w
OFFICE OF NATIONAL RECOVERY ADMINISTRATION
DIVISION OF REVIEW
THE SO-CALLED MODEL CODE
ITS DEVELOFMENT AND MODIFICATION
By
Harry Mulkey
WORK MATERIALS NO. 36
t
NRA ORGANIZATION STUDIES SECTION'
March, 1936
\
OFFICE OF NATIOFAL RECOVERY ABUDTI STRATI ON
RnSTON PUBUC LIBRARY ... DIVISION OF HE7IET5
,,, jiiiiiiiiiiiiii
3 9999 06317 360 1
THE SO-CALLED "lODEL CODE
IrI'S DEYELOPilEHT ALTD iDDIFICATIOF
3y
Harry LIulkey
A 0?. -AFIZATIOF STUDIES SECTIOi
i LARCH, 19S6
9810
OSD
This study of "The Development of the Model Codo and Model Pro-
visions for Codes" was "ire-jared by Mr. Harry 3. yulkey of the 1"RA
Organization Studies Section, Mr. Uilliam v;. Bardsley in charge.
The subject has been treated from an historical point of view.
The report discusses in chronological order the events which culminated
in the passage of the rational Industrial Recover' Act, the early pro-
blems which v/er - present relrtive to code making, the policies involved
in the formulation of che Model Code of November -, 1933, subsequent
issues of the Model Code and the ->r omul 0at ion oi model provisions
amendatory thereof, and its reception by industry. The study methods
pursued by the author are realted in Appendix I.
At the bach of this report will be found a. brief statement of the
stuaies undertaken b;r the Division of Review.
L. C. Liar shall, Director
Division of Review
March 17, 1936
9810
-l-
DEVELOPMENT OF TH3 MODEL CODS AND ..ODEL PROVISIONS FOR CODES
TABLE OF CONTENTS
INTRODUCTION
CHAPTER I F.?.ge
REASONS FOR PROMULGATION OF MODEL CODE, NOV. 6, 19:53 7
I. Proposed Codas were rapidly being filed which were
different in approach, treatment, and expression 7
.II. Uniformity was desirable H
III . Expedition was needed 11
IV.. 1TRA Policy had not "been developed 12
V. Industry would be aided in formulating codes for presenta-
tion 12
CHAPTER II
FORMULATION OF kODEL CODE 14
CHAPTER III
MODEL CODES ISSUED 133 1IRA 32
I. Issue of August 8, 1933 32
II. Issue of October 1, 1933 32
III. Issue of October 2-3, 1933 32
IV. Issue of ilovember 6, 1933 32
V. Issue of April 3, 1934 37
VI. Issue of Office Manual, November 21, 1934 38
Proposed Model Provisions. Formulated ''oy the Code Plann-
ing Committoe (April 17 - Lay 27, 1933) 38
CHAPTER IV
PROVISIONS OF THE MODEL CODE 40
CHAPTER V
N.S.A. PRONOUNCE: IF :F AFFECTING LiODSL CODE PROVISIONS 67
I. Commercial Bribery 67
II. Statistical Information 67
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Page
III. Review of Acts of Code Authorities 67
IV. Selling Below 'Cost, Open Price Filing Accounting and
Public Accountant Provisions 69
V. Trade Practice Committees 73
VI . Handicapped Workers 74
VII . Standards of Safety e nd Health 76
VIII. Premiums 77
IX. Mandatory Assessments 78
X. 31ue Eagle Insignia 80
XI. Classification of Customers 80
XII. Advertising Allowances 82
XIII . Liquidated Damages 84
XIV. Prohibiting Dismissal of Employees for Reporting Alleged
Violations of Codes 84
XV. Homework 84
XVI. Son-Waiver of Constitutional Rights 85
XVII . Posting Provisions 87
CHAPTER VI
RECEPTIOiT OF INDUSTRY 89
CHAPTER VII
COilCLUSIOITS A1ID FIITDiiT&S 91
APPENDIX 1 93
APPENDIX II • 94
-lii-
9810
EXHIBIT SUBJECT
1 "Model Code" for Self -Governing Industries under "The National In-
dustrial Recovery Act," issued by the National Association of Manu-
facturers, May 31, 1933.
2 Basic Code for Substitutions Before the Policy Board in FRA.
3 Issue of Model Code of August 7, 1933, by W. F. Farnsworti.
4 Issue of Model Code of August 10, 1933, by W. P. Famswoith.
5 Types of Unfair Competition - Fractices Condemned in Federal Trade
Commission's Orders to Cease and Desist. (Abstracts from the Federal
Trade Commission's Annual Report, June 30, 1934).
6 Confidential Report of the "L!RA-Commerce" Committee on an American
Basic-Code of Fair Fractices.
7 An Ideal Charter for Trade Associations, issued by the Bureau of
Foreign and Domestic Commerce.
8 "Model Code" or Suggested Outline for Codes, draft of November 6,
1933 .
9 " Model Code" or Suggested Outline for Codes - draft of October 1,
1953.
10 "Model Code" or Suggested Outline for Codes - draft of October 25,
1933 .
11 "Model Code" or Suggested Outline for Use in Code Drafting, Draft
of April 3, 1934.
12 Executive Order No. 6464, November 27, 1933. Rules and Regulations
Relating to Commercial Bribery Provisions.
13 Executive Order No. 6479, December 7, 1933, Providing for the Sub-
mission of Statistical Information by Persons Subject to Codes of
Fair Competition.
14 Office Memorandum No. 228, June 7, 1934. Open Price Filing, Costs,
Price Cutting and Accounting Provisions in Codes.
15 Executive Order No. 6606-F, February 17, 1934, Prescribing Rules and
Regulations for the Interpretation and Application of Certain Labor
Provisions of Codes of Fair Competition as They May Affect Handi-
capped. Workers.
16 Office Order No. 71, March 14, 1934. Standards for Health and Safety.
17 Administrative Order No. X-51, June 15, 1934. Safety and Health
— iv-
9810
Standards.
18 Office Memorandum No. 23?, June 12, 1934. Premiums.
19 Office Memorandum Ho. 316, December 6, 1934. Premiums .^nd "Free
Deris" . ^
20 Executive Order No. 6673, A pril 14, 1934. Making Provision for a
Clause in Codes of Fair Competition Relating to Collection of Ex-
penses of Code Administration.
21 Office Memorandum No. 267, July 20, 1934. Classification of Custom-
ers.
22 Office Memorandum No. 326, January 5, 1935. Advertising Allowances.
23 Office Memorandum No. 331, January 29, 1935. Liquidated Damages.
24 Executive Order No. 6711, May 15, 1934. Prescribing a Regulation
Prohibiting Dismissal of Employees for Reporting Alleged Violations
of Codes of Fair Competition.
25 Executive Order No. 6949, January 22, 1935. Non-Waiver of Constitu-
tional Rights in Connection with Codes of Fair Competition.
26 Executive Order No. 6711-A, May 15, 1934. Prescribing Rules and
Regulations for the Interpretation and Application of Certain Labor
Provisions of Codes of Fair Competition as They May Affect Certain
Homeworkers.
27 Recommended Trade Practice Provisions Formulated by the Code Planning
Committee, May 20, 1935.
28 General Labor Provisions Formulated by the Code Planning Committee,
May 22, 1935.
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A GENERAL HE VI 5?
This study relates the events which culminated in the passage of
the National Industrial Recovery Act, the early problems which were pre-
sented to the National Recovery Administration relative to the needs for
and the policies involved in the formulation of each provision which was
included in the "Model Code" of November 6, 1933; also subsequent issues
of the Model Code and amendments thereto, which were issued in the form
of Executive, Administrative, and Office Orders, and Office Memoranda.
As implied by its title, the Model Code was a guide or a model used
by the personnel of NRA and members of industry connected with code
making. The model provisions were formulated in order to obtain uniform-
ity and to expedite the approval of codas.
The Introduction deals with some of the events which culminated in
the passage of the Act; also the formulative of "A 'Model Code' for
Self-Governing Industries under the 'National Industrial Recovery Act'",
issued May 31, 1933, by the National Association of Manufacturers.
The reasons for the promulgation of the Model Code are discussed
in Chapter I and Chapter II treats of its formulation*
Chapter III relates some of the facts concerning the official
and unofficial issues of the Model Code. '. _■-'-' '-"
Chapter IV sets forth its provisions. Policy and other N.R.A.
pronouncements affecting its provisions are discussed in Chapter V.
Industry's reception of the Model Code is briefly related in
Chapter VI.
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-1-
THE DEVELOP" l./ J 0^ TT-n ".[OPEL CODE
a.'d~:qdel :t.ovi3io:"s for codes
i. 2rgd"g?ig's~
In the cc rly spring of 1935, the economic situation had "become
very desperate and nroposals for government action nere being made by
many Orou;?s and individuals. Direct relief for the unemployed, indep-
endent relief for the farmer, and a large program for public works
were among those thrown into the "public forum" for discussion. It
was obvious that in order to decrease unemployment and to increase
purchasing power industrial establishments should cooperate and move
forward together in a movement for a rapid expansion of productive
activity.
The business degression which began in the fall of 1929 caused
many Trade Associations to request aid from the Government. The
degression had bro Lght forward a number of plans for price fixing and
production control which were in violation of the anti-trust laws;
some of these plans had become known to the Department of Justice,
and public action to enforce the anti-trust laws was in progress. In
the early months of 1953 many groups were working in Congress and
through the Chamber of Commerce of the United States, the National
Association of Manufacturers and the American Federation of Labor, to
aid in drafting some type of legislation which would temporarily re-
move the stringent provisions of the anti-trust laws in order to
permit a partnership between Government and business. Industry and
labor were sponsoring the partnership proposal, and were of the opinion
that legislation permittin0 such an Act would be of great aid in
helping business to _.et out of the depression. Certain individuals
proposed a Government guarantee against loss to private construction
enterprises as an inducement to stimulate activity in capital Doods
industries. Other Oroups advocated a program whereby under government
leadership and guidance the establishments of the major industries
by voluntary agreements amon& themselves could expand their schedules
of production simultaneously for a definite period and at the same
time subscribe to a schedule of minimum wages and maximum hours.
This program was calculated to decrease unemployment, and start the
forces of recovery moving. Advocates of tho latter view 'aided in
drafting the earliest of the many bills which were discussed during
the formative period of the national Industrial Recovery Act. Some
of the bills proposed to modify the anti-trust laws with a view of
eliminating "unfair and cut-throat" competition throu0h concerted
action by trade association.
On December 31, 193?., Senator Black of Alabama, introduced a bill
(3". 5267) known as the "Five Day Week and Six Hour Day" Bill (*)
The vital provision of the bill is as follows:
"That no article or commodity shall be shipped, trans-
(*) Congressional Record, December 31, 193?, ?nd Session, 73nd
Congress, p. 8?0.
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ported or delivered in interstate or foreign commerce which
was produced or manufactured in any nine, quarry, cannery,
workshop, factory-, or manufacturing establishment situated
in the United States in which any person was employed or
permitted to work more Shan five days in any week or more
than six hours in any day, provided that, this section shall
not apply to commodities or articles produced or manufactured
before the enactment of this law."
March 10, 1933, Senator Black of Alabama intorduced, in the first
Session of the Seventy- Third Congress, a bill (5.153) (*) to prohibit
shipment in interstate commerce of certain commodities and articles pro-
duced in establishments in which vrsons were employed more than five
days per week or six hours per day. Industry, evidently fearful of the
Black bill, favored the proposed legislation sanctioning voluntary
agreements.
On May 17, 1933, President Roosevelt sent a special message to
Congress (**), which read in part as follows:
"Before the Special Session of Congress adjourns, I
recommend two further steps in our national campaign to put
people to work.
"My first request is that the. Congress provide for the
machinery necessary for a. great co-operative movement through-
out all industry in order to obtain wide re-employment, to
shorten the working week, to pay a decent wage for the shorter
week and to prevent unfair competition and disastrous over-
productions. •
"Employers cannot do this singly or even in organized
'groups, because such, action increases costs and thus permits
cut-throat underselling by selfish competitors unqilling to
join in such a public-spirited endeavor.
"One of the great restrictions upon such co-operative
efforts up to this time has been our anti-trust laws. They
were properly designed as the means to cure the great evils
of monopolistic price fixing. They should certainly be
retained as a permanent assurance that the old evils of
unfair competition shall never return. But the public
interest will be served, if \7ith the authority and under the
6ui dance of ,_.overn.aent, private industries are permitted to
..rake agreements and code insuring fair competition. However,
it is necessary if we thus limit the operation of anti-trust
laws to their original purpose to provide a rigorous
licensing -lower in order to meet rate cases of non-co-opera-
tion and abuse. Such a safeguard is indispensable."
(*) Congressional Record, March 10, 1933, 1st Session of 73rd
Congress, p. 116.
(**) Congressional Record, May 17, 1933, 1st Session, 73rd Congress,
p. 3j49.
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Cn the sa;vie day, Senator Vfagner of New York introduced a bill (S.1712)
for national industrial recovery (*). Several weeks of hearings were
held by the eonLuttees of the Senate and House. In these hearings it
became clear that what was contemplated was (l) concerted action "by trade
and industrial Orou~is to end the intense competition then prevailing;
(2) the setting up of standards of wages and hours of labor; and (3)
bivin^ the President a degree of ower over business enterprises un-
paralleled in previous peace-time history of the country.
Immediately after the introduction of the National Industrial
Recovery Bill in Congress, General Johnson, who had helped to draft the
bill, in anticipation of its nassa6e called in consultation Mr. C.
Judkins, of the Trade Association Section of the Bureau of Foreign
and Domestic Commerce, with reference to drafting information for
distribution to the trade associations as to "v/hat can business
organizations do at once now the National Industrial Recovery Bill will
soon become law?" General Johnson requested Mr. Judkins to formulate
instructions within the boundaries of the -oronosed Act, which would
be of aid to industry in drafting nronosed codes.
At this time General Johnson's idea was that it would be better
to limit code making 00 the major industries and not to nermit small
or unorganized industries to have separate codes. V'ith this in mind,
Mr. Judkins in conjunction with Dr. A. P. Haake of the Motional
Associati-n of Furniture Manufacturers, Mr. John C. Gall and Mr. Noel
Sargent of the National Association of the Manufacturers, and
representatives of the American Federation of Labor, studied the -lending
bill, and formulated a ^uide for use by industries in the preliminary
draftin3 of codes, tfhich was issued on May 31, 1933, by the National
Association of Manufacturers as "A Model Code for Self-Governi:i_.
Industries under "the rational Industrial Recovery Act". (Exhibit l)
This "Model Code" included (l) a chart _ivin,_, the most important features
of the bill; (2) a chart indicating what a trade association could do
to prepare for the Act; (3) an introduction and notes containing further
suggestions to members of industries; (4) "A Suc^estcd Form of Outline
for a Code of Fair Competition" (adapted from a code drafted by the
National Lumber : anuf; .cturers Association); and (5) a chart indicating
a "breakdown" of the many divisions of the Lumber Industry.
General Johnson, on June 3, 1933, in an address to a gathering of
business leaders called together by the National Association of
Manufacturers, explained how he believed industry and labor would both
be helped by the Act, and officially intorduced the "Model Code for
3 elf-Governing Industries." He said that this"Modcl Code," seemed to
answer their wishes for something to do at once, that they should go
back to their industries, call together their members, draft a plan
which would be of benefit to employers and employees, and submit it for
approval when the National Industrial Recovery Bill became a law.
About five thousand copies of this "Model Code" were nrintcd and
distributed by the National Association of Manufacturers. The Bureau
of Domestic and Foreign Commerce, with the -permission of the National— _
(*) Congressional Record, May 17, 1933, 1st Session, 73rd Congress,
p. 3550
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Association of Manufacturers, also printed several hundred copies and
distributed them to industries and labor organizations.
The introduction of the "Model Code for Self-Governing Industries",
in part, follows:
"This is a preliminary outline. It is designed to aid
industrial executives adapt trade associations to the immediate
requirements under the National Industrial Recover;/ Act. A
subsequent outline will be issued to meet any essential changes
which may be made in the bill. (Although this outline touches
upon all major requirements of a 'Code of Fair Competition, '
the advice of legal counsel is urgently recommended properly
to adopt the general suggestions herein given to the detailed
requirements of each individual case.)"
"l"o Code can fit all industries, but there are sufficient
features in common to justify offering what may be termed a
'Preliminary Model Code. ' This will have to be adapted to
meet particular situations, as well as the rules, regulations
and requirements which those charged with the administration
e'f the Act may subsequently, stipulate."
"The Code which follows is designed for an industry
made up of a number of closely related divisions which
compete with each other or otherwise come into such intiruete
contact with each other in common markets that a common code
and coordination is essential to them all."
"The Lumber Industry, whose proposed form of organiza-
tion is shown in connection with this Code, is an example
of such an inclusive industry. The Furniture Industry pro-
vides another example, with its sub-groups - manufacturers
of upholstery, case goods, tables, chairs, bedding, reed and
fibre goods, etc."
"For such industries, the 'Model Code' may be adopted
practically as outlined."
A brief synopsis of the text of this "Model Code," of May 31, 1933,
is as follows:
Article I - "Purpose." Contains the purpose clause.
Article II - "Participation." Provides that any member of
industry may be extended the benefits of the code, but must
accept his share of the cost and responsibility be becoming
a member of the association. ITo provision is made for
participation by non-association members.
Article III - "Divisions of the Industry" , for the purpose
of administration. Provides that industries shall be
divided into divisions, each division to designate and
establish its own administrative agency; also provides for
9810
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I i establishment of an Executive Comnitee
i . each division to administer the code, receive
idjust complaints, and consider proposed amend-
ments to the code.
Article IV - "Division Regulations". Sets forth
standards for labor, including Section 7 (a) of
the Act. Includes provision for production
control and for the establishment of methods of
cost accounting and prohibits sales below reason-
able cost.
Article V - "Emergency ..national Committee" Article
III referes to this Committee as the one author-
ized to adopt and administer a code for a division
if the division fails to perform its obligation.
It was to be the general planning and coordinating
3, ency jf the industry.
Article VI - "Industry Regulations," This article
empowers the Emergency ITatiohal Committee to es-
tablish a marketing code with respect to (a) group
selling; (b) classification of outlets or purchasers
and recognition of standard and economically justifi-
able -price differentials among them; (c) division of
consuming territory into market areas, providing for
plants best equipped to serve particular markets, to
concentrate sales efforts in such districts; (e) sim-
plification and standardization of products; (f) co-
operative advertising for the industry; (g) collection
and interchange of credit information; and (h) co-
operative administration of insolvent debtors.
The Trade Practice rules suggested are as follows:
Price discrimination, commercial bribery, misrepre-
sentation, rebates, terms of sale, false invoicing,
freight absorption, piracy of design, dumping, mis-
branding, free goods, and interference with contracts.
Article VII - "Statistics" Requires members of the
industry to furnish, and the Emergency national
Committee to gather, statistical information for
the purpose of Administration.
Article VIII - "national Control Committee" Provides
for the appointment of national Control Committee,
to act as an Executive '-.. ency for the Emergency
National Committee and to be charged with the en-
forcement of the code, and with the duty of adjust-
ing complaints, and considering proposed amendments
to the code.
Article IX - "General" prohibits interpretations
or applications of code provisions so as to:^
promote monopolies, permit or encourage unfair
9810
-o—
competition, eliminate or oppress or discriminate
against small enterprises. The President is given
power to cancel or modify any provision of a code.
The Emergency national Committee is empowered to
submit amendments to the code. The appropriate
steps to be taken "by each division for the sub-
mission of a division code are set forth in detail.
While the National Incus trial Recovery Bill was being
debated in Congress, many industries, anticipating the passage of the
bill, called their members together and dismissed the formulation of
their codes. The "Model Code for Self-Governing Industries" was used
as a guide in this early code formulation, as is apparent in the first
twenty or thirty codes approved by the President and many of the other
early drafts of codes submitted for approval.
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CHAPTER I
REASONS F0~ P:i: ICLGATIOI: OF MODEL CODS. NOV. 6. 1933.
I. PROPOSED CODES 'TEBE RAPIDLY BEING- FILED T7HICH ¥ERE DIFFERENT
IE APPROACH, TREATMENT, AMD EXPRESSION.
The National Industrial Recovery Act as passed "by Congress and signed
"by the President on Jun^ 16, 1933, differed "basically from the proposals
which gave impulse to the Act. The President, immediately after signing
the Act, issued a statement in which he commented on the Act and "briefly
explained the procedure to he used "by associations in filing codes and
the machinery to he used hy NRA in aporoving codes. This Bulletin stated
in part as follows '-
"The lav I have just signed was passer! to. nut people
hack to ™ork — to let them huy more of the to ro ducts of
farms and factories end start out business at a living rate
again. This task is in two stages — first, to get hundreds
of thousands of the unemployed hack on the payroll hy snow-
fall and second, to plan for a better future for the long
pull."
* # * * * *
"As to the machinery — the practical way of accomplish-
ing what we are setting out to do, when a trade association
has a code ready to submit and the association has qualified
as truly representative, and after reasonable notice has been
issued to all concerned, a public hearing will be held by the
Administrator or a. deputy. A Labor Advisory Board appointed
by the Secretary of Labor will be responsible that every af-
fected labor group, whether organized or unorganized, is fully
and adequately represented in an advisory capacity and any in-
terested labor group will be entitled to be heard through
representatives of its own choosing. An Industrial Advisory
Board appointed by the Secretary of Commerce will be responsible
that every affected industrial group is fully and adequately
represented in an advisory capacity and any industrial group
will be entitled to be heard through representatives of its
own choosing. A Consumers' Advisory Board will be responsible
that the interest of the consuming -oublic win be represented
and every reasonable opportunity win he given to any group or
class who may be affected directly or indirectly to present
their views."
"At the conclusion of these hearings and after the most
careful scrutiny by a comoetent economic staff the Administrator
will present the subject to me for my action under the law."
981C
"Under Title I of this Act, I have appointed Hugh
Johnson as- Administrator and a Special Industrial Re-
covery Board -under the chairmanship of the Secretary of
Commerce. This organization is now prepared to receive
proposed codes and, conduct prompt hearings looking to-
ward their submission to me for approval. While accept-
abl e pro-posals of no trade .group will "be delayed, it is
my hope that the 10 ma.jor industries which control the
"bulk of industrial employment can submit their simple
"basic codes at once and that the country can look forward
to the month of July, as. the "beginning of our great nation-
al movement hack to work. " ■
On the same day the Act was signed the Trade Association Section of
tho Bureau of Foreign and Domestic Commerce issued a "bulletin outlining-
the provisions of Title I of the Act, as an aid to industry in drafting
proposed codes.
June 19, 1933, the Special Industrial Recovery Board, appointed "by
the President "by Executive Order No. 6173, held its organization meeting
at the Department of Commerce. General Johnson, now the NRA Administrator,
presented to the Board a detailed statement of action already taken toward
setting up an organization for the administration of the statute, and
various questions of policy in connection with the form of the organiza-
tion and the steps to "be taken under the Act were considered. The Board
approved the issuance as NRA Bulletin No. 1 of the President's statement
of June 16, 1933, and also issuance as Bulletin No. 2 of a guide to in-
dustry for preparing and securing codes of fair competition.
It was the consensus of the Board that the procedure adopted should
place the initiative upon industry, and that the functions of the Govern-
ment should be primarily directed toward stimulating cooperation in in-
creasing purchasing power "by putting additional labor "back to work while
at the same tine protecting the consumer against premature price increases.
The purpose of Bulletin No. 2 was to inform all trade associations
and industrial and labor groups how to proceed 'to secure the benefits of
the Act. Relative to the content of the codes the following was stated:
"It is not the function of the National Recovery
Administration to prescribe what shall be in the codes
to be submitted by associations or groups. The initia-
tive in all such matters is expected to come from within
the industry itself "
Upon the issuance of Bulletin No. 2, NRA Press Release No. 4 was
given out, reading as follows:
"Basic principles which will guide the National
Recovery Administration in consideration of "codes of
fair competition" were announced today by Administrator
Hugh S. Johnson in offloiaO Bulletin No. 2.
9810
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"The Bulletin emphasizes the fact that the initia-
tive in the recover"'' program rests upon industry itself
and that 'it is not the function of the National Recovery
Administration to prescribe what shall he in codes
or to compel the organization o f either industr-'- or labor.'
'"Basic Codes' the bulletin continues, 'containing
provisions respecting maximum hours of labor, minimum
rates of pay and conditions of employment, which are in
themselves satisfactory, will be subject to approval,
although such conditions may not have been arrived at by
collective bargaining. '
"Again emphasizing the purpose of the Act to encourage
'a voluntary submission of codes,1, the bulletin points out
the penalty provisions of the law applicable to industries
which fail to comply voluntarily.
"The bulletin invites the immediate submission of
simple Basic Codes by the ten largest industries, as sug-
gested by the President when he signed the' Act, the codes
to cover 'only such agreements' as meet at once the three
objectives of the Act, namely, 'Maximum hours of labor, min-
imum rates of wages, and such means as each industr2r may
find necessary to protect its constructive and cooperating
majority from the wasteful and unfair competition of minori-
ties or recalcitrants. '
"The basic codes, it is suggested, should propose an
'average work wee1: designed so far as possible to provide
for such a spread of employment as will provide work for em-
ployees normally attached to the particular industry. '
"Likewise codes should propose a minimum wage scale
'sufficient in fact to provide a decent standard of living
in the locality where the workers reside. '
"Broad protection for the interest of the public as
consumers is assured by specific provisions for representa-
tion at all hearings, to the end that the effect of increased
money wages shall not be offset by too rapidly mounting prices. "
A proposed Cotton Textile Code was submitted to the National Re-
covery Administration by the Cotton Textile Institute the day the
President signed the Act. The first code submitted. It was formulated
during the Congressional debate on the Recovery Act by conferences
among representatives of the industry with the assistance of General
Johnson and his aides.
A large majority of industries and trade groups desired to cooper-
ate with the President in the recovery movement, and were preparing
codes to be submitted under the provisions of Section 3(a) of the Act.
The result was that NRA was soon flooded with codes of all types
imaginable.
9810
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Jul-
jisted below are some of the prominent codec filed during June and
(1
(7
(3
(9
(10
(11
(12
(13
(14
(15
(16
(17
(18
.(19
(20
(21
(22
(23
(24
Cotton Textile
Cast Iron Soil Pine
Lumber
rSaSpbuilding and Shiprepairing
Petroleum
Coat and Suit
Iron and Steel
Wool Manufacturers
Kay on Heaving
Hay on and Synthetic Yarn
Electrical Manufacturing
Clothing Manufacturing
Lace Manufacturing
Millinery
Cotton Garment
Wall Paper
Photographic
Corset and Brassiere
Pull Length Dramatic and Musical Theatrical
Industry
Dress Industry
Automobile Industry
Retail Dry Goods
Pood and Grocery Dist. Trades
Lime Industry
June
16
June
22
July
11
1!
12
II
13
II
13
It
14
1!
15
II
16
II
19
II
19
11
19
II
21
1!
22
11
25
II
27
11
27
11
27
II
27
II
28
II
29
II
31
11
31
11
31
As of Jul]- 10, 1935, one hundred and six national and local codes
had "been received. By August 8, three hundred and ninety-nine codes
classified as having a national status had "been submitted.
Prom June 16 to September 5, 1933, eight hundred and thirty-three
national codes were filed. The breakdown as to periods of filing are as
follows:
Period
Number
June 16 - July Id
July 15 - July 31
August 1 - August 15
August 16 - August 31
September 1 - September 5
65
144
262
284
78
Prom September 5 to September 23, 1933, inclusive, the classification
of the codes received is as follows:
Classification
Period
September 5 - 9 inclusive
" 11 - 16 "
" 18 - 23 'I
National
95
61
29
AAA. Non-National Total
9
0
12
234
368
239
338
429
280
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-11-
At the close of business September 23, 1933, the total number of
codes received subsequent to June 16, was as follows:
National 981
Non-National 2634
Total 3665
From June 16, 1933, to January 2, 1934, the total number of codes
received was:
National _ 928
Local 2552
Supplemental 263
AAA 553
Total 4296
II. UNI303LIITY WaS DESIRABLE
Bulletin No. 2 stated: "It is not the function of the National
Recovery Administration to prescribe what shall be in codes to be sub-
mitted by associations or groups. The initiative in all such matters
is expected to come from within the industry itself." This statement
apparently misled some associations into believing that it would be
possible to secure approval of trade practice provisions advantageous
to their particular industries only; evidently they were forgetful
that one of the main reasons for "the act was to decrease unemployment
and increase purchasing power. Uniformity of provisions was desirable,
because public understanding would depend in substantial degree upon
the adoption of simple rules and provisions in codes. Furthermore, if
a large number of industries' were under similar provisions, the question
of compliance would present fewer problems.
Up to the first of August, 1933, with the aid of the "Model Code
for Self-Governing Industries," previously described, NRA Bulletin No,
2, the "3asic Code for Substitutions before the Policy Board in PEA",
(See Z:±Libit 2), (*) and the provisions of approved codes, industries
were drafting codes of many types and forms.
III. EXPEDITION 77AS NEEDED.
As implied in the President's message when he signed the National
Industrial Recovery Act, the codes submitted by the ten major industries
would be given first consideration by the NRA. The immediate task was to
put codes through the mill, and to get people back to work.
Bulletin Ho. 2, also stated: "It is the purpose of the Act to en-
courage a voluntary submission of codes of fair competition and the pro-
cedure offered by those provisions (Bulletin No. 2) for basic codes is
intended to simplify and expedite this process."
(*) See "The President's Reemployment Agreement"
A Division of Review Reoort.
-12-
It was the Administration' s desire to have codes submitted,
approved, and set in operation as soon ?s possible, because time was
of the essence ii unemployment was to be relieved before winter set in.
Nevertheless, the negotiations and approval of the Cotton Textile
Code required about three weeks and first it seemed that the code mill
was grinding a lowly, for only eight codes (Cotton Textile, Shipbuilding
and Ship re-pairing, Wool Textile, electrical Manufacturing, Coat and
Suit, Lace Manufacturing, Corset and Brassiere, and Ligitimate Full
Length Dramatic and Musical Theatrical) were approved ''oy August 16, two
months after approval of the Recovery Act.
However, curing the ensuing two months 49 codes were approved and
by Mid-October there was increasing realization in NBA of the need of
stock taking with respect to the provisions alreac.y approved and
daily receiving pp .roval.
IV. NBA POLICY EAD NOT BEEN DEVELOPED.
At the time of the establishment of the Code Analysis Division
in ERA, about July 15, 1933, no general policies, regarding the
provisions to be included in codes, had been announced by the Adminis-
trator. This Division adopted its own standards for checking proposed
codes, and these standards were established upon the Act which provi-
ded that specific (obligatory) provisions be included in every code
approved by the President, NRA Bulletin No. 2, and the precedent estab-
lished b; the codes approved up to that time. It was upon these
standards that the codes were checked and analyzed. In the analysis of
a code the attention of the Deputy Administrator in charge of the
code was called especially to any price-fixing and production control
devices which in the opinion of the Division weie economically undesir-
able. These analyses were purely advisory and were furnished to the
Deputy Administrator in charge of the specific code; the Industrial,
Labor, and Consumers1 Advisory Boards; the Legal Division; and the
Research and Planning Division.
In October, 1953, the Code Analysis Division was abolished;
therefore the responsibility of passing on the representative character
of the applicant group was placed upon the Deputy and his legal adviser.
The code checking process was transferred to the Deputy, his advisers,
and the Code Assistants of the newly created divisions, on October 25,
1933.
V. INDUSTRY WOULD BE AIDED Id FORMULATING CODES FOR PRESENTATION.
After a. few weeks of hearings on the codes first submitted,
it became obvious that many of the provisions proposed by industry
would be rejected by NBA, yet during the early months of code making,
ERA had not issued any guide for code drafting that could be used
by Industry. A result was prolonged negotiations and delays in the
approval of codes. During the months of July through October, industry
used as one ruide in code drafting the first twenty or thirty ap jroved
codes. The officials of NBA. realized that in order to obtain uniformity
and to expedite the process of code making industry should, have an
an official guide.
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-13-
1'TRA Press Release No 7, of June 22, 1933, carried a story of a
tin, of Dudley Gates, Assistant Administrator, NRA, with represen-
tatives of the United Typothetae of Anerica. The following are excerpts
from the release:
"Mr. Cates at the outset clarified two misconceptions
which many business men have carried to Washington with
them when they have come to discuss codes for their indus-
tries. The government, he' declared, had no intention of-
telling industry what it must do - the initiative must pro-
ceed from within industry inself. "
"ITor does the Admin-i strati on contemplate price-
fixing as pert of its function. Price agreements- propo-
'sed by separate industries are subject to aporoval, Mr. _
Cates explained, if they are not monopolistic in inten-
tion ox .effect or otherwise opposed to the public in-
terest. "
*
Industrie.., basing their hope- on such statements as were made
by the Assistant Administrator, flooded NBA with many novel devices
for price fixing and other fantastic provisions. The codes were
generally lacking in uniformity.
The Administrator, in a radio address of August 23, 1933, opened
his speech with the following:
"The first month of effort under the President's
Reemployment Program .is drawing to a close. A' principal
yiu- jose was to s^eed up the submission p_f cod.es. We
are happy to report to you that it has had, effect end-
that , '-'ith _a very few exceptions, ~:racticelly the whole
of American industry and, commerce have submit tea co de s
for yublic ". eaiings. In addition to these codes over one
and onc-h.-lf million individual agreements have been
signiecL. I'ew signatures are coming in at the rate of one
millions aonth and the intensive effort in the various
con1.' ranities cloes not begin until next week."
As stated by the Administrator, -Industry had submit tea codes
covering about every type of business in the United Sta.tes. However,
these codes had been formulated without the aid of a "Model Code" from
ERA.
9810
-14-
CHAF'JBR II
FORMULATION OF" MODEL CODE
From the time of the establishment of the NRA, various officials
had seen the necessity for the ■uniformity of code provisions, and a
few attempts had "been made to formulate a Model Code. Mr. William P.
Farnsworth of the Legal Division took the initiative in the formulation
of the first Model Code to he used by any part of the NRA, drafted a
"Model Code" (See Exhibit "3") , which on August 7, 1933, was distributed
to the members of the Legal Division for their comments. Copies were
distributed subsequently to the heads of the Industrial, Labor and Con-
sumers Advisory Boards, and of the Research and Planning Division. The
comments received, in reply to this memorandum were duly considered, and
a "Rough Draft tf4 of Model Code (See Exhibit "4") was issued about
August 10th. This draft was used only within the Legal Division. It
set forth the purpose of tphe Act; definitions; general labor provisions,
including .Section 7(a) of the Act, prohibition of child and penal labor,
maximum hours and minimum wages; provided for the administration of the
code, the establishment of an industrial relations committee, and mod-
ification of the code. Objections were raised by Mr. Richberg to this
draft, and the issuance of this Model Code was held up.
While the formulation of a model code was an NRA problem, historic-
ally it must be noted, that in April, 1932, more than a year before the
passage of the National Industrial Recovery Act, the Bureau of Foreign
and Domestic Commerce of the Department of Commerce, desiring to aid the
trade associations, which were fast losing membership and due» because
of the business depression, issued an "Ideal Charter for Trade Associa-
tions" (Exhibit 7) . The purpose of this charter which was in a way a
forerunner of the NRA Model Code, to call the attention of trade associa-
tions to the scope of co-operatives which they could carry on. Many
groups at that time were "in a fog" as to what they could do within their
l<?gal rights without incurring the penalties of the anti-trust laws.
Frederick M. Feiker, Director of the Bureau of Foreign and Domestic
Commerce, presented this charter at the April 5, .1932, session of the
Annual Award Meeting of the American Trade Association Executives, held
in New York City.
The chief authors of this "Ideal Charter" were C. J. Junkin, of
the Law Division of 'the Department of Commerce, and C. Judkins, head of
the Trade Association Section, Bureau of Foreign and Domestic Commerce.
The "Ideal Charter" was revised by Mr. Judkins, and on May 26,
1533, the revised form known as the "Model Charter" was introduced be-
fore Congress by Congressman Celler of New York, member of the Judiciary
Coramittee of the House of Representatives. It was apparently Mr. Celler1 s
belief that the Government should aid business in establishing some form
af partnership agreement to permit greater business stability under the
anti-trust laws.
Mr. Celler' s address to the House of Representatives and the Act
introduced by him, are to be found on pages 4399 to 4403 of the Congress-
ional Retford of May 26, 1933.
9810
-15-
The Model Charter as referred to above was used by the Code
Standardization Group, hereinafter discussed, in formulating the pro-
visions of the Model Code.
In late July, 1933, a committee, known as the NRA-Commsrce Committee
on an American Basic-Code of Fair-Fractices , composer! of John Guernsey,
Chairman; C. Judkins, Secretary; Blackwell Smith; T. McFadden, and H.
Heyden, had started a survey of the many hundred Codes filed by that
time with the NRA, the resolutions voluntarily adopted by industry
through its various trade associations, the rules approved by the Fed-
eral Trade Commission at trade practice conferences of approximately
150 industries extending over a period of 15 years and agreements of
accuracy and fair practices in advertising and selling developed by
better business bureaus and American newspapera. The Committee in its
report of September °8, 1933, to the Legal Division of NRA (See Exhibit
6) recommended the adoption by NRA of 16 basic rules to be used by all
industries in codes of fair competition. The subjects covered by the
16 basic rules were as follows: (l) inaccurate advertising; (2) bait
advertising; (3) inaccurate labelling; (4) inaccurate references to
competitors; (5) claims of "We undersell everyone"; (6) selling below
cost; (7) threats of law suits; (8) secret rebates; (9) free goods;
( 10) selling on consignment; (ll) bribing employees; ( IS) false billing;
(13) interference with another's contracts; ( 14) repudiating one's own
contracts; (15) "tying" and block hooking contracts; ( 16) "black lists."
The Committee was of the opinion that the above basic principles
were sufficient to cover practically any case of unfair practice in
industry or trade.
In drafting the 16 basic principles, the Committee found that
while unfair trade practices could be covered by these principles,
there had been more than a thousand ways of stating them.
Relative to enforcement of the unfair trade practice provisions
in codes, the Committee in its report made the following comment:
"Unfair practice provisions in any Code of fair
competition for an industry will have little value
unless they are feasible for practical enforce-
ment. No industry is completely isolated. It has
some relationship with other industries either
through a 'vertical' association as one of the
steps between production and consumption or through
a 'horizontal' arrangement of industrial contact.
"The whole code structure. is so directly balanced on
the theory of '5USINES3 GOVERNING ITSELF' and
prompt protection hy enforcement that unless the
mean's of enforcement are clearly understood and
easily demonstrated it will be practically im-
possible to ohtain any material degree of com-
pliance. The uniformity of provision and procedure
in enforcement will eliminate that difficulty entirely."
9810
-16-
The "Model Code" of November 6, 1933, included twelve of the six-
teen fair practice provisions which were recommended by the NRA-
Commerce Committee on the American Basic-Code of Fair-Practices.
Early in September, 1933, as a result of an effort to improve the'
effectiveness of the NRA Research and Planning Division, a committee
was named to study the problem of the standardization of code provisions.
The membership of this committee, known as the Code Standardization
Group, was partly from outside NRA and was as follows:
Alderson
Barkin
Compton
Coles
Cope land
Cocoran
Cover
Culberson
Creditor
Edwards
Engle
Gates
George
Glasgow
Guernsey
Haake
Halstead
Hammond
Heyinger
Heydon
Ho r ton
Hunt
Jeffrey
Judkins
Junkin
Ludlum
Massel
Iv'eyer
McFadden
Rice
Shannon
Shields
Smith, L.M.C,
Stone
Thompson
Ward
Wilmotte
Worthy
Young
Department of Commerce
Labor Advisory Board
Industrial Advisory Board
Public Relations Division
Central Statistical Board
AAA
Central Statistical Board
Industrial Advisory Board
Executive Office'
Consumers' Advisory Board
Department of Commerce
Labor Advisory Board
Department of Commerce
Deputy Administrator, NRA
Trade Associations
Trade Associations
Office of Deputy Administrator King
Trade Association Division
Industrial Advisory Board
Better Business Bureaus
Federal Trade Commission
Consumers' Advisory Board
Executive Office
Department of Commerce
Department of Commer'ce
Office of Deputy Administrator Whiteside
Consumers' Advisory Board
Research and Planning Division
Trade Associations
U. S. Census Bureau
Legal Division
Office of Deputy Administrator Davis
Legal Division
Research and Flanning Division
Central Statistical Board
Office Deputy Administrator Simpson
Labor Advisory Board
Office of Deputy Administrator Howard
Office of General Hammond
9810
-17-
This group was asked to formulate the provisions of n "Model
Code" which could be released by the Administrator, and which would
contain the results of the experience gained by tne unofficial copies
of model cod.es previously circulated among the personnel of NP.A, other
governmental agencies, and outside organizations'.
It is noted that the Department of Commerce, Federal Trade Comi-
mission, Central Statistical Board.', Agricultural Adjustment Adminis-
tration and Census Bureau, as well as trade associations and better
business bureaus, were represented in the Code Standardization Group.
Some of the members were among those who aided in drafting the "Model
Code for Self-Governing Industries" issued by the National Association
of Manufacturers, May 31, 1933.
Those of the group from the Bureau of Foreign and Domestic Commerce
of the Department of Comrerce, the Federal Trade Commission and the
trade associations were familiar with the codes of ethics of various
industries. Many of the provisions of the codes of ethics were examined
and some were included as fair trade practice provisions of the "Model
Code". Tne practices condemned in the Federal Trade Commission's orders
to cease and desist were also duly considered (See Exhibit 5).
On October 17th the Associate Counsel directed to the Executive
Officer the following memorandum:
"From: Blackwell Smith
"To: Alvin Brown
"Subject: Folicy Questions
"1. In general, do we wish to assume the administrative burden
of extreme provisions .in any more codes or have we enough ex-
periments underway with the 200 or so codes now about complete.
"2. Fair Trade Fractice Frovisions:
"Whether to encourage, permit or discourage inclusion in
codes of trade practice provisions which cannot clearly be es-
tablished in the record as necessary for protection to the
industry.
"(Ferhaps policy of requiring report of Code
Authority on desirability thereof.)
"3. Frice Control:
"Whether to encourage, permit or discourage:
11 ( a) any actual price fixing:
"(b) protection of sellers stipulated resale price.
"(c) provisions protecting 'cost' plus reasonable
return on investment.
9&10
-18-
"(d) provisions protecting seller' s ' cost ' , includ-
ing all items included in that term by good
accounting practice.
"(e) provisions protecting production or direct cost.
"(f) prohibition of sales below lowest cost or lowest
reasonable cost for the industry or subdivision,
(with or without aid of an impartial agency in
determining the same) .
"(g) open price systems (with or without periods of
notice before changes of published prices are
permitted and with or without distribution of
the actual price lists to competitors) .
"(h) provisions empowering code authorities to adjust
published prices or suspend operations of pub-
lished prices.
" (i) handling of price control for service industries, and
how.
" 4 . Limitations on product ion :
"(a) new productive equipment
"(b) limits on use of existing
"(c) allocation of production
" 5 • Investigation :
"(a) Whether to encourage, permit or discourage pro-
visions giving code authorities or trade asso-
ciations full, moderate or minimum powers of in-
vestigation (either directly or by means of 'im-
partial agents') with reference -to members of
the particular industry or
"(b) Whether to limit code authorities' and trade
associations' investigatorial powers and pro-
vide for reference to N.R.A. of matters, re-
quiring investigation.
"6. Enforcement :
(same questions as under No. 5 above)
"7. Expenses of Administration:
"Whether to permit apportionment of expenses of code ad-
ministration or non-assenting members of industry (making payments
of share of expenses a condition of right to use of code insignia
of participation in code authority activities, or otherwise).
9810
•19-
"Whether to permit code authorities to require sworn statements
from industry.
"9. Labels;
"whether to permit provisions
"(a) requiring labels fror: all who comply
"(b) permitting code authorities to control issuance
of label s.
"10. Comnilation of Statistics:
"Whether to encourage, permit or discourage code authorities
to compile and distribute statistics, or whether to require that
reports from industry be transmitted to Washington directly or
through the Code Authority, with or without rights of trade Associa-
tions to make use of the same for compilation and distribution to
members.
"11, Reporting Periods;
"whether to require reports for periods constituting multiples
of weeks.
"12. Accounting Systems;
"Whether to permit codes to require new cost accounting systems
or whether to tie down accounting to Internal Revenue methods.
"13. Handling; of coops;
"Whether to require insertion of clauses in each code - whether
to encourage a single code or whether to provide by Executive Order
that genuine cooperatives are exempted from rebate provisions.
"14. Physically or i.Ientglly Disabled;
"(a) How best to handle competition of products of charitable
institutions, etc. (Permit sale at not mere than fo
below?).
"(b) The question of the aged, cripples, etc. receiving less
pay in codes. (except them from minimum wage provisions?),
"15. Exoort Business:
"How to treat in Codes; (set standards and except export
business specifically from the inappropriate provisions?).
"16. Import Business;
9810
-20-
"17, Prison G-oods:
^Ho-r to -handle competition of prison goods - probably in a
compact betY/een President and States; (for"bid sale below competitive
prices in private commerce?).
"18, Local Situations;
"Whether to permit local codes or agreements -
"IS. Labor Agreements;
"Where to draw line as to and how to handle labor agreements
submitted for approval of President under S.7 (b).
"20. Trr.de Ass'n. Functions;
"What to provide to cover part of trade ass'ns. in code ad-
ministration,,
"21. Control of Distrib's. by Producers:
"Whether to permit boycott for failure to maintain fair practices
of producers code, resale prices, etc,
"22. Inequitable Restrictions;
"Whether to permit requirements of majority vote of Boards or
of Assoc, members for admission of new members.
"23. Unions;
"Writing union contracts into codes (especially preferential).
"24. Code Authority;
"General scope of authority.
"25. Appointment of Code Authorities;
"Appointment of rep's, on Code Authorities - (without vote, to
rep. to rep. Admin, or such other groups as he may designate?).
"26. Use of Trade Assoc. Board or Ex. Committee as Code Authority;
"27. Protection of minority in selection of Code Authority;
"Whether to require, and if so how, that minority have 'a right
to appoint one or more representatives. .
"23. Control of .Employees;
*
"By indirection yjhen practices against employers interests.
9810
"29; Exceptions, exemptions, etc.;
"what tc do about legitimate requests coding up more than 10
days after code goes into effect.
"30. rorvrerd Contracts:
"(a) Whether to provide in codes for relief of seller
as. "oer PSA.
"(b) Policy in excepting from that provision of PRA.
"31. Price. Increases:
"Whether to require provisions against sane in codes.
"32. Changes in by-la"S. of Tro.de Associations after approval:
"Whether to reqaire submission for approval etc.
"33. Differentials above minimum wages:
"Ho1- best to ;orcvide for maintenance of same and whether
absolutely to require such provision in each code,
"34. Arbitration Clauses: . . • . .
"Thetner to insert American, Arbitrary Association Clauses;
what to do -bout facilities, rules :\nd regulations.
"35. Po-Ters under sec. 5(e):
"TTkether to treat as supplemental for codes or inclusive of
all pov/er of relief ".s to imports.
"36. Right to give Premiums:
"Whether to protect the concerns doing this business and where
to draw the line.
"37. Percentage of Industry equal to true rep:
"38. Contents of Blanket Executive Order:
"(a) Making reports to government confidential
"(b) Requiring all persons having knowledge to give it
when requested, in reports, in any investigation
( subpoena) .
"(c) Access of books and other sources (subpoena).
"(d) Investigations by IIRA.
9610
-22-
"39. Amendments of Codes:
"Hot ice, formalities, assent.
"40. Handling of codification of Industries:
"In outlying possessions.
"41. Handling of Salesmen in Codes:
"42. Adoption and Use of Code Insignia:
"43. Handling of Professions:
"Encouragement of agreements with the President (?).
"44. The North-South Differential:
"45. Protection to the Hegro: "
To further develop the Administration's position on the questions
raised in the foregoing memorandum, an informal committee consisting of
representatives, of the three advisory "boards and of the Research and
Planning Division and the Associate Counsel, met a day or two subsequently
at the suggestion of the latter, and on October 20th made the following
recommendations, among others, to the Administrator:
" I • I r o c o dur al Re c come ndat i oxis :
"1. Small Industries
"A survey should be made and ail efforts centered temporarily
on codes affecting more than, say 15,0(10 employees. To prevent
loss of time during postponement of any code, industry should be
given Model Code and scheduler qf information to complete. . When
reached, their codes should go through quickly if they use the time
on these. Small industries caught in peak seasons by. PRA should be
given exceptions rather than talcing time for codes to meet their
problems,
"2. Model Code.
"The model outline for codes should be farther polished,
given general approval (subject to HRA complete freedom in its
application to specific codes) and made freely available. (*)
"II, Recommendations for Uniformity on Substance of Codes.
"l
• fcodel Code Contents-
"Each clause in the model code would be clearly marked as
(*) The "model outline for codes" referred to (Exhibit 9) was dated
October 1, 1333, See also Chapter III of this report,
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•23-
'G-enerally Applicable1 or 'Merely Suggestive1 and the 'Generally
Applicable ' class should be expected from all industries unless
good cause is shown as to their inappropriateness.
"2. Price Provisions.
"II ore tine is spent on price provisions than any other single
variety.
"(A) Until final decision of the President's Price Committee,
it is recommended that we oppose:
"(a) Any real direct or indirect fixing of sales prices
as opposed to minimum prices, except perhaps in
wasting natural resource industries;
"(h) Any provisions forbidding reduction by distributors
of the producers' stated resale price;
"(c) Any provisions forbidding sale below 'cost' when
the term is undefined, or includes any inflationary
items such as depreciation, return on capital, etc.
"(d) Any provisions forbidding sale below the particular
seller's own cost, no matter how defined, because
"(i) separate determination of cost of each party
complained of means hopeless morass administra-
tively and
"(ii) seller should be permitted to meet price of a
competitor if latter not selling below his
own cost.
"(B) It is recommended we raise no objection to:
"(a) Provisions prohibiting sale below properly defined
costs for lowest fo of the Industry as determined
and published by any approved impartial agency.
"NOTE: The findings could be made on a reasonable
but arbitrary engineering and accounting basis,
would avoid difficulty of actual determination of
any one concern's costs (impossible with precision)
and when published could be directly compared with
actual prices of members of industr?/-; would be
entirely self-policing if published minimum were
freely available.
"(b) Provisions for true open price systems, meaning
"(i) published prices of effective within not more
than 10 days in complex industries or 5 days
in simple
9810
~24r-
"(ii) not to be incapable of withdrawal for any-
period of time
"(iii) Hot to be subject* to veto or modification by
any agency .and
"(iv) To "be generally published for "benefit of
buyers as well as sellers.
"3. Code Authorities.
"Standardization on this point would save- much time. It is
recommended that:
"(a) The Code Authority may be the Board or Executive
Committee of a Trade Association or a combination of several, where
more than one association, but
"(b) T/here trade associations do not cover practically entire
industry, at least two regular members of Code Authority should be
selected by non-association members voting by themselves without
participation by association members.
"(c) The Administrator should be given the right (to be un-
iformly exercised in the major industries ..but perhapd only in special
cases among small industries) to appoint not more than three non-
voting members.
"(d) Power of Code Authority to be normally limited to
"(i) administrative matters without discretion in matters
affecting rights and property of members of industry.
"(ii) collection of reports of all concerns and passing
same on to Washington and to legitimate trrde
associations.
"NOTE: In view of desire to strengthen trade
associations important functions such as compilation
and analysis of report's from industry for benefit
of members of the industry, can well be left out of
Code Authority and be made peculiar privilege of
Trade Associations in serving their members.
"(iii) distributing information, interpretations, etc. to
industry.
"(iv) collecting and properly referring or administratively
caring for complaints.
"(v) making recommendations to the administrator.
9310
-25-
"(e) Powers of Code Authority should not include
"(i) any judicial functions (except as it can provide
facilities for impartial arbitration).
"(ii) any power to investigate into books and private
affairs of members of industry except through ap-
proved impartial agent.
"4. Expenses of Co^e Administration,
"Since nc one had shown a strong ground for believing we can
assess expenses of code administration on all, including non-assenters,
it is recomnended.
"(a) that exroen^es of Cede Authority be kept down, as per above
limitations, leaning on trade associations.
"(b) that a Code Insignia, including the Blue Eagle be devised
at once, and mads 'available only to those who express
assent.
"(c) that only assenters be permitted to participate in selec-
tion of rembers and in the activities of the Code Authority.
"(d) That if this problem seems serious in January we put it up
to Congress, along with other matters then requiring
attention.
" 5. Union Agreements in Codes.
•"It is recommended:
"(a) That no union agreements, existing or prospective, in-
volving separate concerns, be written into codes.
"(b) 'That no union agreement be permitted to be made by the
code a standard for all, including nonparties thereto, in
a locality, until submission to and a;or>roval by KRA.
"(c) That no union agreement be made by a code the standard
for all in any locality, without consent of a very sub-
stantial majority (at least 65J5) of the industry in-
volved.
"6. Statistics
"(a) In view of the practically uniform objection of industry
to Office Order Ho. 34, it is suggested that a new clause
be prepared to cover the entire matter of furnishing re-
ports ~oy members of industry, whether through Code Au-
thorities or directly to the Administr-tor, so that the
requirement of the claure in Office Order Ho. 34 shall
not have the ap "e^r-nce of a, purely additional require-
ment. It may be provided that the Administrator may de-
5810
-26-
ternine whether such reports are- to be furnished directly
or through the Code Authotity, and to what government
agencies they shall "oe sent.
"(b) In order to reassure industry as to the protection of
information sent through to Washington, and in order to
add dignity to the whole natter of furnishing reports,
it is recomnendcd that. rules and regulations on this
matter "be prescribed along the lines suggested by the
Central Statistical Board and Secretary Perkins at an
earlier date,. A rough draft of such an executive order
is available.
"7. Labels;
"(a) It is recommended that provisions nay properly permit the
use of an N.R.A. label by those complying with the Code,
and may forbid such use by those who do not comply with
the Code, but that we not permit provisions compelling
the use of N.R.A. labels.
"(b) Code Authorities may control the issuance of labels,
but should not have final discretion to determine that
any members of industry are not entitled to the use of
labels.
"8, Limitations on Production;
"This sort of provision is an example of the special provisions
which should' not be permitted unless a clear showing can be made on
the record that the needs of the industry really demand the same, as
such limitation can only be permitted if the Administration assumes
heavy resppnsibility to observe the operation, and a very large per-
centage of codes already in final stages places such responsibility
on the Administration. The sane comment applied to provisions limiting
new productive equipment and allocating production.
" 9 . Control of Distributors by Producers;
"The comments made in the last paragraph apply likewise to pro-
visions whereby one branch of the industry seeks to control the
practices of another branch of the industry. Such control is fre-
quently requested and raises extreme difficulties of legislation of
one group for another,
"10. Export Business;
"In general, any trade or Industry Involving exoort phases
should be covered by the entire code, with the exception of specified
provisions which can be shown to be inappropriate or undesirable for
export business (including in this category, price and trade practice
provisions, but never including labor provisions).
9810
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"11. Insular possessions:
"This matter should be handled by covering in codes the entire
United States, including all possessions, subsequently appointing
deputy administrators for each possession, and holding hearings in
e.-ch possession at hich the special treatment required for the
particular possession involved may be worked out for each affected
industry, all as set forth in a full memorandum prepared under
direction of Mr, Alvih Erown and the Legal Division.
"12. Prison Goods:
"This matter should be handled by a compact between the
President and the States, which is now in preparation, and provisions
in codes in the meantime, if any, should be made operative only
until the effective date of such compact. Any provisions in codes
should probably be aimed to forbid transactions in prison goods at
prices lower than the lowest reasonable cost or price of the same
in private commercec
"13. Cooperative Organizations:'
"This matter should be handled by an' executive order as now
prepared, providing that no provision of any code shall ba construed
to make illegal any patronage divident of a bona fide and legitimate
cooperative organization, as to be defined on the basis of the facts
developed at a hearing called by the executive order. No provision
in codes should deal with this matter in the meantime,
"14. Accounting Systems:
"Provisions in codes referring to new cost accounting systems
should provide for recommendations to the Administrator and the
adoption of the accounting systems 'should never be made mandatory
on every member of the industry, at least without an adequate period
of adjustment.
"15. Forward Contracts:
"In view of the wide-spread abuse of provisions such as that in
P,R.A, by members of industry adding arbitrary surcharges labelled
'3RA additional costs', or 'MA taxes', etc., with the general result
of excessive raising of prices, it is recommended:
"(a) That no further provisions of this sort be inserted in
codes, rnd
"(b) That there be a policy of free exception from that pro-
vision of P. It, A. by any 'member of industry who is caught
with requests for an adjustment that he cannot pass on.
"16, Price Increases:
"A provision should be inserted in codes declaring policy against
over-pricing, perhapd in the form used in the model code, with an
9810
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additional declaration such as the President's in favor of relying on
future volume as a source of profit.
"17. Arbitration;
"Declaration, perhaps in form similar to the clause submitted
to the American Arbitration Association, should be inserted in favor
of arbitration as a method of determining disputed facts', as well as
controversies between members of the industry, the main thing being
the providing of facilities and rules and regulations by the Code
Authority, Promotion of this activity can be taken on by the"
division for promotion for trade association and Code Authority
organization.
"18. Premiums:
"No provision should forbid the use of premiums in a reasonable
fashion. The following statement by the consumers is approved;
'"Premiums are among the most effective form of advertising
open to many small enterprises, and may furnish additional
value to the consumer. Deception and misrepresentation about
their quality, value, and terms of distribution should be pro-
hibited as false advertising but provisions flatly prohibiting
them should be opposed. ' "
"19. Physically or mentally disabled;
"This matter can be properly handled in the following manner:
'"A person whose earning capacity is limited because of
physical or mental defect, age, or other infirmity, may be em-
ployed on light work at not less than (75$) of the minimum wage
set by the Code: provided, however, that the total number of
such employees in any one piant hall not exceed two percent
(2fo) of the total of such plant, if the employee of the em-
ployer for the employee obtains from the State Authority desig-
nated by the United States Department of Irbor, a certificate
authorizing his employment at such wages and for such hours as
shall be stated in the certificate. Such Authority will be
guided by the instructions of the United States Department of
Labor in issuing certificates to such persons.'"
"20, Local Situations:
"No local codes should be permitted until further notice but
in order to make minimum working conditions of any value it is im-
portant to encourage machinery in codes for the extablishment of
minimum requirements for regions, preferably on the basis of agreement
between a. majority of tho momberrt of tho J n Hair try and the- employees
involved.
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"21* Wa^e Rates above the Minimum:
"A clause on this should be definitely inserted in each code
and the following method of handling the matter seems as satisdactory
as any yet devised:
"'All employees, except as herein otherwise provided,
shall have their hourly rates existing on or about June 16,
1935, increased by an amount not less than per-
cen cent. ' "
'"FOR THE COMMITTEE CF FIVE Oil
SPEEDING tJP CODE PREPARATION.
'"Blackwell Smith.
Associate Counsel. ' "
Some of the recommendations made by the "Committee of Five from the
five Advisors'- Divisions and Boards" were included in the Policy Memorandum
of October 25, 193S set forth below, and the "Model Code" of November 6,
1933, both subsequently referred to herein. Other of the recommendations
were later issued as policy statements in the form of Office Orders or
Office Memoranda.
The Special Industrial Recovery Board appointed by the President by
Executive Order No. 6173, of June 16, 1933, approved the first policy
announcement, Bulletin No. 2, issued by the N.R..A. From June 16, 1933,
until September 16, 1933, there was no internal "MA board appointed to
pass on policy. Office Order No. 35, September 16, 1933, made the
following announcement:
"In anticipation of working out a change in our organization
to accommodate the gradual merger of the Blue Eagle work into the
work of code hearings and code administration, and to free the time
of the Administrator by a greater delegation of responsibility and
authority, a policy board is created consisting of
W« L. Allen Alexander Sachs
Alvin Brown X. M. Simpson
Thomas S. Hammond Nelson Slater
Robert W. Lea 4 Robert K. Straus
Edward F. McGrady Walter C. Teagle
Charles Michel son A, D. Whiteside
Malcolm Muir C. C. Williams
Donald R, Richberg Leo Wolman"
Mrs. C. C. Rumsey
As a guide to the personnel of NRA, the first announcement of policy
issued by the Policy Board was the "Policy Memorandum of October 25, 1933."
The content of this memorandum was as follows:
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. -30-
"POLICY M Z M 0 3 A H D U LI
"(Confidential)
"At the meeting of the Policy loard on October 25 the following con-
clusions were reached:
"1. Order of Hand] ing Codes, To the extent pernitted by other
consideration, effort should be devoted to those codes which
affect the greatest number of employees.
"2. Special Provisions, in Codes. So far as is practicable, pro-
visions in codes designed to meet special situations should be
excluded until a later date unless they are of great import.
The code may provide for a report on their necessity sometime
after the code is in effect.
"3. Price Provisions. No real direct or indirect fixing of sales
prices (as opposed to minimum prices) will be accepted.
"Wo "orovision forbidding reduction by distributors of the
producers' stated retail price will be accepted.
"In a price provision based on cost, cost should be defined
to the extent of indicating its principal elements in a general
way. Cost of production may include a reasonable allowance for
depreciation, but not for return on capital.
"A limitation of price based on seller's cost should be
subject to the exception that' the seller be permitted to meet
the price of a competitor whose price does not violate the code.
"Open price systems should be urged, provided that prices -
"(a) shall be effective within not more than
ten days in complex industries or five
days in simple.
"(b) shall "be capable of withdrawal at. the
pleasure of the seller.
"(c) are not subject to veto or modification by
> • any agency
"(d) are to be generally published for the benefit
of buyers as well as sellers.
"4. Code Authorities. The Code Authority may be the Board or Ex-
ecutive Committee of a trade association or a combination of
several, or may be' elected by such trade association or
associations, if properly representative of the industry.
"In general, rather than attempt to enumerate the powers
of Code Authorities, it is preferable to provide that the duty
of the Code Authority shall be to execute the provisions of
9810
£
*
-31-
the code and the act, subject to disapproval by the Administrator
of any of its nets.
"5« .Expenses of Code Administration. If reasonable limits are pre-
scribed, codes nay provide for assessment on members to meet
the expenses of the Code Authority,
"6. The Blue Eagle. A variation of the Blue Eagle will be devised
for the use of assenters to codes. A serial number may be
assigned to members for use in conjunction with the insignia.
"7. Participation in Code Administration. Only assenters shall
be permitted to participate in the selection of members and in
the activities of the Code Authority,
"8. Union Agreements and Schedules of Wages. No union agreements
are to be written into codes nor are schedules of wages to be
included in codes. The latter does not forbid two or three
basing rates.
"9. Labels. Codes may properly .. permit the use of an NBA label by
those complying with the code and may forbid such use by those
who do not comply,
"10. Exports. It is proper to e::cept exports from any provision re-
garding price or trade practices but never from labor provisions.
"!!• Prison-made Goods. Codes nay include a provision forbidding
transactions in prison-made goods at prices lower than the
lowest reasonable cost or price in private commerce,
"12. Accounting Systems. Provisions in codes, referring to new cost
accounting systems should provide for recommendations to the
Administrator and the adoption of the accounting should never be
made manfatory, at least without adequate period for adjust-
ment, and without allowing the utmost latitude consistent with
obtaining information on a comparable basis,
"13<» Forward Contracts. No further provisions respecting forward
contracts should be inserted in the codes.
"14. Premiums. It will not be stated as a policy that industries
may not forbid the use of premiums but provisions for premiums
will be carefully scrutinized,"
9310
-32-
C"TA?TER III
?'0DEL CODES ISSUED I" iTRA
I. ISSUE OF AUGUST 8, IE 33
This issue of a "liodel Code" (Exhibit 4) was formulated by 1. P.
Farnsworth of the Legal Division. The General Counsel of HRA r'as. of the
opinion that Article VI, which provided for the establishment of an In-
dustrial Relations Board, was "full of dynamite", and advised against
the general distribution of this issie; therefore, it did not receive
the approval of the- Administrator and was used only within the Legal
Division. (*)
II. ISSUE OF OCTOBER 1..1933
s ...
This issue (Exhibit; 9) was entitled "A Suggested Outline for Codes"
and was prepared in the Legal Division. It was the intention that its
use was to be temporary until an official "Fodel Code" was issued over
the Administrator ':; signature. At the time of its issuance the Code
Standardization Group was preparing recommendations on the provisions
which were to be included in the "i'odel Code" issued Fovember 6th. The
Associate Counsel requested the Code Standardization Groixp to consider
any objections raised to this draft in making their recommendations.
This draft was to be used merely as a "stop-gap". The preface stated;
"This form merely embodies suggestions for guidance in
preliminary stages of endeavors to 'prepare codes, and none of
the provisions contained therein are to be regarded as having
received the approval of the National Recovery Administration
or a.s being applicable to any Particular trade /industry."
III. ISSUE OF OCTO: ER 25, 1^33
The Code Standardization Group, through its Chairman, submitted to
the Associate Counsel of the Legal Division on October 25j 1933, a re-
vised draft of a "Suggested Outline for Codes" (Exhibit 10) "for legal
refinements and general consideration." Its distribution was limited
to the personnel of NRA.
IV. ISSUE OF 1T0VEID3ER 6, 1933
The Administrator, on "Tovember 6, 1933, approved the final draft
of the "Kodel Code" (Exhibit 8) and many hundreds of copies were imme-
diately distributed to E3A personnel, other governmental agencies, and
industrial and labor groups. A full discussio?i of the provisions of
the Hodel Code is contained in Chapter IV hereof.
The foreword of the i'odel Code stated:
"The suggestions herein made are intended to assist trade
and industry in the preparation of codes.
( *) This statement was made to the author by "r. Farnsworth.
9810
-33-
"Except as to those provisions which are required to be included
in all codes by the National Industrial Recovery Act (which provi-
sions are clearly indicated herein), none of the suggestions em-
bodied in this draft are mandatory.
"It is believed, however, that the preparation of codes and their
approval by the President will be greatly expedited if those who
prepare codes conform as far as possible with, the uniform phraseo-
logy here proposed. "
NBA Press Release No. 1620 of November 3, 1933, contained
the following account of this issue of the "Model Code":
"The National Recover^ Administration today made public a Model
Code of Pair Competition which, embracing in approximately 3,000
words the whole spirit and purpose of. the NIRA, is applicable
with minor variations to any industry: More than 7,500 conies
of the Model Code are to be distributed to trade associations,
organizations and units of industries now engaged in the prepa-
ration of codes for submission to the Administration.
"The inclusion of only one section of the so-called Standard
Code — the Collective Bargaining guaranty required by the Re-
covery Act — is mandatory (*). The other sections, the result
of several months intensive study of codes approved by the Pres-
ident, of pending codes and of ruli'-gs of the Federal Trade Comm-
ission during the last 15 years are recommended by the Administra-
tion to industries anxious to expedite the consideration and ap-
proval of their codes.
"Representatives of the country' s leading manufacturing, retail
and wholesale associations, the Federal Trade Commission, the
Department cf Commerce and the Better Business Bureaus collaborated
with the legal division, the research and planning division and
the industrial, labor and consumers1 advisory boards of Adminis-
tration in writing the Model Code designed to simplify the problems
facing code-framers and facilitate the clearance of codes through
NRA.
"ITinety-nine cedes had been approved by the President as of today
and 159 others, on which public hearings have been had, are being
prepared for his approval, while another 5n are scheduled for hear-
ing within the ne t two or three weeks. In these three groups are
included all of the largest industries of the country. But, scores
of preliminary codes have been filed or are being prepared by small-
er industries and the Model Code is expected to be of material aid
to them. "
The issuance of the Model Code brought forth prompt comment from
William G-reen, president of the American Federation of Labor and a
member of the NBA Labor Advisory Board, who wrote to Leo vlolman, chair-
(*) The inclusion of Section l°(b) of the Act was also mandatory.
9813
-34-
man of the Labor Advisory Board. The portion of his letter "bearing
on the Model Code follows:
"There was released as of November 6 over the signature of
General Johnson a Suggested Outline for Codes which bears on the
cover page a statement that it is intended to assist trade and
industry in the preparation of codes; and that while none of the
suggestions are mandatory, it is believed that the preparation
of codes and their approval by the President will be greatly
expedited if those who prepare cod.es confrora as far as possible
with, the uniform phraseology of the Suggested Outline.
"This document will, of course, profoundlj'- influence both the
organization and the phraseology used in the codes, that are
presented. Accordingly, certain matters in the Suggested Out-
line for Codes arc of deep interest to the Labor Advisory
Board.
"1. The Code Authority. On this point the Suggested
Outline for Codes says (page 8): 'In addition
. . . there nay be members without
vote, to be appointed by the President, to serve
for a term of months from the date
of appointment.'
"This phraseology seems unfortunate both because
it fails to designate the types of representation
which should be provided for and because (prob-
ably unintentionally) it definitely provides
that these members shall hold office for only a
limited period.
"It is suggested that the following phraseology
would be more appropriate: 'There shall be appoint-
ed by the President as members of the Code Authority
three members without vote; one. representing the
Government, one representing the consumers, and
one representing labor. The initial appointment
of the representative of the consumers is to be
on recommendation of the Consumers Advisory Board;
the initial appointment of fche representative of la-
bor is to be on. recommendation of the Labor
Advisory Board. Due notice of all meetings of the
Code Authority shall be given to the representatives
without vote and they shall be afforded complete
access at all times to all records, statistical
material or other information furnished to the
Code Authority in connection with or for the pur-
poses of the administration of the code.'
"It is worth noticing that the iron and steel code
contains the following statement with respect to
such non-voting members: ' They shall be given full
opportunity at such times as shall be reasonably
convenient to discuss with the Board of Directors
9810
-35-
or any committees thereof any natters relating to
the adnini strati on of the Code and to attend ect-
ings of the Board at -jhich action 0:1 any such mat-
ters shall be undertaken and to make recommendations
as to methods or no sures of adnini storing the Code.
Due notice of all : .ings the Board of
Directors shall oe ;iven to such representatives
of the Administration. The records of the Board
of Directors relating in any nay to the adniaistra-
tion of the Code shall he open to such representa-
tives at all reasonable tines. Kiey shall he af-
forded by the Board of Directors complete access at
all times to all records, statistical material or
other information furnished or readily available
to the Board of Directors in connection with, or
for the purpose of, the administration of the Code.
The Board of Directors, acting directly or through
one or aOre committees appointed 'oy it, shall give
duo consideration to all requests, suggestions or
recomneno.ations made by such representatives of
the Administration aid render every possible as-
sistance to such representatives in obtaining full
information concerning the operation and adminis-
tration of the Code, to the end that the President
may be fully advised regarding such operation end
administration through reports that nay be made to
him from time to tine by such representatives, and
to the end that the President may be assured that
the Code and the administration thereof do not
promote or permit, monopolies or monopolistic
practices, or eliminate or oppress small enter-
prises, or operate to discriminate against them
and do provide adequate protection of consumers,
competitors, employees and others concerned and
that they are in furtherance of the public inter-
est and operate to effectuate tl c purposes of
Title I of the National Industrial Recovery Act.'
" 2 . A Joint Indus trial Bslations Board. The Suggested Out-
line for Codes makes nc provision dor such a board.
In view oi the inroortance of implementing all codes
for the order!;' and peaceful negotiations of all
issues between industry end labor, it is suggested
that sone such provision as the following should
be inserted: 'There shall be constituted by the
Administrator a Joint Industrial Relations Board
of the Trade/ Industry, con-
sisting of an equal number of representatives of
employers and. employees, and an impartial Chairman
elected ~oy the members of the Board, to serve as
an adjustment agency -ith respect to hours, wages
and general labor conditions; provided, however,
that an existing adjustment agency may be utilized
for this purpose if in the opinion of the Adminis-
trator an appropriate agency exists. The selection
9810
-36-
oi the representative or representatives of
employees shall he by the Labor Advisory Board;
the selection of the representative or repre-
sentatives of employers shall he hy the Code Au-
thority. The Joint Industrial Relations Board
nay establish such aubsidiary agencies as it
finds necescary in its worh. '
"3. Payment for Overtime. The Sug'-'ested Outline for
Codes contains no -provision with respect to pay-
ment for overtime. This omission places upon
labor the entire burden of arguing not only for
the principle but for the proper rate of pay. The
Suggested Outline should contain in some form a
provision that overtime shall be compensated at
the rate of t ime-and- one-half .
"4. hiscellaneous Provisions. The foregoing deals
with the more important defects of the Su;y:ested
Outline from the point of view of the Labor Ad-
visors'- Board. It is to be said, however, that
several of the labor clauses are susceptible of
improvement. It would be desirable to have these
improvements embodied in any new edition of the
Sugge st ed Outl ine , and in any event standard labor
clauses for use in preparation of briefs, etc.,
might well be approved by the Labor Advisory Board.
"As a means of promoting the discussion of such
standard claases, there is appended a document
entitled Standard Labor Clauses for Codes.
"As a means of summarizing the preceding discussion, the follor
ing issues are raised:
"1. Does Labor Advisory Board wish to recommend
to General Johnson the inclusion, in a revised
edition of the Suggested Outline for Codes, of
clauses dealing "ith:
A. The Code Authority
B. A Joint Industrial Relations Board
C. Overtime
"And if so, what phraseology will the Labor
Advi s o ry Board ' app ro ve ?
"2. Does the Labor Advi no ry Board wish to
. recommend to Genera]. Johnson any changes
in phraseology of the other labor clauses?"
9810
-37-
Dae to objections from various sources to specific provisions
of t.ie Lodel Code, an effort was nade by the Administrator to
recall it. Its use by the oersonnel of 17RA. was stopped for a time
and thereafter it "as circulated merely as an aid in code making and
on an unofficial basis.
v. issue cr apt.il s, 1934.
This issue (Exhibit 11) was a revised edition of the Liodel Code
of November 6, 1933, and tras the result of criticisms of the earlier
issue and the experienced thats«had been gained iron code administration.
Some minor changes were made in the definitions; the hour, wage and
general labor provisions, and the trade practice rules. The recommen-
dations of the Secretary of Labor in a letter of 1'ovenber 11, 1933 (*)
pertaining to the collection of statistics by the Federal Government,
Section 7 (c) of Article VI of the ITovenber 6th issue ^ere followed.
Another change was the revision of the "Assessment" provision,
Section 7 (f) of Article VI, which was amended to make it mandatory in
form. A provision was added that an itemized budget of the expenses
of the Code Authority should be submitted to the Administrator for his
approval. This was to permit IT5A to exercise more adequate control of
Code Authority finances.
A major addition was a provision for the establishment of Indus-
trial Relations Committees. On December 5, 1933, the following memo-
randa:! was issued to the Legal Division for future guidance:
"17ATI0I1AI RECOVERY ADI.IKI STRAP 101!
"Decer.iber 6, 1933.
":.:n .craitjui:
"To Legal Division
"From Bladwell Smith
11 Sub j e c t Industrial delations Boards
"Complaint has come from the Labor Advisory
Board that members of the Legal Division are striking
out from codes the following provisions which the Labor
Board, has approved setting up an Industrial Relations'
Board to handle labor complaints and problems:
1,1 There shall be established hy the Jjjmin-
istrator, a i7s,tional Industrial Relations Board
for the Industry consisting of an equal number
of representatives of employer? and employees to
deal with all matters in t he co "e relating to
(*) IT3A Files. 131 "Labor Advisory Board, :etti ■ fro; Secretary of
Labor to- Chj iman of th •'.■ bor Advisory Bor»+;d.
9310
-38-
labor. Where a majority agreement of the
Board cannot "be reached, the Board shall
select an impartial chairman to render a
decision. The creation and^ functioning
of these Boards including the selection of
representatives of employees shall be in
accordance with Section 7 of the Act. If
no trul3r representative labor organization
exists, the employee members of such Board
shall be chosen by the Labor Advisory Board
of the IT.R.A. The employer representatives
shall be chosen by the Code Authority. The
Industrial delations Board may establish
such subsidiary agencies constituted in like
manner as it finds necessary- '
"So far as I can see there is nothing in this pro-
vision which we" should object to as a matter of legal
policy, although there is room for refinement in the
form. It se^ns to i.ie that it is purely a matter of
administrative policy whether or not to include this
or some similar provision, assuming that a workable
method is included for the selection of the labor re-
presentatives. The method suggested in the qpioted
clause, i.e., nomination by the Labor Advisory Board
seems at least workable where there is no truly repre-
sentative labor organization, and if the latter exists
selection by such -an organization would be workable.
"Blackwell Smith
Associate Counsel"
Apparently the recommendations made by William Green, President of
the American Pederation of Labor, in his letter of November 10, 1933,
previously referred to, had some bearing on the issuance of the above
memorandum and the inclusion of such a mro vision in the model Code of
April 3, 1934.
VI. ISSUE OP OPPICE MANUAL, NOVEMBER 21, 1934.
Incorporated in Part II of the IT. P. A. Office Manual was an "Out-
line for Code Making" which included changes and additions found de-
sirable through experience. It also included the substantive requirements of
Executive Administrative and Off ice Orders and Office L'enoranda issued
subsequent to the Model Code of April 3, 1934.
PROPOSED MODEL PROVISIONS. PORI.ULATZD BY THE CODE
PLANNING COMMITTEE. (APRIL 17 - MAY 27, 1935)
The Executive Secretary of the National Industrial Recovery Board
on April 5, 1935, called to the attention of the Board that under any
extension of the Recovery Act only a short period of time might be
9810
-39-
available in which all codes must be revised to conform to the new
Act. (*)
The Board, on April 10, appointed a Co-ordinating Committee for
the purpose of organization and control of the code revision program,
composed ox the Executive Secretary of the Board, the Code^ Adminis-
tration Director, and the Control Officer rith the Chairman of the
Board as an ex-officio member. This committee drey on 1-TRA personnel
for sub- commit tees to study code reorganization, to draft a new model
code, to sug;:est the policies regarding codes, and to study code con-
solidation. (**)
For the purpose of revision, the Lodel Code was divided into three
parts — Administration, Labor and Fair Trade Practices. A sub- commit-
tee was appointed to revise each part. (***)
The "Recommended Trade Practice Provisions" (Exhibit 27) was
submitted to the Code Administration Director on ..ay 20th and the
"General Labor Provisions" (Exhibit 28) on May 22nd. The "Administra-
tive Previsions" were never submitted, being in the process of final
revision when the Schechter decision was handed down.
The author desires to emphasize the fact that the provisions for-
mulated by the sub-committee were never used in code drafting, and he
has included them onl" as a matter of information.
(*) Memorandum to the He co very Board, April 5, 1935-
17PA Piles, Executive Secretary 1T.I.H.B.
(**) Minutes of Meeting of national Industrial Recovery Board,
April 10, 1S55. -iffiA Piles
(***) Minutes of Code Planning Committee, April 19 and 22, 1935.
HSA Files, Code Planning Committee.
-40-
CHAFTEK IV
PROVISIONS OF THE ::ODEL CODL
The "Suggested Outline for Codes", better known as the "Model Code",
issued November 6, 1933 (Exhibit "13"), '-as the first outline used as a
guide for code drafting to receive the approval of the Administrator.
As heretofore pointed out, various individuals within the organization
had made attentats to establish unitormity, and at the same time speed
uc the code making process. The "nodel Code" clearly revealed the
provisions which were deemed desirable to be incorporated in codes, and
gave to the -personnel of the NEA as "'ell a s to industry an official
guide to be used in code drafting.
The Articles of this "Model Code" are set forth below as well as
some of the reasons for the inclusion of the specific section of the
Article.
ARTICLE I.
"Purposes
"To effect the policies of Title I of the National
Industrial Recovery Act, this Code is submitted as a
Code of Fair Competition for the Trade/industry,
and upon approval by the Fresident, its provisions shall be
the standards of fair competition for such trade/industry
and shall be binding upon every memoer tnereof."
This Article was predicated on the provisions of Section 3(b) of
Title I of the Act. The inclusion of the substance in a code presented
for approval was mandatory.
There were variations of the wording of this Article in the first
25 or 30 codes which were approved. Some of the provisions were brief,
others '"ere lengthy. For example the purpose clause of the Code of
Fair Competition for the Cotton Textile Industry '"'as as follows:
"To effectuate the policy of Title I of the National
Industrial Recovery Act, during the period of the emergency,
by reducing and relieving unemployment; improving the
standards of labor; eliminating competitive practices
destructive to the interests of the public, employees, and
employers; relieving the disastrous effects of over-capacity,
and otherwise rehabilitating the cotton textile industry;
and by increasing the consumption of industrial and
agricultural products by increasing purchasing power; and
in other respects, the following provisions are established
as a Code of Fair Competition for the cotton textile industry."
Many of the above phrases were taken from Section 1 (Declaration
of policy) of Title I of the National Industrial Recovery Act. Later
many of the above pnrases '"ere included in the "Findings" of the letter
of transmittal of codes from the Administrator to the Fresident for his
approval.
-41-
The Code of Fair Cora-petition for the Shipbuilding and Shiprepairing
Industry, Approved Code No. 2, set forth the following as its purpose
clause:
*
"To effectuate the policy of Title I of the National
Industrial Recovery Act, the following provisions are
established as the Code of Fair Competition for the Ship-
building and Shiprepairing Industry."
The Codes approved for the national resource industries, before the
issuance of a guide, went into detail in the purpose clause, especially
to explain the necessity for the inclusion of a provision for control
of production.
ARTICLE II.
"Definitions
"The 'term' Trade /Indus try as used herein
includes the __ (State accurately what is included
in the trade /industry, whether manufacturing, building, trans-
porting, repairing, selling, and/or distributing at wholesale
or retail etc.) of
(Products, merchandise or service etc.), and such related
branches or subdivisions as may from time to time be included
under the provisions of this Code by the President of the
United States, after such notice and hearing as he may
prescribe.
"The term 'member of the trade /industry1 includes, but without
limitation any individual, partnership, association, corporation
or other form of enterprise engaged in the trade /industry
either as an employer or on his or its o^n behalf.
"The term' 'e____e' as used herein includes any and all persons
engaged in the trade /industry, however, compensated, except
a member of the. trade /industry.
"The term 'Act' and 'Administrator' as used herein mean
"respectively Title I of the National Industrial Recovery Act,
and the Administrator for Industrial Recovery.
""Population for the purpose of this Code shall be determined
by reference to the latest Federal Census. (Insert only when
needed) "
This Article, setting forth the definitions, was one of the most
important of the Code. The definition of "industry" was to be clearly
but concisely stated, so as to include specifically all fundamental
functions of the industry, and was supposed to be so worded as to
exclude all functions of any other industry, in order to avoid over-
lapping and misinterpretations.
Many codes included in the definition the term "manufacture and
sale". "Sale was construed to meaji sale by the manufacturer, or by any
9810
instances was def ined' as follows:
"The tern 'Member of the Code' includes any member of the
industry who shall expressly signify assent to this Code."
The "Model Code" did not include the above definition because a
member of the industry included under the defintion of a code was
bound by the provision-: of the code whether or not he assented to it.
The definition of the term "member of the trade /industry" was
necessary in order to include under a code all members within the
function of the definition o^ the "trade/industry."
The definition of the term "employee" was included to make more
definite the application o^ the maximum hour, minimum wage and general
labor provisions of a code.
Under the NIRA there we^e two Administrators appointed. One to
administer Title I, the other to administer Title II. To avoid confusion
and for brevity, it was desirable to define the term "Administrator"
for Title I of the Act.
To avoid unnecessary repitition of the full title of the. Act,
it was advisable to define the tern "Act".
ARTICLE III.
"Hours. "
"MAXIIHTM HOURS
"Section 1. No employee shall be permitted to work in
excess of hours in any one week or hours
in an?/ twenty-four (24) hour period beginning at midnight,
except as herein otherwise provided. A normal work day
shall not exceed hours.
"(Maximum hours for special classes of employees, if any,
should be inserted under the appropriate paragraph, together
with the hours applicable.)"
Primary uunoses of the NIRA were to nut more piocle to work and
increase purchasing power as soon as possible. NRA Bulletin No. 2
sta.ted:
"(7) In preparing basic Codes, the following principles should
be given consideration:
• "(a) Basic Code provisions relating to maximum hours
may involve appropriate consideration of the varying
conditions and recmirements of the several industries
and the state of employment therein. An average
'rprk week should be designed so far as possible to
provido for such a spread of employment as will
work so far as practical for employees normally
9810
-44-
attached to the particular industry.
"("o) Minimum wage scales 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.
"(c) Conditions of employment should contain
necessary safeguards for the health and safety
of the workers and for stabilization of their
employment. "
Subsection 3 of Section 7(a) of the Act "by implication gave the
President oower to approve maximum houT-s of labor, minimum rates of
nay, and other conditions of enroloynent. It v;as uoon the authority of
the Act that the principles set forth in Bulletin Ho. 2 ,17ere established.
The first objective which was to be aimed at was to limit the
number of hours any emoloyee could work to a point where it would
be necessary to employ more persons to do the same amount of work.
Many codes contained provisions averaging the permissible hours of
work over a period of several weeks or months. The desirability of such
averaging was questioned by some N.R.A. officials, who took the
■position tha.t no such arrangement should be allowed and that needs
should be met by an exception to a straight maximum hour provision.
However, maximum hour averaging -orovisions were commonly aporoved,
especially in the earlier codes, and policy pronouncement was not made
definitely against such orovisions until the issuance of Office
Memorandum No. 272 on July 21, 1934. This set forth a policy require-
ment of stated maximum hours, with a proviso for a definite t'olerance
except when unlimited tolerance was justified, with payment in either
case of overtime wage for time worked above the established maximum
hours. Later paragraph 1222, Part II, Office Manual, incorporated
the following policy:
"Averaging in provisions governing hours of work has in
practice proved unsatisfactory. Conditions of -peculiar
seasonal or other needs of any industry, should be met by
a definite tolerance."
ARTICLE III (Continued)
"HOURS FOR CLERICAL AID OFFICE EMPLOYEES
"Section 2. No oerson erroloyed in clerical or office
work shall be -permitted to work in excess of hours
in any one ,iTeek or hoiors in any twenty-four hour
■period. A normal work day shall not exceed hoars."
Section 2 was included to aid the "white collar" employee.
9810
ARTICLE III (Continued)
"EXCEPT IOHS AS TO HOURS
"Section 3. The provisions of this Article shall not
apply to travelling salesmen, or to employees engaged in
emergency maintenance or emergency repair work, or to
persons employed in a managerial or executive capacity
who earn "not less than Thirty-five Dollars ($35.00) per
week.
"(Provisions governing over time payments should be inserted
at this noint; for example , for emergency maintenance and
emergency repair, etc.)"
To prevent the evasion of the maximum hours provisions of this
article by the reclassification of the duties of the employees, the
$35.00 minimum weekly "'age was established as the line of demarcation
for employees' who were to be exempt from this provision and then only
if engaged in managerial work.
Many codes approved prior to the issuance of the "Model Code"
exempted "outside salesmen" from the maximum hours. This term led to
endless difficulty under the President's Reemployment Agreement and
caused the issuance of many needless interpretations under code
provisionsc To eliminate confusion the term "travelling salesmen" was
therefore substituted for the term "outside salesmen".
ARTICLE III (Continued)
"STAiZURD WEEK
"Section 4. No employee shall be permitted to work more
than days in any day period. "
To prevent the spreading over a seven day Period of the total
number of hours per week an employee could work, and to give every
employee one day of rest out of every seven, it was deemed advisable to
have the above provision included in each code.
ARTICLE III (Continued)
"E: :PL0Y!-OTT BY SEVERAL Si iPIOYSES •
"Section 5. No employer shall knowingly permit any employee
to work for any time which when totaled with that already
performed with another employer or employers in this trade/
industry, exceeds the maximum permitted herein."
This section was obviously a "spread the work" provision.
9&1C
-46-
ARTICLE IV.
"WAGES"
"MINIMUM WAGES
"Section 1. No employee shall be paid in any pay period
less than at the rate of cents per hour, except
as otherwise herein provided.
"(Minimum wage adjustments based on locality and/or
"oopulation may be indicated here.)"
The main objective of the minimum wage provisions of any code was
to provide for workers in industry what the President had defined as a
"living wage". Minimum wage rates '-eve established for unskilled or
common laborers. It was honed that the minimum wage rate established
by codes would provide a decent living for the employees, and at the
time increase the purchasing power of the individual employee.
The minimum wage adjustment based on locality or population was a
provision which led to much controversy between industry and labor and
within industries.
At a -oress conference on June 20, 1933, the Administrator was asked
questions pertaining to wages and wage differentials. The questions
asked, and his replies are as follows:
Question. "Will the $10 and $11 wage proposed in the
Textile Code create enough buying power?"
Answer. "That rate is for the lowest class of wages in
the industry. That is the basis in all
industries in making up the whole schedule
of nay. "
Question. "In effort to set up a minimum wage, do you
contemplate a better -"'age in New York than in
the South, for instance, for machinists, or
a difference in wages paid to carpenters in
Seattle and those in Ohio?"
Answer. "There are differences in living costs. In
the common labor rate between Moline and Chicago
there is a difference of about 7 cents. Yet I
think the people in Moline are better off than
the people in Chicago. They live in a smaller
town, better advantages for children - - there
is a difference in the economic structure - -
that we cannot disturb, I think, however, we
also recognize that there are some differences
that arise from exploitation, where people are
living and working at less than a living scale.
We can't have that. We can help there. The
thing to do is to lift these wages up where it
9810
-47-
is -practicable, and if we can get everybody
to do it we v.'ill be carrying out the purpose of
the Act as expressed by the President."
ARTICLE IV (Continued)
"PIECEWORK COMPENSATION - MINIMUM WAGES
"Section 2, This article establishes a minimum rate of .pay
which shall apply, irrespective of whether an employee is
actually compensated on a time rate, piece-work, or other
basis. "
To prevent evasion of the minimum wage provision by the placing
of time rate erroloyees on a piece rate basis, employees were guaranteed
the code minimum wage by the above provision. Some industries were
contracting with home workers on a piece work basis. It was thought
this provision would benefit the home workers, but the desired results
were not obtained because in some instances the employers withdrew
their contracts with the home workers rather than guarantee them a
minimum wage.
ARTICLE IV (Continued)
"MINIMUM WAGE RATES BY LOCALITY /OCCUPATION
"Section 3. After the approval of this Code, the Code
Authority may present for approval to the Administrator,
after notice and hearing, recommendations as to upward
adjustments in minimum wages for specified localities/
occupations, in order to effectuate the purposes of the Act."
The different standards of living and the corresponding variance
in purchasing power of the dollar in the different localities as well
as the great variance in the standards of efficiency of southern and
southwestern labor as compared with that of the other sections of the
United States were the main reasons for providing for proposals of
upward adjustments in the minimum wage rates for particular localities
or occupations.
ARTICLE IV (Continued)
"WAGES ABOVE MINIMUM"
"Section 4."
"No employee ^hose normal full time weekly hours for the four
weeks ending (date) are reduced by less than
per cent shall have his or her full time weekly earnings
reduced. No employee whose full time weekly hours are
reduced by more than said per cent s_hall have his or her
sa.id earnings reduced by more than per cent."
: ALTERNA-
TIVE
SUGGES-
TIONS
9810
-48-
"There shall ^ an equitable adjustment of all wages rALTERNATIVE
above minimum, and to that end, within ( •
thf n°* T^S) frpm the aPPr0val of this Code, -SUGGESTIONS
the Code Authority shall submit 'or the approval
of the Administrator a proposal :or adjustment in
wages above the minimum. Upon approval by the
Administrator, after such hearing as he may orescribe,
such proposal shall become binding as a part' of this
Code provided, however, that in no event shall
hourly rates of pay be reduced, n
w^R !oLab'°r Sef ions were designed to prevent undue reduction of the
min.Jf i enrol°yees receiving in excess of the established
"arnW y IT °Yf reduction of WOOTB under Article III. To reduce
earnings would reduce purchasing power.
Woo1 m^!ffP? ? °f Art,icle II of the Code of Pair Competition for the
Wool Textile Industry, (code No. 5), approved on July 26, 1933,
incorporated the following:
"As to wages of employees now receiving not less than the
minima wage established, by this Code, no employer shall,
on or after the effective date, Day any such employee a
wage rate which will yield a less wage for a work week
ot lorty hours than si*fah employee was receiving for the
same class of work far the established longer week of
iorty-eight hours or more prevailing prior to the
effective date. "
hn+ tl^r"^ the flrSt auDroved Code to contain this type of provision,
but the first two codes approved contained provisions for the
maintenance of wage differentials.
ARTICLE IV (Continued)
"FEMALE EMPLOYEES"
"Section 5, Female emoloyees performing substantially the
same work as male employees shall receive the same rate
of pay as male employees."
Tnis section protected the objects of minimum wage provisions.
ARTICLE IV (Continued)
' • ■ "HAHDICAPPED PERSONS"
"Sec+cion 6. A person whose earning capacity is limited
because of age or physical or mental handicao may be
em-cloyed on light work at a wage below the minimum
established by this Code if the employer obtains from
X,he State authority designated by the United States
.Department of Labor a certificate authorizing his
employment at such wages and for such hours as shall be
981f
-49-
stated in the certificate. Each employer shall file with
the Code Authority a list of all such persons employed by
him." (*)
The principal ^eason for the inclusion of this section was to
prevent loss of employment by handicapped employees.
ARTICLE V
"GENERAL LABOR PROVISIONS"
When the President signed the National Industrial Recovery Act,
he said it was passed "to put people back to work — to let them buy
more of the products of farms and factories and start our business at
a living rate again. This task is in two stages - first, to get many
hundreds of thousands of the unemployed back on the pay roll by snowfall
and second to plan for a better future for the long pull."
With the above in mind, the NRA was striving "to plan for a better
future" for the employees by including in the codes general labor
provisions which would improve the standards of employment and at the
same time improve the standards of health under which the employee worked.
"CHILD LABOR"
"Section 1. No person under sixteen (16) years of age
shall be employed in the trade /industry. No person under
eighteen (18) years of age shall be employed at operations
or occupations which are hazardous in nature or dangerous
to health. The Code Authority shall submit to the
Administrator before (date) a list of such
operations or occupations. In any State an employer
shall be deemed to have complied with this provision as
to age if he shall have on file a certificate or permit
duly signed by the Authority in such State empowered to
issue employment or age certificates or permits showing
that the e-iployee is of the required age."
Though not required by the Act, a clause prohibiting child labor
aor>eared in every approved code. There were, however, a case or two
of limited exceptions.
ARTICLE V (Continued)
"PROVISIONS FROi' THE ACT (inclusion obligatory)"
"Section 2. In compliance with Section 7 (a) of the Act it
is provided:
"(a) That employees shall have the right to
(*) Section VI, Chapter V, hereof, discusses later provisions
concerning employment of handicapped workers.
981T
-50-
organize and "bargain collectively through
representatives of their own choosing, and
shall "be free frora the interference,
restraint, or coercion of employers of labor,
or their agents, in the designation of such
representatives or in self-organization or
in other concerted activities for the purpose
of collective "bargaining or other mutual aid
or protection.
"(b) That no employee and no one seeking employment
shall be required as a condition of employment
to join any company union or to refrain from
joining, organizing, or assisting a labor
organization of his own choosing, and
"(c) That emoloyers shall comply with the maximum
hours of labor, minimum rates of oay, and
other conditions of employment approved or
prescribed by the President."
Every approved code had to contain the above section. This section
was designed for the interest of labor. During the ep.rly days of NRA
many controversies arose over Section 7(a) , especially as to the
inclusion in the codes of special clauses sanctioning, for example, the
comoany union and the right of employers to select, retain, or advance
e'rployees according to individual merit. A "Merit Clause" was included
in the Code of Pair Competition for the Automobile Manufacturing
Industry. (*)
An instruction against approval of code provisions such as
"Merit Clause" was given to the Administrator in a letter from the
President, as follows:
"October 19, 1933
"General Hugh S. Johnson
Administrator for National Recovery
Washington, D. C.
"Dear General Johnson:
"Following our recent discussion of various misunderstandings
and misinterpretations of Section 7(a) of the National Industrial
Recovery Act, I wish to advise you of my position.
"Because it is evident that the insertion of any interpretation of
Section 7(a) in a Code of Pair Competition leads only to further
controversy and confusion, no such interpretation should be incorporated
in any code. While there is nothing in the provisions of Section 7(a) to
(*) Article VII of the Code for the" Automobile Manufacturing Industry,
Codes of Fair Competition, Volume I, page 256.
9810
-51-
interfere with the bona fide exercise of the right of an employer to
select, retain or advance employees on the "basis of individual merit,
Section 7(a) does clearly prohibit the pretended exercise of this right
by an employer simply as a device for compelling employees to refrain
from exercising the rights of self-organization, designation of .■
representatives and collective bargaining, which are guaranteed to all
employees in said Section 7(a).
"Very truly yours,
Franklin D. Roosevelt"
Several weeks earlier, the General Counsel for NRA had issued to
the Legal Division the following memorandum:
"August 30, 1933.
MEMORANDUM
"To: All Members of the Legal Division
"From: Donald R. Richberg
"From newspaper account it appears that there is likely to be some
misunderstanding regarding the final sentence in Section 7 of the
Automobile Code.
"This indicates again wisdom in adhering to the policy previously
announced that nothing should be written into a Code which could be
regarded in any way as a Qualification, explanation or interpretation of
the mandatory provisions of Section 7(a).
"The National Industrial Recovery Act reauires that every code,
agreement or license approved, prescribed or issued shall contain the
conditions set forth in Section 7(a). This is not only a mandate that
these conditions snail be contained, but also a mandate against includ-
ing anything in a code which may be even misinterpreted to permit any
variation from the requirements of the law. Even innocent or meaning-
less statements may be distorted to give some apparent sanction to
evasion or violation of the law. In order to avoid such a result, it
will be the policy of the Legal Division to decline to permit the in-
clusion in any code, not only of interpretations of Section 7(a), but
of any statements vhich may be regarded as interpretations, or used as
misinterpretations. The fact that a. statement construed by me as
harmless surplusage was included in the Automobile Code, furnished no
precedent for any member of the Legal Division to approve the inclusion
of that, or any similar statement in any other code."
However, a "Merit Clause" appeared in the approved Chemical
Industry Code, but was almost immediately deleted by an Administrative
Order dated February 17, 1934.
981C
-53-
ARTICLE V (Continued)
"RECLASSIFICATION OF EMPLOYEES »
"Section 3. No employer shall reclassify employees or
duties of occupations performed or engaged in any other
subterfuge for purpose of defeating the purposes or
provisions of the Act or of this Code,"
Some of the 'early approved codes did not contain such a provision.
In August and September of 1933 there appeared a tendency to evade the
President's Reemployment Agreement and the codes which had been
approved by reclassifying workers.
To prevent the reclassification of employees, or their duties
or occupations performed, in an attempt to circumvent the wage and
hour provisions of the code, the above section was included as a
model provision.'
ARTICLE V (Continued)
"STANDARDS FOR SAFETY AND HEALTH"
"Section 4, Every employer shall make reasonable provision
for the safety and health of his employees at the place and
during the hours of their employment, (Frovision may be in-
serted reouiring the Code Authority to submit proposed
minimum standards for safety and health of employees)."
The Department of Labor for a number of years had been endeavor-
ing to improve the conditions for safety and health, to better working
conditions for employees and to decrease the nvmber of accidents in
industrial establishments throughout the United States. Nevertheless,
in 1933 there were 17,000 killed and 1,225, COO. injured in industrial
plants throughout the United States, (*)
At the request of the Administrator, the Secretary of Labor
appointed a Committee to prepare Minimum Standards for Safety and
Health, The Committee prepared and recommended "The Minimum Standards
for Safety and Health of Workers in Manufacturing Industries" which
were approved by the Secretary of Labor and the NRA Administrator,
These standards were used as a guide by m'eabers of industry and Code
Authorities in preparing such standards for their particular industry
to be approved by NRA. (**)
(*) Accidents in Manufacturing Industries, "U. S. Department of
Labor.
(**) Section VII, Chapter V, hereof, discusses later provisions con-
cerning standards of safety and health.
9810
-53-
ARTICLS V (Continued)
"STATE LAWS"
"Section 5. No p-ovision in this Code shall supersede any
State or Federal law which inxooses on employers more
stringent requirements as to age of employees, wages,
hours of work, or as to safety, health, sanitary or
general working conditions, or insurance, or faire pro-
tection, than are imposed by this Code."
No comment on this provision seems necessary.
ARTICLE V (Continued)
"POSTING"
"Section 6. All employers shall post complete copies of
this Code in conspicuous places accessible to employees."
The above provision was included in order that an employee might
easily obtain knowledge of the labor provisions of the code governing
his employment. (*)
ARTICLE VI
"Organization, Powers and Duties
of the Code Authority"
"ORGANIZATION AND CONSTITUTION"
"Section 1. There shall forthwith be constituted a
Code Authority consisting of persons to
be selected in the following manner:
(Here shall be stated the manner in ^hich the
members of the Code Authority shall be selected.
Provision should be made so that the Code Authority
will be truly representative of the various
majority, minority, and other interests in the
trade/industry. If, however, by reason of conditions
peculiar to the trade /industry, selection by the
trade-industry is impossible, it may be provided
that appointment sha.ll be by the President.)"
This section provided for the establishment of a Code Authority,
and sets out certain standards as to its representative character.
While much leeway was left an industrv with respect to its proposals,
and many methods of selection or election were authorized by the codes,
(*) Section XVII, Chapter V, hereof i discusses later provisions con-
cerning -costing. '
9810
-54-
the N.R.A. intent was to assure the designation of a membership repre-
sentative of the entire industry.
ARTICLE VI (Continued)
"Section 2. In addition to membership as above provided,
the^e may be members, without vote, to be appointed
by the President, to serve for term of months from
the date of appointment. !'
Government representation on the code authority. was for. the purpose
of keeping the Administrator informed as to the action taken by this
body, and also the Government member ^as to act as an adviser to the
Code authority.
ARTICLE VI (Continued)
"Section 3. Each trade or industrial association directly
or indirectly participating in the selection or activities
of the Code Authority shall ( L) impose no inequitable
restrictions on membership, and (2) submit to the
Administrator true copies of its articles of association,
by-laws, regulations, and any amendments when made thereto,
together with such other information as to membership,
organization and activities as the Administrator may
deem necessary to effectuate the purposes of the Act."
Section 3(a) of Title I of the Recovery Act granted the President
power to approve codes, provided the applicant group imposed no in-
equitable restrictions on admission to membership in said group. The
above provision was based on this section of the Act.
ARTICLE VI (Continued)
"Section 4. In order that the Code Authority shall at
all times be truly representative of the trade/industry
and in other respects comply with the provisions of the
Act, the Administrator may Tores vibe such hearings as he
may deem proper; and thereafter if he shall find that the
Code Authority is not truly representative- or does not in
other respects comply with the provisions of the Act, may
reauire an aopropriate modification in the method of se-
lection of the Code Authority." (*)
This provision gave the Administrator power to modify the method
of election of the Code authority if he found that the code authority
was not -truly representative or did not otherwise comply with the Act.
ARTICLE VI (Continued)
"Section 5. Members of the trade /industry shall be entitled
(*) Section III, Chapter V, hereof, discusses the review of acts of
code authorities 'oy the Administrator.
9810
-55-
to participate in and share the benefits of the activities
of the Code Authority and to participate in the selection
of the members thereof "by assenting to and complying with
the requirements of this Code and sustaining their reason-
able share of the expenses of its administration. Such
share of the expenses of administration shall be determined
by the Code Authority, subject to review by the Administrator,
on the basis of volume of business and/or such other
factors as may be deemed equitable." (*)
The purpose of the above section was to provide for the expenses
of code administration by the Code Authority.
Some members of industry and certain individuals in the NBA
expressed the opinion that such a provision included in a code would be.
used by the Code Authorities as a weapon to coerce non-association
members of the industry to join the association or associations which
^ere the applicant group of the industry for a code.
During the early period of code making, the Question was con-
stantly arising as to whether a code could include a provision which
required all members of an industry to share the expenses of adminis-
tration of the code. Some felt that such a condition had been brought
about by a "racket" of association organizers and lawyers who were
framing codes and who expected to collect reimbursements by levying
the pro rata share on the members of the industry.
John M. Keating, an Assistant Counsel of the ERA Legal Division,
in a memorandum, August 15, 1933, to the Associate Counsel, on "Policy
Matters of Code Administration," said:
"Personally, I feel that there is no power In Title I of
the Hational Industrial Recovery Act to levy a tax and
that this would be illegal for that reason. Farther than
this I do not believe we would have the right to delegate
power to levy this cost to any association.
"In connection with this matter I direct attention to the
following paragraph which was contained in the Coat and
Suit Industry Code.
"The expenses of maintaining the Coat and Suit Code
Authority shall be borne by the International Ladies'
Garment Workers Union, the "oarties of this Code, and all
other employers in the industry in such proportions and
amounts and in such manner as may be determined by the
Coat and Suit Code Authority.'"
The Legal Division, on August 23, 1933, informed its staff relative
to code administration expense provisions in codes, a.s follows:
(*) Section IX, Chapter V, hereof, discusses later provisions
concerning mandatory assessments.
981?
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"w"e have approve^ .the imposition of pro rata cost of
maintenance of Code Autnority activities, as destinguish-
ed from trade association activities, on those who accept
the benefit's of such code Authority activities."
The provision which was included in the "Model Code" was ques-
tioned for the reason that wheth:r or not a concern formally
assented to a code, it should "be entitled to participate in the
selection of the Code Authority. Apparently some individuals did
not comprehend the -phrase "and share the benefits of the activities
of the Code Autnority", avid others could not contemplate any benefits
of the activities of a Code Authority, vvhich wouldor should not
accrue to every member of an industry.
On September 21, 1933, the Associate Counsel of the NRA legal
Division r eceived a memorandum from the Code Analysis Division com-
menting on the proposed provisions that -.-ere to he incorporated in
the Model Code of October 1, 1933 (Exhibit 9).
The Assessment provision was questioned because it was thought
that such provision might be construed to mean that every member of
an industry would be compelled to pay a pro rata share of the cost
of Code Administration of the Code through the Code Authority, and
if such provision were included in an approved Code it would be
legally binding and would become law for the industry. It was agreed
that such assessments would be in the nature of taxation and would
place an additional burden on the taxpayer. It was v.- commended that
the responsibility of raising revenue 'for Code Administration should
be placed entirely upon the Trade Associations.
The model code provision for assessments when included in ap-
proved code placed no legal liability on a member of an industry to
pay code assessments. ' Subsequently, howevjr, the NHA permitted
mandatory assessment provisions.
The Code of Ea.ir Competition for the Elec-trical Manufacturing
Industry (Code Ho. 4) was the first approved code to contain a pro-
vision to provide for the expenses of code administration (*).
ARTICLE VI (Continued)
"Section 6. Nothing contrined in this Code shall
constitute the members of the Code Authority part-
ners for any purpose. ITor shall any member of the
Code Authority be liable in any manner to anyone for
any act of any other member, officer, agent, or em-
ployee of the Code Authority. N0r shall any member
• f the Code Authority,' exercising reasonable
diligence in the conduct of bis duties hereunder, be
liable to anyone for any action or omission to act
under this Code, except for his own willful misfeas-
ance or non-feasance."
(*) Article VII of the Code for the Electrical Manufacturing
._ Industry, Codes of Fair Competition, Volume I, page 48.
9810
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The above provision was inserted as a legal protection for
Coda Authority members.
ARTICLE VI (Continued)
"POVfZRS A1ID DUTI3S"
"Section 7, The Code Authority shall have the following
further powers and duties, the exarcise of which shall
be reported to the Administrator and shall he subject
to his right, on review, to disapprove or modify any
action taken by the Code Authority.
"(a) To insure the execution of the provisions of
this Code and provide for the compliance of the trade/
industry v/ith the provisions of the Act.
"(b) To adopt by-laws and rules and regulations for
its procedure and for the administration and enforce-
ment of the Code.
"(c) To obtain from members of the trade/ industry such
information and reports as a re required for the administra-
tion of the Code and to provide for submission by members
of such information and reports as the Administrator may
deem necessary for the purposes recited in Section 3 (a)
of the Act, which information and reports shall be submit-
ted by members to such administrative and/ or government
agencies as the Administrator may designate; provided that
nothing in this Code shall relieve any member of the in-
dustry of any existing obligations to furnish reports to
any government agency. No individual reports shall be
disclosed to any other member of the trade/ industry or
any other party except to such governmental agencies as
may be directed by the Administrator.
"(d) To use such trade associations and other agencies
as it deems proper for the carrying out of any of its
activities provided for herein, provided that nothing
herein shall relieve the Code Authority of its duties or
responsibilities under this Code and that such trade
associations and agencies shall at all times be subject
to comply with the provisions hereof.
"(e) To make recommendations to the Administrator for
the coordination of the administration cf this Code with
such other codes, if any, a.s may be related to the trade/
industry.
"(f) To secure from members of the trade/ industry an
equitable and proportionate payment of the reasonable
expenses of maintaining the Code Authority and its act-
ivities.
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"(g) To cooperate with the Administrator in regulating
the use of any ¥. R. A. insignia solely by those members
of the trade/ industry who have assented to, and are comply-
ing with, this Code.
"(h) To recommend to the Administrator further fair trade
practice previsions to gove.m members of the trade/ industry
in their relations with each other or with other trade/
industries and to recommend to the Administrator measures
for industrial planning, including stabilization of em-
ployment. M
The original idea as to code administration was that each
industry was to be governed by a self-chosen group, with bread
powers of administration as to all matters pertinent to the code
with the least possible regulations ^oy the Government. Industry
was to be its own ruler, within the limitations nf its code.
Some 1TRA officials were of the opinion that the trade associa-
tions were to be given all the power they needed to govern pro-
perly the affairs of their industries. They were to be enforcing
agencies. They were to be taught gradually to be independent of
Government authority in administering the provisions of their
codes.
Each industry was to govern itself. Only in those instances
where ignorant, stubborn, or malevolent elements of an industry re-
fused to play the game, and were found incapable of regulations
by the industry's self-governing agency, would the National Recovery
Administration step in, and even then, only upon request. (*)
Some few of the earlier approved codes contained provisions
which enabled the members of the Code Authority, who were also mem-
bers of the industry, to secure secret and confidential information
as to other members' mode of operation, sales, and financial condi-
tions. An example of powers given the Code Authority was the pro-
vision in the Coat and Suit Industry Code which was as follows:
"The Coat and Suit Code Authority shall have power
to examine all bocks, of accounts and records of em-
ployers so far as necessary to ascertain whether they
are observing the provisions of this Code, and all em-
ployers shall submit their books and records for such
examination. "
On August 15, 1933, Mr. Keating commented in a memorandum to
the Associate Counsel as follows:
(*) NRA Press Release N0. 654, September 8, 1933.
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•'.*-■■-
"In a number of codes which I have examined attempt
is made to ^ive the Cede Authority the right to ex-
amine the hooks of the units in the industry. This
is a field in which I feel re should go extremely
slowly. Particularly is this true when there is no
restriction on da ba which the Code Authority can re-
quire from the individual unit. The tendency, as you
know, over the United States at the present time is
not to give this right to s toe' -.holders of a corpora-
tion unless they desire the information for some
legitimate purpose. I note that the Coat and Suit
Industry Code which was approved by the President per-
mits this practice."
On ITovember 4, 1933, the following M Press Release (Ho. 1566)
stated the position of the Administrator relative to the administra-
tion of codes:
"General Johnson today made the following statement in
regard to the administration of codes by code authorities,
trade associations and other agencies of industrial
s e 1 f-go ve rnment :
"The function of code administration lies primarily with
the Code Authority provided for in each Code, neverthe-
less, it is the responsibility of the National Recovery
Administration that the Code be administered. Whenever,
as in the Bituminous Coal Code, an industry is organized
for self-discipline that, function will be accorded it.
But in many instances industries are not so organized
that they have machinery appropriate to the adjustment
of complaints of violations of the trade practice, and
other provisions of their Codes.
"The organization of very few industries is at this
time appropriate for the adjustment of complaints of
violations of the labor provisions of Codes. While,
in eve.."y case, where the authority is organized, adjust-
ment of fair trade practices will be left to the Code
Authorities, as a general rule the code provides n^
plan for the adjustment of their labor provisions. The
Code Authority will be permitted to function on labor
disputes when provision is made for adequate representation
of labor on all committees, beards or other agencies set up
to entertain and adjust complaints by employees against
their employers for violations of labor provisions.'"
ARTICLE VII.
"Trade Practice Rules
"(1I0TB: Sponsors of codes, in preparation of drafts for
submission to 1>TPA, should select from the following such
rules as are deemed applicabel to their particular trades
or industries and. may set forth such other rules as
may be deemed desirable, to meet conditions peculiar to
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their trade/ industry', covering such subjects as:
Returned goods
Methods of leasing equipment
Sales by sample
Sspionage
Trade discounts and/or selling terms
T ran sp o r ta t i o n p rs c t i c e s
Design piracy
Price or special guarantees
Advertising allov/ances .
Ztc.)
"Rule 1. Inaccurate Advertising.
"No member of the industry shall publish advertising
(whether printed, radio, display or of any other nature),
which is misleading or inaccurate in any materiel par- ,'
tic-alar, nor shall any member in any way misrepresent
any goods (including but without limitation its use,
trade-mark, urade, quality, quantity, size, substance,
character nature, finish, material, content or prepara-
tion) or credit terms, values, policies, services, or
the nature or form of the business conducted.
"Hule 2. False Billing.
"Ho member of the industry shall knowingly withhold
from or insert in any quotation or invoice any state-
ment that makes it inaccurate in any material particular.
"Rule 3. .Inaccurate Labelling.
"Ho member of the industry shall brand or mark or pack
any goods. in any manner which is intended to or does
decive or mislead purchasers with respect to the brand,
grade quality, quantity, origin, size, substance, character,
nature, finish, material content or preparation of such
goods.
"Pule 4, Inaccurate Reference to
Competitors, etc.
"Ho member of the industry shall publish advertising which
refers inaccurately in any material particular to any com-
petitors or their goods, prices, values, credit terms,
policies or services.
"Rule 5. Selling Below Cost,.
"(Provisions may be inserted against selling below cost
based upon principles of costing formulated by the Code
Authority and approved by the Administrator. Such ">ro-
visions should be applicable to the individual industry
-61-
and should take into cons i da rat ion the necessity of selling
below cost to meet competition, to dispose of distress
merchandise etc.)
"Rule 6. Threats of Lav' Suits.
"Ho member of the industry shall publish or circulate
unjustified or unwarranted threats of legal proceedings
which tend to or have the effect of harassing competitors
or intimidating their customers. Failure to prosecute in
due course shall be evidence that any such threat is un-
warranted or unjustified.
"Rule 7. Secret Rebates.
"No member of the industry shall secretly directly offer
or make any payment or allowance of a rebate, refund,
commission, credit, unearned discount or excess allowance,
whether in the form of money or otherwise, nor shall as
member of the industry secretly offer or extend to any
customer any special service or privilege not extended
to all customers of the same class, for the -outdo se of
influencing a sale.
"Rule 8. Selling on Consignment.
"No member of the industry shall ship goods on consign-
ment except under circumstances to be defined by the Code
Authority, where peculiar circumstances of the trede/ industry
require the practice.
"Rule 9. Bribing Zimiovues.
"No member of the industry shall give, permit to be
givem, or directly offer to give, anything of value for
the purpose of influencing or regarding the action of
any employee, agent or representative of another in re-
lation to the business of the employer of such employee,
the principal of such agent or the represented party,
without the knowledge of such employer, principal or
party.
"Rule 10. Interference with Another' s
Contracts.
"No member of the industry shall attempt to induce the
breach of an existing contract between a competitor and
his employee or customer or source of supply; nor shall
any such member interfere with or obstruct the performances
of such contractual duties or services.
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"Eule 11. Coercion.
"No member of the industry shall require that the pur-
chase or lease of any goods be prerequisite to the pruch3.se
or lease of any other goods.
"Pule 12. Blacklisting.
"Ho member of the trade/ industry shall join or participate
with other members of the trade/ industry who with such
member constitute a substantial number of members of the
trade/ industry or who together control a substantial per-
cent of the business in any specific product or products
of the trade/ industry, in any transaction known in law
as a black list, including any practice or device (such
as a white list), which accomplishes the purpose of a
black list."
As heretofore noted, an NBA - Commerce Committee on Basic-
Code of Fair-Practices began in July, 1933, to study the work
of the Federal Trade Commission over the preceding 14 years as
to trade practice conferences and the resulting rules of fari
practice.
On September 11, 1935, a confidential report was made to
the Associate Counsel of the ITPA Legal Division by the other
members of the Committee which said in part:
"We have carefully checked each of the more than 1,000
rules approved 'oy the Federal Trade Commission since
1919, and are able to classify all of real importance
under six basic nrinci) les which we present herewith.
"More than 150 Trade Practice Conferences were held
during this period. More than 200 trade associations
participated. As you know, there is a distinct and
significant change in the legal phraseolog-y used by the
Commission prior to and since May, 1931, caused by
adverse decisions of the United Supreme Court along the
general line of thought that the Commission and ex-
ceeded its legal powers in its early rulings. Our
study which was the basis of this report to you in-
cluded both old and new rules, realizing full well that
although the Commission felt its hands to be tied after
May, 1931, the National Industrial Recovery Act imposed no
such restrictions."
9R10
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The six basic principles, and the divisions thereof, as recommend-
ed by this Committee are as follows:
I. INACCURACY
(1) Inaccurate Advertising
(2) "Bait" Advertising
(o) Inaccurate Labelling
II. ATTACKING- COMPETITORS
(4) Inaccurate Reference to Competitors, etc.
(5) "We undersell all Competitors."
(6) Selling below Cost
(7) Threats of Lawsuits
III. FRICE DISCRIMINATION
(8) Secret Rebates
(9) "Free" Goods
(10) Selling on Consignment
IV. COi.iLZSRCIAL BRIBERY
(11) Bribigg Rmployoes
(12) False billing
V. BREACH OF CONTRACT
(lo) Interference with another's Contracts
(14) Repudiating one's own Contracts
81. COERCION
(15) "Tying" and "block-booking" Contracts
(16) Black (or white) lists
On September 28, 1933, this Committee made an additional report
(Exhibit 6) to the Associate Counsel, which was in more detail than
the previous report of September 11, 1933, but it contained the same
16 rules formerly recommended. October 29, 1933, NBA Press Release
No. 1435 and the leading newspapers of the country carried an account
of the Committee's report. The publicity given to this report gave
to industry an idea as to the trade practice rules, which the NRA in
the future would advocate for codes. Of the sixteen rules recommended
by the Committee twelve were included in the "Model Code". The rules
pertaining to "Bait" Advertising, "We undersell all competitors",
"Free" Goods, and Repudiating one's own contracts were omitted.
9810
ARTICLE VI I.I
"Sxoort Trade"
"Section 1. Ho provision of this Code relating to -prices
or terms of selling, shipping or marketing, shall apply
to export trade or sales or shipments for export trade."
For the industries whose codes contained provisions as to sales
below cost, production control and allocation, classification of
customers, minimum price s price cutting emergencies, and other market-
ing and distribution devices, the above section was added for the
benefit of members engaged in foreign trade, to enable them to compete
with foreign manufacturers. The hour and wage provisions, however.,
continued to apply to them.
ARTICLE VIII (Continued)
"Section 2. Subject to the approval of the Code Authority,
the exceptions established by this section shall apply also
to sales or shipments of materials actually used in manufac-
ture for export trade.*
A-txI ujj^j IX
"Modification"
(inclusion of Section 1
Obligatory)
"Section 1. This Code and all the provisions thereof are
expressly made subject to the right of the President, in
accordance with the provisions cf subsection (b) of Section
10 of the Act, from time to time to cancel or modify any
order, approval, license, rule, or regulation issued under
such Ac t „ "
The inclusion of this section was mandatory inider Section 10 (b)
of the Act.
ARTICLE JX-Continued)
"Section 2. This Cods, except as to' provisions required by
the Act, may be modified on the basis of experience or changes
in circumstances, such modifications, to be based upon applica-
tion to the Administrator and such notice and hearing as he
shall specify, and to become effective on approval of the
President., "
(*) A provision may be introduced into the administrative section of
the Code, providing that questions relating to production for ex-
port, not enumerated in the above section, may be submitted by any
member of the trade/ industry to the consideration of the Code
Authority; and that its decision thereon shall be submitted to the
Administrator and shall not be effective unless and until approved
9810 by Mm«"
-65-
A3TICLE X
"Monopolies, etc. "
"Ho provision of this Code shall be so applied as to per-
mit monopolies or monopolistic -jractices, or to eliminate,
err? re s s , or discriminate against small enterprises."
Section 3 (a) of the Act granted the President power to approve
codes, "Provided, that such code or codes shall not permit monopolies
or monopolistic practices." Though the Act did not specifically
provide for the inclusion of this Article, it was thought desirable
by N.R.A. to include it in each code.
APTICL2 XI
"Price Increases"
"Y/hercas the policy of the Act tr increase real purchasing
power will be made more difficult of consummation if prices
of goods and services increase as rapidly as wages, it is
recognized that price increases except such as may be re-
quired to meet individual cost should be delayed, but when ms.de
such increases should, so far as possible, be limited to
actual additional increases in the seller's costs."
When the President signed the Act he said:
"I am fully aware that wage increases will eventually
raise costs, but I ask that managements give first con-
sideration to the improvement of operating figures by
greatly increased saljs to be expected from the rising
purchasing power of the public. That is gcod economics
and good business. The aim of this Whole effort is to
restore our rich domestic market by raising its vast
consuming capacity. If we now inflate prices as fast
and as far as we increase wages, the whole project will
be set at naught. V7e cannot hope for the full effect
of this plan unless, in these first critical months, and,
even at the expense of full initial profits, wd defer
price increases as long as possible. If we can thus
start a strong sound upward spiral of business activity
our industries will have little doubt of black-ink opera-
tions in the last quarter of this year. The pent-up
d;~and of this ;oeople is very great and if we can release
it on so broad a front, we need not fear a lagging re-
covery. There is greater danger of too much feverish
speed." (*)
(*) HHA. Bulletin No. 1.
J310
-66-
This Article was a declaration of ilHA. policy "based on the Presi
dent's statement.
"AETICL1 XII"
"Effective Date"
"Tliis Code shall become -effective or. the second Monday
after its approval by. the President, (unless otherwise
stated.,)11'
To avci(? any Fiistuiderstanding: and in order that members of
industry and the public should definitely know when a code became
effective, this or a similar provision was included in every code
approved.
9810
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CHAPTER V
NRA PRCNOUNCEhllilT affecti::c- ,.qdel code provisions
The irriod of code mailing overlapped that of code administration,
and the experience gained from the latter was an aid in the formulation
of policy for the former; therefore, certain policies expressed in the
November 6, 1933, issue of the Model Code nere changed, and many addi-
tional provisions were found desirable. Certain provisions made manda-
tory by Executive Orders were added. Various Office Orders and Office
Memoranda announced official policies to the personnel of NBA and to
industry, which policies rere recommended for consideration in future
code making or a,s code amendments. This chapter discusses the changes
in the model Code provisions effected by the foregoing pronouncements.
I. COMMERCIAL 'BRIBERY
Due to '"idespread misunderstanding concerning the commercial
bribery and advertising provisions in codes, and reports received by
the Administrator that because of this misunderstanding advertising
novelty manufacturers ^ere losing business, the president issued Execu-
tive Order No. 6464 (Exhibit 12) on November 27, 1933. This Order
stated that commercial bribery provisions vere not not to be construed
"to prohibit free and general distribution of articles commonly used
for advertising except so far as such articles are actually used for
commercial bribery***." This Order modified any inconsistent "commer-
cial bribery" provisions which had been included in codes prior to its
issuance, and prescribed that all codes approved subsequently should
conform to the model provision set forth in the Executive Order.
II. STATISTICAL INFORMATION
On December 7, 1933, the President by Executive Order No. 6479
(Exhibit 13) modified all codes approved previously to provide "that,
in addition to information reordred to be submitted to any code author-
ity, all or any of the persons subject to such code, agreement, or
license furnish such statistical information as the administrator may
deem necessary for the purposes recited in 3 (a) of said Act to such
Federal and State agencies a.s the Administrator may designate;***,"
The above Executive Order also provided that every code, license,
or agreement approved subsequent to the issuance of this Order should
contain the above quoted provision.
III. REVIEW OF ACTS OF CODE AUTHORITIES
Article IV, Section 3 of the Code of Fair Competition for the
Cap and Closure Industry, approved October 20, 1933, incorporated the
following jio vision:
"In addition to the porers herein specifically conferred
upon the Code Authority, it shall have the following porters and duties
to .the. extent permitted by the Act, subject to the right of the
Administrator, on review, to disapprove or modify any action taken."
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Th e Code of Pair Competition for the Funeral Supply Industry, ap-
proved iTovember 4, 1933, contained the following provision:
"The Code Authority or its duly authorized committees, offi-
cers, or agents, shall cooperate with the Administrator as a plan-
'ning, coordinating, Administrative, and fair practice agency for
the Funeral Supply Industry, a'-.d shall keep the Administrator in-
formed as to the functioning and observance or non-observance of
any of the provisions of this cede, and shall have the following
duties and powers to the extent permitted by the rational Industrial
He co very Act, subject to right of the Administrator on review to
disapprove or modify any action taken by such code authority or its
duly authorised representatives* " (*;
Sc.ie code sponsoring committees objected to provisions similar to
those quoted above, on the ground that such provisions gave power to the
Administrator to modify actions of the code authority, whereas the code
authorities were established to promote self-government of industry and
if the Administrator were to have power to modify their actions they
would never know where they stood. Ho objections were raised to the power
granted to the Administrator to disapprove actions of the code authority,
because such disapproval would "wipe the action from the slate."
To meet the above objections the following memorandum was issued by
the General Counsel of NBA. to the members of the Legal Division:
"November 22, 1933
I.iEkOPAEDUi; TO ALL MSMBEHS OF LEGAL DIVISION
It is not required and it is not proper, except in special
instances, to grant in a Code any general power to the Administrator
to review and modify actions token \>ir the Code Authority. If anyone
insists upon incorporating such clause, you may refer to this memo-
randum as a statement of policy to promote self-government of indus-
try, as distinguished from political government of industry, which
should guide the Legal Division."
For the guidance of 1IEA personnel the following Office Memorandum
of January 2, 1934, was issued:
"In lieu of provisions heretofore used in codes, referring to
approval or disapproval by the Administrator of acts of code authori-
ties, the following provision should hereafter be incorporated in
. . all codes:
If the Administrator shall determine that any action of a code
authority or any agency thereof is unfair or unjust or contrary to
the public interest, the Administrator mas'" require that such action
be suspended for a period, of not to exceed thirty days to afford an
opportunity for investigation of the merits of such action and fur-
ther consideration by such code authority or agency pending final
action, which shall be taken only upon approval by the Administrator."
(.*) Article VII, Section 2 of the Code for the Funeral Supoly Industry,
Codes of Fair Competition, Volume II, page 429.
C 310
9810
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Objection made to this memorandum re stilted, in its revision "by an
OiYice Llenorandiam issued January 27, 1954, as follows:
"In lieu of provisions heretofore used in codes, referring
to approval or disapproval by the Administrator of acts of code au-
thorities, the following provisions should hereafter he incorporated
in all codes:
If the Administrator shall determine that any action of a code
authority or any agency thereof nay he unfair or unjust or contrary
to the public interest, the Administrator nay require that such ac-
tion be suspended to afford an opportunity for investigation of the
merits of such action and further consideration by such code authority
or agency pending final action which shall not be effective unless
the Administrator approves or unless he shall fail to disapprove
after thirty days' notice to him of intention to proceed with such
action in its origin-1 or modified form,"
IV. SEL1I13G IIELOW COST, OFEil P2IGE FILIIIC-, AED
PUBLIC ACCOUITTAITT PROVISIONS
The "selling belor,r cost" provisions in codes were the cause of much
dissension within industry. The 1I2A had intended that such provisions
should be used as a preventive of destructive price Cutting, which had
been carried on by some members of industry prior to the passage of the
Act. It was the opinion of the Administration that they would result
in abolishing the "loss leader" items used by retail and wholesale con-
cerns, in the past to stimulate sales. The Code Standardization Group
which had formulated the iiode'l Code believed that each industry could
draft a suitable provision for its code. A large number of "selling be-
low cost" provisions merely suggested that the Code Authority determine
and submit to the Administrator for his approval provisions against sell-
ing below cost.
The Model Code of November 6, 1933, had not set forth a model provi-
sion for " selling below cost," but stated:
"(provisions nay be inserted against selling below cost based upon
principle's of costing formulated ~by the Code Authority and approved
by the Administrator, Such provisions should take into considera-
tion the necessity of selling below cost to meet competition, to
dispose of distress merchandise, etc.)"
To establish a gaide and to further uniformity in code provisions the
following Office Memorandum was issued on February 3, 1934:
"The following has 'been approved as a standard provision for
codes relating to limitation of prices:
'".en the Code Authority determines that an emergency exists
in this industry and that the cause thereof is destructive price-
cutting such as to render ineffective or seriously endanger the
maintenance of the provisions of this Code, the Code Authority
may cause to be determined the lowest reasonable cost of the
products of this industry, such determination to be subject to
981C
-70-
such notice and hearing an the Administrator may require.
The Administrator may approve, disapprove, or modify the
determination, Thereafter, during tha period, of the emer-
gency, it shall he an unfair tr;;d.e practice for any memher
of the industry for which the lowest reasonable cost has
been determined at such ;orices ox upon such terms or con-
ditions of sale that the 'uyer wMl pay less therefor than
the lowest reasonable cost of s'icf: products.
,T7hen it appears that conditions have changed, the Code
Authority: upon its own initiative or upon the request of any
interested party, shall cause the determination to he review-
ed. "
This provision should he recommended to industries as
desirable in new codes, and of course, may he used as a
substitution in any approved coue if the industry desires.
Under this provision no exception to meet lower cost
competition within the industry is necessary. '
Other exceptions, as to distress stocks, for export
purposes, and to compete with lower-cost imports, may re-
main as at present."
Much study was given to the question of the sales-below-cost provisions.
Finally it was referred to the NBA Trade Practice Policy Board for further
study and recommendations. Office Memorandum TTo. 228, issued June 7, 1934,
Exhibit 14 contained the recommendations of this Board. Model provisions
on "Costs and Price Cutting" were set forth in this memorandum, which was
generally concurred in by the Advisory Boards as ^ell as the Legal and
Research and Planning Divisions.
Another device used in the effort to prevent -orice cutting was a
provision for open price associations or a price filing system. The pro-
visions for price filing in early codes called for a waiting -oeriod, usually
of 10 days, before the prices filed should be effective. This arrangement
was open to abuse and to rectify the situation, Office Order No. 63-B,
January 27, 1934, made the following announcement of policy:
"As a result of the price change hearing a study is
being made of o-oen orice associations. This study
particularly involves the waiting ueriod before filed
prices become effective. Therefore, any nrovision for
a waiting -oeriod in codes not yet approved will be
stayed in the Executive or Administrator's Order of
approval for sixty days, or pending completion of the
study."
The open price filing system provisions were also referred to the
Trade Practice Policy Board for study and recommendations. Exhibit 1 of
Office Memorandum No. 228 incorporated the recommendations on this subject
which were officially adooted.
9810
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To provide a standard provision for uniform cost accounting, the
following clause was recommended to oe used in code drafting:
"The Code Authority shall cnuse to be formulated
an accounting system and methods of cost finding
and/or estimating capable of use by all members
of the industry. After such system and methods
have been formulated, full details concerning them
shall be made available to all members. Thereafter
all members shall determine and/or estimate costs in
accordance with the principles of such methods."
(Office !'emora:idum of January 29, 1934.)
It was pointed out that the advantage of the above clause was two-fold:
(1) it was completely divorced from the sel1 ing-belo^-cost clause, and
(2) it introduced the ider1. of cost estimating, which <-as the thing some
industries needed rather than, or in conjunction with, cost accounting.
To aid members of industry in computing the cost of their commodities
the code authorities had set up cost accounting systems, some few of which
were very elaborate and expensive. Some codes provided that an accounting
system should be drafted by a certified public- accountant". To prevent
discrimination against other accountants the' following Office Memorandum
was issued November 22, 1933, to clarify the situation, and misinterpreta-
tion which had been applied to such provisions:
"Some codes vest duties in publich accountants-,, who
are quite generally referred to as 'certified public ac-
countant'. This is a coimon usage which overlooks the fact
that there are other -public accountants, equal1 y suitable to
perform the s-^me work as certified public accountants. When-
ever any code provision imposes duties on public accountants,
therefore, i t should read in manner such a.s the following:
"by a certified public accountant or by an accountant having
the equivalent in qualifications and ability of a certified
public cccountant, provided, however, that as to any service
to be performed in any particular state or governmental sub-
division of the Uniced States, such accountant in any event
shall have the qualifications required by law in such state
or governmental sub ii vision of the United States for the per-
formance of such service."
To further clarify the above, the following Office Memorandum was
issued January 29, 1934:
"In answer to objections which have been raised against
the provision referring to public accountants in office mem-
orandum of November 22, "1933, a.s tending to prefer some classes
over others, the following wording is suggested for codes im-
posing duties in public accounting:
'by a certified, registered, chartered, or any
other practitioner of public accountancy'
9810
-73-
"Of course, the industry is entitled to define what
type of accountant it desires to use, but it is 'believed
that industries in general have no desire to discriminate,
and it is suggested that the above language be recommended
to industries so that no unintentional discrimination may
be made. "
Office Memorandum No, 228, previously referred to, ^as undoubtedly
one of the most important announcements in KRA administration. It estab-" ',
Wished the policy that Fas to govern pricing practices under codes and
amendments in the future. This policy was determined by the Administration
after months of study and experimentation, and was generally concurred in
by the Advisory Boards, the Legal, and Research and Planning Divisions,
In brief the policy was as follows: To ban fixing even of minimum prices
except in emergencies when it, was necessary to halt destructive price cut-
ting, protect small enterprises, curb monopolistic tendencies or maintain
code wages and working conditions; to permit price filing, where desired
by an industry, with a confidential disinterested agency for distribution
to all members of the industry and customers wil"1 ing to pay for the ser-
vice-.—-such posted prices not to be changed for 48 hours. Policy also
announced in this Office Memorandum, was to encourage the inclusion of
model cost finding and accounting provisions, which should, however, not
be obligatory, but not to encourage uniform additions in the form of ■per-
centages or differentials designed to bring about arbitrary uniformity
in cost or prices.
An important feature of the new policy was that machinery was set
up to prevent cut-throat price competition between emergency periods. Any
interested individual was permitted, to complain of destructive prices to
the code authority, which, if it was unable to adjust the situation to the
satisfaction of the complainant or respondent, was to refer the complaint
to the Research and Planning Division of NRA.
The plans of certain code authorities for the approval of elaborate
accounting systems were hastily discarded after the issuance of Office
Memorandum Ho. 228. Thereafter, except in cases of emergencies, accounting
systems were approved only provided they were to be used only for educa-*-
tional purposes among the members of the industry.
The issuance of this memorandum was the cause of much confusion among
members of industry. To give industry the proper interpretation of the
purpose of the memorandum the following. announcement was made (Release
NO. 5682) by the Administrator on June 9, 1934:
"There seems to be widespread and misunderstanding about
the recently announced N.R.A. price policy. The main purpose
of that announcement was to obtain some uniformity in future
codes and, while it is our hope that industries under approved
codes may desire to agree to: changes, the policy order does not
now effect them and will not unless and until the adjustment has
been workfcd out in negotiations with .the interested code authorities.
In no event will there be- any imposed change in an approved code or
any change suggested without relation to the particular conditions >
981G
-73-
in that industry.
"It should he clearly understood that all of the provisions
of apnroved coc'es. including their price provisions are in full
force and effect and must he complied with,
"This applies for example to those of all Retail Trades
including Automotive Dealers, Bituminous' Coal, sCl Lumber and
Timber Products and Building Materials, Electrical, Rubber
Tires, Paper Industries, Graphic .Arts and Printing, Bus,
Trucking, and Transport, Garment and Textiles, Radio and all
durable goods industries. I mention these codes specifically
only because this is where the misunderstanding has been most
general. Omission to mention any other does not mean that the
general statement just made does not apply to them."
V. TRADE PRACTICE COMMITTEES
To encourage code authorities of closely related industries to co-
ordinate their trade practice rules, a model provision for the establish-
ment of a trade practice committee, incorporated in Office Order No. 66, was
recommended to be used in the formulation of new codes and revisions of ap-
nroved codes.
The text of the Office Order was as follows:
"TRADE PRACTICE £ AFFECTING RELATIONSHIPS BETWEEN
MEHFEi-.S U/ILJR DISF.Ti-EJCT CODES
"Trade practices incorporated in codes usually deal ef-
fectively with the relationships between all employers subject
to the code. On the other hand, the equal1y important rela-
tionships existing between production employers and distribution
employers who are under different cedes have not been dealt with
to any extent and, of course, cannot be dealt with so readily as
in the first case. However, it is equally important that fair
trade practices be established in the latter case.
"It is desired that the following paragraph be recommended
-.. to all industries who are in the course of formulation of new
codes or the revision of approved codes for inclusion among
the powers and duties of the code authority:
'To appoint a trade pra.ctice committee which shall
meet with the trade practice committees appointed
under such other codes as may be related to the
'. ••• trade/ industry for the purpose of formulating fair
trade practices to govern the relationships between
production and distribution employers Under this code
and under such others to the end that such fair trade
practices may be proposed to the Administrator as
amendments to this code and such other codes.
9813
-74-
"In this connection attention is invited to section
7 (e) of the Suggested Outline of Codes which has been
incorporated in a number of approved codes and "hich
authorises the code authority to make recommendations
to the Administrator for coordination of the adminis-
tration of related codes. Under this clause any existing
code authority may proceed as suggested above."
VI. PROVISIONS GOVERNING EMPLOYMENT OE HANDICAPPED WORKERS
President Roosevelt issued Executive Order No. 6606-P on February 17,
1934 (Exhibit 15) providing that a person whose earning capacity wa.s limit-
ed because of age, physical or mental handicap, or other infirmities could
be employed on light work at a wage below the minimum that was established
by a code.
The Order was intended to clarify the question whether minimum wage
and maximum hour provisions of codes were to prevent those handicapped by
physical or mental defect, age or other infirmity from having their former
opportunities of employment.
It was ordered that no provision of any code previously or thereafter
approved was to be so construed or was to be applied so as to violate the
rules and regulations quoted in Executive Order No. 66G6-F.
The following press release (No. 6557), issued July 23, 1934, gives
the report of an N.R.A. Commission which made a study of the effect of codes
upon employment of physically or mentally handicapped workers:
REPORT OE NRA COMMISSION TO STUDY EFFECT OF CODES UPON
EMPLOYMENT OF PHYSICALLY OR MENTALLY HANDICAPPED WORKERS
Employers must be induced to hire 'a proper pro-
portion' of handicapped persons or the great bulk of
such workers will have to be -pensioned and kept in idle-
ness 'at enormous cost to the public', the special com-
mission appointed by National Recovery Administrator Hugh
S. Johnson to study the effect of codes upon employment
of the physically or mentally handicapped, reports in
findings made public today.
The report, which is signed by Oscar M. Sullivan,
Frederic Woodward and Stanley P. Davie s, the latter
secretary and general director of The Charity Organiza-
tion Society of New York, calls upon industry to adopt;,
voluntarily, 'a right minded and socially desirable1
attitude toward sub-standard workers and to make it
possible for those 'who are not less than 50fo deficient'
to receive regular employment.
The Commission's report is based upon field studies
made in 14 representative cities and upon an analysis
of replies to an intensive questionnaire sent to all
vocational rehabilitation supervisors in the country as
9810
■75-
to private placement agencies for the handicapped and
a selected list of social service agencies, T7hile the
net results, the report declares, 'are not in the nature
of things reducible to statistical form', the conclusions
reached reprefi snt 'a. careful evaluation after allowing
for varying conditions,'.
Regarding the rumored wide-spread discharge of
handicapped employees immediately prior to or fol-
lowing the adoption of codes, the report declares
that 'in many localities no instances of this were
found at all1, though the report 'seemed to he well-
founded* in Massachusetts. . . .
Similarly, but few instances "'ere reported of
efforts to employ efficient handicapped workers under
sub-standard certificates, though the commission recom-
mended, as desirable, 'a. check-up of this and other
features' at a later date.
With regard to the employment of handicapped
'who are indisputably sub-standard' , the report de-
clares that many elements of disagreement were found,
with the most frequently expressed opinion to the
effect that not enough of the sub-standard were ob-
taining employment and that 'the percentage limita-
tions on bhe number of sub-standard employees in any
one establishment, as '"ell as the reduction that
could be made in the minimum wage, were not flexible
enough to meet conditions.'
As to the extent to which handicapped workers
have participated in the re— empl oyment program, the
commission found a ride diversity cf conditions. In
a number of places, notably Grand Rapids and Michigan
in general, Louisville and Hartford, 'strong testimony
was given that the U.S.A. had been the cause of much
new employment' and that the handicapped 'had bene-
fitted directly thereby1. In other places, tne report
stated, ' the evidence seemed to be that the handicapped
were no better off and no worse off than they were be-
fore. '
Reporting on the proposals for bringing about in-
creased employment of handicapped, the commission de-
clared:
'Some of them, although good, obviously did not
come within the scope of the National Recovery Admin-
istration. Of such character was the suggestion that
the federal government and other governmental agencies
should set the example to business and industry by
adopting regulations which would make certain the allo-
cation of a fair proportion of public positions to the
handicapped.
9810
-76-
'Also meritorious, though outside the "orovince
of the N.R.A, except insofar as it related to sheltered
workshops, was the proposal of a group of social thinkers
that the handicapped not absorbable by industry he en-
couraged to produce well-selected and standarized arti-
cles that could be marketed in the government purchase
field, '
'Suggestions which the commission found desirable
were included in a recommendation that the National
Recovery Administration 'call to the attention of all
coded industries .... as socially desirable measures
for their codes, either in a mandatory way or as recom-
mended practices, the following:1
'(a) Every employer should, whenever the nature
of the disability or the individual -personality does not
negative such a step, re-hire in suitable employment
persons who have received permanent injuries in their
employ.
'(b) Employers should, in the ordinary course of
expansion call back one equal basis with other handicapped
workers who have been in their employ within the last four
years.
'(c) Employers should endeavor to have a suitable
proportion of handicapped workers, whether sub-standard
or fully efficient, in the ranks of their employees in
order to make certain of a. fair distribution of opportunity
to work. This proportion in all probability would be as
large as two percent and might even be close to five per-
cent'."
VII. STANDARDS FOR SAFETY AND HEALTH
In Chapter IV of this report, comment was raad.e as to the neces-
sity for the inclusion in the Model Code of a provision for standards
for safety and health of employees.
In Office Order No. 71 of March 14, 1934 (Exhibit 16) the
manner in which the -orovisions for safety and health were to be
drawn was outlined.
A Committee on Standards for Safety and Health for Codes was
appointed by the Secretary of Labor to formulate the minimum standards
for safety and health of workers in manufacturing industries. The
standard recommended by this committee were used by many code authori-
ties. The standards submitted by the code authorities when approved
by the Administrator, in accordance with Administrative Order No. X-51,
June 15, 1934 )Exhibit 17), became part of the code governing the partic-
ular industry, and were enforceable as any other provision of the Code.
9810
VIII. PREMIUMS,
Among the fair trade practices of certain codec were provioions
prohibiting the use of premiums. The following were some of the specific
forms of this practice prohibited:
Salt Producing Industry - Article IV, Section 9.
"Offering of salable gifts or prizes."
Cap and Closure Industry - Schedule A, Section G.
"Free deals and/or contributions — - The offering
or giving of prizes, -oremiums, or gifts in connec-
tion with the sale of products, or as an inducement
thereto. "
Industrial Sut>t)l j q s and Distributors Trad ft - Article VI, Section 3.
"She payment or allowance of secret rebates, refunds,
discounts, commissions, or other special considera-
tions or allowances, including donations, gifts, or
premiums of any nature whatsoever to any firm or
individual. "
Asbestos Industry - Article VII, Section 3.
"To subsidize buyers by special donations, give
premiums. "
Toy and Playthings Industries - Article VII, Section 11.
"The offering or giving of prizes, premiums, or
gifts in connection with the sale of products, or
as an inducement thereto, by any scheme which in-
volve lottery, misrepresentation, or fraud."
Gas. Appliance and Apparatus Industry - Article X, Section 6.
"Using premiums in the sale of merchandise. "
The premium problem proved to be quite troublesome. Ther'? were
irreconcilable conflicts between the desires of certain non-premium iar-
dus tries on the one hand and concerns engaged in th«i manufacture and
distribution of premiums on the other. The manufacturers of novelty
gods which were extensively used in premiums had built up a consier—
able industry and employed a large number of persons. 1$ addition, other
■oroducts which were not. intrinsica1 ly related to the manufactura of pre-
miums were purchased for premium use. The first statement of policy
on the subject of -oremiums was announced in the Policy Memorandum of
October 25, 1933. Later the policy as to premiums was revised, as
announced in pffice Memorandum of March 19, 1934, as follows: /
7
9810
"The use of premiums or coupons may be prohibited
"by an industry when the desire for such prohibition is
general.
"Prohibition of the use of premiums or coupons will
not be apt) roved where a -member of the industry has been
accustomed to make a proper use of premiums or coupons
and objects to the prohibition., "
Many protests were- received by ..NBA from the manufacturers of . articles
used for premiums, and from business concerns whose businesses were con-
ducted on a premium basis. They felt that they were being discriminated
against and that the prohibition of premiums was not in accord with the
purposes of the Act.
The result of this criticism was thr>t the problem was referred to
the Trade Practice Policy Boa.rd for study and recommendations, which
were made public in Office Memorandum No. 232, issued June 12, 1934
(Exhibit 18).
The term "free deals" was used in certain codes, and to clarify
the question whether these were to be classed in the same category as
premiums Office Memorandum No, 316 of December 6, 1934 (Exhibit 19)
was issued to supersede Office Memorandum No. 232.
IX MANDATORY ASSESSMENT'S.
Under, Article VII ,• Section ,7^f) of the Model Code of November 6,
1933, no legal liability to pay code assessments existed unless a con-
tractual obligation to pay had been created by an assent to the "code.
Presumably on the theory that all members of the industry, whether as-
senting to codes o"" not, received benefits from the operation of the
codes, Executive 'Order No. 6678, dated April 14, 1934 (Exhibit 20) , was
issued authorizing the code authorities Lo amend their codes by the
inclusion of a mandatory assessment provision and provisions which would
permit the code authority to incur leascna^le obligations necessary for
its expenses and to. submit bo the Administratojr, f or. his approval an
itemized budget and an equitable basis of contribution. It also permitted
the code authority to institute legal proceedings for the collection of
■the- equitable contribution. The mandatory assessment provision was to be
effective only after approval by the Administrator of the budget and
basis of contribution.
N.R.A. Press Release No. 4434 of April 15, 1934, with reference to
the purpose of the order, stated:
"Under the order, which eliminates racketeering
through provisions for prior approval of both rates
and budgets by the Administrator, non-payment of an ,
equitable contribution is to be a code violation sub-
jecting the delinquent to withdrawal of all Code bene-
fits and loss of the Blue Eagle as well as to a suit
which may be brought by the. .Code Authority."
981")
-79-
S'imulta'neously with the issuance of Executive Order Mo. 6678, the
Administrator issued Administrative Order TTo. X-20 which supnlrmented
the Executive Order, defined the procedure under which rates and budgets
would be approved, and emphasized that nnroloyers who were subject to
several codes would, with certain exceptions, be assessed only for the
support of one eode authority — that representing their principal line
of business. To relieve members of industry operating under more than
one code from multiple assessments. Administrative Order No. X-20 was
supDiemented by Administrative Orders Mo. X-36, No. X-78, Mo. X-1G6,
No. X-131, and No. X-14C.
981 D
~8i>
X. BLUE EAGLE INSIGNIA.
The revised edition of the Model Code issued April 3, 1934, incor-
porated under the powers and duties of the code authority, Article VI,
Section 7 (g),cthe following provision:
"To cooperate with the Administrator in regulating the use
of any N.R.A. insignia solely "by those members of the trade/ in-
dustry who have assented to, and are complying with this Code."
Some members of industry had "been deprived of the right to display
the Blue Eagle Because they had not assented to the code for their parti-
cular industry, although they were complying with its provisions. To
correct this injustice Office Memorandum No. 229 was issued June 9, 1934,
as follows:
"It is the policy of this Administration to encourage the
display of Code Blue Eagle Insignia "by all trade and industry
members complying with the provisions of the Code or Codes of Fair
Competition to which they are subject. Blue Eagles are being dis-
tributed to sll employers ope rating under approved codes who have
not been reported for violation; and, when issued, the Blue Eagle
may be withdrawn only by N.R.A. for violation of code provisions.
"Ho limitation such as assent to the code should be imposed
upon the right of employers operating in conformity with the pro-
visions of approved codes to receive and display Blue Eagle Insig-
nia. Hereafter, Administrative approval will not be given to any
code provision or any code authority by-law or regulation that
seeks to impose such a condition."
XI. CLASSIFICATION OF CUSTOMERS.
An analysis of the first 500 approved codes shows that seventy-seven
included some form of "classification of customers" provisions, inr..
dicating a differentiation among customers. Some members of industry
used this classification as a basis for open price filing or for placing
restrictions on discounts, prices or terms of sale. Other members used
it as a means to divert products of the industry into specific trade
channels.
The problem of classification of customers was referred to the N.R.A.
Trade Practice Policy Board for its consideration and recommendations
which were made as follows:
"The problem of classification of customers has had very care-
ful consideration. A number ox the proposed classifications have
been examined. The Committee has also had before it a number of pro-
ponents of customer classification. Some of these have been repre-
sentatives of particular codes, others, persons who have confidence
in the desirability and feasibility of customer classification. The
most affirmative member of the latter group has declared that he had
not yet seen any specific forms of customer classification which he
believes would be satisfactory.
9810
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"Classification of customers by interested groups has been ex-
perimented with for a number of years. It has been tried in the
lumber industry, and in other cases in which it has been studied by
the Federal Trade Commission. A consideration of these studies, as
well as the discussions mentioned above, lead to the conclusion
that it is contrary to the public interest to entrust the serious
responsibility of creating binding customer classifications to trades
or industries concerned. Usually,., if not in all cases, such plans
appear to contain some design to restrict, destroy, or otherwise
discriminate against certain individual concerns or classes of cus-
tomers. Such plans are, further, in a large number of cases com-
bined with compulsory resale price maintenance provisions, manda-
tory observation of classification by individual sellers, and uni-
form discount requirements, all tending in the direction of a ri-
gidity of distribution structure and of prices.
"There is one type of customer classifi cation work which the
1T.P.„A. wou Id be well advised to permit code authorities to carry on ,
as an educational activity. It would consist, of determining and
listing the trade channels open to members of the trade, pointing
out the functions performed by various trade channels, and indi-
cating developing trends and possible new channels of distribution.
Such work, if conducted continuously by the code authority, should
lead to a better awareness of market opportunities, lower costs of
distribution, and quicker adaptation to the changing economic si-
tuation .
"In no case, however, should the provisions of a code or the
work of a code authority be permitted to place restrictions on the
freedom of an individual vender to choose such distribution channels
as he believes will best serve his purposes. ITor should influence
be brought to bear to bring about such a result. Nor should there
be -permitted any classification of types of customers which con-
tains or suggests resale price maintenance provisions, uniform dis-
count requirements, or other features tending in the direction of
rigidifying channels of distribution, and prices.
"The above observations and the recommendations which follow
are in line with the principles of open price filing set out in
Office Memorandum 228 and, specifically, that part of Exhibit A —
Open price Filing — which states that price lists when filed 'shall
completely and accurately conform ato and represent the individual
pricing practices of said member'."
RECOMMENDATIONS
"It is recommended:
"1. That code provisions for classification of customers
should go no further than to authorize code "authorities to formu-
late and keep current classifications which include the following:
9810
"(a) A statement of those tyoes of customers to "be found in the
trade/industry;
"(h) Definitions and explanations of these several classes of
customers in terms of their functions.
"2. Such classifications should
"(a) Include all known types of customers,
"(d) Expressly recognize the right of any members of the trade/
industry to recognize such additional types as he may desire,
"(c) Expressly recognize the right of any member of the trade/
industry to classify his own customers as he may desire.
"3. Such classification should in no case include or be supple-
mented "by
"(a) Provisions contemplating' the suppression or elimination
of certain types of distributors or competitors or individual distri-
butors or competitors;
"(b) Any reference to uniform prices, discounts or differen-
tials to be used by members of the industry for the various classes
of customers indicated;
"(c) Any requirement or suggestion designed to bring about
the maintenance of resale prices by members of the trade/industry or
their customers;
"4. Code provisions for classification of customers should
specifically declare that it shall be a violation of the code for the
code authority or members of the industry individually ©r collecti-
vely to require or suggest to any other member of the industry the
differentials, prices, or discounts to be used or employed as bet-
ween the various classes of customers indicated, or to suggest or re-
quire the inclusion of individual concerns in any indicated class."
The above recommendations were duly considered by the Administration,
and led to the issuance of Office Memorandum No. 267 of July 20, 1934 (
(Exhibit 21).
XII. ADVERTISING ALLOWANCES.
The practice of manufacturers in making advertising allowances to
purchasers permitted secret rebates, sometimes in violation of code pro-
visions against such rebates. NRA policy with respect to the question of
prohibiting advertising allowances through the oodes was not definitely
developed until lat«, but finally was announced by Office Memorandum No.
326, of January 5, 1935, ( Exhibit 22), as follows:
"Manufacturers or other vendors selling goods to distributors
frequently find themselves desiring to purchase from their customers
ail advertising or promotion service which their customers can render.
In purchasing such services the vendors have become accustomed to
make payment by 'allowing' a certain reduction from what would other-
wise he the price. The nayments thus made hove become known as 'ad-
vertising allowances'.
Code provisions declaring the giving of advertising allowances
an unfair practice would not change the basic facts that sellers
must price their goods to buyers and that certain buyers have pro-
motion services which they are desirous of selling for which those
who sell to them are willing to pay. The remedy for such suspicion,
secrecy, confusion, and misrepresentation as may be connected with
advertising allowances, lies in:
(a) Clearly separating and thus establishing the distinct iden-
tities which are involved in giving advertising allowances.
(b) Causing that part of the advertising allowance which is
actually a price reduction to appear in prices - reported prices,
if the industry or trade has an open price plan.
(c) Causing that part of the advertising allowance which is
actually a payment for advertising or promotion service to appear
as such with definite description of the service for \?hich it is
given, and with such publicity, where publicity is practicable, that
it is unlikely that the payment will be more than the competitive
worth of the services involved.
Accordingly, it is H.3.A. policy that an industry desiring to
regulate advertising allowances should not be permitted to do so by
general prohibitions, by restrictions on the basis of products or
types of distributors, or otherwise than in accordance with the fol-
lowing:
1. That no member of an industry or trade shall designate as
an 'advertising allowance', 'promotion allowance' or similar term,
any price reduction, discount, bonus, rebate, or other form of price
allowance or concession, or any consideration for advertising or pro-
motion services offered or given by him to any customer.
2. That no member of an industry or trade shall offer or
give any consideration for advertising or promotion services to any
customer except for definite and specific advertising or promotion
services .
3. Agreements to purchase advertising services from customers
shall be made in written contracts separate from sales contracts.
4. Such contracts shall specifically and completely set out
the promotion services to be Derformed, together with the precise
consideration to be paid therefor, the method of determining per-
formance, and all other terms and conditions relating thereto.
5. Some arrangement for publicity may be made, where effective
machinery therefor can be devised. In considering any .-arrangement
9810
-34-
for publicity, c\re should be token to avoid machinery so cumbersome
that its cost will outweigh "benefits t: be gained.
The niodel provisions for advertising allowances which were to be
incorporated in cedes are then set forth.
XIII. LIQUIDATED DAI. AGES PROVISIONS.
Prior to the issuance of office Lemcrraiduai Nc. 331 , J-nuary 29,
1935, (Exhibit 23), fifteen codes were rpprcved which contr.ined pro-
visions for liquidated damages. This Memorandum express LrPA policy
as to such provisions and was the last expression of such policy, al-
though the question subsequently received further consideration by
the PEA Advisory Council, which made recommendations for revision.
XIV. PROVISION PEC JBITIEG DISMISSAL GP EMPLOYEES POP REPORTING
ALLEGED VIGIiATICES OF G'EES.
It had been brought to the Administrator's attention that some
employees were being dismissed because they were reporting code
violations; also that many violations were not being report because
the emaloyaes were in fear of being discharged if their employer
learned that the employee had reported to the proper authority a vio-
lation of a code. To correct such dismissals and fears the President,
"oy Executive Order No.' 6711 of i.iay 15, 1934, (Exhibit 24 established
t.._e following rule:
"No employer subject to a cede of fair competition
approved under this title shall dismiss or 'demote
any employee for making a complaint or giving,
evidence with respect to an alleged violation of
the provision.- of any code of fair competition
approved under this title."
Tme above rule was t. ereafter used as ;a model provision for' codes.
XV. hCMEV/CRK.
After the bo.sic code? for the Garment Industries were approved
it so~n become apparent that the provisioni; in codes eliminating home-
work had caused severe hardships among those employed in such work.
On the other hand it was recognized that homework offered a vicious
type of unfair competition in many industries.
A committee was appointed to study this ouestion, and to make
recommendations to the Administrator, as t? regalations governing
homework.
Office Memorandum of Pebruo.ry 17, 1934 stated in part .as follows:
"Pending completion of the study and solution of
the problem, it is suggested that homework pro-
visions be very c -refully v/eighed, and stayed
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waere hardships may result."
On the recommendations of tiie Commission, which had made a
stud/ of homework, the President issued Executive Order Ko.6711-A
on Lay 15, 1934 (Exhibit 26), "Prescribing fiules and Regulations for
the Interpretation and Application of Certain Labor Provisions of
Codes of Pair Competition as They hay Affect Certain Homeworkers. "
This Order stated in part as follows:
"1. .'. person may be permitted to engage in home-
work at the same wage rate of wages as is paid
for She same type of work performed in the factory
or other regular place of business if a certificate
is obtained from the State authority or other
officer designated by the United States Department
of Labor, such certificate tc be granted in accord-
ance with the Department of .Labor, provided:
(a) Such person is. physically incapacitated
for work in a factory or other regular
place of business raid is free from any
contagious disease; or
(b) Such person is unable to leave home be-
cause his or her services are absolutely
essential for attendance on a person who
is bedridden or an invalid and both, such
persons are free from any contagious
disease.
2. Any employer engaging' such a person shall keep
such certificate on file and shall file with the
Code Authority for the trade or industry or sub-
division thereof concerned the name ana address of
each worker so certified.
This Order shall become effective imm.edia.tely
and shall be binding upon all trades, industries
or subdivision thereof subject to Codes of Pair
Coup tition in which homework is prohibited, * * *;
prov .ded, however., that this Order shall not apply
to or affect Codes of Pair Competition heretofore
or hereafter approved for food or allied products
trades, industries or subdivisions thereof, which
contain provisions prohibiting the manufacture
and/or processing of food products in homes."
XVI. NON-WAIVEE CP CONSTITUTIONAL RIGHTS.
Article VII of the Code of Fair Competition for the Daily news-
paper Publishing Business contained the following provision:
"Those submitting this Code recognize that pur-
suant to Section 10 (b) of the Act the President
9310
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rnay, from time to time, cancel cr modify any order
approving this Code, out insubmitting or subscrib-
ing to this Code, tne publishers do not thereby
consent to any modification thereof, except as
each may thereto subsequently agree, nor do they
thereby waive any constitutional rights, or con-
sent tc the imposition of any requirements that
might restrict or interfere with the constitution-
al guarantee of the freedom of the press."
The President approved the Code with the above Article included
with the following comment (Paragraph 3 of the Executive Order of
Approval ) :
"Insofar as Article VII is not repaired by the
Act, it is pure surplusage. While it has nc mean-
ing it is permitted to stand merely because it has
been requested and because it cculd have nc such
legal effect as would bar its inclusion. Cf course
a man does not consent to what he does net consent
to. But if the President should find it necessary
to modify this Code, the circumstance that the
modification was not consented to would not affect
whatever obligations the non-consentor would have
under Section 3 (d) of the National Industrial Re-
covery Act.
Of course, also, nobody waives any constitutional
rights by assenting to a Code. The recitation of
the freedom of the press clause in the Code has
no more place here than would the recitation of the
whole Constitution or of the Ten Commandments. The
freedom guaranteed by the Constitution is freedom
of expression and that will be scrupulously respected
— but it is not freedom to work children, cr do
business in a fire trap or violate the laws against
obscenity, libel and lewdness."
Some writers and newspapers continued to contend that the "non-
waiver of constitutional rights" clause should nave been included in
all cedes. Many of the early codes as proposed did contain similar
clauses, but these were deleted in every instance before the code was
approved.
Evidently with the purpose of preventing further criticism the
President issued Executive Order No. 6249, January 22, 1935 (Exhibit
25), which read in part as follows:
"(l) It is understood that neither the Govern-
ment nor any member of industry waives, or can
properly insist that the other has waived, any
constitution al right pertaining to the Govern-
ment or to any individual by approving, assent-
9310
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ing to, or cooperating under a Code of
Fair Co ipetiticn.
" (.]) The approval orders of rll sue'.: codes
heretofore approved r.re hereby modified to
the extent necessr.ry to make this Order a
condition thereof, and this Order shr.ll
operate as a condition of the approval of
my such code hereafter r.pproved. "
XVII. ?C STING PXVI SI CMS
Executive Order 6599-B, February 3, 1934, delegated authority
to the Administrator of FHA to prescribe rules and regulations re-
quiring persons subject to codes to "jest or display the terms and pro-
visions of said codes, or otherwise "bring such terms and provisions
to the attention of any and all interested persons, including employees.
The Administrator was further authorized to trice such steps as he
might deem advisable to effectuate sue: rules and regulations pre-
scribed by him.
Administrative Order X-6, February 12, 1934, prescribed rules
and regulations governing the posting of labor provisions of codes
as follows: That every person subject to any code was to register,
within thirty days of the order, the effective date of the code, or
the date upon which lie became subject, whichever war latest, the
full name of his enterprise, together with a statement of the number
of shops, establishments or separate units tnerecf and their location,
wit: the code authority of the trade or industry of which he was a
member. Upon registration, or as scon thereafter as was possible,
each such person was to be furnished with official copies of provisions
of the code to which he was subject relating to hours of labor, rates
of pry and other conditions of employment, such copies to be kept
conspicuously posted at all times by such person in each shop, es-
tablishment or separate unit of his enterprise tc the extent necessary
to make them freely accessible to all employees. The employer was
also to secure from the code authority and to post alongside the copy
of code provisions a certified copy of any exemption, exception or
modification permitting him to pay lower wages or work his employees
longer hours or establish conditions of employment less favorable to
/lis employees then those prescribed by the subject code. No employer
was to display incorrect copies of code provisions or exemptions; he
was to comply with any code provisions relating to posting.
Administrative Order X-7 of February 28, 1934, superseded
Administrative Order X-6 concerning regulations governing the posting
of labor provisions. The later order mr.de it incumbent upen the em-
ployer to apply tc his code authority or code authorities for official
copies of labor provisions witnin forty-five days of the date of the
order, the effective date of the code or the date upon which the appli-
cant became subject to the code, whichever was latest. In addition,
the Administrator's power to remove the Blue Ea.gle for failure to
comply with those regulations was set forth.
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Admini strati ve Order X-82, September 1, 1S34, added to the regu-
lations governing posting of labor provisions the proviso that
official copies, in addition to containing provisions of codes re-
lating to hours of labor, rates of pay and ot. .er conditions of em-
ployment were to contain such conditions, orders, interpretations,
explanations or statements issued by tie President or the Adminis-
trator as part or in connection with any order approving a code
or any amendment thereto relating to labor provisions; other in-
terpretations, orders and explanations, all to such extent as NBA
might deem advisable to effectuate the purposes of those rules and
regulations in the case of each code.
9810
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CHAPTER VI
RECEPTION BY INDUSTRY
Immediately after the passage of the Act the hopes of industry were
seemingly lifted by the issuance of the following statement in NRA Bulletin
No. 2:
"It is not the function of the National
Recovery Administration to prescribe what shall be
in codes to be submitted by associations or groups.
The initiative in all such natters is expected to
come from within the industry itself."
Many members of industry interpreted the provisions of the Act to
mean that they would be relieved from the anti-trust laws and from the ■
destructive competitive practices which were raining their markets, and
anticipated that there would be official enforcement of price control
measures.
-men the Cotton Textile Code (No. 1) was approved their hopes were^
raised further by the clauses providing for indirect control of production
through limitation of machine hours. Anticipations of relief from destruc-
tive pricing practices seemed well founded when the Shipbuilding and Ship-
repairing Code (¥.o. 2) was approved with a prohibition against selling
below cost, the electrical Manufacturing Code (Fo. 4) with a fully developed
open price reporting system, the Coat and Suit Code (No. 5) with a grant of
power" to the Code Authority to examine books and records of members of that
industry, the Iron and Steel Code (No. 11) with price reporting, merchandise ■
ing, and minimum price provisions, and the Lumber and Timber Code (No. 9)
with a system of price fixing and provisions for control and allocation of
production. The result of the approval of such provisions as these was
that many fantastic provisions, notably those of a price fixing character,
were included in the codes submitted to NRA.
Prior to the issuance of the Model Code of November 6, 1933, ninety-
nine codes had been approved, including those for nine of the ten major
industries. The Code for the Construction Industry, classified as one
of ten major industries, had not been approved. The Model Code did not
receive a hearty reception from certain members of the industries whose
codes had not been approved, because the codes that had received first
consideration and had been approved prior to November 6, 1933, contained
many provisions which were inconsistent with the model. Members of indus-
try frequently expressed the opinion that the NRA was reversing its
previous policy and in advising the use of the Model Code was trying to
place them in a straight jacket. Almost every industry had by November 6,
1933 drafted and submitted cedes to NRA, and therefore the Model Code was
not extensively availed of in the drafting process. However, it was used
extensively by NRA and industry in modifying the proposed drafts in order
to obtain approval.
The numerous cases referred to the TTRA Advisory Council and the
various Policy Boards indicate that much time, labor and expense would
have been saved if the NBA had issued a Model Code before many public
hearings on proposed codes were held. If this had. been done the Administra-
9810
-90-
tion would not have been subject to the criticism previously referred
to that provisions were permitted in earlier apnroved cedes which
were not embraced in the Model Code of November 6th and the subsequent
issue, and were denied to industries whose codes had not already been
ap-oroved.
However, experience was a valuable guide, and if a model code had
been issued before many public hearings were held, numerous amendments
of it to express the lessons learned through experience nrobably would
have been necessary.
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CHAPTER VII
CONCLUSIONS AJH) FINDINGS
The preface of the Model Code cf November 6, 1933, stated in
part as follows:
"Except as to those provisions which are required to be
included in all codes by the National Industrial Recovery
Act (which provisions are clearly indicated herein), none
of the suggestions embodied in this draft are mandatory."
This issue of the Model Code was widely distributed to industry,
and some members of industry were misled by the above quoted state-
ment and did not follow the wording of the provisions verbatim in
drafting their cedes; however, before their codes were axroroved they
realized time would have been saved for all parties concerned if the
preface had stated that those -provisions of the Model Code which were
incorporated in codes should be verbatim-
Some members of industry expressed the coinion that if it was
the policy of the Administration that the wording, of the model pro-
visions should be followed verbatim the preface should have so
indicated; also that the -preface should have specified the provisions
which were fundamental, those most highly desirable, and those optional.
Many of the -provisions included in a-p-proved codes varied from
the model -provisions of the Model Code, from which it would appear
that the Model Code was too narrow, especially the chapter pertaining
to trade practices.
One cf the -principal advantages of the Model Code was that it
incorporated policies which had not heretofore been expressed by the
Administration, and for this reason it was a very useful guide for
the members of NRA connected with code making. Some of the officials
of NBA immediately adopted the Model Code as their 3ible in code
making, others took the -preface at its face value and declined to
follow it, but they fell into line when they realized that codes
moved forward to approval more rapidly when their contained provisions
were patterned after those of the Model Code.
However, it must be observed that even after changes in NRA
-policy between November, 1933 and April, 1934 were expressed in the
revised Model Code of April 3, 1934, policy announcements affected
model code -provisions. Therefore, code -provisions negotiated with
model previsions as a guide sometimes had to be reopened and this
undoubtedly brought about some measure of exas-peration on the part of
code sponsoring committees and members of industry and created criti-
cism of NBA.
From the study of the development of the nr^visions of the Model
Code it is arroarent that:
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1. Much time would have been saved and many mistakes
avoided had FRA adopted an official Model Code
much earlier in the code-making period:
2. NRA personnel had only Title I of NIRA and NBA
Bulletin No. 2 for use as guides in the early days
of code drafting.
3. A large number of approved codes appear to have
been too hastily drafted.
4. "The Model Code for Self-Governing Industries," a
document issued by the National Association of
Manufacturers under date of May 31, 1933, the
President's Reemployment Agreement, as well as the
earlier approved Codes, were used by many industries
as a basis for drafting Codes which they nroposed to
submit for approval, insisting that similar provision:
be included in their Codes.
5. The delay in the establishment of a Policy Board and
the formulation of policy handicapped the development
of an official Model Code and caused much, uncertainty .
to exist in the minds, not only of NRA personnel but
of members of industry as to just what provisions would
be approved.
Recommendation
In the event that any new legislation is enacted which contemplates
the formulation and adoption of codes of fair competition to govern
industry, a policy board should be created with a personnel consisting
of representatives of government, industry, labor, rmd consumers, to
study the legislation thoroughly and formulate policy for its administra-
tion, including the adoption of a model code which might be used as a
guide in drafting proposed codes under the legislation.
9810
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APPENDIX I
This study is ^resented in a narrative form and has been treated
from an historical -noint of vie"', The events which culminated in the
passage of the National Industrial Recovery Act, the early r>roblems
which were presented relative t: code making, the needs for and the
•policies involved in the formulation of the Model Code of November 6,
1933, subseauent issues of the Model Code and amendments thereto,
and its reception by industry have been treated in chronological order.
The so-called basic code, promulgated under Administrative Order No. X-61
is not discussed because it is the subject of separate study. (Work
Materials No. 33). An attempt ha.s been made to analyze the benefits
derived by the use of the Model Code, as well as an analysis of its
shortcomings, and to present recommendations in event any future
legislation, which would involve code making, is passed by Congress.
The procedure followed in the development of this study is as
follows: First, a tentative outline for the subject was prepared.
Second, all available information germane to the subject was obtained
from various files of the NBA. In some instances, where information
relative to policy involved in the drafting of some model provision
had not been recorded it was necessary to confer with the individuals
who had aided in drafting such provisions. Valuable information, in
most cases, was obtained by such conferences, and was of aid in fully
developing the tentative outline. Third, a preliminary draft of the
study was written and submitted. Fourth, with a few minor changes,
the study was submitted in its present form. The author is of the
opinion that no further research is necessary for this subject.
However, if further work is to be carried on, it is recommended the
study of "The 3asic Code (Administrative Order No. X-61)" (Work
MaterialsNNo. 33) be correlated with this study.
9810
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APPEKDIX II
9810
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Liay 31, 1933.
POREtfORD
In the preparation of this "CODE" liberal use has
been made of materials and assistance from the Bureau of
foreign & Domestic Commerce of the Department of Commerce.
I also acknowledge the cooperation in the preparation
of this pamphlet of John C. Gall, Associate Counsel, and
Ho el Sargent, Economist, both of the Up.tional Association
of Manufacturers.
A. P. Haake
9810
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ii"** * ' •' - **—
,. ft. .M..I.I »™™, .tit.
•«« 1 I TM l»ll •> • rWt.
(■VI -Til tit . Tr»M ,
* 3 • Vn* M«el«tioM I. the 0. f.
» » i TttMlKiimwtir mu'i.
THE NATIONAL INDUSTRIAL
RECOVERY ACT"
Tbrtk* aiacla aaalas, fr**. fraa tha
||aOaaa I Aaaoalatloa Qi aha-*faatar*r»,
U ■. atad St., Ba* Tor* City, cr
Oaioe Traat BUS., »i»Ucwi, DO
•r-tpar**! br th* abora eonfadaratlon
of orar 400 lndva trial aaaooiatlons
in aooparatlon nth U»
Burtau of Tornltn * Doaastlo Co-wee*,
U.S^partawat of Chmni. ffuh.p,C,
TMa la brUi till Ha, IJIJi
btM or a*ar*a*tlat.T*a MU
aaawtarivf aha
aatllc aorfca pra-
U tuntrin iwcnl
Imh tax rata* »o
44 aad U* I'm*.'!.
1MB aarpatvat* 41 vi-
natra' tax w> li*.
4. Ontt-MtlM ol
i .m
1T-W
*3r*
j>t i
T3K C»a«T**a: Ut t**.«Laa.
tatraaajaad by Snt'^r B. T. Up-r «f BW To.*-.
faBlla toarlBCft bpfor* Itttt Kara 4 kui Oaaalttaa
Bypart af **••-* •aaaaltti- as aa tax-ratal** wwr.
i*a*atatlaas; <m»n wit*, tha pal Uahrd
fciarUM. af *04 •)■**,"■.>
•ahlla tearlnrn Wfart tat B.B.Saa**.* riaaao*
Ooar.lt to*.
Vban tha 4am ta 9a*a*lttaa* » l
aa 1U baarl***-a 1b raaac, thara Bar tb-m
W a ra-draftiaa; af tba Mil bafora It
U finally r-ohatttad for vot* to both
Boumb of tha Ohltatt Et»t*t. 0oa«T*sa.
If paasod aj 0ta«ra«s, It will
thm at nbmittvd ta to* Pr»»xdaot,
afaaaa o*n theathta opan tha arlfliv-1
Bill art fivao. la part. Valoa - -
axtrac 1 1 from Us Mar l»th M*asa«Ta
ta tha Coot-rait.
1344 to 1MB.
<B*M EJwa Bill #57M)
tbi paaicoT or «b tanm tvr\s»
(fart X la
pa*** 1-11)
Oar-half af
Mil
'at*-*-. ass
fart
MOBILIZATION OF INDUSTRY
INTO TRADE ASSOCIATIONS
By craatlrtc — fax 2 YEA**:
almost unllirttM y*4*ral powtT,
if am** aaarr, ^lf aach a*»a*«*._of
ladastrr 4aaa art **at*o.tarilT 4o to)
ta arias aboat cawtrollo.. prodaa-
ttat.. wa«a*. hoars of laaar,
aa-aUtlea, ata.
"v.
(N>t 8 u
>•*•. li-a)
A HUGE#5.3OO.OOfltO0O
PROGRAM OF
PUBUC-WDRKS CONSTRUCTION
By t-raatlna.
af avrtiaTirnt
to bo obtain**! fwn atle of
f*>f a awaraa of pabl.a atnfca.
olaaraa« of altr Una*, aahlla
hU»»a«. wblle Valldl
<R\ 8( A»tBTB* ntBBi
b«. 4tralaa-
* • • a (Teat oaaptratlv* aawajjt Mutatt
•at all lo4.Hi. u oraar tat
Cfetaia *das n -aajlofaaat;
lo
B.
5 . Pay a aaaaat aaoa far laa)
4. pravaat aafalr aoatpotlttoB, oral
6. Dlaaatroaa oror-prodaatlc-t.
•ptplarara aaaaat 4o tai. tlaflr. or araa
la inaaaliiil croups, bt^aaao aaoh aottaa 1»-
muii aest aad thas pamlta «at-taroat noil
aollla* *j aclftih onapoUtora anaUllo* to
Jala la aaoh pahlla-splrltod aaJamai. ...
"Oao of ta* ajraat raatrlanarai oa snefa *o-
oparatlr* ofrorta ap ta thla -Urn* baa baaa
oar aatt-trut laaa. . . Thj pttalic lattrtst
•411 ba aaraai If, alth tha authority «**
aa4«r tha gnUaaar of oownarat, prlrat*
laarutrloa *r* ptsilltt** to aakc oajiiaoiili
a*4 ooaoB laamrlac fair eo*-p* titloa.
it la aaaasaajT, If at thru Halt tha •
tloo of atl-tmi laaa to thalr ortf^aal
aarpoao. to pronto a rlaoroas Ueta&iaa: paatr
U oratr to aaat sart **=»% off i
la ladl:
H-34WBVrg
oh
■mewry tm
■ . . to start a larga an^rm of dlnct
aaploraa&t, k cartful rurv«p eoavtaaaa aa)
that oppraataattly $ 3,300,003.000 oaa ba
I ■'.*•! t*4 la mtafal aa4 aoaoasarjr pablla
coastroetloB, aa4 at tha <.«*•* tla* pot tba
lorratt pottlbta saabor of p*«pl* to aofk.
"BrorlBloa (hoold b* aao* to panlt StatBB,
eonatlOB, and BKa..dpalltlat to aaoaTtafea
•aatfal pablle vorkt; cabjaet, hoaaror, ta tba
aott •ffecllvt poatlbla aaaas of tllalaalLM
favorltlaa and »ait»*Vl axpaodltoiaa aa oa-
*arraatBd trA tm-oooaoale projoett...
*At l*oii | 220,000,000 of aldlUaaal
rrrtmat *111 ba taqolral to aarvlea (iattraat
aad tloklog frakda) tba eaataaclatoa borrot-
lara of tb* Ooraraaaat.
**• aaat, by pro«pt and vlcoraaa aetlam,
ortlTid* vaaaeoMalr obatmctloas ahld. ta tha
paa* ha*a dalayad tb* atartlac of pnbllo aorha
prosraas.
"Thla can ba accoapllabad by alarala tad
direct prcta*tra."
Oaauta By
0, , —
I THB 9 SBCTIOBS 0? FAftT I)
Baatlaa 1. *Bartaralloa of (Slier*
* 3. "AamUUtratLra actaoias*
•f fair Ooaaaut
9810
Ba naaaatUa frea aatl-traat Laaa
<*. "LLalUtUaa apan iopUoaUaa
of Tltla*
t. Btory OBaT hvtt CaotaU Ctr-
taU Utor 4*i-klas OaadltUai
4. 'hppllaatUa e" .l«Tlaal-aral
aajaataaat hot".
Tb* Tf. S. Caaai Baaat
of Ccaataiui baa a
flU aa oaah ef tba
aatlaa'a 14.000
trada-laabu trial
aasaaUtlOos:-
i.300 - national
4,400 - Stata
Eta.
I the 9 afacfforfS o" FAaTin
401. Tadaral ]
latratioa of Pohlia 1
BOB. "yraparatlaa of tha 1
BOB. Tloanoi**. af tha Pr*>t«t**
404. 'OoaatraaUotl Paada to tha
Statos*
BOB. -Thirtr-Bour Baak (ao far aa
praauoal) aad iaaaaa a«f->
floiaat far 'a ataa4ar4 of
Unas La aaataay aad
•Phdat aad bacalatloaj'*
laaoa of aaoarittaa aad
BOB. **p*aapl«raaat aad BaUaf Tare*
_ »04. -APproprlaHoa*
SJl-t. "BUaaaUaaataia Baatloaa
-97-
TW «. 3 DiUfWil
•f .-aMtm baa «
nil *• Nd of uw
NlUt'l 1ft ,000
■r»4,a-.*«wairUi
UaWCtaileaa -
f.JOO - MtltUl
1. 100 . jud
KU.
OUST H WHAT^ CAN ^A TRADE ASSOC I AT I ON^ 00g
AT ONCE TO PREPARE FOR THE BILL ?
»•*•*♦
• • • •
THE NATIONAL INDUSTRIAL
RECOVERY ACT"
The National Industrial
Recovery 1111. introduced
on May 17 and passed by toe
Souse on '.be 2b. endeavora
to provide for a balanced
national econoi^ through
"eolf-rorulatlon of industry
under Oovorament Benetton".
Jhe. medium, la to be, largely,
the trade association".
It le estimated that eome
$ 20.000,000 waa expended in
19?9 by the orer 5,000 nation-
al and atata commercial organ-
isations In the "Jnited Statea.
There are almoat 1,000
trade aaeoclatlona of a strictly
lnteratate manufacturing charac-
ter. The Bill appllea directly
to thaaa. Sone of then hare
long carried on successful work
of a complete etatiatlcel nature
and hare been active in restrain-
ing unfair competition within
their induatrlea.
Such asaociationa aa thee*
ahould he able to quickly pre-
pare the eort of baalc Codea
which the Induatry Recovery Act
proridea for.
flth the trade aaaoclatlon
machinery theae groups have, and
being already aupplled with such
of 'the atatlatical data needed,
they can promptly obtain the in-
duatry'a composite thought ae to
auch Heme aat
1. Maximum hpura of labor.
2. Minimum wag.ee (by aajor
types of labor; and
number employed,
normally and now;. etc.)
3- Production etaiietlce
(including oapaelty data
plua factory and total
coat of items in various
price brackets).
U. The moat glaring 'unfair
competition* practicee
within the Induatry.
8ueh information ahould be
quicklv obtained through the
u»e of queetlonnalree, aa well
aa regional and national con-
ferences .
The Administration to be aat
up in Waahlcgton If the proposed
Bill becooea a law, will be
chiefly concerned with the above
major polnta. If a trade aaao-
clatlon la truly repreaentative
of ita Induatry, or induatry eub-
dlvlaion, the Secretary might
well now arrange the following:
TOOK DTTOSTRY'S TRADI ASSOCIATIOK
(If the sole one, or the
moet representative one, in
its field.)
ITS S3CKBIART
Informs himself fully
on the Bill.
Plena to make hie organi-
sation stronger and
of utmost helpfulness
to both members and
non-members. (Never
before has he had the
golden opportunltlee
for unlimited assist-
ance to his Industry
which the Wagner-
Doughton Bill presents)
Secretary and President
arrange
for an
immediate
meeting
of the
BOARS
OF
DI SECTORS
full, frank discussion.
Means decided upon to make
the Association more re-
presentative; to change
membership qualifications
if necessary; to revise
the constltutlou.etc.
Appointment at once
of a
•COM* COUQTTIX; and
beet means decided upon
to quickly find the true
consensus of opinion, of
both employers and employ-
ees, ae to t
the 4 major Items
named on this Chart
and soma or all of
the other Items
named in Article Til
(■ Statistics ") In
Dr. Haeke's MOIEL
OOU, issued today by
the National Assn. of
Manufacturers, (Send
for free copy. )
Meeting of your Board of
Directors.
Explanation that the Consti-
tution and By-laws must be
revlaad, if necessary, to
provide for the aet-up of
a CODE OF fAIR COMPETITION ,
and some means for having
cer trained representation
(perhapa one or three per-
aona) to act for the trade
astociation in direct deal-
ings with the Administra-
tion at Washington.
The Secretavy preaenta to the
Board the beat possible
summary of tho present
atatua and future possi-
bilities of the Wagner-
Doughton Bill as it affects
hie and allied lnduatrlaa.
A Committee might then be
arranged for and authorised
to work upon the needed
eode. The Secretary might
well have ready a tentative
outline of a Code.
(Send for a copy of the
helpful B.A.M. booklet
lasued today! " A MOOT,
COIffi TOR SHJ-OOVERMTO
INDUSTRIES" . )
Queetlonnalree could then be
prepared to aand to all
membera of the industry,
within and without tne
association, in an endeavor
to learn their'exact present
views aa to the four major
items above-mentioned.
Tour aim will then be to eoa-
pile as quickly aa poaslble
a correct atatiatioal pic-
ture of your Induatry aa to
such data.
All of thaaa constructive
efforta and reaulta will
bind your membera cloaer
to the Association, bring
in new members - - -•
perhapa even have sons
tens diets effect as to hours,
wages, lessening deetructlve
trade practicee. bringing
the "recalcitrant minority"
into line, etc.
Why wait till the BUI pro-
greaaaa further through Con-
greea before endeavoring to
have a correct, present-
moment report prepared - -
on at least the above few
(U) llnea - -, ready fpr a
probably-soon real need' f
XB." nSwey
C. Jhdkioe
9810
-9R-
INTRODUCTION
Under the National Industrial Recovery Bill, now before Con-
gress "but not yet enacted into lav;, a great many groups of manu-
facturing and distributing establishments will immediately want to
set up "Codes" and the necessary enforcement machinery to comply
with the provisions of the law. Many of these, realizing something
of the magnitude and urgent need for prompt organization, are al-
ready taking steps in that, direction.
This is a preliminary outline. It is designed to aid industrial
executives adapt trade associations to the immediate requirements under
the National Industrial Recovery Act.* A subsequent outline will be
issued to meet any essential changes which may be made in the bill.
(Although this outline touches upon all major requirements of a "CODE
OS FAIR COMPETITION, " the advice of legal counsel is urgently recom-
mended properly to adapt the general suggestions herein given to the
detailed requirements of each individual case.)
It should be borne in mind that , while the immediate declared ob-
jective is to increase employment and to raise purchasing power through
increased and wider spread wages, as well as to encourage improved con-
ditions of employment, the fundamental and real effect of the bill is
not revealed in its emergency character. Its eventual consequences are
designed by its authors to be a better-balanced national economy, built
on the premise that the welfare of all the people is a necessary condi-
tion to the welfare of the individual; in contrast to the theory of
Laissez-Paire, which exalts the individual, rather than the group of
which he is a part.
A bloodless, but nevertheless far-reaching, revolution is de-
throning the unrestricted individual and making the group our economic
and social unit. Whether or not this is a permanent change, it must
be recognized in the individual points of view with which the proposed
new organization and direction of industry is approached.
The first step for each individual firm is to recognize the neces-
sity of becoming "group-minded" and accept some limitation of individual
rights for the sake of promised enlarged practical advantage.
* If any manufacturing group has no trade association, write to the
N.A.M., Union Trust 31dg. , Washington, D. C. , for a booklet on this
subject issued May 23, 1933.
9610
-99-
The second step for the individual members of an industry is
to make sure that their trade association, is qualified to function as
en effective agency in the promotion of self-government. The alter-
native is direct government supervision and control.
An effective trade organization must nave the direct partici-
pation of the major e :eo itives of an industry. The major problems
of business call for the best brains, the leadership, and wholehearted
"followership" in an i anus try.
The association executive, commonly known as "Secretary , " faces
a new and far more exacting responsibility than ever before. No trade
association executive may safely rely on what have sometimes been con-
sidered the conventional activities of a secretary. He must understand,
coordinate, and direct activities in costs, fact-finding and fact-hand-
ling, production, marketing, and administrative economics. He must help
his industry, which is but part of a far greater whole, to fit itself
properly into the -entire picture.
The first step for the trade association (as distinct from the
individual member of the industry) is the setting up of a "Code,'1 as
provided for under the Act. It may even be necessary to alter the or-
ganization, its constitution and by-laws, to enable it to function
properly under the Act.
No one Code can fit all industries, but there are sufficient
features in common to justify offering what may be termed a "Pre-
liminary Model Code. " This will have to be adapted to meet parti-
cular situations, as well as the rules, regulations and requirements
whicn tnose charged with the administration of the Act may subsequently
stipulate.
The Code which follows is designed for an industry made up of a
number of closely relatea divisions which compete with each other or
otherwise come into such intimate contact with each other in common
markets that a common Code and coordination is essential to them all.
The Lumber Industry, whose proposed form of organization is
shown in connection with this Code, is an example of such an inclu-
sive industry. The. Furniture Industry provides another example, with
its sub-groups — manufacturers of upholstery, case goods, tables, chairs,
bedding, reed and fibre goods, etc.
For such industries, the "Model Code" may be adopted practically
as outlined.
However, in some industries having no internal competition be-
tween divisions of the trade, the "Model Code" can be modified by
merging the Emergency National Committee and the Divisional Executive
Committee into one board with consequent concentration of authorities
and responsibilities.
9810
-1-00-
Later development will undoubtedly require a merging of many
associations in' related fields, and, as far as is practical, those
mergings should be anticipated by an immediate organization of the
industry as a whole, as has been done so effectively by the Lumber
Industry.
Details as to the actual calling of meetings, submittal of the
Code to the industry, and other matters preliminary to the actual
submittal of the code for approval by the President, are shown graphi-
cally in Chart II,
NOTES
For the adaptation of this
Code to your own Industry:*
Arrangement of your Code
You may find it advisable to group the provisions with respect
to organization, duties, and powers in one section; and to combine all
of the regulations which are to be enforced in a section by themselves,
instead of separating the Industry Regulations and Division Regulations
as has been done in this Code.
Sources of Information
We suggest you avail yourself of specific suggestions and other
assistance provided by the following;
3UREAU OF FOREIGN & DOLiESTIC COMMERCE
U. S. Dept. of Commerce, Washington, D. C.
NATIONAL ASSOCIATION OF i/iANUEACTURERS
Union Trust Bldg. , Washington, D. C. ,or
11 West 42nd Street, New York, N. Y.
CHAMBER OF COMMERCE OE THE UNITED STATES
1615 H. Street, N. W, , Washington, D. C.
AMERICAN TRADE ASSOCIATION EXECUTIVES
Room 1919, 666 Lake Shore Drive, Chicago, 111., or
Hotel Statler, Detroit, Mich. , or
Room 1800, 386 Fourth Ave., New Yovk City.
♦WARNING: There may be attempts to exploit lack of knowledge on
the part of industries or groups which have no trade
association. Protect yourself by submitting proposals
to any of the above sources.
The spirit of this National -Recovery measure is utterly
opposed to any semblance of "racketeering.11
9810
-101-
A Suggested Eorm of Outline
for a
"GODS 0? FA IE COMPETITION"
(Adr.pted from the Code of the national
Lumber Manufacturers Association)
Article I. PURPOSE
This Code is set up for the purpose of increasing employment,
establishing fair and adequate wages, effecting necessary reduction
of hours, improving standards of labor, and eliminating unfair trade
Dractices (etc. ) , to the end of reha militating the
industry and enabling it to do its o..rt toward establishing that bal-
ance of industries which is necessary to the restoration and mainte-
nance of the highest practical degree of public welfare.
It is the declared purpose of the industry
and adherents to this Code to bring, insofar as may be practicable,
the rates of wages paid within the industry to
such levels as are necessary for the creation and maintenance of the
highest practicable standard of living; to restore the income of en-
terprises within the industry to levels which will make possible the
payment of such wages and avoid the further depletion and destruction
of capital assets; and from time to time to revise the rates of wages
in such manner as '.ill currently reflect the equitable adjustment to
variations in the cost of living.
Article II. PARTICIPATION
Participation in this Code, and any subsequent revision of or
addition to the Code, shall be extended to any person, partnership
or corpora* ion in the industry who accepts his
share of the cost and responsibility, as well as the benefit, of such
participation by becoming a member of the
association or any affiliated organization. No initiation or entrance
fees shall be charged, but there shall be dues levied on the following
basis: (Insert here what this basis should be). Subscription fees, or
other assessments, if any, shall be levied on the same basis, provided
not less than per cent of the membership approve the
amount of such assessments.
Article III. DIVISIONS 0E THE INDUSTRY
A. Powers
Eor the purpose of the administration of this code the
industry or trade shall be divided into divisions as set
forth below. Each division shall designate or establish its own ad-
ministrative agency or agencies. Each such division shall be independ-
ent and self-governing in respect of all conditions and problems relat-
ing exclusively to the said division. Proposals in respect of matters
9810
-102-
affecting more than one division may be initiated by any division,
and shall be suomitted for consideration to the Emergency National
Committee of the industry, hereinafter described, and its
determination shall be binding upon said division and all other divi-
sions affected thereby.
3 . Names of Divisions
Divisions are hereby established as follows: (insert here the
name of each division of your industry).
(NOTE: The following divisions were established by the
Lumber Industry. Their names are printed here
through the courtesy of Dr. Wilson Compton of
the National Lumber Manufacturers Association.
Cypress Division
Hardwood Division
Northern Hemlock Division
Northern Pine Division
Northeastern Pine Softwood
Division
Redwood Division
Southern Pine Division
¥est Coast Lumber Division
Western Pine Division
Other divisions of lumber, and of manufacturers or producers of
lumber and timber products, may be established upon application of
any such group, subject to the approval of the Emergency National Com-
mittee hereinafter described; such divisions to have representation on
the Emergency National Committee of the Lumber Industry. )
C. Executive Committee
Each of the above divisions, and any others which may subse-
quently be formed within the industry, shall set up an Ex-
ecutive Committee for the purpose of administering the provisions
of the Code, to secure . adherence thereto, to hear and adjust com-
plaints, to consider proposals for amendments, thereof and exceptions
thereto (and such other provisions as you may wish to include), and
otherwise to carry out within the division the purposes of the National
Industrial Recovery Act as set forth in this Code.
If a division, as named above, does not ooncur in the submittal
of this Code; or if, at any time thereafter, a division fails to per-
form its obligations as provided hereunder,- the Emergency National
Committee of the. industry, hereinafter described, is hereby
empowered to adopt a Code for the division and may provide for the
administration of that Code as if said Emergency National Committee
were the Executive of the division concerned.
9310
-103-
Artxcle IV. DIVISION HEGULA.TIOHS
A. Labor Code
Each of the above divisions, end any other which may subse-
quently be formed, shall promptly undertake the formulation of a
labor code.
The labor code established by the said division shall, upon ap-
proval of the Emergency National Committee of the industry, be
binding upon all producers of products in such division. The labor
code of each division shall contain the following provisions:
(a) Employees in the.. industry shall have the right
to organize and bargain collectively through representatives of their
own choosing, and shall be free from the interference, restraint, or
'coercion Of employers of labor, or their agents, in the designation of
such representatives or in self-organizations or in other concerted ac-
tivities for the purpose of collective bargaining or other mutual aid
or protection.*
(b) No employee in the industry, and no one seeking em-
ployment therein, shall be required as a condition of employment to
join any company union or to refrain from joining a labor organization
of his own choosing.*
(c) Employers of labor in the industry agree to comply with
the maximum hours of labor, minimum rates of pay , and other working con-
ditions approved or prescribed by the President.*
And, in addition,
(d) A classification of kinds of labor in the industry.
(e) Maximum hours for each class of labor, and exceptions.
(f) Minimum wage for each class of labor, and exceptions.
(Which may take into consideration geographical
location of plants and varying skill of employees, etc.)
(g) Other provisions in regard to working conditions, etc.
B. Production Codes
Each of the above divisions, and any others which may subse-
quently be formed, shall promptly undertake the formulation of a
production code. This code shall operate within the limits of the
production quota of the division as determined ay the Emergency
National Committee, and on such equitable basis, and for such period,
* See Section 7 of the Act. The above lao - is mandatory under the
bill as passed by the House.
9310
-104-
as it shall determine, and shall allot a maximum* production to each
producer of (product) in operation,
or which proposes to operate, within the said division.
Production of U??9W9^ I in e:;cess of his
approved allotment,* during any period "by any producer of . . (P?9W?t,i . . .
after having received from said established division a production al-
lotment on the "basis approved by the Emergency National Committee, is
an unfair method of competition. (Bote: The determination of produc-
tion allotments Is exceedingly important; these may he based on produc-
tion capacity, or on sales, on a combination of both or in other ways.)
C. Cost Codes
Each of the above divisions, and any Others which may subsequently
be formed, shall proceed at once to provide for standard methods of cost-
ing which shall be used by all manufacturers within that division for the
purposes of this section of the code.
It shall be an unfair method of competition for any such manufac-
turer to sell belcw reasonable cost. What is statistically known as
the "mode",** may be used as a reasonable cost, but must be so approved.
(Note: It might instead be provided that no producer shall sell below
his own cost production.)
Dropped lines or surplus stocksj, sometimes designated as "close-
outs," or inventories which must be converted into cash to meet im-
mediate needs, may be sold at such prices as are necessary to move
the merchandise into buyers' hands. However, all such stocks must
first be .reported to the Executive Committee of the division, and be
disposed of subject to the approval of that committee.
* If the establishment of an arbitrary maximum is not practicable, the
industry may succeed in setting a "norm" of production for each divi-
sion and unit thereof, departure from the "norm" being penalized so
as to discourage circumventing tactics without discouraging individual
initiative. .Thus , it might be provided that an assessment of 2$ be
levied on the first 25$ over the norm, o'l on the r?ext 25$ and 10$ on
all over; receipts to go into a corumon fund for the benefit of the
industry.
**The "mode"* is that figure in an array of figures, according to their
relative importance, which occurs with the greatest frequency. The
"average" of the figures, of the "median" (Middle item) might be used.
9810
-101- • ..
Article V. EMERGENCY NATIONAL COMMITTEE
: A. Representation
There shall be an Eaergeiiey National Committee of the
industry to consist of a representative, or representatives, of each
division, selected by the said division, representatives of the indus-
try at large to be selected by divisional members, and representatives
of other groups which v..-iy be entitled to representation, for the pres-
ent na led as follows: (Here insert names of divisions and
groups, and number of representative's.)'
B. Powers
This Emergency National. Committee shell be the general planning
and coordinating agency for the industry. Its members selected by es-
tablished divisions shall be empowered by the said divisions to act for
them conclusively in respect to all matters before the committee for con-
sideration and within i';s jurisdiction.- The committee shall have powers
and duties as provided uerein, and in addition thereto it shall
(a) from time to tine require such reports from divisions as in
its judgment may be necessary to advise it adeojuately of the adminis-
tration and enforcement of the provisions of this Code;
(b) upon complaint of interested parties, or upon its own initia-
tive, make such inquiry and invest igat ion into the operation of the
Code as may be necessary; and
(c) make rules and regulations necessary for the administration
and enforcement of this code. The Committee may delegate any of its
authority to the National Control Committee hereinafter provided, and
may designate such agents as it shall determine.
The Emergency national Committee of the industry in
cooperation with, and subject to, the approval of the properly designated
representative of the president under the Nation?! Industrial Recovery
Act, shall determine, and from time to time revise, an estimate of
expected. ....... .\ .?1.'9rV9t i consumption; and based thereon,
it shall establish, and from time to time revise, an equitable production
quota of the industry and for each division thereof.
Article VI. INDUSTRY REGULATIONS
(The same for all Divisions,' as distinct from Division
Regulations which may differ from Division to division.)
A. Marketing Codes
The Emergency National Committee may establish a Marketing Code
with provisions with respect to;
S81G
-106-
(a) group selling;
Cb) classification of outlets or purchasers and recognition of
standard and economically justifiable price differentials among them;
(c) division of consuming territory into market areas, providing
for plants best equipped to serve particular markets, to concentrate
sales efforts in such districts;
(d) adoption of uniform grading of products;
(e) simplification and standardization of products;
(f) cooperative advertising for the industry;
(g) collection and interchange of credit information;
(h) cooperative administration of insolvent debtors;
(i) and/or otner aspects of marketing.
B. Trade Practice Rules
The Emergency National Committee shall hold a trade practice con-
ference at its earliest convenience to establish rules of fair trade
practice for the entire industry. (If satisfactory rules of fair trade
practice already exist, this section can ratify or adapt such in lieu
of holding a new conference. )
(NOTE; The following list indicates some of the practices which
have been covered by rules in trade practice conferences:
Price discrimination
Commercial bribery
Misrepresentation
Rebates
Terms of sale
False invoicing
Freight absorption
Piracy of design
Dumping
Misbranding
Free goods
Interference with contracts)
The Emergency National Committee may authorize any one division
to adopt fair trade practice rules relating to the practices peculiar
to that division.
Article ¥11 STATISTICS*.
■ In order to provide data necessary for the .administration, .of. . . ,
the National Industrial Recovery Act, the members of the...,
Industry shall furnish, and the Emergency National Committee, .shall
gather, statistical information from all the members of the industry.
* NOTE: Such data may well include;" ^ay~capacity; (b) production, orders,
and shipments during the month; (c) unfilled orders and inventories
(raw and -finished) on hand at the end of the month; (d) number of per-
sons employed, wage rates, earnings, and hours worked; (e) accounts
receivable at the end of month; (f) price, costs; (g) and other items
at the option of the industry, In many industries, producers may pre-
fer to give such data to an independent accountant or expert employed
by the committee or association. The firm. of Ernst and Ernst will act
as general advisers to the National Association of Manufacturers in
proposing cost systems, methods of compiling and using statistical
data, etc,
9810
-108-
to effectuate within the industry or within any Division
thereof the purpose of the National Industrial Recovery Act as administered.
4. Amendment to this Code may he proposed hy any Established Divi-
sion to the Emergency National Committee or may he initiated hy it, and
when approved hy the President shall he effective.
5. Violation hy any producer of industry prod-
ucts of any provisions of this Code, or of any approved rule issued there-
under, is an unfair method of competition,
5. In order to avoid undue delay in making effective throughout
the industry this Code of Pair Competition, the following
provisions are adopted, and other provisions of the Code in conflict
therewith, are suspended until such time as the Emergency National Com-
mittee shall determine that the purposes of the Article have heen accom-
plished:
a. Each Established Division shall submit as promptly as possible
to the Emergency National Committee, a complete Division code
in conformity with the general provisions of this Code. Such
Divisional Code, if found substantially to promote the pur-
poses of the National Code, shall be accepted provisionally
by the Emergency National Committee end its immediate en-
forcement authorized. The Emergency National Committee shall
thereupon proceed as rapidly as practicable to make such ad-
justments of and coordination between the provisions in re-
spect of hours, wages, production and costs* of several di-
visional codes as may be necessary to bring them into conform^-,
ity with the provisions of the National Code by:
1. Consultation and negotiation between the
Divisions affected.
2. By its own findings after full consideration
of all factors involved.
b. If any Division fails to submit within a reasonable time code
provisions as provided in sub-section (a) of this Article,
and if in the judgment of the Emergency National Committee
such failure is unduly delaying the effective operation of
this Code, the said Committee is authorized to act as a
Divisional agency for said Division and to submit on its
hehalf the necessary code provisions which upon approval by
the President shall be effective until the said Division
shall have submitted satisfactory code provisions.
7. This Code shall be in effect beginning ten days after its
approval by the President.
IT02E: In place of costs you may find it preferable and possible to
deal with minimum prices. In ay judgment it is preferable to deal
with costs. (A.P.H.)
9810
-107-
Article VIII. NATIONAL CONTROL COMMITTEE
The Emergency National Committee of the industry
shall appoint from its own membership a National Control Committee
of members. (One i-combar will often be enough, unless there are
minority interests to' be- represented, in which event there might be two.
The number should not excess tnree). Tnc National Control Committee shall
shall exercise sr.ch authority as may have been delegated to it by the
said. Emergency National Committee.
AH communications and conferences of the industry
with the president or with his agents concerning the approval or amend-
ment of this Code or of any of its provisions, or any. matters relating
thereto, shall be through the Said National Control Committee. ' The
National Control Committee shall serve as an executive agency for the
Emergency Nations I Co:r.;rm ttee of the. industry, and shall be
charge with the enforce i-/nt of the ^revisions of this Code and with the
duties, through agents cr otherwise-, of hearing and adjusting complaints,
considering propolis for amendments and making recommendations thereon,
approving recommf 'atio^is for exceptions to the provisions' of this Code,
and otherwise a istering its provisions. Any division or any adher-
ent to the ore . ./ ens of this Code or subject to its terms shall have
the right of appeal to the Emergency National Committee from decisions
of the National Control Committee and the deci^ on of the said Emergency
National Committee on said appeal shall be final.
'i'he function of this Committee shall be the general planning
and coordinating for the indastry, and the coopera..
tion with similar bos.ro 3 of other industries to the end of effecting
a balanced national economy.
Article IX. GENERAL
1. No provision in this Code shall be interpreted or applied
in such a manner as to:
a. Promote monopolies,
b. permit or encoxirage unfair competition,
c. Elimina.te or copress small enterprise, or
d. Discriminate against small enterprises.
2. This Code or any of its provisions may be cancelled or modi-
fied and any approved rule issued thereunder shall be ineffective to
the extent necessary to conform to any action by the President under
section 9 (b) of the National Industrial Recovery Act.
3. The Emergency National Committee of the industry and the
National Control Committee shall from time to time make to each Division
established or to be establisned under tli: provisions of this Code, such
recommendations, including amendments of the Code, as in their judgment
will add the effective administration of this Code or may be necessary
9810
-109-
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9810
-110-
EXHIBIT 2
BASIC CODE FOR SUBSTITUTIONS BEFORE
THE POLICY BOARD IV P. R. A. FOP. SECTIONS
TO
INCLUSIVE
DEFINITION:
The term trade /industry
as used herein includes "out is not limited to
S EC T I OIT I . LABOR PROV I S I OPS :
A. Employees shall have the right to organize and "bargain collect-
ively through representatives of their own choosing, and shall
he free from interference, restraint, or coercion of employers
of labor, or their agents, in the designation of such represen-
tatives or in self-organization or in any other concerted ac-
tivities for the purpose of collective bargaining or other
mutual aid or protection;
3. No employee and no one seeking employment shall he required
as a condition of employment to join any company union or to
refrain from joining, organizing or assisting a labor organi-
zation of his own choosing; and
C. Employers shall comply with the maximum hours of labor, mini-
mum rates of pay, and other conditions of employment, approved
or prescribed by the President.
SECTION II. CHILD LABOR:
After August 31, 1933, no person under IS years of age shall
be employed; PROVIDED, however, that where a state law specifies
a higher minimum age, no person below the age so specified ~oy
such law, shall be employed within that state.
SECTION III. LIAXIMUM EOURS:
A. Employees not covered by Section III 3 (except outside sales-
men) may not be employed in any place or manner for more than
hours in any one week, averaged over a
months' period, but may be employed a maximum week of
hours for any weeks, within any months'
period; provided, however, that such employees may not be
employed more than eight hours in any one day. The hours of
any store or service operation shall not be reduced to below
hours in any one week, unless such hours were
less than hours per week before July 1, 1933, and in
the latter case, such hours shall not be reduced at all.
>31C
-111-
B. No factory or mechanical worker or artisan shall be employed
more than a maximum week of hours , averaged
over a months' period, hut may he employed a
maximum week of hours for any
weeks within such months' period; provided, however, that
such employees shall net he employed more than
hours in any one day.
C. The maximum hours fixed in the foregoing paragraphs III A
and III 3 shall not apply to employees in establishments em-
ploying not more than two persons in towns of less than 2500
population, which towns pre not a part of a larger trade area;
nor to registered pharmacists or other professional persons
employed in their nrof essions ; nor to employees in a managerial
or executive caoacity, who receive more than $35.00 per week;
nor to employees on emergency maintenance and repair work;
nor to very special cases where restrictions of hours of
highly skilled workers on continuous processes would un-
avoidably reduce production (state classes and work). 3ut
in any such special case, a.t least time and one-third shall
be paid for hours worked in excess of the maximum hours per
day hereinbefore -orovided; not to
The population for the purposes of this Code shall be
determined oy reference to the 1950 Federal Census.
SSCTIOIT IV. iHHIMDls iVAG-ZS:
A. Employees in the classes covered by paragraph III A sho.ll be
paid not less than dollars per week
in any city of over 500,000 population or in the immediate
trade area of such a city; nor less than
dollars per week in any city of between 2,500 and 250,000
population, or in the immediate tra.de area of such city; and
in towns of less than 2,500 population, wages shall be in-
creased by not less than percent, provided that
this shall not require wages to be paid in excess of
per Y/eek.
3. Iknloyees of the classes mentioned in 'oaragraph III 3 shall
be paid not less than cents per hour. It is
agreed that this paragraph establishes a guaranteed minimum
rate of ~oay, regardless of whether the employee is compensa.ted
on the basis of a time rate or on piece work performance.
C. (List here exceptions to ant1 exemptions from the above
figure, if any.)
3 " "_ :
-113ft-
SECTI01T V. PRESIDENTIAL MODIEICATIOIT:
The President may, from time to tine, cancel or modify any
order, approval, license, ruling or regulation issued under
this title.
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E^IBIT 3
(ROUGH DRAFT 4g OF kODEL COPE)
CODE OF FAIR COMPETITION AND TRADE PRACTICE
F^R THE INDUSTRY
-oOo-
To effectuate the t^licy of Title I of the National Industrial Re-
covery Act, the following provisions are submitted as a code of fair com-
petition for the Trade/ Indus try, and
upon acceptance by the Fresident, shall be the standard of fair competition
for this industry.
DEFINITIONS.
The term Trade/industry as used herein includes,
but is not limited to, the (building, fabricating, manufacturing, as-
sembling, re-pairing;, reconstructing, remodeling, selling and/or distributing
at wnolesale ^r retail, etc.) of (-product -r merchandise") and (sub-
product or merchandise^ and (their component and/or repair -parts) and
(accessories ; , and other related branches as may from time to time be in-
cluded under the -provisions of this code.
The term unit as used herein includes but is not limited to factories,
mills, shoos, -plants, stores, offices, departments or establishments.
The tern enroloyee(sN as used herein means all person(s) employed in the
conduct of any -phase of the industry.
The term employer(s) as used herein means all those by whom such
employees are employed.
The effective date as used herein m°ans the i day after
this code shall hav° been approved by the President of the United States.
Population for the p .rposes of this code shall be determined by reference
to the 1930 Federal Census.
I. GENERAL REGULATIONS.
A. Employees shall ha^e the right to organize and bargain collectively
through representatives ^f their iwn choosing, and shall be free from in-
terference, restraint, or coercion of employers of labor, or their agents,
in the d;signation of such representatives or in self-organization or in other
concerted activities for the purpose of collective bargaining or other mutual
aid or protection.
3. No employee and no one seeking employment shall be required as a
•ondition of employment to join any company union or to refrain from joining,
organizing, or assisting a labor organization of his own choosing; and
9810
-114-
C. Enrol overs shall company wifh the maximum h"urs ^f labor, minimum
rates of pay, and other conditions of employment approved or -prescribed by
the President.
II. CHILD LABOR.
After , 1933, no person under 16 years of age shall
be employed; PROVIDED, however, t.iat where a State law specifies a higher
minimum age, no person below the a^e so specified by such law shall be
employed within that State.
III. PENAL LABOR.
To penal labor shall be us =d in the trade /industry governed by this
code.
IV. HOURS.
A. Employees not covered by Section IV~B (Except outside salesmen)
may not be employed in any place or manner for more than nours in
any one week, (averaged' over a ' months' period,) but may be
employed a maximum week of Lours for any weeks,
within any such months' period; ' PROVIDED, however, that such
employees may not be employed mor3 than eight hours in any one day. The
hours of any store or service operation shall not be reduced to below
hours in any one week, unless such hours were less than hours per
week before July 1, 193?, and, in the latter case, such hours shall not be
reduced at all.
B. No laborer, factory employee, mechanical worker, or artisan shall
be employed more than a maximum week of hours, averaged over a
months' period, but may be employed a maximum week of
hours for any weeks within such months' period;
PROVIDED, however, that such worker may not be employed .more than
hours in an-' ^ne day.
C. The maximum hours fixed in the foregoing paragraphs Vl-a and IV-B
shall not apply to employees on emer.^encv maintenance and repair work, but
in any such special esse, at le^st time and one- third shal1 be paid for hours
work-d in excess of the maximum hours per day hereinbefore provided; nor
to
D. Fnere a State law specifies a lo"Ter maximum number of hours that may
be worked, no employee may be worked above the maximum so specified by such
State law within that State. .,
E. The provisions for maximum hour^ set out in Section IV establish a
maximum number of hours of labor per week for every employee covered, so that
under no circumstances will such an employee be employed or permitted to work
for one or more employers in the industry in the aggregate in excess of the
prescribed number. of hours in a single week.
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V. WAGES.
A. Employees in the classes covered by oaragratsh IV-A shall be raid
not less than dol'ars per week in any ci+y of over
500,000 population, or in the immediate trade area of such city;- nor le?s
than dollars per week in any city of between 250,000 and
500,000 population, or in the immediate trade area of such city; nor less
than dollars per week in any city of between 2,-500 and
250,000 population, or in the immediate trade area of such city; and in towns
of less than 2,500 population, wages shall be increased by not less than
percent, -provided that this shall not require wages to be paid
in excess of dollars tier week.
B. Employees of the classes mentioned in -paragraph IV-B shall be -paid
not less than cents r>er hour (in ^he North, and. not" less" than
cents tier hour in the South. The South shall consist of
It is agreed that this paragraph establishes a guranteed minimum rate of pay,
regardless of whether the employee is compensated on the basis of a tine rat<?
or on a piece-work performanoe,
C. Where a State law specified a higher minimum waee , no employee may
be p id less than the minimum so specified by such State law within that
State.
D. The amount oT' differences existing prior to 19 _f between the
wage rates -paid various clfsses of employees receivin* more than the
established minimum wage rate shall not be decreased. In no event shall any
employe: pay an employee a wage rate which will yield a less wa^e for a work
week of __^ hours than sue employee was receiving for the same
class nf work for a hour week prior to , 193 _.
E. (List here exceptions to, and exemptions ^rom the above wage
scale, if any.)
Vl/a. POLICY QIIE STICKS
A. Policy questions on which there is no ruling at present, but which
must be decided one way or the other in the near future - for example;
arbitration and adjustment of existing private and public contracts.
B. The problem of labor which is under a long term contract to the
employer.
C. Etc.)
VI. TRAji PRACTICES. (Awaiting report from Federal Trade Commission.)
A. First will be listed generally accepted provisions laid down by the
Federal Trade Commission and about which there can be no reasonable difference
of opinion.
3810
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B. Second will "be listed the special trade practices peculiar to
the particular industry, including (if the -oolicy is so declared limi'tations
un plant, production, or -orice.)
VII. INDUSTRIAL SELF- GOVERNMENT AGENCY.
A. (l) The Constitution, and "by-laws of the
Association having been amended in all respects and to the
extent necessary to make them conform to the National Industrial Recovery
Act and to the provisions of this code and the rales provided thereunder,
the Association is hereby designated to co-
operate with the Administrator as a Planning and Fair Practice Committee
until such a committee is created by the Industry. Three persons may be
appointed by the President to sit on such Committee, and shall- in every
respect be members 'thereof , except that they shall not have the right to-
vote, - •
(2) To further effectuate the policies of the Act, the
_Association, or such successor committee as may
hereafter be constituted, may present to the Administrator recommendations
based on conditions in the trade/industry as they may develop from time to
time. Such Committee is also to cooperate with the Administrator in
collecting such reports as may be required by him concerning the functioning
and observance of any provision of this code, and to forward the same to the
Administrator.
VIII. INDUSTRIAL RELATIONS.
A. There shall 'be constituted by appointment of the Administrator a
_National Industrial Relations Board, to be composed of
three members, one to be nominated by the Planning and
Fair Practice Committee to represent the employer, one to be nominated, by
the Labor Advisory Board of the National Recovery Administration to represent
the employees, and a third to be selected by the Administrator. This
National Board shall be provided by the National Recovery Administration
with a per diem for actual days engaged in such work and with such secretarial
and erpert technical assistance as it may require in the performance of its
duties.
B. The Administrator, upon the nomination of the
National Industrial Relations Board, shall appoint in each State in which
the _Trade/lndustry operates a State
Industrial Relations Board, one of whom shall be selected from the employers
°f the Trade /industry, one from the employees of the
Trade/industry, and a third to represent the public.
C. (l) Whenever in any unit of the industry a controversy shall
arise between employer and employees as to any problem of working conditions,
the employer and the employees may establish in such unit an Industrial
Relations Committee chosen from the management and the employees of the
unit, and on which the employer and employees shall have equal representation
of not more than three representatives each. If such a committee is not
otherwise established, the employer or the employees or both may apply to the
State Industrial Relations Board for assistance in establishing in the unit
9810
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such an Industrial Relations Committee. The term of service of each Unit
Committee shall be limited to the adjustment of the controversy or problem of
working conditions, for the adjustment of which the Committee was created.
(2) If the representatives of the employer and of the employees
in such Unit Industrial Relations Committee are unable to arrive at an
agreement and united action with respect to such differences of opinion, the
representatives of the emnloyer or of the employees, or both, may appeal to
the State Industrial Relations Board for cooperation and assistance in
arriving at an agreement and united action.
(3) It shall be the duty of the State Industrial Relations Board
to endeavor to adjust the controversy. In cases where the State Board reaches
agreement with respect to any controversy, such agreement shall be final,
except that it shell be submitted to the . National
Industrial Relations Board for review and approval under such regulations as
the National Board may establish.
P. (1) It shall be the duty of the State Industrial Relations Board,
where their assistance is requested, as provided in sub-section 3, to co-
operate with employers and employees in organizing industrial relations com-
mittees in individual units an3L to cooperate with such
committees in the development o? conference procedure and in the adjustment
of differences of opinion with respect to the operation or introduction of
any systems or other problems of working conditions.
(2) In the event that the State Industrial Relations Board is
unable to bring about agreement and united action of labor and management
in a controversy submitted to it, such State Industrial Relations Board shall
present the controversy to the National Industrial Relations Board for
hearing and final adjustment.
E. The National Industrial Relations Board shall hear and finally
determine all such questions brought before it by the State Industrial
Relations Boards and certify its decisions to the Administrator, and shall
have authority to codify the experience of the Industrial Relations Committees
of the various units and State Boards, with a view to establishing standards
of q^netal practice with regard to systems and other problems of working
conditions.
IX. MODIFICATION OF TH2 CODE.
Recommendations for modification of this code may be made to the
Planning and Fair practice Commit tee by any croup
representing industry, labor, or consumer. If the Committee approves of such
recommendation it shall forward the same to the Administrator. If there is
an unreasonaule refusal to act on the part of the Committee, and the recom-
mendation be made by a substantially interested group, they may forward a
copy of their recommendation and a statement of the Committee's refusal to act,
directly to the Administrator, filing a copy of such communication with the
members of the Committee appointed by the President.
X.
(Additional clauses, amendments, modifications, etc.)
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XI. PETITION FOR EXEMPTION.
During the period between the acceptance of the
code "by the President and the effective date, hearings may be given by the
Administrator or his designated representative to units of the industry which
did not participate in establishing, or consent to, the code, but which
directly affected thereby, and which claim that applications of the code in
particular instances are unjust as to them, and which apply for an exception
to, or exemption from, or modification of the code.
XII. CHANGES AND ADDITIONS.
Such of the provisions of this code as are not required to be included
therein by the National Industrial Recovery Act, may, with the approval of the
President, be modified or eliminated in any such manner as may be indicated
by the needs of the public, by changes in circumstances, or by experience;
and supplementary provisions of this code or additional codes may be sub-
mitted from time to time for the approval of the President. All the pro-
visions of this code, unless so modified or eliminated, shall remain in effect
until the expiration date of Title I of the rational Industrial Recovery Act.
XIII. PARTIAL INVALIDITY.
If any provision of this code is declared invalid or unenforceable, the
remaining provisions thereof shall nevertheless continue in full force and
effect in the same manner as if they had been separately presented for ap-
proval, and approved by the President.
XIV. PRESIDENTIAL MODIFICATION^
The President may, from time to time, cancel or modify any order,
approval, license, rule, or regulation issued under this title.
(Date) 1933
)810
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EXHIBIT 4
(HOUGH DhArT -4 Oi: LlODEL CODE)
CODE Oj JAIH CO. ^jlTIIIOI! ANT ThADE FrJVCTICE
^ OH THE IK3USTHY
To effectuate the policy oi Title I oi the National Industrial
Recovery Act, the following provisions are suomitted as a code of fair
competition for the Trade/industry, and up or approval
by the President, shall be the standard of fair competition for this
industry.
TEFTFITIOFS
The term Trade/ Industry as used herein in-
cludes, but is not limited to, the (building, manufacturing;, re-
pairing, selling and/or distributing at wholesale or retail, etc.
oi (-product or merchandised and branches or subdivisions thereof
as may from time to time be included under the provisions of this
code.
The term unit as used herein includes but is not limited to
iactories, mills, shoos, plants, stores, offices, departments or
establishments.
The term e anlovee as used herein means any person employed in
any phase of the industry.
The term employer as used herein means any employer of such
employee.
The effective date as used herein means the xirst -onday after
this code shall have been approved by the President of the United
States.
Population for the purposes oi'this code shall be determined
by reference to the 1930 lederal Census.
I . C-EFEB.'_L HEC-UL AT I OF S
A. Employees shall have the right to organize and bargain col-
lectively through representatives of their ov,n choosing, and
shall be free from interference, restraint, or coercion of
employers of labor, or their agents, in the designation of
such representatives or in self-organization or in other
concerted activites for the purpose oi collective bargaining
or other mutual aid or protection;
9610
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B« No employee and no one seeking eraplovraent shall oe recuired
ps p condition 01 employment to join any company union or
to refrpin from joining, organizing, or assisting a labor
organization of his o--n choosing; pnd
C. Employers shall comply -"ith the maximum hoars of labor,
minimum rates of ppy, pnc other conditions of employment
approved or prescribed by tne President.
1 1 . CHI LP) LAPGn
After , 1933, no person under 16- years of
p^e shall be e .roloved in the Trade/ Industry; PROVIDED,
however, that "-here a State la'"7 specifies a higher minimum
a°;e, in that respect the requirement of such lay shall
govern within that St^te.
III. PETAL LABOR
Fo renal labor shall be usee in this Trace/industry
IV. HOURS
A. Employees not covered by Section :; of Article IV may not be
employed in any place or manner tor more than hours
in any one "eek, nor be employed more than eiffht hoars in
any one day.
3. Ko laborer, iactory employee, mecnanic^l worker, or artisan
shall be employed more tuan a maximum ^eek of hours,
nor be employed -.ore than hours in any one dav.
C. The maximum hoars i ijs.ee in the foregoing sections A and B of
Article IV shall not apply to employees on emergency mainten-
ance pnd repair <-ork, but in any such special case, at least
time and one half shall oe paid for hours '--orked in excess
of the ma xi main hoars per cay heieirauove provided.
D. here a State la'" soeciiif s a lo^er maximum number of hours
that may be "-orked, in that rerpect the retirements of such
Stpte la'- shall govern.
E. The provisions for maximum hours set out in Section IV establish
a maximum number of nours of labor per ~'eek for each employee
so that under no circumstances shall any employee be employed
or permitted to vork for one or more employers in the industry
in the a^yregate in excess of the prescrioed number of hours.
V. AGES
A. Employees in the clpsses covered by Section A of Article IV
shall be paic not less tuan dollars
per yeek.
y&io
-121- '
B. Employees of the classes mentioned in Section B of Article IV
sh=ll be paid not less than cents per hour. It is
agreed that this paragraph estaolishes a guaranteed minimum
rate of pay, regardless 01 whether the employee is compensated
on the basis of a time pate or on piece '."ork performance,
C. ' here a State lav enforces higher minimum wage requirements
as to pny cIpss of labor, no such employee may be paid less
thar the minimum so specified by such State lav within that
StPte.
T. (The proponents of the code are expected to submit a plan for
ecuitpble adjustment of those wages above the minimum).
VI . IIJSUSTHIAL SBLF-COVErNmKNT AGENCY
A. (1) The Association (the constitution and
by-lp"-s of which conform in pll respects to the requirements
of Title I of the National Industripl Recovery Act and of this
code) is hereby oesignrtec to coonerpte '"ith the Administrator
as p planring and fair practice agency until a permpnent
committee for such purpose is crepted by the industry.
(£) (insert mpcnirery i or erection oi such a permpnent
Committee) .
(3) Three oersons may be appointed by the President to sit on
such Committee, and shell in everv respect be members thereof,
except that their shall not have the right to vote.
(4) To effectuate the policies oi the Act, the
Association, or such successor committee
ps may hereaiter be constituted, may present to the Ad dhis-
trptor recommendations of his o«"n, or those of pny interested
pprty or ?:roup, b^sec on conditions in the Trpde/ Industry as
they ma"' develop from tune to time. Such Comaittee shall also
cooperate ,r-ith the Administrator in collecting such reports
as lav be reruired bv him in order to record the functioning
or poservpnce of this code, and snpll lor^ard the same to the
Administrator. Tne me.nbers snail furnish to the Committee
such reports as may be rec uired by the Administrptor.
VII. IIT'JSThlAL KELATIuNS
A. There shall be constituted by appointment of the Ad liristrator
a Fational Trace/Industry Industrial Re-
lations *-<carc, to be co.;coscd of three members, one to be
nominated bv the Trade /Indus try Planning
and Pair Practice Committee to represent the employer, one to toe
nominated .fey the Labor Advisory Board of the National Recovery
9bl0
-122-
Administration to represent the employees, and a third to- be
selected by the Administrator. This National Board shall be
compensated, by the National Recovery Administration on a per
diem basis for actual days en&aged in such' work and with such
secretarial and expert technical assistance as it may recuire
in the performance of i.ts duties.
B. The Administrator, upon tae nomination of the
National Industrial Relations Board, shall appoint in each
State or greater geographical cistrict in vmhich'tht
Trade/ Industry operates a St"te or District
Trade/ Industry Industrial relations Board, one of whom shall
be selected from the era-clovers of the
Trade/industry, onefromthe employees of the
Trade/ Industry, and a third to represent the puclic.
C. (1^ ' henever in any unit of the incustry a controversy -shall
=rise between employer and .employees as to any problem of
working conditions, the emplover and the employees may establish
in such unit an Industrial relations Committee chosen from
' the management and the emplovees shall have ecual represen-
tation of not more than three representatives each. If such
a committee is not otaor'-ise established, the employer or the
employees or both may apply to the State or district Indus-
trial relations Board for assistance in establishing in the
unit sach an Industrial relations Committee. The term of
service of each Unit Committee shall be limited to the adjust-
ment of the particular controversy or problem of working
conditions, for the adjustment of which the Committee was created.
(2) If the representatives of the employer and of the employees
in such Unit Industrial Relations Com dttee are unable to
bring aboat an adjustment v-ith respect to such controversy,
the representatives of tine employer or of the employees, or
both, may appeal to the Sta te/Bistrict Industrial Relations
Board for cooperation and assistance in arriving at an
ac justment.
(3) It snail be the duty of the State/Pistrict Industrial
■Relations Board to endeavor to aejust'the controversy. In
cases where the State/District Board fails to bring about an
adjustment of any controversy, such controversy shall be
submitted to the Trade/ Industry National
Industrial Relations Board for adjustment.
D. It shall be' the duty of the State/District Industrial Re-
lations Board., where their assistance is recuested, as pro-
vided in subsection 3 of Section C, to cooperate with em-
ployers and e rcloyees in organizing industrial relations
committees in individual units and to cooperate with such
committees in the development of conference procedures and
in the adjustment of differences with respect to the oper-
ation or introduction or any systems or other problems of
working conditions.
9810
—123*-
VIII. MODIFICATION OF THE CODE
Recommendations for modification of this code may be made to the
Planning and Pair Fractice Committee by any
interested party or, group representing industry, labor, or consumer.
If the Committee approves of such recommendation it shall forward
the same to the Administrator. If there is an unreasonable
refusal to act on the -part of the Committee, and the recommen-
dation oe made by a substantially interested group, such party
or syoup mav forward a ccpy of the recommendation and a statement
of the Committee's refusal to act directly to the Administrator,
filing a copy oi suoh communication vith the members of the
Committee appointed uy the President.
IX. CHANGES AND ADDITIONS
Such of the provisions of this code as are not required to be in-
cluded therein by the National Industrial Recovery Act, may, with
the approval of the President, and shall at his request, be modi-
fied in any manner indicated, by changes in circumstances, or by
experience, or otherwise; and supplementary provisions of this
code or additional codes may oe suomitted from time to time for
the approval of the President. All the provisions of tlhis code,
except as so modified, snail remain in effect until the expiration
date oi Title I of the rational Industrial Recovery Act.
X. PARTIAL INVALIDITY
If any provision of this code is declared invalid or unenforceable,
the remaining provisions thereof shall nevertheless continue in
full force and effect in the same manner as if thev had been
separatelv presented for approval, and approved by the President,
XI. PRESIDENTIAL ..CSII-'ICATIC!"
The right of the President, from time tO'Ume, to cancel or
modify anv order, approval, license, rule, or regulation,
issued under this title-, is recognised and accuiesced in.
(Date) , 1933
9&10
-124-
EXHIBIT 5.
TYFES OF UNFAIR COMPETITION (Pgs. 69-74)
(Annual Report - Federal Trade Commission - Fiscal Year
• Ended June SO, 1934.)
Practices Condemned in Orders t o C.^ase and Desist
The following partial list 'shows unfair methods of competition con-
demned by the- Commission from time to time in its orders to cease and desist
issued under section 5 of the Federal Trade Commission Act.
These do not include Clayton Act violations, which, under the juris-
diction of the Commission, embrace, sxibjeet to the various provisions of-
the statute, price discrimination (sec. 2, Clayton Act), typing and
exclusive contracts or dealings, coi'poi-at-e stock acquisitions (sec. 7,
Clayton Act), and interlocking directorates (sec. 8, Clayton Act).
The list is as follows:
The use of false or misleading advertising, calculated to mislead
and deceive the purchasing public to tneir damage and to the injury of
competitors.
Misbranding of fabrics and other commodities respecting the materials
or ingredients of which they are composed, their quality, purity, origin,
or source, and selling them under such names and circumstances that the
purchaser would be misled in these respects.
Bribing buyers or other employees of customers and prospective cus-
tomers, without the latter1 s knowledge or consent, to secure or hold
patronage.
Procuring the business or trade secrets of competitors by espionage,
or bribing the employees or by similar means.
Inducing employees or competitors to violate their contracts and
enticing away employees of competitors in such numbers or under such cir-
cumstances as to hamper or embarrass the competitors in the conduct of
their business.
Making false and disparaging statements respecting competitors'
products, their business, financial credit, etc.
Wide-spread threats to the trade of suits for patent infringement
arising from the sale of alleged infringing products of competitors, such
threats not being made in good faith but for the purpose of intimidating
the trade and hindering or stifling competition.
Passing off goods or articles for well and favorably known products
9810
of competitors through appropriation or simulation of such competitors'
trade names, labels, dress of goods, etc., with the capacity and tendency
unfairly to divert trade from the competitors, and/or with the effect of
so doing to their prejudice and injury and that of the public.
Selling rebuilt, second-hand, renovated, or old products or articles
made from used or second-hand materials as and for- new.
Paying excessive prices for supplies for the purpose of buying up
same and hampering or eliminating competition.
Using concealed subsidiaries, ostensibly independent, to secure
competitive business otherwise unavailable.
Cooperative schemes and prices for compelling wholesalers and retail-
ers to maintain resale prices fixed by the manufacturer for resale of his
product.
Using merchandising schemes based on a lot or chance.
Combinations or agreements of competitors to enhance prices, main-
tain prices, bring about substantial uniformity in prices or to divide
territory or business, to cut off competitors' sources of supply, or to
close T.arkets to competitors, or otherwise restrain or hinder free and
fair competition.
Various schemes to create the impression in the mind of the pros-
pective customer that he or she is being offered an opportunity to make a
purchase under unusually favorable conditions when such is not the case,
with capacity and tendency to mislead and deceive many of the purchasing
public into buying products involved in such erroneous belief, and/or
with the effect so to do, to the injury and prejudice of the public and
of competitors, such schemes including -
(1) Sales plans in which the seller's usual price is falsely
represented as a special reduced price made available on some pretext for
a limited time or to a limited class only.
(2) The use of the "free goods" or service device to create the
false impression that something is actually being thrown in without
charge, when, as a matter of fact, it is fully covered by the amount
exacted in the transaction taken as a whole.
(3) Use of misleading trade names calculated to create the im-
pression that a dealer is a manufacturer selling directly to the consumer
with resultant savings.
(4) Use of pretended exaggerated retail prices in connection with
or upon the containers of commodities intondod to-be sold as bargains at
lower figures.
9810
"126-
Subsidi zing public officials or employees through employing them
or their relatives under; such.. circumst prices as to enlist their interest
in situations in. which they, will he cslled/upon by virtue of their
official position to act officially, making unauthorized changes in
proposed municipal bond issues, corrupting public officials or employees
and forging, 'their ■ -signatures , and u.Jng numerous other grossly fraudulent
coercive and oppressive practices in dealing with small municipalities.
Imitating or using standard containers customarily associated in
the mind of the general purchasing public. with, standard weights or
quantities cf product therein contained to -sell, to the public such com-
modity in weights or quantities less than the aforementioned standards,
with capacity and tendency to deceive, the purchasing public into believing
that they are purchasing the quantities generally associated with the
standard ..containers involved, and/or with the effect of so doing, and
with tendency to divert trade from and otherwise injure the business of
competitors who do not indulge in such practices and/or with the effect
of so doing, to the injury of such competitors and to the prejudice of the
public.
Concealing business identity in connection with the marketing of
one's product, or misrepresenting the seller's relation to others, e. g. ,
claiming falsely to be the agent or employee of some other concern or
failing to disclose the termination of such a relationship in soliciting
customers of such concern, etc.
Misrepresenting in various ways the advantages to the prospective
customer of dealing with the seller, with the capacity and tendency to
mislead and deceive many among the consuming public into dealing with
the person or concern so misrepresenting, in reliance upon such supposed
advantages, and to induce their purchases thereby, and/or with the effect
of so doing, to the injury and prejudice of the public and of competitors,
such as -
( 1) Seller's alleged advantages of location or size.
(2) False claims of being the authorized distributor of some
concern.
(3) Alleged enforcement of the concern or product by the Govern-
ment or by nationally known businesses.
(4) False claim by a dealer in domestic products of being an
importer, or by a dealer of being a- manufacturer , or by a manufacturer
of some product of being also the manufacturer of the raw material
entering into the product.
(5) Being manufacturer's representative and outlet for surplus
stock sold at a sacrifice, etc.
(6) Representing that the seller is a wholesale dealer, grower,
producer or manufacturer, when in fact such representation is false.
9810
-127-
Usq by business concerns associated as trade organizations or
otherwise of methods which result, or are calculated to result, in the
observance of uniform prices or practices for the products dealt in by
them, with consequent restraint or elimination of competition, such as
use of various kinds of so-called standard cost systems, price lists
or guides, exchange of trade information, etc.
Obtaining business tnrough undertakings not carried out and through
dishonest oppressive devices calculated to entrap and coerce the customer
or prospective customer, with the result of deceiving the purchasing
public and inducing purchases by many thereof, and of diverting and tend-
ing to divert trade from competitors who do not engage in such false,
misleading, and fraudulent representations, all to the prejudice and
injury of the public and competitors, such practices including -
(1) Securing by deceit prospective customer's signature to a con-
tract and promissory note represented as simply an order on approval;
obtaining agents to distribute the seller's products through promising
to refund the money paid by them should, the product prove unsatisfactory,
and through other undertakings not carried out.
(2) Obtaining business by advertising a "free trial" offer pro-
position, when, as a matter of fact, only a "money-back" opportunity is
offered the prospective customer.
Giving products misleading names so as to give them a value to the
purchasing public or to a part thereof which they would not otherwise
possess, with the capacity and tendency to mislead the public into pur-
chasing the products concerned in the erroneous beliefs thereby induced,
and with the tendency to divert and/or with the effect of diverting
business from and otherwise injuring and prejudicing competitors who do
not engage in such practices, all to the prejudice of the public and of
competitors, such as -
(1) Names implying falsely that the particular products so named
were made for the Government or in accordance with its specifications
and of corresponding quality, or are connected with it in some way, or
in some way have been passed upon, inspected, underwritten, or endorsed
by it ; or
(2) That they are composed in whole or in part of ingredients or
materials respectively, contained only to a limited extent or not at all;
or
(3) That they were made in or came from some locality famous for
the quality of such products; or
(4) That they were made by some well and favorably known process,
when, as a matter of fact, they were only made in imitation of and by a
substitute for such process; or
"810
"lpfi-
•128-
(5) That they have been inspected, passed, or approved, after
meeting the tests of some official organization, charged with the duty
of making such tests expertly, disinterestedly, or giving approval; or
(6) That they were made under conditions or circumstances con-
sidered of importance by a substantial part of the general purchasing
public, etc.
Selling below cost, with the intent and effect of hindering,
stifling, and suppressing competition.
Dealing unfairly and dishonestly with foreign purchasers and thereby
discrediting American exporters generally, with the effect of bringing
discredit and loss of business to all manufacturers and business concerns
engaged in and/or seeking to engage in export trade, and with the capacity
and tendency to so do, to the injury and prejudice of the public and of
offending concerns' export trade competitors.
Coercing and. enforcing uneconomic and monopolistic reciprocal
dealing.
Falsely representing that a moving picture is a pictorial record of
an expedition in a foreign country and a depiction of travel therein show-
ing true happenings, peoples, customs, and animal life.
Entering into contracts in restraint of trade whereby foreign cor-
porations agree not to export certain products into the United States, in
consideration of a domestic company's refusal to export the same commodity
or sell to anyone other than those who agree not to so export the same.
9810
—129—
EXHIBIT 6
September 1953 Confidential report
of the "HRA-Commcrco"
Committee on an
AMERICAN BASIC-CODE
OF EAIR-PRACTICES.
S|c * * * * ******* * * * * * * *
Unfair practice previsions in any code of fair competition for
an industry will have little value unless they arc feasible for
practical enforcement. To industry is completely isolated. It has
some relationship with other industries either through a "vertical"
association as one of the steps between production and consumption
or through a "horizontal" arrrngeraent of industrial contact.
The whole code structure is so directly balanced on the theory
of "BUSIITESS G0V13KI1TG ITSELE" and prompt protection by enforce-
ment that unless the means of enforcement arc clearly understood
and easily demonstrated it will be -practically impossible to ob-
tain any material degree of compliance. The uniformity of pro-
vision and procedure in enforcement will eliminate that difficulty
entirely.
Having completed our survey we recom-
mend that the philosophy of the 16
■provisions on pa._.es 3 and 4, covering
basic "cut-throat competition" evils,
be universally adopted; after de-
sired refinements or regrouping by
General Counsel Richberg and your
ERA Legal Staff. This step would meet
unanimous employee- enrol oyer aooroval
throughout the United States;
9SK
Sept.
1933
1TPA LEGAL DIVISION
Blackwell Smith, Esq,
-130-
Confidential memorandum
on
UNFAIR COMPETITION.
Your last week's speech in Chicago "before
the Trade Assn. Managers' annual conven-
tion announced that
"an unofficial NRA-Dept. of Commerce Com-
mittee" was surveying the problem of
FAIR PRACTICES, including the 14 years of
trade association efforts in this field
with Federal Trade Commission cooperation.
The Employers' Reward:
(The managers present, representing the
nation's employers, stressed the immedi-
ate need of Government help to control Un-
fair Competition:
"American employers' promised reward from
EPA for the hours-wages "benefits re-
cently given their employees.")
Investment of Capital:
EKA's "Hew Leal'' Program has recently
"brought employment to some 3, 000 s 000
American workers, of last winter's esti-
mated total of 14,000,000 unemployed.
The country has an aDuadar.ee of capital.
(Our annual national income is normally
\ that of the entire world!) Yet invest-
ment in new labor-giving industries is
unfortunately hesitant.
Because of the complex overlapping of
industries, investors and employers can-
not (without universal adoption of uni-
form "basic Pair-Practices Pules) protect
themselves against the "cut-throat minor-
ity" of business firms. It is chiefly the
practices of such firms that hampers busi-
ness stabilization and national-economic-
planning efforts to permanently reduce un-
employment,
necessity of White House aid:
Your Committee believes, frankly, that
ERA success in this field cannot be won
without a Presidential Order blanketing
these few basic fair-practice rules upon
all industry and trade at the earliest
possible date. Each business group could
then concentrate on its "special to our
industry" Pair-Practice problems; as ex-
plained in attached two pages — and the
15 page appendix.
*
THE
*
*
16.
*
BASIC
RULES
*
*
* * *
* * *
1. Inaccurate advertising
2. "Bait" advertising -
3. Inaccurate labelling -
4, Inaccurate references
to competitors -
5. Claims of "we undersell
ti ~
everyone
6. Selling below cost -
7.
8.
9.
10.
• •
11.
12.
13.
14.
• •
15.
Threats of lav; suits -
Secret rebates -
"Free goods'1 -
Selling on consignment
• • •
Bribing employees -
False billing -
Interference with
another's contracts
Repudi at i ng one ' s
own contracts -
"Tyiing" and block-
booking contracts -
16. "Black lists.1
ETC.
• The jam of Hearings & clearances of ERA CODES
30 are approved, but 1,000 others (many minor)
9810
will be vastly relieved
remain in ERA.
-131-
Ccnfidential
T o : ERA. LEGAL DIVISION
From the iVslr Practices
Committee
Guernsey (Chr.)
Heydon
McFadden
Judkins (Sec.)
Sept., 1933
(First
draft) .
Suggested basic rules for
all industries; adapted
from the 1919-1933
Trade practices Con-
ferences.
I nac curate
Advertising.
"Bait"
advertising.
Inaccurate
labelling.
* * * * * *
Inaccurate
references
to competi-
tors, etc.
The Sixteen
FAIR-FRACTI CE FROVI SIOIIS
For Inclusion in All Codes.
RULE 1 . Ho member of the industry shall use advertising
(whether printed, radio, display or of anv other nature)
which is inaccurate in any material particular or in any
way misrepresents any commodity (including its use,
trade-mark, grade, quality, quantity, origin, size,
material content or preparation) or credit terms, values,
policies or services.
RULE 2. No member of the industry shall use advertising
cr selling methods or credit terms which tends to de-
ceive or mislead the customer or prospective customer.
RULE 3. No member of the industry shall brand or mark
any commodity in any manner which tends to deceive or
mislead purchasers with respect to the grade, quality,
quantity, origin, size, material content or preparation
of such commodity.
* * * * it * * * * * * * * >;: :;::;:***** * ******* >
RULE U. Ho member of the industry shall use advert isig
or other representation which refers inaccurately in any
material particular to any competitors or their com-
modities, prices, values, credit terms, policies or
services.
"T7e under- RULE 5. No member of the industry shall use advertising
sell all or other representation which lays claim to or implies
com-petitors" a policy or continuing practice of generally under-
selling all competitors.
Selling
below
cost
Threats of
law suits
981C
RULE 6. No member of the industry shall sell any com-
modity below cost or replacement value. COST shall in
elude the cost of production in a manufacturing or pro-
cessing industry; or the net invoice delivered cost
in a retail or wholesale industry. (However, any member
may meet the price competition of anyone whose costs
under this code provision are lover.)
RULE 7. No member of the industry shall publish or cir-
cularize unjustified threats of legal proceedings which
tend to or have the effect of harassing competitors
or intimidating their customers.
Secret
"JJT
Gooaa1'
Selling_qn
Con si nrmoiit
*******
Bribing
employees
-133-
RTILE 8t No member of the industry shall secretly make
any payment or allowance of a rebate, refund, commission,
credit, unearned discount or excess allowance, whether
in the form of money or otherwise, for the purpose of
influencing a sale, nor shall a member secretly extend
to any customer any special service or privilege not
e::t ended to all custom ns of the same class.
BUM 9. Uo member of che industry shall grant an ad-
vertising allowance or r premium or any form of free
goods except for a definite service rendered and in a
form which is accountable.
RULE 10, No member of the industry shall ship com-
modities consignment, except under contract or bona fide
orders.
*^***** ********** *************
RJl'.E 11. No 'member of the industry shall give, permit
to be giving, Pr offer to give, anything of value for the
purpose of influencing or yevording the action of any
employee or agent of another in relation to the business
of the employer of such' empi yec or the principal of such
agent without the knowledge of such employer or princi-
pal.
False
billing
****** 3
Interference
with
another' s
contracts.
Repudiating
one's own
contracts.
*******
"Tying" &
RULE 1.?. ho member of the industry shall secretly give
anything of value to the employee or agent of a customer
for the purpose of influencing a sale, or in furtherance
of a sale render a bill or statement of account to such
employee, agent or customer which is inaccurate in any
mat erial par t i cular .
*£ *****;,* *********************
RULE 13. No member of the industry shall induce or
attempt, to irdr.ee the breach of an existing contract
between a competitor and his employee or customer or
source of supply; nor shall any such member interfere
with or obstruct the p- rformance cf such contractual
duties or services.
RULE 14. No member of the industry shall repudiate a
contract entered into in good faith when the purpose of
such repudiation is to create for such member an unfair
price advantage.
****** *****.;< *****************
RULE 15. I'o member of the industry shall require that the
"block-booking" purchase or lease of any ccrmiodity be a prerequisite to
contracts. the purchase or lease of any other commodity.
"Black"
(or white)
lists.
*******
RULE 16. Ho member of the industry shall join with any
other member or participate in any transaction known
in law as a blacklist.
*****************************
THEN: any special-to-an
industry, etc. Rules.
9810
1 '
— 1. —
For }TRA Legal
T7HAT IIIDUSTRIAL GROUPS WILL 3E
HOST AFFECTED 3Y KRA. ?
There were, in A-->ril 1930 (date of decennial Census):
122,800,000 people i:: this count" y, with
48,800 COO of then: \ • ' '■ 11,' occupied,"
or J'J-SyS " f the -)opul:;t- en.
Employment is new at least 3 millions below that of
3|- years ago. The V'&k. has < I ready, in 3 months,
brought eaplo;Tne,:it to 3,000,000, (September Am. Fed.
of Labor estimates are: 11 millions & 2.3 millions).
"Lormal" NATIONAL INCOME has, in current dollars,
dropped from 80 to 50 billions in 1932.
RETAIL^TRAPE from 50 to 50 " in 1932.
WHOLESALE PRICES from 100 to 70$ of normal ( 1926), in August
RETAIL PRICES from 100 to 75$ " " " " "
BUSINESS ACTIVITY from ICO to 65$ "
FACTORY PAYROLLS from 100 to 50$ "
FACTORY ElIFLOYMEIT from 100 to 70$ "
CONSTRUCTION ACTIVITY from~I00 to 30$ "
It
II
II
II
II
II
II
II
II
II
II
II
>•. ■•:■ ' *$ ;. *-;:».*#:,.>'- * #*# #* =i!* *# *# ## ** * * # ##*
* A » quick-picture" of the job NRA has *
* before it is presented below: *
* * -,; * * tf ;; -,'fi I:- 1*- $ * ^. Sit * * if • ■- * * if. ;,; ;.: :< ^ * * % ;,- * * V s ¥.,^:;**** * * * *
Of all the
48.8
mill ion
persons:
The "SIX ISA"
GROUPS of the 10
Census Bureau
grey:- s:
Th ore were working, in 1930 :
(10 yrs. or older in age)
Including:
(29$).
(13$).
( 8$).
( 8$),
( 2^).
.MANUFACTURING (l) "employed1! 14.1 million persons. . .
(c; mechanical) 1,900,000 women
DP, employed 6.1 million persons. . .
(Oct. 1st may see" -he approval of 1,000,000 women
the HPJL'a greatest:the 'M4.5TER RETAIL COft3'«)
.CLERICAL employed 4.0 million persons. . .
(not incl. store clerks) 2,000,000 women
.T employed 3.8 million persons. . .
300,000 women
erroloyed l.C (practically no)
million persons - (females employed)
employed 0.3 (practically no)
million persons - (females employed)
(<3b communication)
.MINERALS
(| of 1$) FORESTRY
(& fishing)
(60$) of the nation's
wa^e- earners, salaried
persons & employers)
29.3 Million persons 5.2
millions million
the
48.8
women
& girls
9810
-134-
The other 4 Census groups are
chi ef ly "not under USA."; they
total 40$ of America's workers;
(21',j) ... AC-3 1 CULTURE employed 10.5 million persons. . .900,000 women
(10$) ... DOMESTIC SERVICE " 5.0 " " ...3,200,000 '«
(& "oersonal sor.)
(7'5) PROFESSIONAL SERVICE " 3.3 " » ...1,500,000 »
(incl. 161,000 lawyers)
(2$) rUBLIC SERVICE " 0.9 » "
(15.7) (5.6)
Total of :43.8 ) of whom 10.8 million were
millions) women or girls.
(1) "MANUFACTUEIKG", the largest NRA
employment group consisted of,
roughly :
86^o wage-earners
13(.' salaried employers
Vfa owners
****** *:i;* ** * *;;. *****:;:****************
* TO WHOM IS THE NATION'S ANNUAL *
* *
* NATIONAL INCOME DISTRIBUTED? *
Sfe****** *********** * ** ** ***** V *******
It is very unfortunate that there have been no official data in the
past ten years, hut the U. S. Dept. of Commerce will, in December,
issue a national survey (now "being completed by Dr. Thorp and his
staff of the Bureau of Foreign & Domestic Commerce) on this most vital
subject. Present estimates of "equitable distribution of wealth" and
of "purchasing power" differ widely.
The unofficial estimatsn of the Nat. 3urcau of Economic Research
indicated, for 1927, of total national income:
35,000,000 EMPLOYEES received 58$ (3 million were on salary)
10,000,000 EMPLOYEES » 42$ (6 million of these were
farmers; and roe'd the well-
known very small pcr-capita
income) .
9810
-135-
Gro up "I" & "II" Rules
List of usual subjects covered
in the FEDERAL TRADE COMMISSION'S
two classifications of the
1919 - 19^3 Trade Practice Conferences;
C 1 early ill egal :
being violations of Federal
Trade Commission ACT, etc., GROUP "I" RULES
********* '- ** ****** ** ****************
Secret rebates. Fraud.
Substitution of quality. False certification.
Breach of contract. Misbranding.
Repudiation of contract. False quantity.
Commercial bribery. .... : ._ . .
False defamation of competitors business integrity.
False disparagement .of goods...
Misrepresentation in written or spoken word.
Deviation from established standards of the industry.
Underbidding by offering inferior materials.
Unjustly excluding a competitor from a market.
Threats of Toatent, etc. , suits not made in good faith.
Price discrimination under Sec. 2. of Clayton Act.
Selling below cost to injure competitors or lessen competition.
Etc.
"Opinions Of The Trade"; being unfair
or unsound gractices which, however,
have not been declared unlawful by the
Commission or Courts; GROUP "II" RULES
******************************
Style - piracy.
Ambiguous contracts.
Guarantee against price decline or advance.
Post-dating and prc-dating.
Confining sales to F. 0.3. factory.
Giving "dealer's discounts" to those not dealers.
Selling without specification.
Abuse of buying power to force unjust terms of purchase or a
sale.
.For perhaps the m*st frank
recent studies of the
commission, and its Trade
Practice conference, see the
1930 ANIIUAL REPORT OF THE
For ISA Legal •. •. "ATAE" (American Trade Assn.
Aug. 1933 Executives) & the Columbia Uni-
versity Press survey(M suggested by
9810 Prof.R.G.Tugwell"-now a leader of
the Ag. Adj. Adm.): "THE FEDERAL
TRADE COMMISSION", 320 pagcs-T.C.Blaisdell-1932.
Frige in
No. of
H&oklet
Rule
unent 54
8
52
3
52
2
i 74
15
59
9
65
12
-136-
INDEX TO LATEST REPORT OF FEDERAL TRADE COMMISSION
Note: This brief summary (of 26 standardized Group I rules), which
we have prepared because the booklet has no index, may be of
value to your staff as a handy guide to the recently issued
165 page report, "TRADE PRACTICE CONFERENCES", of the Federal
Trade Commission. (it contains only revised rules of 96 of
the over 150 industries which have held conferences.)
The- first words of ficch 1931-33
Our 6 classes Commission rule are:
"INACCURACY" (7)
The making or causing or permitting. . .advertisi
The sale or preferring for sale of any product
The false marking or branding of products
The practice of shipping or delivering products
Deviation from the established st.-„.*iurds
Offering for sale merchandise at a price
The use of the word "free" when not properly
qualified 105
"ATTACKING COMPETITORS" (5)
The selling of goods below cost
The defamation of competitors )
The false disparagement of the grade ) 125-2
Securing information from. coraoetitors
The circularization of threats o/f suit
"PRICE DISCRIMINATION" (4)
The secret payment or allowance
It is an unfair practice. . .to discriminate
The shipping of goods on Consignment
The acceptance of orders for large quantities
"COMMERCIAL BRIBERY" (3) •
Directly or indirectly to give
For any person'. ..to give anything
Commercial bribery is immoral, against the
public interest 153
"BREACH OF CONTRACT" • (5)
Maliciously inducing
Maliciously enticing
The wilful interference by any person
The imitation of the trade-marks
For any person. ..to aid or abet another
"COERCION" (2)
The practice of coercing the purchase
To incite, aid or abet. . .anything unlawful
9810
52
7
55
12
54
7
59
7
66
7
52
4
52
5
74
12
133
7
53
8
130
17
52
1
52
9
2
1
54
5
144
7
54
10
156
6
•137-
To Blackwell Smith, Associate Counsel. C01IFIDEITTIAL (3)
What is a just appraisal of the 1919-33 efforts of the
Federal Trade Commission in this field of Fair Practice?
Many believe that a book published "in "August by the McGraw Hill
Company, "Business Under the Recovery Act" (Chapter IV, "A Government
Farce that Blazes the Trail"), gives a fair rnpraisil of the- commissi'ofi*s
past work:
"A governmental Ttrody has been attempting to do this for
more than ten years (suppression of unfair competition)...
almost precisely what the new HEA Act proposes to do... This
is the Federal Trade Commission and the so-called Trade
Practice Conferences...
"The Commission's own legal fickleness added to the
general legal uncertainty of the entire affair sufficed of
themselves to make a hodge-podge of these Trade Practice
Conferences. . .Decision to, sign and abide by the Code finally
drafted was purely voluntary...
"And Congress never did. ..(give that power to the
Commission). . .not until it passed the National Industrial
Recovery Act, which specifically designates the Federal Trade
Commission as one of the enforcing agents. .. thus a study of
the reasons for the failure of the trade practice con-
ferences really throws a spot-light on the reasons for these...
provisions of the Few Act.
"But the (150 ) conferences. . .provide, ready-made, an
interesting list of what industry, itself, has decided con-
stitutes "unfair competition" .. .at each of these meetings,
up to fifteen or more- practices were voted to be unfair
methods of competition. . .
"Such a list should be of utmost value. . .By reading
the published reports of all the meetings, it is possible to
obtain a list of unfair trade practices that will be an. ■ .
excellent guide to business conduct in the future. . . as
envisioned in the national Industrial Recovery r Act."
9RI0
-138-
To: Blackwell Smith, Esq. 5 apt.
IIHA Le^al Division.
K- "Cut::.. :■;.. . -..oJs
From: Judkins-G-uernsey
Hayden-McFadden
The Six Ma.jor
FAIR-PRACTICE PROVISIONS
For (Suggested) Inclusion in All Codes^
Nojtc: This preliminary report to you is the result of
our careful studying over of the some 1,000
rules adopted by industry itself in the 1919-
1933 period, in cooperation with the Federal
Trade Commission.
I. IMC CURACY
******** -:•*** ***
Inaccurate Prov. 1. No member of the industry shall use advertising
Advertising.
(whether printed, radio, display or of any other
na.ture)
which is inaccurate in any material particular or in any
way misrepresents any commodity
(including its use, trade-mark, grade, quality,
quantity, origin, size, material content nr
preparation)
or credit terms, values, policies or services.
"Bait" Prov. 2. No member of the industry shall use advertising
Advertising, or selling methods or credit terms which tends to de-
ceive or mislead the customer «r prospective customer.
Inaccurate Prov. 3. No member of the industry shall brand or mark
Labelling. any product in any manner which tends to deceive or mis-
lead purchasers with respect to the grade, quality,
quantity, origin, size, material content or preparation . ■"0v^"
of such product.
************ ** ***** *** * *** * * ******** ********** \ ********* **************
Remarks:
Prohibition a&ainst "untruthful and mis-
leading" advertising is included in practi-
cally every set of trade-practice con-
ference rules hold under the Federal Trade
Commission during the past 14 years.
-139-
But it is hard to prove untruthfulness with
its element of moral impulse or intent and
its further element at tTUS/e 'is misleading,
and to whom. It lias been suggested' fre-
quently of late that the term "inaccurate"
should be used, which provides the business-
facts approach or measure instead of the
moral approach.
The worst abuses under INACCURACY include:
misrepresentation of quality, use or nature
of products
offers of "easy credit" terms which arc not
in fact extended, and
deceitful branding or labelling of goods
in imitation of established brands.
TERMINOLOGY:
It is assumed by the Committee that the legal powers of the
ERA vastly exceed those of the Commission during the 14 year
period we surveyed. That is one of the reasons our suggested
terminology is so greatly simplified: another reason being the
stand taken by the American Law Institute and its active
sponsors of eminent jurists and lawyers that, in this practical
business era, legal verbosity is no longer necessary in 'Law
Merchant' acts. For example, although two of the Committee arc
lawyers, wo believe that such a layman-simplif ication as given
below will not weaken the provision against false advertising:
(yet will cause NR&. to assume leadership in a lasting, needed
business-law reform)
Usual wording:
"The making or causing or -permitting to be made
or -published any false, untrue or deceptive state-
ment by way of advertisement or otherwise con-
cernin0 the" (product of an industry)
Our suggestion:
"""o(mcmbcr) shall use advertising. . .which is
inaccurate in any material -particular....
Wording used in FEDERAL TRADE
COMMISSION reports, for:
"INACCURACY" types of rules.
*****
"The making or causing or permitting to be made or published any
false, untrue or deceptive statement by way of advertisement or other-
wise concerning the grade, quality^ quantity, substance, character, nature,
origin, size, or preparation of any product of the industry, having the
tendency and capacity to mislead or deceive purchasers or prospective
purchasers, is an unfair tra.de practice."
9810
-140-
"The sale or offering for sale of any product of the industry by
anv false means or device which has the tendency or capacity to mislead
or deceive customers or prospective customers as to the quantity,
quality, substance, or size of such product, is an unfair trade
practice..!'
"The false marking or branding of products of the industry with
the effect of misleading or deceiving purchasers with respect to the
quantity, quality, size, grade, or substance of the materials pur-
chased, is an unfair trade practice."
"The practice of shipping or delivering products which do not
conform to the sample submitted or representations made prior to se-
curing the orders, without the consent of the purchasers to such sub-
stitutions, and with the effect of deceiving or misleading purchasers,
is an unfair trade practice."
"Deviation from the established standards of the industry by any
deceptive or false means or device with the effect of misleading or
deceiving purchasers or prospective purchasers is an unfair trade
practice. "
"Offering for sale merchandise at a •price reduced from a marked
up or fictitious price with the tendency and capacity to mislead or
deceive purchasers or prospective purchasers is an unfair trade
practice. "
"Use of the word "free" where not properly or fairly qualified
when the article is in fact not free, with r„ tendency and capacity to
mislead or deceive purchasers or prospective purchasers, is an unfair
trade practice."
"False and misleading advertising in this industry, regarding the
nature of sales outlet, and the making of untruthful claims, intending
to deceive purchaser or user, as to the quality of said articles, its
source and method of preparation, is an unfair method of competition."
"To sell products which are not plainly and accurately described
or branded, and in full compliance with legal and trade definitions
and requirements, is m unfair method of competition."
"Advertising by use of the printed word, or pictorial represen-
tation, or by radio, or otherwise, for the purpose or with the effect
of misleading or deceiving purchasers with respect to the quantity,
quality, grade or substance of goods purchased, is an unfair method of
competition. "
II. ATTACKING COMPETITORS
Inaccurate Prov. 4. Ho member of the industry shall use advertis-
ref erences ing or other representation which refers inaccurately
to competi- in any material particular to any competitors or their
tors, etc. merchandise, prices, values, credit terms, policies or
services.
9810
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"We under- Prov. 6^ ilo member of the industry shall use advertising
sell all or other .representation rwhich la3rs claim to or implies
conroetitiors" a policy r:'co. ciuuiiig' practice of generally undersell-
ing all c ie titers* .
Selling Prov, "5. Jo member of the industry shall sell any product
below below cost or replacement value. Cost shall include the
cost cost of production in a manufacturing or processing indus-
try-; or the not invoice delivered cost in a retail or
wholesale industry-, (However, any member nay meet the
price competition of anyone whose costs under this code
provision are lo/er.)
Threats of Prov- 7. lie member, of the industry shall nublish or
law suits circularize unjustified threats of legal .proceedings
which tend to or have the effect of harassing competitors
or intimidating their customers.
Remarks:
The distinction is clear between constructively
advertising one's own goods and services and
destructively advertising claims or comparisons
against competitors. It is sought to prevent
a business concern from disparaging others in
order to advance itself.
This habit of attacking competitors takes the
form of broad claims directed at competitors
in general, no one of whom can reply specifi-
cally, ye1 feiC'Be of rhom at least "re in fact
underselling ov meeting the advertiser in price.
Kb such • claims to e continuing practice of generally
underselling all competitors can be true.
Another form of attacking competitors is the use
of "loss leaders", intended both as stimulators
of sales and as misleading measures of an implied
underselling policy as to other goods as well.
Still another attack is to threaten legal action
against customers of a competitor on the ground
of alleged infringement of a patent or trademark
when such right has not yet been adjudicated or
established in a ccurt action against the in-
fringing competitor. The damage here is real
but difficult of proof because it keeps away
prospective customers whose identity cannot be
discovered.
Selling below cost is universally condemned and
it is especially vicious when one or more units
of a multi-unit organization are carried at a
loss in order to arive out competitors. The
9810
only prohlem is what is cost. It is intended
that the lowest possible bases be used - that of
actual replacement of the goods. When one
member's costs are higher than another's, it is
necessary to permit him to meet the price compe-
tition to avoid what otherwise would amount to
virtual monopoly.
Price discrepancy may arise from such causes
as: volume of purchases; purcha.se of "distress
and bankrupt" stocks: "close-outs" (through
discontinuance of lines); and similar temporary
abnormal trade conditions.
Words used
in FEDERAL TRADE _C 02.2.11 SSI ON reports,
for:
"ATTACHING COMPETITORS" types of
f *********** rule01
"The selling of goods below cost with the intent and with the
effect of injuring a competitor and where the effect may be to substanti-
ally lessen competition or tend to create a monopoly or to unreasonably re-
strain trade i s an unfair trade practice."
"The defamation of competitors '"ay falsely imputing to them dishonorable
conduct, inability to perform' contracts, questionable credit standing, or
by other false representations, with the tendency and capacity to mislead
or deceive purchasers or prospective purchasers is an unfair practice."
],Tn.e false disparagement of the grade or quality of the goods of com-
petitors with the tendency and capacity to mislead or deceive purchasers
or prospective purchasers is an unfair trade practice."
"Securing information from competitors concerning their businesses
"by false or misleading statements or representations or by false imperson-
ations of one in authority and the wrongful use, thereof to unduly hinder or
stifle the competition of such competitors is e^i unfair trade practice."
"The circularization of threats of suit for infringement of patent
or trade-mark among customers of competitors not made in good faith but
for the purpose and with the effect of harassing and intimidating custom-
ers, is an unfair trade practice."
One Industry's Rule:
read: :
"Advertising should be at all times fair and honest. It is not dis-
creditable to becoi;e enthusiastic in print about the goods you offer for
sale, but to imply that your neighbor is not selling good products, or to
criticise him directly or indirectly is bad enough when practiced by sales-
men, but infinitely more serious is it when a paid advertisement conveys
even your own apprehension (which may be well founded) to the general reading
9810
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public as to your opinions of your competitor or of his wares, and it should
not be permitted, because we consider it an unfair method of competition."
"Disparagement of officers, employees and products of competing con-
cerns and circulation of false rumors of financial standing of competitors
is Gin unfair me-thod of comp'etion. . " '
III. PHI 03 Dl'sCRIMIITATIOM
**************************
Secret Pro-. 8„ No member cf the industry shall secretly make
Rebates any payment or allowance of a rebate, refund, commis-
sion, credit, uu.-arnssd dlscounU or excess allowance,
whether in the form of money or otherwise, for the pur-
pose of influencing a sale, nor shall a member secretly
extend to any customer any special service or privilege
not extended to all customers of the same class.
"Free Prov^ 9. No member of the industry shall grant an ad-
G-oods" vertising, allowance or a premium or any form of free
goods except for a definite service rendered and in a
form which is accountable.
Selling on Prov. 10. No member of the industry shall ship goods on
Consignment consignment, except under contract or bona fide orders.
***************************************
Remarks:
There is a proper line to be established between
concessions on price and terms on account of
volume, purchases; and unfair concessions ob-
tained either with the club of macs buying power
of othei merchandise or in conspiracy to injure
othex actual or prospective purchases.
Volume, purchases deserve price concessions when
then result in production savings or less sell-
ing and shipping expense, but not when the terms
of sarL3 or a multiplicity cf small shipments
dissipates the supposed savings. Ncr is there
any reason why price concessions (in whatever
form) to one buyer si:. o_;.ld not be extended to all
buyers under the same stated conditions.
The shipment of goois^ on consignment is a form of
price discrimination ivhen it is extended to some
buyers wjth;;ut being available to all under like
conditions; it is also a form of unfair practice
when used as a method of promoting sales by un-
solicited shipment of merchandise on approval or
"consignment" in the hope it will induce the
recipient to purchase the goods.
9810
-144-
Words used
in FEDERAL TRADE COMMISSION reports
for:
"PRICE DISCRIMINATION" types of rules.
************
"The secret payment of allowance of rebates, refunds, commissions,
or unearned discounts, whether in the form of money or otherwise
or secretly extending to certain purchasers special services or privileges,
not extended to all purchasers under like terms and conditions, with the
intent and with the effect of injuring a competitor and where the effect may
be to substantially lessen competition or tend to create a .monopoly jr to
unreasonably restrain trade is an unfair trade practice."
"It is an unfair trade practice for any person engaged in inter-state
commerce, in the course of such commerce, either directly or indirectly,
to discriminate in price between different purchasers of commodities, where '
the effect of such discrimination may be to substantially lessen competition
or tend to create a monopoly in any line of commerce; provided, that nothing
herein contained shall prevent discrimination in price between purchasers of
the same class on account of differences in the grade, quality, or quantity
of the commodity sold, or that .makes only due allowance for differences in
the cost of selling or transportation, or discrimination in price in the
same or different communities made in good faith to meet competition, and
provide further, that nothing herein contained shall prevent persons engag-
ed in selling the products of this industry in commerce from selecting their
own customers in bona fide transactions and not in restraint of trade. "
"The shipping of goods on consignment, with the intent and with the
effect of injuring a competitor and where the effect may be to substantially
lessen competition or tend to create a monopoly or to unreasonably restrain
trade, is an unfair trade practice."
"The acceptance of orders for large quantities of industry products
and then making small delivering at quantity prices for the purpose and
with the effect of discriminating unlawfully between different customers
of the same class is an unfair trade practice."
"T7e discourage and abhor all forms or secret rebates and settlements
whereby books and accounts can be so manipulated as to cover up the actual
conditions. For instance, we strongly condemn refunding of any amount to
the purchaser unless it is clearly shown for what reason the refund is made,
and that it is legitimate, and charging funds returned to accounts other
than the proper ones, we consider unfair and unwise and it is prohibited.
We agree that we shall not pursue the aforesaid prohibited practices, by
reason of their being an unfair method of competition."
IV. COMMERCIAL BRIBERY
***.+; **** * * * * ;[;*** ****.***
Bribing Prov. 11. No member of the industry shall give, permit to
employees be given, or offer to give, anything of value for the pur-
pose of influencing" or rewarding the action of any employee
9810
-145-
or agent of another in relation to the "business of the
employer of such employee or the principal of such agent
without the knowledge cf such enplo -er or principal.
False prov. 12. No member of the industry shall secretly give
billing anything of value to the employee or agent of a customer
for the purpose of influencing a sale, or in furtherance
of a sale render a bill -or ptate.:ent of account to such
employee, agent or customer nhich is inaccurate in any
material particular.
*******************************.** * * * *
Henarks:
Commercial 3ribery is practiced most often between
a manufacturer or wholesaler and the agent of a
purchaser, the purpose being to influence the
agent to violate the trust imposed in him by his
principal and appear to e::ercise his judgment in
selection or negotiation when in fact his inter-
est is not exclusively on the side of his princi-
pal. Both in law and in federal Trade Commission
rulings the giving of anything of value as an
inducement to influence the trusted agent of
another is prohibited*
The second paragraph is designed for retail and
wholesale codes, to deal with the unfair practice
of bribing servants to purchase for their employers
at prices lower than the prices charged to such
employers, with the difference as the bribe.
lords u?ed
in PPilJPxJ, T_l.:JE CO! II SSI OH reports
for:
,:C0::;lE3CI*Ji IT-IIZEY" types of rules.
"Directly or indirectly to give or permit to be given or offer to give
money or anything of value to rgents; employees, or representatives of
•customers or prospective customers or tc agents, employees, or representatives
of competitors' customers or prospective customers, without the knowledge of thi
their employers or principals., as an incoiofcment to influence their employers
or principals to purchase or contract bo pu.rch.ese industry products from
the maker of such gift or offer, or to fnfluence such employers or princi-
pals to refrain from dealing or contracting to deal with competitors, is an
unfair trade practice."
"Por any person, firm or corporation to rive anything of value to
those employed in any cacc'] ty involving special trusb (such as instructor,
purchaser, supervisor, or school official), without the knowledge of their
employers upon the condition or understanding, empress or implied, that
its goods be recommended or used by such per con in preference to the goods
or equipment of a competitor or competitors of that person, firm or cor-
poration, with the tendency to injuriously affect the business of competi-
9sio
-146--
tors, is an unfair trade practice: provided, that nothing in this resolu-
tion shall prevent any person, firm or corporation from selling its goods
to anyone upon whatsoever terms it sees fit but without any condition or
understanding, express or inrplied, as to the recommendation or use of said
goods or equipment."
"Commercial bribery is immoral, against the public interest, and is
an unfair method of competition."
"We do hereby condemn the practice of giving money, premiums, or
any other forms of gratuity to persons placing orders for the purchase of
any products of our industries in all cases where such persons are not the
actual purchasers, and the acceptance of the money, premiums, or other forms
of gratuity is surreptitious and for the personal benefit of the person
placing such order, and we hereby further register our opposition to the
practice of giving of so-called advertising specialties bearing the donor's
name or imprint, costing more than $2. each
V. BREACH OF CONTRACT
********** ****** t*****
Interference
with
another1 s
contracts.
Prov. 13. No member of the industry shall induce
or attempt to induce the breach of an existing con-
tract between a competitor and his enroloyee or cus-
tomer or source of supply, nor shall any such member
interfere with or obstruct the performance of such
contractual duties or services.'
Repudiating
one' s own
contracts
Prov. 14. No member of the industry shall repudiate
a contract entered into in good faith when the pur-
pose of such repudiation is to create for such member
an unfair price advantage.
* *
* * * * * * *
* * * * * *
***** **
Remarks:
Breaching of contracts for the purpose of taking
an unfair price advantage in a rising or falling
market, or inducing others to break contracts with '«' ,;
competitors by false representation of facts, is an
unfair -oractice. It is desirable to safeguard the
integrity of contracts.
Although legal redress is possible for damages suf-
fered by reason of a breach of contract, in the great . •
majority of cases the injustice is suffered in silence
because of the fear of reprisal through the withholding
of future business or of excessive cost and suit and
legal del ay s
On the practice of inducing the breach of existing
contracts between BO"."oetiicrs and their customers the
Federal Trade Commission's usual rule reads:
981^
-1 17-
.:. "Maliciously inducing or attempting 'i i induce
the br ' existing contracts bpjtv^en compe«-
titpj ■ ai LBir customers b<r any false or decep-
tive i; ts< ever, or interfering with or ob-
structing the perforaraance of any such contractual
chibiec or service's by any such means, with the
purpose and iff act of ur hily hampering, injuring,
or embarrassing competitors in their businesses,
is an unfair trae'e practice-."..
Words used
by FEDERAL TRADE COMMISSION reports,
for:
"BREACH OP CONTRACT" types of rules.
**********
"Maliciously inducing or attempting to induce the breach of existing
contracts between competitors a^a their customers by any false or deceptive
means whatsoever, or interfering with or obstructing the performance of any
such contractural duties or services ^y any such means, with the purpose
and effect of unduly hampering! injuring, or embarrassing competitors in
their businesses, is an unfair trade practice."
"Maliciously enticing away the employe 3s of competitors, with the purpose
and effect of unduly hampering, injuring, or embarrassing competitors in
their businesses is an unfair trade; practice. "
"The wilful interference by any person, association, or corporation,
by any means or device 'whatsoever, v.ith any existing contract between an
employer and an employee or agent of such employer, in or abort the produc-
tion, manufacture, transportation, purchase, . or sale, of any product of the
industry, or the performance of any contractural duty or service connected
therewith, such interference being for the pii.rpose or with the effect of
dissipating, destroying, or appropriating, in -..'hole or in part, the patron-
age, property, or business of. another engaged in such industry, is hereby
declared an unfair trace practice."
"The imitation of the trrd;, -marks, trade names, slogans, or other
marks of identification oi competitors, having the tendency and capacity
to mislead or deceive purchasers or prospective purchasers, is an unfair
trade practice."
"For any person, firm, or corporation knowingly to aid or abet another
in the use of unfair trade -practices is an unfair trade practice."
"Inducing of employees of competitors to violate contracts or entic-
ing away employees of competitors in such numbers, or .under such circum-
stances as to constitute a conversion and an appropriation of the value
created at the expense of the said competitor."
"Contracts, either written or oral, are business obligations which
should be performed in letter and in spirit. The repudiation of contracts
by sellers on a rising market, or by buyers on a declining market, is equally
9810
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reprehensible. Such actions shatter confidence, induce violent fluctua-
tions in price, destroy stability in business operations to the consequent
injury of the industry as well as the general public, and is an unfair
trade practice."
VI . COERCION
# * *#::>::# %. # :.: $ $ * %
Frov. ■ 15. No member of the industry shall require that
the purchase or lease of any commodity be prerequisite
to the purchase or lease of any other commodity.
Prove. 16. No member of the industry shall join with any
other member or participate in any trans-action known
in law as a blacklist.
sfc:fi •,;<>;: }i :]; ■ :;: :','. :]: :]'.:',< :': -};. * ** * * * '■'.< * * * >je 5(e * * * -,'• '.< * # # * * -fi ■'.' '-'.'''fi ■:• * -'.< ■!: :.'- £#"< ^: 2fi ■■< * * # * -'■ * * * # #' * * * * * # * >!- * -!'"-!: * * :'.
Remarks:
"Tying" &
"block-book:
Lng"
contracts.
"Black"
(or white)
lists.
Coercion by so-called "tying" contracts, "block-
booking" contracts (of the movie industry, etc.), or
requiring other lines of goods or products to be
bought or leased as a condition precedent to being able
to buy or lease the goods or products or services off-
ered, is an unfair practice.
Under the same subject heading, any attempt, by joint
action to discriminate against one class, group, or
race of customers when in fact there is no sound ec-
onomic ground for such discrimination, is unfair
practice.
Thi. .-• -or-letes our list of
STANDARD FAIR PRACTICES: Sixteen provisions, in
Six classifications:
I. " I IL.C CURACY" has 3 "orovisions (Rules).
II. "ATTACKING- COMPETITORS" — " 4 "
III. "PRICE DISCRIMINATION" " 3 "
iv. "co::::ercial bribery" » a "
V. "BLEACH OF CONTRACT" " 2 "
VI. "COERCION" — " 2 »
16 in all.'
(See following pages for all supplementary or special-to-an-
industry provisions.)
VII. SPECIAL PROVISIONS
f '■''• * :'; * % * 'M '■'■'- ^' :': S(c Jjc J^ sj« ;H X >\: >',■• ■'■ * :■« •% i'?. $t
("Below the Line")
The CODE AUTHORITY (in each industry ) shall study the
-149--.,
following proposal fair-practice provisions and from
time to time shall make any recommendations to the \
Administrator for additional provisions to this Code;
and when approved by the Administrator,, after such \
hearing as he may prescribe, the;/ shall become a
part of this Code and have frill force and effect as
provisions hereof: •• .
(Here may be set forth fair-practice provisions which the Industry con-
siders it is desirable to incorporate in the Code due to special con-
ditions not covered or not sufficiently covered in our 15 "regular" ,„
fair~practice provisions; See list below.
***************************** *******
Remarks:
The several standard trade-practice provisions have been
prepared with the thought in mind that they are appli-
cable.to every code, whether the code covers an industry
in the so-called production field or in the so-called
distribution field.
In addition it is recognized that special provisions may
be required to meet conditions peculiar to a given in-
dustry and that there should be no objection to such ad-
ditional provisions if they are sound. However, it would
seem to be an imposition on the N.E.A. LEGAL DIVISION nnd
the cause of unavoidable delay if it were necessary for
the Legal Division to inform itself on all the techni-
calities of the industry which might be involved in its
determination of whether or not such proposed additional
provisions are in fact sound and desirable. It is pro-
posed, therefore, that any provisions offered by the
industry other than those contained in the "standard
provisions" above should be incorporated under Group
• VI J so that they do not become operative immediately
and can be dealt with in due course after sufficient
• determination of merits.
"Special Provisions", which our 16 suggested rules may
not cover (or sufficiently cover) include:
Returned Goods Sales by sample
Misuse of leased Espionage
equipment
Slack-filled packages Design piracy
Trading stamps Hidden (retail store)
demonstrators
Trade discounts Price guarantees
Credit terms Special guarantees
Unfair transportation Standardization
practices Simplification
9810
* '.'■ -• -.h - . — : — i .... ■
' " ■ . '•■' , :'■•■,
-151-
EXHIBIT 7
DEPARTMENT OP COMMERCE
WASHINGTON
An Ideal Charter for Trade Acs point ions
PREAMBLE
WHEREAS in the nast the economic and! industrial development of this
country has "been predicated uoon the arinciple of independence within
the industry in relationship to other grouns, and T7KEEEAS at the present
time, increasing e:cperience and wider vi'sion indicate the fundamental
interdependence of industry, not only within the industry, hut with all
groups in the social fabric:
IHEREPORE, wo the (blank) industry do hereby organize' and creale the
(blank) trade association, for the mutual benefit and advantage of those
employed by it, of those engaged in allied industries, of those applying
our materials, of those distributing our output, of those consuming our
aroduct, and of all those interested in the development, improvement,
and betterment of our methods, rnd in our place in the social and economic
organization of the nation.
ARTICLE I — LIEIDEIiSHIP
This Association, recognizing the interest of other groups in the
prosperity, welfare, development, and conduct of the (blank) industry,
and desiring the cooperation, the benefit. of thought and research, and
the suggestions of all those interested in that interdependent struc-
ture which affect the welfare of those engaged in this industry, hereby
creates the following types of membership.
Active Membership - Any individual, firm or corporation in the
(group) is eligible to become an active member of this Association.
Cooperative Membership - Any individual, firm, corporation or or-
ganization engaged in related lines, sup liers, distributors, service
bodies, scientific grouos, representative of other tr^de, scientific
or service bodies, or representative cf l^bor, or consumers, is eligible
to this form of membership and may enjoy the facilities of the Secretary's
office in the promotion of matters of mutual interest, the privilege of
the floor at open sessions, may be assigned to committees, or if deemed
desirable may even be elected to office, but shall not have the privilege
of voting.
Associate Membership - Any individual, firm, corporation or organi-
zation memben of either of the p?jove classes of membership may enter one
cr more associates who 'oy virtue of certain qualifications in the scien-
tific, service, promotion, legal or social fields mazy be in a position to
further the activities and objectives of the association, but privileges
of this group are to be no greater than those set forth in the Cooperative
Member shin group,
9310 ... •"
-152-
ARTICLE II - ECOirOi ilC OBJECTIVES
'vTHEHEAo the welfare and. development of an industry depend upon its
stable progress pad its planned and proper growth, and
UEEBEAS the interest of those dependent upon or connected with the
industry is vitally intertwined with the accomplishment of this purpose.
HOW THEREFORE, this Association shall have for its, basic purpose a
broad vision not only of its own interests, but the interest of those
dependent upon it, catering to it, or dealing with it; and for this pur-
pose this Association shall study, investigate, and make research into all
those factors which may affect its economic stability, growth, prosper-
ity, and welfare,
For examole :
1. Economic planning by the Association.
a, Model plan for individual firm
b» Model plan for the entire industry
c. Model plan for interrelated industries
2. Economic planning in its boradest aspects, cooperating with
other trade and professional groups and the government in
"Hational Economic Planning"
3. Preparing surveys as to
a. Seasonal fluctuations affecting sales product
b. Cyclical fluctuations
Etc.
4. Preparing surveys as to the long-term trends of practices in
a. Production
b. Capital goods investments
c. Marketing
d. Trans o or tat ion
e. Labor and personnel problems
f. Trade practices and ethical standards
g. Changes in consumer needs and demands
3810
-153-
5, Statistical activities (to further planning possibilities)
A. Current statistics of production or trade
a» Capacity g. Shipments .
b. Purchases h. Prices
c. Production i. Returned goods
d. Stocks on hand j. Inquiries
e. Orders, Unfilled k. Bids
Cancellations 1. Contracts
3. Labor Statistics
a. Number employed
b. Pay rolls
c. Personnel training
C. Management or Cost Statistics
a. Uniform cost accounting (classification of
accounts)
b. Cost estimating
c. Standard forms for orders, bills, bids,
contracts, etc.
d. Cost studies of
1, Budget 4. Depreciation
2, Overheading 5. Obsolescence
3, Production 6. Ship-ping
7. Turnover
8. Stock or inventory control
9. Maintenance of a research library and
lab orato^
D. Forecasting research as to sales possibilities
a. Consumer needs, potential purchasing -oovrer,
relation of competing products and possibi-
lities of acceleration by advertising pro-
grams
b. 3-.sed on nexj inventions in production equip-
ment, etc.
c. 3ased o n equipment expansion.
E. Research into cooperative buying or bulk quantity
commitment.
9310
-154-
ARTIOLE III - BUSINESS OBJECTIVES
THERMS an industry which does not render true service to the public,
or an industry which is without true profit to itself must eventually
face elimination.
IT0T7 THUHEiOES, this Association shall have for its immediate pur-
pose the conduct of activities hooking toward the betterment of its pro-
duct, the elimination of wasteful practices, the promotion of high stan-
dards of practice, the development of public confidence, and the dissem-
ination of knowledge about the industry's products — their usefulness
and place in the economic scheme.
For example:
1. Cooperative advertising of products to
a. Manufacturers and distributors in this and related
industries
b. Professional advisors (a.s architects, engineers, etc.)
c. The consumer
2. Market Research
a. Discovering and defining logical market areas of each
product
b. Determining probable long-term market growth factors
c. Determining normal seasonal fluctuations in sale and
consumption
d. Determining the responsiveness ia sale of each product
to the business cycle influence.
3. Product Research
a. As to materials now used
b. As to new materials
c» As to new or improve products
d. As to new uses for present products
4. Industrial Standardization
a» Standard specif ications for raw and seniprocessed materials
b. Standard specifications for equipment and supplies
purchased
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c. Sponsorship of standards for articles produced promoting
uniformity and interchangeability of parts
d. Trr.de association certification service ("Standard Quality11)
and quality trademark
5. Simplified Prrctice
6. Operation Research
a. Regarding equipment ncr used
b. Regarding conten mlated new equipment
c. Regarding contemplated manufacturing methods
d. Regarding contemplated ne-' utilisation of by-products or
waste raaterials
7. Credit Activities
A. Establishment of a credit bureau to
a» Operate within the association
b. Cooperate with other associations
c. Cooperate with commercial credit agencies
3. Establishment of r collection bureau service
8. Transportation Problems
a. Establishment of a traffic deportment, concerned with
rrie and classification matters
b. Cooperation with Regional Joint Advisory Boards
c. Clarification of overseas shipping oroblems
d. Improvement of transportation facilities
9. Insurance Problems
a. Securing equita>le rates nnd uniform schedules
b. Securing more rdequate coverage or irotection
c. Studying feasibility of cooperative insurance
arrangement s
d. Acting as insurance service bureau for members
9310
10. Cooperative deliveries
11. Coo-oerative warehousing
Etc
ARTICLE IV - SQCI.iL OBJECTIVES
T7HE3EAS the economic future and progress of industry are predicated
upon the welfare, health, safety, economic independence and freedom from
uncertainty of those without whose services the industry could not exist.
N0T7 THSiCrOIE, this Association shall havo for its third pur-pose the
study and formulation of the needs, and plans for meeting the needs of
those engaged in this industry, whether management or la.bor or produc-
tion or distribution.
For exaraole:
1. Stabilization of Employment
a. Employment surveys as to wages, hours, -oersonnel,
efficiency, adaptability, etc.
b« Placement service
c. Cooperation with public or private employment agencies
2. Unemplovnent insurance
3. Employee Retirement Plans
4. Training Schools for Employees
a. Tor apprentices, namual v;orl:ers, formen, salaried
workers, salesmen, and executives.
5. Living and working conditions
a. Health, hygiene and welfare provisions
b. Plant sanitation
c. Hospital', and medical ca.re
d. Employee recreation
6. Employee Safety Plans
a. Safety campaigns or contest';
b. Pirst aid instruction
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7. Savings Funds and Stock Purchase- Plans
8. Encouragement of conciliation and arbitration in dis-outes or
misunderstandings with employees
9. Woman end child labor policies
10. Public relations
a* Press contact
b. Government contact (local, state and federal)
c. Public participation in problems of trade
d. Educational projects, tributes to industrial or
social leaders, etc.
e. Public information bureaus
f. Advertising
Etc
ARTICLE V - LEGAL OBJECTIVES
WHEREAS new laws affect industry! and
WHEREaS new industries and new relationships with industries result
in laws, and
WHEREAS it is to the interest of this industry, in seeking to abide
by existing laws, to have a proper voice in the development of those new
laws which ma./ affect this industry directly, or in its relationship to
others.
NOW THEREFORE this Association shall have for its fourth purpose the
study of pertinent 1 ws, the dissemination of information concerning them
and the formulation or criticism of those proposed projects which may con-
cern it, and the development of those activities, functions and purpose
which may properly be within its scope.
For Examle:
1. Objectives as to existing laws to
a.. Study find determine le :al means to further all major
and minor objectives
b. Hake available information concerning laws and decisions
c. Perform service in litigation involving association policy
d. Assist in relations with governmental regulatory bodies
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e. Standardize or improve forms and terminology of
commercial and legal documents, etc., peculiar to
t rade
f. Defend the legality and propriety of the Association's
established trade practices
g. Encourage the use of commercial arbitration settling
T?hen "best suited in misunderstandings or disputes.
2. Objectives as to proposed legislation to
a. Keen -posted on all legislative proposals, . State and
Federal, affecting the industry and related indus-
tries,
1. Supply of raw materials
2. Transportation
3. Communication
4. Production - control
5. Etcetera
b. Initiate desirable legislative reforms
c. Promote uniformity of stpte legislation
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EXKiaiT 8
SUGGESTED 0UTLIE1 COLES
a(< sfe • ; <: * & * ■'■ '^ * * ■ ; -I- :« ■''- "' * "i; --" ** * *
*«oOo-
The suggestions lie rein made are intended to .assist trade and
industry in the •prcoTPtio:.! of codes.
Except - s to those provisions which are required to be included
in all codes by the LATICZJAI Ii'LUSTRIAL RECOVERY ACT (which provisions
aro clearly indicated herein), none of the surest ions embodied in
this draft aie j ; ; 5 ndatory .
It is Relieved, however , that the "preparation of codes and their
rjy-al "b~r the President will "be greatly expedited if those v.rho pre-
pare codes coiifqrrn as far as possible with the u--iform phraseology
here proposed.
HIKS S. JOHrTSOlT
Administrator for
Industrial Recovery
November 6,
1933
ARTICLE I.
pur;-' oses
To effect the policies of Title I of the Hationallndus trial Re-
covery Act, this Code is submitted as a Code of Fair Competition for
the _!rade/ Indus try, and upon - : r :val by
President, its provisions shall be the standards of fair com-
petition for such trade/industry and shall be binding upon every
. iber thereof.
ARTICLE II.
lef initions
(This article on definitions is one oi the flost important in
this Code. Each definition must "03 worded in clear and specific terms.
Concisely state the exact cL ss or classes of enterprise included with-
in the division or division's di the trade /industry.)
The term " Trade/ Indus try" as used herein
includes the _(state accurately what is in-
cluded in the trade/ industry, whether manufacturing, building, trans-
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porting, repairing, selling and/or distributing at wholesale or retail,
etc.) of (Products, merchandise or service etc.),
and such related toraiichfts or subdivisions as may from time to time "be
included under the provisions of this Code by the President of the
United States, after such notice and hearing as he may prescribe.
The term "member of t he t rade / ir.dus t ry " includes, "but without
limitation any individual, partnership, association, corporation or
other form of enterprise engaged in the trade /industry, either as an
employer or on his or its cwn behalf.
The term "employee" as used herein includes any and all persons
engaged in the trade/industry, however compensated, except a member
of the trade/ industry.
The term "Act" and " Admin i s t rat or" as used herein mean respectively
Title I cf the National Industrial lie cove ry Act, and the Administrator
for Industrial Recovery.
Population for the purposes of this Code shall be determined by
reference to the latest federal Census,. (insert only when needed.)
ARTICLE III.
Hours
MAXIMUM HOURS
Section 1. Ho employee s1tt.11 be permitted to work in excess of
Jnours in any one weeS: or hours in any twenty-
four (24) hour period beginning at midnight, except as herein otherwise
provided. A normal work day shall not exceed _ _Jiours.
(Maximum hours for special classes of enroloyees, if any, should
be inserted under the appropriate ram. raph, together with the hours
applicable. )
HOUTig F'B CLERICAL A D OFFICE " PLOYEES
Section 2» Iso person employed in clerical or office work shall
be permitted to work in excess of _hours in any one week or
hours in any twenty-four hour period. A normal work day shall not
exceed hours.
EXCEPTIONS AS TO HOURS .
Section S. The provisions of this Article shall not apply to
travelling salesmen, or to employees engaged in emergency maintenance
or emergency repair work, or to- ocrsor.s employed in a fimna^rerisl or Executive
capacity who earn not less than Thirty-five Dollars ^$35. 00) pt-. week.
(Provisions governing over time payments skoul be inserted at
this point; for example, for emergency maintenance and emergency repair,
etc.)
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STAirDAED week
Section 4. No employee shall be permitted to work more than
days in any _____ __day period.
EMPLOYMENT 5Y SEVERAL EMPLOYEES
Section 5. No employer shall knowingly permit any employee to
work for any time which, when totaled with that already performed with
another employer or employers in this trade/ industry, exceeds the
maximum permitted herein.
ARTICLE IV.
•es
:"i_ii:.i.: "ages
Section 1. No employee shall be paid in \ny pay period less than
at the rate of cents per hour, except as otherwise
herein ; rovided.
(llinimum wage adjustments based on locality and/or population may
be indicated here.)
PIECEWORK COi.iPE-JSATICU - __I__1__U_ WAGES
Section 2. This article establishes 3. minimum rate of pay which
shall apply, irrespective of whether an employee is actually compen-
sated on a time rate, piece-work, or other basis.
i_I_I___j £AGE FATES BY LOG ALI TY/ CC CUPAT I ON
Section 3. After the approval of this Code, the Code Authority
may present for " roval to the Administrator, after notice and hearing,
recommendations as to upward adjustments in minimum wages for specified
localities/occupations, in order to effectuate the purposes of the Act.
WAGES ABOVE HIlTILUIi
Section 4. No employee whose normal full time weekly hours for the
four weeks ending [date) are reduced by less than percent
shall have Ms or her full time weekly earnings reduced. No employee
whose full time weekly hours are reduced
by more than s.id percent shall have his or :
her said earnings reduced by more than _____„ ALTERNATIVE
percent. :
-I.-jTc shall be an equitable adjustment :
of all wages above minimum, and to that SUGGESTIONS
end, within ( _days or months) from the :
roval of this Code, the Code authority
shall submit for the approval of the Administrator a proposal for ad-
justment in wages above the minimum. Upon approval by the Administrator,
after such hearin; as he may proscribe, such proposal shall become bind-
ing as a part of this Code, provided, however, that in no event shall
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hourly rates of pay be reduced.
FEMALE EMPLOYEES
Section 5. remale employees performing substantially the same
work ~.s male emplo; ei s shall i-eceive the same rate of pay as male
employees.
HAHDICAPPE:
Section 6. A person whose earning capacity is limited because
of age or physical or mental handicap may he employed on light work
at a wage below the minimum established by this Code if the employer
obtains from the State authority designated by the United States
Department of Labor a certificate authorizing his employment at such
wages and for such hours as shall be stated in the certificate. Each
employer shall file with the Code An-thority a list of all such persons
employed by him.
ARTICLE V.
C-ener-al Labor Provisions.
CHILD LABOR
Section 1. Fo perron under si::teen (16) years of age shall be
employed in the trade/ industry. Fo person under eighteen (18) years
of age shall be employed at operations or occupations which are hazard-
ous in nature or dangerous to health. The Code Authority shall submit
to the Administrator before (date) a list of such operations
or occupations. In rny State an employer shall be deemed t o have com-
plied with this provision ~s to age if Ve shall have on file a certificate
or ]-iermit duly signed by the Authority in such State empowered to issue
employment or age certificates or permits showing that the employee is
of the required age.
PROVISIONS PROi i TI-IE ACT (inclusion obligatory)
Section 2. In compliance with Section 7(a) of the Act it is
provided: ^-..-*
(a) That employees shall have the right to organize and bargain
collectively through representatives of their own choosing,
and shall bo free from the interference, restraint, or coer-
cion of employers of labor, or their agents, in the designation
of such representatives or in self-organization or in other
concerted activities for the purpose of collective bargaining
or other mutual aid or protection.
(b) That no employee aid no one seeking em] Lovment shall be re-
quired as a condition of employment to join any company union
or to refrain from joining, organizi g, ir ssisting a labor
organization of his own choosing, and
(c) That employers shr I1, c imply with the maximum bmirs of labor,
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minimum rates of pay, and other conditions of employment approved or
prescribed by the President.
RECIASSIFICA2I01T OT ShTLOYEES
Section 3. llo employer shall reclassify employees or duties of
occupations performed or engage in any other subterfuge for the purpose
of defeating the purposes or provisions of the Act or of this Code.
STAITDATDS ?0h SAFETY AFP HEALTH
Section 4. Every employer sliall mal:e reasonable provision for
the safety and health of his employees at the place and during the
hours of their employment. (Provision may "be inserted requiring the
Code Authority to submit proposed minimum standards for safety and
health of employees.)
STATE LA"S
Section 5. Ho provision in this Code shall supersede any State
or Federal law which imposes on employers more stringent requirements
as to age of employees, wages, hours of work, or as to safety, health,
saiitary or general working conditions, or insurance, or fire pro-
tection, than arc imposed by this Code,
POSTIHG
Section 6. All employers shall post complete copies of this
Code in conspicuous places accessible to employees
ARTICLE VI.
Organization, Powers and Duties
of the Code Authority
QRC-AHIZATI01T AhD COliSTITUTIOi!
Section 1. There shall forthwith be constituted a Code Authority
consisting of persons to be selected in the following manner:
(Here shail be stated the manner in which the members of the
Code Authority shall be selected. Provision should be made
so tliat the Code Authority will be truly representative of
the various majority, minority, and other interests in the
trade/industry. If, however, by reason of conditions peculiar
to the trade/ industry, selection by the trade/ industry is im-
possible, it nay be provided that appointment shall be by the
president. )
Section 2. In audition to membership as above provided, there
may be _ members, without vote, to be appointed by the
President, to serve for term of _months from the date of
appointment.
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Section 3. Each, trade or industrial association directly or
indirectly participating in the selection or activities of b" - Ce"~
Authority shall (1) impose no inequitable restrictions on membership,
and (3) submit to the Administrator true copies of its articles of
association, by-laws, regulations, and any amendments when made thereto,
together with such other information as to membership, organization,
and activities as the Administrator may deem necessary to effectuate
the purposes of the Act.
Section 4. In order that the Code Authority snail at all times
be truly representative of the trade/ industry and in other respects
comply with the provisions of the Act, the Administrator may prescribe
such hearings as he may deem proper; and thereafter if he shall find
that the Code Authority is not truly representative or does not in
other respects comply with the provisions of the Act, may require
an appropriate modification in the method of selection of the Code
Authority,
Section 5, Members of the trade /industry shall be entitled to
participate in and share the 'benefits of the activities of the Code
Authority and to participate in the selection ofj the members thereof
by assenting to and complying with the requirements of this Code and
sustaining their reasonable share of the1 expenses of its administration.
Such reasonable share of the expenses of administration shall be deter-
mined by the Code Authority, subject to review by the Administrator ,
on the basis of volume of business and/or such other factors as may
be deemed equitable.
Section 6. Nothing contained in this Code shall constitute the
members of the Code Authority partners for any purpose, Nor shall
any member of the Code Authority be liable in any manner to anyone
for any act of any other member, officer, agent or employee of the
Code Authority. Nor shall any member of the Code Authority, exercising
reasonable diligence in the conduct of his duties hereunder, be liable
to anyone for any action or omission to act under this Code, except
for his "Ti willful mis-feasance or non-feasance.
POWERS AXD DUTIES
Section 7, The Code Authority shall have the following further
powers and duties, the exercise of which shall he reported to the Ad-
ministrator and shall be subject to his right, on review, to disap-
prove or modify any action taken by the Code Authority,
(a) To insure the execution of the provisions of this Code and
provide for the compliance of the trade/ industry with the pro-
visions of the Act,
(b) To adopt by-laws avid rules and regulations for its procedure
and for the administration and enforcement of the Code.
(c) To obtain from members of the trade/industry such information
and reports as are required for the administration of the Code
and to provide for submission by members of such information and
reports as the Administrator may deem necessary for the purposes
9810
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recited in Section 3(a) of the Act, which information and reports
shall be submitted by members to such administrative and/ or govern-
ment agencies as the Administrator may designate; provided that
nothing in this Code shall- relieve any member of the industry of
any existing obligations to furnish reports' to any government agency.
No individual reports shall be disclosed to any other member of the
trade /industry or any other party except to such governmental agencies
as may be directed by the Administrator.
(d) To use such trade associations and other agencies as it' deems
proper for the carrying out of any of its activities provided for
herein, provided that nothing herein shall relieve the Code Authority
•f its duties kr responsibilities under this Code and that such trade
associations arid agencies shall at all times be subject to and comply
with the provisions hereof.
(e) To make recommendations to the Administrator for the coor-
dination «f the administration of this Code with such other codes, if
any, as may be related to the trade/ industry.
(f) To secure from raernbersof the trade/ industry an equitable
and proportionate payment of the reasonable expenses of maintaining
the Code Authority and its activities.
(g) To cooperate with the Administrator in regulating the use
rf any il.H.A. insignia solely by those members of the trade/industry
who have assented to, and are complying with, this Code.
(h) To recommend to the Administrator further fair trade practice
provisions to govern members of the trade/ industry in their relations
with each other or with other trades /industry and to recommend to the
Administrator measures for industrial planning j including stabilization
of employment,
ARTICLE VII.
Trnde Practice Rules
(HOTE: Sponsors of codes, in preparation of drafts for submission
t« '_TFA., should select from the following such rules as are deemed
applicable to their particular trades or industries ana may set forth
such other rules as may be deemed desirable, to meet conditions
peculiar to their trade/ industry, covering such subjects as:
Returned goods
Methods of leasing equipment
Sales by sample.*
Espionage
Trade discounts and/or selling terms
Transportation practices
Design piracy
price or special guarantees
Advertising allowances.
etc. )
981M
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Rule 1. Inaccurate Advertising.
Ho member of the industry shall publish advertising (whether
printed, radio, display or of any other nature), which is misleading
or inaccurate in any material particular, nor shall any member, in
any way misrepresent any goods (including but without limitation its
use, trade-mark, grade, quality, quantity, origin, size, substance,
character, nature, finish, material, content or preparation) or credit
terms, values, policies, services, or the nature or form of the busi-
ness conducted.
Rule 2. False Billing.
Ho member of the industry shall knowingly withhold from or inser't
in any quotation or invoice any statement that makes it 'inaccurate in
any material particular.
Rule 3, Inaccurate Labelling.
ITo member of the industry shall brand or mark or pack any goods
in any manner which is intended to or does deceive or mislead purchasers
with respect to the brand, grade, quality, quantity, origin, size,
substance, character, nature, finish, material content or preparation
of such goods.
Rule 4. Inaccurate References to
Competitors, etc.
Ho member of the industry shall publish advertising which refers
inaccurately in - .. \i terial particular to any competitors .or their
goods, prices, values, credit terms, policies or services.
Rule 5. Selling Below Cost.
(Provisions may be inserted. against selling below cost based upon
principles of costing formulated by the Code Authority and approved
by the Administrator. Such provisions should be applicable to the
individual industry and should take into consideration the necessity
of selling below cost to meet competition, to dispose of distress
merchandise, etc.)
Rule 6. Threats of Lav; Suits.
Ho member of the industry shall publish or circulate unjustified
or unwarranted threats of legal proceedings which tend to or have the
effect of harassing competitors or intimidating their customers.
Failure to prosecute in due course shall be evidence that any such
threat is unwarranted or ■unjustified.
Rule 7. Secret Rebates.
Ho member of the industry shall secretly directly offer or make
any payment or allowance of a rebate, refund, commission, credit,
unearned discount or excess allowance, whether in the form of money
or otherwise, nor shall a member of the industry secretly offer or
9810 *
. -167-
extend to any customer any special service or privilege not extended
to all customers of the same class, for the purpose of influencing
a sale.
Rule 8, Selling on Coneignaent
No member of the industry shall ship goods on consignment except
under circumstances to he defined by the Code Authority, where peculiar
circumstances, of the trace/industry require the practice.
Rule 9. Bribing Employees.
No member of the industry shall give, permit to be given, or
directly offer to give, .anything of value for the purpose of influencing
or rewarding the action of any employee, agent or representative of
another in relation to the "business of the employer of such employee,
tne principal of such agent or the represented party, without the
knowledge of such employer, principal or party.
Rule 10. Interference with Another ' s Contracts.
No member of the industry shall attempt to induce the "breach of
an existing contract between a competitor and his employee or customer
or source of supply; nor shall any such member interfere with or ob-
struct the performance of such contractual duties or services.
Rule 11. Coercion,
No member of the industry shall require that the purchace or
lease of any goods be a prerequisite to the purchase or lease of any
other goods.
Rule 12. Blacklisting.
Nn member of the trade /industry shall join or participate with
other members of the trade/ industry who with such member constitute
a substantial number of members of the trade/ industry or who together
control a substantial percent of the business in any specific product
or products of the trade/ industry, in any transaction known in law
as a black list, including any practice or device (such as a white
list), which accomplishes the purpose of a black list,
ARTICLE VIII.
Export Trade
'Section 1, No provision of this Code relating to prices or
terms of selling, shipping or marketing, shall apply to export trade
or sales or shipments for export trade.
Section 2. Subject to the approval of the Code Authority, the
exceptions established by this section shall apply also to sales or
shipments of materials actually used in manufacture for export trade. (*)
(*) A provision may be introduced into the administrative section
(Continued)
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ABTICLE IX.
iiodif i cat ion
(inclusion of Section 1
Obligatory)
Section 1. This code and all the provisions thereof are expressly
made subject to the right of the President, in accordance with the
provisions of subsection (b) of Section 10 of the Act, from time to
time to cancel or modify any order, approva1 , license, rule, regula-
tin issued under said Act.
Section 2. This Code, except as to "rovisions required by the
Act, may be modified on the basis of experience or changes in circum-
stances, such modifications to be based upon application to the Adminis-
trator and such notice and hearing as he shall specify, and to- become
effective on approval of the President.
ARTICLE X.
Monopolies, etc.
"do provision of this Code shall be so applied as to permit
monopolies or monopolistic practices, or to eliminate, oppress, or
discriminate against small enterprises.
A5TICLE XI.
price Increases.
Whereas the policy of the Act to increase real purchasing power
will be made more difficult of consummation if prices of goods and
services increase d.s rapidly as wages, it is recognized that price
increases except such as may be required to meet individual cost should
be delayed, but when, made such increases should, so far as possible,
be limited to actual additional increases in the seller's costs.
ARTICLE XII.
Effective Date.
This Code shall become effective on the second Monday after its
approval by the President (unless otherwise stated).
(*) (Continued) of the Code, providing that questions relating to
production for export and sale for export, not enumerated in
the above section, may be submitted by any member of the trade/
i industry to the consideration of the Code Authority; and that
its decision thereon shall be submitted to the Administrator
and shall not be effective unless and until approved by him.
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EXTUdTT 9
Sl7G-G."STLD OlTLi::. FOR COPES
Dr-ft of October ]. ,
19 3 3.
For temporary use - proposrls for improvement should be delivered
to the Legal Division of U.K. A. Thir. form merely embodies suggestions
for guidrnce in preliminary strges of enc.ervors to prepare co<es, and
none of the provisions contrined therein pre to be regrrded as hpving
received the r.p proval of the Mationp.l Recovery Admini stration or as
being applicable to my particular trr.de/industry.
oOo
CODE OF FAIR COiiFLTITION
FOR TILE TRADE/ IiLAJSTRY
ARTICLE I.
F -POSES
To effectuate the policies of Title I of the National Industrial
Recovery Act, the following provisions rre submitted p.s a Code of Frir
Competition for the Trr.de/lndustry, rnd upon approvrl by the
President shr.ll be the standard of fr.ir competition for such trrde/
industry -,nd shall oe wincing upon ever;y member thereof.
Al-TILE II.
DLFIIIITIOrS
The term Trade/industry r.s used herein incl\ides the
(state r,ccu.rp„tely what is included in the trade /industry, whether
manufacturing, building, trrnsporting, repairing, selling, rnd/or
distributing at whole- le or retril, etc.) of (product, mer-
chandise, or service, etc.), rnd such branches or sub-divisions thereof
rs rary from tine to time be included under the provisions of this Code.
Tlie term "employee" as used herein includ.es anyone engaged in the
trade/industry in/.afcrpr.city receiving compensation for his services,
irrespective cf the nature or method of a yment of such compensation.
The term "employer" as used herein includes anyone by whom any such
employee is compensated or employed.
The term "member of trade/industry" includes anyone en^r-G^ in the
trade/ industry as r.bove defined, either as an employer or on his own
behalf.
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The terms "President", "Act," -nd "Administrator" ps used herein
shrll mean, respectively the President of the United States, the Na-
tional Industrial Recovery Act, and the Administrr.tor of Title I of
said Act.
Population for the purpose of this Code shell he determined by
reference to the 1930 Pederrl Census. (Insert only when needed).
ARTICLE III.
HOURS
l
I-'o employees shrll l>e permittee, to work in excess of
Hours in any one week or hours in rny twenty- four (34) hour
p. riod.
(I70TE: Exceptions, if rny, should oe inserted here, together with
the hours applicable to such exceptions.)
2. The maximum hours fixed in the foregoing section shrll not
s iply to "itj employee on emergency mrintenrnce or emergency repair
work involving breakdowns or protection of life or property, but in
any such special case at least times his normal rate shrll be
o-md for hours worked in excess of the maximum hours herein provided.
3. Ho employee shrll be permitted to work more than _days in
rny dap period.
ARTICLE IV.
WAGES
1. llo' em loyee shall be paid at less than the ra.te of _____
6.0 liars per week of hours (or cents )er hour).
wr ;'e
(l~0TE: If there rxe to be/rates for employees rbove the minimum,
they may be set forth here).
2. This Article establishes .? minimum rr.te of pay, regardless of
whether an employee is compensated on - time-rate, piece work, or other
basis.
3. (The proponents of the Ode are expected to submit a definite
pirn for an equitable adjustment of those wages above the minimum.)
Female employee- performing substantially the same work as
male employees shrll receive the same rates of jry as male employees.
ARTICLE V.
QEhEEAL I.A3C- ThOVI^IOhS
1. ho person under yea.rs of age shrll be employed in the
trade/industry, nor anyone under years of age at operations or
occupations la.zrrdous in na.ture or detrimental to health. The Code
Authority shall submit to the Administrator before (arte) a list of
such occupations. In - ny State an employer shrll be deemed to have
9810
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cornpliec". with this provision if he shall have on file a certificate or
permit duly issued oy the authority in such Strte empowered to issue
employment or r..;e certificates or permits, showing that the employee is
of the required age.
2. Lm plo^^es shrll have the right to organize and bargain col-
lectively throxigh representatives of their own choosin ;, and shnll be
free from the interference, restraint, or coercion of employers of
labor, or their agents, in the designation of such representatives or in
self-or-r nidation or in other concerted activities for the purpose of
collective bcr\- ining or other mutual aid or protection.
3. II o employee and no one seeking employment shrll be required as
a condition of employment to join ?:.\y company union or to refrain from
joining, organizing, or assisting a labor organization of his own
choosing and
Employers shall comply with the maximum hours of labor, mini-
mum rates of pay, and. other conditions of employment, approved or
prescribed by the President.
5. T.".'ithin each State this Code shrll not supersede any laws of
such State imposing more stringent requirements on employer regulating
the age of employees, wages, hours of work, or Health, fire or general
working conditions than under this Code.
6. Employers shrll not reclassify employees or duties of occupa-
tions performed by employees so as to defeat the purposes of the Act.
7. Each employer shall post in conspicuous places full copies of
this Code.
AuTICLB VI
AJJMmSTf-ATIOIT
To further effectuate the policies of the Act, a Code Authority is
hereby constituted to cooperate with the Administrator in the adminis-
tration of this Code.
1. Organization and constitution of Code Authority.
(a) The Code Authority shall consist of individuals, or
such otae:_ number as may be ap rovec. from time to time by the Adninis-
trator, to be selected as " ereinafter set forth. The Administrator, in
his discretion, may appoint not more than; adc.itional members (with
or without vote) to represent the Adaini strator or such groups or
interests as may be agreed upon (with or without expenses) to the
Trade/l ndus try.
(b) (Here may oe set up the manner in which such Code
Authority is to be selected, and from which rroups. )
9810
-172-
( c) Sad, trade or industrial rs"ocirtion c.irectly or indirectly
participating in the selection or activities of the Code Authority shall:
(l) Impose no inequitable restrictions on membership, :nd (2) submit to
the Administrator true copies of its articles of association, by-laws,
regulations, rnd any amendments when made thereto, together with such
other information as to membership, organization, rnd activities as the
Administrator nay deem necessrry to effectuate the purposes of the Act.
(d) In order that the CotJ.e Authority shall at nil times be truly
representative of the trade/ industry rnd in other respects comply with
the provisions of the Act, the Administrator may provide stich hearings
as he may c.e^m ' irojjer; and thereafter if he shrll iind. that the Cod.e
Authority is not truly represent' oive or o.oes not in other respects com-
ply with the provision'.: of the Act, may require an appropriate modifica-
tion in the net" cd of selection of the Coi e Authority.
( e) (here may be set forth any other provisions e.ealing with the
organisation ■ iu constitution of the Code Authority or related, a encies,
such as joint conference boards to confer with labor, etc., which the
proponents desire to incorporate.)
2. The Code Authority shall lave the following duties rnd powers
to the extent lermitted ~oy die Act, subject to the right of the Auninis-
tr-tor on review to cisrpprove or modify any rction taken ay the Code
Authority.
(a) (Here may oe. inserted provisions for the administration of the
Code and the maintenance of the Coc.e Authority an. its activities, in-
ducing the obtaining u-on employers of reports based on periods of one,
two or four weohs or multiples thereof in respect to business, wages,
hours of labor, etc., for the Ac'ministr-tor. )
(b) Members of the trad.e/inc,ustry shall be entitled, to participate
in and share the benefits of the activities of the Code Authority and to
pjrticipate in the selection of the members tnereof by assenting to and
complying with the reapiirements of this Code and sustaining their
reasonable share of the expenses of its administfrtion. The reasonable
share of the ercsenses of administration shall be determined by the
Coue Authority, subject to review by the Administrator , on the basis of
volume of business ane./or such other factors as may be deemed equitable
to be tahen into consie.erption.
3. In addition to the information required to oe submitted to the
Coc.e Authority, tnere shall be furnished to government agencie- svich
statistical information as the Administrator may deem necessary for the
purposes recited, in Section 3 (a) of the Act.
AHTICLL VII,
THAIS PHACTICLS
s The followin : ractices constitute unfair methoc s of competition
for members of the trrde/ industry enC are prohibited:
9810
-173-
1. False Marking or Branding The false marking or branding of
any product of the trade/industry which has the tendency to mislead or
deceive customers or prospective customers, whether as to the grade, qual-
ity, quantity, substance, character, nature, origin, size, finish or pre-
paration of any product of the trade/industry, or otherwise.
2. Misrepresentation or False or Misleading Advertising:
The making or causing or knowingly permitting to "be made or pub-
lished any false, materially inaccurate or deceptive statement by way of
advertisement or otherwise, whether concerning the grade, quality, quan-
tity, substance, character, nature, origin, size, finish, or preparation
of any product of the trade/industry, or the credit terms, values, poli-
cies, or services of any member of the trade/industry, or otherwise, hav-
ing the tendency or capacity to mislead or deceive customers or prospec-
tive customers.
3. Commercial Bribery: Directly or indirectly to give or permit to
be given, or offer to give, money or anything of value to agents, employ-
ees or representatives of customers or prospective customers, or to agents,
employees or representatives of competitors' customers or prospective
customers, without the knowledge of their employers or principals, as an
inducement to influence their employers or principals to purchase or con-
tract to purchase from the makers of such gift or offer, or to influence
such employers or principals to refrain from dealing or contracting to
deal with competitors.
4. Interference with contractual relations: Maliciously inducing
or attempting to induce the breach of an existing oral or written contract
between a competitor and his customer or source of supply, or interfering
with or obstructing the performance of any such contractual duties or ser-
vices.
5. Secret Rebates: The secret payment or allowance of rebates,
refunds, commissions , credits, or unearned discounts, whether in the form
of money or otherwise, or the secret extension to certain purchasers of
special services or privileges not extended to all purchasers on like
terms and conditions.
6. Giving of Frizes, Premiums or Gifts: The offering or giving
of prizes, premiums, or gifts in connection with the sale of products, or
as an inducement thereto, by any scheme which involves lottery, misrepre-
sentation or fraud.
7. Defamation: The defamation of competitors by falsely imputing
to them dishonorable conduct, inability to perform contracts, questionable
credit standing, or by other false representations or "by the false dis-
paragement of the grade or quality of their goods.
8. Threats of Litigation: The publishing or circulating of threats
or suits for infringement of patents or trade marks or of any other legal
proceedings not in good faith, with the tendency or effect of harassing
competitors or intimidating their customers.
9810
-174-
9. Is-iion," %'c of Competitors: Securing confidential information
concerning the uv. iness of r competitor by r frlse or misleading state-
ment or representation, by a false impersonation of one in authority "by
bribery or by any other i-nfair method.
10. Other Unfair Prrctices; ITothing in this Code shall limit the
effect of ray adjudication oy the Courts, or holding by the Federal Trade
Commission on complaint, finding, rnd or> er, that any practices or method
is unfrir, providing that such re. judication or holding is not inconsis-
tent with any provision of the Act or of this Code.
(iTOTL: Members of the trade/ industry may adopt any of the
foregoing which are deemed applicable, ana may rlso
set forth such other trade >ractices, safety and
health provisions, and provisions reiatin to stand-
ards, which it is desired to incorporate in the Code.
Upon the a ;proval oi the Code, re itional trade
practice provisions may be incorporated, in accordance
with the provisions of Article VIII, Section 2).
A..TICLE VIII.
LDJJIFI'CATIOi:
1. This Code and all the provisions thereof are expressly made
subject to the right of the President, in accordance with the provisions
of subsection ( b) of Section 10 of the National Industrial Recovery Act,
from time to time to cancel or modify m-j order, approval, license, rule
or regulation issued voider Title I of said Act and specifically, but
without limitation, to the right of the President to cancel or modify
his approval of this Code or any conditions imposed by him upon his
approval thereof.
2. This code, except as to jrovisions required by the Act, may be
modified on the basis of experience or changes in circumstances, such
modification to be based upon application- to the Administrator ana such
notice of hearing as he shall specify, rnd to become effective on
approval of the President.
(if desired, it may be provided that upon the recommendation
of the Code Authority provisions covering specifically des-
cribed matters may be modified, eliminated or supplemented
by the Administrator, after such notice and hearing as he
shal 1 sp ec i f y) .
ARTICLF IX
MONOPOLIES.' FTC.
No provision of this Coc'e shall be so applied rs to peimit monopo-
lies or mono olir.tic prrctices, or to eliminate, oppress or discriminate
against small enterprises.
9810
-175-
ARTICLjS X.
FKlCx, IXCICASXS
VShereas tlie policv of the Act to increrse rerl purchasin ; power
will be made possible of consummation if prices of goods and services
increase as rapidly as wages, it is recognized that price increases
should be delcyed and that, when made, the name should, so far as
reasonably possible, be limited to actual increases in the seller's
costs.
ARTICLE XI.
LFFJ.CTIF-, BATS
This Code shall become effective of the jiay after its
approval by the President.
9810
-175-
CONFIDENTIAL
EXHIBIT 10
* SUGGESTED OUTLINE FOR CODES *
* *
* Including Some Suggested *
* General Provisions *
5(j * ;fc Up * sjc * l£ Jfi ;■: % >l: 5^: :;: ^; :'■ 'Jf % *;. sjc % :;: ;|; ^ : * * : . a^ :fc
Foreword to the attached 12
page "Liodel Cede" (a summary
of which is given on the fol-
lowing page) .
Suggested "model" provisions
for Code Authority By-laws
will "be contained in a sepa-
rate mimeograhi.
REVISED *
Draft of
October 25th
1933
To: BLACIC'JELL SHITE, Legal Division, N.R.A.
From: CODE STANDARDIZATION GROUP.
The "model code" OUTLINE issued by the Legal Division on October
1st, prepared by yourself, L.1.1.C Smith, and ethers of the Division,
stated that it was for temporary u^,e and ashed for "proposals for
improvement. "
The OUTLIKE was the result of an insistent public request,
and proved popular. Over 1,000 copies were called for.
Business groups seem to heartily desire the time-saving
effect of a basic standard framework or outline; on this
framework each industry can effectively hang the Code
provisions which it desires for its individual needs.
The attached 12 pages contain the majority-opinion suggestions of
a group of over twenty persons (listed on following page) who have met
daily since October 12th on this matter. Practically every session
has been attended by one or more staff members of the:
Executive Office
Legal Division
Research £ Planning
Consumers Advisory Board
Industrial » "
Labor " "
U. S. Dept. of Commerce
Federal Trade Commission
etc.
About 200 Codes of Pair Competition have been approved by the
President or await his approval (these include all the largest in-
dustries), but many times this number are here in preliminary form
or are in process of being prepared in all parts of the United States
3810
-*177-
'oy smaller industrial groups. Seldom -.re two alike as to outline
form. limy are exceedingly voluminous.
Yet these groups wish to receive the benefits of the National
Industrial Recovery Act as soon as possible. Heasonabl e standardi-
zation of the form of Codes should vastly facilitate their clear-
ance through the U.S.A. Divisions, improve understanding of each
Code' s objectives, assist in desired allied-industries' Code Auth-
ority relationships, etc.
This tentative October 25th GUTLIEE now submitted to you- for
legal refinements end general consideration, consists of some 3,000
words (as compared with about 2,000 in the October 1st draft).
The present one v;a,s somewhat increased in length so as to include
t .e ..lost desirable of the suggestions submitted by the public and
the N.E.A. staff in response to your request for "proposals for im-
provement" .
In size, the present 0UTLIE3 can be summarized thus:
Article I
50
. 180
. 130
440
. 400
. 560
. 470
. 1.30
20
50
10
wo rd s
II
ii
III
IV
V
General Labor Provisior
Code Authority Organize
" " Powers i
t
VI
VIT
Lon
Duties. . .
VIII
IX
X
XI
Effective Date on each
0,020 "
The informal CODS STAPDAPJDIZATICN C-ECU? which has worked on this
present draft includes the following individuals, a number of whom.
have attended all of the daily sessions:
(Those indented attended only the last meeting; Oct. 24th)
ALDExlSOU Department of Commerce
BAHKIK Labor Advisory Board, 3JRA
COhPTGN Industrial Advisory Board
CGLB3 Press Division
•COPELAMD U. S. Central Statistical Board 7003 2650
COHCCPAi: Agr. Adj. Ad.;. (Atty. Frank | s office)
9310
...oom
Tele'xione
3076
2384 ;
3311
362
4821
2128
4514
342
•178-
COVER
CULBERTSGN
CREDITOR
EDWARDS
ENGLE
GATES
GEORGE
BLASGOW
guernsey
::aaks
hal stead
EALiMOND
heyeiger
IIEYDON
EORTON
HUNT
JEFFREY
JUDKINS
JUNKIN
JUDLUM
I/IAS SEL
MEYER
MCFADDEN
RICE
SHANNON
SHIELDS
LUC SMITH
STONE
THOMPSON
TOMPKINS
W WARD
WILMGTTE
WORTHY
U. S. Central Stat. Bd.
Industrial Advisory Board
Executive Office
Consumers' Advisory Board
Department of Commerce
Labor Advisory Board
Department of Commerce (and Sec,
Filene Com, on Trade Practices)
Deputy Adm . , NRA
Trade Assns. (Retail-Wholesale)
Trade Assns. (Manufacturing)
Office of Dep. Adm. King
Trade Assn. Division
Industrial Advisory Board
Better Business Bureaus
Federal Trade Commission
Consumers' Adv. Ed. (From Fed.
Trade Commission)
Executive Office, 1IRA
Department of Commerce
Department of Co.rm.erce
Office of Div. Adm. Whiteside
Consumers' Advisory Board
Research £ Planning Division
Trade Assns. (Producers-Iif rs. ) .
U. S. Census Bureau
Legal Division
Office of Div. Adm. Muir
Legal Division
Research C: Planning Division
U. S. Central Stat. Bd.
Industrial Advisory Board
Office of Div. Adm. Simpson
Labor Advisory 3oard
Office of Dep. Adm. Howard
Room
Telephone
7028
2650
4321
2688
4840
645
4868
619
3860
2170
3315
617
3076
2383
4064
2324
3087
2413
3087
2418
4019
2212
3039
2375
4821
2128
3017
329
Nation
al 7720
4869
2344
4840
2304
3087
2418
3843
2356
4830
363
4869
2344
3412
2164
3087
2413
5804
2601
4055
687
4033
2242
4041
2341
4041
2341
7028
2650
4821
2128
4336
317
3315
617
4320
2641
YOUNG
Office of General Hammond 3059 2575
Dr. E. Christopher Meyer is acting as
chairman of the group. Room 3412, Tel. 21 64.
9810
Mr. C. Judkins is acting as Secretary of
the group. Room 3087, telephone 2418.
October 25, 1933
-179-
ARTICLI
Section
A TWO -PAGE SUMMARY
of the
12 -oage "OUTLINE" .
"PURPOSES"
II
III
"DEFII ITIOII
"hours"
IV.
".vagi
a,
5.
1.
o
<J ■
r?
O.
4.
5.
6.
7.
8.
9.
."SEHEHAI LABOR PI
1.
2.
3.
4.
5.
6.
(The provisions of the submitted Code,
when approved by the President of the
United States, are to be binding on
every member of the individual indus-
try cr trade. )
1. (Definitions of the industry, member,
employee, etc. )
Maximum hours.
" " for clerical and office employees
Exceptions (travelling salesmen, etc.)
Standard week,
Employment by several employees.
Minimum wage,
" " for clerical and office employees.
Piecework compensation. !' ,
Rates by occupations.
Evasion through re- employment.
Wages above minimum
Cver time.
Pemale employees.
Handicapped person s .
IOVI SICKS". .
Child labor.
a. Collective bargaining,
b. Company unions and other labor organizations.
c. Employers shall comply with hours, etc. rules.
Reclassification of employees.
Standards for health and safety.
State laws with more stringent requirements.
Posting of the Code when approved.
VI "CODE AUTHORITY". Organization and Powers & Duties.
OBGANIZATICH: ". .
1. Its function.
2. Members on tlie C. A.
3. Participating Trade Assns. , shall have no in-
equitable restrictions on membership.
9 810
-180-
P.VTERS (1 DUTIES. 4. Maintenance of a "truly representative"
ciiaracter.
5. The activities of the C.A.: participating
in them - - assenting to - - sharing
its ex; ?n s e s .
f>. Eon-liability of G. A. members for official
acts.
?. Following powers d duties, subject to re-
V J ew :
a. Adopt by-laws. . .for Code administration.
b. Statistical reports from members.
c. Handle Cede violations.
d. Utilize Trade Assn. .' other agencies
facilities.
e. Coordinate this Code with related indus-
tries.
f. Create Joint Industrial Relations Board.
g. ..embership fees — "who accent the "bene-
or otherwise assent" —
h. URA Code Insignia solely to those em-
ployers who —
i. Establish an agency to develop Pair Trade
Practices & Industrial Planning.
j . Consider amendments to the Code.
GEIIERAL ADniHISTPATIVE PROVISION
0. Statistical data for Government agencies.
9. Method of appealing from Code Authority' s
actions.
VII . . ."ThADE PRACTICE RULES"
1. Inaccurate Advertising.
2. "Bait" Advertising.
•3. Palse Billing.
4. Inaccurate Labelling.
5. References to Competitors.
6. Selling Below Cost.
7. Threats cf Law Suits.
0. Secret Rebates.
9. Selling on Consignment. • . ,
10. Bribing Employees.
11. Interference with Another's Contracts.
1?. Repudiating One' s Own Contract.
IG. Coercion.
vlil.."l.:ODIPICATI( ,:
IX "l/iCIIOPOLIES" ,
1. Right of the President to modify. 12
2. Procedure of me'mbers to modify.
12.
rressioc - s ,1 enterprises,
9810
X.
."P2ICZ LITCBSASES"
-181-
Tl'.e -policy of tlie Act is "to increr.se
real purchasing ■oower" — increased prices,
therefore, sh:uld be limited to actual in-
creases in seller' s costs.
XI "EFFECTIVE DATE".
1. On tiie 2nd Monday after its approval by
the President of the United States.
13.
13,
Our suggested 3,000 word "Model
Code" OUTLIKE (which these two
pages summarize) comprises 11
Articles, including 6,3 Sections.
Yet very few of these Sections
are mandatory and the total
number of Sections in many codes
far exceeds the above total.
9810
(Y-? 'T'T'DF'H'FT ,VT s******************************* REVISED
* SUGGESTED OUTLINE FOR CODES *
* * Draft of
* Including Some Suggested * October 25th
* General previsions * 1933
The suggestions in this outline are intended to assist trade and
industry in the preparation of codes.
Except as to those indicated provisions which the NATIONAL IN-
DUSTRIAL RECOVERY ACT requires in all codes, none of the suggestions in
this draft are mandatory.
It is "believed, however, that the preparation of codes, and their
approval "by the president, will he greatly expedited if those who pre-
pare codes resort as far as possible to the uniform wording suggested
in this outline.
Circulation of this present draft is limited to N. R. A.
Suggestions for improvements are requested.
ARTICLE I.
purposes
To effect the policies of Title I of the National Industrial
Recovery Act, the following provisions are submitted as a Code of Fair
Competition for the Trade/ Industry, and upon approval by
the President shall be the standard of fair competition for such
trade/ industry and shall be binding upon every member thereof.
ARTICLE II.
Definitions
The term Trade/industry as used herein includes the
(state accurately what is included in the trade/
industry, whether manufacturing, building, transporting, repairing,
selling and/or distributing at wholesale or retail, etc.) of
(products, merchandise, or service, etc.) and such related branches or
subdivisions thereof as may from time to time be included under the
provisions of this Code by the president after such notice and hearing
as he may prescribe.
The term "member of the trade/industry1' includes any individual,
partnership, association, corporation, or other person engaged in the
trade/ industry, either as an employer or on iiis or its own behalf.
The term "employer" as used herein means any employer engaged in
the trade/industry.
9810
-1! . -
The term " enrol oyee" as used herein includes any and all -nersons
engaged in the trade/ industry, however compensated, except a member of
t he t tp- '. e / i ndus t ry .
The terms "Act", and "Administrator" as used herein shall mean
respectively Title I of the National Industrial Recovery Act, and the
Administrator for Industrial Recovery.
Population for the purposes of this Code shall he determined "by
reference to the latest Federal Census. (insert only when needed.)
ARTICLE III,
III,
Hours
v **■■... s-
MAXIMUM HOURS*
Section 1. No employee shall he permitted to
work in excess of (35) hours in any one
week or (8) hours in any twenty-four (24)
hour period, except as herein otherwise provided.
A normal work day shall not exceed (7) hours.
* (Maximum hours for special classes of
employees, if any, should he inserted
under the appropriate paragraph, to-
gether with the hours applicable.)
Note:
The figures
in brackets
are not man-
datory, but a
are set forth
for purposes
of illustra-
tion.
Each industry
mav make its
own proposals.
HOURS FOR CLERICAL AND OFFICE EMPLOYEES*
Section 2. No person employed in clerical or office work, shall
be permitted to wor1-- in excess of (40) hours in any one week
or (9) hoars in any twenty-four hour period. A normal work
day shall not exceed (3) hours.
EXCEPTIONS AS TO HOURS
Section 3. The provisions of this Article shall not apply to
travelling salesmen, or to employees engaged in emergency maintenance
or emergency repair work, or to persons employed in a managerial or
executive capacity who earn not less than (£35.00) per week.
STANDARD WEEK
Section 4. ' No employee shall be permitted to work more than
(5) days in an:/ (7) &a& period.
Ej :?LOYIviSNT BY SEVERAL EMPLOYERS
Section 5. No employer shall knowingly Permit any employee to
work for any time which when totaled with that already performed
with another employer, or employers, in this trade/ industry exceeds
the maximum permitted herein.
* See note at center of page on Maximum Hours
"18 4-*
ARTICLE IV.
Wages
*****
IV.
MINIMUM WaGE
Section 1. No employee shall be paid less than at
the rate of ($14.00) per week of (35)
hours or (40) cents per hour, except as
herein otherwise provided.
MINIMUM WAGE FOP. CLERICAL AND OFFICE EMPLOYEES
Section 2. No person enroloved in clerical or
office work shall be paid less than ($14.00)
per week.
PIECEWORK COMPENSATION - MINIMUM WAGES
Section 3. This Article establishes a .minimum
rate of pay which shall apply, irrespective of whether '
an employee is actually compensated on a time-rate,
piecework, or other ba.sis.
MINIMUM WAGE RATES BY OCCUPATION
:-';':' ' ' • :'''. ■'{>■
.... , -I
Note.:
The figures
in brackets
are not man-
datory, '"B lit
are set forth
for purposes
of illustra-
tion.
Each industry
may make its
o^n proposals.
Section 4. Within
_days after the approval of this Code,
the Code Authority shall determine the occupations in this Industry and
present for approval to the Administrator after notice and hearing a
schedule of minimum wage rates for occupations by localities.
EVASION THROUGH REEMPLOYMENT
Section 5. No employee now employed a.t a rate in excess of the
minimum shall be discharged and re-employed at a lower rate for the
purpose of evading the provisions of this Code.
WAGES ABOVE MINIMUM
Sec
the four
percent
employee
(50) per
than
in exces
adjusted
class of
whether
tion 6. No employee whose normal full-time weekly hours for
weeks ending (date) are reduced by less than (30)
shall have his or her full-time weekly earnings reduced. Any
whose said full-time weekly hours are reduced by
cent shall not have his or her said earnings reduced by more
(25) percent. All other employees whose hours are reduced
s of the said (20) percent shall have their earnings
proportionately. The principle of this section shall apply by
worker to all other employees whose hours have been reduced,
compensated on a time-rate, piece-work, or other basis.
OVERTIME
Section 7. All employees who work more than the normal number
of hours per day in any twenty-four hours, or more than the normal
number of hours per week in any seven days, provided in this Code for
9810
-185-
the class of ror'- performed by such employees, shall he Note:
paid not less than (1-1/2) times their normal The figures in
rate of pay for said excess. Such overtime shall not brackets are
exceed (6) hours in any one wee1-:, except in not mandatory,
cases of emergency maintenance or emergency repair but are set
work involving breakdowns or protection of life or prop- forth for pur-
erty, provided that all such cases of emergency work "ooses of
shall be reported to the Code Authority. illustration.
Each industry
may make its
o^n proposals.
FEMALE EMPLOYEES
Section 8. Female employees -performing substantially the same
work as male employees shall receive the same rate of pay as male employees.
HANDICAPPED PERSONS
Section 9. A person whose earning capa.city is limited because of
age or physical or mental handicap may be employed on light work at a wage
below the minimum established by this Code if the employer obtains from
the State Authority designated by the United States Department of Labor
a certificate authorizing his employment at such wages and for such hours
as shall be stated in the certificate. Each employer shall file with the
Code Authority a list of all such persons employed by him.
ARTICLE V. V.
General Labor Provisions
St:***********************
CHILD LABOR PROVISION
Section 1. Ho person under sixteen (16) years of age shall be em-
ployed in the trade/industry. No -person under eighteen (18) years of
age shall be enroloyed at operations or occupations- which are hazardous
in nature or dangerous to health. The Code Authority shall submit to the
Administrator before (date) a list of such operations or occupa-
tions. In any State an employer shall be deemed to have comolied with
this provision as to age if he shall have on file a. certificate or
permit dulv issued by the Authority in such State empowered to issue
employment or age certificates or permits showing that the employee is
of the required age.
PROVISIONS FROM THE ACT (INCLUSION OBLIGATORY)
Section 2. In compliance with Section 7 (a) of the Act,
it is provided:
(a) That employees shall have the right to organize and
bargain collectively, through representatives of their own
choosing, and shall be free from the interference, restraint,
or coercion of employers of labor, or their agents, in the
designation of such representatives or in self-organization
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or in '-other concerted activities for the purpose of collective
bargaining or other mutual aid or protection.
(b) That no employee and no one seeking employment shall
be required as a condition of employment to join any company
union or to refrain from joining, organizing, or assisting a
labor organization of his or?:i choosing, and
(c) That employers shall comply with the maximum hours
of labor, minimum rates of pay, and other conditions of employ-
ment approved or prescribed by the President.
RECLASSIFICATION OF EMPLOYEES
Section 3. Ho employer shall reclassify employees or duties of
occupations performed for the purpose of defeating the provisions of the
Act or of this Code.
STANDARDS FOE SAFETY AND HEALTH
Section 4. Every employer shall provide for the safety and health
of his employees at the place and during the hours of their employment.
Standards for safety and health shall be submitted by the Code Authority
to the Administrator within six (6) months after the effective date of
this Code.
STATE LAY/S
Section 5. Ho provisions in this Code shall supersede any State
or Federal law which impose_s more stringent requirements on employers as
to age of emplovees, wages, hours of work, or as to safety, health,
sanitary or general working conditions, or insurance, or fire protection,
than are imposed by this Code.
POSTING
Section 6. AH employers shall post complete copies of this Code
in conspicuous places accessible to employees.
' ARTICLE VI. VI ,
Organization, Fowers and Duties of the CODE AUTHORITY
ORGANIZATION
Section 1. A Code Authority is hereby constituted to cooperate
with the Administrator in the administration of this Code.
Section 2. The Code Authority shall consist of members
to be selected as hereinafter provided, and in addition thereto there
may be members without vote, to be appointed by the President,
to serve without expense to the trade/ industry for months from
the date of appointment.
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The trade/ industry members shall be selected as follows:
(Here should be stated the manner in which the
members of the Code Authority shall bo selected.
Provision should be made so that the Code Authority
will be trulv representative of the various majority,
minority, and other interests in the trade/ industry.
If, however, by reason of conditions peculiar to the
trade/ industry, selection by the trade/ industry is
impossible, it may be orovided that armointment shall
be by the President.)
Section 3. "Each trade or industrial association directly or indirect-
ly participating in the selection or activities of the Code Authority
shall (l) impose no inequitable restrictions on membership, and (2) submit
to the Administrator true copies of its articles of association, by-laws,
regulations, and any amendments when made thereto, together with such
other information as to membership, organization, and activities as the
administrator may deem necessary to effectuate the purposes of the Act.
Section 4. In order that the Code Authority shall at all times be
truly representative of the trade/industry and in other respects comply
with the provisions of the Act, the Administrator may provide such hear-
ings as he may deem proner; and thereafter if he shall find, that the Code
Authority is not truly representative or does not in other respects comply
with the provisions of the Act, may require an appropriate modification in
the method of selection of the Code authority, or any sub-Code Authority.
Section 5. Members of the trade/ industry shall be entitled to
participa.te in and. share the benefits of the activities of the Code Author-
ity and to -participate in the selection of the members thereof bv assenting
to and complying with the requirements of this Code and sustaining their
reasonable share of the expenses of its administration. Such reasonable
share of the expenses of administration shall be determined by the Code
Authority, subject to review by the Administrator, on the basis of volume
of business and/or such other factors a.s may be deemed equitable.
Section 6. ITothing contained in this Code shall constitute the
members of the Code Authority partners for any purpose. T'or shall any
member of the Code Authority be liable in any manner to anyone for any act
of any other member, officer, agent or employee of the Code Authority
exercising reasonable diligence in the conduct of his duties hereunder be
liable to anyone for any action or omission to act under the Code, except
for his o"Ti willful mis-feasance or non-feasance.
P0~?.S AID DUTIES
Section 7. The Code Authority shall have the following powers and
duties in addition to those elsewhere Drovided in this Code, subject to the
right of the Administrator, on review, to disapprove or modify any action
taken by the Code Authority.
(a) To adopt by-laws and rules and regulations for its pro-
cedure and for the administration and enforcement of the Code
in accordance with the powers herein granted, and to submit the
same to the Administrator for his approval together with true
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copies of any amendments or additions when made thereto, minutes
of meetings when held, and such other information as to its
activities as the Administrator may deem necessary to effect the
purposes of the Act.
(b) To obtain from members of the industry for use of the
Code Authority, for the Administrator in the administration and
enforcement of the Code, and for the information of the President,
reports based on -oeriods of one, two or four weels, or multiples
thereof, as soon as the necessary readjustment within the industry
can be made and to give assistance to members of the industry in
improving methods, or in prescribing a uniform system, of accounting
and reporting. All individual reports shall be kept confidential
as to members of the trade/ industry and only general summaries
thereof may be published.
(c) To receive complaints of violations of this Code, make
investigations thereof, provide hearings thereon and adjust such
complaints, and bring to the attention of the Administrator for
prosecution, recommendations, and information relative to unadjusted
violations; but in no event shall the Code Authority proceed to
prosecute without notice to and approval by the Administrator.
(d) To use such trade associations and other agencies as
it deems proper for the carrying out of any of its activities pro-
vided for herein and. to pay such trade associations and agencies
the cost thereof, provided that nothing herein shall relieve the
Code Authority of its duties or responsibilities under this Code and
that such trade associations and agencies shall at all times be
subject to and conroly with the provisions hereof.
(s) To coordinate the administration of this Code with
such other codes, if any, as may be rela.ted to the trade/ industry,
or any subdivision thereof, and to delegate to any other administra-
tive authority, with the approval of the Administrator, such
powers as will promote joint and harmonious action upon matters of
common interest.
(f) To create as an Agency of the Code Authority, a
JOINT INDUSTRIAL RELATIONS BOARD, consisting of an equal number
of representatives of employers and employees, and an impartial
Chairman elected by the members of the Board, to investigate all
matters in the Code relating to hours, wages and general labor pro-
visions and to report their findings and recommendations to the
Code Authority. The designated employees representatives shall be
truly representative of the employees of the industry and shall be
selected by such employees.
(g) To secure an equitable and proportionate payment of the
expenses of maintaining the Code Authority and its activities from
members of the industry.
(h) To cooperate with the Administrator in regulating the
use of the N.R.A. Code Insignia solely by those employers who have
assented to, and are complying with, this Code.
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(i) To establish or designate an agency on PLANNING AND
FAIR PRACTICE to rhich shall be added by the' Administrator a
representative instructed to safeguard the interests of the
consumer, which shall cooperate with the Code Authority in de-
veloping fair inter and intra, trade practices and industrial
planning, including the regular'ization of employment and
stabilization of employees for the industry. Any such recom-
mended practices being amendments to the Code must be approved
by the President. .
(j) To initiate, consider and make recommendations for the
modification or amendment of this Code. ,;
GENERAL ADMINISTRATIVE PROVISION
Section 8. In addition to the information required to be submitted
to the Code Authority as set forth, in this Article there shall be
furnished to government agencies • such, statistical information as the
Administrator may deem necessary for the purposes recited, in Section 3(a)
of the National Industrial Recovery Act.
Section 9. An- appeal from any action by the Code Authority affect-
ing the rights of any employer or employee in' the trade/ industry may be
taken to the Administrator.
■ . ■.-,; ' ARTICLE VII. .
Trade Practice Rules
(Still in Process of Revision) •■• ■
GENERAL DEFINITION.
For all purposes of the' Code the'
acts, described in this Article shall
constitute unfair practices. Any
member of the trade/ industry who
shall directly, or indirectly
through gny officer, employee,' agent
or representative, knowingly use,
employ, or permit to be employed,
any of such unfair practices shall
be guilty of a violation of tne Code.
(Rules concerning Trade Inaccuracies)
Rule 1. (Inaccurate Advertising. )
No member of the industry shall use advertising (whether printed,
radio, display or of any. other nature.) or other representation which
is inaccurate in any material particular or in any way misrepresent any
commodity, (including its use, trade-rmark, grade,' quality, quantity,
origin, size, substance, character, nature, finish, material content or
preparation) or credit terms, values, policies', services, or the nature
or form of the business conducted.
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R-ale 3. ("3ait" Advertising.)
No member of the industry shall use advertising or selling
methods or credit terms which have the capacity or tendency to de-
ceive or mislead the customer or prospective customer.
Rule 3. (False Billing. )
No member of the industry shall withhold from or insert in any
quotation or invoice any statement that makes it inaccurate in any
material particular.
Rule 4, (Inaccurate Labelling. )
No member of the industry shall brand or mark or pack any com-
modity in any manner which tends to deceive or mislead purchasers with
respect to the brand, grade, quality, quantity, origin, size, material
content or preparation of such commodity.
(Rules Concerning Attacking of Competitors)
Rule 5. (Inaccurate References to Competitors, etc. )
No member of the industry shall use advertising or other repre-
sentation which refers inaccurately in any material particular to any
competitors or their commodities, prices, values, credit terms, poli-
cies or services.
Rule 6. Selling Below Cost
(provisions may be inserted against selling below cost based
upon principles of costing formulated by the Code Authority and ap-
proved by the Administrator, Such provisions should be applicable to
the individual industry and should take into consideration the neces-
sity of selling below cost to meet competition, to dispose of distress
merchandise, etc.)
Rule 7. Threats of Law Suits.
No member of the industry shall publish or circularize unjusti-
fied or unwarranted threats of legal proceedings which tend to or
have the effect of harassing competitors or intimidating their cus-
tomers.
Rule 8. (Secret Rebates. )
No member of the industry shall secretly offer or make any pay-
ment or allowance of a rebate, refund, commission, credit, unearned
discount or excess allowance, whether in the form of money or other-
wise, for the purpose of influencing a sale, nor shall a member se-
cretly extend to any customer any special service or privilege not
extended to all customers of the same class.
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Rule 9. (Selling on Consignment. )
No member of the industry shall ship commodities on consignment,
except under contract or boar- fide orders.
(Hale Concerning Commercial Bribery)
Rule 10. (Bribing Fmplcyees. )
No member of the industry shall give, permit to be given, or
offer to give, anytning of velue for the purpose of influencing, or re-
garding the action of say employee, agent, or representative of another
in relation to the business of the employer of such employee or the
principal of such agent without the knowledge of such employer or prin-
cipal.
(tentative addition:
(tentative addition provided that nctaing herein shall prohibit
the free and general distribution of articles used solely for
advertising. ")
(Rules Concerning Breach of Contract)
Rule 11. (interference with Another's Contracts. )
No member of the industry shall attempt to induce the breach of
an existing contract between a competitor and his employee or customer
or source of supply; nor shall any such member interfere with or ob-
struct the performance of such contractual duties or services. Nothing
in this rule shall qualify Section 7 (a) of the National Industrial
Recovery Act or obstruct the free exercise of tne rights of collective
bargaining therein guaranteed.
Rule 12. (Repudiating One's Own Contracts. )
No member of tne industry shall repudiate a contract entered into
in good faith when the purpose of such repudiation is to create for
such member an unfair price advantage.
(Rule concerning Coercion)
Rule 13. (Coercion. )
No member of the industry shall require that the purchase or
lease of any commodity be a prerequisite to the purchase or lease of
any other commodity.
(NOTE: Members of the trade /industry may adopt any of the
foregoing which are deemed ap'oli cable.
They may also set forth such oth^r trade practices,
and provisions relating to stanu rds, v/hich it is
desired to incorporate in the Code. Upon the ap-
proval of the Code, additional trede practice pro-
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visions may "be incorporated in accordance with the
provisions of Article VIII, Section 2.)
ARTICLE VIII. VIII.
iic-iif ication
***********
1. This Code and all the provisions thereof are expressly made
subject to the right of the President, in accordance with the provisions
of subsection (t>) of Section 10 of the National Industrial Recovery Act,
from time to time to cancel or modify any order, approval, license, rule,
or regulation issued under Title I of said Act and specifically, but
without limitation, to the right of the President to cancel or modify his
approval of this Code or any conditions imposed by him upon his approval
thereof.
2. This Code, except as to provisions required by the Act, may be
modified on the basis of experience or changes in circumstances, such
modification to be based upon application to the Administrator and such
notice and hearing as he shall specify, and to become effective on ap-
proval of the President.
ARTICLE IX. IX.
Monopolies, Etc.
***************
No provision of this Code shall be so applied as to permit mo-
nopolies or monopolistic practices, or to eliminate, oppress, or dis-
criminate against small enterprises.
ARTICLE X.
Price Increases
***************
Whereas the policy of the Act to increase real purchasing power
will be made more difficult of consummation if prices of goods and
services increase as rapidly as wages, it is recognized that price in-
creases except such as may be required to meet individual cost should
be delayed. But when made such increases should, so far as possible,
be limited to actual additional increases in the seller's costs.
ARTICLE XI.
Effective Date ; .
This Code shall become effective on the second Monday after its
approval by the President,
Suggestions for improve-
ment of this confidential OUT-
LINE will be appreciated.
qq-jq Kindly communicate them
at once to the acting Chairman
-19 -
EXHIBIT 11
SUGGESTED OUTLINE
for
use, in code drafting
Draft of April 3, 1934
-oOo-
It is intended that the suggestions herein contained should be
used only to the extent that they are found suitable, and none of the
provisions herein are reauired in this -precise form except those
(clearly indicated) which are required by the National Industrial
Recovery Act.
This outline is intended nrimarily for internal use within NRA.
Revisions of particular -provisions may- be made1 from time to time and
anyone in -possession of a co-oy should kee-p the same up to date as
changes are circulated.
ARTICLE I
Purposes
To effect the -policies of Title I of the National Industrial
Recovery Act, this Cede is submitted as a Code of Fair Competition for
the Trade/industry, and uoon a-pnroval
its -provisions shall be the standards of fair competition f or such
Trade /Indus try and- be binding uoon every member thereof.
ARTICLE II
Definitions
(This article on definitions is one of the most
important in this Code. Each definition must b
worded in clear and specific terms. Concisely
state the exact class or classes :' ^-orise
included within the division rr divirlr 3 of th
trade /industry) .
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The term " Trade/industry" (or Trade/indus-
try") as used herein includes the (state accurate-
ly what is included in the trade-industry, whether manufacturing, "building,
transporting, repairing, selling and/or distributing at whole-sale or re-
tail, etc.) of (products, merchandise or service,
etc.,) and such related branches or subdivisions as may from time to time
be included under the provisions of this Code.
The term "member of the trade/industry" as used herein includes, ;but
without limitation, any individual, partnership, association, corpora-
tion or other form of enterprise engaged in the trade-industry, either
as an employer or on his or its own behalf.
The term "employee" as used herein includes any and all persons en-
gaged in the trade /industry, however conroensated, except a member of the
trade /industry.
The term "employer" as used herein includes anyone by whom such em-
ployee is compensated or employed.
The term "Association" as used herein shall mean the
Association.
The terms "President", "Act", and "Administrator" as used herein
mean respectively the President of the United States, Title I of the
National Industrial Recovery Act, and the Administrator for Industrial
Recovery.
Population for the purooses of this Code shall be determined by
reference to the latest Federal Census. (insert only when needed.)
ARTICLE III
Hours
MAXIMUM HOURS
Section 1. No employee shall be nermitted to work in excess of
, hours in any one week or i hours in any twenty-four (24)
hour period (beginning at midnight), except as herein otherwise -orovided.
A normal work day shall not exceed hours.
(Maximum hours for special classes of employees, if
any, should be inserted under the appropriate para-
graph, together with the hours applicable.)
HOURS FOR CLERICAL AND OFFICE EMPLOYEES
Section 2. No -oerson employed in clerical or office work shall be
permitted to work in excess of hours in any one week or
hours in any twenty-four (24) hour period. A normal work day shall not
exceed hours.
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EXCEPTIONS AS TO HOURS
Section 3. The previsions of this Article shall not apply to travel-
ing salesmen, cr to employees engaged in emergency maintenance or emer-
gency repair work, or to persons employed in a managerial or executive
capacity who earn regularly thirty-five dollars $35.00) per week or
more; provided, however, that enroloyees engaged in emergency maintenance
and emergency reoair work shall he -oaid at one and one-half (l?) times
their normal hourly rate for all hours worked in excess of hours
per day and ________ hours oer week.
STANDARD WEEK
Section 4. No employee shall he permitted to work more than
days in any day period.
EMPLOYMENT BY SEVERAL EMPLOYERS
Section 5. No employer shall knowingly permit any employee to work
for any time which, when added" to the time spent at work for another em-
ployer or employers in this trade /industry (or otherwise), exceeds the
maximum permitted herein.
ARTICLE IV
Wages
MINIMUM WAC-E5
Section 1. No employee shall he paid in any nay period less than at
the rate of cents per hour, except as otherwise herein provided.
(Minimum wage adjustments based on locality and/or
population, if appropriate, may be indicated here.)
OFFICE AND CLERICAL EMPLOYEES ■
Section 2. No clerical or office employee shall be paid in any pay
period less than at the rate of ■ ________ dollars ( ) per week.
PIECEWORK COMPENSATION - MINIMUM WAGES
Section 3. This Article estahlishes minimum rates of pay which
shall apply, irrespective of whether an employee is actually compensated
on a time rate, piece-work, or other hasis.
(provisions governing overtime payments should he in-
serted at this point; for example, for emergency main-
tenance and emergency repair, etc.)
)B10
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WAGES ABOVE MINIMUM
Section 4. No employer shall make any reduction in the full time
weekly earnings of any employee whose normal full time weekly hours are
reduced "by percent, or less, below those existing for the four weeks
ending . When the normal full time weekly
hours of an employee are reduced by more than said -percent, the full time
weekly wage of such employee shall not be reduced by more than one half
of the percentage of hour reduction above said percent. In no event shall
hourly rates of nay be reduced, irrespective of whether compensation is
actually paid on an hourly, weekly or other basis, nor shall any wages be
at less than the minimum rates herein provided.
Within days of the effective date hereof, (unless such ad-
justment has been made theretofore) each employer shall adjust the sched-
ules of wages of his employees in such an eauitable manner as will con-
form to the provisions hereinabove set forth, and still preserve wage
differentials reasonably proportionate to those in effect prior to the
effective date of this code,
F1MALE EMPLOYEES
Section 5. Female employees performing substantially the same work
as male employees shall receive the same rate of pay as male employees.
HAND I CAPPED PERSONS
Section 5. A person whose earning capacity is limited because of age
or physical or mental handicap may be employed on light work at a wage
below the minimum established by this Code if the employer obtains from
the State authority designated by the United States Department of Labor a
certificate authorizing his employment at such wages and for such hours as
shall be stated in the certificate. Each employer shall file monthly with
the Code Authority a list of all such persons employed by him, showing
the wages paid to, and the maximum hours of work for such employee.
ARTICLE V
General Labor and other provisions
CHILD LABOR
Section 1. No person under eighteen (18) years of age shall be em-
ployed in the Industry except as (list here specific occupations, such
as office boys, office girls, messengers, etc.) No person under sixteen
(16) years of age shall be employed in the Industry in any capacity. In
any State any employer shall be deemed to have complied with this provi-
sion as to age if he shall have on file a certificate or permit, duly
signed by the Authority in such State empowered' to issue employment or
age certificates or permits showing that the employee is of the required
age.
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PROVISIONS FROM THE ACT (inclusion obligatory)
Section 2. (a) Employees shall have the right to organize and bar-
gain collectively through representatives of their own shoosing, and shall
be free from the interference, restraint, or coercion of employers of
labor, or their agents, in the designation cf such representatives or in
self-organization or in other concerted activities for the purpose of
collective bargaining or other mutual aid or protection.
(b) No employee and no one seeking employment shall be required as
a condition of employment to join any company union or to refrain from
joining, organizing, or assisting a labor organization of his own choos-
ing, and
(c) Employers shall comply with the maximum hours of labor, minimum
rates of pay, and other conditions of employment approved or prescribed
by the President.
EVASION ithrough subterfuge
Section 3. No employer shall reclassify employees or duties of
occupations performed or engage in any other subterfuge as to defeat
the purposes or provisions cf the Act or of this .Code.
STANDARDS FOR SAFETY AND HEALTH
Section 4. Every employer shall provide for the safety and health
of employees during the hours and at the places cf their' employment.
Standards for safety a.nd health shall be submitted by the Code Authority
to the Administrator within six months after the effective date of the
code.
STATE LAWS ■
Section 5. No provision in this Code shall supersede any State or
Federal law which imposes en employers more stringent requirements as to
age of employees, wages, hours of work, or as to safety, health, sanitary
or general working conditions, or insurance, or fire protection, than are
imposed by this Code.
POSTING
Section 6. All employers shall post and keep posted copies of this
Cede in conspicuous places accessible to all employees. Every member of
the trade/industry shall comply with all rules and regulations relative
to the posting of provisions of Codes of Fair Competition which may from
time to time be Prescribed by the Administrator.
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ARTICLE VI
Organization, Powers and Duties
of the Code Authority
ORGANIZATION AND CONSTITUTION
Section 1. A Code Authority is hereby established consisting of
-persons to be' selected in the following manner:
(Here shall be stated the manner in which the members of
the Code Authority shall be selected and the terms for
vsrhich they shall serve. Provision should be made so that
the Code Authority will be truly representative of the
various majority, minority, and other interests in the
trade /industry. If, however, by reason of conditions
peculiat to the trade/ industry, selection by the trade/in-
dustry is impracticable, it may be provided thot appoint-
ment shall be by the Administrator.)
Section 2. In addition to membership as above provided, there may
be members, without vote, to be known as Administration mem-
bers, to be appointed by the Administrator to serve for such terms as he
may specify.
Section 3. Each trade or industrial association directly or in-
directly participating in the selection or activities of the Code Author-
ity shall (l) impose no inequitable restrictions on membership, and (2)
submit to the Administrator true copies of its articles of association,
by-laws, regulations, and any amendments when made thereto, together with
such other information as to membership, organization, and activities as
the Administrator may deem necessary to effectuate the purposes of the
Act.
Section 4. In order that the Cede Authority shall at all times be
truly representative of the trade/industry and in other respects comply
with the provisions of the Act, the Administrator may prescribe such
hea.rings as he may deem proper; and thereafter if he shall find that the
Code Authority is not truly representative or does not in other respects
comply with the previsions of the Act, may reauire an appropriate modi-
fication of the Code Authority.
Section 5. Nothing contained in this Code shall constitute the mem-
bers of the Code Authority partners for any purpose. Nor shall any
member of the Code Authority be liable in any manner to anyone for any
act.of any .athermember, officer, agent or employee of the Code Author-
ity. Nor shall any member of the Code Authority, exercising reasonable
diligence in the conduct of his duties hereunder, be liable to anyone for
any action or omission to a.ct under this Code, except for his own wilful
malfeasance or non-feasance.
Section 6. If the Administrator shall at any time determine that
any action of a Code Authority or any agency thereof may be unfair or
unjust or contrary to the public interest, the Administrator."may require
that such action be suspended to afford an opportunity for investigation
9810
of the merits of such action and further consideration "by such Code
Authority or agency nending final action which shall not he effective
unless tile Administrator approves or unless he shall fail to disapprove
after thirty (30) days' notice to him of intention to -oroceed withsucn
action in its original or modified form.
PC WERS AKD DUTIES
Section 7„ Subject to such rules and regulations as may he issued
by the Administrator, the Code Authority shall have the following powers
and duties, in addition to those authorized by other provisions of this
Code*
(a) To insure the execution of 'the -orovisions of this Code
and to nrovide for the compliance of the trade /industry with the
provisions of the Act.
(b) To adopt by-laws and rules and regulations for its
■orccedure.
(inclusion of second sentence obligatory)
(c) To obtain from members of the trade/ industry such
information and report's as are required for the administration
of the Code. In addition to information required to bo sub-
mitted to the Cede Authority, members of ' the trade/industry
subject to this Code shall furnish such statistical information
as the Administrator may deem necessary for the purposes re-
cited in Section 3(a) of the Act to such Federal and State
agencies as he may designate; provided that. nothing in this
Code shall relieve any member of the trade/industry of any
existing obligations to furnish reports to any G-overnment agency.
No individual report shall be disclosed to any other member of
the trade/industry or any other party except to such other Gov-
ernmental agencies as may be directed by the Administrator.
(d) To use such trade associations and other agencies as
it deems nroper for the carrying out of any of its activities
provided for herein, -provided that nothing herein shall relieve
the Code Authority of its duties or responsibilities under this
Code and that such trade associations and agencies shall at all
times be subject to and comply with the provisions hereof.
(e) To make recommendations to the Administrator for the coor-
dination of tne administration of this code and such other codes, if
any, as may be related to or affect members of the trade/industry.
(f) 1. It being found necessary in order to support the admin-
istration of this code and to maintain the standards of fair competi-
tion established hereunder and to effectuate the policy of the Act,
the Code Authority is authorised:
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(a) To incur such reasonable obligations as are necessary
and proper for the foregoing purposes, and to meet such
obligations out of funds which may be raised as herein-
after provided and which shall be held in trust for the
purposes of the Code;
(b) To submit to the Administrator for his approval, sub-
ject to such notice and opportunity to be heard as he
may deem necessa.ry (l) an itemized budget of its esti-
mated expenses for the foregoing purposes , a nd (2) an
eauitable basis upon which the funds necessary to sup-
port such budget shall be contributed by members of
the trade/ industry;
( c) After such budget and basis of contribution have been
approved by the Administrator, to determine and obtain
equitable contribution as above set forth by .all mem-
bers of the trade/industry, and to that end, if neces-
sary, to institute legal proceedings therefor in its
own name.
2. Each member of the trade/industry shall pay his or its
equitable contribution to the expenses of the maintenance of the Code
Authority, determined as hereinabove provided, and subject to rules
and regulations pertaining thereto issued by the Administrator. Only
members of the trade/industry complying with the code and contributing
to the expenses of its administration as hereinabove provided, (unless
duly exempted from making such contributions,) shall be entitled to
participate in the selection of members of the Code Authority or to
receive the benefits of any of its voluntary activities or to make use
of any emblem or insignia of the National Recovery Administration.
3. The Code Authority shall neither incur nor pay any obli-
gation substantially in excess of the amount thereof «s estimated in
its approved budget; and shall in no event exceed the total amount
contained in the approved budget except upon approval of the Admin-
istrator; and no subseouent budget shall contain any deficiency item
for expenditures in excess of prior budget estimates except those
which the Administrator shall have so approved.
(g) (This subsection has been eliminated.)
(e) To make recommendations to the Administrator for the
coordination of the administration of this Code with such other codes,
if any, as may be related to or affect members of the trade/industry.
(f) (l) It being found necessary to support the Adminis-
tration of this Code, in order to effectuate the policy "of the Act
and to maintain the standards of fair competition established hereunder,
the Code Authority is authorized:
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(a) To incur such reasonable obligations as are neces-
sary and proper for the foregoing -purposes and to
t ;■ Lch obligation."; out of funds which shall be
held in trust for the purposes of the Code and raised
as hereinafter provided;
) To submit to the Administrator for his approval,
subject to such notice and opportunity to be heard
as he may deem necessary:
1. An itemized budget of its estimated expanses for
the foregoing purposes, and
2. An enuitable basis upon which the funds neces-
sary to support such budget shall be contributed
by all members cf the Industry entitled to the
benefits accruing, from the maintenance of such
standards, and the administration thereof:
( c) After such budget and basis of contribution have
been approved by the Administrator, to determine and
collect eaui table contributions as above set forth,
and to that end, if necessary, to institute legal
proceedings therefor in its own name.
(2) Each member of the trade/industry shall be liable for
his or its eaui table contribution to the expenses of the maintenance of
the Code Authority as hereinabove provided. Only members of the trade/in-
dustry complying with the Cede and making such contribution shall be
entitled to participate in the selection of the members of the Code
Authority or to receive the benefits of its voluntary activities or to
make use of any IT. P.. A. insignia.
(g) To cooper?-te with the Administrator in regulating the
use of any N.R.A. insignia solely by those members of the trade-industry
who have assented to, and are complying with, this Code.
(h) To recoircnend to the Administrator any action or measures
deemed advisable, including further fair trade practice -provisions to
govern members of the trade/industry in their relations with each other
or with other trades/industries; measures for industrial planning,
and stabilization of employment; and including modifications of this
Code which shall become effective as part hereof upon approva,l by the
Administrator after such notice and hearing as he may specify.
( i) To appoint a Trade Practice Committee which shall
meet with the Trade Practice Committees appointed under such other
codes as may be related to the trade/industry for the purpose of
formulating fair trade practices to govern the relationships between
employers under this code and under such other cedes to the end that
such fair trade -practices may be proposed to the Administrator as
amendments to this code and such other codes.
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(j) To -orovide appropriate facilities for arbitration,
and subject to the approval of the Administrator, to prescribe rules
of procedure and rales to effect compliance with awards and determina-
tions.
ARTICLE VII
Trade Fra.ctice Rules
(Note: Sponsors of codes, in preparation of drafts for submission
to NRA, may select from the following such rules as are deemed applicable
to their particular trades or industries and may propose such other
rules as may be deemed desirable, to meet conditions peculiar to their
trade/industry. )
Rule 1. Inaccurate Advertising.
Ho member of the trade /industry shall -oublish advertising (whether
printed, radio, display or of any other nature) , which is misleading or
inaccurate in any material particular, nor shall any member in any way
misrepresent any goods (including but without limitation its use, trade-
mark, grade, quality, quantity, origin, size, substance, character, na-
ture, finish, material, content or preparation) or credit terms, values,
policies, services, or the nature or form of the business conducted.
Rule 2. False Billing.
No member of the trade/industry shall knowingly withhold from or
insert in any quotation or invoice any statement that makes it inaccurate
in any material particular.
Rule 3. Inaccurate Labelling.
No member of the trade /industry shall brand or mark or pack any goods
in any manner which is intended to or does deceive .'or mislead purchasers
with respect to the brand, grade, quality, quantity, origin, size, sub-
stance, character, nature, finish, ma.terial content or preparation of
such goods.
Rule 4. Defamation.
No member of the trade /industry shall defame a competitor by falsely
imputing to him dishonorable conduct, inability to perform contracts,
questionable credit standing, or by other false representation, or by
falsely disparaging the grade or quality of his goods.
Rule 5. Destructive Price Cutting.
(Possible protective provisions against destructive price cut-
ting will be separately circulated.)
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Rule 6. Threats of Law Suits.
No member of the trade/industry shall publish or circulate unjusti-
fied or unwarranted threats of legal proceedings which tend to or have
the effect of harrassing competitors or intimidating their customers.
Rule 7. Secret Rebates.
No member of the trade/industry shall secretly offer or make any
payment or allowance of a rebate, refund, commission credit, unearned
discount or excess allowance, . whether in the form of money or otherwise,
nor shall a member cf the trade/industry secretly- offer or extend to any
customer any special service or privilege not extended to all customers
of the same class, for the purpose of influencing a sale.
Rule 8. Bribing Emnloyees.
No member of the industry shall give, permit to be given, or offer
to give, anything of value for the purpose of influencing or rewarding
the action of any employee, agent, or representative of another in rela-
tion to the business of the employer of such employee, the principal of
such agent or the represented party, without the knowledge of such em-
ployer, principal or party. This -provision shall n^t be construed to
prohibit free and general distribution of articles commonly used for ad-
vertising except so far as such articles are actually used for commercial
bribery as hereinabove defined.
Rule 9. Inducing Breach of Existing Contracts.
No member of the industry shall wilfully induce or attempt to induce
the breach of existing contracts between competitors and their customers
by any false or deceptive means, or interfere with or obstruct the per-
formance of any such contractual duties or services by any such means,
with the purpose and effect of hampering, injuring or embarrassing com-
petitors in their business.
Rule 10. Coercion.
No member of the industry shall require that the purchase or lease
of any goods be a prerequisite to the purchase or lease of any other
goods.
Rule 11. Onen Price Provisions.
(Suggested open price provisions will be separately circulated.)
ARTICLE VIII
Ex-port Trade
Section 1. No provision of this Code relating to prices or terras
of selling, shi-nping or marketing, shall ap-oly to export trade or sales
or shipments for export trade. "Export Trade" shall be as defined in the
Export Trade Act adopted April 10, 1918.
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ARTICLE IX
Modification
(inclusion of Section 1 Obligatory)
Section 1. This Code and all the provisions thereof are expressly
made subject to the right of the President, in accordance with the -provi-
sions of subsection (b) of Section 10 of the Act, from time to time to
cancel or modify any order, approval, license, rule, or regulation issued
under Title I of said Act.
Section 2. Such of the provisions of this Code as are not required
to be included herein by the Act may, with the approval of the Adminis-
trator, be modified or eliminated in such manner as may be indicated by
the needs of the public, by changes in circumstances, or by experience.
All the provisions of this Code, unless so modified or eliminated, shall
remain in effect until June 16, 1935.
ARTICLE X
Monopolies, etc.
No provision of this Code shall be so ao-olied as to permit monopolies
or monopolistic practices, or to eliminate, oppress, or discriminate
against small enterprises.
ARTICLE XI
Price Increases
Whereas the policy of the Act to increase real purchasing power will
be made more difficult of consummation if prices of goods and services
increase as rapidly as wages, it is recognized that price increases except
such as may be required to meet individual cost should be delayed, and
when made such increases should, so far as possible, be limited to actual
additional increases in the seller's costs.
ARTICLE XII
Effective Date
This Code shall become effective on the second Monday after its
approval by the President, (unless otherwise stated.)
DESTRUCTIVE PRICE CUTTING
and
OPEN PRICES
Provisions on destructive nrice cutting and open prices are still
in a formative state. They will be separately circulsted for suggestions
and will be dealt with in the near future.
9810
INDUSTRIAL RELATIONS COMMITTEES
There shall be established an Industrial Relations Committee for
the trade/industry, which shall consist of an equal number of repre-
sentatives of employers and employees and an impartial chairman. The
Administrator shall appoint such impartial chairman upon the failure of
the committee to select one by agreement. If no truly representative
labor organization exists, the employee members of such board may be
nominated by the Labor Advisory Board of the N.R.A. and appointed by
the Administrator. The employer representatives shall be chosen by the
Code Authority. Such committee shall deal with complaints and disputes
relating to labor in accordance with rules and regulations issued by the
Administrator. The Industrial Relations Committee may establish such
divisional, regional, and local industrial adjustment agencies as it may
deem desirable, each of which shall be constituted in like manner as the
Industrial Relations Committee.
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EXHIBIT 1?
EXECUTIVE ORDER
In order to effectuate the -policy of title I of the National
Industrial Recovery Act, approved June 16, 1933, I, Franklin D. Roosevelt,
President of the United States, pursuant to the authority vested in
me by title I of said National Industrial Recovery Act, hereby prescribe
the following rules and regulations which shall have the effect of
modifying any inconsistent provisions of any order, approval, rule, or
regulation heretofore issued under title I of said act,
1. By reason of confusion and misapprehension which has arisen
regarding the meaning of certrin commercial oribery provisions included
in codes heretofore approved by me, I hereby interpret all provisions
to mean the following:
No member of the industry shall give, permit to be given, or
directly offer to give, anything oi value for the purpose of
imluencing or regarding the action of any employee, agent,
or represent? tive of another in relation to the business of
tne employer of such employee, the principal of such a^ent or
the represented party, without the knowledge of such em-blovr,
principal or party. Commercial oribery provisions shall not
be construed to prohibit free mo general distribution of
articles commonly used for advertising except so far as such
articles are actually used for commercial bribery as herein-
above defined.
?. I further order that if commercial bribery provisions are
hereafter included in codes they shall conform to the foregoing.
3. This order is intended to relate only to commercial bribery
provisions and is not intended to interfere '-'ith an industry, if it so
desires, dealing specifically \^ith the subject of premiums in any way
it may or shsll have proposed if approved by me.
FRANKLIN D. ROOSEVELT.
Approval recommended:
Hugh S. Johnson,
Administrator.
The White House,
November 27, 1933.
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EXEIBIT 13
EXECUTIVE ORDER
PROVIDING xOR THE SUB [ISSIOK 0I< STATISTICAL I! jO.ivLA.TION BY
PERSONS SUBJECT TO CODES OE FAIR COMPETITION
Pursuant to the authority vested in rae by title I of the
Fational Industrial Recovery Act, upon due consideration of the
lacts, and uuon the report and recommendation of the Administrator
for Industrial recovery.
I, Franklin D. Roosevelt, President of the United States, do
hereby order that everv code of fair competition, agree aent, and
license heretofore approved be, and hereby is, modified to provide
that, and everv code of fair competition, agreement, and license
hereafter approved be upon condition that, in addition to information
required to be submitted to any code authority, all or any of the
persons subject to such code, agreement, or license furnish such
statistical information as the administrator may deem necessary for
the purposes recited in section 3 (a) of said act to such Federal
and State agencies as the Administrator may designate; nor shall
anvthins- in anv code, agreement, or license relieve any person of
any existing obligation to furnish reports to G-overnment agencies.
FRANKLIN D. ROOSEVELT.
Approval recommended:
Hugh S. Johnson,
Administrator.
The Hvhite House,
December 7, 1933.
9610
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EXHIBIT 14
OFFICE MEMORANDUM NO. 228
June 7, 1934
OPEN PRICE FILING, COSTS, PRICE CUTTING AND ACCOUNTING PROVISIONS IN
CODES
The following is the r>olicy of NEA on the above matters:
(1) Open Price Filing: Prices, discounts, rebates, allowances
and terras and conditions of sale, shall oe filed with a confidential
disinterested agent of the Code Authority if any and if none, with
an agency to be designated by NRA. Immediately unon receint such
data shall be noticed to all such members of the Industry and their
customers as shall anclv therefor and. defray the cost thereof. No
higher price shall be filed within 46 hours. No member of the Industry
shall sell. or offer to sell except at filed terras and conditions; nor
shall he enter into any combination or conspiracy to fix price or
intimidate others either by himself or in any such combination or
conspiracy.
(Note: See Exhibit A for further guidance.)
(2) Costs and Price Cutting: (a) Any member of such code or of
any other code or the customers of either may at any time complain to
the Code Authority that any such filed price constitutes unfair com-
r:etit,ion as destructive price cutting, imperiling small enterprise or
tending toward monopoly or the impairment of code wpges and working
conditions. Such Code Authority shall within five days afford an
opportunity to. the member filing the price to answer such complaint
and shall within 14 davs make a ruling or adjustment thereon. If such
ruling is not concurred in by eithei party to tne complaint, all papers
shall be referred to the research and Planning Division of NRA "hich
shall render a report and recommendation thereon to the Administrator.
(b) In an emergency, declared uy the Administrator, after proper
showing of cause, and for such time as the Administrator may determine,
stated minimum prices may be approved by the Administrator.
(Note : See ExhiDit B for furtner guidance.)
(3) Accounting Provisions: Codes should contain clauses recom-
mending principles of cost finding appropriate to the Industry and
approved by the Administrator, but no such methods shall be obligatory
and none shall suggest uniform additions to total sales cost in the form
of percentages or differentials designed to bring aoout arbitrary uni-
formity in costs or prices.
(Note: See Exhibit C for further guidance.)
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(4) ,- djustmrnt of Codes: Pencirv cocles and codes hereafter sub-
mitted shall be adjusted to these policies. Divisional Administrators
shall seek through agreements with Code Autnorities of approved Codes
to amend them to conform with these colicies and, "herever resistance
is encountered, the subject shall be taken up with tht Administrator.
By Direction of the Administrator:
G. A. Lynch ,
Administrative Olficer.
EXHIBIT "A".
OPEI' Pr, ICE FILING
1. >TLA policv favors properly drawn open rrice provisions in
codes "'here desired by the industry. The attached draft Article
reflects approved policy and should, be substantially followed.
8. The objective is to achieve fair competition, based on knowledge
of competitive factors to the fullest extent possible without unduly
curtailing private initiative or destroying incentives to any individual
legitimately to extend his business.
3. .here indue tries believe that some waiting period is essential
in order to accomplish the objectives outlined, the matter "ill be
treated on its merits as in the case ol any proposed departure from
announced oolicy.
"ARTICLE _; OPEN PrJCE
"Section 1. Each member of the trade/industry shall file with a
confidential and disinterested agent of the code authority, or, if
none, then with such an agent designated by the Administrator, identi-
fied lists oi all oi his nrice.:, discounts, reoates, allowances, and all
other terms or conditions of sale, hereinafter in this article referred
to as 'price terms1, which lists shall completely and accurately .conform
to an represent the individual pricing practices of said member. Such
lists shall contain the price terms for; all such standard products of
the industry as are sold or offered for sale b/ said, member and for
such non-standard products oi said member as snail be designated .by the
code authority. Said price terms shall in the first instance be filed
9813
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within _ de'ys alter the date 01 approval of this provision.
Price terms and revised nrice terms shall become effective im lediately
upon receipt thereof by said agent.. Immediately upon receipt thereof,
said agent shall by telegraph or oth'ir equally p.vompt means notify
said memoer of \,hn time of such receipt. Such lists End revisions,
together with the effective time thereof j shall upon receipt be im-
mediately a.id sicultaneouelv distributed to ell members of the industry
and to all of their customers "ho have applied therefor and have offered
to defray the cost actually incurred by the code authority in the pre- f
paration t:j\C) distribution thereof and be available for inspection oy
any of their customers at the office of such agent. Said lists or, re-
visions or any part thereof shall not be made available to any person-/'
until released to all members of the industry and their customers, was
aforesaid; provided, that prices filed in the iirst instance sh/11 not
be released until the expiration 01 the aforesaid day petriod
after the approval of tnis code. r' is code authority shall maintain a
permanent file of all nrice terms filed as herein provided., and shall
not destroy any part of such records except ucon written consent of the
Administrator. Upon reauest trie code authority shall furnish to the
Administrator or any duly designated agent of the Administrator copies
of any such lists or revisions of price terms.
"Section ?. '.»hen any member of the trade/industry has filed any
revision, such member shall not file a higher nrice within fortv-eight
(48) hours.
o
"Section 3. T.To member of the trade/ industry shall sell or offer t
sell any products/ services oi the trade/ industry, for which price terms
have been filed pursuant to the provisions oi this article, except in
accordance with such nrice terms.
"Section 4. No member of the inaustrv shall enter into any agree-
ment, understanding, combination oi conspiracy to fix or maintain price
terms, nor cause or attempt to cause rn/ member of tne industry to
change his price terms by the use of intimidation, coercion, or any
other influence inconsistent with the maintenance of tne free p.nd open
market which it is the purpose of this article to create."
ii'XHIBIT »: "
GOSTb ACT '..IZiL ObTTIFG-
The attached draft Article reflects approved nolicy and should be
substantial!, followed and admin isterec in accordance with the following:
1. ./hen there is no emergency it is NBA nolicy to avoid price
fixing but also to prevent destructive price cutting in accordance with
Section 1 of the annexed Article.
2. The following conditions may be deemed to tecuire investigation
to determine whether an emergency exists: (a) impairment of employment
9810
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Qr wage scales; (b) particularly high mortality of enterprises,
especially small enterprises; or (c) panic in an industry or otner
Special conditions:' throught oy the Acministrator to reauire stabiliza-
tion by means of minimum price. When the Administrator believes that
the declaration of an emergency might oe advisaole, tne matter will be
referred to the Research and Planning Division, notice of such fact
being sent to the Advisory Council.
3. The Research and Planning Division shall examine ell available
evidence and analyze the -probable effects of various possible minimum
prices on tot.^1 national production, general employment andgeneral
recovery, production and consumption of tne product of the industry in
question, other -chases of national life, and the interests of the
industry in Question to the extent compatible. <"ith the foregoing and
shall render a written report of its findings and recommendations to
the Administrator and furnish copies 01 said report to the Advisorv
Council.
4. If on the Dasis of this report the Administrator determines that
an emergency should be declared, he will make such declaration and
establish the minimum price effective under the circumstances. The
declaration of an emergency will be accompanied by a statement of the
facts ucon which the declaration is based and an explanation of the
plan whicn is being applied.
5. Emergencies will be declared only for particular products and
for a state period, not longer than ninety days, subject to earlier
termination or toextension, upon decision of the Administrator.
6. Remedial provisions mil be put into effect subject to a plan
of supervision, which it shall oe the duty of the Research and Flanning
Division to devise, i"hich '-ill include the requirement of such financial,
operating, employment, ana other reports as shall be necessary to
indicate the effect of tne provision.
COSTS AND PrJCE CUTTING.
Article
Section 1. Tne standards of fair competition for the industry
with reference to pricing practices are declared to be as follows:
(a) Wilfullv destructive price cutting is an unfair metnod of
competition and is forbidden. Any member of the industry or of any
other industry or the customers of either may at any time comclain to
the Code Authority that any filed price constitutes unfair competi-
tion as destructive -crice cutting, imperiling small enterprise or
tending toward nonoroly or the impairment of code wages and working
conditions. The Code Authority shall within 5 cays afford an opportun-
ity to the member filing the nrice to answer such complaint and. shall
within 14 days make a ruling or adjustment thereon. If such ruling is
9810
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not concurred in by either party to the compfi^flBL all papers shall
be referred to the Research and Planning Divisl^OTsy: NRA "'hich shall
render r report and recommendation thereon to tue T^ftjnSfcd^rator.
(j) hen no declared emergency exists as to any givriw -naprinct,
there is to be no fixed minimum "basis for prices. It is intspled
that sound cost estimating methods should be used and that consider-
ation should he given to costs in the determination of pricing policies.
(c) 'hen an emergency exists as to any given product, sale
below the stated minimum -price of such product, in violation of
Section c hereof, is forbidden.
Section 2. Emergency Provisions:
(a) If the Administrator, after investi :?tion shall at any time
find both (1) that an emergency has arisen within the industry ad-
versely affecting small enterprises or wages or labor conditions, or
tending toward monopoly or other acute conditions which tend to
defeat the purposes of the Act; and (2) that the determination of the
stated minimum price for a specified product within the industry for
a limited period is necessary to .litigate the conditions constituting
such emergency and to effectuate the purposes of the Act, the Code
Authority mav cause an impartial agency to investigate costs and to
recommend to the Administrator a determination of tne stated minimum
price of the product effected by the emergency and thereupon the
Administrator may proceed to determine sikch stated minimum price.
(b) fthen the Administrator shall have determined such stated
minimum price for a specified product for a stated period, which price
shall be reasonably calculated to mitigate the conditions oi such
emergency and to effectuate the purposes of the National Industrial
Recovery Act, he shall publich such price. Thereafter, during such
stated period, no member of the industry shall sell such specified
products at a net realized price below said stated minimum price and
any such sale shall be deemed destructive price cutting. Prom time
to time, the Code Authority may recommend review or reconsideration
or the Administrator may cause any determinations hereunder to be
reviewed or reconside ed pnd appropriate action taken.
LXKI3IT "C".
COST FINDING- AND ACCOUNTING
NRA will encourage proper cost finding and accounting provisions
in codes. 'hen such provisions are incorporated they should substan-
tially conform to the fol'o^ing:
"Section . Cost Finding: The Code Authority shall cause
to be formulated methods of cost finding and accounting capable
of use by all members of the industry, and shall suumit such
methods to the Administrator for review. If approved by the
9610
Administrator, full' information concerning such methods shall be made.
available to all members 01 the industry. Thereafter, each
member of the ihlustry shall utilize such methods to the
extent found practicable. Nothing herein contained shall be
construed to' permit the Code Authority, any agent thereof,
or. any member of the industry to suggest uniform additions,
percentages or diif erentials or other uniform items of cost
which are designed to bring about arbitrary uniformity of
costs or prices. "
9810
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EXHIBIT 15'
EXECUTIVE ORDER
Prescribing Rules and Regulations for the Interpretation and
Application of Certain Labor Provisions of Codes of Fair Com-
petition as They May Affect Handicapped Workers
In Codes of Pair Competition which have heretofore been approved or
submitted for approval and in such Codes which may hereafter "be submitted
and approved, question has arisen or may arise as to whether the minimum
wage and maximum hour provisions preclude those handicapped by physical
or mental defect, age or other infirmity from their former opportunities
for obtaining employment.
Pursuant to the Authority vested in me by Title I of the National
Industrial Recovery Act, upon due consideration of the facts and upon the
report and recommendation of the Administrator:
I, Franklin D. Roosevelt, President of the United States, in order
to carry our the purposes of Title I of the National Industrial Recovery
Act, do hereby order that no provision of any Code of Fair Competition,
agreement, or license, which has heretofore been or may hereafter be
approved, prescribed or issued pursuant to said Title of said Act shall
be so construed or applied as to violate the following rules and regula-
tions which are hereby promulgated and prescribed, to-wit:
1. A person whose earning capacity is limited because of age,
physical or mental handicap, or other infirmity, may be employed on
light work at a wage below the minimum established by a Code, if the
employer obtains from the state authority, designated by the United
States Department of Labor, a certificate authorizing such person's
employment at such wages and for such hours as shall be stated in the
certificate. Such authoritj^ shall be guided by the instructions of
the United States Department of Labor in issuing certificates to such
persons. Each employer shall file monthly with the Code Authority
a list of all such persons employed by him, showing the wages paid
to, and the maximum hours of work for such employee.
2. Any approval order of a Code of Fair Competition, agreement
or license heretofore approved, prescribed or issued pursuant to
Title I of the national Industrial Recovery Act, if any necessity
er.ists therefor in order to make these regulations effective, is
hereby modified so as to permit and be conditional upon the full
applications and operation of these regulations.
These regulations shall become effective immediately and shall there-
upon be binding upon all industries and members thereof unless, and only
to such extent as, prior to that date good cause to the contrary shall be
shown to the Administrator for Industrial Recovery by any affected party
or parties with reference to any trade, industry, or subdivision thereof.
FliAIiKLIIT D ROOSEVELT
Approval Recommended:
Hugh S Johnson, Administrator
9810
The White House
Feb. 17th 1934
-215-
EXHI3II 16
CFEICE OEDER ITO, 71
■ — — r ' ■" ' — ' ■
March 14, 19o4.
STAlTpAPJS 0? HSALTH AID SAFETY.
In exercise of the President's power -under the National Industrial
Act to ->rescribe conditions of employment , the following provisions vd.ll
hereafter he included in every code which has not, at this date, been
formally submitted oy the industry:
"Every employer shall provide for the safety and health of
employees during the hours and at the places of their employment.
"Standards for safety and health shall he submitted by the
code authority to the Administrator within six months after the
effective date of the code."
Ihese provisions, 'including similar ones now embodied in most
codes, will be given execution in the following manner:
1. Each code authority will create a committee on safety and
health which will study the number and causes of accidents
-nd health hazards in the industry and report a compre-
hensive program,
2. In these --.rograms developed by the committees on safety and
health consideration will be given to the following:
(a) A statement of the average accident experience in
the industry; a comoarision of the experience of
employers most successful in red'acing accidents;
and a plan for uniform accident reporting in the
industry
(b) Preparation of a statement showing the possible
benefits to individual employers, individual em-
ployees, and the industry as a whole, through con-
tinuous organized safety efforts.
(c) A recommended plan for organized safety work for
various types and sizes of companies,
(d) Einimum standards for safety and health for the
industry.
By direction of the Administrator:
Alvin Erown
9810
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EXHIBIT 17
ADMINISTRATIVE ORDEE HO. X-51
June 15, 1934
SAFETY AltD HEALTH STAITDAFDS
Whenever, in accordance with the provisions of a
Code of Pair Competition, a Code Authority submits to
the Administrator standards for safety and health and
such standards are approved "by the administrator, the
standards thus approved shall thereafter be part of
?u::"h Code and shall be enforceable as such.
Hugh S. Johnson,
Administrator.
9810
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EXHIBIT 18
OFFICE ITEUOBJSSOtM HO. 232.
June 12, 1934.
Premiums .
The following policies will govern premium clauses in codes.
1. There should be no general provisions prohibiting the use of
premiums,
2. Certain uses of premiums would constitute methods of evading
trade practice provisions; for example, provisions against selling be-
low cost and open-price provisions. The proper way to prevent such
evasion of any trade practice provision is careful drafting of the
provision in question. For example, in a provision prohibiting sell-
ing below cost, it should be provided that all premiums should be in-
cluded in the computation of cost. Similarly, in an open price pro-
vision, it should be required that all terms and conditions of sale,
including premiums, must be filed.
5. Although there should be no general prohibition against the
use of premiums, the use of premiums in the following ways may be
prohibited:
a. The use of premiums in ways which involve com-
mercial bribery in any form.
b. The use of premiums in ways which involve lottery
in any form. The term "lottery" should be con-
strued to include, but without limitation, any
' plan or arrangement whereby the premium offered
differ substantially in value from customer to
customer of the same class, except as a result of
differences in quantities purchased.
c. The use of premiums in ways which involve misrepre-
sentation, or fraud, or deception in any form,
including, but without limitation, the use of the
word "free", "gift", "gratuity", or language of
similar import in connection with the giving of
premiums fcr the purpose or with the effect of
misleading or deceiving customers.
d. The giving of premiums to any customers when such
premiums a.re not offered to all customers of the
same class in the tra.de area.
3y direction of the Administrator:
G. A. Lynch,
Administrative Officer.
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EXHI3IT 19
OFFICE MEMOEAHDUI.1
No. 31 e*
DecemDer 6, 1934.
PREMIUMS ANS "FREE DEALS"
The following jOlicies '.'ill govern clauses in codes relating to
premiums or "free detils."
1. There should be no general previsions -orohi biting the use of
;1
2. Certain uses of iremiuns or "free deals" would constitute methods
of evading trade practice provisions'; for example, ooen price provisions.
The proper way to prevent such evasion of an" trade practice orocision is
careful drafting c^ the prcvisior ir Question. For example, in an open
price provision, it shoulc' be recuired that all terms and conditions of
sale, including -lemiuns or "free deals" and conditions relating thereto, '
must be filed.
3. Although there should be no general prohibition against the use
of premiums or "free deals, " the use of "premiums or "free deals" in the
following ways -may be prohibited:
(a) The use of premiums or '"free deals" in ways which involve com-
mercial bribery in any form.
(b) The use of premiums or "free deals" in ways which involve lottery
in any form. The term "lottery" should be construed to include, but with-
out limitation, any plan or arrangement whereby the premium or "Free deal"
offered differs substantially ir. vadue from customer to customer of the
same class, except as a, result of differences in aurntities purchased.
(c) The use of premiums or "free deals" in ,rays which involve mis-
representation, or fraud, or deception in any form. It should be noted
that the use of the word "free," "gift," "gratuity," or language of simi-
lar import in connection with premiums or "free deals" can not be declared
deceptive in and of itself. It will be proper , however, to prohibit the
use of this or any other language with intent to deceive, or in such a way
that it does in fact mislead or deceive customers in some material parti-
cular.
(d) The giving of premiums of "free deals" to any customers wnen
such permiums or "free deals" are not offered to all customers of the same
class in the trade area.
4. Office Memorandum To. 232 is hereby , siv.ie:" seeled.
3y direction of the National Infest rial P.ecoverv Board:
". A. liAHiilMAE
Administrative Officer.
(*)Note — The substance of this memorandum will be incorporated in the 1TRA
Office Manual under "Code Making raid Amendment, Part II - 1746."
9810
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EXHI3IT 20
EXECUTIVE ORDER
MAZING PROVISION FOB A CLAUSE IN CODES OF
FAI3 COMPETITION RELATING TO COLLECTION
OE EXPENSES OE CODE ADMINISTRATION
B^ virtue of ana pursuant to the authority vested in me under the
provisions of Title I of the National Industrial Recovery Act of June 16,
1933 (ch. 90, 48 Stat. 135), and in order to effectuate the lourposes of
said Title, I hereto- order that the following clause or any appropriate modi-
fication thereof shall become effective as a part of anv code of fair com-
petition approved under said Title, upon application therefor (l) pursuant
to the provisions of the code relating to amendments thereto or (2) by one
or more trade or industrial associations or groups truly representative
of the trade or industry or subdivision thereof covered "oy the code, if
the Administrator for Industrial Recover shall find that approval by him
of such clause is necessa^r in order to effectuate the policy of Title I
of said Act:
1. It beinj found necessary, in order to support the admini strati on
of this Code and. to maintain the standards of fair competition established
by this Code and to effectuate the police of the Act, the Code Authority
is authorized, svibject to the approvel o f the Admini stro tor:
(a) To incur such reasonable obligations as are necessary and proper
for the foregoing purposes and to meet such obligations out of funds which
may be raised as hereinafter provided and which shall be held in trust for
the purposes of the Code;
(b) To submit to the Administrator for his approval, subject to such
notice and opportunity to be heard as he may deem necessary, (l) an item-
ized, budget of its estimated expenses for the foregoing -mrposed, and (2)
an equitable basis upon which the funds necessary to support sue i budget
shall be contributed by members of the Industry;
(c) After such budget and basis of contribution have been approved
by the Administrator, to determine and secure eouitable contribution as
above set forth \>y all such members of the Industry, and to that end, if
necessary, to institute legal proceedings therefor in its own name.
2. Only members of the Industry complying with the Code and contri-
buting to the expenses of its administration as "orovided in Section 1 here-
of shall be entitled to jarticipate in the selection of the members of the
Code Authority or to receive the benefit of its voluntary activities or to
malre use of any emblem or insignia of the National Recover;'' Administration.
ERANKLIN D. ROOSEVELT
Approva.1 recommenced:
HUGH S.. JOHNSON, Administrator
3y G. A. Lynch, Administrative Officer
THE WHITE HOUSE,
April 14, 1934.
9810 (No. 5578)
-220-
EXHIBIT 21.
OFFICE MEMORANDUM NO. 267.
JULY 20, 1934.
c las s if i cation of customers.
The following clause reflects NRA policy on this matter and should
"De substantially followed wherever provisions for classification of cus-
tomers are included in codes:
"The Code Autnority shall cause to be formulated and
keep current a classification of all types of customers
of the industry. Such classification shall he subject
to the disaprroval of the Administrator and shall contain:
(a) A comrlete list of all of the classes of customers of
the industry, including a class to cover every known type
of customer; and (b) definitions or descriptions of the
several classes in terms of functions performed, or in
other appropriate terms such as purchasers of defined
quantities.
"After submission to the Administrator, if there is no
disapproval or request for suspension of action within
twenty (20) days, full information concerning the classi-
fication shall be made available to all members of the
industry. No one shall by intimidation, coercion, or
other undue influence cause or attempt to cause the in-
clusion of any customer in or the exclusion of any
customer from any class of customers, or the exclusion
of any class of customers from tne classification, or
the use of uniform or stipulated prices, discount, or
differentials and each member of the industry may at
all times classify his own customers in accordance with
his own judgment."
No such proposed code provision nor any classification thereunder
shall be approved if the same is designed or would tend to fix uniform
prices, discounts or differentials, or to establish resale price mainten-
ance, eliminate or suppress, or discriminate against any customer or
class of customers.
Other proposed provisions concerning classification of customers
are presumed to be contrary to policy.
By direction of the Administrator:
G-. A. Lynch
Administrative Officer.
9810
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BXHI3IT 22.
OFFICE MEMORANDUM NO. 326*
JANUARY 5, 1035.
AD VERT 1 3 1 NG ALL OW ANC ES
M,--nufacturers or otner vendors selling goods to distributors
frequently find themselves desiring to purchase from their customers an
advertising or promotion service which their customers can render. In
purchasing such services the vendors have become accustomed to make pay-
ment by "allowing" i certain reduction from what would otherwise be the
price. The payments thus made have become known as "advertising allow-
ances ."
Code provisions declaring the giving of advertising allowances an
unfair practice would not change the basic facts that sellers must price
their goods to buyers and that certain buyers have promotion services
which they are desirous of selling for which those who sell to them are
willing to pay. The remedy for such suspicion, secrecy, confusion, and
misrepresentation as may be connected with advertising allowances, lies
in:
(a) Clearly separating and thus establishing the distinct
identities cf the two activities which are involved in
giving advertising allowances
(b) Causing that part of the advertising allowance which is
actually a price reduction to appear in prices - reported
prices, if the industry or trade has an open price plan.
(c) Causing that part of the advertising allowance which is
actually a payment for advertising or promotion service
to appear as such with definite description of the service
for which it is given, and with such publicity, where pub-
licity is practicable, that it is unlikely that the payment
will be more than the competitive worth of tne services
involved.
Accordingly, it is NBA policy that an industry desiring to regulate
advertising allowances snould not be permitted to do so by general pro-
hibitions, by restrictions on the basis of products or types of distri-
butors, or otherwise than in accordance with the following:
1. That ao member of an industry or trade shall designate as an
^.advertising allowance" , "promotion allowance" or similar term, any price
reduction, discount, bonus, rebate, or otner form of price allowance or
concession, or any consideration for advertising or promotion services
offered or given by him to any customer.
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2. That no member of an industry or trade shall offer or
give any consideration for advertising or promotion services to any
customer except for definite and specific advertising or promotion
services.
3. Agreements to purchase advertising services from customers
shall he made in written contracts separate from sales contracts.
4. Such contracts shall specifically and completely set out
the promotion services to be performed, together with the precise con-
sideration to be paid tnerefor, the method of determining performance,
and all other terms and conditions relating thereto.
5. Some arrangement for publicity may be made, where effective
machinery therefor can be devised. In considering any arrangement for
publicity, care should be taken to avoid machinery so cumbersome that
its cost will outweigh benefits to be gained.
There is attached a draft section (Exhibit A) suggested for use
in codes in which it. .is desired to regulate advertising allowances.
By direction of the National Industrial Recovery Board:
W. A. HARRIMAN,
Administrative Officer.
*Note~-The substance of this memorandum will be incorporated in the NBA.
Office Manual under "Code Making and Amendment - Basic Code - Trade
Practices - Fart 11-3031.15" when released in Office Manual form.
9810
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EXHIBIT A
Section . No member of the trade/industry shall designate as
an "advertising allowance", a "promotion allowance" , or by a similar term,
any price reduction, discount, bonus, rebate, concession, or other form
of allowrnce, or any consideration for advertising or promotion services,
offered or given by him to any customer.
No member of the trade/industry shall offer or give any considera-
tion merely for "pushing", "advertising", or otherwise than for definite
and specific advertising Or promotion services.1 Such consideration shall
be given only pursuant to a separate written contract therefor, which con-
tract snail specifically' and completely set forth the advertising of pro-
motion services (in such manner that their specific character mav be under-
stood by other members of the trade/industry and their customers) to be
performed by' the recipient of said consideration, the precise consideration
to be paid or given therefor by said' member, the method of determining
performances, and all other terms and. conditions relating thereto.
The following. are examples, of provisions for publicity which may
be found workable and desirable by particular industries:
Example 1. Immediately upon the making of any such contract for
advertising or promotion services by any member of the trade/industry, a
true copy thereof shall be filed by said member with a confidential and
disinterested agent of the Code Authority (as provided for in this code),
or, if none, then with .such an agent to be designated by the National
Industrial Recovery Board. Said agent shall maintain all copies of such
contracts on file until .six (o) months after the termination thereof, and'
shall make the same available at his office for inspection at all reason-
able times by all members of the trade/j.ndustry , and all of their customers
and shall distribute a trae copy of any such contract to any member of
the industry or any customer who applies therefor and offers to pay the
cost actually incurred by the Code Authority in the actual preparation
and distribution thereof-; provided ,' that no such inspection or copy shall
be permitted or made available to any person until permitted or made
available to all members of the industry and tneir customers, as aforesaid.
Upon request, said agent shall furnish to the National Industrial Recovery
Board, or any duly designated agent of said Board, copies of any such
contract.
Example 2. Immediately upon the making of any such contract for
advertising or promotion services by any member of the trade/industry,
a true copy thereof shall be filed- with a confidential and disinterested
agent of the Code authority (as provided for ih this code), or, if none,
then with such an agent to be designated by the' National Industrial Re-
covery Board. Said agent shall thereupon proceed to have copies of such
contract published in a journal or journals or other appropriate medium of
general circulation among members of the trade/industry.
9810
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, -EXHIBIT 23
OFFICE MEMORANDUM
NO. 331*
January 29, 19,35
LIQUIDATED DAMAGES
The following policies will govern the subject of agreements
for liquidated damages in connection with code provisions:
1. If an industry (trade) desires such an arrangement, its code,
should be amended to provide authority for members thereof to enter
into a liquidate damages agreement, which agreement is to become
effective only uoon issuance of HRA consent thereto. A suggested code
provision to that effect is attached.
2. The principles set forth in the Office Manual, Section 11-1626,
should be called to the attention of such industries (trades) for
their guidance in the formulation of such agreements, and such
principles should be adhered to as closely as the individual situation
will permit in the consideration of such agreements by NBA.
By direction of the National Industrial Recovery Board:
W. A. Rarriman,
Administrative Officer.
*Note— The substance of this memorandum will be incorporated in the HRA Office
Manual under "Code Making and Amendment - Substantive Guides - Part 11-1626"
when released in Office Manual form.
Addenda to Office Memorandum No. 331
PROPOSED CODE PROVISION
Concerning
LIQUIDATED DAMAGES
"Any member of the industry (trade) may enter into an agreement with any
other member or members of the industrv (trade) providing for the payment of
liquidated damages by any r>arty thereto upon violation by him of any provision
of the Code, provided, however, that such agreement shall become effective and
binding on the parties thereto only after the execution thereof shall have
received the consent of the National Recovery Administration."
9810
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EXHIBI T 24
EXECUTIVE ORDER
PRESCRIBING- A REGULATION PROHIBITING DISMISSAL OF EMPLOYEES FOR
REPORTING ALLEGED VIOLATIONS OF CODES OF FAIR COMPETITION
By virtue of anc< pursuant to the authority vested in me under title
I of, the National Industrial R?coverv Act of June 16, 1933 (ch. 90, 48 Stat,
195), and in order to effectuate the -ourposes of said title, I hereby
urescribe the following rule and regulation:
T'o employer subject to a code of fair competition aunroved under •
said title shall dismiss or demote any employee for malcing a com-olaint
or giving evidence with, re sue ct to an alleged vi6lation of the urovisions
of any code of fair conroetition a-puroved under said title.
All persons are hereby informed that section 10 (a) of the National '
Industrial Recovery Act prescribes a fine not to exceed five hundred
dollars ($500) or imprisonment not to exceed sir. (s) months, or both, for
tne violation of any rule or regulation prescribed under tho authority of
said section 10 (a).
FRANKLIN D. ROOSEVELT.
THE WHITE HOUSE,
May 15, 1934.
No. 6711
9G10
-226-
EXHIBIT 25
EXECUTIVE ORDER
NON-WAIVER OP CONSTITUTIONAL RIGHTS IN CONNECTION WITH
CODES OP FAIR COMPETITION
By virtue of and pursuant to the authority vested in me "by Title 1
of the National Industrial Recovery Act of June 16, 1937 (48 Stat. 195),
and in order to effectuate the policy of said Title and to eliminate any
confusion or misapprehension which may have arisen concerning the effect
on constitutional rights of assent to, or cooperation under, Codes of
Pair Competition, I hereby order that:
(1) It is understood that neither the Government nor any member of
industry waives, or can properly insist that the other has waived, any
constitutional right pertaining to the Government or to any individual by
approving, assenting to, or cooperating under a Code of Pair Competition.
(2) The approval orders of all such codes heretofore approved are
hereby modified to the extent necessary to make this Order a condition
thereof, and this Order shall operate as a condition of the approval of any
such code hereafter approved.
FRANKLIN D. ROOSEVELT
THE WHITE HOUSE
January 22, 1935.
(No. 6949)
9810
• -227-
EXHIBIT 26
EXECUTIVE ORDER
PRESCRIBING RULES AND REGULATIONS FOR THE INTERPRETATION AND APPLI-
CATION OF CERTAIN LABOR PROVISIONS OF CODES OF FAIR COMPETITION
AS THEY MAY AFFECT CERTAIN HOMEWORKERS.
In Codes of Fair Coerce tit ion heretofore or hereafter approved, which
provide for the abolition of homework, the question has arisen or may-
arise as to whether the abolition of homework has precluded certain persons
who are incapacitated for factory work from their former opportunities for
obtaining employment.
Pursuant to the authority vested in me by Title I of the National
Industrial Recovery Act and in order to carry out the -ourboses and- policy
of said Title of said Actt and upon due consideration of the facts and
uoon the report and recommendation of the Adminstrator ,
I, FRANKLIN D. ROOSEVELT, President of the United States , do hereby
order that no provision of any Code of Fair Competition heretofore or
hereafter approved pursuant to said Title of said Act, shall be eo construed
or applied as to violate the following rules and regulations which are
hereby promulgated and nrescribed,.' to-wit :.
1. A person may be permitted to engage in homework at the same rate
of wages as is r>aid for the same type of work performed in the factory or
other regular niece of business if a certificate is obtained from the
State authority or other officer designated by the United States Department
of Labor, such certificate to be granted in accordance with instructions
issued by the United States Department of Labor, provided
(a) Such person is physically incapacitated for work in
a factory or other regular -olace of business and is
free from any contagious disease; or
(b_) Such person is unable to leave home because his or
her services are absolutely essential for attendance
on a person who is bedridden or an invalid and both
such TDersons are free from any contagious disease.
2. Any employer engaging such a person shall keep such certificate
on file and shell file with the Code Authority for the trade or industry
or subdivision thereof concerned the name and address of each worker so
certificated*
This Ordir shall become effective immediately and shall be binding
upon all trades, industries or subdivisions thereof and members thereof
subject to Codes of Fair Competition in which homework is nrohibited, and,
9810
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to the extent necessary to nermit the full application and operation of
the foregoing rules and regulations, shall onerate as a condition uoon any
nrevious order ap-oroving any Code of Fair Competition under Title I of the
National Industrial Recovery Act, and shall remain in effect until revoked
or modified "by my further order or by order of the Administrator for
Industrial Recovery; provided, however, that this Order shall not apoly to
or affect Codes of Fair Conroetition heretofore or hereafter approved for
food or allied products trades, industries or subdivisions thereof, which
contain provisions prohibiting the manufacture and/or nrdcessing of food
products in homes*
..,. , . FRANKLIN D. ROOSEVELT
Approval lecommended:
HUGH 3. JOHNSON"
Administrator for Industrial Recovery
THE WHITE HOUSE
May 15,- 1934,
No. 671 i-A
9310
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EXHIBIT 27
tOLiOPAITDUM
May 30, 1935
TO: Prentiss L. Coonley, Code Administration Director
FROM: '.'/alter Mangum, Chairman, Code Planning Committee
SUBJPCT: Pecommended Trade Practice Provisions.
The following gauge was used as the "basis for the
tentative recommended provisions on Pair Trade Practices:
Group "A" provisions include those which, in the
opinion of the Deputy, fulfill the following basic require-
ments:
1- Hot contrary to public interest.
2- Susceptible to enforcement.
3t Non-discriminatory.
4- Pecognized as desirable and required
by the industry.
5- Sanctioned by custom.
Group "B" provisions include the requirements of
Group "A", with the exception cf the requirement that the same
be sanctioned by custom.
Group "C" provisions include the requirements of
Group "A", with the exception of the requirement that the same
be sanctioned by custom, and otherwise might present certain
problems of enforcement.
These provisions have been tentatively, approved by our
Legal Advisors for form and content.
Walter Liangum, Chairman,
Code Planning Committee
9810
-230-
AETICLE VII
TRADE PRACTICE RULES
CLASS "A" PROVISIONS
Rule 1. Deceptive Advertising and General
Misrepresentation.
No member of the trade/industry shall publish advertising (whether
printed, radio, display or of any other nature), which is misleading
or inaccurate in any material particular, nor shall any member in any
way misrepresent any goods (including but without limitation its use,
trademark, grade, quality, quantity, origin, size, substance, character,
nature,: finish-.,- material, content or preparation) or credit terms,
values, policies, services, or the nature or form of the business
conducted.
Rule 2, Commercial Bribery.
Ho member of the industry shall give, permit to be given, or offer
to give, anything of value for the purpose of influencing or rewarding
the action of any employee, agent, or representative of another in re-
lation to the business of the employer of such employee, the principal
of such agent or the represented part, without the knowledge of such
employer, principal or party. 'This provision shall not be construed
to prohibit free and general distribution of articles commonly used
for advertising except so far as such articles are actually used for
commercial bribery as hereinabove defined.
Rule 3. Interference with Contracts.
No member of the industry shall 'wilfully induce or attempt to
induce the breach of existing contracts between competitors and their
customers by any false or deceptive means, or interfere with or obstruct
the performance of any such contractual duties or- services by any such
means, with the purpose and effect of hampering, injuring or embarras-
sing competitors in their business.
Rule 4. Defamation of Competitors.
No member of the trade/industry shall defame a competitor by
falsely imputing to him dishonorable conduct, inability to perform
contracts, or questionable credit standing, or by other false represen-
tation, or by falsely disparaging the grade or quality of his goods.
Rule 5. False Invoicing
Ho me ber of the trade/industry shall knowingly withold from
9810
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or insert in any quotation or invoice any statement that makes it
inaccurate in any material particular.
Rule 6. False Marking or Branding.
No member of the trade/ industry shall brand or mark or pack
goods in airy- manner which tends to deceive or mislead purchasers
with respect to the brand, grade, quality, quantity, origin,
size, substance, character, nature, finish, material content or
preparation of such goods.
Rale 7. Secret Rebates and other Concessions.
No member of the trade/ industry shall secretly offer or
make any payment or allowance of a rebate, refund, commission,
credit, unearned discount or excess allowance, whether in the
form of money or otherwise, nor shall a member of the trade/
industry secretly effer or extend to any customer any special
service or privilege not extended to all customers of the same
class, for the purpose of influencing a sale. .
Rule 8. Coercion.
Ho member of the industry shs.ll enter' into any agreement,
understanding, combination or conspiracy with any other member
of the industry to fix or maintain price terms, or cause or
attempt to cause any member of the industry to change, fix or
maintain price terms by the use of violence, intimidation or
coercion.
CLASS »B" PROVISIONS
Rule 1. Consignment Selling.
No member of the industry shall sell or ship goods on con-
signment or memorandum.
Rule 2. Extended Dating.
Dating invoices as of any other date than the date of shipment
is prohibited.
If it is desired to permit an extended dating it should read:
"Dating invoices more than (for example 60 days) after date
of shipment," and "dating invoices more than 60 days after
date of shipment is prohibited."
Rule 3. Standards.
To be included in Codes according to the' needs and requirements
of the particular industry desiring the same.
9810.
-23£~
1. Within thirty (30) days after the effective date of the
Code, the Code Committee shall establish a permanent standards
committee, two members of which shall be appointed by the Nation-
al Industrial Recovery Board, to represent Government and Consumer
interests.
2. This Committee shall:
(a) Make studies and investigations for the establish-
ment of classifications, dimensional standards, stan-
dards of quality (grades) and labeling of the products
of this industry, in cooperation with the American
Standards Association or the National Bureau of Stan-
dards of the United States Department of Commerce, and
submit recommendations based upon such studies to the
Code Committee within six (6) months of the date of
the Committee's appointment.
(b) Propose appropriate revisions of approved standards
from time to time.
(c) Advise the Trade Practice Complaints Committee
concerning the enforcement of all such standards as
established and approved.
3. Upon submission of the Committee's findings to the Code
Committee, the Code Committee shall immediately submit such standards
either to the American Standards Association for consideration and
approval or to the National Bureau of Standards of the United States
Department of Commerce for consideration and promulgation; provided,
however, that in case of disagreement within the Committee the Code
Committee shall determine, subject to the approval of the National
Industrial Recovery Board, the nature of the standards to be submitted
to such standardizing agencies.
4. After promulgation and such review as the National Indus-
trial Recovery Board may determine, these standards may be approved
as a Fair Trade Practice to be mandatory upon all members of this
Industry pending the approval of subsequent standards or revisions
of standards which may be established from time to time through
the same procedure as set forth above.
5. It is further provided, however, that no standard shall
be approved by the National Recovery Administration which may be
construed in any material particular as prohibiting the manufacture
and/or sale of non-standard industry products which are accurately
labeled and/or clearly identified to purchasers as to their devia-
tion from such standards, if such non-standard products are in no
way harmful to the users.
9810
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Rule 4. Design Protection plan Number I.
Manda to ry P. eg i s t rat ion
1. Design Protection.
No member of this industry shall take orders for, or use in the
manufacture of any products of this industry, any design embodied in
such products unless an exact copy thereof has been registered with
the Design Registration Bureau of the industry and unless such mem-
ber is the holder of the registration certificate or has obtained
the written consent of the member making the registration. This
rule shall not apply to such standard or stable designs compiled
by the said Registration Bureau and on file therein, and provided
that nothing herein contained shall limit or deprive any member
of this industry of any rights or benefits existing under the present
patent or copyright laws.
(a) The term "design" as used in this industry shall mean
and be limited to the effect obtained by a combination of such of
the following elements as are embodied in a product manufactured
in this industry: (l) the shape resulting from the method of cut-
ting, sewing, draping, and pressing; (2) the combination of fabrics
and colors, including their use and placement; (3) the decoration,
including kind and placement; provided that the term "design" shall
not include style trend.
2. Power and Duties of Design Registration Bureau.
There shall be designated by the Code Committee, subject to
the approval of the National Industrial Recovery Board, an impartial
agency to be known as the "Design Registration Bureau". Said Bureau
shall have the following powers and duties, subject to such rules
and regulations as may be issued by the National Industrial Rocovory
Eoard:
(a) Said agency shall compile and make permanent a list of
all standard or stable designs now recognized as such in this indus-
try, and upon completion of such compilation shall make such list
available to all members of this industry.
(b) Pol lowing completion of the compilation of such list of
standard or stable designs the said agency shall not accept for
registration any design, the identical design of which is contained
in said compiled list, or any design previously registered, provided
that whenever a design so submitted is rejected for registration
on the grounds that it is either contained in the compiled list, or
has been previously registered by said Bureau, the rejected applica-
tion may be referred for determination to an arbiter agreed upon by
the Code Committee and the member whose registration was rejected.
Provided that any design accepted for registration must be used
within three months after its registration, otherwise said design
shall be classified as a stable or standard design, and provided
further that aftor one year from the date of its registration the
9810
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said registered design shall "be classified as a stable or standard
design.
(c) The Code Committee shall have the right to require a
fee to "be paid by the member of the industry submitting the design
for registration^ the amount of which fee shall be recommended by
the Code Committee and approved by the National Industrial Recovery
Board.
Design Protection Plan IJumber 2.
Mo pL.egj.gt ration.
No member of this industry shall use in the manufacture of his
products, nor take orders for such pro due bs, which embody a design
previously used and owned by any other member of this industry with-
out first obtaining written permission to use such design from said
prior user, provided that this prohibition shall not apply to standard
or stable designs' used in the industry s and provided further that noth-
ing herein contained shall limit the protection or right granted under
the existing patent and copyright laws*
(a) The term "defligr.'1 as used in this industry shall mean and
be limited to the effect obtained by a combination of such of the
following elements as are embodied in a product manufactured in this
industry: (l) the "shape resulting florn the method of cutting, sewing,
draping, and pressing; (.3) the combination of fabrics and colors,
including their use and placement; (7>) the decoration, including kind
and placement; provided that the term "design" shall not include style
trend.
(b) Any complaint made to the Code Committee under this provision
shall be referred *o an impartial arbiter or commission agreed upon by
the person complained of and the Code Committee and such determination
made by such impartial arbiter or commission shall be subject to re-
view by the national Industrial Recovery Board.
9810
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EXHIBIT 28
MEMORAHDmi
Hay 20, 1935
r
TO: Mr. Prentiss L. Coonley, Code Administration Director
FROM: Walter Liangum, Chairman, Code Planning Committee
SUBJECT: Wage Provisions to be used i'n Code Revision
Attached are the Wage Provisions recommended by the Code Planning
Committee for your consideration during code revision.
As we are working against tine, our tentative recommendations on
each article will be sent you as completed, rather than waiting until
the entire draft is finished. The attached provisions have not yet
been put into legal phraseology by the legal division, as we desire to
receive the comments of the Division Administr; tors, the various Boards
and other parties before malting our final recommendations. Please bear
in mind that these are merely tentative suggestions, and should be so
considered.
Cur recommendations will be divided into two parts:
(a) Provisions which we think should be adopted by
every industry, unless extremely good reason
to the contrary can be shown.
(b) Provisions, which will be included in an Appendix
attached to the draft code, will consist of those
which are deemed not contrary to policy, but which
pre to be used only when the needs of a particular
industry make them practicable.
Attention is drawn to the fact that many wages provisions heretofore
in codes are omitted. This is the result of numerous conferences with
various interested parties in the organization, and many hours of dis-
cussion by the committee. We feel that simplification is imperative, and
to that end as I will mention further on, certain provisions have been
suggested to go into the Appendix, giving our reasons for having failed
to recommend other specific provision's which were sent us for consider-
ation.
We have changed the wording of Section 1 and Sections 2-A, 3 and
C to read "no employer shall pay" rather than the old wording "no
employee shall be paid less than." The reason for this is obvious.
9810
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Section 1 with this change is the spue as in the present Model
Code, except we have added "and/or sex". Since wage adjustments
are presumably based on locality, and/or population, and/ or sex,
it is thought this last should "be added. This also applies to Sec-
tions 2- A and 2-B.
Section 3 on Piecework Compensation, we feel is clearer than
the present provisions, and will be more readily enforceable. The
alternative clause is riven because experience has shown instances
where labor is of a poor qualify, and/ or Where the labor works spas-
modically, and an hourly minimum guarantee is unenforceable.
Section 4 covering Payment of Fages, we feel is clearer than
the one generally used in codes, and affords the employee more pro-
tection.
Section 5 follows Executive Order 6S06-F with two exceptions.
We feel that the worker should have the right to apply for a certifi-
cate, as we believe that would' mere readily facilitate his obtaining
employment if the employer is not put to the trouble of obtaining a
certificate. At present, Code Authorities are required to submit, monthly
a list of all such employees, -and we feel that if such a list is origi-
nally submitted, and then a monthly report made of changes, this will
be sufficient.
Section 6 on Learners, we believe to be simpler and clearer,
although it is longer than the general provision now in use. The old
provision has resulted in innumerable requests for interpretations,
and we are hopeful that the suggested section will present this in the
future. The apprentice section rill be covered in the general labor
provisions.
Since we are making our recommendations from p. practical viewpoint,
we are omitting from the draft certain provisions about which there is
a difference of opinion regarding enforceability. As an example, a clause
which has proved very troublesome is "Wages Above the Minimum." We do
not feel this should be included in the draft itself, but that a state-
ment should be included in the Appendix to the effect that where indus-
tries desire classified wage scales or plural minima, that it is not
contrary to -oolicy to include them in the code. This also applies to
provisions covering wages for new employees, part time wages and vacations.
Other recommendations ma.de to the committee were considered, and
failure to mention any specific provision does not mean that they were
not given thoughful consideration, but that we felt it inadvisable to
include them in the draft code. The committee not only considered every
recommendation sent it, but all matter on the subject that it could ob-
tain in the time at its disposal.
9810
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Provisions covering area agreements, female employees performing
substantially the same work transportation, employment privileges, and
provisions covering wages for certain legal holidays will all he cov-
ered "by sections in the .Appendix* The substance of these sections is
now with the legal division, and as soon as they are -out into legal
phraseology will "be sent to you for consideration.
Ualter I.langum
Chairman, Code Planning- Committee
9810
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ARTICLE IV
T7AGES
EUNHIUM 17AGES
Section 1. Ho employer shall pay arty employee in any pay period
less than at the rate of cents pe r hour, except as otherwise
herein provided.
(Minimum wage adjustment based on locality and/or population,
and/or sex if appropriate, may be indicated here,)
OFFICE Ai-iD CLERICAL EMPLOYEES
Section 2-A. ITo employer shall pay any clerical or office employee
in any pay period less than at the rate of dollars ( )
per week.
(Minimum wage adjustment based on locality and/or population,
and/or sex if appropriate, may be indicated here.)
Section 2-B. Ho employer shall pay any watchman or guard in any
period less than at the rate of dollars ($ ) per
week.
(Minimum wage adjustment based on locality and/ or population,
ajid/or sex if approriate, may be indicated here.)
Section 2-C. No employer shall pay any office boy or girl less
than (80) per cent of the rate specified in Section 2-A of this Article.
The number of such employees shall not exceed per cent of the
total number of office enrol oyees, provided however, that every employ-
er shall be allowed at least one office boy or girl.
PIECEWORK COMTEK SAT I Oil
Section 3-A. This Article establishes minimum rates of pay which
shall apply, irrespective of whether an ©mloyee is actually compensated
on a time rate, piecework, or other basis.
Section 3-3. Pay for piece rates shall be com-outed on the basis
of not more than a day period, and shall yield not less than
the minimum rate of pay established under Section 1. Uhere overtime
is utilized, such piece rates shall be increased in the same proportion
as the overtime rate is to the minimum established in Section 1 and
shall yield not less than the minimum overtime wage.
If shall be in accord with policy for suitable industries to have
a piece rate clause as follows:
9810
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"The industry may establish piece or quantity rates with approval
of NBA without an hourly minimum guarantee."
PAYiSiTT OF WAGES '
Section 4-A. Payment of all wages due shall be made in lawful
currency or by negotiable check or draft therefor, payable on demand
at par, provided that reasonable facilities are available for cashing
such check.
Section 4-B. Time of Payment and Deductions. Except as otherwise
provided, wages and salaries shall become due and payable at least semi-
monthly, with not to exceed ( ) calendar days holdover. Wages
and salaries shall be exempt from all deductions, charges or fines,
except such as are voluntarily consented to by the employee, or author-
ized by law. Employers or their agents shall not directly or indirectly
accept rebates on such wages or salaries.
HAEDI CAPPED ffOBKERS
Section 5. A person whose earning capacity is limited because of
age, physical or mental handicap or other infirmity, may be employed on
light" work at a wage below the minimum established by the Code, if the
employee or the employer obtains from the State authority, designated
by the United States Department of Labor, a certificate authorizing
such person's employment at such wages and for such hours as shall be
stated in the certificate. Such authority shall be guided by the in-
structions of the United States Department of Labor in issuing certi-
ficates to such persons. If any employer employs any such person or
persons, he shall file with the Code Authority a list within 30 days
after the Code is approved of such employees and whenever there is a
change in the number of such employees the employees shall file with
the Code Authority within 30 days after any such change showing the dis-
charge of any such employee and/ or the addition of any such employee with
the wages paid and the maximum hours of work of such newly hired employee.
LSAB1T5BS
Section 6- A. notwithstanding the provisions of Article IV, Section
1, learners, as hereinafter defined, to a number hereinafter permitted,
may be employed at not less than per cent of the minimum wage
specified in Article IV, Section 1, or, if compensated on a piece-work
rate, at not less than the employer's standard piece rate for the oc-
cupation in which the learner is engaged.
Each employer may employ one learner for each per cent of the
total number of employees, and in any case each employer may employ at
least one learner.
Section 6-B. A learner as used in this Code is an employee who
has actually worked less than hours (consecutive or non-consecu-
tive) at the occupation in which he is engaged.
9310
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Section 6-C. IPoon the termination of a learner* s employment, the
employer shall sign .and give, him a card hearing the learner* s name,
stating the occupation in which he has been employed as learner for
that employer, and the number of hours so employed.
Section 6-D. When a.lBarner has completed _____ hours actually
worked in an occupation, in the employ of one or more employers his ■
employer shall sign and give him a ca.rd "bearing the learner's name,
the occupation in which he has been so enployed and stating that he
is no longer a learner in such occupation.
Section 6-E. No employer shall employ a learner at less than
the minimum wage specified in this Section and no eimloyer shall em-
ploy a. greater number of learners than is authorized "by this Section
at less than the minimum wage prescribed hy Article IV, Section 1.
I <
9810
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UEMQRAKDUM
Jtry 22, 1935
TO: Prentiss L. Coonley, Code Administrr tion Director
PROM: TJalter Mangum, Chairman Code Planning Committee
SUBJECT: General Labor Provisions
Attached hereto find the recommendations of the Committee on the
above mentioned provisions. These are substantially the same , as those
in the present Model Code, with the addition of Sections 4, 5 (b) , 8
and 9, which are added to conform with the Executive and Administrative
Orders issued since the publication of the Model Code. Section 2
(Section 7 (a) ) was quoted from the so-called Harrison Bill. This,
of course, will be amended to conform with the law as finally passed.
The present thought is that the Sections recommended in Article V
should be mandatory in all codes, but it is quite likely that on final
revision, Section 8 and 9 will go into the Appendix. The. Sections in
the Appendix are those which are not applicable to all industries, but
which may be adopted when deemed necessary. On the same theory, it is
quite likely that Section 1 of the Appendix will be transferred to
Article V itself and may be , thus mp.de mandatory.
These provisions are now in the hands of the Legal Division for
- jroval as to phraseology.
Walter l.iangum, Chairman
Code Planning Committee
9810
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ARTICLE V
GENERAL LABOR PROVISIONS
CHILD LABOR
Section .1. No person under eighteen (18) years of age shall be
employed in the industry except as (list here specific occupations,
such as office "boys, office girls, messengers, etc.). Ho person
under sixteen (16) years of age shall he employed in the industry in
any capacity. In any State any employer shall he deemed to have cormlied
with this provision rs to age if he shall have on file a certif ica.te or
permit, duly signed by the Authority in such State empowered to issue
employment or age certificates or permits shoving that the employee is
of the required age.
EMPLOYERS AND EMPLOYEES
Section 2.
(a) Every code of fair competition or agreement approved,
-prescribed, or entered into under this title shall contain the follow-
ing statement of rights of employees, which are hereby declared pnd
affirmed: (l) Employees shall have the right to organise and bargain
collectively through representatives of their own choosing, and shall
be free from the interference, restraint, or coercion of employers of
labor, or their agents, in the designation of such representatives or
in self-organization or in other concerted activities for the purpose
of collective bargaining or other mutual aid or -orotection; and (2) no ■
employee and no one seeking employment shall be required as a condition
of employment to join any company union or to refrain from joining, or-
ganizing, or assisting a labor organization of his own choosing.
(b) All employers in the trade or industry or sub-division thereof
with respect to which any such code or agreement is in effect shall
comply with the requirements of subsection (a) and with the maximum
hours of labor, minimum wages and other conditions of employment set
forth in any such code or agreement.
SUBTERFUGE
Section 3. No employer shall reclassify employees or duties of
occupations performed or engage in any subterfuge, so as to defea,t the
purposes or provisions of the Act or of this Code.
II SI IIS SAL POR CO! PLAINS PORDIDDEN
Section 4. No employer shall dismiss or demote any employee for
making a. comolaint or giving evidence with resoect to any alleged viola-
tion of the provisions of this code of fair competition. (Executive
Order No. 6711, Llay 15, 1934.)
9310
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EXISTING LAUS AND LABOR AGREEMENTS
Section 5.
(a) No provision- thereof shall supersede any Federal, State or
Municipal Ian or any labor agreement, which establishes more stringent
requirements as to age of employees, wages, hours of work, or general
working conditions than are established in this code.
(b) Ho provision in this code shall supersede any provisions
of a bonr—fide Labor agreement now in force between members of the trade/
industry and their employees which provides higher wages, shorter hours,
or better working conditions than those prescribed by this code, or which
provide specific arrangements as to methods of wage payments.
SAFETY AIE) HEALTH
Section 5. Every employer shall make reasonable provision for
the safety and health of his employees at the place and during the
hours of their employment. (*). Standards for safety and health shall
be submitted by the Code Committee to the National Industrial Recovery
Board for approval within si;c (S) months after the effective date of
this code. After approval, such standards shall become the minimum
standards of safety and health for all members of the industry and shall
thereafter be a part of this code and enforciblc as such.
APPRENI ICE SHIP
Section 7. Every apprentice hired "ay a member of this industry
shall be engaged in accordance with Executive OrJ.er No. 6750-C. June 27,
1934.
CONIRACTHIC-
Section 8. This provision is being given further consideration
by the Committee.
COMPANY TOUN CLAUSE
Section 9. No enroloyee other than maintenance or supervisory men
or those necessary to -orotect property shall be required as a condition
of employment to live in homes rented from or designated by the employer.
No employee shall be required as a condition of employment to trade at any
store or subscribe to any services owned or designated by his employer
or his agents.
(*) For industries with homework, insert: No work shall be done or
permitted in tenements, private houses, basements, or in any build-
ings unsanitary or unsafe on account of fire risks.
9310
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POSTING
Section 10. Every erroloyer shall -oost and kee-o roosted the labor
provisions of this Co fie in accordance with rules and regulations pres-
cribed "bv the National Industrial Recovery Board*
APPENDIX
HAZARDOUS OCCUPATIONS
Section 1. No person under eighteen (18) years of age, except
'apprentices, shall he employed in operations or occupations which are
hazardous in nature or dangerous to health. The Code Committee shall
submit to the National Industrial Recovery hoard for approval within
days from the effective date of the code a list of such oper-
ations or occupations. In my state an employer shall he deemed to
have complied with this provision as to age if he shall have on file
a valid certificate or permit duly signed by the authority in such state
empowered to issue employment or age certificates or permits, showing
that the employee is of the required age.
NOTICE OF DISCHARGE
Section 2. , ITo employee who has been regularly emoloyed for four
(4) weeks with any one establishment may be discharged or laid off
without a prior notice of one week,
H0HET70RK
Section 3. No homework shall be allowed except as hereinafter
provided:
1. A person ucy be permitted to engage in homework at. the same
rate of wages as is paid for the same type of work performed in the
factory or other regular place of business if a certificate is obtained
from the State authority or other officer designated by the United
States Department of Labor, such certifica.te to be granted in accor-
dance with instructions issued by the- United States Department of
Labor, provided:
(a) Such person is Dhysically incapacitated for work in a.
factory or other regular place of business and is free
from any contagious disease; or
(b) Such person is unable to leave home because his or her
services are absolutely essentia.! for attendance on a
nerson who is bedridden or rn invalid and both such per-
sons are free from any contagious disease.
2. Any employer engaging such a person shall keep such certificate
on file and shall file with the Code Committee for the trade or industry
or sub-division thereof concerned the name and address of each worker so
certificated.
9310
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 formation 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 extent of compliance or non-compliance,
and 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,
dux also in terms of the experiences of the deputies and others concerned with code formation
and administration.
The Code Histories, (including histories of certain NRA units or agencies) are not
mimeographed. They are to be turned over to the Department of Commerce in typewritten form.
All told, approximately eight hundred and fifty (850) histories will b6 completed. This
number includes all of the approved codes and some of the unapproved codes. (In Work
Materials No 18, Contents of Code Histries. 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 voa.umes
9768—1 .
-ii-
set forth the origination of the code, 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 Wor_k Materials ho. 17, Tentative Outlines and Summaries of
Studies in Process, these materials are fully described).
Industry Studies
Automobile Industry, An Economic Survey of
Bituminous Coal Industry under Free Competition and Code Regulation, Economic Survey of
Electrical Manufacturing Industry, The
Fertilizer Industry, The
Fishery Industry and the Fishery Codes
Fishermen and Fishing Craft, Earnings of
Foreign Trade under the National Industrial Recovery Act
Part A - Competitive Position of the United States in International Trade 1927-29 through
1934.
Part B - Section 3 (e) of NIRA and its administration.
Part C - Imports and Importing under NRA Codes.
Part D - Exports and Exporting under NRA Codes.
Forest Products Industries, Foreign Trade Study of the
Iron and Steel Industry, The
Knitting Industries, The
Leather and Shoe Industries, The
Lumber and Timber Products Industry, Economic Problems of the
Men's Clothing Industry, The
Millinery Industry, The
Motion Picture Industry, The
Migration of Industry, The: The Shift of Twenty-Five Needle Trades From New York State,
1926 to 1934
National Labor Income by Months, 1929-35
Paper Industry, The
Production, Prices, Employment and Payrolls in Industry, Agriculture and Railway Trans-
portation, January 1923, to date
Retail Trades Study, The
Rubber Industry Study, The
Textile Industry in the United Kingdom, France, Germany, Italy, and Japan
Textile Yarns and Fabrics
Tobacco Industry, The
Wholesale Trades Study, The
Women's Neckwear and Scarf Industry, Financial aDd Labor Data on
9768—2
- iii -
Women's Apparel Industry, Some Aspects of the
Trade Practice Studies
Cou-odities, Information Concerning: A Study of MRA 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
Resale 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
comparison with Trade Practice Provisions of NRA Codes.
Labor 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
Administrative 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
Approve Codes in Industry Groups, Classification of
Basic Code, the — (Administrative Order X-61)
Code Authorities and Their Part in the Administration of the NIRA
Part A. Introduction
Part B. Nature, Composition and Organization of Code Authorities
9768—2.
Part C. Activities of the Code Authorities
Part D. Code Authority Finances
Part E. Summary and Evaluation
Code Compliance Activities of the NRA
Code Making Program of the NRA in the Territories, The
Code Provisions and Related Subjects, Policy Statements Concerning
Content of NIRA Administrative Legislation
Part A. Executive and Administrative Orders
Part B. Labor Provisions in the Codes
Part C. Trade Practice Provisions in the Codes
Part D. Administrative Provisions in the Codes
Part E. Agreements under Sections 4(a) and 7(b)
Part F. A Type Case: The Cotton Textile Code
Labels Under NRA, A Study of
Model Code and Model Provisions for Codes, Development of
National Recovery Administration, The: A Review of its Organization and Activities
NRA Insignia
President's Reemployment Agreement, The
President's Reemployment Agreement, Substitutions in Connection with the
Prison Labor Problem under NRA and the Prison Compact, The
Problems of Administration in the Overlapping of Code Definitions of Industries and Trades,
Multiple Code Coverage, Classifying Individual Members of Industries and Trades
Relationship of NRA to Government Contracts and Contracts Involving the Use of Government
Funds
Relationship of NRA with States and Municipalities
Sheltered Workshops Under NRA
Uncodified Industries: A Study of Factors Limiting the Code Making Program
Legal Studies
Anti-Trust Laws and Unfair Competition
Collective Bargaining Agreements, the Right of Individual Employees U Enforce
Commerce Clause, Federal Regulation of the Employer-Employee Relationship Under the
Delegation of Power, Certain Phases of the Principle of, with Reference tc federal Industrial
Regulatory Legislation
Enforcement, Extra-Judicial Methods of
Federal Regulation through the Joint Employment of the Power of Taxation and the Spending
Power
Government Contract Provisions as a Means of Establishing Proper Economic Standards, Legal
Memorandum on Possibility of
Industrial Relations in Australia, Regulation of
Intrastate Activities Which so Affect Interstate Commerce as to Bring them Under the Com-
merce Clause, Cases on
Legislative Possibilities of the State Constitutions
Post Office and Post Road Power — Can it be Used as a Means of Federal Industrial Regula-
tion?
State Recovery Legislation in Aid of Federal Recovery Legislation History and Analysis
Tariff Rates to Secure Proper Standards of Wages and Hours, the Possibility of Variation in
Trade Practices and the Anti-Trust Laws
Treaty Making Power of the United States
War Power, Can it be Used as a Means of Federal Regulation of Child Labor?
9768—4.
THE EVIDENCE STUDIES SERIES
The Evidence Studies were originally undertaken to gather material for pending court
cases. After the Schechter decision the project was continued in order to assemble data for
use in connection with the studies of the Division of Review. The data are particularly
concerned with the nature, size and operations of the industry; and with the relation of the
industry to interstate commerce. The industries covered by the Evidence Studies account for
more than one-half of the total number of workers under codes. The list of those studies
follows:
Automobile Manufacturing Industry
Automotive Parts and Equipment Industry
Baking Industry
Boot and Sho6 Manufacturing Industry
Bottled Soft Drink Industry
Builders' Supplies Industry
Canning Industry
Chemical Manufacturing Industry
Cigar Manufacturing Industry
Coat dnd Suit Industry
Construction Industry
Cotton Garment Industry
Dress Manufacturing Industry
Electrical Contracting Industry-
Electrical Manufacturing Industry
Fabricated Metal Products Mfg. and Metal Fin-
ishing and Metal Coating Industry
Fishery Industry
Furniture Manufacturing Industry
General Contractors Industry
Graphic Arts Industry
Gray Iron Foundry Industry
Hosiery Industry
Infant's and Children's Wear Industry
Iron and Steel Industry
Leather Industry
Lumber and Timber Products Industry
Mason Contractors Industry
Men's Clothing Industry
Motion Picture Industry
Motor Vehicle Retailing Trade
Keedlew-rk Industry of Puerto Rico
Painting and Paperhanging Industry
Photo Engraving Industry
Plumbing Contracting Industry
Retail Lumber Industry
Retail Trade Industry
Retail Tire and Battery Trade Industry
Rubber Manufacturing Industry
Rubber Tire Manufacturing Industry
Shipbuilding Industry
Silk Textile Industry
Structural Clay Products Industry
Throwing Industry
Trucking Industry
Waste Materials Industry
Wholesale and Retail Food Industry
Wholesale Fresh Fruit and Vegetable Indus-
try
Wool Textile Industry
THE STATISTICAL MATERIALS SERIES
This series is supplementary to the Evidence Studies Series. The reports include data
on establishments, firms, employment. Payrolls, wages, hours, production capacities, ship-
ments, sales, consumption, stocks, prices, material costs, failures, exports and imports.
They also include notes on the principal qualifications that should be observed in using the
data, the technical methods employed, and the applicability of the material to the study of
the industries concerned. The following numbers appear in the series:
9768—5.
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- 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, and Lacquer, Mfg. Industry
Coffee Industry Plumbing Fixtures Industry
Copper and Brass Mill Products Industry Rayon and Synthetic Yarn Producing Industry
Cotton Textile Industry Salt Producing Industry
Electrical Manufacturing Industry
THE COVERAGE
The original, and approved, plan of the Division of Review contemplated resources suf-
ficient (a) to prepare some 1200 histories of codes and NRA units or agencies, (b) to con-
solidate and index the NRA files containing some 40,000,000 pieces, (c) to engage in ex-
tensive field work, (d) to secure much aid from established statistical agencies of govern-
ment, (e) to assemble a considerable number of experts in various fields, (f) to conduct
approximately 25% more studies than are listed above, and (g) to prepare a comprehensive
summary report.
Because of reductions made in personnel and in use of outside experts, limitation of
access to field work and research agencies, and lack of jurisdiction over files, the pro-
jected plan was necessarily curtailed. The most serious curtailments were the omission of
the comprehensive summary report; the dropping of certain studies and the reduction in the
coverage of other studies; and the abandonment of the consolidation and indexing of the
files. Fortunately, there is reason to hope that the files may yet be cared for under other
auspices.
Notwithstanding these limitations, if the files are ultimately consolidated and in-
dexed the exploration of the NRA materials will have been sufficient to make them accessible
and highly useful. They constitute the largest and richest single body of information
concerning the problems and operations of industry ever assembled in any nation.
L. C. Marshall,
Director, Division of Review.
9768—6.
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