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National Industrial Recovery Act: Definition & Summary

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  • 0:04 The Great Depression
  • 1:28 Public Works Administration
  • 3:14 Effects of the NIRA
  • 5:00 Lesson Summary
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Lesson Transcript
Instructor: Jason McCollom
To address the economic slump of the Great Depression, the Roosevelt Administration created the National Industrial Recovery Act to revive the industrial sector. Learn about the aspects of this program in this lesson.

The Great Depression

When there are bad economic times, whether in the 1930s or today, businesses usually take a few predictable actions. First, they cut production because consumers have less money to buy their goods. Second, they lay off workers because fewer are needed to meet the reduced output. Finally, those workers who remain on the job see their wages decrease.

During the Great Depression of the 1930s, President Franklin D. Roosevelt and his New Deal program addressed this very issue with the National Industrial Recovery Act (NIRA),which attempted to revive the industrial economy with a public works program and the creation of a series of rules for businesses, both big and small. The result was a series of reforms, some of which were more successful and long lasting than others.

The NIRA came to fruition in response to the massive industrial crisis caused by the Great Depression. Business leaders slashed production, with industrial production as a whole falling more than 40% between 1929 and 1933. This created widespread unemployment, which was 25% of the workforce by 1933, and downward pressure on wages.

The NIRA was created by the Roosevelt Administration in June of 1933 and was at the heart of the New Deal's determination to revitalize the industrial economy.

The Public Works Administration

There were two major sections of the NIRA. The first, the Public Works Administration (PWA), put the unemployed to work on massive construction projects. The federal government paid these laborers to build things such as public buildings, roads, hospitals, bridges, and other infrastructure. Though the PWA was not designed as a permanent fix, it did offer people a modest paycheck and the self-respect that comes with honest work.

The second part of the NIRA was much more controversial. FDR held that the National Recovery Administration (NRA) aimed to prevent unfair competition and disastrous overproduction. This would promote economic growth by having each major industry agree on rule codes created by groups of businessmen, labor representatives, and consumer groups. These codes were designed to promote standards for working conditions, set prices, and minimize competition between businesses.

To encourage consumers to spend money at businesses that were part of the NRA, posters with the NRA's Blue Eagle were placed in shop windows across the nation. Additional promotional efforts urged NRA member businesses to stamp their products with both the Blue Eagle and agency slogan, 'We do our part.'

The most significant aspect of the NRA was the adopted labor policy codes. Demanded by workers and unions, these codes declared a national 40-hour workweek, minimum wage laws, and a federal ban on child labor. In addition, Section 7a of the NRA provided federal protection for workers' right to unionize. Section 7a marked the revival of the American union movement, which had been stalled since the late 19th century.

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