THE NRA

The Emergency Banking Act was the first of an unprecedented flurry of legislation during the first three months of Roosevelt’s administration, a period known as the “Hundred Days.” Seizing on the sense of crisis and the momentum of his electoral victory, Roosevelt won rapid passage of laws he hoped would promote economic recovery. He persuaded Congress to create a host of new agencies, whose initials soon became part of the language of politics—NRA, AAA, CCC. Never in American history had a president exercised such power or so rapidly expanded the role of the federal government in people’s lives.

The centerpiece of Roosevelt’s plan for combating the Depression, the National Industrial Recovery Act, was to a large extent modeled on the government-business partnership established by the War Industries Board of World War I. Roosevelt called it “the most important and far-reaching legislation ever enacted by the American Congress.” The act established the National Recovery Administration (NRA), which would work with groups of business leaders to establish industry codes that set standards for output, prices, and working conditions. Thus, “cutthroat” competition (in which companies took losses to drive competitors out of business) would be ended. These industrywide arrangements would be exempt from antitrust laws.

The NRA reflected how even in its early days, the New Deal reshaped understandings of freedom. In effect, FDR had repudiated the older idea of liberty based on the idea that the best way to encourage economic activity and ensure a fair distribution of wealth was to allow market competition to operate, unrestrained by the government. And to win support from labor, section 7a of the new law recognized the workers’ right to organize unions—a departure from the “open shop” policies of the 1920s and a step toward government support for what workers called “industrial freedom.”

Headed by Hugh S. Johnson, a retired general and businessman, the NRA quickly established codes that set standards for production, prices, and wages in the textile, steel, mining, and auto industries.

Johnson launched a publicity campaign to promote the NRA and its symbol, the Blue Eagle, which stores and factories that abided by the codes displayed. But after initial public enthusiasm, the NRA became mired in controversy. Large companies dominated the codewriting process. An inquiry conducted by the labor lawyer Clarence Darrow in 1934 concluded that they used the NRA to drive up prices, limit production, lay off workers, and divide markets among themselves at the expense of smaller competitors. Many anti-union employers ignored section 7a. The government lacked the manpower to police the 750 codes in effect by 1935. The NRA produced neither economic recovery nor peace between employers and workers.

The Spirit of the New Deal, a 1933 cartoon in the Washington Star, depicts the federal government, through the National Recovery Administration, promoting peace between workers and employers.

If you find an error or have any questions, please email us at admin@erenow.org. Thank you!