National Industrial Recovery Act

Definition

The National Industrial Recovery Act (NIRA) was a key piece of legislation enacted in 1933 as part of the New Deal, aiming to stimulate economic recovery during the Great Depression by promoting industrial growth and fair labor practices. It sought to achieve this through the establishment of industry-wide codes that regulated competition, set prices, and established minimum wages and working hours for employees. By fostering cooperation between businesses and labor, the NIRA aimed to boost consumer purchasing power and restore economic stability.

5 Must Know Facts For Your Next Test

1. The NIRA was signed into law by President Franklin D. Roosevelt on June 16, 1933, as part of his New Deal agenda to combat the Great Depression.
2. It authorized the creation of industry codes that set standards for production, prices, wages, and working conditions across various sectors.
3. The NIRA aimed to reduce destructive competition by encouraging businesses to cooperate rather than compete against each other, which was seen as essential for recovery.
4. The Supreme Court declared the NIRA unconstitutional in 1935, ruling that it exceeded the federal government's authority to regulate interstate commerce.
5. Despite its short-lived nature, the NIRA set important precedents for labor rights and government involvement in the economy that influenced future policies.

Review Questions

• How did the National Industrial Recovery Act aim to stimulate economic recovery during the Great Depression?
  • The National Industrial Recovery Act sought to stimulate economic recovery by establishing industry-wide codes that regulated competition and set standards for wages, hours, and prices. By promoting cooperation among businesses instead of competition, the NIRA aimed to stabilize industries and boost consumer purchasing power. This comprehensive approach was designed to create a balanced economy that could recover from the downturn caused by the Great Depression.
• What were the roles of the National Recovery Administration within the framework of the National Industrial Recovery Act?
  • The National Recovery Administration (NRA) was established under the NIRA to oversee and enforce the industry codes created by the Act. The NRA worked with various industries to develop fair competition practices and ensure compliance with established standards for wages and working conditions. Additionally, it promoted collective bargaining rights through Section 7(a), empowering labor unions and contributing to a more equitable balance between employers and employees.
• Evaluate the impact of the Supreme Court's decision regarding the National Industrial Recovery Act on labor relations and government intervention in the economy.
  • The Supreme Court's decision to declare the National Industrial Recovery Act unconstitutional had significant implications for labor relations and government intervention in the economy. This ruling underscored limitations on federal authority in regulating interstate commerce, which led to a setback in New Deal policies aimed at stabilizing labor relations. However, despite its invalidation, the NIRA influenced future legislation that reinforced labor rights and established a precedent for increased government involvement in economic affairs, shaping subsequent labor relations in America.

Related terms

Public Works Administration: A New Deal agency that funded large-scale public works projects, creating jobs and stimulating the economy.

National Recovery Administration: The agency created under the NIRA to enforce industry codes and promote fair competition and labor practices.

Section 7(a): A provision of the NIRA that guaranteed workers' rights to organize and collectively bargain, significantly empowering labor unions.