The National Recovery Administration, or NRA, was instituted in the wake of the passage of the National Industrial Recovery Act (NIRA) into law in 1933. The NIRA was one of the earliest efforts by President Franklin D. Roosevelt and his administration to ease the economic depression into which theUnited States had been plunged when the stock market crashed in 1929. The purpose of the NIRA was to encourage the formation of industrial cartels. Supposedly, the existence of cartels would put a stop to the cutthroat price-cutting that was integral to competitive business practices at the time yet would still allow businesses a reasonable profit; with these profits, they could afford to employ greater numbers of workers. In exchange, however, businesses had to set up a code, one of whose provisions, Section 7a, granted workers in that industry the right to bargain collectively "with representatives of their own choosing." Once the government cracked the door on collective bargaining, it was soon knocked down by labor organizers, who convinced workers that the president was essentially calling on them to join unions.
When Franklin D. Roosevelt (1882-1945) was sworn in as president in 1933, the economy of the United States was near total collapse. After declaring a bank holiday, Roosevelt and his administration set about creating policy to stimulate the economy. The Roosevelt administration was not the sole actor on this stage, however; at the instigation of the American Federation of Labor (AFL), Senator Hugo Black (1886-1971) of Alabama introduced legislation in April 1933 to decrease the workweek to 30 hours, a law that the Senate promptly approved. Roosevelt's advisors were opposed to this unilateral adjustment of wages and hours, however. They believed that it was bad policy for the government to arbitrarily set wages and hours; moreover, they were convinced that the United States Supreme Court would find such legislation unconstitutional. Therefore, the president's advisers sought to create mechanisms that facilitated a planned adjustment of factory output, hours, and wages based upon the rationalization of competitive conditions. Rather than oppose the Black bill, however, the administration proposed to replace it with another piece of legislation that would utilize this idea of rationalizing business competition.
The National Industrial Recovery Act, passed early in the summer during the famous First Hundred Days of the administration, was planned to "encourage national industrial recovery, to foster fair competition, and to provide for the construction of certain useful public works." In fact, the purpose of the act was to help steady the economy. The intent was to foster confidence on the part of the American public by stabilizing wages and creating more full-time jobs in which to earn these wages. President Roosevelt and Labor Secretary Frances Perkins (1882-1965) were less interested in supporting unionism than in raising labor standards. However, to gain the support of organized labor for the bill, Section 7a was added at the insistence of AFL president William Green (1873-1952), who thought the clause would guarantee workers the right to bargain collectively, which had long been a goal of the AFL.
To achieve these ends, advisors to Roosevelt proposed to allow the creation of a number of cartels, which were to be self-regulating and would allow members to control output, prices, and wages within the industry. When Roosevelt assumed the office of the presidency, fully 25 percent of American workers were without jobs, and many of those who had retained jobs were working only part-time. Advisors close to the president placed much of the blame for this condition upon the competitive nature of capitalism, in which companies tried both to increase sales of their product by cutting prices, and to control the costs of doing business by cutting wages.
To end this trend, members of the "brain trust" (an informal group of advisors consisting of Raymond Moley, Rexford G. Tugwell, and Adolph A. Berle, Jr.) proposed to allow industries to form cartels and regulate output among themselves, which would also allow them to regulate the wages of their workers at a higher rate than was the current practice at the time. Although Roosevelt's cousin (and political idol) Theodore Roosevelt made his reputation through his "trust-busting" activities, he had in fact broken up only those trusts that he determined were "bad" for the country. Rather than break up monopolies, however, the younger Roosevelt proposed to encourage their growth, as long as these cartels agreed to abide by certain conditions. Firms wishing to form a cartel had to submit their code to the administration for approval. These firms also had to pledge that they would not engage in monopolistic practices, especially those practices concerned with consumer prices, which would have to be submitted to the government for its approval. Members of a cartel were also restrained from prohibiting other firms within the industry from joining the cartel. Members within each cartel also had to agree to abide by Section 7a of the act, which guaranteed employees the rights of organization and collective bargaining.
To monitor this legislation, a new government agency was mandated, the National Recovery Administration (NRA). The NRA was led by a retired brigadier general, Hugh Johnson (1882-1942), who had served as the War Department representative on the War Labor Board during World War I. After resigning his commission in 1919, Johnson worked for financier Bernard Baruch and as an executive with Moline Plow. From his experience with government planning in World War I, Johnson became firmly convinced of the desirability of a government-business partnership in the management of the country's economy. Because of his service with the War Labor Board, Johnson also realized that the cooperation of labor was required in this endeavor, and to that end he recruited a leading labor lawyer, Donald Richberg, to assist him in the administration of the agency.
For the administration's point man in the Senate, Robert Wagner (1877-1953), Section 7a was the heart of the bill; indeed, he stated that he could not support the bill without its inclusion. Wagner had long been an advocate of legislative and administrative action to achieve fundamental social change. Wagner had been frustrated during the Hoover years (1928-1932) and complained that the potential of law to play a constructive role was limited by the belief that its role was to prevent certain behaviors, rather than to encourage others. Senator Wagner viewed the NIRA as a means of freeing the law from these fetters.
In what was to become typical Roosevelt fashion, several different groups both within and without the administration were working on recovery legislation. Once the groups had developed plans, Roosevelt called them into the White House to work together to prepare the bill he would submit to Congress.The group that advised Roosevelt on recovery legislation consisted of Secretary of Labor Frances Perkins, Director of the Budget Lewis W. Douglas, Rexford G. Tugwell, assistant Secretary of Commerce John Dickinson, Senator Robert Wagner, and General Hugh Johnson and Donald Richberg from the proposed NRA. This group worked out a bill that the president submitted to Congress on 17 May; by 13 June the NIRA was passed by both houses of Congress, and the president signed it into law three days later.
Labor enthusiastically embraced Section 7a of the legislation. William Green, president of the AFL, described the section as a "Magna Carta" for labor, and Daniel Tobin, president of the International Brotherhood of Teamsters (IBT), declared the bill as "about as good, or better, than we expected." Most famously, organizers from John L. Lewis's United Mine Workers (UMW) used Section 7a to appeal to unorganized workers, telling them, "The President wants you to join the union." Workers in the second half of 1933 and 1934 responded to these appeals in huge numbers, not only in mine work and other already established craft unions, but also in industries that had heretofore been unorganized, particularly automobile, rubber, and electrical manufacturing.
Management, on the other hand, was not enthusiastic about reintroducing labor unions into their businesses, particularly after just having rid themselves of most of them in the early 1920s. To maintain the appearance of worker representation (part of the "American Plan" proposed to members by the National Association of Manufacturers), many companies had adopted the practice of hosting company unions. Through these paternalistic organizations, companies were able to control most areas of employer/employee relations, while at the same time denying workers the right to collective bargaining. Because Section 7a did not outlaw company unions but merely stated that workers had the right to choose a union, companies attempted to "encourage" workers to choose the company union as their bargaining representative. Many workers resisted this ploy, however, and sought representation from unions affiliated with the AFL. Workers employed in unorganized sectors of the manufacturing economy were particularly adamant in seeking out independent unions, even though the AFL had no craft union for them to join. Workers in the automobile and rubber industries were particularly insistent. Workers in the Firestone and Goodyear Rubber plants formed federal unions, as did automobile workers in Cleveland and Toledo, Ohio, and other minor automobile manufacturing centers around the Midwest. (Federal unions were a kind of protoindustrial union, where the AFL organized workers while negotiating jurisdictional control of the workers organized.)
As a result, the various industrial boards set up to administer price and production controls spent much of their time adjudicating labor-management disputes instead. The resultant backlog discouraged not only management but also the labor unions, which had been the greatest proponents of the NIRA. The ultimate result was that the legislation was in fact a dead issue even before the United States Supreme Court administered the coup de grâ ce in 1935 by declaring the act unconstitutional. Despite what may be termed the failure of the NIRA, however, the legislation introduced institutions that remained a part of the government-labor-business sphere during the remainder of the New Deal era and beyond. The most important aspect of the NIRA that remained was the National Labor Board, which was transformed slightly by the Wagner Act of 1935 and remains the major institution at the government level handling labor-management disputes to this day. Perhaps most importantly, the NIRA signaled a change in government policy towards labor-management disputes, in that it could no longer be assumed that the federal government would merely allow business to use the courts to control their labor problems.
Green, William (1870-1952): The second president of the American Federation of Labor, this former coal miner was the conservative voice of labor during the New Deal years. Green supported the NIRA and the agency that the legislation created, the National Recovery Administration, but quickly became disenchanted with the lack of results.
Johnson, Hugh (1882-1942): In 1933 President Franklin D.Roosevelt appointed Johnson as the person to lead the National Recovery Agency that had been created by the National Industrial Recovery Act. Johnson was responsible for leading the agency's effort to organize industries under the fair trade codes that trade associations set up by companies within these industries. Both industry and labor quickly became disenchanted with the agency, however, and had stopped supporting the agency well before the Supreme Court declared it unconstitutional in 1935. Johnson later became an administrator with the Works Progress Administration, before leaving government to work for the Scripps-Howard newspaper chain.
Lewis, John L. (1880-1969): Lewis was long-time president of the United Mine Workers (1920-1960). Autocratic in his methods, Lewis saw the well-being of his union threatened by the antiunion drives of the 1920s. With the passage of the NIRA in 1933, particularly Section 7a, Lewis instructed his organizers to tell miners that "the President wants you to join the Union."
Roosevelt, Franklin Delano (1882-1945): Following in the footsteps of his cousin Theodore Roosevelt, Franklin Roosevelt assumed the office of the presidency in 1933, during the depths of the Great Depression. Roosevelt was swayed by arguments that one of the causes for the depression was cutthroat competition by businesses, which caused overproduction. Roosevelt's disappointment with the Supreme Court decision abolishing the NRA led him to "pack" the Supreme Court with justices whose viewpoints aligned with his own.
Wagner, Robert F. (1877-1953): A native of Germany, Wagner served in the New York legislature and as a Supreme Court justice in that state. In 1926 Wagner was elected to the United States Senate, were he became labor's strongest advocate in that body. In 1933 Wagner helped write the National Industrial Recovery Act and insisted upon the clause known as Section 7a, which granted workers the right to join a union "of their own choosing." Franklin D. Roosevelt appointed Wagner as the first chairman of the National Recovery Administration.
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