The National Recovery Administration was initially a premier economic agency set up by U.S. President Franklin D. Roosevelt in 33. Its purpose was to bring industry, labor, government and academia together to develop codes of professional practice and establish market-based prices for services such as insurance, real estate, and consumer protection. When the New Dealer's Fair Trading Act became law, this was expanded into the National Recovery Administration. Today the NDA is still in existence and it is its policy which determine what the recovery plan will be for each area of the economy.
For example, consider how the New Dealers Fair Trading Act, or Recovery Act, of 1930 protected consumers against predatory lending and predatory business practices such as price fixing. The first major law which established the NDA involved the regulation of loans and advances. One important provision of the act was the establishment of the Federal Office of Thrift Supervision, which was created to supervise or regulate the use of loans by financial institutions. The Depression era, also known as the Great Depression because it lasted almost a whole decade, is widely regarded as one of the worst economic periods in American history.
The National Recovery Administration set about drafting a series of laws and regulatory amendments that would reform the way banks and lenders treated one another and the manner in which they granted loans. The new deal made it easier to obtain a loan, to buy a home, to engage in commercial enterprise and to purchase shares in a company. As was the case under the New Dealers Fair Trading Act, there was a concerted effort to prevent the development of monopoly or concentration interests by banks and the lending industry. Many observers today believe that the original purpose of the New Dealers' Fair Competition Act was not to create competitive conditions for businesses but to establish a system for providing a measure of federal protection against predatory lending practices and mergers and acquisitions which might result in a situation whereby a lender could take control of a business that might otherwise have been acquired through mergers and acquisitions.
The National Recovery Administration also wanted to strengthen the economy by encouraging investment in new technologies. For this purpose, it adopted a series of policies such as encouraging research and development in the area of energy, communications, automobiles, consumer durables, consumer goods, education, the production and distribution of goods and services, and foreign trade. Another policy instrument which was adopted was the creation of the National Industrial Recovery Act or the NIRAs. This was another important economic policy instrument, designed to support the goal of establishing fair competition in the economy.
It was also hoped that the new deal would encourage both employers and employees to contribute to the improvement of the economy. This was viewed by some critics as a step towards increasing concentrations of wealth at the top. The problem with this view is that increasing concentration of wealth at the top can often lead to a reduction in wages and in employee benefits, leading to an erosion of the true value of the investment made by workers in the new venture. Further, there is the risk that large profits gained through mergers and acquisitions may divert money away from investments in basic goods and services needed for the general welfare of society, thereby reducing the flow of revenue into the economy. Such a situation may eventually result in the failure . . . . . . of the recovery administration's efforts to establish fair competition.
However, many economists believe that there are more advantages than disadvantages in the way the National Recovery Administration has attempted to encourage the growth of businesses through its Nira. According to some critics of the Recovery Administration, such measures simply constitute governmental intervention in the free market. In other words, the government has no business trying to dictate the amount or type of profit an enterprise should earn, and whether or not it should achieve higher levels of productivity in the same amount of time. Under the prevailing circumstances, they argue, the existence of a competitive economy ensures that workers can receive a higher level of pay for the effort they put forth in order to produce items that the community needs and enjoys. Any attempts by the government to stifle free enterprise or to limit the amount of profit that workers receive is not only unjustified but also inconsistent with the fair system of competition that prevails in the marketplace.