The New Deal
Herbert Hoover Speeches
Reply to Press Inquiry, Palo Alto
May 15, 1935
IN REPLY to your question, the one right answer by the House of Representatives to the Senate's action extending the life of the NRA is to abolish it entirely.
Present NRA proposals are as bad, in many ways, as the original. With its continuation until the next Congress and with Federal agents putting pressure on State legislatures to get them to enact State laws in support of NRA, it is evident that there has been no real retreat.
This whole idea of ruling business through code authorities with delegated powers of law is un-American in principle and a proved failure in practice. The codes are retarding recovery. They are a cloak for conspiracy against the public interest. They are and will continue to be a weapon of bureaucracy, a device for intimidation of decent citizens.
To the customary answer of "destructive criticism” or the other question "what substitute is offered?” I suggest that the only substitute for an action that rests on definite and proved economic error is to abandon it. We do not construct new buildings on false foundations, and we cannot build a Nation's economy on a fundamental error.
The beneficent objectives of a greater social justice and the prevention of sweating, child labor and abuse in business practices should be and can be better attained by specific statutory law.
There are already sufficient agencies of government for enforcement of the laws of the land. Where necessary those laws should be strengthened, but not replaced with personal government.
The prevention of waste in mineral resources should be carried out by the States operating under Federally encouraged interstate compacts. That is an American method of eradicating economic abuses and wastes, as distinguished from Fascist regimentation.
The multitude of code administrators, agents or committees has spread into every hamlet, and, whether authorized or not, they have engaged in the coercion and intimidation of presumably free citizens. People have been sent to jail, but far more have been threatened with jail. Direct and indirect boycotts have been organized by the bureaucracy itself. Many are being used today. Claiming to cure immoral business practices, the codes have increased them a thousandfold through "chiseling.” They have not protected legitimate business from unfair competition but they have deprived the public of the benefits of fair competition.
The whole NRA scheme has saddled the American people with the worst era of monopolies we have ever experienced. However monopoly is defined, its objective is to fix prices or to limit production or to stifle competition. Any one of those evils produces the other two, and it is no remedy to take part of them out. These have been the very aim of certain business elements ever since Queen Elizabeth. Most of the 700 NRA codes effect those very purposes.
Exactly such schemes to avoid competition in business were rejected by my Administration because they are born from a desire to escape the anti-trust laws. If the anti-trust laws had not been effective in a major way, there would have been no such desire to escape them. If they do not meet modern conditions, they should be openly amended or circumvented.
My investigations over the country show that the codes have increased costs of production and distribution, and therefore prices. Thus they have driven toward decreased consumption and increased unemployment. They have increased the cost of living, and placed a heavier burden on the American farmer.
NRA codes have been crushing the life out of small business, and they are crushing the life out of the very heart of the local community body. There are 1,500,000 small businesses in this country, and our purpose should be to protect them.
The codes are preventing new enterprises. In this they deprive America's youth of the opportunity and the liberty to start and build their independence, and thus stop the men and women of tomorrow from building soundly toward a true social security.
Publishers have had to resist arduously the encroachment of these NRA codes upon such fundamental, constitutionally guaranteed American liberties as free speech.
The whole concept of NRA is rooted in a regimented "economy of scarcity”—an idea that increased costs, restricted production and hampered enterprise will enrich a Nation. That notion may enrich a few individuals and help a few businesses, but it will impoverish the nation and undermine the principles of real social justice upon which this Nation was founded.
If the NRA has increased employment, it is not apparent. If we subtract the persons temporarily employed by the coded industries as the direct result of the enormous Government expenditures, we find that the numbers being employed are not materially greater than when it was enacted. NRA's pretended promises to labor were intentionally vague and have never been clarified. They have only promoted conflict without establishing real rights.
That original ballyhoo used to hypnotize and coerce the people into acquiescence is now gone. Most of the originally grandiose schemes now are conceded to be a violation of the spirit and the letter of the American Constitution.
Some business interests already have established advantages out of the codes, and therefore seek the perpetuation of NRA. Even these interests should recognize that in the end they themselves will become either the pawns of a bureaucracy that they do not want or the instruments of a bureaucracy the American people do not want.