So, the National Recovery Administration was declared unconstitutional by the Supreme Court in 1935. However, even if it hadn't been, it was bureaucratic and believed to be hurting the recovery due to its damage on small businesses and was supposedly unlikely to be reapproved by Congress anyways. So, could the National Recovery Administration, even if watered down heavily, have been retained? And if so, how?
Could the National Recovery Administration have been retained?
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History Learner
Banned
What we got IOTL was basically a watered down NRA. Retention of a non watered down version would've been disastrous, however; UCLA did a study on it and found it extended the Depression out by years.
The NRA was largely a dead letter even before the Supreme Court's decision. I agree with Brad DeLong's judgment that "a durable, comprehensively-implemented NIRA would have been a disaster, but my understanding (from Ellis Hawley's The New Deal and the Problem of Monopoly) was that it was neither comprehensively implemented nor durable. It was always spotty, and was a dead letter by the middle of 1934, a year before it was overturned in Schechter Poultry." https://www.bradford-delong.com/2007/01/the_new_deal_an.html
"A second key criticism of the Act is that it lacked support from the business community, and thus was doomed to failure.[15] Business support for national planning and government intervention was very strong in 1933, but had collapsed by mid-1934.[3][6][11] Many studies conclude, however, that business support for NIRA was never uniform. Larger, older businesses embraced the legislation while smaller, newer ones (more nimble in a highly competitive market and with less capital investment to lose if they failed) did not.[11][68] This is a classic problem of cartels, and thus NIRA codes failed as small business abandoned the cartels.[66][67] Studies of the steel, automobile manufacturing, lumber, textile, and rubber industries and the level and source of support for the NIRA tend to support this conclusion.[69] Without the support of industry, the Act could never have performed as it was intended." https://en.wikipedia.org/wiki/National_Industrial_Recovery_Act_of_1933 The NRA was probably misguided to the extent that it encouraged cartelization but "Others point out that the cartels created by the Act were inherently unstable (as all cartels are), and that the effect on prices was minimal because the codes collapsed so quickly.[66][67]" Ibid. See Matthew B. Krepps, "Another Look at the Impact of the National Industrial Recovery Act on Cartel Formation and Maintenance Costs": "Alexander's (1994) finding that the National Recovery Administration's Codes of Fair Competition led to a change in the critical concentration level during the 1930s is questioned. No regime switch is detected when a common industry sample is employed. Also, when industries with and without codes are analyzed, codes appear to have no effect on price–cost margins during the period. This absence of effect is postulated to be a result of the unenforceability of trade practice provisions contained in many codes. The empirical results of this paper suggest that the existence of codes was not sufficient to enable industries to overcome cartel formation costs. Only easily enforceable trade practice provisions appear to have affected the structure–performance relation in the period following repeal of the National Industrial Recovery Act."
www.mitpressjournals.org
"A second key criticism of the Act is that it lacked support from the business community, and thus was doomed to failure.[15] Business support for national planning and government intervention was very strong in 1933, but had collapsed by mid-1934.[3][6][11] Many studies conclude, however, that business support for NIRA was never uniform. Larger, older businesses embraced the legislation while smaller, newer ones (more nimble in a highly competitive market and with less capital investment to lose if they failed) did not.[11][68] This is a classic problem of cartels, and thus NIRA codes failed as small business abandoned the cartels.[66][67] Studies of the steel, automobile manufacturing, lumber, textile, and rubber industries and the level and source of support for the NIRA tend to support this conclusion.[69] Without the support of industry, the Act could never have performed as it was intended." https://en.wikipedia.org/wiki/National_Industrial_Recovery_Act_of_1933 The NRA was probably misguided to the extent that it encouraged cartelization but "Others point out that the cartels created by the Act were inherently unstable (as all cartels are), and that the effect on prices was minimal because the codes collapsed so quickly.[66][67]" Ibid. See Matthew B. Krepps, "Another Look at the Impact of the National Industrial Recovery Act on Cartel Formation and Maintenance Costs": "Alexander's (1994) finding that the National Recovery Administration's Codes of Fair Competition led to a change in the critical concentration level during the 1930s is questioned. No regime switch is detected when a common industry sample is employed. Also, when industries with and without codes are analyzed, codes appear to have no effect on price–cost margins during the period. This absence of effect is postulated to be a result of the unenforceability of trade practice provisions contained in many codes. The empirical results of this paper suggest that the existence of codes was not sufficient to enable industries to overcome cartel formation costs. Only easily enforceable trade practice provisions appear to have affected the structure–performance relation in the period following repeal of the National Industrial Recovery Act."
Another Look at the Impact of the National Industrial Recovery Act on Cartel Formation and Maintenance Costs
Abstract. Alexander's (1994) finding that the National Recovery Administration's Codes of Fair Competition led to a change in the critical concentration level during the 1930s is questioned. No regime switch is detected when a common industry sample is employed. Also, when industries with and...
www.mitpressjournals.org
I get "page not found." I assume you are referring to Cole and Ohanian (btw, a study by two professors at UCLA is not "a study by UCLA") and as noted some economists believe they overstate the effects of the NRA while others who agree the NRA was a bad thing find them quite wrong in other respects... https://uneasymoney.com/2011/09/26/misrepresenting-the-recovery-from-the-great-depression/
History Learner
Banned
Link appears dead, so here's another website talking about it. As for it's status, that seems extremely nitpicky; it was published by UCLA faculty and covered by their news room, so it seems fair to call it a UCLA study. As for whether they're right not, disagreement does not imply them being wrong, after all, some still argue Smoot-Hawley was the main cause of the Depression.
Is there anything that could've prevented this? Any alterations that could've made small businesses happier with the arrangement and make the NRA at least slightly beneficial rather than detrimental?The NRA was largely a dead letter even before the Supreme Court's decision. I agree with Brad DeLong's judgment that "a durable, comprehensively-implemented NIRA would have been a disaster, but my understanding (from Ellis Hawley's The New Deal and the Problem of Monopoly) was that it was neither comprehensively implemented nor durable. It was always spotty, and was a dead letter by the middle of 1934, a year before it was overturned in Schechter Poultry." https://www.bradford-delong.com/2007/01/the_new_deal_an.html
"A second key criticism of the Act is that it lacked support from the business community, and thus was doomed to failure.[15] Business support for national planning and government intervention was very strong in 1933, but had collapsed by mid-1934.[3][6][11] Many studies conclude, however, that business support for NIRA was never uniform. Larger, older businesses embraced the legislation while smaller, newer ones (more nimble in a highly competitive market and with less capital investment to lose if they failed) did not.[11][68] This is a classic problem of cartels, and thus NIRA codes failed as small business abandoned the cartels.[66][67] Studies of the steel, automobile manufacturing, lumber, textile, and rubber industries and the level and source of support for the NIRA tend to support this conclusion.[69] Without the support of industry, the Act could never have performed as it was intended." https://en.wikipedia.org/wiki/National_Industrial_Recovery_Act_of_1933 The NRA was probably misguided to the extent that it encouraged cartelization but "Others point out that the cartels created by the Act were inherently unstable (as all cartels are), and that the effect on prices was minimal because the codes collapsed so quickly.[66][67]" Ibid. See Matthew B. Krepps, "Another Look at the Impact of the National Industrial Recovery Act on Cartel Formation and Maintenance Costs": "Alexander's (1994) finding that the National Recovery Administration's Codes of Fair Competition led to a change in the critical concentration level during the 1930s is questioned. No regime switch is detected when a common industry sample is employed. Also, when industries with and without codes are analyzed, codes appear to have no effect on price–cost margins during the period. This absence of effect is postulated to be a result of the unenforceability of trade practice provisions contained in many codes. The empirical results of this paper suggest that the existence of codes was not sufficient to enable industries to overcome cartel formation costs. Only easily enforceable trade practice provisions appear to have affected the structure–performance relation in the period following repeal of the National Industrial Recovery Act."
Another Look at the Impact of the National Industrial Recovery Act on Cartel Formation and Maintenance Costs
Abstract. Alexander's (1994) finding that the National Recovery Administration's Codes of Fair Competition led to a change in the critical concentration level during the 1930s is questioned. No regime switch is detected when a common industry sample is employed. Also, when industries with and...
History Learner
Banned
Yeah my bad, I had to find another link; I had the UCLA newsroom one bookmarked and hadn't checked it in awhile.