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A Model of Industrial Self-Government

Despite suffering early casualties, NEMA was perhaps better prepared than any other trade association in the United States to rally its membership in the first years of the Great Depression. In an effort to reverse the steady decline of the American economy, the Roosevelt administration enacted the National Industrial Recovery Act (NIRA) in 1933, one of several measures intended to bolster production and decrease industrial unemployment.

NIRA encouraged manufacturers to adopt codes of fair competition and to coordinate production, pricing, sales, distribution, and labor policies with competitors; NEMA, through section and policy committees, was able to affect this kind of coordination very rapidly. Former president Herbert Hoover, impressed with the quick and efficient manner in which NEMA had drawn up a manufacturer’s code and used its statistical data collection system in the spirit of the NIRA, praised the association as “a model of industrial self-government.”

Persuading member companies to follow the terms of the code proved to be a challenge, however, taxing the leadership abilities of the executive board and the many coordinating committees responsible for forging relationships between and among NEMA members and non-members, especially wholesalers. In October of 1933, a new layer of NEMA administration was created when the association was reorganized into seventeen classification groups, with each group assigned a supervisory individual or committee tasked with enforcing the industry code.

It was during this period of self-regulation that NEMA grew the most; by 1934, the association had 175 product groups, up from only 58 in early 1933. Optimists predicted that this consolidation of electrical manufacturing would reverse the industry-wide slump that had brought member companies to the verge of insolvency.

Electrical sales did improve slightly in 1934 and early 1935, but the spirit of cooperation that had guided the recovery was short-lived. In October of 1935, the Federal Trade Commission (FTC), who accused NEMA of conspiracy to control the power cable and wire markets, charged the association with unlawful combination under established anti-trust laws. This suit came on the heels of the U.S. Supreme Court’s landmark Schechter Poultry Corp. v. United States decision that invalidated the National Recovery Act and the NIRA, thereby making industry codes a form of illegal trust behavior.

As NEMA struggled to defend the actions of the sixteen member companies named in the FTC suit, the association became embroiled in yet another New York labor dispute with Local No. 3 of the IBEW. In December of 1935, NEMA filed suit against the union, charging that Local No. 3 had conspired to damage business by barring products made by NEMA companies from construction work in Manhattan and the surrounding boroughs.

NEMA appealed to the FTC to prosecute the union under the same laws that had made the association the target of federal action; NEMA Managing Director W.J. Donald described the dispute with the union as “a battle for industrial liberty.”

Both matters were soon settled, with NEMA agreeing to change its policies vis-à-vis the cable and wire sections. The union was penalized for engaging in coercive business practices, and soon abandoned any formal claims of control over the electrical business in New York.

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