Perhaps the most radical aspect of the New Deal was the National Industrial Recovery Act, passed in June 1933, which created a massive new bureaucracy called the National Recovery Administration. Under the NRA, most manufacturing industries were suddenly forced into government-mandated cartels. Codes that regulated prices and terms of sale briefly transformed much of the American economy into a fascist-style arrangement, while the NRA was financed by new taxes on the very industries it controlled. Some economists have estimated that the NRA boosted the cost of doing business by an average of 40 percent - not something a depressed economy needed for recovery.
The economic impact of the NRA was immediate and powerful. In the five months leading up to the act's passage, signs of recovery were evident: factory employment and payrolls had increased by 23 and 35 percent, respectively. Then came the NRA, shortening hours of work, raising wages arbitrarily and imposing other new costs on enterprise. In the six months after the law took effect, industrial production dropped 25 percent. Benjamin M. Anderson writes, "NRA was not a revival measure. It was an antirevival measure. ... Through the whole of the NRA period industrial production did not rise as high as it had been in July 1933, before NRA came in."
The man Roosevelt picked to direct the NRA effort was General Hugh "Iron Pants" Johnson, a profane, red-faced bully and professed admirer of Italian dictator Benito Mussolini. Thundered Johnson, "May Almighty God have mercy on anyone who attempts to interfere with the Blue Eagle" (the official symbol of the NRA, which one senator derisively referred to as the "Soviet duck"). Those who refused to comply with the NRA Johnson personally threatened with public boycotts and "a punch in the nose."
There were ultimately more than 500 NRA codes, "ranging from the production of lightning rods to the manufacture of corsets and brassieres, covering more than 2 million employers and 22 million workers." There were codes for the production of hair tonic, dog leashes, and even musical comedies. A New Jersey tailor named Jack Magid was arrested and sent to jail for the "crime" of pressing a suit of clothes for 35 cents rather than the NRA-inspired "Tailor's Code" of 40 cents.
In "The Roosevelt Myth", historian John T. Flynn described how the NRA's partisans sometimes conducted "business":
The NRA was discovering it could not enforce its rules. Black markets grew up. Only the most violent police methods could procure enforcement. In Sidney Hillman's garment industry the code authority employed enforcement police. They roamed through the garment district like storm troopers. They could enter a man's factory, send him out, line up his employees, subject them to minute interrogation, take over his books on the instant. Night work was forbidden. Flying squadrons of these private coat-and-suit police went through the district at night, battering down doors with axes looking for men who were committing the crime of sewing together a pair of pants at night. But without these harsh methods many code authorities said there could be no compliance because the public was not back of it.