As with most banking panic, prices were falling in the 1930s due to a collapse in the money supply. For example what cost $100 in 1929 cost $75.69 in 1933.
Some people saw the symptom declining prices and thought it was the disease. Including among such people were the Dims newly in control of Congress and the White House So they enacted the National Recovery Act that essentially made price competition a crime. By 1935 the SCOTUS had found the National Recovery Act and its industrial “codes of fair competition” unconstitutional.
Here is a link to the wikipedia page on the National Recovery Administration set up by the act:
http://en.wikipedia.org/wiki/National_Recovery_Administration