The National Industrial Recovery Act

The National Industrial Recovery Act (NIRA) provides a case study of the legal and constitutional assumptions behind the early New Deal. The NIRA, which drew its constitutional authority from the commerce clause of the Constitution, set up a system of industrial self-government to manage the problems of overproduction, cutthroat competition, and price instability. The statute authorized the president "to establish such agencies . . . as he may find necessary" and to "delegate any of his functions and power" to officials appointed by him. ¹⁵ The measure provided for the creation of codes of fair competition with the purpose of preventing the practices that had driven prices downward, but this national experiment in government by trade association began without the barest semblance of an administrative structure through which to draft and implement these codes. Members of industrial groups doing business in interstate commerce drafted their own codes, which had the force of law, and their decisions were seldom subject to review under existing antitrust laws. The framers of the codes had to make provision for working conditions, including minimum wages and maximum hours. Child labor was outlawed and (under section 7[a]) workers received the right to organize and bargain collectively "through representatives of their own choosing." ¹⁶

The president charged the National Recovery Administration (NRA) with the responsibility of implementing regulatory control over more than three million large and small businesses. The president appointed Hugh Johnson as head of the agency,

-273-

and Johnson in turn hired Donald Richberg, a prominent labor lawyer during the 1920s, to the post of general counsel. Richberg then assembled his own legal staff.

Among other immediate consequences, early New Deal legislation brought a flood of lawyers into the nation's capital to take charge of operating the new administrative machinery. These New Deal lawyers were almost uniformly born in the twentieth century, and over one-half of them were in their late twenties or early thirties. They were, according to a critic dismayed as they swooped down on Washington, "boys with their hair ablaze," bringing a new spirit of active government involvement in every aspect of public life. ¹⁷ They were also disproportionately recruited from the elite law schools; fully 60 percent came from Harvard, Yale, and Columbia. Some received their training from realists; most were schooled in the modified Langdellian scheme of legal education that became prevalent in the 1920s and 1930s. Most of the New Deal lawyers "emerged from law school with a veneer of progressive liberalism over a foundation of doctrinal orthodoxy and apolitical professionalism." ¹⁸ Felix Frankfurter, a close adviser to Roosevelt, sent a steady stream of his students, known as "Happy Hot Dogs," to Washington, where they were stuffed into the New Deal agencies. These young lawyers were politically liberal, and they were urban in upbringing and Jewish and Catholic in heritage. The New Deal created such a demand for skilled lawyers with the proper political credentials that it opened the corridors of political power to people previously excluded by reason of their ethnicity or religion.

The lawyers assembled to administer the NIRA codes quickly found themselves often at odds with the practices and behavior of the business community whose voluntary and cooperative regulation they sought to cultivate. The NIRA depended for its success on efficient administration and a respect for the standards of due process. Neither of these conditions was realized. Both small producers and labor failed to receive significant protection under the legislation. A profound disregard for due- process standards as well as the spirit and letter of the law frustrated early regulatory efforts inside the NRA and other New Deal agencies. Many businessmen, as well as a few of the lawyers within the NRA, considered that traditional concerns with due process only led to an overemphasis on legal methods that promoted delay in decision making. Businessmen used their authority to dominate industries they were supposed to protect, and they abused their power by interfering with union organizational efforts. Donald Richberg concluded that "private enterprise was not only generally intolerant of interferences by organized labor and by the government, but sought continually to exercise public authority to discipline its own ranks."¹⁹

The NRA, like almost all of the early New Deal agencies, suffered from two major defects. First, it rested on an ill-defined constitutional foundation, which the Supreme Court used in 1935 to strike it down. Second, and as important to the future of administrative law and regulation, the trade association model of the NRA precluded the kind of vigorous enforcement and rational planning that made administrative agencies attractive. Many of the New Deal lawyers pressed for a more vigorous commission system of administrative oversight. Under this scheme, the government administrators would cease to be middle men who would ensure cooperative and voluntary acceptance of commission findings and become active participants basing their judgments on a neutral and impartial investigation of the facts.

-274-

Date: 2015-01-29; view: 644