National Industrial Recovery Act - Background and Enactment

Background and Enactment

The Depression began in the United States in October 1929 and grew steadily worse to its nadir in early 1933. President Herbert Hoover feared that too much intervention or coercion by the government would destroy individuality and self-reliance, which he considered to be important American values, and his laissez-faire views appeared to be shared by the Secretary of the Treasury Andrew W. Mellon. Hoover organized a number of voluntary measures with businesses, encouraged state and local government responses, and accelerated federal building projects, but his policies had little or no effect on economic recovery. Toward the end of his term, however, Hoover supported several legislative solutions which he felt might lift the country out of the depression. The final attempt of the Hoover administration to rescue the economy was the passage of the Emergency Relief and Construction Act (which provided funds for public works programs) and the Reconstruction Finance Corporation (RFC) (which provided low-interest loans to businesses).

Hoover was defeated for re-election by Roosevelt in the 1932 presidential election. Roosevelt was convinced that federal activism was needed to reverse the country's economic decline. In his first hundred days in office, the Congress enacted at Roosevelt's request a series of bills designed to strengthen the banking system, including the Emergency Banking Act, the Glass–Steagall Act (which created the Federal Deposit Insurance Corporation), and the 1933 Banking Act. The Congress also passed the Agricultural Adjustment Act to stabilize the nation's agricultural industry.