Large numbers of regulations were generated under the authority granted to the NRA by the Act, which led to a significant loss of business support for the legislation.

NIRA was set to expire in June 1935, but in a major constitutional ruling the Supreme Court held Title I of the Act unconstitutional on May 27, 1935, in Schechter Poultry Corp. v. United States.

Among the suggested causes are that the act promoted economically harmful monopolies, lacked critical support from the business community, and that it was poorly administered.

The NIRA had no mechanisms for handling these problems, which led Congress to pass the National Labor Relations Act in 1935.

[1][2][3] 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.

[4][5][6] To combat the growing economic decline, Hoover organized a number of voluntary measures with businesses, encouraged state and local government responses, and accelerated federal building projects.

[26] Some work on an industrial relief bill had been done in the weeks following Roosevelt's election, but much of this was in the nature of talk and the exchange of ideas rather than legislative research and drafting.

[29] By May 1933, two draft bills had emerged, a cautious and legalistic one by John Dickinson (Under Secretary of Commerce) and an ambitious one focusing on trade associations by Hugh Johnson.

The capitalist’s opposition to section 7a in congressional hearings was not convincing enough to persuade an overwhelmingly urban liberal Democratic Congress.

As Kenneth Finegold and Theda Skocpol have correctly pointed out, congressional Democrats were eager to consolidate their electoral majorities by supporting and enacting prolabor legislation.

Senators William E. Borah, Burton K. Wheeler, and Hugo Black opposed any relaxation of the Sherman Antitrust Act, arguing that this would exacerbate existing severe economic inequality and concentrate wealth in the hands of the rich[40] (a severe problem which many economists at the time believed was one of the causes of the Great Depression).

[50][51] Title I, Section 7(a) guaranteed the right of workers to form unions and banned yellow-dog contracts: ... employees shall have the right to organize and bargain collectively through representatives of their own choosing, and shall be free from the interference restraint, or coercion of employers of labor, or their agents, in the designation of such representatives or in self-organization or in other concerted activities for the purpose of collective bargaining or other mutual aid or protection; [and] (2) that no employee and no one seeking employment shall be required as a condition of employment to join any company union or to refrain from joining, organizing, or assisting a labor organization of his own choosing...

[58] Title II, Section 204 explicitly provided $400 million for the construction of public highways, bridges, roads, railroad crossings, paths, and other transportation projects.

[72] Between 4,000 and 5,000 business practices were prohibited, some 3,000 administrative orders running to over 10,000 pages promulgated, and thousands of opinions and guides from national, regional, and local code boards interpreted and enforced the Act.

[81] On August 5, 1933, the National Labor Board was established under the auspices of the NRA to implement the collective bargaining provisions of the Act.

[84] But many in the Roosevelt administration felt PWA should not spend money, for fear of worsening the federal deficit, and so funds flowed slowly.

[86] Although the U.S. Supreme Court would rule Title I of NIRA unconstitutional, the severability clause in the Act enabled the PWA to survive.

[90] But the business backlash against the New Deal,[74][39] coupled with continuing congressional concern over the Act's suspension of antitrust law, left the President's request politically dead.

On April 13, 1934, the President had approved the "Code of Fair Competition for the Live Poultry Industry of the Metropolitan Area in and about the City of New York.

[93] Under the new poultry code, the Schechter brothers were indicted on 60 counts (of which 27 were dismissed by the trial court), acquitted on 14, and convicted in 19.

[94] One of the counts on which they were convicted was for selling a diseased bird, leading Hugh Johnson to jokingly call the suit the "sick chicken case".

"[95] Although Roosevelt, most of his aides, Johnson, and the NIRA staff felt the Act would survive a court test, the U.S. Department of Justice had on March 25, 1935, declined to appeal an appellate court ruling overturning the lumber industry code on the grounds that the case was not a good test of the NIRA's constitutionality.

[97] On May 27, 1935, Chief Justice Charles Evans Hughes wrote for a unanimous Court in Schechter Poultry Corp. v. The United States that Title I of the National Industrial Recovery Act was unconstitutional.

In view of the scope of that broad declaration and of the nature of the few restrictions that are imposed, the discretion of the President in approving or prescribing codes, and thus enacting laws for the government of trade and industry throughout the country, is virtually unfettered.

The dire economic circumstances the country faced did not justify the overly broad delegation or overreach of the Act, the majority concluded.

[106][107][108][109] A key criticism of the Act at the time as well as more recently is that the NIRA endorsed monopolies, with the attendant economic problems associated with that type of market failure.

[110][115] But other economists disagree, pointing to far more important monetary, budgetary, and tax policies as contributors to the continuation of the Great Depression.

Larger, older businesses embraced the legislation while smaller, newer ones (more nimble in a highly competitive market and with less capital investment to lose if they failed) did not.

By the end of 1934, NIRA leaders had practically abandoned the progressive interventionist policy which motivated the Act's passage, and were supporting free-market philosophies—contributing to the collapse of almost all industry codes.

996, enacted June 18, 1934, which amended the False Claims Act of 1863 to read:[128] ... or whoever, for the purpose of obtaining or aiding to obtain the payment or approval of such claim, or for the purpose and with the intent of cheating and swindling or defrauding the Government of the United States, or any department thereof, or any corporation in which the United States of America is a stockholder, shall knowingly and willfully falsify or conceal or cover up by any trick, scheme, or device a material fact, or make or cause to be made any false or fraudulent statements or representations, or make or use or cause to be made or used any false bill, receipt, voucher, roll, account, claim, certificate, affidavit, or deposition, knowing the same to contain any fraudulent or fictitious statement or entry, in any matter within the jurisdiction of any department or agency of the United States or of any corporation in which the United States of America is a stockholder ...This form of the statute, in slightly modified form, still exists today at 18 U.S.C.