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The National Industrial Recovery Act was passed in 1933 as part of President Roosevelt’s New Deal. It aimed to stimulate the economy and reduce unemployment by regulating industry and business, prohibiting child labor, setting a minimum wage, and funding public works projects. Antitrust laws were suspended, allowing for business cooperation and the elimination of unfair advantages. The law was largely unpopular and met with limited success, with codes of practice being declared unconstitutional in 1935.
The National Industrial Recovery Act is a piece of legislation that was passed in the United States in 1933 as part of President Franklin D. Roosevelt’s New Deal. This bold and controversial legislation gave the president the power to regulate and control industry and business in order to stimulate the economy and reduce unemployment. The legal provisions prohibited child labour, defined maximum working hours, set a minimum wage and protected collective bargaining rights. It has also earmarked US$3.3 billion for public works projects.
Under the law, antitrust laws were suspended, allowing monopolies and cartels to operate. The president and his advisers, acting on the belief that unrestrained competition was partly responsible for the Great Depression, used provisions of the National Industrial Recovery Act to force business cooperation and eliminate practices that gave one business an unfair advantage on another. Businesses have been directed to draft codes of practice, industry-wide policies that regulate wages, prices and practices. The newly formed National Recovery Administration (NRA) was responsible for overseeing the drafting and implementation of these codes.
After the codes were drafted, they were sent to the White House for approval. The codes had to be inclusive and could not discriminate against small businesses or hinder trade. Compliant industries were encouraged to display signs featuring a blue eagle, the NRA logo and the message “Do Our Part”.
New labor laws have been put in place to level the playing field and deny any company an unfair advantage. A cap on hours worked forced employers to hire more workers, and a minimum wage ensured that workers had real purchasing power. The law also encouraged collective bargaining with the intention of using industrial action rather than overregulating and controlling the industry.
The public works provisions of the National Industrial Recovery Act sought to further reduce unemployment by implementing an unprecedented level of government spending on roads and other infrastructure projects. Highways, railway lines, schools, hospitals, courthouses, post offices, water treatment plants and dams were built.
However, the law was largely unpopular and met with only limited success. Companies didn’t like the law’s restrictions on labor costs and prices. The unions felt that while it marked some progress for workers, it did not go far enough and still benefited the employer. Funding for public works projects flowed too slowly to have an effect on employment and the economy. In 1935, a Supreme Court decision declared codes of practice unconstitutional and their use ended.
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