That guarantee was contained in section 7 a of title I and proved to be the most enduring legacy of NIRA. The Senate eventually approved the bill by a margin of seven votes. NIRA was divided into three sections, or titles. Title I promoted centralized economic planning by instituting codes of fair competition for industry. The codes were intended to arrest the downward spiral of the economy in which high unemployment depressed wages, which decreased public purchasing power, leading to lower prices and profits as desperate businesses tried to undersell one another , putting further downward pressure on wages.
It was hoped that organized cooperation between business and government would correct what was perceived by some to be waste and inefficiency in the free-market economy. NRA began its work with great fanfare and initially received enthusiastic public support. A massive public relations campaign included the largest parade in the history of New York City. The NRA began to work with businesses to establish the mandated codes for fair competition, which were to be exempt from the antitrust laws.
Cooperation to this extent among competing businesses would ordinarily be prohibited. Industrial groups first submitted proposed codes to the president for his approval. The president was to approve the codes only if the submitting organization did not restrict membership and was representative of the industry and if the codes themselves promoted the policy of the act.
Codes were to neither foster monopolies nor discriminate against small businesses. Once approved, the codes became legally enforceable standards for that trade or industry. Under section 3 c of the act, federal district courts had jurisdiction over code violations, and U. Under Section 7 a , industry codes were required to include provisions for the protection of labor.
Section 7 a also provided that an employee must not be required to join a company union or be prevented from joining any other union as a condition of employment. Section 7 a was to have such far-reaching consequences that some labor historians have called it the Magna Charta of the labor movement.
Nationwide, union membership grew dramatically. The Amalgamated Clothing Workers, for example, doubled its membership from 60, to , between early and mid Under the supervision of the NRA, several hundred industry codes were rapidly enacted, but public support soon diminished. The codes tended to increase efficiency and employment, improve wages and hours, prevent price cutting and unfair competition, and encourage collective bargaining. The Bill of Rights Institute engages, educates, and empowers individuals with a passion for the freedom and opportunity that exist in a free society.
Use this narrative after students have read the Chapter 12 Introductory Essay: to introduce the New Deal and the National Recovery Administration. Drawing on the examples of the Progressive Era, World War I, and the s, they sought government-business cooperation to rationalize and plan the economy and avert what they considered ruinous competition. This led to a rapid expansion of the federal regulatory state, with emergency powers to combat the Depression in the public interest. Businesses could once again collude to artificially lower production and raise prices for their goods, restoring profits so they could expand and hire workers again.
Johnson touted the NIRA as a voluntary rather than a compulsory industrial program, to make it more palatable to business leaders who were skeptical of government regulation. The NIRA was supposed to encourage democratic self-regulation by business, but instead it used the coercive power of the federal government. Johnson compared code violators to the biblical character of Judas Iscariot for betraying the public good. Not all were pleased, however.
Schechter Poultry Corporation. They ran two small kosher butcher shops in Brooklyn, New York, that practiced the Jewish dietary laws of kashrut. Kashrut requires that animals be treated humanely and imposes high standards of sanitation and health. Customers could also inspect the animals and reject any that seemed unfit to purchase. These standards attracted buyers who knew the Schechter brothers followed ethical standards while providing high-quality meat.
Under regulations established by the NRA, however, customers could not inspect chickens before buying them. The law forced the brothers to abandon their kashrut practices, putting their business in jeopardy. The Schechter brothers thought the NRA codes were oppressive and soon refused to abide by them. An appellate court upheld their conviction, and the case went to the Supreme Court.
He must put his hand in the coop when he buys from the slaughterhouse and take the first chicken that comes to hand. On May 27, , the Supreme Court rendered a unanimous decision in favor of the defendants in Schechter v. United States. He asserted the federal government had taken on expansive emergency powers during World War I and that the crisis of the Great Depression demanded it do so now.
Roosevelt was dissatisfied because he thought only the federal government had the power needed to solve the unprecedented economic crisis of the Depression.
This will mean that everything that this Administration has done of any moment will be nullified. Big business quickly grew to resent regulatory control by the government. Unlike the Agricultural Adjustment Act, which was also rejected by the court, the National Industrial Recovery Act was never reintroduced.
An enduring legacy of the act, however, was its support for collective bargaining rights Title I, Section 7 a , which was reaffirmed in the National Labor Relations Act of Such support allowed labor organizing to flourish over the following years.
See our summary of the NLRA, also on this web page. Title II of the act was much more successful. The PWA helped fund tens of thousands infrastructure projects across the nation, many of which we still utilize today.
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