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Full text of "Evidence study"

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11^906317 549 9 ' C^^^V.,Al>L 



NATIONAL RECOVERY ADMINISTRATION 

■ ■ ■ S 1936 

DIVISION OF REVIEW 



EVIDENCE STUDY 
NO. 34 

OF 



RETAIL TRADE 



Prepared by 

DAVID M. POLAK 



August, 1935 



PRELIMINARY DRAFT 
(NOT FOR RELEASE: FOR USE IN DIVISION ONLY) 



THE EVIDENCE STUDY SERIES 

The EVIDEl'ICE STUDIES viere originally planned as a means of gathering evidence 
"bearing upon various legal issues which arose under the National Industrial Re- 
covery Act. 

These studies have value quite aside from the use for which they were originally 
intended. Accordingly, they are now made availahle for confidential use within the 
Division of Review, and for inclusion in Code Histories. 

The full list of the Evidence Studies is as follows: 



1. Automobile Manufactixring Ind. 23. 

2. Boot and Shoe Mfg. Ind. 24. 

3. Bottled soft Drink Ind. 25. 

4. Builders' Supplies Ind. 26. 

5. Chemical Mfg. Ind. 27. 

6. Cigar Mfg. Industry 28. 

7. Construction Industry 29. 

8. Cotton Garment Industry 30. 

9. Dress Mfg. Ind. 31. 

10. Electrical Contracting Ind. 32. 

11. Electrical Mfg. Ind. 33. 

12. Fab. Metal Prod. Mfg., etc. 34. 

13. Fishery Industry 35. 

14. Furniture Mfg. Ind. 36, 

15. General Contractors Ind. 37. 

16. Graphic Arts Ind. 38. 

17. Gray Iron Foundry Ind. 39. 

18. Hosiery Ind. 40. 

19. Infant's & Children's Wear Ind. 41. 

20. Iron and Steel Ind. 42. 

21. Leather 43. 

22. Lumber & Timber prod. Ind. 



Mason Contractors Industry 

Men's Clothing Industry 

Motion Picture Industry 

Motor Bus Mfg. Industry (Dropped) 

Needlework Ind. of Puerto Rico 

painting & Paperhanging & Decorating 

Photo Engraving Industry 

Plumbing Contracting Industry 

Retail Food (See No. 42) 

Retail Lumber Industry 

Retail Solid Fuel (Dropped) 

Retail Trade Industry 

Rubber Mfg. Ind. 

Rubber Tire Mfg. Ind. 

Silk Textile Ind. 

Structural Clay Products Ind. 

Throwing Industry 

Trucking Industry 

Waste Materials Ind. 

Wholesale & Retail Food Ind. (See No. 31) 

Wliolesale Fresh Fruit & Veg. 



In addition to the studies brought to completion, certain materials have been 
assembled for other industries. These MATERIALS are included in the series and are 
also made available for confidential use within the Division of Review and for in- 
clusion in Code Histories, as follows: 



44. Wool Textile Industry 

45. Automotive Parts & Equip. 

46. Baking Industry 

47. Canning Industry 

48. Coat and Suit Ind. 



49. Household Goods & Storage, etc, (Dropped) 

Ind. 50. Motor Vehicle Retailing Trade Ind. 

51. Retail Tire & Battery Trade Ind. 

52. Ship & Boat Bldg. & Repairing Ind. 

53. Wholesaling or Distributing Trade 



L. C. Marshall 
Director, Division of Review 



(\-b\^ 



I A^^ 



CONTENTS Page 

Foreword 1 

CHAPTER I - NATURE OF THE RETAIL TRADE 2 

Number of Retail Stores 3 

Nimber of Proprietors 2 

Number of Stores by States 2 

Number of Proprietors by States 3 

Number of Failures and Liabili ties Involved 5 

Total Net Sales 5 

Total Sales by Kind of Business 7 

Principal Commodities Sold 8 

Competitive Trends Within Retail Trade as 

a Wliole 9 

CHAPTER II - LABOR STATISTICS 11 

Number of Fall-Time Employees 11 

Seasonal Variation in Employment 11 

Total Annual Payrolls of Pull and Part-Time 

Employees 12 

Monthly Indexes of Employm.ent and Payrolls 12 

Average Hourly Earnings 12 

Average Weekly Hours per Employee 13 

Average Weekly Wages per Employee 13 

Number of Employees, by States. 13 

Total Annual Payrolls, by States 16 

CHAPTER III - KINHS AND SOURCES OF I^EERCHANDISE SOLD 19 

Kinds of Merchandise Sold by Members of the 

Trade 19 

Sources of Merchandise Sold 19 

CHAPTER IV - SALES AND DISTRIBUTION. 20 

Net Sales by States 20 

Volume of Sales 20 

Evidence of Interstate Character of Retail 

Trade 21 

Retail Sales in Selected Interstate Trading 

Areas 21 

Interstate Character of Mail-Order Trade 22 

Interstate Character of Department Store 

and Other Types of Retail Trade 23 

Interstate Shipment of Stocks to Retailers 24 

Nature of Advertising Media Used, 24 

Interstate Character of Newspaper Advertising 25 

CHAPTER V - TRADE PRACTICES 25 

Unfair Trade Pra^ctices Prevalent Prior to 

the Code 26 

Trade Practices T/hich Became Detrimental 

Because of Abusive Use 26 

8489 -i- 



CONTENTS (Cont'd^ 



Pace 



Unfair Trade Practices Prevalent Under the 

Code 26 

Effect of Unfair Trade Practices on Retail 

Trade and Sources of Supply 26 

CHAPTER VI - GENERAL INEO.RivlATION 29 

Retailing as a Part of the Distributive 

Process 29 

Trade Association Activity 29 

National Retail Furniture Association 30 

National Retail Hardware Association 30 

Tlie Mpil-Order Association of America 30 

Tlie National Association of Retail 

Clothiers and Furnishers 30 

The National Retail Dry Croods Association 31 

The National Shoe Retailers Association 31 

National Council of Shoe Retailers 31 

The Limited Price Variety Stores 

Association 32 

Competitive Trade Associations 32 

The Extent of Union Activity 32 

Labor Conditions Within Various Trade Groups 33 

In General 33 

In Department Stores 33 

Company Unions 33 

Mutual Aid Associations 33 

Old Age Pensions 34 

Group Insurance 34 

Financial Condition of Retail Trade 34 

Effect of the Code on the Retail Trade 37 

Prices and Stocks 37 

Wage s 37 

Hours 37 

Operating:; Costs 38 

Proportion of Trade-Marked Merchandise 38 

Limited Price '"'ariety Stores 38 

National Council of Shoe Retailers 38 

National Retail Dry Goods Association 38 

Effect of Imports of Foreign Merchandise... 39 

In Goneral 39 

Department Stores 39 

Variety Stores 39 

Shoe Stores 39 

List of Q,ualified Uitnesses 39 



8489 



-11- 



TABLES 

Page 

TABLE I - ITura'ber of Stores in the Trade as 

Defined by the Code, by Principal 

States ^ 

TABLE II - IvT-omber of Proprietors in Trades Covered 

by the Code, by Principal. States 4 

TABLE III - Niunber of Failures and Amount of 

Liability Involved 5 

TABLE IV - Total Sales in Trades Covered by the 

Code, by Zinds of Business 8 

TABLE V - Principal Commodities Sold by Variety 

Stores, 1934 9 

TABLE VI - Indexes of Employment, by Ilonths, 1933 11 

TABLE VII - Avorr^.ge Hourly Wage Rate, Average TTeekly 
Earnings, and Average Hours Per Week 
in the General Merchandise Group 13 

TABLE VIII - Average Number of Pull-Time Employees 
in the Tra.de as Defined by the Code, 
by Principal States 14 

TABLE IX - Average Number of Full and Part-time 

Employees Combined, and of Part-Time 

Employees in Trades Covered by the 

Code, by Principal States 15 

TABLE X - Per Cent Change in Total Number of 

Employees, in Pall and in Part-Time 
Employees, in Trades Covered by the 
Code, by Principal States, 1929-1933 15 

TABLE XI - Total Annual Payrolls in Trades Covered 

by the Code, by Principal States 18 

TABLE XII - Net Sales in the Trade as Defined by 

the Code, by Principal States 20 

TABLE XIII - Net Sales of Selected Stores in Cities 

and ToTTns Having an Interstate Trading 

Area 22 

TABLE XIV - Per Cent of Publicity Cost per Dollar 

of Sales 25 

TABLE XV - T^^Tiical Operating Results of Department 

Stores 35 



8489 -iii- 



TABLES (Cont'd) 

Page 

TABLE XVI - Net Profit or Loss in Retail Stores, 
Classified by Size of Annunl Salos, 
1929-1933. . /. 35 

TABLE XVII - Operating Results of Hardivare Stores, 

' 1930-1933 37 

CHART I - RETAIL TRADE 5 



-oCo- 



84-89 -iv- 



- 1 - 

EETAIL THADE 

Porev;ord 

Basic Retail Code Nizmber 60 "by definition excludes those retail stores 
dealinj; in automobiles, food, dairy products, lumber, and tobacco, as v/ell 
as trades governed by a separate code. Allowing for these deductions approxi- 
mately one-third of all retail stores as listed by the Census of Retail Dis- 
tribution fell witMn the scope of the Code. An executive order exempting 
stores in all places having a population of 2,500 or less from jurisdiction 
of the Code further limits its scope. 

Tlie Census data used in this report cover all the Idnds of retail 
business not exp^ressly excluded from the Code by its definition and not 
covered by another code. The groups included are as follows: general stores; 
general merchandise group; apparel group, except custom tailors; furniture 
and household group; and "other retail stores" excepting farm implement 
stores, cigar stores and stands, coal and wood yards, jewelry stores, 
opticiriis and optometrists, and nonuinent and tombstone works. 

Since the Census of Distribution contains a less detailed break-dov.-n 
in 1935 than in 1929, Census data for two minor groups, opticians and 
monument works, are not available for 1933. Estimates covering these groups, 
which were made by the Retail Census, have been used, however, in order to 
subtract the data for these groups from the published totals. These estL.iates 
are as follows: number of establisliments, no change; employment and payroll, 
the sai'-ie percentage decline as in retail trs-de; sales oy opticians, 45 per 
cent decline; sales by iionument works, 65 per cent decline. 

Deductions to allow for the exemption, by Executive Order, of stores in 
places with population of less than 2,500 imve been based on Census data for 
that group. Retail stores in these small places constitute approximately 
one-third of the total number of stores, account for about one-fifth of a.11 
retsdl sales, and employ one-eighth of all full-time employees engaged in 
the Retail Trade. It has been assTomed that the per cent of retail stores 
subject to the Code was the sai.ie in small places as in all places. A stuoy 
of the groups excluded and inclixded shows this to be a reasonable assumption. 

Inasmuch as classifications by size of city are not available for part- 
time emloyces and part-time payrolls, nor in sufficient detail h^r kind of 
business, a few te.bles have been included in this report in which no deduc- 
tions he.ve been made for small places exempt from the Code. Wherever this is 
the ca,se, it has been so noted on the tables. 



8489 



Ci-LAPTEE I 

MTURE OF THE RETAIL TRADE 

Iliuaber of Retail Stores 

According to the Census of Aaerican Business, there were, in 1933, 
1,526,119 stores in the Retail Trade. Of this nuraber only 297,100 eventually 
■becnrnc stibject to the Code. The reiiiainder were either excluded by definition 
or else v/ere excluded under an E:>:ecutive Order of the President which exeiapted 
stores in towns having a popule.tion of less than 2,500 from code provisions. 

d'le Census of Retail Distribution for 1929 indicates that there were in 
that --ear approxiuately 359,000 stores in the Trade as later defined by the 
Retail Code, as compared with the total of 297,100 reported in the Census of 
American Business in 1933. (See Table l). 

Fanber of Proprietors 

Tlie nuuber of individual proprietors in the Trade as later defined by 
the Code niuabered 289,100 in the year 1933, (See Table II). This represented 
a IS per cent decline from the 1939 total of 343,000. 

Huaber of Stores by States 

Table I indica.tes that of the more tiaaii 297,000 stores in the Trade as 
defined by the Code 61.2 per cent of the total were located in the 10 states 
specified in 1933. Of these New York contained the lar^jest niimber, nesaelv- 
43,500 stores, or 14.7 per cent of the total in the Trade, and Pennsylvania 
follov/ed with 22,900 stores, or 7.7 per cent of the total number. The con- 
centration of retail stores closely follows that of population, and each 
sta,t8 has appro ::imately its proportionate share of retail oiitlets. 

TABLE I 

Iroxiber of Stores in the Trade as Defined by the Code, 
by Principal States a/ 







19 29 


-. 


1933 




State 


ITurnb er 


Per Cent 


i\-u-nber 


Per Cent 




U. S. Total 


369,000 


100.0 


297,100 


100.0 




Cali f rni a 


21,800 


5.9 


19,500 


6.6 




I llinois 


25,900 


7.3 


21,200 


7.1 




Massachusetts 


15,900 


4.3 


12,800 


4.3 




Michijaai 


13,900 


3.8 


11,400 


3.8 




Mi s souTi 


11,000 


3.0 


9,300 


3.1 




New Jersey 


14, 900 


4.0 


13,200 


4.5 




Hew "fork 


58,500 


15.8 


43,500 


14.7 




Ohio 


20,200 


5.5 


17,000 


5.7 




Penns Ivenia 


33,400 


9.0 


22,900 


7.7 




Texas 


13,100 


3.5 


10,900 


3.7 




Total, 10 States 


229,400 


52.2 


181,900 


61.2 




Other states 


139,500 


37.8 


115,200 


38.8 





8489 (Continii.ed on following; pace) 



- 3 - 

TABLE I (Cont'd) 

Source: Uvdted Sta tes Census of Pist rilp iition. Hetall 'Trade, 1950 , 
Taole I ; and Censiis of A-n.erican ^isiness. United States 
giu . a.-.ary of Hetail Census, 1952 , Table 3, s-id State Heoorts, 
Table E. 

a/ Data for place;3 with, po^^ula-tion of less than 2,500 and for 

trades e.:cluc1ed from the Code were estimated "by NRA Research 
and Planning Division aiid subtracted from the Census totals to 
Cive code coverage. 

JMuiiber C"'" Proprietors b" States 

The distribution of proprietors in the 10 principal states in 1929 vias 
appro::imatel7 the same, in proportion to the total number, as the distribution 
of retaal stores (See Table II), Although data by states, on the number of 
proprietors in the Trade as defined by the Code — which involves the ex- 
cliision of those in places having a population of less thaii 2,500 — are not 
available for 1933, any change in the relative importance of these 10 
principal states betv/een 1929 and 1953 nay be inferred from the left-hand 
side of Table II. These figures, representing all the proprietors in the 
trades later covered by the Retail Code, ind.icate very little shift in the 
relative im-oortance of these states during this neriod. 



8489 



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gU89 



- 5 



Humbei- of Failures and Lialjilities Involved 



The National Betail Code Authoiuty has compiled failxxres data y/hich 
cover most of the trades included imder the Code, These indicate that 
failures declined in nui:iber from 4,882 in 1933, to 2,278 in 1934, and in the 
amount of liabilities involved from $75,118,000 in 1935, to $27,148,000 
in 1954* These reductions v;ere equivalent to 53.3 per cent in the number 
of failures and 55.9 per cent in the amount of liabilities. (See Table III). 

TABLE III 

Number of Failures and Amount of Liability Involved-S^' 



Year 



Number of 
Fai lures 



Amount of Liability 
Involved (OOO's) 



1930 
1931 
1933 
1934 



7,793^ 
8,597^ 
4,882 
2, 278 



119,186^/ 

151,360^ 

75,118 

27,148 



Source: National Retail Code Authority, Inc., "Reply to Questionnaire 
of Litigation Division - iIRA, on Code for Retail Trade," 
April 1, 1955. 

a/ Includes failures of General Stores, Clothing and Furnishings, 

Dry Goods and Department Stores, Leather and Shoes, Furniture 
and Crockery, Hardware, Stoves and Tools, Paints, Kats, Gloves 
aiid Furs. 



b/ IVliolesale and retail combined in 1930 and 1931, but, according 

to the Code Authority, by far the greater proportion was retail. 

The foregoing figures differ from those published under the Traders' 
Group in Dun and Bradstreet Monthly Review in that the latter figures, 
although they are predominantly for retail stores, include wholesale 
establisliments as well. From the Dun and Bradstreet classification the 
clothing, furniture, books and paper, and miscellaneous groups have been 
combined and presented by months, 1929 to date in Chart I, Analysis of 
these figures indicates that ih the 5eai"1932 failures in the Retail Trade 
reached their peak both in nuraber and total liabilities involved, and were 
successively lower in 1933 and 1934. In the latter year, retail failures 
were lower, both as to number and total liabilities involved, than in any 
of severril years preceding the depression. 

Total Net Sales 

Net sales of stores in the Trade as defined by the Retail Code were 
$8,664,000,000 in 1933, as coi:pared with $17,946,000,000 in 1929. (See 
Table XII, ) Tlie Census defines sales as the total receipts of retail stores, 
consisting of cash or its equivalent accepted in exchange for merchandise, 
repairs or other service, space or concession lea.se, and the like. Refunds 
or allo\7aiices on returned merchandise are deducted. 



8489 



Ch--)rt T 



RETAIL TRADE 



-e- 



3 



AyCHASC HOURLY WACC IN CENTS 




-I 1 

MIRAGE HOURS WORKED PER WEEK 



AVERAGE WEEKLY WAG E IN 
so. 




200 



INDEX OF VARIETY STORE SALES 




INDEX 



WH(bLes ALe PftldES 



(/)(<)I00 

UJ (71 Oi 

U — 
Eio 80 



INDEX OF RETAIL PRICES, 
FIRST o r MONTH ' 



^ 8 

120 7 

100 loN 
90 :C* 

70 PW 




192* r»30' 1931 lfla< 193? 1934 (935 

Sources of Data: Rireani of Labor Statistics - Labor data, HB& estimate of average weekly 
wages froQ indexes of eaployment and payroXlj index of wholesale prices, NBA. oonposlte 
of boot and shoe, textiles, and hotttsefumishings grofup, Jederal Jtoeerva Bulletin - 
Index of department store sales and stocks. Bareaa of Foreign and Domestic Oommeroe - 
Indox of variety store sales; index of rural salos of general aerohandiae. Ifeirohild 
Publications - Index of retail prices. Chart prepared by Hesearch and Planning Division. 

nail. 



- 7 - 

Total Sa les by Kind of 3usiness 

Including sales made by stores in tovras of less than 2,500 population, 
net sales by the hinds of business subject to the Code, amounted to 
$10,529,000,000 in 1933, and $21,813,000,000 in 1929, as shown in Table IV. 
Separate details by kind of business are not available for the smaller 
places. 

Of the total sales for 1933, 58 per cent consisted of sales of the 
folloT/in;^- 8 kinds of stores: _l/ 

Department Stores (including Mail Order Sales) 

Dry Goods Stores 

Variety Stores 

Apparel Stores (excluding Shoes and Custom 

Tailoring) 
Shoe Stores 
Furniture Stores 
Hardware Stores 
Drug Stores 

This group of stores numbered 206,567 or 46,3 per cent of the stores in the 
kinds of business subject to the Code. 



1/ It should be noted that in 1933 the kind-of-business classification 
wcs based on the usual designation of the store or the principal line 
of goods handled in the absence of information on sales by comjaodities 
which were utilized in classifying reports for 1929. For this reason 
a store may have been differently classified by the Census in 1933- 
even though the nature of its business was the same as in T-oes". 



8489 



TJLBLE IV 

Total Sales in Trades Covered "by the Code, 
by Kinds of B-asiness a/ 





— 


- ■ 









Value 


of 


Sales 








Number c 


f Stores 




(In mill 


-ions) 


Kind of 3u.Einess 






1929 


1933 




19 29 




1933 


Total 






541,457 


444, 579 


$ 


21,813 


$ 


10,529 


Departi-ient Stores 


















(including Hail Order) 




4,321 


3,544 




4,350 




2,545 


Dry Goods 






25,450 


12,746 




663 




150 


Variety Stores 






12,110 


12,046 




904 




678 


Apparel (E;:cluding 


















Shoes and Custom 


















Tailorini^-) 






78,753 


60,726 




3,269 




1,445 


Shoe Stores 






24, 259 


18,835 




601 




425 


Furn it-are 






25,155 


17,418 




1,510 




554 


Hardware 






25,330 


22,844 




705 




311 


Drugs 






58,258 


58,407 




1,690 




1,055 


Total 3 groups 






253,534 


206,567 




13,899 




7,174 


Otiier 






237,925 


238,012 




7,914 




3,355 


Source: U. S. Census of 


Ret. 


ail Distri 


but ion, 1930 


: U. S. 


Sor.'L.iary, 


Table lA; 


and Census of Ar.ierican irasiness 


: U. S. 


Sum.iary 


of Retail 


Trade , 


19: 


53, Tables 


1 and 3. 











a/ ri^ires include stores in places of 2,500 or les£ 

population which are eicempt from the Code. 



m 



Inde::es of department store sa,les, of variety store sales, and of 
rural scJes of f;eneral merclicuidise show the monthly movements of sales of 
a fev/ of the more important kinds of business which are included under 
this Code. A comparison of these may be seen in diart ITumber I. 

Principal ConEodities Sold 

Tlie relative importance of the principal commodities sold is available 
for one of the more important groups under the Code, namely, variety stores. 
These data, which are presented in Table V, show that apparel, notions, 
and home furnishings account for more than a third of the total sales in 
these stores. 



8489 



- 9 - 

TABLE V 

Principal Com]?.odities Sold "by Variet:' Stores, 1934 
(in Order of Sales Importance) 



Per Cent 
of Total 

Commodity Variety Sales 

Total 100.0 

AjDparel and Accessories 13.4 

Notions and Snie-ll ITares 10.1 

Home Furnishings (principally China, G-lassv/are, 

and Crockcr^O 10.0 

Confectionery and Huts '''•9 

Drugs and Toiletries 7.8 

Hardware V.V 

Stationery, Books (princi j-.lly Paper and Fa-ncy 

Paper Goods) * 5.4 

Dry Goods 5.4 

Toys and Gaiaes 5.4 

Soda Fountain Sales and Lmiches 3.9 

Clothing- and Fumishin^ss (Men's and Boys') 3.8 

Jewelry (principally Costume) 3.0 

Electrical Supplies and Materials 2.3 

Miscella:ieous 12.4 

Source: Presenting the Limited Price Variety Stores Association . Inc., 
pace 1. 

Competitive Trends Within ?.etail Trade as a. Tnole 

Possihly as a result of the depression, there has heen a notal)le 
tendency for retail stores to widen their lines of merchandise and go 
outside of their regular fields of tra,de. For e::ai.:ple in the drug field 
there ha.ve sprung up the so-called "pine-hoard" shops which specialize 
only in the fast selling a-iid more profitable lines of merchandise such as 
cosmetics and toothpaste, while items comi.i.only found in hardv;are stores, 
dry goods stores, and jewelry shops can he purchased in drug stores. 

A-iother trend aas heen the development of direct selling hy manufac- 
turers aaid mail order houses. A fui-ther development in recent years has 
"been the establishment hy nail order houses of retail outlets throughout 
the United States. These stores are, of course, in direct competition 
with those owned by chain and independent coi-raetitors. 

pLecent changes in the relative importance of chain stores are 
indicated in the report on "Changes in ITnolesaling and Retailing "between 
1929 faid 1933," issued by the Research and Planning Division of the 
national Recovery Administration and based on Census figures. Chain 



8489 



- 10 - 

stores wliich ntuiitcr 9.5 per cent of the total outlets in 1933, find 9.6 per 
cent in 1929, sold 25,3 per cent of the value of all merchandise retailed 
in 1933, as a;:;ainst onl^ 20 per cent in 1929. l/ Althoiogh the nuj-iber of 
such outlets was sli,;htl7 smaller, reL-^.tive to the total, than in 1929, 
sales shov;ed an increase rclativo to total sales. Independents, on the 
other hand, showed a decrease lioth as to their per cent of total sales raid 
of total outlets. Their sales decreased from 77.5 per cent of total in 
1929 to 71,2 per cent in 1933, aiid the nuriber of outlets declined fron 
89.1 per cent of the total to 83.4 per cent. 



1/ "Changes in YJholesaling and Retailin^^ between 1929 and 1933," 
(Llarch, 1935) Tables 10 and 11. 



8489 # 



-11- 

CHAPTER II 
LABOR STATISTICS 

ITunljer of IPall-Tine Er.Tolo?/ees 

Analysis of Census data for tlie years 1929 a^id 1933 shows that enploy- 
ment of full-time employees in the Trade as defined "by the Code declined 
fron 1,6UU,10G in 1329, to 1,06S,750 in 1933, ?- decrease of 35.2 per cent. 
(See Table VIII.) The eniploynent data incliide all persons \7hether on a 
salary or v;age "basis. 

Seasonal Variation in Drployment 

Enploynent in the trade groups subject to the Ba.sic Retail Code is 
higlily seasonal. Inde:: nur.foers of employnent for each month of 1933 i^^'-'^e 
"been calculated separately for full-time, part-tirae, and tot?JL employment 
and are presented in Table VI. For each group, the average for the year 
was used ?,s the "base (monthly average = 100). 

In each of these series the lorr point of employment occurred in the 
early months ' of the year and \7as followed "by a graduaJ rise to the spring 
pealc which occurred in April. The slightly lower employment of the ne::t 
four months was followed "by a sharp rise which started in Septem"ber and 
culminated v;ith a decided peal: in Decem'ber. It Tiei^ he presumed that this 
seasonal variation \7as characteristic of years other than 1933 i "ith pos- 
si'ble changes in the location of the spring pe£>2: according to the month 
in which Easter occurred. 

TABLE VI 

Inde--es of Em.ployment, "by Ilonths, 1933 
(Monthly Average - lOO) 



Month 








Total 




Eull-Time 




Part-Time 


Average 








100.0 




100.0 




100.0 


January 








90.2 




07 7 




79.6 


Pe"braar3' 








S9.7 




92.1 




SI. 3 


March 








90. U 




92.0 




SU.S 


April 








9S.S 




97.0 




105.0 


May 








96. s 




96.6 




97.5 


June 








9S.2 




97.7 




99.9 


July 








96.0 




96.5 




9U.6 


August 








97.6 




9S.6 




9U.3 


Septem"ber 






loU.U 




105.2 




101. s 


Octo"ber 








107.7 




107.5 




10s. u 


Eoven"ber 








10s. 9 




lOS.O 




111.3 


Decem'ber 








121.2 




115.5 




lUl.O 


Source: 


Construct! 


3d "by lOlA. Research raid 


Planning Division from 




da.t 
cf 


a in Cj 
Retail 


3nsus of Arier: 
Distri'bution 


Lean Business, 


United States Sur.ii.iar?,'- 




, 19r^, T£ 


ihles 


h and Ua 



iUS9 



-12- 

Pp,rt-ti:-.ie euploynent vras lo'.rest during Jantiar^-, in \rhicii nonth enploj''- 
nent v-p.c fy.S per cent of the yearly averace. ZXirinf; the month of Decerfoer 
part-tivie er.ploy^ient 'jas "-i-l per cent higher thrjn the average for the yea.r, 

Fall-tine enploynent \7as lor/est in I.Iarch rath an inde;: nanher of 92.1, 
a,nd highest in Decejiber, for • hich i:onth the inde:: nunher 'jas 115.5j ^s 
coupared vrith 100 for the year. 

Total euploynent, iierjilng "both full aiid part-tiiie, v/as lov/est in Jeh- 
ruar;', rhen it stood at S9.7j p^^^'- highest in Deceiioer, vrhen it ^jas 21.2 per 
cent ahove the year's avera.ge. 

Total Aiinual Payrolls of Fall and Part-Tine Hi-oloyees 

Total payroll figares ac used in this report represent the salaries, 
v;ages, co:v.-issions, and "bonuses padd part-tine and full-tine employees cjid 
sa2a.ried officers during the yea,r. They do not include conpensation of 
proprietors e::copt for fi::ed salar;'' of active partners if such salary is 
paid supplenentary to the pa,rtner* s participation in profits. Such se-laried 
partners are considered hy the Census to "be conparahle ;7ith salaried e::eai- 
tives of a corporation and axe counted as en.ployees rr.ther tha.n proprietors.!/ 

After decuction of groups si-ibject to separate codes aiid also of stores 
in towns rith population of less than 2,500, which were e::enpted hy Presi- 
dential Order, total annual payrolls of fall-tine and part-tine employees 
for the groxips later subject to the Code amounted in 1329 to $2,222,000,000, 
as against $1,19S,000,000 in 1933. The decline as het'jeen the t'jo Census 
Shears rxiounted to U7.5 per cent. (See Table XI.) 

Monthly Inde::es of Eir,olo:/Tient ajid Pa'/rolls 

Por inde::es of enploynent raid payrolls by :ionths, 1929 to date, in 
the general merchandise group, see Chart IToi-.ber I. This group includes de- 
partment, variety, and general nerckandise stores and nail-order houses. 
The enplojrnent and paj'-rolls series sho'.in on this Chart are less inclusive 
than the Code coverage, but are more nearly'' coyiparable vdth Code coverage 
than are the only other avails-ble inde::es, nanely, the Bureau of La.bor 
Statistics series for the entire Retail Trade. Carrent data are based on 
appro::inately a 50 per cent saLiple. 

Avera.^e Hourly learning s_ 

Accorc'lng to figures obtained from the U. S. 3u.reau of Labor Statis- 
tics, and bs,sed on a sai^ple of the General herclor.ndise Group in the Retail 
Trade, average hourly earnings in tha.t group increased from U2.7 cents in 
1933 to H7.5 cents in I93U. (See Table VII.) Average hourly earnings by 
months, 1933 to date, e.re sho".7n in Chart !?a:;.ber I. 



1/ Census of American Business, 1933 > Retail Distribution, 
Vol. I, page 69. 



gl+29 



-13- 

TABLE VII 

Average Hourl;^'' Waf-^e Hate, Average 'iTeel:!" Earnings, and. 
AvcraQe Hours Per T'eek in the C-ener?2 I.Icrc>.r.ndise Group 

Averaf^e Ho\irl3' Average T/eehly Average Hours 
Year Tfoge Kate Earnings Per Weel: 

$ 19.07 a/ 

15.07 aj 

15.50 33.0 

Source: Conputed Ijy IIEA, Research oiid Planning Ditsion, 

froa unpublished Bureaii of Lalior Statistics data. 



1329 


^ 


1931 


a/ 


1933 


$ .U27 


1S3^ 


.U75 



a/' ilot a-vailahle. 



Averri.f^-e TJee ]:ly Hours per Erroloyee 

According; to a sai.iple oS the Genera,! Merchandise Group of the Reta-il 
Trade ohtained froia the Bureau of Later Sta.ti sties, the average hours per 
en-oloyee "oer v/eeh declined frora Ul.l in 1933, to 3.:;.0 in 193^- (See Tahle 
Yli . ) 

G-iart lluii'ber I shovs average hours -jorhed per ueek during each month, 
1933 to date. 

Average TJechly Wages vev Enployee 

Estimated average v;eekly \7ages per enployee in the General Merchandise 
Group in I929, aiiounted to $19.07 per week. In I93I the corresponding fig- 
ure vas $1S.07, and in 1933, $l'+'7'7 per neek. As the resu.lt of operation 
of the ninirmn wage provisions in the Setail Code wages per week averaged 
somewhat higher, nanely, $15.50 per e/nployee in I93U. (See Tahle VII.) 

The foregoing figures are estiuates ootained hj' dividing the esti- 
nated payi-oll for the group hy the estimated enploynent. Estimated employ- 
ment and payroll figures are ootained hy niultiplying the inderces of e'lploy- 
ment and pr.3''rolls "by their respective Census "base figure. 

Por average weekly wages in dollars, 1S:29 to date, see Chart Numher I. 

Uiinher of SiToloyees. hy States 

E:--roloj~ient in the Retail Trade closely follows the number of estah- 
lisliraents. Table VIII shows that in 1933 6^-7 per cent of all of the 
full-tine employees combined were found in the identical 10 sta^tes, wliich 
were shown in Table I to contain bl.2 per cent of all establishments. 
New York employed lU.g per cent of the totaJ under this Code, and Pennsyl- 
vania employed 9.1 per cent. 



2US9 



-14- 



TABLE VIII 

Avei-ajTie ITuralier of Full-Tine Er.iployecs in the Trade 
as Defined "by tlie Code, by Frincioal States a/ 



State 



1S29 
llunber Per Cent 





1333 




Jll.lJil'l 


3er Per Cent 


066, 


,750 


100.0 


71, 


,900 


6.7 


ss, 


,300 


2.3 


56. 


,500 


5.3 


UO, 


,200 


3.S 


37, 


,100 


3.5 


33, 


,500 


3.2 


15S, 


,Uoo 


lU.S 


67, 


,Uoo 


6.3 


96, 


oOO 


9.1 


ho. 


000 


3.7 


6S9, 


900 


Gk.i 


376, S50 


35.3 



U. S. Total 1,SUU,100 100.0 



California 

Illinois 

Ma s s achu s e 1 1 s 

Michigan 

Missouri 

Hev; Jersey 

lle-.T York 

Ohio 

Pennsylvania 

Te::as 

Total, 

10 states 

Other states 



109,700 

1140,500 

34,700 

67,200 

55,500 

U9,S00 

2^12,100 

102,200 

151,900 

61,900 

1,066,100 
57:;, 000 



6.7 

S.5 

5.2 

k.l 

3.4 

^.0 

1U.7 

6.2 

9.2 
3.3 

6U.G 
35.2 



So"arce: United Stater. Censiis of Distrioution, 1030 , Tahle 1; 

and Census of jxierica:: Basi-iess, United Sta.tes Sannary of 
Retail Distribution, 1933 . Taole 3» and State Heports, Table D. 

a/ Data for places with popula,tio;i of less tlian 2,500 and for 

trades excluded fron the Code v.'ere estimated by NEA, Rese?.rch 
and Planning Division, and subtracted fron the Census totals 
to give code coverage. 



The fiiiount of part-tine enploynent in to'./ns having a population of less than 
2,500 is not published by the Census. The conparison in Table IX between 
full and part-tine enployees, conbined, sjid part-tine enployees is therefore 
necessarily based on da.ta -jhich include stores in snail places. Reference 
to this table shov.'s that in 1929, 6I.I per cent, and in 1933, 6O.5 per cent 
of all full and part-tine enployees conbined \7ere located in the 10 princi- 
pa.l states. 



sUsg 



-15- 



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-16- 

Pro:i 1S2S; to 1933 the clir.nf-jes in the total ntu.i'ber of full aiad part tine 
eriployees conoinec. and of full-time einploj-eeG rere apiDroxinately the same 
for these 10 states as for tJie country as a vfhole. (See Tahle X.) During 
thds period the nuiiiber in the former group decreased about 30 per cent, in 
the latter, about 35 pei' cent, both for these 10 states as a group and for 
the entire countrj'. On the other hand an increase of appro::imately 1 per 
cent in the number of part-tine employees v.'ac found in the group of 10 states, 
\7hile for the country a,s a uhole, part-time employment increa.sed appro::ima,tely 
2 per cent. 

The shift from full-tine employment to part-time v/as considerable. 
Prom Ciata presented in Table IX it ha,s been computed that in I929 part-time 
employment in this group of businesses aiMunted to 15.S per ceiit of the total 
employment but in 1933 it had increased to 22.5 P^'^" cent. 

TABLE X 

Per Cent Change in Total ITiimber of r;m]plo3'eea, in Pull 

pjid in Part'-Time Employees, in Trades Covered by 

the Code, by Principal States, 1929~1933 a/ 





Total Pull 










and Part-Time 










Ei;plo3'-ees 


Pall-Time 


Part-Time 




State 


Com-bined 


Eriployees 


Employees 




U. S. Total 


-23.3 


-35.1 


+ i-S 




California 


-26.1 


-3^N5 


-1-36. "S 




Illinois 


-3S.7 


-37.1 


- 1.5 




Massachusetts 


-2S.6 


-33. U 


- 2.5 




Michigan 


-33. s 


-U0.6 


+ 7.1 




Mi s sourl 


-26. s 


-33.2 


4-10.6 




Nev,' Jersey 


-2S.9 


-32.7 


- 9.3 




lTe\7 York 


-31.0 


-3U.6 


- 5.2 




Ohio 


-27. s 


-3U.1 


^ H.7 




Pennsylvania 


-31.5 


-36. U 


- 5.3 




Te::as 


-30. 3 


-35.U 


-10.2 




Total, 10 states 


-30.0 


-35.3 


-(. 0.9 




Total, 33 other 










states 


-2o.2 


-3^^.7 


■h 3-2 





Source: Derived from Table IX. 

a/ Pigures include stores in places havin/^ 

2, '^00 nhich i.7cre ercerrpt from the Code. 



a "ooT)ulation of less than 



TotaJ. Arj-ua-l Payrolls, by States 

According to Census data, the total annual payrolls paid to all 
employees in the Trade as defined ^oy the Code (e::cluding places having a 
population of less than 2,500) v/as $2,282,000,000 in I929, and $1,192,000,000 
in 1933. 

sUsg 



-17- 

As already'' noted aoove, the decrease in total pa3'rolls aonoanted to U7.5 
per cent. It has likev;ise been noted that the vast hulk of employment oc- 
curred in 10 states, and total ann:J.^.l '.rages lollov: the sa:ie course. In 
1329, 67.6 per cent of \7ages paid in the Retail Trade and in 1933> 66. S per 
cent of such v;ages were paid to enployees vdthin the sane 10 states (See 
Tahle XI) . 

Ne'.T York accounted for hy far the largest i^roportion of v/ages paid 
to retail enployees, and in 1933 this amounted to a,ppro::inately I7 per cent 
of the total. Pennsylva,nia followed with 0.5 per cent, Illinois with 2.2 
per cent, and California v;ith 1,6 per cent of the total of retail payrolls. 

A conparison of the relative importance of state payrolls with that 
of enploynent can he made only on data including stores in small places, 
since figures on part-time enploynent are not availahle, hy states, for 
places with population of less tha.n 2,500. Fror. Te.Dle IX and the left-hand 
side of Ta^hle XI it is apparent that the 10 principal states accounted for 
a larger proportion of total amiual payroll thpji of the total numher of 
employees. 



SUS9 



-18- 



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-19- 

CHAPTER III 

KiraS Al^ SOURCES OF l.nSHCHAliDISS SOLD 

K i nas of ;: erch aii dise Sold 1)7 1.1611136 rs of the Trade 

The -orincipal ]:inds of merchandise sold by meinters of the P.etedl Trade 
as defined hy the Code are: 

Ta.rn i ture Sho e s 

Hardvfare ilusical Instruiaents 

Clothing Drags 

Dry Goods Cosmetics 

notions Variety Store Merchandise 

S ources of merchandise Sold 

The sources of ijroauction of goods sold "by the Retail Trade vary ac- 
cording to the type of merchtindise under considerationo Some types of mej>- 
chandise are produced in practically ever:/ state in the United States and a 
considerable portion is laiovm to be imported from Europe, Japan, the 
Philippines, and Puerto Rico. 

A fe-j -.liscellaneous examples illustrate this variation, as well e.s the 
wide range in the sources of retailers' merchandise. Cotton textiles are 
made in Hev? England and in the Southern States. HandJcerchief s are made both 
in the United States and in Puerto Eico, but they are also imported from the 
Philippines and Japan, Shoes are produced chiefly in Massachusetts, Ecj York 
and Pennsylvania. 

In the last fev/ years the importation of cheap Japanese goods, v.hich 
compete on the sam.e counter with those of do!.iestic origin, has increased. 
The glass factories of Czechoslovakia are in direct competition with those 
operated 'o-j domestic m;uiufacturers, and the products of each are to be found 
within the same retail stores. In the dinnerv/are departments of department 
stores, the products of Great Britain, Prance, and Japan, compete directl;'- 
with those of domestic producers. 

It CDZi be stated in general that the sources of material sold by members 
of the Retail Trade cover an immense geographical range. An analysis of such 
sources would involve a detailed brea!:-down of figures contained in the Census 
of HanrJractu.res as well as those on imports reported by the Bureau of Foreign 
and Domestic Commerce, 



8489 



-20- 
CHAPTES IV 

S.A1ES Ai:ID DISTRISUTION 

Het Sales by States 

In Doth 1929 and 1933 approximately t\70-thirds of the value of the net 
s:iles in the Trade as defined uy the Retail Code were made in 10 states. 
These states \7ere Calif oi-nia, Illinois, Massachusetts, Michigan, Missouri, 
New Jersey, New York, Ohio, Pennsylvania, and Texas. In 1953 Ne\7 York ac- 
coxmted for over 16 per cent of the total; and Pennsylvania, ?/hich \7as the 
second most ira-oortant state, accounted for over 8 per cent of the total, 
Illinois and California sold 7.9 and 7,4 per cent of the total, respectively. 
Sales in the 10 foregoing states amounted to $11,736,000,000, or 65.4 per cent 
of all sales in 1929, and $5,576,000,000, or 64.3 per cent in 1933. Net sales 
in the groujj of 10 states decreased 52.5 per cent as oetween the ti70 Census 
years, 

TABLE XII 



Net Sales in the Trade as Defined "by the 
Code, "by Principal States^:/ 



State 



U. S. Total 



1929 




AxAOunjb. 


Per 


(in millions) 


Cent 



$17,946 



100.0 



1933 
Amount 
(in millions' 



$8,664 



Per Cent 



100.0 



California 

Illinois 

Massachusetts 

Michigan 

Missouri 

New Jersey 

Neirr York 

Ohio 

Pennsylvania 

Texas 

Total, 10 
states 

Other states 



1,210 


6.8 


1,531 


8.5 


830 


4.6 


774 


4.5 


569 


3.2 


595 


3.3 


2,957 


IS. 5 


1,056 


5.9 


1,543 


8.6 


670 


3.7 


.1,756 


65.4 


6,210 


34.5 



640 


7.4 


682 


7.9 


437 


5,0 


309 


3,6 


278 


3,2 


305 


3.5 


1,400 


16.1 


511 


5.9 


707 


8.2 


307 


3.5 


5,576 


64.3 


3,088 


35.7 



Sources; 



a/ 



United States Census of Distribution. Retail Trade, 1950, Tahle 1; 
Census of Araerican Business. United States S-ommary of Retail Distri- 
"oution, 1955 , Table 5, and States Reports, Table D. 

Data for places vdth population of less than 2,500 and for trades ex- 
cluded from the Code were estimated by NSA, Research and Planning 
Division c^nd subtracted from Census totals to give code coverage. 



Voluiae of Sales 



Owing to the miscellaneous character of merchandise sold in the Retail 
Trade, no information is available as to the total of each of the individual 
8489 



-31- 

unitG of lueas-urement (yards, poujfids, mm^er, etc.) sold in each state or in 
the United States as a vrhole. The data are limited entirely to dollar volime 
of sales 

Evidence of Interstate Character of Retail Trade 

The National Retail Code Authority in a doc-ument entitled "Reply to 
Questionnaire of Litigation Division - m>A, on Code for Retail Trade," dated 
Aijril 1, 19S5, stated: 

"As to the question of selling' in interstate commerce hy re- 
tailers, it is possible to establish the natiire and the e::tend of 
such selling by an examination of three factors: 

1. The aaount of retail business done oy retailers located 
in cities and tov.Tis whose trade obviously includes neigh- 
boring cities and towns across state borders; 

2. Amount of business done bj' retail concerns clearly en- 
gaged in interstate commerce such as chain stores and 
mail order houses; 

3. Amount of advertising done by retailers in newspaoers 
whose circulation to buying public transcends state lines." 

The first two points and others in evidence of interstate commerce are 
discussed just below. The third point is discussed later in connection with 
advertising media. 

Retail Sales in Selected ^Interstate Trading Areas . - 

In connection with point n^uraber 1, the Code Authority included in the 
above-;;ientionod re;oort a tabulation entitled "Net Sales of Stores Operating 
Under Retail Code in Cities and To'.tls located on State Boundaries or Otherwise 
having Interstate Trading Are-." 

This table has been reproduced as Table XIII of this report. It indicates 
that sales in su.ch cities for the stores selected amo^mted to $2,047,096,000 
as against a total for the United States of $7,821,741,000, This suggests that 
at least one-quarter of the total b-asiness of the Retail Trade is handled by 
establishinents located in cities and towns either on state boundaries or with- 
in inter sts.te trading areas. The amount of such sales actually made in in- 
terstate commerce is not sho'-/n. 



8489 



-22- 

TABLE XIII 

Net Sales of Selected Stores in Cities and Towns 
Having an Interstate Trading Area 
(in thousands) 



City or Torn 



Net Sales 



New Yorlc City 
Philadel;ohia, Pa. 
Chicago, 111. 
St. Louis, Mo. 
Pittsburgh, Pa. 
Cincinnati, Ohio 
Memphis, Tenn. 
Omaha, Nebraska 
Louisville, Ky. 
Portland, Oregon 
Toledo, Ohio 
Chattanooga, Tenn 
Duluth, Minn. 

lioline, 111. ) 
Rook Island, 111. ) 
Davenport, la. ) 

Bristol, Va. ) 
Bristol, Tenn.) 

Dubuque , Io'.7a 

Texarkana, Texas ) 
Te:car)'ana, Arkansas) 

Augusts., Georgia 

Total, above stores 

Total for U. S. 



$ 888,251 

239 , 854 

434,006 

105,676 

96 , 239 

64,483 

29,981 

25,577 

29,211 

41,392 

29,473 

10,817 

9,291 



16 , 842 



3,262 







5, 


,660 






2, 


440 






14 


, 641 


$ 


2. 


,047 


,096 


$ 


7, 


,821 


,741 



Source: National P.etail Code Authority, Inc., "Reply to Questionaire of 
Litigation Division - NRA, on Code for Retail Trade," (April 1, 
1935). 

Interstate Character of Mail-Order Trade . - The National Retail Code 
Authority in the docanent already r ef erred to stated: "An indication of the 
amoimt of sales made by firns clearly engaged in interstate coranerce is ob- 
tained from the folloi/ing totals of sales by mail order houses ,and chain 
stores during 1933; Mail-Order Houses, $228,600,000; Chain Stores $1,853,- 
474,000." 



8489 



-23- 

Details regardiiv the interstate character of the raail-order husiness, 
which have been obtained from the 2 leading mail-order houses, are jresented 
helou. 

Montgomery Ward and Company operates ap-oroximately 489 retail stores 
located in 45 of the 48 states of the Union, 9 nail-order stores, and 2 main 
Avarehouses for shiptiing mail-order merchandise. Its mail-order business in- 
volves sales to customers in every one of the 48 states. Total sales for the 
business year ended Janue.rjr 31, 1334, both mail-order and retail, araoimted to 
$243,805,721, Its merchandise is purchased from aT-;proximately 12,000 manii- 
facturers who are scn,ttered thrcjghout most of the states of the Union, 

Montgomery Ward and Company distributes e, mail-orf'er catalog-ue t-'ice a 
year to between 5,500,000 and 6,500,000 customers. This mail-order catalogue 
carries aporoximately 90,000 different items of merchandise. The company e^lso 
distributes smaller special catalOc^es to as many as 7,000,000 to 10,000,000 
custoi.iers, 

InfoCTiiation received from the Vice President in charge of mercliandising 
of Sears, Roebuck and Company, indicates that its retail stores are located in 
fotir zones, namely. Eastern, Midwestern, Southeastern and Southwestern, GJid 
that there is a large nximber of retail stores in various states reporting to 
each of these zones. In addition, the Con;uany maintains districts located in 
Chicago, New York, and on the pacific Coast, to each of which a large addition- 
al group of stores reports. A further set of stores is located in and about 
16 large cities throughout the country r'ithout regard to state lines; these 
stores rewort to headquarters located in each of these cities. 

Other information s\ipplied 'b^'' Sears, Roebuck and Company indics-ted that 
they purchase manufactured tires in Akron, Ohio, Gadsden, Alabama, and Los 
Angeles, California, and that the Company maintains the follov/ing mail-order 
plants from which they ship tires: 

Chicago, 111. Minneapolis, Minn. 

Kansas City, Mo. Boston, Mass. 

Seattle, Wash. Philadelphia, Pa. 

Los ATxgeles, Cal, Atlanta, Ga. 

Da.llas, Tex. Memphis, Tenn. 

Ho direct information could be obtained as to the percentage of shipments 
made by these ma.il-order houses to customers in each state. 

Interstate Character of Department Store and Other TrvTes of aetai]. -Trade - 
Information received by the writer from the United Pa.rcel Service shov'S that 
its customers, located in Manhattan Borough, City of New York, shi^o roughly 
15 to 19 per cent of their merchandise across state lines into New Jersey and 
Connecticut* 

It has been estimated by one authority-' that 25 to 30 per cent of New 
York City de-partment store sales are shipped across state lines. That there 
are extreme variations from this average is indicated in the case of one store 
from which not more than one-half of one per cent of the merchandise is said 
to be shi-rped out of New York State. ^/ 



1/ J« A. Kaylin, Associate Editor, Fairchild Publications. 

2/ Statement by the Vice Pi-esident of a Brookl^nri department store, 

8489 



-24- 

Int ei-strte Shipment of Stocks to Retailers . - According to Dr. Paul H, 
K^Astrom, President of tiie Limited Price Variety Store Association, Inc., chain 
stores liave v/arehouses in large cities and ship across state lines. No figure 
are available, as the individual members refuse to make this information publi 
or to re iort it to the Limited Price Variety Store Association. 

Information as to value and voltime of products sold by nholesalers in 
each state to retailers in other states is not directly available. The Census 
of \Tnolesale Distribution provides a great deal of information as to the state: 
in v/hich wholesale sales are made but does not indicate the points to to 'rhich 
the mercheaidise involved is shipped. 

The Census of Wholesale Distrib\ition (1930) vol-ume II, page 10, contains 
the follouing statement: 

"....the operations of many wholesale establishments 
cover T7ide territories, considerably beyond the boimd- 
aries of tiie state in which they are located," 

It is evident, therefore, that a considerable portion of merchandise ]3ur- 
chased b'- retailers ia shipped to them from beyond the confines of the states 
in v/hich they are located. 

In recognition of this situation the Research and Planning Division of 
the Rational Recovery Administration in Februr.ry, 1935, prepared a Stp.dy of 
Natural Areas of Trade in the United States, based upon the 37 major trade 
areas corresponding to the 57 Federal Reserve Divisions, as adjusted to the 
flow of trade. These major trading areas in no instance were found to coin- 
cide with tiie boundaries of an individual state, 

Natyg-e of Advertising iJedia Used 

Advertising media used are the radio, fashion magazines — such as 
Harriers 3azaar -the Mew Yorker , aaid also daily newspapers. 

The annual survey of the Sales Promotion Division of the National Re- 
tail Dry Gonds Association has indicated tliat the cost of publicity for 
approxiraateljr 300 depart, ;ent stores ranges from 4,5 cents per sales dollar, 
for stores with sales voluiie of less than one million dollars, up to 5,7 
cents for stores selling over ten million dollars worth of merchandise. 

As shown in Table XIV, 2.75 per cent of each sales dollar was ejcoended 
in newspaper advertising- in the case of stores selling \mder one million 
dollars annually. As the sa.les volxune increased this percentage increased, 
also, to a uazdmuiu of 5.82 cents per dollar for the group having an annual 
sales volume of more than $10,000,000 ajinually. 



8489 



-25- 
TABLE XIV 

Per Cent of Piitlicitjr Cost ver Dollar of Sales 



Total Per Cent Per Cent Spent 
Spent for for NerrsTja,per 
Sise of Sales Vol-ume Publicity Publicity 

Under $1,000,000 4.50 2.75 

$1,000,000 to $2,000,000 4.65 2.90 

$2,000,000 to $5,000,000 5.18 3.39 

$,5,000,000 to $10,000,000 5.50 3.60 

Over $10,000,000 5.70 3.82 

Su^Trce; Annual Analysis of Sales Promotion Division of the National 
::ietail Dry Goods Association. 

An analysis of tne distriliiition of the 1934 retail publicity dollar in- 
dicatac. that 66 cents of each dollar used for advertising purposes ','as e:cpendr- 
ed for ne'vspaper publicity, 5 cents for miscellaneous media, 2 cents for radio 
hroa,dcasting, and 2 cents for direct nail advertising. The hplance xras e:roend" 
ed in -n-oduction cost, advertising payroll, display, and other items. 

Distribution of the 1934 Retail 
Publicity Dollar 



Nensijaioers 


66 


Cents 


Production 


4 


Cents 


Miscellaneous media 


5 


Cents 


Eadio broadcasting 


2 


Cents 


Direct mail 


2 


Cents 


Advertising ipajToll 


8 


Cents 


Total display 


10 


Cents 


All other 


3 


Cents 



Source: Annual Anedysis of Sales 
Promotion Division of the 
National Retail Dry Goods 
Association. 

Interstate Clis-racter of Me-gspa-ner Advertising 

The Rational Retail Code Authorityi/ has stated that: 

"Advertising statistics for newspapers in 52 representative cities 
indicate that in the year 1934, the total lineage of retail advertising 
amounted to 700,000,000 lines out of a total of 1,179,000,000 lines for 
all advertising. In 1933 retail lineage amounted to 597,000,000 lines 
oiit of a total of 1,066,000,000 lines, 

Uhile it is difficult to ascertain to v/hat extent this retail ac^ver- 
tising is carried to customers across state lines, it is safe to say that 
by far the major part of this advertising nas in newspapers which have an 
interstate circulation and vmich serve to bring purchases from other states 
to retail stores, either in the person of the customer himself or by mail 
order. " 



1/ "Reply to Questionnaire of Litigation Division-NRA, on the Code for Retail 

Trade" (A-oril 1935). 
8489 



-26- 

CHAPTER V 
THADS PIIA.CTICES 

Unfair Trade Practices Prevalent Prior to the Code 



1/ 



Unfair trade practices prevalent in the Trade prior to the Code veve 
misrepresentations of ^'^oods, false advertising, and the use of loss leaders. 
These practices developed dTirin;^ the fight for sales which tecame Eiore and 
more intense o,s the depression progressed. The imoortant consideration to 
retailers was the meeting of expenses rather than the malcing of a profit. 
Consequently the entire Trade was disturbed "by price cutting. 

T rade Practices T/hich. Became Detrimental Because of 
Abusive UseE Z 

The follovring trade practices are not necessarily in themselves unfair, 
"but "because of the depression they v/ere carried to such an extent that thejr 
"became abuses. 

1. Price cutting 

2. Unlimited privilege of returning merchandise 

3. Irresponsible advertising statements 

4. General disposition to reduce the quality 

of merchandise 

Unfair Trade Practices Prevalent Under the Code^ 

The UJifair trade -oractices which existed prior to the Code prevailed 
also under the Code but to a lesser degree. G-enerallj'- some improvement oc- 
curred in trade practices and certain abuses were fairly regularly checked. 

Effect of Unfair Trade Practices on Retail Trade and 
Sources of Sao'oly 

The effect of imfair trade practices on the Retail Trade is rell ex- 
pressed in the following quotation from the National Retail Code Authority, 
Inc.!/ 

"The effect of this frenzied process of competitive methods was marked. 
Advertising and sales promotion methods became more and more reckless 
of dignit]/ and truth — even of cost. The merchant whose advertising 
included the loudest and most blatant exaggerations took business 
away from those who clung conservatively to the truth. At the outset, 
these methods -ere confined to a few of the more desperate and less 



1/ Based on opinions of such qualified -itnesses as Ivir. Le-- Hahn, 
Dr. Paul H; Nystrom and lir. William Girdner. (See list of 
q'oalixied witnesses at the end of Chapter VI.) 

2/ Based on a statement by Mr. Hahn. 

3/ Based on the opinion of Mr. Hahn. 

4/ "Re-oly to Questionnaire of Litigation Division-IJRA, on Code for 

Retail Trade" (April 1, 1935). 
8489 



scrup-ulous , out f^radually more and more stores '.--ere forced to adopt 
thein as a measure of self-defense. 

"One of the notalDle results of these methods -ras the increasing use 
of novel and costly uromotions of lotteries, contests, -oremium ex- 
travagances and siiiiilar trade stimulation devices. While nan;r or all 
of these had lonr teen recognized as valuaole adj^mcts of sound ner- 
chandisineT policy, their use between 1930 and 1933 threatened to 
eliminate competition in merchandising and store service and to sub- 
stitute therefor comoetition for the doubtful honor of telling the most 
engaging untruths or giving the "biggest prizes. It is questionable 
v'hether the ' soraething-for-nothing' mania had ever been so whole- 
heartedly indulged since the advent of modern retailing. 

",This or,r."* was not only destructive of sound merchandising; it drew 
the c ''.psfeitive advantage to the less scrupulous ajnong those retail 
institutions vrhose financial resources permitted of vTidespread and 
expensive advertising. This widespread disregard for truth in adver- 
tising and selling m.ethodE on the part of a fer.' tended to undermine 
the confidence of consumers in all retailers - which placed the bur- 
den most heavily on the most ethical. 

"The , period ending in 1933 saw the development of the so-called 
'loss leader' to the point of absurdity. A 'loss lea.der' is an 
article of merchandise, ostensibly desirable, oriced far below 
a normal figure - at times below invoice cost - to entice trade, 
in the expectation that customers so attracted to the store will 
P'orchase other and more profitable merchandise. Some stores which 
used this method extensively relied upon the natural grants of their 
custor.ers in other lines to stimulate other sales and recompense 
them for the loss entailed in the profitless selling of the 'loss 
leader.' Others ased 'loss leader' merchandise of so low a quality 
that the customer 'c ov.ti common sense could be relied upon (with 
subtle stimailation of salesmanship) to switch the purchase to better - 
and more profita.ble goods. 

"One of the inevitable results of 'loss leader' merchandising was a 
wave of price wars. The offering of such a leader in a community 
would inaiogurate a series of ^orice cuts among the competing stores, 
termina.ting, more often than not, in sales far below cost. The 
resulting losses wrought unfair competitive hardshir) upon specialty 
stores and small establishments carr^/ing a limited number of lines, 
since such an establishment might be caught up in a price war involving 
one of its few lines - perhaps its only line. This was particularly 
true because nationally advertised branded lines, which form an im- 
portant part of the stock of many such stores, were the favorite items 
of such 'loss leader' merchandising. 

"The obvious effect of the 'loss leader' was to disrupt fair competi- 
tion. Hesourceful stores could, by judicious price-cutting, drive 
weaker competitors out of business - preparrtory to raising prices 
when the competition had been disposed of. This was particularly 
true whenever a new store utilized this device to lure the patronage 
of a community a-way from the established merchants. 



8489 



" Tlie coraoetitive pressiire in retailing backed up against 

the manufsctiorer and wholesaler in the forn of insistent demands 
for lorer and lovv-er prices to meet or imdersell competitive retail 
prices. The manufact'orer or wholesaler not only watched his volume 
decline; in addition, he v;as forced to grant price concessions to 
absorh part of the loss that was "being forced on the retailer. 
This was one of the factors which forced the manufacturer to drive 
do\m \7a.ges of his own labor, in order to meet the demand for 
cheaper orices. .. .Further, this pressure on manufacturers and 
wholesalers was greatest when it was exerted by retailers and 
groups of retailers with large buying power and plentiful cash 
reserves, resulting in further increasing their competitive ad- 
vantage. " 



8439 



-29- 

CHAPTER VI 

GEl-jlRAL IIJ^ORI.^TION 

Retailing- as a Fart of the Dist.ri"butive Process 

Once merchandise is readv for distribution, it may te sold to ultimate 
consuir.ers 133- a nu-iber of different methods. The merchandise sold by retail 
stores may be purchased by such stores either direct from manufacturers or 
through wholesalers (and in a number of instances oossibly tlirough jobbers 
or sub- jobbers) , who in turn purchase direct from manufacturers. Oftentimes 
om-chp.ses are made from the a.^ent of the manufacturer by the P\irchasing Agent 
of a chain store orgnjii -nation and distributed either direct from the mill 
to the individual stores — as in the case of certain paoer oroducts — or 
delivered to the chain store 'jorehouse a,nd shipped thence to the individual 
retail stores. 

Opoosed to the foregoing t-roes nf distribution are those in v/hich the 
manufactrjrer sells direct-by-nail to the ultimate consumer; and the more 
imoortant division of mail-order selling in \7hich the mail-order house as- 
seT.ibles its stock from msnixf actui^ers located all over the United States in- 
to varioxxs central i.7arehouses, sends its catalO:gij.es to a mailing list of 
customers in the varioas states, and ships uoon recerot of a mail-order 
from the customer. The transaction may be on a CCD. basis, '¥hich means 
tna.t the customer pays the oostmn for the merchandise UDonreceiot of the 
order. 

Still other types of retailing exist in T;hich the retailer acts as agent 
of the manufacturer, transmits the order, and the merchandise is delivered 
to the customer from the factory. This latter t--oe has very little appli- 
cation to merchandise sold under the Retail Code. Another t^'pe of merchan- 
dising is found in cases in which manufacturers have appointed state or re~ 
gional distributors to sell to a selected list of dealers who in turn sell 
direct to customers, as for example, in the distribution of radio sets. 

Trade Associatio n Activity 

The Code of Fair Competition for the Retail Trade was sponsored by nine 
national associations, some of which are made up of direct memberships, and 
others of which are made up of member associations. These associations are 
as follows: 

The National Retail iVrniture Association 
The National Retail Hardi.vare Association 
Mail-Order Association of America 
The Ifetional Association of Retail Clothiers 

and Furnishers 
The National Retail Dry Goods -"-ssociation 
The National Siioe Rete.ilers Association 
National Council of Shoe Retailers 
The Limited Price Variety Stores 
National Association of Iviusic Merchants 



3489 



-30- 

The National Retail Hardv/are Association represents small independent 
retailers; the liail-Order Association of Anerica represents the large mail- 
order houses; and the National Retail Dry Goods Association represents a 
group of department stores among which is the J. C. Penny Company's entire 
chain. The National Shoe Retailers Association and the National Council of 
Shoe Retailers represent different t^,npes of shoe retailers; the former teing 
comoosed chiefly of independently owned and opera.ted stores, while the 
latter is composed chiefly of the shoe chains. The Limited Price Yarietj'- 
Stores Association represents the 5i3f-10^--$1.00 groiJp of stores. 

Documents presenting information in support of a Retail Code of Fair 
Compeitition were submitted by several of the ahove associations in August 
1923. i/lhey include the following data on menhership and number of employ- 
ees covered. 

National Retnil F-jrniture Association . - An undated meraorandmn from 
this Association stated that it was composed of a total membership of 3,439 
members. 

National Retail Hai'dware Associntion . - On August 19, 1933, this asso- 
ciation, Aiirith heada;mrters in Indianapolis, filed a document with the HRA 
containing a certification of the membership in the Association within each 
state. Total membership wa.s placed at 11,303 members. 

The I.lail-Order Association of America . - This Association was organized 
July 9, 1933. Its membership as of August 19, 1933, consisted of the follow- 
ing: 

Montgomery Ward and CoraiTany, Chicago, Illinois 

Sesrs, Roebuck and Company, Chicago, Illinois 

Siegal, May, Stern, Inc., Chicago, Illinois 

Walter Field Company, Chicago, Illinois 

Chicago ilail-Order Company, Chicago, Illinois 

N. ¥. Savage Corapa.ny, Minneapolis, Minnesota 

The National 3ellas-Hess Company, Kansas City, Missouri 

Larkin Comnany, Inc., Buffalo, New York 

Lane-Br^^ant , Inc., New York, N. Y. 

It is re 'Orted that the Association is "truly representative and has 
sent letters and application blanks to about 105 persons throughout the United 
States advising them to join the Association. These persons and firms are 
said to be engaged in the retail mail-order business." 

The National Association of Retail Clothiers and Furnishers . - This 
Association, which was organized nineteen years a^o under the laws of the 
State of Iowa as a membership corporation, has had uninterrupted activity 
since that time. Its total membership was comoosed of 1,789 distributors 
located in all but two states in the Union. In addition, there were 2,000 
others that receive the official maga^^ine of the Association "thus indicating 
their desire to continue contact with the Association, although they are 
unable to continue to pay thuir dues." Prior to the depression, its member- 
ship was approximately 6,700. 



1/ These documents are filed with the Code Record Division, National Recovery 
Adniinistration, under "Material pertaining to Code Number 60." 

8489 



-31- 

The ITational Ketr.il Dr y G-ooc ls Acsoci-'^.tion. i/ - In Auarust 1933, the 
r.n.L.G-.A. consisted of 4,157 stores loc?ted in evsr-r state in the Union, as 
"."'ell S3 in the District of Coliu-nbia and the Territory of Ha-vaii. The ap-proxi- 
rnate nunher of employees of such stores ^''as 450,000, pnd the arariror.irnate ^oliime 
of sales \7as estimated at $3,000,000,000 annuall;'. The names and addresr.es of 
the neriber stores r'ere individ^uilly listed in a 64-pa^e document. Hernhership 
includes the J. C. Penny Conoany group of sone 1,500 chain stores. There has 
been sone increase in tl'.e nunher of small stores in the Association since ap- 
plicp-tion '"'as made for the Retail Code. 

The H.R.D.G.A. publishes an annual report entitled The 'Torh . in r.-hich is 
^iven a detailed cccouiit of the activities of each of its committees and de- 
partraents. 

Tlie ITational Shoe Eetailers Association . - The document submitted oy this 
Association in support of a Retail Cede containes an eriiihit of 75 sectional, 
state, and local associations affilir. tec? '■'ith the Nation Association, or for 
'7hom the Association had heen aathorised to act. 

The membership of the ITational Shoe P.etailers Association is comToosed 
chielfly of independent cealers hut also includes chain store o-oerators. Hem- 
hershi-Q consisted of 124 chain store operators '^ho controlled. 1,201 stores plus 
2,317 individual members and 4,220 affiliated members. The nuxiber of independ- 
ent members as of Au^-u-t 29, ""933, vras 6,637 \ hich, to.'~ether rrith the chain 
store members, gave a total of 5,761, The total nunher of stores represented 
in the Association ras air^-^Da^rently 7,c'33. 

The chief functions of the Association are to inforri members of important 
trade affairs; to supply them fith forecasts of seasona.l styles, colors and 
materials; to furnish information and a.dvicc on matters oertainin? to the manu- 
facturing or retailing of shoes; to a.djust cTievances arisin'^ bet'-reen mantifact- 
urers, rrholesalers, or tra-veling sa.lesmen; anc'. to eliminate or control unfair 
trade oractices. 

I'ationr.l Co'up.cil of Shoe r.ete.ilers. S/- Although this Association includes 
menbers of all t.^Ties of stores, it is predominantl;.'' composed of national, sec- 
tional, and local ch-'ins. On lia.y 1, 1935, the membership consisted of 78 
cuains ''hich controlled 3,53 6 stores. Eighty per cent of the volume of chains 
in the shoe business is controlled oy members of this "'roup. 

The Council supiDlies its members ^'ith praictical information on business 
changes and informs them prompily of all state tax legislation. Under the Code 
it furnished its uembers r/ith specific information on fair practice provisions 
of the Code, rith correct interpretations based upon ITational Retail Code 
Authority rulings, and "ith a complete lilc of all interoretations and regula- 
tions issued ''^2'' the Code Authority. 

1/ Statement of Mr. G. P. Plant, iianager of the Store management Grou^^ of the 

ITational Retail Dry Goods Association, 
2/ Information given by Mr. Girdner, Executive Secretar", ITational Council of 

Shoe Retailers. 



8489 



-3C- 

T he Limited Price Vg rie ty Storer, Assoc iatio'i. 1/ - The limited price vrrie^ 
store trade, including both chains and independent rtores, is i-epresented by 
the Limited price Variety Store Association, '"'hich vas incor7porated "Luac'er the 
membership corporation "' ar's of the State of lle^- York, on Au.^st 17, 1933. 
Nearly every national chain store conpany, as, for exa/rale, "oolrorth, Kresge, 
Grant Kress, Nenberry, G. C. Kurohy, ScotL-Burr, Keisner Brothers, and H. L. 
Green Conpanj''; practically every sectional chain store conpany; and the Ben 
Pranlrlin League, rith a raenbership of over 2,000 individua.llj'' or,Tied variety 
stores, joined the AGSOcia.tion irr lecTiately. The Association soon hpd s, ijenber- 
ship of 2,294 coni^anies vrhich operate ap-oroxinately 7,000 stores, or 60 per 
cent of a.ll vnriety stores in the country. The sales ^'•olume of these raeinber 
coniDanies represente nore than 80 per cent of the variety store trade in the 
United States. 

In cooperation rith other retail groups, the L.P.V. S.A. "orked rith the 
IIRA in obtaining the Retail Code, rhich '."'as approved on October 22, 1937;, 

The major a.ctivities of the Association consist of serving as a central 
research bureau for the trade by collecting:, compiling, a-ns-lyzing, inter-Dretin 
■and distributing infornntion axid data of timely interest; serving as a clearin 
house for member companies on all logisla.tive and ta:: matters affecting them; 
and siipplying information on variety stores to interested non-members of the 
trade. Under the Code it represented the indu.stry before the ITational Pietail 
Code Authorit]'' pnd before the VRk, sind. served as a clearing house for all I^^ 
interpretations and amendments to the Retail Code. 

Corn'oetitive Trade Asrocia.tions 

Competitive trade associations exist in at least '^n.e field of retail trad 
- the shoe trade. The ITatipna,]. Shoe Retailers Ansociatiom is con-oosed of a, 
group of associa-tions of indeioendent shoe reta.ilers and of chain store opera- 
tors, but the great majority of its members are independent dealers. The 
ITa.tioi'.a-l Cov-ncil of Shoe Retailers , on the other hand, consists chiefl;'- of 
chain store operators. !;e:-ibers of this association handle 80 per cent of the 
sales ma.de by cha.in stores, as already indicated. 

The E::tent of Union Activity 

Labor unions in the retail trade are relatively fe'^. In most instances 
these are comr)osed of carpenters, painters, needle ''•orkers, or alteration hand: 
'^ho are employed in rork-rooms. i- a fe'" c^ses the ^sales clerks are organized. 
One such organization, The Retail Sales Peo'nles Internati-'mal Protective 
Association , is located in Lafayette, Indiana, It is affiliated rith the 
American Pedera'r.ior .i'' Labor. 

An ertample of union activity is found in the Butte (Montana) Clerks Union, 
rhich ras formed in 1886.-'/ Tliis organization is one of the ler groups in the 
United States rhich is able to bargain collectively rith employers. In :iost 
cities the i"'Jiions present their require-ients to individual emploj^ers. In ""iittt 
horever, a general agreement has been in effect since 1925, betreen the Butte 
C lerks Union and members of the Silver Bor Eminloyers Association, rho com-prise 
1/ Presenting the Linitec' Price Varietv Store Association, Inc., pp. 3,4,7, 

and 9, 
2/ "Closed shop in stores of Butte, since 1925," in Retailing . (Executive 

Edition, Februa^ry 11, 1S35). 
8489 



-33- 

most of tho nerchants of the city. This agreement, in effect, covers also all 
independent merchants vrho, clthou^h the3'" are not neubers of the Employers 
Association, subscribe rea'^.ily to the union ar,-reenent. 

The general contract nov effective rnc. enforced betrreen the clerks and em- 
plo^'-ers lorescribes n closed saop and miniraura r^a^^e scales; a five-day veek chir- 
Ing the s^rl^^er; a '.-:orl:inr day of 6 hours and 40 iiinutes, ' ith an hour for lunc 
time off for holidays; overtime pay; and rigid stirsulations regarding pay for 
apprentices. 

In Great Palls, I'.ontana,; Coffeyville, Kansas, and a fer P.oclcy Kountain 
tonns, the retail stores have been unionized, and although no strikes have oc- 
curred there lia,s been some picketin^^.l/ 

The most notrble recent strike occurred in The Boston Store, iiilraulcee, 
Wisconsin, as a result of an attempt by the union to gain recognition as I'ell 
as TTB^e adjustments. There have also been strikes for the same rea.sons in bot 
the Klein and Ohrbach stores in Keu Yorl:, 

Labor Conditions ""^ithin Various Trade Cttouv^S J 

In General . - Controversies bet^veen labor and management are considered t 
have been practically non-e;:istent in stores '"iiich ?,re members of the ITational 
Shoe Eeta.ilers Associa.tion. The same situation exists among the members of th 
lTa.tional Cotmcil of Shoe Retadlers, but non-members rre said to have labor dif- 
ficulties, l^enbers of the ITational detail Dry Goods Association are reported 
to have had- little trouble. Friendly relations betrreen employers and emploj^'ees 
have been outstanding. 

In Department Stores . - A recent survey of en-olo;;'-Tent conditions in de- 
partment stores made by George ?. Plant, lianager of the Store I'anagement Group 
of the National Retail Dry Goods Association, covered a,pproximately 440 stores 
i.7ith r, total of 170,000 emplo;^ees,2/ While not fully complete as yet, it is 
believed to be the broadest stud^r thus far made in the department store field. 
Inforraa.tion nas obta.ined concerning the follo^"'ing Subjects; 

1. Company Unions . - Only tvelve of the total nui-iber of stores h8,d com- 
pany unions. In four or five of these stores membership in the luiion r^as not 
storevide, but vac confined to one ma.jor division, usually the deliver]'- de- 
partment. Several of these imions \7ere organized a.boat the time of the Presi- 
dent's Reemployment Agreement. 

2, Mutual Aid Assoications . - "niile the number of direct employee repre- 
sentation associations 'jas small, mutual aid societies ^"ere found in appro xi** ' 
mately 130 stores. These mutaal aid societies, nhich are usually organized an 
administered by the employees, have as their principal features the payment of 
sick axid death benefits as veil a.s the carrying on of various aocial activitie 
for the employees. 

The management of the stores "ids in the a.ctivites of these a ssociations, 
by contributing funds in some cases pjid in almost all instances by riernitting' 
1/ Statement by Dr. Paul H. ITystrom. 
2/ Based on opinions of LIr. Girdner, Mr. Holden, and llr. Plant. (See list of 

qualified witnesses at the end of this Chapter.) 
3/ HeT7 York Times . June 30, 1935. 

8;439 



-34- 

the uce of store time c?jic1 oy cooperatini=; in the preioaration of forms and 
notices. 

3, Old Ar^e Pensions. - Dealin']; r'ith the question of old age pensions, the 
survey indicated tnat old age pension plp.ns on a contri'butory tasis x'ei-e found 
in only 5 or 4 stores. A jiajority of the larger stores, however, have informal 
pension plans ur.der ^rhich the expense involved is "borne by management alone. 

4, G-ro\ip Insurance. - Approximately onc-thirc", or 140 of the total number 
of stores provide some organized form of grouo insurance for employees. In the 
::iajorit3' of ca.ses this covers straight life insurance and is usually administer- 
ed thror^i'h one of the established life insurance companies. IiiT3lo7/ees contrib- 
ute to the e:rpense of carrying the insurance, .although in most cases the e::tent 
of their contribution is limited to a maximum set b;r the state, usually a.bout 

60 cents per $1,0(jO of insurance. 

Although group insurance is not usually available to organisations having 
less than 50 employees, stores find that wholesale issuance of insurance can be 
obtained in such ca.ses. It is interesting to note tlia.t out of 100 stores 
Trhich have less than 50 employees each, nineteen "Drovide some form of wholesale 
insurance. 

Financial Condition of P.etail Trade 

Herchandising vnd. operating results of department and specialty/ stores have 
been ajia.lyzed and published by the Controllers' Congress of the National Retail 
Dry Goods Association.!/ Table XV contains excerpts from these reports and in- 
dicates t;'nDical gross "largins, opera.ting expenses, and operating profits or 
losses for stores r-ithin various selling ranges. The figures ore averages 
based upon a large number of stores. 

G-ross margins 'jere smaller in the smaller establishments. In 1933 operat- 
ing expenses, in practically every case, veve slightly larger than gross mar- 
gins; in 1934 the opposite vir\.s true. As the result, the "tj'pical" store in 
nearly every instance shov;ed an operating profit in 1934 as against a loss in 
1933. 



!_/ Controllers' Congress of the iJational Retail Dry Goods Association, Deioart 
mental Herchandisinr a,nd Q-oeratin-T: Results . 



8489 



-35- 



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-36- 

Under date of ipril 1, 1935, the National Retail Code Authority, Inc., 
suimnarized the operating results of typical department stores 1929~1933, in- 
clusive, as published "by the Harvard University Bureau of Business Research.iy 
The figures indicated that "between 1930 and 1933, in practically every in- --. 
stance, department stores operated at a net loss, although during 1929 net 
profits were achieved. The heaviest losses occurred during the year 1932, 
(see Tahle XVI.) 

In the document mentioned ahove — ' the operating results of hardware 
stores as collected by the National Retail Hardware Association, were also 
summarized. These results were in terms of percentage of sales and indicated 
a loss for each year ranging from a low of 1.8 per cent in 1930 to a high of 
12.7 per cent in 1932. For the year 1933, a loss of 5.6 per cent was in- 
curred hy these stores. 

Although the foregoing figures represent a ccTiposite of over 1,000 hard- 
ware stores, a certain proportion reported net profits in each year. In 
1930, 50 per cent of the stores reported a net profit while in 1932 only 17 
per cent so reported. For the year 1933, 43 per cert of the stores reported 
that they had made some net profit. (See Table XVII.) 

TA3I.E XVI 

ITet Profit or Loss in Retail Stores, Classified 
by Size of Annual Sales, 1929 - 1933 
(in Per Cent of Annual IJet Sales) 



Amoimt of Annual 
i^et Sales 



1929 



1930 



1931 



1932 



1933 



Less than $150,000 
$150,000 - $300,000 
$300,000 - $500,000 

All under $500,000^ 

$500,000 - $750,000 
$750,000 - $1,000,000 
$1,000,000 - $2,000,000 

All $500,000 - $2,000,000^ 

$2,000,000 - $4,000,000 
$4,000,000 -$10,000,000 
Over $10,000,000 

All over $2,000,000^ 





— 


~ 


5.2 


- 


8.1 


-10.3 


- 


2.4 




— 


— 


2.4 


— 


6.6 


- 8.7 


- 


3.0 




— 


- 


2. 3 


- 


5.2 


- 6.2 


- 


1.0 


4. 


0.3 


_ 


3, 2 


_ 


6.5 


-11.3 


_ 


3.8 




»^ 


_ 


1.7 


_ 


4.5 


- 8.2 


— 


2.7 




— 


- 


2.3 


— 


5.8 


- 9.5 


- 


3.3 




— 


- 


1.8 


- 


3.9 


- 6.8 


- 


2.7 


+ 


1.0 


— 


1.3 


■^ 


4.0 


- 8.2 


— 


2.4 




__ 


_ 


0.7 


_ 


3.5 


- 7.8 


_ 


2.9 




-- 


- 


0.6 


— 


2.6 


- 7.4 


- 


2.4 




— 


+ 


0.1 


- 


1.9 


- 4.8 


- 


1.3 


+ 


1.2 


— 


0.5 


— 


2.9 


- 6.8 


- 


2.3 



Source: 



National Retail Code Authority, Inc., "Reply to Qp.estionnaire of 
Litigation Division - NPA. on Code for Retail Trade" (April 1, 1935). 
Data are from Harvard University, Bureau of Business Research. 

The figures in this line of the Table are not from exactly the same 
stores as the three above. Consequently, they do not represent a 
sui-rna,ry of the three precedi ng figures. ^^^_^^_^ 

1/ i:a,tional Retail Code Authority, Inc. , "Reply to Questionnaire of Liti- 
gation Division-KRA, on Code for Retail Trade" (ij^ril 1, 1935). 



a/ 



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TABLE XVII 
Operating Results of Herdrare Stores, 1930-1933^/ 



Ratio of Net Loss Per Cent of Total Stores 

Year To wet Sales Reporting Ket Profit 

1930 1.78 50 

1931 6.5S 37 

1932 12.66 17 
1953 5.55 43 

Source: l-T^.tional Retail Code Authority, Inc., "Reply to Questionnaire of 

Litigation Division-lCPJl, on Code for Retail Trade" (April 1, 1935). 
Data from Harvard University, Bureau of Business Research, 

a/ Conpos ice results from more than 1,000 stores in each j^esr, collected 

by National Retail Hardviare Association. 

Effect of the Code on the Retail Trade 

Prices and Stocks . - For comparison of index nunhers of wholesale prices 
hv months , 1929 to date; and retail inrices, 1931 to date, see Cha.rt Nxunher I. 
The spread ■bet\/een the tFO series has narroT^ed gradualj?- through 1934. An in- 
dex of department stor'e stocks at end of each month, 1929 to date, is also in- 
cluded in this chart. 

Uage s . - Experts in the retail trade vary in their opinion as to the 
effect nhich the Retail Code lias had on v/ages in the Trade. One Author it j'=t/ 
has eicoressed the opinion that the average \7age is not higher as the result 
of the Code and may possibly he lower. Another has asserted^/ that the Code 
resulted in a payroll increase of 18-20 per cent at the same -..tine that there 
was only a 12 per cent increase in employment. Data compiled "by the Bureau of 
Labor Sta^tistics from a sample of the general merchandise group indicate that 
average v/eekly wages as well as average hourly wage rates vrere considerably 
higher in 1934 than in 1933. At the sane tine the average hours worked "oer 
week decreased. (See Table VII and Chart I.) 

Einplo-yees in variety stores have been more affected by the minimum wcge 
than have any other large grouv in retail trade.—' Average wages jumped from 
$11.84 to $14.00, an increase of about 25 y<er cent over the pre-code period. 
During the sane period employment incre.'-sed 11 per cent and payrolls increased 
aLout 23 per cent. Less efficient employees liave been gradually replaced b^'- 
those considered a,ble to earn the minimum wage. Consequently, operative 
standards, insofar as the members of this group are concerned, have been rais- 
ed above the levels existing prior to the Code. 

Hours . - It is generally agreed that the Code has resulted in shorter 
houTs and in more part-time enplojonent. Chart I presents average hours worked 
per week, by months, from January 1933 to date. 

1/ Mr. Earl W. Elhart. 

2/ Ilr. Plant. 

3/ Dr. Paul H. Nvstrom. 

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O,oeratin<g: Costs . - One authority^' has maintained that opera.ting costs 
increased a,s a, result of the Code. This vms attributed to Increased pa3Tolls 
and a higher cost of sup"olies and equipmont, 

Pro'^ortion of Trade-Harked Merchandise 

The follo\/ing information concerning the relative amount of retail mer- 
chandise v/hich is trade-raarlced is based upon the opinion of experts in the re- 
tail field, and is consequently limited in scope. 

Limited Price Variety Stores. - Of the Products sold by Variety Stores, 
onl;,- drugs and toiletries are sold under trade-marks v/hich have any meaning. 2/ 
Sales of drugs and toiletries in 1934 sjnounted tq nearly 8 per cent of the 



s 



total saler ra3.de by this group of chain stores.—/ About 56 per cent of the 
mercha,ndise sold b"''' members of this group had no trade-mark, and about 36 per 
cent of the merciiandise carried trade-marks ^7hich Fere more or less meaningless 

Merchandise v;hich bore trade-raa.rks of little mea.ning is found in the 
following classes: 

Notions and Small Wares 

Confectionery and ITuts 

Stationery and Books 

Toys and Games 

Clothing and Fiu-nishings (Men's and Boys') 

Electrical Sup jlios and Materials 

Hon- trade -narked merchandise is found in the following cl?.sses: 

Apparel and Accessories 

Home Ftu-nishings (princiTjally China, Glassware, 

and Crockery) 
Eardrare 
Dry Goods 

Soda. Fountain Sales and Lunches 
Jevvelry (principally Costume) 

fetional Council of Shoe Hetai]ers . - All of the merchandise sold by 
members of the Kational Council of Shoe Retailers is trade-marked^/. The pro- 
portion of total sales re^oresented by registered trade-marks is not yjioxm., but 
is thoiigiit to represent a very large percentage of the total. 

Rational Retail Dry Goods Association . - In department stores, the follow- 
ing lines of retail merchandise are those in v?hich trade-marked items are most 
prevalent*^ 

1. Toilet Articles and Cosmetics 

2. Books 

3. Groceries 

4. Notions 

5. Hosiery 

1/ I.ir. Plant. 

2/ Statement by Dr. Nystrom. 

3/ See Table V. 

4/ Statement by Mr. Girdner. 

5/ Statement by Mr. Dibrell 

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6. 


Totacco 


7. 


Gloves 


8. 


Corsets 


9. 


Domestics (sheets) 


10. 


Blankets 


!!• 


Ho\ise J-urnisliings 



Tlie most iwpoi^tant items, 'dth resoect to trade-marks, aonear at the top of the 
list, Ver;-- fev- trade-marks are fotuid in fiirniture, jenelry or p.pparel. Trade- 
marked items, which constitute less than 10 per cent of total sales, are 
usToally sold on the main floor, 

Effect of Im'oorts of ?orei^n Merchandise 

In General . - On the v/hole, the effect of forei^jn imports on retail trade 
is slight. i/ Imports amoiinted to not more than 5 per cent of the total mer- 
chandise sold in 1929, and possitly is not nov; in excess of 2-g per cent. 

Departm.ent Stores . - The effect of foreign goods on retail trade varies 
with the line of merchandise handled oy the various kinds of stores. Depart- 
ment store sales are little affected by such imports, 2/ Devaluation of the 
dollar and increase in tarifi" rates h;ive raised the cost of foreign merclian- 
dise over that existing in the past. One store, which, in 1929, purchased 11 
per cent of its merchandise in Europe, today huys 85 per cent less in foreign 
markets (this figu.re is ahout 1.65 per cent). Higher selling prices of im- 
ported OTods make their sales prohihitive. 

Variety Stores , - Variety stores, on the other hand, are considerably 
affected by imports of foreign merchandise. 5/ Formerly a large part ras in- 
ported from Germany, but as the result of a boycott on German goods, such 
imports have decreased. Japanese goods have recently been imported in large 
quantities. 

Sxioe Store s. - Imports of shoes from Czechoslavakia and Japan ha.ve de- 
moralized the trade of independent shoe retailers, 3/ j^ chain of shoe stores 
is maintained in Chicago by the Bata Organization for the purpose of selling 
shoes made by their factory in Czechoslavakia. This ty;ie of merchandise is 
mostl]'- found in so-called bargain basements. 

List of Qualified Witnesses 

Mr. Edwin 11. Dibrell , Vice President in charge of Merchandising, Associat- 
ed Dry C-oods Corporation, wnich o\ims and operates a chain of department stores 
including Lord and Taylor, and James t'cCreery and Company. Mr. Dibrell joined 
Lord and Taylor in 1919, where he merchandised piece goods and became Vice 
President in 1926, at the age of 37. In 1927 he became Executive Vice Presi- 
dent and Publicity Director of H. H. Macy and Company; and has been active 
recently as Vice Chairman of the Retail Protective Committee in representing 
retail interests before the 1\[RA in Washington. Mr. Dibrell has served as 
Chairman of the Merchandise Managers Groun of the National Retail Dry Goods 
Association, and also ?.s Chairman of the Sales Promotion Division. 

1/ Statement by Mr. Elhart. 

2/ Based on the opinion of Mr. Dibrell. 

3/ Statement by Dr. Nystrom. 

4/ Statements ty Mr. Girdner and Mr. Holden. 

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Mr. Earl W. Elhart , 1 East 13th Street, Ne-7 York, Weu York, Editor, Fair- 
child putlications. ur. Elhart lias "been associated rdth Fairchild Piihlications 
for a m-unlDer of years. He is the Editor of the Executive Edition of a weekly 
paper entitled Retailing . 

Mr. William C-irdner , Executive Secretary, National Council of Shoe Re- 
tailers, Inc., 1 East 42nd Street, New York, Neu York. 

Mr. Lew Halin , forner Chairrnan, National Retail Code Authority, and nemher 
of the Industrial Advisory Board of the NRA; and president, National Retail 
Dry Goods Association, 1933. Mr. Hahn played an important part in the forma- 
tion of the Retail Code ajid represented the Trade hefore the NRA in Washington. 
He 'vrs formerly connected with the Hahn Department Store. 

Mr. John J. Ho 1 den , National Shoe Retailers Association, Empire State 
Buildin-, Room 3022, New York, Hew York. 

Mr. S. ICatzen , Vice President, A. I. Nam and Sons, Brookljni, New York, 

Mr. J. A. Kaylin , Associate Editor, Fairchild Fablications. 

Ua.jor Ben.iaiuin H. Naiim , President, A. I. Nam-n and Sons. Major Namii has 
■been one of the outstanding supuoi-ters of the Retail Code and has delivered a 
numher of sxieeches throughout the country in supiaort of NIHA. He was active 
in the formation of the Code at the time of the original puhlic herrings in 
August 1953, and attended a large numoer of conferences for the ptirpose of 
formulating a Code prior to that date. 

Dr. Paul H. Nystrom , Vice Chairman, National Retail Code Authority, 
President of the Limited Price Variety Stores Association, Inc. Dr. Nl^strom 
was a-o lointed Economic Adviser of the L.P.V.S.A. shortly after its origin on 
July 24, 1933, and rei^resented the Industry in negotiating "ith the NEA for 
a satisfactory Code, prior to his work with L.P.V.S.A., Dr. Nystrom had the 
following connections: Director, Trade Research, U. S. Ruhher Company; Sales 
Manager, International Magazine Company; Director, Retail Research Association, 
and Associated Merchandising Corporation; professor of Marketing, Colvjnhia 
University, and Business and Marketing Consultant. He is also author of 
nuiTierous hooks, the most recent of which are Economics of Fashion (1923), 
Economic Princinles of Consmrotion (1929), and Fashion Merchandising (1932). 

Mr. C-eor^~e F. Plant , Manager of the Store Management Grouo of the Nation- 
al Retail Dry Goods Association, 225 West 34th Street, New York, New York, 



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