The direct antecedent of the National Recovery Administration can be found in the expanding role of the government during the tenure of Herbert Hoover as commerce secretary under presidents Harding and Coolidge. Hawley (1974) explores Hoover’s role in the creation of a corporatist state prior to the New Deal years. The Hooverian philosophy contained a vision of business and government cooperating to modernize, rationalize and manage the American economy. Hoover believed in a community of interests between capital and labor, and promoted cooperative associations as means to private sector self-government and ultimately the material and moral advancement of the US.
As secretary of commerce, Hoover engaged in an ambitious program of administrative re-engineering, whereby he sought to subsume varied aspects of economic life. Hoover attempted to transform the Department of Commerce into an agency propelling and managing economic development, relying on private “networks of cooperating committees and allied associations” (Hawley 1974, 129). For this aim, Hoover enlisted business, academia and the media, and enrolled technocrats and topical experts, in what the author calls “adhocracies” (Hawley 1974, 131). Hoover found resistance to his project and fought institutional inertia: Hawley’s evidence suggests there were several groups of interest within and outside the government which opposed thoroughly the Hooverian ideal of an associative state.
Hoover’s reaction was to decrease the pace and scale of reform. The secretary’s stance yielded a set of regulating committees and overseeing boards with representatives from the government and the private sector, in what the author calls “quasi public organs” (Hawley 1974, 125). Hoover secured government intervention in new areas such as aviation and radio by arguing about their “public nature”, and intervened decisively in areas such as construction planning, housing and children’s welfare (Hawley 1974, 127). Hawley’s article thus raises questions on administrative history and the relationship between policymakers of distinct public agencies with their peers (such as the Federal Reserve Board, Treasury and State Departments) and with the private sector.
The approval of the National Industrial Recovery Act (NIRA) in 1933 gave momentum to “the associational idea of self-government” first essayed in the Hoover administration (Hawley 1995, 62). NIRA was an ambiguously written law that granted “unprecedented peacetime powers” to President Roosevelt for counteracting the effects of the economic downturn (Hawley 1995, 20). NIRA was an “enabling act, an economic charter” (Hawley 1995, 33), that placed the executive branch as an ultimate arbiter of industrial relationships. Also called the Wagner act, NIRA was a law that appealed to different ideologies and conflicting constituencies, such as “business planners […], trade unions, social workers, […policymakers,] spenders and pump-primers (Hawley 1995, 25).
Hawley’s account on the making of NIRA is an interesting instance of legislation under critical circumstances. Initially, politicians, businessmen and labor representatives stood behind the bill; opposition came from small business leaders and antitrust advocates. Hawley offers an interesting framework to approach the ideological contradictions of NIRA: the act echoed competing and conflictive visions of the American societ, as “business commonwealth […], cooperative, collectivist democracy [… and], atomistic economy” (Hawley 1995: 35-36). Big businesses sought to codify oligopolistic practices. Technocrats tried to apply modern management techniques from the private sector to public problems. The American intelligentsia divided itself between those who saw an almost natural progression towards market concentration and those who urged the government to enforce competition and restore economic flexibility.
The case of the National Recovery Administration (NRA) led by Hugh Johnson offers a cautionary tale of a regulatory agency captured by interest groups. NIRA presented a dilemma for economic policymakers: how could price policies be enacted without incurring in plain oligopolistic power? Code-making was in its core a “bargaining process” (Hawley 1995: 56), and industry representatives aimed to set minimum prices, open-price systems, terms of sales and controls of production, often with the complacency of NRA authorities. Soon, however, the collusion of big private interests affected small businesses and undermined public support for NIRA. The complexity of industrial chains often ended in overlapping and chaotic regulation. The NRA entered in conflicts with other public agencies, and industrial price fixing schemes derived in the rise of consumers as a constituency in American politics. Roosevelt could not remain deaf to these claims, and henceforth his administration had to move away from the Hooverian vision of “industrial self-government and the association idea” (Hawley 1995: 90).