National Industrial Recovery Act
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The National Industrial Recovery Act (NIRA) of June 16, 1933, part of President Franklin Delano Roosevelt's New Deal, was a set of United States federal laws and codes that authorized the President to regulate businesses in the interests of promoting "fair" competition, supporting (that is, raising) prices and wages, creating jobs for unemployed workers, and stimulating the United States economy to recover from the Great Depression. The law created a National Recovery Administration (NRA), an executive agency exercising powers which Congress had delegated to it, to promote compliance on the part of corporations. Firms which voluntarily complied could display the Blue Eagle.
The NIRA was strongly supported by heads of industry, some of whom had helped draft the legislation. Gerald Swope, head of General Electric, was one of the first champions of this legislation which legalized cartels and encouraged government spending on public works. This increased spending benefited General Electric. Harry Harriman, president of the U.S. Chamber of Commerce, was a leading supporter of the legislation, arguing that "it constitutes a most important step in our progress towards business rehabilitation." Most large corporations supported it. Small, less efficient ones did not. This owed to the fact that the former had enjoyed above-average productivity gains for most of the 1910's and 1920's attributable to the application of electromagnetic power, while the latter had not. Not surprising, it was a small company that ultimately brought down the law.
The NIRA was overturned on May 27, 1935 when the Supreme Court of the United States ruled in the case Schechter Poultry Corp. v. United States (295 U.S. 495), sometimes called the "sick chicken" case, that the Act infringed upon states' authority, unreasonably stretched the Commerce Clause, and gave legislative powers to the executive branch in violation of the Nondelegation doctrine.
There is controversy over the effectiveness of this act. While it is easy to point to regions, businesses, and industries that benefitted, in some areas it was not successful in achieving its stated goals on a national level.
Section 7a dealt with labor issues and later found its way into the Wagner Act.
Origins
Had its roots in the writings of Simon Patten, Rexford Tugwell, and Thornstein Veblen. All three felt that the U.S. economy in the 1910's, 1920's and 1930's was underperforming. Technological change in the form of extremely-high throughput, continuous-flow production techniques, pioneered at the Ford Motor Company, had increased potential output significantly; income and expenditure, however, had not followed suit, resulting in overproduction/underincome.
While Henry Ford opposed Roosevelt's attempt at nudging the U.S. economy onto the higher growth path (as defined by the new technology), he nonetheless agreed with its basic underlying philosophy, namely increasing real wages. In fact, as early as 1914, Ford had instituted a NIRA of his own, by doubling nominal wages at his Highland Park plant (Five-dollar day).
The NIRA was also consistent with the writings of Howard Scott and Walter Rautenstrach, the two main architects of the Technocracy movement. Both felt that electrification had, by increasing potential output, opened up a significant gap between potential output and actual output, between potential real income and actual real income, and potential expenditure and actual expenditure. To rectify the situation, income (real and nominal) would have to rise.
External links
Readings
Weinstein, Michael 1980, Recovery and Redistribution under the NIRA. New York, NY: North Holland.
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