Arthur Schlesinger Jr. and like-minded historians believed that the New Deal had two distinct periods. The First New Deal, during Franklin Roosevelt's first term, emphasized coordination between government and the private sector. According to Schlesinger, the basis of the First New Deal was that the technological revolution had rendered big business inevitable and competition in the marketplace could not be relied on to protect social interests. New institutions had to be created to replace cutthroat competition to balance the economy.

National Recovery Administration

To prevent unfair competition, disastrious overproduction, and the cycle of low prices and wages, the NRA was established under the National Industrial Recovery Act of 1933. The NRA was charged with supervising the process where business and government would hammer out industry specific codes that set production quotas, prices, wages, and general business practices. The textile industry was the first to draft a code, which included a 40 hour work week, a child labor ban, a minimum wage, and collective bargaining.

Unfortunately, the NRA had little power to enforce its vast responsibilities. NRA head Hugh Johnson had to use a moral propaganda campaign, the Blue Eagle drive, to get stubborn industries to draft codes. It was the larger producers that ended up making the codes, at the expense of small business, labor, and consumers. The submitted codes that Johnson approved amounted to nothing less than the cartelization of huge sectors of American industry, according to David Kennedy. Meanwhile, the NRA became a bloated bureaucracy trying to oversee more than 700 overlapping codes. By the time the Supreme Court ruled the NRA unconstitutional in Schechter vs. the United States, the NRA was a failure.