How Roosevelt Harnessed Economic Recovery
As in earlier economic recoveries, in 1933, U.S. production began increasing more quickly than workers could find jobs. A 50 percent increase in industrial output from March to July generated just 14 percent more factory employment. With orders rising, manufacturers commonly extended current employees' weekly hours instead of rehiring those who had been laid off.
Hugh "Iron Pants" Johnson, director of the National Recovery Administration, focused on closing this gap as President Franklin D. Roosevelt's first 100 days in office came to an end in June. The purpose of the National Industrial Recovery Act was simple: "Wages are to be increased and hours of work curtailed in order to distribute more widely the available employment," according to the Economist.
"The Administration has made no secret of its belief that if the slump is to be overcome, employment and wages must rise much faster in the initial stages of the recovery than output and prices."
As elsewhere, though, the question was how. Mass marketing was one key way, given the Roosevelt campaign's brilliant use of traditional media and the president's mastery of radio broadcasting. In the spirit of the World War I "Liberty Loan" campaigns, Johnson appealed directly to the more than 12,000 communities in the U.S. to form committees to carry on the struggle against the Great Depression. The core goal of the program was to put men and women back to work. The public response was immensely favorable, with thousands of letters and telegrams in support of the program sent to the National Recovery Administration.
Second, to decentralize the work, the administration invited industrial groups -- generally trade associations -- to draft codes of fair competition that followed the National Industrial Recovery Act's requirements for maximum hours and minimum wages, among other provisions. National Recovery Administration staff would check the codes for compliance and certify them for implementation.
Dozens of codes were rapidly put in place, starting with the cotton textile industry, in late June. But the U.S. had hundreds more manufacturing trades to revitalize. Requests poured in from the oil and coal, power generation, retailing, movie projection, food service and real-estate sectors. This surge overwhelmed agency staffers. Without some simplification, chaos loomed.
The solution was a national voluntary blanket code, which was unveiled July 20. Employers in all sectors could put the code's rules in place as a temporary expedient. Johnson made it clear that this was strictly an emergency measure to be modified for each industry as individual codes were submitted.
In 14 sections, the "President's Re-Employment Agreement" stipulated that factory hands should labor no more than 35 hours per week through year-end, with a busy-season exception allowing longer hours for one six-week period. Clerical and transport workers had parallel limits: 40 hours and 52 hours, respectively. Small towns were exempted, as were companies with two or fewer employees. Minimum pay in service and transport was to be $15 a week in large cities, dropping to $12 in small towns, with manufacturing labor to earn between 30 cents and 40 cents an hour. In addition, employers who signed up agreed to avoid price increases.
A week later, NRA clerks distributed 600,000 individual pledge forms to New York City employers. Signed returns swiftly increased to 10,000 a day, even as trade groups everywhere continued work on about 500 sectoral codes.
Spirits rose with this intense activity, but would the jobs follow?
(Philip Scranton is a Board of Governors professor of the history of industry and technology at Rutgers University at Camden and the editor-in-chief of Enterprise and Society. He writes "This Week in the Great Depression" for the Echoes blog.)
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Philip Scranton at email@example.com