National Industrial Recovery Act of 1933
The National Industrial Recovery Act of 1933 was a US labor law and consumer law passed by the 73rd US Congress to authorize the president to regulate industry for fair wages and prices that would stimulate economic recovery. It also established a national public works program known as the Public Works Administration. The National Recovery Administration portion was widely hailed in 1933, but by 1934 business opinion of the act had soured.
The legislation was enacted in June 1933 during the Great Depression as part of President Franklin D. Roosevelt's New Deal legislative program. Section 7 of the bill, which protected collective bargaining rights for unions, proved contentious. Congress eventually enacted the legislation and President Roosevelt signed the bill into law on June 16, 1933. The Act had two main titles. Title I was devoted to industrial recovery, authorizing the promulgation of industrial codes of fair competition, guaranteed trade union rights, permitted the regulation of working standards, and regulated the price of certain refined petroleum products and their transportation. Title II established the Public Works Administration, outlined the projects and funding opportunities it could engage in. Title II also provided funding for the Act.
The act was implemented by the NRA and the PWA. Large numbers of regulations were generated under the authority granted to the NRA by the Act, which led to a significant loss of business support for the legislation. NIRA was set to expire in June 1935, but in a major constitutional ruling the Supreme Court held Title I of the Act unconstitutional on May 27, 1935, in Schechter Poultry Corp. v. United States.
The National Industrial Recovery Act is widely considered a policy failure, both in the 1930s and by historians today. Disputes over the reasons for this failure continue. Among the suggested causes are that the act promoted economically harmful monopolies, lacked critical support from the business community, and that it was poorly administered. The NIRA had no mechanisms for handling these problems, which led Congress to pass the National Labor Relations Act in 1935. The act was also a major force behind a major modification of the law criminalizing making false statements.
Background
The Depression began in the United States in October 1929 and grew steadily worse to its nadir in early 1933. President Herbert Hoover feared that too much intervention or coercion by the government would destroy individuality and self-reliance, which he considered to be important American values. His laissez-faire views appeared to be shared by the Secretary of the Treasury Andrew W. Mellon. To combat the growing economic decline, Hoover organized a number of voluntary measures with businesses, encouraged state and local government responses, and accelerated federal building projects. However, his policies had little or no effect on economic recovery. Toward the end of his term, however, Hoover supported several legislative solutions which he felt might lift the country out of the depression. The final attempt of the Hoover administration to rescue the economy was the passage of the Emergency Relief and Construction Act and the Reconstruction Finance Corporation .Hoover was defeated for re-election by Roosevelt in the 1932 presidential election. Roosevelt was convinced that federal activism was needed to reverse the country's economic decline. In his first hundred days in office, the Congress enacted at Roosevelt's request a series of bills designed to strengthen the banking system, including the Emergency Banking Act, the Glass–Steagall Act, and the 1933 Banking Act. The Congress also passed the Agricultural Adjustment Act to stabilize the nation's agricultural industry.
Enactment
of the National Industrial Recovery Act climaxed the first 100 days of Roosevelt's presidency. Hugh S. Johnson, Raymond Moley, Donald Richberg, Rexford Tugwell, Jerome Frank, and Bernard Baruch—key Roosevelt advisors—believed that unrestrained competition had helped cause the Great Depression and that government had a critical role to play through national planning, limited regulation, the fostering of trade associations, support for "fair" trade practices, and support for "democratization of the workplace". Roosevelt, himself the former head of a trade association, believed that government promotion of "self-organization" by trade associations was the least-intrusive and yet most effective method for achieving national planning and economic improvement.Some work on an industrial relief bill had been done in the weeks following Roosevelt's election, but much of this was in the nature of talk and the exchange of ideas rather than legislative research and drafting. The administration, preoccupied with banking and agriculture legislation, did not begin working on industrial relief legislation until early April. Congress, however, was moving on its own industrial legislation. In the Senate, Robert F. Wagner, Edward P. Costigan, and Robert M. La Follette, Jr. were promoting public works legislation, and Hugo Black was pushing short-work-week legislation. Motivated to work on his own industrial relief bill by these efforts, Roosevelt ordered Moley to work with these Senators to craft a bill. Overburdened, Moley delegated this work to Hugh S. Johnson.
By May 1933, two draft bills had emerged, a cautious and legalistic one by John Dickinson and an ambitious one focusing on trade associations by Hugh Johnson. Many leading businessmen—including Gerard Swope, Charles M. Schwab, E. H. Harriman, and Henry I. Harriman, president of the U.S. Chamber of Commerce—helped draft the legislation. A two-part bill, the first section promoting cooperative action among business to achieve fair competition and provide for national planning and a second section establishing a national public works program, was submitted to Congress on May 15, 1933.
The House of Representatives easily passed the bill in just seven days. The most contentious issue was the inclusion of Title 1, Section 7, which protected collective bargaining rights for unions. Section 7 was nearly eliminated from the bill, but Senator Wagner, Jerome Frank, and Leon Keyserling worked to retain the section in order to win the support of the American labor movement. According to one study
... The capitalist’s opposition to section 7a in congressional hearings was not convincing enough to persuade an overwhelmingly urban liberal Democratic Congress. As Kenneth Finegold and Theda Skocpol have correctly pointed out, congressional Democrats were eager to consolidate their electoral majorities by supporting and enacting prolabor legislation. With the urban industrial working class becoming a major electoral bloc for urban Democrats, it is not surprising that pressures from industrial workers, both employed and unemployed, played a major role not only in moving congressional Democrats to favour prolabor legislation but also in moving the Democratic party itself left of center.”
The bill had a more difficult time in the Senate. The National Association of Manufacturers and Chamber of Commerce opposed its passage due to the labor provision. Despite the positions of these two important trade associations, most businesses initially supported the NIRA. Senator Bennett Champ Clark introduced an amendment to weaken Section 7, but Wagner and Senator George W. Norris led the successful opposition to the change. The bulk of the Senate debate, however, turned on the bill's suspension of antitrust law. Senators William E. Borah, Burton K. Wheeler, and Hugo Black opposed any relaxation of the Sherman Antitrust Act, arguing that this would exacerbate existing severe economic inequality and concentrate wealth in the hands of the rich. Wagner defended the bill, arguing that the bill's promotion of codes of fair trade practices would help create progressive standards for wages, hours, and working conditions, and eliminate sweatshops and child labor. The Senate passed the amended legislation 57-to-24 on June 9.
A House–Senate conference committee met throughout the evening of June 9 and all day June 10 to reconcile the two versions of the bill, approving a final version on the afternoon of June 10. The House approved the conference committee's bill on the evening of June 10. After extensive debate, the Senate approved the final bill, 46-to-39, on June 13. President Roosevelt signed the bill into law on June 16, 1933.
Structure of the Act
The National Industrial Recovery Act had two major titles.Title I was devoted to industrial recovery. Title I, Section 2 empowered the President to establish executive branch agencies to carry out the purposes of the Act, and provided for a sunset provision nullifying the Act in two years. The heart of the Act was Title I, Section 3, which permitted trade or industrial associations to seek presidential approval of codes of fair competition and provided for enforcement of these codes. Title I, Section 5 exempted the codes from the federal antitrust laws.
Title I, Section 7 guaranteed the right of workers to form unions and banned yellow-dog contracts:
... employees shall have the right to organize and bargain collectively through representatives of their own choosing, and shall be free from the interference restraint, or coercion of employers of labor, or their agents, in the designation of such representatives or in self-organization or in other concerted activities for the purpose of collective bargaining or other mutual aid or protection;that no employee and no one seeking employment shall be required as a condition of employment to join any company union or to refrain from joining, organizing, or assisting a labor organization of his own choosing....
Title I, Section 7 permitted the establishment of standards regarding maximum hours of labor, minimum rates of pay, and working conditions in the industries covered by the codes, while Section 7 authorized the President to impose such standards on codes when voluntary agreement could not be reached.
Title I, Section 9 authorized the regulation of oil pipelines and prices for the transportation of all petroleum products by pipeline. Section 9 permitted the executive to take over any oil pipeline company, subsidiary, or business if the parent company was found in violation of the Act.
Title II established the Public Works Administration. Title II, Section 201 established the agency and provided for a two-year sunset provision. Section 202 outlines the types of public works which the new agency may seek to fund or build. Title II, Section 203 authorized the Public Works Administration to provide grants and/or loans to states and localities in order to more rapidly reduce unemployment as well as to use the power of eminent domain to seize land or materials to engage in public works. Title II, Section 204 explicitly provided $400 million for the construction of public highways, bridges, roads, railroad crossings, paths, and other transportation projects.
Title II, Section 208 authorized the president to expend up to $25 million to purchase farms for the purpose of relocating individuals living in overcrowded urban areas to these farms and allowing them to raise crops and earn a living there.
Title II, Sections 210–219 provided for revenues to fund the Act, and Section 220 appropriated money for the Act's implementation.
Title III of the Act contained miscellaneous provisions, and transferred the authority to engage in public works from the Reconstruction Finance Corporation to the Public Works Administration.