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What is the National Industrial Recovery Act?

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  • Written By: Henry Gaudet
  • Edited By: A. Joseph
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  • Last Modified Date: 10 September 2016
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The National Industrial Recovery Act is a piece of legislation that was passed in the United States in 1933 as part of President Franklin D. Roosevelt’s New Deal. This bold and controversial legislation gave the president sweeping power to regulate and control industry and business in order to stimulate the economy and reduce unemployment. Provisions of the law prohibited child labor, defined maximum work hours, set a minimum wage and protected collective bargaining rights. It also set aside $3.3 billion US Dollars for public works projects.

Under the act, antitrust laws were suspended, allowing monopolies and cartels to operate. The president and his advisors, acting under the belief that uncontrolled competition was partly responsible for the Great Depression, used the provisions of the National Industrial Recovery Act to force cooperation among businesses and eliminate practices that gave one company an unfair advantage over another. Businesses were directed to draw up codes of fair practice, industry-wide policies regulating wages, pricing and practices. The newly formed National Recovery Administration (NRA) was responsible for overseeing the drafting and implementation of these codes.

After the codes were drawn up, they were sent to the White House for approval. Codes had to be inclusive and could not discriminate against small businesses or hinder trade. Compliant industries were encouraged to display signs depicting a blue eagle, the NRA’s logo and the message “We do our part.”

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New labor laws were put into place to level the playing field and deny any business an unfair advantage. A cap on hours worked forced employers to hire more workers, and a minimum wage ensured that workers had real purchasing power. The law also encouraged collective bargaining with the intention of using union action rather than excessive regulation and inspection to control industry.

Public works provisions of the National Industrial Recovery Act sought to further reduce unemployment by implementing an unprecedented level of public spending on roads and other infrastructure projects. Highways, rail lines, schools, hospitals, courthouses, post offices, water treatment plants and dams were constructed.

The law was widely unpopular, however, and met only limited success. Businesses disliked the restrictions that the act placed on labor costs and pricing. Labor unions felt that, although it did mark some progress for workers, it didn’t go far enough and still favored the employer. Funding for public works projects was trickling through too slowly to have an effect on employment and the economy. In 1935, a Supreme Court decision found the the fair practice codes unconstitutional, and their use ended.

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