When the National Industrial Recovery Act was being designed in the spring of 1933, the enthusiasts for “concentration and control” – as opposed to “competition and conflict” – were riding the crest of the wave. A new industrial order appeared to be within reach. Tugwell and those like-minded saw this legislation as marking a sea change in the functioning of the American economy. At last it had been officially recognized that faith in the social benevolence of free markets was out of touch with the reality of mature industrialism. A brighter future could be anticipated when visible hands guided the allocation of resources.

By early 1934, much of this original enthusiasm had been spent. Results clearly did not measure up to expectations. Work had been spread, but output in the manufacturing sector had stagnated. NRA codes might have something to recommend them as instruments of reform, especially through their attacks on child labor and on sweat shop working conditions. But their impact on lifting the economy out of depression was increasingly perceived to be negative. Codes that encouraged firms to limit production and to postpone investment (out of fear that capital spending would simply add to excess capacity) offered no formula for a return to prosperity. In the press, NRA was being pilloried as standing for “No Recovery Allowed,” “National Retardation Association,” or “National Run Around.”

These circumstances stimulated some fundamental rethinking of NRA's design, to which economists of a variety of persuasions were to contribute.