National Industrial Recovery Act Research Articles

Senator Elbert Thomas and the Hope for Industrial Equity

Senator Elbert Thomas and the Hope for Industrial Equity

Planning on the Potomac: A Review Essay on Jason E. Taylor’sDeconstructing the Monolith: The Microeconomics of the National Industrial Recovery Act

Taylor (2019) details heterogeneity in the effects of the National Industrial Recovery Act (NIRA) across industries and across time. Through first the President’s Reemployment Act (PRA) and then industry-specific “codes of fair competition,” the NIRA raised wages and restricted working hours. In some—but far from all—cases industries also used a NIRA code to collude, raising prices and restricting output. The effect of the NIRA peaked in fall 1933 and winter 1934; thereafter, compliance declined. I review the intellectual history of the NIRA, the implementation of the PRA and the NIRA codes, and Taylor’s econometric evidence on their effects. I end with a discussion of the implications of Taylor’s book for understanding the effect of the NIRA on US recovery from the Great Depression. (JEL D72, G01, H50, N32, N42)

The Myth of Section 7(a): Worker Militancy, Progressive Labor Legislation, and the Coal Miners

In this article, the authors look at the supposed causal role of progressive labor legislation on union organizing. As an extension of the Wagner Act debates of the late 1980s and early 1990s, the authors argue—contrary to the accepted wisdom of virtually all established scholarship—that “progressive” labor legislation is not generally the impetus for worker organization, a necessary prerequisite without which mass unionization would be impossible. Rather, this legislation is often consciously cooptive, with the explicit goal of diffusing worker militancy, denuding and undermining radical leadership while simultaneously placating popular discontent. The theoretical and methodological shortcomings of the former position are analyzed in the context of the passage of Section 7(a) of the National Industrial Recovery Act (NIRA). The authors argue that if the unionization of coal miners—the supposed primary beneficiaries of the stimulus attributed to the legislation—occurred prior to the passage of the NIRA, Section 7(a) could not have acted as a catalyst to unionization in the coalfields. The authors show, using archival and secondary accounts, that nearly all the nation’s coal miners were organized before the passage of the NIRA. In light of this empirical data, the authors propose an alternative model of union growth that rejects the methodological individualist assumptions that tacitly undergird the existing literature.

How Roosevelt Transformed the National Industrial Recovery Act

This paper examines the evolution of the National Industrial Recovery Act (NIRA) from its intellectual origins in the writings of Tugwell and Moulton, to the passage of the Act itself on June 17, 1933. What began as an attempt to address a structural problem, namely the widening gap between productivity and wages in manufacturing and mining, was transformed by President Franklin Roosevelt and Hugh Johnson into an economy-wide, multi-purpose policy instrument in the form of the NIRA and the subsequent President’s Reemployment Agreement (PRA). The multiple objectives and comprehensive breadth of the NIRA ultimately contributed to its demise. A simultaneous review of structural, cyclical and moral objectives, shows that the NIRA failed on all accounts. Specifically, firm and industry heterogeneity conspired to defeat all three objectives. Wages were increased in industries that had not been touched by electrification, contributing to lower aggregate employment and higher prices, thus providing an example of what not to do in the current debate over raising the minimum wage to $15.

Cementing the case for collusion under the National Recovery Administration

Macroeconomists have long debated the aggregate effects of anti-competitive provisions under the “Codes of Fair Conduct” promulgated by the National Industrial Recovery Act (NIRA). Despite the emphasis on these provisions, there is only limited evidence documenting any actual effects at the micro-level. We use a combination of narrative evidence and a novel plant-level dataset from 1929, 1931, 1933, and 1935 to study the effects of the NIRA in the cement industry. We develop a test for collusion specific to this particular industry. We find strong evidence that before the NIRA, the costs of a plant's nearest neighbor had a positive effect on a plant's own price, suggesting competition. After the NIRA, this effect is completely eliminated, with no correlation between a plant's own price and its neighbor's cost.

Antitrust Enforcement During the Great Depression

We offer an empirical study of antitrust enforcement by the Department of Justice (DOJ) and Federal Trade Commission (FTC) during the New Deal. The goal of this research is to address arguments that antitrust policies during the Great Depression were harmfully lax or even “suspended”. These arguments stem from the National Industrial Recovery Act (NIRA), lasting from 1933 to 1935, that allowed industries to collude in specific ways under specific rules. Therefore, on the surface, the NIRA indicates antitrust policies were nonexistent during this period. Other non-legislative antitrust actions by regulators and the courts also affected antitrust policy. However, changes in antitrust policy do not imply no enforcement of competition law during this period. We seek to resolve this growing assumption in the literature by creating a detailed dataset, and then carefully examining federal antitrust cases from 1925-1939. Resolving this growing assumption of nonexistent antitrust enforcement is important because some base conclusions on the extent of the Great Depression and output on an assumption of suspended antitrust policy. Such policy implications during this period have been paralleled to potential policy changes in today's economic environment. Our analysis provides a detailed look at the industries and alleged violations investigated and prosecuted by the DOJ and FTC, as well as other non-legislative antitrust policies in place, the size of the regulatory agencies, the resulting remedies, and length of cases. We examine the years 1925-1939 due to vacillating antitrust enforcement perspectives of the government between these years, as well as to compare to periods outside of the NIRA. Complementing our case data with specifics of the NIRA Codes of Fair Competition (rules of collusion for each industry), as well as data on other non- legislative antitrust policy, we determine factors that explain antitrust enforcement, thereby providing a clearer picture of exactly how antitrust enforcement responded to changes in antitrust policy during this fragile period. As of the date of this draft, data is still being entered and we have not examined any data in detail.

An Anatomy of a Cartel: The National Industrial Recovery Act of 1933 and the Compliance Crisis of 1934

This paper explores the nature and causes of the cartel compliance crisis that befell the National Industrial Recovery Act (NIRA) one year after its passage in 1933. We employ a simple game-theoretic model of the NIRA's cartel enforcement mechanism to show that the compliance crisis can largely be explained by changes in expectations, rather than a change in enforcement policy. Specifically, firms initially overestimated the probability that defection would be met with sanction by the cartel's enabling body, the National Recovery Administration - including a consumer boycott resulting from loss of the patriotic Blue Eagle emblem - and complied with the industry cartel rules. As these expectations were correctly adjusted downward, cartel compliance was lost. We support this hypothesis empirically with industry-level panel data showing how output and wage rates varied according to consumer confidence in the Blue Eagle. The analyis provides insight about cartel performance more generally.

Cartel Code Attributes and Cartel Performance: An Industry‐Level Analysis of the National Industrial Recovery Act

This paper uses the cartel‐enabling National Industrial Recovery Act (NIRA) of 1933 to gain insight into cartel performance. I employ a monthly panel of 66 industries that passed an NIRA code of fair competition to examine how specific attributes of these cartel codes affected the ability to achieve collusive outcomes. I find that output growth was significantly lower during cartel months, consistent with cartel theory, and that industries with more complex codes were more successful than those with simpler ones. Furthermore, industries with code restrictions on new productive capacity, production quotas, and requirements to file data with a central board were the most successful at reducing output, which suggests that these types of provisions were the most effective in helping firms attain collusive outcomes. Finally, I find that the effectiveness of data‐filing provisions was limited to the early months of the NIRA, prior to a wave of cartel breakdown occurring in spring 1934.

Unionizing the Trinity Portland Cement Company in Dallas, Texas, 1934-1939

1934-35, Pres. Franklin D. Roosevelt's administration confronted a direct challenge to Section 7 (a) of the National Industrial Recovery Act (NIRA) in Dallas, Texas. A local panel of the National Labor Relations Board established by the president through power given him by a congressional resolution in June 1934 ruled that the Trinity Portland Cement Company had to recognize the overwhelming desire of workers at the company's plant in Dallas to name Portland Cement Workers Union Number 1 93 1 o as their exclusive bargaining agent. Portland Cement Workers Union Number 193 10 was affiliated with the Texas State Federation of Labor (TSFL) and the American Federation of Labor (AFL) . On December 10,1 934, however, the company notified the board that it refused to comply with the ruling.1 Although Trinity's workers had voted in favor of the union by a nearly unanimous margin of 150 to 2, company officials held out in defiance of the NIRA's labor provisions, hoping to retain their company union and reaffirm exclusive control over labor policies. Until January 1939, Trinity's workers battled an array of anti-union measures in an attempt to force the company to recognize their union and sign a collective bargaining agree-

Franklin D. Roosevelt and the Transformation of the Supreme Court (review)

Reviewed by: Franklin D. Roosevelt and the Transformation of the Supreme Court Amos Kiewe Franklin D. Roosevelt and the Transformation of the Supreme Court. Edited by Stephen K. Shaw, William D. Pederson, and Frank J. Williams. Armonk, NY: M. E. Sharpe, 2004; pp 271. $22.95 paper. This edited volume investigates Franklin Roosevelt's "Court-packing" scheme of 1937 and the ensuing crisis thereof. The study seeks to prove that despite the immediate setback and criticism, Roosevelt did bring significant changes to [End Page 709] the makeup of the Supreme Court and the judiciary. More importantly, Roosevelt's social agenda changed the course of presidential activism. What on the surface appeared to be Roosevelt's miscalculation had both reason and context. This study puts Roosevelt's action in context to show that the president had to find a way to confront a Supreme Court that invalidated many of the New Deal's legislative programs. Roosevelt also found himself in the awkward and rare position of having completed a full term without being able to appoint a single justice to the Court (yet by the fourth term, he would appoint seven of the nine justices). Roosevelt was thus compelled to act to ensure that the many changes he had implemented in overcoming the Great Depression and the collapse of the U.S. economy would not be overturned. The volume is divided into three parts with several chapters covering the theme of a given part. Part 1 tracks the events leading to Roosevelt's attempts to change the direction of the Supreme Court, covering important judicial developments that led to the crisis of 1937. Part 2 tracks the careers of key individuals in the 1937 crisis such as justices Charles Evans Hughes, Hugo Black, Felix Frankfurter, and William Douglas. This section delves into judicial and political background and their impact on the "Court-packing" case. Part 3 examines the impact of the "Court-packing" attempt on future legislation in areas such as civil rights, religion, First Amendment, and the legacy of Roosevelt's attempts to change the direction of the Supreme Court. The various chapters are well written and well researched. The volume seeks and succeeds in taking a balanced view of Roosevelt's action and impact. The strength of the book is in giving readers an appropriate context from which to assess Roosevelt's action in seeking to change the direction of the Supreme Court. The discussion is limited when the various writers contemplate rhetorical, symbolic, and relational aspects of this presidential and judicial clash. For example, the discussion on Roosevelt and the Supreme Court alludes to "the symbolic presidency" but this discussion is not fully developed to realize Roosevelt's actions as rhetorical rather than political or that the New Deal and the famous first 100 days were highly rhetorical. In other words, Roosevelt often sought political changes through symbolic and rhetorical means. The volume excels when assessing the public image of the Supreme Court up to 1937 and the significant changes thereafter. This discussion details specific Supreme Court cases that led to Roosevelt's growing frustration with the Court (such as Home Building and Loan v. Blaisdell and Schechter Poultry Corp. v. United States). By 1935, Roosevelt was alarmed to see major portions of the National Industrial Recovery Act (NIRA) being struck down as unconstitutional. Despite the strong criticism Roosevelt suffered after his attempt to add justices to the Court, two of his key "opponents" changed their votes in subsequent cases, thus bringing the change Roosevelt sought. Indeed, a significant [End Page 710] shift in the Supreme Court's ruling had taken place already by 1937, proving Roosevelt's contentions all along. The shift is not only in the direction of specific cases but in the Court's overall increased activity and involvement. Roosevelt's task, well documented in the volume, was difficult and risky. He was severely criticized by many newspaper editorials but in the end, Roosevelt prevailed, not by resorting to coercion but by persuasion. Yet, on balance, Roosevelt's interpretation of executive power was beyond constitutional precedents. His New Deal legislation was grounded on the political need of the president to take all necessary measures during...

The Effect of Cost Heterogeneity in the Success and Failure of the New Deal's Agricultural and Industrial Programs

The Agricultural Adjustment Act and the National Industrial Recovery Act (NIRA) were cornerstones of the early New Deal, designed to cartelize agriculture and industry. When the Supreme Court annulled both acts, agricultural regulation was reinstalled within 6 weeks, following organized lobbying by farming interests, but broad industrial regulation was not reinstated. There was no corresponding lobby effort by industry to return the NIRA. To explain these differences we analyze the effect of farm/firm cost heterogeneities within commodity programs and industries on the ability of the parties to agree to and adhere to collusive regulations. We find that in the case of agriculture, because agricultural pricing and production policies were designed and implemented by low-cost producers, they were relatively self-enforcing and long-lasting. In contrast, high-cost firms in industry played a major role in setting prices and output within many of the NRA industrial codes. Consequently, these collusive policies were not self-enforcing and failed to create an effective lobby for their reinstatement.

Opportunity lost? Chances for cost accountants' professionalization under the National Industrial Recovery Act of 1933

The passage in June 1933 of the National Industrial Recovery Act (NIRA) heralded an opportunity for the cost-accounting branch of the profession in the US to play a prominent role in the endeavour to revitalize the national economy. This early New Deal legislation sought to end unfair and destructive competition by authorizing industry-based codes which typically contained uniform methods of cost accounting and cost-based floors for pricing. For the first time on a broad scale, unregulated companies were required to maintain and utilize cost accounts. Many thought that a golden age of cost accountancy had arrived. However, the demise of the NIRA by 1935 left these expectations totally unfulfilled. Any opportunity for cost accountants to achieve a professional status commensurate with that of their financial accounting brethren had quickly dissipated.

Public policy and market power in the rayon industry

This paper investigates the effects of the National Industrial Recovery Act (NIRA) and the Robinson-Patman Act on market power in the 1930s rayon industry. Unlike the traditional structure-conduct-performance approach of constructing measures of market power from accounting data, the model we use in this paper estimates market power from a gauge of the discrepancy between price and marginal cost. The results show that the NIRA increased market power in the rayon industry, whereas the Robinson-Patman Act did not have a noticeable effect on market power. Also, market power appears to have steadily declined throughout the 1930s.

Sectionalism and Racial Politics: Federal Vocational Policies and Programs in the Predesegregation South

Extant literature onvocational reformsgives the impression that they, like other educational reforms, resulted from a consensus between northern industrialists and professional educators (e.g., Bowles and Gintis 1976; Cohen 1968; Cremin 1961; Cuban 1982; Fones-Wolf 1983; Kett 1982; Powers 1992; Tyack 1981 [1974]). If national educational reforms reflected national economic interests, we should expect twentieth-century federal vocational legislation to reflect the interests of an increasingly industrialized national economy. By the same token, regionally specific economic interests should find their reflection primarily in local educational practice. This view rests on the assumption that a “national economy” has existed and that federal policies have not reflected sectional economic interests. In reality, southern sectional interests have shaped a variety of economic and social policies, ranging from post-Reconstruction child labor and compulsory education laws to New Deal policies such as the 1933 National Industrial Recovery Act (NIRA), the 1935 National Labor Relations (Wagner) Act, welfare policy, and the 1935 Social Security Act establishing old-age security and unemployment compensation (Alston and Ferrie 1985; Bensei 1984; Lieberman 1995; Quadagno 1988, 1994; Shulman 1991; Skocpol 1995).

Explaining New Deal Labor Policy

The National Labor Relations Act (NLRA) of 1935 represented a turning point in modern labor relations policy in the United States. In the December 1989 issue of thisReview, Michael Goldfield examined the effects of worker insurgency and radical organization on the enactment of the new labor law and rejected theories that emphasized the autonomy of the state from societal forces. In thisControversy, Theda Skocpol and Kenneth Finegold argue that the growing strength of liberal Democrats in Congress following the 1934 election and the failure of the National Industrial Recovery Act (NIRA) as an economic recovery measure provided the most important causes for the passage of the NLRA in mid-1935. In response Goldfield argues that the results of the 1934 election were themselves influenced by the protest environment and that the passage of the NLRA was a foregone conclusion before the NIRA was struck down.

State Capacity and Economic Intervention in the Early New Deal

descent from parliamentary democracy into the Nazi dictatorship. No such radical change of regime occurred in the United States. Yet the Deal of Franklin Delano Roosevelt's first two presidential terms (1933-1940) was one of the most innovative sets of measures put through by any of the liberaldemocratic governments caught up in the maelstrom of the Great Depression. In the context of U.S. history, moreover, the New Deal-along with the national mobilizations for World Wars I and II-was a major watershed in the establishment of an economically interventionist national state. Two of the New Deal's most ambitious efforts at economic intervention -one destined to be shortlived and the other to prove more enduring -were launched right at the start. Both the National Industrial Recovery Act (NIRA) and the Agricultural Adjustment Act were passed by Congress in the spring of 1933, during the heady Hundred Days of intense legislative activity that followed FDR's inauguration amidst the depths of the depression. These acts were an extraordinary new departure for the U.S. national government, which abandoned

The Taft-Hartley Act and the Nurse

signed into law a bill which became known unofficially as the Wagner Act and officially as the National Labor Relations Act. This was the first comprehensive labor relations act adopted by Congress, although a great deal of labor legislation had been previously placed on the statute books from time to time.L The precursor of the Wagner Act was Section 7(a) of the National Industrial Recovery Act (NIRA), which had been adopted to combat the depression of the early thirties.2