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Deconstructing the MonolithThe Microeconomics of the National Industrial Recovery Act$
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Jason E. Taylor

Print publication date: 2019

Print ISBN-13: 9780226603308

Published to Chicago Scholarship Online: September 2019

DOI: 10.7208/chicago/9780226603445.001.0001

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The Underpinnings, Precursors, and Development of the NIRA

The Underpinnings, Precursors, and Development of the NIRA

(p.15) 2 The Underpinnings, Precursors, and Development of the NIRA
Deconstructing the Monolith

Jason E. Taylor

University of Chicago Press

The policies put forth during the National Industrial Recovery Act of 1933 seem puzzling today. Why did the Roosevelt administration employ a combination of higher wage rates, shorter hours, and intraindustry collusion in an attempt to boost output during the Great Depression? All three of these policies would appear to be contractionary rather than expansionary. This chapter discusses the logic behind these three policies. Higher wage rates were pushed as a way to boost aggregate demand. Shorter hours were promoted in the name of work sharing. Finally, intraindustry collusion was promoted as a way to eliminate the unfair competition that many firms increasingly blamed for their troubles. In all three cases, arguments in favor of policies such as those embedded in the NIRA had been brewing for over a decade. In fact several bills that contained various aspects of what the NIRA would implement were considered in 1931 and 1932, and these certainly aided the bill’s speedy formation and passage in spring 1933. When the NIRA is viewed in the full context of economic and political movements and debates of the prior fifteen years, the legislation does not appear as radical as it does when viewed outside of that context.

Keywords:   Franklin Roosevelt, Great Depression, high wage policy, collusion, work sharing

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