative integration of the economy, rather than competition, the act suspended antitrust laws for those whose codes were accepted by the government. A group offering a code had to be truly representative of the trade or industry involved, and no code could be designed to promote monopoly or oppress or eliminate small enterprises. Every code also had to provide for maximum hours and minimum wages and abide by section 7a, guaranteeing freedom for workers to join their own unions. Within a year nearly all American industry was codified.
The NRA failed to live up to hopes that it would fundamentally reform the economy and lead to recovery with full employment. One problem was that the chief administrator, Hugh Johnson, chosen because of his energetic service in the WIB during World War I, proved to be unstable and failed to inspire cooperation. As Johnson engaged in promotional campaigns, feuds, and drinking bouts, businessmen exerted their advantage within the councils. They knew their industries' operations far better than government officials and consumer advocates and were well organized to advance self-interest. As a result, the 541 codes eventually completed tended to maintain high prices, low wages, and long hours. Consumer desire for more affordable goods was thwarted, as were plans to reduce unemployment by spreading the work around through shorter hours. Workers also soured on the promises of section 7a as NRA officials repeatedly allowed industries to form company unions, rather than deal with independent labor organizations.
The failure of the NRA dashed progressive hopes for a planned economy. Yet it did demonstrate that active governmental involvement in the running of the economy was possible. In particular, the NRA established the principle of maximum hours and minimum wages on a national basis, abolished child labor, and made collective bargaining a national policy, setting the stage for the transformation of organized labor.
By the time the authorization of the NIRA approached its end in early 1935, public support had dwindled, and the chances for renewal in Congress were in doubt. The Supreme Court then delivered the death blow in the case of Schechter Poultry Corporation v. United States (1935), which ruled that NRA codes were an unconstitutional delegation of legislative power and further violated the Constitution by regulating commerce within sovereign states. Although Congress acceded to the president's wish for renewal, the NRA had lost its powers and was terminated on 1 January 1936.
Bibliography
Brand, Donald R. Corporatism and the Rule of Law: A Study of the National Recovery Administration. Ithaca, N.Y.: Cornell University Press, 1988.
Hawley, Ellis W. The New Deal and the Problem of Monopoly: A Study in Economic Ambivalence. Princeton, N.J.: Princeton University Press, 1966. The classic work on the importance of the NRA to New Deal policy.
Himmelberg, Robert F. The Origins of the National Recovery Administration. New York: Fordham University Press, 1976.
