BOSTON PUBLIC LIBRARY lllllilift 3 9999 06317 372 b *?3T/, I A OFFICE OF NATIONAL RECOVERY ADMINISTRATION DIVISION OF REVIEW POLICY IN THE CONTROL OF WAGES UNDER NRA INTRODUCTION AND MINIMUM WAGE POLICY By Robert M. Woodbury (A Section of Part C: Control of Wages) WORK MATERIALS NO. 45 THE LABOR PROGRAM UNDER THE NIRA Work Materials No. 45 falls into the following parts: Part A Part B Part C Part D Part E Introduction Control of Hours and Reemployment Control of Wages Control of Other Conditions of Employment Section 7(a) of the Recovery Act LABOR STUDIES SECTION March, 1936. OFFICE OF ITATIOLTAL FZCOVZRY £3.11111 STHATIOr DIVISION CF H37I3TJ POLICY IF TIF CO: 7B.OL OF UAGES U21BER KHA IIFDE03UCTIOF AITD MIFIFUII T7AGE POLICY — >-_ F.o'bert LI, TToodliuiy LA30F STUDI3S SFCTIO! lipxcti, 1936 9846 "°V 30 1950 The stud/ of "Folio;' in the Control of Uages Under ERA:. Introduction and Lfininan tfage Folic/ 11 - was prepared "by Mr. Robert II. IToodbury of the Labor Studies Section, Mr. Solomon 3arl:in in charge. It is the first of several studies on ERA wage policy. These wage policy studies discuss the oolicies, standards, problems, and code provisions v.'hich vere rorked out in the development of wage legilation in NRA codes. In this study the ITRA bacl:ground for the negotiations of codes and the organisation of 1"RA for the development of policy are depicted to secure a "better understanding of the manner in rhich policy aand code orovisions evolved. The or inciplcs. which rere to bear uoon the determination of min- imum uages are discussed. The inquiry is especially directed to the import- ance of bargaining, orecodents, and iTEA -nrincroles in the establishment of code minimum wage rates. Fecess-.rily, a study of the t^e here presented, must be representative of the author's individual analyses rather than of official positions. At the back of this report will be found a brief statement of the studies undertaken by the Division of Review. L. C. Marshall, Director Division of Review March 25, 1956 9846 9346 TABLE OF C0I:Q31;TS POLICY III I3E C0IIT30L 0? WAGES UKBEH IIBA IIKERODUCTIOE AI T I) iilFILIUli '."."AGS POLICY Page Chapter I. Introduction I . Principles of Policy 4 II. General Policy as Affecting Wage Provisions.. 6 A. Types of Codes 6 B. Administration Set-Up and Personnel 7 C. Procedure and Framework of Code negotia- tions 3 III. The Organs of Policy 11 A. Review 13 B. Policy Determination 14 Chapter II. iiininum Wage Policy 17 I . Development of Policy 17 A. The Law 17 B. General Statements of Policy and Objectives 18 1. By the President 18 2. By the Administrator 19 C. The First Code 21 D. Policy as Indicated in the PRA 24 E. Subsequent ERA Policy 28 1. Review Division 28 2. The Policy Group 32 3. The Labor Policy Group 34 4. The Advi sor' Council 37 5. Code Planning Committee... 38 6. Statements on Policy by the President, the Administrator, or the I"IRB 40 II . Summary of Principles of Policj'" 41 A. The Decent Living 41 3. Increase in Wages 44 1. By a Substantial ( Satisfactory) Percentage 44 (a) Some Increase Essential 44 (b) Increases Under First Code 45 (c) Increases Under PRA and PEA Substitutions 45 (d) Increases in Codes After the Eirst 47 2. As Much as Industry Can Reasonably Bear 48 3. To Maintain Weekly Earnings (As of Pre- Code Period (June 1933) 50 4. To Restore 1929 Rates or 1929 Purchas- ing Po' 'er 51 (a) PRA Provisions in Relation to 1929 Level of tfages 51 (b) Code Provisions ITot Less Than PRA or PRA Substitutions 51 -ii- Page (c) The So-CaUed 1929 Clause in the 3oc.es 52 (d) Code provisions in Relation to 1929 Pates 52 (e) Pelation to 1929 Pates in Lon "?age Industries 53 5. Combinations of Principles 54 C. Qualifications 54 1. Inability to Pay 54 2. Lower Pates in Competing Industries... 56 3. Lover Rates -in Industries Allied. to .. < Agri cul tur e . .. . '. .......... „ . . . 57 III. Significance of 'Principles in Pelation. to . - Code Provi sions 60 Appendix I . I . methodology 61 II. Points on Tliich Further Peseo.rch is 1'eeded 61 9846 -in- -1- SUMMARY Chapter I. Introduction Policy includes both explicit policy as formulated by policy determ- ining organs within the IRA and implicit policy embodied in the decisions of approval or disapproval of codes. The principles of policy constituted the guiding lines for the deputies and the Administration in their efforts to realize the objectives of the NIRA. The framework of negotiations and the principles governing the rules of the struggle between the contestants were vital parts of general policy affecting and controlling the wage provisions of the codes. Differences in the strength of labor in different industries were of special signifi- cance in affecting the character of the results obtained. Industry was favored by the fact that all codes were voluntary. The Deputies were in position to bargain with industry by in effect trading fair trade prac- tice provisions against higher wage rates, and to obtain for labor a better bargain than labor— at least unorganized labor— might have been able to obtain by itself. The organs of policy within the KHA include the Review Division and the policy formulating groups, including the Policy Doard, the Policy Group, the Labor Policy Group, and the Advisory Council. Chapter II. Minimum Wage Policy The law contained a statement of the general objectives "to increase purchasing power" and "to improve standards of labor", together with authorization for codes of fair competition for industries and trades to include minimum wage rates for their labor. Provision for collective bar- gaining and emphasis upon negotiated agreements suggest that it was con- templated that minimum rates of wages might be determined by a bargaining procedure. General public -pronouncements by the President and the Administrator emphasized the need for wages sufficient to give a decent living to workers for the shorter week necessary to permit reemployment of the unemployed. The first Code, that for the Cotton Textile Industry, set the general outline for the minim™ rates. Pates for male employees set at $12 and $13 a week of 40 hours for the south and north, respectively, were justified on the around that they represented, though not perhaps a decent living, a substantial increase over existing wages and as much as the industry could reasonably be expected to bear. The PSA "blanket Code" set a standard rate of 40;* for 35 hours for factory woikers. Substitutions might be approved by the Administration^ for an industry on the basis of evidence that the circumstances in the in- dustry required the lower amount. In some few cases the substitution raised the rate for certain districts. Subsequent SBA policy was gathered, correlated & contained in various pronounce- ments of the Review Division, which reviewed all codes set up for approval to determine whether they were in accord with established principles of policy, and in decisions and recommendations of the Policy Board, Policy Group, and the Advisory Council. 9846 -2- The principles of policy concerned with minimum ws^es may "be sum- marized under two main headings, the Decent Living and the Increase in Wages. So far as the decent living is concerned, the first -pronouncements "by the President emphatically set forth the decent living as a principle to he followed in the determination of minimum wages. This principle was aided "by a specific statement that industries unable to pay a wage sufficient for a decent living were not entitled to he allowed to sur- vive. Pronouncements of the Administrator and of the Review Division followed this cue. Actually, the first code was signed with a dis- claimer that the rates of $12 and $13 a week, were economically suf- ficient for decent living; and the safeguarding requirement that in- dustries unahle to pay were to he outlawed was specifically negatived by a Policy Board decision, which in effect held that the conditions of an industry were paramount to any requirement that wages should he enough to support a decent standard. In practice wage rates "below 25^ were approved in some 23 codes, including some with rates as low as 15^ an hour. The principle undoubtedly produced results "by direct pressure on the part of the Administration in the direction of raising rates, especially in the low wage industries. The second main principle required an increase in wage rates. This principle appeared in a number of different forms. "Increase hy a substantial amount" was one form of statement of this principle. Some increase was evidently required under the law. The wording of the clauses applicable to small towns and villages under 2,500 population in the PEA suggests that 20?o was considered a reason- able amount of increase. Individual codes provided increases in some cases up to and even in excess of ICO per cent. Data were usually asked for, to shew the estimated increase which proposed wage rates would bring about in the industry. Increase by as much as the industry could bear was another formu- lation. Two decisions by the Policy Board incorporate this form of the principle. A case where the rate was raised from 40^5 to 45rf (in the yeast code) because the industry could vay the higher rate suggests that minimum rates should be set at as high a point as industry could reasonably pay. The formula, to maintain weekly earnings, derived support from the President's statement of policy, and from the general consideration that since one of the objectives of the act was -to reduce hours and increase employment, the wage objective was (at least) to secure the same weekly pay as before hours were reduced. The campaign undertaken in March 1934 for further reduction of hours, with maintenance of weekly pay, brings this principle to clear formulation. To restore 1929 rates or 1929 purchasing power was frequently cited as the objective. This formulation finds support in the discussion ever the rate to be inserted in the PEA, and in the subsidiary or corollary principle that code rates should not be less than PEA or PEA substitu- tions. In a few codes, the so-called 1929 clause was carried over from the PEA; but policy tended to eliminate this form of clause not because 9846 ■rZ-r of its being based on 1929 rates "but because of its indef initeness and consequent unsuitability as an enforceable provision of law. In many letters of transmittal of codes, reference was made to the relation between the code rates and the rates -oaid in 1929. Particularly in low wage industries, the code rates might often exceed the 1929 levels. In man^r cases these principles might be appealed to in combination. All these principles were subject to qualifications, chief of which was inability of industry to pay. When industry could -Drove to the satisfaction of the Administrator of its inability to pay, the above principles might be suspended or set aside, and lower rates approved. Besides inability to pay, the qualitication that rates should net be required lo exceed rates in competing industries was appealed to the principle exception. Lower rates were allowable also for industries closely allied to agriculture. Finally, this review of principles suggests the importance of the basic principle that set the conditions for the orocess of bargaining and negotiation. With so much latitude allowed in the application of principle, so much vagueness in their formulation, and subject to such wide qualifications, the essential feature of the whole plan appears to have been the set-up that allowed the struggle of labor for higher rates and the pressure of the deputies for wage increases to carry out the purposes of IT LEA ±o force wage rates to the n^int wher^ the circum- stances of the industry tended to oppose further increase. The minimum wage rates in the codes must then be characterized not as wages designed solely to aid those lowest in the economic scale to obtain a minimum of subsistence, but rather as wages set at a competitive level by a bargain- ing procedure designed to increase wages up to the reasonable ability of the industry to pay. 9846 -4- CHAPTER I INTRODUCTION I. pri::cipl t -:s or policy Did the USA have a wage policy? What was wage policy under the NRA? These are the fundamental questions to "be discussed in the present section of these Labor Studies. They were frequently raised both within and outside the NRA during the period of o-oeration. Answers to those questions are necessary to an understanding of the wage program of the UxlA, to an evaluation of its effects, and as a basis for evaluating the NBA experience with respect to any future program of governmental control. Consideration of these questions calls for a clear understanding of what the term policy means. Policy implies an objective. (*) Given the objectives with respect to wages as set forth in the Act, wage oolicy was the body of rules, Tjrincieles or guiding lines by following which the Administration sought to reach these objectives. Consistent with this sense of the term, policy may be an explicitly f ormiilated, perhaps written set of rules. On the other hand, policy may never be formally or explicitly stated but represent only the common, constantly followed, element in a series of de jisieiis- with respect to specific cases or issues, or the guiding principle followed in a single crucial decision. In a rapidly changing situation or in a situation where decisions must be reached under high pressure, the latter t3'pe of policy is the more common and the more realistic type. The absence of explicit formulation, therefore, cannot be taken as evidence of lack of policy. Within the ERA organization during its period of activity policy was often or commonly identified with "established -nolicy". This term denoted the rules or principles established in explicit form to which the deputies were required, except in unusual circumstances, to make codes conform. This concept served the purpose of distinguishing between questions as to which the deputies followed these established rules of -lolicy and questions as to which the discretion of the deputy was presumed to prevail, subject to the discretion and eower of approval or disapproval of the Division Administrator, the Administrator, or the President. In the present survey of what policy was, the word must be understood to include implicit as well as explicit policy. Implicit policy included the principles and rules governing the decisions of the cduinistrator r>rior to their being formulated in exolicit terms, and all principles and rules governing decisions irrespective of whether they were or were not then or subsequently so formulated. (*) For definition see Statement of Review Officer t>. 17 Work Materials #19. 9846 -5- It is l>y no means to be presumed that because no explicit policy had "been formulated that decisions were taken without regard to any principles of policy or without regard to their "bearing upon the objectives of the Act. In this view of policy, implicit policy is embodied in the decisions and approvals of codes if not in the words of explanation accompanying the letters of transmittal. What is sought in this survey is to determine the actual rules, or principles, whet of. written and formulated, or unwritten, which were held in vie", in arriving at the decisions made by the Administration in pursuance of the objectives of the A.ct, (*^ Two points should be made with respect to the point of view adhered to in these pages. In the first place, we are concerned with what policy was and not with what it should have been. The theoretical issues underlying policy are treated in another section of these labor studies reports. During the life of the HRA in deciding upon alternative proposals as to policy, arguments in suoport of each would doubtless have received thorough and critical attention. But the problem of formulating policy in accordance with given objectives and sound theory as to the effects of various alternatives is not the task here. The present purpose is simply to ascertain what the rules, principles, and guiding lines of policy actually were. Secondly, we are not concerned here with the theories held by those who decided upon policy. They may or may not have adhered to the purchasing power theory of wages; their theories may have been based on this or that hypothesis or supposition as to facts; their judgments and decisions may or nvy not have been logically in accordance with these theories. Fortunately, in the present inquiry, it is unnecessary to attempt to explore the minds of those who made the decisions to ascertain what were their processes of reasoning. The sources of information are inadequate for an investigation as to who held what theories, and even if all the data necessary for any such investigation were at hand, their significance with respect to policy is not clear. The important and decisive data arc spread upon the record in the specific formulations of explicit policy on the one hand, and in the .decisions of approval and disapproval of codes, amendments and similar acts on the other. Again, the point is that this study is concerned with what wage policies were, rather than with the theories, whether sound or unso'ond, held by those who determined these policies. (**) (*) This is not meant .to exclude rules that are inferable from decisions even though their maker be unaware of them. (**) This discussion is not meant to imply that the reasoning back of the policies adopted is without significance for these studies. That reasoning is considered elsewhere. 9846 -6- In the development of the phases of policy concerned with different aspects of wage questions, the relative emphasis given to explicit and to implicit policy varies. Thus, with regard to policy on handicapped workers or on apprentices, policy was formulated explicitly and comprehensively. Implicit policy may have preceded this formulation, "but the explicitly formulated policy represents the position of the Administration on this question. With regard to differentials, however, there is little explicitly formulated policy. On this matter a study of the decisions ao-oroving the early codes reveals the policies that were followed. In developing the story of policy on each of these topics, therefore, the emphasis in the discussion must follow the relative stress which the Administration laid upon explicit and implicit policy, respectively. II. G-EITEBAL POLICY AS ABTSCTI1TG WAGS FHOvTSIOHS Certain phases of general policy vitally affected the content and sco-oe of wage provisions in the codes. These include (l) policy as to ty-oes of codes, (2) policy as to administrative set-up and personnel, and (3) policy as to general -orocedure to "be followed in code negotiation. A. Types of Codes The Act provided for more than one r,ossible procedure in writing codes: voluntary codes submitted under Section 3(a), negotiated agree- ments under 7(h), imposed limited codes of labor provisions under 7(c), and imposed codes under the provisions of Section 3(d). The administration in effect limited the codes to voluntary codes sub- mitted "by industry under Section 3(a) of the Act. (*) No codes were at any time in the NBA imposed "by the Administration under Section 3(d). Though in one or two cases public hearings were held with a view to imposing codes, no further stens in the direction of imposition were taken. (**) The difficulties of administering imposed codes "by means of a code authority corrorised of members of the industry opposed to the whole ^lan may well have appeared insurmountable. In nractice no code was imposed upon any industry. (***) So far as concerns (*) Tor discussion of the whole question, see article by Solomon Barkin, Collective Bargaining and Section 7(b) of the Act, in Annals of the American Academy, March, 1936. llote also the comment in Note 10 of that article with regard to the meaning of the word industry. In the following pages, industry is used in the sense of the employers in an industry or trade. (**) In a few cases changes in codes assented to by industries were made by the order of ap-oroval in signing the code. (***) Nor was any use made in practice of the licensing provisions. 9846 -7- Section 7("o) , no use was made of it in negotiating national coder.. Its application was restricted to use as a method for determining labor standards for geographical or industrial subdivisions rather than for an industry as a whole. (*) No use was made of the provisions in Section 7(c) for imposing limited codes of labor provisions, after investigation of the facts. As a result of these -oolicies, the expe- dient of voluntary codes submitted by industry and then, typically, revised after hearings and after negotiations with the Administration is the only one considered here. The absence of an effective alter- native to this code-making -orocedure was an important point for wage policy. An important decision was that the cod-^s as originally submitted by industries for the consideration of the ERA were to be the work of the industries and wholly within their control. The ERA claimed no jurisdic- tion or authority over the content of these proposals t>rior to their submission to the ERA. Por these proposed codes submitted by industry, the term "industry" was inter-oreted, as not^d, to mean the employers only. In s-oite of the emohasis laid in the law uoon collective bargaining and negotiated agreements, it was ruled by the Administration that codes as submitted by industry need not represent any kind of negotiation between employers and employees. (**) B. Ac" mini strati on Set-up and Personnel The set~uo of the Administration included at first an Administrator subject to a Special Industrial Recovery Board. (***) Subsequently (*) "Two different uses of this provision were developed. In the first type were included the cases where local trade agreements were recognized and given legal approval and standing but bound only the signers to the agreement. In the second tyoe were those cases where Section 7(b) was applied through specific provisions in the code so as to make the conditions of employment and trade agreements arrived at through collective bargaining the minima for the local area." 1 Barkin Op. cit.' In this discussion of policy, these phases are discussed in detail in the sections on "Wages Above the Minimum" and "Differentials" . (**) Cf. General Johnson's statement June 19, 1933, in ERA Bulletin I!o. 2, Basic codes of fair corroetition (Washington:- Government Printing Office - 1933), "Basic codes containing -orovisions rerroecting maximum hours of labor, minimum ro.tes of pay, and other conditions of emoloyment which are in themselves satisfac- tory, will be subject to approval, although such conditions may not have been arrived at by collective bargahning." (Office Manual, Part V - Appendix V-B-4) (***) Cf . Executive Order, ITo. 6173, dated June 16, 1933. ERA Office Manual, V-C-l 9846 the powers of -the Administrator wore expanded. (*) He was aided by divisional and deputy Administrators and by a number of Advisory Boards,-— -the Labor Advisory Board representing labor, the Industrial Advisory Board representing industry, the Consumers' Advisory Board representing consumers and in addition Legal Advisers, and the Research and Planning Division, which last was to furnish impartial statistical and economic reports on the problems of industry. (**) An important question affecting policy was one of personnel criteria in the selection of deputies. Since, in general, the deputies were assigned to particular industries or industry groups, qualifications ordinarily included familiarity with the industrial conditions in the industries to which they were to be assigned. Appointments included Army officers, persons with industrial experience, persons formerly connected with industry, persons with technical, professional and scientific training and experience and a few connected with labor organizations or having labor affiliations. C. Procedure and Framework of Code Negotiations For a clear understanding of the place of administrative policy in affecting or controlling the actual provisions of the codes, a brief statement of the process of code negotiation is in point. The reason for this lies partly in the range of discretion allowed to the deputies on many aspects of wage policy, and partly in the fact that policy, in setting up and approving the frame of negotiations, in a real sense determined the content of the code provisions that came up for approval. The importance of this frame can be set forth by an illustration. Assuming that in a given code a minimum rate of wages anywhere from 35(* to 45(£ would be approved by the Administration so far as policy was concerned, the question remains what determined the rate actually incorporated in the code. In such a. case, the general structure or frame of code negotiations, as set up in accordance with administrative policy on procedure, might well have a determining part in the final rates. The framework and procedure of code negotiations constituted as it were the arena for the struggle of interest groups and the rules under which these groups fought with one another or with the Administration to determine the actual provisions of the codes. (*) Executive Order 6205-A, dated July 15, 1933. NBA Office Manual, V-C-3 (**) The Labor Advisory Board was appointed by the Secretary of Labor, while the Industrial Advisory Board was appointed by the Secretory of Commerce. — HRA Bulletin #1 Statement by the President. . .Outlining Policies of the national Recovery Administration June 16, 1933. ISA Office Manual, V-B-2 9846 -9- As to what these interest groups were and their relative strengths is not hero the question. The point of irroortance here is that the ■oolicy of recognizing those groups and arranging for a procedure in which the struggle could cone to expression, together with the policy of rp'oroving provisions reached as a result of such negotiations, subject to certain reservations, was a vital part of general policy affecting and controlling the actual wage provisions of the codes. The content of codes in the first instance was determined "by action of their sponsoriiv industries. It was required that the proposed code he presented by a sponsoring group that was "truly representative" 1 of the industry nlking the application. Over the content of these proposed codes the Administration had no control. So far as nininun wages were concerned, the provisions were doubtless influenced by the publicity given to the standards incorporated in the PRA. Once the proposed code had been submitted to the liRA, it was assigned to the deputy in charge of the industry group in which the industry fell. Aided by his advisers, representing labor, industry, the consumers, the legal division, and the research and planning division, he entered into negotiations with industry representatives with a view to bringing the code m-ovisions in line with policy. There night be one ■ or more conferences with these industry representatives, at which administration advisers would be present. Often representatives of labor unions in the industry were asked to marticipate. After the code was in reasonably satisfactory shrne and mre-hearing conferences conpleted, a public hearing was held at which its proponents and opponents were given opportunity to be hoard. Post-hearing conferences were then held to iron out any differences that remained. Finally, assent to the "final" code was sought from the representatives of the industry. This "final" 1 draft was then submitted by the deputy in charge of the code to the Advisory boards, ljhcr, consumers' , and industrial, and to the legal and research and planning divisions, each of which made a report to him re com: lending approval, disaoproval, or suggesting some change or changes, necessary in their judgment to make the code satisfactory. These recommendations might be rcce-oted by the deputy and made the basis of further negotiations with the industry; or they night be recocted by him: he had to make a definite decision. When the code was believed to be in satisfactory form, the deputy sent the code with his. reoort thereon to the Divisional Administrator. Attached to it were the reports of the advisers. If the Divisional Administrator agreed, with the provisions of the code as prepared by the deputy, it was then sent to the Review Officer, who examined the code to see whether it was consistent with "established policy". (*) If so, he forwarded it to the Administrator for approval or for transmittal to the President, with data for a letter of approval or transmittal, (*) For definition see Statement of Review Officer Work Materials #19 Page 18, Div. of Review. 9846 -in- and a summary of the code. If not, it was returned to the deputy with a lenorandun on points where it departed fron accepted policy. The deputy thereupon usually reopened negotiations with the industry; in sone cases he night urge that the -oroposed code provisions were the test that the industry could or would grant. The question of policy involved could in the latter instance he referred to the Policy Group, tor. li-ter to the Advisory Council. Eventually it would he placed upon the desk' of the Administrator, or later he sent to the national In- dustrial Recovery Board for approval or for transmittal to the President. Within this general outline procedural details night he varied,; — for present -oux-ooses it is not necessary to detail all the various strges in the process of negotiating. Suffice it to point out that the procedure normally gave ample scope for all parties at interest to present their views. Both labor and the employers had the right to present facts deal- ing with the issues. Labor was represented by the Labor Advisory 3'oard, and in the unionized industries, the representatives of their unions. Industry was represented by its chosen representatives, -"ided by the Industrial Advisory Board. Three joints are of especial interest with regard to the deter- mination of wage provisions in the codes. The first is the character 'of the negotiations. These were typically of throe types: (l) those between the industry and the deputy assisted by his labor adviser, where the burden of obtaining a satisfactory wage figure devolved upon the Administration itself insofar as the industry was unwilling or unprepared at the outset to grant it. This pattern was typical of negotiations for codes for unorganized industries; (2) those between industry and the deputy assisted by his labor adviser and representatives of unions in the industry, in cases where the unions had not sufficient strength in the industry to compel direct negotiations, but had sufficient influence materially to rid the deputy to arrive at a figure for minimum wages satisfactory to them, and (3) those between industry and the representatives of the xinion in the industry, with the official labor and industry advisors on side lines, and the deputy ready to approve the agreement reached, which typically in this type of case would satisfy Administration policy. An example of the third group of codes negotiated by collective bargaining, may ho cited the bituminous coal, dress, fur, and lace industries; of the second group of codes negotiated by indirect representative bargaining by consultations with union representatives, the graphic arts, cigarette, chinaware and porcelain, and structural steel codes; while the vast majority of codes fall in the first class and were negotiated between the industry "nd the dcfiutjr^aidcd only by his advisors. The second point is the advantageous position of the industry in code negotiations in protecting its interests. The codes were voluntary. (*) (*) In the sense that it was not mandatory upon industry groups to submit codes, nor to acceot them when finally completed; if accepted, their final cont; ct, how ivcr, was not always wholly voluntary. 9846 -11- Industry did not hr.vG to agree to' wage provisions that ^ould plr.ce too great a burden upon then. But industry urs anxious to secure fair trade practice provisions that TOuld reduce the evils of unfair compe- tition. To obtain these provisions industry night agree to hour and wage -orovisions to which otherwise they night never have acceded. Moreover, industry executives no doubt were affected "by the Blue Eagle publicity cr.npr.ign for cooperation in neeting the conditions of the. depression, and were reluctant to submit to the odiun attaching to the paynent of unconscionably low wage scales. The third point is the role of the deputy in these negotiations. In nany cases he was able to KCert an inportant influence upon the results. Certain statistical data wore always asked for by the deputy to justify his action on the proposals of an industry. These included (l) data showing the increase in wages (and purchasing power of labor) which the proposed nininur. would effect, (2) data showing the existing wage rates and wage structure in the industry, and (3) data bearing upon conpetitive conditions in the industry. The Research and Planning DiviO sion in its report upon each code always attempted an estinate of the effect the proposed code would have in raising wages and increasing pur- chasing power. If this was inconsiderable, or in its judgment insufficient, its recommendations against the proposed code rate might cause the deputy to insist upon raising the minimum. Very important was the fact that the deputy was in position fully to appreciate the weight of the desire for fair trade practices on the part of industry. In nany cases there was c. frank bargaining give— and— take of trade practice provisions desired by industry in return for lrbor provisions desired by the deputy in pursuance of Administration objectives and policy. Each deputy nho conducted negotiations rath industry on codes of fair competition was responsible for carrying out the general -policies of the Adiinistrrtion; each was provided with copies of the Act, ERA Bulletins, Executive and Administrative Orders and all official material issued by the ERA; much was left to his discretion. The discretion of the deputies was subject to the direction and discretion of the divisional Administrators, who were responsible for all matters of policy within their divisions. The fact that the deputy, in general, was under instructions from the Administrator to make the codes conforn to policy nade him an instrument in giving to code provisions a definite direction, for example, to in- crease purchasing power. III. THE ORGAES OE POLICY The original source of policy was the MI2A itself. The primary sources of administrative policy in carrying out the law were first the President, through official pronouncements, executive orders, official approval of codes, and all other administrative acts for which he was responsibl >, and second the the Administrator charged with the administration of the law through his official acts in pursuance of the power entrusted to him. After the Administrator was superseded by the National Industrial Recovery Board, final authority was in the hands of the latter, action being taken therefore by the Administrative Officer. All official policy was derived from these authorities. 9846 -12- Within the 1I3A, in the rcrplict tion of the law and the developnent of codes for the various industries, policy ur.s developed, interpreted, and -applied throughout the whole organization whenever decisions were nr.de on policy questions. The individual deputies interpreted policy r.nd applied it as oest they could to the questions which erne to then. Divisional administrators were formally in charge of deternining nolicy in their respective divisions. All determinations of policy "by divisional r.dninistrr tors or deputies were tentative; and it er.rlyhecr.no necessary' centrally to formulate policy on various specific issues to insure that policy should do uniform throughout the organization. It will dc helpful to trace hero in this introduction the developnent of the policy organs that at different periods were active in forming r.nd formulating the guiding principles of the IffiA policy. Two lines of development of policy determination, formulation, codification, and application can he traced. The first was connected with the -orohlcn of the review of codes to insure the application of uniform policy concepts. This review led to attempts at codifica- tion of policy and to the preparation of the N2A Office Manual. The second was concerned with iDolicy determination, developnent and formulation and led to the* establishment of policy groups, councils, Dorrds, and committees which wore entrusted with the task of considering and formulating recommendations on natters of policy. 9846 -1 3~ A. REVIEW The need for the review of codes coming to the Administrator for approval was early recognized and an arrangement was made for review by personnel attached to the Administrator's office. As more and more codes were completed, this task became more arduous. A special section of the Executive Office was set up to review all codes. Office Order Ho. 65, dated January 31, 1934, recognized difficulties which had arisen in the review procedure and emphasizes the duties of the executive and code assistants in each industry division for coordination of the work of their divisions and for review of the codes before their reference to the Executive Officer. The whole matter was reorganized a few days later by Office Order Eo. 68, dated February 8, 1334, which created the Review division, and charged it with the duty of examining all codes submitted to the Administrator for approval to insure conformit5 r with established policy. Its functions included review of codes and orders submitted to the Administrator for approval, and review of approved codes to suggest amendments to bring them in line with established j^olicy. If changes appeared -ko be required by policy, the Review Division proposed such action to the division administrator concerned. In case of disagreement, the matter was referred to the Coordination Committee's final decision was of course in the hands of the Administrator.* Thus, the Review Division scrutinized each code as it passed out of the hands of the Deputy for conformity with established policy. In many cases also, questions were raised on matters on which policy had not been specifically established. ** Another function which the Review Division performed incidentally to the work of review was the compilation of principles of established policy. Such a compilation was of great value in facilite.ting the scrutiny of codes with respect to policy. In July, 1934 a •summary of established principles for the Review Division was prepared as a guide*** for use of the Review Officer. The Office Manual issued later, incorporated many of these principles in its formulation of model provisions and official policy. There was issued as of June 1935, a final restatement by the Review Officer of policy in effect prior to May 27, 1935, which constituted a proposed revised office manual.**** It should be stated, however, that all of the * This proceedure was changed somewhat by office orders 75 & 76. ** See History of the Review Division, February 8, 1934 to June 16, 1935. HRA Division of Review, Work Materials, #19, p. 18-20. *** Loc. Cit. p. 19, **** Policy Statements Concerning Code Provisions and Related Subjects, NRA Division of Review, Work Materials #20. This compilation contains many provisions which are given paragraph numbers in the Office Man- ual, which never had been issued to the deputies and hence did not exert any influence over the actual writing of code provisions. Also the Model Code included in this volume, apparently was never in the hands of the Deputies in this form during the life of the NRA. 9846 -14- statements of policy issued "by the Review division ( *) while serving as a guide to the^Review Officer and as an outline of policy for the deputies were not necessarily official nor did they have "binding effect. Only approval "by the Administrator, or later the 1T.I.E.B., was effective in actually determining and establishing policy. 3 . POLICY DBTBBMIHATIOIT The second line of development led to the establishment of policy- determining groups. During the summer of 1933, the Administrator met regularly with the principal staff members, heads of divisions, and representatives of the advisory boards and consulted with these staff officers in relation to various questions, including matters of policy affecting the content of the codes. In lid-September, a policy hoard was established with functions defined in general terms and not specifically limited to or concerned with the content of code provisions. (**) Early in January, 1934, the Policy Board -as reorganized hy Office Order Ho .55 (Jan. 6, 1934) and its functions -ere defined as being to "advise the Administrator on all natters of general policy arising in 1IRA and all other questions specifically referred to it." The method of reference to this board of all questions of policy was described in the order. The hoard concerned itself with comparatively few questions of policy touching the content and form of code provisions. Late in March, a Labor Policy Board was created by Office Order Ho .74 (March 26, 1934). The mandate was contained in the following words under the general heading "D . COZE ADMI1IISTPATI01T": "1. In order to expedite and coordinate decisions of administrative policy (not only as to approved codes in making and general policy questions as well); the following Policy Boards are established. These Boards will make recommendations to the Administrator and Trill advise Division Administrators on final decisions of policy on problems within their respective fields. The Hevie\7 Advisor" Board is invited to send representatives to attend any or all meetings of these Boards. (a) Labor Policy Board. (1) Scope. In general, this Board will consider all problems involving the labor provisions of codes and all Questions of labor policy. Typical problems within the field of this. Board are those involving hours and wages, differentials, conditions of labor, inconsistencies in codes for similar industries, etc. (*) They -ere "based uoon precedent'.:- in approved codes. (**) Office Order "do. 35, dated September 16, 1933. However, a "Policy Memorandum (confidential)", dated Octoher 25, 1933 presented certain decisions made by the Polic~ Board re- garding policy affecting code provisions. 9846 -15- (2) Personnel. Chairman ( to "be appointed by the Administrator ) . One representa- tive each from the Labor, Industrial and Consumers' Advisory Boards and from the Legal and Planning end Research Divisions." (*) A fen days later, April 9, 1934, this Labor policy Board was abolished and the Office of the Assistant Administrator for policy was erected by Office Order !To . 83. The Office of the Assistant Administrator for Folicy had one section devoted to the subject of Labor Policy, headed by L. C. Marshall, Deputy Assistant Administrator for LaDor Policy. A Labor Policy group, including representatives of the Legal Division, Research and Planning, Compliance Division, and Industrial, Consumers and Labor Advisory Boards, was formed to consider the formulation of general policy on labor Questions. Besides the function of formulating policy on labor in general terms, the Office of the Assistant Adminis- trator for policy had to pass upon specific questions of policy sub- mitted to it. (**) Subsequent chary es during this period involved the setting up of the Advisory Couicil as a body on which each of the advisory boards was rep- resented in order to make unified recommendations with respecy to the approval or disapproval of proposed codes in place of the separate recommendations by each of the Advisory Boards, as well as to constitute a board to make recommendations on policy questions. With the reconstitution of the Advisory Council, November 14, 1934, Office Memorandum No . 306, the Office of the Assistant Administrator for Policy was discontinued, and questions of policy were referred to the Advisory Council for its recommendations. It was also authorized to make recommendations on policy on its own initiative. (***) Finally, mention may be made of the Code Planning Committee, an informal group organized April 17, 1935, to consider the questions in- volved in drafting new model code provisions such as might be followed in revising codes after an extent ion of the NBA beyond its original termination date . Prom the point of view of policy determination, the whole NBA ex- perience may bo divided into the formative period, during which policy was gradually evolved as the majority of codes were written, but was not always clearly formulated, and the forraulative period, during which policy was formulated, refined and revised, and was the special province first of the policy Board and the Assistant Administrator for Policy, and later (*) Two other boards, The Trade Practice Policy Board and the Cede Author- ity Policy Board were also created but do not concern us here. (**) See Office Memorandum Bo. 207, March 17, 1934; Office Order No. 83, 83-A, and 74. (***) Expressions of the Advisory Council in the absences of the approval of the Administrator, or after him the BIBB, were not regarded as determinations of policy, but on doubtful points of policy were strongly persuasive. TTork Materials #19 p 17 Division of Review. 9846 -16- of the Advisory Council. The dividing point between these periods nav he taken as April 9, 197.4, when Office Order " T o . 83 was issued creating the Office of the Assistant Administrator for policy with the special function of studying and making recommendations on all questions of policy. This demarcation seems appropriate as the recognition by the^KSA that the "hole mass of policy questions deserved and required study and analysis by specially qualified personnel. 9846 -17- CHAPTEH II MIHIIIUM W A GE POLICY ' I. THE LAW ■ • ■ The statute contemplated that the codes of fair competition autho- rized "by it might contain provisions establishing minimum wages. Sec- tion 7 (a) included, as part of the conditions to be incorporated in each code, the following clause: "Employers shall comply with the maximum hours of labor, minimum rates of pay, and other conditions of employment, approved or prescribed by the President. 1 * Section 7 (b) authorized the President to approve agreements entered into between employers and employees containing, among other things, minimum rates of pay. Section 7 (c) further authorized the President, after investi- gation, to establish limited codes of fair competition including mini- mum rates of pay. It was thus contemplated that the codes of fair com- petition for the several industries should include labor provisions and in particular that these provisions should include minimum rates of pay for labor employed in these industries. By implication, and under the administration of the Act, all approved codes had to have labor provi- sions with minimum wage rates. With regard to the colicy governing the determination of minimum wages, the law contains a general statement of police and one limita- tion. The general statement of -oolicy in Section 1 of TilleTlcof ' ihe ITI HA includes the following phrases: "to increase the consumption of industrial and agricultural products by in creasing purchasing power.. " and "to improve standards of labor". These words justify the inferences that wages should be increased as one method of increasing purchasing power, and that minimum wa^es should be so set as to increase wages. (*) The only limitation upon minimum wage policy is contained in a clause of 7 (c), as follows: "The President may differentiate according to experience and skill of the employees affected and according to the locality of employment; but no attempt shall be made to introduce any classification according to the nature of the work involved which might tend to set a maximum as well as a minimum wage". This clause prohibit- ing the introduction of certain classifications seems to have referred more specif icallv to the skilled wage rates ra.ther- than to minimum rates themselves. (**) (*) These inferences are confirmed by the antecedents and the legisla- tive history of the 1JIRA. (**) Aplication was made in some cases to minimum rates when, for ex- ample, a minimum group average piece rate was adjudged to be contrary to this principle since it tended to become a maximum for the group. Lawson, William. Policies on Wages above the Minimum. 45 Section C '.7 o rk Has, t e t i al s - 9846 -18- The minimum wages contemplated in the law are not minimum-of -sub- sistence wages. On the contrary, by inference, they are to re-oresent an increase over what has teen paid, and lead to increased purchasing power. By inference, they are rates arrived at after negotiations-wages reached "by agreement "between employers and employees. The rights of labor to collective "bargaining are stressed. Section 7 (b) emphasized the duty of the President to favor establishment of minimum wages by mutual agreements between employers and employees. Though the minimum wage rates did not have to he reached hy collective bargaining between workers and employers, rates so reached might he incorporated in the codes. In the development of the codes, wage rates were the subject of negotiations between industry and the Administration, in many cases with union representatives as advisers. In respect to the emphasis upon negotiated or bargaining wages, the minimum wages of the codes represent a new development in minimum wage regulation in the United States. The implications of the law go even beyond this permission or authorization for negotiated minimum wages. The law was designed to "increase purchasing uower" and "improve the standards of labor". But even with bargaining between employer and employee existing before the law, wages had been slipping downwards, unemployment had been increas- ing, and it seemed impossible to halt the downward spiral. The law not only recognized the propriety of bargaining to set minimum wages; it definitely strengthened' the position of labor in the bargaining process. Furthermore, by giving to the President discretion in his approval of ^ the terms of the bargain, it authorized the Administrator to take posi- tion definitely to assist labor in getting a better bargain and to ask that the code minima as established should actually mean an increased purchasing wer of labor. C*) In return, valuable fair trade practice privileges and the suspension of penalties against restraint of trade were granted to industry. At all events, in judging the law and its results, we must keep in mind the psychological situation at the bottom of the depression in which the law was enacted. No detailed rules or guiding principles for determining minimum wages in the codes are laid down in the law. The only clause bearing upon the question is, "the President may differentiate according to experience and skill of the employees affected and according to the locality of employment", which applies specifically to the limited codes of fair competition prescribed after a study of hours, wages, and con- ditions of labor in cases where no mutual agreement has been reached. But this provision gives little or no guidance with regard to the basic problems of determining minimum wages, except as it appears to leave ...the matter in general open to the bargaining process. II. GE--.BAL STATEMENTS OF POLICY AMD OBJECTIVES A. 3Y THE PRESIDENT (*) Or at least an increase in money wage rates over what labor had been getting. 9846 -19- In NRA Bulletin No. 1, (*) issued June 16, 1933, the President stated.; (**) "In my inaugural I laid down the simple proposition that nobody is going to starve in this country. It seems to me to be equally plain that no business which depends for existence on paying less than living wages to its workers has any right to continue in this country. By "business" I mean the whole of commerce as well as the whole of industry; by workers I r.iacn all workers — the white collar class as well as the men in overalls; and by living wages I mean more than a bare subsistence level — I mean the wages of decent living. "Throughout industry, the change from starvation wages and starva- tion employment to living wages and sustained employment can, in large part, be made by an indistrial covenant to which all employers shall subscribe. It is greatlv to their interest to do this be- cause decent living, widely spread among our 125,000,000 people eventually means the opening up to industry of the richest market which the "'orld has known. It is the only way to utilize the so- callel excess canacitv of our industrial plants. This is the prin- ciple that makes this one of the most important laws that ever came from Congress because, before the passage of this Act, no such industrial covenant was possible. "On this idea, the first part of the act proposed to our industry a great snontaneous cooperation to put millions of men back in their regular jobs this summer. The idea is simply for employers to hire more men to do the existing work by reducing the work-hours of each man's week and at the same time paying a living wage for the shorter week. " According to the President, the minimum wages of the codes were thus to be "living wages". The point is expressly made that an industry or business which "depends for existence on paying less than living wages to its workers" has no right to continue in this country. By liv- ing wages he meant more than a bare subsistence level — "I mean the wages of decent living". So conceived, the objective of the Act was much broader in scope than of anv previously proposed minimum wage legi- slation. 3. BY THE ADMINISTRATOR In Bulletin No. 2, (*) issued June 19, 1933, General Hugh S. Johnson, Administrator for the NIRA, laid down general policies for codes. He emphasized that the codes were to be submitted by associations or groups, and that the initiative rested with industry both as to whether any code should be submitted and as to what it should contain. With regard to minimum wages, the following statement was made: (*) Basic Codes of fair competition. NBA Office Manual, V-3-3. (**) Statement by the President... Outlining Policie s of the NRA (Office Manual, V - B-l) 9846 -20- »Cb) Minimum wage rates should be sufficient to furnish compensation for the hours of work as limited, sufficient in fact to provide a decent standard of living in the locality where the workers reside." (*) (*) Bulletin No 2, is reproduced in NBA Office Manual, V-B-5. 9846 -Si- ll I. THE FIRST CODE The first code, approved July 9, 1033 was for the cotton textile in- dustry. It provided minimum wages of $13 and $12 in north and south, re- spectively, for a 40 hair week; these are equivalent to 32.5 cents and 30 cents per hour respectively. This was the first concrete embodiment of the "decent living wage" in a code of fair competition. It is important, there- fore, to note the rttitudc of the Administrator and the President in re- gard to it, and to examine the reasons _.iven for aDirovin: these rates, with especial reference to the question, to what extent did these rates reflect the policy of the Adnini strati on on minimum wages. The minimum rates of $13 and $12 represented a substantial advance over the wage rates prevailing in the industry. A statement by President McHahon of the United Textile Workers of America, stated, that "wages of 55 and $6 a week are common throughout the industry." President Green of the American Federation of Labor, stated that: !'12jo of all men employed in the cotton mills studies were receiving wages which averaged below $10 and in seme cases below $8 for a 53-54 hour week, (as of 1S32)." He reported the average weekly wage in the cotton c oods industry, as of the month of May, 1933, at §10.40* The Research and Planning Division of the National Recovery Administration secured from representative mills in the industry sample payrolls for north and south. "These payroll records show that minimum wages as of the low in March-April this year, applicable to between 10p and 2C$ of the payrolls, even in the neighborhood of $6 to SS.50 for the South for a 50 hour week and ^9 and $9.50 for the " T orth for a 48 hour week." (*) The Administrator stated that the guiding principle was to effectuate the policy laid down by the President. "The Idea is sinm>l~ r for employers to hire more men to do the existing work and a.t the same time paying a living wage for the shorter week. This policy sets as an objective and as a norm for the emergency at any rate the restoration cf the pur- chasing power which the worker in the industry had prior to the depression." (**) (*) ~ Code of Fair Competition for the Cotton Textile Industry as approved July 9, 1953 'oy President Roosevelt, Code of Fair Competition, Vol. I, p. 9. (**) Ibid, p. 11. 3,846 -22- An attcrr.pt was made to justify these minimum rates by showing that the proposed minimum represented an increase in real purchasing power over the rates prevailing in 1929. "Now in 1029, the average unskilled weekly wage in the North was $17.60 ($19.47 for male workers and $15.75 for female workers). This average unskill- ed wage for the forty-eight hour week has in the course of depression declined to a recent low point of $11.76 in April and $11.62 in January this year (for male workers, $13.25-$13.15 for the respective months, and for female, $9.96 and $10.37). During the same - period the decline in the cost of living as computed "by our Division of Research has amounted to about 30$. Applying the -nrogrcssive decline in livin & costs to the original $17.60 of 1929 weekly earnings, we obtain as a 'real' weekly earnings for May this -ear $12.16; that is, the present required dollars to give the 1929 purchasing power. We have to carry this idea of purchasing power wages one step further. For in a period of price increases living costs tend at first to lag behind the advance in the price level, which has followed in the wage of the end of the liquidity complex and deflation and the synthetic business and price recovery brought about since March of this year." "To lift up and provide adequate purchasing power, we should adjust 'real' wages to the moving trend of prices and living costs, else we shall be no mere effective than trying to catch a train moving out of the station by aiming for where the back platform was when the train was standing still. There has already occurred an advance of between 16$ and 20$ in certain comprehensive yet not ton insensitive indices of wholesale prices. In general the cost of living changes about 6$ for each 10$ change in wholesale prices due to the inclusion of certain relatively stable and slowly varying elements. It appears necessary then to anticipate and adjust for a rise of 10$ in the cost of livin L which as of May 1933 was 69^ of 1929 taken as IOC. This gives the figure of $13.21 as the requisite average weekly wages for unskilled male and female workers in For .hern mills to produce now on a forty-hour week the purchasing power which they had on a forty-eight hour week in 1929." (*) ( * ) lb i d, Vo 1 . I , p. 11 . -1846 .. -23- Finally, the ooint was made that these increases, which for certain mills would be substantial if not onerous, were about the limit of what could "be expected for the industry as a whole. According to the Division of Research the application of the minimum rates of $13 in the Forth end $12 in the South will mean that "the average mill wages throughout the country would be increased about 30$ and hours reduced over 25>o." "We arc increasing for certain mills unskilled rates enormously and total wage payments by about 2C r ' and lowering hours over 250. It is about the limit of present practicability." "~ . "Our studies show, however, that any larger wage increase would require such a mark-up as might impair consumption and so react unfavor- ably on "the President's whole reemployment policy." (*) So far as the "decent living wage" is concerned, the President wrote in his letter of transmittal, "approval of the minimum wages proposed by the Code is not to be regarded as approval of their economic sufficiency." (**) The an-oroval of the code was limited to a period of four months, after which the wage rates might be raised if the condition of the industry war- ranted. Review- of the case was a device which permitted the Administration to reconsider the whole question if new evidence justified or required an -increase in rates. It recognized the importance of evidence as a means of determining what the rates should be. At the same time the device tended to forestall criticism, since it could be urged that the rates wore temporary and that if sufficient convincing data could be assembled to demonstrate that an increase in rates was necessary or justified action could be taken promptly to. raise them. These outlines of policy were filled in by later developments. (l) Wage rates must represent a substantial contribution to increased purchasing power, (***) (2) Industry must not be unduly burdened, (3) Decision must be based upon evidence, (4) Low rates might be reviewed and revised after a short trial period, (5) The "decent living wage" remained undefined. (*) Ibid, n. 12, The rates of increase, 30'' and 20;.., appear in the nublished version of the letter of transmittal. (**) Paragraph 3 of .Executive Order approving the code, Ibid., p. 1. (***) In the sense of increased money wage rates. 9846 -24- IV. POLIC v 'A3 INDICATED IK THE PRA The President's Reemployment Agreement was issued July 20, 1933 as a blanket plan for covering all industries in advance of the actual writing of specific industry codes. It had become obvious that delays would ensue before codes for all thenajor industries coild be corrmleted. It was deemed to be important that industry be brought under the cede system as rapdily and as uniformly as possible to take advantage of the first enthusiasm for the codes. Delays in codifying some industries while cormeting industries were operating under codes might lead to difficulties. Furthermore, the precedent already set in the lew wage rates of the cotton textile code co- vering 483,000 employees, might "Drove embarrassing in obtaining a satis- factory standard wage for industry in general, unless it was offset by some definite pronouncements by the Administrator on the question of what the standard wage should be. Even though the second and third codes had re- latively higher rates, 45 cents and thirty-five cents for shipbuilding, (55,000 employees), and 35 cents and 32^ cents for wool textile (151,000 employees), they were relatively much- smaller industriesand their higher rates would not fully offset the precedent already set and publicized by the low rates of the first code. Prom the point of view of policy, therefore, the PPiA appears much more important than the actual provisions of the first few codes. Since it was designed to cover all industries, its provisions may be presumed to reflect the general purposes of the Act, as applicable to industry as a whole, in contrast to the situation with regard to a specific code, in writ- ing which the general mimosas of the Act may have had to be sacrificed t< the particular circumstances of the industry. ;o The President's Reemployment Agreement consisted of a contract enter- ed into between the individual employer and the president, signed by the employer voluntarily, (*) by which the employer agreed to reduce hoars and increase wages, and in return was allowed to display the Blue Eagle as a token of his having signed the agreement. The plan was to cover the period from September 1 to December 31, 1933, at which time, it was hoped, all the codes would be comoleted. (Subsequently this period was extended to April 30, 1934 (**), and later indefinitely (***) up to the time of adoption of a code for the industry.) The minimum v/age clauses in the PRA were as follows: (****) "(5) Not to pay any of the classes of employees mentioned in paragraph (2) less than $15 ;oer week in any city of over 500,000 population, or in the immediate trade area of such city; nor less than $14.50 per week in any 'city of between 250, CCC (*) Though subject to the pressure of public oninion in case of refusal to display the Blue Eagle. (**) Executive Order No. '6515, issued December 15, 1933, ITtA. Office Manual, V-C-16 (***) Executive Order No.. 6S78-A, issued Anril 14, 1'34, NRA Office Manual, V-C-29 (****) In EEA B U n c tin No. 4, What the Blue Eagle means to you and How You Can get It, paragraph 5 and 6 interpret these provisions. These require no comment here. > oc i46 -25- end 500,000 population, or in the immediate traau area of such city; nor less than $14 per week in any city of between 3,500 and 250,000 population or in the immediate trade area of such city; and in towns of lest than 2,500 population to increase all wages "by not less than 20 percent, provided that this shall not require wages in excess of $12 per week." "(6) Not to pay any employee of the classes men- tioned above in paragraph (3) less than 40 cents per hour unless the hourly rate for the same class of work on July 15, 1929, was less than 40 cents per hour, in which latter case not to pay less than the hourly rate rn July 15, 1929, and in no event less than 50 cents "cr hour. It is agreed that this paragraph established a guaranteed minimum rate of pay regardless of whether the employee is compensated on the basi-s of a time rate or on a piecework performance." These provisions, then, embodied the views of the President and his advisers on the substantive content of minimum rates. Forty cents an hour for thirty-five hours was the goal to be set as a general minimum rate for factory worker- ■ this meant $14 a week. (*) This standard was substantially relaxed, especially in the south and also in the smaller towns and villages by the clause that permitted paying the wage rates of July 15, 1929 pro- vided that thev were not less than 50 cents an hair. For clerical, office and sales workers the weekly rate for 40 hours was slightly lower than for factory workers and set on a scale varying according to the size of the community; it ranged from $15 in the largest cities to $14 in cities and towns from 2,500 to 250,000 population, while in towns and villages of less than 2,500 population no minimum was set, but it was merely requircu that wages shall be raised 2^ percent provided that this did not require wages in excess of $12 a week. Even these rates were speedily reduced in the ensuing adjustments to the specific circumstances of individual industries. It was possible f^r specific industries to sign the PRA and display the Blue Eagle as a token of adherence to the program, and Pay less than these minima, provided that they successfully Petitioned to substitute other rates for those of the blanket agreement.' This procedure required (l) that the industry submit a proposed code to the NBA in which the proposed substitute rates were in- corporated, and (2; that the proposed substitution receive the approval of the NBA (** ) . _____ ____ ' (*) 40 hours were permitted for not more than 6 weeks up to Dec. 31, 1933. (**) A statement of policies governing action on PBA substitutions is con- tained in Office Order No. 6, dated July 31, 1933. After a code was submitted by an industry containing the clauses to be substituted for the PEA paragraph, it was referred to the deputy to whom the industry or trade" was assigned. The deputy "shall examine such Code to deter- mine whether the designated provisions are in line with the PBA and will not authorize unfair competition with signers of the PBA and will substantially increase employment and total wage Payments m the trade or industry." -26- A study of the PEA substitutions shows some 252 cases of changes affecting some part of wage clauses, "(5)" and "(6) n . (*) In a few cases, these changes allowed apprentices or learners or others to work for less than the minimum rates. In a considerable number of cases (94) a southern or other geographical differential was applied for and approved. In the majority of cases the substitution reduced the wage rate as given in the PEA. In a few cases (13), the top wage rates were raised above 40 cents. (**) In a considerable number of cases the exemption for 1929 rates down to 30 cents was omitted. Female differentials were allowed in many cases. In practically all cases, therefore, these substitutions represented, in some respect, a reduction of the minimum as set forth in the PEA. These substitutions, then, raised the same questions that were being raised in the writing of code provisions. In approving these substitutions decisions had to be made on questions of policy. (***) The procedure de- veloped required approval by representatives of the Labor Advisory Board, Industrial Advisory Board, the Legal Division, end the deputy Administrator in charge of the trade or industry involved. The decisions were thus made after consideration of the various aspects of the question as it affected the parties at interest. So far as the substantive elements in the PEA substitutions arc con- cerned, they need not be discussed further, since in general they parallel- led the provisions in the codes. In some few cases, it is true, a PSA agreement covered an industry which never came under a code. In such cases, the PEA provisions applied to employers who voluntarily accepted it and its extensions. Perhaps it will serve to clarify the direction of policy in its further development to mention at this time a few points on which the code provisions departed from the PEA precedent. In the first place, the code provisions in general omitted refcrrence to 1929 rates on. the ground that such clauses were unenforceable. To find an employer guilty of paying less than the minimum, if the minimum were defined in terms of rates paid in 1929, would require a statistical investigation prior to bringing complaint. Secondly, and partly in place of the 1929 clause, population and geographical dif- ferentials were written into a large proportion of the factory or produc- tion worker minimum wage clauses. Thirdly, with respect to the office, (*) Most of these substitutions were contained in HEA Bulletin ITo. 6, Substituted Wages and Hours Provisions of the Presidents Eccmploy- ment agreement. Washington-Government Printing Off ice-1933-others in TEA archives. (**) In one substitution, all the rates were set at 40 cents or more. Terminal Elevator Grain Industry-NEA 3ulletin-!To. 6. Substituted Wages and Hours Provisions of t c Presidents Eeemploymcnt agreement- p. 213" (***) A Policy Board was set up by Office Order Ho. 1C, August 7, 1933 to pass upon all PEA substitutions. 9846 -27- clcrical and sales force group, the code minimum for towns under 2,500 population were written usually in terms of a definite minimum rather than in terms of a percentage increase, although a fev codr-s still fol- lowed the PPA form. (*) Finally, the codes in many cases provided for no geographic or population differential for clerical workers and in many cases raised the low rates of the PPA to a flat $16 a week compar- able with the PEA rate for factory workers. (*) For example, some of the retail trade group. 9846 -28- V. LATER NBA POLICY In the discussion of subsequent HRA. policy, the series of official and semi-official pronouncements on the subject from the various organs of policy in the NRA will "be reviewed. After this review of explicit policy, an analysis will be made both of explicit policy and of im-plicit policy as developed in the codes to show the position of the Adminis- tration on each of the several important formulations of -oolicy principles. The sources of these enunciations of explicit policy include the Review Division with its Guide (precedents) for the use of the Review Officer, and the Office Manual; the Policy Group and the Labor Policy Group, with. The Compendium of Abstracts of Policy and Other Statements, Suggested Labor Provisions for a General Code, and the Tentative Formu- lation of Labor Policy, (*) and the Advisory Council with its Decisions. After a review of these official and semi-official statements of policy, the discussion will turn to an analysis of each of the important principles of policy, as formulated and as applied in NRA codification. A. Review Division As already explained, the Review Division did not originate policy. Its function was, by advice and suggestion, to promote con- sistency of action throughout the organization .(**) It was responsible, furthermore, for compilations of policies as established in codes or approved in official decisions. These compilations, therefore, form an important source of information on policy. One of the early questions treated by the Administration, after the Review Division was established***) was whether it was possible to set up standards for minimum wages. The Review Officer held that such standards could be established and would be helpful in guiding the work of the deputies. The following comment on the subject is contained in a memorandum on labor policy, dated February 13, 1934. No standards as regarding minimum wages were officially set up. ii Colonel Lea, Dr. Wolman and Mr. Barrett were of the opinion that no standards for wages could well be adopted, but that on the con- trary, each case must be considered on its own merits. Mr. McGrady believed that standards should be adopted, and will make recom- mendations to General Johnson. Mr. Brown believed that standards should be adopted for the guidance of the organization. "( ****) (*) Mimeographed Documents in ERA Archives. (**) History of the Review Division, work material #19, pp. 18-20. (***) Office Order No. 68, February 8, 1934. NRA Archives. (****) Memo ty j^ lvin p rown> policies on Labor Provisions, February 13, 1934. Letter from Alvin Brown, Review Offi cer> to Hugh S. John- son, Administrator. 9846 -29- The Guide for use of officers of the Review Division in their re- view of codes submitted to them "by the deputies prior to approval by the Administrator or transmittal to the President, contained certain principles on wage policy. This Guide, (*) prepared in June 1934, and added to intermittently, embodied principles and policies developed during the previous NRA experience. (**) The following pronouncements on the subject of minimum wages are found in the Guide: (1) 'The minimum wage should as a "basic ideal in pursuance of the Act, provide a decent standard of living. (2) It should not, except in unusual instances, be less than the PEA' or substituted PEA provision. (5) It is desirable that such "basic rate, as far as is practic- able, approximate the minimum rate of 1929. (4) A minimum hourly rate less than 25 cents, except in rare in- stances, falls short of these "basic requirements. The ability of the industry to pay is suggested in this statement: (5) An industry whose labor costs are low in proportion to the total value of the product, is in a more favorable position to in- crease minimum. wage rates than an industry where the lahor cost is high. ,"-.", Departures from these standards might be permitted in certain cases: (6) It is permissible to allow a minimum wage rate, otherwise objectionable, becauseit is substandard, if industries under ap- proved codes, with like or similar provisions, are related with the applicant industry for the reason that any other action might work an unjustifiable hardship on the applicant industry. (7) It is suggested that- where minimum wage provisions are sub- standard but the condition of the industry precludes too great a change, that the Order of Approval provide that the Code Authority, through a committee, make a study of wages and hours in the indus- try looking toward measures which will enable an improvement in standards and shall report such study with recommendations to the Administrator within a reasonable -period. (*) Mimeographed Document , NBA Archives. (**) See History of the Review Division, February 8, 1934 to June 16, 1935. NRA Division of Review, Work Materials ¥0. 19, p. 22. The date of formulation of each of these principles does not appear in the Guide. 9846 -30- Ezcept as these -pronouncements were used as guides "by the Review Officer, they had no official standing; they were never approved as such by the Administrator or by the National Industrial Recovery Board, nor were they even issued as Administrative or Executive Orders. Nor were these "guides'' rigorous. (*) The codes which fell short of these requirements might he returned to the Deputy, hut he was at liberty to return them accompanied by argument and evidence to support his posi- tion that the provisions in question were the best obtainable. There- upon the Review Officer might recede from his position, or nass the matter along with his recommendations to the Administrator, or later to the national Industrial Recovery Board. The Office Manual was prepared by the Communications & Control after the middle of the year 1934. As the different sections were com- pleted, they were issued to the deputies for use within the NRA. Up to the time the Supreme Court decision was rendered, the section of the manual on minimum wages contained no statement of principles governing the setting of general minimum rates of pay. The model code provision in the Manual took the form: "Ho employee shall bepaid in any pay neriod less than at the rate of __ cents per hour, except as otherwise herein pro- vided." (**) At the time of the Supreme Court decision, the Review Officer was engaged in preparing a revised office manual, which, issued under date of June 12, 1935, contained the following clauses on minimum wages: (***) " Standard for minimum wage The requirement of a minimum wage is that it affords to the employee a decent standard of living. This guide is, of course, incapable of exact application. It will vary according to con- siderations of geography, population, and price levels. Other factors will be pertinent in particular cases. ¥.o absolute cal- culation is practicable. The wage actually paid in 1929 will be of considerable significance in most cases as a test of the appli- cation of the standard." Ibid, p. 21 (*). The specific guides, as distinguished from general formulation, were based upon precedents in definite cases approved by the Administration: these -precedents when applied to cases with substantially identical circumstances would be rarely upset. (**) Office Manual, Tart II, Sec. 1311.11 (***) Policy Statements Concerning Code Provisions and Related Subjects. KRA Division of Review, Work Materials #20. 9846 -31- 1 ' A mount of minimum wage Analyses of present conditions show that minimum wages. of 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. For departure from them for whatever reason the burden of adequate showing is on the proponent . (Model, 401, 402)." Ibid, P. "21. ■;, " Wage rates in allied codes Uhere rates have been established .in one code, there is a presumption for similar rates in the codes of allied industries, both because of the finding of fact in the first instance, and becau.se disparate rates would be discriminatory." Ibid, p. 21. " Industries allied to agricu lt ure Since it is recognized that living costs in agricultural communities are relatively low, there is a presumption of propri- ety of lower wage rates in industries allied to agriculture." Ibid, p. 22. The same publication also contained a Model Code, with clauses as follows on minimum wages: " Minimum wages Section 1. No employer shall pay any employee in any pay period less than at the rate of 40 cents per hour, except as otherwise herein -provided." Ibid, p 53, ; " Office and clerical employees Section 2. ■ No employer shall pay any clerical or office em- ployee in any pay period less than' at the rate of $15 per week." Ibid, p.53. It has been noted that this revised and amplified Manual was not in the hands of«any deputy or officer of the NBA during the formulative period and hence did not influence policy. Its value, therefore, con- sists in its being a summary of the policies as understood by the Re- view Officer. So far as concerns the 40 cent rate recommended in the manual and in the "model code" draft above referred to, this constitutes a "standard" such as official policy had repeatedly refused to sanction. No other model code contained any definite standard of hourly rates. This standard of 40 cents cannot be regarded, therefore, as. part of officially approved and formulated '.policy. 9346 -32- B. The Policy Group From the Compendium of Abstracts of Policy and Other Statements Issued "by the Policy Group, (*) the following statements on minimum wage policy are pertinent: "Labor provisions to conform with K11A. policy must restore em- ployment and increase purchasing power to such an extent as can he reasonably "borne "by the industry involved in relation to com- peting and similar industries and in relation to other costs. If this test has been met, in no situation is any particular figure for minimum wage or maximum hours so contrary to what policy ought to be that we should disapprove it. Discretion of the Division Administrator in charge of the code as guided by his Deputy is the controlling factor in such situation, unless there is evidence cf abuse of discretion." (**) This general statement of policy is perhaps the clearest state- ment u-o to that time (Hay 17, 1934) on the policy of the NBA on measur- ing 'the minimum wage of codes. The position thus taken is that the minimum rate must depend upon the situation in each industry, or more specifically, upon the ability of industry to pay as judged by Com- petitive position. If the minimum rate means a substantial increase in wages and as much as the industry can reasonably be expected to bear, it would be approved by the Policy Board as fulfilling these purposes of the Act". It should be noted that this completely nullfies the* "decent standard of living" doctrine as part of minimum wage policy. The statement of policy on this point is amplified by the follow- ing statements: . .'• , "TThere it can be shown by the deputy that the labor provisions substantially improve the lot of workers and are the most stringent that can be obtained by the deputy, the matter i s with- in the realm of administrative discretion and the Division Ad- ministrator should be entitled to determine an issue of detail." "The policy requirement on minimum wages is that the industry contribute purchasing power as much as can be reasonably borne. Any arbitrary figure considered as minimum for living purposes may be too high relative to conditions in a particular industry." (*) Mimeographed Document in HBA Archives. (**) To Administrative Officer, May 17, 1934, re Code for Alcoholic 3everage Wholesale Industry, Compendium, Page 15. Since the code rate for this code was 45 cents, the issue raised was evi- dently on the question of policy with respect to minimum wage rates over 40 cents. (***) To Division Administrator, Division Six, May 24, 1934, re Code for Bottled Soft Drink Industry, Compendium, Page 16. (****) To Administrative Officer, May 17, 1934, re Code for the Cotton Pickery Industry, Compendium, Page 15. -33- A decision "bearing on the question of revision of the wage rate at a later date contains the following: "The wage rate should he reconsidered at a later date, if it appears that the industry is not contributing to the purchasing power of workers to the extent that might he reasonably expect- ed." (*) A later statement on the same question is as follows: "Ordinarily, the question of the proper minimum wage rate should he within the discretion of the Division Administrator, hut when it is agreed that the proposed rate is not likely to effectuate the purposes of the HIEA, it is a policy issue whether or not it should he allowed to' stand. Serious consideration should he given to an upward revision of the rate hut if, because of the status of code negotiations, it is deemed too late to undertake revision, the order of approval should provide for revision of the code at the end of three months and should include a clear statement to the effect that changes in the code to bring it in line with poli- cy will be made at the end of three months unless the industry produced evidence that such changes would, not be warranted." (**) One decision relates to the form of wage statement as follows: "Wage provisions referring back to 1929 wages should be stricken from the code. 11 (***) It is clear from these statements issued by the policy G-roup that the determination of minimum wares in each code was in general based upon a showing that the pro-nosed minimum rates were actually such as to effectuate the purposes of the Act, namely, to contribute to increasing -ourchasing power of workers subject to the special conditions prevail- ing in the particular industry. Wide discretion was given. to the division Administrator and the deputy in accepting evidence as present- ed with respect to the industry seeking a code. With regard to the (*) To Administrative Officer, May 16, 1934, re Code for Bicycle Manufacturing Industry, Compendium, Page 15. : (**) To Acting Division Administrator, Division Three, September 14, 1934, Compendium, Page 21. (***) To Division Administrator, Division Four, August 8, 1934, re Code for Pacer Dress Pattern Industry, Compendium, Page 20. 9846 -34- "bottom limit of minimum wages, the Policy Board refused to set a minimum even for decent living arid indicated that the special condi- tions of the industry were of paramount importance. This statement of policy appears to negate the statement "by the President (in NRA. Bulletin No. 1) that, "it seems to me to "be equally plain that no "business which depends for existence on paying less than living wages to its workers has any right to continue in this country". The statements of the Policy Group had no official standing until approved "by the Administrator cr issued in Executive Order or Adminis- trative Orders. They constituted recommendations which, however, tended to determine policy within the organization until they were overruled "by appeal to the Administrator or the President. C. The Labor Policy Group During this period the Labor Policy Group was engaged in preparing a draft of a model code. A draft dated June 2, 1934 contained the following clause on minimum wages: "Ho employee shall "be paid in any pay period less than at the rate of '$13 a week except in , , , , and , in which states no employee shall be paid in any pay period less than at the rate of $12 per week." A memorandum of the Labor Advisory Board commenting on this draft states: ''Section 5. The weekly quotation is delusory; the rate should be hourly. It should be more than $13 which is 32.5^ per hour. The blanks constitute an incitement to Southern differentials." Under date of June 8, 1934, a draft of Suggested Labor Provisions for a General Code was prepared. The minimum wage clauses are pre- sented here lo show what was being suggested for consideration. "ARTICLE II. WAGES . "Section 1. Minimum Wages : The clause to be used for this nurpose might appropriately take any one of three forms. These three forms are given below in the order of the preference of the Labor Policy group. . (A) A clause to be worked out thus: The suggested -orovisions in the codes still to be approved should be studied from the eoint of view of the relationship of these industries to industries in which codes have already been approved; and minimum wage provisions should be drawn which will be harmonious with those of the existing related codes. It would probably require then days or two weeks to complete such a study and, as is evident, this -procedure would result in varying minimum wage provisions in the codes still to be approved. If the exigencies of the situation do not permit the utilization of this method, the grouo recommends the use of Clause B or Clause C below. 9fW.fi -36- Administ ration, tc provide a recent standard of living. 2. The basic minimum rate, as stated in the codes, is; typically to be applied to unskilled workers. Common labor is a rcase in point, without being the only possible case. 3. It is desirable that the basic minimum rate approximate, so far as is practicable, the cor- responding rate of 1929. 4. The minimum wage should be stated clearly and definitely. It is contrary to oolicy to state it in terms o^ a relationship to some ore- vailing wage as of the year 1929 (or otnpr date), since such method of statement introduces uncer- tainty of meaning and spells difficulties in com- pliance. 5. The minimum rate should not, except in un- usual circumstances, be less than the P.'R.A. or substituted P.R.A. provision. 6. The basic minimum wage may properly vary as among the different classes of workers. In gen- eral, for manufacturing industries in the North a rate of forty cents per hour for production em- ployees has come to be regarded as a reasonable basis; just as a minimum hourly rate less than twenty-five cents per hour in any district has come to be regarded as falling snort of basic re- quirements and to be approved, only in rare and unusual circumstances. For clerical or office employees a wage stated at the rate of fifteen dollars per week has come to be regarded as an appropriate wage in Northern districts. 7. It is standard practice to provide that "this Code establishes a minimum rate of nay whicu shall apply irrespective of whether an employee is compensated on a time rate, piece- work, or other basis." 8. Although piece-rate workers may properly be protected by a provision that they shall not get less than the minimum wage, it is contrary to policy to insert piece rates in a code except under .unusual circumstances. Typically, piece rates are attached to work requiring a higher grade of skill than applies to the minimum wage; and, typically they are an appropriate subject for collective bargaining rather than specific fixing by code . 9846 -37- 9. If the condition of a particular industry is such as to preclude, for the present, a minimum rate which may be characterized as standard, the order of aooroval may properly provide tnat the Code Authority, through a committee, shall rmke a study of wages and hoars in the industry, look- ing toward measures which will bring about an im- provement in standards. Such a study, with recom- mendations to tne Administrator, should be re- ported within a reasonable, specified period. 10. For a given applicant industry it may some- times be permissible to allow a sub-standard minimum wage rate if industries already under approved codes, having a similar provision, are so related to the applicant industry that any other course of action would clearly work an unjustifiable hardship on the applicant industry. In such event, however, these substandard provisions should be allowed only until a change is effected in the code of the other industry or industries, and procedures should be set up looking toward bringing about this change . " ( * ) The document was mimeographed and circulated in the NBA for com- ments and criticisms. Many comments were received from the Advisory Boards and Deputy Administrators. Nothing further was done with this Tentative Formulation of Labor Policy; the Labor Policy Group disap- peared with tne appointment of its chief member to the National Indus- trial Recovery Board, and the Advisory Council took over the functions of the Policy Group. No official aporoval was given to this tenta- tive formulation. D. The Advisory Council The decisions of the Advisory Council contain certain pronounce- ments anu recommendations on minimum wages. One dealt with the mini- mum wage rate in the jeweled watch industry. The rate in the proposed code was thirty-five cents; the Labor Advisory Board and the Review Division recommended forty cents. The representatives of the industry stated that piece rates were commonly paid in the industry and that such piece rates were set so as to enable skilled workers to earn thirty- eight cents an hour. A code for a competing industry, the Assembled Watch Industry, provided a minimum rate of forty cents. After hearing the deputy in charge of the code 'and obtaining the evidence of the Research and Planning Division, the Advisory Council recommended tha.t the proposed rate of thirty-five cents be disapproved. As to how miich.iihe rates should be, the Council considered that the; r did not have sufficient (*) Tentative formulation of labor policy (mimeographed document in NRA Archives, pp. 5-6. 9846 -38- f actual evidence to determine that question. (.* ) Another case was the question of the rate in the Pecan Shelling Industry. The code as presented set a minimum of sixteen and one-half cents for the north and fifteen cents for the south. Gn the ground that proposed rates -represented a considerable increase over those pre- vailing in this highly seasonal industry, the Advisory Council recom- mended the immediate approval cf the code in order that they might be made effective for the current season. They recommended also that investigation be made and a report be -prepared within 120 days. (**) The Advisory Council's recommendations, like those of the Policy Group, had no official standing unless approved by the Administrator or the National Industrial Pecovery Board or unless issued as executive or administrative orders. Nevertheless, within the organization these recommendations were considered, as definite statements of oolicy formu- lated for the guidance of deputies and division administrators. E. Code Planning Committee This recital of the work of group concerned with labor policy would be incomplete without reference to the Code Planning Committee, an organization formed in April 1935, with the purpose' of drafting a model code that should meet . requirements for revision and redrafting of all codes contemplated or in prospect under new legislation which Con- gress was expected to enact. This committee held a number of meetings, but its deliberations did not go far because they were interrupted by the decision of the Supreme Court. Its formulations were still in the tentative stage, and while some of them were submitted to the Advisory Boards for their opinions, none of tnem has reached the stage when they could be considered as carrying the stamp of approval of the Administra- tion itself. A memorandum of the Labor Sub-Committee of the Code Planning Committee made tne following recommendation on tae "decent standard of living": "It is our recommendation that the NRA set up a separate board with power to render decisions and to have this board establish, in the public interest, a single standard of decent living, applicable to unskilled labor at a cost of maintaining that standard in different areas of the country. This board shall be removed as far as. possible from industry, labor and politics. (*) Advisory Council Divisions, Vol.1, p. 48. Decision No. 53, October 19, 1934. (**) Advisory Council Divisions, Vol*, p. 49 Decision No. 54, October 20, 1934, Pecan Shelling Industry. The Code was approved by the U.I.E.B. Oct. 23, 1934. 9846 -38*- "It should make a 'preliminary estimate for immediate use which should oe subject to revision as raoidly ns data can be obtained. Industry, labor and consumers should be allowed to submit to such t board at bay time factual evidence showing that + .ie costs should be changed. "It is also our' recommendation txiat this board utilize people who have had experience in this work at least for writing the original tentative determination. Also cooperation with the F.JS.R.A. should be facilitated as they have a parallel problem." (*) (*) i'emorandum of Labor Sub-Committee of Code Planning Committee on Labor, bay 23, 1935, in N.P.A. Archives. 9845 -40- F. Statem ents on Policy by the President, the Administrator , or the IT. I.B.E . Comparatively few formal statements on minimum wage policy were issued by the President, the Administrator, or the II IBB subsequent to the PEA and the first code. In the letters of transmittal and approval of codes, after the first, comments on policy are few. As more and more codes were prepared, the letters of transmittal tended to become stereo- typed; of those that included more than the brief form letter, some con- tained a summary of code provisions, others included a discussion of the economic effects expected under the code, with in a few cases a state- ment bearing upon policy. In the next section such policy statements, as well as the provisions of codes, will be analyzed and summarized in so far as they throw light upon policy. Apart from these letters of trans- mittal and approval, the following statements on minimum wage policy are worthy of mention. At a general public meeting, or hearing, held February 27, 1934, General Johnson in his address laid stress among other things upon the need for "uniformity of wages and hourly rates in competitive industries" and furtner reduction in hours per week and further increase in hourly wages. " (*) _ _ Early in March, 1934, a series of meetings of industry code author- ities and trade association code committee members was held. In order to promote furtner reemployment, the proposal was made to reduce hours of labor by an additional ten percent, substituting a 36 hour week for the standard 40 hour week. All codes already written or in progress were to be revised in accordance with the new standards. Weekly wages were to be maintained, notwithstanding this reduction of hours. The re- duction of ten percent in hours was to be accompanied by a corresponding ten percent increase in wage rates. This proposal thus embodied a prin- ciple of maintaining' weekly pay. The address of the President to the general conference, March 5, 1934, contained this statement: J'We must now consider immediate cooperation to secure increases in wages and shortening of hours. . . Seductions in hours coupled with a decrease in weekly wages will do no L ,ood at all. ..'"'(**) (*) "Before we open this hearing, it may be appropriate to say what we already know from all these sources need immediate attention. "3. Uniformity of wages and hourly rates in competitive industries. "5. Further reduction in hours per week and further increase in hourly wages. " Address delivered by national Becovery Administrator Hugh S. Johnson, before opening session of General Public Meeting, February 27, 1934, 11 A. M. , Department of Commerce Building Auditorium, Washington, D. C. .Broadcast over National Broadcasting Co. Network. NBA Belease No. 3507, p. 4. NBA Archives (**) Address of the President of the United States, General Conference, on March 5, United States News, Vol.2, #11, March 16, 1934, Extra NBA Edition. 9846 -41- A statement 'oy '-eneral Jolinson shows the details of the proposal. "There are some industries that couldn't do what I tentatively suggested ah out wages and hours.... But there are many that ob- viously can— and ought to — meet the suggestion to work on a 10$ decrease in hours per week and a 10fa increase in hourly wages." (*) . This effort to shorten hours and increase pay net with little success. Its importance for policy lies in its emphasis upon the maint-enance of weekly earnings. In connection with hearings on the employment provisions of the codes, a statement of policy issued by the NIPJ3, January 17, 1935. is perhaps worthy of mention, though the paragraph relating to minimum wages contributes little beyong an endorsement of the idea of minimum wages. The position of the board at that time was stated to be "That a minimum wage structure is socially beneficial not only as a safeguard to the worker but also as a wage floor for the operation of the competitive system and therefore should be maintained. It would seem, however, tha.t greater simplicity and uniformity, especially as among related industries, could be brought about in the minimum wage provisions of the codes. These matters, together with the general level of the minimum wage structure ant the considerations which should govern in setting that level, are appropriate subjects for the presen- tation of evidence," VI. SUMMARY OP PHIPCIPLPS OP POLICY In summary, the principles of policy followed in fixing minimum wages may be grouped under two general heads: first, a standard of decent living, and secondly, increase in the wages of labor. A. The Decent Living Though the decent standard ."the wages of decent living"- was mentioned definitely by the President in his first pronouncement on the subject of wages in codes, there is little evidence that it was a factor in setting actual rates. The attitude of the Review Division was indi- cated 'oy its characterisation of this standard as a basic ideal. "The minimus.: wage should as a basic ideal in pursuance of the Act provide a decent standard of living*" (**) (*) Ibid, p. IS. Address of National Recovery Administrator .Hugh S. Johnson. (**) See above p. 29. SZkG . -42- The concept was never defined either in terns of the substantive content of the standard or in terms of how ranch none;- it would require to maintain it. (*) do .official pronouncement was ever made to the effect that any given sun was sufficient. In the letter of approval of the Cotton Textile Code, the President disclaimed that the rates of $13 and $12 set in that code -,/ere regarded as economically sufficient to maintain decent living. (**) To declare that any given hourly rates, without reference to the time actually to be vorred during the week, were sufficient for decent living would have been open to serious objection. It was presumably accepted policy not to set any definite sum as "sufficient" for decent living. Such an announce: lent might have operated to fix an upper limit to minimum wages; it night even have been interpreted as suggesting a principle that labor was not entitled to more than a. "decent living" as thus recognized. TJhile no official definition of "decent strndard" was given, in practice Administration pressure to raise wage rates on the ground that they -/ere so insufficient for "decent living" as to cause criticism of HRA policy was not in evidence in cases of minimum wages of Uo cents an hour or more. In other words, the presence of the 4.0 cent rate in the PEA and in the majority of codes might be regarded as evidence that the insistence - upon the principle of a decent standard in the NRA. did not play any part in raising minimum r-tes above kO cents. This view of bo cents as a "reasonable basis" is expressed in one of the statements issued by the Labor Policy Group and quoted above. (***) The Revised Office Hanual of June 12, 1935 also in eludes an inference to the same effect. (****) (*****) The principle of "the decent living" finds application -There pro- posed wage r tes -.ere considered insufficient for decent living. Darin,": the HRA period, the P.eview Division guide for review officials included a statement to the effect that "A minimum hourly 'ate of less than 25^, except in rare instances, falls short of these basic requirements." of the "decent living" standards. However, rates as low as 15' cents an hour actually were approved in codes in certain cases. Pour codes without differentials had rates below 25 cents, while of the codes with differ- entials, 19 had rates for at least one area below 25 cents besides 11 (*) Except as noted below, . . ' (**) See above, p. 23. (***) Page 36 Paragraph S. m his had no official approval. (****) See above, p. 31 » r -'his had no official approval. (*****) An allied rucstion arose with regard to differences in the cost of decent living in different sections of the country. This problem raises the issue whether the principle of decent living is to be interpreted as meaning that labor in each section is entitled to no -.ore than the decent living, or to no more than the same percentage of the decent living in different sections of the country. This question will be treated under the subject of wage differentials. 9S^6 -43- coo.es ^ith no lower limit set in the codes. (*) Exceptions merely meant that the principle was not applied. The President's statement, in NKA Bulletin ITo. 1, and quoted above p. 00, that, "no business which depends for existence on paying less than living wages to its workers has any right to continue in this country", expresses a policy that would give the principle of the decent living real meaning. In practice it was negatived by the Policy group's pro- nouncement which in effect recognized the economic condition of an in- dustry as the governing element in the situation. (**) "Any arbitrary figure considered as a minimum for living purposes nay be too high rel- ative to conditions in a particular industry." And the Advisory Council in its decision on the Pecan Shelling Industry recommended approval of the code with Vj cents in the south and 16-%- cents in the north, on the ground that these rates represented a substantial increase in rates actually paid. As a principle for determining minimum wages, the decent standard was not effective. Approval of codes did not signify that their minimum rates '.'ere considered to be sufficient for decent living. As .an influence, the importance of the principle lay in its reinforcing by its appeal to conscience the significant principle of increasing the wages of labor subject to the ability or inability of industry to pay. At the same tine, the importance of the concept in strengthening the position of the Administration in demanding increases in wages where they were low should not be underestimated. This was a very real force. Its effect is shown in repeated cases where prevailing low rates vere raised by much larger percentages than were required in industries with prevailing high rates, -he low wages in the south received larger per- centage increases under codes than the higher wages in the north. Low wage industries in a number of cases reported increases in wages under the codes of 100 per cent or more. Even though the minimum rates in the code judged by the standard of decent living, were still low, the sub- stantial gains reveal the influence of the concept in raising low wages proportionately much more than high wages. (*) Eleven codes in met, 11 and Wholesale Trade and Pinance provided no lower 1 imit in towns of less than 2,500; in these towns wage rates were to be increased 20^ provided tlir.t this did not require an increa.se to over $12 a. week. (**) See above, p. 32. 92U6 -44- 3 . Increa s e in '..'ages Other principlos .".irected toward the increase of purchasing power of labor and raisin; the standards of labor ma;' be grouped under the general heading "increase in wages". How much of an increp.se in wages, whether .an increase in weekly wages or in hourly '..'age rrtes, was required, the limits of increase and the qualifications limiting the application of the principles are problems of definition of policy on minimum wages. The actual fixing of the rates was left, in general, to the discretion of the deputies, subject, of course, to the approval of the division admin- istrators and to review. The principles followed by the deputies in determining the rates and by their superior officers in reviewing and approving them are the principles sought. In practice, this discretion gave to -the deputies the power to decide as between different and partial- ly contradictory principles in their application to the particular case. In addition it probably included a certain range of arbitrary power to approve rrtes that nay 'not have coincided with any of these principles. These principles Lave both positive and negative aspects, the positive side stating the principle for raising wages, the negative the limits and qualifications to the application of the principle. In final analysis, these principles must be related to the living standard of the worker, and to the market or competitive determination of the wage. The role of ne jotiation in reaching the final adjustment must also be borne in mind. 1. By A Substantial (Satisfactory) Percentage (a) Some Increase Essential Some increase in wage rates appeared to be essential under the law. (*) If minimum rates as incorporated in the code did not mean any increa.se in wage rates, they were subject to legal objection that they were not in accordance' with the act. The act specified increase in purchasing power, but a mere sharing the available work with a larger number of employees at the same hourly rates would not increase payrolls. Evidence that this was a principle actually followed would consist of cases where proposed codes were sent back and. refused approval because of failure to raise wage rates. This principle in fa.ct was often appeal- ed to during the course of negotiations by the deputies and by labor ad- visers or by representatives of Research and planning. A statement of the Folicy Group refers to this point: "Ordinarily, the yuestion of the proper minimum wage rate should be within the discretion of the Division Administrator, out -.'hen (*) The phrase in the lav; wa.s "increase in purchasing power." Herely sharing available work among a larger number of v'orkers at the same rates per hour would not increase purchasing po'"'er. For this objective an increase in rates per hour was indicated. On the other hand, too high an increase in wage. rates might reduce employment so much as to reduce total purchasing power. In cer- tain circumstances any increase in wage rates : ight conceivably diminish total purchasing pe'er, and it night even be argued that in some cases a. ".ccrease in rates might increase total earnings. Qohf. T ^ e latter view had few, if any, adherents in the Administration. -45- it is agreed that the proposed rate is not likely to effectuate the purposes of the III3A-, it is a policy issue whether or not it should' be allowed to stand," (*) 1QA, Archives, p. 21 - (KimeographecL do cm :ent) (b) Increases Under the First Code The letter of transmittal of the first code suggests that the minimum rates of the code would increase average mill wages through- out the country by about 30$. (**) On the basis of sample studies of wage earnings in the Cotton Textile Industry made b7 the Bureau of Labor Statistics, it is estimated that S5;1 of the workers -/ere receiving at or less than the minimum rates in the code. (***) Mention is made that during the low in Llarch - April of 1933. wages of $E> - $8.50 for the south for a 50 hour week and $9 - $3.50 for the north for a *+8 hour week were applicable to between 10 and 20 per cent of the payrolls. The code minimum for a *+0 hear reek of $12 for the south and $13 for the north may be said to represent a substantial increase for these minimum rate groups. Arguments justifying the proposed rates include other points to be mentioned below. The letter of transmittal gives the impression that the increases obtained were substantial enough to satisfy the Admin- istration. (c) Increar.es Under the ERA and PPA. Substitutions Under the PPA, the blanket wage cf UO cents an hour was modified by a series of approved substitutions, granting, in most cases, lower rates than the standard. This complicated system of minimum rates makes it difficult to determine how much of an increase in wage rates the PPA. as a whole obtained. Put in the provision for wage rates for clerical, office, and sales employees in towns of less than 2,500 in lieu of a minimum rate, the requirement was made that all wages be in- creased by 20 per cent, provided that this did not mean an increase to over $12 a week. This suggests that a 20-1 increase in wages was deemed comparable in amount with the other increases expected. A review of the work of the PHA Policy Board, written in October, 193*+, — i.e., a year or so after the Board was dissolved — states that in passing upon petitions for substitution, (*) To Acting Division Administrator, Division Three, September lU, 1934.. Compendium of Abstracts of Policy and Other Statements Issued By the Polic3' - C-roup, p. l6. (**) See above. (***) Estimated from data in A. P. Hinrichs, Uage P.ates and Ueekly Earn- ings in the Cotton Textile Industry 1933-3*+. Monthly Labor Review, Vol. *+0, , T o. 3, March 1935 - p. 6l8. '„gl+6 -46- "a 25$ increase in rrages. (i.e., wage rates) and a 25p decrease in hours over Jul;* 1933 was considered satisfactory. " (*) A memorandum from Robert K. Straus, ~::ecutive Secretary of the PRA Policy LDorrd, states, "5. The PRA Folic; - Uoard having established in its own mind what its outside li;:it of approval would bo, examined each individual ap lication for substitution on the basis of two qxiestions: (a) TJhat was the percentage wage increase proposed, whether on an hourly or weekly basis, as cor/oared with 1923 and July 1, 1933"; (b) ".That ras the reduction in weekl"* hours proposed, as conparcd \lth 1929 and July 1, 1933. "7e considered 'chat a twenty-five per cent ir>cre-.se in wages and a twenty— five per cent reduction in hours r„s " compared with July 1, 1333» TC-s satisfactory." (**) (*) Memorandum fro:: ':. P. 3oyd, Assistant Secretary" to the PRA- Policy Board, to L. C. Marshall, on the "sub-ject, PfA Policy 3o?rd, dated October 5, 193^, p. 3. N.R.A. Archives (**) Memorandum from P.ohcrt K. Straus to Helen Bo- -d, dated October h, 193^» "in response "our imruiry Tor a brief summary of the work of the PRA Policy Board for the benefit of the Lh:ecutive Secre- tary of the illRB. 11 II. R. A. Archives. 92U6 -45- it is agreed that the proposed rate is not likely to effectuate the purposes of the 17I3A, it is a policy issue whether or not it should he allowed to stand," (*) IQA, Archives, p. 21 - (llimeographed do cm :ent) (b) Increases Under the First Code The letter of transmittal of the first code suggests that the minimum rates of the code would increase average mill wages throu^tt- out the country by about 30^. (**) On the basis of sample studies of wage earnings in the Cotton Textile Industry made by the Bureau of Labor Statistics, it is estimated that 85;1 of the workers were receiving at or less than the minimum rates in the code. (***) Mention is made that during' the low in Ilarch - April of 1933. wages of f)S - C ; S«50 f° r the south for a 50 hour week and $9 - $3.50 for the north for a kS hour week were applicable to between 10 and 20 per cent of the payrolls. The code minimum for a kO hour week of $12 for the south and $13 for the north may be said to represent a substantial increase for these minimum rate groups. Arguments justifying the proposed rates include other points to be mentioned below. The letter of transmittal gives the impression that the increases obtained were substantial enough to satisfy the Admin- istration. (c) Increases Under the PSA and PEA Substitutions Under the PEA, the blanket wage of UO cents an hour was modified by a series of approved substitutions, granting, in most cases, lower rates than the standard. This complicated s: r stem of minimum rates makes it difficult to determine how much of an increase in wage rates the PRA as a whole obtained. But in the provision for wage rates for clerical, office, and sales employees in towns of less than 2,500 in lieu of a minimum rate, the requirement was made that all wages be in- creased by 20 per cent, provided that this did not mean an increase to over $12 a wee]:. This suggests that a 20$ increase in wages was deemed comparable in amount with the other increases expected. A review of the work of the PEA Policy 3oard, written in October, 193U, — i.e., a year or so after the Board was dissolved — states that in passing upon petitions for substitution, (*) To Acting division Administrator, Division .Three, September lU, 193^. Compendium of Abstracts of Policy and Other Statements Issued By the Policy Croup, p. l6. (**) See above. (***) Estimated fro:: data in A. P. Hinrichs, yage Bates and Ueekly Earn- ings in the Cotton Textile Industry 1333-3^. monthly Labor Review, Vol. kO, .-.0. 3, Ilarch 1935 - p. 6lS. ,346 -46- "a 25^ increase in -.rages : (j/. ! e. , wage rates) and a ?5d decrease in hours over July 1233 w ^s considered satisfactory." (*) A memorandum from Robert K» Straus, Executive Secretary of the PRA Folic - / Uorrd, states, "5. The PSA Folic: - Hoard having established in its ov:n mind what its outside li::it of approval would bo, examined each individual ap; lication for substitution on the basis of two questions: (a) TThat was the percentage wage increase proposed, whether on an hourly or weekly basis, as conpared with 1Q29 and July 1, -1933; (b) TThat was the reduction in weekl - " hours proposed, as conpared with 1929 and July 1, 1333" 7e considered that a twenty-five per cent increase in wages. and a twenty— five per cent reduction in hours as compared with July 1, 1933 1 v/a-s satisfactory." (**) (*) Memorandum fro:: ::. 13. 3oyd, Assistant Secretary to the. PRA Folicy Board, to L, C. liar shall, on -the subject, PRA Folic 1 / 3oprd, dated October 5> 193^s ?• 3» K.H.A. Archives (**) Memorandum from Robert K. Straus to Helen 3o';'d, dated October k, 193^» "in response -your inquiry for a. brief summary' of .the work of the PRA Policy Hoard for the benefit of the Executive Secre- tary of the iTIR3." H.R.A. Archives. 9SU6 -47- (d) Increases in Codes After Code No. 1. Many letters of transmittal mentioned the -stimated increase that the ccd minimum wage rates were expected to produce. The following quotations nay serve as illustrative data; "Proposals by the Southern lumber industry to increase minimum rates to 22-|-(* per hour re-presented an advance of practically 100 per cent from average of 11. 6^ per hour in 1932... and 350)0 above minimum "ages paid in the month cf April, 1933. "(*) "The parentage of increases of wages under the Code will, approximate from 10 per cent tc 12 per cent above the current rate of wages. "(**) "The i sgii provisions of the Code will immediately raise the -"ages an av rage of 3 r ; per cent' for practically 90 p;sr cent of the unskilled labor in the industry. "(***) "Increases from the level of the first quarter of 1932 will b required of as much as 50 per cent in the South and over 30 per cent in the North." (****). The case of the yeast manufacturing code is interesting because it throws light upon the Administration idea of what was regarded as an insufficient or unsatisfactory increase. In the order, of approval, the rate el 45 cents was substituted for the original rate of 40 cents. The data submitted showed that the minimum wage previsions of the cod represented an increase ^bove their June 15, 1933 wages applicable to but approximately fifteen per cent of the employees. Weekly earnings of office workers, however, it was estimated, would be increased by approximately 8 per cent. (*****) These increases evidently were deemed insufficient in the circumstances. The- use of the term "substantial" in the a oove formulation may appear to give the principle more meaning than the facts warrant. But the word is not defined; without definition •the principle merely reflects the general attitude of the deputies toward their task — that they -'ere obligated to require an upward adjustment of wages that ■ culcl be satisfactory to the Administration. (*) Lumber and Timber Products Code. Codes of Pair Compe- tition, Vol. I, p. 103. (**) Motion Picture Industry, Ibid, Vol. I, p. 300 (***) Luggage and Fancy Leather Goods Industry, Ibid, Vol. I, p. 521. (****) Boot and shoe jjf g> industry, Ibid, Vol. I, p. 543. (*****) Ood s 0I - Fair Competition, Vol. XII, p. "198. Wo statement whs made as to the percentage of increases cf wages for all factory 'workers, "it 9846 -48- A complete analysis of the effects' of the codes in raising wages would he necessary — and extremely valuahle — to show what the code in- creases actually accomplished, and would give real meaning to the word "substantial". Unfortunately, statistics are wanting for any complete report of this kind; however, a summary of available data will he pre- sented in another part of these studies of wages. Furthermore, so far as this particular principle is concerned, the qualifications under which it was aoolied must he "borne in mind in any appraisal of the principle of upward adjustment by a substantial percentage. In tne remarks below on the alternative formulations of the -principle of upward adjustment, further light is thrown upon the concrete meaning of "substantial" and "satisfactory". 2. As Much As The Industry Can Seasonably Bear. This formulation of the limit for raising wages is found in a state- ment of the Policy Group issued under date of "lay 17, 1934, "The policy requirement on minimum w ages is that industry con- tribute purchasing power as much as can be reasonably borne. "(*) Also, in another decision in the same group, the following phrase- ology is employed: "The wage ra.te should be reconsidered at a later date, if it ap- pears that the industry is not contributing to the purchasing power of workers to the extent that might be reasonably expected." (**) In approving the code for the yeast manufacturing industry, the President substituted a rate of 45 cents for the original ra.te of 40 cents. This was based upon the statement in the letter of transmittal of the code to the President : "Prom the information submitted, it would appear that this indus- try can pay a higher hourlv rate than forty cents (4C\0 per hour as provided in this Code. The Order of Approval approving this Code, is dra ir, n, therefore, to increase the rate from forty cents (40$0 oer hour to forty-five (45^) per hour. "(***} The words "can pay" suggest that the ability of the industry reasonably to pay more is sufficient warrant for increasing the rate. Comparatively few cita.tions on this positive phase of the "reasonable burden" principle can be made, though many are available on the negative aspect where higher rates could not be asked for because they would prove an unreasonable burden. (*) See above, p. 33. (**) See above, p. 32." (***) Codes of Pair Competition, Vol. XII, p. 199, 9846 -49- In the first code the argument is advanced, "Our studies show, ..that any larger wage increase would require such a mark-up as might impair consumption and so react unfavor- ably on the President's whole reemployment policy. ..It is about the limit of present practicability. "(*) Striking examples of amplication of this principle mav be found, especially in the cases of industries with minimum rates in excess of 40 cents or with at least one regional rate above 40 cents; the oriniciple, of course, finds amplication throughout the range of rates. Of the 280 codes with no differentials, 23 had rates of over 40 cents, while of the 298 codes with differentials, 28 had the higher rates over forty cents. Of the 23 with flat rates, one had a minimum rate of 75 cents, 4, minimum rates of 50 cents, 14, minimum rates of 45 cents, 2, of 42\ cents, and 1, of 41 2/3 cents. The wrecking and salvage industry code had a minimum rate of 70 cents for the New York Cit^ metropolitan area, and 50 cents for Chicago. (**) In the soiith, the minimum was set at 30 cents. The letter of transmittal states, "During the oast f o or years, according to the Industry, minimum wages have ranged from as low as seven and one-half (7-^) cents to twenty-five (25,0 cents oer hour. " The bituminous coal code, with rates ranging from .689 cents to 40 cents in different regions is an example of a strong union organization obtaining rates through direct bargaining and having the results incorpo- rated in the code.(***) The highest minimum rate of any code was in the print roller and print block code, with a minimum of 75 cents. ( **** ) This industry is high- ly unionized and the rate was fixed by collective bargaining orocedure be- tween the union and the industry. These illustrative examoles show that minimum rates were by no means kept at 40 cents or less. Other examples could easily be given of indus- tries where union -pressure raised the rates to much higher levels than would otherwise have been attained. The flat rate minimum of 40 cents in the construction code is a case in point. It is obviously impossible with- in the brief limits of the nresent discussion to atterrot any comolete ex- position of this nhase of the subject; all that can be done is to outline and give illustrative examples of the forces at work and the -orinciple that emerged from the results. (*) Ibid, Vol. I, O. 12. (**) Codes of Fair Competition, Vol. VII, p. 460-461 (***) Ibid, Vol. I, p. 325-6* Vol, X, p. 43L-3. (****) Codes of 7air Competition, Vol. VIII, p. 541. 9846 -50- One major difficulty involved in the "broader amplication of this or indole was the difficult?/ of determining the upper limits of an indus- try's ability to pay. It might require a mass of' statistical evidence which was not available. In practice, the usual procedure, especially if labor unions entered into the picture, was to demand more, with the knowledge that at or before the Doint where the burden became unreason- able, after industry had obtained its fair trade practices, industry would balk and refuse to agree to the rates. In the veast manufacturing case already cited, the statistical evidence at hand indicated that jrooosed rates were markedly less than the industry was able to pay and led there- fore to action by the Administration increasing the rate. 3, To Maintain Weekly Earnings (As Of the Pre-Code Period (June 1933) In connection with the -orogram of reducing weekly hours, the main- tenance of weekly earnings night offer a test of maintaining purchasing power. This would require an increase in the minimum hourly rate in any industry proportionate to the reduction of hours. Since in many indus- tries reductions in hours of 20 per cent were not uncommon, this principle would require an increase in the wage rate per hour of 25 per cent to maintain weekly earnings. This principle found application in certain of the wages-above-the- minimum clauses, a topic which will be discussed fully in another place. The statement of the President in MBA Bulletin Mo. 1, June 16, 1933, may perhaps be regarded as embodying this princiile. "The idea is simply for employers to hire more men to do the existing work. ..and at the same time ;oaying a living wage for the shorter week. "(*) However, this form of statement leaves the effect uncertain until the definition of the living wage is known. If existing weekly ^ages were equal to the living wage, it meant maintenance of weekly pay; if less, advance in weekly pay; though if more, the gate was open to reduction in such weekly pay. The principle was set forth specif iCally in the discussions of March, 1934, when a campaign was initiated to reduce hours an additional lOfi, maintaining weekly wages at the same time. This formulation re- ceived its clearest enunciation in its application to the proposed pro- gram. If this had been the sole basis for determining the rate of mini- mum wages, a formula could easily have been develooed for calculating the minimum in terms of pre-code rates, a. reduction in hours of one tenth would require an increase in wages of one-ninth; a reduction in hours of one-fifth, would require an increase in wages of one-fourth; etc. But the codes did not specify minimum rates" in : this fashion, but al- ways placed the actual minimum rate in the code. The evidence cited in (*) Quoted in the letter of transmittal of the Cotton' Text ile Code, Codes of Pair Competition, Vol. I, p. 11. 9846 -51- the codes do as not furnish any clear oasis for the conclusion that the principle "as in fact effective. It neither set a maximum limit to "age increases, nor did it set a limit that was always attained, though in man,'' codes the principle 7as satisfied. 4. To Restore 1929 Rates Or 1929 Purchasing Power. This formulation ias discussed in detail in the letter of transmittal of the first code in which an elaborate calculation is presented to show that the minimum rates proposed in the cotton textile code would actually somewhat increase purchasing power as of 1929, did not always clearly dis- tinguish between 1929 rotes and 1929 purchasing po^er. Usually the terra 1929 rates was used; "but in view of the decrease in cost of living, 1929 rates would mean more than 1929 purchasing power,, provided that the de- crease in hours had not "been so great as to offset it. In most cases the decrease in hours ■ was substantial. (a) PEA Provisions in Relation to 1929 Level of 'Sages. The PHA provision for a basic 40 cent an hour rate was adopted after considerable discussion of its relation to the rate prevailing in 1929. From the minutes of the staff meeting, the following notes are pertinent; "General Johnson. . .pointed out that in many instances a minimum rate of 40 cents per hour w as far in excess of the 1929 minimum hourly rate. "Mr. Pdchberg pointed out that there was a real problem as to whether the minimur, wage should be adjusted to provide: (l) the same hourly rate as in 1929, or (2) the same weekly pay envelope. "After considerable further discussion it was finally agreed that the formula should be to establish a 35-hour week in manu- .' facturing industry and to set a. minimum hourly rate of 40 cents, except in those cases where the hourly rates as of December 31, 1928 was below 4(3 cents, in which cases the rate as of December 31, 1328 will be used, provided however that in no case shall a minimum hourly rate of less than 30 cents be permitted. "(*) This discussion indicates that the 1929 rates were very much in mind in fixing the standard PRa rates. Changes made in the final provision were to set 40 hours as the basic week in manufacturing in lieu of 35 hours, and to use the date July 15, 1929 in place of December 31, 1928. The PRA provision p or factory workers allowed rates below 40 cents down to thirtv cents, provided that the 1929 rate for the same type of work was less than 40 cents. ¥o rates below 50 cents were permitted tinder the basic PRA provision. (b) Code Provisions "riot Less Than PRa Or PRA Substitutions. (*) Reports of NBA Staff ileeting, July 15, 1933 (mimeographed) KRA archives. 9345 -52- Code provisions were not' necessarily- governed "by the PBa general rate. The principle was early enunciated that code rates should not "be approved "below the PEA rate or the PRA substitution. (* ) In so far as the general PRh. rate reflected the HEA idea of the general 1929 wage, this meant that the industries which did not seek PBA substitutions — or presum- ably those that could well nay the 40 cent rate — should have at least 40 cents in their codes. Industries unable to pay the 40 cent rate of the PBA, on the other hand, generally applied for substitutions permitting a lower rate. PEA substitutions were generally allowed on the basis of evidence presented by the industry and compared with data ore-oared bv the Research and Planning Division of' the HEA and other sources, showing the effect of the proposed substitution on wages and what they were able to pay. As noted, above, a showing that wages would be increased 25$ was considered by the PEA Policv Board to be satisfactory. The objective of the PEA in respect to wages is described in a memorandum by the assistant secretary of the board as being "to raise wages to the equivalent of real wages in 1929". If the industry accepted'the ruling of this board on its oetition, a substitution was issued. The rule that code rates should not fall below the PEA or substitu- tions for it, merely means that the fact that industry had agreed to pay a particular rate in the summer of 1933 could be acceoted as prima facie evidence that that rate was not beyond its ability- to pay. The rule formed, therefore, a useful check for the guidance of HEA deputies. (c) The So-Called 1929 Clause in the Codes. Code provisions following the PBA model in the form of excepting be- low 40 cents or whatever the code rate was, provided that less than that amount was paid in 1929, were relatively infrequent. On grounds of policy there was objection to the vague form of statement; since the rate w; s defined in terms of a 1929 prevailing rate it was difficult to enforce, since to determine the 1929 rate was a requirement preliminary to ascer- taining whether any violation of the code had occurred, (** ) Only 33 codes incorporated the so-called 1929 clause, and in 4 of these the clause was subsequently deleted by amendment. (d) Code Provisions in Belation to 1929 Bates. The appeal to 1929 rates was made in a number of letters of trans- mittal of codes as justification for approval of rates. Commonly when Bule No. 5 in Tentative Formulation of Labor Policy, see above, d. 36. See above, p. 36 No. 4. "The minimum wage should be stated clear- ly and definitely. It is contrary to policy to state it in terms of a relationship to some prevailing wage as of the year 1929 (or other date), since such method of statement introduces uncertainty of meaning and spells difficulties in compliance. " See also De- cision of the Policy Group, dated Aug. 8, 1934, quoted above, p. 33. 9346 -53- mention was made of 1°29 rates, it '"as used to justify approval of rates which otherwise would seem below ~JHA objectives. A direct statement of o^licy hearing mon the relation between the code minimum and the 1929 rate is contained in the Tentative formulation of Labor Policy #3. "It is desirable that the basic minimum rate approximate so far as is "oracticable, the corresponding rate of 1929. "(*) This arroears to inroly not only that code rates should be at least as much as, but also should not exceed the 1929 rate. So far as the latter mean- ing is concerned, the statement of aolicy is in error, for there was never any rejection of a rate agreed to oy industry on the part of the ITEA Ad- ministration on the ground that it was either too high or in excess of the 1929 rate. In fact, in a number of codes, attention was drawn in letters of transmittal to the fact that the code minimum was in excess of the 1929 rate. The letter of transmittal of the lumber and timber code, for example, states that "After careful consideration of the evidence. . . it was concluded that wage rates at least equal to those r>aid in 1929 were desirable and possible. " Eighty per cent of the total employees received less than 30 cents in 1929. The provision adopted in the lumber and timber code -orovided for an increase in the 1929 rates where less tnan 30 cents by a percent- age varying from Op at 30 cents to 15;'o at 20 cents. (**) On tne other hand, the Iron and Steel Code had code rates that in relation to 1929 varied from a decrease of 16 per cent in the East, a de- crease of 10 per cent in Pittsburgh, Great Lakes and the Kiddle West, to an increase .of 13 oer cent in the South. (***) (e) Relation to 1929 Rates in Low Tage Industries. Finally, the point should be made that the Administration pressure for raising rates was greatest and most effective when the rates in the industry were low. In cases of rates below 30 cents, even the 1929 level would not satisfy the Administration, but an increase considerably above that level might be required; between 30 cents and 40 cents, definite oressure was brought not only to substitute definite rates for the vague description in terms of 1929 wages, but also to raise them as high as the circumstances of the industry would oermit. On the other hand, above 40 cents, it is -orobable that Administration oressure for raising rates was distinctly less, and if labor was satisfied, the Administrator might ap- prove rates that did not equal the 1929 level. Again, for a complete ex- position of the relation of the code minimum to the 1929 figures, statis- tical data would be required that are not available. ( * ) See above, p. 36. (**) Codes of Pair Competition, Vol. I, T3. 126. (***) Codes of Pair Comoetition, Vol. I, p. 175. 9846 -54- 5. Combinations of Principles. The point should be emphasized, finally, that the several principles thus far presented agreed in favoring upward adjustments of '.rages, and differed among themselves merely in the limits to which wages should he raised. In principle, there was no upper limit to wage minima e::cept as noted in the qualifications discussed in the newt section. In these cir- cumstances, the pressure of the labor groups seeking increases, and of the Administration seeking to realize the objectives of the Act tended to support upward movements of wages up to the limits set by the ability of the industry to pay. And the important point is that this pressure for upward adjustment of wage minima was greater when several of these principles seemed to he involved and much diminished when one after anot- her seemed to have been satisfied. Fundamentally, therefore, the pressure backing the wage increases, and the principles setting the conditions for ewerting this pressure were determining factors in i::ing the final rates. C. Qualifications ' Any or all of the foregoing principles night he modified' in their application to a specific case 'o~j certain qualifying or limiting consi- derations. These were three in number, (l) the inability of the industry to pay this being the negative aspect of the principle embodies in the phrase "as much as the industry could reasonably hear," (2) lower rates in competing industries, and (3) lc r er rates for food industries closely allied to agriculture. 1. Inability to Pay. If industry could show that it was unable to pa;/ rates that, the deputies, acting under the general instructions, cashed for, rates lower than those that normally would he -satisfactory might be accepted. The ruling consideration was the economic position of the industry. The Policy Group statement, already ruoted, set forth this principle in clear terns: "Any arbitrary figure considered as minimum for living purposes nay be too high relative to conditions in a particular industry. "(*) Points relevant tn the question of the ability of the industry to pay minimum rates include a series of economic factors, such as whether the industry was highly competitive, whether the product was subject to elastic or inelastic demand, whether the product was a necessity or lu;air- T , whether substitutes for the product were available or could easily be placed on the market, the effect of the proposed increase in wage rates upon increases in unit costs, whether the industry as a whole was waking money, the relative proportion of capital equipment in the industry, and other similar factors. (*) See above, n. 32 . • ■ 9SU6 -55- The deputies liad general discretion on the question in first instance. The general statements of official policy to raise rates of pay were their guiding principles. They might "be influenced "by union or labor pressure, bv the pressure of industry representatives, and ~by statistical materials ■nrenared and presented by industry, labor, the Research and Planning Divi- sion of the IJRA, or other agencies. They were in position also to weigh the desire of the industry for its fair trade practice provisions and to drive a bargain up to the ability of the industry to pay. But if:' industry was unwilling or unable to pay, the industry representatives might refuse to concede the wage rates demanded, and having intimate knowledge of the facts of their situation were in the best position to present evidence to substantiate their claims. A number of specific problems bea.r \ipon this subject of ability of industry to pay. In some industries certain establishments were well able to pay more than other establishments. Should the rates be set on the basis of the ability of the marginal firm or how should the ability of the industry be appraised? In the -pretzel industry, special minimum rates for hand operatives (32^-<£ and 30(0 were set below the rates for machine operatives, (40^) . (*) In the baking industry, the hand craft shops, though handicapped in competition with machine equipped shops on bread ■products, enjoyed a differential in hours but had no advantage in minimum wage rates. (**) The cigar manufacturing industry had a. problem of adjust- ment between hand and machine production, the more skilled hand worker receiving less than the less skilled machine worker. (***). in these cases the special handicaps of the establishments employing an economically less profitable technique were taken into consideration. In many industries, establishments in certain sections were less able to pay than those in other sections. These differences in relative ability to pay were taken care of in many cases, at least in part, by geographic and population differentials. The whole problem of geographical and populational differentials, though closely related to the- problem of the minimum, is discussed in all its ramifications in another place. (****) (*) Codes of Fair Competition, Vol. XV., p. 89 (**) Ibid, Vol. XI, pp. 4-5. (***) Ibid, Vol. XII., p. 64. (****) Certain aspects of differentials appear to present the same issues as the single minimum. At first thought it might seem as if the problem of setting minima, in South and ITorth, using North and South as typifying the general problem of differential rates, in an industry extending over both sections was the same a.s that "of setting minima in separate industries ea.ch confined to one section. But in the problem of differentials each section or division was interested not only in the minimum rates but • parti cularljr in the relative position of the rates in the several sections or divisions. In industries where competition between the sections or divisions was a vital factor, the determination of minimum rates in each section could not be made solel" r upon the criteria, already discussed as applicable to the general problem of determination of minimum rates. The additional criterion is important; that the rates as established for each section should be equitable as between the different sections of the industry, that they rh should not favor one section as against another, nor impair the competitive position of any section. Because of these and other special considerations affecting the determination of the. minima with differentials, this whole subject is treated in a separate section. 9846 -56- In still other industries, divisions within the industry made it probable that' difficult ies in compliance would arise if the rates set, were too high. This asoect of the case reinforced the tendency to allow claims of industry that they were unable to pay and led to the ap- proval of rates lover than the general standards called for. 2. Lower Hates in Competing Industries. A second basis for qualification of the principles previously des- cribee 1 was the existence of lover rates in competing industries. This -orinci-ole was early recognized. Under the P?A, it was part of the pro- cedure" to hee-c substitutions to related industries as uniform as was. . . -oracticable. (*) At the sane time, -hen substitutions had been granted upon too lenient a basis or without justification in evidence, the P.R.A. Policy might refuse to grant the sane terms to other industries, unless to refuse would create "an unfair competitive situation. "(**) In the Code of Pair Competition for the Underwear and Allied Products Industry, the letter of transmittal states: "The labor provisions in this code are substantially the seme as the labor provisions in the Code for the Cotton Textile Industry... "To establish any differences in the minimum wage or the working hous for employees in the manufacture of under- wear would cause difficulty in the labor conditions. »(***) In the letter o:' transmittal of the Textile Bag Industry Code, the following statement appears: "Because of the fact that a number of Textile Bag manufacturers operate their own mills, that many of bag manufacturing plants are located in textile areas and that the. class of labor in the textile bag industry is similar to that in the Textile Industry, it is clearly evident that the labor pro- visions" should be substantially the same. »(****) (*) Ilenorandum of H. B. Boyd to Br. L. C. Ilarshall, dated Octover 5, 1S3 1 !-, P. 3» KBA General Piles. (**) "In almost no case rras the Board prevailed upon to change its . decision by this argument unless the industry in question was so closely related to" the industry to whom a lenient substitution had been granted, that more stringent provisions would have created an unfair competitive situation," Ibid, p. 3. (***) Codes of 3'air Competition, Vol, I., p. 312, Underweaf and Allied Products Code, Ho, 23, Approved September IS, 1333. (****) Codes of Pair Competition, Vol. I, p. 363* 9SU6 -57- The situation cane to further errpression at the time of the general conference of code authorities and trade association committees in Llarch, 153^* k"- "-S address introducing the subject, General Hugh S, Johnson remarked that one of the conc'itions needing immediate attention was the problem of uniformity of wages and hourly rates in competitive industries. This statement recognized the principle tha.t codes for competitive in- dustries should have uniform -age rates, "out left open the nuestion of the a.ppropirate lemedy, whether the lower rate wa.s to "be raised to the level of the higher, or the higher rate lowered to the level of the lower, or some internedia,te level determined by nay of compromise. This problem was still acute at the time of the Supreme Court decision in the Schechber case. The lack of unoformity of "age rates in competitive industries was one of the obstacles in the v, fy of consolidation and simpli- fication of. the codes. 3. Lover Hates in Industries Allied to Agriculture. A third qualification was that in industries allied to agriculture, lover minimum rates might be conceded. The first code in -rhich the situa- tion arose was apparently the fertilizer code. ...The letter of transmittal states: "".Thile the absolute wage ra.tes provided by the Code still are not high, it is believed thrt this industry with its. close interlock with agriculture can be affected only a.dveirsely if higher minimum wages are required. (*) The proposed Office IJanual, as revised June 12, 1S35» carried the statement alrea.dy quoted(**) adverting to the resumed propriety of lo'-rer rates in industries allied to agriculture, in vie^ of the lower living costs in agricultural communities. This formulation leaves much to be clarified. The phrase "Industries a.llied to agriculture" seems vague: what was meant "ere industries concerned with, the handling and first processing of agricultural products, utilizing unskilled labor of the sane type as found employment in agriculture!. . The cotton pickery industry, raw peanut millin;;, pecan shelling, and loose leaf tobacco warehousing, "ere industries of this class. The justification adduced-* the relative!/ low living costs' iTTagri- 'cultural' comrouhi ties' - was not the sole or even the principal ground for lower rates. (***) (*) Codes of lair Competition, Vol. II., p. 122, fertiliser Code No. 57, Approved October ^1, 1333* (**) See .." ., p. 31,. Ho statement on policy covering industries allied to agriculture is to be found in the official pronouncements by policy determining agencies prior to the Supreme Court decesion. This formulation had neither official approval nor was it issued to Deputies curing the UFA period. $***) The "hole question of cost of living in ' -" !r -ti' to wage rates "ill be discussed in the section on differentials. SSU6 -58- The relative inefficiency of the t3p>e of later enployed was often alleged as a ground for lover rates for these industries. In certain of these industries, a large proportion of the unskilled la"bor was Negro. Thou"h no open racial differential or discrimination was admitted in any 'NBA code, a low rate night "be demanded "by industry employing largely Negro labor as requisite to its continuing innoperation. In some cases the fact that the labor was light repetitive work and was carried en largely by female workers, in some cases Negro and iie:;ican femai labor, was advanced ^rj industry as a reason why it could affdi-c". only a lo'-r rate. An important factor in this situation was the relationship between IDA and AAA. A brief statement of the nature of this relationship is therefore in point. The AAA was established to aid agricultural recovery, with special reference to the farmer rather than to farm labor. At the outset all the food industries were transferred to code purposes to the jurisdiction of the Secretary of Agriculture, except that the IDA retained jurisdiction over the labor provisions for these codes. In so far as the direct influence of AAA over wage rates was concerned, officially it had no jurisdiction. Negotiations on wage rates were entirely in the hands of IDA deputies designated to handle these matters. The severance of the negotiations over -rages from those over fair trade practice provisions constituted a severe handicap to the deputies' bargaining position. 3a ir trade practice provisions were in the hands of AAA officials. It was not possible in these situations for the IDA deputies to bargain -r ith industry, offering a more lenient trade practice provision in return for a. better wage rate. Ho effective cooperation on this question was evolved or developed between AAA and N?A deputies. One explanation for lack of cooperation nay have been a fundamental divergence in points of view. Even had there been cooperation' >between the two admin- istrations on the question, a divided power of negationation would have been relatively less effective than the unified responsibility in IDA codes. Not only were, the negotiations over fair trade practice provisions severed from the negatiations over labor provisions, but the policies of AAA in regard to these fair trade practice provisions operated, in some instances, to discourage industries from seeking codes. In particular, the AAA insisted upon the incorporation in the codes of the so-called "books and records" clause, giving the Secretary of Agriculture the right to inspect the boPks and records of all members of the industry. The practice, followed in all ercept a few cases, of holding the labor provisions of the codes until the fair ttra.de practice sections were 9S4S -59- ready for approval resulted in delays in codification. (*) The result, of this division of responsibility was that uo to January S» 1S3 •» only six codes for food industries had "been approved. On this date &n Executive Order transferred "ba.cl: to NBA the niajor part of the food industry group — all industries subsequent to the first processing. A second group of "reserved" codes "as transferred "bach to K2A subject to the reservation that the Secretary o^ Agriculture must approve any fair trade practice provision concerned with price, production control, and a few other enumerated topics in which the farmer had a special interest. A third group of industry codes was left under joint jurisdiction as "before. (**) So far as the food codes were concerned, especially those that re- mained under joint jurisdiction, labor was, in the main, unorganized, and hence was not an important factor in "bringing pressure to "bear to secure miniium wages up to the usual standard. These factors then tended to strengthen the position of the industry spokesmen in refusing to a^ree to the "standard^ 1 minimum rates in their codes. Though not "bearing upon the specific issue of the inability of the industry to pay more, these elements in the situation weakened the "bargaining position of the deputies. In a few cases, notably the stoclzyards and livestock commission agency codes, the Secretary of Agriculture had authority, "under the Fackers and stockyards Act, over the rates which the industry was al- lowed to charge. The industry represented themselves as 'Tilling to raise pay to labor, provided that they could raise their charges. Here a direct conflict of interest between the farmer and the labor in these industries rendered negotiations for raising wages difficult. (*) The labor provisions for the beet su,gar code were approved October 27> -S33> before the fair -trade practice provisions were prepared. In- dustry was \7illing to accept them in this coase because of favors expeo» ted from tariff legislation. No fair trade practice provisions ever were approved for this industry. Certain of the alcoholic beverage codes -ere approved in advance of their labor provisions, in order to set up the Federal Alcohol Control Administra- tion. Labor Provisions for these were subsequently prepared and approved. In these industries union labor is a. predominating influence. (**) Executive Order Ho. 655I, dated January S, 153*+. "he list of industries is given in Exhibit A of the Order. NBA Officer hanual, V-C-19. 92U6 -so- li I. SIGI7IFICAHC3 OP PHIITCIPLZS The significance of these principles in their relation to the actual rates incorporated in the codes has become clear from the re- ceding discussion. As the story of the development of. the principles h&« ^ro^ressed, nore and -ore importance is seen to be attached to tne ■forces and pressures operating to raise of lo-er -rages. The principles of policy on minimum -rages operate not as rigid requirements, out as objectives or goals to he attained. Only is the presence of effective pressure from unionized groups, or ^en competitive conditions m tne industry we favorable, do these principles cone to full egression in code" rates. And, nas been explained in the preceding pages, per- haps the nost significant principle of all is that vrhich set tne rules •for the bargaining orocess betVeen industry and labor -here labor -as strongly organized, and betneen industry and the adninistration aic.ed by labor advisers, -here labor -,-as -real: or unorganized, and authorized tne approval of the rates reached in this -process. The paps between orincioles and their realization in many cases rmst have beenYonsiderable, Failure of the deputies to appreciate the meaning of the orincioles they -ere expected to incorporate in the coc.es, lac: o. s^ro-.thry -ith these objectives of the Act, vadue sympathy vith incus.ry, acceptance of claims without proof, and lad: of necessary statistical evidence each of these considerations helps to account for divergences betveen principles and practice. Even for industries with the lost conplete statistical evidence, it is difficult enough to determine -here- the ra.tes should have been set to accomplish the purooses of the Act; horr inch nore difficult -hen the statistical data -ere largely or entirely -ranting:. In nost cases the industry -roue kne- the facts from intimate first nand hno-lecge, -nile the deputies : iere dependent for their kno-Tledge upon general statistics or uoo'n s-oecial assistants -ith technical experience. Industrial interests trilling to lake concessions u P .to Kievbisft Sucre inheres us of infevx- dual members of the industry began to be affected,, bat beyonc ^tnat resistance to further concessions increased. This fact emphasises apain the essential!" bargaining-: nature of these proceedings lor set- ting minimum rates in the codes, in -hich the Administration sought to assist labor in obtaining the increased purchasing poner contemplated b-' the statute. csU6 -61- AFFE:TDIX I I . Methodology The primary method employed in the study is examination of the various sources of policy. These included, as described in the text, the official utterances of the President and the Administrator, the official and semi-official pronouncements of policy^-detormi.ning organs within the hPA, the letters of transmittal in the codes and the code provisions themselves. IHie technique of determining what was policy from an examination of the code provisions is a difficult one. In general, the code pro- vision should embody principles of policy. However, a code provisions .may depart from policy he cause of the exercise of discretion hy the deputy beyond the range justified hy policy. Furthermore, the code provision may embody the compromise reached in case of conflicting 'policy principles. A case where examination of code provisions is im- portant for ascertaining what was policy, is when a particular industry group was singled cut as entitled to special consideration. A case in point is the case of industries closely allied to agriculture. II. Poi nt s fo r Fur the r ho sef rch A. Case Studies of Individual Industries, with Especial Reference to Types of negotiation. One source for material on policy, especially with regard to the methods of applying it,, is the code histories. These histories review in detail the course of the negotiations for codes from their initial presentation hy the industry through the various conferences held by deputies and their advisers and with labor representatives and show the changes made in the original code provisions to conform with policy or in response to pressure. The letters anc oronouncements by the deputies incorporated in these code histories furnished an additional source for ascertaining policy as understood and interpreted by the deputies, who were responsible in first instances for -cutting principles into the codes. They are valuable also for the If ht they throw upon the influence of labor organizations in obtaining better minimum wage rates than industries at first presented*. The contrast in the code histories as between different types of negotiations should furnish a very interesting study of policy in action. Rie "ririnal plan for studies of this section included a number of ■ detailed studies of negotiations and experience with minimum wages in selected industries. 3. Statistical Evidence. An important line of attach is in the analysis of statistical evidence available for each industry. Such an analysis is essential in order to arpr^ise the degree to which policy was actually carried out and embodied in code provisions. If policy required that the minimum 9846 -62- wage raise existing rates in the industry, statistical evidence is needed to "rove that the minimum wage adopted actually did raise rates to any consiaernble extent. la the absence of evidence, industry might present a r te which, according to its claim was sufficient to carry out the purposes of the MRA. Such a rate agreeable to the industry and .accented by it in its conferences might in fact not represent any increase in rates. To judge whether a.id to what extent the rates act- ually reflected the policies followed by the deputies and the Adminis- tration requires statistic.?! evidence. Statistical evidence is needed also for appraisal of the "ability- to-pay" principle. In many cases, industry claimed not to be able to pay a given minimum rate. An examination of the evi. ence wouli be necessary to demonstrate this point. C. Discretion A study of the discretion allowed the deputies would be of interest. Did the exercise of discretion by the deputy mean the development of policy in its application to s^eciol circumstances or did it often ::e":: disregnrd of t.:e principles of policy? Failure to earry out policy might be due, for example, to (l) failure on the part of the deputy to under- stand policy, (;";) incompetence, (3) a mistahen idea that he was carrying out policy when he was being deceived ''oy industry's claims sr by in- adequate or erroneous statistics, (4) bias in favor the industry, or (5) subservience to pressure from industry, D. Relation to Administrobility , A study of the relation between high minimum rates in codes to administrability is important. The specific question here is how far questions of administrability entered into or modified policy. If diffi- culties in enforcement were expected and foreseen, lower .rates than would otherwise be granted might be an^roved, in order that the rates adopted might have a better chance of being observed by industry and of being enforceable . E. Policy on Ancillary Points. In addition to the subject of minimum wage, itself, policy on number of topics ancillary to minimum wages should be covered in scnaratc analysis. These include: (l) Definiteness of statement of the rate — policy required that r"tes be stated in definite terms and th- t indefinite terms such as the 1929 clauso and the indefinite minimum should be frowned upon. (2) Form of rates, whetbt-r hourly or piece rote — policy required in general that ill codes have an hourly minimum, even in enscs whore rates were also placed in the codes. (0) Piece rate policy — the whole problem of ; olicy governing piece rntes requires separate study. (4) The safeguarding clause on the nplicaoility of the minirr.ua. irrespective of the method of comae. :satioii. OFFICE OF THE NATIONAL RECOVERY ADMINISTRATION THE DIVISION OF REVIEW THE WORK OF THE DIVISION OF REVIEW Executive Order No. 7075, dated June 15, 1935, established the Division of Review of the National Recovery Administration. The pertinent part of the Executive Order reads thus: The Division of Review shall assemble, analyze, and report upon the statistical information and records of experience of the operations of the various trades and industries heretofore subject to codes of fair competition, shall study the ef- fects of such codes upon trade, industrial and labor conditions in general, and other related matters, shall make available for the protection and promotion of the public interest an adequate review of the effects of the Administration of Title I of the National Industrial Recovery Act, and the principles and policies put into effect thereunder, and shall otherwise aid the President in carrying out his functions under the said Title. I hereby appoint Leon C. Marshall, Director of the Division of Review. The study sections set up in the Division of Review covered these areas: industry studies, foreign trade studies, labor studies, trade practice studies, statistical studies, legal studies, administration studies, miscellaneous studies, and the writing of code his- tories. The materials which were produced by these- sections are indicated below. Except for the Code Histories, all items mentioned below are scheduled to be in mimeo- graphed form by April 1, 1936. THE CODE HISTORIES The Code Histories are documented accounts of the formatioa and administration of the codes. They contain the definition of the industry and the principal products thereof; the classes of members in the industry; the history of code formation including an account of the sponsoring organizations, the conferences, negotiations and hearings which were held, and the activities in connection with obtaining approval of the code; the history of the ad- ministration of the code, covering the organization and operation of the code authority, the difficulties encountered in administration, the c::tent of compliance or non-compliance, end the general success or lack of success of the code; and an analysis of the operation of code provisions dealing with wages, hours, trade practices, and other provisions. These and other matters are canvassed not only in terms of the materials to be found in the files, but also in terms of the experiences of the deputies and others concerned with code formation and administration. The Code Histories, (including histories of certain NRA units or agencies) are not mimeographed. They are to be turned over to the Department of Commerce in typewritten form. All told, approximately eight hundred and fifty (850) histories will be completed. This number includes all of the approved codes and some of the unapproved codes. (In Work Mate- rials No^ 18, Conte nts of Code His to ries , will be found the outline which governed the preparation of Code Histories.) (In the case of all approved codes and also in the case of some codes not carried to final approval, there are in NRA files further materials on industries. Particularly worthy of mention are the Volumes I, II and III which constitute the material officially submitted to the President in support of the recommendation for approval of each code. These volumes 9768 — 1 . -ii - set forth the origination of the codes, the sponsoring, group, the evidence advanced to sup- port the proposal, the report of the Division of Research and Planning on the industry, the recommendations of the various Advisory Boards, certain types of official correspondence, the transcript of the formal hearing, and other pertinent matter. There is also much offi- cial information relating to amendments, interpretations, exemptions, and other rulings. The materials mentioned in this paragraph were of course not a part of the work of the Division of Review. ) THE WORK MATERIALS SERIES In the work of the Division of Review a considerable number of studies and compilations of data (other than those noted below in the Evidence Studies Series and the Statistical Material Series) have been made. These are listed below, grouped according to the char- acter of the material. (In Work Materials No . 17 , Tentativ e Outlines and Summ ari es of Studies in Process , the materials are fully described). I ndustry Studies Automobile Industry, An Economic Survey of Bituminous Coal Industry under Free Competition and Code Regulation, Ecnomic Survey cf Electrical Manufacturing Industry, The Fertilizer Industry, The Fishery Industry and the Fishery Codes Fishermen and Fishing Craft, Earnings of Foreign Trade under the National Industrial Recovery Act Part A - Competitive Position of the United States in International Trade 1927-29 through 1934. Part B - Section 3 (e) of NIRA and its administration. Part C - Imports and Importing under NRA Codes. Part D - Exports and Exporting under NRA Codes. Forest Products Industries, Foreign Trade Study of the Iron and Steel Industry, The Knitting Industries, The Leather and Shoe Industries, The Lumber and Timber Products Industry, Economic Problems of the Men's Clothing Industry, The Millinery Industry, The Motion Picture Industry, The Migration of Industry, The: The Shift of Twenty-Five Needle Trades From New York State, 1926 to 1934 National Labor Income by Months, 1929-35 Paper Industry, The Production, Prices, Employment and Payrolls in Industry, Agriculture and Railway Trans- portation, January 1923, to date Retail Trades Study, The Rubber Industry Study, The Textile Industry in the United Kingdom, France, Germany, Italy, and Japan Textile Yarns and Fabrics Tobacco Industry, The Wholesale Trades Study, The Women's Neckwear and Scarf Industry, Financial and Labor Data on 9768—2 - iii - Women's Apparel Industry, Some Aspects of the T rade P ractic e Studies Commodities, Information Concerning: A Study of NRA and Related Experiences in Control Distribution, Manufacturers' Control of: Trade Practice Provisions in Selected NRA Codes Distributive Relations in the Asbestos Industry Design Piracy: The Problem and Its Treatment Under NRA Codes Electrical Mfg. Industry: Price Filing Study Fertilizer Industry: Price Filing Study Geographical Price Relations Under Codes of Fair Competition, Control of Minimum Price Regulation Under Codes of Fair Competition Multiple Basing Point System in the Lime Industry: Operation of the Price Control in the Coffee Industry Price Filing Under NRA Codes Production Control in the Ice Industry Production Control, Case Studies in F.ssale Price Maintenance Legislation in the United States Retail Price Cutting, Restriction of, with special Emphasis on The Drug Industry. Trade Practice Rules of The Federal Trade Commission (1914-1936): A classification for comparision with Trade Practice Provisions of NRA Codes. Labo r Studies Cap and Cloth Hat Industry, Commission Report on Wage Differentials in Earnings in Selected Manufacturing Industries, by States, 1933-35 Employment, Payrolls, Hours, and Wages in 115 Selected Code Industries 1933-35 Fur Manufacturing, Commission Report on Wages and Hours in Hours and Wages in American Industry Labor Program Under the National Industrial Recovery Act, The Part A. Introduction Part B. Control of Hours and Reemployment Part C. Control of Wages Part D. Control of Other Conditions of Employment Part E. Section 7(a) of the Recovery Act Materials in the Field of Industrial Relations PRA Census of Employment, June, October, 1933 Puerto Rico Needlework, Homeworkers Survey A dministrative Studies Administrative and Legal Aspects of Stays, Exemptions and Exceptions, Code Amendments, Con- ditional Orders of Approval Administrative Interpretations of NRA Codes Administrative Law and Procedure under the NIRA Agreements Under Sections 4(a) and 7(b) of the NIRA Approved Codes in Industry Groups, Classification of Basic Code, the — (Administrative Order X-61) Code Authorities and Their part in the Administration of the NIRA Part A. Introduction Part B. Nature, Composition and Organization of Code Authorities 9768—3 . - IV - Part C. Activities of the Code Authorities Part D. Code Authority Finances Part E. Summary and Evaluation Cjde Compliance Activities of the NRA Code Making Program of the NRA in the Territories, The Code Provisions and Related Subjects, Policy Statements Concerning Content of NIRA Administrative Legislation Part A. Executive and Administrative Orders Part B. Labor Provisions in the Codes Part C. Trade Practice Provisions in the Codes Part D. Administrative Provisions in the Codes Part E. Agreements under Sections 4(a) and 7(b) Part F. A Type Case: The Cotton Textile Code Labels Under NRA, A Study of Model Code and Model Provisions for Codes, Development of National Recovery Administration, The: A Review of its Organization and Activities NRA Insignia President's Reemployment Agreement, The President's Roemployment Agreement, Substitutions in Connection with the Prison Labor Problem under NRA and the Prison Compact, The Problems of Administration in the Overlapping of Code Definitions of Industries and Trades, Multiple Code Coverage, Classifying Individual Members of Industries and Trades Relationship of NRA to Government Contracts and Contracts Involving the Use of Government Funds Relationship of NRA with States and Municipalities Shelt3red Workshops Under NRA Uncodified Industries: A Study of Factors Limiting the Code Making Program Legal Studies Anti-Trust Laws and Unfair Competition Collective Bargaining Agreements, the Right of Individual Employees to Enforce Commerce Clause, Federal Regulation of the Employer-Employee Relationship Under the Delegation of Power, Certain Phases of the Principle of, with Reference to Federal Industrial Regulatory Legislation Enforcement, Extra-Judicial Methods of Federal Regulation through the Joint Employment of the Power of Taxation and the Spending Power Government Contract Provisions as a Means of Establishing Proper Economic Standards, Legal Memorandum on Possibility of Industrial Relations in Australia, Regulation of Intrastate Activities Which so Affect Interstate Commerce as to Bring them Under the Com- merce Clause, Cases on Legislative Possibilities of the State Constitutions Post Office and Post Road Power — Can it be Used as a Means of Federal Industrial Regula- tion? State Recovery Legislation in Aid of Federal Recovery Legislation History and Analysis Tariff Rates to Secure Proper Standards of Wages and Hours, the Possibility of Variation in Trade Practices and the Anti-Trust Laws Treaty Making Power of the United States War Power, Can it be Used as a Means of Federal Regulation of Child Labor? 9768—4. - V - THE EVIDENCE STUDIES SERIES The Evidence Studies were originally undertaken to gather material for pending court cases. After the Schechter decision the project was continued in order to assemble data for use in connection with the studies of the Division of Review. The data are particularly concerned with the nature, size and operations of the industry; and with the relation of the industry to interstate commerce. The industries covered by the Evidence Studies account for more than one-half of the total number of workers under codes. The list of those studies follows: Automobile Manufacturing Industry Automotive Parts and Equipment Industry Baking Industry Boot and Shoe Manufacturing Industry Bottled Soft Drink Industry Builders' Supplies Industry Canning Industry Chemical Manufacturing Industry Cigar Manufacturing Industry Coat and Suit Industry Construction Industry Cotton Garment Industry Dress Manufacturing Industry Electrical Contracting Industry Electrical Manufacturing Industry Fabricated Metal Products Mfg. and Metal Fin- ishing and Metal Coating Industry Fishery Industry Furniture Manufacturing Industry General Contractors Industry Graphic Arts Industry Gray Iron Foundry Industry Hosiery Industry Infant's and Children's Wear Industry Iron and Steel Industry Leather Industry Lumber and Timber Products Industry Mason Contractors Industry Men's Clothing Industry Motion Picture Industry Motor Vehicle Retailing Trade Needlework Industry of Puerto Rico Painting and Paperhanging Industry Photo Engraving Industry Plumbing Contracting Industry Retail Lumber Industry Retail Trade Industry Retail Tire and Battery Trade Industry Rubber Manufacturing Industry Rubber Tire Manufacturing Industry Shipbuilding Industry Silk Textile Industry Structural Clay Products Industry Throwing Industry Trucking Industry Waste Materials Industry Wholesale and Retail Food Industry Wholesale Fresh Fruit and Vegetable Indus- try Wool Textile Industry THE STATISTICAL MATERIALS SERIES This series is supplementary to the Evidence Studies Series. The reports include data on establishments, firms, employment, payrolls, wages, hours, production capacities, ship- ments, sales, consumption, stocks, prices, material costs, failures, exports and imports. They also include notes on the principal qualifications that should be observed in using the data, the technical methods employed, and the applicability of the material to the study of the industries concerned. The following numbers appear in the series: 9768—5. - vi - Asphalt Shingle and Roofing Industry Fertilizer Industry Business Furniture Funeral Supply Industry Candy Manufacturing Industry Glass Container Industry Carpet and Rug Industry Ice Manufacturing Industry Cement Industry Knitted Outerwear Industry Cleaning and Dyeing Trade Paint, Varnish, ana Lacquer, Mfg. Industry- Coffee Industry Plumbing Fixtures Industry Copper and Brass Mill Products Industry Rayon and Synthetic Yarn Producing Industry Cotton Textile Industry Salt Producing Industry Electrical Manufacturing Industry THE COVERAGE The original, and approved, plan of the Division of Review contemplated resources suf- ficient (a) to prepare some 1200 histories of codes and NRA units or agencies, (b) to con- solidate and index the NRA files containing some 40,000,000 pieces, (c) to en£age in ex- tensive field work, (d) to secure much aid from established statistical agencies of govern- ment, (e) to assemble a considerable number of experts in various fields, (f) to conduct approximately 25% more studies than are listed above, and (g) to prepare a comprehensive summary report. Because of reductions made in personnel and in use of outside experts, limitation of access to field work and research agencies, and lack of jurisdiction over files, the pro- jected plan was necessarily curtailed. The most serious curtailments were the omission of the comprehensive summary report; the dropping of certain studies and the reduction in the coverage of other studies; and the abandonment of the consolidation and indexing of the files. Fortunately, there is reason to hope that the files may yet be carec for under other auspices. Notwithstanding these limitations, if the files are ultimately consolidated and in- dexed the exploration of the NRA materials will have been sufficient to make them accessible and highly useful. They constitute the largest and richest single body of information concerning the problems and operations of industry ever assembled in any nation. L. C. Marshall, Director, Division of Review. 9768—6.