An Air of Unreality
It was normal for business to slump during the summer months and then to stage an upturn in the fall. Even those who viewed the demise of the NRA as beneficial to business expected that the summer slump would take place as usual and that any upward movement would not reveal itself until the fall. However, the normal slump did not take place in the summer of 1935. Instead, business indices rose slightly during the month of June, following the NRA decision, and then maintained their level through the summer. In late July, Business Week reported that business had shown "more vitality this summer than even the most sanguine expected." 1 On September 15 the New York Times reported that its business index had reached 88.5, which it described as "the highest level since the week ended August 19, 1933, during the pre-code boom period." 2 The implication was obvious: the two highest levels in its business index had been reached before the NRA codes went into effect and after they had been invalidated.
The business statistics were only bearing out the optimistic predictions of economists. In mid-June, Professor Malcolm McNair, director of business research at Harvard, predicted a substantial amount of business recovery over the next 18 months. 3 Economist Leonard Ayres issued a similar prediction a few days later. Observing that in the two years during which it had operated under the New Deal the U.S. economy had made "almost the worst record of the nations of the world insofar as recovery is concerned," Ayres regarded the demise of the NRA as now giving businessmen confidence and improved business conditions. 4 As for Ayres' criticism of U.S. recovery in relation to the rest of