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BOSTON PUBLIC LIBRARY
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
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:
Control of Hours and Reemployment
Control of Wages
Control of Other Conditions of Employment
Section 7(a) of the Recovery Act
LABOR STUDIES SECTION
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!
"°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
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-
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
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)
(a) Some Increase Essential 44
(b) Increases Under First Code 45
(c) Increases Under PRA and PEA
(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
(c) The So-CaUed 1929 Clause in the
(d) Code provisions in Relation to
1929 Pates 52
(e) Pelation to 1929 Pates in Lon "?age
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
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
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.
The principles of policy concerned with minimum ws^es may "be sum-
marized under two main headings, the Decent Living and the Increase in
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
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
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.
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
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.
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.
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
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.
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
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
(**) 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
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
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
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
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
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
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.
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
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
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.
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.
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
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.
(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
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.
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.
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
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
(*) 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 -
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
In NRA Bulletin No. 1, (*) issued June 16, 1933, the President
"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
"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
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-
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)
»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.
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 $8 for a 53-54 hour week, (as
He reported the average weekly wage in the cotton c oods industry, as
of the month of May, 1933, at §10.40* The Research and Planning Division
of the National Recovery Administration secured from representative mills
in the industry sample payrolls for north and south.
"These payroll records show that minimum wages as
of the low in March-April this year, applicable
to between 10p and 2C$ 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.
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
( * ) lb i d, Vo 1 . I , p. 11 .
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
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.
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.
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
(***) Executive Order No.. 6S78-A, issued Anril 14, 1'34, NRA Office Manual,
(****) 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
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."
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
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-
(***) A Policy Board was set up by Office Order Ho. 1C, August 7, 1933
to pass upon all PEA substitutions.
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.
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
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.
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-
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
Departures from these standards might be permitted in certain
(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.
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-
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.
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."
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-
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.
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.
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-
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.
"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
''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.
Administ ration, tc provide a recent standard of
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-
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 .
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-
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.
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-
A memorandum of the Labor Sub-Committee of the Code Planning
Committee made tne following recommendation on tae "decent standard of
"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.
"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.
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
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
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
(**) See above p. 29.
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
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.
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
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
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.
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.
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-
(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 $12 a week. This suggests that a 20-1 increase in wages was deemed
comparable in amount with the other increases expected.
A review of the work of the PHA Policy Board, written in
October, 193*+, — i.e., a year or so after the Board was dissolved — states
that in passing upon petitions for substitution,
(*) To Acting Division Administrator, Division Three, September lU,
1934.. Compendium of Abstracts of Policy and Other Statements
Issued By the Polic3' - C-roup, p. l6.
(**) See above.
(***) Estimated from data in A. P. Hinrichs, Uage P.ates and Ueekly Earn-
ings in the Cotton Textile Industry 1933-3*+. Monthly Labor Review,
Vol. *+0, , T o. 3, March 1935 - p. 6l8.
"a 25$ 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
(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.
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-
(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.
"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
(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.
(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,
(****) 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
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
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,
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
"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.
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
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.
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
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
"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
(*) Reports of NBA Staff ileeting, July 15, 1933 (mimeographed) KRA archives.
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
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.
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.
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.
' 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
"Any arbitrary figure considered as minimum for living
purposes nay be too high relative to conditions in a particular
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 . • ■
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.
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*
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
"".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
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.
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
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
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.
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.
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
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
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
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.
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
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 .
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
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
- 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
- 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
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
Relationship of NRA with States and Municipalities
Shelt3red Workshops Under NRA
Uncodified Industries: A Study of Factors Limiting the Code Making Program
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
Enforcement, Extra-Judicial Methods of
Federal Regulation through the Joint Employment of the Power of Taxation and the Spending
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-
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?
- 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
Automobile Manufacturing Industry
Automotive Parts and Equipment Industry
Boot and Shoe Manufacturing Industry
Bottled Soft Drink Industry
Builders' Supplies Industry
Chemical Manufacturing Industry
Cigar Manufacturing Industry
Coat and Suit 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
Furniture Manufacturing Industry
General Contractors Industry
Graphic Arts Industry
Gray Iron Foundry Industry
Infant's and Children's Wear Industry
Iron and Steel 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
Silk Textile Industry
Structural Clay Products Industry
Waste Materials Industry
Wholesale and Retail Food Industry
Wholesale Fresh Fruit and Vegetable Indus-
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:
- 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 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
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
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.