Business Cycles in the Progressive Era and New Deal
Chapter 11: The aftermath of the National Industrial Recovery Act
From 1933 to 1935 the NIRA had a brief but controversial career. We saw in the last two chapters how controversial it was, given the many ways in which it was interpreted – ranging from monopoly and fascism to a programme of cooperation by business, government, labour and consumers. Some of our economists, pundits, politicians and business leaders who advocated for the moral economy saw in it a hope for planning while others saw it as a betrayal of planning, depending on their vision of the moral economy. The friends of the market economy saw it as government blunder- ing in the economy in ways that hindered the recovery from the Great Depression. The controversy over the NIRA abated, to some degree, when the US Supreme Court voided it in 1935 in the Schechter Case. In this chapter we review the efforts that were made to evaluate where the NIRA had worked well and what had gone wrong with it. We start with the Court’s decision to find the NIRA unconstitutional. The US Supreme Court found the NIRA to be unconstitutional in the Schechter Case by a unanimous vote in a decision announced on 27 May 1935. In reviewing the facts of the case, we can see that the Court interpreted the NRA as overly intrusive, with the full weight and power of the federal government brought to bear on a small family business selling chickens. As part of its decision, the Court outlined the facts of the case.
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