On May 17, 1933, Rep. Robert Houghton, a North Carolina Democrat, introduced H.R. 5755 into the House. This would become the National Industrial Recovery Act, the first comprehensive attempt to fix the economy of the Great Depression through national planning. While deeply flawed, the NIRA not only was a critical early response to the Depression, but it also spurred tremendous labor activism that laid the groundwork for the more comprehensive labor legislation of the decade.
From the beginning, the NIRA was intended to stabilize the economy by reducing the ruinous competition between businesses in many industries, leading to no one making money. Thus, the Roosevelt administration worked closely with many major corporate leaders who saw how this could work to their advantage. In fact, many New Deal programs tended to promote an oligarchical capitalism of a few companies dominating each industry. The Chamber of Commerce was behind it, as were leading capitalists such as Gerald Swope of General Electric and Charles Schwab of Bethlehem Steel. The monopoly aspects to it did lead to opposition in the Senate from people such as George Norris and Hugo Black but it passed and Roosevelt signed it on June 16.
The NIRA created the National Recovery Administration and the Public Works Administration. General Hugh Johnson was placed in charge of the NRA and Harold Ickes the PWA. The NRA would be more important in terms of implementing the act. The Blue Eagle was created as the NRA’s symbol, with compliant companies getting the official seal of approval. But from the beginning the NRA did not work well. There were hundreds of industry codes approved and thousands of business practices outlawed. The pages of legal opinions about implementation ran to the tens of thousands or more. It was only a 2-year program before it needed to be renewed and it became fairly clear early on that renewal was unlikely.
Section 7(a) was the most controversial part of the legislation. It read, in part:
employees shall have the right to organize and bargain collectively through representatives of their own choosing, and shall be free from the interference restraint, or coercion of employers of labor, or their agents, in the designation of such representatives or in self-organization or in other concerted activities for the purpose of collective bargaining or other mutual aid or protection; [and] (2) that no employee and no one seeking employment shall be required as a condition of employment to join any company union or to refrain from joining, organizing, or assisting a labor organization of his own choosing.
Some industry captains thought there might be a place for “responsible” unions in helping to regulate these industries because stable decent wages that were enforced across industry would undermine that devastating competition. Since business couldn’t stop competing with each other, some at least wanted government and even unions to do it for them. This led to the insertion of 7(a). The needle trades actually openly relied on the Amalgamated Clothing Workers led by Sidney Hillman to enforce the industry code against cheaters in one of the worst industries when it came to devastating competition. The retailer Edward Filene stated, “Our labor unions have a better understanding of what is good for business today than our chambers of commence have.” AFL president William Green definitely agreed and saw the NRA as the ticket to rebuilding a movement absolutely devastated by the anti-union sentiment of the 1920s and one that was carefully watching its left wing as well to prevent its model of business-friendly conservative unionism from being challenged.
FDR and Johnson assumed 7(a) would be self-regulating and so created no meaningful enforcement mechanism. That did not work. It soon created an ad-hoc National Labor Board after the fact to mediate disputes and it had good people on it–William Green, John L. Lewis, Robert Wagner among them–but it was winging it. Meanwhile, led by the National Association of Manufacturers, most employers absolutely refused to accept unions in their workplaces. The oil and chemical industries simply ignored anything the NRA said about labor. The Chemical Alliance told its members to ignore NRA wage standards. In fact, the NLB’s decisions alienated Hugh Johnson as well. After it ruled against Weirton Steel and Budd Manufacturing in a couple of cases that pushed labor rights, both the employers and the NRA itself simply ignored the rulings.
Workers thought that 7(a) explicitly said that the government wanted them to organize. That wasn’t really true; FDR had not gone that far. But it barely mattered. The NIRA gave workers an opportunity to shape their own history. Incredibly angry over their treatment on the job, the continued repression of their unions, and desirous of making serious change to their lives and the country, workers believed that the NIRA was a message from the president telling them he wanted them to join a union. Of course, this is not what Roosevelt said or meant. He had no major problem with unions and believed they had a role in regulating the nation, but he was not overtly pro-union at this point. In the first six months of 1933, the economy lost an average of 603,000 worker days to strikes per month. In July this went up to 1.375 million days and in August to 2.378 million as workers tested just what the NRA would do for them. Then, in four great strikes in 1934–at the Auto-Lite plant in Toledo, the docks in San Francisco, in the trucks and warehouses of Minneapolis, and throughout the textile belt in the South and New England, workers walked off the job to fight for the rights they believed Roosevelt had granted to them.
The NIRA was declared unconstitutional by an outraged Supreme Court in Schechter Poultry Corporation v. U.S. in 1935. By this time, business had turned against the NRA very sharply. Charles Evans Hughes wrote the decision for a unanimous court. The actual impact of this was limited. By this time, Roosevelt himself saw the weaknesses in the plan. Congress was unlikely to reauthorize it anyway as it had been so disastrous in practice. So he moved on to his so-called Second New Deal, a period that included the Social Security Act and the National Labor Relations Act, following closely upon the Court’s decision. The latter finally granted workers the explicit right to organize. The NLRB grew out of the NLB, which had renamed itself the National Labor Relations Board in 1934 and would be legally enshrined the next year.
I borrowed from Colin Gordon, New Deals: Business, Labor, and Politics in America, 1920-1935 in the writing of this post.
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