Tag Archives: Monopolies

Hatching Another One for the Ax?

FDR shields a New NRA egg, as the Supreme Court awaits for its inevitable denial.
FDR shields a New NRA plan in the form of an egg, as an old man representing the Supreme Court awaits with a ready ax for its inevitable demise.

“Hatching Another One for the Ax?” is a political cartoon published on March 4th, 1937 by John Knott, that exemplifies the unconstitutionality conflict between the contents of the National Recovery Administration(NRA) and the Supreme Court.  FDR hoped that the new NRA would revitalize the business industry, which was badly damaged by the severity of the Great Depression.  The Great Depression was historically considered one of the greatest economic disasters the United States has ever sustained, so understandably, its ripple effects are still in effect. Its magnitude was so noticeable, that it made sense for legislation to be introduced as quickly as possible.  It was desirable for legislation to be introduced because the U.S had never encountered such widespread economic disaster in its history.  As part of then president FDR’s first 99 days, he implemented the National Industrial Recovery Act (NIRA) on June 16, 1933 (history.com).  He also established the National Recovery Administration (NRA) to enforce it. Unemployment rate was one contributing factor to the NRA’s creation, but others included minimum wages, shorter hours, the ability to join labor unions, better working conditions and greater regulation for competition between businesses.  The unemployment rate was up to nearly 25% by the time the NIRA was introduced, and by 1933 the economy had produced half as much money as it did only 4 years back ($57 million to $105 million)(history.com).

 Within John Knott’s political cartoon, Knott portrayed FDR, the Supreme Court(represented as an old man), and a chicken with a “New NRA” egg under it.  FDR appears to be attempting to hide the egg from the Supreme Court in the background, but based on the title of the cartoon, it appears inevitable that Supreme Court will terminate the New NRA as soon as they see it.  As expressed in the editorial, Haste Made Waste, the NRA attempted to basically do too much to o fast because of the urgency of the situation, but FDR would still not be given a pass when attempting to produce a new NRA.

The editorial touched on one of the main issues with the introduction of the NRA, which was the debate in the readiness of all the industries for its policies.  Roosevelt wanted to do what the steel industry had already done, with regulation over wage and hours.  The value of the NRA came into place with its regulation over a more widespread level of industries, thus impacting the economy in a more immediate and in depth fashion.  But again, the editorial discussed how difficult it was to put something like that in place, given the failure of the first NRA.  That previous failure, combined with the need for economic reinvigoration were the two butting heads in FDR attempting to pass a second NRA(along with the desire for it to be constitutional this time around).

When it first came into existence, the NRA was based on industrial codes that could change the formatting of how business was done.  One overarching example of this was the attempt to completely eliminate any chance of monopolies, or one company dominating an entire industry.  The NRA preached fair trade and fair competition between business, and went to the lengths of code implementation to reach their goal.  What perhaps was underestimated by FDR before he went ahead and installed this code system all across varying industries, was the fact that the regulation aspect of the NRA became exceedingly difficult to accomplish(Buchholz).  Bigger name industrialists didn’t like the regulations of the codes that forced minimum wages and shortened hours, so the leadership of the NRA was tested.  Companies began to alter codes in their favor, and essentially continued the path of unfair competition that the NRA had hoped to stop in the first place.  General Hugh Johnson was the man set in charge of overseeing the NRA, but his lack of awareness clearly forced the NRA downhill.  This sequence of events led to the legality conflict that is alluded to in the cartoon (Knott), with the Supreme Court being the only real opposing force in FDR getting away with the “New NRA.”

A couple of points were made by the Supreme Court to invalidate the NRA, but one of the major points revolved around the new law making power of FDR.  When the NIRA and NRA began, the codes that FDR basically forced on businesses came across as a power that should only be distributed to members of Congress(Buchholz).  That alone, violated a major cornerstone of the U.S. government, in the individual branches knowing their responsibilities and not crossing boundaries.  The other point of emphasis by the Supreme Court was Congress’ freedom that they gave to FDR in order to put his codes in place. FDR was essentially given lawmaking powers, which should only ever be in the hands of the legislative branch . Also, Congress had become too involved in interstate commerce, when in reality the states know best on how to regulate their pricing, wages and hours (brittanica.com).

The NRA was eliminated May 27th, 1935, but parts of its legislation continued in the National Labor Relations Act (NLRA) of 1935 and Fair Labor Standards Act of 1938, which stood for the better parts of what the NRA represented, in labor unions, fair pricing, wages and hours.  Prior to any regulation, businesses weren’t forced in any way to have an hour limit for their workers, or a set wage.  Also, without any labor unions, workers couldn’t establish any control over any of those wage and hour issues they dealt with.  Even with these acts created to rectify an economy in bad condition, the long-term effect of something like the Fair Labor Standards Act can be for the worse in modern times(sites.gsu.edu).  The reason for this, is because the FLSA was, in short, an act put into place to install a minimum wage and bring more equality to workers through actions such as overtime compensation standards (brittanica.com). Minimum wage is seen as a beneficiary in allowing a certain amount of income to be received by those who are working jobs.  However, the ability for the minimum wage to be included in society, paved way for issues to arise in labor unions, like the common desire to raise minimum wages.  For example, smaller businesses of today will be forced to close down if the minimum wage is raised from a number like maybe $10 to $15.  That amount could be too much money for those individual small businesses to pay their employees, thus initiating a vicious cycle of firing workers and not being able to produce to a high enough level will ensue, hurting the economy.  This adjustment is one of the problems associated with how the NRA has left its legacy, but a balance in how workers are treated and how businesses can simultaneously be sustained is still a major goal for future economic growth.

Works Cited:

History.com Staff. “The Great Depression.” History.com, A&E Television Networks, 2009, www.history.com/topics/great-depression.

Buchholz, Rogene A. “National Industrial Recovery Act.” Encyclopædia Britannica, Encyclopædia Britannica, Inc., 7 Feb. 2014, www.britannica.com/topic/National-Industrial-Recovery-Act.

The Editors of Encyclopædia Britannica. “National Recovery Administration (NRA).”Encyclopædia Britannica, Encyclopædia Britannica, Inc., 14 Feb. 2017, www.britannica.com/topic/National-Recovery-Administration.

“National Industrial Recovery Act (NIRA).” Powered by Sites@Gsu – Blogs for Georgia State University, sites.gsu.edu/us-constipedia/national-industry-recovery-act-nira/.

Knott, John. “Hatching Another One for the Ax.” The Dallas Morning News, 4 March 1937.