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BOSTON PUBLIC LIBRARY 



/ 



2.0 



3 9999 06542 010 9 



NATIONAL RECOVERY ADMINISTRATION 



DIVISION OF REVIEW 



POLICY STATEMENTS CONCERNING CODE PROVISIONS 



AND RELATED SUBJECTS 



WORK MATERIALS No. 20 



> 3 i 3 it. 



.U4-8 

rro. 2.0 



i J ^ > J 



> 3 i i i >' 



Administrative Section 
December, 1935 



, 1 t f t C C. 



Jilt 



CONFIDENTIAL 



MEMORANDUM TO: SECTION HEADS Decem'ber 19, 

19 3 5 

SUBJECT: WORK MATERIALS NO. 20 

POLICY STATEMENTS CONCERNING CODE 
PROVISIONS AND RELATED SUBJECTS. 



The following pages contain a coinr>ilation of policy- 
statements with resToect to code provisions and related suh- 
jects. The coimDilation, while not an official document, is 
expressive of the standards that were ordinarily followed. 
It is now made available for confidential use within the 
Division of Review in connection with the various studies in 
process. 

This volume was compiled "by Alvin Brown, Review 
Officer of the National Recovery Administration, in May, and 
June, 1935, at the request of the Executive Secretary of the 
National Industrial Recovery Board. 

The numhers in the margin refer to the Dertinent 
paragraphs in the Office Manual. 



L. C. Marshall, 
Director, Division of Review 



9307 



C033E MAKING 



— 0— 



Substantive G-uides 



(Manual, 11-1000-1999) 



— .0- 



Amendments: Substantive Guides 



( Manual , 1 1 - 51 00- 51 9 9 ) 



— 0- 



Model Code Provisions 



9307 -i- 



June 12, 1935 



CONTENTS 



Sulpstantive Ouides : 

II - 1000 General considerations 1 

1100 Definitions 12 

1200 Hours 18 

1300 Tfeges 24 

1400 Other conditions of eraplojTnent 31 

1500 Attested trade r)ractices 37 

1600 Experimental trade practices 39 

1700 Prices 48 

1800 Code administration 57 

1900 Miscellaneous matters 67 

■Amenc'.ments 

II - 5100 SulDstantive Guides 70 

Model Code Provisions 72 

Index 92 



13 My 35 g 



9307 



-11- 



-2- 



G-ene ral p olicy 

It is then declared to be the policy of Congress to do the 
follor/ing things: 



1012 



Ohs true t ions to connerce 



To remove obstructions to the free flow of interstate a,nd 
foreign comiaerce uhich tend to diminish the amount thereof. 



1012.1 



O rganization of industry 

To provide f©r the general welfare "by promoting the or- 
ganization of industry for the purpose of cooperative action among 
trade groups. 



1012.2 



Cooperation of labor and industry 

To induce and maintain united action of labor and 
management luider adequate government sanctions and supervisions. 



1012.3 



Unfair competition 

To eliminate unfair competition. 



1012,4 



Utilization of Productive capacity 

To promote the fullest possible utilization of the 
present productive capacity of industries; to avoid undue re- 
striction of production (except as may be temporarily required.) 



1012,5 



Increase of consumption 



To increase the consumption of industrial and agricult- 
ural products by increasing purchasing power. 



1012,6 



Unemplo^TTient 



To reduce and relieve unemployment, 



1012.7 



Standards of labor 



To improve standards of labor. 



1012,8 



In general 



Otherwise to rehabilitate industry and to conserve 
natural resources. 



1012.9 



Means of execution of policy 

As the means of executing this policy the Act prescribed 
the following instruments; 



9307 



(1) Codes of fair competition applied for by industries 
(sec, 3a) 



1013 



-3- 

(2) Codes of fair competition prescribed by the President 1013 
(sec, 3d) 

(3) Voluntarv agreeraents with or among persons in industry, 
labor oijanizations, and industrial organizations 
(sec. 4a) 

(4) Agreements botvoen employers and employees respecting 
standards of eraplo;>Tnent (sec, 7b) 

(5) Limited codes of fair competition dealing only with 
standards of em-oloyment, prescribed by the President 
(sec. 7c) 

(6) Licensing to conduct business (sec, 4b) 

(7) xlestrictions upon imports (sec, 3e) 
These means are discussed hereafter. 

Conformity of means to purpose 

Each of these means must, whenever employed, and in every 1014 
respect, be in conformity with at least one of the purposes declared 
by Congress, and must not be contrary to any one of such purposes. 
The mission of this body of Substantive Guides is to determine what 
actions in particular situations so conform and what are contrary. 

Codes of fair competition applied for by industries 

What codes of fair competition may properly contain in de- 1020 
tail is described in succeeding sections. But there are certain 
antecedent general requirements, which, being provisions of the law, 
are subject to no. waiver. These are contained in section 3a of 
the Act, 

The policy of the Act 

Codes must tend to effectuate the policy of the Act 1021 
(sec, 3a), as above set forth, 

AiTolicants must be representative 

There are other types of codes, as set forth above, 1022 

but this type comes into being by the approval of the President 
only upon the application of one or more trade or industrial 
associations or groups. The law expressly requires that the 
applicants be "truly representative of such trades or industries 
or subdivisions thereof" (sec, 3a), To be truly representative 
an applicant group must include a sufficiently broad cross section 
of the industry to insure that the views of its members sub- 
stantially correspond with those of the non-members. 



Q'xn'7 



Nature of applicants 

The applicants vaa.y consist of one or more trade associa- 1022,1 

tions, or of one or more trade associations ^7ith T/hom a group of in- 
dividuals has joined for the purpose of presenting the code, or 
solely of a £ioup of individuals. 

Aspects of representation 

To be truly representative an applicant group must in- 1022,2 

elude enterprises of all distinctive types, such as — 

(1) Various sizes, 

(2) All significant types of locality, with regard "both 
to sections of the country and population densities, 

(3) All sii^nificant t;^,rpes of plant operation, 

(4) All significant types of distri"bution methods. 

Percentage of representcotion required 

The apulicant gvouv should include a sufficiently high 1022,3 

proportion of enterprises of ea.ch t^^pe so that the mere number of 
those included, as compared with thore not included, will give 
rise to a strong probability that those who ha.ve been silent would 
concur ii they chose to speak. For exaiaple, in an industry with 
widely scattered units, a group consisting of even less than half 
from each significant class or t;rpe , if properly distributed, 
might viell give rise to the inference that such group reflected the 
views of the industry as a whole. On the other hand, in an in- 
dustry containing some 20 members, well known to each other and 
readily accessible , a very high iDroportion of the 20 would have 
to be included within the group before it coiiLd fairly be inferred 
to reflect the opinion of the industry as a whole, 

Representation for particul.ar purposes 

Provisions proposed for a code which affect different 1022.4 

members of the industry in varying degrees impose special re- 
quirements of representation. Thus, a prohibition of a business 
practice not loreviously regarded as essentially unfair, but 
nevertheless detrimental in unregulated form to the best in- 
terests of the industry, would require the representation of any 
si,'2piif ica.nt class previously engaged in the practice. 

Authorization to act 

Generally the association or group delegates to a 1022.5 

comiiiittee the pov/er to act on its behalf in formulating the code. 
It must be furnished with credentials showing the extent of its 
authority to act. Such authorization must be evidenced ''oj the 
minutes of the meeting at which the committee was chosen, shov/- 
ing who was in attendance at such meeting, and what the vote was, 
and certified by the proper officer of such meeting, 

9307 



-5- 

Inequitfible restrictions upon membership 

Applicant associations and grop-ps must impose no inequit- 1023 
able restrictions on admission to membership therein, (Act, sec 3 a). 
In the case of trade associations such provisions are to be sought 
in the association's constitution and by-lav/s. In the case of groups 
previously unassociated. there requires only a showing that all mem- 
bers of the indu!5try ^'vere invited to join. 



Definition of industr y 

In order that membership may be denied to no one in the 
industry, the definition of the industry in the association's con- 
stitution should be as broad as that contained in the proposed code. 



1023.1 



MembershiTj restrictions 

Membership should be automatically available to any mem- 
ber of the industry who agrees to pay his dues and (if the 
association wishes) coropily v;ith the code. Provisions reserving dis- 
cretion to the association respecting admission to membership are 
objectionable unless there is a factual showing that they have not 
been invoked in the past. Any provision which would establish re- 
strictions based on citizenship, race, color, creed, skill, time in 
business, etc., is definitely inequitable. 



1023.2 



Dues 



Dues, unless nominal, must be proportionate to volume of 
business or some other reasonable factor. Dues of any substantial 
size shop.ld be explained by submission of typical budgets of the 
association. Initiation fees must not be unduly large. 



1023.3 



Voting 



Voting on any basis other than one vote for each member 
should be justified by a showing that it does not discriminate 
against any class cf members, particularly those doing a small vol- 
ume of business. 



1023,4 



Expulsion 



The association should not have power to suspend or ex- 
pel its members except for retirement from the industry, violation 
of the code when such violation has been determined by a duly con- 
stituted administrative or judicial agency, violation of the by- 
laws, non-payment of dues or assessments, or judicially determined 
bankruptcy or insolvency, permission of expulsion "for cause" or 
"for conduct prejudicial to the best interests of the association" 
is bad. 



1023,5 



Government of association 



If there is a substantial delegation of authority to a 
board of directors or an executive committee, such board or com- 
mittee should hold office for no longer than one year and should be 
responsive to the membership at large through the medium of special 
meetings subject to the call of a minority of the membership at large, 
9307 



1023,6 



-6- 

Removal of inequi table restrictions 

Upon determination that the constitution or by-laws of an 1023.7 
association contains inequitable provisions the association should be 
requested at the eE-rliest possible date to remove such provisions. 
Where it is advisable that a code be approved prior to the removal 
of such provisions, the code may be forwarded for approval if; 

(1) A \vritten statement is obtained from the association, 
signed by an officer of the association that (a) 

the provisions will be removed or their removal urged, 
(b) the provisions will be made non-operative pending 
their removal, and (c) no members have been refused 
admission or expelled or are at the present time sus- 
pended because of the provisions, and 

(2) The code contains a provision whereby the National 
Industrial Recovery Board is given the power to 
change the code authority if it finds the code 
authority is not truly representative. 

(3) If either (1) or (2) is lacking, the order of ap- 
proval must require that the inequitable provisions 
be removed within a stated period (generally 30 days) 
from the effective date if the association is to 
participate further in the activities of the code 
authority, 

Monoijolies 

Codes must not be designed to promote, nor may they per- 1024 
rait, monopolies or monopolistic practices, (Act, sec, 3 a). 
Fixed tests to determine this question cannot be laid down. It 
must rest uroon an examination and appraisal of the effect of each 
code provision. Each code must contain an express prohibition of 
monopolies and monopolistic practices, (Model, 821), 

Tests for monopoly 

Where there is any ireason to fear monopolistic effect, 1024,1 
the question should be examined from the following viewpoints: 

(1) Character and extend of existing competition, 

(2) Reasonably anticipated effect thereon of code 
provisions, 

(3) The factors, if any, including any provision tend- 
ing toward price control, concerning which a 
question of tendency toward monopoly has arisen 

or might arise. 



9307 



-7- 

Record of -partic-a].ar industry 

If the industry hs.s a history under the anti-trust laws, 1024,2 
actual cases which have been decided may indicate the points which 
have to he answered. 

Small enter-prises 

Codes must not be desif2;ned to eliminate or oppress small 1025 
enter-orises nor operate to discriminate against them. (Act, sec, 
3 a). In pa-rt, this question overlaps that of monopoly, in that 
whatever tends to "oroduce monopoly tends also, of course, to op- 
press small enterprise. There are also sources of such oppression 
which are apart from monopoly. Again, no fixed tests to determine 
this question can be laid down. The conclusion must rest upon an 
examination and appraisal of the effect of each code provision. 
Each oode must contain an express prohibition of elimination and 
o-npression of and discriminations against, small enterprise, 
(Model, 821). 

Facts to be examined 

Determination of the effect upon small enterprises re- 1025,1 
quires examination of the number of such enterprises which have 
joined in the application, the conditions affecting such enter- 
prises before the submission of the code, and the probable effect 
of code provisions upon such conditions. 

Hearing 

Where a code affects the services and welfare of persons 102S 
engaged in other steps of the economic process, such persons shall 
have the right to be heard prior to approval of the code by the 
President, (Act, sec, 3 a). Since all codes do generally have 
such effect, hearing prior to approval is mandatory. 

Not ice of hearing 

The reasonable execution of this requirement necessitates 1026,1 
adequate notice to all such persons of the time and place of hearing, 

Non-?/aiver of Constitutional rights 

Neither the Government, nor any member of industry, waives 1027 
xiT can properly insist that the other has waived any Constitutional 
right pertaining to the Government or to any individual by approving, 
assenting- to, or cooperating under any code of fair competition 
(Ex. Order 6949). 

Jurisdiction of codes 

Multi-pie coverage 

Due to the complexity of the organization of business, 1031 

it is impossible to avoid situations ?;here one establishient will 

be under more than one code. It will be under a code only to the 
9307 ..--.- X . , 



-8- 

extent its Toroducts or fimctions are T.'ithin the definition of the 1031 
particular industry. Every effort will be made to encoiirage the 
alignment of industries and cones so that overlar)ping is prevented 
as fully as possible. 

Professional Functions 

Coc.es i.7ill not be applied to professions in t'crns of 1032 
functions. Such professional persons shou].d be controlled, if 
at all, through the provisions of the code for the industry to 
which they are attached. 

The public interest 

Every code provision must be examined as thoroughly from the 1040 
standpoint of the public interest as from the st;\ndpoints of indus- 
try and labor. The public interest is that of the v/hole body 
politic — of everyone as citizen, consumer, rnd taxpayer, In deter" 
mining the propriety of a particular provision, no interest is 
paramount; all three must be nicely balanced; each may have some 
concessions to make. It is often overlooked that frequently one 
interest, by accepting an apparent particular disadvantage, gains 
a great genera,! advantage in the long run. Thus, the public in- 
terest, by co:iceding decent wages to labor and a reasonable profit 
to industry, ives hostages to fortune for the longer pull. But 
this is only a qualification upon tho general principle that neither 
labor nor industry must benefit at the eypense of the public interest. 

Amendment of cod es 

Rig ht to modify codes 

Section 10 (b) of the Act, empo'.Tering the President 1051 
from time to time to cancel or modify any order, approval license, 
rule or regulation under the Act, is required to be inserted in 
each code. It should be set forth in full in all codes, includ- 
ing supplemental. (Model, 811). 

Amendinent by industry 

In addition, the right shoiiLd be reserved to the in- 1052 
dustry to apply for amendments in the same manner, and subject 
to the same conditions, as in the case of ap-olications for codes 
(Model, 812). The industry may delegate to the code authority 
the full power to represent it in applying for amendments, or 
it may reserve such pov/er to itself. 

S upplemental codes 

Where s]?ecial conditions affecting any portion of an in- 1060 

dustry require special provision, a supplemental code may be 
applied for by such portion of the industry. Since the basic 
code applies generally to the entire industry, no supplemental 
code affects any of its provisions unless it expressly super- 
sedes it, Qi course, if the basic code provides that supple- 
mental codes must be consistent therewith, no provision of any 
supplemental code may be inconsistant with a basic code provision, 

9307 



-9- 



Re^ional codes 

Exce-:)t in most imusual circumstances, regional coden shoiild 
not "be "oermitted in industries ^jhich distribute on a nation-wide 
basis. The problems of industry cannot be solved on a piece-meal 
basis. 



1070 



Other codes and a^'reements 

In so far as applicable, these substantive guides apply to other 1080 
codes and agreements under the Act as vrell as to codes which are 
applied for by industries. 



Codes p :. e scribed by the President 

The President has not yet exercised his authority to 
prescribe codes (sec, 3 d) or limited codes dealing v.dth standards 
of emplojTnent (sec, 7 c). Should he exercise such authority'', it is 
to be assumed that such codes x-^ill accord '"Ith the policies ajj- 
plicable to voluntary codes. 



1081 



Agreements 



president's Heemuloyment Agreement 

The President exercised his authority under section 4 a 
by entering into the President's Re -employment Agreement vdth a 
very large portion of trade and industry. Its simple terms conformed 
to the policies for codes. These agreements have been largely super- 
seded by codes. 



1082.1 



Other agreements 

Soth by e:^^press authority contained in the Construction 
Code and thj general authority contained in section 7 b of the Act, 
the President has approved a number of agreements between employers 
and employees in that industry respecting labor standards. These 
have conformed to the policies governing codes. No other agreements, 
as provided in either section 4 a or section 7 b, have been approved. 

Licenses 



1082,2 



The President did not invoke his authority to license 
business (sec, 4 b) , and, by the terns of the Act, that authority 
expired on June 16, 1934, 



1083 



Restrictions upon imports 

There have been relatively only a fev/ applications for 
action as provided in section 3 e. Determination of such action is 
largely a factual matter and controlled by the circumstances in each 
case. No general policy has been developed in dealing therewith. 



1084 



9307 



-10- 

M iscellaneous consi derations 

Necessity of factual showin^^ 

It cannot be too strongly emphasized that each proposal 1091 
of a code provision requires a factual shov/ing of its necessity 
and its propriety. It is not sufi'icient that an industry desires a 
particular -orovision. The need must be shorrn. The propriety must 
be shovrn. Of course, there are certain classes of provisions (as 
attested trade practices) the need and propriety of nhich have been 
sho-iTn generally and for which a particular showing is unnecessary; 
and there are certain standards (as in the case of hours and wages) 
which are pre; iimptively proper. But as to provisions other than 
these, KSA cannot fairly be asked to accede to a proposed provision 
unless its need and its propriety are clearly shown. 

Degree of industry sup'oort required for proposed actions 

It is not the intention of democratic ijolicy that merely 10S2 
because a trade majority decides one particula-r method of doing 
business is more convenient than another it should be \7ritten into 
law. Majority action must be qualified as follows; 

(a) If there is an important social gain to be secured 
through a mode of action u^pon which the great major- 
ity of the industry is agreed NSA is bound to respect 
it. 

(b) If the overwhelming majority of an industry wants to 
bind all members to a course of action in which there 
is no particular harm and to v/hich there is no strong 
objection from any source }TRA may accommodate itself 
to the sentiment, 

(c) If there is no social issue at stake, and if the ob- 
jective of the majority'- is definitely opposed by the 
minority or by a considerable group of the customers 
of the industry, there is clearly no obligation on 
HEIA to sanction the operation of such provisions under 
these conditions. 

Enforceability 

Since law is useless beyond the point to vdiich it is 1093 
capable of enforcement, no mandatory provision should be included in 
any code if it is incapable of reasonable enforcement. This princi- 
ple does not prevent the inclusion of provisions v/hich are otherwise 
acceiptable in the form of standards which define and encourage right 
conduct without commanding it. 

Uniformity of language 

In the interest of simplicity of administration and ease of 1094 
securing compliance, it is higlily desirable that all codes follow the 
standard phraseology in the model code. 



9307 



-11- 

Trades 

Industry and trade are distinguished in the Act 1095 

(sec, 3 a), "but for convenience and brevity "both are referred to 
in these Guides as industry. The word uill he understood to have 
equal application to trade. 



9307 



-12- , 

DEFINITIONS 

In order to avoid aratiguities, ^iiy term whose intention may 1100 
be dculDtiul should "be carefiaiy defined. Definitions may also "be 
carefully defined. Definitions may also "be used to facilitate brev- 
ity of expression; e.g., the definition of "Board" as "National In- 
dustrial Eecovery Board" permits the use of the single word througout _. 
the code. 

Geographical appli cation 

In the a.bsence of strong reason to the contrary, codes should 1110 
have full geographical application and should, therefore, cover ter- 
ritories and insular possessions a-s well as the States, except that 
the Philippine Islands are not within the scope of the Act, The codes 
have this broad anplication without requirement of specific defini- 
tion. Short of naming all of the territory affected, any terms which 
may be used by way of definition axe vague, and it is, therefore, de- 
sirable to avoid attempted definition. 

Application to territories and insular -possessions 

Tii/hile, in the absence of strong reason, codes should have 1111 
complete geographical application, it is recognized that conditions 
in territories and insular possessions may demand special treatment. 
These ere best provided for by supplemental codes, rather than by 
independent codes, 

LeaJiin^!;- of "Unite d States " 

Adjudicated cases seem to define "United States" to include 1112 
Alaska, and Hawaii, but no insular possession. The lan^juage of section 
7 d might be construed to modify this application. Consequently, 
the e:roressipn is indefinite and should not be used. If exceptional 
reason exists for territorial lim.itation, then that territory to be 
excluded should be specifically mentioned. The territory in question 
comprises Alaska, Ha.waii, Puerto Rico, the Canal Zone, and the Virgin 
Islands. 

Ileaning of "Continental United States ' ' 

'The term, ^'continental United States, is also vague since 1113 
Alaslca is a. portion of the continent and it is not clear whether the 
intent is to include or exclude it. The use of the term should be 
avoided. 

Industry or trade 

Since the definition of the industry or tra.de determining the 1121 
applica.bility of the code, the greatest care is essential in the con- 
struction of this definition (Model, 201), 



9307 



-13- 
Trc.de d.isti3iruished from industr.y 

It is provable that industry, in its "broad sense, 1121 

includes trade. Lut trade is ordinarily understood as referring 
to the distriLiutive processes as distinguished from the -oroduc- 
tive, 

JDefinition should "be exclusive an well as inclusive 

3::clusion from the definition of activities not intended 1122 
to "be covered wider the code is equally as necessary as the inclu- 
sion of activities intended to "be covered, 

Overla'O'ping 

It is most essential that no definition overlap or con- 1123 
flict v/ith the definition in another code. 

Activities customarily incidenta l 

All activities custom.arily incidental to the conduct of 1124 
a "business are included without necessity for specific enumeration 
in the definition. Thus the definition of a manufacturing enter- 
prise includes the purchase of raw material and the primary sale of 
the finished product whether or not the definition specifically 
enumerates then. In case of douht, however, it is "better to specify 
the activity. 

Suo'ijlemental activities which may not "be incidental 

liflrien it is desired to include activities not o'bviously in- 1125 
cidental, such activities should he carefully specified. Thus, even 
where it is customary for manufacturers to install their product, it 
is desira,"ble that the definition specifically cover this activity. 
Of coiu-se, in the a"bsence of representation of other installers, the 
definition can cover only installation "by mc^nufacturers. 

Controlled enter-prises 

In order to prevent evasion of code provisions, the de- 1126 
finition should include any controlled enterprise which performs any 
of the f-'onctions incidental to the industry. Otherwise, "by the or- 
ganization of sales affiliate, the primary sale of the product might 
"be removed from the operation of the trade pra-ctices of the code. 

Con-i,unctive or disjunctive character of z e veral function s 

Miere the definition of industry includes several activi- 1127 
ties, care should "be taken to indica.te v/hether the -inerformance of 
all or only one is essential to mem"bership in the industry. 'The 
word "ejLid" is not a.lways clearly to "be taken in the conjunctive 
sense. Thus, './here an industry is defined as the "manufacture and 
insta,llation" of a product, it may not "be clear v;hether one v/ho 
manufactures "but does not install is a raem"ber, 

9307 



I- ..^. ■, — 



-14- 

ScQ-pe of "manufacture" 

In raanLifacturin^ codes the word "manufacture" should "be 1128 
carefully defined, particularly with reference to whether it is in- 
tended to include mere portions or the complete process of producing 
a completed article; whether it is intended to include only concerns 
performing the actual work or to include also those which ha.ve the 
products physically produced for them "by contract. (Model, 202), 

Memher of industry 

A memher of the industry or trade is ordinarily "best defined 1130 
as any individual, firm, or corporation engaged in the industry 
(Model, 203). 

Ezem-ption in towns under 2500 

Employers engaged only locally in retail trade or local 1131 
service trades or industries who operate not more than three es- 
tablishments and -^hose iDlace or places of business are located in a 
town or towns each of less than 2500 population, and not in the 
immediate trade area of a city or to^m of larger population, as de- 
termined "by the Administration, are exempted from those provisions 
of approved codes which relate to hours of employment, rates of pay, 
the minimum price at which merchandise may he sold or services per- 
formed, and the collection of assessments, exceiDt in so far as any 
such employer shall signify to KRA his intention to "be "bound "by such 
provisions. (Ex. Order 6710). 

A-p-plication to mem"bers 

Codes "bind all members of the industry regardless of assent 1132 
or dissent, exceiDt ths-t any provision whose application specifically 
requires assent is not binding without such assent. 

Classification of members 

Members of an industry should not be classified into 1133 
groups, subject to imDortant differences in restrictions or pro- 
visions, when the demarcation between such groups is arbitrary or 
so narrow that a small difference places employers in one group or 
the other. As for example, where a man with ten employees is in 
one grou]p, but with nine would be in another. 

Requirement of "establishment " 

Since the meaning of "establishment" is incapable of ex- 1134 
act definition and is, therefore, o^en to abuse, it is improper 
t« stipulate as a Qualification for member^hir) in an industry 
that eo.ch nomber shall have an "established" place of business. 

Separate conduct of business 

To require that each member conduct his business under the 1135 
code separately from other businesses in which he may be engaged is 
likely to cause hardship to small enterprise and is, therefore, 
improper, 
9307 ' 



-1 F,- 



Emiployer 

Employer is ordinarily test defined as any member of the indus- 1140 
try or trade "by whom any employee is employed or compensated 
(Model, 212). Since a member is not necessarily an emioloyer, the 
definition of the latter does not obviate the necessity for defini- 
tion of a member, 

Em-ployee 

Employee is ordinarily best defined as any person engaged in 1150 
the industry or trade except a member. (Model, 211). 

Classes of employees — clarity of definition 

Classes of employees subject to varying conditions of em- 1151 
ployment should be carefully defined so as to avoid ambiguity. The 
term "processing employees," for example, is extremely vogue, leav- 
ing doubtful whether foremen, timekeepers, cleaners, and other per- 
formers of incidental tasks are intended to be included. Likewise, 
the cirprossion "laborers," which sometimes is intended to refer 
only to manual labor, and sometimes more broadly. Of course, it is 
desirable, so fa,r as possible, to avoid any discrimination between 
classes of employees. Wliere it is necessary, it is best to specify 
and define particular excepted classes (e.g. watchmen, firemen, truck 
drivers), thus avoiding any necessity for characterization of the 
general body of employees. 

Classes of em-ployee — re a sonableness of definition 

Definitions of particular classes of employees should not 1152 
contain requirements materially at variance with common acceptation, 
so as to result in hardshi-^ and discrimination. For example, many 
competent skilled workmen might be barred by a definition requiring 
a stated number of years' eicperience. 

Light occupations 

A light occupation is one requiring neither substantial 1153 
physical exertion nor any educational qualifications. In particu- 
lar industries which distinguish light occupations, such occupar- 
tions should be carefully defined. 

Professional employees 

The words "professional employees" shoiild not be used 1154 
without a list of the particular occupations intended to be in- 
cluded under the term, since experience h-is proved that standing 
alone it is so indefinite as to cause considerable uncertainty in 
allocating individual classes within or without this category. 

Ap'or entice 

An apprentice is a person of at least 16 years of age v^ho 1155 
has entered into a written contract with an employer which provides 

9307 



-16- 

for at least 2000 hoars of reasonr.-bly continuous employment and 1155 

particir)ation in a progrrm of training approved by an agency de- 
signated by the Secretary of Labor. (Ex; Order 6750-C| Model, 
213). A code may make other provisions, but any eraoloyer may 
elect to follor; these. If the code purports to folio-.? the execu- 
tive order, its provisions must not be ].ess th&Ji the minimum es- 
tablished thereby, (Fed, Coram, on Apnr. Training, March 25, 1935), 

Learne r 

A learner is an employee \7ho has worked less than a 1156 
specified number of hours (consecutive or non-consecutive) at 
the occupation in rhich he is engaged, (Model, 241). Ordinarily 
such number of hours should not exceed 240. IJo upper age limit 
should be placed on learners. 

Sundry definitions 

Act 

For convenient reference the term ''Act" should be de- 1191 
fined as meaning Title I of the National Industrial Recovery Act 
of June 16, 1933, 

Southern states 

In general, the southern states may be said to com- 1192 
prise Virginia, West Virginia, North Carolina, South Carolina, 
Georgia, Florida, Kentucky, Tennessee, Alabama, Mississippi, 
Arkansa-s, Louisiana, Oklr.homa, Nev/ Mexico, and Texas, 

Hone '^f living quarter s 

The terms "home" or "living quarters" as used in home- 1193 
work provisions raea.n the private house, private apartment, or 
private room, whichever is the most extensive, occupied as a home 
by the employee and/or his family (Model, 232), 

Population 

Population is determined by reference to the latest 1194 
figures of the U, S. Bureau of Census. (Model, 223). 

Effective date 

A code becomes effective UJDon the date of its approval 1196 
unless some other date is specifically stipulated in the code. 
Ordinarily it is desirable to define the effective date as the 
second Monday subsequent to the date of approval. (Model, 841), 

Accountant 

Some codes vest duties in public accountants, who are 1197 
quite generally referred to as "certified public accountants." 
This is a. common usage which overlooks the fact that there are 
other public accountants equally suitable to perform the same work 
as certified public accoLmtants, Whenever any code provision im- 
9307 



-17- 

poses duties on "oublic acco-ontants, therefore, it should read in 1197 
manner such as the iollo?/ing: "by a certified public accountant or 
by an accoun.tant having the equivalent in qualifications and abilitj'- 
of a certified public accoimtant, provided, horrever, that as to any 
service to be performed in any pr.rticular state or governmental sub- 
division of the United States, such accountant in any event shall 
have the qualifications required by law in such state or governmental 
subdivision of the United States for the performance of such service," 

Impartial or confidential agency 

An agency, to be impartial or confidential, must be un- 1198 
biased as bet\Yeen the code authority and the industry as a whole, 
and as between individual members of the industry, particularly where 
one of the members concerned may be a member of the code authority. 
Obviously, therefore, the code authority cannot act as an impartial 
or confidential agency, nor can its secretary. The a;p;oroval of N3A 
is essential to the determination of its impartial or confidential 
character. 



9307 



-18- 

HOURS 

^m-'jloyevs shall comply vith the maximum hours of lator ap- 1200 
proved or prescrited by the President (Act, sec, 7 a). Accord- 
ingly, every code will make .provision for maximum daily and weekly 
hours. 

Weekly hours 

The limitation placed upon hours must necessarily "be a com- 1210 
promise between the requirement of reemployment and the ability of 
industry to adjust itself to the change in operating conditions. 
Experience under present codes shows that, for the majority of in- 
dustry, 40 hours per week is the lov/est maximum presently practicable. 
Accordingly, in the absence of convincing showing to the contrary, 
no ei.iployee r.dll be permitted to work more than 40 hours per week, 
(Model, 501,302). 

Hours in allied industries 

Where hours have been established in one code, there is 1211 
a presumption for similar hours in the codes of allied industries 
with like operating conditions, both because of the finding of fact 
in the first instance and because disparate hours might be discrimina^- 
tor:^. 

Exceptions; by industries 

Maximum hours may be fixed in particular industries at more or 1220 
less than 40 per week upon convincing evidence of reason therefor. 
The follo\7ing are some examples of acceptable cases. 

Continuous process industries — 36 hours 

Some industries operate on continuous processes em- 1221 
ploying four shifts. In such cases, where it is practicable to 
suspend operation on Stmdays , er.ch em-oloyee will work 36 hours 
per v;eek, end. his hours may properly be so limited. 

Continuous process industries — 42 hours 

If the impracticability of suspension of operation on 1222 
Sunday is demonstrated, maximum hours of 42 may be permitted. But 
see 11-1271 respecting provisions for days off. 

Retail trades 

Employment in retail trade has customarily been at longer 1223 
hours than in industry generally, and to reduce such hours presently 
to a maximum of 4-0 is recognized as impracticable. The hours per- 
mitted should be reasonably proportioned to the customary hours of 
store operation. 



9307 



-19- 



Special classes of em-ployees 



Other than the standard maximum hours may he provided for 1230 
special classes of employees upon adequate showing of necessity'- 
therefor. (Model, 303). Certain classes of employees have been 
generally recognized to he properly so excepted, viz: 

Service employees 

The normal operation of a plant is sometimes dependent 1231 
upon certain service employees workin.? longer than the general 
body of employees. Thus, the presence of firemen and engineers is 
often required earlier than other employees in order that power 
and heat may he available. Maintenance employees, shipoing crews, 
pnd truck drivers may he required for longer hours for like reasons. 
Where such necessity is shov.Ti, longer hours are proper. Such hours 
will generally he limited to 45 per week, since one hour additional 
per day will ordinarily meet the requirement. 

Executives and supervisors 

The time of executives and supervisors and their 1232 

secretarial assistants is not alwaj^'s amenable to limitation. It is 
proper, therefore, to permit no limitation of their hours. But to 
insure that this exception he not too broadly applied, it "'ill be 
limited to persons whose rate of pay amoujits to not less than $35 
per week. 

Professional, scientific, and technical employees 

For similar reasons, lorofessional, scientific, and techni- 1233 
cal eraployees may be excepted from limitations of hours, subject to 
the sai?.e condition respecting rate of pay. Such classes of persons 
should be carefully defined to insure certainty in the application of 
the provision. 

Commission and travelinr2: salesmen and collectors 

The earnings of commission salesmen and collectors depend 1234 
peculiarly upon their own efforts. Not only would it be unfair to 
deny them f ull scope for their energy, but such a provision would be 
difficu].t of enforcement. Accordingly, no limitation of their hours 
is required. Nor is it practicable to place limitations upon salesmen 
and collectors who travel. 

Watchmen 

The work of watchmen being less arduous than other forms 1235 
of emplojnnent, they may be employed for not more than 56 hours per 
week, 

Ap'orentices 

An apprentice ( 11-1155) may work in excess of the code 1236 

hours upon authority to his employer from the agency designated by 

the Secretary of Labor. (Ex, Order 675C-C; Model, 409). If code 

hours are 40 or less per week, the hours of instruction under pub- 
9307 



-20- 

lie authorities nay be in addition thereto, but the total hours 1236 

shall not e^cceed 44. (Fed. Comia. on Appr. Training, March 25, 

1935). 

Mixed employment 

It is desirable to insert a specific provision Trith re- 1237 
lation to the hours of emriloyees performing \7ork in tno categories 
of employment which have different limitations of hours. 

Averaging of hours 

With certain limited exceptions, any averaging of hours is 1240 
undesirable. Sufficient flexibility is available from the pro- 
vision permitting unlimited overtine at the overtime rate of pay 
(11-1250). 

Office emT3loyees 

The hours of office employees may be averaged over 5 1241 
weeks in order to provide for the monthly peak of accounting, 
billing, collecting, and inventorying, 3ut such employees should 
in no week be permitted to work more than 48 hours, should be 
limited to 9 hours in a day, and the Drivilege of one day off in 
7 should not be impaired. 

Continuous process employees 

The hours of continuous process employees may be 1242 

averaged over two weeks in order to provide for days off, 

T/atchmen 

For similar reasons, the hours of watchmen may be 1243 

averaged over t:ra weeks, 

EmTployrnent for less than -period of averaging 

Where hours of labor are permitted to be. averaged, 1244 
the code should make definite provision for the situation aris- 
ing where a worker is employed for less than the permitted period. 
Generally, pay at overtime rates should be required if the pro- 
rated hours exceed the average limitation. 

Time lost due to inclement weather 

In certain outdoor industries where working time is 1245 
dependent upon weather, it is proper to permit time lost due to 
inclement weather to be made up in subsequent weeks. But this 
should be limited to the 5 weeks ensuing upon such inclement 
weather, hours per day should nevertheless be limited to 9, and 
it should not impair the privilege of one day off in 7, 



Q 



9307 



-21- 

Qvertime 

Tiie limitation of hour*-, with no exception to take care of 1250 

fluctus.tion in the load factor, or even ^^ith provision for certain 
■oeak periods, places too great an administrative "burden mjon in- 
dustry end NRA., and deprives industry of the simple elasticities 
to which it is almndantly entitled. On the other hand, a require- 
ment of extra pay is a sufficient encouragement to hire nevj help 
and therefore a sufficient deterrent against ahuse of an overtime 
i:)rivilege. Accordingly, overtime nay "be permitted ^7ithout liraita^ 
tion, conditioned upon the payment of 1^ times the emplo3'-ee's 
nonaal rate of pay, 

Pea::s and tolerances 

For reasons str„ted in II-125C, peaks and tolerances are 1251 

unne ce s sar;^'' and ■'undesirable, 

Emergencies 

Overtime vrork on accoijnt of emergencies should "be suV 1252 

ject to the requirement of over tine pay as specified in 11-1250, 
and therefore need not be s-oecially provided for. 

Extra "jay for overtime 

All working time permitted to any emrjloyee in excess 1253 
of his normal maximum hours will be compensated at l.V times his 
normal rate of pay. In the case of piece workers, the overtime 
rate is l-i- times the normal piece rate, 

Daily hours 

No enrployee will be permitted to work more than 8 hours in 1250 
any 24 (Uodel, ZCl, 302), except where in special cases the weekly 
hours may exceed 40, and in such cases the d&.ily hours '^ill be 
limited to 9 in any 24, 

Days off 

ITo employee will be permitted to work more than 6 consecu- 1270 
tive days. Certain exceptions are jjermissible , viz: (Model, 304). 

17orkers on continuous processes 

In the case of industries with continuous operations or 1271 
with rotating shifts, not more than twelve days may be permitted in 
any -.ourteen day T)eriod, 

Watchmen 

Watchmen may be permitted to work not more than thirteen 1272 
days in any fourteen day period, * 



9307 1273 



-22- 



Emerg:ency maintenance work 



Maintenance and repair nen may be permitted to ^ork on 1273 

days othenvise prohibited T7here such .'ork is necessary to the pro- 
tection of life, safety, health, or property, or to the continiied 
operation of the plant. For all ^.vork on such d^iys employees rrill 
be paid not less than ly tines their normal rate of pay. 

Holidays 

In addition, employees will not work on holidays. Since 1274 
holidays vary among the several states, the tern will be specifi- 
cally defined as comprising Hew Year's, Washington's Birthday, 
Llemorial Day, Independence Day, Labor Day, Thanksgiving, and Christ- 
ma.s. 

Sunc-ry provisions 

Id.le time 

Time required to be spent at the place of employment or 1291 
in connection with the discharge of d.uties of such employment , is 
a portion of the time of employment even thou^ the employer may 
have no rrork for the employee to perform. An employee is entitled 
to his regular rate of pay for such time, includ.ing the overtime 
rate when applicable, (Model, 431), In view of the varjring situa^ 
tions in d-ifferent industries, it will be necessary to adapt the 
language of the code provision thereto. 

EmT^loyer working''- as employee 

In a number of industries in which there are many small 1292 
units, it has been alleged to be unfair coax»etition for working 
employers to be permitted to work more than the maximum hours 
allowed for employees. The importance of the problem depends upon 
the cl^aracter of trie l-ndMstrj, In most cases, the operations of 
such persons are of such little significance in the total activity 
of the industry as to have little effect. Where they are of im- 
port, the question immediately arises whether it is an industry in 
which regulation is feasible. Of course, it is proper to forbid the 
evasion of labor lorovisions by giving proprietorshiu status to 
persons who are really employees; in most instances this type of 
evasion is prevented by the prohibition of subterfuge ( 11-1492), 

Eours of o-peration 

Proposal to limit trie hours of operations by fixing 1293 
starting and finishing hours na«y riroceed either from a desire to 
regulate production or from an intent to support enforcement of 
labor provisions. It is a type of meticulous regulation not to 
be encQ-Djraged, In its former aspect, it is discussed in connec- 
tion with the control of production ( 11-1650), Where there is a 
definite showing that the limitation of shop hours is needed as 
an important support to enforcement of labor provisions, it may be 
entertained, but only if there is no effect to restrict production 

9307 



-23- 

and T7here it will cause no embarrassment to other industries. The 1293 
limitation of shop hours cannot he applicable to employers or 
proprietors (see 11-1292). 

Split shifts 

In certain industries the practice of breaking the work- 1294 
in§- day of the employees into t'^ro or more periods divided by periods 
of lay-off for several hours or more has been recognized as a parti- 
cular evil. In such cases there should be appropriate requirement to 
make the hours of work consecutive or as nearly so as feasible. 

Night ^7ork 

The labor of man should, desirably, be confined to the 1295 
daylight hours, and therefore employment should be limited to a 
single shift. Those industries accustomed to the use of more than 
one shift should undertake consideration of the practicability of 
such a limitation. Particularly desirable is the elimination of 
the "graveyard" shift, 

Dual employment 

No employee may be permitted to work for two or more 1296 
employers in excess of the time he might work for a single em- 
ployer (Model, 305). 



9307 



-24- 

WAGES 

Employers shall comply with the minimimi rates of pay prescribed 1300 
"by the President (Act, sec. 7 a). Accordingly, every code will make 
provision for minimiim hourly or weekly wages, or both, and no em- 
ployee sho-uld "be excepted therefrom. 

Standard for minimum wg^e 

The requirement of a mininium wage is that it afford to the 1310 
employee a decent standard of living. This guide is, of course, in- 
capable of exact application. It will vary according to considera- 
tions of geography, population, and price levels. Other factors 
will be pertinent in particular cases, llo absolute calculation is 
practicable. The wage actually paid in 1929 will be of considerable 
significance in most cases as a test of the aiDplication of the 
standard. 

Amount of minimum wage 

Analyses of present conditions show that minimum wages of 1311 
40 cents per hour or $15 per week for 40 hours conform reasonably to 
this standard. There is therefore a presumption in favor of these 
rates. ?or departure from them for whatever reason the burden of 
adequate showing is on the proponent. (Model, 401, 402). 

Tfeelvly wage as a minimum or rate 

In any provision for a minimum weekly wage, it should be 1312 
made clear whether it is intended as a minimum regardless of the 
time actually worked, or whether it establishes a rate which may be 
prorated when less than a full week is worked. 

¥age rates in allied codes 

Where rates have been established in one code, there is a 1313 
presumption for similar rates in the codes of allied industries, 
both because of the finding of fact in the first instance and be- 
cause disparate rates would be discriminatory, 

G-eneral excer)tions 

Geogra-phical differentials 

Eactors affecting geographical differences in costs of 1321 
living are difficult of evaluation. Generally, it may be accepted 
that lower costs in the south (11-1192) warrant a differential of 
$1 a week in minimum rates. Yet it must be accepted that there is 
no actual line at which the costs divide; that the difference in 
costs is one of gradual geographical progression; and that arbitrary 
dividing lines may in many cases provide discriminating competitive 
situations. Accordingly, it is necessary to look at the conditions 
in each industry and endeavor to draw the line in a practical 
fashion. Sufficient evidence may be adduced in some cases to warrant 
a third intermediate zone, 

9307 



-25- 

PoTDulation differentials 

The differences in cost of living incident to different 1322 
densities of population are also difficult of evaluation. The pre- 
sumption may "be accented, however, that such differences justify in 
each geographical territory a decrease in the "basic minimum "by the 
following amounts: 

$1 per week in cities of from 

100,000 to 500,000 population. 

$2 per week in cities of from 

25,000 to 100,000 population. 

$3 per week in cities of from 
2500 to 25,000 population. 

$4 per week in places of less than 
2500 population. 

In order to support such differentials in particular cases, how- 
ever, it is essential for the pro-oonents to show that no comioetitive 
discrimination will result therefrom. The propriety of such 
differentials may "be re'butted "by showing that equivalent differentials 
have not, in fact, existed in the industry in the past. 

Industries allied to agriculture 

Since it is recognized that living costs in agricultural 1323 
communities are relatively low, there is a presumption of propriety 
of lower T/age rates in industries allied to agriculture, 

S-pecial classes of em-ployees 

Light occupations 

If convincing evidence is adduced that light occupations 1331 
(11-1153) exist in an industry, a lower minimum may "be justified. 
Based on the considerations stated in 11-1311, the appropriate 
wage is 35 cents per hour. 

Protection of women from discrimination 

Fnere women perform su"bstantially the same work as men, 1332 
they will he paid the same pay; and where they displace men at 
substantially the same work, they will "be paid the same as the men 
they displace (Model, 407), Important differences in the conditions 
as well as the actual processes of work should "be recognized in 
interpreting the phrase, "substantially the same work." For example, 
since work at night is more onerous than in daylight hours, it is not 
"substantially the same work." 



9307 



--26- 

A-Q-prentices 

A person may be employed as an apprentice (11-1155) at a 1333 
wage lov;er than the code miniirrum UDon authority to his employer from 
the agency designated hy the Secretary of Labor (Ex. Order 6750-C; 
Model, 409), Tlie "beginning wage shall not he less than 25^ of the 
"basic wage for joiarneymen, and the average wage for the entire 
period not less than 505^. (Fed. Coram, on A-o-or. Training, 
March 25, 1935). 

J-gnior em-ployees 

In some exceptional cases, a minimum of 80fj of the basic 1334 
minimum he.s been permitted for junior employees such as office boys and me 
and messengers — generally minors. (Model, 404). To justify such 
an exception there must be adequate showing that the work is light 
and unskilled, and that the exigencies of the industry require. 
Where such lower rate is r»ermitted, the number will be limited to 5^ 
of the total comparable class of employees (factory or office), but 
every employer will be allowed at least one such emr)loyee. 

Handics^-Qped workers 

Regardless of provisions in particular codes, a person 1335 
whose earning capacity is limited because of age, physical or mental 
handicap, or other infirmity, may be em-oloyed on light work at a 
wage below the code minimum, if the emioloyer obtains authorization 
from the State authority designated by the U. S. Department of 
Labor. Each em-olcyer must file monthly a list showing the wage and 
hours of such persons employed by him. (Ex. Order 6606-F; Model, 408). 
Unless specifically approved by the Department of Labor or permitted 
by the code, certificates will not be granted for more than b')o of 
the working force in an establishment, nor for wages of less than 75f^ 
of the code minimum. However, one such person is permitted to every 
establishment, (instructions. Department of Labor, November 8, 1934). 

Watchmen 

By reason of their relatively lighter work, the hourly 1336 
rate of watchmen may be less than that of other employees, but in 
no event will such rate be so low as to result in a less wage per 
week than received by employees at the basic minimum (Model, 403). 

Compensation on commission basis 

The fact that an employee is paid on a commission basis 1337 
is no reason for excepting him from the minimum limitation. 

Mixed employment 

It is desirable to insert a specific provision with rela^ 1338 
tion to the wages of employees perform.ing work in two categories 
of employment which have different wage provisions. 

9307 



-27- 
Learners 

A sulD-minimxijn wage for learners ( 11-1155) is unnecessary in 1340 
most industries. Where an industry needs highly skilled workers, 
the apprenticeship provisions (11-1333) are available. Learner 
provisions are open to the abuse of resulting in establishing a 
sub-minimum wage group. 

Requirements for learner provision 

Provisions for learners may be permitted in exceptional 1341 
circumstances but the burden of proof rests on the industry to 
show — • 

(a) That there is a need for new employees 
who have had no previous experience in 
the industry; 

(b) That the unskilled rate is not applicable 
to the new employees; a,nd 

(c) That the occupations for which learners 
are desired do, in fact, require a 
significant learning period. 

Minimum wage for learners 

No learner will be paid less than the standard piece 1342 
rate, if such be the method of compensation, and in no event less 
than 80/a of the basic minimum. (Model, 410). 

Number of learners 

The number of learners employed in each establishment 1343 
may not exceed b% of the total number of employees, but in any 
industry where learners are permitted each employer may employ 
at least one. (Model, 410). 

Evidence of completion of period 

Upon termination of a learner's employment, the employer 1344 
will sign a.nd give him a card showing the occupation and the 
number of hours employed as a learner. (Model, 411 ). When a 
learner has comDleted his learning period, the employer will sign 
and give him a card evidencing such fact, (Model, 412). 

Piecework compensation 

Minimum rates apply irrespective of whether an employee is 1350 
actually compensated on a time, piecework, or other basis 
(Model, 405)". 



9307 



-28- 

Period for Computation of piecework ipay 

In applying the minimum wage restriction, compensation 1351 
is to "be computed on the "basis of not more than a 7-day period. 
Where the conditions of production in an industry warrant, the 
period may he reduced. Fluctuation in earnings due to faulty 
management should not be the risk of the employee. 

Overtime rates for pieceworkers 

Where overtime is utilized, piece rates will he in- 1352 
creased in the same proportion as overtime hourly rates. 

Re.jected DJecework 

No corarjensation can he claimed hy a pieceworker for 1353 
spoiled work, hut this does not affect the ohligation to pay him 
the minimum wage. 

Fart piecework pay 

Where an employee is engaged partly on a piece rate 1354 
basis and partly on an hourly basis, he must be paid at least the 
minimum while on an hourly basis, regardless of the amount of his 
earnings while on a piece rate basis. 

Wages above minima 

In general, t]ie function of the codes is limited to fixing 1360 
minimum wages, and there is no obligation or express authority to 
devise s. schedule of wages for all the kinds of work comprised by 
an industry. To do so incurs a risk of freezing such wages, and 
thus setting a raaziraum contrary to the prohibition of the Act. 
Further, the Act itself, in section 7 a, provides a more fluid 
method for determining such wages. This general rule is subject 
to certain exceptions, however, viz: 

S-pecial kinds of emDloyment 

As has already been indicated, it is proper to fix 1361 

minima for special kinds of employment, as office employees, watch- 
men, and apprentices. 

Different rate bas es 

Where there are two or more types of employment with 1362 
substantially different characteristics, there may be adequate 
reason for differing minima. Tlius, office employees, who are 
customarily paid on a weeldLy or serai-monthly basis, may have a 
minimum different from that of factory emioloyees, who are 
customarily paid on an hourly basis. So also, in mining indus- 
tries, there may be a distinction drawn between employees whose 
duties take them below the surface of the earth and those whose 
duties do not, 

9307 



-29.- 
Minima for skilled workers 

A minimum wage may "be established for skilled workers 1363 
as distin^ished from the imskilled workers to whom the basic mini- 
mum is applicable. Care should "be taken, of course, accurately to 
define the term "skilled workers" according to the custom of the 
industry. 

Wage schedules 

Where wage schedules, establishing minimum hourly or 1364 
piece rates for various classes of workers, have been arrived at 
by collective bargaining, it is proper to include such wages in 
the codes, since the method prescribed by section 7 a has been 
follo\7e6.. This exception applies largely to industries, such as 
the garment trades, where the negotiation of rates has become 
settled practice. 

Ad.justment of wages above minima 

The general reasons why wage schedules should not be 1365 
included in codes do not prevent a reasonable measure of protec- 
tion to employees paid in excess of the minima. This may be 
afforded by a Torovision which will restrict the reduction in 
weekly earnings to a reasonable relationship to the reduction in 
hours, ¥nere the reduction in hours is small, there should be no 
reduction in weelcLy earnings. In either case, the percentage of 
reduction in weekly earnings should not exceed one-half of the 
percentage of reduction in weekly hours. In no event should 
hourly raten be reduced. (Model, 406). 

Fre- e:':i;3t i rr st a ndard 

If it is found desirable to make use of pre- 1366 

existing covjdit lor.s to determine hours or wages, it should be 
made clear \;nat is the base upon which the standard is to be 
calculated-- -whether the industry as a whole, the individual plant, 
the particular class of employee, either throughout the industry 
or in a particular plant, or the individual worker. It should also 
be definitely stated how, if at all, the standards are to be 
applied to i_istances not existing UTDon the date selected for de- 
termining the standards. 

Sundry ;orovisions 

Manner of payment of wages 

Payment of wages will be in lawful currency, or by 1391 

negotiable check or draft, loayable on demand at par, when reason- 
able facilities for negotiation are available. Pay periods may 
not be longer than half a month, nor the holdover longer than 
five calendar days. Wages will be exempt from deductions, except 
those voluntarily consented to by the employee or authorized by 



9307 



-30- 

law. Employers and their agents may not accept rebates. 1391 

(Model, 421, 422). 

Dismissal wage 

The development of the practice of providing a dis- 1392 
missal wage is undoubtedly desirable. It is not conceived to "be 
the function of NRA, however, to extend general regulations of 
hours and wages into this area. Such a provision may he included 
in a code if the industry desires. 



9307 



-31- 

OTPSH CONDITIONS OF EMPLOYI.ffiNT 

Employers shall comply v/ith other conditions of employment 1400 

approved or prescribed "by the President, This provision is re- 
quired to iDe included in every code, (Act, section 7 a) 

Collective "barffaininig; 

Employees shall have the right to organize and Dargain 1410 

collectively through representatives of their o\7n choosing, and 
shall "be free from the interference, restraint, or coercion of 
employers of labor, or their agents, in the designation of such 
representatives or in self-organization or in other concerted 
activities for the purpose of collective bargaining or other 
rautuel a.id or protection. This provision is required to be in- 
cluded in every code (Act, section 7a), 

Free choice of organization 

No en"-olo3''ee and no one seeking eraplo3rment shall be required 1420 

as a condition of emplo;'.nnent to join any company union or to re- 
frain from joining, organizing, or assisting a labor organization 
of his ovjn choosing. This -nrovision is required to be included in 
every code (Act, section 7 a). No provision which attempts to in- 
terpret this or the preceding provision, or v/hich attempts to 
qualify the industry's assent thereto, may be included in the code. 

Child labor 

It is generally accepted that the em;oloyraent of children 1430 
reoresents an unfair method of com;oetition. The employment of 
persons under 16 years of age will be forbidden (Model, 501), 
Such narrov; exceptions as may be permitted, as beloY7 indicated, 
require demonstration of propriety 'heyond a reasonable doubt. 
Of course, where industries desire to set higher standards, 
they should be encouraged. 

Hazardous occupations 

Employment in hazardous occupations of persons less 1431 
theji 18 years of age is forbidden. In the absence of evidence 
of necessity to the contrary, this should be stated as prohibi- 
tion of all employment of persons under 18 years except in 
specified occupations (as office boys and girls, messengers, 
etc.) ■ (Uodel, 501), Where the ^prohibition is simply of 
hazardous occupations, it is necessary for the industry to sub- 
mit a list of such occupations within tv/o months. Where the 
entire operation of the industry is hazardous , or where the 
industry is generally free of employment of youths at the present 
time, the provision can be greatly simplified by setting a blanket 
minimum of IS years. 



9307 



-32- 



Exce-otions to 16'^ye r ^T lira it 

The only permissible exceptions to the 16-year limit are 1432 

for part-time employment nhich does not interfere ^.vith schooling nor 
deprive children of reasonable opportimity for play. Thus a limited 
number of hours may be periiitted for employment of children over 14 
years of a;^,'e on curb service at drug stores, or in the delivery of 
newspapers or magazines. The burden is on the proponent of such en- 
ploy, lent to shov tliat it benefits employee as well as employer. It 
is essential in such cases that the scope and conditions of the em- 
plojTaent be carefully defined. 

Evidence of af^e 

An employer will be deemed to have complied with the age 1433 

■orovisions if he shall have on file a certificate signed by the 
authority in his State ruthorized to issue such certificate. 

Emplo:'nnent of minors 'oj parents 

In the aiDplication of labor provisions to minors em- 1434 

ployed by their parents, lav;s such as relate to compulsory shcool- 
ing furnish useful analogy. These are universal in their convic- 
tion tiip.t the proper developi-aent of children is sufficiently im- 
portc'Jit to outweigh the judgment of the occasional parent who may 
consider schooling unnecessary. But due regard must be had for 
the fs.ct that performance of occasional chores coniiected with the 
business of parents is natural enough, does not constitute em- 
ployment in the real sense, and is hs^rmless so long as it does 
not interfere with the health or schooling of the children. 

Safety and health 

Every employer must ma'^e reasonable provision for the safe;- 1440 

ty and health of his employees at the olace and during the hours of 
emplo^nuent (Model, 523), If the industry wishes to recommend stand- 
ards to be used only as a basis for educational -.'ork, it may do so. 
If it wishes to recoraxviend certain mandatory standards, it may do so. 
In any event, the relationship of KHA is a cooperative one. It should 
be noted that a special committee of experts has been established 
which \7ill both assist industry in develo-oing standards when de- 
sired, and advise ILlA. as to ar)-oroval of any proposed standards. 

Industry committee 

It is desirable that each industry'- create a committee on 1441 
safet"^ and health which will study the number and causes of acci- 
dents rjid health hazards in the industry and reDort a comprehensive 
program. 

Details of program 

The program for safety and health should consider the 1442 
following: 

9307 



-33- 

(a) A statement of the avera.^'e accident experience of 1442 
the industry; a comparison of the experience of 
employers most successful in reducing accidents; 
and a plan for uniform accident reporting in the 
industry. 

(h) Preparation of a statement showing the possible 
"benefits to individual employers, individual em- 
ployees, and the industry as a whole, through con- 
tinuous organized safety efforts, 

(c) A recommended plan for organized safety work for 
various types and sizes of companies, 

(d) Minimum standards for safety and health for the 
industry. 

Safety a,nd health in homework 

In industries in which homev/ork is permitted, such work 1443 
will he prohibited in any homes or "buildings v/hich are unsanitary 
or unsafe on account of fire risks. 

« 

Stabilization of emr)loyraent 

Ever"^ industry subject to seasonal or other fluctuations in 14-50 

eraplojrment should undertake the study of its situation in order to 
devise ways and means for the stabilization of employment to the 
utmost extend practicable. 

Homework 

Homework, limiting the term to mean industrial work done in 1460 
the hovae ( 11-1193) for wages paid by an outside employer, is a form 
of labor which, des-Qite arguments of convenience and low cost, ha-s 
usually been accompanied by low wages, long hours, and poor ^-^orking 
conditions. Furthermore, it creates a state of competition unfair 
to those emplojT-ers who maintain establishments where labor conditions 
can be regulated. Present mU policy is the result of a long period 
of stud^^ by a special committee. 

General policy 

Homework should be discouraged except where such action 1461 
would work undue hardship. 

Conditions under which homework may be permitted 

Though an industry can show that complete abolition of 1462 
homework will not be in the public interest, it should neverthe- 
less be restricted so far as possible, endeavoring to malce the con- 
ditions of home workers comparable to those of factory workers. 
While the provisions of the next paragraph are conditions on the 
prohibition of homework, they also express a proper measure of 
restriction, and should be broadened only upon strong showing 
(Model, 531). 

9307 



-34- 
Excepti ons to prohibition of homew ork 

Every prohibition of homevrork, except in the food or 1463 
allied products industries which contain prohibitions of the manu- 
facture or 2Ti'0cessing of food in homes,' must permit a person to en«- 
gage in homework at the same rate of wages paid in the factory if 
a certificate is obtained from the State authority designated by 
the Department of Labor, provided, 

(a) Such person is physically incapacitated for work in 
a factory or other regular place of business and is 
free from any contagious disease; or 

(b) Such person is unable to leave home because his or 
her services are absolutely essential for attenda.nce 
on a person who is bedridden or an invalid and both 
such persons are free from any contagious disease. 

The euploj'-er shall keep such certificate on file ajid shall file with 
his code authority the nrme and address of each worker so certificated 
(Ex. Order 6711-A). 

Problens in 'particular industri es 

Contract ir,'< of work 

The problem of contracting out work is not a general one, 1471 
but i^- confined to particular types of industries, being most -preva- 
lent in the garment trades. This practice is susceptible ■....' use 
as a .eaiis of evasion of codes, and should be so regulated as to 
prevent such misuse. In most cases it should be possible to do this 
by careful draftsmanship of the definition so as to bring such con- 
tractors under the code. Where this is not deemed effective, the 
code should prohibit contracting out work lonless the contract in- 
cludes a requirement to abide by the code provisions (Uodel, 552), 
Other provisions may be shown to be necessary in particular cases, 

Gom'oany toiTCis and stores 

TiiS problem of the company town is fo"and only in certain 1472 
industries, No employer may require as a condition of em'olo;^,nnent 
that his employee live in a house or buy in stores owned by the 
employer (Model, 541), Of course, excerjtions will be necessary in 
some particular instances, as v/here maintenance men must of neces- 
sity live on company property, but in such cases the nature of the 
workers so excepted and some fixed limitation on their number should 
be specified. 

Increase in work load 

The problem of increase in work load is an acute one in a 1473 
number of industries, but a difficult one to deal with in codes. 
Code provisions which attempt to solve the problem by rigid prohibi- 
tion of changes in work loa:ds and assignments do not constitute a 
sound approach. The problem is best dealth with by collective bar- 
gaining arrangements between employers and employees. Any attempt at 
9307 



-35- 



control through code provisions must "be addressed to the conditions 
in a particular industry. 

Existin;:^- lar^s and a.^reement s ^ 

IIRA, in seeking to establish minimuia standards, is not 
necessarily defining the minima '.-hich represent the best social 
standards. It must not "break do\7n .higher standards already set. 
Therefore, such existing standards, while not, incorporated in the 
codes, will not "'oe affected 'oy the codes (Model, 524), 



1473 



1480 



Laus 

No code provision supersedes any Federal, State, or 
municipal law which establishes more stringent requirements as to 
age of employees, wages, hours of work, or general working condi- 
tions than are estaolished in the code. 



1481 



Agreements 

No coc.e provision supersedes any agreement "between em- 1482 
TDloyees and employers which Torovides higher wages, shorter hours, 
or "better working provisions than those prescri'bed in the code, or 
which prescri'bes specific methods of wage payment, 

Worki?-en>s compensation 

Workmen's compensation is generally covered "by State 1483 
legislation and should "be dealt '"rith in codes only when a clear 
case can be uade that the variation among State laws results in 
undue hardships in certain areas. 

Sundry provisions 

Posting' of la"bor provisions 

Every employer must post and keej) posted the la"bor pro- 1491 
visions of each code under v/hich he operates, in accordance with 
rules ajid regulations prescri'bed "by NRA (Ex. Order 6590-B; Model, 
525), 

Evasion by subterfuge 

Codes will soecifically prohibit any attempt at evasion 1492 
by subterfuge, such as by reclassifying employees, or the duties 
of occupations, or change in method of payment, or by firing and 
rehiring* (Model, 521). 

Enticement of employees 

While in certain instances the enticement of extremely 1493 
skilled employees or those who are familiar with confidential in- 
formation has become a definite ^^roblem, a prohibition of entice- 
ment in general terms prevents employees from having the freedom 
of the labor market in their efforts to better their conditions of 
emnlojTnent, Such a cure is far worse than the evil itself, and, 
9307 



-36- 

therefore, employees should, "be excepted from general enticement 1493 

clauses. In those cases where a definite need can te sho\¥n to 
exist the prohibition should be restricted to specified classes 
of eniiployees. 

Dismissal 

For complaints 

No employer shall dismiss, demote, or otherwise dis- 1494,1 
criminate against any em-oloyee for making a complaint or giving 
evidence vith respect to an alleged violation of a code provi- 
sion (Sx. Order 6711; Model, 522). 

Notice of dismissal 

Fnile the prpxtice of giving adequate notice before 1494,2 
dismissal is undoubtedly desirable, NHA should not make a special 
effort to extend general regulations of hours and wages into this 
area of personnel policy. The industry may make such provision as 
it desires (Model, 551), 

Night work for women and childre n 

The question whether women and children should be per- 1495 
mitted to work at night is one for State regulation rather than 
for code regulation. Furthermore, in certain quarters there is a 
definite insistence that it is a form of sex discrimination not 
consistent with the attitude toward women in this day and age. 

Vacations 

Regulation of the practice of giving vacations should 1496 
not be encouraged. 

Retention of employment privileges 

Code provisions stipulating generally that workers shall 1497 
continue to enjoy any privileges which were theirs at some previous 
time are extremely difficult of enforcement both practically and 
legally, and should not be encouraged, 

Trans^3ortation. meals, etc . 

Where it has been customary for employers to reimburse 1498 
employees for certain expenses, and where employees are being or 
may be deprived fo such reimbursement, such mistreatment may 
properly be prohibited. Provision is made elsewhere ( 11-1391 ) 
protecting minimum wages from infringement ''ay deductions. 



9307 



r 



-37- 

A TTESTE D T RADE HEIACTIGES 

Certain trade practices have "becorie a commonplace of our legal 1500 
and business structure. Such may "be included in codes nith little 
or no necessity of formal safeguards in the public interest being 
expressed, 

Misre'oresentation 

Of product or services 

No member of industry may use misleading or inaccurate ad- 1511 
vertising or misrepresent any goods, credit terms, values, policies, 
services, or the nature or form of the business conducted (Model, 
701). 

I'alse marking or branding 

No member of industry may mark or brand goods so as to 1512 
mislead customers respecting such goods (Model, 703), 

i'alse invoicing 

No member of industry may knowingly v.dthhold from or 1513 
insert in a quotation or invoice any statement that makes it in- 
accurate (Model, V02). 

Defamation 

No member of industry may falsely impute to a corapeti- 1514 
tor dishonorable conduct, inability to perform contracts, question- 
able credit standing, or make other false representation concerning 
him or the quality of his \-oods (Model, 704), 

Ar)-'-)roprir.tion of competitors' property 

Misa'opropriation of trade marks 

The use of any trade iiark or trade name nhich has pre- 1521 
viously been adopted and used by a competitor is unfair and may be 
■orohibited, 

Co mine r c i al e sp i o na ge 

Members of industry may be prohibited from Drocuring in- 1^32 
formation res;oecting the business of any competitor, except with 
his consent, when such information is properly regarded as confi- 
dential or a trade secret. Such prohioition does not extend to in- 
formation relating to a code violation. 

Interference with contracts 

Members of industry may be prohibited from wilfully attempting 1530 
to induce the breach of contracts between competitors and their cus- 
tomers "oy any false or deceptive means, and from interfering with the 

9307 



n 



-38- 

performance of such contracts rrith the effect of emharrassin; com- 1530 
petitors in their "biisiness (Model, 708), 

Inf rin.'-ement of territorial rights 

The rit;3ht to contract an exc].usive sales territory, r)ro- 1531 
vided it does not tend toward monopoly, is well recognized at law. 
Any attempt hy a competitor to sell goods covered by such a contract 
in the exclusive territory is unfair and may "be prohibited if the 
goods are not of such character that the exclusive agency tends 
toward monopoly. 

Substitution of goods and services 

No member of the industry may substitute goods other than or- 1540 
dered by his customer without notice to such customer ajid opportunity 
to refuse acceptance free of expense. 

Price fixing and c oercion 

No members of industry may enter into agreement with other 1550 
members to fix prices or atteia-ot to coerce any other members to 
change, fix, or maintain prices (Model, 714), 

S.'oecious th reats of litigation 

Members of industry may be prohibited from publishing 1551 
or circ-j.lating unjustified or unwarranted threats of legal pro- 
ceedings vrhich tend to harass competitors or intimidate their 
customers (Model, 705). 

Commercial briber y 

No member of industry may give anything of value for the pur- 1560 
pose of influencing or rewarding the action of an employee or 
agent in relation to his principal's business without the knowledge 
of such principal. This shall not be construed to prohibit advertis- 
ing articles except as they may be used for commercial bribery, 
(Executive Order 6464; Model, 707) 

Secret rebates and other concessi ons 

No member of industrj'- may make or offer secret rebates or 1570 
other concersions, in money or otherwise. Services and lorivileges 
should be extended equally to all customers of the same class 
(Model, 706). 

Trade practices not dealt w ith 

There may be trade practices which have been held unfair by 1590 
the courts or the Federal Trade Commission, but are not dealt with 
by the code. In order to avoid any inference that the code is intend- 
ed to supersede such situations, it should be provided that the code 
has no effect to limit any such holding, TDrovided that such holding 
is not inconsistent with the Act or the code. Of course, if the code 
denominates as unfair a practice which has previously been held to 
be fair, the code would govern, 
9307 



If 



-39- 

EXP ERIMEN TAL TR ADE PHACTICES 

Those trade practices which are still in the formative, or 1600 
trial, or experimental stage, and which have not as yet "been fully- 
adjudicated, may he included in codes only in conjunction with 
appropriate procedures and expressly stated safeguards in the pub- 
lic interest. 

Eactual "basis 

The inclusion of any such trade practice must rest u-oon 1601 
a full, adequate finding of facts showing justification thereof 
"by the particular industry concerned. This finding of facts must 
reach far "beyond some "agreement" on the Toart of the industry 
memhers; far "beyond "validation" "by a formal puhlic hearing. 

Previous custom 

Of such provisions, one that is founded on a previous 1602 
custom of the industry has greater claim to acceptance than one 
which proposes an innovation, 

Com"binations of -provisions 

It is particularly important to examine not merely an 1603 
individual trade practice "but also any proposed com'bination of 
trade practices. Sometimes a trade practice that is uno"bjection- 
able if standing alone "becomes o'bjectionable when associated with 
certain other trade practices. 

Limitation on number of iprovisi ons 

It is higahf desirable that only a small number of such 1604 
provisions be inserted in any one code at the outset. This is 
necessary in order to Toerrait inquiry adequate to establish the 
findings of fact and careful supervision of operation in the pub- 
lic interest. In other vrords, the -nolicy should be one of gradual 
introduction of s\ich provisions in any particular industry so as 
properljr to substantiate their worth. 

Reservation of right to s tay 

Any of this class of provisions must include a provision 1605 
empowering IIEA, after due notice, to stay the operation thereof in 
case it proves to be not in tlie public interest. 

Discriminatory provisio ns 

It is difficult to discuss the subject of whether a 1606 
particular provision is discriminatory without begging the question. 
Obviously, an unsound provision is very likely to be discriminatory, 
while a sound provision can har&ly be. If the provision in question 
has not been accepted as wrong in principle, s.nd if it interferes 
with the business practices of some of the members of the industry, 

9307 



r 



-40- 

the presiunption of discrimination is strong. In such case the 1606 
burden is on the proponents to demonstrate the absence of 
discrimination. 

Sellin^-g; methods 

The field of merchandising is one which should "be invaded 1610 
hesitantly, if at all, for the Durpose of limiting individual 
practice and initiative. To justify any such limitation must re- 
quire a clear showing that the particular practice complained of 
is unfair or injurious to the industry as a whole. 

Terms of payment 

Upon adequate showing of abuses, or possibility of 1611 

abuses, a reasonable limitation, consistent with the custom of 
the industry, may be -olaced upon terras of payment, cash discounts, 
and datings. The provision must be no more than a maximum, per- 
mitting the member of industry to establish his own terms on a 
stricter basis if he desires. The limitation of terras may not be 
permitted if it has any tendency to contribute to price fixing. 

Extended dating 

The prohibition or limitation of extended dating of 1612 
invoices must depend upon convincing evidence of tangible ill 
proceeding therefrom. 

Consignment selling 

There is nothing inherently bad in consignment selling. 1613 
It is sometimes susceptible of misuse, as where it is employed by 
large, well—financed concerns to take customers away from weaker 
competitors. Nevertheless, in such case there must be strong 
showing of injury to warrant its prohibition or limitation. In a 
few instances the practice may be found to have unduly burdened 
the cost of distribution. In addition to such factual showing in 
the latter case, there ought to be practical unanimity among mem- 
bers of the industry in order to warrant its prohibition or 
limitation. 

Contracts for future delivery 

Limitations on the period for which members of industry 1614 
may contract for future delivery are well outside the normal area 
of code regulation. Generally a provision requiring members of 
the industry to file their practices as to such contracts in ac- 
cordince with the open price plan will meet any evil which gives 
rise to a demand for this type of regulation. Where it is 
reasonably clear that filing would be ineffectual, however, and 
upon adequate showing of need, there may be limitation upon the 
following conditions — 



9307 



-41- 

Feriod of limitation 

The maximiim contract period must "be reasonable with 1614,1 
respect to the nature of the indiistry's products, and its trade 
practices. It must not "be more stringent than the customary- 
practice in the industry over a preceding period of at least 
one year. 



o 



Special types of contracts 

Adequate consideration must "be given to the necessity 1614.2 
of providing for special types of contracts which may require ex- 
ceptional treatment, such as contracts to furnish materials for a 
specific project, or cost-plus contracts. 

Compliance 

Compliance must "be rea.sonatly anticipated to a degree 1614.3 
which will avoid any suDstantial increase in the administrative 
and enforcement "burden of l^TRA^ 

Effect on other interests 

It must be assured that the provision will not tend 1614,4 
to render production and employment less stable or "be unfair to 
purchasers, 

Forr. of sales contrac t 

Uniform sales contracts are in the shadowland of policy. 1615 
(llo reference is here nmde to the content of such contracts; it is 
assumed to "be proper; otherwise, o"bviously, the contract form is 
unaccepta'ble.) As a means of enforcing desira'ble trade practices, 
and as a means of "better informing the customer of his rights and 
o'bligations, much may "be said for them. Yet they constitute the 
more meticulous, detailed species of regu].ation which for many 
reasons it is desira"ble to avoid. The industry desiring such uni- 
formity should he made aware that NRA is averse to such detailed 
regulation, and should "be required to make an adequate case for it, 
"before the provision can "be entertained. 

Trado-in allov:ance s 

In some industries the fictitious inflation of trade-in values, 1620 
"by deceiving competitors as to the prices at which sales are "being 
made, and customers as to the values they receive for their money, 
constitute a definitely unfair trade practice. Any casual, uncon- 
sidered limitation of trade-in allegiances would offend against the 
policies respecting price fixing. Where the evil is adequately dis- 
closed, however, and failing any sounder remedy, a provision for 
limitation of such allowances may he entertained. 

Method of limitatio n 

The limitation must in no case do more than determine a 1621 

9307 



-42- 

maximura, "below which each member of industry is free to fix the 1621 
amount of his ovm allowance. 

Basis of 1 irai tat ion 

The existence of the evil of extravagant allowance is no 1622 
reason for emhracini^; the evil of the other extreme. The limitation 
must he reasonable, or it will impose an equal hurden urjon commerce. 
Nor may the allowance he "based upon arbitrary or hypothetical figures 
of what the value should "be. The only proper "basis is a factual 
showing of the prices of actual sales of such second-hand products 
in the open market. Such prices may "be given a moderate adjustment 
to allow for reconditioning and sales cost. 

Advertising all owa nce s 

Manufacturers or other vendors selling goods to distri"butors 1630 
frequently desire to purchase from their customers an advertising or 
promotion service which such customers can render. In doing so it 
has been customary to make payment by "allowing" a certain reduction 
from what would otherwise be the -orico of the goods. The payments 
thus made have become known as "advertising allowances." Code pro- 
visions declaring such Ellowances to be unfair would not change the 
ba.sic facts that sellers must price their goods to buyers and that 
certain buyers have promotion services which they desire to render 
and for which the sellers are willing to "nay. 

The evils and their remedy 

The remedy for such suspicion, secrecy, confusion, and 1631 
misrepresentation as may be connected with advertising allowances 
lies in (Model, 741-744)— 

(a) Clearly separating and thus establishing the 
distinct identities of the two activities 
which are involved. 

(b) Causing that part of the advertising allowance 
which is actually a price reduction to aio-'Dear in 
prices, and if the industry has an open price 
plan, to be reported, 

(c) Causing that part of the advertising allowance 
which is actually a payment for service rendered 
to aiDTDear a.s such with a definite description of 
the service and with such publicity, where 
practicable, as will render less likely the pay- 
ment of more than the comiDetitive worth of the 
service. 

No general -prohibition 

Advertising allowances may not be prohibited generally by 1632 
restrictions on the basis of products or types of distributors. 

9307 



-43- 
Re"bates not to "be disffliised 

The menbers of an industry may "be prohibited from desig- 1633 
nating as an advertising allov7ance, promotion allovrance, or similar 
term, any price reduction, discount, bcnuf:, rebate, or other form 
of price allowance or concession, or any consideration for advertis- 
ing or promotion services offered or given by them to any customer. 

Service must be definite 

The offering or giving of any consideration for advertising 1634 
or pronotion services to any customer may be prohibited except where 
the service is definite and s-oecific. 

Separate contracts 

Agreements for the purchase of advertising service from 1635 
customers may be reouired to be in written contracts, separate from 
sales contracts, and such contracts may be required to set out the 
promotion services spe-^.if ically anf. com-cletely, together with the 
r-recise consideration to be paid therefor, the method of determining 
performance, and other proper terms of con6.ition. 

Publicity 

Seme arrangement for X/Ublicity may be made where effective 1636 
machinery therefor can be devised. In considering any such arrange- 
ment, care should be taken to avoid machinery so c':mberscme that its 
costs will outweigh benefits to be granted. 

Fremi^jzis and "free de als " 

There should be no general prohibition of the use of premiums 1640 
or "free deals." Usually it is the misuse of these, rather than the 
use, which is objectionable, as where premiums are used to evade 
the proper purposes of an onon price provision. Tae proper way to 
prevent such evasion is by careful drafting of the provision in 
question. lor ezaaiple, in an open price provision, it should be re- 
quired that all terms and conditions of sale, including premiums, 
be filed. Alth:>ugh there should be no general prohibition, the use 
of premiums in the following ways may be prohibited: 

Commercial bribery 

The use of premiums or "free deals" in ways which in- 1641 
volve commercial bribery in any form. 

Lottery 

The use of -oremiums or "free deals" in ways which involve 1642 
letter;,'- in any form. Tne term "lottery" should be construed to in- 
cluG-e, but without limitation, a.ny plan or arrangement whereby the 
premi^jc or ^free deal" offered differs substantially in value from 
customer to customer of the same class, except as a result of 
differences in quantities rurchased. 

93C7 



-44- 

Misre'oresentation, fraud, or deceTPtion 

The Mffc^of vremixuiTs- or '^Tr ere' deals" -in. ways which involve 1643 
misreTji-efjentation, or fraud, or deception in any form. The use of 
any of the words "free", "gift", "gratuity", or language of similar 
import in connection with the giving of premiums or "free deals" 
cannot be declared deceptive in and of itself. But such use may "be 
prohilDited if there is intent to deceive, or if it does in fact 
mislead or deceive customers in some material particular. 

Discrimination "between customers 

The giving to any customer of nremiums or "free deals" 1644 
which are not offered to all customers of the same class in the 
trade area. 

Production control 

No general Dolicy has "been formulated res-oecting measures 1650 
designed to control -Droduction. Experimental iDrovisions have "been 
permitted in a numher of codes, em-oloying different devices: 
machine hour limitation, production quotas, limitation of new 
capacity. None of these has demonstrated a right to permanence. 

Hours of o-peratio n 

The limitation of hours of operation has already "been 1651 
considered in its aspect as a means of suTo-oorting enforcement of 
labor provisions (11-1293). As a means of controlling production, 
it is suDject to what has been said above. 

National res ource indu stries 

'The best case for -oroduction control can be made out for 1652 
the natural resource industries. As to method, it must be observed 
that the system of quotas authorized in the lumber code was not a 
success, 

Factu-al show ing required 

Without commitment as to loolicy, it may be said that any 1653 
application for production control must be accompanied by strong 
factual evidence of the necessity of the limitation. Such evidence 
should present a -oicture of the industry's productive capacity and 
the consumer's demand for the -oroducts of the industry, both for the 
industry as a whole and for the individual members comprising it. 
The data must reveal that the demand for the products of the industry 
is far below the productive capacity of the industry, and that over- 
production and its resulting evils have been a characteristic of the 
industry, with the resulting evils of destructive price competition, 
unfair competitive iDractices, and instability of employment. Any 
limitation must allow ample room for substantial increase in demand 
for every member of the industry. 

9307 



-45- 

Standards of x)roduct 

Standardization of product is not to be accepted as a universal 1660 
prescription, nor is it usually a zone of action into which lOlA. 
should project itself. In many cases, the prohibition of false 
marking or branding ( I 1-1512) is a sufficient protection. Where 
the industry discloses a strong sentiment for it, however, or where 
a strong showing is made in the public interest, URA will lend its 
cooDsration in the manner and UDon the conditions following 
(Model, 761-767): 

Standards committee 

The code committee will establish a permanent standards 1661 
committee, upon which government and consumer interests will be 
represented, 

formulation of standard s 

This committee will study and formulate standards in co- 1662 
operation 7/ith the American Standnrds Association or the U. S, Bureau 
of Standards, The code committee will submit such standards either 
to the Association or the liureau for ap-croval. If the standards 
committee disagrees, the code committee, with the aToproval of NRA, 
may determine the standards to be siibmitted. After such review as 
NBA raa^'- consider necessary the standards will be bind.ing on members 
of ind.ustry. 

Revision of standards 

The standards committee will observe tlie operation of 1663 
compliance with such standards, and will recommend revisions when- 
ever necessity appears. S^ich revisions will follow the same 
procedure. 

Non-standard rroducts not -prohibi ted 

The establishment of standards will not nrohibit the 1664 
manufacture and sale of non-standard -oroducts which are accurately 
labeled or otherwise clearly identified to customers, if such non- 
standard products are in no way harmful to the users. 

Design -oiracy 

Each man should have the right, in the absence of contrary con- 1670 
siderations of public policy, to the exclusive use for a reasonable 
period of the product of his mind. There can be, therefore, no 
fundamental objection to the prohibition of design piracy. The 
difficulty of administration, however, is an objection seriously to 
be considered. No industry in which design piracy is not a serious 
problem should attempt to deal with the matter (Model, 771-779). 

Registratio n of desi gns 

Coupled with any prohibition of design -oiracy should be a 1671 
9307 



-46" 

provision for registration of designs; otherwise the administrative 1671 
problem is too difficult. Such registration should he with an im- 
partial agency. It should not, of course, "be mandatory; and should 
be merely a condition of protection against -piracy. The filing 
bureau should be required to give all the factual assistance required 
by IdA. to mske determinations in particular cases. 

Relation to existing laws 

Where design protection is offered by existing statutes, 1672 
the period permitted therein should be accepted as the appropriate 
maximum. No code may afford protection for a longer period. ITor 
should the code provision be in contravention of any such statute 
in any respect; it should express its intention to be consistent 
therewith. 

Guaranty of -product 

The guaranty by a reputable manuf act^urer of the quality of his 1680 
product is at once one of the solidest of sales devices and a grate- 
ful protection to the cons-umer, IIRA sho-uld be very chary of ac- 
cepting provisions which unduly limit the right to give guaranties. 

Limitation to defects of mate r iel or Trcrkmanship 

The above is not to say, of course, that ^guaranties may 1681 
not be abused. They are sometimes; and where such abuse can be 
shown, a proper limitation may be imposed. But no manufacturer 
should be prohibited from guaranteeing his material and workmanship. 

Limitation of -period of guaranty 

The length of the period of guaranty can never be pre- 1682 
sumptive of extravagance of guaranty. Unreasonable length of 
guaranties do afford a means of giving cloaked concessions, but 
there must be definite evidence that this is so in any particular 
case. The fact that one manufacturer gives a longer gaaranty than 
his competitors is not prima facie unreasonable; he m.ay be able 
to demonstrate that his guaranty is entirely appropriate to the 
quality of his -product. 

Adjustments by dealers 

Manufacturers may not be required to -prohibit their 1683 
dealers from making adjustments -pursuant to their guaranties. With 
full appreciation of the piroblem -posed by the retailer who is 
irresponsible in the matter of replacements, nevertheless that 
problem does not justify placing an unnatural bar between the 
customer and the retailer with whom he deals. 

S-gndr-/- questions 

Classification of customers 

No code may -properly classify customers if the effect is 1691 
9307 



-47- 

to fix nrices, discounts, or differentipls, or to establich resale 1691 
price maintenrnce, or eliminate, suDDress, or discriminate against 
any customer or class of customers. ?or -oro-ner r)urposes there can 
te no objection to a classification of custonerr., "but no one may "by 
coercion atterrot to cause the inclusion of a cuctoner in, or his 
exclusion from, any class. Each member of industrj?- must "be permitted 
to clsscif''^ his ovTi customers in pccordence '-'ith his o^-m judfi^nent 
(!!odel, 626, S?7) . 

Restrictions as to customer s 

The restriction of sales "b"'' manufacturers to dea,lers of 1692 
certain qur.lifi cations, such as those T^ho maintain a T)l9ce of busi- 
ness and warehouse, rould be a species of class legislation ^hich 
could not be c^p-oroved. It is not the function of codes to limit the 
judgment of members of industry es to the ^)ersons to rrhom they should 
sell. 

Re tur:i of g oods for credi t 

It must be admitted that in many industries, particularly 1693 
in times of stress, laxness in t'le r-cceptance of the return of goods 
for credit tends to becom.e en obstruction to commerce, harassing to 
the manufact"arer r:id ultimately cost];^^ to the consumer. TJliere such 
conditions pp-oea-r, a reasonable limitation unon such return may be 
considered. An'* such provision must be entirel*' fair to purchasers. 
Returns ma;'' be limited to causes due to t'\e fa.ult of the seller, a.s 
defects or errors; or, if returns a.re allowed for causes not the 
fault of the seller, the purchaser ma3'" be required to pay the return 
freight. The period allowed for examination of goods by the 
purchaser nu.st be reasonable, pnd. there should be no limitation on 
return on excoi'jit of defects not easily discoverable. 

Conforna: i ce of bid to sti-pulated -price 

To require tha„t bids adliere to the stipulated, appropria- 1694 
tion for a project exceeds all "oroDer limitation on bidding practices. 
It TTOuld be unjust to -orevent a bidder availing himself of his shill 
or lower costs to place a bid at less than the stipulated appropria- 
tion. 



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PRICES 
General pr ice ^jolicy-Introd-uction 

The competitive syste:n 

In the area of free enterprise, price is supposed to "be 1701 
determined in an open market, where it is assumed to emerge from the 
operation of a.ll the competitive forces rhich are included in the 
shortha^id v/ords, sup-oly and demand. This comnetitive system is often 
sool'en of as an automatic self-regulating mechanism, but, as a matter 
of fact, it is not no\7 and never uas, C-overnrnent intervenes to 
secure the iiaixitenance or restoration of competitive conditions \Yhere, 
for exe.Tiple, an understanding among interested "business men may pre- 
vent the establishment of a competitive price. Government also under- 
takes to regulate the plane of competition in the field of wages and 
working conditions. It regulates that plane further in the field of 
trade practices. 

Purpose of price policy 

A price policy should, of necessity, be stated in general 1702 
terms. Its end is to cause lorice to perform its essential functions; 
to insure that it be a com^oetitive price in an open market, free from 
the influences of ignorajice, malice, deception, or collusion. 

Factors to be considered 

The establishment of a plane of competition involves a con- 1703 
sideration of all the arrangements, usages, and customs under which 
prices are made. Such mechanisms as a free market, open price filing, 
quantity discounts, cost accountancy, and the like are neither good 
nor bad in themselves; the merit or demerit of each cones from the 
use to which it is actually put. Nor can any device or procedure 
be judged alone, for it al^'ays ap'oears in combination with other de- 
vices# 

Differences in indListries 

Industries are far from being enough alike to permit iden- 1704 
tical treatment. They differ in structure, organization, and usages. 
They are cr.rrently at very different stages of development. They are 
susceptible to diffent types of supervision. 

Objectives and means 

It follo'.TE that a statement of x)olicy can present no more 1705 
than an a;op roach .of this problem. The objectives, of course, are 
definite. The goal sought is the establishment of conditions under 
which, in a free and open market, competition may determine a fair 
price. The means must be flexible, requiring the use of a miscellany 
of devices and "procedures. 



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Oipen price filiriis: 



Open price filing is a mere device. Its Dotentialities for 
"benefit or mischief depend upon the purpose to which it is put and 
the methods which attend its use. The standard "by which it should 
"be judged is price making similar to that afforded by an open and 
competitive market, such as an organized commodity exchange. 

Ob.jectives of -price filing 



1710 



The ideal of an open and competitive market can seldom "be 
fully attained. It is ho-ped to approximate its objectives by open 
price filing under appropriate circumstances. It is possible for 
the open file to allow buyers and sellers to accommodate their ac- 
tivities to comiDetitive conditions, to fix limits to the spread of 
quotations at any given time, and to tend to make -orice perform its 
industrial function. Open price filing should, so far as -oossible, 
be made to furnish a public record of nrice movements, provide a 
check on discrimination among customers, give the small enterpriser 
information about the activities of his larger competitors, reduce 
the amount of deceDtion among buyers and sellers, give the parties 
concerned a fuller knowledge of conditions affecting the market, and 
promote ajid safeguard the integrity of the TDrocess of competitive 
price making. 



1711 



Essential characteristics 



The following are the essential characteristics of an 
open price provision (Model, 711-714): 



1712 



The filing agency 

An impartial and confidential body (11-1198) should be 
the administrative agency in order that price lists may be dis- 
tributed to members of the industry and to their customers without 
partiality and without efforts to influence the quotations. If 
the body is a private agency, its activities must be subject tn 
the immediate oversight of the Government. 



1712.1 



Publicity 

The prices must be genuinely available to all customers and 1712,2 
members of the industry, together with the name of the seller when- 
ever it is necessary to an identification of the quality of the 
product. 

definite -prices 



The filed prices must be those at which sales are actually 
to take place, rather than merely minima above which members of an 
industry may secretly vary their prices as they choose, or maxima 
from which discounts are to be allowed. 



1712.3 



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-50- 

Identif ic-^.tion of orod'uct 

"Ehe various qualities, styles, and sizes of the product 1712,4 
must "be cs.pa'ble of accurate ideutif ication, 

CoiiTolete filing 

Since any one of the terns of sale may "be emplo3'ed to vai^ 1712,5 
the actual sales price, all such terms — quality, qucntit^'', style, 
size, discounts, point of shipTient, classes of custodiers, manner of 
■■)a>'^;ient, and so forth — nust "be filed in precise and definite tjrms» 

The field for use of o^oen pricing 

Unfavorab l e f ields 

Open price systems should not be indiscriminately ^ \ 1721 
applied to the entire range of Aiaerican industry. This device may 
require much effort and give little usable information ^here — 

(1) Comj.iodities differ so -^.'idely in q-oality, character, and 
accompanying service that prices are likely to vary ^vith 
ea,ch sale, 

(2) Uhere the number of concerns and products is very large. 

(3) TThere, through custom or convenience, prices remain 
stable and market changes lie -mostly in the character 
of the goods sold, 

(4) "Where comnodities are highly perishable and their supply 
fluctuates rapidly, 

(5) where the nature of the product malies identification of 
quality, style, or size difficult, 

Favorable fields 

On the other hand, the feasibility of an open price sys- 1722 
tern increa,ses in so far as price competition is active, the p^od-- 
ucts of the industry can be clearly identified, and price changes 
are frequent without being incessant. 

Factors to be considered 



Consideration should be given to the follov/ing factors: 1723 

(1) Frequency and extent of price change, 

(2) Complexity of terras of sale, 

(3) Ease of identifying the product. 

(4) Number and geographical diffusion of members of the 
industry. 

9307 



-51- 

(5) Degree of price conpetition 1723 

(6) Economic importance of the product. 

(7; In some instances, rs tiiere the finished product of one 
industry is the rav material of another, the conditions 
in correlative industries, 

ul'-ere O'oen ".rice gysteias shculi I'e avoided 

In certain industries, open price systems -involve such 1724 
prooa"bilities of serious atuse that, even though they are feasicle, 
they si-culd "be avoided. These are industries in TKr.ich the need is 
to preserve competition against attaclv, rptiier than to foster it» 
Such is an industry in which the dominance of an enterprise or 
group is inti-_ii dating to smaller independents, or one in Trhich the 
chief ohstacle to collusion is the difficulty of devising machinery 
for price -understandings. The field for open pricing is that in 
:T::ich competition tends to te active, "but ill-infcmed and chaotic; 
not that in irhich competition tends to evolve into monopolistic 
restraint. 

TTaitini: rrricd 



A waiting period is likely to freeze a competitive process 173C 
■;7hich should "be keut active. In an open market there is no counter^ 
:art of such a device. When prices are rising, r flood of orders 
luring a waiting period mas'" unsettle a future market, Fnen p.ices 
are too hi^, the incentive to reduce them may "be lessened "by 
knowle'dge that competitors ma-y destroy most of the sales advantage 
"before reductions can "become effective. Therefore, the general 
presumption must "be against the use of the waiting period, and the 
hurden of proof is upon the industry' which wishes to employ it. 

Best case for rait in r r^ericd 



Fro"ba"bly the "best case for a waiting period can "be made 1751 
for industries in which sales are of large size and small num'cer, 
members ?j?e many and widely scattered, and information ?."bout prices 
cannot, for seme reason, "be quickly circulated. 

Limit on frequency of -price change 

In industries -^^ere prices immediately effective are 1732 
manip-ulated for the purptose of allowing large discriminatory dis- 
co-unts to privileged customers, it may he necessary to impose some 
limit upon the frequency of price change. In such rare cases this 
can "be done 'c-f requiring that a price, once effective, must remain 
so for some reasona"ble minimum period, A waiting period ""tef ore 
the price "becomes effective is not necessary in dealing with this 
T)ro"blem, 



93C7 



-52- 



Smidry price filin^g; provisions 



When prices Tpecome effective 



In the absence of a waiting period, prices become effec- 
tive immediately upon receipt by the agency, and the code should 
so state, InTo member filing a revised price may file a higher 
price within 43 hours. 

Price basis 



1741 



No open price plan may require members of industry to 
file prices on any specific basis, The;^ must be free to file 
f,o«b, factory or delivered prices, list or net prices, as they 
elect. 



1742 



Adopting: another's price list 

To avoid unnecessary expense or trouble for small enter- 1743 

prises, members of industry may be permitted, if they desire, to 
adopt the price list of another instead of filing a separate one, 

L"ump-sum prices 

Any general prohibition of lump-sum prices is an iinwar- 1744 
ranted reg^alation of individual sales practice. To prevent evasion 
of price filing provisions, however, members of an industry may be 
required to quote or invoice separately any articles for \7hich 
prices have not been required to be filed. 

Preservation of records 



The agency will maintain a permanent file of all price 
terras and will not destroy any part of such records except upon 
written consent of i^'BA, 



1745 



Price statistics as an alterna.tive 

A price statistics s^'-stem is one v/hich provides for the open 1750 
reporting of price summaries, price ranges, and sales volumes 
based upon records of past transactions. Such a system involves 
neither the same technical problems, nor, if the identities of 
sellers are concealed in the summaries, as great danger of abuse 
as necessarilj?- appear with current price filing. The contrivance 
of this form requires a nice balance between the safeguards of 
secrecy and the necessity of information. But there are many 
industries which will be adequately served thereby and in which, 
accordingly, open price filing is unnecessary. 

Destructive price cutting 

TJilfully destructive price cutting is an unfair method of compe- 1760 
tition. It imperils small enterprise, tends toward monopoly, and 
impairs code wages and proper working conditions. Because of the 



9307 



-53- 

difficj-ltj of defining it, no prohibition in a code can "be selx"- 1760 
executing, "but the facilities of NEA can "be empl0}^ed to determine 
the existence of destnictive price c"attin;f?; in particular cases 
(Model, 720-725). 

Complaints 

Any menber of the industry, or of any other industry, or 1761 
the custodiers of either, nay, at slyij time, complain to the code 
authority of the existence of destructive price cutting. The 
code authority r^ill, within five days, afford an opportunity to 
the person complained of to ansT7er such complaint and ^Till formu- 
late a coxiclusion within fourteen days. If either party dissents 
from such conclusion, all data vdll "be referred to NRA. for investi- 
gation "by it. 

Declaration of erne rgency 

TiThenever . the IIRA., after investigation, shall find (l) 1762 
that an emergency has arisen within an industr;'- adversely/ affect- 
ing small enterprises or -./ages or labor conditions, or tending 
toward monopoly or acute conditions v/hich tend to defeat the 
purposes of the Act, and (2) that the determination of a minimum 
price for a specified product within the industry is necessary 
to mitigate the conditions constituting such emergency, and to 
effect the purposes of the Act, the code e.uthority is authorized 
to cause an impartial agency to investigate costs and to recommend 
such minimum price to HRAo 

Establishment of minimum price 

If I'RA agrees to the price so recommended, it will es- 1783 
tablish such minimum price for a sta.ted period. Thereafter, during 
such period, no member of industry may sell the specified product 
at a net realized price below such rainimura, NBA, either upon re- 
viev/ 'by the code authority?" or by itself, may revise such action 
at any time. 

The loss leader 

The loss leader is a device, not of the technology'' of merchan- 1770 
dising, but of the business struggle for customers. The rivalry 
betv;een retailers should be based upon practices which promote 
economy in m.erchandising, not upon sheer financial strength or 
predatory tacticso 

Difficulty of solution 

Yet it is not eo.sj to find a solution for the problem, A 1771 
system of accounting cannot be made to reveal the cost of handling 
specific articles; even if it could, retail merchandising cannot be 
subjected to the i^rinciple that each article must bear its own 
cost. 



9307 



-54- 



Tentative provision 



The limits of the prohihition of loss leaders must "be 
determined in a tray that will allow the utmost leeway to the indi- 
vidual enterpriser in allocating the cost of doing "business among 
the dozens or hundreds of articles which he offers for sale. The 
present provision in many codes which forbids the sale of an article 
at less than the invoice cost plus a small addition to cover a part 
of the la'bor exriense incurred in the sale, is a compromise. Ex- 
Toerience with this provision is not conclusive; it should continue 
under o'bservation. Meanwhile, lacking a real answer to the problem, 
it may be accepted tentatively. Its use should always be safe- 
guarded by a provision that the clause may be deleted if found not 
to be ^7orking in the Dublic interest, without such deletion serving 
to invalidate the rest of the code. 



1772 



Cost systems 



Accounting is invaluable for presenting the state of a business 
and supplying information essential to its successful o-oeration. 
But it is a device, not a science. Its results are at best approxi- 
mations. It requires accuracy and fidelity, but it cannot exclude 
the arbitrary. 



1780 



Cost-f ormula^for--crice 



A costing system and a cost-formular-for-price are quite 
different things. A costing system is a guide to the individual 
enterprise in meeting its business comiDetition. A cost-formula- 
for—price attempts to determine the cash-terms in the bargain of 
sale. 



1781 



As controlling prices 



The great majority of cost provisions employed to delimit 
prices are unwise and unenforceable. In most cases the difficulty 
is not basically a problem of cost or even of price, but of indus- 
trial maladjustment. It rests unon a disiDarity between the capacity 
of the industry to produce and of the market to absorb. 



1782 



Relationship bet\7een cost and prices 

Analysis shows little justification for attempting to 
secure a sinrole and continuing relation between the cost and prices, 
A pegging of prices on the basis of cost can neither establish 
economic justice nor restore industrial prosperity. For these 
reasons (set forth in detail in Adm. Policy, New Series No. Ill) 
the use of a cost formula to limit price may be allowed only in the 
case of loss leaders, natural resource industries, and emergencies. 
In other instances the necessity for its use and its practicality 
must be established beyond reasonable doubt. 



1783 



Mandatory cost systems 



A mandatory cost system for other than price-making pur- 
poses may be ap-oroved if its necessity and practicability are 
9307 



1784 



-55- 

established iDeyond reasonable doubt. Generally, it can be approved 1784 
only for an industry in which a general uniformity of conditions can 
"be approximated. In instances where a whole industry desires a uni- 
form system, where processes and Droducts are identical, and where 
there are no serious obstacles to its operation, mandatory costing 
will "be given an opDortunity to make out its case. In industries 
such as coal and textiles, where unusual privileges have "been given 
or unusual forms of control established, cost records may "be a 
necessary adjunct in order to furnish information for public control. 
In any event it must be recognized that elaborate systems of costing 
are expensive; they are a burden which small enterprises cannot afford. 

Voluntary cost systems 



One of the dominant objectives of WA is the creation of 
conditions of fair competition. The lack of accurate knowledge by 
business men of the elements on which their costs and prices depend 
is a factor which works against the orderly operation of the indus- 
trial system. The formation, improvement, and extension of sound 
systems of costing need encouragement. Voluntary systems are a 
matter for control of the parties but NRA is willing to cooperate 
in their establishment whenever called upon (Model, 731). 



1785 



Estimating bureaus 

Ho provision which binds members of the industry to use 1786 
in any part the cost figures prepared by an estimating bureau can 
fail to have the effect of limiting prices. It is therefore sub- 
ject to all the observations herein made respecting price limita^ 
tion (II-1701). There can, of course, be no substantial objection 
to an estimating bureau which members of industry may use at their 
election, though this is orien to the serious question whether the 
industry is financially able to support it. Now should the ex- 
pense be assumed in the absence of substantial unanimity in the 
industry. 

Sundry matters 

Resale lorice maintenance 

No form of price control by the producer or vendor over 1791 
products of which he no longer holds title is acceptable. 

B asing -point sy stems 



No mandatory basing -point or zoning system for prices 
may be permitted. But there may be no objection to such a system 
which permits manufacturers to sell on an f.o.b. plant basis if 
they elect, provided there is a satisfactory showing that the 
system cannot tend toward monoTDOljr. Thus, a system in the lime 
industry, whereby producers were to sell at f.o.b. plant prices 
in their own zone and in any other zone for which they elect to 
file prices, was found acceptable. 



1792 



9307 



-56- 

price differential s 

Any proposal to limit or control lorice differentials, 1793 
whether "between different classes of customers or between different 
styles or sizes of oroduct, or the nrices of extras, is subject to 
all the observations which have "been made respecting lorice limi- 
tation. 

P rice of repair work 

Any proposal to limit the "orice at which a member of 1794 
industry may furnish repair work on products which he has sold is 
subject to the general observations on urices. It may also further 
be objected that such a provision would be difficult of enforcement. 

Guaranties against -price decline 

Beyond requiring the filing of practices pursuant to a 1795 
price filing system, individual judgment should not ordinarily be 
shackled by prohibiting guaranties against price decline. Ex- 
ception may be warranted, however, in an industry where the prac- 
tice of refraining from guaranteeing c'xgainst price decline is well 
established, vrhere it has aroused little or no opposition among 
customers, and where the business is largely spot. 



9307 



:}(: 



-57- 

COnE ADHINISTRi!.TION 



Fe^r' of the provisions of codes are self-executing. In one or 18C0 
"both of two aspects nearly all provisions require continuing ad- 
ministrc^tion. One of these aspects is concerned v/ith securing 
compliojice vith codes "hy the individual members of industry. The 
other aspect is concerned v;ith the general effect of code provi- 
sions, 

Hes'ponsi"bility for administration 

Responsihility for the administration of codes belongs 1801 
primarily to KRA and seconda.ril;!'- to the enforcement agencies of 
the Government, That responsibility cannot be relinquished to 
industry or industrial agencies, 

C-eneral effect of codes 

The general effect of codes must be a subject of cc-' • 1802 
tinuing interest. Obviously not all of the problems of an in, j.s— 
try c^n be solved in the first formulation of its code. Equally 
obviously, not all the proposed solutions will be found desir- 
able. The field is too nei: and too vast to expect immediate 
perfection. All that can be reasonably/ asked is a continuing 
improvement. To encourage this is the responsibility of the Code 
Administration division. The policies governing this responsibi- 
lity are contained in this section and in the section dealing 
with Amencanents; the methods of carrying out the responsibility 
are elsewhere in this I.ianual, 

Oonplience 

Compliance is the responsibility of the Compliance and 1803 
Litigation divisions of NSA and the enforcement agencies of the 
Government, The policies governing this responsibility are set 
forth in ajiother section of this I.ianual, 

Industry's share in ac'jnini strati on 

Though full responsibility for the administration of codes 1804 
remains v;ith the Government, it is wholly proper and desirr'.''ole 
for industry to encourage and assist in compliance \7ith the 
codes, to observe their general operation and effect, and to 
continue to plsji their improvement. This section of tte I.ianual 
is devoted to the m.anner of this participation in administration. 

O rganization of industry/ 

Since generally it is impracticable for an industry to act 1810 
as a whole, it is customary- and desirable for it to delegate to 
some agency the power to act for it. Such an agency may be 
termed a code authority, or a code committee, or some name apt 
to the particular industry: the name is not important. The 
use of the word "a.uthority" is not to be construed as vesting 

9307 



-58- 

the agency uith any of the government's authority. Such authority 1810 
as it has is limited to the delegs.tion "by the industry of the right 
to represent the industry and to e.ct on its "behalf. Since the term 
"code authority" has "been generally used to denominate the agency 
which represents the industry, that term \7ill he used here. 

Size of code authority 

The code authority should he large enough to permit 1811 

representation of all classes of raemhers of Industry (11-1812,2) — 
generally not less than 5— hut not so large as to he unv/ieldy, 

Qua2ifications of code authority 

If po^7er is to he delegated to the code authority to 1812 
act on hehalf of the industry (and otherwise there is no reason 
for its existence), it must he truly representative of the indus- 
try. It is the duty of NBA to insure that the code makes proper 
provision therefor, 

I.Iemhers of industry 

G-eneralljr speaking, the memhers of the code authority 1812,1 
should he memhers cf the industry. It is not often that the in- 
terests of representation are hetter served hy persons from with- 
out the ranks of those represented. 

Representation of all classes 



IThere the industry comprises different classes of 1812,2 

memhers, provisions must he made for proportionate representa- 
tion of each. Thus, where the memhers of industry vary greatly 
in the si^e of their husiness, hoth the large and the small 
memhers must he assured of representation. Thus also, where 
some memhers of industry employ a means of distrihution dif- 
ferent from others, there must he representation of hoth classes, 
\lheTe a different character of xoroduct is made "hy different 
classes, hoth must he represented. The proportion of representa- 
tion may he hased on the same considers.tions which determine 
voting power (II-1825), The determination of such representa- 
tion requires the application of judgment to all the facts in 
the particular case. 

Trade association as a code authority 

It is entirely proper, and in some cases desirahle, to 1812,3 
constitute a trade association (or its governing hody) as the 
code authority, provided that such association fulfills the re- 
quirements of the Act (11-1022, 1023), But, since it must he 
representative, it may act alone only where the industry is well- 
knit sjid generally participates in the trade association. Where 
there is a suhstantial minority of the industry v/hich does not 
participa,te in the association, provision must he made for ad- 
ditional memhers on the code authority to represent such minority. 

9307 



-59- 

Jxiay troAe o.ssociation participating either directljr or indirectly 
in coc.e c.uthoritj'- activities must fulfill the requirements of the 
Act (Uodel, 603), 



1812.3 



I.Iod.ification of code authority 

In order to insure that the code authority remain truly 
representative at all times, co.des \/ill provide that if NEA shall 
find, after hearing, that any code authority is not truly repre- 
sentative, or otherwise fails to comply v/ith the Act, appropriate 
modification may "be required (Model, 604), 

S election of Code authority 

The code vrill provide a means wherehy the industry may se- 
lect the raerahers of the code authority. This method must he 
sufficiently specific to protect the rights of individual mem- 
"bers of industry, hut should not he so detailed as to stultify 
the industry?- uhen unforeseen circ^^Jnstances arise,, Considerahle 
latitude in the method may he permitted if coupled i.Tith the pro- 
vision that the method shall he satisfactory to ITEA, 

Time of selection 



1813 



1820 



Suhsequent to the approval of the method of election 
and prior to the date of election, a sufficient interval should 
elppse so that all non— merahers of the association or non— parti- 
cipants in sponsoring the code may have a reasonable time to he 
informed of and comply with the prescrihed method of election. 

Selection hy NBA 

IThile highly desirahle that members of the code au- 
thority he chosen hy the industry/-, there may he cases r/here 
such choice is impracticable, '.There this is properly substan- 
tiated, or Vj'here certain cla.sses of menbers have failed to 
elect their representatives nithin a specified or reasonable 
time, such selection may be by IIEA, ilevertheless, endee.vor 
should be made to secure selection by the industry as soon as 
conditions peirnit. 



1821 



1822 



Temi of members 



The code should provide for the term of office of 
members of the code authority and the date upon v/hich in 
subsecoient years the election is to be made, 

ITotice to industry 

ilhatever the provision of the code, it is obvious 
that ell members of industry must be given proper notice of 
the time and method of the election, '*7hat is proper notice 
must depend, of course, on the situation in the industry; the 
number of members of the industry, their geographical distribu- 
tion, and the completeness of the information available 

9307 



1823 



1824 



-60- 

respecting their identitv and domicile. Opportimity must "be given 1824 

to all to vote and to perform any conditions precedent thereto. 

The association or committee applying for the code must use reason's^ 

ahle diligence to locate all memhers. If payment of assessment is 

a condition precedent, all members must he given a reasonable 

notice and opportunity to pay. 

Voting 

The "basis of voting is best chosen in the light of the 1825 
situr.tion in the particular industry, with a single guiding 
qualification: it must be fair to all. Where the volumes of 
business of the members of an industry are more or less of equal 
amount, it is proper to allon each member a single vote. This 
would hardly be fair, however, in an industry which includes 
some large and many small members. In such case, voting would be 
fair neither on a numerical basis nor a volume basis alone; some 
combination of these factors is desirable. Where it would be 
proper to apportion votes in part on the basis of volume, the 
number of employees may be used alternatively. Voting power 
usually has no relationship to the amount of assessment, ^JThere 
the disparity between members of industry is marked, it is best 
cared for by separate representation of different classes, 

Qjigalification for voting 

In order to be eligible for participation in the selec- 1825,1 
tion of the code authority, members of industry may be required 
to be in compliance v;ith the code, Thej'- must be contributing 
their proper share of the e:cpenses of administration (Executive 
Order 5678), Since assent to the code is unnecessary in determin- 
ing a member^ s rights and obligations, siich assent may not be made 
a condition precedent to the right to vote. 

Vacancies 

A vacancy in the membership of the code authority should 1826 
be filled in such manner as to maintain its representative charac- 
ter as provided in the code, and the manner of filling it should 
be specified in the code. 

Recognition by JUA 

It is customar^^ for ITEA to "recognize" the code author- 1827 
ity after its recognition. In this action, ERA exercises no dis- 
cretion. It simply verifies the fact of election in accordance 
\7ith the provisions of the code, Hecognition constitutes a 
notice to the industry that NHA is satisfied of the propriety of 
the selection and is prepared to deal with the code authority as 
the representative of the industry. 



9307 



-61- 

No n- Indus try nerJpers 

Adrainistration members 

To represent the public interest, provision will be 1831 
made for not exceeding three members on each code authority to be 
appointed by IIRA, Such Administration members have no vote in 
code authority'' proceedings (Mode]., 6C2) , 

Em-ployee renpresentat ion 

!Em;oloyees are entitled to equal representation on all 1832 
bodies which deaJ. definitely vdth problems affecting labor and 
industry jointly. Code authorities are not such bodies. They 
speak only on behalf of industry and have no power to dispose of 
labor problems excerpt as they may negotiate with employees. Em- 
ployees are no more entitled to representation on code authorities 
than is industr:?" entitled to re-oresentation on agencies which 
represent labor. Some industries have found it very helpful, 
nevertheless, to invite employees to participate in code authority 
activities, ^here they desire to do so, there can be no objection. 
They have the right, of course, to define the terms of such 
participation. 

Organization of code authority 

The organization of the code authority itself is largely a 1840 
matter of internal detail which ma;/ safely be left to it rather 
than provided for in the code. The code should authorize the 
code authority, subject to the approval of NEA, to adopt by-laws 
defining such particulars (Model, 612) , 

ScoDe of by-la\7S 

The b2"— laws may properly -orovide for — _ 1841 

(1) Establishment of code authority headquarters, 

(2) Procedural and ministerial details for election 
of members in conformitjr with the substantive 
provisions of the code, 

(3) Meetings and notice thereof, 

(4) Officers and employees, 

(5) (forums, 

(6; Duties, powers, and res"Donsibilities of code 
sxithority officers, 

(7) Keeping of minutes and records of code authority, 
(s) Method of amending by-laws, 

9307 



-62- 

Limitations on l)y-la^7s 

Provisions directed at re^ila.tion of the conduct or 1842 
procedure of Lierfoers of inc^ustry, individually or collectively, 
are proper matter for code provision, and "beyond the scope of "by- 
laws. 

Inconooration 

The code may lorovide for incorporation of the code 1843 

authority. The terns of such incorporation must "be examined and 
ap"oroved "by KRA, ho^'ever, in order to insure that it has no 
effect to extend or alter the -orovisions of the code, 

Functions of code authority 

In general, the duties of the code authority must "be those, , 1850 
and no more, which are expressed in the code. But it is usually 
provided that the code authority shall have the general duties of , 
insuring the execution of the code provisions and compliance there- 
with (Model, 611) and of observing the operation of the code and 
making recomnendations for its imr;orovement (Model, 623), and, "by 
the very fact of its creation, the code authority may "be assumed 
to have "been vested with those general dLities. As to more specific 
duties, the follorjing paragraphs indicate those which, in the 
discretion of the industry, may properly 'be assigned to it. 

Power to "bind the industry 

The povrer of the code authority to "bind the industry 1851 
depends upon the delegation made to it in the code. "(Jnless there 
is a,n express delegation of po^er, no right to "bind the industry 
can "be inferred (Model, 623). 

Comr)liance 

The code authority ma,y assist in securing co^^roliance 1852 
"by constituting conpla.ints committees which Y/ill undertake to ex- 
plain to memhers of industry their oljligations under the code and 
to secure adjustment of complaints (Model, 628). Details of pro- 
ced.ure are stated in another "oortion of this Manual. 

Information and ro-ports 

The cod.e authority may "be charged to oh tain from mem"bers 1853 
of the industrjT- siich information and reioorts as in the judgment of 
NEA are needed for the administration of the code (Model, 613). 

Inter- industry relationshi-ps 

The code authority should make recoiTimendations to ERA 1854 
for the coordination of its code with other codes (Model, 616). 
It should also appoint committees to meet with committees from 
other industries to consider inter- industry problems (Model, 624). 

9307 



-63- 

S -'3^c ir,l s ii'b,1ects of inquiry 

The code authority may be given the cT^ity of studyin{: 1855 

arxj'' particulr.r siilDJect yhich is of interest to the industr'/, or 
u-oon which the decision as to sone particular code provision may 
turn. 

Dele gation of auth ority ' hy TIEA. 

Tlie exercise of authority under the Act is vested in 1856 

the President and such Government agencies as he may designate or 
create. An industry' or its code authority is not a Government 
agency. Authorit" to e7:ercise indeioendent discretion cannot he 
delegated to it. An industr^,'- or its code authorit^r may he crapo^'er- 
ed, however, to carry out certain res-oonsihilities created h"'" the 
code, hut the mamier of such carrying out must he su.hject to prior 
ap;oroval h;^ InIHA, Fnere the duty is rell defined hy the code, and 
its execution remits a negligible latitude of discretion, such 
execution may he m.ade subject sirroly to disao'oroval hy ICIA, 

EevieTT "0 7 IE{A 

ITHA should have pcrer to review any action of the code 1857 

authority, and, if it appear unfair or ■'jjijust or contrary to the 
public interest, to sus-)end it oending investigation and hearing 
(Model, 606). 

A-Q-oeal t o I!PA 

Whether expressed in the code or not, any person affected 1858 
b^'- any action of a. code authorit3' has the right to appeal to I'llA 
for redress. 

Liability of nenbers of code au th ori ty 

Me:-.ioers of a code authority should not be held to be 1859 
partners, nor should one member be lia.ole for the act of another. 
No member exercisin'^ due diligence in his duties should be liable 
for any act or o;.iission exceot his O'-'n rilful malfeasance or 
nonfeasance (l.Iodel, 605), 

Agencies of the code authority 

The code a.uthorit*;- may emolo^'" such a-gencies as are r)roT)er 1860 
and reasonably reouired for the -oerforna-nce of functions defined 
in the code. 

Trade associr.tion s 

Code authorities may use trade associations or other 1861 
like organiza.tions for the performance of their duties, but this 
docs not relieve then of their res-oonsibility (Model, 615), 



9307 



-64- 

Impa rtial or confidential agencies 

Ti/liere industry/ mem'bers are required to file reports of 1862 
such nature that disclosure would he conmetitivcl^ injurious, an 
impartial or confidential agenci^- ( 11-1198) must he designo.ted or 
estahlished to receive such reports. 

Suh-autho r i t i e s 

Fnere ad-ministration of the code will he facilitated 1863 
therehy, there may he provision for suh-autho ri ties, either repre- 
senting particular classes vdthin the industry or geographical 
areas. Exce-ot that they are responsible to the code authority, 
all that is here said of code authorities is applicable to sub- 
authorities. 

Finances 

Members of the industry may be rec[uired to contribute to the 1870 
expense of administering the code uoon the conditions enumerated 
below (Executive Order 6678; Model, 617, 62l) . 

Budget 

Each code authority must submit to IIRA an itemized budget 1871 
of the expenditures pro-oosed to be made. Such expenditures must 
be shown to be reasonable having in view the purposes of the code 
and the size of the industry. Expenditures are limited to th- 
amounts of the biidget as approved by ITRA (Model, 619). The pi'oper 
scope of budgets is discussed in detail in another section of this 
Manual . 

Assessment s 

The amount of the f-ujids required, as determined by the 1872 
budget, must be apportioned among the nembers of the industry on 
some basis which vdll be fair to all, and as ajo-oroved by IHlA. 
(Model, 620). 

Insignia 

The right to use official insignia belongs to every member 1880 
of industry who is comolying ■■-^ith the codes to vrhich he is subject, 
and cannot be denied because of failure to assent. Members must 
contribute their proper share of the expenses of code a.dministration 
in order to be entitled to make use of insignia (Executive Order 
6678), No one ma^y display or use insignia contrary to rules and 
regulations prescribed by ITRA. (Executive Order 6337), The use of 
insignia, under any code maybe d.enied for failure to comply with 
one code. 

Labels 

Under proper supervision of NEA,, industries to which it 1881 
is appropriate may require their members to use a label upon their 

9307 



-65- 

prodn.cts evidcncir.;T the fact th/^.t suc'i oroc'-'icts -'ere nr.nufactured 1881 

in conforTiance to code -orovisions. ^aere la^bels are used as a 
raediiim for the collection of funds to defray code exoenses, they 
are subject to the requirerients res-oectinc* "budgets (ll-137l), 

Withdray/fJ- of in s ignia 

The ri^ht to use insignia (including labels) Tna.y "be 1882 

TTithdrawn onl^' b^'" KRA, 

Sundry matters 

Statict ic al informatio n 

Ever-^ code is a.-o-oroved uoon condition that loersons 1891 

subject thereto furnish such sta.tistica] informa^tion to Federal 
and State ?.ger.cies as ITRA dee:is necessary for the purposes of the 
Act (Executive Order 6479). A similar provision is to be includ- 
ed in each code (l.lodel, 613). 

Add i t i :i r l - q cnal ties 

The Act orescribes certain -^Denalties for the violation 1892 

of code provisions. Had other penalties been desira.ble, ConfTess 
'70uld doubtless have -orovided them. It is .?;ene rally iiTo roper, 
therefore, to atteint in a code to attach additional penalties to 
a violation. Of course, this ha.s no reference to the v^ithholding 
of privileges during a period of continuin,^ violation. 

Li qui da tec'' damaj^e a /^reerients 

So:ie industries desire to esta.blish contractual relation- 1893 

ships under vrhich each contracting member is oblir^^ed to loay a stated 
sum a.s liquidated da.ma^es to the industr;'" for a. violation of the 
code. Such a contract does not de-oend upon the code for its validity, 
but there can be no objection if the code authorizes it, provided 
the form is approved by ITHA (Model, 751 ). Codes may do so on the 
followinfr conditions! 

Assent to be voluntary 

Assent to the contract will be se-oarable from assent to 1893.1 

the balance of the code and failure to assent mfust not deprive a 
member of the industry of any -orivilege extended under the code. 

Detcr'i i na.tion must be imrjartial 

Jurisdiction for determining the existence of a violation 1893,2 
giving rise to the contractua.l liability for liquidated damages 
should be given (l) to ITRL or (.?) to some ir-rpartial agency either 
nominated o" the code authorit^'' or designated b^'" assent of the 
-parties T/ith the a-o-oroval of ITRA.. 



9307 



-66- 

A no'LiJ i t of damg.ges 

The amount of liquidated damages should "be correlated 1893.3 
reasonably to the protalDle injury. 

Di s'oo sition o-f damag;es ' . 

Dciis^i^es paid should he applied as follovrs: 1893.4*' 

Pirst, if the violation from \7hich they arise was of a lahor pro- 
vision involving under-payments to employees, all damages must he 
distributed equitahly among all employees directly affected hy 
such violation. Second, if the violation va.s of a lahor provision 
not involving unde repayment to em-oloyees, or other than a lahor 
provision, such 6.amages must he used for the expenses of code_ 
administration, and the balance d.istrihuted equitably and -oeriodi- 
cally among members of the industry assenting to the contracts 

Righ ts of others ' . 

Causes of action in favor of individual members of 1893.5 

the industry, emplo^'-ees, or others should not be affected by any 
provision of the contract. 

Records and re-oor ts 

Memhers of the industry may bind themselves to heep 1894 
accurate records of tra.nsactions rhenever required t^ p^ny pro- 
vision of the code, and to furnish reports thereof. It mo-y further 
be provided that, in case of doubt as to the accuracy of ejiy such 
report, the records nay be examined o?/ an imoartial agency (II-1198). 
The results of such examinations are to be kept confidential, 
except as may be necessary for the -oro-oer administration or enforce- 
ment of the code (Model, 614). 



9307 



1910 



-57- 

M.ISCELLiUIEOUS 1'1ATT:^RS 
« .1 ■ , .. —^ 

Cooperative or,g:cJiigationn 

ITo code cr.n oe const mied to ;orevent sales to, or through, 
a "bona fide coo-ierative orfcanization, nor to ;orevent sn.ch a co- 
OTDerative or^i'anizs.tion fron receivin;^, or distributing to its 
menbers as ;o?trono.ge dividends, such discounts, coinnissions, 
rebates, or dividends as are allo^-^ed to other ?Dur chasers in '-rhole- 
sale quantities, either ordinarily or pursuant to any code 
(Ex. Orders 6355 and 6606-A) . 

Definition oi* coo 'oe rative or ganization 

In order to qualify for the above provision a co- 1911 

operative organizo>tion nust coriply ^-^ith the follo^-^ing conditions! 

(a) Be duly organized under the la^s of any state, 
territory, or the District of Colunbia, 

(b) Allov each -ne'iber o^-ming a fully paid share 
one vote and only one, exceot as othervrise 
provided by the la;? under ^7hich it is incorporat- 
ed, provided that a central or regional associa.- 
tion comprised of cooperative associations nay 
base voting vcoon the volume of business done nith 
each member association, or on the nuiaber of 
members in the member association. 

(c) Operate on a, cooDerative basis for the mutual 
benefit of members, distributing all income on 
the basis of -oatronage at stated periods not 
oftener than semi-annually, after providing 
proper reserves and paying not more than 8/o on 
stock or membership cajDita.l. 

(d) Do at least half of its business in any fiscal 
year for the account of members. 

(e) Afford information to all members and stocldiolders 
res-oecting com-oensation -os.id officers and emoloyees, 
and pay no com-oensation except for services 
actually'' rendered. 

(f) Distribute patronage dividends equally to all 
nenbers and. stocldiolders nho comr)ly vdth require- 
ments in proportion to their purchases and sale 
and mal^e no representation of any definite or 
specified dividend. Dividends due a non-member 
may be accwaulated for the iDur^^ose of purchase 

of a sha.re of stock. 

(g) Allon to organizers no more than 3^j of the 
capital raised, 

9307 



-.68- 

(h) lie subject to no control "b" any no n- cooperative 1911 
organization or -oerson to v.rhom eivj profits or ex- 
cessive coTToensation is paid, nor "be required to 
"bry comnodities from any specified non-cooperative 
concern. 

(i) Conrpl^'' with codes to which it is su'bject. 

Any of the foregoini.3 conditions which are in conflict with the law 
under which siich associc'^.tion is organized are waived. 

Prison labo r 

The President has invited each State to enter into a compact 1920 
with him -orovicTing that the use of -orison labor in the manufacture 
of products for comr.ierce shall be governed in respect of hours of 
labor and machine operation, and child labor, by the provisions of 
the code applics-ble to such Toroduct; and., further, that such goods 
shall be sold at the fair current market nrice (Ex. Order, April 19, 
1934). As to States which have adhered to this compact, there is 
no occasion for codes to contain restrictions upon prison-made 
goods. Except as to such States, in any industry where goods made 
by prison la.bor a.re cho^-ni to have da.maging coraDetitive effects, 
members may be forbidden to buy or sell such goods, or to do so at 
less than the fa.ir market price of goods manufactured in private 
commerce, 

Simdry code provisions 

Products sold in export 

Exports t:i3?j be excepted from sxiY provision regarding 1951 
prices or trad-o pra.ctices, though never from labor provisions 
(Model, 8OI) . E:}^oort trade, if not specifically excepted, is in- 
cluded and boiuid b^" code -provisions. 

Forest conservation 

One of the policies of the Act is the conservation of 1952 
natural resources. The major code affected thereby, that for 
Lumber and Timber Products, has made -orooer -o revision for rules of 
forest practice and the operation of forest areas on a. sustained 
3?-ield basis. It is essential to the effective operation of any 
conservation progra.i that conservation measiires be apr)li cable to 
all forest opera.tions irresioective of the ultima„te use of the 
forest prodxicts. Accordingl'"-, each code covering forest OToerations 
will include provision for conservation measures, 

Arbitra.tion 

The code may r^rovide for facil.ities for arbitration, 1953 
and the code authoritj'- may be authorized with the ap-oroval of the 
¥Rk to prescribe rules of lorocedure and rul'es to effect compliance 
with awards and determinations (Model, 625), 

9307 



-69- 

Furclirses fr o n non-conrolie rs 

It is fair to Tirohibit mem"bcrs of industry from purchasing 1954 
materials or sup"olies for Lise in their "business from persons A?ho fail 
to comply with codes to which they are suhject. In order not to 
place too onerous a "burden on the purchaser, however, he should "be 
entitled to relv uipon the representa.tions of the seller, whether 
express or inferred from the display of the Blue Eagle, 

Price increases 

In recognition of the fact that recovery is dependent 1955 
in material degree upon an increase of -purcliasing power more rapid tha.n 
than any increase of -orices, the policy of limiting "orice increases 
to actual increases in cost should he expressed in the code 
(Llodel, 831). 

Sundry limitations 

Assent to code 

Since assent or non-a.ssent to a. code has no effect upon 1981 
the rights or o"bligations of a nem"ber of industry thereunder, there 
should "be no requirement of such assent. 

Restrictions of imports 

Section 3e of the Act provides a means for dealing with 1982 
injury to any industry from the importation of competitive goods. 
Code provisions, the puroose of which is directly or indirectly to 
restrict or handicap importations, should therefore "be avoided. 
This does not mean that a provision is to he condemned mereljr he- 
cause it may affect imports, whether or not such is its puroose. 
Where the provision has a proper primary;- purpose, and the effect 
on imports is onl2'' secondary, the im-porters ^ould he given a 
hearing and the question determined on the hala^nce of good. 

Price ad.jiistments due to codes 

Codes may not require a.djustment in purchase contract 1983 
prices on account of any difference in costs caused h:' such codes. 
The matter is one properly for priva.te contract. 



9307 



-70- 

AME^IDIENT S 

SUBSTANTIITB GUIDES 

The ter"i anenclraent as anTjlied to codes means any addition, 5100 
deletion, or other change of any language thereof. For the sake 
of -uniformity, the rords "modification," "sup^olement, " "re- 
vision," "addition," or "adjustment" will not "be used to describe 
amendments, 

Suhstantive guides in general 

The suhstantive gaides applicable to code-making (II-IOOO) 5110 
are equally applicalDle to amendments, "both as to the content 
thereof, and as to the precedent requirements 8vA conditions. 

Applications "by industry 

An industrry maj apply for an amendment, either hy virtue of 5120 
the general provisions of the Act relative to aoplications for 
codes, or Dursuant to express provision for a.mendment in its code. 

Amendment of -provisions irhich are contrary to policy 

To a code -orovision nhich diverges more than slightly 5121 
from policy, and if such divergence is not justified hy the 
peculiar conditions in the industry, amendments will not be ac- 
cepted unless they "bring the provision into conformity with 
policy. 

Requirement for amendment 

Provisions contrary to -policy 

Every provision in an existing code which is contrary 5131 
to policy presents the necessity for a.n administrative decision, 
whether it is to he permitted to continue or whether other action 
is to he taken. Such a provision may he permitted to continue 
where the deviation from -policj'" is -unimportant, or where facts in 
possession of ITRA justify such deviation. 

Provisions fo-gnd unworkp.hle 

Provisions which in practice are fo-und to he unworkable, 5132 
or to fail to achieve their expected result, present the necessity 
for an administrative decision •'whether to abandon or to modify. 

Initiation of action 



jnever administrative decision is reached to take 5133 
action res-pecting an existing code provision, the industr;^ will 
be offered a.n opportunity to negotiate vath !IRA or to be heard on 
the subject. If no new facts thereby aroTDcar to impair the sound- 
ness of the decision, the industry will be invited to propose 
app rop r ia t e anendinen t , 

9307 



-71- 

ProTDOsals "by IJR k 

Where code -orovisions are contrar^r to policy, or have proved 5140 

unworkable or ineffective, or rrhere the code lacks some Torovision 
required "by )Olicy, DroiDOsal for amendment mDy "be made "by ¥Rk, 
Proposal v.'ill l)e so made only in resoect of matters of importance. 

Stays 

Where a code provision, or a portion thereof, aoTDears clearly 5150 
to require deletion, and no amendment has "been a-oT)lied for, or the 
need for action is too urgent to -oermit of the orderly process of 
amendment, such provision, or -oortion thereof, may he sta,yed hy 
NEA, If the need is only to miti;^ate the effect of the provision, 
it may "be sta3^ed subject to such conditions as vrill correct the 
situation. 



9307 



n 



-72- 

MODEL CODE PROVISIONS 

■ARTICLE I 

PURPOSES 

To effect the policies of Title I of the National Industrial 100 
Recovery Act, this Code is estaMished as a Code of Fair Conpeti- 

tion for the Trade/lndiistry, and its provisions 

shall "bo the standards of fair competition for such Trade/ Indus try 
and he "binding upon every member thereof. 

ARTICLE II 

DEFINITIONS 

1, The terra "Trade/ Industry" as used herein includes the 201 
(state accurately rhat is included in the Trade/- 



industry, whether manufactiiring, building;, transporting, repairing, 
selling, and/or distributing at Taiolesale or retail, etc.) of 

(vToducts, merchandise, or service, etc.) and such 

related brsnches or subdivisions as may from ti^ie to time be in- 
cluded under the provisions of this Code, 

Suggestive: The industry includes manufacture for sale by 202 
anyone under his own trade name of the products of the industry 
as above defined, whether he is engaged exclusively in the manu- 
facture of such oode products or is engaged also in some other 
industry; and whether so engaged as an employer or on his own be- 
half; and whether he actually makes code products in his own plant, 
or has them made for him to his own specifications, formulae, or 
patents; and whether he actually maJces in his own plant all types 
and sizes of code loroducts which he markets, or has certain types 
and/or sizes made for him to his ov/n specifications, or formulae, 
or patents, 

2, The term "member of the industry" is any legal person 203 
engaged in the industry other than an employee. 

3, The term "employee" as used herein does not include a 211 
member of the industry but includes any and all persons in the 

trade/ industry, however compensated, subject to the direction and 
control of an employer. 

4, The terra '^emr)loyer" p.s used herein includes any person 212 
in the trade/ industry by whom as employee is com.pensated or em- 
ployed. 

5, The terra "apprentice" as used herein shall mean a person 213 
of at least sixteen jrears of age who has entered into a written 
contract i7ith an employer or an association of employers which pro- 
vides for at least two thousand hours of reasonably continuous em- 
ployment for such person and his participation in an approved program 

of training as herein above provided. 



9307 



!i 



6, The terra "Association" as used herein shall mean the 221 

Association, 



7, The terms "President," "Act" and "Board" as used herein 222 
mean respectively the presio.ent of the United States, Title I of 

the National Industrial Recovery Act, and the National Industrial 
Recovery Board, 

8, Population for the purposes of this Code shall "be de terrain- 223 
ed oy reference to the latest Federal Census, (insert only v/hen 
needed), 

9, The term "homevrcrk" as used herein sha.ll mean industrial 231 
work done in the home for wages pa.id "by an outside employer, 

10, The terra "horae or living quarters" as used herein means 232 

the private house, private apartment, or private room, whichever 
is the most extensive, occupied as a horae "by the employee and/or 
his family. 

11* A learner as used in this Code is an employee who has 241 

actually \7orked less than 240 hours (Consecutive or non-consecu- 
tive) at the occupation in which he is engaged, 

ARTICLE III 

HOURS 

Maximum hours 

Section 1, No erarjloyee shall "be permitted to work in excess 301 

of 40 hours in any one week or 3 hours in any 24- hour period (he- 
ginning at midni>i:;ht) , exce;ot as herein otherwise provided, 

(i.iaximura houi^s for s-oecial classes of employees, if any should 
be inserted -onder the appropriate parat.-iTa^oh , together vith the hours 
applicable, ) 

Hours for clerical and office em"oloyees 

Section 2. No person em-jloyed in clerical or office work 302 

shall "be permitted to work in excess of 40 hours in cany one week 
or 8 hoiu-s in any 24-houi" period. 

Exceptions s.s to hours 

Section 3. The provisions of this Article shall not apply to 303 

traveling salesmen, nor to employees engaged in emergency maintenance 
or eiuergency repair work, nor to persons empl07/-ed in a managerial or 
executive capacity who earn re.-gularly $35 per week or more; provided, 
however, that em;-jloyees engaged in emergency maintenaiice and emergency 
repair work shall "be paid at one and one-half times their normal hour- 
ly rate for all hours -.^ork-ed in excess of 40 hom-s per week and 8 
hours per day. 



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Standard- i,7eek 

Section 4. No employee shall "be permitted to work more than 304 
6 consecutive days. 

Emplo.Tonent "by several employers 

Section 5. Each employer slriall require as a condition of con- 305 
tinued employment, that ea,ch of his employees shall not nork for any 
employer suhject to a code so tliat the total of his working time 
exceeds the longest maximum hour provisions of any code governing his 
work. 

APJICLE IV 
MGES 
Minimum v/ages 

Section 1. No employer shall pay any employee in any pay 401 
period less tlian at the rate of 40 cents per hour, except as other- 
wise herein provided. 

Office and clerical employees 

Section 2. No employer shall pay any clerical or office em~ 402 
plojT'ee in any pay period less than at the rate of $15 per week. 

Watchmen and guards 

Section 3. No employer shall pay any 'vatchman or g-uard in any 403 
pay period less than at the rate of $15 per week. 

Office "boys and girls 

Section 4. No employer shall pay any office "boy or girl less 404 
than 80^t of the rate specified in section 2 of this Article, The 
numoer of such emj)loyees shall not exceed 5^j of the total num"ber of 
office employees, provided however, that every employer shall "be 
allowed at least one office "boy or girl, 

piecework compensation - Minimum wages 

Section 5, The minimum rate of compensation shall apply irres- 405 
pective of whether an employee is actually compensated on a time 
rate, piece rate, hours, commission, or other "basis. In determin- 
ing the application of this clause compensation shall "be computed 
on the "basis of not more thain a 7-day period. Where overtime is 
utilized such compensation shall be increased in the same ratio as 
in overtime hourly rates. 

Wages a"bove minimum 

Section 6, No employer shall make any reduction in the full 406 
time weekly earnings of any employee whose normal full time weekly 

9307 



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i^ 



hours are reduced by 25fo, or less, be lev those existing for the four 406 
weeks ending June 17, 1933. When the normal fu].l time weekly hours 
of an employee are reduced by more than said percentage, the full time 
weekly uage of such employee shall not be reduced by more than one- 
half of the percentage of hour reduction above said percentage. In no 
event shs.ll hourly rates of pay be reduced, irrespective of whether 
compensation is actually paid on an hourly, weekly or other basis, 
nor shall any wages be at less than the minimum rates ^lerein provided. 

Within thirty days of the effective date hereof, (unless such 
adjustment has been heretofore made) each emplo^rer shall adjust the 
schedules of wages of his erai^loyees in such an equitable manner as 
will conform to the provisions hereinabove set forth, and still pre- 
serve wage differentials reasonably proportionate to those in effect 
nrior to the effective date of this code. 

gemale emr)loyees 

Section 7. Female employees rierforming substantially the same 407 
work as male employees shall receive the same rate of pay as male 
employees, and, where they displace men at substantially the sane v;ork, 
the]'- shall be paid the same rate of pay as the men they displace. 

Handica'p-ped ipersons 

Section 8. A person whose earning ca,pacity is limited because 408 
of age, phj'-sical or mental handicap, or other infirmity, may be em- 
ployed on light \7ork at a wage below the minimum established by this 
Code, if the employer obtains from the State authority, designated 
by the United States Department of Labor, a certificate authorizing 
his emplojTTient at such wages and for such hours as shall be stated 
in the certificate. Each employer shall file monthly with the Code 
Authority a list of all such persons employed by him, showing the 
wages paid to, and the maximum hours of work for such employee. 

Apprentices 

Section 9. A person may be employed as an apprentice by any 409 
member of the industry at a wage lower than the minimum wage, or for 
any time in excess of the maximum hours of labor, established in 
this Code, if such member shall have first obtained from an agency, 
designated or established by the Secretary of Labor, a certificate 
permitting such person to be emi:loyed in conformity with a training 
program approved by such agency, until and unless such certificate 
is revoked. 

Learners 

Section IC-A. Notwithstanding the provisions of Article IV, 410 
section 1, learners, as hereinafter defined, to a number herein- 
after permitted, may be employed at not less than 80^ of the 
minimum vrage specified in Article IV, section 1, or, if compen- 
sated on a piecework rate, at not less than the employer's standard 
piece rate for the occupation in which the learner is engaged. 



9307 



-76- 

Each emiDloj^er rae.y enoloy one learner for erch 20 per cent of 410 

the total nw.iber of employees, and in any case eacii eraployer may 
emplo]- e.t least one learner. 

Section 10-3. Uoon the termination of a learner's employment, 411 

the em-oloyer shall si.:gi and rive him a card "bearing the learner's 
name, statin^- the occiroation in nhich he has "been em-oloyed as learn- 
er for that employer, and the n-uiriber of hours so employed. 

Section 10-C. T/hen a learner has completed PAO hoiirs actually 412 
ivorked in an occupation, in the e^n^loy of one or more employers, 
his employer shall sign and c^ive him a card "bearing the learner's 
name, the occupation in ^7hich he has "been so employed, and stating 
that he is no longer a learner in such occupation. 

Section 10-D. No em-oloyer shall employ a learner at less than 413 

the minimum \7age s-oecified in this section and no employer shall 
employ a :;reater mjinber of learners than is authorized hy this 
section at less than the minim"um wage prescribed by Article IV, 
section 1, 

Payment of wages 

Section 11, Paj^ment of all wages due shall "be made in lawful 4-21 

currency, or "by negotifi'ble check or draft therefor, payable on de- 
mand at par, provided that reasonable faxilities are available for 
cashing such check, 

Ti'-ie of pai^^mient and deductions . Sxceot as otherwise provided, 422 

wages and salaries shall become due and payable at least serai- 
monthly, with not to exceed five calendar days holdover, Wages 
and sals.ries shall be exempt from all deductions, charges, or fines, 
except such as are voluntarilj'' consented to bj,'- the ennloyee or 
authorized by law. Employers or tlieir agents shall not directly or 
indirectly accer)t rebates on such wages or salaries. 

Working time 

Section 12, An employer shall not pay an employee less than 431 

the regular rate of pay (including t'le overtiie rate when ap-olicable) 
for any tine required to be srjent at the place of emoloyment or in 
connection with the discharge of duties Of such employment, and such 
tiiae shall be recognized as part of the permitted maximum hours, 

ARTICLE V 



GEITEHAI LASOR PROVISIONS 



Child labor 



Section 1, No person under sixteen years of age shall be em- 501 
ployed in the industry. No person under eighteen years of age shall 
be employed in operations or occupations which are hazardous in 
natin-e or dangerous to health. The Code Authority shall submit to 
the Board for approval within two months from the effective date of 
the code a list of such operations or occuioations. In any State an 
9307 



-77- 

em"olover shall be deemed to have complied \7ith this provision as to 501 

age if he shall have on file a valid certificate or permit duly sign- 
ed by the E/athority in such State empo^vered to issue employment or age 
certificates or permits, sho^-'ing that the employee is of the required 
age. 

Provisions from the Act 

Section 2. (a) Employees shall have the right to organize and 511 
bargain collectively through representatives of their ovm. choosing, and 
shall be free from the interference, restraint, or coercion of employ- 
ers 01 labor, or their agents, in the designation of such representa- 
tives or in self-organization or in other concerted activities for the 
purpose of collective bargaining or other mutual aid or protection, 

(b) No employee ejid no one seeking emplo^mient shall be required 512 
as a condition of employment to join any company union or to refrain 

from joining, organizing, or assisting a labor organization of his ovm 
choosing, and 

(c) Employers shall comply -.vith the maximum hours of labor, 513 
minimum rates of pay, and other conditions of era-olojniient approved 

or prescribed ''oy the President, 

Evasion through subterfuge 

Section 3, No eraploysr shall re-classify employees or duties 521 

of occupations performed or en.-^age in any subterfuge so as to de- 
feat the purposes or provisions of the Act or of this Code, 

Dismissal 

Section 4, No employer shall dismiss, denote, or otherr^ise 522 
discriminate against any em;oloyee for making a complaint or giving 
evidence with respect to an alleged violation of the provisions of 
any Code of Eair Competition, 

Standards for safety and health 

Section 5. Every employer shall make reasonable provision for 523 
the safety and health of employees during the hours and at the place 
of employment. Within six months of the effective date of the code, 
standards of safety and health (permissive and/or mandatory) shall 
be submitted by the Code Authority to the Board for approval. 

State la.us 

Section 6, No provision in this Code shall supersede any Federal, 524 
State, or Municipal la-? or any labor agreement --hich establishes 
more stringent requirements as to age of employees, wages, hours of 
work, or g-eneral working conditions, then are established in this 
Co de . 

Posting 

Section 7. Every employer shall post and keep posted the labor 525 
provisions of this Code in accordance \;ith rules and regulations 
9307 



r 



-78- 
prescribed "by the Board, 525 

Home work 

Section 8, No employer shall permit any homework exce;nt at 531 

the sane rate of wages as is paid for the same type of work per- 
formed in the factory or other regular places of business and 
after a certificate tias "been obtained from the state authority 
or other officer designated "by the U. S. Department of Labor, 
such certificate to "be granted in accordance with instructions 
issued "by the U. S. Department of Labor. Such certificate shall 
be granted only if: 

(a) The employee is physically incapacitated for work in a 
factory or other regular nlace of business and is free from any 
contagious disease; or 

(b) The employee is unable to leave hone because his or 
her services are absolutely essential for attendance on a "oerson 
who is bedridden or an invalid sad both such per.^'Ons are free 
from any contagious disease. 

An emioloyer engaging such a person shall keep such certifi- 
cate on file and shall file with the Code Authority for the trade 
or industry or subdivision thereof concerned, the name and address 
of such worker so certified, 

ComDany towns and stores 

Section 9, No employee other than maintenance or super- 541 

visory men or those necessary to protect property sha.ll be re- 
quired as a condition of continued employment to live in a 
house rented from or designated by his employer or the employer's 
agent, 

No employee shall be required as a condition of continued 
emplo"Tiient to trade at any store or subscribe to any services 
designated by his employer or the employer's agent. 

Notice of g-is charge 

Section 10, No emr)loyee who has been regularly employed for 551 
four weeks with any one establishment may be discharged or laid 
off without a prior notice of one week. 

Contracting 

Section 11. No member of the industry, irrespective of the 552 
method of compensation, shall contract out work vvhich if done by 
him would be subject to this code, unless there is inserted in the 
contrt'ict an express provision for the benefit of the era- 
plo"-eef:. of the c: n tract nr ren; •.iring ftv.cl. contrive tor tu -• cic'.e 
by the provision of this code, and a provision that such contractor 
shall not avoid or evade the labor provisions of this code by further 
contracting for such work, 

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^79- 

AETICUE VI 

ORGAI-TIZATION, POWERS AND DUTIES 
OF TPIS CODE AUTHORITY 

Origjanization and constitution 

Section 1. A Code Authority is herelDy established consisting 601 

of persons to be selected in the follo'ving manner: 

(Here shall oe stated the manner in uhich the raera- 
bers 01 the Code Authority shall be selected and 
the terns for xvhich they shall serve. Provision 
should be made so that the Code Authority V7ill be 
tru3.y representative of the various majorit'^.'', 
minority, and other interests in the trade/ industry. 
If, hov/ever, by reason of conditions peculiar to 
the trade/ industry, selection by the trade/ industry 
is impracticable, it may be provided that appoint- 
ment shall be bv the Administrator.) 

Section 2, In addition to me.abership as above provided, 602 

there nay be members, without vote, to be known as 

Administration members, to be appointed by the Board to serve for 
such terns as it may s;oecify. 

Section 3, Each trade or industrial association directly 603 

or indirectly particiT)ating in the selection or activities of 
the Code Authority shall (l) imoose no equitable restrictions 
on membership, and (2) submit to the Board true copies of its 
articles of association, by-laws, retaliations, and any amendments 
when made thereto, together nith such other information as to 
raembershi-o, organization, and activities as the Board may deem 
necessary to effectua.te the purposes of the Act, 

Section 4, In order that the Code Authority shall at all 604 

times be trul'^^ representative of the trade/ industry and in other 
respects comoly \7ith the provisions of the Act, the Board may 
prescribe such hearings as it may deem proper; and thereafter if 
it sliall find that the Code Authority is not truly representa- 
tive or does not in other res;oects comply '.■ith the provisions of 
the Act, may require an appropriate modification of the Code 
Authority, 

Section 5, HothiU;': contained in this Code shall constitute 605 

the me: ibers of the Code Authority partners for any purpose. Nor 
shall pjiy member of the Code Aa.thorit;^'' be liable in any manner to 
anyone for any act of any other member, officer, agent, or era- 
ploj/ee of the Code Authoritjr, Nor shall any member of the Code 
Authority, exercising reasonable dili;:-ence in the conduct of his 
duties hereunder, be liable to anj'-one for any action or ommission 
to act uiider this Code, exce-ot for his o\'n \7ilful malfeasance or 
non-feasance. 



9307 



-80- 

Section 6. If the Board shall at any time determine that any 606 
action of a Code Authority or any a,,-ency thereof may "be -onfair or 
unjust or contrary to the puolic interest, the Soard may require 
that such action iDe suspended to afford an opportunity for investi- 
gation of the merits of such action and further consideration "by 
such Code Authority or agency pending final action which shall not 
■be effective unless the Board approves or imless it shall fail to 
disapprove after thirty days notice to it of intention to proceed 
witn such action in its original or modified form. 

Powers end duties 

Section 7. Subject to such rules and reflations as may "be 610 
issued hy the Board, the Code Authority shall have the follouing 
powers and duties, in addition to those authorized "by other pro- 
visions of this Code: 

(a) To insure the execution of the provisions of this Code 511 
and to provide for the compliance of the trade/ industry xiith the 
provisions of the Act, 

(b) To adopt by-la\7s and rules and reflations for its 612 
■nrocedure, 

(c) To obtain from members of the trade/ industry such in- 613 
formation and reports as are required for the administration of 

the Code, In a.ddition to information required to be submitted 
to the Code Authority'-, members of the trade /industry subject to 
this Code shall furnish such statistical information as the Board 
may deem necessary for the purposes recited in Section .3 a of the 
Act to such Federal and State agencies as it may designate; pro- 
vided tha,t nothing in this Code shall relieve any member of the 
trade/ industry of any existing obligations to furnish reports to 
any government agency. No individual re-oort shall be disclosed 
to any other member of the trade/ industry or any other party ex- 
cept to such other Governmental agencies as may be directed by the 
Board, 

(d) Each member of the industry'- shall kee^o accurate and 614 
complete records of its trenssctions in the industry v:henever 

such records may be required under any of the provisions of this 
Code, and shall furnish a^ccurate re-oorts based upon such records 
concerning any of such activities TThen required by the Code Author- 
ity or the Board, If the Code Authority or the Board shall 
determine that substantial doubt exists as to the accuracy of any 
such repoi^t, so much of the pertinent boohs, records and papers 
of such member as may be required for the verification of such 
reToort laay be examined by an impa.rtia,! agency, agreed woon between 
the Code Authority and such member, or in the absence of agreement, 
appointed by the Board. In no case shall the frets disclosed by 
such examination be made available i?i identifiable form to any 
competitor, whether on the Code Authority or otherwise, or be 
given ejiy other publication, except such as may be required for 
the proper administration or enforcement of the provisions of this 
Code, 

9307 



-81- 

(e) To use such associations ar.u other a^^encies as it deens 615 
proper for the carr.ying out of DJCi'j of its activities provided for 
herein, -orovidec. t>jat no thin;- herein shD.ll relieve the Code Authority 

of itc duties or resoonsitilities under this Co-.e and that such trade 
associations sna acjencies shiSll at all times be suhject to and com- 
r)lj nith the provisions hereof, 

(f ) To na'j.e recom-iendations to the Board for the coordination 616 
of the adriinistration of this code and such other codes, if any, as 

may he related to or affect merabers of the trade/ industry, 

(g) 1, It oein- found necessary in order to sup'oort the 617 
administration of this code and to maintain the standards of fair 
conroetition established hereunder and to effectuate the policy of 

the Act, and Code Authoritj^ is authorized: 

(a) To incur such reasonable obligations as are 613 
necesse.ry and proper for the fore^roing pur- 
poses, and to meet such obligations out of 

f"unds rrhich may be ra.ised as hereinafter provided 
and which shall be held in trust for the pur- 
poses of the Code J 

(b) To submit to the Board for its approval, sub- 619 
ject to such notice and op'oortunity to be heard 

as it may deem necessary (l) an itemized budget 
of its estijiated expenses for the foregoing 
■ourposes, and (2) an equitable basis upon which 
the f-onds necessary tc support such bud:3et sh-all 
be contributed "oj members of the trade/ industry; 

(c) After such budget and basis of contribution have 62C' 
been approved ''oy the Board, to determine and ob- 
tain e suitable contribution as above set forth 

by all me::bers of the trade/ industry, and to that 
end, if necessary, to institute le^'^'al proceedings 
therefor in its own name. 

2, Each member of the trade/ industry sh^all pay his or its 621 
equitable contribution to the expenses of the maintenance of the 

Code Authority, determined as hereinabove provided, and subject 
to r-o2es end. reg-alations pertaining thereto issued by the Board, 
Only members of the trade/ industry compl^^in- with the code and 
contributing to the expenses of its administration as hereinabove 
■orovided, (unless duly exempted from raakin~ such contributions), 
shall be entitled to participate in the selection of members of 
the Code Authority or to receive the benefits of ejiy of its 
voluntary activities or to mal^e use of any emblem or insignia of 
the national Eecovery Administration, 

3, The Code Authority shall neither inc-jr nor pay any obligar- 622 
tion substantially in excess of the amount thereof as estimated in 

its approved budget (and shall in no event exceed the total amount 
contained in the approved budget), except upon approval of the 
Board; and no subsequent budget shall contain any deficiency item 
for ezrpenditures in excess of ^^rior budget estimates except those 
which the Board shall have so approved, 
9307 



-82- 

(h) To rcconmend to the Bocird any action or measures deeraed SSG 
advisc/olc, including further fair trade practice -provisions to 
govern menhers of the trade/ industry in their relations with each 
other or nith other trades/ industries, i.eacures for industrial 
■olannin^-, and stabilization of employment; and including modifications 
of this Code which shall "becone effective as part hereof upon approval 
by the Aciainistrator after such notice and hearing as he may specify. 

(i) To ap-QOint a Trade Practice Committee which shall meet 624 
with the Trade Practice Coraiaittees appointed under such other 
codes as may be related to the trade/ industry for the purpose of 
formulating fair trade practices to govern the relationship's 
between employers under this code and under such other coC.es to 
the end that such fair trade practices may be proposed to the 
Board as amendments to this code and such other codes 

(j) To provide appropriate facilities for arbitration, and 635 
subjoct to the approval of the Administration, to_prescribe ruies 
of procedure and rules to effect cont/liance with awards and de- 
terminations. 

(k) The Code Authority sh>all cause to be formLLLated and 526 
keer) current a classification of all t'^^jjes of customers of the 
trade/ industry. Such classification shall be subject to the 
disapproval of tne Board and shall contain: (a) a complete 
list of all of the classes of customers of the trade/ industry, 
including a class to cover every known type of customer^ and 
(b) definitions or descriptions of the several classes in terms 
of fimctions performed, or in other ap-oropriate terms such as 
^urcliasers of defined qurji titles. 

After submission to the Board, if there is no disapproval 627 
of request for suspension of action within twenty days, full in- 
formation concerning ihe classification shall be ma.de available 
to all members of the trade/ industry. No one shall tr/ intimida^- 
tion, coercion, or other undue influence cause or attempt to 
cause the inclusion of any customer in or the exclusion of any 
customer from any class of customers, or the exclusion of any 
class of customers from the classification, or the use of uniform 
or stipulated prices, discouits, or differentials; and each 
member of the trade/ industry nay at all times classify his own 
customers in accordance with h.is own judgment, 

(l) There shall be established a Labor Complaints Com- 628 

mittee for the trade/industry, which shall consist of an eqijal 
n-um''aer of representatives of employers and employees and an 
impartial chairman. The Board shall appoint such impartial 
chairman upon the failure of the committee to select one by 
agreement. If no truly representative labor organization exists, 
the enroloyee members of such board nay be nominated by the 
Labor Advisory Board of the National Recovery Administration 
and appointed by the Board, The employer representatives shall 
be chosen by the Code Authority. Such Committee shall deal 
with complaints of violations of the labor provisions of this 
Code in accordance with rules and regulations. The Labor Com- 

9307 



r 



-S3- 

plaints Committee nay establish such divisionrd , regional, and local 628 
industrial adjustnent agencies as it raa^'- deera desirable, each of 
which shall be constituted in like iaanner as the Labor Complaints 
Committee, 

AR110L2 111 
T PJU3E PR AC TICE RULSS 
Rule 1. Inacc-Q-rate adver tising 

No member of the trade/ industry shall publish advertising 701 
(whether printed, radio, display, or of an7 other nature), which 
is r-isleadin^: or inaccurate in any material par tic-alar, nor shall 
any menber in any vray misrepresent any goods (including but '-with- 
out lir.itrtion its use, trade-nark, grade, quality, o/oantity, 
origin, size, substance, character, nat-cire, finish, material, con- 
tent, or ^^repal'•ation) or credit terns, values, policies, services, 
or the nature or form of the business conducted. 

Rule 2. 7alse billing 

i<!0 member of the trade/ industry shall kno'ringly witlihold from 702 
or insert in any quotation or invoice any statement that makes it 
inaccurate in any material particiolar. 

Rule 5, Inaccurate labellin^s; 

No member of the trade/ industry shall brand or mark or pack 703 
any goods in any manner ^/hich tends to deceive or mislead purchasers 
with respect to the brand, grade, quE-lity, quantity, origin, size, 
substance, character, nature, finish, material content or prepara^- 
tion of such goods. 

Rule 4, Jefanation 

No member of the trade /industry shs.ll defame a competitor 704 
by falsely imputing to him dishonorable conduct, inability to 
perform contracts, or questionable credit standing, or by other 
false representation, or by falsely disparaging the grade or 
qualit"'- of his goods. 

Rule 5, I hreats of law s-'.iits 

No me.iber of the trade/ industry shall publish or circulate 705 
unjustified or unrrarranted threats of legal proceedings which 
tend to or have the effect of harassing cometitors or intimidat- 
ing their customers. 

Rule 6. Secret rebates 

No member of the trade/ industry shall secretljr offer or make 706 
any -oaj^ent or allowance of a rebate, refijmd, conmission, credit, 
unearned discount, or excess allor^ance , whether in the form of 
money or otherwise, nor shc.ll a menber of the trade/ industr''- secret- 
ly offer or extend to an3'- customer pny S'oecial service or privilege 
9307 



-34- 

not extended to all customers of the same class, for the purpose of 706 
influencinji a sc.le. 

Rule 7, Bri oinfp; employees 

Ho member of the trade/ industry shall give, permit to "be given, 707 
or offer to ^.ive , anything of value for the purpose of influe..cing 
or reu£.rding the action of any employee, agent, or representative of 
another in relation to the business of the employer of such employee, 
the principal of such agent, or the represented person, without the 
knowledge of such employer, principal, or person. This provision shall 
not be construed to prohibit free and general distribution of articles 
corar.ionlj'- used for advertising except so far as such articles are 
actually used for coranercial briberjr as hereinabove defined. 

Rule 8, Ind ucing breach of existin.? co ntracts 

No member of the trade/ industry shall rilfully induce or attempt 708 
to induce the breach of existing contracts betneen comoetitors and 
their customers by any false or deceotive means, or interfere with or 
obstruct the performance of any such contractual duties or services 
by any such neans , with the purpose and effect of hampering, injuring, 
or embarrassing competitors in their business. 

Rule 9 . Coercion 

>To member of the trade /industry shall require that the purchase 709 
or lease of arrj goods be a -prerequisite to the purchase or lease of 
any other goods. 

Rule 10. O^e n Tjrice -provisions 

Sach member of the trade/ industry shall file with a confidential 711 
and disinterested agent of the Code Authority, or if none, then with 
such an agent designated by the Board, identified lists of a" J. of his 
prices, discounts, rebates, allowances, and all other terras or condi- 
tions of sale, hereinafter in this Article referred to as "price terms," 
which lists shall completely and accurately conform to and represent 
the individual pricing practices of said member. Such lists shall con- 
tain the price terras for all such standard products of the trade/ in- 
dustr;'^ as are sold or offered for sale by sa,id member and for such 
non-standard products of said member as shall be designated oy the 
Code Authority, Said price terms shall in the first instance be filed 

within days after the date of approval of this provision. 

Price tarr.s and revised price ter:.is shall become effective imnediateli'- 
upon receipt thereof by said agent. Imiiediately upon receipt thereof, 
said agent shall by telegraph or other equally prompt means notifj- 
said member of the time of such receipt. Such lists and revisions, 
together with the effective time thereof, sliall upon receipt be 
iranediately and simultaneously distributed to all members of the 
trade/ industry and to all of their customers who have applied therefor 
and have offered to defray the cost actually incurred by the Code 
Authority in the preparation and distribution thereof, and be avail- 
able for inspection by any of their customers at the office of such 
agent. Said lists or revisions or any part thereof shall not be made 
available to any person ^jintil released to all me::bers of the trade/- 
9307 



-85- 

industry and their customers, as aforesaid; provided, that prices 711 
filed in the first instance shall not "be released until the expira^ 

tion of the aforesaid day period after the approval of this 

Code, The Code Authority shall maintain a permanent file of all 
price terms filed as hereinabove provided, and shall not destroy 
any part of such records except upon written consent of the Board, 
Upon reo^uest the Code Authority shall furnish to the Board or 
any duly desi.^nated agent of the Bo^rd copies of any such lists or 
revisions of price terms, 

yhen any member of the trade/ industry has filed any revision, 712 
such member shall not file a higher price within forty-eight hours. 

1^0 member of the trade/ industry shall sell or offer to sell 713 
any -oroducts/ services of the trade/ industry, for v:hich price 
terms have been filed pursuant to the provisions of this Art_^le, 
excex)t in accordance with such price terms, 

No member of the trade/industry shall enter into any agree- 714 
ment, understanding, combination, or conspiracy to fix or maintain 
price terms, nor cause or attempt to cause any member of the 
trade/ industry to change his price terras by the use of intimida- 
tion, coercion, or any other influence inconsistent \7ith the 
maintenance of the free and open market which it is the purpose of 
this Article to create. 

Rule 11, Costs and price cutting 

'The standards of fair competition for the trade/ industry with 720 
reference to pricing practices are declared to be as follows: 

(a) Wilfully destructive price cutting is an unfair method 721 
of competition and is forbidden. Any member of the trade/ industry 

or of any other trade/ industry or the customers of either may at 
any time complain to the Code Authority that any filed price con- 
stitutes unfair competition as destructive price cutting, im- 
periling small enterprise, or tending toward monopoly or the im- 
pairment of code wages and rorking conditions. The Code Authority 
shall within five days afford an opportunity to the member filing 
the price to answer such complaint and shall within fourteen days 
make a railing or adjustment thereon. If such ruling is not concur- 
red in bj- either party to the complaint, all papers shall be re- 
ferred to the Research and Planning Division of the National Re- 
covery Administration which shall render a report and recomme-ia^ 
tion thereon to the Board. 

(b) IThen no declared emergency exists as to any given product, 722 
there is to be no fixed minimum basis for prices. It is intended 

that soimd cost estimating methods should be used and that considera- 
tion should be given to costs in the determination of pricing policies, 

(c) When an emergency exists as to any given product, sale 723 
belo\/ the stated minimum price of such product, in violation of 
paragraph e hereof, is forbidden, 

9307 



-86- 

(d) If the Board, after investigation s^iall at any time find 724 
toth (1) that an emergency l^s arisen within the trade/ industry 
adversely affecting sraall enterprises or v;ages or labor conditions, 

or tending toward monopoly or other acute conditions uhich tend to 
defeat the purposes of the Act; and (2) that the deternination of 
the stated riinimuin -orice for a specified -jroduct within the trade/- 
industrs" for a limited period is necessary to mitigr.te the condi- 
tions constitutinr'? such emergency and to effectuate the purposes of 
the Act, the Code Authority may c^use an imparrial agency to in- 
vestigate costs and to recomriend ±o the Board a determination of the 
stated ninij-ium price of the product affected "by the emergency and 
thereu-pon the Board may proceed to determine such stated minimum 
price, 

(e) TThen the Board shall have determined such stated minimum 725 
price for a. specified product for a stated period, which price 

shall ce reasonably calculated to mitigate the conditions of such 
emergency and to effectuate the purposes of the Act, it sha.ll 
publish such price. Thereafter, during such stated period, no 
member of the trade/ industry shall sell such specified products 
at a net realized price below said stated minimum price and any 
such sale shall be deemed destructive price cutting. From time 
to time, the Code Authority may recom-nend review or reconsidera- 
tion, or the Board may cause r^ny deter:ninations hereunder to be 
reviewed or reconsidered and appropriate action taken. 



Rule 12, Cost findin 



£i 



The Code Authority sho.ll cause to be fomiulated methods of 731 
cost finding and accounting capable of use by all members of the 
trade/ industry and shall submit such methods to the Bor.rd for re- 
view. If approved by the Board, f-jll information concerning such 
methods shall be made available to all members of the trade/ in- 
dustry;-. Thereafter, each meiriber of the trade/ industry shall 
utilize such methods to the extent found practicable , l^othing 
herein contained shall be construed to permit the Code Authority, 
any ag-ent thereof, or any member of the trade/ industry to suggest 
uniform additions, percentages, or differentials, or other uniform 
iteris of cost which are designed to bring about arbitrary uniformity 
of costs or prices. 

Rule 1 3, Adve r t i s i ng all o wa nc e s 

No member of the trade/ industry shall designate as an "advert is- 741 
ing allowance", a "promotion allowance," or by a similar term, any 
price reduction, discount, bonus, rebate, concession, or other form 
of allowance, or any consideration for advertising or promotion services, 
offered or given by him to any customer, 

No member of the trade/ industry shall offer or give any con- 742 
sideration merely for "pushing", or "advertising," or otherwise 
than for definite and specific advertising or promotion services. 
Such consideration shall be given only pursuant to a se^oarate written 
contract therefor, which contract shall specifically and completely 
set forth the advertising or promotion services (in such manner that 

9307 



-37- 

their s-:)eciiic character ma-,- be -understood "by other ne ibers of the 712 

trade/ industry and their customers) to be jjerforned by the recipient 
of said consideration, the precise consideration to be paid or given 
therefor by said ;je:iber, the method of determining performances, and 
all othsr t-jr-.s and conditions relating thereto. 

(The follo\:ing are exai;plcs of provisions for publicity nhich 
may be found norkable and desirable oy particular industries.) 

Lxauple_l, I. mediately upon the ma.king of any such contract 743 

for advertising or promotion services by any mer.iber of the trade/in« 
dustry, a t:;r.e copy thereof shall be filed by said neraber rTith a 
confidential and disinterested agent of the Code Authority (as 
■nrovided. for in this code), or, if none, then vrith such an agent 
to be designated oy the Board, Said agent shall maintain all coi^ies 
of such contracts on file until six months after the termination 
thereof, and. shall malie the same available at his office for in- 
spection at all reasonable times oy all me:ibers of the trace/in- 
dustry, and all of their c us toilers, and shall distribute a true 
co-'iy of any such contract to any member of the industr"^?- or any 
customer who applies therefor and offers to pay the cost actually 
incurred, ty the Code Authority in the actual preparation and. dis- 
tribution thereof; provided, tliat no such inspection or copy shall 
be permitted or made available to any person until permitted or 
mad-e available to all members of the industry and their customers, 
as aforesaid. Upon request, said agent shall furnish to the Board, 
or any d.uly designated agent of the Board, copies of any such 
contract, 

Exarrole 2 , Immediately upon the making of any such contract 744 

for advertising or promotion services by any member of the trade/- 
industrjr, a true copy thereof shall be filed \iith a confidential 
ajid disinterested agent of the Code Authority (as provided for in 
this Code), or, if none, then Tith such an agent to be designated 
by the Board., Said agent shall thereupon proceed to have copies 
of such contract published in a journal or Journals or other 
appropriate medium of general circulation among members of the 
t r ade / ind-us t r^;- , 

Rule 14, Liquidated dsjnages 

Any member of the trade/ Indus try may enter into an agreement 751 

with a.ny other member or members of the trade/ ind.us try provid'-ng 
for the pa2niient of Liquid.ated damages by any party thereto u]'— n 
violation oy him of any provision of the Code, provided, however, 
tiiat such agreement shall become effective and binding on the 
parties thereto only after the execution thereof shall have re- 
ceived the consent of the Board, 

Rule 15, Standards 

(a) Within thirty days after the effective date of the Code, 761 

the Code Committee sliall establish a permanent standards com.mittee, 
two members of which shall be appointed by the Board to represent 
Government and Consumer interests, 

9307 . 



-88- 

("b) Tills Comi.iittee shall: 

(1) Make studies, and inv9atii'?;ations for the estrMish- 762 
raent of classifications, dimensional standards, standards of quality 
(grades), and labeling of the products of this industr^r, in coopera^ 

tion with the Arierican Standards Association or the Bureau of 
Stande.rds of the United States Departrne-.it of Coni'ierce, and submit 
recomnendations based upon such studies to the Code Comr.ittee ^-'ith- 
in six months of the date of the Con.iittee's appointment, 

(2) Proposes a.ooropriate revisions of approved standards 763 
frora ti;-ie to time, 

(3) Advise the Trade Practice Complaints Com. -ittee con- 764 
cemir:.^- the enforcement of all such stando.rds as established and 
approved, 

(c) Upon submission of the Comr.ittee' s findings to the Code 765 
Committee, the Code Committee shall immediately submit such standards 
either to the American Standards Association for consideration and 
ap-jroval or to the B^oreau of Standards of the United States Depart- 
ment of Commerce for consideration and promulgation; provided, how- 
ever, tha,t in cs.se of disagree; ":ent -.rithin the Committee, the Code 
Comiiiittee shall determine, subject to the ap^oroval of the Board, 

the na.ture of the standards to be submitted to such standardizing 
agencies, 

(d) After promulgation and such revie-, as the 3o?.rd ma^'' de- 766 
termine, these standards may be approved as a fair trade practice 

to be i^ndator;?' upon all members of this trade/ industry pending 
the approval of subsequent standards or revisions of standards 
v/hich may oe established from time to time txii"0U;;;':h the same pro- 
cedure as set forth above, 

(e) It is further provided, hov/ever, that no standard shall 767 
be approved by the Board ^'^hich may be construed in any m.aterial 
particular as prohibiting the manufacture and/or sale of non- 

stsjidard industry products clearly identified to purcha.sers as to 
their deviation from such standards, if such non-standard products 
are in no -Tay harmful to the users. 

Rule 16. Desi:.-pi ^^rotection ; Plan Number 1 

I/iandatory registration 

(a) No member of this industry shall ta^ce orders for, or use 771 

in the manufacture of anj"- products of this industr''', "my design em- 
bodied in such products unless an exact copy thereof has been re- 
gistered vrith the Design llegistration Burea.u of the industry and 
unless such mem,ber is the holder of the registration certificate or 
has obtained the v/ritten consent of the member making the registrar 
tion. This rule shall not a;oply to such standard or stable designs 
coraroiled by the said Registration Bureau and on file therein, and 
pro^^ided that nothing her'^in contained shall li.iit or deprive any 
member of this industr^r of any rights or benefits existing under 
the present patent or co"D?Ti.j,ht lairs, 

9307 



-89- 

("b) The term "design" as used in this industry shell mean and 772 
be limited to the effect obtained by a combination of such of the 
follonin;^; elements as are embodied in a -oroduct manufactured in this 
industry: (l) the shape resulting from the method of cutting, sewing, 
draping, and pressing; (2) the combination of fabrics and colors, 
including their use and placement; (3) the decoration, including the 
kind aiid ^oiacement; provided that the term "design" shall not include 
style trend. 

(c) There shall be designated by the Code Committee, subject 773 
to the a-rproval of the Board, an impartial agency to be knovrs as 
the "Design Registration Bureau." Said Bureau shall have the folio:?- 
ing poT/ers and c'uties, subject to such rules and regulations as may 
be issued by the Board: 

(1) Said Bureau shall comoile anc make permanent a list 774 
of all standard or stable designs now recognized as such in this 
industry, and UDon completion of such compilation shxall make such 

list available to all members of this industr;^'-, 

(2) Following completion of the compilation of such list 775 
of standard or stable designs the said Bureau shall not accept for 
registration any design, the identical design of 'vhich is contained 

in said compiled list, or any design previously registered, "provided 
that \7henever a design so submitted is rejected for registra.tion on 
the grounds that it is either contained in the compiled list, or has 
been -oreviously registered 'oj said Bureau, the rejected application 
may be referred for determination to an arbiter agreed upon b - the 
Code Gom.iittee and the member whose registration vzas rejectee ■. Pro- 
vided that any design accepted for registration must be used within 
three months after its registration, otherwise said design shall be 
classified as a stable or standard design, and provided further that 
after one year from the date of its registration the said registered 
design shell be classified as a stable or standard design, 

(3) The Code Committee shall have the right to require 776 
a fee to be paid by the member of the industry submitting the de- 
sign for registration, the amount of ^;diich fee shall be recommended 

by the Code Committee and approve d by the Board, 

Design iirotection ; Plan Number 2. 

No registration 

(a) No member of this industry shall take orders for, or use 777 
in the manufacture of his products any design embodied in such 
products previously used and ov/ned bj?- any other member of this in- 
dustry without first obtaining writton -oermission to use such de- 
sign from said prior user, provided that this -prohibition shall not 
apply to standard or stable designs used in the industry, and pro- 
vided fiu-ther that nothing herein contained shall limit the protection 

or right granted under the existing patent and c opyright laws, 

(b) Tiie terra "design" as used in this industry shall mean and 778 
be limited to the effect obtained by a combination of such of the 
follov/ing eleraents as are embodied in a product manufactured in this 
industry: (l) the shape resulting from the method of cutting, sewing, 

9307 



-90- 

draping, and pressing; (2) the combination of fabrics and colors, 778 

including their use and placement; (3) the decoration, including 

kind a.nd placement; provided that the terra "design" shall not in- 
clude style trend. 

(c) Any coraolaint made to the Code Comiaittee imder this pro- 779 

vision shall be referred to an impartial arbiter or commission 
agreed upon by the person comTDlained of and the Code Com.nittee and 
such determinatiqn made by such impartial arbiter or commission 
shall be subject to revic? by the Board. 

ARTICLE VIII 

EXPORT TRADE 



No provision of this Code relating to prices or terms of sell- 801 

ing, shipping, or marketing shall apply to exnort trade or sales or 
shipments for erport trade, "Export Trade" shall be as defined in 
the Export Act adopted April 10, 1918. 

ARTICLE IX 

MODIEICATIOI 

Section 1. This Code and all the provisions thereof are ex^ 811 
pressly made subject to the right of the President, in accordance 
with the provisions of subsection (b) of Section 10 of the Act, 
from time to time to cancel or modify any order, approval, license, 
rule, or regulation issued under Title I of said Act. 

Section 2. Such of the provisions of this Code as are not re- 812 
quired to be included herein ''oj the Act may, \7ith the approval of 
the Board, be modified or eliminated in such manner as may be in- 
dicated by the needs of the public, by cha,nges in circumstances, or 
by ez^erience. All th3 provisions of this Code, unless so modified 
or eliminated, shall remain in effect imtil June 16, 1935. 

ARTICLE X 

LiOl^OPDLIES. ETC . 

No provision of this Code sliall be so a^Tolied as to permit 821 
monopolies or monopolistic practices, or to eliminate, oppress, 
or discriminate against small enterprises. 

ARTICLE XI 

PRICE INCREASES 

Whereas the policy of the Act to increase real purclmsing 831 

power villi be made more difficult of consummation if prices of 
goods and services increase as rapidly as wages, it is rdcogniz- 
ed that price increases except such as may be required to meet 
individual cost should be delayed, and \7hen made such increases 
should, so far as possible, be limited to actual additional in- 
creases in the seller's costs, 
9307 



-91- 

A RTICLE XII 

Eg? ECTI\:S DATE 

This Code shall "become effective on the second Mondaj?- af-^3r its 841 
approval "by the president. 



9307 



-92- 

II-ID^ 

Accountant, 1197 

Accounting systems. See Cost Systems 

Act, definition, 1191 

purpose J 1010-1012 
Administration, compliance, 1803 

effect of code provisions, 1802 

general aspects, 1800 

industry's share, 1804 

organization of industry, 1810 

records and reports, 1894 

responsilDility of Government, 1801, 1856 

statistical information, 1891 

See also Code authority 
Administration memters, 1831 
Advertising, allowances, 1650-1636 

misleading, 1511 
Agreements, existing, 1482 

under the Act, 1082 
Allowances, advertising, 1630-1636 

trade-in, 1620-1622 
Amendments, 5100 

application "by industry, 5120 

code provision for, 1052 

initiation of action, 5133 

modification "by President, 1051 

of provisions contrary to policy, 5121, 5131 

of unworkahle provisions, 5132 

proposals "by IMSA, 5140 
Appeal I'rom code authority, 1858 
Apprentice, definition, 1155 

hours, 1236 

wages, 1333 
Arbitration, 1953 
Assent, 1132 

no requirement of, 1981 

not necessary to vote, 1825.1 
Assessments, apportionment, 1872 

payment essential to voting, 1825.1 
Averaging of hours, generally, 1240 

continuous process employees, 1242 

employment for less period, 1244 

inclement weather, 1245 

office employees, 1241 

watchmen, 1243 

Basing point systems, 1792 

Bids, conformance to stipulated price, 1694 

Branding, false, 1512 

Brands, misappropriation, 1521 

Brihery, commercial, 1560 

Budgets, 1871 

Bureaus, estimating, 1786 

By-laws of code authority, 1841-1842 

9307 



-93- Capacity- 



Capacity, limitation of, 1650 
Child labor, forbidden, 1430 

emplojinent by parents, 1434 

evidence of age, 1433 

exceptions, 1432 

hazardous occupations, 1431 
Children, night work, 1495 
Classification, customers, 1691 

of employees, 1151, 1152 

of members of industry, 1133 
Code administration. See Administration 
Code authority — 

Administration members, 1831 

agencies, 1860 

appeal from acts, 1858 

by-laws, 1841-^1842 

compliance functions, 1852 

eraTDloyee representation, 1832 

finances, 1870-1872 

functions generally, 1850 

incorporation, 1843 

individual liability, 1859 

information and reports, 1853 

inter-industry relationships, 1854 

limitations on authority, 1856 

members of industry. 1812.1 

modification of, 1813 

nature, 1810 

organization, 1840 

power to bind industry, 1851 

qualifications, 1812 

i*.Qcb^:'iition, 1827 

representative requirements, 1812^2 

review of acts, 1857 

selection, method, 1820 

selection by NRA, 1822 

selection, notice to industry, 1824 

selection, time, 1821 

size, 1811 

special studies, 1855 

sub-authorities, 1863 

term of members, 1823 

trade association, 1812,3, 1860 

vacancies, 1826 

voting by industry, 1825 
Code provisions — 

contrary to policy, 5121, 5131 

degree of industry support required, 1092 

discriminatory, 1606 

effect of, 1802 

enforceability, 1093 

factual shov/ing, 1091 

stays, 5150 



9307 



-94- Code 



Code -orovisions — 

J. 

■uniformity of language, 1094 

Tinwo r kat 1 e , 5132 

See also particular provisions. 
Codes — 

amendment. See Amendments 

applicants must "be representative, 1022 

hearing, 1025 

modification "by President, 1051 

multiple coverage, 1031 

prescribed "by President, 1081 

purpose, 1010-1012 

regional, 1070 

supplemental, 1060 

See also particular Torovisions 
Coercion respecting prices, 1550 
Collective "bargaining, 1410 

"basis for wage schedules in codes, 1364 
Collectors, hours, 1234 

wages, 1337 
Commercial "bri'bery, 1560 

"by premiums, 1641 
Commercial espionage, 1522 
Commission salesmen and collectors, hours, 1234 

wages, 1337 
Company towns and stores, 1472 
Competitive system, 1701 
Complaints, dismissal for, 1494.1 
Compliance, administration, 1803 

essential to voting, 1825.1 

functions of code authority, 1852 

violators, purchase from, 1954 
Confidential agency. See Impartial agency 
Conservation, forest, 1952 

purpose of Act, 1012.9 
Consignment, 1613 
Constitutional rights, 1027 
Consumer interest, 1040 
Continuous process employees, days off, 1271 

hours, 1221, 1222 

hours, averaging, 1242 
Contracting out work, 1471 
Contracts, adjustment due to codes, 1983 

for advertising allowances, 1635 

future delivery, 1614 

infringement of territorial rights, 1531 

interference with, 1530 

sales, uniform, 1615 
Contri"butions, 1872 

Cooperative organizations, 1910-1911 
Cost systems — 

estimating bureaus, 1786 

mandatory, 1784 

relationship to price, 1781-1783 

voluntary, 1785 

9307 



'*^^~ Courts 



Courts, prior holdings, 1590 
Customers, classification, 1691 
restrictions, 1692 

Daily hours, 1260 
Damages , liquidated, 1893 
Dating, extended, 1612 
Pays off, 1270 

holidays, 1274 
Dealers, guaranty adjustments "by, 1683 
Deductions frcra wages, 1391 
Defamation, 1514 
Definitions, 1100 
Delivered prices, 1742 
Design piracy, 1670-1672 
Design registration, 1671 
Destructive price cutting, complaints of, 1761 

declaration of emergency, 1762 

minimum price, 1763 

unfair, 1760 
Discriminatory provisions, 1606 
Dismissal, notice, 1494,2 

wage, 1392 
Dismissal for complaints, 1494.1 

Effective date, 1196 

Emergencies. See Destructive price cutting 

Emergency work, 1252 

days othervase prohibited, 1273 
Employees, classes, definition, 1151, 1152 

continuous process, days off, 1271 

definition, 1150 

emergency work, 1273 

enticement, 1493 

idle time, 1291 

Junior, wages, 1334 

light occupations, definition, 1153 

light occupations, wages, 1331 

mixed employment, hours, 1237 

mixed employment, wages, 1338 

night work, 1295 

processing, 1151 

professional, definition, 1154 

professional, hours, 1233 

representation on code authority, 1832 

scientific, hours, 1233 

split shifts, 1294 

technical, hours, 1233 

See also particular classes of em-ployees 
Employer, definition, 1140 

small towns, 1131 

working as an employee, 1292 



9307 



■rw 



-96- 

Enrployraent — 

child lator. See Child lahor 

conditions, posting, 1491 

general conditions of, 1400 

•orivileges, retention, 1497 

stahilization, 1450 

See also s-oecial forms of employment 
Engineers, hours, 1231 
Enticement, 1493 

Equitable adjustment of wages, 1365, 1366 
EsToionage, commerical, 1522 
Establishment, requirement of, 1134 
Estimating "b\ireau.s, 1785 
Evasion of labor provisions, 1492 
Executives, hours, 1232 
Ejiports, 1951 
Extended dating, 1512 

False advertising, 1511 

Ealse invoicing, 1513 

False marking or branding, 1512 

Federal Trade Commission, prior holdings, 1590 

Finances, 1870-1872 

Firemen, hours, 1231 

Foremen, hours, 1232 

Forest conservation, 1952 

Free deals, 1640-1644 

Future delivery contracts, 1614 

Geographical application of codes, 1110 
Goods, See Product 
Graveyard shift, 1295 
Guaranties, price decline, 1795 
product, 1680-1683 

Handicapped workers, wages, 1335 

Hazardous occupations, 1431 

Health, See Safety and health 

Hearing, 1026 

Holidays, 1274 

Home, definition, 1193 

Homework, conditions on prohibition of, 1453 

conditions under which permitted, 1462 

general policy, 1450-1461 

safety and health, 1443 
Hours — 

averaging, 1240 

continuous process industries, 1221, 1222 

daily, 1260" 

dual eraplo2,Tnent, 1296 

emergencies, 1252 

exceptions by industries, 1220 

idle" time, 1291 

in allied industries, 1211 

mixed employment, 1237 

operating, 1293, 1651 

overtime, 1250 
9307 



Employment 



-97- Hours 

Hours — 

peaks and tolerances, 1251 

requirement of limitation, 1200 

retail trades, 1223 

service employees, 1231 

split shifts, 1294 

standard, 1210 

See also particular classes of employees 

Idle time, 1291 
Impartial agencies, 1862 

definition, 1198 

for price filing, 1712.1 
Imports, restrictionsj 1084 

effect of code provisions, 1982 
Incorporation of code authority, 1843 
Indiistry — 

classification of memhers, 1133 

controlled enterprises, 1126 

definition, 1120 

degree of support required for proposed actions, 1092 

delegation of power to code authority, 1851 

exemption in small to\7ns, 1131 

finances, 1870-1872 

incidental activities, 1124 

inter- industry relationships, 1854 

memher of, 1130 

organization for code administration, 1810 

overlapping definitions, 1123 

records and reports, 1894 

representp.tion on code authority, 1812.2, 1825 

scope of "manufacture," 1128 

separate conduct of memhor's "business, 1135 

several functions, 1127 

small enterprises, 1025 

special studies, 1855 

statistical information, 1891 

supplemental activities, 1125 

voting "basis, 1025 
Inequitable restrictions — 

definition of industry, 1023,1 

dues, 1023o3 

expulsion, 1023.5 

government of association, 1023.6 

memhership restrictions, 1023,2 

removal, 1023.7 

voting, 1023.4 
Insignia, 1880 

withdrawal, 1882 
Insular possessions, 1111 
Invoicing, false, 1513 

Junior employees, 1334 



9307 



-98- La'oels 

Latels, 1881 

Labor. See Employees; Employment 

Labor agreements, existing, 1482 

Laborers, 1151 

Labor organization, freedom of choice, 1420 

Labor provisions. See specific provisions; and generally, 

Employment. 
Laws, existing, 1481, 1672 
Learners, age limit, 1156 

comDletion of period, 1344 

definition, 1156 

need for, 1341 

member of, 1343 

wages, 1340, 1342 
Licenses, 1083 
Light occupations, definition, 1153 

wages, 1331 
Liquidated damages, 1893 
Litigation, threats, 1551 
Loss leader, 1770''1772 
Lump-sum prices, 1744 

Machine hour limitation, 1650 
Maintenance employees, emergencies, 1273 

hours, 1231 
Manufacture, scoue of, 1128 

Marking, false, 1512 
Meals, 1498 

Messengers, wages, 1334 
Misrepresentation, 1511-1514 

by premiums, 1643 
Monopolies, 1024 

Natural resource industries, 1652 
ITight work, generally, 1295 

more onerous than day work, 1332 

women and children, 1495 

Office boys, wages, 1334 

Office employees, hours, averaging, 1241 

hours, daily, 1241 
Open prices o See Price filing 
Organization, labor, freedom of choice, 1420 
Overlapping definitions, 1123 
Overtime, generally, 1250 

pay, 1253 

pay, pieceworkers, 1352 

Payment of wages, 1391 

Payment, terms, 1611 

Peaks, 1251 

Penalties, additional, 1892 

Philippine Islands, 1110 

Piece rates, fixed by code, 1364 



9307 



^-^ Piecenorkers 



Pieceworkers, overtime rates, 1352 

part hourly Ids' sis, 1354 

period for computation of minimum, 1351 

rejected vrork, 1353 

vrage mininiim, 1350 
Fopulationj 1194 

wage differentials, 1322 
Posting of la"bor provisions, 1491 
Premiums, 1640-1644 
Price cutting. See Eestructive price cutting 

Price filing — 

ado-otion of another's prices, 1743 

"basis of prices, 1742 

essentials, 1712 

field for, 1722, 1723 

general policy, 1710-1711 

prices effective, when, 1741 

records, preservation, 1745 

statistics, 1750 

unfavorable fields, 1721, 1724 

waiting period, 1730-1732 
Price fixing, agreements, 1550 

emergencies, 1763 
Prices — 

"basing points, 1792 

cost systems, 1781-1783 

differentials, 1793 

extras, 1793 

general policy, 1701-1705 

guaranty against decline, 1795 

increases due to codes, 1S55, 1983 

loss leader, 1770-1772 

lumD-sum, 1744 

repair work, 1794 

resale, maintenance, 1791 
Price statistics, 1750 
prison labor, 1920 
Product, guaranty, 1580-1683 

identification for price filing, 1712,4 

misrepresentation, 1511 

repair, price, 1794 

return for credit, 1693 

standards, 1660-1664 

su"bstitution, 154C 
Production control, 1650-1653 
Production quotas, 1650 
Productive capacitj'-, 1012.5 
Professional employees, definition, 1154 

hours, 1233 
Professions, 1032 
Pu"blic interest, 1040 

(Quotation, false, 1513 



9307 



-100- RelDates 

Rebates, disguised as advertising allowances, 1633 

secret, 1570 
Regional codes, 1070 
Registration of designs, 1671 
Repair work, prices, 1794: 
Representation, 1022 
Resale price maintenance, 1791 
Retail trades, hours, 1223 

small towns, 1131 
Return of goods for credit, 1693 

Safety and health — 

homework, 1443 

program, 1442 

provision for, 1440 

study of, 1441 
Sales affiliate, 1126 
Sales contracts, uniform, 1615 
Salesmen, commission, hours, 1234 

wages, 1337 
Salesmen, traveling, hours, 1234 
Scientific employees, hours, 1233 
Secret rebates, 1570 
Selling methods, limitation, 1610 
Shifts, limitation, 1295 

split, 1294 
Shipping crews, hours, 1231 
Shop hours, 1293 
Skilled workers, wages, 1363 
Small enterprises, 1025 
Southern States, 1192 

wages, 1321 
Speed-up, 1473 
Split shifts, 1294 
Stabilization of employment, 1450 
Standards of product, 1660-1664 
Statistical information, 1891 
Stays, 5150 

of experimental trade practices, 1605 
Stretch-out, 1473 

Substitution of goods and services, 1540 
Subterfuge, 1492 
Supervisors, hours, 1232 
Supplemental codes, 1060 

Technical emioloyees, hours, 1233 
Terms of payment, 1611 
Territories, 1111 
Tolerances of hours, 1251 
Trade, 1095 

definition, 1121 

local, 1131 
Trade associations — 

applications for codes, 1022 

as code authority, 1812.3 

inequitable restrictions. See Inequitable restrictions 

9307 



-101- Trade-in 



Trade-in allowances, 1620-1622 
Trade marks, misappropriation, 1521 
Trade practices, attested, 1500 

experimental, 1600-1605 

not dealt vith "by code, 1590 

See also particular types 
Trade secrets, 1522 
Transportation, 1498 

Traveling salesmen and collectors, hoiirs, 1234 
Truck drivers, hours, 1231 

Uniform contracts, 1615 

United States, definition, 1112, 1113 

Vacations, 1496 

Violations, additional penalties, 1892 

liquidated damages, 1893 
Violators, purchase from, 1954 
Voting "by industry, 1825 

Wages — 

allied codes, 1313 

deductions, 1391 

dismissal, 1392 

geographical differentials, 1321 

industries allied to agriciilture, 1323 

light occupations, 1331 

manner of payment, 1391 

mixed employment, 1338 

overtime, 1253 

pay period, 1391 

population differentials, 1322 

requirement of minimum, 1300 

schedules, 1364 

standard, 1310, 1311 

weekly, 1312 

women. 1332 

See also particular classes of employees 
Wages above minima — 

adjustment, 1365, 1366 

generally, 1360 

rate "bases, 1362 

schediiles, 1364 

skilled workers, 1363 
Waiting period for price filing, 1730-1732 
Watchmen, days off, 1272 

hours, 1235 

hours, averaging, 1243 

wages, 1336 
Women, night v^^ork, 1495 

wage discrimination, 1332 
Work load, increase, 1473 
Workmen's compensation, 1483 

Zoning for prices, 1792 

9307# 



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