The National Industrial Recovery Act (NIRA, 1933) allowed price and output agreements among firms in an industry and permitted greater labor organizing and COLLECTIVE BARGAINING. In effect, NIRA suspended ANTITRUST LAWs regarding restraint of trade. Price and output agreements were designed to increase producers’ INCOME during a time of falling prices. Almost 900 industry agreements were written. UNION organizing and collective bargaining would increase workers’ incomes, allowing them to increase their purchases. NIRA was the first major federal legislation recognizing workers’ right to organize. It was a radical step, contrary to the then-prevalent doctrine of CLASSICAL ECONOMICS. Classical economic theory suggested economies would tend to operate at a full-EMPLOYMENT level of output and income, and prices and wages would adjust to maintain a full-employment level of output. NIRA was a centerpiece of President Franklin Roosevelt’s policies to address the GREAT DEPRESSION. Along with government-spending programs like the WORKS PROGRESS ADMINISTRATION (WPA) and youth-employment programs like the CIVILIAN CONSERVATION CORPS (CCC), NIRA was designed to reverse the 33 percent decline in output (GROSS DOMESTIC PRODUCT) and 25 percent UNEMPLOYMENT rate. In 1935 the Supreme Court ruled NIRA unconstitutional on the grounds that the act affected primarily local markets and industries, not interstate commerce. Thus, the actions allowed under NIRA were outside the power of Congress to control. The court also ruled that, with NIRA, Congress had delegated excessive powers to the president.
See also SHERMAN ANTITRUST ACT.