National Industrial Recovery Act

Passed by Congress in 1933, the National Industrial Recovery Act (NIRA) was one of several measures that were passed by Congress and supported by the Roosevelt administration that were aimed at helping the nation recover from the Great Depression. The NIRA was a unique experiment in U.S. history as it suspended the antitrust laws that were passed to root out conspiracies and combinations in restraint of trade and sanctioned and supported an alliance of industries. Under the law, companies were required to write industrywide codes of fair competition that effectively fixed wages and prices, established production quotas, and placed restrictions on the entry of other companies into the alliances. These codes were a form of industry self-regulation and represented an attempt to regulate and plan the entire economy to promote stable growth and prevent another depression.

Under the act, employees were given the right to organize unions and could not be required, as a condition of employment, to join or to refrain from joining a labor organization. Prior to this act, the courts upheld the right of employers to do just about anything to prevent the formation of unions. Companies could fire workers for joining unions, force them to sign a pledge not to join a union as a condition of employment, require them to belong to company unions, and spy on them to stop unionism before it got started. Attempts to form unions without government help were thus not very successful, and before the Great Depression, interest in unionism was waning. The NIRA rekindled this interest.

The law created a National Recovery Administration (NRA) to promote compliance with the act on the part of corporations. This administration was chiefly engaged in drawing up industrial codes for companies to adopt and was empowered to make voluntary agreements with companies regarding hours of work, rates of pay, and prices to charge for their products. More than 500 such codes were adopted by various industries, and patriotic appeals were made to the public to encourage wider compliance. Companies that voluntarily complied could display the Blue Eagle emblem in their facilities, signifying NRA participation.

According to most historians, these codes did little to help economic recovery and, by raising prices, actually made the economy worse. Under criticism from all sides, the NRA did not last long enough to fully implement its policies. In a case called the Schechter Poultry Corporation v. The United States decided in May 1935, the Supreme Court declared the NIRA unconstitutional because it assigned lawmaking powers to the NRA, which violated the Constitution's allocation of such powers to Congress, and said that the provisions of the poultry code (the case in question) did not constitute a valid regulation of interstate commerce and thus unreasonably stretched the Commerce Clause. Many of the labor provisions in the NIRA, however, were reenacted in later legislation.