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3 9999 06317 373 4 



OFFICE OF THE NATIONAL RECOVERY ADMINISTRATION 
DIVISION OF REVIEW 



POLICY ON WAGES ABOVE THE MINIMUM UNDER THE NIRA 

By 
William Larson 

(A Section of Part C: Control of Wa^es) 



WORK MATERIALS NO. 45 
THE LABOR PROGRAM UNDER THE NIRA 



Work Materials No. 45 falls into the following parts: 

PART A: Introduction 

PART B: Control of Hours and Ree2ployme.1t 

PART C: Control of Wages 

PART D: Control of Other Conditions of Employment 

PART E: Section 7 (a) of the Recovery Act 



LABOR STUDIES SECTION 
MARCH, 1936 



office or Tin: ;tatio::al zccovezi ADtinn strati on 

DIVISIOIT Or REVIEW 



policy o: t uages at^vi the miituiui: ihtee hira 

3:- 
I7illi« i ■ 1' "son 



LA303 STUDIES SECT I Oil 

iiarch, idsg 






tna^sy^tj: 



fore :; 2 D 

This study of '^policy on T7ages Above the Llinimum Under the 
ITational Industrial Recover;? Act" was prepared by Mr. TTilliam Lawson 

under the supervision of Mr. Solomon Barkin. 

The study is one of a series concerned with different aspects 
of 1THA experience with wages — comprising policy, code provisions, ad- 
ministrative experience, compliance and effects. 

In this study are discussed ISA policies with respect to the 
wages of workers receiving more then the minimum. This study outlines 
the acceptance b" r 1TRA of the meo. of some method of protecting such wages 
and the controversies over the type of code provision nost adequate to 
attain the 6.esired objective. The question of the propriety of incorpor- 
ating definite rage basing points and wage schedules was outstanding in 
SEA wage policy history. Other .ethocs for protecting the wage groups 
above the minimum are also discussed. The findings are of course those 
of the author and are not official utterances. 

At the back of this report will be found a brief statenent of 
the studies undertaken by the Division of Review. 



L. C. liar shall 
Director, Division of Review 



March 23, 1936. 



9856 -i- 



POLICY ON WAGES ABOVE THE MINIMUM 
UNDER THE 
NIRA 



TABLE OE CONTENTS 

Page 

Summary of Findings 1 

I. Introduction 4 

A. The Meaning of the Term 4 

3. The Significance of Wages Above the Minimum 5 

C. The Purposes of the Administrative Law 7 

D. The Lai? 8 

II. Development of Policy 9 

A. Introduction 9 

B. The Code Bargaining Scene 9 

C. Early Development of Formal Policy 12 

1. Statements of the President and the Administrator 12 

2. The First Code, July 9, 1933 12 

3. The Presidnet's Reemployment Agreement 13 

4. The Policy Memorandum of October 25. 1933 16 

5. The Model Codes of October 25 and November 6, 1933 19 

6. The Executive Order of December 7, 1933 

Dealing with Labor Statistics 23 

D. Subsequent Development of Formal Policy 23 

1. The Policy Group Period 23 

(a) Labor Policy Group 24 

(b) The Basic or General Code 37 

(c) Tentative Formulation of Labor Policy 39 

(d) The Electric and Neon Sign Industry Case 44 

(e) The Questionnaire to the NRA Field Offices 48 

2. The NRA Office Manual 49 

3. The Advisory Council Period 50 

(a) The Steel Casting Industry Case 51 

(b) The Questionnaire to the NRA Field Offices 53 

(c) The Electric and Neon Sign Industry Case 54 

(d) The Bedding Manufacturing Industry Case 57 

F. Implicit Policy 61 

1. An Analysis of the Code Provisions 61 



9856 



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Page 

G-. The Policies of the ERA Advisory Boards Technical 

Divisions and the Review Division 66 

1. The Labor Advisory Board 67 

2. The Industrial Advisory Board 68 

3. Consumers' Advisory Board 70 

4. The Legal Division 70 

5. The Division of Research and Planning 70 

6. The Review Division 71 

H. The Code Planning Committee 72 

I. Communications Between the ERA Administrative Office and 

the Chairman of the ERA Labor Advisory Board 77 

III. An Appraisal 79 



9856 



-in- 



A P ? E N J) I C 2 S 



Appendix "A" 

Appendix "3" 

Appendix "C 
Appendix "D" 
Appendix n E n 



Memorandum by Donald E. Richberg, NRA General 
Counsel to George L. Berry,. NRA Division Administrator, 
February 17, 1334, Concerning the Question of Wage 
Agreements in the Code for the Construction Industry 

Extracts from a Compendium of Abstracts of Policy and 
Other Statements Issued by the Policy Group 

Statement of Policy Used by Division of Review 

Brown Memo on Policies on Labor Provisions 

Questionnaire by the Labor Policy Group to the 
NRA Field Offices of the NRA. Compliance and Enforce- 
ment Division Requesting the Experiences of These 
Offices Respecting the Compliance with and the Enforce- 
ment of Provisions in Codes for "Wages Above the 
Minimum. " 

Major Decisions of the ERA Advisory Council Dealing 
Directly with the Subject of "Wages Above the Minimum" 
and Related pertinent Matter 

Expressions of the Policy of the IRA Labor Adviser^ 
Board Relative tc Wages Above the Minimum 

Report of July 15, 1235, by Alfred G. Son, Resident 
Industrial Adviser, NRA Industrial Advisory Board, 
Relative to l! 7ages Above the Minimum, " together with 
a Resume of the Industrial Advisory Board's Policy en 
"Wages Above the Minimum" 

Appendix "I" Memorandum of April 23, 1935, by George Bronz, NBA 

Assistant Counsel to L.M.C. Smith, General Coordinator 
of the 1"?A Legal Division, Relative to the Problem 
of "Wa^es Above the Minimum." 



Appendix "F" 

Appendix "G" 
Appendix "H" 



Appendix "J" 



Extract from the Division cf Economic Research and 
planning' s Report, Relative to the Proposed Code 
of Fair Competition for the Men's Neckwear Industry, 
Approved by Andrew C. Court, Unit Chief, dated 
December 15, 1933. 



9856 



-iv- 



-1- 

POLICY Oil WAGES ABOVE THE MINIMUM 
UHDES THE 
KIM 
SULliAHT OF FlrDIITGS 



I. irTPODUCTIOIT 



Provision? in codes of fair competition for "wages above the minimum", 
although frequently referred to in terras of "semi-skilled" and "skilled" 
occupational and operation classifications of workers, were construed to 
mean those provisions providing a control for the wages of all those workers 
exclusive of workers in the pre-code "lowest paid class". Provisions for 
"wages above the minimum" directly affected about 95 per cent of all workers 
under the ITIRA and indirectly all workers affected by the I'IPA. 

The purposes of the regulations were to provide an adequate legal 
control through the implementation of codes of fair competition, agreements 
and licenses in order to increase the .money earnings of the workers in the 
higher-wage-scale brackets. The basic law, the I'IPA, is found adequate to 
furnish a basis for the administrative statutes in codes of fair competition, 
agreements and licenses. 

1 1 . DEVELOPIZSI'T OF POLIC Y 

The rational Industrial P.ecovery Act lacked any definite and complete 
legislative -oattern for the formulation of policies. The PPA adopted the 
"trial and error" method for the promulgation of the new industrial laws. 
There was a pre-conceived plan for immediate objectives. The Administrator 
for Industrial Recovery determined that collective bargaining was not a 
prerequisite to the substance of the labor provisions in voluntary codes 
proposed by management. The depulr/ administrator was the pivotal executive, 
vested with wide discretionar; r -oowers. 

Statements of the President and the Administrator issued shortl;*- after 
the signing of the 1IIPA established the principle that the mone:'- earnings 
of the workers were to be increased* The first concrete evidence of policy 
dealing with "wages above the minimum" was contained in the Presidential 
Order, approving Code No. 1 for the Cotton Textile Industry. The President's 
Reemployment Agreement and the "model" codes prepared by the USA for the 
guidance of industry and trade also contained provisions for "wages above 
the minimum". The policy memorandum issued by the Policy 3oard on October 
25, 1933, was the first announcement of formal policy on this subject. 

The suggested patterns presented in the early PPA documents were charac- 
terized "oy ambiguities, contradictions and other imperfections. These 
patterns did not "orovide for an increase in nor even the maintenance of the 
former money earnings of all the workers involved. Provisions were frequently 
of such a nature that it was impossible to interpret them. The policy 
memorandum of October 25, 1933, was the only official announcement of formal 
policy during this period. And although it was negative, incomplete and 
indefinite, it affected the development of all future codes in which "wage 
schedules" and "basing points" were proposed, 

9856 



-2- 

t 

The relationship of the Executive Order of December 7, 1933, dealing 
with the collection of statistical data, to the proper administration of 
provisions for "wages above the minimum" in codes of fair competition is 
pointed out. 

During the active period of the labor policy group, under Leon C. 
Marshall, Deputy Assistant Administrator for Policy involving labor 
problems, an effort was made to formulate a definite policy on this subject. 
Ho additions to or changes in formal policy, however, were officially 
announced during this period. The meagre standards for "wages above the 
minimum" suggested by the ZTA Office Manual were equally as deficient as 
those offered by the sources from which these standards were abstracted. 

The I~BA Advisory Council considered the provisions for "wages above 
the minimum" in three specific industries presented to it for review. Ho 
new formal nolicy was announced during its activities to '.lay 27, 1935, the . 
date the Supreme Cou^t declared the process of codification under Title I of 
the IIIRA unconstitutional. The difficulties of the TEA, when presented 
with a situation involving a "wage schedule" or a "basing point" are evidenc- 
ed by its handling of the electric and neon sign industry case. The inertia 
of the PPA is also indicated Oy its failure to act in response to the im- 
practicability to obtain compliance shown by the replies to the questionnaire 
to the PPA field officers. 

Administrative discretion dominated the choice and substance of the 
various types of deficient provisions and clauses incorporated in codes of 
fair competition. Implicit policy, nevertheless, appeared to indicate that 
some "irovision for "wages above the minimum" was desirable end essentials 

The iPA Labor Advisory Board had fined objectives to increase the 
money earnings of all workers and recognized its responsibilities to attain 
these objectives. It was cognizant of the weakness of the various provisions 
for "wages above the minimum" incorporated in codes of fair competition 
and made recommendations to the EI KB for possible future legislation. 

The TEA Industrial Advisory Board opposed the inclusion of any pro- 
vision for ""'ages above the minimum". All leading industrialists, however, 
did not subscribe to this policy. The ERA Consumers' Advisory Board limited 
its opposition to the incorporation of "wage schedules". 

The TEA Legal Division appeared to hold conflicting views on this 
subject. It appeared to be unable to adhere to any fixed position, par- 
ticularly as regards the inclusion of "wage schedules" and "basing points". 
The '/PA Division of Research and Planning, although generally following the 
"established" policy of the Administration, frequently digressed to express 
individual ideas. 

The PRA Review Division had no specific policy of its own. It acted ?s 
a checking unit to determine whether or not a particular document or proposal 
was or was not consistent with its interpretation of "established" policy. 

The Code Planning Committee, organized informally on April 17, 1935, by 
the Code Administration Director, to suggest policy for the re-drafting of 
codes of fair competition proceeded to prepare another "model" code. It 
decided that it did not need the advice of the Labor Advisory Board in form- 
ulating suggested policy on labor problems. The PEA Labor Advisory Board 
9856 



-3- 

voiced its' objections to its proposals for treating "wages above the 
mi nimum " • 



The complexity of this continuing problem and the inoperative mean- 
ings of the greater number of the provisions for "wages above the mtnim-mgti 
in approved codes and the resultant state of non-complia-nce is summarized in 
a communication from the 'JRk Administrative Office to the chairman of the 
Labor Advisory Board in March 1935. The chairman's reply invites attention 
to organized Labor's traditional opposition to the fixing of rages in private 
industry by the government. But aside from the chairman's abstract solution 
by the application of collective bargaining, no plan for the resolution of 
this issxie is suggested. 

III. AI' APPRAISAL 

The Presidential Order approving the code for the cotton textile 
industry definitely established the principle that the wages of all workers 
had to be protected. A control additional to that contained in the provis- 
ions for minimum wages was essential. This principle was re-affirmed by 
the President's Reemployment Agreement. The 1IRA, however, failed to make 
any official announcement that the provisions for "wages above the minimum" 
were mandatory. 

The patterns suggested for "wages above the minimum" in the "model" 
codes issued for the guidance of industry and trade indicated a lack of 
proper planning. 

The much-quoted, yet negative, indefinite and incomplete, Policy Board 
decision of October 25, 1933, prohibiting the inclusion of "rage schedules" 
in codes, may have been the result of the situation in which the Adminis- 
tration found itself as a consequence of the conflict on the code for the 
construction industry. Although it was the only piece of formally announced 
policy on this subject during the entire life of the ERA, it was not always 
observed although generally passively accepted. 

Implicit policy, although sometimes contradictory to formal policy 
in other respects, appeared to require some type of regulation. As a 
consequence some orovision for "wages above the minimum" was included in 
all but 13 codes. 

I"RA policies dealing with "wages above the minimum" were vague, vacill- 
ating and contradictory. The results as incorporated in codes of fair com- 
petition ranged from definite "rage schedules" with recognizable minimum 
rates and clauses for the maintenance or partial maintenance of former 
weekly earnings to platitudinous clauses without operative meaning. 



9856 



„4- 

POLIOY Oil WJUES ABCYd 1 7~' MINIMUM 

Under the 

NATIONAL INDUSTRIAL RECOVERY ACT 

I . INTORDUCTIQN 

A. THL . ZANIhG QF TI - T, TERM 

Before proceeding to a discussion of the development of policy 
dealing with that part of the public law, promulgated pursuant to the 
National Industrial Recovery Act, relating to "Wages Above the Minimum" , 
it must 'be made clear what is me rut by such a term. 

The term as com. .only usee within the National Recovery Administration 
and by industry was frequently explained to mean those wages above the 
minimum rate prescribed by a code of fair competition or the President's 
Reemployment Agreement, required to be paid to workers considered to be 
in the so-termed "skilled and semi-skilled" , 'as distinguished from so- 
termed "common labor", operation or occupational classifications. (*) 
Such terms, however, were loosely used and never precisely defined, 

In the development and administration of codes of fair competition, 
provisions for "wages above the minimum" were necessarily considered in 
relation to the "minimum wage" "orovisions. The N?A did not issue any 
general regulations setting forth in precise language iny specific 
application of the rate or rates set by the "minimum wage" provisions. 
(**) By this is meant, that, fit: i h the "minimum wage" provisions of 
a code were designed to be all-inclusive and consequently to apply to 
all workers (other than these specifically excepted), they were not, in 
themselves, specific as to what division of workers the "at least" rate 
of the "minimum ^age" provisions was to be paid. 

The Presidential Order of July 9, 19-33, approving Code No. 1 for 
the cotton textile industry recognize! two classes of wages, i.e., 



(*) The term "industry" as used in this study means the entire productive 
process (within the limits of the IT IRA) or a specific sub-division, 
such as the Construction Industry.. It contemplates the two major 
elements, "capital" -and "labor". The term "management" as used 
means the interests representing the ownership of "capital. 

(**) 1TTA Policy permitted more than one basic minimum wage. Frequently 

an all-inclusive basic minimum was supplemented by other basic minima 
for specific groups of workers, establishing geographical, population, 
sex and other differentials. (Sec NRA Office Manual, Par. No. 
II-1300ff .) UFA policy also permitted exceptions to these basic 
minima wages for learners, apprentices, handicapped workers and 
junior employees. (See NRA Office Manual Par. No. II-1300ff.) 



9S5R 



-5- 

and •wages in the high.er-pr.id classes". (*) It also 
inferential'." desicnat c wh b cl ss of -or',:e?: were to "be paid more tha - : 
the "at least 11 rate set "ay the "minimum • \ e" rovision, i.e., those not 
in the pre-code "lowest paid class". (**) The wages of this class of 
worker-, are referred to by the terra "■* ;es hove the minimum 11 . 

Accordingly, provisions- for "\Y?.ges above the minimum" when strictly 
considered were construed to apply o the wages of -.11 workers that 
were not in the pre-code "losest paid class". This class was comprised 
of those wo riders that by reason of skill, training, longevity of employment 
or other ability or subjection to hazard or for other reason or scarcity, 
commanded or ".vera paid, prior to a code or the President's Reemployment 
Agreement, wages above the rate paid to the lowest wage scale class for 
a comparable period of time »r amount of output. 

3. Tr~ SK5TIEICA1TCE 07 ""ACTS ABOVE 33: MIHHTO". 



Sab-section 3(a) of Title I of the national Industrial Recovery 
Act empowered the President of the United States to approve codes of 
fair competition for all industry i fcr de. There was only one limi- 
tation as to the scope or ch racter of the industry or trade. This 
limitation .7as to the effect th t "nothing in this Act, and no regulation 
thereunder, shall prevent an individual from pursuing the vocation of 
manual labor aal selling or trading the products thereof; no- shall 
anything ir chis Act, nor - alation thereunder, prevent any one "from 
marketing or tr C a, the produce of his farm"-. Even the codification and 
administration of the l'bor provisions of agricultural industries and 
tr des '. re within the jurisdiction of the 1TIRA. 

Statistic I dat are not v ilable bo segregate (1) the number of 
workers, or (2) the annual e rnings or "we ;e bill" involved or afiected 
by provisions for "'.ages above the minimum" _i .. r under codes of fair 
competition, the President's Reemployment Agreement, or under the hI?A. 
Complete codificat: in under Sub-section 3(a) of the JTIRA has been estimated 
to include about .0 mil i n workers. (***) Of these it has been estimated 
that !2.6 millions were embraced by royed:codes of fair competition in 



(*) The term "class" as used In his sense denotes a group of workers. 
It is not limite ny operation or occu ational classification, 

(**) Condition i T b. 5 of the Executive Order of July 9, 1933, approving 
the original code for the cotton textile industry reads as follows: 
n 1:'i\c existing amounts by which wages in the higher-paid, classes, up 
to worke s receiving $30. C er week, exceed wages in the lowesf 
id class, shall be maintained. " 

(***) Estimate compiled by the president's Committee on Economic Security, 
Includes 17. S employe 1 las 6.4 unemployed workers. 



9856 



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effect on Kay 27, 1935. (*) 

Ihe'.percentage of workers directly involved by ;>-ovisions for "wages 
above the minimum" has been variously estimated between GO and 95 -percent 
of .11 workers eove-ed by codes of fair competition.. It would a near, 
however, that the proportion of workers more nearly ip Toadies 95 percent. 
(**) This proporti ;n represents the workers directly involved. But a 
worker was not fixed to his pre-code status. Hence, if and when, worker 
of the pre-code "lowest paid class" advanced to a higher wage bracket, 
his earnings were influenced by whatever regulations may have been estab- 
lished to control the wages of workers in the "higher-wage-brackets". To 
this extent, all workers under the NIBA were affected by the provisi ns 
for "wages ".hove the minimum". 



(*) Cf. Classification of approved cod s in industr' groups, Work 
Materials Ho. 13, by the Division of R e view, National Recovery ■ 
Administration (1935). On May ,7, 1935, then r ers 555 basic NBA cod's 
and 19 joint AAA-NRA-L.F. Codes in efiect. HRJ Code Ho. 176 was 
consolidated with Code Ho. 201. HRA Code Ho. 191 was cancelled by 
Administrative Order Ho. 191-6, December 19, 1934. The joint AAA- 
HRA-L.P. codes embraced agricultural industries and insofar s HRA. 
was concerned, consisted of labor 'provisions only. A4A-HRA-L.P. 
codes Ho. 2, 3, and 4 were consolidated into HRA codes Hos. 490, 
196 and 132, respectively. The 1929 Census of Manufactures was used 
as - basis for the astir ited figure of 22.6 millions. This figure 
represents the number of -"employable" and therefor- the estimated 
number or workers involved but not the number affected by the codas 
of fair competition or the HIRA. 

(**) In the cotton textile industry, comprising royi.. lately -"SO, 000 

workers, unpublished datv of the Bureau of Labor Statistics, Depart- 
ment of Labor, indicates that in the pre-code period of July 1933, 
■8,99 per cent were in the wage scale bracket of "under 12.5 cents". 
In the silk an'' rayon industry, comprising about 130,000 workers, 
the Bureau of labor Statistics, Department of Labor indicates that in 
the pre-code period of April 1953, 4.1 per cent were in the sarr wage 
scale bracket. (See Monthly Labor Review, June 1955). In the woolen 
and worsted goods industry, comprising about 151,00 workers, the 
■Bureau of Labor Statistics, Department of Labor, indicates that in 
■ the pre-code period of January to March 193.?, 11.9 per cent were in 
the lowest wo.re scale brocket of "under 25 cents". (See Monthly 
Labor Review, June 1935) In the bituminous coal mining industry, 
comprising about 469,000 workers, there was reported in 1933, 268 
"trappers" (the lowest paid class of workers reported), i.e., less 
than 1 per cent ol a total of '".1,43s workers cove red by a study 
of this industry. (See Monthly Labor Review, September 1933) . I n 
1932, there was reporter a total of 99 sewin -machine ope-^tors 
(the lowest paid class of workers reported), i.e., less than 1 per cent 
of a tota.l of 114,21-: direct manufacturing workers in the motor vehicle 
industry covered by study of this Industry. (See Monthly Labor 
Review, June 1933. It is to be noted that the number of workers 
indicated in each wage scale bracket does not indicate the number in 
the lowest paid class. 



9856 



c. tze puaFOS^'c " z-~ A kT'ikfATiT? t aw 

The purpose of the provisions for "wages above the mi^invum was to 
provide legal control thru the implementation of codes of fair competition, 
agreements and licens s, in order to effectuate the policies and ptj~pose-s 
of the 1IHA. providing for an increase in the "purchasing power" of the 
workers in the higher-wage scale brackets. 

As stated previously, the "at le st" minimum rates of the ifmiTiiTnaoj 
wage" provisions applied to workers in the pre— code lowe-ot claus. (*) 
To increase the weekly earnings of this class of workers, the "minimum 
wage" provisions would have to be designed so that "the rate (in terns of 
time,' e.g., an hourly rate), when coupled with bhe allowable full-time 
code week, would provide full-time weekly earnings in excess of the 
earnings for the pre-code week. The accomplishment of this objective 
was important inasmuch as the rate prescribed by the "minimum wage" 
provisions to a great degree acted as a "basing point for the "wages 
above the minimum" provisions. (**) 

Minimum wage provisions, however, were not sufficient either to 
maintain or increase the money earnings of all workers. They did not 
provide a legal oasis whereby an increase in money earnings was guaran- 
teed to that large group of workers, estimated to comprise about 95 
per cent of all workers. The rate established by minimum wage provisions 
applied to workers contributing to only - small share of the total labor 
income. Consequently, the larger share would remain unregulated unless 
other provisions were "re scribed. 

furthermore, without some further effective provision, a concen- 
tration at or near the minimum would receive legal sanction. Management 
would be left free to leave unchanged o:~ even reduce the wages of certain 
workers to compensate for any increase iroviclei by the minimum wage pro- 
visions. Employers without a sense d social justice could continue 
their past "chiseling" practices in the competitive market at the ex- 
pense of the worker. 

In the declaration of policy as set forth by Section 1 of the 1TIRA, 
the objective to "increase the consumption of industrial and agricultural 
products by increasing archasing power" preceded the charge "to reduce 
and relieve unemployment". Insofar as the, national ""age bill" was con- 
cerned, these two objectives were correlative, for an increr.se in the 
number of workers employed would ten", to increase the total payroll 



(*) A number of codes were pprove with sub-minimum rates for certain 
groups such as learners, apprentice s, handicapped workers and junior 

employees. 

(**) The "wages above the minimum" provisions in 82 coc.es provided for 

the maintenance af differentials, i.e., the maintenance of the pre- 
code differences in rates of pay. Other provisions, e.g., some of 
those providing for- the maintenance of weekly earnings, also, provided 
for the maintenance of differentials. 



9856 



But to prevent the " share- the-work" program from becoming a " share-the- 
poverty" movement by reason of the reduction in the hours of employment, 
it ".• ,s essential that the entire wage structure below which the forces 
of the co" ipetitive market could be prevented from operating, should be 
sup srted, at least until such time as the State had extended its paternal- 
ism to the unionization of labor in all industry and trade to insure 
genuine collective action which the TJlP-A appeare to foster. 

The State had declared that the latest recurrence of the social- 
economic disturbance ' as acute-, An emergency existed. Successful accom- 
plishment of an increase in the money earnings of the workers thru the 
process of collective bargaining depended on the unionization of labor 
in all industry and trade. Such an accomplishment, although deeir 
essential to the objectives of the NTBA, was a momentous task, requiring 
time andpl inning. It was also doubtful whether the- Sea te was prepared 
to proceed with patera: lism on such i scale. Some other means o '.ccom- 
plishing equal results was essential to the imced-iate situation. Accord- 
ingly, provisions purporting to maintain or increase the money ( irnings 
of the great majority of the workers to • which the rate -. et by the. min- 
imum wage provisions did not directly ap l 1 ' were conceived in the various 
forms and substances of the administrative -t uvtes for "wages ; oove 
the minimum" . ■ 

D. T EE LAW 

The legislative policy set forth in Section 1 of Title I of the HIBA, 
"to increc se the consumption of industrial and agricultural products by 
increasing purchasing power", clearly meant to increase the earning 
of the workers in order to enable then to ourchase more goods and services. 
The legal way of affording this protection to the workers was by tb 
creation Of administrative laws through the implementation of the codes, 
agreements or licence , empowered under Title I of the LTIBA. To insure 
that this protection would be complete as to all workers, it would be 
necessary to embrace the entire range of worker and their wages. 

Sub-section 7(c) empowered the President to prescribe limited codes 
of fair competition, fixing maximum hours of labor, minimum rates >t pay 
other conditions of employment necessary to effectuate the policy of 
Title I, if, after investigation of the labor practices, policies, wages, 
hours of labor, and conditions of employment in aw industry or trade where 
no mutual agreement bat been ap rove , he found it ivi sable. In so doing 
the President was empowered to "differentiate according to experience and 
skill of the employees affected", provided no attempt \r-r ade "to intro- 
duce any classification according to the nature of the work involved 
which might tend to set a maximum as well as a minimum wage". This sub- 
section clearly empowers the President not only to provide '■ minimum wage 
for all workers, but to establish a minimum wage for each class according 
to experience and skill. (*) T'ae one specific restriction was against the 
introduction of any classification that might tend to set a maximum as 
well as a minimum. 



Cf. Memorandum by Blackwell Smith, NBA Associate Counsel, to G-. A. 
Lynch, NPJV. Administrat: :n Officer, Hay 10, 1934. See also "Compendium 
of Abstracts of policy and Other Statements Issued by the policy group" 
(not dated) NBA. Mimeo Ho. 1637, Appendix "B" in NBA Studies Special 
Exhibits - Work daterials No. 45. 



9856 



-9- 

II. DEVEL OPMENT OP POLICY 
A. INTRODUCTION 

In the introduction of the study of "Policies in the Control of Wages 
under the national Industrial Recover:; Act", the "Principles of Policy" 
have been discussed and defined. (*) In this discussion it lias been point- 
ed out that NRA policy on the subject of wages took two forms: (l) 
fomsuL or explicit policy represented 'oy a stated set of rules, sometimes 
in written form, and (2) informal or implicit policy represented by 
common principles underlying the action taken in a series of decisions 
or the guiding principle followed in a single important situation. Of 
tae two forms, implicit policy was the more common, due in a large 
measure to the dearth of formal HBA pronouncements on the more basic 
issues. It was also pointed out that the lack of formal policy for admin- 
istrative guidance must not be. interpreted to mean the absence of any 
policy or even more than one contradictory policy on the same issue under 
a similar set ef circumstances, "or must it be understood that formal 
or explicit policy, in all cases, agreed with or superceded implicit 
policy. To fully appreciate these contradictions, the freouent shifting 
and hedging, and the freedom Permitting the use of administrative dis- 
cretion, it is necessary to understand the NBA code-making scene. 

3. • TEE COSE BA R GAINING- SCENE 

At the outset it would appear that the President elected to rely 
on the cooperation of management to submit voluntary codes and to revise 
their substance so as to oe acceptable to such standards as the NRA im- 
provised. The power of imposing a code under subsection 4(b) of the NIRA 
was never exerted, although orders of approval frequently modified the con- 
tent of a code finally submitted. Furthermore, executive and adminis- 
trative discretion rather than legislative dictum, to a large extent, 
accounted for the nature of the administrative organization and the pol- 
icies Pursued by the NRA. (**) The 17IRA offered no complete and Precise 
pattern. It did provide, however, for the two technical divisions, i.e., 
the Legal and the Research end Planning Divisions. 

.In the beginning the President elected to appoint one Adminis- 
trator vested with temporary powers subject to an Industrial Recovery 
Board. (***) Shortly after, however, much broader powers were delegated 
to the Administrator;- and. these continued to be augmented from time to tine 
by other Executiv e Orders. (** * *) -Jo Executive O rder, however, appeared to 

(*) This Chapter - "Policies on Wages above the Minimum" is part of the 
study' of "Policies in the Control of Wages under the National Indus- 
trial Recovery Act." 

(**) Cf.. Subsection 2(a) of . the Act. 

(***) Cf. Executive Order No.. 6173, June 15, 1933. 

(****) Cf. Executive Order No. 6205-A, July 15, 1933. 



9356 



-10- 

set forth clearly arid completely the "machinery" for the development and 
administration of codes. 

Apparently it was decided that the MRA venture in the creation of 
industrial law required an elastic method for the crystalization of the 
experiement in industrial self-government and accordingly the method 
of trial and error was adopted. The code-making rules and regulations 
that were prescribed appear to reflect a preconceived plan for immediate 
objectives rather than for any long range planning. (*) 

The initial step in the organization of the NRA was instituted 
"by the President, i.e., the establishing of the three advisory. boards 
to represent the interests of management, labor and consumer. (**) 
The Administrator in turn completed the system of organization. Codi- 
fication centred about the deputy administrators appointed ''oy the Admin- 
istrator to whom powers and responsibilities were delegated. These 
executives were largely drawn from industry with some few with a prev- 
ious labor background. (***) Although obligated to support the Constitution 
of the United States, they were not pledged to support the policies- and 
purposes of the NIRA. Nor were they examined to determine whether they 
were familiar with the objectives of the HI HA. Except on important issues, 
the Deputy Administrators approved or disapproved the substance of the 
provisions of voluntary codes. They even composed the letters of 
transmittal to the President bearing the Administrator's recommendations. ( 

At almost the beginning of code negotiations, the Administrator 
ruled that the labor provisions in codes proposed by management did 
not necessarily have to be the result of collective bargaining with 
tiie workers. (****). Such a ruling was confounding. But, if it had been 
otherwise it would undoubtedly have changed the entire organisation for 
codification, at least insofar as the provisions dealing with labor 
issues were concerned. .Representatives of "organized labor had believed 
that all provisions affecting labor would be arrived at as a consequence 
of collective agreement,- In this regard their opinions would seem to 
have been supported by the NIRA, itself, which not only appeared to be 
designed to promote collective bargaining but also to promote the organ- 
ization of labor as well as management and even to permit labor and Con- 
sumer groups as well as employer groups to ' ck out and submit. codes of 

(*) Cf. NBA Bulletin No. 1, June 15, 1933, and NRA Release No. ~11, June 
35,. 1933. 

(**) Cf..NRA Bulletin ITo, 1, June 15, 1933. 

(***) Cf. NRA. Release ITo. 3633, March 5, 1934, quoting Pierre S. Dupont 
a member of the NRA Industrial Advisory Board, as follows: "The 
cooperation of industry has "been notably illustrated within recent 
weeks by a response to a request of General Johnson that industry 
furnish the names of industrialists willing to undertake to act 
either as deputies of the Administrator or as government represen- 
tatives of code authorities. The response to this appeal, which was 
made, through the Industrial Advisory Board, was prompt and generous.." 

(****) Cf. Section 6 NRA Bulletin 2, June 19, 1933. 

9356 



-11- 

fair competition or other mutual agreements. 

Such a ruling also appeared to anticipate th« content of the rules 
and regulations -.7" ich the President might prescribe- as a measure to determ- 
ine tlie true representative character of a proponent groves, (*) The 
Administrator apoarantly concluded that such rules, and regulations would 
not require the establishment of representation in the submission i>£ codes 
for one of the two major elements of, industry, i.e., the workers. Futtace 
policy of the ITRA appeared to support the Administrator's conclusions. 
Tor, while the MA instituted certain policies respecting the establish- 
ment of the representative character of a proponent group, it would appear 
that specif ic. consideration was not given to the lab or element.' 

The BBA. also appears to have "been conscious of the limitiations 
of the unionization of enrol oyees at the beginning of code negotiations 
and the accompanying difficulties of obtaining employee representation 
or collective action in the great number of unorganized fields. Tae 
President apparently. had this situation in mind when he directed the 
appointment of a Labor Advisory Board by the Secretary Labor to "be 
responsible that every affected labor group, whether prgainized or un- 
organized, be fully and adequately represented in an advisory capacity 
and any interested labor group will be entitled to be heard through re- 
presentatives of its own choosing. "(5**) 

An Industrial Advisory Board was also "appointed ~oy the Secretary 
of Commerce to "be responsible that every affected industrial group is 
fully and adequately represented in an advisory capacity and any interes- 
ted industrial group will be entitled. to be heard through representatives 
of its own choosing." (***) At the same ; time a Consumers' Advisory Board 
was appointed to "be responsible th ,t the interests of the consuming public 
will be represented and every reasonable opportunity will be given to 
any group or class who may be affected directly or indirectly to present 
their, views". (****) 

The Legal Division, to advise the BBA and its members regarding the 
lef;a.l phases of action taken oursuant to the 1T1RA and the Division of Re- 
search and Planning to gather and analyze facts concerning each industry 
and trade, completed the five major ISA Advisory groups. 



(*) Cf, Section 6 (b) of the BIBA. 
(**)Cf. KBA Bulletin Ho. 1, June, 15, 1933. 
(***) Ibid.. 
(****) Ibid. 



9356 



-12- 

c. early development of former policy 

1. Statements Of The Presid enj^AndJThe Administrator 

It is not illogical that the first statement reflecting the attitude 
of the National Recovery Administration respecting the wages of workers 

- all workers - should he made hy the President of the United States. 

In NRA Bulletin No. 1, issued June lb, 1933, the date the President signed 
he^rthe President stated: -The law I nave just signed was passed 
to out people hack to work - to let them buy more of the products of 
farms and factories and start our business at a living rate again , and 
cont nSng: -'It seems to me to he equally plain that no ^-- * c £ 
depends for existence on paying less than living wages to its workers has 
any right to continue in this country. By business I mean the whole of 
commerce as well as the whole of industry; by workers I mean all workers 

- the white collar class as well as the men m overalls; and by living 
wages I mean more than' a bare subsistence level - I mean *be wages of 
decent living." "The idea is simply for employers to hire more men to do 
the existing work by reducing the work-hours of each man s week and at 
the same time paying a living wage for the shorter week." "The aim of 
the whole effort is to restore our rich domestic market by raising the 
vast consuming power." In these words the President emphasized one of 
the purposes of the NIRA - the raising of wages of all workers. { ) 

This statement of the President was followed on June 19, 1933, by 
the issuance of NRA Bulletin No, 2 in which General Hugh S. Johnson, Ad- 
ministrator of the NRA, stated: "In order td carry out the President s 
suggestion as quoted in paragraph (l) and to effect an immediate reduc- 
tion of unemployment and increase of mass purchasing power, trade associ- 
ations or groups are invited to submit without, delay a basic code covering 
only such agreements as are consistent with the policy of the act, re- 
specting maximum hours of labor, minimum rates of wages, and _ such means 
as each industry may find necessary to protect its constructive and co- 
operating majority from the wasteful and unfair competition of minorities 
or recalcitrants" and that "minimum wage scales should be sufficient to 
furnish compensation for the hours of work as limited, sufficient in 1 act 
to provide a decent standard of living in the locality where the workers 
reside". (**) The Administratpr by these statements emphasized the two 
important points for early codification:- an immediate reduction of un- 
employment and an increase of mass purchasing power. The pattern oiierea 
for the regulations was by providing "minimum wage scales" in codes oi 
fair competition. 

2. The First C ode. July 9. 1 933 

The first concrete evidence of the policy to be pursued in dealing _ 
with "wages above the minimum" in codes of fair comoetition was contained 
in the Presidential Order of July 9, 1933, approving Code No. 1 for the 



(*) NRA Bulletin No.. 1,. June 16, 1933. 

(**) Cf. NRA Bulletin No. 2, June 19, 1933. 



9856 



-13- 

cotton textile industry. This order provided that: 

"the existing amounts by which wages in the higher paid classes, 
up to workers receiving $30 per week, exceed •'.ages in the lowest 
paid shall be maintained; "(*) 

Apart from the qualification in this provision limiting its applica- 
tion to workers receiving less than $30.00 per week, it was a definite 
prescription that the wages of workers in the higher-bracket-wages group 
were to he increased by amounts equal to the increase that was urescribed 
by the minimum wage provisions. Furthermore, this provision embraced all 
workers in the higher paid classes (up to workers receiving $30.00 per 
week). (**) 

The provision contained in this Executive Order demands emphasis: 
first, because the voluntary code submitted by industry failed to include 
any provision for ""'ages above the minimum" and the provision was included 
by Presidential Order; secondly, because it was the first expression of 
administrative policy on "wages above the minimum"; and thirdly, because 
it implied that the "at least" minimum wages prescribed by the "minimum 
wage" provisions were to be oaid to the "lowest paid class" of workers. 
It was therefore apparent by this initial act of the President that pro- 
visions for "wages above the minimum" were to be provided in each code of 
fair competition and such provisions were to be designed to protect the 
wages of all workers not in the pre-code "lowest paid class". 

3. Provisions And Interpretations Of The President's He-Employment 
Agreement 

The President's Re-employment Agreement of July 20, 1933, is the 
next important step in the development of policy dealing with this sub- 
ject. The approval of only one code preceded the institution of this 
Agreement. This Agreement was a voluntary "blanket" affair designed for 
all industry and trade. Hence, its policy implications were correspond- 
ingly important. 

This Agreement, pursuant to sub-section 4(a) of the Act, was con- 
ceived in order to accelerate the return of prosperity by prompt action 
to shorten work week and to raise wages for the shorter week pending the 
develoornent and approval of codes. (*'**; Section 7 of this Agreement con- 
tained provisions affecting the compensation for employment in excess of 
the minimum as follows: 

(*) Cf. Condition'No 5 of Executive Order, July 9, 1933, approving 
the code. 

(**) Section 3 of Schedule . "A" of proposed modifications approved July 
16, 1935, and again modified and incorporated as Section XIII of 
the amended code, approved November 8, 1933, did not adequately 
provide for the wages of all workers. In the amended code, the 
"maintenance of differentials" provision, protected only those 
workers receiving in the ore-code period more than the minimum 
prescribed by the code. 

(***) Cf. NBA Bulletin No. 3, July 20, 1933. 
9856 



-14- 

"iTot to reduce the compeii'satiori for employment- now in excess 
of the minimum wages hereby agree to (notwithstanding that 
the hours worked in such' employment may he hereby reduced) 
and to increase the pay for such employment by an equitable 
adjustment of all pay schedules." 

Immediately following the issuance of this Agreement, questions as 
to the intent of these provisions became- so numerous that the Administra- 
tion was forced to make certain interpretations which were later compiled 
in LOA Bulletin No. 4 issued early in September 1933. Two of these in- 
terpretations, libs. 1 and 20, referred to the "equitable readjustment" 
provisions as follows: 

11 Interpretation r-To . 1 - Concerning Par. 7 

"Paragraph 7 means, first, that compensation of employees above the 
minimum wage group (whether now fixed by the hours,. day, week, or other-, 
wise) shall not be reduced, either to compensate the employer for in- 
creases that he may be required to make in the minimum wage group in or- 
der to comply with the agreement, or to turn this reemployment agreement 
into a mere share- the- work movement without a resulting increase of total 
purchasing power. This first provision of paragraph 7 is a general state- 
ment of what shall be done, which is that rates of pay for employees above 
the minimum wage group shall be increased by "equitable readjustments". 
Uo hard and fast rule can be laid down for such readjustments, because 
the variations in rates of pay and hours of work would make. the applica- 
tion of any formula unjust in thousands of cases. We, present, however, 
the following examples of the need for and methods of such readjustments: 

Example 1. — Employees now working 40 hours per week in factories. 
"Then hours are reduced to 35, the present rate per hour if increased one- 
seventh would provide the same compensation for a normal week' s work as 
before. 

Example 2. — Employees now working 50 hours per week in factories, 
"/hen hours fire reduced to 55, s rat.:; per hour if increased one-seventh 
might be insufficient to provide proper compensation. But, tb increase 
the rate by five-sevenths, in order to provide the same compensation for 
35 hours as previously earned in 60, might impost an inequitable burden 
on the employer. The 60-hour week might have been in effect because of 
a rush of business, although a 40-hour week might have been normal prac- 
tice at the same hourly wage. Seasonal or temporary increases in hours 
now in effect, or recent increases in wages, are proper factors to be 
taken into consideration in making equitable readjustments. 

The policy governing the readjustment of wages of all employees in 
what may be termed the higher wage groups requires, not a fixed rule, 
but "equitable readjustment" in view of long standing differentials in 
pay schedules, with due regard for the fact that payrolls are being 
heavily increased and that employees will receive benefits from shorter 
hours, from the reemployment of other workers, and from stabilised em- 
ployment which may increase their yearly earnings. > 

The foregoing examples indicate the necessity of dealing with this 
problem of "equitable readjustment" of the higher rates of pay 

9356 



-15- 

on the basis of consicl • tio o: the varying circumstances and con- 
ditions of the thousands o l it mrices d c rploymenta involved. Any 
attempt to define a . biona! standard v-ould be productive or widespread 
injustice. The Fatio i P.ecov ry A ministration vail, through lo« a l 
agencies, observe carefully t i n r in v dch employers comply with, 
their agreement and to make "cquitabl r tdjustments" , and will take 
from time to time and nounce fn '.7; shin ton such action as may be 
necessary to correct clear cases of unfairness ant t aic conscientimis 
employers in carrying out in good faith the terns of the agreement. 

When an employer signs e:a agreement and certifies his compliance 
and also joins in the submission of a Code of Pair Competition before 
September 1, 1933, his determination of what are "equitable readjust- 
ments" should be accepted at least prior to September 1, as a prima 
facie compliance with his agreement, pending action 'oy PPA upon the 
Co e submitted, or any other action by "LA taken to insure proper inter- 
pretations or applications of agree tents. This will afford "IRA an 
opportunity to survey t u eral r suits of the reemployment program 
and to iron out difficulties and mi~suriderstan ings over agreements that 
are of p. substantial character." 

Int. : r j r etatio n . r o . 20 (Cone e rning Par . 7 ) 
Supplementin I 1 rj retatio: H o. 1 

"Paragraph 7 prevents the reduction of compensation in excess of 
the minimum, whether it is pal by the hour, day, or week, or month. 

Therefore, an employee previously aid by the day, week, or month 
will receive as much for t s Lorter day, wee:, or month. 

•An employee previouslj by the hour will receive as much ver 
hour, but as shortenin; tis hours wil] reduce his itual earnings per 
day or week ids compensation r er hour is to be increased by an equit- 
able re ad j us t me n t . 

There is no fixed rule which : lied, to c.etermine what is 
an equitable read. jus tnent. In < leral, it '-'ill be equitable to figure 
what the employee would have e rn ds revious rate per hour in a. 
normal week in the industry, an I n n to increase the hourly rate so as 
to give him substantially the same com s 'ion as he would have gotten 
for that normal week. But consideration must be given to other factors, 
including: Is the existing rate high or low compared with the average 
rate paid in the Industry? Will the resulting adjustment result in an 
unfair competitive advantage to other employers or other trades or in- 
dustries? Pill a long-standing wage differential be lost if there is 
no increase in the existing rate?" 

The first sentence of paragraph do.l of Interpretation ITo. 1 estab- 
lishes that (1) compensation (hourly, daily, weekly or otherwise) of 
employees; "above the minimum wa ; e group" shall not be reduced and (2) 
in any event "purchasing power" shall be increased. The method offered 
is by "equitable adjustments" of pay schedules. The examples, however, 
which are set forth to show the application of these provisions, im- 

9856 



-16- 

t.^^. „- r ,— ,1-ication n.-.id the inclcf initcness 
mediately indicate tie complexity oj. ^ Uca "- Jl - , . , . ,, . 

derived from the shorter work week, reemploy^ cu o.ne. ™f ^ *no. 
p stabilizrtion of employment, shoulc oc considered, io what °-cgree, 
however! these other intangible factors were to be considered, was not 
S Sned. Although compensation in the opeing sentence a™ - 
refer to hourly, daily, weekly or ether comoc ns 5 .t on t^e c an^lc 
su-estihg a method of "equitanle readjustment" , a pear to e.taoxisn 
sl - jtS ° . _ 1 .. 1 .: „„., pv P-.-minr-. on the basis 01 tne shortei 
4.V-+ n -^ virrpn<!e in yk el-l y money e -n iij.ii&= uii u -"- , 

tnat an increase j-.i w.o , _„ rm q.i« -ore-Agreement week 

w ek was intended. Tne determination ox a normal pie ^ 
I! essential to the mathematical formula suggested. And apparently it 
wL -rested ha the number ox hours in this "normal" P re~Agreement 
!!:,. w :: "eater than tne shorter week prescribed -,y tne Agreement. 
r r%. -niloye'rworkin S fewer hours per week before _ the Agreement tnan 
the haximum described by the Agreement, tnese -..revisions merely guaran 
teed no reduction in hourly, daily or weekly earnings. 

It would also a--oear that "eouitanle adjustments" were to be made 
individually. Consequently, employers who h-,d nade tne .greatest de~ 
lnaiviuuaxx^. v, il! ^H •>» .Mil retair t>>eir advantageous 
creases prior to tne Agreement coul< ..sail r-ctaix. t .cir a - 
market position insofar as labor east, -ere concerned. And the n 
equalities in the wages, paid to employees ppriormmg tne same work 
tne same industry could be ( preserved. 

It is also significant to note that Interpretation Ho. 1 referred 
to the "compensation of employees above tne minimum wage group . The 
limitations" of this "minimum wa. roup" were not stated ™J ™ £<* 
a term v^ed in the original provision in tne Agreement. Similai im 
perfect™* occurred in codes following tne pattern of this Agreement. 

Summed up, the President's ^employment Agreement and the two 
official interpretations re-established that some control was essen- 

al to -n-otect tne wa.es of those workers who prepaid comjensatx n 
in excess of the -^-Agreement minimum in order co increase- 'pachas in b 
-oower". Tne standards and nethods of application ox tais control were 
indefinite, to "eauitable adjustment" of nay schec.ules appeared to 
reauire compensation, substantially the same for the post-Agreement 
week as that for the : re-Agreement "normal" week. But tnere was no 
guarantee that such an "equitable readjustment" would provide anything 
more than a preservation of existing rates. 

4. The Policy Memorandum of Octobe r 25, 1933 

The v.cxt important step in the development of policy on this sub- 
ject was the policy board" s" confidential Policy memorandum released to 
tne administrative staff on October 25, 1933. (*) 

Paragraph To. 8 of this policy memorandum reads as follows: 
1 Un ion Agr e erne nts' a: id Schedules of Yfages 



T^TM. I1BA 1 Office Order llo. 35, S eptember 16, 1933, for tne creation 
of the Policy Board. 



9356 



-17- 

"go union a, roe .cits ere t- be written into, codes 

nor s.re scb.ce les es bo - : included in c»Aoe. 

The latter docs not forbid two jr three easing ra-tes. 1 * {•>•) 

Prior to the issuance of this policy board decision, a serious 
conflict had developed in connection with the negotiations for a number 
of the codes involving livisions of the construction industry. Organ- 
ized labor identified with the c r.'.s t ruction industry had put -op a stiff 
fight for the incorporation of "wage schedules" or "basing points" in 
the basic and supplemental codes for the construction industry for the 
various classes of so-termed "semi-skilled" and "skilled" workers. (**) 

The 1TRA not only supported management's opposition to the incor- 
• tion of "wage schedules" for "semi-skilled" and "skilled" workers 
but was actively engaged in promoting a program conceived to revive 
the construction industry by extending an inducement to private finan- 
cial interests in the form of defla.ting existing wages in this industry(***) 



(*) This decision did not define t ... erms "wage schedule" nor "basing 
rates". ■ o rates nay be divided i <, : two general classes, i.e., 

time or unit rate for a specific "occupc tiona.l" or "operation" 
classification. Provisions for "wages above the minimum have been 
construed r vi a "wage schedule" if the provisions 2^rovide 
a wage rate or a series of wage rates (above the basic minimum) 
either of which is sufficient to provide a. control of the minimum 
rates to be paid the occupe,t onal or operation classification or 
clacsif ications of all or any significant and large area of the 
workers in the industry or tradi . Provisions have been construed 
to provide a "basing point" ii they provide one or more rates 
( Dove bhe .-sic minimum) which cc" es a "floor" for and/or in- 
fluence t ■■ os to be "~aid to a ■ -''cup of occupational or opera- 
tion classifications. Infra. 

(**) One dasic code was proposed for t /aire construction industry, 
including the clesi nin , constructing, alte-ing and" repairing of 
buildings, bridges, highways, railroads , dams, sewers, etc. 
Provision was made in t . I asic code for supplemental codes for 
divisions such as electrical contracting, heating, piping and 
air conditioning, iiason contracting, plumbing .contracting, etc. 

(***) Cf. " A Complete Resume of negotiations Covering the Establish- 
ment of the Cede of Fair Competition for the ruilding Construction 
Industries" prepared by the Building Trades Department of the 
A erican P. deration of Labor in colla.bora.tion with Solomon Parkin, 
Assistant "xecutive director of the L bor Advisory Board of the 

tional Industrial hecoverj- Administration, in the January, 1935, 
issue of tne B r idg e .en's iiagazine published by the International 
Associat of Bridge, Structural and Ornamental Iron Workers, 



9856 



-18«. 

In this regard it is important to "bear in mind that on September 12, 1973, 
the Administrator for Title II of the itflPA had issued a "bulletin incor- 
porating minimum rates for "skilled" and "unskilled labor" in the three 
geographical areas of the United States for construction projects under 
the Public Works Administration, following the recommendations of the 
Labor Advisory Board appointed by the Secretary of Labor. (*) At that 
time it was estimated that 90 Per cent of all construction activity w as 
involved by the Public Works Administration programme. 

This problem concerning the incorporation of "wage schedules" in 
codes was considered the most far reaching of all labor problems before 
the SPA. The /HA., management and labor "'ere aware of its complications 
and proportions. A real test presented itself for tl e enactment of in- 
dustrial statute to safeguard the money earnings of the 3,400,000 work- 
ers in the construction industry. 

Ultimately, Donald P.. Pichberg, ,T PA General Counsel, ruled that the 
I'TIPA did not permit the inclusion of "wages schedules" in codes. (**) 
The result of the deliberations of the Administrator, the General Counsel 
and the Policy Board were finally disclosed in the aforementioned policy 
memorandum. (***) 3ut this neg< tive and incomplete decision '■16 not set- 
tle the issue. The problem had been and continued to be the subject of 
controversy. In fact, in connection with the development of the codes 
dealing with the construction industry, it eventually helped to precipi- 
tate a rupture in the administrative organization. 

From labor's point of view positive protection for all workers was 
essential. Management feared not only their bugaboo, "regimentation", 
but also trie inroads of further unionization. The issuance of this po- 
licy was epochal. In spite of the fact that it was recognizee that the 
problem, concerning the incorporation in co^es of minimum rates for all 
classes of workers had net been resolved, the greater part of the admin- 
istrative organization appeared to passively accept the decision and pro- 
ceeded to develop and administer codes accordingly. 



(*) Cf. Bulletin Bo. 2, September 12, 1933, Federal Pmergency Admin- 
istration of Public ,Tr orks. 

(**) This ruling was later confirmed in the General Counsel's Bemoran- 
dum of February 17, 1934, to George L. Berry, Division Administrar- 
tor, in charge of the codes involving construction. See Appendix 
"A", in EPA Studies Special Exhibits - ir "ork "laterials Bo. 45. 

(***) This was the only decision recorded under the topical index of 

'B'ages" in the "Bational Pecovery Administration Index of Fxecu-' 
tive Orders, Administrative Orders, Office Orders, Office 'emo- 
randa and Other Pertinent Bemoranda" for administrative guidance 
during the first year of code mailing. 'Blether this situation was 
indicative of the incompleteness of the index or not, the index 
served as an administrative guide in the development and adminis- 
tration of codes. See release (not dated.;, Bimeo T o. 11539. Re- 
leased about August 13, 1974. Included NPA Orders to July °7, 1934. 

9R56 



' -19- 

5. liodel Coc.es, Oct = ; ;,5 and^"Yc;:d^r_ 5^1933 

On tlie sam date th i hi ch quoted policy boaix ^cision of 
October .-25, 1933, Has issued, a reviser :v confidential "Suf&v^ted 
Outline for Codes" (frequently termed a model code) was released \> v 
the ISA. The letter of tr; as i d 1 from the ERA code standardization 
group to Blackwell Smith of the ERA Legal Division states that this 
"model code outline" contains the majority-opinion suggestions of a 
group oi over twenty persons (tliis group included three from the Labor 
Advisory Board) who had met drily since October 12 on this matter. Two 
provisions in this "model code outline" deal with "wages above the mini- 
mum". These provisions are as follows: 

. i nimuui Wage Bates by Occupation 

"Section 4, Within days after the approval 

of this Code, the Code Authority shall determine the oc- 
cupations in this Industry and present for approval to the 
Administrator after notice and hearing a schedule of mini- 
mum wage rates for occupations by localities." 

Wage s Above_ jbhe 'iininram 

"Section 6. do employee '-hose normal full-time weekly 
hours for the four v/eehs endii (date) are reduced 

by less than (20) percent shall have his 

or her full-time weekly amings i-cduced. Any employee 

whose said full-time weekly hours are reduced by . 

(50) percent shall not hive his or Ib r said earnings reduced 

by more th ( ! .rcer.t. All other employees 

whose hours arc rei xcess of the said . 

(.20) percent shall have their c ■ adjusted proportion- 
ately. The ■ riiciple of this section shell apply by class 
of worker to all other employees whose hours have been re- 
duced, whether compensated on a time-rate, piece-work or 
other basis." 

Accompanying these two provisions was a note as follows: 

"Hate: The figures in brackets are not mandatory, but are 
set forth for purposes of illustration. Bach industry may 
make its own proposals." 

It has already been stated that this "model ccd.e outline" was 
confidential (presumably to the executives of ERA.)- but it should also 
be stated that the su gestions were intended "to assist trade and in- 
dustry in the preparation of codes". This point is emphasized as the 
administrative staff to a great degree considered the various "model 
code outline" as the developing policy of the administration and ran 
examination of the provisions in a proved codes will witness that this 
was a fact. But more important, however, are the apparent contradictory 
situations. On the same date that the policy board declared that sche- 
dules of wages must not be written in codes, the code standardization 
group suggested to industry and trade to incorporate a provision whereby 
it he came mandatory on the code authority to determine the occupations 
in the industry or trade and present to the Administrator for , 
a p.roval minimum wage rates for occupations ay localities. 
9856 



-30- 

And simultaneously this same group suggested a "model" provision to incor- 
porate in the same code providing , for a "proportionate" adjustment of 1_r ages 
above the minimum. In this regard industry was permitted to propose its 
own terms. 

The reason advanced against incorporating "wage schedules" in codes was 
that such provisions did not afford full opportunity to the workers involved 
to participate by bargaining collectively. Cf course such reasoning was well 
founded. But the policy board decision of Octo or 25, 1933, was not so quali- 
fied. It was a blanket prohibition. It must also be recalled that the pro- 
visions for minimum wages were established without resort to what had here- 
tofore been acknowledged as genuine collective bargaining. (*) Furthermore, 
the reason for prohibiting "wage schedules" in codes would, from a practical 
point of view, hold equally trae 30, 60, 90 or some other period of days 
after the effective date of a. code or whenever the code authority was obliged 
to submit the minimum wage schedules by localities unless some effective 
means had been determined and made operative in the interim to accomplish 
collective bargaining. Certainly the Administration did not consider that 
the due process stipulation in the suggested provision was sufficient. The 
methods of accomplishing this suggested, procedure or other qualifications on 
which the approval might depend, were apparently left for future consideration. 

The provisions relating to the "proportionate" adjustment of wages above 
the minimum were also significant. The Administration was suggesting to 
Management for incorporation as public law, provisions which it later ho.d to 
admit were impossible of interpretation and consequently not enforceable. 

Aside from this, the Administration appeared to establish a new policy 
which tolerated something less than the maintenance of the amounts of pre— 
code differentials. The "normal full-time" week was introduced without 
qualification as to what constituted a "normal full-time week". Furthermore, 
it is possible in some codes that the number of hours, constituting the 
pre-code "full-time week" arrived at, woxild be fewer than the code week. In 
such an event a worker, receiving in the pre-code period more than the code 
minimum hourly rate, was left unprotected. This provision also permitted a re- 
duction in weekly earnings. 

On "November 6, 1933, Hugh S. Johnson, Administrator for Industrial Recov- 
ery, released another revised "Suggested Outline for Codes". Again this re- 
vised "model code outline" was in the nature of suggestions "to assist trade 
and industry in the preparation of codes". This time the "Minimum T7age Rates 
by locality and occupation" provisions were modified as follows: 

(*) In ITRA Bulletin ilo. 2, June 19, 1933, the Administrator stated: "Basic 
codes containing provisions respecting maximum hours of labor, minimum 
rates of pay, and other 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". William Green, 
President of the American Federation of Labor did not agree with Leo 
TTolman, Chairman cf the ITRA Labor Advisory Board that the procedure pur- ■ 
sued by the ITRA applied in spirit and in fact the principles of collec- 
tive bargaining. 



9856 



-21- 

"Section 3, After approval of tiais code, the Code Authority may 
present for approval to the Administrator, after notice and hearing, 
recommendations as to the upward adjustments in minimum wages for 
specified localities/occupations, in order to effectuate the purposes 
of the Act." 

Industry and trade were offered a choice to two suggestions for the 
provisions dealing with "wages above the minimum". At the same time the 
deputy administrator and the advisory boards and technical divisions, 
charged with the responsibility cf and participating in developing a code 
considered that they, too, wer^ offered the same selection for their con- 
sideration. Hence, recommendations of the deputy or the advisory boards 
or technical divisions as to the propriety of either one of the proposed 
alternates for the particular cede under consideration depended on the 
interests represented. Furthermore, the alternate, if any, ultimately 
accepted and proposd by industry depended on the relative bargaining power 
of the opposing groups and the discretion of the deputy administrator. The 
two suggested. alternates were ?s follows: 

"A. Section 4. Uo employee whose normal full-time weekly hours 

for the four weeks ending (date) are reduced 

by less than (percent) shall have his or her full- 
time weekly earnings reduced. Uo employee whose full-time weekly 
hours are reduced by more than said percent shall have his or her 
said earnings reduced by more than percent. 

"B. There shall be an equitable adjustment of all wages above 

■ the minimum,, and to that end, within ( days or 

months) from- the approval of this code, the Code Authority shall 
submit for approval of the Administrator a proposal for adjustment 
in wages above the minimum. Upon approval by the Administrator, 
after such hearing as he may prescribe, such proposal shall become 
binding as a part of this code, provided, however, that in no event 
shall hourly rates of pay be reduced." 

At once the indef initeness of the "minimum wage rates by occupations 
and localities" provisions is discerned even though the Administrator deemed 
it advisable to add that the procedure was to effectuate the purposes of the 
Act. The time of performance is not stated. The Provision, itself, is 
permissive, not obligatory. Wage schedules are replaced b^ r recommendations. 
The entire provision appears impracticable. The contradiction with the policy 
board ruling of Octoter 25, 1933, however, appears to be removed in this new 
"model code outline" along with any other meaning. 

The suggested provisions for the " adjustment" of "wages above the 
minimum" appear to introduce further new thoughts. Alternate A retains the 
"normal full-time week" id.ea from the previous "model code outline" but permit- 
industry to propose the percentage limitation for the hourly reduction basis v> 
well as for th,e earnings reduction basis. This alternate likewise permits a 
reduction in weekly earnings. It also departs from the original idea of main- 
taining the amounts of differentials. 

Alternate 3 introduces a new scheme for the "equitable adjustment" of all 
wages above the minimum. It also introduces a procedure whereby it becomes 

985n 



mandatory for the code authority to submit within a stated time its proposal 
for the accomplishment of the "equitable adjustment" which may be revi erred, 
approved and made statute. Such a procedure raises the question when the 
adjustment is to be made effective, normally, adjiistments became effective 
on the effective dote of the code. In this suggested language there appears 
the implication that the adjustment may become effective on administrative 
approval. But the administration did not guarantee any approval. This 
alternate B also raises t'he question whether the "adjustment" might be made 
in accordance with some plan for all occupational classifications in an 
entire industry. Except for the suggested establishment of a schedule for 
minimum wage rates by the provision for "minimum wage. rates by occupation" 
offered in the "Suggested Outline for Codes" released October 25, 1933, it 
would appear that "adjustments" had been heretofore construed in terms of 
each individual enterprise or perhaps each unit of each enterprise. In the 
absence of any declaration to the contrary and in the light of the suggested 
section 3 - minimum wage rates by occupations and localities, industry could 
assume that a governmental approval of the entire range of wage schedules was 
possible and proceed accordingly. Such a procedure, however, was contra- 
dictory to the -oolicy board decision of October 25, 1933, previously mentioned, 
which implied that neither "wage schedules" nor "basing points" would be 
countenanced for all occupational classifications. Moreover, unless the 
Administration aided the organization of workers in unorganized fields, it 
is probable that the conditions of such a provision as Alternate 3 could 
not be accomplished, at least if genuine collective bargaining was to be 
observed. 

Questions relating to "wages above the minimum" continued to present 
themselves not only insofar as new codes were concerned, but also respecting 
the application of the provisions in existing codes. Furthermore, while this 
problem was the subject of considerable thought and discussion, the Adminis- 
tration does not appear to have made any further progress in the development 
of a definite policy of sufficient importance to be generally announced at 
the time a labor policy group was crea.ted on March 26, 1934. (*) notwith- 
standing, it would appear pertinent to refer to certain statements by high 
1J3A officials, indicating the unproductive groping of the 1TRA for an answer 
to the inquisitorial demands of those seriously interested in a solution to 
the problem: 

"I have the impression from various sources that industries tend 
to meet the minimum wage requirements at- the expense of those immed- 
iately above the minimum '.rage group so that the payroll as a whole is 
not increased- as much as ii should' be. In order to effectuate the 
policies of the Act there should be a general increase of all pay 
schedules and the gross payroll would have to be increased." (**) 

"The term "equitable adjustment" is a general term which has no fixed 
or inflexible meaning. It is a term which is subject to broad, inter- 
pretation and one which was probably used advisedly in the first place 
because it was general and could be used to cover ever*/ conceivable 
situation that might arise. Obviously, therefore, what might be an 
equitable adjustment in one circumstance might be inequitable under 
other circumstances. 



(*) Cf. TEA Office Order To. ^74 

(**) Cf. Memorandum ''oy Blackwell Smith, TEA Associate Cbmnsel, to S. M. 
Dubrul, November 10, 1933. 

9356 



-23- 

"In determining whether or not a ^articular readjustment is an equit- 
able one there are certain factors which sliould always be considered. 
Chief anions these is whether or not the adjustment is in keeping with 
the -policy expressed in the Act and by the President, to wit, that 
of increasing purchasing power. Other factors to be considered are: 
(a) Is the existing rate high or lo" when compared with the average in 
the industry? (b) Till the adjustment result in unfair competitive ad- 
vantages to other employers or other industries? ( c) TTill the adjust- 
ment result in the maintenance of long standing differentials.?' 

"To be equitable, a readjustment must be fair to both employer and 
enroloyee, but it would seem that in most cases major consideration 
sliould be given to the employee. Ordinarily, an employee's weekly 
wage should not be reduced because his hours of work are reduced. 
If heispaid on a hourly basis his hourly rate of pay sliould be ad- 
justed upward so that the weekly wage will be maintained unless, of 
course, the reduction in hours is very great. It is very difficult to 
state hywothetically whether a given readjustment i s an "equitable 
readjustment". In each case cue consideration should be given to all 
surrounding circumstances and an amicable agreement reached if possible.' 
(*) 

S. Executive Order of December 7, 1953, Dealing with 
Labor statistics 

It is also important at this point to call attention to the fact that 
the Administrator for Industrial Recovery authorized the Bureau of Labor 
Statistics, Department of Labor,' to request, receive and tabulate reports 
from members of industries concerning payrolls, employees, and man-hours 
worked. (**) TThile such a procedure does not in the strictest sense indi- 
cate a direct development of policy on this subject, it nevertheless is in- 
dicative of the Administration's consciousness that the acquisition of sta- 
tistical data was essential to the proper administration of codes and partic- 
ularly in respect to the proper application of the code provisions for "wages 
above the Minimum"* (***) 

B. SUBSEQUENT DSVSLOPI KIT? 0? EOPdiAL POLICY 

1. The Policy Group Period 



(*) Cf. Memorandum by Blackwell Smith, ".HA Associate Counsel, to 
Ealph A. Byers, March 16, 1934. 

(**) Cf. Executive Order Fo. 6479, December 7, 1933, and ERA. Administrative 
Order X-10, March IS, 1934. 

(***) Cf. "Issiies Within the Problem of Wages, in the Higher Brackets", in 

Section II-D-l(a)- Labor Policy Group; Comments of Committee on Labor 
Policy in Section II-D-l(c)- Tentative Formulation of Labor Policy 
and Hecommendations of the 1IBA Labor Advisory Board in Section II-I-l- 
The La.bor Advisory Board. 



985S 



-24- 



(a) Labor Policy Group 

On Llarcl: ]6, 1934, the Administrs/tor established three oolicy boards 
"to expedite and coordinate decisions of administrative policy (not only 
as to ap \roved codes but as to codes in making and general policy questions 
as well)". (*) These boards were established to "make recommendations to 
the Administrator" and tc "aivise division administrators on final 
decisions on oroblems wit, in fcieir respective fields". One of these 
boaris was a labor policy board, consisting :f a ciairrnan and one 
representative from tbe NBA Labor, Industrial', and Consumers' Advisory 
Boaris and the NBA Legal an<j Research and Planning Division-. All problems 
involving the labor Provisions of coles and all questions of lajor policy 
weoe to be' 'considered ~oy this Board. T . ■. 2 >erscnnel and t .e functions of' 
the ."old Policy Boar 1 .", .-'sever, were not displaced. .The name was merely 
changed to the "Staff". "Important matters of policy and of administration" 
were still to be considered by tae "Staff". (**) 

On April 9, 193'', t e Administrator created two staff units, a 
Personal St.: ih and an Administrative Staff. (***) T e Adaiiij.stro.tive 
Staff indue 1 n Assistant Ahhiiistrator for Policy to perform the 

functions of t.ie t..ree newly created policj/' boaris oreviousl/ mentioned. 
Tie three policy board? v ;re i lolished. The NBA Office Order embo lyin 
this reorganization of the policy set-up oresc.ibed that the Assistant 
Administrator for Policy would uavi supervision over policies governing; 

11 B m .doy.naiit Preble as : Sac. problems indole those involving the 
labor provisions of codes and other questions regarding hours, wages, 
differentials, conditions of labor, etc." (****) 

Tiree policy O roups were provided for "oy this jrder under Deputy 
Assistant Administrators for Policy. L ;cn C. liars all was designated as 
the Deputy Assistant Administrator for the "Bin loyment Problem" group, 
generally referred to a= the labor policy group. (*****) This group 
was composed of permanent advisers from the* three NBA Advisory Boards, the 
two NBA Technical Divisions and t..e ERA Co.mli nee Division. 

On hay 17, 1934, tie Administrative jfficer set forth the guiding 
principles to be observed "in ^rder tc enable the. oolicy staff to produce 
the results that a^e desired oy all". (******) i n this same memorandum it 
was stated that "policies when promulgated officially by the Assistant 
Alministrator for Policy will be binding as to all future codes and 
modifications, except w t ere special circumstances make departure necessary". 



(*) Of. NBA Office Order No. 7', Marc , 26, 1934. 

(**) Ibid. •• 1 _' . 

(***) Of. NBA Office Orders Nos. 83 -nl 33a, d?ted April 9, 1934, and 

ilay 9, 193'' , respectively. 
(****) T e Assistant Administrator for Policy was delegated supervision 

over "Trade Practice Problems" and "Code Authority and Classif icatio: 
Problems" , also. 
(*****) The two other deputy administrators for policy were designated 
by NBA Office Memorandum No. 180, April 14, 193:. Tiere is no • 
record of an official orler designating Leon C. Marshall. 
(******) Cf. NBA Office Memorandum No. 207, hay 17, 1934. 

9306 



-25- 

7ith the organization of the 'Labor Policy Board, it prepared to 
attack tie subject of "wages above tie rainimuin" on a broad front. At a 
meeting on Hay 18, 1934, tie following topical memorandum was presented 
for consideration: 

" I^SIGS VflTIIN TI3 ?j303L5u 07 7/AG35 
I'.'. T-12 :T1 ~ZR 33ACK5T 3 

"If tie N2A is to plan and control a program of handling wages in tiie 
upper brackets, policies must be framed upon a large number of issues, 
upon which heretofore varying stands have been taken. A partial list 
of the issues involved follows: 

1. The extent of the increase in weekly ani yearly wages. 

(a) The bearing of competing products. 

2. Hie week or period to be taken as base. 

3. Definition of full time working week before the code oeriod. 

4. Classification of occupations. 

(a) The prevention of reclassification of employees to avoid 
improper adjustment. 

5. Tiage differentials: plants, areas, etc. 

6. "Jage differentials between com arable workers in different 
industries. 

7. The place of independent unions and company unions in the 
bargaining. 

(a) Existing labor agreements. 

3. The legal status of the agreements. 

9. The inclusion of all workers. 

(a) Prevention of exceptions. 

10. Tae 'period of wage determination and the freezing of wages. 

1.1. Part time workers. 

12. Piece rates. 

13. Salaried and commission workers. 

14. Uon-mcney compensation. 

15. Collective settlement of disputes and a system of compliance. 

16. A statistical reporting system." 

And at the May 19th meeting the following outline was offered for 
review and discussion of the subject-! 

9856 



-26- 

" AU APPBOACH TO TH E PiiOBLSk 

WAGES III T 3 hlGhEH 3.USKdT 3 

"What follows is designed merely to serve as a basis of definite, 
pointed discussion. It may facilitate tins discussion to point out that 
the material deals only with an immediate course of acti:n, and this only 
in certain classifications of codes. Furthermore, this material is drafted 
on the assumption that the immediate course of action should not contemplate 
inserting tie codes classifications of occupations with attached wage rates. 

THE FACTS: In the codes thus far approved, there has been great variation 

in the clauses dealing with wages in tie higher brackets. Then 
too, there has been diversity of practice on the part of code authorities, 
even when administering identical clauses. The outcome of the whole matter 
has many unfortunate elements: (a) the Compliance Division cannot operate 
effectively when the provisions in a code are vague and uncertain — as is 
frequently true of the clauses under consideration; (b) there is considerable 
unrest among workers, some of whom feel that the attitude of the Adminis- 
tration on the maintenance of purchasing power is not being carried out, 
that many of tie clauses are irritatingly vague and noncommittal, and that 
many of the clauses hinder rather than promote collective bargaining; 
(c) in a considerable number of industries tiere is dissatisfaction with 
these clauses because the varying policies of the different firms have 
resulted in a difficult, if not unfair, competitive condition. 

THE PROBLEM: The problem breaks into two parts: (a) what simple and 

immediate applicable course of action will give a' satisfactory 
solution of the problem? (b) will this immediately applicable course of 
action sufficiently take care of long-run developments? Furthermore, in 
the practical application of policy, each of these parts may be considered 
in terms of (a) codes still to be approved and approved codes in which 
later action on other issues properly serves to reopen the problem, and 
(b) the other codes already approved. 

What follows is concerned only with --n immediately applicable course of 
action; and within that area, only with action in terms of codes still 
to be app.oved and approved codes in which tie issue may naturally and 
properly be reopened. 

A POSSIBLE C0U.RSE OF ACTION: In -rler to simplify compliance problems, 

secure cooperative and united action of labor 
and management, and secure fair competitive conditions of the members of a 
given industry, the policy should be followed of inserting, in the codes 
now under consideration, clauses which will have the following character- 
istics: 

1. There should be an avoidance of such vague and uncertain phrases 
as "so far as practicable", or "it shall be the policy to", or "a reason- 
able readjustment of wages above the minimum", or "an enui table readjustment 
of wages above tie minimum", or "wage differentials shall be equitably 
maintained" and the like. So also such phrases as these excusing a member 
of the industry from paying a higher wage rate than is paid by a competitor 
in the same district should be avoided. Classifications of occupations 

9856 



-27- 

have not been sufficiently accurate ani dependable, to prevent such plirases 
from leading to confusion and charges of non-compliance. 

2. The minimum wage provided in such clauses for any given employee 
should be r-adily and definitely computable, ;o that .any isso.es which may 
be raised in the matter of compliance or fair competition may be definite, 
and not vague and uncertain, issues. 

3. If the minimum wages to be paid a given employee are to be 
derived from soma comparison with wages in an earlier period, tiese earlier 
wages should be definitely ascertainable and the earlier period should be 
precisely stated. 

4. Any terms or phrases dealing with wages, compensation, etc., 
should be carefully stated in terms of weekly rates, daily rates, hourly 
rates, or piece rates (as may be appropriate) so that there can be no 
misunderstanding concerning precisely what is meant. 

5. It should always be made clear that minimum wage rates are being 
stated so that there can be no possibility of a later interpretation to 
the effect that (maximum) wage rates are fixed by the code. 

6. Care must be taken to make exclusions, if any, of groups or 
classifications of 'workers precise and definite. 

7. If the clauses are made sufficiently definite, there is no need 
of reports by members of the industry to the code authority and/or the 
Administration concerning the action taken by individual members on wages 
in the higher brackets. This statement, of course, has no application 
to the ot_;er reports on wages, hours, production, etc., that may be 
required in a given code. 

8. Unless the matter is safeguarded at another place in tie code, 
tiere should be provision for the maintenance of any more favorable 
standards of labor that may be provided for under existing agreements or 
state or federal laws. 

9. Either among these clauses or at another place in the code, there 
should be a safeguard against evasion by such devices as re-classification 
of workers or their duties. 

10. What otier characteristics 'should be listed? 

T-ie following suggested section for a code is given as one which meets 
tie requirements stated above and also embodies tie theory of tie mainten- 
ance of the purchasing power of the individual worker. (The clause which 
follows is the last one presented to the group for discussion). 

"Each employee (except one engaged in a supervisory managerial, 
executive or selling capacity, who is paid Fifty ($50.) Dollars per 
week or more), shall be paid a wage rate (whether paid on a time rate, 
piece rate, bonus, commission or other basis) which will yield at 
least the same wage for the shorter full-time week herein established 
that he could have earned for the same class of work for the longer 
full-time week as of June 15, 1933. Wage increases established under 
the President's Reemployment Agreement shall at least be maintained." 
9856 



-28- 

Gertain alternative clauses were also presented for consideration, 
including the following: 

' " ALTERATIVE CLAUSE G.T I/iAIi>ITENAIlC3 OF WEEKLY COIPENSATIOH 
"1. Increase for all employees . 

Each employee (except one engaged in a supervisory, managerial, 
executive, or selling capacity rah? is paid ,!;50.00 per week or more) shall 
"be paid a wa^e rate (whether paid on time rate, piece rate, "bonus, com- 
mission or other basis) which will yield for the shorter full-time week 

herein established a compensation fo above that which he could have 

earned when continually employed on the same class of work for the longer 
full time week as of . 

2. Increase for all enrol eye 3 s except those earning 1929 wages . 

Each establishment with the exception of those 



(1) Which are operation under wage agreements arrived at by 
co^ective bargaining; and 

(2) These which are paying not less than the weekly compensation 
which they were paying on July 15, 1929, shall make increases in its 
average hourly compensation for all classes of skilled labor, within 

30 days after this Code becomes effective, on the following basis: 

Including increases made under Paragraph of this Section each plant 

shall increase the hourly rates to a point where (including increases made 
since July 1, 1933) .they are . percent higher, than the hourly rates 
in effect on July 1, 1933, with this limitation, they need not increase 
rates above those paid on July 13, 1929. .71 thin 30 days after this Code 

becomes effective any rate increases under Paragraphs and must 

■be further augmented, if necessary, to bring the aver ge hourly .compensa- 
tion paid in each establishment up to 90 percent of the hourly rates 
prevailing on July 1, 1933. 

In applying the foregoing paragraphs, differentials in wage rates from 
basic rates for varying tasks within the same classes shall be maintained 
as in effect December 1, 1933, in the individual establishments. 

3. Increase to common labor: maintenance of weekly compensation to 
others . 

Each employee (except one engaged in supervisory, managerial, 
executive or selling capacity, who is paid Fifty ($50.) Dollars per week 
or moe), shall he paid a wage rate (whether paid on a time rate, piece 
rate, bonus, commission or other basis) which will yield at least the same 
wage for the shorter full-time week herein established that he could have 
earned for the same cltss of work for the longer full-time week as of 
June IS, 1933. Wage increases established under the President's Reemploy- 
ment Agreement shall at least be maintained. 



9856 



-yy- 

4. maintenance of weekly compensation to all . 

iTage rates for piece and/ or h urly workers shall "be at least $ 

in excess of the average rates prevailing on June 26, 1933. leekly workers 

shall not receive less pay for hours th.?ji they received for the 

prevailing work-week prior to Jane 06, 193:. Differentials in amount as 
the/ existed prior to June 26, 1933, oetween workers receiving minimum pay 
and workers in tie higher paid clashes, shall be maintained. 

5. Maintenance to all in jorne cases: cut tc all in otiers . 

No employer shall make any reduction in the full-time weekly 
earnings of any employee whose normal full-time weekly hours are reduced 

oy i 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 
wa c 3 of suck employ 2e sball n.^t be reduced by more th.">n one half of the 
percentage of hour reduction above said percent. In no event shall hourly 
rates of pay be reduced, irrespective of w. etaer compensation is actually 
paid on hourly, weekly or other basis. 

6. 1/iaintenance to common labor: cut to .all others, (applicable Perhaps 
to some capital goods industries . 

(a) Each employee paid at the minimum rate herein established 
shell be paid a wage rate (whether paid on a time rate, piece rate, bonus, 
commission or other basis) which will yield at least the same wage for the 
shorter full-time week herein established that he could have earned for the 
same class of work for the longer full-time week as of June 16, 1933. lage 
increases established under the President' s Reemployment Agreement shall at 
least be maintained. 

(b) Employees paid a rate above tie minimum herein established shall 
not have their haurly rates of pay reduced, irrespective of whether compensa- 
tion actually paid on hourly, weekly, or other basis." 

The deliberations of the Labor Policy G-roup culminated in the following 
proposals sent to the various ]OA Advisory Boards and Divisions as the 
Administration's proposed policy respecting "wages above the minimum": 

"SUBJECT: 7AGE5 IN T!^ dGhE ? 3 PACKET 3 

Thh PACTS: In the codes thus far approved, there has been great variation 

in the clauses dealing with wages in the higher brackets; and 
few of tie codes have dealt with the problem in definite or enduring 
fashion. Then too, there has been diversity of practice on the part of 
Code Authorities, even when administering similar clauses. The resultant 
situation has many unfortunate elements: 

1. The Compliance Division cannot operate effectively when the pro- 
visions in a code are vague and uncertain, as is freouently true of the 
clauses under consideration. The use of such phrases as "so far as prac- 
ticable", or "it shall be the policy to", or "an enui table adjustment of 
wages ...bove the minimum"; the use of loosely defined phrases referring to 
wages or compensation; the authorization of the setting of wages under 

9856 



-30- 

provisions which prevent these a.^es oeing readily and definitely com- 
putable — these and similar defects have greatly interfered with the 
effectiveness of the work of the Compliance division. 

2. There is consideaaole imrest among workers, many of whom feel 
that tie attitude of the A< ainistration on the maintenance of purchasing 

i er is not "being carried out; that many of the clauses are irritat- 
ingly vague and nonce a dttal; and that many of the clauses hinder rather 
than promote the collective b- r : ining which is of the very spirit of 
the national Industrial Recovery Act and is -explicitly encouraged in 
Section 7(b). 

3, In a considerable number of industries there is dissatisfaction 
with these clauses. In part, this dissatisfaction arises from an in- 
creased burden of reportin, by members of tie industry to the Code huthor- 
ity and/or the Administration concerning the .-.ction tahen by individua.1 
members on wages in the higher brackets. In part, it -rises from a grow- 
ing conviction on the part a lany i ustrialists that collective bar- 
gaining provides the only workable method of arriving at an adjustment 

of those wages which will be mutually satisfactory to all parties con- 
cerned, v.i' all make ; ossicle cooperatively reached future adjustments. 

It is desirable to have more ctive ;■ revisions with respect to 
wages in the higher brackets in future codes; an gradually to correct 
existing cotes, as appropriate occasion nay offer. 

THE hTCOl hh.hhTIOV': In order to bring about a more effective and 

equitable handling o wa es in the higher 
brackets in codes yet to I roved, it is 
recommended: 

1. That the revisions set forth in Paragraph 3 below be 
accepted as. expressive of the Administration's policy. 

." . That appropriate communi cat ions be transmitted to Divi- 
sion ? r eads, ;eputy Achuinistrators, and other interested 
parties, looking toward the insertion of tnose clauses in 
all future codes, except in those which have reached such 
r. stage of development that this course of action is not 
feasible. (if the "policies herein set forth are approved 
by the Administrator, a later memorandum will deal' with 
possible './ays of dealing with bras problem in the approved 
codes. ) 

3. That, as the long-run and standard method of dealing with 
wages in the higher brackets, the following provisions be 
inserted in future codes: 

The Code Authority shall, immediately upon its 
organization, establish a Committee on the De- 
scription and Classification of Occupations in 
the Industry. The Committee shall consist of an 
equal representation of employers and employees, 
and its personnel shall be subject to the approval 
of tne Administrator: provided that an appropriate 

)856 



-31- 



Indus trial Relations Soard may, with the approval 
f the Administrator, oe used in this connection. 



o 



The Administrator will provide an appropriate 
agency which will assist the Code Authority in 
developing this description andclassification 

of occupations. 

Within ninety (90) days after its establishment-, 
the Committee shall report to the Code Authority 
and through it to the Administrator, in-such manner 
and in such form as nay be specified by the Admin- 
istrator, a detailed description and classification 
of occupations in the Industry, to ■ ether with the 
ranges of wages actuelly being paid in each class- 
ification by establishments in the various regions. 

In the light of the information thus obtained, the 
Code Authority acting in conformity with the re- 
quirements of Section 7(a) of the National Indus- 
trial Eecovery Act, shall forthwith promote col- 
lective bargaining between the employers and employees 
in the industry, in order to arrive at an equitable 
adjustment of wages and other conditions of employ- 
ment. The parties concerned may, in their discretion, 
utilize the services of an appropriate Industrial 
Relations Board in connection with such negotiations. 

As an interim measure, pending the adjustment 
worked out in conformity with the above pro- 
visions, each employee shall be paid a wage 
rate (whether r;i" on a time rate, piece rate, 
bonus, commission, or other basis) which will 
yield for a given occupation at least the same 
compensation for tne shorter full-time week 
herein established that he could have earned 
for the same class of work for the longer full- 
time week '(normal for that occupation in the 
establishment) as of DATE TO 3E INSERTED* pro- 
vided however, (l) that any person engaged in 
a supervisory, managerial, executive, or sell- 
ing capa.city who is regularly paStS Fifty ($50.) 
Dollars per week or more shall be excepted 
therefrom; and (2) that if the normal full- 
time working week of any employee as of the 
foregoing date 1ms been reduced by more thai 
thirty percent by the provisions of this code, 
taere may be a reduction in such weekly coin*" 
pensation of such employee not to exceed five 
percent; and (3) that wage increases established 
under the President's Reemployment Agreement 
shall at least be maintained. 

The selection of the date is to be 
determined in the light of the facts 
pertaining to each industry. 



9356 



-33- 

4. That the Administrator at once authorize the establish- 
ment of the agency referred to in Paragraph 3 above so that 
effective counsel may "be made -vail .hie to Code Authorities 
in executing the policy sot forth in that paragraph. Con- 
cerning this agency, it is to he said: 

A. That it need not he large or an expensive agency, since 
its activities will he advisory rather than administra- 
tive. 

B. That both within and outside governmental circles there 
exist a body of literature and competent personnel that 
can he readily drawn upon. 

C. That in event the policy set forth in Paragraph 3 above 
is accepted by the Administrator, the Labor Policy Group 
will submit a detailed memorandum indicating the ways 
and means of establishing this service agency together 
with a suggested procedure to govern its operations." 

These proposals were submitted to the 1TRA Labor Advisory 
Board by A. Howard Myers, Assistant to the Executive Director for the 
Board, and were rejected at its meeting on Hay 28, 1934, as recorded 
by its minutes in the following manner: 

"Dr. A. H. Myers, alternate for Mr, Sidney Blllman, 
representative of the Labor Advisory Board on the 
Labor Policy Board, read a clause regarding pro- 
visions for wages above the minimum which the 
Labor Policy Board proposed to include in all 
future codes and which possibly would be made 
retroactive to all approved codes ,,,,,,,,,,,, 

"It was vottdthata letter, opposing this clause 
be addressed to Dr. Leon Marshall, Deputy Assist- 
ant Administrator for Labor " 

The complexity of the problem and the existing state of confusion, 
both from the point of view of the administration of approved codes and 
the fixing of policy for future codes, are readily discernible from the 
summary contained under the topical heading "The Pacts". It is also 
important to note that the proposed "maintenance of weekly earnings" 
provision suggested as an interim measure apparently did not contemplate 
an increase in the money earnings of the individual worker nor even the 
maintenance of money earnings in all cases. The recommendations, how- 
ever, were not approved and consequently no further policy on this sub- 
ject was established as a result of this effort. 

It is important a.t this point to mention that the labor policy ^raup 
were concurrently considering the problem of the formation and function- 
ing of industrial relations boards. Administrative Order ho. X-12, pro- 
viding for the immediate creation of industrial relations committees, 
had already been issued on March 30, 1934. 



)856 



-33- 

ITumerous codified industries had i ade leraands on the 1TRA for some 
definite state) ent of its policy regarding the handling of labor com- 
. Taints and labor disputes.. IThe issuance of this Order precipitated 
further criticise of the NBA. At least it did not settle t„e other 
disturbing problem, i.e., the problem of handling industrial relations. 

Some industries ever, went so far as te state that thej iuld cease 

further negotiationsunless they -ere assured that Administrative Order 
To. X-12 T, r ould not apply upon approval of the code. At the came time 
there was an undercurrent in the ".ISA, that the problem of handling in- 
dustrial relations ras go interlocked with other labor problems, par- 
ticularly collective bargaining that it -equired further consideration. 
Executive Order lTo. 6753, was issued on June 29, 193:':, creating the 
Hational Labor Relations Board, pursuant to Public Resolution !To. 4-4 of 
the 73rd Congress. (*). This Executive Order was followed by Adminis- 
trative Order No. X-69 issued July 27, 1934, abrogating Administrative 
Or:.er Ho. X-12. 

The reason for the inter jecti n i ~ :ese remarks regarding the 
problem of industrial relations is due ~-c the fact that this issue was 
also involve - in the recommendations of the labor policy group concern- 
ing "wages above the minimum" , previously mentioned. It will be ob- 
served that the proposed "long-run and standard" method required a job 
analysis in each industry and trade. An approved appropriate industrial 
relations board (presumably created for the specific industry or trade) 
was permitted to be used in naking this analysis. An appropriate (al- 
though no necessarily "approved") in ustrial relations board was also 
- ermitted to be utilized in connection with the promotion of collective 
bar, aining. So, while the Labor Advisory Eoard did not express any_ 
reason for its rejection of the recommendations of the labor policy 
board, it i as presumably gui> ed in its action by its consider' ion of 
the formation and aoSivitieg of the industrial realtions" boaid and the 
influence of these boards in respect to collective '• argaining. This 

seems zo be borne out by a . urn ' ■ .. the Labor Advisory Board to 

Leon C. horshali, )eputy Assistant Administrator for Policy, under jate 
of Pay 29, 1934, as follows: 

"The Labor Advisory Board, after several weeks of 
thorough-going consideration of tne subject of in- 
dustrial relations boards and after lengthy con- 
ferences with General Hugh S. Johnson, Administrator, 

and Mr. "V. Averill Harriraan, Assistant to the Adminis- 
trator, and in addition having discussed the subject 
at length with the Secretary of Labor, have reached an 
understanding, which is mutually satisfactory." 

"In view of this, the Labor Advisory Board suggests 
the inadvisability of any other body, within the 1TRA 



(*) The Daily Revised hanual of Emergency Recovery Agencies and 

Facilities states that b te -in functions cf the National Labor 
Relations 3oard were to insure the orderly and just settlement of 
Labor disputes and to promote the observance of Section 7(*0 of 
the NIBA. 

9656 



-34- 

taking up for recommendation any feature connected 
with the setting up or the functioning of industrial 
relations "boards, or similar committees." 

The direction of thought of the labor policy group at this par- 
ticular period is further set forth in a memorandum by Leon C. Marshall 
to Blackwell Smith, Assistant Administrator for Policy, dated May 29, 
1934, which reads as follows: 

" Wages in the High er Brackets 

1. The Labor Policy Group continues work on this problem. I hope 
we are Hearing a completion of our labors. 

2. Mr. Bard c !ey's memorandum to you of Hey 25 is based on a mis- 
apprehension of the work in progress. In large part, the work of the 
Labor Policy group has had in mine, the injustice of forcing an employer 
who has been generous to his employees during the depression to continue 
to pay more or less permanently a higher wage than his competitors pay. 
We are attempting to remedy this situation by a provision which promotes 
the description and classification of occupations, and collective bargain- 
ing based thereon. 

There are, of course, several conceivable courses of action which might 
be taken in this area: 

A. The provisions concerning wages in the higher brackets might be 

left so vague that no real control is exercised over the situation. 

This lias been demonstrated to lead to inequality in competitive 
conditions. 

3. These "provisions might be made quite stringent and definite, being 
based on weekly wages as of some "''ate. This also i si ineqiil table 
because it penalizes the generaous employer. 

C. The task might be assumed of conducting hearings and fixing 

(minimum) wages in the higher brackets in the codes. This is 
of doubtful wisdom, and would call for an almost incredible ex- 
penditure of energy in connection with the hundreds of small codes, 
to say nothing of the difficulties with the larger codes. 

D. Steps might be taken to promote collective bargaining on wages 
in the higher brackets, expecting thus to arrive at a workable 
solution of the difficulties, and one which will be moderately 
satisfactory to all parties concerned. This is the policy toward 
which the Labor group is heading; and clauses regulating weekly 
wages are thought of as necessary interim clauses, to be used 
while the process of collective bargaining continues." 

This memorandum appears to emphasize a. new view point. It em- 
phasizes the "injustice of forcing an employer who has been generous to 
his employees during the depression to continue to pay more or less 
permanently a higher wage than his competitors pay". The real issue, 
however, was the injustice to t.ie employee, who, due to the reductions 
in earnings he had been forced to accept during the depression, finds 

9356 



-35- 

himself exchanging his labor in the production of the same or similar 
product or service at a much less vrice than other workers who were 
not victimised to such an extent. Apparently, Mi*. Marshall was con- 
templating a greater equilibrium of minimum wage rates by occupational 
classifications within each industry and trade in order to obtain an 
optimum respecting the most disturbing product-cost variable. The 
accomplish .ent of such an optimum required a critical job analysis of 
each industry and trade. 

An intelligent analysis of each industry and trade was ante- 
cedent to such a. job analysis. At the time effective enforcement of 
codes seemed almost hopeless due to the multiplicity of code "over- 
laps" and "gaps" in the scope of industries and trades. (*) Conse* 
quently, it would be difficult to establish proper specifications for 
each occupation or op< ration unless the limits of the industry were 
reasonably determined. Furthermore, a proper and orderly arrangement 
and composition of industries and trades was essential to any scheme 
to promote collective bargaining. 

Space will not permit a review of all the discussions of the 
labor policy group on this subject. The ^roblem, nevcrtholoss» con- 
tinued to harass the Ac ministration. In at least o:~e instance the 
Assistant Administrator for Policy, Blackwell Smith, appeared to de- 
part from the October 25, 1953, official policy decision of the Policy 
Board and permittetl the incorporation of three "basing points" accord- 
ing to geographical are? s for "skilled workers" and three for "unskilled 
workers" in the code for the plumbing contracting division of the con- 
struction industry, approved Liiy 15, 1934. This decision was as follows: 

„ "Ho tenable objection can lie to the establishment of a 
Vani'mum" wage 'for unskilled labor and a higher wage mini- 
mum for skilled labor. The Act does not prohibit the es- 
tablishment of such rates, but on the contrary, it might 
be argued that Section 7(c) is express authority therefor. 
In addition, the establishment of such rates, according to 
the Division Administrator, is in accordance with a promise 
of the President." (**) • 



(*) Cf. Section II - H, The Code Planning Committee for Statement by 
L. J. Martin, Acting Administrator (former Chief of the Compli- 
ance Division). Cf. "Continuing Issues", p. 396, The national 
Recovery Administration; An Analysis and Appraisal," The Brook- 
ings Institution (1935) 

(**) Cf. Memorandum to Col. : . A. Lynch, Administrative Officer, Hay 
10, 1934. See also Appendix "B" , Extracts Prom A Compendium Of 
Abstracts Of Policy And Other Statements Issued By The Policy 
Group (not dated), JRA iiimeo "do. 1637, and Appendix "C", p.l. - 
Statement of Policy Used By Division Of Review, in 1TRA Studies 
Special Exhibits - "fork Materials "do. 45. 



9856 



-36- 

Othcr recommendations leaned toward the official decision of the 
Policy Eoard, Among the opinions rendered .j? r Leon C. Marshall, Deputy 
Administrator for Policy, in June 1934, the following -arc representative: 

"Article 17 of the Code (Cap and Cloth Hat Industry), in 
Sections 2 and 3 provides for certain types of chilled 
labor a minimum of fifty-five cents per hour in the 
Eastern area and thirty-seven and one-half cents per hour 
in the Wi stern area." 

"The Review Officer refers to the policy memorandum of 
- October 25, which says: "ho union agreements are co be 
written into codes nor are scnodules of wages to 'be in- 
cluded in codes. The latter does not forbic two or three 
basing rates." The Review Officer points out, furtnermore , 
that our general policy is not to include skilled wa, e 
rates except they be the result of collective bargaining 
with proper notice and hearing in advance of such." 

"Conccrniiip the problem thus raised, it would seem! 

1. That the- basing rates of fifty-five cents and 
thirty-seven and one-half cents are not, in and of 
themselves, contrary to expressed policy. 

2. That the Question oi fact involve:"- whether these 
basing rates represent true collective bargaining 
in the industry and whether they have boon "oro-ocrly 
arrived at in the processes of code formation is 
one which this office cannot answer. The " 

5. That, in general, the insertion of definite wage 
r?_tcs above the minimum in a code is a matter 
that ehould be very carefully safeguarded, with 
much responsibility ultimately resting on the 
Administrator concerned." (*) 

oOo 



(*) 'Memorandum to Blackwell Smith, Assistant A ministrator for Policy, 
June 2, 1934, Sec also Appendix "B" , p. 2, in ITEA Studies Special 
Exhibits - Work ; Materials ITo. 45. 



9856 



-37- 

"TILE "ACTS: The Indxistry (Harking Devices Industry) 

suggests a auite act iled method of hand- 
ling wages i: the higher brackets on the basis of a class- 
ification of experience, knowledge, and skill of the em- 
ployee in any work classification. The plan as arranged 
would "nave certain repercussions upon learners and appren- 
tices. It appears that the intention is to confer upon 
this plan the force and effect of a code. 

I3IF02MAL FIHDIITGS: This issue -was placed before the 

Labor Policy Group in can informal 
way and can accordingly be met by the following informal 
findings. It is believed: 

1. That the presumption is strong a ainst giving any 
such detailed formulation of wage procedure the force 
arc" validity of a code. 

2. 'That, in vny event, such a detailed formulation should 
be given t.ic force of v. code only after a true collec- 
tive ear, air. within the industry and/or a very full 
and free public aearing on the matter. 

3. That the subject matter of this "•articular formulation 
is definitely more appropriate for true collective 
bargaining within the industry than it is for formal 
insertion in a code." (*) 

(a) The Lasic or Ge neral Code 

During the criod in which the labor policy group was attempt- 
ing to crystalize some definite -olicy relative to "wages 
above the minimum", the Administration was giving considerable 
thought to the codification of the remaining groups of industry 
and trade, not covered by approved codes. Orders were issued 
embodying a plan for the completion of code maiding and a com- 
mittee was appointed to supervise the execution of the plan»(**) 
Deputy Assistant Administrators for Policy, Leon C. Marshall 
and George S. Brady, were named as two of the three members 



(*) liemorprdum to Blackwell Smith, Assistant Administrator for Policy, 
June 2, 1234. Sec also Appendix "3", p, 1, in "ULA Studies Special 
Exhibits - Work Materials ".To . 45, 

(**) Cf. NBA Administrative Orders Hob. X-61, X-62 -ad X-63, July 10, 
1934 and NLA Offia 'Order ho. 100, July 10, 1934. 



9856 



-38- 

of this committee, under the Chair; unship of Robert E. Straus. Part 
of this plan included what was termed the "Basic Code". (*) Section 4 
of Article II of this "Basic" or general code- treated "ttages above the 
minimum as follows: 

"All wages shall be adjusted so as to maintain a 
differential at least as great in amount as that 
existing on June 16, 1933, betv/een wages for such 
employment and the then minima. In no case shall 
there be any reduction in hourly rates; nor in 
weekly earnings for any reduction in hours of less 
than thirty per cent." 

It will he observed that two cf. .the d oputy assistant administra- 
tors for policy who had advocated the proposals previously mentioned 
were designated on this "mop-up" committee. (**) 



(*) ' Cf. BRA Office Memorandum Ho, 251, July 10, 1934 and attachment 
Exhibit' "A". . 

(**) For the plan see Section II-^-l (0) labor policy group. 

Deputy Assistant Administrator for Policy, George S. Brady, al- 
though appointed to handle policies governing code, authority and 
classifications ''oy Office Memorandum No. 184, April 14, 1934, 
advocated a job analysis study of industry a .d trade and had 
been consulted by and -assisted Leon C. Mar-shall in formulating 
•the proposals. Georje's. Erady was relieved as Deputy Assistant 
Administrator for Policy and a; pointed Assistant Ai.ministrativc 
Officer, July 3, 1934 - Sec BRA Office Memorandum Bo. 246, July 

5 , 1934. 



9856 



-39- 

The scheme for "-'ages above the minimum" in this general code, however, 
was quite different from the plan proposed by the labor policy group. 
The first requirement of the provisions in t. is general code is a 
positive prescription to maintain the amounts of differences existing 
on June 16, 1933, and in this regard is similar to the prescription 
contained in the Executive Order for Code Ho. 1 for the cotton textile 
industry, it re-affimed that the provisions for ""ages above the minimum" 
involved the wages of all workers not in the pre-code "lowest paid 
class". The importance of this latter stipulation has already been 
demonstrated. The second requirement, i.e., the maintenance of "eekly 
earnings, produced a limited added protection. Apparently, it "as the 
intent that these t"0 requirements, taken collectively, would provide 
not only for the maintenance, but also for an increase in the money 
earnings of the workers affected. The provision, however, "as not defin- 
ite as to --hat weekly earnings "ere to be maintained, Furthermore, it 
was possible that in certain cases there "ere fewer hours in the pre-code 
week than in the ^ost-code week. Reference to a "normal 11 or "full-time" 
pre-code week "as avoided. The suggested provisions of the labor 
policy group's previous recommendations looking towards a grea.ter 
equilibrium in minimum wages ~c~ r occupations or operations "ere not 
incorporated in this general code* This type of provision, however, 
overcame the necessity of attempting to interpret the various "equitable 
adjustment" provisions patterned after the President's Reemployment 
Agreement and the "model" codes, and\which brought forth comments from 
the NBA Legal Divisim such as : 



" I know of no general interpretation of the above term 
^"equitable adjustment") which has been issued by 1TRA, and I am unable 
to give you such an interpretation," 

" The term is too vague and indefinite to be interpreted insofar 
as it applies to all codes, and I do not think that it can be arbitrarily 
interpreted insofar as it applies to a single code. TThat might be 
equitable for one member of the industry light be very inequitab 1 e to 
another member of the industry." 

In my opinion, no interpretation can be made without a detailed 
study of the conditions under which a particular employer is o-oera.ting 
and I doubt that an interpretation!, even though made under such circum- 
stances, "ould be binding on an employer unless he agreed thereto. 
Personally, I feel that the terms are so vague, indefinite, and ambiguous 
that no prosecution based upon failure to readjust "ould be successful, "(*) 

( c ) Tentative T o r mulatior. of Labor Policy 

The nest important mea.sure in the development of labor policy, 
including policy respecting "wages above the mini-mum", "as initiated by 
the Assistant Administrator for Policy, Blackwell Smith's request to 
.eon C. Marshall to prepare a draft on "labor Policy" of the NRA for 

(*) Cf. Memorandum to E.L. Jeffrey, 1TPA Revie" Division, bj' L.J.Bernard, 

Assistant Counsel, August 14, 1934. 

9856 



-40- 

presentatioii to Walton K. Hamilton, Chairman of the 1T3A Ac'yisory Council. (*) 
Accordingly, this draft was prepared. The seconc" part, submitted on 
August 34, 13 74, contained recommendati ns relating to "wa^aE above the 
minimum" as follows: ',"'.' 

2"IV-. WAG-US III. jT>I3. EIGHTS; ZEACKT^S 

"W?_es in the hi her brackets have prevailingly beer handlec by methods 
sketched -under A belo 1 "; occasionally method 2 has ?een vift^; method 3 
unfortunately has had little or no use. 

A. Provisions Which Do not Specify Bates but Call for "Adustmert" 

The overwhelming majority of the codes call for some ty~-e of "adjustment" 

of v;r ; es in the higher brackets. The more commonly used methods arc as 

follows: 

1. In some instances weekly earrings hev'e been aii tained. This 
is permitted by policy; but the provisions must be carefully, 
drafted so that it rill be clear, definite, anc capable of 
smooth handling by co :t liance a, encies. 

2. In other instances, so. .■ specific n-o: ortion of weekly we 
has been ,iai tained, the fornmlj varying from case to c: r e. 
This partial maintenance of weekly ;-ir.u s is rlso permitted 
by policy; and again the provision must be carefully drawn. 

3. In still other instances, a prov.i.&i or has been usee", that an . . 
"equitable adjustment" shall be .. r -'e ir :■■■ s, ?.aove the minimum. 
A provision which does only this may new be re arded as con- 
trary to poli;cy, since it is without operativ :■ in; ; " '. 

this fact- -always hamp-ers compliance agencies, and freouently 
militates against "united action of labor and _ ■.■ ent." 

4. In still other instances, there is a provision that an adjust- 
ment shall be made (or a plan of adjustment formulated) and re- 
ported for approval by the Administrator. This method is per- 
missible, but only under unusual circumstances should adjust- 
ments thus made be given "tnc force and effect of the code it- 
self." In an; event, the interests arc. partici ation of labor 
must be safeguarded lest this method stimulate friction rather 
than "united action of l r bor and management 1 '. . 

llote 1: Some matters which patently call for care in connection with the 
foregoing methods are these: 

(a) Such phrases as "prevail inn' in the community" (or even 
in •■the plant), "class of work", "normal full-time week", 
^'long-established differentials", "prevailing differen- 
tials", and the like, have no clear operative me- ring 



(*) The ERA Advisory Council was it tablishe'd 'or lay 21, 1374, by I'M 

Office Or. or ho.. 89. 
3856 



41 



and accordingly possess dangeroas joints of friction be- 
tween worker and management. furthermore, they constitute 
serious -problems of interpretation for compliance agencies. 
The general rule is clear that vague, confusing clauses 
should be avoided. 

(o) A provision frequently appears, often' in connection with 
some other -provision, that a "differential" is to be 
maintained. This is subject to such difficulty that 
the "maintaining" may be on several possible bases, such 
a.s either oro-portional or arithmetical additions to ex- 
isting wages. If such a provision is used, it should be 
-?hra.sed with great care. 

(c) Attention mist be given to the problem whether certain 
employees are to be excluded from the adjustment. 

Note 2: ^ Sample provision which by no means overcomes all the difficulties 
cited (the difficulties of the "adjustment" method seem almost insuperable), 
is given below. It is of course, only one example. 

Each employee shall be paid a wage rate (whether paid on a 
time rate, piece rate, bonus, commission or other basis) 
which will yield for a given occupation at least the same 
compensation for the shorter full-time .week herein established 
that he could have earned for the same class of work for the 
longer full-time week (normal for that occupation in the 
establishment) as of DATE TO 3E INSERTED; provided however, 
(l) that any -person engaged in a. supervisory, managerial, 
executive, or selling capacity who is regularly paid fifty 
( ;50) dollars per week or more snail be excepted herefrom; 
and (2) that if the normal full-time working week of any 
employee as of the foregoing date has by the provisions of 
this code been reduced by more than thirty oer cent, there 
may be a reduction in such weekly compensation of such 
employee not to exceed STATED per cent; and (3) that wage 
increases established under the President's Reemployment 
Agreement shall at least be maintained. 

B . S necific ati on of Rates by Classes of Worker s 

Schedules of minimum rates for specified classes of workers have been 
inserted in a small number of codes. This is permissible only under 
unusual circumstances; only if the schedules reflect true collective 
bargaining; only if they cover a small number of basing rates. 

C . Provisions for Collective Bargaining 

In view of the -pronouncements of the Recovery Act on collective bar- 
gaining, it is clearly in accord with policy to provide for the use of 
collective bargaining ^s the method of handling wages in the higher 

brackets this either with or without making use of Section 7(b) of the 

Act. The clause -providing for collective bargaining should implement 

9856 



-42- 

the bargaining process so that it may be carried on in the light of 
exact information and clear definition of terms. (The safeguarding of 
workers representation, if needed, has "been provided for in Public 
Resolution 44 of the last session of Congress and in the Executive Order 
establishing the National Labor Relations Board.) Phraseology that will 
meet the requirements of implemented collective bargaining is given, as 
an example, below. 

The Code Authority shall immediately upon its organization require 
from each member of the industry a detailed and duly certified report, 
which shall be made within ninety days in such manner and form as may be 
specified by the Administrator, covering a description and classification 
of occupations in his plant or establishment together with the wages act- 
ually being paid therein. (The- Administrator will provide an appropriate 
advisory agency on procedure tc be follovred in connection with this work.) 
The Code Authority shall transmit these reports so the Administrator who 
will cause them to be compiled in statistical form without individual 
indent if ication, and will make the same available to facilitate the pro- 
cesses of employment ana collective bargaining. 

The members of -the industry, acting in conformity with the require- 
ments of Section 7(a) of the National Industrial Recovery Act, shall 
thereafter by collective bargaining arrive at an equitable adjustment of 
all wages above the minimum and other conditions of employment. The 
parties concerned may, in their discretion, utilise the services of an 
appropriate industrial relations board in connection with such negotia- 
tions. The bargaining may be in terms of the separate units of an estab- 
lishment, an establishment as a whole, a region, or the nation. Pending 
the- conclusion of this collective bargaining, the following provision 
shall govern wages above the minimum (insert the material in note 2 above.)" 

Again Dr. Marshall drew attention to the confused state of affairs 
within the NEA concerning this important part of the wage structure, em- 
phasized the ineffectiveness of most of the inoperative and cryptic provi- 
sions that had been incorporated in codes and the consequences induced by 
such conditions particularly the danger of conflict between employers and 
employees. 

The suggestions contained in this draft were practically the same 
as those latent recommendations presented by Mr. Marshall to the various 
HRA advisory boards and divisions in May 1934. (*) The "Committee on the 
Description and Classifications of Occupations" recommended in the former 
was omitted. These latest recommendations also provided that "the bar- 
gaining may be in terms of the separate units of the establishment , an 
establishment as a whole, a region, or a nation". The utilization of 
an appropriate industrial relations board was likewise left to the dis- 
cretion of the parties to the bargaining. 



(*) Cf. Section II-D-l-(a)- labor policy group. 



9856 



Gustav Pec 1 :, Executive Director of the KRA Labor Advisor-/ Board, 
immediate^ tool: exception to the handling of labor policy by the 
Advisor; 7 Council and requested the Chcirman of the Council to defer 
its review until the proposals had been studied by- the Labor Advisory 
Board. ( *) On August 30, 1934, the Labor Advisory Board met and voted 
to request that action on this matter be deferred by the Advisory 
Council . 

In the meantime LIr. Llarshall had embodied the foregoing proposals 
in an h?A release (confidential) titled "Tentative Formulation of 
Labor Folicy" which he forwarded just prior to his appointment on the 
ITationrl Industrial Recover Board, to the several IT2A Acvisory Boards 
and. Divisions and other I'M. executives requerting comments, suggestions 
and criticisms. (**) This "Tentative Formulation of Labor Policy" indicated 
that it bar no official standing but merel;^ reflected the analysis of 
one person, wresumable L'r. Marshall. The sections relating to "wages 
above the ninimum" we^e, in general, a repetition of the proposals 
submitted by I.Ir. Marshall to the Advisor;/ Boards and Divisions in hay 
1954. (***) 

The relatively few written criticisms received would appear to 
indicate a state of .inciff erence concerning this continuing issue. It 
is possible that certain executives preferred not to commit their ideas 
in written form. One division administrator merely pencil— endorsed the 
proposals as appearing satisfactory to him. All written comments by 
executives, sufficiently interested and conscious of the importance of 
the problems dealing with labor to study the plan and prepare an 
analysis, were not forwarded to Dr. LI; r shall. (****) The proposals, 
however, were not an 1"EA official act. Therefore a .summary of the 
comments from individual ewecutives is being omitted from this summary. 

The comments of the Committee on Labor Police, however, are of 
value to show the trend of thought of L'r. h rshall's immediate advisers 
and accordingly are quoted - s follows: 

"17. TTAC-ZS IT T-L1 ' ' . hTlh TAI'.ZTS 

TTages above the minimum are proper subjects for collective bargain- 
ing. Pair competition within an industry requires the stabilization 
of minirvum rates for the industry as a whole for the various occupa- 
tions or for classes of occupations so as to define uniform wage costs. 

(*) Cf. henorandum to Dr. Tfalton ". Hamilton, Chairman of the Ad- 
fisory Council by Dr. Gustav Pec 1 :, dated August 29, 1934. 

( **) The rational Industrial hecoveigr Board was created by Bwecutive 
Order ho. 5359, September 27, 1934, to administer Title I of the 
IHA. This board replaced the Administrator for Industrial 
Recover^ appointed June 16, 1933. 

(***) Cf. Section II - D - 1 - (a) - Labor Policy Group. 

(****) it was customary to forward criticisms of this nature through the 
channels of higher authority. The higher authorit;- could elect to 
"file" such recommendations as in hisopinion served no useful 
purpose. 



9356 



-44- 

To accomplish the above, it is therefore recommended that (l) the 
Administrator, through the proper advisory agency on procedure, 
shall, in cooperation with Code Authorities, obtain detailed and 
duly certified reports on actual wages paid for the various 
categories of labor in that industry. This information shall be 
available to facilitate the process of collective, bargaining; and 
(2) the Administrator shall invite the employer and labor re- 
presentatives in an industry or from a region to negotiate a region- 
al or Notional agreement which shall be made mandatory upon such 
region or upon such industry -if National under' Section 7(b) of the 
Act. 

In the absence of an approval of an agreement developed under th« 
procedure set forth above, the following is recommended as the most 
clearly phrased statement concerning adjustment of wages above the 
minimum: 

Each employee shall be paid a wage rate ' 
.(whether paid on a time rate, piece rate, 
bonus, commission or other basis) which 
will yield for a given occupation at least 
the same compensation for the shorter full-time 
week herein established that he could have earned 
for the same class of work, for the longer full-time 
week (normal for that occupation in the establish- 
ment) as of DATE 10 33 INSERTED* provided however, (l) 
that any person engaged in a supervisory, managerial, 
executive, or selling capacity ..who is regularly paid 
fifty ($50.) dollars per week or more shall be ex- 
cepted herefrom; and (2) that if the normal full-time 
working week of any employee as of the foregoing date 
has by the provisions of this code been reduced in 
such' weekly compensation of such employee not to exceed 
STAT1D percent; and. (3) that wage increases established 
under the President's Reemployment Agreement shall at 
least be maintained." (*) 

This further effort of Mr. Marshall is i v i irtive of his persistent 
attempts to awaken the Administration to the necessity of arriving at 
some definite plan of resolving this problem. 

.(d) Electrio And Neon Sign Industry Ca se _ 

The next important situation in which the policy to be pursued 
relating to "wages above the minimum" was challenged, came about 
through the request of the electric ark neon sign industry for an 
amendment to its code, approved August '24, 1934. Originally, both 
the management and labor elements of gthis ijnoustry_ had ejidprs_ed_ the 
(*) Cf. Memorandum from the Committee on Labor Policy to the NRA Advisory 
Council, October 25, 1934. Comments of this- Committee en Labor Policy 
were submitted to the individual members of the Advisory Council by 
memorandum of the executive secretary, April 17, 1935. 



9856 



-45- 



incorporation of a minimum rate of not less than $0.7"' per aour for 
skilled workers. This u-o ir ision, no\.ever, had been delete'' from the 
a -> roved code at the insistence of Alvin Brown, ERA Review Cfficer, 
who ruled it was contrary to -estai lishec policy. The ;oro":>cnents agreed 
to this condition in order ts hasten the approval of the code but peti- 
tioned for an amendment shortl" afterwards. Ultimatel ' this case was 
pi escnted to the Labor Advisory Beard on September 13, 1934, by Gustav 
Peck, Executive Director. (*) 



(*) Gustav Peck presented the problem as follows: "A very imoortant 
matter of labor policy has grown out of cur handling of the Neon 
Light Code. In this indsutry, which is about eighty percent or- 
ganized, both unions concerned and the industry sponspored. a wage 
. for skilled workers of seventy-five cents, specifying exactly the 
"occupations which are to receive no less than that minimum. In 
addition, the code carried a minimum of forty cents." 

"The skilled rate was thrown out by Alvin Brown the Review Cfficer, 
on the ground that it in "opposed to ERA policy". The industry 
agreed to have it out o;il ■■ because they wanted a code and have since 
informed both the unions ant" the Labor Advisory Board that they are 
anxious to have it restored. A related and competitive industry, 
the Commercial Sign Code, also carries a skilled rate and that 
promises to be thrown out by Alvin Brown for the same reason." 

"In the light of our experience with the effect of minimum rates 
mon average wages and especially the w es of the semi-skilled 
group not covered by union contracts, some of us have thought that 
v/e ought to make a cc ; centrated effort to establish at least one 
more minimum rate in a r : many cc or. as possible. This notion that 
a secant, rate for skilled workers is not warranted by an inter- 
pretation of the "Jational Industrial Recovery Act is of long stand- 
ing among deputiesi Alvin Brown says he is merely a Review Officer 
and Administrator and is not concerned with making tolicy; that this 
policy was established b: the. Adair nistrr tor some time in October 
1933. When that order was c i^cussed in one of General Johnson's 
regular staff meetings, I raised the question as to whether this 
would prevent us from establishing one or two additional rates such 
as we have, for examile, in t.ie Lien's Clothing Code. The General 
said it did not and he interpreted! these additional rates as "basing 
points". " 

"In my discussion with Alvin Brown yesterday., he said that that 
was not his interpretation; that by a. basin ; -joint he meant a 
situation which is common in the extractive industries, where one 
rate mi;:ht be established far aurface workers and another for under- 



t> 



round workers." 



93 : 



"I told him that this was an issue of very serious im; 'ortahce to 
us and that we wo tic! have to raise it for a ruling by the Admin- 
istrator. I intend to draw ui a. fairly eladoor? ;e case in which 
I shall show ho 1 .- frequently we have been able to secure more than 
one minimum rate p.nC. the good effect uoon the total situation that 



-46- 

And on September 20, 1934, the NRA Labor Advisory Board unanimously 
passed 'the following resolution: 

"Resolved that the Labor Advisory Board reiterate its stand 
in favor of established wages above the minimum and that a 
committee 'of the Board hold an early conference with Col. _ 
Lynch (IRA Administrative Officer), Leon Henderson (Economic 
Adviser to the National- Industrial Recovery Board), Blackwell 
Smith (Assistant Administrator for Policy) and other members 
of the HRA Policy Board to ask for a ruling." 

The following day a delegation of the Labor Advisory, Board met 
with G. A. Lynch, ERA Administrative Officer, Blackwell Smith Assistant 
Administrator for Policy, and representatives of the NRA Research and_ 
Planning Division to review 1IRA policy respecting "Wage above the mini- 
mum". As a result of this meeting the staff of the Labor Advisory Board 
were advised as follows: 

"This morning a delegation of the Labor Advisory Board 
met with Col. Lynch, Blackwell Smith and representatives 
of the Research and Planning Division, to review ERA 
policy with respect to "Wages Above the Minimum". 
Discussions lasted for about an hour and a half 
and it was agreed that there should be no fixed 
policy outline by the Administration; but that there 
is nothing in accepted practice to prevent Industry 
and Labor from agreeing upon more than one wage 
minimum if that is felt necessary for purposes 
mutually satisfactory to effect the aims of the Act." 

"While the emphasis was placed upon situations in 
which Industry and Labor agreed, the door is still 
. left open for KRA to impose a second or third minimum. 
In the light of this open door policy, it is your 
responsibility to continue to make efforts to 
secure minimum wages for semi-skilled and skilled 
workers or for particular skilled occupations where- 
ever possible and satisfactory to the outside labor 
advisers working with you. 



Footnote continued: 

this had. I also said if you could not have a second rate 
that there was not much point to the "equitable adjustment" 
clauses which are inserted in all codes. Brown agreed with 
that and said he would welcome another interpretation by the 
Administrator." 

"I hope that we can thrash this out at the next meeting and 
it is important enough for a special meeting early in the 
week before most of the Board members go West." 



9856 



-47- 

Do not be aeterred by any so-called policy 
issued last year." 

"Where you have an agreement with the Industry 
and you find that the Deputy Administrator is 
resisting your efforts to secure a satisfactory 
wage for skilled workers, be sure to call it 
to my attention. " (*) 

The Executive Director of the Labor Advisory Board also took steps 
to clear up any misunderstandings respecting the incorporation of min- 
imum rates in codes for skilled workers and accordingly requested that 
the Assistant Administrator for Policy inform all NBA executives charg- 
ed with the responsibility of developing or administering codes as 
follows: 

"I think it would be advisable to issue a 
statement for internal use regarding our 
understanding with reference to second and 
third minimum rates in a code. There are 
so many new deputies who go by the written 
word that our staff members have difficulty 
in pursuadin ; them that the memorandum of 
October 1933 does not prohibit the insertion 
of a cecond or third rate. I have a memoran- 
dum before me written by a Division Adminis- 
trator from which I quote the following: 

"You are doubtless aware of the fact 
that there has been much discussion 
as to the advisability of writing into 
codes minimum wage scales only, and 
should the iIRA ultimately adopt this 
idea, wage schedules for skilled and 
semi-skilled labor would have to be 
eliminated from codes, and to write into 
the code at this time such a provision 
might lead to troublesome complications 
in the near future. 

"If a. Division Administrator holds this view, you can 
very well see how impatent„ staff members would be in 
combating fixed ideas of innumerable deputies. I have' re- 
^ited many complaints from staff members in addition 
to the Neon Light case which we discussed in your office, 
and I think we will save ourselves a considerable amount 
of controversy and needless friction if a classifying 
statement were made by you as Assistant Administrator 
for Policy." (**^ 



(*) Cf. Memorandum by G-ustav Peck, Executive Director, IIRA. Labor 

Advisory Board to the Labor Advisory Board Staff, September 21,1934. 

(**^ Cf. Memorandum by G-ustav Peck, Executive Director, NBA Labor Ad- 
visory Board, to Blackwell Smith, Assistant Administrator for 
Policy, Seyjtember 22, 1934. 
9856 



-48- 

The Assistant Administrator- for Policy- in turn forwarded this 
Memorandum to Leon C. Marshall, Deputy Assistant Administrator for 
La Dor Policy, who commented that in his opinion, "no action need "be 
taken in this matter", and that the Advisory Council was then "working 
on a codification of labor policy that would automatically take care 
of the situation." The substance of the understanding was not issued 
for the guidance of the NHA. officials administering codes. The ques- 
tion of formulating definite policy on this subject was subsequently 
considered by the Advisory Council but no definite recommendations were 
made at the time of the Supreme Court decision on May 27, 1933. 

(e) Questionnaire To The IHIA. Pield Officers 

The last important official act relating to "wages above the 
minimum" taken by the labor policy group took the form of a question- 
naire to the several field offices of the KHA Compliance and Enforce- 
ment Division. The purpose of this questionnaire was to obtain in- 
formation showing the experiences of the different field offices 
with the compliance and enforcement of provisions dealing with 
"wages above the minimum". (*) The activities, however, of the labor 
policy group ceased before the returns from this questionnaire were 
recorded. This matter, however, is discussed later under the func- 
tioning of the Advisory Council. (**) 

Summarizing, it may be stated that while the labor policy group 
made a sincere effort and brought forth a bold programme for the 
solution of this problem, its production did not officially establish 
any new explicit policy for administrative guidance. 



(*) See Appendix "3" for complete questionnaire, in IGA Studies 
Special Exhibits - "Work Material Ho. 45. 

(**) Cf. Section II - D - 3 (b) . 



-,49- : ' '•■ ■-■! 

2. The NPA Office I.'i.- umal 

During the middle. of 1934, the Administrator designated a 
committee of three to organize a compilation of EHA. working rules for 
the purpose of eliminating "all conflicts and obscurities in existing 
Office Orders, Office ivivmonnda and Administrative Orders" and to 
"provide a single authoritative source of information in which can he 
found, all current rules and regulations governing the organization, sub- 
stantive, guides and procedure of IOA including Executive Orders of gen- 
eral application to NHA." These rules were issued in the form of the 
NBA Office Manual, the first parts of which were issued on August 29, 
1934. 

Section II treated the subject of "Substantive Guid.es", i.e., 
"the rules of substance which guide the use of administrative discretion 
by officers within the NBA." The introduction of this Section states: 

"The National Hecovory Administration is endeavoring 
in light ot its experience to formulate general policies. 
This does not mean that every code in process and not 
aoproved at the time of the announcement of a general 
policy must conform - in the sense of .including the 
type of provision favored 'o2 T policy." 

No expression of policy concerning "wages above the minimum" 
w a s stated. Two model code provisions were included as follows: 

Paragraph 1331.31 

"Within days of the effective date hereof, 

(unless such adjiistment has been made heretofore) 
each employer shall adjust the schedules of wages 
of his employees in such an equi table manner as 
will conform to the provisions hereinabove set forth, 
. and still preserve wage differentials reasonably 
proportionate to tnose in effect prior t 3 the 
effective date of this Code. 

Paragraph 133-J..1 

"No employer shall make any reduction in the full 

time weekly earnings of any emplo2 ? ee whose normal 

full time weekly hours are reduced by percent, 

or less, belov 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 to more than one half of the 
percentage of hour reduction above said percent. In 
no e-vent shall hourly rates of pay be reduced, irres- 
pective 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." (*) 



(*) The Office Manual was revised and enlarged following the issuance 
of the first parts. The sections dealing with "Wages above the minimum" 

(Continued on next page) 
9856 



~50- 

It will be observed that the substance of paragraph 1331.31 merely 
expresses that some sort of a reasonably proportionate equitable adjust- 
ment is to be made within some stated period following the effective date 
of the code unless it has already oeen made. The provision is meaningless. 
Yet it was offered as a guide in spite of the fact that the KRA associate 
counsel had previously indicated that such provisions were impossible of 
interpretation, (l) 

The provision set forth by paragraph 1334.1 is taken from the sug- 
gestions offered ^oy the former "model" codes, and like the provisions in 
these "model" codes, it is likewise vague and deficient. This provision 
neither provides for an increase in nor the maintenance of former weekly ■ 
earnings. It appears to merely repeat that hourly rates shall not be re- 
duced and that the minimum wage provisions shall be observed and to pro- 
vide for a partial maintenance of the weekly wages paid during a stated 
pre-code period. 

3. The Advisory .Council 

.On May 21, 1934, an Advisory Council was created consisting of 
the executive committees of the KRA Labor, Industrial and Consumers'" 
Advisory Boards. The Order establishing this body stated that "all 
matters and documents heretofore referred, in any prescribed manner, to 
the Advisory Boards, will hereafter be referred in the same manner, to 
the Advisory Council". (2) Gradually this body assumed the function of 
developing policy. The policy groups, although not officially discontinued 
until November 14, 1934- , actually ceased to function with the transfer of 
the executives in charge. (3) 



(1) Cf. Memorandum by Blackwell Smith, KRA Associate Counsel to Ralph A. 
Byers, March 16, 1934. See Section II-C-5, Model Codes of October 25 and 
November 6, 1933. 

(2) Cf. KRA Office Order No. 89, May 21, 1934. 

(3) Cf. NRA Office Memorandum No. 306, November 14, 1934. Deputy Assis- 
tant Administrator for Folic", George S. Brady, had been appointed an 
Assistant Administrative Off icer. on July 3, 1934. Deputy Assistant M~ 
ministrator for Policy, Leon C. Marshall, had been appointed a member of 
the^National Industrial Recovery Board and Assistant Administrator for 
Policy, Blackwell Smith, had been appointed Legal Adviser to the Board 

on September 27, 1934. (See Executive Order No. 6859, September 27, 1934). 



(*) Note continued from preceding page. 

were not modified or added to as of May 27, 1935. Revisions to the 
"Subst.-ntive Guides" were compiled at the request of the Executive Secre- 
tary of the National Industrial Recovery Board under date of June 12, 1935. 
Inasmuch as these revisions appear to express the opinion of one NBA 
executive, the Review Officer, and were not issued for the guidance of 
the KRA during the life of the codes, they are not being considered in 
this discussion. See "Policy Statements Concerning Code Provisions and 
Related Subjects", Work Materials No, 20, National Recovery Administration, 
Division of Review. 



aase 



-51- 

(A) The Steel Casting Industry Case 

On August 15, 1934, the Advisory Council released the first of 
its three individual decisions dealing directly with "wages above the 
mi 2i i mum" . This decision No. 19, relative to a question concerning the 
application of provisions in the code for the Steel Castings Industry 
set forth the following statement of policy for this specific case as 
reported "by its committee: 

"1. Your committee "believes that K3. has and needs to 
have no fixed policy against the establishment of wages 
above the minimum in the few industries where such an es- 
tablishment is acceptable to those immediately concerned. 

2. It is not the policy of the Administration to give the 
Code Authorities the power to classify labor in their in- 
dustries and set minimum wages for each class apart from 
the procedures both of collective bargaining and of public 
'.tearing. 

3.. Your committee understands that the power conveyed to 
the Code Authority by Article VI, Section 5(b) of the Code 
applies to a particular form of equitable adjustment of 
wages above the minimum at the time of the initiation of 
minimum rates; and does not give the Code Authority power 
to maintain continuous classifications of labor and control 
over the minimum wages of each class. 

4. Your committee regards the activity of the Code Authority 
in bringing about the prescribed increase in wages as an able 
struggle with a difficult problem. Nevertheless, in view of 
the importance of the issues involved, we recommend that the 
Division of Research and Planning review the rates established 
and report upon any inequities which may appear. 

5. Your committee believes, however, that the form of the 
announcement made by the Code Authority tends to obscure 
the difference between the immediate adjustment undertaken 
and the permanent control over skilled wages in the industry 
which was neither undertaken nor, we believed, contemplated. 

6. Therefore, your comnittee recommends that the Code Author- 
ity be requested to make clear to members of the Industry that 
the minimum wage rates announced and the classifications es- 
tablished were for the purpose of compliance with Section 5(b) 
of Article VI, and that the N3A does not give its approval to 
any Code intended to establish permanent labor classes or per- 
manent labor rates, since activity of that sort is not authorized 
by the Act." (*) 

(*) For Co. plete Decision see Appendix "P" in IOA Studies Special Exhibit- 
fork Materials No. 45 



-52- 

There are several items in this decision worthy of mention. Item 
No. 1 conveys no new thought. It is merely a re-statement of the decision 
reached a.t the conference with the Administrative Officer and the Assis- 
tant Administrator for Policy requested by the Labor Advisory Board on 
September 20, 1934, the results of which were not officially announced 
to all ITRA. executives. Moreover, to be acceptable to those immediately 
concerned: - management and labor, would ultimately mean an agreement 
through the process of collective bargaining. Item No. 2, however, does 
indicate to some degree a change of policy from that in force when the 
"model" codes were issued for the guidance of industry and trade. (*) 
The provisions in the "model" codes for establishing minimum wages by 
occupations made no mention of collective bargaining. And it certainly 
indicates a change from the policy existing on June 27, 1934 at the time 
the Code of Fair Competition for the Plastering and Lathing Contracting 
Industry was approved. (**) The minimum rates in this code were established 
without resort to collective bargaining on a national scale. Item So. 2 
also appears to disclose a contradiction with the proposed recommendations 
of Leon C. Marshall, Deputy Assistant Administrator for Labor Policy, 
presented for approval in May, 1934. At that time Mr. Marshall had pro- 
posed to empower the code authorities to designate committees. on the 
description and classification of occupations in industry. In turn these 
committees were obligated to determine the occupational classifications 
in the industry and to report their findings to the Administrator. The 
Advisory Council was definite that it was not the policy of the ERA to 
empower code authorities to classify labor in industries and set minimum 
wage rates. Such a declaration, however, was difficult to reconcile inas- 
much as the proponents of codes, frequently designated on approval of the 
code as the code authority, were permitted to specify the rates for mini- 
mum wages without resort to collective bargaining. The balance of this 
decision appeared to be a weak informative answer to the code authority 
that it was not empowered to propose or announce to the members of the 
industry any recommendations that resembled establishing specifications 
for occupational classifications for the industry or an equality of rates 
.for occupations' by wage districts. (***) 

(*) Cf. "Minimum Hates by Occupations" in "model" codes. See Section 
II-C-5. 

(**) Cf. Section 1 of Article III of Supplement No. 14 of Code No. 244 
for the Plastering and Lathing Contracting Industry provides minimum wage 
scales for plasterers, modelers, model makers, casters, lathers, and 
plasterers' laborers in each of three geographical areas. 
(***) The provisions for "wages above the minimum" in the code for the 
steel castings industry is set forth in Subsection (b) of Section 5 of 
Article VI of the code. This "adjustment" provision appears to have been 
lifted from the code of fair competition for the Iron and Steel Industry. 
Wage districts are set up by Schedule B. This provision, which follows, 
appears to have been conceived to not only replace any type of bargaining 
but also to empower the Code Authority (the Directors of the Trade Asso- 
ciation) to make wage determinations for the various- classes of labor; 
"The rates of pay for classes of labor heretofore paid at a rate in excess 
of the rate heretofore paid for common labor shall be increased at least 
to the extent necessary to maintain, in relation to the minimum rates for 
common labor under the Code, the percentage relations heretofore existing 
(as determined by the experience of the several wage districts with the 

(cont'd on next 7&£< ) 
9856 



-53- 

( b ) Questionnaire to MM Field Q ffi ces 

It has "been previously stated that the last important official act 
of the labor policy group was the forwarding of a questionnaire to the 
various field offices of the H3i compliance and Enforcement Division. 
On October 15, 1934, the assistant to the Executive Secretary'' of the 
National Industrial Recovery Board and a former assistant to the former 
Deputy Assistant Administrator for Labor Policy, prepared a summary of 
the chief points of interest contained in the replies. The "high-lights" 
of this summary indicate: 

"1. Very few complaints have been received by our 
field officers concerning violations cf clauses calling 
for adjustment of wages in the higher brackets. 

"2. The fact that relatively few complaints have been re- 
ceived does not ::■ - v. that workers are satisfied with the op- 
eration of these clauses. On the cantrarv, a goodly majority 
of the forty-five officers point out that there is wide- 
spread dissatisfaction among workers based on the feeling 
that a djust ments tc - those ear^ i -x^ more than the minimu m have 
not been r.- _ V: and that consequently, there is a definite ten- 
dency for the mini mum wa.re s to b e come the max imum . 

"3. The answer (to why there have been so few complaints) 
in mo t cases in which an answer was given, is fear. 
The employees are afraid to complain because of fear of losing 
their jobs. Ignorance of code provisions is another expla- 
nation given, while a third is a feeling that nothing will be 
gained by complaining.' lai suggestion was clear in one or two 
cases that there is no feeling of confidence in IIPA's compli- 
ance machinery. 

"4. That this feeling of dissatisfaction is justified 
to some extent at least, is indicated by the fact that ap- 
proximately two-tnirds of the responding offices quite defi nite- 
ly asserted widespread non-compliance with t hose cl auses ca lling 
for adjustment of wages in the hi pier brackets . 

"5. About a dozen offices expressed dissatisfaction 
with the replies received from Washington. Half of these 
complained that the replies were neither prompt nor clear 
cut. 

"6. It is quite apparent from the replies to the ques- 

* (Cont'd from last page) 

approval of the Board of Directors) between the rates of pay for 
such classes of labor and the rates of pay for common labor. The fore- 
going provision shall not be so construed as to require any number 
of the industry to make any increase in the rate of pay per hour to 
be paid by such member to any of its employees in any wage district 
that will result in a. rate of pay per hour which shall be higher than 
the rate of pay per hour paid to employees doing substantially the same 
wage district by any other member of the industry which shall have in- 
creased its rates of pay per hour in accordance with such provision." 

9856 



'54- 



tionnaire that the Labor Compliance Officers themselves are 
interpreting and applying these cl.-uses in quite varying 
fashions. 

"7. It (is) quite significan that in response to a 
request for suggestions with regard to the use or non-use of 
these clauses or ' ith regard to their meaning, onl iT five 
field officers expressed the opinion that they were satis- 
factory as they stand. Sixteen offices plead for more clear 
and precise r:or'ding of these clauses, pointing out in most 
cases that they are no '.enforceable as oresently worded. 

"3. Four offices recommended the complete abolition 
of these clauses in favor of specified wage rates for wages 
in the higher "brackets. Three other offices suggested aban- 
donment of these clauses without putting anything in their 
place, while one other office suggested a procedure for col- 
lective bargaining as the substitution." (*) 

This summary requires oarticular attention for it reveals con - 
ditions that are vital to the effective ac ^ mini stratio n of the labor 
provisions of codas and the effectuetion of ■ mie purposes of the Act . 
But the conditions disclosed by the re lies were not genera.ll" diffused 
through the 1JHA. for administrative guidance. Apparently 'he Advisor" 
Council and the National Industrial Itecover ,r Board considered a. solu- 
tion to this completing problem of " rages above the minimum" was a matter 
for centralized consideration. In any event, no positive official ac- 
tion was taken. Apparently the Advisory Council and the KI3A elected to 
continue their consideration of the problem. 

( c) Electric and ITeon Si<ni Indus tr - "' Case 

The nest major decision of the Advisory Council dealing with "'..•ages 
above the minimum" was brought about by the Council's deliberations 
relative to the industry's proposed amendment ot the Code for the Elec- 
tric and Neon Sign Industry to include so-termed "basin;- points" for 
"skilled! 1 workers. This problem had originall" beer, jresentec co the 
labor policy group but had not been resolve', at the time this group 
ceased functioning. (**) 

In this regard it should be noted that the Advisory Council had 
selected a committee to explore the problem of "",7a es above the mini- 
mum". This committee reported to the Advisor" Council or. ITovember 1, 
1934, as follows: 

"Your Committee reports that it is in accordance with 
K3A policy to approve wage scales above the basic mini- 
mum for unskilled labor on an-' of the following grounds: 



(*) For complete summary see Appendix "E" in 1T2A Studies Special Ex- 
hibits — "ork Materials 116. 45. 

(**)Cf. Section II - D -1 - ( a.) . 

9856 



-DO- 



1« where a lar :e pro -sort ion c. workerE ir. the 

Industry arc- skilled said the minimum for such is ne- 
cessary to ^reserve their basic living stand- 
ard. 

3. Where such scales are necessary to safeguard 
fair competition in the Industry. 

3. There such scales are few and not elaborate. 

4. There such scales represent in general the 
concensus of joth errolo-fers and emplo-'ee's. 

5. There such scries ten:", in general to allay 
rather than to e: cite labor disputes. "(*) 

And on November 3, 1334, the co.i ifctee recommended that it consult 
v:ith the various deput" administrators handling cores containing 
arovisions for more than one minimi!'; wage. (**) There is no record, 
however, that any definite action '7a taken on these recommendations 
regardless of the fact the powers of the Advisor-' Council were en- 
larged to include the making of recommendations to the national In- 
dustrial Recovery Board on its own initiative. (***) 

heve: theless, the report of the committee is significant. 
Heretofore, it was declared to be contiar" to ppliey to include wage 
scales in codes of fair competition unless the rater were determined 
by the process of collective o-rgaining. ITo reference to collective 
bargaining was made in this report. The committee reported that the 
incorporation of wage scales above the basic minimum was in accord- 
ance with oolicy ore. ided there was a large proportion of "skilled" 
workers in the in uotr and a minimum wage for such was necessar" to 
oreserve their basic livin standard . Such a distribution of workers 
existed in .all industries. (*•*•*•*) Furthermore the umoses of the NBA 
^ere not :>nly to preserve livin' star* ards but to irnrove living stand- 
ards. The NI2A was also Designed to promote fail competition. Either of 
the two reasons stated in i'ens.l and 2 of the report for incorporat- 
in wage scales in codes was therefore sufficient for permitting 
wage scales to be incorporated in all ccf.es. 

Tilth the benefit of the recommendations of its committee, the 

Advisor-- Council oroceedeC to made • rather e: tensive examination of 
all iho.sss of the electi ic an.' neon si n industry. (*****) During the 
course of its considerations it Was poirted out that the workers in 

(*) Cf. Memorandum from the committee on wages above the minimum 

to the advisor" Council, November 1, 1934. 
(**) Cf. Llemoranc'um f. on n ustav Peck to Edward George, Secretary 

Advisor-- Council, November 3, 1334. 
(***) Cf. hhA Office ;.; noran'um do. "OS, November 14, 1934. 
(****) Cf. The Significance of "TTages above the hinimum" , Section I-B 
(*****) cf. h'inutes of Meetings, Advisor- Co-ncil, hovember 9, 1934. 



9356 



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this industry we.e, in en.ral, highly organise, and Lhat management 
considered the establishment of a minimum for "skilled" labor desir- 
able. A. Howard Livers, representing the Labor Advisor^ Hoard, called 
the Council's attention to the fact that the labor cost of the oro- 
duct represented approximately? 50 -oer c=nt of the total nd that the 
effects of severe price competition would undoubtedly be lasced or. to 
the worker. The questional v "hether minimum wage orovisions were fojr 
a social purpose to insure a decent standard of living or were for 
the general improvement of labor standards and the Increase of 
"purchasing power", was discussed. Consideration was given to the 
possibility that the proposed minimum of $0.75 per ::our, if estab- 
lished by public .law, right tend to rigidif^ conditions and oerhaps 
act against those skilled workers who had been receiving T-es in 
excess of this amount. In this re. -ard the Laoor Advisor _r Board's 
re <resentative countered that the existing $0.40 -oer hour code mini- 
mum appeared to further aggravate such a condition. The Council 
finally voted in favor of the following specific recommendations: 

"The Council recommends Miat tnis Particular 
amendment to this articular code be aporoved., 
with the :roviscs thai: the De-out^ Administrator 
raal:e certain that the wage raae set is not op- 
pressive to members of the Industry i; a;-.- -area, 

that this action is not in a:v way to be 
construe, a: an approval of the incorporation 
into the coo.es of general schedules of labor 
rates." (*) 

This decision of the Advisory Council was forwarded to the ha'cional 
Industrial Recovery B ard which transmitted its approval to the Admini- 
strative Officer on November 19, 1934. (**) On November 24, 1934, 
the proposed amendment including a so-termed "basing point" of $0.75 
per hour for skilled workers was a. proved by the national Industrial 
Recovery Board. The report to the President by the Administrative 
Officer stated that the amendment was submitted "in or..er that the 
code nay conform to the bes: policies governing labor" and that "the 
core p.i. amended complies in all respects with the ertinent orovisions 
of said Title (Title I) of said Act (The national Industrial Recover- 
Act)." 

Repercussions were immediately noticeable :.o'i tnis decision of 
the Advisory Council. The N3A Review Division considere that the 
National Industrial Recovery Board had, in effect, abrogated the 
longstanding and only official policy of record on this subject. (***) 
As a consequence the Advisory Council advised the Administrative Offic- 
er that the "recommendations of the Council arising out of the electric 
and neon sign case did not presume to write new policy but were intended 
merely to safeguard against undue departures fro-, the policy of a single 



(*) Cf. For complete decision see Appendix "P" , in NBA Studies 
Special Exhibits — Work L'aterials ho. 45. 

(**) Cf. Lienorandum from L. C. Liar shall , Executive Secretar- of the 
rational Industrial Recover- Board to '.7. A. Harrison, Admini- 
strative Officer, November 19, 1934. 

(***) Cf. Decision by the Polic- Board, October 25, 1933. 

9055 



-57- 

"basic niiniraa.ii. » (*) The amendment, however, was subsequently stayed in- 
definitely. (**) 

(d) The Bedding Manufacturing Industry Case 

The next and final major decision by the Advisory Council concerned 
the Code for the Bedding Manufacturing Industry, approved January 23, 
1934. The vagueness and ambiguity of the provision for wages above the 
minimum which was coupled with provisions for mimimum wages in Section 1 
of Article IV of this code had caused considerable disagreement. (***) 
This provision, particularly what was intended to be meant by +he "long- 
er work week prevailing prior to June 1, 1933", had been variously ex- 
plained. The" code authority had construed this language to mean each^ 
individual manufacturer' s standard scheduled work week prevailing during 
thn period from January 1 to June 1, 1933, but in no case less than a 48 
hour week and had so declared to the industry on March 2, 1934. 

The resultant confusion finally precipitated a labor dispute at the 
Atlanta, Georgia, plant of the Simmons Bed Company. Ultimately, ^ a com- 
plaint reached the^Begional Director of the national Labor Relations 
Board at Atlanta, Georgia and was forwarded to the Washington, D. C. 
office for consideration. Upon request of the National Labor Relations 
Board, the administration issued a formal interpretation on December 3, 
1934, consisting of a question and ruling as follows; 

tf Que st ion ; Does the above provision (basic wages) 
apply" tcTpieceworkers and, if so, what is the method 
to be followed in computing the wages to be paid such 
workers under said section of said code ruling? 

Euljng: It is ruled that Article IV, Section 1 applies 
to" piece-workers. The method of computing the wages of 
piece-workers in each individual plant is to multiply 
the piece rate paid prior to June 1, 1933, by the pre- 
vailing longer number of hours worked by each class of 
piece-workers in that individual plant prior to June 
1, 1933, and divide the total thereof by 40." (****) 



(*) Cf. Memorandum from Willard L. Thorp, Chairman, NBA Advisory 

Council, to f. A. Harriman, November 30, 1934. See Appendix "£» 
for complete memorandum, in NBA Studies Special Exhibits - Work 
Materials No. 45. 

(**) Cf. NBA Administrative Order No. 506-8, December 19, 1934. 

(***) Section 1 of Article IV of the cod« reads: "No employee shall 

receive a lesser rate than is required to provide the same earn- 
ings for 40 hours of labor per week as was received for that class 
of work for the longer work week prevailing prior to June 1, 1933; 
provided, however, that no factory employee, whether remuneration 
is based upon an hourly or piecework or incentive plan, shall re- 
ceive less than a minimum of thirty cents per hour in the South, 
and thirty-five cents per hour in the North; and further provid- 
ing that all other employees whose remuneration is based upon a 
weekly or monthly rate shall receive not less than a minimum of 
$15.00 per week. . , . ." 
(****) Cf. Administrative. Order No. 219-16, December 3, 1934. 

9856 



~D«- 



An e:".cmination of ttus interpretation issued over ten 'Oxiths f tex- 
tile jrovisio: - . became effective, at once discloses the misleading deficiency 
in the first part of the cueeti n and which : as apparently ignored in the 
answer. Section 1 of Arti_le IV was not United to niece-workers, hut 
applied to all ernio^ees, It further dincloses the apparent absence of a 
complete couuehension of tne e::tent of the whole issue. The obscurity 
of the provision extended bej^ond its application to niece workers. 
Its application to other workers required an explanation. What con- 
stituted the "longer work week orevailing orior to June 1, 1933" was 
also an issue. The national Labor Halations Ooard's request did not 
appear to limit the is.ue. The release of this interpretation was im- 
mediately followed h r a further request of the National Labor dela- 
tions Board to interpret the interpretation, narticularly the meaning of 
the phrase — "the longer Y;ork week prevailing nrior to June 1, 1933". T71lile 
the denut" ninistiator was deliberating as to trie aenronriate method 
of arocedure and endeavoring to formulate a new interpretation sufficiently 
clear and all-inclusive to resolve the rpoblen, the code ant ority for the 
industry, released another ezrplanation on January 1.1, 1935, as follows: 

"The longer work v^eek nrevailin for each ela.ss of 
work nrior to June 1,1933, shall therefore be in- 
terpreted to nean a. 48 hour ' eel: which was determined 
by a national survey to be the longer work week 
nrevailing in the industry prior to June 1, 1933." 

In this connection, it is to be noted that altho the former in- 
terpretation had been issued to. the code author! ty on Decenoer 3, 1934, 
the Administration -as conscious of the fact that it had not been gen- 
erally issued to all members of the industry and consequently not posted 
with other labor nrovisions until each unit of the industr - ' received its 
official labor nrovisions ooster. (*) 

Eventuall"", the deputv administrator drew up a set of ?ronosaJs ac- 
ceot ing the code authority's 40 hour week b^se and embod-'ing an individual 
plant adjustment as follows: 

"The words 'the longer work week orevallin- nrior to 
June 1, 1933', as founc. in Article IV, Section 1, of 
the Bedding Manufacturing Code, are hereby internre- 
ted to mean a 48-hour week. 

"The entire code provision is hereby interpreted to 
mean that no employee shall receive a leseer hourly 
or piece-work wage than would be required to provide 
the sane weekly earnings for 40 hours of labor per 
week as he would receive if herorked 48 hours of 
labor per week at the hourly or niecework wage paid 
his class of labor in the same plant nrior to June 
1, 1933, nrovided, however, that no factory ennloyee , 
whether remuneration is based upon an hourl"' or ^iece 

work or incentive ^lan, shall receive less than a 

(*) Interpretations of the Labor nrovisions of co: es were required 
to be posted as required b>- Admihist: reive Order I'o. 32, Sen- 
tember 1, 1934, anending Administrative" Orders Hos. 6 and 7, 
dated -Februar" 12th and 28th, 1934, . espectively. 

9856 



-59- 



minimum of thirty cents per hcyur in the South, sue. 
thirty — five cents per hour in t.cie iTorth an: further 
providing that al"! other errolcr ees whose rcnimeration 
is based uoon a weekl" or nonthl" rate shall receive 
not less than a nir.inura 0- -'15.00 ner week. 

"The method. of confuting an e: : lo--.-.e ' s adjusted hour- 
ly or -oiecew'ork wage, accordingly, is t) rmltinly 
the hourl" or piecework wage for his class ox' labor 
in the sane plant prior to June 1, IS '3 lr r 43 ana 
divide by 40. The resulting hourl" oi niecework wage 
will constitute an increase of 20p over the hour sly or 

iecework -: ye for t..e sane class of labor in the 
sane nlant nrior to June 1, 1933,, and no." be regarded 
as satisfying code require lents provided it is not 
less than the 3Gi~S;j '■ ninina required by the Code. 

"The first e.rolenatian of this orovision given b~ the Code 
Authorit" is hereby disapproved, and the second is hereby 
affirmed. So rau.cn of the interpretation, issued 
by the National Recover^ Administration as Order To. 
219-15, as in conflict with or inconsistent with 
this interpretation, is hereby superseded.' 



!l 



"Jl'iile this second proposed interpretation aonears to have been 
a studied attenrot to settle the issue, it nevertheless invites in- 
quiry of the doubtful legal basis' of establishing a 48 hour 
week as the longer work 'reek urevailin orior to June 1, l'T : 3. Dae to ob- 
jections to the auoroval of these ;oronosals, principalis b"- the ITHA 
Legal Division and the ITHA Heview Officer, the Advisor- Council, 
at the request of the Labor Advisory Board, took this matter under 
consideration and on Aril 1. , 19'.. , issued its oecision to the na- 
tional Industrial Recover^ Board with the following recommendations: 

"(l) As the code did not e;:pressly sti- 
pulate how the prevailing work week prior to June 
1, 1932 was f o be c.eterrained, h is recovnended that 
the general work week of the h dustry, arrived at 
through the industry's survey, be accented "s the 
: oedful stancrrd. 

[2) It is therefore also recommended that the pro- 
posed interpretation of the Deputy Administrator be 
a:roroved, with the following qualifications: 

(a) That the facts of the Code Authority's in- 
vestigation upon which the interpretation is 
based should be written into the bod" of the 

i:: terpretation. 

(b) That the sentence in the last paragraph, 
rescinding any part of Order To. 219-16, as 
night be in conflict with this new order, be 
broadened also to rescind any part or -oarts 
of the code authority's previous interpreta- 
tions of this "orovision as ight be inconsist- 

9856 



-60- 



ent with this new order. 

(3) It is reconmended that the controversial code 

rovisio' 1 . go erning '.. r o.ge rates above the nininnra 
should also be revised in the interests of clarit" 
and definiteness when the whole code is revised after 
passage of the new Act." (*) 

Finall", a second and final interpretation as approvec anc issued . day 
13, 1935, incorporating the recor.r.end tions of the Advisory Council. (**) 

Tlie foregoing discussion affecting the bedfing r.anufacturin'j 
industry is a good example of the comlexit" 7 of tie '.'hole :>. . o'olem, 
the difficulties encountered in administration and the seeming in- 
abilit" of the A'diiristra' io - to get at the root of the problem in 
an orderly, complete and expeditious nanner. 

S"ui.inari zing the activities of the Advisoiy Cornell, it :io- r be 
stated that no s:::licit 'jolicy or. this important subject was off iciall-- 
announced as r result of its activities. (***) On the contro.r - the de- 
cision of the Advisory Council on the electric and neon sign-c: 1 e, to the 
extent that it a" eared to confuse the long- standing -->olicy of October 
1933, plus the apparent inertness of the administration to take any po- 
sitive steps '0 clear up this recurring and continuing issue, tended to 
only further aggravate the chaotic state of affairs. 



(*) For complete decision see Ao-oendix "7" in N3A Studies Special 
Exhibits - dork materials Nod 4-5. 

(**) : Cf. NBA Administrative Order l T o. 219-25, day 13, 191 . 

(***) Decisions of the Advisory Council were in fact recommendations 
to the Administrator or the National Industrial Recovery Board. 
They obtained official status only if and when they woro offici- 
ally approved. 



9856 



-61- 
P. II JLI CIT FOLIC x 

Implicit policy \£~ T be termed the guiding principles resulting from 
the utilization of administrative discretion:- dire rot ion largely e.xerted 
by the deputy administrators charged with the responsibility of developing 
voluntary odes of fair competition and crystallized in the provisions in- 
corporated in approved codes or amendments to ccier and subject to the 
discretion ry approval or disapproval by higher authority, i.e., division 
administrators, the Administrative Officer, the Administrator and the 
President. ( *) The acts resulting from the discretionary approvals or 
disapprovals of these higher authorities likewise created implicit policy. 
Hence, implicit policy dealing- with "wager above the minimum" nay be best 
traced through the provisions finally approved in codes of fair competition 
or amendments thereto. 

1. An Analysi s of the Code Prov isi ons 

The variety of the provisions incorporated in codes of fair competition 
was numerous, indicating the e::tent to which administrative discretion ""'as 
employee" in approving provisions for this important part of the wage structure 
Nevertheless, policy appeared to dictate that some provision should be in- 
cluded. As a consequence all but 13 of the 533 basic LTRA cod.es and the IS 
AAA-iPA-LP codes in effect on hay 27, 1935, contained some sort of a. provis- 
ion for "wages above the minimum". Exact meanings of the provisions, however, 
were frequently obscured by ambiguities, contradictions, deficiencies and. 
border line situations. 

Such conditions complicate a separation of the various provisions and 
clauses into classifications tho.t express their probable content and ob- 
jectives. Leon C. Marshall, during his activities as FHA Assistant Deputy 
Administrator for Policy and Executive Secretary of the rational Industrial 
Recovery Board, organized, a compilation of the hour and. wage "orovir.ions in- 
corporated in the basic ERA and joint AAA-1'RA-LP codes, approved as of 
December 1924. (**) Inasmuch as Dr. Marshall's segregation represents 
"an irred." :ible minimum if a realistic examination is to be made of the 
interacting wage provisions of particular codes", notwithstanding that "even 
twelve classes fail to do justice to the com-)le;;it" r of the situation that 
exists in this vitally important aspect o* wage structure", it would appear 
that for the purposes of this discussion Dr. Marshall's groupings are suffi- 
cient with one exception. (***) The first major grouping: "'..V ~e Schedules 
and Basing Points", has been further broken down into two sub-divisions, 
i.e., "wage schedules" and "basing Doints". (****) 



( *) The national Industrial Recovery Board replaced the Administrator 

by Executive Order he. 6854, September 27, 1934 

(**) This compilation was published, by the Brookings Institution. Of. 

"Hours and T7ages in PPA codes" by Leon C. Marshall, The 3rookings 
Institution (1935). 

(***) Cf. "The national Hecovery Administration: An Analysis and Ap- 

praisal" by The 3rookings Institution, (1935). 

(****) Q f# „ The content of ihU Administrative Law with Deference to 
Hours and Wages" prepared by Roth Reticker, Division of Review, 
al Recovery Administration. 



9856 



-62- 

Provisions for "rages above the mininrum" in 52 basic 11HA codes and 
1 AAA-HM- L.P. code, affecting about 6.0 millions-, of 'vor'rers, were included 
in the first major classification, i.e., wage schedules and basing points. (*) 
Of these 53 codes, all but V included some provision complementary to the 
"'■;- -e schedule" or "basing point" purporting to provide additional protec- 
tion, e.g., the code for the purporting to provide additional protection, 
e.g., the code for the coat and suit industry also includes a provision for 
maintaining weekly earnings. "Wage Schedules" were incorporated in 24 codes 
and "basing points" in 29 codes. 

Oddly enough, the issue involving the incorporation of "wage schedules" 
and "basing points" received more attention than any other issue dealing 
with "wages above the minimum" and was the only subject covered b- an offi- 
cial formal declaration of exolicit policy, notwithstanding the prohibition 
against "wage schedules" or the inference that "basing points" were frowned 
upon by the Policy Beard decision of October .25, 1933, approximately 10 
per cent of all the approved codes contained a provision of this clascifi- 
cation. 

The second major classification, "haintain ••eehly £a„rnings" accounts for 
143 basic I'M codes and 18 AAA-1IM-L.P. codes, affecting about 9.8 millions 
of workers. Provisions, designating a maintenance of former weekly wages in 
whole or in part and sometimes reinforced by an additional requirement, are 
grouped in this major classification. Provisions under this major el a r ;;:-ifi<* 
cation may be separated into three general sub-divisions: (l) provisions 
providing for the maintenance of former weekly earnings plus an added require- 
ment; (2) provisions providing for the maintenance of former weekly earnings 
and (3) provisions providing for the partial maintenance of former weekly 
earnings. 

The provision contained in Section 3(c) of Article II of Code I'o. 13 
for the Pishing Tackle Industry is an example of the first type under this 
major sub-division. The provision in the code fcr this industry is as 
follows: 



(*) Cf. Section II-C-4, The Policy emorandum of October 25, 1933 for the 
meaning of the terms "'."'age schedule" and "basing point". In the dis- 
tribution of codes, the code for the Construction Industry has 'oeen con- 
sidered as a "wage schedule" code, regardless of the fact tha.t -'o^e 
r; tes established for an occupational classification or an area, e.g., . 
for plasterers or electricians or for hew York City or Philadelphia, 
Pennsylvania, tend to influence the rates for other occupational class- 
ifications or areas and accordingly could be considered as "basing points 
for other classifications or areas. The code for the Petroleum Industry 
has 'oeen treated as three codes and listed accordingly under three sub- 
divisions. For one division of this industry, i.e., the "derrick and 
rig building, frilling, production, refiner-', and pipe line operations" 
division, the code provides a "wage schedule" with rates for the two 
main occupational classifications of mechanical ermloyees. 



9856 






"The amount of difference existing on July 15, 1933, "between wage 
rates paid various classes of employee's receiving more than the 
established minimum wage shall not be decreased; and in no event 
shall any employee bs paid a less wage for a work week of forty 
(40) hours than such employee was receiving for the same class of 
work for the longer week prevailing prior to the effective date of 
this code. 1 ' 

This general type of provision was incorporated in 31 codes, affect- 
ing 1343,6 thousands of workers. 

The provision contained in Section 5 of Article IV of Code "Jo. 79 
for the Novelty Cm-tains Draperies, Bedspreads, and Novelty Pillow In- 
dustry is aii example of the second type under this major sub-sivision. 
The provision in the code for this industry is as follows: 

"The compensation for employment now in excess of the minimum wages 
herein provided shaLl not be reduced notwithstanding that the hours 
worked in such employment shall be hereby reduced, and rates of pay 
for such eiij 1 oyment shall be increased by an equitable readjustment 
of all pay schedules." 

This general type of provision was incorporated in 74 codes, affecting 
5324.45 thousands of workers. 

The provision contained in Section 2 of Article IV of Code No. 201 
for the Wholesale or Distributing Trade is an example of the third type 
under this vnajor sub-division. The -orovision in the code for this trade 
is as follows: 

"Ho employee whose normal full-time weekly hours prior to July 1, 
1933, are reduced by less than 20$ shall have his or her full-time 
earnings reduced. No employee whose normal full-time weekly earn- 
ings are reduced 20$ or more shall have his or her full-time weekly 
earnings reduced by more than 10/o. " 

This general type of provision- was incorporated in 35 codes, affecting 
5041.9 thousands of workers. 

Provisions of the first type of this major classification appear 
to be an adaptation of the provision contained in the President's Re- 
employment Agreement and the provision contained in the Executive Order 
ap-oroving Code No. 1 for the Cotton Textile Industry. Provisions of the 
second type are and adaption of the provisions in the President's Re- 
employment Agreement. Provisions of the third type appear to follow the 
substance of the ! ' model" code of October 25, 1933. All three types are 
subject to the same criticisms as the provisions from which they were 
abstracted. 

The third major classification, "Maintain Differentials", accounts 
for 54 basic NRA codes and 1 AaA-NFA-LTPJ code, affecting 1733.9 thou- 
sands of workers. The maintenance of former differentials, customary 
differentials, long-established differentials or some such equivalent, 
forms the basis of this classification. The provision contained in Sec- 
tion 2 of Article VII of Code No. 9 for lumber and Timber Products Indus- 
try is an example of this type. The provisions in the code for this 
industry is as follov/s: 

9856 



-64- 

"The existing amounts by which minimum wages in the higher paid 
classes, up to workers receiving $30.00 per week e.-ceed minimum 
wages in the lo' 'est paid classes, shall "be maintained." 

Provisions of this type follow the Executive Order ay->roving Core 
To. 1 for the Cotton Textile Industry and accordirgly do not neees^"' ; 5 ■ 
guarantee an incret-.se in nor the maintenance of weekly earnings. 

The fourth major classification, "Adjustment Provisions", accounts 
for more codes than any other classification. This group consisted of 
213 basic ERA cedes and 3 AAA-IRA-L.P. code, affecting 5107.7 thousands 
of workers. Provisions basicly providing for v.n "adjustment" of w, es co - 
prised this classification of generally indefinite and inoperative provisions, 
The provisions of this major classification may be segregated into four 
general types: (l) provisions for an "adjustment" of wages to maintain 
equitable differentials; (2) provisions for an "equitable adjustment" to 
be interpreted in accordance with the President's Reemployment Agreement; 
(3) provisions for an "equitable adjustment" plus other requirements, e.g., 
no reduction in hourly rates and (4) provisions for an "equitable adjust- 
ment", only. 

The --rovision contained in Section 3 of Article 17 of Code iTo. 305 for 
the Fishery Industry is an example of the first t^pe under this major classi- 
fication. Trie provision in the code for this industry is as follows! 

"I;: ar&er to mairtain fair differentials between employees an 
equit; i !.e readjustment in rates of pay shall be made in cases of 
employees who on June 15, 1933 received mors than the minimum rates 
of pay then prevailing; but in no case as a part of such readjustmi nt 
shall hourly rates be reduced." 

This ge.j sral type of provision was incorporated in 27 codes, affecting 
523.1 bh a- sands of workers. 

The provisions contained in Section (d) of Article 17 of Cor'e To. 27 
for the Textile Bag Industry is an example of the second type under this 
major classification. The provision in the code for this industry is as 
follows: 

"Employers shall not reduce the compensation for employment row 
in excess of the minimum wages hereby agreed to (notwithstanding 
• that the hours worked in such employment may be hereby reduced) 
and shall increase the pay for such employment by on ecui table 
readjustment of all pay schedules. This clause shall be construed 
in the same manner as paragraph 7 of the President's Reemployment 
Agreement has been interpreted by the rational Recovery Adminis- 
tration in Interpretations Tos. 1 and 20, and subsequent interpre- 
tations. " 

This general type of provision was incorporated in 12 codes, affecting 

64.9 thousands of workers. 

The provision contained in Section 2 of Article 17 of Code To. 56 for 
the motor bus industry is an example of the third type under this major 
classification. The provision in the code for this industry is as follows: 

9356 



-65- 

"The rates of pay of employees whose hours of employ- 
ment nave been reduced by the provisions of this Cole shall 
be increased by an equitable readjustment and tae rates of 
pay of employees whose hours have not been reduced shall 
not be decreased, as a result of this Code, below those in 
effect in the week ending June 17, 1933." 

This general type of provision was incorporated in 134 codes, affecting . 
1081.2 thousands of workers. 

The provision contained in paragraph 3 of Article II of Code No. 17 
for the automobile manufacturing industry is an example of the fourth type 
under this major classification. The provision in the code for this in- 
dustry is as follows: 

"Equitable adjustment in all pay schedules of factory 
employees above the minimums shall be made on or before 
September 15, 1933, by an employers who have not heretofore 
made such adjustments, and the first monthly reports of 
wages required to be filed under this Code shall contain 
all wage increases made since May 1, 1933." 

This general type of provision was incorporated in 43 codes, .affecting 
1433.5 thousands of workers. 

The foregoing four types of "adjustment" provisions are nothing more 
than modifications of the provision in the President's Reemployment Agree- 
ment. Unfortunately, the discretion used in approving the modification 
failed to recognize or in any event remove the legal impracticability of 
the provision, itself. 

The fifth major classification, "No Positive Provision", accounts 
for 90 basic ERA codes and 2 AAA-NRA-L.P. codes, affecting 2325.5 workers. 
Codes including no positive provision for "wages above the minimum" are 
included in fcis classification and are grouped into three general types. 

The provision contained in Section 5 of Article IV of Code No. 119 
for the newsprint industry is an example of a provision embodying a 
"statement of policy". The provision in the code for this industry is 
as follows: 

"The wage rates of all employees receiving more than 
the minimum rates herein prescribed shall.be reviewed and 
such adjustments, if any) made therein as are equitable in 
the light of all. the circumstances. lithin 90 days after 
the effective date hereof, the Code Authority shall report 
to the Administrator the action taken by all members of 
the industry under this section." 

This general type of provision was incorporated in 68 codes, affecting 
1353.0 thousands of workers. 



9856 



-bo- 

Tlie provision contained in section paragraph (e) of Article III 
of Code No. 4 for tlie electrical manufacturing industry is an example 
of a provision requiring a "report", only. The provision in the code 
for this industry is as follows: 

"Not later than ninety (90) days after the effective 
date the electrical manufacturing industry shall report 
to the Administrator through the Board of Governors of 
National Electrical Manufacturers Association the action 
taken by all employers in adjustin the hourly wage rates 
for all employees receiving more than the minimum rates 
provided in paragraph (b) of this Article." 

This general type of provision was incorporated in 11 codes, affecting 
517.0 thousands of workers. 

In 13 codes, affecting 455.5 thousands of workers, there was no pro- 
vision for "wages above the minimum". This group of codes comprised the 
third type under the fifth major classification. 

The absence of any positive provision for "wages above the minimum" 
in this fifth major classification indicates that as early as August 4, 
1933, and as late as July 13, 1934, in the process of codification, ad- 
ministrative discretion appeared to permit considerable freedom in the 
choice of the provisions, if any, that might be incorporated in codes to 
protect this important part of the wage structure. (*) It is possible 
that the deputy administrators under whose jurisdiction this particular 
group of codes was developed, with the support of the higher authority 
in the NBA, considered that the industries in this group were "peculiar" 
and therefore demanded special consideration. Such a statement, however, 
must be considered as stated, i.e., a possibility. It is introduced be- 
cause of the reference to the "peculiarities" of an industry as the reason 
frequently offered for the inclusion or omission of some particular pro- 
vision. 

G. THE POLICIES jg TilE NBA ADVISORY BOARDS, TECHNICAL DIVISIONS AND THE 

REVIEW DIVISION 

No discussion of NRA policy on any subject would be complete without 
a resume of the attitudes of the three advisory boards, the two technical 
divisions and the Review Division. To some extent, at least, each acted 
as a pressure group within the Administration. The 'product of this pres- 
sure, however, was evaluated not only in terms of an intelligent estimate 
of the circumstances. Its reception frequently depended on the disposition 
of the recipient to prooerly consider the situation in the face of more 
formidable, but not necessarily rational, pressure of a competing group. 
Expediency coupled with a "laissez faire" attitude in some quarters rather 
than long range planning frequently appeared to be the guiding influence. 

(*) The Code for the Electrical Manufacturing Industry was approved 
August 4, 1933. The Code for the Dental Goods and Equipment 
Industry was approved July 13, 1934. 



9356 



-67- 

Dae to the nature cf the subject, it lias been necessary to set forth 
in numerous instances the attitude of the Labor Advisory Board, the Legal 
Division, the Review Division, and the Compliance and Enforcement Division. 
Aside from these specific references, however, it would also seem essential 
to cite other references that disclose the direction of thought of the 
several advisory and staff groups. 

1. ' The Labor Advisory Beard 

The Labor Advisory Board held that the incorporation in codes of sev- 
eral so-termed "basing points" providing minimum rates for skilled workers 
would tend to promote fair competitive conditions and to increase the money 
earnings of the workers affected. On the other hand, it opposed provisions 
that tended to hamper the free play of genuine collective bargaining or that 
jeopardized the jurisdiction of real employee unions. It opposed the ad- 
ministration of collective bargaining or industrial relations activities by 
code authorities appointed by and from management only. It opposed the 
union of collective bargaining activities with other industrial relation mat- 
ters. It advocated any and all activities to promote the use of the instru- 
ment of Section 7(b) of i^.e Act. 

As early as 1934, the Labor Advisory Board,, after a comprehensive sur- 
vey of the existing situation as represented by the various code provisions 
and the action taken by the code authorities and the Administration, sensed 
the weakness of the labor provisions in the LIRA in the light of developing 
opinion and summarized its recommendations for future legislation in its 
memorandum of December 15, 1934 to the National Industrial Recovery Board. 
This memorandum emphasized the following: 

1. The majority of workers covered by codes have boen left 
to the protection of ssme wishful thinking clause calling 
for an equitable adjustment. 

2. The result has produced an unfair competitive situation 
in the wages paid in, many industries, often at the expense 
of those plants who were paying affair wage scale before 
the 1IRA... 

3. In many plants the minimum wages became the maximum. 

4. In other plants the upper brackets of wages were reduced 
to make up for the increased wages of those brought up to the 
new minimum, or even to pay the wage bill of the workers re- 
employed by re.ason of tie hours reduction. 

5. That only by establishing separate minimum for common, 
semi-skilled, and skilled labor can an approach to a prac- 
ticable solution of this problem be found. 

6. That tiras far very little effective work has been done 
to establish an adequate programme for the collection of 
nation' -wide statistics. 

9856 



-68- 

7. That even less effective have "been efforts looking 
toward real industry and inter-industry planning on a long ■ 
range scale. (*) 

Farther evidence of tie Labor Advisory Board's appreciation of its re- 
sponsibilities and its efforts respecting the necessity for the protection 
and control of wages for all workers and toward the findings of a solution 
to this problem, is disclosed "by its i/Iemorandum No. 7, dated April 22, 
1935, on the subject cf "Equitable Adjustments". (**) 

2. NBA Industrial Advisory Board 

The NBA Industrial Advisory Board was set up to represent the inter- 
ests of management and as such it probably exerted the greatest pressure 
of any group interest within the Administration to that of the NRA Labor 
Advisory Board. Its policy respecting this problem is summarized in a 
report prepared by Alfred G-. Son, Resident Industrial Adviser, dated 
July 16,". 1935, as follows: 

"The Board's policy at the outset of NBA seemed to be one 
of agreement with the principle of wage classifications 
above the minimum. However* as the problem arose in its 
application to specific industries, the Board's policy 
seemed to be that while "wages above the minimum" might 
have a place in certain industries, any agreement by the 
Board to their inclusion in a specific code might operate 
as an opening wedge for their inclusion in all codes, and, 
therefore, except in ,ne or two instances in the course of 
the oast eighteen months, the Board's policy has been de- 
finitely opposed to the inclusion of any provision for 
wages above the minimum in any Codes." (***) 



(*) See Appendix '»&" in NBA Studies Special Exhibits - Tcrk Materials 
No. 45, for NRA Release No. 9237, December 17, 1934. Cf. Reference 
to Executive Order No. 6479 and Administrative Order No.X-10 in 
Section II-C-6. See also "Issues within the Problem of Wages in 
the Higher Brackets" in Section II-D-l(a). Of. Reference to 
industry and trade analysis in Section II-D-l(a). See also com- 
ments of the Committee on Labor Policy in Section II-D-l(c). 

(**) F or complete memorandum (and "model code" provisions referred 
to) see Appendix "G-", in NBA Studies Special Exhibits - Work 
Materials No. 45. 

(***) For complete report and opinions of the Industrial Advisory Board - 
see Appendix "E" , in NBA Studies Special Exhibits - Work Materials 
No. 45. 



9856 



-59- 

It must be understood, however, that all outstanding industrialists 
did net subscribe to this policy of the NBA Industrial Advisory Board. 
In a nation T-wi'de radio address on October 9, 1933, Edward A. Filene, a 
brother of Lincoln Filene, who was a member of the Industrial Advisory 
Board, stated: 

"If Labor and "the rest of our peopls had wages high enough 
to enable them to buy the products of their work, then every- 
one would find work with fair pay, and prosperity would re- 
turn bringing fair profits to employers. 

"If wages were taken ^ut of competition and every employer 
knew that every direct or indirect competitor had to pay the 
same wages of adequate buying power that he himself must pay, 
taen the blind opposition of some of us employers to adequate 
wages would disappear. If wages were taken out of competition, 
then we employers would be obliged to make the higher wages 
pay by improving our technique and cur management of our busi- 
nesses and especially by fighting the enormous wastes that still ' 
exist in distribution and in SO? of our production in this coun- 
try. If this were done, then for the first time we employers 
would find that car improvements in our businesses would be 
met by adequate buying power of our customers instead of as so 
often has happened in the past that these improvements with 
their increased output met a buying power that was so inadequate 
that our surplus production, largely due to our improvements, 
resulted only in flooding the markets, lowering prices and kill- 
ing 'our legitimate profits. 

"On the eve of the meeting of the American Federation of Labor 
recently, William. Green, its President, set as an ultimate goal 
a union membership of 25,000,000. 

"I have been an cod iyer throughout my life. My reaction to 
this labor objective — which is startling to many — therefore may 
seem strange and paradoxical. 

"I think that employers, as a body, and in their own interest 
should hope that labor organizations realize their ambition to 
enroll twenty-five milli'n members in union ranks. 

"It would mean stability. It w uld mean prosperity. It would 
mean steady buying power, it would mean a solid foundation on 
which business could build." (*) 



(*) Gf. KRA Release No, 1076, October 10, 1933. 



9856 



-70- 

3 . The NBA Consumers' Advisory Board 

The NBA Consumers' Advisory Board's attitude on this subject appears 
to be revealed in an address on January 30, 1934, by Dr. 'Thomas C. Blais- 
dell, Jr. before the public hearings on employment -provisions in codes 
of fair competition, as folio-....; 

"Tie do not believe that c. ?„ssif:">c4 wage-scales should be made 
a general feature of the preseab code structure. Enforcement 
of such above-the-minimum rates is sufficiently difficult even 
in trades where labor is strongly organized. In unorganized 
ones it is very unlikely that it can be accomplished. But our 
judgment does not rest entirely on administrative expediency. 
There are inherent difficulties in establishing "fair" scales 
of wages. In this realm we approach the same problems which are 
found in other forms of price fixing. On this view, the matter 
is one for the future. If the minimum wage becomes in practice 
the maxim'am, the remedy should be found through collective bar- 
gaining — not through the code machinery." (*) 

4. The Legal Division 

The -positions (for there appeared to be more than one this issue) 
taken by the NBA Legal Division have already been mentioned beginning 
with the NBA General Counsel's (Donald A. Richberg) edict stating that 
the NBA did not permit the incorporation of "wage schedules" or "basing 
points" in the Construction Code and the NBA Associate Counsel's (Black- 
well Smith) apparent contradictory declaration which permitted the incor- 
poration of six "basing points" in the Code for the Plumbing Contracting 
Division of the Construction Industry; The NBA Legal Division, although 
seemingly unable to decide and set forth in unequivocal terms the legal 
issues involved, was nevertheless drawn into this problem at each re- 
curring situation. Furthermore, the 1IEA Legal Division was familiar with 
the complications of enforcement of the cryptic "adjustment" provisions. 
It failed, however, to prescribe any definite policy of its own. Just 
before the Supreme Court decision on May 27, 1935, it undertook a study 
of the subject. (**) 

5 . The Division of Research and Planning 

Altho the NBA Division of Research and Planning presumably held to 
the formal policies of the Administration, it is found that it frequently 
advanced individualistic idea.s. Its report on the Proposed Code for the 
Lien's Neckwear Industry is an example. This report reads in part as f ol- . 
lows: 

"Prom the practical economic point of view the Research and 
Planning Division believes that detailed wage scales, whether 
piece or time, are decidedly unwise for the following reasons: 

— — . fc — — — — - 

(*) Cf. The Consumer Interest in Employment Policy by Thomas C. Blaisdell, 
Jr., Executive Director, Consumers' Advisory Board at the Public 
Hearings on Employment Provisions in the Codes, January 30, 1935. 

(**) See Appendix "I" for memorandum by George Bronz, Assistant Counsel 

to L. ivi. C. Smith, NBA Legal Division, General Coordinator, April 23, 
1935, in NBA Studies Special Exhibits - Work i.:aterials No. 45. 

9856 



— ex— 

1. They make much more difficult the task of enforce- 
ment and so tend to lessen respect for the national 
Recovery Administration. 

2. They establish rigidities in the economic structure 
which tend to maka it less flexible or adaptable to 
technological, style, and economic changes. Classi- 
fied minimum piece rates are much mors vicious than 
comparable hourly rates in this respect, for they 
remove all incentive which the manufacturer may hope 
to gain with better machinery and finer sub-division 
of labor. 

3. They are likely to penalize individual concerns who 
have invested large amounts of capital to simplify 
operation;- md who are organized with an unusually 
fine division of labor or who define operations in 
a non-stand; rd '-'ay for one reason or another. 

4„ Such classified wage rates tend strongly to act as 
limitation on earnings." (*) 

6 . The Rev .lew Division 

The Review Division created by MRA Office Order No. 68, February 8, 
1934, was established to review the consistency or inconsistency with 
established "policy" of recommendations and proposals by the staff units 
of the NRA and by the NRA executives charged with the responsibility of 
developing and administering codes of fair competition. It did not in- 
itiate policy. 

As a facility to its functioning and its scrutiny of codes and oth- 
er documents, the Review Division prepared a compilation of "established 
policy". This compilation was prepared in July 1934 and was added to as 
new principles were proclaimed and new situations arose. (**) The com- 
pilation, however, was not generally distributed to all officials nor 
units of the NRA for their guidance. And although certain of the prin- 
ciples set forth in this compilation were incorporated in the NRA Office 
Manual, the " Sustentive Guides" of this Manual did not include any ex- 
pression of policy on this subject. (*** ) 

The compilation of policy of the Review Division respecting "wages 
above the minimum" is unique to the extent that no statement of policy 
appears on this tcpie, except that part dealing with "wage schedules" 
and "basing points 11 . In regard to the incorporation of "wage schedules", 
the Review Division affirmed the decision of the Policy Bsrd of October 
23, 1933 with the added qualification that it was contrary to "established 



(*) See elso Appendix "J" in MRA Studies Special Exhibits - Work Mater- 
ials No. 45. 
(**) Of. "History of the Review Division, February 6, 1934 to June 16, 
1935", Work Materials Mo. 19, national Recovery Administration, 
Division of Review (December 1935). Of. Appendix "C" for ex- 
tracts from this compilation dealing with "wages above the minimum", 
in NRA Studies Special Exhibits - Work Materials No. 45. 
(***) Cf. Section II-D-2, The NRA Office Manual 
9850 



-72- 



policy" to include wage rates for so-termed -skilled" "^"J^ 8 " 
such rates were determined by collective bargaining between truly repre 

entativr g rou P s of employers affected by the code. ^uch a procedure 
required a. determination by collective bargaining on a national ba= is. 
But such a procedure was not always observed as nas oeen shown in the 
previous discus-ion of the development of policy. { ) 

H. Tm, r.nTTC PLATO-TI ES COMMITTAL 

The activities of another group, the Code Planning Committee set 
up within the Administration during the period clearings ana jeWj 
of toe 74th Congress concerning the extension 01 the National Industrial 
recovery Act, also require, consideration in_ the cascus.ion ox MA 
oolicy. This committee was organized on April 17, 133 by Prentiss U 
Coonley, Code Administration Director, al the there aoe 3 no appear to 
be any official oner authorizing it, fromation. lo wi hstan ",, its 
importance was stated by its Chairman wno announceo "tnat this joint 
Board (the Committee) would be considered a, importantas an, group 
working on the problem (suggested policies and limitations for code 
drafting) and that all questions affected by its enaeavors would be 
referred to it. " (**) 

At this time the Administration was confronted with attacks from 
both labor and management for its apparent failure to bring about 
"recovery". It had also come to the realization that the success of the 
industrial control programme required that (1 we must rightly move 
to correct some things done or left undone", (2) "we must work out the 
coordination of every code with every other code", (3) we must simplify 
-orocedure", (4) "we must obtain current information a, to the wording 
out of 'code processes", U) "we must check and clarify such provisions 
in the various codes as are puzzling to those operating uno.er them , 
and (G) "we must make more and more definite the responsibilities ot 
all of the parties concerned." (***) 



(*) Cf. Discussion regarding the incorporation of "basing points 
in 'the code for the Plumbing Contracting Division of the Con- 
struction Industry in Section II-D-l-(a), Labor Policy Group 
and regarding the rates included in the Plastering and Lathing 
Contracting Division of the Construction Industry m Section 
II-D-3(a) , 'the Steel Casting Industry Case. 

(**) Cf. Minutes of Meeting, April 

(***) Cf. Message of the President to the Congress of the United 
States, February SO, 1935. 



9856 



-73- 

Such a charge appeared to be a challenge to the apparent lack of an 
effective administrative organization and of a programme promoting 
orderly planning and coordination. (*) Aside from the major problem of 
determining a policy orienting lfbor to the general scheme, the problems 
of t.ae enforcement of labor provisions of code? and of a proper ?n£. 
planned scheme for the cohesive arrangement of actual industries and 
trade- versus the unregulated grouping of units of businesses by codes, 
on which the former so intimately depended, apperrec to be harassing 
situations endangering the whole system of codification. 

The minutes of the first meeting of the group of executives, chiefly 
deputy administrators, states that the purposes of the committee is "to 
study code reorganization, to craft a new model code, to suggest policies 

.'ding codes and to study code consolidation." These purposes, how- 
ever, appea.r to have been somewhat delimited. The first report of its 
organization states that "it was finally decided, in view of your 
(Prentiss L. Coonley's) expressions in the matter that the Committee will 
devote its entire attention to preparing 'suggested policies and limita- 
tions for Code drafting'." (**) The minutes of the first meeting also 
quotes Prentiss L. Coonlej as st tin ; teat the committee "havin ; full 
knowledge of the problems in the various code under their supervision 
had been selected for its insight ant intelligence. " 

This committee in turn selected t" : ;ree sub-Committees, one of 
which was a labor (provisions) committee, consisting of three deputy 
administrators. In this regard the committee appears to have elected to proceed 



(*) Cf. Leon C. Marshall's "Walrus Memo" to th« National Industrial 
Recovery Board, April 5, 193 . 

(**) Cf. Memorandum from Code Planning Committee tc Prentiss L. Coonlcy, 
NBA Code Administration Director, April 22, 1935. 



3856 



-74- 

without the advice of the labor advisory "board which was presum- 
ably "composed of men who are thoroiighly acquainted with labor prob- 
lems throughout the country" , (*) nor did the labor advisory board parti- 
cipate in any of the deliberations dealing with such an important part 
of the whole program. On the other hand, it would appear that the Com- 
mittee considered that its collective perspective of labor issues would 
be better extended by the opinions of industrial specialists and according- 
ly invited the industrial advisory board, representing management, to 
participate in the discussions of labor -->roblems. The committee also 
departed fromGaneral Johnson's "gold-fish bowl" method of conduct, in- 
asmuch as it regarded its proceedings as "highly confidential". (**) 

The committee and the several sub -commit tees held numerous 
meetings between April 17, 1935 and May 27, 1935. At its second meet- 
ing the committee decided that the way to proceed to suggest policy 
was by preparing another '.'model code". A perusal of the minutes of 
the various meetings woulc 1 seem to indicate that there was a paucity 
of advanced industrial thought particularly as regards the problem of 
labor, and that the general direction of activity appeared to disregard 
the more fundamental issues of social-economic planning. Furthermore 
the committee appeared to oppose the incorporation of any mandatory 
provisions in cooes dealing with "wages above the minimum". To some ex- 
tent this trend of .thought may have been inspired by the fact that Leon 
C. Marshall appears to have questioned the consideration of any pattern 
for "wages Above the Minimum" in his "Walrus Memo" of April 5, 1935 to 
the Nation? 1 Industrial Recovery Board. This memorandum gave impetus to 
the creation of this committee. 

The minutes of the meetings, nevertheless, do expose the individual 
and collective attitudes of those executives appointed for their know- 
ledge of the problems and their insight and intelligence. The direction 
of industrial thought of this latest policy-making committee and some 
of its members on the issue of wages above the minimum and related sub- 
jects may be judged by the following quotations from the minutes of the 
various meetings: 

Meeting, Aoril 19, l?r;5 : 

The Commi 1 1 ec_: 

"It was felt that there should be no official 

ruling as to what constitutes an industry." 



-oOo- 



Mooting, April 22, l'"35 : 

Query: "Does not the broad question of admin- 
istration cover everything in a code except 
labor urovisions?" 



(*) Cf. National Recovery Administration in the national Emergency 
Council "Manual of Emergency Recover:/ Agencies and Facilities". 

(**) Cf. Minutes of Meetings on Aoril 18, 1935, at the V/illard Hotel, 
Washington, D. C, and April 19, 1935, at the Department of 
Commerce Building, Washin ton, D. C. 

9356 



-75- 

balter han via, Chairman of the Corfu t tee ; 

7& 'uty Admin i strator ; 

"It is my idea that it does." 

0O0 



.e : tin' 



L« J. 1 art in, Act in , Administrator 
(former Chief of Compliance Division): 
"There is no way, from s compliance viewpoint, 
of writing 'an above the mininrum scale provi- 
sion' so it rill be workable. But yon can't 
leave it out." 

"Put nothing in the coce except that which 
is workable and reasonably sure of enforce- 
ment. Equitable adjustment should "be taken 
out, hut I don't know whether you could 
attempt to enforce it." 

"The reel problems in compliance are over- 
la-- in , interlocking definitions and too 
wide a coverage. " 

"I believe I would go on record as sir- tin 
drat I believe equitable adjustment should 
be left out of the code as a mandatory pro- 
visicn. " 

: Oo 



". J. Ammerman, Deputy Administrator ; 
"Since you can't establish a ma. the.ua ti eel 
yardstick ^-j which you can measure equit- 
able adjustment above the minimum that is 
a subject for collective bargaining." 



_ oQo • 

hooting, i.iay 9, 1S?5 ; 

?.. h. Doherty, Denuty .-hministrator; 

C .ember of the Ichor S-ij-Corr.iittec ) ; 

;, by argument against collective bargaining 

in setting up a wage 'scale is that it is 

economically unsound. " 

"I would 1 not make it (referring to provi- 
sions for area-agreements— collective bar— 
gainin; ) mandatory. " 

oOo- 



3856 



~*76- 



C-oor;;c C. Stanley,' pe'uity Administrator; 
LhmL :;: ■ :■ of the Labor £uf -Committee : 
"I don't think wages r bovc the minimum pro- 
visions could be enforced. It is predicated 
uoon there bein: no differential. " 



-0O0- 



:.Gcti— , Lay 14. I'Jr" ; 
"falter ::rnyam, .~c-.vty Administrator ; 
Chairman of thj Co:" .littcc ; 
"The provision for no reduction in wages 
is also a debatable q-uestion. Mr. Marshall 
(Leon C. Lis.rslTe.il, Executive Secretary, na- 
tional Industrial Recovery Board), feels 
that this, Committee, aside from drafting' 
the Lodel Code, has stifficient intelligence 
to 'work out some procedure to enable industry 
to handle wages in higher brackets outside 

Code. Anyway, industry v/ill handle it 
about as it pleases." 



-0C0- 



hceti r . iky IP. lCrO ; 
kaltcr i^:y . U7i, De-put: Administrator : 
Chrirrnan of the Committee ; 
"Referring to the equitable adjustment 
feature, the Committee feels it should bo 
left out of the Code and hlr. Lvarshall (Loon 
C. Larshall, Executive Secretary, of the na- 
tional industrial Recovery Board), said wo 
woulc" have the- unaninuras vote of the Board 
(presumably the IT. 1. 11.3. ) backing us u> on 
that." 



-oOo- 



Lxcti.y., iky 2"', If " "5 : 

Y'altor I .an,: urn. De puty .'/miristrator : 

Chr.irman of the Gora,.d.ttec; 

"I haven't had any discussions with the 

Labor Advisory Board, sc my ideas are not 

tinted. " 



-oOo- 



: lectin- , Lfey 34. 13T5; 

'.'.'. V.". hose, Jo-raty ,/P. '..f.nistrator : 

Vice Chairman of the Co. mittce 

Chaiii-ivn of the Labor Sub -Commit tee : 

"Cn the other hand, the Labor Advisory Board 



9856 



-77- 



has spent considerable' time in getting up 

ess things (presumably the Labor Advisory 
Board's recommendations) for inclusion in the 
cooe which upon mature judgment we believe 
-■- f - unenforceable, or noi essentially to the 
r •.-■::-. ta.c- of labor." 

Ultimately the committes drew up a set of proposals. The labor 
advisory board criticized the committee's proposals" dealing with labor 
issues an., called attention to the incompleteness of the committee's 
recommendations and specifically called attention to the omission of 
any reference to the problem of "wages above th? minimum,!^*) 

The committee, however, finally decided that no orovision for 
"wages above the minimum" should oo ms.de mandatory by Public law and 
the "model" code, suggesting the policy proposed by this committee, 
did not include any such provision. lurthermore, collective bargain- 
in S Provisions for so-termed "wage-aree-agreementS"were inclu.de d°with 
the group o: remissive provisions subject to election ir tie ^arti- 
cular industry. 

lt cc:i:.uiT iCA r Ji:-.-: bity/but p; -r; -j-a at,— -tr^m'tv^ ofpicb afd the 
CEAiru.Ai: or tl: :;pa labob a")visc:j boabd ~ 

Before concluding; this Chapter on UFA policy, it would appear rele- 
vant to quote a letter, dated L&.rch o, l r y5, from Gustav Peck, Assistant 
to the Administrative Officer, to 'Jilliam Green, Chairman of the labor 
advisory board, rhich sets forth the intricacies of the oroblem and 
this assistant administrative officer's endorsement of the employment 
of so-termed "basing points" - s a support for the wage structure: 

"There is a problem which has cone vn repeatedly in the 
..r± and because it affects so intimately the position 

of trade unions in our scheme, I am submitting it to you 
for consideration with A.ZT. of L. officials and nossibly 
also with the Labor Advisory Board. 

"nearly all the codes have a provision for 'an couit- 
able adjustment of rates ?bovc the minimum', ho one 
knows clearly what that means, and there is some evi- 
dence that the wage rates of the better mid workers 
have not -one up in proportion to those of the un- 
skilled. 

"Generally there is no information throughout the 
administrative offices regarding the adjustment of 
wages above the minimum which have been made by industries. 
It would be well nigh impossible to consider this rjrovi- 



(*) Cf. Memorandum iron the Labor Advisory Board to the Code Planning 
Committee, hay 22, 1535. 



9856 



-78- 



sicn -;i enforceable -ere provision. The compliance 
offices have very little to guide them; "but their 
records show that they bandied very few cases of 
wa.fes above the minimum. 

"Occasionally however, an industry '.-rill tahe this 
provision with the decree of seriousness that 
ou L ht to hearten there -.hose interest it is to 
-irotect the -position of labor. They Cj o through 
some conroutations of the we:pe structure by plants 
-nc" for the whole industry, before and after the 
establishment of the code, and work uo an elaborate 
ra^e scale for ell the different occupations in the 
industry. I am attaching an illustration of one cu 
these efforts in an industry that is not well organ- 
ized. Having done this, they asklTPA's approval for 
these minimum rates for the different occupations. 
iy own -oosition is that, while the effort on the part 
of the industry is to be ao^lauded and that perhaps these 
-proposed rates would have a lifting effect upon wages 
in the industry, we can not approve the procedure. I 
base this judgment, first - upon the very great diffi- 
culty of estimating proper wage rates where conditions 
vary' so much over the industry, and second - upon the 
fact that such rates arc established by employers with- 
out the necessary consultation with representatives of 
the workers in the industry. You must understand that 
if we amrove those provisions, arc 1 make them part of 
the code', they would quite certainly become the actual 
rates paid, and not merely the minimum rates. I am 
afraid that this would tend to freeze rates and would 
give government sanction to a rigid wage structure. 

"As yon. perhaps know, I personally approve of the 
establishment of several minimum rates sufficiently 
far apart between the least skilled and the most 
skilled to bolster uo the wage structure. The provi- 
sion of one of two addition?! minima above the lowest 
minimum -seems to me a necessary provision to maintain 
fair competition, to give the unorganized workers 
some 'orotection under the codes, and to give both 
organized labor and employers who deal with organized 
labor some protection. 

"It remains true however the only comparatively 
few codes provide for more than one minimum. Nearly 
all of them have the provision for 'equitable adjustment 1 . 
The dilcmna is this: The great bulk of the industries 
are doing nothing about it; the Compliance Division is 
happy because there can practically be no evasions of 
such a provision; the workers have no protection if 
they receive more than $15 or $16 a week. On the con- 
trary, when an industry makes an honest effort to handle 



9856 







-79- 

„his problem on an industry-wide bases as they 
.-re really ordered to in the code, we can not 
pfford, Tor reasons I have already outlined, 
either to ay- rove these provisions or to permit 
them to he broadcasted over the industry. Of 
course, the only final answer to this whole 
problem it collective bargaining; *™.* wmt 
Blffl.ll we do in the interval, and what is the 
proper policy from the ion- range point of 
view? " 

lir. G-reen replied to the Assistant Administrative Officer under 
date of ;:arch P, 1935, as follows: 

"I appreciate fully the importance of the point 
rhich "--on raise in your letter dated Lferch jth, 
I&bor," however, has been reluctant to approve 
a -.-.lan which would provide for the fixing oi 
several additional minimum rates above the lowest 
minimum set in industrial codes of fair prac- 
tice. Such a procedure; involves a wage fixing 
nolicy on the part f the government which of 
course has always been objectionable to labor. 

»Yh have always felt that the real solution 
of this oroblem to which you have celled my 
attention is the practice end application of 
collective bargaining. I realize that in the 
veil organized industries the interests of the 
workers can be protected through collective 
bargaining. In the unorganized industries, 
however, collective bargaining is not practiced 
and as a result the minimum rates of pay fixed 
in the code become applicable to an increasingly 
larger number of workers. 

"I realize that you have raised a very serious 
-oroblem. It is a -oroblem which should be given 
intense consideration by the rational Recovery 
Administration and by the representatives of 
lab oi . 

" I thank you sincerely for writing me about 
this matter." 

III. All APrhAlSAL 

The foregoing, tracing the substantial details in the development 
ano formulation of I"A policy dealing with the subject of "wages 
pbove the minimum", disclosed the inconstancy of the Administration 
with the ultimate result that no complete plan was formulated for ad- 
minist rat ive guidance . 



9856 



-so- 

At the outset, it is -Tonic; that the first code, the Code for 
Cotton Textile Industry, submitted without any provision for the con- 
trol of wages o:' bhat lai'ge group of workers receiving more than the 
p re-code-minimum, was modified by the Presidential Order of approval 
on July 9, 1933 to provide for the maintenance of the existing dif- 
ferential:, in the wages of these workers. Of itself 1 , such a provision 
did not necessarily provide for >n incx-er.se in the money earnings of 
the worker or even the maintenance of his former earnings. Such sit- 
uations were conditioned by other circumstances, nevertheless, it is 
evident that the President concluded that it was essential that some 
consideration should be giver, to the regulation of the wages of these 
workers beyond that contained in minimum wage provisions. Accordingly, 
it may be inferred th?t ? precedent for £ policy was created but the 
Administration failed to make any announcement . 

Again, it is found that the President re-affirmed his conclu- 
sions on July IS, 1933 in the issuance of the President's reemploy 
ment agreement, although the provisions in this "blanket Code" deal- 
ing with this subject were vague and cert- inly not in the positive 
terms expressed in the Order approving the first code. Once more 
the Administration appears to have failed to announce whether or not 
such provisions were to be considered mandatory and if so to offer 
a clear-out pattern. 

Such indications of a trend toward regulation of the entire 
wage structure as the two just mentioned were followed by the provi- 
sions su pestec" for the guidance of industry and trade in the sev- 
eral "model codes". It would appear that some provisior was desirable 
but the patterns offered were indefinite and conflicting. Furthermore, 
the provisions were not mandatory. Management was permitted to state 
its terms or no terms. 

In the meantime no ;oiations regarding the coCo for the Construc- 
tion Industry centered attention o: Incorporation of some pro- 
visions for the control of the wages of so-termed "skilled" and 
"semi-skilled" workers. Organized labor, backed by the ITEA labor 
advisory board, were demanding protection for these workers. Both 
appeared to be seeking protection for the wages of the workers in 
the higher-wage-scale brackets throu, h the processes of collective 
bargaining and the employment of the instrument of sub-section 7(b) 
of the Act. Apparently, a decision could not be avoided and the 
Administration through the original Folic?- Board announced on Octo- 
ber 25, 1933, its one formal although negative, incomplete and in- 
definite policy, dealing with "Wages Above the Minimum", to the 
effect that neither union agreements nor wage schedules were to be 
incorporated in codes. This declaration was qualified to permit the 
inclusion of one or two "basing points". The terms "ware schedules" 
or "basing points", however, were not defined. For did the Admin- 
istration announce what sort of a provision, if any, was acceptable 
or required. 

Regardless of the Administration's failure to make any other 
formal annoimcment concerning the requirements in codes on this sub- 

9356 



-31- 

ject, a great maaber of the executives charged ,r -ith the responsibility 
of dcvelo^ir coc.es appear to have considered that the inclusion of 
some provision, inoperative though it might he, was necessary to con- 
form to the unwritten oolicy. Provisions, frequently patterned after 
the clauses in the Presidential Order for the coco for the Cotton 
Textile Industry, in the President's Reemployment Agreement end in 
the "model codes" and modifications of these as they appeared in 
other codes, continued to he included. In a number of instances 
"wage schedules" although contrary to expressed formal policy were 
permitted. Twenty-nine codes contained provisions with one or more 
"basing-points" . However, ninety-two codes were approved without any 
positive provision for "wages ahovo the minimum" of which thirteen 
contained no provision. 

The failure of the Administration to develop a definite policy 
in the carl;, days of codification nay he accounted for "by the lack of 
an organized administrative "machine" . This excuse, however, can 
hardly be offered for its indecision subsequent to the reorganizations 
whereby distinct agencies were set-up to consider the formulation of 
policy. 



9856# 



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, 
but also in terms of the experiences of the deputies and others concerned with code formation 
and administration. 

The Code Histories, (including histories of certain NRA units or agencies) are not 
mimeographed. They are to be turned over to the Department of Commerce in typewritten form. 
All told, approximately eight hundred and fifty (850) histories will be completed. This 
number includes all of the approved codes and some of the unapproved codes. (In Work Mate- 
rials No^. 18, Contents of Code Histo ries , will be found the outline which governed the 
preparation of Code Histories.) 



(In the case of all approved codes and also in the case of some codes not carried to 
final approval, there are in NRA files further materials on industries. Particularly worthy 
of mention are the Volumes I, II and III which constitute the material officially submitted 
to the President in support of the recommendation for approval of each code. These volumes 
9768—1 . 



-ii - 

set forth the origination of the codes, the sponsoring group, the evidence advanced to sup- 
port the proposal, the report of the Division of Research and Planning on the industry, the 
recommendations of the various Advisory Boards, certain types of official correspondence, 
the transcript of the formal hearing, and other pertinent matter. There is also much offi- 
cial information relating to amendments, interpretations, exemptions, and other rulings. The 
materials mentioned in this paragraph were of course not a part of the work of the Division 
of Review. ) 

THE WORK MATERIALS SERIES 

In the work of the Division of Review a considerable number of studies and compilations 
of data (other than those noted below in the Evidence Studies Series and the Statistical 
Material Series) have been made. These are listed below, grouped according to the char- 
acter of the material. (In Work Materials No . 17 , Tentativ e Outli nes and Sum marie.s of 
Studies in Process , the materials are fully described) . 

I ndustry Studies 

Automobile Industry, An Economic Survey of 

Bituminous Coal Industry under Free Competition and Code Regulation, Ecnomic Survey cf 

Electrical Manufacturing Industry, The 

Fertilizer Industry, The 

Fishery Industry and the Fishery Codes 

Fishermen and Fishing Craft, Earnings of 

Foreign Trade under the National Industrial Recovery Act 

Part A - Competitive Position of the United States in International Trade 1927-29 through 

1934. 
Part B - Section 3 (e) of NIRA and its administration. 
Part C - Imports and Importing under NRA Codes. 
Part D - Exports and Exporting under NRA Codes. 

Forest Products Industries, Foreign Trade Study of the 

Iron and Steel Industry, The 

Knitting Industries, The 

Leather and Shoe Industries, The 

Lumber and Timber Products Industry, Economic Problems of the 

Men's Clothing Industry, The 

Millinery Industry, The 

Motion Picture Industry, The 

Migration of Industry, The: The Shift of Twenty-Five Needle Trades From New York State, 
1926 to 1934 

National Labor Income by Months, 1929-35 

Paper Industry, The 

Production, Prices, Employment and Payrolls in Industry, Agriculture and Railway Trans- 
portation, January 1923, to date 

Retail Trades Study, The 

Rubber Industry Study, The 

Textile Industry in the United Kingdom, France, Germany, Italy, and Japan 

Textile Yarns and Fabrics 

Tobacco Industry, The 

Wholesale Trades Study, The 

Women's Neckwear and Scarf Industry, Financial and Labor Data on 

9768—2 



- iii - 

Women's Apparel Industry, Some Aspects of the 

T rade P ractic e Studies 

Commodities, Information Concerning: A Study of NRA and Related Experiences in Control 

Distribution, Manufacturers' Control of: Trade Practice Provisions in Selected NRA Codes 

Distributive Relations in the Asbestos Industry 

Design Piracy: The Problem and Its Treatment Under NRA Codes 

Electrical Mfg. Industry: Price Filing Study 

Fertilizer Industry: Price Filing Study 

Geographical Price Relations Under Codes of Fair Competition, Control of 

Minimum Price Regulation Under Codes of Fair Competition 

Multiple Basing Point System in the Lime Industry: Operation of the 

Price Control in the Coffee Industry 

Price Filing Under NRA Codes 

Production Control in the Ice Industry 

Production Control, Case Studies in 

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 

comparision with Trade Practice Provisions of NRA Codes. 

Labo r Studies 

Cap and Cloth Hat Industry, Commission Report on Wage Differentials in 

Earnings in Selected Manufacturing Industries, by States, 1933-35 

Employment, Payrolls, Hours, and Wages in 115 Selected Code Industries 1933-35 

Fur Manufacturing, Commission Report on Wages and Hours in 

Hours and Wages in American Industry 

Labor Program Under the National Industrial Recovery Act, The 

Part A. Introduction 

Part B. Control of Hours and Reemployment 

Part C. Control of Wages 

Part D. Control of Other Conditions of Employment 

Part E. Section 7(a) of the Recovery Act 
Materials in the Field of Industrial Relations 
PRA Census of Employment, June, October, 1933 
Puerto Rico Needlework, Homeworkers Survey 

Administrative S tudies 

Administrative and Legal Aspects of Stays, Exemptions and Exceptions, Code Amendments, Con- 
ditional Orders of Approval 

Administrative Interpretations of NRA Codes 

Administrative Law and Procedure under the NIRA •-. .. 

Agreements Under Sections 4(a) and 7(b) of the NIRA 

Approved Codes in Industry Groups, Classification of 

Basic Code, the — (Administrative Order X-61) 

Code Authorities and Their part in the Administration of the NIRA 

Part A. Introduction .... 

Part B. Nature, Composition and Organization of Code Authorities 

9768—3. 



- IV - 

Part C. Activities of the Code Authorities 

Part D. Code Authority Finances 

Part E. Summary and Evaluation 
Code Cocpliance Activities of the NRA 
Code Making Program of the MRA 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 
Sheltsred Workshops Under NRA 
Uncodified Industries: A Study of Factors Limiting the Code Making Program 

Lep.al Studies 

Anti-Trust Laws and Unfair Competition 

Collective Bargaining Agreements, the Right of Individual Employees to Enforce 

Commerce Clause, Federal Regulation of the Employer-Employee Relationship Under the 

Delegation of Power, Certain Phases of the Principle of, with Reference to Federal Industrial 
Regulatory Legislation 

Enforcement, Extra-Judicial Methods of 

Federal Regulation through the Joint Employment of the Power of Taxation and the Spending 
Power 

Government Contract Provisions as a Means of Establishing Proper Economic Standards, Legal 
Memorandum on Possibility of 

Industrial Relations in Australia, Regulation of 

Intrastate Activities Which so Affect Interstate Commerce as to Bring them Under the Com- 
merce Clause, Cases on 

Legislative Possibilities of the State Constitutions 

Post Office and Post Road Power — Can it be Used as a Means of Federal Industrial Regula- 
tion? 

State Recovery Legislation in Aid of Federal Recovery Legislation History and Analysis 

Tariff Rates to Secure Proper Standards of Wages and Hours, the Possibility of Variation in 

Trade Practices and the Anti-Trust Laws 

Treaty Making Power of the United States 

War Power, Can it be Used as a Means of Federal Regulation of Child Labor? 

9768—4. 



- V - 

THE EVIDENCE STUDIES SERIES 

The Evidence Studies were originally undertaken to gather material for pending court 
cases. After the Schechter decision the project was continued in order to assemble data for 
use in connection with the studies of the Division of Review. The data are particularly 
concerned with the nature, size and operations of the industry; and with the relation cf 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 these studies 
follows: 



Automobile Manufacturing Industry 
Automotive Parts and Equipment Industry 
Eaking Industry 

Boot and Shoe Manufacturing Industry 
Bottled Soft Drink Industry 
Builders' Supplies Industry 
Canning Industry 
Chemical Manufacturing Industry 
Cigar Manufacturing Industry 
Coat and Suit Industry 
Construction Industry 
Cotton Garment Industry 
Dress Manufacturing Industry 
Electrical Contracting Industry 
Electrical Manufacturing Industry 
Fabricated Metal Products Mfg. and Metal Fin- 
ishing and Metal Coating Industry 
Fishery Industry 
Furniture Manufacturing Industry 
General Contractors Industry 
Graphic Arts Industry- 
Gray Iron Foundry Industry 
Hosiery Industry 

Infant's and Children's Wear Industry 
Iron and Steel Industry 



Leather Industry 

Lumber and Timber Products Industry 
Mason Contractors Industry 
Men's Clothing Industry 
Motion Picture Industry 
Motor Vehicle Retailing Trade 
Needlework Industry of Puerto Rico 
Painting and Paperhanging Industry 
Photo Engraving Industry 
Plumbing Contracting Industry 
Retail Lumber Industry 
Retail Trade Industry 

Retail Tire and Battery Trade Industry 
Rubber Manufacturing Industry 
Rubber Tire Manufacturing Industry 
Shipbuilding Industry 
Silk Textile Industry 
Structural Clay Products Industry 
Throwing Industry 
Trucking Industry 
Waste Materials Industry 
Wholesale and Retail Food Industry 
Wholesale Fresh Fruit and Vegetable Indus- 
try 
Wool Textile Industry 



THE STATISTICAL MATERIALS SERIES 



This series is supplementary to the Evidence Studies Series. The reports include data 
on establishments, firms, employment, payrolls, wages, hours, production capacities, ship- 
ments, sales, consumption, stocks, prices, material costs, failures, exports and imports. 
They also include notes on the principal qualifications that should be observed in using the 
data, the technical methods employed, and the applicability of the material to the study of 
the industries concerned. The following numbers appear in the series: 
9768—5 . 



Asphalt Shingle and Roofing Industry 

Business Furniture 

Candy Manufacturing Industry 

Carpet and Rug Industry 

Cement Industry 

Cleaning and Dyeing Trade 

Coffee Industry 

Copper and Brass Kill Products Industry 

Cotton Textile Industry 

Electrical Manufacturing Industry 



Fertilizer Industry 

Funeral Supply Industry 

Glass Container Industry 

Ice Manufacturing Industry 

Knitted Outerwear Industry 

Paint, Varnish, ana Lacquer, Mfg. Industry 

Plumbing Fixtures Industry 

Rayon and Synthetic Yarn Producing Industry 

Salt Producing 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- 
soJidate 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 carec" for under other 
auspices. 

Notwithstanding these limitations, if the files are ultimately consolidated and in- 
dexed the exploration of the NRA materials will have been sufficient to make them accessible 
and highly useful. They constitute the largest and richest single body of information 
concerning the problems and operations of industry ever assembled in any nation. 



L. C. Marshall, 
Director, Division of Review. 



9768—6 .