Work materials ...

BOSTON PUBLIC LIBRARY

3 '9999 06317 386 6 * ^

OFFICE OF NATIONAL RECOVERY ADMINISTRATION

DIVISION OF REVIEW

THE MILLINERY INDUSTRY

By

James C. Worthy

WORK MATERIALS NO. 53

INDUSTRY STUDIES SECTION
March ,1936

OFFICE OF NATIONAL RECOVERY .ADMINISTRATION
DIVISION OF REVIEW

THE MILLINERY INDUSTRY

By

James C. "or thy

INDUSTRY STUDIES SECTION
Llarcli, 1036

?749

FOREWORD

This study of "The Millinery Industry" was prepared by Mr. James
C. "Torthy of the Industry Studies Section, Mr. II. D. Vincent in general
charge.

The study as originally conceived was "both broader and narrower
than the final product: broader, in the sense that it ras to cover all
the headr/ear industries; narrower, in the sense that it was to treat
onl;' certain aspects of these industries.

Review of the preliminary draft in which this plan had been followed
disclosed a relative abundance of material on the millinery industry and
an inadequacy of readily available oata on the hat and cap industries.
In the final draft, therefore, an attempt was made to treat comprehensive-
ly the milliner;'- industry, leaving other branches of the headwear
industries to future investigators.

The millinery industry is an especially attractive laboratory.
It presents most of the characteristic features of the aoparel industry
group - strongly influenced by style, highly unstable, maladjusted in its
distributive relationships, etc. Its code -problems were equally character-
istic, particularly with respect to multiple wage minima. These problems
are readily susceptible of analysis because of the small size of the
industry and the results of the present analysis are largely valid for an
important industrial group.

The author of this study was intimately associated with the
formulation and administration of the Millinery Code during the entire
U.R.A. period.

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

L. C. Marshall
Director, Division of Review.

974S -i-

TABLE Ur CC"T_-.NTS

PAGE NO.

FORE".70RD i

SUMMARY viii

ACKNOiVLEDGEl ESTS xii

Chapter I
THE INDUSTRY

DIVISIONS 01 THE IHDUSTRY 2

A. The Headwear Industries .2

1. Size ^nd Scope .2

2. Principal Branches 3

(a) The I illinery Industry 3

(o) The Hat Manuf acturing Industry 5

(c) The Cap and Cloth "at Industry 4

(d) Subsidiary Headwear Industries 4

3. Vertical and iorizont^l Integration 4

4. The Headwear Codes 5

B. Principal Divisions of the i illinery Industry 6

1. Private or Home Millinery 6

2. Custom Millinery 6

3. Factory I ."illinery 8

4. Machine-Knit 1 illinery 9

5. Production of Millinery by ether Industries

• •

q

II. . CH&1ACTE1TSTIGS OF- THE INDUSTRY in

A. Physical Characteristics 10

1. Location 10

2. Interstate Commerce 10

3. Size of Kstaclishnent 11

B. Members of the Industry 12

1. Ense of entry 12

2. Management Personnel 1?

C. Competition in the Industry 12

1. Extent of Competition 13

2. Control of Competition 13

3. Industrial Mortality 15

D. Other Characteristics 16

1. Absence of Contracting 16

2. Dependence on Imported Raw } ^terials 17

III. SEASONALITY 19

A. Causes of Seasonal Fl Lctuat ions 19

1. Bavins Habits cr Consumers 19

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2. Styles Factors 19

3. Over- Supply of Labor 20

4. Other "actors 20

B. Extent of Seasonal Fluctuations 21

1. Measurement of Seasonality 21

2. Periodicity of Peaks and Valleys 21

3. Comparison of Soring and Fall Seasons 21

4. Tendency toward Increased Seasonality; Causes . 21

(a) General Economic Depression 21

(b) Simplification of Styles

5. Variations in Seasonality

(a) Eetween Areas

(b) Compared with other Industries

C. Effects of Seasonality 23

1. Periodic Unemployment 23

2. Part-Time Employment 23

3. Decreased Earnings 24

4. Impaired ",'crker i ov-ale 24

5. other Effects 24

IV. INDUSTRIAL ASPECTS OF S TYLE 25

A. General Considerations 25

1. Universality of Style Interest 25

2. Style vs. Utility 26

3. Psychological Factors 26

4. Style Movement s „ 27

(a) Major Influences 27

(b) Paris as Style Center 28

(c) Relation of American Industry to Paris ... 28

(d) Relation of Producers to Style Trends .... 29

(e) Forecasting Trends in Consumer Demand .... 29

B. Economic Consequences of Style 31

1. Location of the Industry 31

2. Etimical Characteristics of Labor 31

3. Unionization 31

4. Type of Productive Organization 31

5. Otner Consequences 32

C. Style Piracy 32

1. General Considerations 32

(a) Extent of Copying 32

(b) ' ethods of the Copyist 33

(c) The Question of Control 33

2. The Case for Control 34

O) Ethical Aspects 34

(b) St"rle Origination and Demand 34

(c) Effect of Piracy on Distribution 35

(d) The Consumer Interest 35

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3. The Case Against Control 37

(a) Effect of Copying on Demand 37

(b) The Consumer Interest 37

(c) The Administrative Problem 37

4. Critical Evaluation 38

5. Efforts to Control 40

(a) Through Existing Law 40

(b) The Millinery Quality Guild 40

V. DI STRIBUTION PROBLEMS 42

A. Retail Cutlets 42

B. Buying Syndicates and Leased Departments 42

1. Causes for Growth of Syndicates 43

2. Geographic Distribution of Leased Departments .. 44

C. Displacement of Jobbers and Salesmen 45

VI. ORGANIZED LABOR 47

A. Labor in General 47

1. Principal Occupations 47

2. Apportionment of Employees by Occupation 47

(a) Variations between Markets 47

(b) Variations between Seasons 48

3. '.."age s 48

B. Collective Bargaining 48

1. Historical Background 48

2. Structur e of the Union 49

C. Arbitration of Disoutes 49

1. Preliminary 49

2. The Adjustment 3oarci for New York City 50

(a) Membership 50

(b) Procedure ...» 50

(c) Enforcement of Rulings 50

(d) Cqses H-ndled 50

3. Settlement of Disoutes Outside New York City ... 51

4. Achievements o^ the Adjustment Boards 51

Chapter II

THE MILLINERY CODE

I. FORMULATION OF THE CODE 52

A. Pre-Code Conditions 52

1. Value of Product 52

2. Price Ranges 52

3. Causes of Decline 53

(a.) General Causes 53

(b) Specific Causes 53

4. Effects of Decline 54

(a) Number of Establishments 54

(b) Employment 54

( c ) Wage s ........ , 55

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9749

5. Disorooortionate Incidence of Decline 55

6. Effect on Related Industries 57

B, Development of Code Prior to Faolic Hearing 58

1. Associations in the Industry 58

fa) Associations in General 58

(b) The "iticn-1 j'illinery Council 58

2. Early Code Proposals 59

3. The Public Hearing 60

C. From Public Hearing to Final Aporova.l 62

1 . Tne "Semi-Final Draft " 62

2. Deadlock 62

3. The Deadlock Broken 63

4. The October Agreement , 64

5. Farther Delay 65

6. Final Approval 66

II. LABOR PROVISIONS OF THE CODE 67

A. Occupational Classifications 67

1. The Provision 67

2.' The General Problem of Wages Above the Minimum. 67

(a) The Theory 67

(b) Types of Code Provisions 68

3. The Debate on Classification 69

(a) The Question of Earnings Protection 69

(b) The Argument on Competitive Costs 71

4. Critical Evaluation 73

B. The Pre-Re qui sites of Classification 74

1. Degree of Fnioni?at ion 74

2. Type of Productive organization 74

3. Standardised Productive Processes 75

C. Safeguards on Classification 76

1. Tolerance 77

2. Apprentices 77

3. Substandard Workers 78

4. The Special Millinery Boar: 78

D. Other Labor Provisions 79

1 . As t o ' 'age s 79

2. As to Hours 80

3. General Labor Provisions 81

III. TRADE PRACTICE PROVISIONS 82

A. Under the Original Code 82

B. The Trade Practice Amendments 83

1. Advertising Allovrances 83

2. Terms and Discounts 84

3. Cancellat ions and Returns 84

4. Other Trade Practice Provisions 85

C. Style Piracy 86

D. Attempts to Control Prices 88

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9749

CHAPTEP III
APKINISTRATIOK OP THE CODE

I. INTRODUCTORY 90

II. THE CODE AUTHORITY 90

A. Organi zat i on 90

1. Method o^ Selection 90

(a) Under Original Code 90

(b) Under Amended Code 91

2. Indust ry 1 embers 91

3. Hon- Industry Members 92

4. Officers 92

5. Committees 93

B. Financing the Code Authority 94

1. General Remarks . 94

2. Budgets and Bases of Contribution 94

C. Ccmnliance Activities 95

1. Organi zat ion 95

2. Inspection Policies 96

(a) Hours Inspections 96

(b) Payroll Inspections 97

3. Institution Cases 97

4. Trade Practice Comoliance 97

5 . He ar i ngs 98

6. Regional Offices 98

7. Summary of Compliance Activities 99

III. THE SPECIAL MILLIJTERY BOARD inn

A. Introduction inn

1. Creation of the Board inn

2. Personnel inn

5. Organizat ion ini

B. Functions of the Bo-rd , im

1. Judicial Functions ini

2. Legislative Functions in2

3. Other Functions 103

C. Summary of Bo=rd Activities 103

1. Ordinary Activities 103

2. Typical Cases 104

3. Extraordinary Activities 106

(a) The Chicago Situation 106

(b) Tne Dallas Situation 107

D. Procedure of the Board 107

1. Hearings 107

2. Policy of Unanimity 108

5. Relation to N.R.A 108

4. Basis of Board Decisions 109

5. Policy in Cases Involving i<on-Comoli.ance 110

IV. CONCLUSIONS Ill

A. Results of Code Operation Ill

1 . General Trends Ill

— vi —
9749

2. "iaees Ill

3. StaMlizat ion of Labor Costs 112

4. Employment 113

5. Seasonality 113

o. Trade Practices 114

7. Other Benefits 115

V. DEV£LoPI.E?TT5 SI. CE JIFE, 1S3E 116

APPF dices

i. statistical appeedix 119

II. METHODOLOGICAL APPENDIX 166

-VI 1-

9749

SUIi-.LAJlY

The millinery industry is more important for what it represents
than for what it is. In value of product and employment it accounts
for less than half of one percent of all manufacturing industries,
but because of its size it is readily studied, and the rewards of
any such study are in excess of what might be expected from an indus-
try so small.

In the first place, millinery is the typical apparel industry.
Certain fundamental characteristics of the group are well displayed
in certain industries and other characteristics in other industries.
But millinery, with the single exception of contracting, admirably
displays them all. A study of this industry, therefore, makes possi-
ble a set of conclusions which are largely valid for a sizeable in-
dustrial group.

In the second place, the millinery industry affords a composite
view of the whole range of industrial evolution. Millinery is still
produced in the home, sometimes for personal consumption, sometimes
for sale in a limited market. Up until the turn of the century such
millinery as was not produced in the home was manufactured almost en-
tirely on a custom basis. The factory system did not become an im-
portant element until after 1910, and as late as 1929 the custom
milliner accounted for about a fourth of the value of all production.
Almost three-fourths of all millinery is still produced in the primi-
tive factory stage, although in recent years there has developed a
tendency for cheaper grades to oe manufactured on a mechanized, mass-
production basis — not in the millinery industry proper, but in the
knitted outerwear industry. Goods so manufactured, however, do not
at the most account for more than three or four percent of the entire
output.

The evolution of the industry has been retarded by the influence
of style. The product, because of its individuality and rapid changes
in fashion, does not lend itself to large-scale production. Only in
the very cheapest lines, where style is at a minimum, can the mass
technique be used, and the more expensive lines are still manufactured
at the custom stage. Little may be expected in the way of further
development so long as style and individuality play such an important
part in consumer demand.

The factory stage, with which this study is primarily concerned,
is represented by about 1350 firms, employing an average of about 22
workers each. Management has not been separated from ownership; en-
terprise and responsibility are overwhelmingly personal. There is no
great division of labor and the worker still approximates the crafts-
man. Machinery is elementary and a minimum capital investment is re-
quired. En trace into the industry is simple and many workmen shuttle
back and forth between management of their own enterprise and employ-
ment in another' s.

97*9 *Viii-

The industry is a survival of economic individualism, existing
miserably and precariously in a world of collectivism. The economic
mobility which formerly characterized small scale industry has given
way to economic instability. In all it? relations in the market the
industry must deal with large scale enterprise — large at least as
compared to millinery. Haw materials must be purchased from a hand-
ful of houses ancl about 60 percent of the finished product reaches
the ultimate consumer through salf a dozen ouying syndicates.
Between these upper and nether millstones 1350 manufacturers fight
desperately for their economic existence. The industry labor? under
the weight of a fundamental economic maladjustment.

"Cut throat" is a mild torn when applied to the competi tion exist-
ing in this industry. Possessed of little individual bargaining
ability, manufacturers have no control over their own prices — let
alone the price structure of the industry. They are forced to take
what they can get from their iistributors, and force! to pay for their
materials what their supply houses dictate. The producer is fortunate
if he can cover his costs of production. The rate of industrial
mortality — about .20 percent per annua — indicates that in many instances
he does not .

The whole situation has been intensified by a catastrophic decline
in prices. Dollar volume fell off by more than 6 0 pe rcent b etween
1927 and 1933, empl oyment by about 3 3 pe rcent, and payrolls by about
54 percent. Lower prices are a result of simplified styles requiring
much less material and workmanship, changes in tlie general price level,
the economic depression, and the diversion of consumer income into
other channels. Desirable and socially beneficial though lower prices
may be, they have in this case seriously impaired payrolls and employ-
ment, alarmingly increased industrial mortality, and, above all,
aggravated a fundamental maladjustment.

NHA had to deal with a desperately sick industry in the summer
of 1933. Relations with distributors had reached an all time low.
Manufacturers' prices had been cut to the bone, discount rates were
exorbitantly high, and the industry was forced to accede to unwarranted
return and cancellation privileges, secret rebates disguised as adver-
tising allowances, wasteful production schedules, and other concessions
which it could ill afford to bear. The ultimate burden, of course,
was largely borne by labor, and where workers were protected by collec-
tive agreements, business shifted to non-union centers and the product
was manufactured under sub-standard conditions. Unemployment increased
by leaps and bounds, wage rates were slashed, and increasingly severe
seasonal fluctuations still further impaired annual earnings.

Desperate problems demanded desperate remedies. Ordinary code
provisions had no significance for this industry. Instead of a simple
minimum wage, detailed occupational minima were imperative; a forty-
hour week would have made no appreciable impression on unemployment;
distributive problems arose from muca more vexing circumstances than
occasional lapses from ordinary commercial morality, But agreement
on such drastic measures was difficult because of the extreme degree

9749

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of disorganization. Even when, after four and one-half months of bitter
struggle, a majority agreement had been reached and a code had been
approved, administrative difficulties still remained and were never
satisfactorily solved, nevertheless, the Millinery Code was highly
successful. An element of stability was introduced by the equalization,
of labor costs of production through the establishment of detailed
occupational minima. ij.. labor standard markets could no longer be
penalized by low, raid the price structure became more stable than it
had been in years. Wage rate- advanced 71.3 percent over their
previous levels, and average weekly earnings 33.4 percent. Maximum
hours were set at ol\ (later reduced to 35) , average man-hours were
reduced by 20 percent and employment was increased by about 6 percent.

On the trade practice side, the manufacturer' s bargaining abili-
ties in his distributive relations was improved by the establishment
of maximum iiscounts, the prohibition of advertising allowances and
of unwarranted cancellations and returns, the elimination of consign-
ment selling, and the curtailment of other uneconomic concessions.
Such measures were extremely difficult to enforce, but their mere
existence provided moral support for manufacturers wishing to comply.

So far as consumers were concerned , the principal concomitant of
the Code was a 6.3 percent average increase in prices. This increase
was a result partly of increased labor and material costs and partly
of an increased demand for higher oriced millinery. It was, however,
by no means excessive, nor nearly so great as that occurring in other
industries with less justification.

Since the invalidation of the Code, the industry has relapsed
into its old condition. Manufacturers outside New York City nave
largely abandoned the 55-hour week and most non-union markets no longer
maintain the minimum wage standards of the Code. The tendency for
business to shift from high to low labor standard markets has again
set in. Distributive relations are as bad as they ever were and the
bankruptcy rate appears to be on the increase.

The industry as a whole would like a return of N3A.. That seem-
ing for the monent impossible, it is turning to its own brand of
self government. There has just been established in Hew York City
a "Millinery Stabilization Board", composed of three impartial members,
which will administer a voluntary code now pending before the Federal
Trade Commission. Similar agencies will soon be established in other
markets. The shortcomings of this technique are many, but it offers
the only 'present possibility of dealing with the industry's problems.
(It will be noted that these Boards are an interesting combination
of three ideas: the old impartial machinery, the code authority, and
the Special Millinery Board.)

So long as its basic maladjustment exists, there is actually
very little which may be lone, for the millinery industry. The Code
accomplished as much as was practically possible within the limits of
the Recovery Act. At best, however, it was little more than a pallia-
tive. It did not and could not touch the fundamental problem. "Iow-

9749 -*x-

ever, what the industry has been unable to achieve by normal evolu-
tionaly processes, it may conceivably achieve — partially at least and
possibly to a substantial degree-by the development of cooperative
buying and selling organizations. Such cooperatives would not con-
cern themselves with production as such but would centralize the
buying of raw materials and the distribution of the finished product,
returning to the industry the control over such functions it lias
lest to the great supply houses and to the buying syndicates.
'Without such control, little can be done in the way of improving
conditions.

9749

-XI-

ACKNOWLEDGE H E IT T S

The assistance of the following persons in the preparation of this
study is gratefully acknowle v,-ed:

Mr. I.I. D. Vincent, Coordinator, Industry Studies Section, with
whom the original project and the more important phases of the com-
pleted study have been discuessed in detail and "hose advice thereon
has been invaluable;

Mr. Joseph E. 3rodinsky, cf the il.E.A. staff, who prepared the
original draft of the section of "Organized Labor";

Mr, A. H. Barenboim, of the M.R.A. staff, who prepared the original
draft of the section on "The Special Millinery Board";

Mr. Max Zaritsky, President of the United Hatters, Cap and Millinery
Workers International Union, "ho kindly made available to Mr. Brcdinsky
the files of his organization;

Dr. Paul Abelson, member of the Special Millinery Board and veteran
impartial chairman, who supplied Messrs. Brodinsky end Barenboim with
information relative to the activities of the Special Board and the
Millinery Adjustment Board of Hew York City;

Mr. George V. Brown, Secretary of the Special Millinery Board, who,
at much personal inconvenience, compiled for Mr. Barenboim data on the
activities of the board;

Mr. Joseph Lipshie, Confidential Agent of the Code Authority, who
supplied the author with much of the statistical data on which this
study is based;

Mr. 0. W. Pearson, Administration Member of the Code Authority and
Executive Secretary of the Millinery Stabilization Board, who has kept
the author in constant touch with developments in the industry since
the invalidation of the Code;

Mr. Joseph Heifer, Executive Secretary of the Women's Headwear Group,
who furnished data on recent tendencies within the industry;

Miss Florence Pitch and Mr, A. C. Johnston, of the N.R.A. Tra.de
Practice Studies Section, who supplied information useful in the prepara-
tion of the section on "Style Piracy";

The N.R.A. Statistics Section, which assisted in preparing and
checking the statistical data presented; and

Misses Nellie Spink and Ruth Leritz, "ho stepped into the breach
created by personnel reductions and -cave much of their Toersonal time
during the last three months to typing, editing, and otherwise physi-
cally preparing the final draft of this report.

9749 -xii-

But principally, a debt is owing to Mr. Max Meyer end to Dr. Paul
P. Brissenden. Mr. Meyer's assistance was none the less valueable because
it was indirect. If the .author may pretent to have any understanding
of this industry, it was largely required through long days and evenings
of discussion with Mr. Meyer. His keen insight and philosophical per-
spective have been invaluable supplements to the. factual knowledge
gleaned from other sources. Br. Brissenden, of Columbia University,
the Millinery Stabilization Board, and the b'.R.A. Labor Studies Sec-
tion, though operating already under an exceptionally heavy schedule,
was kind enough to read the manuscript in its entirety and to discuss
at length its more important aspects. The; study has profited much
by his assistance.

Finally, a special debt is owing to Dr. Bror.dus Mitchell, of
Johns Hopkins University and the ERA staff, who did not confine him-
self to his simple duties of review, but, by friendly encouragement
and counsel, assisted materially in the preparation of the entire
study.

9749

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CHAP!TBR I

THE INDUSTRY

5749

CHAPTER I

THE IliUUSTItY

I. DIVI5I01TS OF TIG IIDUSJRY

A. THE HEAI/.ISAR IlEDUSTRI-S

1. Size and Sco~pe - ..

The headwear industries are an integral part of the apparel indus-
tries group and present most of the features characteristic of that
group. In terns of value of product and number of wage earners, they
are only exceeded, within the apparel group, "by the women's clothing,
the men's clothing, and the knitgoods industries. (*) The headwear
industries account for the production of practically 100 per cent of
all headwear, of whatever type, forn, or style worn by the entire
population of the United States. The only headwear used in this
country which is not produced "by these industries are the compara-
tive!-/ insignificant quantities imported from abroad or produced by
related apparel industries in this country. According to the Federal
Census, the headwear industries in 1929 were composed of 2,243 estab-
lishments, employing 62,800 workers, and jproducing products to a total
value of $387,565,231. In this 'same year, these industries distributed
$82,099,340 in wages, and purchased materials, containers, fuel, and
electrical energy from other industries in the amount of $201,359,646.
Value a.dded by manufacture for this year was $186,195,535. (**)

To this census data must be added what da.ta are available on
custom millinery manufacturing, millinery manufactured by the knitted
outerwear industry, and various types of headwear manufactured as
secondary products in other industries. (***) Inclusion of these data
brings the total value of product to something in excess of $465,000,000.
Assuming that the ratio between value of product and number of wage
earners and total payrolls remains fairly constant we may conclude that
the headwear industries in 1929 gave employment to approximately 75,000
wage earners and distributed in wages close to $100,000,000. The total
number of establishments involved was in the neighborhood of 6,000, (****)

(*) For a. detailed comparison of the Headwear Industries with other
a;p-parel industries and with all manufacturing industries, See
Table 1.

(**) See Table 2

(***) See footnote (c) to Table 2

(****) See discussion under "Custom Hillinery"

9749

2» principal Branches.

The headwear industries are divided into four irincipal branches:
millinery, men's hats, caps and cloth hats, and subsidiary products.
Each of these may be further subdivided according to type of product,
method of production, and method of distribution. While each of these
four principal branches, and, to a somewhat lesser extent, each of the
subdivisions of such branches, present a variety of conditions and problems
peculiar to itself, all of them have much in common and for certain -pur-
poses may be considered as a single industry. The term "heady-ear indus-
try" or "industries" as it occurs in this report will be used to include
the four branches noted above and all subdivisions thereunder. For sim-
plicity of reference, however, the designation of "industry" will also
be axolied to each of these branches and, to a.n extent, to certain of
the more important subdivisions.

Table 3 gives the relative importance of each branch. Somewhat more
than half of the total value of products in produced by the millinery
branch, a little less than cne- third by the hat. branch, and less than
one- tenth each by the cap and cloth hat and the subsidiary branches.

(a) The Millinery Industry.

The millinery industry consists of the manufacture of women's and
children's trimmed hats, the manufacture of millinery on a custom basis,
and the manufacture of millinery by the knitted outerwear industry.
Strictly speaking, all such head'-ear is " trimmed" , the designations here
employed being those of the Census which are adopted for purposes of -ore-
sending the available statistical delta. For purposes of convenience, also,
the manufacture of infants' headwear has been considered as a part of the
millinery industry. This procedure is followed more because there is no
other catagory to which this type of product may be assigned than because
it bears any real relation to the millinery industry proper.

Table 4 indicates the relative importance of the various classes of
millinery products. Those products designated collectively as "trimmed
hats," (being the only products subject to the Millinery Code) accounted
for the three-fourths of all millinery produced in 1929o. tfithin this
group, the most important catagory is designated in Table 3 as "other
trimmed hats" , accounting for aboxxt one-third of all -production. These
"other" include primarily trimmed hats made of straw and various textile
fabrics, chiefly silk and velvet. Of the two types of trimmed felt hats,
wool-felts are considerably more important than fur-felts, the exact
opposit of the situation obtaining in the men's hat industry. About a
fourth of the value of all millinery products is attributable to. the
custom branch of the industry.

(b) The Hat 'Manufacturing Industry.

The principal products of the hat industry arc (a) straw hats and other
summer headwear (except caps), for boys and men, including harvest hats,
(b) silk or opera hats, (c) fur-felt hats (including renovated hats), (d)
fur-felt hat bodies for men's and women's hats, (e) wool-felt hats, and

9749

~4—

(f) wool-felt hat todies for men's and women's hats. The most impor-
tant products are fur-felt hats, which in 1929 accounted for three-quar-
ters of the total value of all products. Straw hats and other summer
headwear,, -the next most innortant group, accounted for less than one-fifth
of the total value of products, and wool-felt products for less than ~>
one-tonth of the total value. These comparisons are set forth in detail
in Table 5.

( c ) The Cau and Cloth Hat Industry

The principal oroducts of the cap and cloth hat industry include
uniform caps, aviation caps, hunting caps, helmets, sport and golf caps,
hasehp.ll caps, shop caps-, railroad caps and various types of cloth hats
made from woven fabrics, (*) The cap and cloth hat industry is more
closely related to the cutting-uo apparel trades than any other branch
of the headwear industries. In the millinery industry, the essential
process is the manipulation of materials. The hat industry is built up
around the processes of felting wool and fur and blocking fur-felt,
wool-felt, and straw bodies. The essential processes of the cap indus-
try, on the other hand, are cutting and sewing. Materials are cut
either by hand or by machine and sewed on sewing machines, much as is the
case in the principal apparel industries.

( d) Subsidiary Headwear Industries

Closely, related to the several principal branches of the headwear
industries is a gr.ouo of minor industries supplying various types of
semi-processed raw materials. Catering to the millinery industry are
manufacturers of artificial flowers and feathers, hat frames, hat linings,
millinery brails, millinery trimmings, and other miscellaneous millinery
products. Catering to hat industry exclusively is the hatters' fur cut-
ting industry, and to both the hat and the cap industries are manufactur-
ers of sweatbands, hat linings, cap fronts and other miscellaneous hat or
cap products. The values of these various products are set forth in
Table 8. Many establishments engaged in the manufacture of men's hats,
and to a lesser extent establishments engaged in the manufacture of mil-
linery and caps and cloth hats, also manufacture one or more of these
subsidiary products, principally for their own consumption but also to
some extent for sale. Thus, the output of these subsidiary industries
does not reyjresent the entire oroduction of subsidiary products.

3. Vertical and Horizontal Integration.

The various branches of the headwear industries are integrated to
some extent, both horizontally and vertically. For instance, there are
a number of large manufacturers of men's headwear who also manufacture
a considerable volume of both millinery and caps. These same establish-
ments also manufacture, for their own use, most of the products listed
above as subsidiary. Many members of the millinery industry, particu-
larly those producing in the higher price ranges, manufacture their own
feathers, linings and other materials. The manufacture of hats and

(*) See Tables 6 and 7
9749

-5-

semi-processed materials necessary to the production of the finished
rrticle were at one time a. single industry. With the development of
specialization, separate establishments grew up for the purpose of pro-
ducting only the subsidiary product.

4. The Headuea.r Codes.

Although each of these four principal "branches of the headwear
industries has traditionally been considered separate, all of then have
much in common. For purposes of regulation, they may he considered as
composing a single industry. Unfortunately, under ISA nine codes were
approved, each of which governed the production of one or more headwear
products.

The Millinery industry was especially unfortunate. Instead of a
single comprehensive code, four were approved. The Retail Custom Mil-
linery Code was established for the custom end of the industry, the
Millinery Code for what will later be designated as the "factory", and
the Knitted Outerwear Code for machine-knit headwear. Manufacturers
of children's millinery were given the right to choose whether they would
operate under the Millinery Code or under the Infants' and Children's
Uear Code.

Because of poorly drawn definitions, widely divergent code standards,
and a high degree of inter-industry competition, the inevitable result
of this multiple code coverage was confusion and a. highly complicated
problem of code administration. The administrative problem was further
confused by the fact that each of these codes was written under the super-
vision of a. different deputy administrator and during the greater part of
its existence was administered by a different iiEA division.

If multiple code coverage in the largest branch of the headwear indus-
tries was unfortunate, it was infinitely 'more so in the smallest. A
Total of three codes were approved for the subsidiary branch, whose total
value of Product for 1929 was only $43,000,000. Even so, coverage was
not complete, and a "hat supplies industry" code to govern the manufac-
ture of a group of miscellaneous products was never approved. The Arti-
ficial Flower and Feather Code governed the production of prepared fea-
thers, chiefly for use in the millinery industry; the Hatters' Fur Cut-
ting Code, the lorocessing of hatters' fur for the hat manufacturing in-
dustry; and the Milliner/ and Dress Trimming Braid Code, the manufacture
of millinery braids, linings, hoods, etc. The Hat Manufacturing and the
Cap and Cloth Hat Industries were far more fortunate, ell segments of
each of these Industries having been embraced within their respective
Codes.

Far more satisfactory results could have been obtained had a single
code been written to govern the manufacture of all headwear and subsidiary
products. Basic standards should have been identical and administration
should have been centralized and coordinated. Still better results would
have been obtained had such basic standards been closely correlated. ■with
the basic standards laid down for the entire apparel group.

9749

3. PRINCIPAL DIV^SIOJjS O:1 THE HILLIiffiKY IilDUSTRY

A striking characteristic of the millinery industry is the existence,
side by side, of all the normal stages of industrial evolution. The
industry exhibits at one end of the scale the most limited of productive
techniques with the narrowest of markets, and at the other the most
modern and highly developed techniques with markets world-wide in their
scope. On. the basis of evolutionary advance, the industry falls natur-
ally into four principal divisions: Private or home millinery, custom
millinery,, factory millinery, and machine-knit millinery.

1 . Private or Home Millinery.

This represents the lo-est stage in the evolution <of the millinery
industry, comparable to the home production for home use of fabrics,
clothing, furniture, and other necessities during colonial and frontier
days. This type of production persisted as a fairly important factor
until the early 1920' s. Prior to this time milliner;'' styles were such
as to permit reproduction by persons having ordinary skill in sewing and
manipulation of materials. With the introduction of the simple hat,
however, it became more rnd more difficult for persons not specially
trained and not possessing special equipment to produce stylish effects.
Of importance also was the drastic reduction in millinery prices which
occured at about the same time, in large part the consequence of the
simplification of styles. When hats commonly sold at prices anywhere
from ten to fifty dollars there was a strong inducement, especially
among the lower middle and working classes, to avoid this expense by
making the hats themselves. When prices fell to such a point that mil-
linery of a high quality could be purchased be purchased for two, three,
or five dollars, the inducement to home jjroduction was largely elimin-
ated. Today, the home production of millinery is a factor of little
consequence to the industry.

2 • • Custom Millinery.

The custom millinery establishment represents the s ^ond stage in
the evolution of the industry. Within this stage, several sub-stages may
be discerned, the first and most primitive of which is characterized by
a combination in the heme of household duties and trade activities, a
highly restricted market almost purely personal in character, little or
no capital investment, and the absence of a workroom force. The milliner
is usually a housewife who performs work on orders: supplies of materials
and finished hats are rarely kept. The majority of such milliners are
either former employees of established houses or workers discouraged by
the earning possibilities within the industry 'oroper who attempt by this
means to supplement other sources of income. Milliners of this class
who persist are engaged largely in renovating and remodeling, usually
on a service basis.

9749

-7-

The second sub-stage within the general custom stage may be
designated as "oarlor millinery." This is characterized by a
wider market than obtains in the first sub-stage, separation of
the business from the home, greater capital outlay for materials,
equipment, and quarters, and a small working force. The -oersonal
element still predominates in the relations of the milliner with
her customer and employees. The clientele of such shoos in- still
personal and little or no effort is made to attract a general trade.

The fully developed custom establishment, representing the
highest sub-stage within the custom group, is distinguished from
the preceding sub-stages by a market extended to include a gener-
al as well as a personal trade, a considerably greater outlay of
capital, and a larger working force. Locations are selected which
will attract the street trade. Hats are shown in attractive win-
dow displays, and a substantial stock of finished merchandise is
carried. The capital requirements of such establishments are sub-
stantially greater than those of lower branches of the industry.

There are no reliable figures to indicate the extent of
custom millinery manufacturing,' though certain general estimates
have been made. The Millinery Code Authority was of the opinion that
there are in the United States approximately 10,000 such estab-
lishments, (*) of which 1,986 are located in the Hew York metro-
politan area; of these, 1,245 are eauiuped with complete manufac-
turing facilities. (**) Administrative Officer Harriman, in his
"Report to the President", accompanying his approval of the Cus-
tom Millinery Code, estimated that the trade was composed of about
3,600 members. (***) The National Association of Custom Millin-
ers claimed a membership of over 1,000 shops, located in 42 states.
(****) The average number of -employees per establishment is said
to be two or three, though some employ as many as 100 or more. (*****)

On the basis of such information as is available, it would
appear that in employment and volume of business, the custom branch

(*) Minutes of Conference held to discuss proposed Code of
Fair Competition for the Custom Millinery Trade, Hotel
Aster, New York City, October 19, 1934; p. 34. Central
Records Section.

(**) Brief of Millinery Code Authority in opposition to pro-
posed Code of Fair Conroetition for the Custom Millinery
Trade, October 1..1934,

(***) "Report to the President", Code of Fair Competition for
Retail Custom Millinery Trade, p. 3.

(****) Minutes of Conference, October 19, 1934, p. 6

(*****) Ibid., pp 5 and 10.

9749

of the millinery industry is between one-third and half as large as
,the factory branch, vhile in number of establishments the former
far exceeds the latter. $6'5,G0Q,00U as an estimate of total value
of product for 1929 would probably not be far from wrong.

3. Factory Millinery.

' The wholesale -oroduction of millinery in factories for dis-
tribution to the ultimate consumer through wholesale and retail
"."agencies represents the third major stage in the evolution of the
■industry. It is characterized p rimarily by a wide market area,
frequently embracing the entire country and sometimes entering into
'foreign commerce, a relatively substantial capital investment, and
a- relatively large working force, Whereas the market of even the
largest custom milliner seldom extends beyond the confines of the
city in which she is located, the market for the millinery manufac-
turer normally extends at least to adjacent states. Although com-
pared to many industries, the canital required to operate such' an
establishment is small, it is substantially greater than that re-
quired to operate a custom establishment. Greater outlays must be
made for machinery and other physical equiBment, larger stocks of
raw materials must be carried, and larger provision must be made to
meet current payrolls. Finally, the average number of workers per
establishment varies between twenty-two and twenty-five.

The membership of the National Association of Custom Milliners
was scattered throughout forty-two states and it is unlikely that
there is any state in the Union which ddes not support at least a
few such establishments. There are probably custom milliners in every
city in the country whose population is 2,5C0 or over. The factory
branch of the industry, however, is concentrated in a very small
number of localities. (*) This difference in the location of the
two branches is of especial importance when considering the subject
of administering any form of economic control.

Within the factory branch several sub-divisions may -be discerned.
The lowest of those, from the standpoint of evolutionary development ,
is represented by the so-called "high tyle" nouses. In such estab-
lishments, the shop organization and the technique of production is
similar and in some cases almost identical with those employed in the
better custom houses. The greatest distinction between them lies in
the scope of their respective markets. Using as a basis of classifi-
cation the extent to which machinery arid mass production methods are
employed, the highest evolutionary stage in this branch is reached
among producers of popular-priced merchandise.

It was with the factory as opposed to other branches thrt the
Millinery Code was designed to deal, and all subsequent references

in this Study to the "millinery industry", unless specifically qual-
ified, will apply to this branch only.

(*) See infra, "Location of the Industry".
9749

-9-

4. Machine-Kni t M i lline ry .

The highest stage in the evolutionary development of the millin-
ery industry is reached in the knitted outerwear industry. The
distinction "between this stage and the one immediately preceding is
primarily one of productive technique. The former stage is charac-
terized by the craft technique, the latter by the machine technique.
Although machinery is used in the former, it is essentially an aid
to the human hand; in the latter, the human hand is an aid to the
machine. The introduction of this highly developed machine technique
has worked havoc to established modes of production, and gave rise
to serious difficulties in the administration of the Millinery Code.

5. Production of Millinery By Other Industries.

•

There are numerous manufacturers whose principal business is
in other lines, but who produce a small amount of millinery each year.
The census fixes the value of trimmed hats so produced at $2,240,403
for 1929, or about 1 per cent of the value of all factory millinery.
The principal industries producing' millinery as a secondary product
are the following: (*)

The Code Authority estimated that approximately 250 establish-
ments produced millinery as a subsidiary to other lines of production.
(**)'

(*) Petition of Code Authority for exception to exemption con-
ferred by Administrative Order No. X-36. Production of
millinery by these industries is in addition to the pro-
duction of thp custom millinery and knitted outerwear in-
dustries.

1. Infants' and Children's Wear Industry - Children's Hats

2. Cap and Cloth Hat Industry Cloth Hats

3. Men's Hat Industry Sport Hats

4. Novelty and Sporting Goods Industry Novelty Hats

5. Coat and Suit Industry Matched Set Hats

6. Dress Industry ' Matched Set Hats

7. Cotton Garment Industry Cotton Cloth Hats

(**) Ibid. This figure includes producers of knitted headwear.

9749

-10-

1 1 . CHARACTERISTICS 0? THE INDUSTRY
A. PHYSICAL CHARACTERISTICS.

1. Location.

' Although millinery is oroduced in 25 states and 80 cities, by
far the larger nortion is "oroduced in a single state - in fact, with-
in an area of a few blocks in a single city. In 1934, 393 establish-
ments, out of a total of 1,354 for the country, were located in New
York State; and of these 878 were located in New York City. 90 per
cent 'of all establishments and all production are accounted for by
the six states, of lie™ York, Illinois, New Jersey, Missouri, Massachu-
setts, and California, and more than 80 per cent of all establishments
and production by the six cities of New York, Chicago, St. Louis,
Los Angeles, Union City, New Jersey, and Atlanta. The distribution
of the industry according to establishments, unit sales, value of pro-
duct, wage earners, price range of "oroduct, and class of product, is
set forth in Tables 10 through 15.

The millinery industry is essentially metropolitan. This high
degree of concentration is the result of a number of influences, most
important of which are style factors and the presence of an ample
supply of labor admirably adapted to the processes of the industry.

2. Interstate Commerce.

The location of the industry implies a very considerable volume
of interstate commerce. As a general rule, all markets (**) ship
throughout the country. This is especially true of such larger
markets as New -York and Chicago, but even the smallest regularly ship
beyond the confines of the state of origin. About one-third of all
millinery sold in this country is -oroduced in the State of New York,
whereas only about one-tenth of the totfl population is located there.
The States of New York, Illinois, New Jersey, Missouri, Massachusetts
and California account for about 90 -oer cent of all millinery nro- .
duction; these same states, however, account for less than one-third of
the total -copulation of the country. (***) Much interstate shi-oment
of goods, therefore, is evident. Indeed, the competition between
various markets, located in different states, was the fundamental
problem in the formulation and administration of the Millinery Code.

*) See discussion under "Industrial Aspects of Style."

**) The term "markets" as used in tJais Study refers to produc-
ing areas, unless another connotation is clearly indicated
by the text.

***) See Table 16

****) See discussion under "Pre-Code Problems."

9749

-11-

3. Size of Establishments.

Another highly significant characteristic of the industry is
the relatively small size of tne typical establishment. Almost
one-fourth of all establishments employ five or less workers dur-
ing peak seasons, about two-thirds employ twenty or less, and only a
little more than one-tenth employ fifty or more. While the average
number of employees per estaolishment in 1929 was twenty-five, this
fell in 1931 to twenty-four, and in the spring of 1935 to twenty-two.

(*)

The Code Authority estimated that the average annual sales
of manufacturers in New York are in the neighborhood of $50,0CP, (**)
and there are probably not more than a score of houses in that area
in the one-quarter million class or over. (***) In 1934, there
were 1353 manufacturers in the industry, and the total dollar volume
of business for that year was approximately $105,000,^00. (****)
The average volume per manufacturer over the entire country, then,
was only a little better than $77,G0C. Establishments in New York
City tend to be somewhat smaller than elsewhere.

This small-scale unit is one of the most characteristic features
of the millinery industry. Productive methods must be kept simple
and elementary and the productive unit small in order to meet the
exigencies of rabidly changing styles. Flexibility is the first
essential, and complicated productive methods and large scale -oro-
duction are inimicable to such flexibility. The few big producing
units in the industry are little more than the smallest units writ
large, (*****)

(*) See Tables 17 .and 18.

(**) Data submitted by Code Authority

(***) The Millinery Industry: A Survey, by E. R. A. Seligman, p. 4

(****) Data suDmitted by Code Authority

(*****) See discussion under "Economic Consequences of Style."

9749

-12-

b . izinnhs op teu ri jus'-.iy

1 • -htso of s itry .

■ Inti,.i; : 1 asso iatpcL- »i l: t is smal] scale unit is the extreme
case with which new )roduci rs . a./ liter th i"iol( . Isarin; the year
193-j, 231 ;.iahufaeturers retiree1, from the i: us try, while 753 new firms
were established. (*) A. minimum capit 1 utl; U required. Only a
relatively small aruount of machinery is necessary, end this may be
:■ ily bt; incd cither on credit or at sec .. 1 aid. Credit for materials
may be secured without difficulty from the supply nouses, and the

:ers, I . . hlj skilled, recuire little supervision. Designs
are rea il ' obtained through the device of copying.

2. I.ian< ement Personnel.

Hi conseouences of easy entrance end small scale operation are
far— reachin . The typical [manufacturer, iroducir. as he does not more
than on —tenth oi :ne per cen; of t - i itire du! jut of the industry,
is not reatl/ concerned with promoting industrial standards. In many
industries, complexity or large capital outlays tend to insure that new
arrivals in the field will possess a certain -amount of responsibility and
business acumen, prospective manufacturers of millinery, as a general
rule;,, pass through. ao ouch proving process. In many instances manu-
f; ctur.ers are former workers risen from 'the bench. They may be skilled
workers of the highest type, but ore likely to" know little or nothing
,oi the- irinci les of cost accounting, nor are they likely to possess
)ther qualifications necessary to the development and maintenance of
sound business Policies'.

This lack of business abili ■;, e s opp< se£ to technical .ability,
and especially this i no ranee of the science of costing, is most im-
portant. An industry cannot, even in times of prosperity, maintain
any great degree of stability if a substantial proportion of its members
lay insufficient attenti n to the calculation of costs. Even in the
calculation of such relatively simple cost elements as labor and materials
there is much to be desired, anc it is co imonplace that many manu-
facturers keep their books on the- backs of used envelopes. In quoting
prices, costs are often estimated in the .lost haphazard manner. The
foregoing is not intended as an indictment of all or oven a majority of
the members of this industry, but of a body sufficiently la-go to keep
the market in a constant state ;f turmoil.

c. coi.-P3"ii-ioit in ';:::". ip, :_5T".-;y

With numerous small producers spread throughout ohe country,
npetitiori is bitter and intense; Th • ' - + if; the typical manu-
f ac tur er

'J. .-...lies far more, in selling his product irrespective of
pric .: i L'htaini'ng either a market or a- -price
level enefits of which mi ht eon. to the industry as
re is thus little fe< lin of .sibility for
'rice anc'. little of the w] ties e fear of retalia-
tion which -icts as a restraint in so ;xmy other lines of

(*) C k city, Fii-iU. An:iurl he >ort, - p. 21.

9 V"-. 9

-13-

business. The result is that whereas a local .rocer at one
one. or a steel company at the ather would carefully wei h
consequences of a price cutting policy, the unscrupulous or
irresponsible millinery manufacturer knows little restraint
and is rarely deterred from making a sale at almost any
figure which will more than cover his direct outlay. "(*)

Manufacturers contend with each other in offering hi. her and
higher discounts, until, just Tier to the adoption of the discount
amendment to the Code, discounts were bein , granted as high as 15 per
cent. (**) Manufacturers compete in the quality of .^cods offered at
the same price. One will agree to a certain amount of extra workman-
ship or a higher grade of material or extra ernamentation, without
extra charge, to get business. Competition in services is especially
keen; manufacturers in order tc make sales often agree to unwarranted
return privileges, uneconomically rapid to '.'.-action schedules, etc.

1 . Ex t en t of Cor id e t i t i o n .

These forms of competition L t Ives, of course, are not
necessarily undesirable. The evil ises from t) len ;ths to which
they are carried. There is such .. thin^ as a price which is economic-
ally too low, which makes it impossible for the manufacturer, to recover
his costs, and which finally results in undermining the standards of
labor. Other forms of competition are in reality correlatives of
price. Bacause wajes constitute in this industry such large element
of total cost, the repercussions of these extreme competitive measures
are felt by labor much sooner than would be the case in other industries,
and unless wages and hours are adenuately protected by legislation or
by labor agreements, labor costs are the first to be cut in the compe-
titive struggle.

2. Control, of Competition.

C-enerall/ sneaking, there are three aeans bv which business men and
industries may aoproach the problems of competition: (l) by combinations
and agreements among coi.ipetitors, (2) hy the development of goods,
policies, and services differing from those of competitors, thus side-
stepping the full effects of competition, end (3) by meeting competition
head-on, matching price cut with price cut until one competitor or the
other is defeated or until a stalemate has been reached. The nature of
the inauctry lar ;ely determines which of these approaches will be chosen.
The nature of the millinery industry makes impossible recourse in any
appreciable degree to the first two possibilities, leaving only the
third, which contributes nothing to the solution of the problem.

Some slight pro ;ress has, however, been made in the field of com-

(*) Seligman, : ). cit., p. 5.

(**) See discussion under "Pre-Code Conditions."

9749

-14-

binations and agreements. The adoption of trade practice rules by
ciations within the in astry, the spread of a sounder knowledge
l cost accountin ,, the. increasin : tendency of competitors, especial-
ly as a result of code activities, frankly to c iscuss the problems
of the industry, and, most important of all, the Millinery (hae it-
self, were steps in this direction. Specific examples of such co-
operation are regulation of c iscourts and terms of sale through
associations and under the Code, cooperative advertising and selling
ca.viaifps, and lans for trade promotion.

i.7otwithstandinL these advances, however, competition remains as
intense as ever at its most essential point, the making of the price.
A reements anc cooperation between competitors, whether legal or not,
can hardly be effective so long as the composition of the industry is
so exceptionally unstable. If it were conceivable that substantial
a^rpement might be obtained among all present members of the industry,
in six, months i.iany of the parties to such an agreement would be out of
the industry and their places taken by new firms not bound by it. So
long as entrance into the industry may be made with such signal ease,
li i tie can be achieved by way of voluntary coonv ration. This same
observation holds true for the attempt of the industry to substitute a
volunt .ry Code the now invalid IffiA code.

To a limited extent a few manufacturers have been able to alleviate
the intensity of cor.roebition by adopting aolicies and furnishing; poods
which cannot be duplicated by other members of the industry. This
avenue of escape, however, is oaen only to such ho\ises as have an ex-
ceptional re utation for Quality merchandise, and even here the escaoe
is onlv uartial because of inability to juard from the encroachments
of the style pirate their primary claim ":c distinction — high style
millinery.

The only remaining recourse of the industry is to recognize the
fact of competition, to meet it head-on, and to accept, Spartan-like,
the rewards or aisasters which it inevitably brings. Intense compe-
tition must be acce'ntea as a fundamental condition i or a long time to
come. The most that can possibly be done is to develo" some form of
Federal regulation which will check the worst of the evils and thereby
protect the most unf or Lunate victims of that competition.

State regulation for this purp6se is ouite inadequate. Any real
effort to control wa es anc bours in one State alone would impose
impossible hardships, from a competitive point of view, on manufacturers
locate^, in that State. Aside from Federal control, the activities of
organized labor offer the most promising possibilities in this direction.
The aisabvanta.es of this expedient, however, are preat . Unless unioni-
zation is universal, manufacturers complying with union standards are
laced at a stron competitive disadvanta i . Zven between organized
mar rets, moreover, the degree of control exercised by the union varies
considerably, with the result that certain markets have been able to
secure relatively advantageous collective agreements, whereas the
agreements imp upon it c arkets are remarkable for their stringency.
The only real nswer to the u-oblem is some form of regulation which
will apply equally to all areas ana individuals, and the only agency
capable of exercising such control in the Federal Government itself.

9749

-15-

3. Industrial Mortality.

The exceptionally high degree of industrial mortality to which
this industry is subject is largely a result of the bitter competitive
struggle. .'.Daring the first ten months of 1934 — the only period for
which data are available - 280 members of the industry, or more than one-*
fifth of all members, went out of business. (* ) Unfortunately, no data
are available to indicate the size ana type of concerns involved in
these failures, nor do any reliable figures exist for previous and
subsequent periods with which comparisons might be made. Some li lit,
however, is thrown on the problem by the opinions of thosenwho are best
acquainted with the trends in the industry over the past decade. (**)

Eight or nine years ago the number of failures in the industry was
not nearly so reat as now, but the size of the firms involved was
larger, averagin about ,50,000 each. In the >ast five years, failures
have been largely concentrated among smaller firms, and at present the
average size of manufacturer involved is probably under 10,000. The
great majority of those who a out of business re-enter within a short
time, usually under a new name, thus developing what amounts to a
class of habitual bankrupts. It is almost a rule that the ...an who
fails once fails a number of times. Once the manufacturer has learned
that he can re-enter business and btain credit a ;ain, lie is inclined
not to worry too much over the possibility of another bankruptcy. The
result is to intendify an already poor management situation.

This exceptionally high mortality rate is the result of a number
of factors, all of which are accentuated by the intensity of the com-
petitive struggle. The C de Authority estimated that at least 75 per
cent of Hie failures are due to poor management. Other important factors
are labor conditions, indadequate capital, poor styling, inefficient
labor, and inefficient foremen and sales staff. On these, the factor of
i nade quat e cap i t al is of especi al i mp or t anc e .

The high mortality rate has serious consequences for the industry
as a whole. ">-'hen in difficulty, the manufacturer will s ell his goods
for what he can get. The inevitable result is a tendency to depress
the entire market. The industry's price structure is precarious enough
at best, and can offer no great resistance to such pounding. The
manufacturer facing banruptcy becomes careless and slip-shod in his
methods. Ee does not much care to whom he ships, for what terms, or
for what prices. He knows -that eventually he is going into bankruptcy.

(*) See Table 19

(**) An attempt was made by the Code Authority to collect information
on this subject, and its conclusions are embodied in an unpublished
paper entitled, "Mortality in the Millinery Industry." See History of
the Code of Fair Competition for the Millinery Industry, Appendix VIII-
pp. 213-222. The data en mortality set forth herein are drawn from
this source, unless otherwise specified.

9749

-16-

ITe may survive a month or tv/o, or si.: months, but' seldom longer. In
any event, he is reconciled to his fate and the carelessnes of his
conduct has serious repercussions on th tar :et.

Kris situation tends to be intensified b/ the custom in the
industry of patronizing finance companies. The practice has grown so
general that these companies have come to be known as the "pawn sho )S
of the industry." According to information supplied b y the Code •
Authority, chares made by these companies vary from 24 to 3G per cent
of loans, with investigation and othei charges included. Lioreover,
they demand collateral on the basis of 1,000 for every .600 loaned. In
the event of bankruptcy, a disproportionate fraction of the manufacturer's
assets is thus tied op by the finance company, to the detriment of other
creditors, the i.ianufacturer himself, and the industry as a whole.

If the condition outlines by the Code Authority with respect to
finance companies is accurate, an attractive field exists for industry
education anc1 association activity. The industry might do a constructive
'oiece of work by encouraging the' practice of liquidating through its
trade associations, It is possible that by so doing some of the worst
features of the Dresent mortality problem could be eliminated. It is
estimated, for instance, that 90 >er cent of those who have recourse to
their associations in time of financial stress are able to continue
in business.

D. OTHER CKA.UCT h.ISTICS .

1 . Ab s enc e of Con t r ■-:■ c t i ng .

Whereas the contract system of production plays an important role
in related apparel industries, it is almost non-existent in the millinery
industry. In general, this particular type of production owns its origin
to (1) certain native characteristics of the immigrant workers who
arrived in this country during the latter part of the nineteenth century
and who were largely absorbed into the needle trades, (2) the necessity
for an extreme degree of flexibility in the productive unit because of
rapid fluctuations in style, (S) the comparatively small capital investment
involved, the absence of highly developed machinery, and the relative
ease with which entrance, into the industry may be effected, and (4) the
high degree of seasonality . (■*)

All of these factors are present in the millinery industry; they
constitute, in fact, some of its most significant peculiarities. They
have not however, led to the development of the contract system of
production in this industry as they did, for instance, in the dress
.and coat and suit industries. This apparent inconsistency may be explained
by a reference to the history of the Industry. During the decade be-
ginning about 1910 there was a steady ;rowth in the number of millinery
contracting shops, a developmi re or less Parallel to the similar

(*) For a discussion of the factors responsibL evelonment of

the contract system in the dress and coat and suit industries, see NRA
Study of the Women's Apparel Industry, by Sherman Trowbridge .

9743

-17-

growth in other apparel industries. (*) During the first few years of
the following decade, however, the growth was not only halted, "but the
tendency completely reversed, until by 1j?.9 the contract shop load
become almost extinct. Receipts for contract, wori; in th t year amounted
to only a little over a million dollars, or about one-half of one ier
cent of the value of all production. (**)

This sudden reveral of what apparently was a normal tendencv is
explained by the radical shift in styles during the 1920' s. Prior to
this time, hats were ornately trimmed with oows, feathers, buckles,
flowers, and other novelties, all executed on a straw or fabric base,
and produced vrimarily by sewinr operations and hand manipulation, The
new styles called for a simple hat on which artistic effects were
nroduced by line, shape, .and color, rather than by trimmings and
decorations. The production cf this new type required, in addition to
hand operations and the sewing machine, t 31 f hat blocks and
blockin , equipment. These bl :ks L-e comp v, ; / I.; e: ■■■ -■ iv< , and be-
cause of the rapid rate of style turnover am the consequent rsuid
obsolescence of blocks, theii arch so constitutes an especially
heavy drain on ti.e manuf acturer ' s capital resources. A millinery
manufacturer could not Ion- stay in business if he njrehased new blocks
for every different style lie >roduci s. & is forced, therefore, to
exercise a considerable degree of i . ity in : .tin old blocks to
the production of new styles. This in 2 : ' is a quality which cannot
readily be delegated to contractSrs,

Generally speaking, the successful manufacturer of dresses in
the salesman type, whose chief resources lie in an ability to select
styles which will win popular acceptance, and throu h lis own efforts
to dispose of garments made for him in suet stales by contractors and
sub-manufacturers'. In the millinery industry the chief requisite for
success is skill in factory processes, and the typical successful
member of this industry is the skilled technician. This difference
between typical members of these two industries supports the foregoing
analysis .

The millinery industry need have no fear of bhs contracting
system until there is a shift in styles to a type of hat which may more
readily bs made by contractors, in which Went the introduction of the
system, with all its attendant evils, will be almost impossible to ore-
vent .

2. Dependence on Imported ?.rw ..: terials. A further important
characteristic of the industry is its heavy dependence uaon foreign
sources for its raw material supplies. In 1329, the industry expended
for materials and containers upwards of .37,000, COO; about one-third

(*) See Van L'leek, A Seasonal Industry; A Stuch- of the- Millinery Trade
in Hew York.

(**) Fifteenth Census of the United States; "Manufactures, 1929",
Vol. II.

9749

-18-

of which was for imported materials. (*)

The importance of foreign materials is explained by a number of
factors. In the first place, Parisian hats are the criteria for almost
every type of hat which goes into production in this country. (**) There
is in consequence a natural tendency toward the incorporation in domestic
products of materials used by French designers. This is particul-
arly true of manufacturers in the higher >rice ranges, who are in close
contact with European markets, and who are better able to afford the
hi her cost of imported materials, most of which carry a high rate of duty.

More important, various essential materials are not produced to
any degree in the United States. The source of many of these products
is limited to countries in particular climatic zones. So also certain
countries have concentrated the facilities of labor and technical
specialization on the development of particular fabrics, materials
and specialty products.. Pur, for example, the basic material from which
fur felt bodies are manufactured, is for the most ;oart imported, .although
the beaver and maskra.t are domestic "u-oducts. The nutria comes from the
Argentine, the hare from Continent;::! Zurope, the rabbit from Australia,
and the coney from Scotland, England, and Prance, Certain feathers which
periodically play an important part in the industry are obtained from
birds which are not habitants of this country, while others are ob-
tained from birds which are arotectrd b Anerican game laws, with the
result that the industry is lar ,ely dependent for this type of trimming
on Prance, Germany, the United Kingdom, Japan, and South Africa

The most important sources of many flowers and ornaments are
Germany, Prance, and Czechoslovakia, where manufacturing techniques
have been highly specialised; and the product is far superior to the
domestic article. Other sources include the United Kingdom, Austria,
Hungary, Poland and China. Hat bodies and materials of straw and similar
fibres are for the most part the specialized products of Japan and Italy.
Lesser quantities are produced in China,, Ecuador, Switzerland, and the
United Kingdom. Italy ranks first, in the. supplying of hats and hoods
of wool, with Czacho Slovakia, Germany, Greece, prance, and the United
Kingdom producing lesser amounts.

Unfortunately, it is impossible to do more than indicate roughly
the nature of imported materials and the geographic diversification of
their origin, because many imported -orodncts are used in industries other
than millinery and import classifications are usually too broad to
permit of a definitive analysis. Nevertheless, a number of general
conclusions may be drawn. An obvious one is that the importation of
partic\ilar items is almost entirely dependent upon trends of style. Im-
ports of certain products are practically negligible in some years

(*) "Millinery Imports," an unpublished paper of the Millinery Code
Authority. The facts and conclusions set forth in the present
discussion are largely drawn from this paper.

(**) See discussion under » The Industrial Aspects of Style."

9749

-19-

and considerable in others, a fluctuation which proceeds without respect
to trends in the volume of imports as. a whole.

Of greater importance is the- fact that the total volume of goods
imported for millinery use has declined considerably during the past
decade. This decline has been due partly to the industry's diminishing
volume, partly to the development of neis industries in this country and
the introduction of substitute domestic' materials, and tartly to the
increasing importance of popular and low priced millinery in which less
expensive materials must be \ised. High rates of duty have also tended
to curtail the volume of imports, at the same tine exerting a stimulating
influence on domestic material manufacturers.

Notwithstanding the relative decline in the importance of foreign
materials, however, the imported materials maintain a strong position
of preference insofar as many specialized as many specialized products
are concerned, and in many cases the substitution of a domestic for
a foreign material is virtually impossible. So long as the production
of many products is limited to certain climatic zones, imported materials
will continue to maintain an important place in the millinery industry.

Ill SEASONALITY

The outstanding characteristic of the millinery industry is its
appalling irregularity. Women wear two types ef hat during the year
and this fact is reflected in two millinery seasons, Spring and fall.
During these two seasons, production is carried on at breakneck pace
and during the remainder of the year the industry practically closes
shop .

A. CaUSNS Or SEASONAL FLUCTUATIONS

1 . Buying Habits of Constnicrs.

,J-he usual causes of s. so t I. v ri n ctivc activity

a. cli uvfcic "changes/- changes i.i social activity, tradition end custom,
and variations in t.:.. supply oi raw paterials. The millinery industry
is influenced by all of these factors, as well as by others more or
less peculiar to itself. The most important cause of seasonal
variations in this industry is found in the buying habits of women.
By a custom of long standing, women purchase hats only during limited
periods of each year, and retail stores find that f:o- 40 tj 50 per cent
of their total sales are made during about two months of each season. (*)
This custom undoubtedly has its basis in climatic changes.

2 . Style Factors

The fact that millinery is at once highly styled and highly
seasonal is frequently noted, and the conculsion .is commonly drawn that
these two facts stand to each other in a causal relationship . Season-

(*) Seligman, op. Cit., p. 13. See alsi Tables 30 and 21

9749

-20-

ality, however, is not the immediate result or style. Style does, however
accentuate se sonal fluctuations, because cf the i; possibility of deter-
minin far in advance whj t the fas' ion will be, production as well as
buyj , must be delayed until the last possible oment, thus aggravating
the industry's inherent proclivity to seasonality. An interesting compar-
ison rnay be made with the fur felt hat industry. (*) The greater part cf
such hats are purchased during limited periods, but because men's styles
change so slowly end the fashion for air," given Season is usually known
well in advance, -roduction may be spread out fairly svenly over the
entire year.

3. Over Supply of Labor., Because of the existence of a surplus
labor s apply in the large iroducin" centers manufacturers there can afford
to risk delaying production knowing their working force can be expanded
almost indefinitely within the limits of their soace and equipment.

It would be difficult, if not impossible, for the industry to meet its
extreme production demands at the height of the season were it not for
the "iresence of this reserve.

4. Qtd.er Factors. The relationship of the manufacuter to his dis-
tributor and to t e ultimate consum< r contributes to the severity of sea-
s o ns.l f luc tat ions :

". . .The wide separation between the designer and the
probable wearer of the hat introduces an element of chance which
contributes in no small degree to the irregularity of the
reasons ."

$3jg9|e:{iijc;fc:te3|e

"... he have to deal . . . with a diversified occupation in
which orders and, consequently, permanence of employment are de-
pendent upon a disorganized system of buyinr and selling, with
keen competition and elements of luck more powerful than any
present efforts to develop a scientific )lan of meeting market
demands. »(**)

Recent structural changes have also contributed to irre ularity in
production. The accelerating tendency to decentralization and the
rapid . rowth of the syndicate method of distribution (***) have ma.de
it increasingly unprofitable for houses in the primary production centers
to send se.les.aen to certain parts of the country. For instance, the
Southern b isiness which formerly kept plants occupied in Kfew York during
January has been largely lost to them their Fe . ruary-March peak being
t he r e b y ac c e ntu&t e Q. .

(*) See Table 25.

(**) Van Kleek, op cit., pp. 57-5E

(***) See discussion under "The Distribution of Millinery, "and" Pre-
Code Conditions."

-21-

B. EXTEITT Q]F SEASONAL FLUCTUATIONS

1. Measurement of Seasonality. In this Industry the index of- pay-
rolls furnishes the best available basis for measuring seasonal
variations. The index of employment is n:,t nearly so reliable, since
during slow seasons workers oftan report for duty and spend all day

in the shop without actually working more than an hour or so, and such
work as may "be available is carried en in a leisurely fashion. Data
on employment and man-hours worked, tnerefore, would not show the full
diminution of activity. Payrolls .however, are highly accurate. The
industry operates largely on a piece-work basis, and the amount of
wages paid indicates with but a small margin of error the extent of
variation in productive activity.

2. Periodicity of Feoks and Valleys. Productions, as measured by the
index of payrolls, normally reaches its peak in the months of March
and September anditslow in November end July. (*) Such variations from
this form as occur are due partly to weather conditions. For instance,
a late spring may have the effect of postponing the spring peak until
April. A late Easter has a similar effect. In 1533 this postponement
was primarily a result of the unsettled economic conditions which cul-
minated in the bank holiday. General business conditions exercise an
important influence on the incidence of the winter low. If demand is
good, the low will not be reached until December, whereas if it is
poor, ib may-ve reached in November, by ind large, however, the in-
cidence of peaks and vallys is fairly regular.

3. Comparison of Spring and Fall Seasons. Of the two seasons, the
Spring is :i shade the mere important. During the years 1926-1934, an
average of about 54 per cent of the yearly activity took place during
the first six months of the year. (**) This inequality is largely due
to tne greater ra.nge in social activities ossible during the spring
and summer months, with the consequent necessity for greater variety
in wearing apparel, and to tne fact th t in the temperate zone there
is a longer period: of warm weather than of cold. Eight months of
the year rxe favorable to spring and summer styles and four months to
fall and winter styles.

4. Tendency Toward Increased Seasonality; Causes. In recent years
there has been a marked tendency toward greater severity in seasonal
variations in activity in the industry. In 1927 the lowest point on
the payrall index was 89.7 per cent of tne highest; in 1932 this ratio
had fallen to 42.4.(***) This progression lias not been steady, but the
general tendency is unmistakable. Thus, in the average monthly fluctu-
ations for the years 1926-1929, the low is 74.8 per cent of the high;
for tne years 1930-1934, it is 57.2 per cent of the high,

(a) General Economic Depression This increase in seasonality
is due to a variety of causes, One of these has been the general econ-

(*) See Table 22.

(**) See Table 23.

(***) See Table 22.

9749

-22-

ornic depression. Curtailment of consumer income decreased absolutely
the demand for millinery, thereby augmenting the industry's labor
surplus. Impaired incomes also caused consumers to withhold what
purchases they did make until the last moment. The general disorgan-
ization and maladjustment incident to the depression has tended also
to increase the extent of fluctuation.

(B) Simplification of Styles. The most fundamental of all causes
was the introduction of the simple hat. Daring the vogue of the orna-
mental hat the rate of style obsolescence was much less than it is to-
day. Consumer demand in consequence coiild be fairly accurately esti-
mated and production carried on well in advance of the selling season.
At present, however, because of the uncertainty as to what the style is
to be, production must be postponed until the very last moment.

5. Variations in Seasonality.

(a) Between Areas. There are marked variations in the degree of
fluctuations to which various sections of the country are subject.
Those portions of the industry located in the Hew .England, £ast Central,
and Southern States are least seasonal and those located in the Kiddle
Atlantic States most seasonal. Between these two extremes are those
portions located in the Middle and Far West. (*)

These variations are the result of a number of influences, chief
among them the relative abundance of the labor supply. Differences in
wage rates also contribute to the result, in that manufacturers can
afford, to retain highly paid employees only in the height of the
season. Finally, the types of merchandise produced in the various
markets differ somewhat in their seasonality.

(b) Compared with other Industries. The millinery industry is
subject to a substantially higher degree of seasonality than most other
industries. In the millinery industry's index of employment for 1934,
the ratio of the lowest month to the highest was 53.1, as compared
with 60.9 for the dress industry, 81.9 for the men's clothing industry,
and 86.4 for men's fur-felt hat industry. (**) The difference be-
tween the c.egree of fluctuation recorded for industries catering to
women and those catering to men is a result of the relatively greater
importance of style in the form<=r.

(*) See Table 24. Attention is called to qualifications set forth in
footnote a/

(**) See Table 25

9749

-23-

C. PPhECTS OF SEASONALITY

1 . Periodic Unemployment.

Twice a year almost half of all workers in the industry are laid
off because of the oncoming of the slow season. During years of
depression the period of employment is even snorter and a greater
proportion of workers are laid off after the. busy season. Great as
these seasonal fluctuations are, however, they afford, but a partial
measure of the actual degree of irregularity in employment. The
worker may lose tine because of sickness or industrial disturbances,
or because the employer fails and goes out of business, or because
fashions change and the proportion of hand work to machine work varies.
To arrive at the actual degree of irregularity in employment, account
must be taken of the length of • employment of individuals during the
year, as well as the seasonal fluctuation. Unfortunately, however,
there are no data on this phase of the subject. Attention is merely
called to the existence of the problem.

The self-supporting worker must get at least two extra jobs
during the year, one in summer and one in winter, even if he or she
is regularly engaged from season to s - son in the same millinery shop.
But as many workers do not- return in the autumn to the same shop where
they worked in the spring, such workers must hunt for jobs four times
every twelve months. In any event, the worker must have at least t-^o
kinds of earning ability. Because of the difficulty of mastering a
second trade, the off-season occupation must often be unskilled or of a
lower grade. Probably the work most frequently engaged in by women
workers is selling in large stores, though many other fields are re-
sorted to. The one common element would seem to be the chance method
of selection. (*)

In addition to actual unemployment, seasonality is responsible
for a vast amount of part-time employment, the extent of which may
be determined by a comparison of the index of payrolls and the index
of employment. (**) Even in the height of the season there is a
certain amount of part-time employment: in March, 1934 the ratio of
the payroll to the employment index was 86.2. In July, the ratio was
66.3, indicating that those actually employed worked — and earned —
at only about two-thirds their capacity. The extent of part-time
employment increased substantially during the depression. Tiiereas
the average ratio for the years 1926-1929 was 102.1, that for the
years 1930-1934 dropped to S3. 2. Attention is called, however, to the
fact that whereas part-time employment increased steadily between

(*) See Periy, Lorinda, The Millinery Trade in Boston and Philadelphia,
and Van Kleek, Mary, op. cit.

(**) See Tables 26 and 27.

9749

-34-

1929 and 1933, - decrease is recorded for 1934. The reversal of the
trend is due to a variety of influences, the most important of which

was the Millinery Code,

3. Decreased ikriiings.

images received "by millinery workers must "be considered in relation
to the equally important question of seasonal unemployment. Hourly
wages in this industry, uarticularly under collective agreements, are
relatively high. Because of the violence of seasonal fluctuations,
however, workers are net able to earn txiese rates for many weeks
•during the year. Annual earnings in coiiseauence are low and workers
are kept constantly near the margin where going into debt or obtaining
as istance from relatives, organized relief, or private charity is
necessary. To the extent that workers are dependent upon such
assistance, the industry is parasitic.

The situation in this respect is ruch better than it was a
number of years ago — not because of any diminution in the decree of
seasonalitj'' but because of greatly increased hourly rates. Never-
theless, the industry is still partially subsidized, and will probably
continue to be so long as employment is subject to such violent
fluctuations. Increased wages are little more than a palliative
a„nd cannot touch the heart of the problen.

4. Impaired V/orker Morale.

Another important result of seasonal variations is a. restlessness
which accounts in pp-rt fa a the irresponsible attitude ajjion^ many workers of
which employers fr< auently complain. During the height of the season
both employer .and employee arc subject to considerable nervous strain.
The speeding' up process necess ry to meet orders promptly, even if
it is not prolonged by a. period of overtime, o:"ten results in the
complete exhaustion of the worker, overtime, moreover, is almost
invariably demanded during the pe'4c period, especially toward the end
of the week when the workers are already seriously fa.tigued. To
continue this nervous strain unduly is to rob the worker of much
needed rest and to impair ooth the quality and quantity of his output.

5. Other Effects.

On the employer's side, the consequences of excessive seasonality
are also grave. Tae manufacturer's risks are concentrated into two
hi hip abbreviated periods and cannot be distributed, as in other
industries, fairly evenly over the y-.-.r. As a result of the vast
number of orders piling up the busy season, many firms are
lured into the industry who have no al-ce there, only to find them-
selves in the off season without enough demand to keep their alants
running. The result is price cutting, wage slashing, and general
industrial demoralization. Finally, from the e-aloyer's point of view,
the continued turn-over in .>< rsonnel is highly undesirable. To be
obliged during the y< ■ ar to pn lmost twice as many workers as are
needed at the peak of any one season is a tremendous industrial waste.

9749

-25-

Seasonality in the millinery industry tends to produce similar

conditions in those industries and trades supplying it -nth roods and
services as well as among wholesaL ":io retail distributors of millinery.
Finallyi the adverse effects of this beasOnability are carried to the
consuming public in the form of higher prices, poorer workmanship, and

diminished purchasing power.

IV. INDUSTRIAL -ASPECTS 0? STYLE

In most industries,, the dynamic which determines structural
characteristics is science and invention; in the. millinery industry,
the dynamic is style. It is the fundamental characteristic which,
direct^ or indirectly, determines practically every other characteristic.

4* GE.T^Ah (X/'Sn^IUTIUlS

1. universality of Style Interest.

The paramount importance of style in the general industrial field
is of comparatively recent development. './hereas in former times style (*)
was an attribute of foods in the higher price ranges only, it is now a
necessary attribute of goods at any price. Even the ten cent hat offered
at "Jool^orth's lays claim to a cert-in degree of, fashionability.

A number of factors have contributed to this extension, the
most important of which has 'oeen the growth in the national wealth.
Only when incomes begin to exceed the subsistence level is opportunity
given for fashion expression. The general increase in the prosperity
of the United States, particularly during" the ten years succeeding
the Uorld Vfer, has been of major importance in opening up a great era
of fashion.

A general increase in leisure exerts somewhat the same influence
as a general rise in incomes. Leisure not only offers an opportunity
for interest in style, but, because it usually involves a variety of
activities, enhances the desirability for variations in dress. The
growth of trade unions, labor legislation, and other influences tending
to the limitation of the working period, as well as the growth of
leisure through accumulations of wealth, are all factors tending to
intensify the importance of fashion in our social life.

(*) Throughout this discussion the terms "style" and "fashion" will

be used interchangeably, notwithstanding rather clear distinctions
ivhich may be drawn between them. For excellent definitions of
"style", "fashion", and "design", see Jystrom, Paul H. Fashion
Merchandising, p. S3. Almost the entirety of this discussion of
style is based upon Dr. Eystrom's Fashion I.'erchand ising and his
.Economics of Fashion. The reader is referred to these works for

an especially able treatment of style in its economic aspects.

9749

An extension of op lortunities for education, particularly "hen
pducation is coupled with leisure and increased income,- tends to
increase interest in fashions and to accelerate fashion movements.
The development of widespread, rapid, and inexpensive means of trans-
portation -nd communication "ddely disseminate ne i fashions and create'
a powerful demand for fashion yoodis.

The effective and inexpensive reproduction of style merchandise
had made nossible the use of such merchandise by the loner income
groups, thus widely extending the sco;ae. of fashion. In this respect,
there appears to be an inverse relation between the rate of style
change and price, lur coats,, for example, hich run into the hundreds
of dollars, must of necessity be morn for several seasons, and their
fashions tend to be of fairly considerable duration. Changes take
place in jewelry styles it an even slower rate. Fp.shions in dresses,
however, fluctuate far more rapidly. .omen ' l hats rs generation ago
■■■ere coiisideraoly more expensive than they are today and style ch-uiges
were correspondingly slower. With the i atroouction of the simple hat,
millinery prices hive be«n reduced to p fraction of their former
level end the rate of style change has been enormously accelerated..

Finally, advertising and selling campaigns tend, to create a
demand for fashion gooda and to eat end their use. This particular
factor, however, has ^een largely overrated in respect to its
alleged ability to promote tae use of ■.> articular styles. "Thile
selling campaigns nay not substantially increase the demand for the
specific style advertised, they more than likely increase the demand
for some style.

2. Style vs. Utility.

Consumer interest in durability and. convenience is probably as
great today as ever, out such qualities are no" Largely taken for
granted, Consuiers concern themselves primarily with the appearance
end style of merchandise, .and excellence of material and workmanship
mean little unless clear ly marked with current fashipn. Finally,
style is a far more important factor than wear paid tear on the ob-
solescence and. displacement of millinery.

3 . Psychological 7- ctor s.

Interest in fashion is the result of powerful forces in human
nature. The fundamental human need of companionship is one which can
only b< r alized through social groups, and social groups of all
kinds exact conformity from their members. This is particularly true
in matters of dress.

" nuicule an& scorn are the sanctions which force jeoole to
follow fashions, and the dissenter is powerless before tarn." (*)

Fashion motivation is plso intimately associated with f at i me or bored.om.
Garments or h< : a o i for a se-scn tire the eye and the sense of

(*) Hurlock, Elizabeth, The Psychol o^y of Dress, p. 7.
J' 749

-27-

touch, a fatigue which may be relieved only by a. change to new
garments or ne'-;. headwear. Curiosity and the desire for adventure
produce a similar, demand' for the hitherto unexperienced. The intro-
duction of a new fashion, a woman's experimentation with a new style,
carries with' it something of the same spirit of adventure that leads
men to the far corners of the earth. The hunger for praise, par-
ticularly from the opposite sex, leads to constant experimentation in
personal decoration and adornment. The desire for self assertion,
efforts to disguise one's social background, "keeping up with the
Joneses", are all manife stations of the inferiority complex and are
■among the most powerful of all psychological factors tending to
spread interest in fashion to all levels of the social structure.

4. Style liovements.

( a ) Major Influences.

Style movements are guided by t.iree general factors: dominating
ideals, dominating events and domincting social - "roups. The Greek
ideal of pure beauty, Christianity, the ideals of democracy and
nationalism, have, each in their turn, exercised a vrofound influence
over the general directions 'of style movements. The current "youth
movement" (*) seems to embrace within its scope the dominating
ideals of modern times. The sc-called Victorian Era is an example of
an age dominated by "elderly" ideals. The prodigious growth of the
beauty parlor and cosmetic industries and. the development of other
devices for the similation of the litheness and smoothness of youth
are indicative of a diametrically opposite trend. In a "oeriod
dominated by age, fashions tend to heaviness of line and somberness
of hue; in a period dominated. i>y youth, they tend to color, lightness,
and. g race,,

Within the braad f ran e-work of dominating ideals, a profound
influence is exerted by- dominating events. The World War is an out-
standing example of such an event in the modern age. The period
of the War was characterized by a' definite slowing xvo of all fashion
movements. The tone of. fashion reflected the drabness of khaki, somber,
events, sober frames of mind. In women's clothing mannish attire,
tailored effects, and a military severness were the order of the day.
The years 1919 and 1920 were -'•ears of mourning, and women's dress was
predominately black. The use of feathers on millinery and dresses
in imitation of the barbaric attire of Ethiopian warriors is a current
example. Svents less cataclysmic, of course, also exert an influence.
Among the more important of these has been the succession of world
fairs which have been held during the last half Century.

Finally, fashion movements are influenced by dominating grouas.
In times past, royalty exercised the principal immediate determinant
of the fashion trend. This influence, however, has declined almost .
to the vanishing point in modern times. The dominant social groups
today are the possessors of wealth accumulated through business enter-
prise. 'In these groups are" concentrated to a marked degree practically

(*) The designation is that of ilystrom. See his Economics of Fashion.
9749

-28-

every fundamental psychological motive which tends to foster interest
in and to promote the development of fashions.^ When, to this
groundwork, is added a high degree of education1, and intelligence, a
shrewd appreciation for the social significance of the events and
affairs of the world, good taste, artistic sen^e, and "a keen desire
to compete with other people for preeminence in style and fashion",
it is not difficult to understand why such groups occupy the position
they do in the world of fashion.

(b) Paris as Style Center.

These dorainent social groups are largely concentrated in the
great, active cities of the world, and it is from such cities,
primarily, that new fashions radiate. Paris is preeminent in this
respect. It is the congregating point for people of wealth and
leisure from all parts of the globe. To it is drawn an especially
large number of --omen who make a business of dressing well. Style
experimentation can be carried on here as nowhere else, and such
experiments as ire successful are promptly and widely disseminated.
Other factors have contributed to £his leadership, among the most
important of ™nich is tradition. Paris has been producing style
goods for several centuries, and has actually led the world in this
field for most of the time during the last. three hundred years. Paris
has at its command admirable artistic and- industrial resources.
Its art collections and libraries are among the best in the world
and furnish inspiration to designer and facilitate the acceptance
of new styles. It is the international market for works of art and
the headquarters for artists of all nationalities. Many of these
artists specialize in the designing of textiles, apparel, and apparel
accessories. No other city can show such a concentration of artistic
ability in the designing field. Paris is also the center of a great
industrial area, devoted to the production of textiles, apparel and
accessories. French workers have a remarkable sense of the artistic
and a highly developed appreciation for line, color, and design and
are imbred with a tradition of fine worlonanship built up over gener-
ations. In the protection of designs and in the opening up of new
markets, the industry has received almost constant assistance from
the .French Government from the days of the Bourbons down to the -ore sent «
It is significant also that Paris designers have been able to adapt
their creations to the slight though significant variations in con-
sumer taste peculiar to various nationalities. If its designers
were not able to make these .adjustments easily, Paris would have,
considerable difficulty in maintaining its importance as an inter-
national style center.

( c ) Relation of American Industry to Paris.

Buyers from American probably rank third in volume of apparel
purchased in Paris, exceeded only by the French -oublic itself, includ-
ing non-French residents of France, and the English, (*) Neverthelossj

(*) Nystrom, op. cit.

9749

-29-

total imports from Paris make up h very small percentage of the total
retail sales of millinery in this country. Ideas more than merchandise
are imported. Many Parisian designers conduct so-called "model
houses" whose chief "business consists in prepar ing sample styles for
sale or rent to domestic or foreign manufacturers. Trade in such
models constitutes the princip&J portion of our tangible imports
of headwear from France. In addition, many styles are pirated and
copied on a wholesale basis - a "trade" which does not show up
on the import-export balance.

It is only fair to point out, in conclusion, that whereas
the dependence of American industry on Paris is extensive, Paris
in tarn draws many suggestions from this country, Parisian designers
and manufacturers frequently visiting the United States to gather
information on taste and style trends and to secure inspiration
for new designs,

( d ) Relation of Producers to Style Trends,

Fashions are the composite product of the taste and temper of
the consuming public at any given moment, and of all the diverse psy-
chological, esthetic, social, and economic influences which determine
that taste and temper. Consumers raid not producers make fashions,

'"The producer or dealer may propose, but it is the consumer who
disposes." (*)

The designer can do little more than attemot to express these factors
in the tangible form of specific fashion suggestions. If the
suggestion corresponds to the current trend it lay win consumer
acceptance; if not, it is ignored and forgotten. "Fashion dictator"
is a contradiction in terms, unless the ohrase is applied to the consumer,

( e ) Forecasting Trends in Consumer Demand.

Much of the instability to which the millinery industry is
subject is a direct result of the rapid fluctuation of styles. Any
attempt, of course, to diminish the rate of fluctuation is imprac-
ticable. The situation might, however, be appreciably relieved were
it possible to develop some fairly accurate me?^ns of forecasting
style movements.

There are several channels which are now at least partially
in use by which some degree of contact is maintained with the con-
suming public in furtherance of this purpose. The most com. ion of
these are the channels of distribution. The advice of individual
retailers, notwithstanding thfiir proximity to the ultimate consumer,
however, is not of .any especial value because it is toe likely to be
tinged with personal prejudice. Most magazines of wide circulation
among consumers ar° equipped to supply their advertisers with
practical information as to current consumer taste and some magazines

(*) Kystrom, paul H. , Op. Cit., p. Ill
9749

-30-

and advertising agencies have gone so far as to establish service
departments for continuous study of the .-problem. This particular
approach, however, presupposes a large volume of advertising which
is not forthcoming from the millinery industry. This method has "oeen
used to considerable advantage by a few large manufacturers, but
offers little possibility for general exploitation.

On the whole, it would appear that the most promising 'method
for this industry is through trade association oi other cooperative
effort. A special agency might be established or the function might
be assumed by one of the existing associations. Systematic methods
could be developed for the collection and tabulation of current
data on consumer taste. The task would be a difficult one, for the
facts regarding such taste are not easily obtained and are still less
easily interpreted. But it would not be impossible, as' witness the
success, in a limited field to be sure, of the service bureaus of
national magazines and advertising agencies. Assuming the success
of such a cooperative effort, members of the industry could be supplied
at all times with far more reliable information on vihich to base pro-
duction schedules than they have ever had in the past.

If the industry is to be stabilized at all, its problems must
be attacked on all fronts. IJo solution can be very effective which
overlooks the necessity for better balance between production and
consumption oy means of more reliable information concerning the
consumer demand. Labor, no less than management, has a vital stake
in the matter. So long as the industry follows a hit or miss
technique, no very great progress can be made toward stabilization
of any kind, and labor must continue to suffer from excessive
seasonal unemployment and low annual wages.

9749

-31-

B. ECOhOUIC CONSEQUENCES OF STYLE

]. . Location of the Inane try

As noted above, the chief centers for the production of fashion
goods are the cities of greatest size, wealth, and political influence.
New York, of ell the cities in America, best fulfills these conditions.
It is only natural, then, that by far the greater oortion of the mil-
linery industry should be located there. Chicago, the next most impor-
tant metropolis, contains the second, largest concentration. The indus-
try, being so dependent uoon style must of necessity locate itself at
the points of greatest style activity. Such points provide no; only the
best market for its lorodxict but, what is more important it is in such
communities that stales cone into being.

2. Ethical Characteristics of Labor.

Llillinery production requires T'orkers equipped with a fairly well
developed sense of the artistic. The Anglo Saxon's appreciation of
line and color suffers in comparison with that possessed by other races,
particularly the Latin and that segment of the Latin called French. If
the French people had settled in this country to any great extent, it is
probable that the millinery and other fashion industries would have
fallen largely into their hands. As it happened, however, the race
with the most highly developed artistic sense to settle here in great
numbers was the Jewish , conseouently, the production of fashion goods
has been largely assumed b'r the Jewish -jeople. The Jews are city dwellers
and are seldom found to anv appreciable extent in this country outside
the larger cities. The tendency, then, of the industry to concentrate
itself in the metropolitan centers wa.s strengthened by the fact that
a great store of labor eminently adapted to. this particular type of
work was at the same tine being built urn in these centers.

3. Unionization.

The industry's exceptionally high degree of unionization is a con-
sequence of its type of labor and its concentration in metropolitan
areas. The common race of the workers has be n an exceptionally power-
ful factor in promoting organizations for cooperative effort in all lines
of activity. Large numbers of employees concentrated within a limited
area made the task of organizers much less arduous and their efforts
much more successful than would have been the c ise had the industry
been decentralized.

4 . Type of Productive Organisation .

The type of productive organization is deter: ined by the exigencies
of style, A plant must be prepared at all tines to shift from the manu-
facture of one tyoe of hat to another on a daw's or even au hour's notice.
Changes in style are so rapid and so man" different designs must be
produced at the same time, or closel" following one another, that flex-
ibility is the first requirement for the productive unit. For the
same reason, only a minimum of machinery may be used. Generally speaking,

9749

~3?-«

machinery is developed in and for industries whose, products rre fairly
veil standardized and in which the tasks nay "be "broken down into simple,
elementary movements. But millinery is not a standardized product, and
while the operations going into the making of e specific style might
conceivably be broken dorn sufficients to render them amenable to
machine treatment, hat styles are "■constantly changing. Handwork, in
c'onseouence , and craft— type labor' must "3 e Used much more extensively
than in other An- rican industries.

5, Other Con-senuences.

From the simplicity of the productive unit flows also certain fur-
ther distinctive characteristics of the industry, among them its rela-
tively large membership, the small scale of the individual establish-
ment, and the excessive ease with which entry into the industry may be
made. The industry's high mortality rate is in part a result of these
characteristics and in part a consequence of the unce-rtaihtloB created
by and the business losses arising from rapid, and erratic movements of
fashion*

C. STYLE PIRACY

1. General Considerations.

The most spectacular of the economic consequences of style is
"style piracy". This term has "oeen defined as a practice which "consists
in the copying, without authorization from the creator or producer, of
ornamental designs for industrial products created or introduced by
others, -and the selling in corn-petition with such creator or producer, of
products embodying the copied designs." (*)

(a) Extent of Copying:.

Although the unauthorized copying of designs is at least as
old as the industry itself, style piracy as a widespread practice, is of
recent origin. It has shown a remarkable growth during the last six
or seven years until from being, as it originally was, little more than
a saoradic annoyance, it is now a. thoroughly organized method of pro-
duction and distribution. Lacking any effective check, legal or other-
wise, piracy is today one of the dominant forces at work in the indus-
try.

There are only a handful of houses which make any great
effort to create new and origin-'] designs; all other members of the in-
dustry depend almost entirely on these houses for their styles. Styles
which are apparently successful are quickly copied, reduced in price and
quality, and put out in such numbers as frequently even to destroy the
markets for which they are intended. It is a common thing for ,an in-
dividual style to run swiftly through the industry's entire price range
by means of a series of rapid aid unauthorized reproductions. This
cheapening process is achieved by lowering the standards of material

(*) A. C. Johnston,. hRA Trade Practice Studies Section, Style Piracy
Study.

9749

-33-

and workmanship, as veil as "by the economies of large scale production
and the absence of designing costs.

( b ) Methods of the Copyist.

The ccoyist is on ingenious person. His methods are many-
some of them crude, some frankly dishonest, others clever to a degree.
The most common of all methods is simply the purchase in the retail .
market of the models to he co-jied. A distributor frequently brings to
a manufacturer samples purchased from an originating house for repro-
duction at lo"rer prices. Resident buyers and the buying syndicates in
particular have bern charged with frequent indulgence in this practice. (*)

Fashion exhibits and style shows provide e xcellent opportun-
ities for the co-oyist. Their activities in this field finally became
so flagrant that rules prohibiting actual sketching became necessary.
Such prohibitions, however, have done little to stop pirating, because
an expert copyist can memorize the details of a design and reproduce
it at his leisure. The window displays of retail shops are also an
important source of the copyist's styles for the season.

Free lance designers, whose services are often utilized by
several establishments concurrently, have sometimes disclosed to one
firm designs prepared by then for another. Copyists have been known to
bribe designers and other employees of fashion originating houses, so
that in spite of all precautions the pirate is sometimes able to ex-
hibit copies at reduced prices simultaneously with the appearance of the
original model. By bringing pressure to bear on manufacturers of hat
blocks, manufacturers ..ore sometimes able to secure copies of blocks pro-
duced for others and to turn out a hat identical vrith that of the or-
iginator,

(c) The Question of Control.

Whenever a designer conceives of a new uray to work an old idea,
the question of ownership is immediately raised. One group holds that
the originator is entitled to a monopolv on his creation; the other
contends that all designs, no matter by whom or when ci sted, are public
property and that no individual is entitled to exclusive right thereto.

The millinery industrv is sharply divided ever this question.
Holders of the first view are for the aost part the "high style'1 houses
who each season go to considerable effort and expense to develop origi-
nal designs. Adherents of the second view are for the post pavt the
rank and file of the industry who depend almost entirely on the creative
work of others. Each group has a vital economic stake in the question
of control. Under present arrangements , the originator, at best, is
deprived of the full benefit of his creation; at worst, he finds his
capital so far depleted as to be able no longer to continue in business.
For their own protection, therefore, the originating houses have attempt-
ed during the last few years to develop means for curbing the activities

(*) See Seligman, E.R.A. , Op, Cit,
9749

-34-

of the pirate. In these a ttenpts the:" have, naturally enough, "been vig-
orously owmosed by the rani' and file of the indui iy, -who sincerely be-
lieve that only through unrestricted copying can they meet competition.
Of all the internal conflicts to which the millinery industry is subject,
none is so deep-seated or so bitter as that ..'a~ing about the question of
controlling style piracy.

.2. The Case for Control. .

( a) Ethical- As~oects.

Proponents of plans for design protection make out a very
good case for themselves on ethical grounds. The laws of this country
are such, the-/ point out, that if a man steals a hat he has committed a
crime, whereas if he copies the style of that hat in its most minute
detail he is entirel-- within the law - this notwithstanding that the
value of the hat lies not ne rly so much in its physical substance as in
the intangible elements of its style. ., '.

"The -oresent lack of a design registration law and the fact
that copying is still considered a lawful activity by the courts amount
to a right to despoil the business of others. It is entirely illogical
that this comaition be allowed to continue." (*)

( b ) Style Originp.tion .and Demand.

All parties agree that the industry is peculiarly dependent
upon a multi-elicit-'' of styles., A small fraction of the millinery now
manufactured \ould suffice the needs of American women .if all they
looked for in their hats were a useful head-covering. Notwithstanding
this general rgreenent, horevt.r, both originators and copyists claim
credit for this essential multiplicity.

In order to hove an industry at all, say the originators,
there must be style creation, and that creation, to be maintained, must
be protected. What the patent laws a"e to the inventor and the copyright
laws to the author, the proper type of design 'orotection would be to
the creative designer. The United States is far behind other countries
in the field of industrial art, and this backwardness is believed by
. man^ to be due to the dominance of the copyist and the inability to se-
cure to the creator the fruits of his labors. If styles ^vere protected
in this country— the argument proceeds — the d esigner would hrve a much
more powerful incentive to produce original models, and demand would be
considerably increased by enhanced consumer interest.

As natters stand, now, however, the originators are rapidly
losing ground because of the unequal odds of the competitive struggle.
The creators of nil? incry styles labor under enough inevitable handicaps
at best. Leadership in fashion may be purchased only at a very high
cost. It involves the expense of eSperimental work., for every style in-
troduced is of necessity an experiment in consumer demand. A high

(*) N^strora, Paul H. , Fashion Uerchandi sing, p. 243.

9749

-35-

proportion of such experiments cannot help but turn out "badly. Expensive
designing staffs must "be maintained and constant touch must "be kept with
European centers. The economies of mass production are impossible and
manufacturing costs must be spread over the relatively small number of
hats produced in styles found successful. When the disadvantages of style
piracy are superimposed upon these inherent conditions, it is small wonder
that the creating houses are being driven from the industry. Ultimately,
the argument concludes, unrestricted copying will lead not only to the
destruction of the originator but to the defeat of the copyist himself
through the failure of the industry to provide that excellence of design
dema'ided even in the lor:est-priced merchandise.

(c) Effect of Piracy on Distribution.

According to the proponents of design protection, the prevalence
of style pira.cy is largely responsible for the excessive rate of merchan-
dise obsolescense and consequently for much of the depressed state of the
millinery market. The more rapidly merchandise becomes out-raoded the more
difficult the adjustment of -oroduction to distribution and consumption.
Millinery values are largely dependent upon day-to-day changes in style.
If the number is out of date, the seller, whether manufacturer or retailer,
is fortunate if he is able to dispose of it at any price.

The retailer suffers with the manufacturer in this respect. As
a matter of fact, style piracy is at the root of much of the returned goods
evil, as well as the cancellation of orders evil, which beset this industry.
Piracy has played a far more serious part in business failures than has been
acknowledged. The yearly loss to the industry, in the form of obsolescent
stocks, returned merchandise, and canceled orders must run into the millions
of dollars. It is a loss which affects the copyist no less than the origi-
nator. It is a loss the industry can but ill afford.

(d) The Consumer Interest.

According to the proponents of control, the curtailment of piracy
would benefit the consumer in several ways. First, the average woman makes
an investment not only in material and workmanship , but, what is more im-
portant to her, in style. At least 70;'o of the value of any piece of outer
wearing apparel consists of this intangible in a woman's raind.(*) To pur-
chase an item in millinery, therefore, which she believes to be an individ-
ual acquisition, and later to find it copied in inferior workmanship and
material and in endless duplication, destroys the greater part of the
satisfaction which she has looked to secure.

In the second place, excessive copying makes it necessary for the
consumer to pay higher prices than would otherwise be the case. If piracy
were controlled the originator ^ould be able to produce more of the hats
he designs. He would purchase his materials in greater volume and conse-
quently at a saving; his factory organization would be more stable and less

(*) M.D.C. Crawford, Consumer^' Advisor, Millinery Code Hearings August
1 and 2, 1933; undated memorandum addressed to De'out^ Administrator Earl
Dean Howard, Central Records Section.

9749

time would be lost in shifting from the production of ono style to another;
the output' of his employees would be increased by limiting their work to a
smaller number of styles. All these econories ■ rould make possible lower
prices to the consumer.

In the third place, excessive copying reduces the quality of
material and worlanaaship going into the industry's product. The trends of
competition are toward the poorest and chea jest that may be produced rather
then to the best that "ill be accented.

9749

-37-
3. The Case Against Controls .

(a) Effect of Copying on Demand. Agreeing with the proponents of
control that the industry depends for its volume on a multiplicity of
styles, the copyists claim for themselves the credit for that multipli-
city. The rapid obsolescence of styles which is one of the consequences
of piracy, they point out, increases the necessity for the constant
creation of new styles. The freedom to imitate designs j moreover, has
enabled manufacturers of low-priced merchandise to make available to
the great mass of consumers the latest and cleverest style innovations
at prices within reach of the most modest purse.

Design protection would also, it is held, decrease the demand for
higher-priced millinery. The desire of women of better financial means
for exclusiveness in their millinery causes them to buy a large number
of hats each season. The speed with which imitations are made and the
great numbers in which they are sold quickly deprive the new hat of its
individuality and thus furnish the makers of more expensive headwear
not only a stimulus to constant creation but also a market for their
newly designed merchandise.

(b) The Consumer Interest. The copyists maintain thrt it has
been primarily through their efforts that stylish millinery has been
made accessible to the average consumer. A curtailment of their acti-
vities would create a condition out of line with our ideas of democracy.
Visitors to this country are constantly amazed at the ability of the
average American woman to dress in the height of fashion. European
countries,, having design protection, make this impossible. It is
possible only where copying is easily and quickly done. A tendency
toward social' stratification with considerable consumer resentment
would be the inevitable result of any attempt to abolish piracy. -

(c) The Administrative Problem. The copyists maintain that the
administrative difficulties confronting any conceivable program of
control are insuperable.. There is, first and foremost, the problem of
defining in general terms what constitutes piracy and determining in
specific instances whether a given hat .is a copy. There are few designs
which are in a strict sense original. The vast majority are simply
variations on old themes.

Keeping in mind that the industry is one in which styles change
with great rapidity-, what recourse would a manufacturer have from an
adverse decision of an administrative body? 3y the time the controversy
could be settled, the st"rle -'ould be worthless. In view of this
rapidity of style change, furthermore,, would it be possible to set up
an agency capable of handling the multitude of styles produced during
the few short busy weeks of the year? It is also reasonable to suppose
that manufacturers woxild file not only a vast number of different
designs but also a multiplicity of variations on each such design,
both to protect themselves and, possibly, to oreempt the field on those
particular types. The result would be a tendency to monopoly as well
as the imposition of an impossible burden on the facilities of the
registration bureau. No system could possibly '"ork which did not render
immediate service* Forty-eight hours would have to be the absolute
maximum time for filing, and even this period is a long time to ask a

9749

~33~

manufacturer to hold off production in the height of the season. The'
work of the agency would expand and contract with seasonal activity.
It would have, to be so organized as' to handle literally thousands of
registrations during a few weeks of the year and to remain comparatively
idle during the slow months.

Finally, "by what means would such an agency enforce its decisions?
In the' last resort, it must, fall "back on the courts. In an industry
where styles are changing so rapidly, any such means of enforcement
cannot be effective. Long before the matter could be scheduled for
hearing, the style would' be worthless.

4. Critical Evaluation.

The most interesting feature of this debate on control is the claim
of both factions for the credit of maintaining demand for the industry's
product. These conflicting claims are not incompatible, however. Soth
the .originator and the copyist contribute to the diversity of styles..
There are two distinct types of diversification involved. Originators
are largely responsible for the diversification of styles offered in the
market at any given instant of time; copyists are largely responsible
for the multiplicity of styles offered during the course of any given
period of time* The copyist,, in other words, is responsible for the'
rapid succession of styles, the creator for the number of styles which
constitute these successive "waves".

The distinction is imoortr.nt, and may be the key to an intelligent
decision between the contentions put forward by each faction. ' Notwith-
standing the lack' of sufficient information on which to determine con-
clusively which type of diversification leads to increased consumption,
a tentative conclusion may be broached. On the face of it, the copyist
seems to have. the. better of the argument, because it is his activity
which brings about the rapid obsolescense of style and consequently the
necessity on the Dart of the consumer for more frequent purchases in
order to keep pace with rapidly changing fashions. It is obvious,
however, that this type of diversification is purchased at too high a
cost. It is also probable that the diversification contributed by
creators would provide sufficient consumer demand without exacting such
tremendous tolls in the form of obsolescent merchandise. Piracy con-
tributes substantially to the high degree of instability "hich besets
the industry. It might very well be that it could afford some
diminution in the rate of style turnover in exchange for more stable
conditions. From the point of view of the consumer, the type of
diversification contributed by the copyist is definitely undesirable.
Style changes at best impose a considerable social cost and an arti-
ficially rapid rate to turnover can only be viewed as an unnecessary
waste.

It is highly unlikely that even the most effective control of
piracy would lead to any monopolistic tendencies. Any form of monopoly
is simply inconceivable in the millinery industry, A prohibition of
copying would -orobably increase the manufacturer's capital requirements
and thereby Prove a hardship to the "bankruptcy fringe," as well as
render entrance into the industry more difficult. Both of these results,
however, would tend to increase the stability of the industry.

9749

■ -39-

Hor is it likely that the abolition of piracy would result in
prohibitive price increases. In the first place, the cost of install-
ing designing departments would not be excessive.- The industry during
the past few years has made wage increases many times greater than
could possibly be involved in employing additional designers. Such
increases have been made without any substantial rise in prices. The
larger volume of business done by the popular- or iced houses would make
it possible to spread the added cost over a wide area. The addition to
unit costs would be relatively inconsequential and the consumer would
suffer little if any advance in price. Finally, competition would not
be impaired and vpuld operate effectively to check any undesirable
"orice increase.

Any program of control would present considerable difficulties of
administration. Piracy has, however, been controlled in the millinery
industry in other countries and in other industries in this country.
Notwithstanding the obvious inadequacies of these plans so far as a
complete elimination of piracy is concerned, they have certainly
checked the practice. Evidently, no undesirable results have accrued
from these curbs; on the contrary, the industries have apparently pro-
fited thereby, (*) In any event, the controls have demonstrated them-
selves not impossible of administration.

Granting the desirability of control and conceding its success in
other lines, the conclusion still does not necessarily follow that
controls in the millinery industry are practicable at the present time.
For instance, there are certain fundamental differences between the
problems of the silk and millinery industries. In the first place,
the elements of design are much simpler in the case of fabrics than in
the case of millinery. Moreover, designs in fabrics are two-dimensional
and in millinery three-dimensional, Conseauently, the problem of
classification is infinitely less difficult, as is the problem of
determining whether a given design is an original or copy. Furthermore,
the number of styles brought out in the millinery industry in any one

season far exceeds the number brought out in a comparable period in the
silk industry. The problems of axuninistration, therefore, "fould be
multiplied many fold in the milinery industry.

It is significant also that the silk industry is able to avail it-
self of the cooperation of converters and printers. Unless a design
had been approved by the Registration Bureau, it ca/inot be processed.
Without this extremely effective cooperation of the converters and
printers it is at least doubtful that the plan could have b-en success-
ful. The millinery industry, unfortunately, has no similar group whose
cooperation could insure the success of a program of control.

(*) See Nystrom, Paul H. , Fashion Merchandising, and Economics of
Fashion. See also Transcript of Hoariny. Dress Manufacturing
Industry, llovemoer 15, 1934, testimony o^ Miss Louise L. Blunt,
Director, The Industrial Design Registration Bureau, Inc. (Silk
Industry) , and Professor Royal Bailey Farnum, Chairman, Design
Registration Bureau for Medium and Low Price Jewelry.

9749

-40-

Most important of all, the silk, industry vent through an extended
educational process before any actual steps toward control were under-
taken. The quest ion "began to be actively discussed in 1916, but it
was not until twelve years later that the Bureau of Registration was
organized. During this period the matter had been -debated on all sides
and by 1928 all factions were ready for fairly stringent regulation.
Without this process of education, the work of the Bureau would certain-
ly have been infinitely more difficult. It might even have proved
impossible.

The millinery industry has not had anything like the education on
the subject that the silk' industry had. . It certainly behooves the
advocate's of control to look to this angle of the matter, for it is
probable that the only permanent and effective means of. dealing with
the problem is by a long range program of education for producers,
distributors, and consumers.

5. Efforts to Control

(a) Through Existing- Law. One of the most persistently reiterated
arguments of those '''ho oppose the various tyoes of piracy control which
are put forward from time to time, is that existing laws afford ample
Protection to the originator "here such protection is warranted. On
examination, however, existing- law, both common and statutory,- (*)
reveal themselves completely inadequate.

The common-law applies only in such instances in which fraud, con-
• spiracy, or larcency may be proved with respect to the methods employed
in copying, and as copying may be so readily done by methods entirely
within the law, the common la- of unfair trade is of no assistance. The
trade mark laws afford no protection to the style creator, for the trade
ma,rk as such is of little value and the thing copied is the style itself.
The copyright laws have been held by the courts to be inapplicable to
designs used in commercial- and industrial production. The patent laws
afford protection only to things new and useful, and millinery designs
have little to do with utility in the ordinary sense of the word.
Finally, the design patent laws, under which one might naturally expect
some sort of protection, are rendered largely inadenuata because of
narrow interpretations of the concept of originality, delays incident
to the functioning of administrative machinery, and prohibitive costs
of registration. The conclusion must be drawn that existing laws fall
far short' of affording adeojuate protection. Fashion creators have
therefore turned to agitation along other lines.

(b) The Millinery Quality Guild. Private efforts of the-
millinery industry to control design piracy have been largely patterned
on the Fa-shion Originators Guild organized in the dress industry in. 1931.
The Millinery Quality Guild, organized in 1934, operates through

(*) This discussion' is based upon the cited vrorks of : Paul H. Nystrom
and upon the Style Piracy Study -of A. C. Johnson, Trade Practice
Studios ^Section,' N.R.'A.

■'•

9749

-41-

agreements '.'ith retailers in much the sane manner as the Fashion
Originator's Guild. These agreements "bind the retailer not to purchase
from any manufacturer any hat Icnown to "be a co iy of a style created by
a member of the Guild. The retailer also binds. himself to stipulate in
his dealings with mr.mufactn.rers that any hat found to be a copy after
purchase and delivery is subject to return. There were fourteen members
of the Guild as of October 29, 1935. (*) The prices of merchandise
manufactured by these members range from $4.50 to $12.50 per hat. The
Guild's agreement has been signed by 1700 of the best retail outlets in
the country (**)

As to the success of the Guild, LIr, N. J. Garfunkel, its Pres-
ident, has this to say:

"The degree of success has been limited, but most
encouraging for the reason that we have been able,
not only to maintain the principles for which this
organization was created, but it has been a great
stimulate and guide for the manufacturers of lower
grade goods, to maintain a degree of ethics".

Fortune iiagazine, reviewing the activities of the Iiillinery
Quality Guild and of the Uptown Creators Guild ( a group within the
Quality Guild) draws the f olio1 ing conclusions:

"The system has ha: d some effect, but the members of
the U.Q.G. (Hill inery Quality Guild) and the U.C.G.
(Uptown Creators Guild) repre' ent only a minute
fraction of the millinery business, and it is useless
to expect the cheapest hat makers and the big, cheap
retail outlets to sign any such agreement,, They have
everything to gain by copying ... and they have
nothing to lose but the goodwill of the highclass
designers and retailers, for which practically enough,
they don't give a dam." (***)

(*) Information contained herein with reference to the Guild, unless

otherwise specified, is based upon a, letter dated October 29, 1935,
from lir. II, J. Garfunkel., President of the Guild.

(**) "$200 9 000, 000 forth of Hats," Fortune magazine, January 1935

(***) Ibid.

9749

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This rather terse conclusion is substantially accurate. It is
highly unlikely that any voluntary efforts to control copying can achieve
any substantial success, and the prospects of compulsory regulation, by
federal statute or otherwise, are equally discouraging, For better or
worse, it ' ould appear that style piracy is here to stay and that the
creative milliner must perforce adapt himself as best he may to a per-
manent. (*)

V. DISTRIBUTION PR03LEIIS

Methods of distribution in' the Millinery Industry have been revo-
lutionized during the last decade. Distribution has assumed the charact-
eristic aspects of large scale capitalism while manufacturing has not
progressed far beyond the elementary factory stages. This revolution,
manifested on the one hand by a drastic decline in the importance of
jobbers and salesmen and on the other by the rapid rise of buying syn-
dicates, is. still in process, and the industry as a whole has not "been
able to adjust itself thereto. Complete adjustment is impossible so
lcng as manufacturing and distribution remain at unequal stages of
development. Substantial instability therefore must continue for some
time, notwithstanding any degree of stabilization which may be achieved
in other directions. ;

. A. RETAIL OUTLETS

There are in the United States approximately 220,000(**) potential
retail outlets for millinery products, by far the most important of
which are leased millinery departments. The manufacturer is heavily
dependent upon his distributive outlets. In the entire industry there
are only a handful of houses whose trade names have any significance to
the consumer. Even in such cases the influence of the trade name as a
selling factor is slight. The manufacturer consequently cannot appeal
directly to the consumer and must depend almost entirely on the promo-
tional efforts of the retailer. This is only one of several factors ■ . Loh
which have combined to weaken the bargaining abilities of manufacturers
in dealing' vith their' distributors.

B. BUYING SYNDICATES ACT LEASED DEPARTMENTS

Some years ago millinery generally reached its retail outlets through
travelling salesmen. In recent years, however, the practice of selling
from sample directly to buying syndicates has become more or less general..
More recently still, there has developed among such syndicates a tendency
to carry this procedure one step further, furnishing the producer with
samples and specifications for manufacture.

"In other words, we have transition from a situation in which

(*) Efforts to control piracy through the Millinery Code will be dis-
cussed subsequently,

(**) Estimate to E. R. A. Seligman, op.cit-, T.25
9749

-43-

the emphasis is on the efforts of the manufacturer to dispose
of his own iroduct, to ore in which lis opportunity to sell
has been replaced ■o'r a chance to bid on )rod icing hats on the
specification of the rarcar ■~e-.n (*)

The syndicate-leased department method of distribution is analogous
to the centralized distributive mechanisms which have developed in other
branches of the retail trace. Syndicates first began to be a factor in
the millinery industry about 1920, but the period, of their great growth
dates from "bout 1925 or 1927. At the present time about SO per cent (**)
of all lillinery produced in the United States passes to the ultimate
consumer through syndicate— op ere tec" deportments.

1 . Causes for Growth of S'^nc "icy te~.

There are a number of reasons Tor the growth of this form of ner-
chandising. In the first place, it is in line - 1th reneral economic ten-
dencies tovrard centralis ':io ■ and. ma.ss distribution. In the second place,
it is a result of the specialized problems inherent in millinery distri-
bution. The management of a milliner;'- department reouires special ability
in order to maintain the necessary reputation for style and in order to
avoid ruinous losses in absolescent merchandise. The rise of the syndi-
cates has been in lr.rge part cue to t i Inability of man-"- department
stores to cope with a specialised men ment problem. Financial diffi-
culties of department store s accelerated the growth of the system curing
the depression. The definite rental offered bv the syndicate wa.s an at-
tractive inducement to a store faced -Ita declining volume and possible
bankruptcy.

Today, almost half of all department stores in the country lease
their millinery departments. (***) lillinery departments are, together
with beauty parlors, the most commonly leased, departments. A survey in
1928 by the National Retail Dry Goods Association indicates that, of the
stores leasing departments, 55 ->er cent, lease their milliner' departments,
and 51 per cent their beauty parlors. Shoes are third in ranking, 37-g
per cent of the stores leasing this department. (****)

The leasee department sv&tem offers lecidec advantages from the
management standpoint. There are, first of all, the very great economies
of large scale buym -. This, to • bn r ' ith the fact bhat the bargaining
power of the syndicate is considerably greater than that of the average
manufacturer, enables the syndicate to purcho.se its goods at extremely
favorable rates.

(*) Seligman, op. cit. page 24. If the contract system ever develops
in this industry, it will be g result of this >rocesc. The development
will, however, be retarded bv the influences discussed above under "The
Absence of Contracting. "
(**) Seligman, op. cit., are 28.
(***) Seligman, op. cit. page 20.

(****) Data, cuoted in an unpublished paper of the Code Authority, enti-
tled "Syndicate Operation of Leased Departments."

9749

-44-

In the merchandising of millinery, one of the greatest -problems is

the obsolercence of stales and oor.seouer.t losses through nark-dorms and un-

moveaole -oo^s. The syndicate system -oartially answers' this problem.

Co, trolling departments in a number of localities, it is possible to t^ans-

fe1* goods from one point to mother, in many cares avoiding mark-&OT?ns

altogether, and in most cases reducing the extent of the mark-down. This

is one of the greatest advantages of the syndicate system over other

types of milliner"- distribution.

*

The syndicate is unquestionable a highly efficient form of distri-
bution. Little advantage therefrom, however, accrues to the industry.
On the contrary, the industry profits less under the new arrangement
than it did under the inefficiencies of the old system. The great size
of the syndicate, as compared ••ith that of the average manufacturer,
and the syndicate's ability'" to -play one manufacturer off against another,
results in most of the benefits falling to the former. The situation
closel"" mrallels that obtaining bet. een management and unorganized
labor. Great discrepancies in bargaining power make it possible for one
of the parties to dictate the terms of an- contract. As labor's solution
to the problem was unionization, so the industry's solution is organized
bargaining. The most promising means would probable lie in the develop-
ment of coo-oera.tive distribution, retaining the efficiencies of the s,rn-
dicake system, but reserving to the industry a fair share of i.ts aovanta-

2. Geographical Distribution of Leasee" Departments . ( *)

In the ten largest cities of the United States, the ratio of store-
to sync" i ca fce-ouera tec departments is about two to one. The favorable
position of the store-operated department in this case, is evidently due
to the proximity of such large cities as Few York, Philadelphia, and
Baltimore to the principal manufacturing center. In the second ten
largest cities, however, the ratio is about t'-'o to one in favor of the
syndicate-operatec department, ark in 4? of the first 93 ranking cities
(not including Hew York, Newark, Philadelphia and 3altimore) the ratio
is aoout seven to three. In cities of less than 100,000 population, the
dominance of the syndicate is even more pronounced.

In following down the line from the first to the ninety-third city
in rank, it is found that the percentage of syndicate-operated depart-
ments tends to increrse fo^ cities '"ith population of less tiian 300,000.
In cities of population in excess of 300,000, ".'ashington, Pew Orleans
and Seattle stand out as consisting almost entirely of leased departments.
In cities of population from 100,0^0 to 300,000, in almost evei"r case
where data were obtained, s^ncicr tes handled a major n(,rt of the millin-
ery business. In Oakland, California; Houston, Dallas and San Antorio,
Texas; Oklahoma City and Tulsa, Oklahoma; Atlanta, Georgia; Birmingham,
Alabama; Fort "rme and Evansville, Indiana; New Haven and Hartford,
Connecticut; Chattanooga, Tennessee; Wichita, Kansas; and Peoria, Illinois,
the distribution of rnillinerv is pr; ctically confined to syndicate-opera-
ted departments.

( *) The data, included in 1 i ction are drawn from r^.n unpublished waper
of the Code Authority, entitle' "S; tent of Leasing of Millinery Departments
in the United States."

9749

- 45-
Th e South has proved to be a particularly fertile field "or the
growth of syndicates. Millinery departments in the District of Columbia,
Georgia, Alabama, Tennessee, Louisiana, Texas, and Oklahoma are almost
entirely in the hands of syndicates. In Missouri, Michigan, Indians,
Illinois, Wisconsin, Ilinnesota, and Kansas a goodly share of the millin-
ery business is handled by leased departments. In the extreme Ease and
Northeast, Connecticut, Massachusetts, and sections of Hew York State
and Pennsylvania stand out. In the Far "Test, California, "".'ashir.gton,
and Oregon indicate extensive syndicate control.

C. DISPLACEMENT OF J03B37.S AND SALESMEN

An inevitable consequence of the development of syndicates has
been the displacement of jobbers and salesmen. Many present day manu-
facturers, particularly in the South, Southwest, and. Midwest, were for-
merly jobbers who as a result of a serious decline in their wholesale
business, turned to manufacturing. Many of the problems arising under
the Code grew out of the fact that such firms, being ne\ to production
and rot having at hand a sufficient supply of skilled labor, had diffi-
culty in maintaining the specified labor standards, No data esist on the
extent to which the jobbing function has reclined in importance, or the
extent to which former wholesalers have turned to manufacturing or gone
out of business alto -ether. It is nevertheless apparent that this func-
tion has lost in large degree its former preeminence, that many jobbers
have rone into manufacturing, and that these developments have been
nrimrrl™ the result of the rapid rise of buying syndicates.

Tot only have salesmen been displ; ced by syndicates dealing directly
with manufacturers, but also by preempting their former outlets. It has
been estimated that the syndicates have destroyed at least 35 aer cent of
the salesman's potential market. (*)

There are in the millinery LncJustT today probabl-- five times as
many salesmen as it can reasonable support. (**) In addition to the
growth of syndicates, other factors have contributed to the present ex-
cess. A marked tendenc1-- toward specialization in certain branches of the
industry lins brought about a situation whereby the lines produced by in-
dividual houses are inadequate to permit their salesmen to display the
wide variety of types that are required by the fair sized modern outlet.
Of emial importance is the fact that, coincidentally with the curtailment
of the field for salesmen, tne supply has increased not only relatively
but absolutely. Bankrupt manufacturers and others formerlv connected
with production have, with the loss of their businesses, gone into sales-
manship, filth the heavy decline in the industry during the last decade,
a very considerable group of this type has been created.

As a consequence of this excessive oversupply, the standards of
salesmanship have deteriorated. In many cases salesmen are onl^ in the
business until they can find something more to their liking. Manv of

(*) "Salesmen in the Millinery Industry," an unpublished paper of the
Millinery Code Authority.
(**) I old.

'9749

-46

them operate or a free lance basis. As aclass, this type of personnel
can contribute little to the orderly development of the business. On the
contrary, they constitute an element of instability in an already badly
unbalanced industry. Gooo salesmen., in ^hon joth employers and customers
have confidence, nave it in their power not onlv to promote stable re-
lations between oroducers end distributors, but, because of their know-
ledge of current conditions, to assist the manufacturer materially in
the formulation of his business policies. The industry has suffered a
serious loss b~r virtue of the glut on the market for salesmen, the loss
of its best salesmen to more lucrative lines, end the impairment of the
morale of those who have remained.

An effort Has mace under the Coc'e to relieve this situation when an
organization of salesmen requester that provision be made for a minimum
i""age of $35.00 "oer Tree':' f or salesmen. The object of this minimum was
not so much a guarantee of compensation as an instrument to force manu-
facturers to weed out their inefficient sales staffs and thus reduce the
number of salesmen to a figure more nearl"r commensurate with the actual
needs of t .e industry. Unfortunately, the movement died a-borning for
lack of bargaining ability on the part of the salesmen's organization,
"•fee" the TDro-oosecl provision been adooted, the results might r:ell have
been salutary.

9749

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VI. ORGANIZED LABOR

A. LABOR III GENZRAL

1. Principal Occupations.

In the parlance of the industry, millinery workers arc. divided into
two principal catagories, "productive" and "non-productive". In the
first category are included "blockers, cutters, operators, and trimmers,
and in the second, "factory" help., office employees, shipping crews,
foremen and designers. The tern "factory" help is a loose one, em-
bracing miscellaneous, non-skilled employees who in various ways
assist the "productive" workers. The other terms are sulf-exolan-
atory. (*)

2. Apportionment of Employees hy Peculation.

Almost half 'of all employees arc trimmers, a little less than
one-fifth operators and a little more than one-tenth blockers. The
least numerous group are the cutters, who in' 1934 accounted for
less than 2 per cent of all workers employed. "Hon-productivc"
workers aggregate at) out 22 per cent of all employees. (**)

(a) Variations Between I.Iarkets. •

There are significant variations in the relative proportions
of these employee groups as "between markets and between seasons.
Thus, the ratio of "blockers in Hew York City is about one in eight
as compared to a ratio in Chicago of about one in sixteen. Operators
in Hew England account for between 23 and 24 per cent of all em-
ployees; on the Pacific Coast, they account for only 15 per cent,
and in Hew Jersey for 28 per cent. (***)

These variations are primarly. the result of two factors. In
the first place, different markets specialize in certain types of
hoadwear. Thus, New York City accounts, proportionately, for a
greater volume of blocked hats than other markets; blockers, there-
fore, are relatively more important. In markets such as those on the
Pacific Coast which specialize in trimmed hats, the proportion of
trimmers is unusally large. Of greater importance is the supply of
labor. Where the supply is limited, the shop must be so organized
as to include a greater proportion of less skilled employees. It
is this labor supply, in fact, which largely conditions the type
of hat to be produced.

y. , — .

(*) For a formalized definition of the terms "blocker", "cutter",
"operator", and "trimmer", see Article II, Code as ame; ded
November 9, 1934.

(**) See Table 23..

(***) See Table 28

9749

-48-
("b) Variations between Seasons.

Squally significant variations occur as between seasons.
In New York City, at the height of the 1934 spring season, 49 per
cent of all employees were trimmers, 19 per cent operators, and
10 per cent "blockers. At the height of the fall season, the
proportions had changed to a "bout 46 per cent trimmers, 16 per
cent operators, and 14 per cent "blockers. In "both seasons, cut-
ters accounted for one and one-half per cent. These variations
arise from the fact that trimmed hats predominate in the spring
and "blocked hats in the fall. (*)

3. Wages .

The most highly paid employees in the industry are the
"blockers and cutters whose average earnings (over the entire
country) in 1934 were in excess of $1700. Operators in 1934 av-
eraged slightly less than $1400., and trimmers $762. There are
wide discrepancies in the earnings of employees in various sections
of the country. The average annual wages for all employees in Hew
York for 1934 was $1,209. as compared with an average of $931. in
the Uc-rth Central, $894. in the West Central and $332. in the South-
ern States. (**) These discrepancies are due partly to variations
in the skill of labor and partly to the presence or absence of
effective collective bargaining. The data quoted covers a period
during which the Code was in operation. Prior to the Code the dis-
crepencies were considerably greater. (***)

3. COLLSCTIVS BA.3GAHJHTG

1. Historical Background.

The first collective agreement in the millinery industry was
signed December 30, 1915. (****) Periodically thereafter new agree-
ments were written, until 1922, when, largely as a result of the post-

(*) See Table 29

(**) Sec Tables 30 and 36

(***) See discussion under "Pre-Codc Conditions", Chapter II

(****) Unless otherwise specified, the data set forth in this
section was compiled by Joseph 5, Bro&insky, Labor
Studies Section, largely by means of personal re-
search in the files of the millinery union in 3Sew York
City.

9749

-40-

war depression, the union was unable to secure a renewal. Collective
bargaining was not reestablished until 1932.

Since that time, the -power of the union-ha-s-~^ro-'"n -ranidly. In early
1932, about 30 per cent of the workers — -practically all of them in
New York City — were under collective agreement?..' By'-tne summer of
1934, the union controlled nractically 100 p?r cent of. the New York
market and had a strong foothold in most of the other important markets.
About 90 per cent of all workers in the industry today are members of
the union and work und;-r the -protect ion *••£ >a collective agreement. _

2. Structure of "the Union. /

The United Hatters', Cat) and Millinery Worker^ ' , International Union,
although affiliated with the American Federation of Labor, is of the in-
dustrial union tyoe. As indicated by its name, it1 embraces within its
member shin not only millinery workers but hat and can workers as well.
The present organization is a result of a recent amalgamation of the
United Hatters of North America and the Can and Millinery Workers' Inter-
national Union. The active affairs of the minlinery workers today are
handled by the "Can and Millinery Department" of the amalgamated organi-
zation.

The millinery workers are exceptionally well led. Their President,
Mr. Max Zaritsky, is a union official of really stateman-iike dualities,
who occupies in the ranks of organized labor a nosition far more important
than the size of his union would otherwise warrant. To him must be given
major credit for the ranid growth of the. union after 1932. It is not too
much to say that, under his leadership, the union, by its effective control
of working conditions in all' the important markets, exercises the most
notent stabilizing influence at work in the industry today.

C. ARBITRATION OF DISPUTES,

I . Preliminary.

Provision of machinery for the peaceful settlement of controversies
between emnloyees and employers has been a feature of collective bargain-
ing in this industry from the beginning,,. ISach collective agreement contains
a nrovision for the election of a shon committee. Whenever a 'worker wishes
to register a grievance he consults the chairman of this committee, who
brings the matter to the attention of the management. If the complaint
can not be settled by the shop chairman and the mgtingement, it is referred to
the business manager of the union and a representative of .the employer's
association, who in turn attempt to reach an amicable settlement. In
the event settlement is still impossible, the entire case is submitted
to a board of adjustment.

9749

-50-

t

2. The Adjustment Board for Hew York City.

(a) Membership.

First established in 1915, the Millinery Adjustment Board
for New York City is composed of five representatives of em-
ployers, five representatives of labor, and an impartial chair-
man. Representatives of management and labor receive no com-
pensation for their services as members of the Board. Joseph
Barondes acted as impartial chairman from 1915 to 1917, when
he was succeeded "by Dr. Paul Abelson, who_ has served until the
present. The Board maintains separate offices, supported equally
by the associations and the union.

(b) Procedure.

Complaints submitted to the adjustment agency may "be heard
either by the full membership of the Board or by the impartial
chairman alone. All pa#-ti*es to the dispute are required to be
present, and lengthy informal arguments are permitted. If the
dispute involves a technical matter — such as the determination
of piece-rates — the impartial chairman, in an investigation
supplemental to the hearing, may utilize the services of ex-
perts.

After sufficient information has been obtained relative to a
complaint, the Board, through' its chairman, usually suggests an
adjustment in the way of a compromise. If the proposal is un-
satisfactory to the parties, the Board hands down a formal decision.
In order to avoid the establishment of precedents, such decisions
are not supported by argument.

(c) Enforcement of Rulings.

Decisions of the Board are binding upon both employers and
omployecs. If the empli^r refused performance within the time
limit fixed in the award, he loses the protection of the collective
agreement. In practice, this usually means a strike. The decisions of
the Board arc also enforceable in courts of lav/.

(d) Cases Handled.

■ During the years 1932-1934,' the Board held 489 hearings and
handed down 271 formal avra-rds. During the first six months of
1935, 190 hearings were held and 130 awards were ma.de. The major-
ity of cases handled by the Board involve piece-rate determination,
equal division of work, discharge and alleged discrimination, and
substandard workers.

In addition to his work as an interpreter of existing terms
of employment, the impartial chairman assists in the negotiation
of new collective agreements. Agreements in New York expire in
January. Some time in advance, conferences are held between
representatives of the association and the union. The impartial

9749

-51-,

chairman presides at such conferences, and while he has no vote
his influence is considerable. He is also often required to act
in an advisory capacity in other connections. By and large, the
impartial chairman is available for any emergency within the scope of
industrial relations,

3, Settlement of Disputes Outside Hew York City.

Collective agreements for other markets have usually established
arbitration machinery similar to that for Hew York. The adjustment
boards for Chicago, Philadelphia, St. Louis, Cleveland, and Milwaukee
furnish the best examples. In each case, the procedure is similar
to that obtaining in New York, though there are minor variations to
meet peculiarities in local conditions. The number of members is
usually smaller, though all boards are bi-partisan and all presided
over by an impartial chairman. These boards, having all been recently
established, have not as yet assumed the commanding position of the
New York board, nor do their impartial chairmen exercise a degree of
influence comparable to that exercised in New York by Dr. Ableson.
Nevertheless, in each case the board and the impartial chairmen are
integral parts of the collective bargaining system, and will in time
probably occupy a position commensurate with that obtaining in New
York.

4. Achievements of the Adjustment Boards.

The principal achievement of the adjustment boards has been in
the maintenance of industrial peace. largely because of their effec-
tive operation the number of strikes lias been materially reduced. In
1934, before the boards outside Sew York had been well established, a
total of 26 strikes took place, involving 12,551 workers and causing
a loss in man-days of 274,070. In the first seven months of 1935,
however, the number of strikes was reduced to 16, the number of workers
involved to 3,312, and man-days lost to 64,040. (*)

(*) Bureau of Labor Statistics.
9749

-52-

ChAPTSH II

T.12 I,iILLIIBitf - D2

I. FO^iSJLATIOH 07 THE COlE

... FiE-SOBS SOMDITiai 3

The millinery industry ..ias been in a constant state of decline
for a number of years. It is probable that this decline first began
about 1925, for it was then tnat the introduction of tlie "simple hat"
accomplished what amounted to a miniature industrial revolution . (*)
Unfortunately, however, no reliable data of any kind exists for any
period orior to 1926. There is no census data, for any period prior
to 1927. Trends prior to these dates may only be surmised.

1. Value of Product

In 1933, the industry's value of product totalled >77 ,000,000, as
compared with ll 4 5, 000, 000 for 1931, 5196,000,000 for 1929, and
'5209,000,000 for 1927. In six years, the industry suffered s decline
in its dollar volume of more than 60 percent. It is evident also
that this decline proceeded at an accelerating pace. From 1927 to
1929, value of product fell off by 6.2 percent; from 1929 to 1931, by
26.0 percent; and from 1931 to 1933, by 47.0 percent. Millinery
values declined at a more ra >id rate than values for manufacturing in-
dustries generally. In 1927, tlie "percentage ratio of millinery to all
other manufacturing was 0.53; in 1953, it was 0.-25. (**)

2. Price Ranges

This drastic decline in value of product is primarily a result of
the introduction of several new price range?. (***) ' Prior to the de-
pression, so-called "popular" hats sold for about ';.'■" .00 a dozen,
wholesale, hats selling at ;16. 50 per dozen -were considered cheap.
The picture today, however, has radically changed. Label sales of
the code authority, disclose that 59.5 percent of all millinery produced
in 1934 sold at $12.00 per dozen or less, and 83.7 percent at '524.00 per
dozen or less. 5.9 percent sold at less than >4.00 per dozen. (****)

(*) See infra.

(**) See Table 32.

(***) See Table 33.

(****) 3ee Table 34.

97^9

-53-

Dorae hats are sold as low as )1.60 per dozen and there are r few firms
wiaicj sell regularly at >0.30 aer dozen. A woman's hat whic . "before
the depression was an article of merchandise in a class wit"., shoes has
now reached the point waere it is being widely distributed through such
retail channels as .Voolw'orth' s and Kres^e' s.

3. Causes of Decline

(a) General Causes. The trend toward lower prices in millinery
is due to bet. general and specific causes. In tie first place, the
trend is in 1 ne with a similar movement in other articles of consump-
tion — as, for instance, the displacement of sterling "by silver plate,
solid furniture "by veneered, etc.

"It is net surprising that this tendency should
have left individual's more susceptible to the
appeal of low-priCed millinery, especially if
it possesses some af t.ie features of the ex-
pensive, carefully designed creations. "(*)

The economic depression, of course, has accelerated the movement
toward lower prices. Drastic declines in labor and material costs
have played an important part in making lower ->rices possible. The
relative decline in each of ties? cost elements has been about the
sane. (**) An even more significant result of the depression was the
<*eneral decline in purchasing pewer, which caused the consuming public
to demand ever cheaper and cheaper merc?iandise.

At least a partial explanation of the decline in millinery prices
has been a change in the general Drice level. Prices of all apparel
rose rapidly from 1914 until they reached their leak in 1930. Prices
taan fell rapidly all thrcu^ 1921, and thereafter declined aore grad-
ually until 19,37, when they ■ -"in turned upwari as ■ result of the
business boom. Even at their height, hpwever, prices in 1° '33 and 1939
never reached the levels of tie war prosperity oeriod, and after 1930
there was again a rapid falling off, thus reducing substantially
dollar Scales volume, without respect to any reduction in unit consump-
tion.

(o) Specific Causes. A considerable amount of consumer income
has been diverted fromthe "urease of millinery to the acquisition of
new luxury items. Among the most important of the.se have been
accessories, hosiery, handbags, costume jewelry, cosmetics, beauty
treatments, etc. Expenditures for items otier than personal adornment
-iave had a similar effect on millinery sales. (***)

(*) Seligman, op. cit. , P. 17.

(**) 3ee Table 35.

(***) See ITystrom, Economics cf Fashion, 3. 441,

9749

-54-

The most important cause for the decline in millinery orices, how-
ever, has been the simplification of styles. The simple hat, which
came into vogue about 1925, required much less expenditure for raw
materials and considerably less labor. 5reat outlays for flowers,
feathers, bows, and buckles were no longer necessary, and hats without
such ornamentation could be produced with a much, smaller working force.
The intensity of competition lias kept prices down to the level of
costs, and even below. (*)

4. Effects of Decline.

The demand for millinery is not greatly dependent upon price.
Drastically lower prices have not brought about, so far ps may be
discerned, any appreciable increase in unit sales. Consequently, the
decline in prices has been accompanied by a similar falling off in
number of establishments, employment, and wages.

(a) Number of Establishments.

In 1927, according to tie Federal Census, there were 1148
establishments in the millinery industry. This number increased to
1,293 in 1929, but declined again to 1,129 in 1931. By 1933 the
total number had fallen to 334 — a decline of 35.5 percent. (**) No
data on mortality as such are available, but the foregoing indicates
that it must have been enormous.

(b) Employment.

Using the 1923-25 average as a base, employment in the in-
dustry fell from 105.7 in 1923 to 91.3 in 1930, to 83.7 in 1931, to
77.3 in 1932, and to 75.9 in 1933.(***) In actual numbers, employment
fell from 33,311 in 1927 to 22,574 in 1933. This rate of decline is
about equal to that recorded for manufacturing industries generally. (****)
In addition to actual unemployment, there was a creat deal of part-time
employment. Whereas the ratio between the index of employment and the
index of payrolls (*****) for 1923 was 105.3 (base year, 1929), the
ratio in 1933 was only 63.2. The difference between this figure and
100.0 indicates the extent of part-time employment.

(*) F ' ■ discussion of the revolutionary effect of the simplici-

cation of styles, see "200,000,000 "forth of hats," Fortune
Magazine, January, 1955.

(**) See Table 13.

(***) See Table 22-A.

(****) See Table 36.

(***■*) See Tables 26 and 27.

9749

-55-

(c) Wage s .

Earnings fell off to an even greater extent than employment.
Using tlie 1933-25 average as a oase, payrolls declined from 113.9 in
1927 to 53.4 in 1S33. As against a total wage bill of I'G.GCO.OOO
in 1937, millinery workers received only ,>31,^00,000 in 1933. This
decline was greater proportionately than that recorded for manufactur-
ing industries generally. Average annual wages during this same period
fell from $1,405" to 3900. The ratio of wages to value of product,
however increased from 22.3 in 1927 to 26.3 in 1933, indicating that
wages did not decline as rapidly as the industry's dollar volume. (*)

5. Disproportionate Incidence of Decline.

Tie decline in value of product, employment, and wages was by no
means uniform throughout the country. In 1929, 64.4 percent of the
industry's total value of product was produced in the State of Hew York,
and in 1933 only 60.3 percent. In the meantime, the snare of business
going to Illinois increased from 10.2 percent to 11.6 percent, that
going to . lassachusetts from 2,6 percent to 3.3 percent, that going to
Georgia from 1 percent to 2 percent, and that going to Texas from 0.9
percent to 1.5 percent. In addition to Hew York, States whose share
in the total business decreased included California, Pennsylvania,
Wisconsin, Ohio, and Washington, (**) An especially good example of
the rise of new markets may be found in the case of Hew Jersey. As
against a decline in dollar volume of almost 63 percent in New York,
dollar volume in II -v Jersey actually increased. In 1929 there were
only 13 establishmi its in the entire state; in 1933 there were 41 —
an increase of more than 320 pervent. An overwhelming majority of this
group had previously been located in New York City and had moved
across t.ie river in search of cheap labnr. (***) In other v/ords, there
had set in a definite tendency for the industry to migrate from its
older and more established centers.

'.7ages constitute an unusually large portion of total cost, and
most of the markets outside New York, because they paid relatively low
wages, had a significant competitive advantage. The average annual
wage in 'New York in 1929 was $1,604, as compared with >1,275 in
Illinois, 151,029 in i/iassachussets, ,21,030 in Hew Jersey, i351 in Texas,
and $771 in Georgia. (****) The fact that in the unionized New York
market the equal iivision of work doctrine prevails indicates that tlae

(>) See Table o 22, 37, and 38.

(**) See Table 12.

(***) See statement of i/Lax Zaritsky, Transcript of ""erring, Proposed

Code of Fair Co .petition for the hill inery .Industry, August 1
and 2, 1953, page 203. See also statement of representative
of New Jersey manufacturers, Transcript of hearing, Special
1,111 inery Board, January 9-12, 1934.

(****) See Table 39.

-56—

discrepancy between wages in this and other markets is even greater
than that set forth above. To a certain extent, the disproportionate
earnings of employees is accounted for "by variations in their skill.
V/hile no data exists on which a scientific compf rison might "be made
of the average abilities of workers in different markers, it is highly
unlikely that the discrepancies in skill were as great as those in
wages. (*)

The tendency of business to gravitate to low-wage markets was
increased by unequal rigidities in the wage structure. As deflationary
influences set in, manufacturers sought desperately to reduce their
costs. It is difficult and often impossible to effect substantial re-
ductions in overhead costs; material costs, while subject to great
variation, are at any given moment substantially the same in all
parts of the country, and in any event not subject to control by the
manufacturer. Labor, in consequence, bore the brunt of the de-
flationary influences, and widespread ware reductions were the order
of the day.

"But the reduction has been neither universal nor uniform.
In some centers and among certain tynes of manufacturers wage
scales have been fairly well maintained. But other employers
whose size or type of biisiness permitted lo'rer wages or who
were loca/ted in a territory in which labor was susceptible to
the 'chiseling' process, were able to set prices on the basis
of low labor costs. It is the spread of this competitive
pressure toward lower wages which has largely demoralized the
industry." (**)

In New York City, where the greater part of the industry is
located, wage rates were high and hours short. Labor, because of its
strong and well-organized position, was able to prevent any sub-
stantial reduction in rates or increase in hours. In non-union
markets, however, this inflexibility did not exist to any thing like
the same degree. TCage rates were cut and hours lengthened practically
at the will of the manufacturer. As a result, New York manufacturers
found themselves in a very unfavorable position as compared with manu-
facturers located in non-union centers.

(*) This conclusion is borne out by general experience in the

administration of the Millinery Code and by the data obtained
on a similar question by the Coat and Suit and the Cap and
Cloth Hat Commissions. In the reports of both these Commissions
it was demonstrated that traditional wage differentials between
markets were considerably in excess of differentials in skill,

(**) Seligman, op. 12.

'"';■'

-57-

Tlie only possible alternatives for most manufacturers compelled
to maintain high wage standards were migration to non-union areas or
sales below actual cost of production. When the first alternative
was followed, labor in the organized market was left stranded; the
resr'.lt of the second was often bankruptcy. It is probable that the
bankruptcy figures of 20 per cent in New York and 8 per cent in other
parts of the count ry, claimed by the Women's Headwear Group, were
not far from wrong. Certainly there was a much higher bankrup t cy
rate in Hew York than elsewhere, and this higher rate is doubtless due
in large part to the unfavorable position of the unionized New York
market.

In this connection it is significant to note that these shifts in
production have added to the industry's burden of overhead, and that
this burden is largely borne by the markets whose production had
declined. "... The industry's overhead has been augmented by the
rise of new production centers . . . The equipment and working capital
(of those located in declining markets) have been seriously injured
and even rendered useless." (*) Thus to the disadvantage of a higher
labor cost was added an increasing overhead.

Ilembers of the industry were compelled by these conditions to
employ unfair and uneconomic business practices. Although prices had
already reached abnormally low levels, secret rebates disguised as
advertising allowances became common. The desire for business and
the need for ready cash brought about the allowance of exorbitant
cash discounts, ranging in many instances as high as 15 per cent. The
downward spiral in prices was so rapid, and these and similar practices
became so widespread, that it w; s impossible for members of the industry
to know at any given time the actual prices at which millinery was being
sold by their competitors, thus further demoralizing an already harassed
market. 3y the spring of 1933 the industry was on the verge of com-
plete collapse,

6 . Effect on Related Industries.

The decline in the purchasing power of millinery workers tended
to depress the market for consumer's goods generally. Industries and
trades supplying the milliner1/ industry suffered severe depreciation
in the valr.e of their goods and heavy capital losses from consequent
failures, Wages and employment in such trades and industries suffered
accordingly. The effect was cumulative and ever-widening. Losses in
one industry were reflected in industries immediately connected with
it. The lowered purchasing power of each labor group resulted in
further losses in other lines.' The net effect was a serious and wide-
spread reduction in the interstate commerce of the nation. The

(*) Ibid., 3.

Q-XAG

-58-

depressed condition of industry caused landlords and the holders a£
realty mortgages and securities to suffer great losses. Landlords
could not collect their rentals, especially when bankruptcy courts
discounted 'claims. Manufacturers, .having lost their credit ratings,
withdrew their bank deposits- The Government suffered a curtailment
in the amount of ta::es collected. ■ . .

Proportionately, the millinery industry played a comparatively
small part in the general economic collapse of early 1933. But it
did contribute to that collapse, and the. extent of its own internal
disorganization was even greater, relatively, than that which
generally obtained.

3, DEVELOPMENT OF THE CODE PRIOR TO PUBLIC HEARING

1 . Associations in the' Industry.

(a) Associations in General. The extent of disorganization
within the Industry is strikingly illustrated by the number of rival
trade associations which antagonistic groups have created to protect
their individual interests, A number of attempts have "been made to
forge an industry-wide association. But all such attempts — incliiding
the national Millinery Council, the most notable of them — have "oesn
remarkable only for the completeness of their failure. The powerful
centrifugal force of these mutual antipathies was later to make itself
felt in the Code Authorit3r and to necessitate unusual treatment on the
part of the National Recovery Administration.

Roughly, the industry is divided on three main lines of
interest - type of labor relationship, ^rice range of product and
geographical location. Associations tend to build themselves up
accordingly. There are associations whose primary purpose is that
of bargaining collectively with organized labor, others whose prin-
cipal objective is the protection of manufacturers in cerjbain price
ranges, and still others whose raison d'etre is the furtherance of
the interests of particular markets. In some cases a single associa-
tion may combine all these purposes, except, of course, such as are
mutually exclusive. Some of the larger organizations also act as
credit-clearing agencies and perform other normal association func-
tions. The Women's Headwear Group is perhaps the best example of
an all-around trade association in the industry, but it is largely
confined to Hew York City. At one time or another between June, 1S33
and June, 1935- no less than 23 associations existed within the
industry. Many of these were created to represent small geographical
groups before the Code Authority and ERA. Since the invalidation of
NRA, most of such associations have disappeared.

(b) The National Millinery Council, The proponent association
of the Millinery Code was the National Millinery Council. About nine
months prior to the passage of the National Industrial Recovery Act,
the. industry had reached such a state of disorganization that a
spontaneous movement had developed looking toward concerted remedial
action. It was not, however, until the Recovery Act began to take

9749

-59-

de finite forn in Congress that the movement progressed "beyond the
conference stage.

The national Millinery Council was formally organized May IS, 1933,
It was an association of associations; in other words, its membership
was made up not of individual manufacturers, hut of organized groups.
In addition to the millinery industry proper, the Council also em-
braced associations within related industries and trades — as, for
instance, distributors, importers, supply houses, manufacturers of
flowers and feathers, etc. The lopping off of thes.e. extraneous
elements was to cause considerable confusion when it became apparent
that, for Code purposes, related industries and trades were to be
given separate treatment.

The Council claimed to — and probable did, prior to the public
hearings — represent about 95 per cent of the New York market and
about 80 per cent of the entire country. (*) The principal associa-
tions of millinery manufacturers composing the Council were the
Women's Headwear Group, the Eastern I.Iillinery* Association, the
National Association of Ladies Hatters (all of New York), the Midwest
Millinery Association (Chica-..©), and the Philadelphia Hat Manufacturers
Association.

The chief executive officer of the Council was Mr. Max Amberg, a
milliner?/ manufacturer whom the industry during the dark days of early
1933 had proposed to make a "dictator. " The general counsel, who was
to play an important part in the first months of the negotiations on
the Code, was Mr. Sylvan Gotshal. Other important figures included
Messrs, J. E, Heifer of the Women's Headwear GrOup, L. Shirley Tark
of the Midwest Millinery Association, J. A. Farley of the New England
Millinery Manufacturers and Jobbers Association, N. J. G-arfunkel of
the Eastern Millinery Association, and Earl M. Earrington of the
National Association of. Ladies Hatters.

The fatal weakness of the Council lay in the fact that it
attempted to bring together factions within the industry without
sufficient recognition of deep-seated and traditional antagonisms. It
was soon to become apparent that the Council was little more than a
rope of sand,

2, Early Code Proposals.

In the formulation of the original Code such matters as fair trade
practices, administration, hours of work, and even secondary labor
provisions were scarcely discussed. The early history of the Code
must therefore be traced in the evolution of the wage provisions
relating to skilled labor.

(*) See discussion of representative character of the Council in
Millinery Code History, p. 9, First Edition.

?749

-50-
On July 5, 1933 a draft of a proposed code, heavily marked
"COHFIDEHTIAL" was submitted to the author in Hew York by Ilessrs. A.iberg
and Gotshal of the National Iiillinery Council, for comment and sug-
gestion. This draft provided for a 35-hour five-day week, and minimum
wages ranging from $14.00 to $43.75 per week according to occupation. (*)

This draft was almost immediately withdrawn. The Council as
. originally organized was composed of four associations whose member-
ship was largely concentrated in Hew York City and for the most part
having contractual relation with the millinery union. They were
naturally anxious that the code specify wage minima fairly commensurate
with their own commitments. In the meantime, however, the Council
had greatly extended its membership through the adherence of groups
from all parts of the country. With the influx of these new elements,
most of which were non-union, the balance of power had shifted and
the original proposals were perforce withdrawn. (**)

A completely revised set of proposals was formally submitted to
ERA on July 18, 1933. Its pertinent provisions called for a 40-hour
week, with a substantial allowance for overtime, and, as to wages that

"Minimum wages shall be paid to all employees at the rate
of 35(* per hour for Hew York City; 323t^ per hour for Chicago
and 30^ per hour elsewhere in the United States of America,"

"The- industry recognizes that certain operations are
classified as skilled and certain operations as semi-skilled and
that foregoing minimum wage has no reference to such classes to
whom higher wages shall be paid." (***)

3. The Public Hearing.

Vigorous opposition to the Council's revised wage proposals
developed at the public hearing. The Uomen's Headwear Group had
resigned from the Council when the "Confidential draft" was withdrawn,
and at the hearing presented a Code of its own, calling for classified
rates ranging from 35 cents to $1.00 per hour. A third Code, specifying
minima ranging from 70 cents to $1.30 per hour was proposed at the
hearing by labor. (****)

(*) Articles II and III, "Confidential Draft of Proposed Code of
Fair Competition for the Millinery Industry, " Docket of Code
Ho. 151, Volimie A, Central Records Section.

(**) The .'--cts set forth above are drawn from the writer's personal
experience. They may be verified by reference to Docket of
Code Ho. 151, Volume A, Central Records Section.

(***) Docket of Code Ho. 151, Vol. A, Central Records Section.

(****) Transcript of Hearing. Pro-posed Code of Fair Corn-petition for the
Millinery Industry August 1 and 2, 1933; pp. 109 and 173.

9749

The lines were clearly drpwn over the issue of classification.
The industry was split into two warring catpu, union and non-union,
and no compromise "between them appeared possible. Litvio «oinS ideration
was given to specific proposed rates, and practically the whole of tho
hearing was given over to debate on the principle of occupational
minima as opposed to a single minimum. Hardly any attention was paid
to the other provisions proposed. So far as tangible results were
concerned, the hearing accomplished little beyond inflaming the
passions of the two factions.

9749 -61-

•b<J-

FROI.i PUBLIC HEARING TO FIHAL APPROVAL

1. "The Semi-Final Draft."

Subsequent to the public hearing, a series of conferences were
held in Uashin.. ;ton and her/ York, culminating in an all day and evening
session in Washington on Augus't 16. As a result of this latter conference,
Deputy Administrator Earl Dean Howard formulated a so—called "Semi-Final
Draft," in which the principle of classification was recognized and
concessions made to the non-union markets in the form of reduced minimum
rates. (*) The provisions of this draft were concurred in, though rather
reluctantly, b" the Deputy's advisors. As to the merits of the comrpo-
mise, Deputy Howard had this to say:

"It is satisfactory to nobody, including myself. However, I
believe that it represents the best thought that up to fete we
have "been able to evolve, that is to say, it will probably raise
the least objection in general from all parties concerned of any
draft that we have yet seen." (**)

This attempt at compromise received the approval of only two groups,
the Eastern Ilillinery Association and the National Association of Ladies'
Hatters. (***) It was vehemently opposed by all the non-metropolitan
groiips on the ground that it recognized the principle of classifica-
tion.(****) Opposition no less vigorous came from the Women' s Headwear
Croup and from the Union; satisfaction was registered, at the recognition
of classification, but objection was made that the rates set were far
too low. (*****)

2. Deadlock

Ho further action was taken during the remainder of August. The
Deputy's office, however, was flooded with protesting telegrams, letters,
and briefs from all parts of the country. About September 1, 1933 the
Deputy addressed a memorandum to the Administrator in which the following
statements were made:

(*) Undated memorandum from Deputy Howard to Administrator; circa Septem-
ber 1, 1933. Docket of Code Ho. 151, Vol. B-2, Central Records Section.

(**) Memorandum of Deputy to Cenfersees, August 17, 1933, docket of Code
Ho, 1.51, Vol. 3-1, Central Records Section.

(***) See joint brief of these associations, addressed to Deputy Howard,
dated August 29, 1933. Central Records Section.

(****) See numerous letters, briefs, and memoranda contained in Docket
of Code Ho. 151, Vols. A,B,B-1, and 3-2, Centra] Records Section.

(*****) For objections to Headwear Group, see their undated 3rief,
Central Records Section. For objections of labor, see letters from Mr.
Liax Zaritsky to Deputy Howard, August 1 , L933; Docket of Code Ho. 151,
Vol. B-l. Central Records Section.

9749

-63-

"Political £-nc. other pressure was allied and a bitter struggle
intfolvin. , personalities was inaugurated...

"The effect of this campaign has been to cause the withdrawal of
all proposals and to start labor disturbances in various markets...11 (*)

On Deputy Howard's memorandum, Acting Administrator Hancock made
the following pencilled notation:

11 1 see no solution but to say to the industry that we will
have to impose a code in ten days unless an a0reement is reached
in the meantime."

This brusque advice was never followed through to a conclusion.
Leaders of both factors were advised that an imposed- code would be
forced upon them if they did not quickly come to terms, but this threat
aid little to soothe the troubled waters. As matters tarned out it was
highly fortunate that action was withheld for neither the industry nor
1JRA. at that time was sufficiently conversant with the implications of the
controversy. Without those four and one-half months of bitter struggle
no successful code for this industry could ever have been written.

3. The Deadlock Broken.

The impasse was finally broken by the Millinery Union. Labor
had recognized before anyone else the fundamental basis of the contro-
versy and had been conduct in. since the middle of Au ust a vigorous
caimai.jn of unionization. As a result of that campai n, the union
consolidated its hitherto dubious strength in Hew York City and brou-jht
a majority of manufacturers in Cleveland, St. Louis, and Chicajo under
collective agreement's. 3y mid-September the effects of the Campaign on
the code—making process had become apparent.

Unionization not only removed the objections of these markets to
occupational minima but made them vigorous jrooonents thereof.
Representatives of the Chicago market, for instance, had been during the
summer aiiion., the leaders of the anti-classification faction. Immediately
upon the settlement of the Chicago strike in favor of the union, however,
these same representatives unblushingly swung to the other side and
became outstanding advocates of classification. The Chicago group:-
should not, however, be accused of unwarranted perfidoty. Their iQsition
merely changed with changing circumstances. The union agreements to
which they became bound called for the payment of ..inimum wages .jradod
according to occupation. They were naturally. anxious that similar1
burdens be borne by all their competitors . It was impossible, for the
moment at least, to hope that this result could be accomplished by the
activities of the union. The only other instrument available was the
code.

A second factor which assisted in the breakin of the impasse to
which i.atters hex. come in early September was the submission of new code

(*) Undated memorandum from Deputy Howard to the Administrator ; Docket
of Code Ho. 151, Vol.B-2, Central Records Section.

9749

- - -64-

proposals "by the Women's Headwear Group anc the Union. (*) These wro-
posals specified classified r.ates — for IT f/ York City rangin._ from 70
cents to jI.30 per hour, and for all other uarkets ranging from 60 cents
to .1 .00 per hour.

■ . Th • Qc t obe r A ;r ■' ■- ment

IT"-, o^iations ',/ero resumed on the basis of these proposals. ITo
;reat progress was ..lade, however, until October V, './Ivan in recognition
of the fundamental division of interest between the union anc. non-union
markets the following su .estions were made by Deputy Howard:

"Lot us divide the country into two areas; (l) the large
city area, consistin,, or' per York, Chicago, Philadelphia, Cleveland,
St. Louis; (2) all the country outside of this area. For the •
large city area let the unions and the manufacturers a, ree to-
gether on the scales to be put into the code, por the outside area,
let us adopt the scales proposed in my compromise elan. (A basic
minimum of -IX:. 00 and - sin le clas Ified minimum of ,27. ..0 for
blockers.)" (**)

These proposals were refined in a series of conferences- held in
New York durin the succeeding ten days.. The resulting draft of a code
divided the country into three areas: metropolitan Hew York, "states
who (sic) are now organized or in the process of organization by Labor,"
.and all other portions of the United States. Classified ra.tes were

i tablished for the principal crafts, with a differential between areas
ran/in , from 20 to 25 per cent. These arrangements were agreed to by
the Women's Headwear Group, the Midwest Millinery Association, the Union,
and what remained p£ the Ilil line ry Council. (***)

The code provisions .thus agreed upon contained several features
designed to compose the diff erences- between the Few York and non-New
York groups. In the first place* three areas were established, with
substantial -differentials between ee.cn. IJillin rs being predominantly
female in areas outside Pew York, a special minimum for female milliners
was established, host si , nific;. r.t of all was the provision that the
classified rates were the apply only to 75 per cent of the total number
of workers in 3 ach craft. This proviso came subsequently to be known as
"tolerance'.' . It constituted, in' reality, e reduction in tin specified
minimum-, but it had the virtue of cds.uisin that reduction.

(*) Se it )( j 14, 1937. Signed cc >y on file in Docket of Code No. 151,
Vol. 3-2, Central Records: Section.

(**) Li bter dated October 7, '.' from Ik >uty .Administrator Howard to
Mr. S flvan Gotshal. See also memorandum dated September 26, 1933 from
Deputy Howard to He. Wolman, Labor Advis ry . rd. Both documents in
Docket of Code No. 151, Vol. B-l, Central I cords Section.

(***) Letter from '.. . J. Garfunkel to D< i b Howard, October 19, 1933.
Docket of Code No .LOT, Vol ".B-l, Central ... i Secti n. It should be noted
th< b is time the Coi.u-.cil representee little outside I . ■. York

; • An . nt between the Council and ,the .] s ;a ax1 Group in mid-
October v/i .. lo means as si, nifiicant as a sinti L, . a reement would have
been in mid~Au nst.

.

U65-

At a meetin, in Washin ;ton on October 20, 1933 a complete code
was drafted on tlie oasis of this agreement, imong other things this
conference finally disposed of the hours ouestion. Labor had demanded
c. 35-hour week, and industry (all factions, for once) had demanded -1-0.
A coimromise was reached at 37,,-. (*)

5. Partner Delay

Ehe delegates left this conference expecting the approval of their
code within a few days. They reckoned, however, without the still
vigorous opposition of the anti-classification minority, whose protests
were so mumerious as to make the Administrator extremely reluctant to
^,ive his approval .(**) He therefore directed that the entire question
be reviewed in detail by Deputy Administrator 3. II. Mitchell and
Division Administrator A. D. Whiteside. Both these officials in the
beginning had considerable doubt as to the wisdom of classification.
After .intensive study and many conferences, however, they finally
came round to the view that it was necessary. Neverthless, the propor-
tion of the industry still in op position(***) appeared so substanti .1
that they still hesitated to recommend tliat the code by approved.
Leaders of the pro-classification forces, recognizing the basis of this
further reluctance, took stops to win the definite allegiance of the
St. Louis and Cleveland markets. These . rkets had ori inally been
leaders^amon. , those opposed to classification, out followin their
unionization the vigor of their protests had gradually diminished.
Unlike Chicago, however, they die not switch immediately to a whole-
hearted support of classification. Their remaining objections were not
against the principle, but were directed toward the specific rates
proposed and the failure — to their minds — tc provide a proper
differential.

In order to bring these markets definitely to their support,
representatives of the hew York and Chica. o jroups made overtures to
St. Louis and indirectly to Cleveland. In the course of a series of
conferences durin , the middle of November an a ;reement was reached
whereby rates were fixed for the St. Louis end Cleveland markets
midway between those )reviously established for Chicago and for the
lowest .wage area. This device had its intended effect of adding St.
Louis and Cleveland to the ranks of those agitating for the approval of
the code.

(*) Daily report of author, October 20, 1033, Docket of Code ho. 151,
Vol. 3-1.

(**) See - Dluminous file of protesting letters, briefs, and t elegrams
in Docket . Coe.e Ho . 151, Vols. A, 3, 3-1, and 3-2, Central Records
Section .

(***) The Associations who had assentec to the Code claimed to represent
85 >er cent of the industry. Actually, the - represented only about C5
per cent. See documents on file with ori inal of coele as approved,
Central Records Section.

9749

6 . Final Approval

The code as so modified received the reluctant approval of Messrs.
7'hiteside and G-it die 11 and was 'resubmitted to the Administrator about
December 1. Protesting delegations again descended upon T'ashin .ton, and
telegrams ant. letters flowed in from all parts of the country. All this
did little to overcome the Administrator's original reluctance, and the
Code was again returned to the Deputy with instructions that its life
be limited to three months and that provision be made for a special
board .o consider and pass upon the cl ims of undue hardships which were
sure to arise. On the advice of the Deputy , the date of termination was
fixed at tlay 15, 1954, in order to carry the code through the indurstry's
sprin season. The order of approval was redrafted to embody these two
provisos and the code was a ,ain returned to the Administrator's ofiice.(*)
After several days further delay it was forwarded to the White Rouse
and finally approved by the President of December 15, 1935.

(*) See letter da.cn D< iber 7, 1933 from i... ..;. W. Amber' to Mr
Sylvan Cotshal; Docket of Code Ho. 151, Vol B-l.

97-J.9

-57-

II LA30F, PROVISIONS 03 TH3 CODS

A. OCCUPATIONAL CLASS 1171 CAT I PITS

1. The Provision. The Code as spr> roved

divided the country into four wage regions, designated as Areas A, 3, C,
and D. Area A included Greater New York cud all territory within a.
radius of 50 miles of Columbus Circle; Area 3 included the city of
Chicago, all territory within a hundred-mile radius of the Chicago City
Hall, the States of Pennsylvania and Connecticut, and that portion of
ITew Jersey outside Area A; Area C included the States of Ilissouri, Kansas,
and Ohio; and Area D included all other "^arts of the United Sto.tes.
liinimum rates of pas'- for the four principal crafts were established as
follows:

Area A Area 3 Area C Area 3

Blockers

$1.19

$0.90

$0.80

$0.70

Operators

1.00

.75

,67y

.50

Cutters

1.00

.75

.SO

Killiners

.55

.47i

.45

.45

(*)

The foregoing nrovisions vere substantially nodified during January
and February as a. result of wholesale exemptions granted on the recom-
mendation of the S-oecial '"illinery 3oard. (**) Such modifications vere
for the most oart embodied in the amended Code aoproved ;'ovember 9, 1934,
Wage areas were re-defined as follows: Area A, Greater lew York and all
territory within a 75-mile radius of Columbus Circle, except any part
of Connecticut or li'ew Jersey; Area 3, the States of Illinois, Pennsylvania,
Connecticut, and Hew Jersey; Area C, the City of St. Louis and the
States of Wisconsin and Ohio; Area 3, all other -Tortious of the United
States. The classified minima were revised in the following manner:

Area A Area 3 Area C Area 3

Blockers $1.18 $0.97 $0.85 $0.75

Operators 1.08 .81 .73 .55

Cutters 1.08 .81 .73 .55

Milliners .59 .51 .49 .49 (***)

2. The General Problem of Ua^es Above the l.'ininum

(a) The Theory. The question of what provision to make in codes
for workers In the more skilled classes was one which was never satis-
factorily answered by II3A. The question was an important one because

(*) Article IV, Sections 1 and 3, Code as approved December 15, 1933.

(**) See discussion of Board's work in Chapter III, "Administration of
the Code."

(***) Article IV, Sections 1 and 3, Code as amended November 9, 1934.

9749

-od-
in many industries, particularly'' in the apparel group, a $13.00, $13,00,
cr $14.00 minimum wage could affect only, a relatively small part of the
\ orkers. The •protection of the earnings of the raore skilled workers,
the increasing jf their purch. sing power, a,nd the establishment of fair
competitive labor Costs — in a. word, the achievement rf the purposes
of the Recovery Act — could not in such industries be accomplished by
a basic minimum- ,

(b) Types of Code Provision. Most codes, therefore, attempted to
establish some for.: of wa ;e "irotection for workers in the higher-. .
brackets. Such provisions may be classified under three^ general tynes:

(1) Provisions which placed, their major emphasis
uioh detailed wage schedules or at least
embodied the "irinci^le of basing noints.

(2) Provisions w] Ldh placed their major corohasis
upon the maintenance of previously existing-
diff erentials between employee groups, or upon
some 'other fairly definite type of "equitable
readjustment.''

(o) Provisi :;-'S which contained no definite re- ■
quirement for change, including codes which
contained no provision whatever for wages in
the higher brackets.

About 9 per cent "of the approved codes, embracing about 28 per

cent of all employees, contained provisions, of the first type; about

74 >er cent of the cooesj affecting about 65 per cent of all ern-
es j; f

pioyees, contained provisions of the second type; and about 17 per
cent of the codes, coverin^. about 6 per cent of all employees,, con-
tained provisions of the third type. (*)

Provisions of the third type, of course, offered no protection
to skilled workers. Mary provisions of the ".equitable readjustment"
type established no s'tandard of equity, and practically all such
standard's as were established were so va.gue that it was anyone's guess
what their operative meaning might have been..

"Even bhe phraseology of some of- -the more definite and
e:"jlicit clause? ':'■'■ \ - is none too good, considered as a state-
ment of law. Tpke, for example . . . (those) clauses which look
toward the maintenance of 'existing! or 'long standing' differ-
entials. Sometimes bhf statement is fairly explicit; but in
the great majority of cases, such questions as these arise:
Does this refer to the Lfferentials as they er.ist in a
particular ilantj a re ion or the' entire Industry? Precisely
what dates ioriods arc to :be taken -• a matter of great
importance - as i,hc basis of maintenance? Are the definitions

(*) "' ove the Minimum" an unpublished paper of 1IRA. Central
Records Section.

- 3

-69-

and classifications of occupations in the industry or even in
a give - plant sufficiently clear and sharp to free adjust-
ments from controversy? Are trustworthy records available for
use in any adjudication of the problem?

"Similar issues arise in connection with the maintenance
of former weekly earnings - unless, indeed, this maintenance
is expressed in terms of the earnings of a particular employee,
and in this event the problems of discharge and reclassification
or flexibility of business operations arise.

"The stark fact stands out that mosc of these clauses
represent poor la.w draf tmanship, poor bases of public adminis-
tration, poor instruments of industrial relationships." (*)

The utilization of wage schedules, and to a certain extent basing
points, largely overcame this difficulty of indef initeness. Upon the
whole it may be said of basing points and schedules that they afforded
fairly substantial protection for skilled workers and that they tended
toward an equality of competitive conditions, neither of which may be
said of the "equitable readjustment provision." Schedules and basing
points accomplished these purposes, however, only at the cost of intro-
ducing certain elements of rigidity and a, certain meticulousness of
control which presented difficulties peculiar to themselves. These
difficulties as they presented themselves in the Millinery Code will be
discussed subsequently.

3. The Debate on Classification. The merits and

demerits of classification were so hotly debated during the formulation
of the code, and the device itself is of such importance in any pro-
gram of ecc. omic control, that a brief examination of the controversy
as it presented itself in this industry is advisable.

(a) The Question of Earnings Protection. Organized labor and
unionized manufacturers argued that ". . . if the purpose of the
national Industrial Recovery Act . . . is to be achieved . . . the
Millinery Code must provide for classification." (**) "If ... no
provision is made to raise the wafces of skilled operators and em-
ployees, then the purchasing power of the great masses engaged in the
Millinery Industry will not be increased ..." (***)

After several months' experience with the operation of wage
schedules, spokesmen for organized labor wrote:

(*) Ibid

(**) Statement of Max Zaritsky, Transcript of Hearing, Proposed Code

of ZTair Competition for the Millinery Industry, August 1 and 2, 1933;
p. 173

(***) "Memorandum in opposition to national Millinery Council Code,
etc.", submitted by the Women's Headwear Group, August, 1933;
Central Records Section.

9749

~7C~

"Classification is regarded as one of the very few means
by which the destruction of wage rates can be avoided . . . The
workers in the millinery industry regard classification ... as
indispensable ... to the maintenance of wage rates that will
enable them tc contribute their share in providing that mass
purchasing power which is conceded by all to lie at the basis
of economic recovery." (*)■

Op-oonents of classification, on the other hand, argued that no
definite provision need be made for, workers in the more skilled classes.
The law of supply and demand, it was held, would take care of such
workers and prevent their exploitation by unscrupulous employers. (** )". .
There has always been a scarcity of semi-skilled and skilled labor in the
Millinery Industry which has automatically produced higher rates of pay
for this class of workers. . " (***)

"The principle and economics of the situation are best
served by a general minimum and not by several minimums.
That the minimum does not operate as a maximum is con-
clusivuly shown by the fact, that hecetofore, when we had no
1j. I.R A. law, yet we paid "a higher scale to those deserving
it, than the scale paid to unskilled labor. And what that
price should be, has been determined ^oy the competitive
market for labor and economic conditions, keeping in mind
the base pay. How, with higher wages and income through-
out the nation, and with a higher base pay, wages in our
industry must rise for all classes, and continue to do so." (****)

(*) "Brief of Cap and Millinery Department, United Hatters, Cap

and Millinery Workers ' International Union, in the matter of the
Petition of Hat Corporation of America and John B. Stetson
Company"; July 26, 1934; Central Records Section.

(**) State of Pletcher H. Montgomery. Transcript of Hearing, Proposed
Code of Fail' Competition for the Millinery Industry. August 1 and
2, 1933; p. 154.

(***) Letter dated August 1, 1933 from A. L. Slocum to Deputy Howard;
Central Records Section.

(****) Letter dated August 2, 1933 from L. Shirley Tark to Deputy Howard;
Central Records Section.

9749

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(b) "he Argument on Competitive Costs. mrora a practical stand-
point, the doctrine of equalization of competitive labor costs was of
much more importance than that of protecting the earnings of skilled
labor. Labor, by and of itself, could never have forced the adoption
of classification. ' For that purpose the support of a substantial body
of manufacturers was necessary, and such support was forthcoming only
on a oasis of improving competitive conditions. The union, of course,
was interested in the promotion of this type of "fair competition,"
for on-'. the ability of the organized markets to compete depended the
jobs and earnings of its members. So far as its own members. were
concerned the Union performed this function admirably. But its ability
in this respect was in jeopardy so long as there existed non-union
markets capable of undercutting the higher standards of union markets.
Furthermore it is obvious that the Women's Headwear Group were actuated
not nearly so much by a concern for downtrodden labor in other mar-
kets as by a fear of the competition of such markets.

The advocates of classification complained that they were being
driven out of business "by the competition of low-wage markets.
Tailure to provide for craft minima, it was held, would not in any way
relieve this situation. (*)

"Because of low wage conditions, manufacturers .... in
the outlying districts are able to manufacture and sell mer-
chandise at absurdly low prices, Iianufacturers in the metro-
politan area, in order to obtain business, have been compelled
to sell their merchandise below cost. .

* * * * * * * *

"The Code submitted by the Women's Headwear Group, Inc.,
will eliminate unfair and cut-throat competition becau.se the
scale of wages will bring all manufacturers throughout the
United States nearer to the one level, and thus permit a clean,
fair and open competition." (**)

In view of the philosophy back of much of our tariff legislation -
the protection of American labor standards against low wage competi-
tion from abroad - it is not surprising that an analogy should have
been drawn between the classified wage proposals and the tariff.

(*) See statement of Max Shlivek, Transcript of Hearing. Proposed

Code Of Fair Competition for the killinery Industry.

August 1 and 2, - 1933; P. 106.

(**) Brief of Women's Headwear Group, August, 1S33 - Central Records
Section.

9749

-72-

Anything that holds good for the protection of American industry
against foreign competition "must certainly apply to the protection
of our own states, regardless of where they are situated." (*) "TTe
are ashing and speaking for a protective wage .... to protect
the industry from the low wage sections of the country . , ."•(**)

The answer of the non-union faction to these arguments was,
first of .all, a categorical denial of the premised, ". . . Hew York
labor, though admittedly paid much higher wages, is even at such pay,
"because of its higher productivity, less costly to the manufacturer,"
with the result that "the average percentage of labor cost in goods
(made outside New York) is practically the same as1 the percentage of
labor cost in goods made in New York," and in some instances even
higher. (*♦*)

The entire principle of the equalization of competitive labor
costs was also attached:

"A study of the theory of classification with market
differentials adjusted to the basis of cost of production, if
properly worked out, will result in a uniform labor cost through-
out the country,

. "If a uniform labor cost throughout the country is obtained,
then there is- eliminated any: possibility of, through efficient
management, obtaining lower labor costs 'and at the ■ same time
paying higher wages. In fact, to carry this theory to its
logical conclusion, any improvement in methods or increase in
efficiency of management resixlting in a lower cost of production
in one factory or market might well be termed unfair competition
end the efficient factory or market penalized therefor." (****)

(*) Statement of Joseph E. Heifer, Transcript of Hearing, Proposed
Code of Fair, .Competition for the 1 .'illinery Industry,
August 1 and 2, 1933; p, 117, . "

(**) Statement of Mas Zar'itsky, Ibid., P.

(***) "Statement of Facts and Srief for Manufacturers outside New York,
.August, 1S33; Central Records Section.

(****) "Comments in Regard to Omissions, Modifications, and Additions
to the. millinery Code," submitted by Messrs. Farley and Mont-
gomery, November 7, 3.933; Central Records Section."

9749

-73-

4, Critical Evaluation.

Obviously, the contentions of the opposing factions were "based
on widely divergent economic philosophies. The one we.s "based pri-
marily on the doctrine of laissez faire - let wages "be cared for "by
the "natural" influences of supply and demand. The other was "based
upon the doctrine of the New Deal in general, the NRA in particular -
in the interests of the general good, corrective measures must "be
taken to curb certain destructive tendencies of "natural" economic
influences. If we are to assume the validity of the underlying
philosophy of the Recovery Act, we must also assume the validity of
the position of the Women's Headwear Group and of organized labor.
Why should "natural" influences protect the earnings of the more
skilled classes any more than previously, these same influences had
protected the earnings of the less skilled classes? Approximately 95
per cent of all workers in the industry are skilled. If their wages
were to "be increased and maintained upon a level commensurate with
their skill, and if: the purpose of the Act to increase purchasing
power were to "be achieved, substantially more than a "basic minimum
was needed. In effectuating the declared purposes of the Act, then,
it was necessary that the Millinery Code provide for the classification
of wages.

The theory of classification has often "been criticised, even by
its friends, on the ground that the efficiency and productivity of
labor is to a large extent dependent on the efficiency of manage; lent.
In support of this contention it is pointed out that even within a
single market, labor costs and efficiency vary to a marked degree. The
conclusion is reached that classification cannot "be supported on the
theory of equalizing labor costs.

It is quite true that the efficiency of labor is very largely
dependent on the efficiency of management and that workers of the same
type, and even identical workers, will produce varying amounts in
different plants. Nevertheless, there is such a thing as an average
-productivity which is not dependent upon anything but the workmen them-
selves. Granted that such an average is extremely difficult to
establish; no one will deny, however, that millinery workers as a group
in Hew York are more productive than millinery workers as_ a grouo in
Dallas, to cite a single example.

Equally, no one will deny that a marked advantage in labor costs
would tend to take business from New York manufacturers, and employment
and wages from New York workers, in favor of Dallas manufacturers and
workers. Not that this latter group is any less entitled to economic
opportunity than the former. But they are not entitled to that
opportunity because of inferior standards. The standards being equal,
then the rewards of the game are fully open to those who can win them.

This was the very basis of the Recovery Act. But in the millinery
industry this objective could not have been achieved by a simple
minimum. If "unfair competition" included competitive advantages
accruing from disproportionately low wages paid by groups within an
industry, then, so far at least as the millinery industry was concerned,

9749

-74-

the control of the wares of skilled, workers was essential. And
classification, while it was only one means of establishing such'
control, was probably in this esse the most effective means.
Assuming the validity of the -Recovery Act tfcesis, we must concede the
validity and necessity of classified --ayes in , the i.iillinery Code,

B. THE P3E-RCQEJI SITUS OE SLA SSI? I CATIOH

~~3A experience has indicated that the principle of classification
is by no means applicable to all industries. Even where the wages of
skilled workmen reauire protection and where disparate labor costs
give rise to grave instability, the establishment of occupational
minima is impractical unless the industry involved displays a definite
set of characteristics. Furthermore, classification is but one of
several possible solutions of this particular tyoe of industrial prob-
lem. Assuming the problem, the solution must be determined by the
nature of the' industry itself.

In brief, an industry must display the following characteristics
to be amenable to the application of classified wages:

■(]-) A relativelv high degree of unionization,
(l) A craft system of production.

(3) Standard productive methods, common to all branches
of the industry.

1 . Degree o'f Unionization.

Partial unionization frequently gives rise to great disparities
in labor costs as between markets and is thus an important factor in
creating conditions requiring remedial action. In order to apply, the
device of classification, however, the union must have a strong hold
on a substantial portion of the industry* Under FHA, non-union
industries (such as textiles) and non-union markets (such as the
Southern millinery market) fought to the last all attempts to introduce
wage schedules. Unionized industries (such as bituminous coal) and
unionized, markets (such as the Hew York milliner1,' market) fought with
equal determination for such schedules. So long as acceptance of
legislation by ma-nag em ent was necessary, classification was dependent
upon a substantial degree of unionization.

In precisely this conflict was found the greatest difficulty in
formulating the codes for the apparel industries. Each of these
industries presented some degree of unionization, and without exception
the unionized markets fought bitterl" for classification. The non-
union markets fought just as bitterly against it. The issue was
usually settled by a rough application of the democratic principle of
"majority rule." The formulation of the Uillinery Code, detailed
briefly above, affords a classic example.

2 . Type of Productive Organization.

Any instrument of economic control must be kept as simple as
possible. This maxim applies with particular force to the control of

97

-75-

wages. IT. 3. A, experience has demonstrated' that the number of rage
rainina in any given industry nust be held as low as possible; other-
wise, there is increased opportunity for evasion, and consequently
greater difficulties of administration.

In the apparel industries, as well as in certain other industries,
the craft system of production prevails. There are, in consequence,
much fewer separate occupations than there are, say, in the autbmbbile
or steel industries. The number of different occupational minima,
therefore, which must be set if classification is determined upon, is
correspondingly less. ■ This is particularly true of the millinery
industry, where four occuoations embrace more than 75 per cent of all.
workers. It was necessary, therefore, to establish only four occupa-
tional minima. Held to this number, administration presented no
great difficulties.

3 . Standardized Productive Processes.

Closely allied to the foregoing considerations is the fact that
occupational classifications are not applicable to any industry whose
methods of production are not reasonably well standardized. If
minimum wages are fixed for various occupations, those occupations
must be common throughout the industry and must bear approximately
the same relationship to each other as to skill and traditional earning
capacity. During the formulation of the Millinery Code, the principle
of classification was frequently attacked on the ground that such
conditions do not obtain in the milliner industry.

"... The extreme diversification in the methods of
manufacture and the types of factories, the varied duties of
the employees dictated by the circumstances in each factory
make classification impracticable without a radical revamping
of the present organization which would seriously disrupt the
industry . . . " (*)

The imposition of set classified rates to all members of the
industry would be grossly unfair to certain localities and would in
such localities constitute an "impossible interference with production, "
(**) and would lead to "the most infinite intricacy and difficulty
of administration." (***)

(*) Brief of Howard Elliot (St. Louis), August, 1933; Central Records
Section.

(**) Statement of Fletcher H. Montgomery, Transcript of Hearing,

Proposed Code of Fair Competition foj the Millinery Industry,
August 1 and 2, 1933, p. 160.

(***) Statement of J. U. Farley, Ibid. p.

9749

1. Tolerance.

The first safeguard was the so-called ."tolerance clause," "by which
25 -oer cent of the total number of employees in any craft might "be paid
less than the minimum wage established for that craft, but in no case less
than the applicable "basic minimum. In. practice, the allowance was

usually applied only to the less skilled employees. It was not a means
"by which an employer might take advantage of a worker "by depriving him
of the classified minimum if the worker's skill were such as to entitle
him thereto:

"... If the operation at which any employee ....
included in the aforesaid tolerance (is employed) -has a piece-
work rate and the amount earned at the prevailing piece-work
rate exceeds the minimum wages specified for such employee, such
employee shall "be compensated on the "basis of actual piece-rate
earnings. In no event shall any employee qualified to receive
a standard hourly rate .... be paid at less than such standard
hourly rate." (*)

Hedged about with such safeguards, the provision did not
jeopardize the interests of the workers. At the same time, it was a
necessary amelioration of a drastic provision which otherwise would
have imposed considerable hardship on certain markets. Actually,
the tolerance constitutes a disguised differential, particularly when
on the recommendation of the Special Board it was increased for certain
areas. The politics of the formulation of the code were such as to
make this course wiser than an out-right differential. In the long
run, however, a high set of minima, with a proviso that a certain
portion of the employees need not be bound thereto, proved more to
the interest of the employees as a whole than a lower set of minima
would have done.

2 . Apprentices.

The original Code made no allowance for apprentices and simply

provided that the Code Authority should make recommendations on the
subject. 'The matter engaged the interested attention of the Special
Board during the first season of Code operation, with the result that
there was incorporated in the Amended Code a well-considered program
for the training of beginners. The program was of no importance in
the metropolitan centers, but it proved of considerable value to
markets lacking an adequate supply of skilled labor. Minimum wages for
apprentices ranged from $8.50 to $21.00 per week according to type of
apprentice, character of work, and length of employment. A legitimate
distinction was made between persons with trade school training and
persons without. In order to prevent possible abuse, no manufacturer
was permitted to emplo3" apprentices without the express permission of
the Special Board. (**)

(*) Article IV, Section 3, Code as Amended November 9, 1934.
(**) Article IV, Section 5, Code as Amended wcvember 9, 1934.
9749

• -73-

3 . Sub-Standard Workers .

In addition to the exemption granted to all industries "by-
Executive Order of the President, the Milliner" Code provided that:

"To alleviate the distress and undue hardship in special
: and exceptional cases wherein a worker, properly belonging to
this Industry, is threatened with, loss of employment or
inability to secure employment because he or she is admittedly
of very low productive capacity, the Special Millinery Board
shall have the power, subject to the disapproval of the
, .national Industrial Recovery Board, to permit the employment
of such worker at less than the basic minimum, provided it is
established to the satisfaction of the said Board that such a
person is admittedly of very low productive capacity because of
old age, physical debility or other sub-normal condition.

"The Special Millinery Board may, subject to the approval
of the National Industrial Recovery Board, provide such rules,
regulations and tests as it may deem necessary to establish
the fact that such very low productivity is actual and not
based on an inequitably- measured piece-rate or unit of pro-
ductivity, or weekly or hourly rate of payment." (*)

This special provision was necessary to meet a peculiar condition
in the industry. Because' of the lightness of the tasks involved many
old firms have kept in their employment workers who might in other
industries have. been long since discharged. This provision was
especially designed to prevent loss of employment to such workers,
and from the manufacturer's standpoint to reduce the rate of labor
turnover. The provision operated to the satisfaction of all parties
concerned.

4 . The S'oecial Millinery Board.

The most important safeguard to classification was the Special
Millinery Board. Ideally, occupational minima should never have been
established exce-ot on a scientific basis. Yet the entire Code edifice
was built up on a species of collective bargaining, in which the de-
termination of rates was more dependent on horse trading than on
ability — ■ or lack of ability — • to pay. The result in the case of the
Millinery Code was a set of rates which would- probably have put most
of the Industry outside the principal markets out of business.

If the rates could not be established scientifically, they could
at least be readjusted impartially. This was the primary function of
the S'oecial Board. If the wage areas had not been rearranged and if

(*) Article IV, Section 6, Code as amended November 9, 1934.

9749

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the rates in many instances had not been substantially revised by the
Board immediately after the approval of the Code, the Code would have
broken down complete^. This revisionary function, together with
the continuing element of flexibility in application wnic'h the
existence of the Board mac 3 possible, was by far the most important
safeguard to classification, The wprk of the Board in this and other
connections will be discussed in gf'eater detail under "Code. Administra-
tion." ...

D. 0TH;S_.LA.]3pj^ P'HO.VISIOITS

1 • As to I7a ;es.

In addition to the detailed wage schedules, both the original
and the amended Code provided basic minima of $1-1-. 00 per week for
Areas A and B and $13.00 oer week for Areas C.-and D. These minima
provided a floor for the wages of office workers, shipping crews, un-
skilled factory labor, and other unclassified -employees, as well as
for employees included in the tolerance allowance. Exceptions were
made only in the case of learners and sub-standard workers. The
provision occasioned little controversy and presented no substantial
difficulties in application. (*)

The Code contained the standard clause specifying that no em-
ployee might be paid at less than the applicable minimum rate regard-
less of the. method of compensation. (**) Provision was also made that
weekly compensation might not be reduced, notwithstanding any reduc-
tion in hours of work, and that piece rates should be so adjusted
that earnings under "the Cod' should be at least equivalent to those
obtaining under the longer hours previously prevailing. A proviso was
added, however, restricting any such advance in wage rates to not more
than 25 per cent over the wage rate as of July 1, 1933. (***)
Finally, the Code provided that all employees should be paid directly
by their employers and that payroll records should specify the' craft
of each employee. (****) The first half of this clause was designed to
correct a, minor evil whereby certain employees were»paid by other
employees. The second half w^s designed to facilitate the compliance
activities of the Code Authority.

(*) See Article IV, Section 2, original and amended Codes.

(**) Article IV, Section 6, Code as approved December 15, 1933;

Article IV, Section 9, Code as amended November 9, 1934.

(***) Article IV, Section 7, Code as approved December 15, 1933;

Article IV, Section 10, Code as amended November 9, 1934.

(****) Article IV, Section 10, Code as amended November 9, 1934,

9749

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2. As to Hours

The Code as approved December 15, 1933 provided for a standard
work week of 37;- hours. Work was United to five days per week and to
sex-en and one-half hours per day. As noted above, this provision was
a compromise "between the union's demand for a 35-hour maximum and the
industry's demand for 40V "TL^proviso was included, however, to the
effect that should subsequent investigation disclose substantial unem-
ployment, hours were to be reduced. Office employees, members of
shipping and receiving crews, engineers, and firemen were permitted to
work 45 hours per week and were not restricted as to number of days pe;.1
week or number of hours per day. (*)

During the spring' of 1934 the union negotiated new collective
agreements in New York, Chicago, Cleveland, and St. Louis calling for a
35-hour week. The Code Authority therefore proposed and a majority of
the industry subsequently agreed to a 35-hour maximum in the amended
Code, This proposal was bitterly contested by all non-union markets,
but as it received the endorsement of the Special Millinery Board it
was finally approved by ERA, » Under the amendments Saturday work was
prohibited except under certain circumstances and for certain groups.
Sunday work was prohibited altogether. Hours of all other employees
were limited to 42-\, except designers, foremen, engineers and watch-
men, who were limited to 45. Outside salesmen, employees engaged in
emergency maintenance and repair, and executives were permitted un-
limited hours. The standard hours were also made applicable to all
members of the industry performing productive work. (**)

Under the original Code no overtime was permitted "except on
the recommendation of the Code Authority and the approval of the Ad-
ministrator," and where allowed was limited to not more than six weeks
in any one season. All overtime worked was to be paid for at time and
one-half. In practice, these restrictions proved entirely too
stringent in view of the extreme seasonal fluctuations to which the
industry is subject. In particular, the securing of permission for
overtime was surrounded wltti far too much red tape. Consequently,
when the Code was rewritten, it was provided that overtime might be
worked simply upon the manufacturer's filing notice with the Code
Authority. The overtime rate was reduced from time and one-half to
time and one-third as compensation for the reduction in hours. The
limit of six weeks overtime per season was retained, but the amount to
be worked in any one week was limited to seven and one-half hours.
Overtime could. not be worked on Saturday except in States where State
law might prohibit the manufacturer availing himself of the overtime

(*) Article III, Sections 1, 2, 4, and 11, Code as approved December 15,
1933.

(**) Article III, Sections 1, 3, 4, 5, 6, 7, Code as amended November 9,
1934.

9749

allowance during week days. (*)

Results during the one season (spring 1S35J "'hen this modified
arrangement was in actual operation indicated the necessity for
still more liberal* allowance, A very large number of special exemp-
tions had to he issued ■oernitting work in erxess of the, overtime
permitted in order to prevent a serious handicap'to productive opera-
tions,. Bven so, the requirement of overtime rates (the special
exemptions called for time and o \e-half instead of time and one-third)
made it difficult and often impossible for manufacturers to realize
anything on their season's, and cons quently their year's production.

These restrictions occasioned considerable dissatisfaction within
the industry, and the Soecial '. illinery Board undertook a thorough
study of the pro "Diem. Shortly prior to the Supreme Court decision a
committee composed of the members of the Board, executives of the Code
Authrotiy and the author agreed to recommend to the industry and to
iTHA. that the Code he ai.ierided to provide for: (l) a basic 35-hour wee1:;
(2) an additional five hours tolerance, at regular rates' of pay,
during six weeks of each season"; anc (3) an overtime allowance of
eight hours above the 40 during six weeks of each season, to be paid
for at time and one-half. This >lan would have been a long step toward
the solution of an extremely difficult1 problem. Unfortunately, there
was no opportunity even to present the proposal, much less to test it
in actual practice.

It wa.s provided in both the Original and amended Codes that no
member of the industry might knowingly employ any worker for any time
which, when totaled with that already performed for another member of
the industry, exceeded the permitted maximum. Finally, the Code
Authority, in the interest of easier administration, was permitted to
fix the hour before which work might not begin and the hour after
which it night not continue, (**)

3. General Labor Provision,

Both the original and the amended Codes included the standard
provisions guaranteeing the right of collective bargaining, requiring
that employers comply with all regulations prescribed by the President,
specifying that no provision of the Code should supersede more
stringent requirements of any State low, requiring that .employers
display conspicuously in their nlaces of business copies of the labor
provisions of the Code and forbidding the reclassification of employees
for purposes of evasion. (***)

(*) Article III, Section 3, Code as approved December lb, 1933;

Article III, Section 2, Code <as "amended November 5, 1954..

(**) Article III, Sections 9 and 10, Code as approved December, 15, 1933;

Article III, Sections 8 'and 9, Code as amended November 9, 1954.

(***) Article V, Sections 1, 2, 5, 4, 5, 6, and 7, original and amended
Codes.

9749

-83-

In addition, work was prohibited in tenement houses, "basements,
unsanitary buildings and "buildings unsafe on account of fire risks or
otherwise dangerous or detrimental to health. Each member of the
industry was required to file with the Code Authority, on request,
satisfactory^ proof of compliance with State and local laws regarding
health, sanitation, etc. Homework was prohibited under the original
Code, but the -oro vision was inadvertently omitted in the amendment.
Since there is no appreciable^ajpount of homework done in the industry
today, the omission had no seriotis consequences. (*)

III THADE PRACTICE PROVISIONS

A. UITDER THE OHIG-L'AL COST]

The Code as approved December 15, 1933, contained little more
than the standard trade practice provisions recommended by the Federal
Trade Commission. In the usual phraseology these provisions pro-
hibited inaccurate advertising, false billing, inaccurate labelling,
inaccurate references to competitors, threats of law suits, secret
rebates, commercial bribery, and interference with .another's con-
tracts. (**) • Hone of these provisions had any great significance for
the industry; they were written into the Code at the suggestion of
NBA., but were too general to be of much assistance in dealing with the
industry's problems. Its difficulties arose from much more vexing
circumstances than occasional lapses from ordinary commercial morality.

To meet its peculiar problems, the industry had originally pro-
posed an extensive set of trade practices, many of which, if approved,
would have strongly affected its distributive relationships. The for-
mulation of labor provisions, however, so completely absorbed the
attention of both the industry and HBA that trade practices were rele-
gated to the background, When the labor provisions of the Code had
at last ''oeen agreed upon, their immediate approval was imperative in
view of the imminent opening of the spring season; consequently, only
those trade practices on which there was a ready agreement between EPA
and the industry included, , ^„- »

Aside from the standard provisions enumerated above, the
original Code also contained a provision prohibiting consignment selling,
and another specifying the circumstances under which a manufacturer
might ac6ept the return of merchandise. (***) There was also a quite

(*) Article V, Sections 8 and 9, original and amended Codes.

(**) Article VIII, Sections 1, 2, 3, 4, 5, 6, 8, and 9, Code as
approved December 15, 1933.

(***) Article VIII, Sections 7 and 10, Code as approved December 15, 1935,

9749

unimportant provision which required members of the industry to notify
the Code Authority whenever, receiving an assignment of accounts from
a custodier, Finally, it was provided that tne Coc.e Authority make
recommendations to the Administrator regarding terns and discounts,
f. o. b. shipments., and advertising allowances. (*)

3 . THE THADE PPAC T I CE A SHE Ei " I S

In line with this injunction, the Code Authority early in 1234
made application for the approval of a series of trade practice amend-
ments. Hearings were held on March 13, 1934, and the amendments, in
slightly modified form, were approved on Liarch 24, 1234. Under the
Code ac amended Hovember 9, 1S34, the original trade practice pro-
visions, as' well as those added "by the march amendment, were continued.
Such changes as '-'ere made were largely in the interests of clarity. ITo
further modification took place during the life of the Code.

1 . Advertising Allowances.

A practice had grown up in the industry daring the previous
decade whereby certain large distributors demanded of manufacturers
considerable sums for newspaper, magazine and other forms of advertising.
Such dc. lands were either for all or a portion of the advertising ex-
pense. As the manufacturer's product was usually advertised in con-
junction with other merchandise handled by the retailer, the identity
of the manufacturer's product was seldom disclosed. Consequently, little
if any of the benefits of the advertising accrued to him, and the sums
paid by him constituted in effect, if not in form, unearned rebates.
Because of his relatively weal; bargaining ability, however, he was in
no position to resist the enactions of the large buyer. Such demands
imposed a burden on the manufacturer that he was ill equipped to bear.
To correct this situation, members of the industry were prohibited from
paying any part of the advertising expense of a purchaser. (**)

But while it operated to protect the rank and file of the industry,
this clause had the inadvertent effect of discouraging national ad-
vertising of branded milliner;'-. Certain manufacturers of such mer-
chandise had developed an entirely legitimate form of cooperative ad-
vertising which had none of the undesirable features outlined above.
But becar.se of the sweeping language .of the prohibition, this mutually
beneficial form of cooperation was forbidden. The retailer was pre-
cluded from bearing a portion of the advertising expense, a fact which
in itself increased the manufacturer's advertising cost by about 100 per

(*) Article VIII, Sections 12, 13, and 14, Code as approved
December 15, 1933.

(**) Article VIII, Section 14, as amended Larch 24, 1954.

'749

-34- • ■■

cent. Furthermore, "by making it necessary for the manufacturer to
place his advertising directly and in his own name, the provision
made it iriroossible for him to secure the more favorable local rates.
As national rates are about 100 per cent in excess of local rates, the
total effect of the provision wa^ to increase advertising costs to
the manufacturer "by about 400 per cent, with no corresponding "benefit
either to the manufacturer or "to the industry as a whole. •

Unfortunately, this situation was not called to the attention of
UFA until the spring of 1935, when an application for exemption was
made "by the Hat Corporation of America. A number of hearings were held
on the question, and an order had been prepared and actually forwarded
for final signature when the Supreme Court handed down its decision.
This particular order modified the provision by permitting the granting
of advertising allowances on condition (a) that the agreement entered
into with the retailer be separate from agreement for the sale of mer-
chandise, (b) that the amount contributed by the manufacturer in no
event exceed 50 per cent of the total cost, and (c) that advertising
space purchased under such agreements display no other oroduct than
that of the manufacturer. Other less important conditions were also
specified. (*) It was planned eventually to rewrite the provision
along the lines of this proposed order. So modified, it would have
accomplished its intended results without prohibiting a wholly legiti-
mate practice.

2. Terms and Discounts. .

Among the most destructive of the abuses to which the industry
had become subject involved discounts and terms of sale. Up until
about 1925 the prevailing discount was 6 ;oer cent for payment within
10 days, with credit extended for 60 days. With the beginning of the
period of intense ;orice competition, manufacturers began to grant,
under pressure from their buyers, discounts of from 7 per cent up.
During the depression discount rates in many instances ran as high as
15 per cent, while discount rates to the manufacturer from his supply
houses averaged from 3 to 4 per cent. (**) Producers of millinery
were forced to trade as. much in discounts as in merchandise. In an
effort to reduce this heavy drain on the manufacturer, as well as to
standardize the industry's practice, the Code limited discounts to a
maximum of 7 per cent, 10 days, end of month.

3 . Cancellations and Returns.

Because of the high rate of style turnover, the -oroblem of obso-
lescent stocks is a serious one to both manufacturer and distributor.

(*) Draft of order in files of Deputy Administrator, Central Records
Section. This order was based upon the advertising allowance
provision of the Hosiery Code.

(**) Transcript of hearing, March 9, 1934.

9749

-35-

The nanuf acturer ' s handicaps in bargaining, however, have made it
possible for distributors to throw bach: mon the industry the major
burden of obsolescence. If the style changes after the retailer has
placed his order, but before deliver;- has' been made, he frequently
cancels his order; if deliver;'1 has been made, he frequently returns
the goods. The length of time required for litigation and the expense
involved tend to frustrate efforts of manufacturers to secure legal
redress. The practice results in enormous annual losses to the
industry, I.iuch of the returned or cancelled merchandise has lost all
value because of style changes. In the best of circumstances the loss
is considerable. In an endeavor to eliminate the twin evils of un-
warranted returns and cancellations, the Code prohibited returns after
five days (except where the merchandise was not in accordance with
specifications) and prohibited cancellations within specified delivery-
time . (•*)

4 . Other Trade Practice Provisions .

The Code provision specifying that all goods be shipped f. o. b.
,city of manufacture was not of particular importance, since it cor-
responded with the well-established practice of the majority of the
industi . . (**)

An uneconomic practice which was largely a result of the depression,
was consignment selling. Although not general, the practice is be-
gin .ing to nalce headway and may eventually prove a serious problem.
Consignment selling nay be beneficial when applied to the distribution
of certain tyoes of product; it is a harmful practice, however, when
applied to so highly styled a product as millinery. Consignment selling-
shoulders upon the manufacturer the retailers' risks in addition to his
own, A highly desirable step, therefore, ^as taken Then the growth of
this practice was halted b;r the orovisions of the Code. (***)

Another source of annoyance to the industry in its distributive
relations was the oractice of certain large retailers to require the
manufacturer to sew in the retailer's trade name label without extra
charge. The practice was not in itself serious, but in a great many
instances' the additional cost thus incurred wiped out the small profit
which the manufacturer had hoped to make. The Code sought to abolish
this practice. (****)

(*) Article VIII, Sections 10 and 11, Code as amended November 9, 1934.

(**) Article VIII, Section IS, as amended liar ch 24, 1934.

(***) Article VIII, Section 7, Code as approved December 15, 1933.

(****) Article VIII, Section 16, as amended March 2k, 1934.

974;

-86-

C. STYLJLPJPAjXT

The Code in its early stages was regarded as the great panacea,
for all the industry's ills, and the "high style" houses naturally
looked to it as a potential means for controlling style piracy.
Their hopes, however, were to founder on two obstacles. The first
was the reluctance of NBA. to embark on such troubled waters, and the
second was the general I3A principle of permitting majorities to
rule. The latter was the more influential, for if a really sub-
stantial -oortion of the industry had expressed itself as favorable to
design protection, the timidity of 1T3A would probably have "been over-
come. The controlling fact was that only a small minority was in
favor of the elimination of st3^1e piracy.

The relative strength of the two factions is indicated roughl^
by the proportions of merchandise sold in various price ranges. Por
the most part, style originators sell in price ranges above $24.00 per
dozen. A certain amount of copying is carried on above this figure
and a certain amount of origination below. By and large, however, it
is safe to assume that the fashion creators do not constitute much
more than 10 per cent cf the industry, (*)

Actually, however, the originators exercised much more power
in the Code Authority than would appear possible from this showing.
In the first place, they controlled four seats, whereas had membership
been allocated in accordance with number of employees or volume of
business, the" would not have been entitled to more than two. Their
influence was further enhanced br a coalition with certain non-metro-
politan groups. Accordingly, the forces working for design protection
were able to wield considerable influence within the Code Authorit".
Nevertheless, the opposition was at all times too powerful to permit
of any definite action.-

The Code on which hearings were held August 1 and 2, 1933, con-
tained the following provision:

"Style and design piracy is declared to be an unfair trade
practice and an unfair method of competition and is prohibited!1 (**)

On the first cla"r of the hearing, "hen the matter of style piracy
was brought up for consideration, the suggestion was made by
Dr. Earl Dean Howard, Deputy Administrator -presiding, that the problem
be attached over a broader field than the millinery industry alone and
that united action be taken by all the apparel industries. (***)

(*) 30. 7 per cent of all merchandise sold in 1934 wholesaled at less

than $24,00 per dozen: Code Authority, First Annual Report, pa e 21.

(**) Proposed Code, as submitted July 22, 1933. Sen Volume A-l
Docket of Code 151, Central records Section.

(***) Transcript o " :!earin •, . .hiljnery Industr-', August 1, 1933, age 305.

?74r.

~c7-

There was 6bne desnl'tory discos sion of a positive provision in
subsequent hearings and conferences, but the idea of cooperative action
with other industries had tafeen such root and the attention of all
concerned was so engrossed ih: the wage controversy that none of these
discussions were of much consequence. 'The Code as finally approved
contained the following orc-visdon among those prescribing the powers
and duties of the Code Authority:

"To undertake an i'j -ediate and complete investigation, in
cooperation with other Code Authorities in related industries,
of style piracy and to recommend to the Administrator, as

promtl" as possible, appropriate means for the regulation
and control of st^le piracy, which recommendations , upon
approval of the Administrator after such notice and hearing
as he shall proscribe, shall become effective provisions of
the Code." (*)

Immediately after its organization the Code Authority adopted
by-laws which anon;; other thin irovidec for the establishment of 'a
Style Pirac"- Committee, to devise "ways and means for the regulation
and control of style piracy as provided in the coda." (**) The
Committee was composed of five persons, two, of whom were favorable to
the interests of the ran1: and file and three of whom were strong
advocates of piracy control. (***) On January 21, 1934, the Com-
mittee submitted its reoort, reco -ending that there be established
an organization similar to the Fashion Originators Guild in the dress
industry. This organization was to be set. up under the auspices of
and be assisted by the Code Authority. (****) Determined opposition
prevented favorable action on these recommendations; report was tabled
and eventually forgotten. ^ie millinery Quality Guild, horrever, was
established as an independent 'realization.

At the .hearing on the proposed amendments to the Code held in
Washington on June 4 and 5,' 1934, a pro to sal was made to amend the
piracy provision to read as follows: '

".The Code Author it3^ shall' organize an appropriate Bureau
for the registration of original styles and designs for the
purpose of establishing priority of ownership (of such styles
and designs. Such registration shall be considered proof of
originality for a period of si:; months from the date of regis-
tration. For the purpose of eliminating -style piracy in the
industry, it shall be an unfair method of competition to make,

(*) Code of Fair Competition for the t.hllinery Industry, as approved
December 15, 1S33; Article VI, Section 7 (f).

(**) A proved by-laws of the millinery Code Authority , Central
Records Section.

(***) See minutes of meeting, December 21, 1933; Central Records Section.

(****) Report of St vie Piracy Committee, minutes of meeting,

January 21, 1931; Central Records Section.
9749

-83-

use, sell or advertise a design of another Manufacturer so
registered, intentionally with a prior knowledge, without
the authorization or license to do so given by the original
registered owner of such style or design. The Code Authority
nay, where it sees fit, cooperate with the Code Authorities
in related industries e*'tlfe .question of style piracy."

Deputy Administrator Howard' again suggested that definite action
he withheld until a carefully worked out -provision could he pre-
sented. (*) In accordance with this suggestion the amended Code was
made to include the following provision: •

"The national Millinery Code Authority shall undertake a
complete investi^atioii of style piracy in the hillinery
Industry and shall recommend to the National Industrial Recovery
Board, as promptly as possible, appropriate means for the
, regulation and control of style piracy, which recommendations
shall he the subject of hearing, and after duo notice and upon
the aroroval of the national Recovery Board, shall become
effective provisions of this Code." (**)

Itov. this time on, the subject of style piracy was a dead issue
so far as the Code Authority and 1 PA were concerned. The high-style
group grew discouraged by the delay, gave up hope for any effective
action through the instrumentalities of the Code or the National
Recovery Administration, and turned to the independent promotion of the
Millinery Quality Guild. (***)

D. ATTlnlPTS TO CONTROL PRICES

The millinery industry, in common with most other industries,
believed during the first six or eight months of the Recovery Act
that the solution of most of its ills lay in the fixing of prices, or
at least in a prohibition of sales below cost. Accordingly, the
industry proposed to forbid sufih sales, cost to be computed in accordance
with a uniform cost accounting system. Toward the end of 1933,
however, ITRA began to have grave doubts as to the wisdom of such pro-
visions and refused to approve the industry's proposal. An avenue
was left open, however, for a possible future sales-below-cost pro-
vision by permitting the Code Authority, subject to appropriate safe-
guards, to establish a uniform cost accounting system. The industry
confidently hoped at the beginning of 1934 that after the development

(*) Transcript of Hearing, Millinery Industry, June 5, 1934;
to. 297-306.

(**) Article VIII, Section 16, Cod': as an< ided November 9, 1934.

(***) See supra,, "gf forts to Control Piracy in the Millinery Industry."

i

9749

* " ■ -39-

of sucli a system, it vrould lie able to persuade 173A to approve its
original request.

Ulien this question was considered on the basis, not of theory,
"but of the concrete difficulties involved, it became obvious that
such a course was completely impractical. In the first place, there
are no uniform standards by which one item of millinery may be con-
pared to another. Even assigning the practicability of a uniform
accounting system for such an industry as this, millinery still can-
not be priced by formula, The value of a hat does not depend on the
labor and materials which go into it, but on its style, and styles
change from day to day. (*•)'»•' •

Coming to realize the impossibility of controlling prices, the
industry refrained from proposing, an it had intended, further code
provisions on the subject. Nor war- there any concerted attempt to
develop a uniform costing system as actually provided for by the
original Code. (**) The most that was done in this direction was to
draw up a model costing system and to circulate it throughout the
industry as a purely educational move. Manufacturers were encouraged
to use this system, but there was no attempt to compel its adoption.
The entire question of price control and mandatory uniform costing
methods became a dead issue, and when the Code was revised no refer-
ence was made to either.

(*) Tor a more complete statement of the difficulties suggested here,
see Seligman, op oit.

(**) See Arpicle VI, original Section 7 (c) Code as approved
December 15, 1333.

9749

-90-

citapter in

ADIalTISTRATIOIT CH TEd CODE

1 . Introductory.

The administration of the .' illinery Code constitute I one of the
most difficult phases of the work of the Apparel Section of HBA, Diver-
gent and contending factions within the industry, a Code Authority in
the beginning flush with what it conceived to he its dictatorial ;oorers,
iDOor leadership, and, hack of all, e highly disorganized iiidustrjr — all
these factors combined to make impossible a smooth and untroubled
adr.ii ni s trat i on .

The settlement of most code questions roouired lea.dershio of the
highest order. There was anole leadership of a sort within the industry,
but little of it ever aspired higher bhan the faction fron which it ^rew.
The need had f i lally to be r.iet by drafting talent fron other fields and
allowing it to find exoression through the Special ilillinery 3oard. It
is against this background that the administration of the Ilillinery Dode
must be viewed.

II TEE C'ODS AUTHORITY

A. 0EGA1TIZATI0K

1. Method of Selection.

(a) Under Original Code. TThcn agreement had finally been reached
on the wage provisions of the Code, attention was burned, alnost as an
afterthought, to such remaining details as hour:; of work, trade prac-
tices, and administration. The consideration yiven to all these matters
was haphazard. The result was that the allocation of code authority
membership left much to bo desired.

Seats "ore distributed on a horse- tr. Ling ■ 3is. Tliree instances
may be cited. As pointed out above, the '..'■ ' i Seadwear Group wa.s the
original advocate of wage schedules. In this it -as at first opposed by
the Hew Y orl: high style group, as -.'ell as by most of the markets outside

[ • York. Tho sup-port of the national Association of La.dies' Hatters
and of the Eastern Millinery Association — both organizations dominated
by high style interests - on the principle of classification, was pur-

■ ■ sed by the Headwear Group in return for extra, seats on the Code
Authority. Cleveland which swung in line on the wage question, re-
ceived one seat. San Francisco, Los Angeles, Portland, and Seattle,
which remained in opposition to the end, had to share one seat between
them, although they represented throe times as much production as
Cleveland. Dallas, one of tin most imports it ■* the secondare markets,
was es leciall r vigoro^^s in its o i Ltion an c • ived no representation
at all.

Even individuals in mark bs scordi .:- tion often had no

voice in the selection i ' Code Aut d i< irs. Che .- lointment of

delegates -. itrollec" by asi ■■-,, ... these bodies often dell

far short of representing bheir localities. And even "here the

9749

-91-

majority in- a given market belonged to the Association, its by-laws
were frequently such as to vest the appointive power exclusively in the
hoard of directors.

All in all, therefore, the method of selecting the Code' Authority
left much to he desired. Certain extenuating circumstances, however,
must he recalled. In the first place, there was no really reliable
information during the formative period of the Code which might have
been used as a basis for a proper allocation of representation. It
was anybody's guess how much a given market represented and how many
seats should be allotted it. More important, II. R. A. itself did not
lay down for many months any definitive standards by which systems of
•representation might be judged. For instance, it proceeded on the
general assumption that code authority members should be elected by
trade associations. Not until later was any official concern shown for
the unorganized minority. Above all, it must be remembered that the
mere allocation of membership on a geographical basis would by no means
have solved the problem. To have been perfectly fair it 'would have
been necessary to accord representation on the triple basis of geogra-
phical location, type of labor relationship, and price range of pro-
duct. This, however, was obviously impossible without so greatly in-
creasing the size of the Code Authority as to render it unwiedly and
prohibitively expensive.

(b) Under Amended Code. When the Code was revised in the autumn
of. 1934, the method of selecting the Code Authority was completely re-
vamped. In addition to a national code authority, provision was made
for a series of regional code authorities elected by the association in
.the various markets. Members of the national code authority were to be
selected by the regional bodies.

Theoretically, this scheme corrected most of the short comings of
the original arrangement. It was seen at the last moment, however, to
be far too involved for practicability in operation. Consequently, in
the order approving the amended Code, these provisions were stayed pend-
ing further study. The Code Authority as established under the ori- '
ginal Code was continued as a temporary agency. Its functioning, how-
ever, was made subject to the orders and supervision of NRA. In part-
icular, the selection of code authority officials was made subject to
NRA approval, NRA reserving the right to appoint such officials direct-
ly should circumstances so warrant. During the winter and spring of
1935 a thorough study of the entire problem was made, the results of
which it was planned to incorporate in a series of amendments to be
considered during the summer. Activities along this line were cut short
by the Supreme Court decision.

2. Industry Members. The original industry personnel of the Code
Authority was comprised of (a) Messrs. Sam Lish, Sam Simon, Walter K.
Marks, and Morris Schachter representing the Keadwear Group; (b) Messrs.
Earl M. Parrington, David Herstein, G-. Howard Kodge, and N.J. G-arfunkel,
representing the National Association of Ladies Hatters and the Eastern
Millinery Association jointly; (c) Messrs. Sam Budwig and L. Shirley
Tark, representing the Midwestern Millinery Association (Chicago); (d)
Mr. Howard Elliot, representing the Associated Millinery Industries of
St. Louis; (e) Mr. Bernhard Stern, representing the Philadelphia Millinery

9749

-92-

Manuf ac'turers « Association, (f) ilr. George I. Tafias, representing the
New England Millinery Jobbers' and Manufacturers' Association, (g) Ilr,
Nicholas Schwartz, representing the Cleveland Ladies Hat Manufacturers
Association, (h) Ilr. L. D. Thompson, representing the Southern Millinery
Manufacturers' Association, and (i) Mr. Louis IT. Pokress, representing
the markets of the Pacific Coast. (*)

Messrs. Elliot, Tark, and Stern were not members of the industry
hut attorneys. They had, however, played a considerable part in the
formulation of the Code and their selection to the Code Authority was a
natural consenuence. iilA came subsequently to frovm upon industry repre-
sentation by persons other than members of the industry. In line with
this policy Mr. Tark was succeeded "by Mr. Samuel 3aer, Mr. Elliot by Mr.
George A. Sherman, and Mr. Stern by Mr. George Kraft sow. As noted above,
the Pa.cific Coast markets were allotted only one representative between
them. Ey an arrangement between themselves, Los- Angeles and San Fran-
cisco were to alternate in selecting a member. The first member, Mr.
Pokress, was named by Lcs Angeles. He was succeeded ^oy Mr. Emil Fall:,
named \)y San Francisco. (**)

3. Eon-Industry Members. One of the unusual features of this Code
Authority was that it included two voting members representing labor.
Although even non-voting labor representation was a sore point in many
industries, voting membership went almost unquestioned here. The
designated labor members, Messrs. Max Zaritsky and Alexander Rose,
brought to the Code Authority a high order of experience and ability.

ERA was at all times represented on the Code Authority by one or
more non-voting members. On December 23, 1933, Messrs. 3. H. Gitchell,
Deputy Administrator, J. A. Stein, Industrial Advisor, and the author
were appointed administration members. These three subsequent!;" re-
signed and their place was taken by Mr. 0. W. Pearson,- who continued in
office during the life of the Code. (***)

4. Officers. As part of the compromise leading to the adoption of the
Code, Mr. Max Amberg, the leader of one faction, was engaged as code
director, and the leader of another faction, Mr. Sam Lish, was elected
chairman. Mr. Jas-ocr he-is, an aide of Mr. Anberg in the affairs of the
llational Millinery Council, was appointed executive secretary, and Mr.
Ma:: Shlivok, attorney for the TTomen's Headwear Group, was retained as
general counselo Mr. Joseph Lipshie, a, certified public accountant,
wa.s en£c4e?- as confidential agent. His duties from the first, however,
included the functions of organizer and general manager.

(*) Administrative Order lie. 151-17, Central. Records Section.

(**')' ERA Millinery file, Central Records Section

(**'*) Administrative; Orders 151-?, 151-3, 151-9X, and 151-15,
Central Records Section.

9749

-93-

Mr. Ambers was unable to hold his own against the tortuous intrigue
within the Code Authority and was finally forced to resign in August,
1934. Prom that time until the approval of the amended Code in November,
Mr. Lish served as acting code director, assisted in the details of
administration by Messrs. Lev/is and Lipshie. Simultaneously with the
approval of the amended Code, Mr, Mai: Meyer s chairman of the Special
Millinery 3oard and the most important figure in the negotiation of the
amended Code, "as elected chairman and director, which dual position
he continued to hold until May 27, 1935, Mr, Shlivek resigned as
counsel in June, 1934 and was succeeded by Mr. Maxwell Lopin, who served
until November, when he in turn was succeeded hy Mr. David Drechsler.
Mr. Drechsler' s place was taken by Mr. A< II. Barcnboim, formerly of the
MA legal staff, in March, 1934, which position he continued to hold up
until the Supreme Court decision. (*)

5. Committees. Various committees "ere set up by the Code Authority
from time to time, among them: a Committee on Committees, to make recom-
mendations to the Code Authority as to necessary committees and as to
committee personnel; a Nominating Committee to recommend names for
official positions; a Committee on Location, to obtain suitable code
authority quarters; a Label Committee, to devise rules and regulations
for the issuance and sale of labels; a. Labor Cormlnints Committee and a
Trade Practice Complaints Committee to insure code compliance; an Inter-
Code Committee to keep in touch with NBA and with other code authorities
as to all matters affecting the industry or the Code Authority; a
Publicity Committee to disseminate information to the press and to the
industry regarding the activities of the Code Authority; a Style Piracy
Committee to devise means for the regulation of copying; and a Committee
on By-Laws and Pules and Regulations.

The work of the Publicity Committee was cut short when iiPA reihised
to allow the Code Authority to retain a publicity director at $6000 a
year. The work of certain committees was only transitory and that of
others was in large part taken over by paid officials of the Code
Authority. One committee, however, was of lasting importance. Because
of the size of the Code Authority and the consequent heavy expense of
calling it together, meetings were held as seldom as possible. In the
interim, all decisions which could not be made ^oy the code director were
referred to the Policy Committee. Some executive committee of this sort
was necessary. In the circumstances, however, it could be comoosed only
of New Yorkers and decisions of industry-wide consequence had frequently
to be made. This draw-back was at least partially overcome by IIRA re-
quiring that its representative be present at all meetings of the Com-
mittee. Nevertheless, its workings were often subject to criticism.

(*) IIPA Millinery Pile, Central Records Section

9749

-94- .
B. rilTAKCHTC- THg CODE AUTHORITY

1. Gen~iv,.l he. narks ■ The L'illinery Code Authority Was amply financed.
Its activities '-'ere not restricted, as was frequently the esse among
code authorities depending on voluntary contributions or ordinary
assessments, since the necessary funds vrere obtained from the sale of
KRA labels. Retailers "'ere forbidden by the Retail Code from accept-
ing unlabelled merchandise and the manufacturer Lculd not move his
goods unless he affixed labels which could only be purchased from the
Code Authority. Collection was therefore automatic, and label prices
were so fixed as to yield a revenue more than sufficient to cover
expenses.-

The temptation to spend liberally was strong, and the Code Auth-
ority was frequently criticised, for an apparent carelessness in its
financial affairs. To a certain extent these criticisms were justi-
fied. LIuch too elaborate an establishment was maintained, and official
salaries in a number. of instances were out of line with salaries paid
for similar duties by other code authorities. Nevertheless, measured
by the job done, the matter appears in a better light. Most of the
manes'- collected vrent directly into compliance activities. The problem
of enforcement was unusually great, end it was necessary not only to
maintain a considerable force of inspectors and office employees, but
to build up a competent executive staff, both for the ilew York head-
quarters and for the various regional offices. Valuable though neces-
sarily expensive work was also done in the compiling of statistics and
in financing an economic survey of the industry by Professor S. R. A.
Seligman.

2. Budgets and liases of Contribution .On April 5, 1934, 1IRA. approved
a body of regulations governing the issuance of labels by the Code
Authority, in which label . charge s '. ere fixed at $3.50 per thousand. A
budget covering the period from December 15, 1933 to December 14, 1334,
was submitted about the same time. Although URA favored the proposal
made therein to reduce the label charge to $5.00 per thousand, it
disapproved the gross amount of $522,856 which the Code Authority pro-
posed to spend. A revised budget was submitted on hay 10 in which
total expenditures were reduced, to $395,650 — about 2/5 of one per
cent of the industry1 s estimated net dollar volume. The gross amount-
end many individual items '-'ere still unsatisfactory to UFA, and a
third budget was submitted in August, 1934, in which total expenditures
were reduce", slightly (to $384,316) and label charges were fixed as
follows:- for hats selling at less than $7.50 per dozen, $3.50 per .
thousand-; for hats selling between $7.50 and $48.00 per dozen

$5.00 per .thousand; and. for hats selling for more than $48.00 per
dozen, $10. 10 per thousand. The revised Code was then under consid-
eration and .any changes were contemplated in the organization of
the Code Authority. (*) Action ca these proposals was consequently
hole in ahoy-i.. je.

A" au Lt : bhe Code Authority books brought to light certain
improper it ms incurred during th first fiscal .-ear, the chief of
whi< i ' ■ for a "style show" in the spring of 1934. iJ?A ordered

that the Code Authority be reimbursed to the extent of $15,253.26

(*) S< ra, "Code Authority under bhe Amended Code".

37

-95-

by its members or by the trade associations which such members repre-
sented. The Code Authority protested this order and negotiations
thereon were still in process at the tine of the court decision.
After the approval of the amended Cor'.e, a ner' budget nas submitted,
this time for the period of January 1, 1935 - December 31, 1935. This
budget nas tentatively approved for a six reeks period beginning
January 1, and was subsequently extended to April 12, and re-extended
to June 15.

Gross expenditures Here estimated at $259,136.71, with label
charges the sane as previously approved er.eept for an increase of
$10.00 per thousand in the price of labels to be affixed to hats sell-
ing for more than $48.00 per do^en. A number of protests were received
against this budget, principally with respect to four executive sala-
ries of more than $10,000 per year. Seductions totalling $12,900 per
annum in these salaries were agreed to at tne insistence of the Deputy
at a conference shortly before the invalidation of the Code.

The audit mentioned above showed income from the sale of labels
to have been $573,669.25 as of December 31, 1934. Later reports show
label income for the period of January 1, 1335 -April 1, 1335 to have
been $120,643.21. Actual expenditures during this latter period

amounted to $123,776.96, or $17,570.35 un

I.lay 27, 1335 the Code Authority had a casl

restitution account of $4,000. An orderly

which these s'oms and such amounts as were realized from the sale of

equipment were returned to the industry. (*)

Ler the proposed budget. On
i balance of $20,000 and a
liouidation followed, in

C. COiZPLIAlICE ACTIVITIES

1. Organization. For the raimose of conducting its activities the
employees of the Code Authority "ere divided among several departments.
The departments of the New York office and the number of individuals
engaged in each were as follows:

Analyzation Clerks 10
Book1 .:• p -rs 4
Administration S
Laoel Clerks 11
Compliance Clerks 2
Office Staff 9

Inspectors IS
Trade Practice Staff 6
Field Auditors 18
Statistics 8

Adjusters 3

Special Investigators 2

99 (**)

(*) 1TRA millinery files and Administrative Orders 151-13, 151-24,
151-34, 151-52, 151-61, and 151-72; Central Records Section.

(**) Code Authority, First Annual Report P. 2

9749

-96-

The analyzation, label, and compliance clerks, inspectors, field
auditors, trade mractice staff, aajustors, and special investigators —
uL persons in all — '-era engaged directly in compliance activities.
In addition, at least half of the executive personnel, listed above
under "administration" , were also engaged in this work and the duties
of all other employees '"as either partialis7- or indirectly concerned
with con fliance.

2. Inspection Policies. The conpliance activities of the Code Author-
ity centered around t"ro groups,- inspectors and field auditors. In-
spectors '-ere charged with the enforcement of the hours provisions of
the Code, an auditors with all other provisions.

(a,) "Jours Inspections. host factories in kew York City -'ere
visited at least once each day by an inspector. In naiiy instances
visits ,rere r-ir.de as often as three times a day, once between 7:30 and
9:00 A. k. once during the lunch period, and once between 5;00 P. 1.1.
and midnight. Conpliance '-ith the hours provisions could best be main-
tained b;r enicrcing the uniform opening and closing hours which the
Code permitted the Code Authority to prescribe. Inspections were sonerv
what less frequent in districts outside of iTew Yorl:, but the policy of
numerous visits was uniformly followed. These inspectors also checked
the classif icaticn of employees and the use of labels by the manufac-
turer. Some restitution cases '-ere handled by this group, but only to a
minor degree. A daily report was filed by each inspector, showing the
factories inspected, the exact time of each visit, and any apparent
code violation discovered.

Although inspections of this type were made by from 15 to 20
employees in the ITew fork area alone, the maximum number of violations
in any one meek on which hearings ' ere held totalled forty. A sum-
mary of the hearings conducted between karch 1 and September 26, 1S34
as a result of the activities of this department is as follows:

Type of Violation Number of
Hearings

Wor :in, during lunch hours 160

JToki. m Saturdays 175

Working on Sim days OS
JTorkin outside of regular hours

(not elsewhere included) 499

Hon-posting of labor provisions 14

Shipwin merchandise without labels 53

Total 954 (*)

(*) "State i.ent concerning Procedures of i illinery Code Authority,"
by k. ir. kickord. Unless otherwise specified, all data
induced in this section is from this paper, i'r. Hickord was
an ERA. official who conducted s special investigation into
the affairs of label Code Authorities.

S749

In general, the inspector's attitude was lenient. first offenders
and those guilty of Minor infractions' '' 'ere usually let off with a
warning. The inspectors had tiie respect and confidence of the manu-
facturers. . .

(b) Par/roll ■ Insmecticnr. . i?h«= books of eacl. member f the industry
were inspected regularly about oner a month. These inspections,
carried out oy employees .with an accounting background, included examina-
tion of payrolls, income e^d. expenditures, sales and returns, and check
and tine boohs. Transcripts of payroll records in complete detail for
each employee were .forwarded to heacl quarters for examination b3r the
anal;rzation department. If no violation ls discovered, the transcript
was forwarded to the statistica1 department "here pertinent data v.Tas
summarized anc" then filed. li an apparent violation was found, the case
was scheduled for hearing, hearings developed by this group averaged
about 4-5 a v-e eh.

3. Restitution Bases. The Code Authority staff was highly effi-
cient in the handling of cases involving restitution. '.Then the amount
of restitution due employees had been fined by a hearing, the employer
was given 48 hours in which to make payment. Payments '-"ere made, not
to the workers but to the Code Authority, which in turn reimbursed
the employees. Checks '"ere mailed employees on the same dap payment
was made "o" the employer. Aside from a few instances during the early
days of the Code, no charges or fines over raid above the actual amount
of restitution due were imposed.

4. Trade Practice Comuliance. The fair trade practice division
received complaints of alleged violation from both manufacturers and
the trade practice inspectors. As of September 29, 1S34, 409 complaints
had been received from the form? v source ancj about 1000 from the latter.
About two-thirds of the corral* ints filed by manufacturers had to do
with unwarranted returns of : merchandise anc' onl;r abouv, one-fourth with
alleged infractions of the discount provisions. (*) Apparent viola-
tions of discount provisions reported 03- inspectors, however, over

this same period accounted for about 85 per cent of the total from
this source; complaints involving returnee" goods accounted for only 5
per cent 01 the total. The inference would seem to be that manufac-
turers "ere greatly concerned about unwarranted returns from retailers,
but because of the intensity of competition, quite ready to connive
with their buyers in the evasion of discount requirements.

The Toercentage distribution of tra.de practice violations reported
by inspectors up to October 1, 1954, is as follows:

(*) Data supplied by Code Authority.

974-9

-98-

G-iving inproper discounts 34. 5, >

Violation of f.o."b. provisions 7.5;i

Inproper return of goods 5, Op

'IsJ se invoicing 1.5;j

Inproper use ">f Labels 0.5,j

. isleading advertising 0. 5,?

Sales on consignment O.o\o

100. (Xi

Because oi the manufacturers' special concern with the unwarranted
return of .merchandise, the trade practice division offered its ser-
vices as arbitrator in disputes on this point between nanufacturers
and their customers, nrovided both parties agreed beforehand to abide
by its findings and awards. The success of this service was lir.ited,
less than two-fifths oi all cases handled having 'been satisfactorily
disposed pf.

5. Hearings ■ ihich of txie work of the inspectors ana auditors "nay be
regarded as good will end educational activity. As a policy the business
of the nenber is interrupted as little as possible. Earnings are

given when they will prove effective. Hhen hearings are required an
attempt is wade to render these as informal as possible. In any case,
the investigators and those "ho work up and present violation case ma-
terial do not corduct hearings... By means oi these informal nan-to-nan
hearings, cases are settled expeditiously and general^ to the satis-
faction of all concerned." (*)

Difficult cases — for instance, those involving cpiestions of
policy — '-ere ^andled in a formal manner by the Compliance Committee.
To this con ittee also were referred all cases in which the alleged
violator requested ; formal hearing. In such hearings the respondent
was usually represented by couasel. The committee was composed of
tno industry and two labor members, with an "impartial chairman" who
was visually the executive secretary of the Code Authority. fhe extent
to which easer :f alleged violations were settled informally may be
judged by the fact that the compliance com: 'ittee heard an average
of only five cases a month.

In the event settlement ci the case did not result from the formal
hearing, an application would be made to the Label Review Ofiicer of ESA
for a permit to withhold labels. TJ.aiall;' the mere threat of such ac-
tion was sufficient to force settlement, "out in a nunbe ■ of cases
labels -ere actually withdrar/n. If compliance was still not forth-
coming, tue case would then be referred to the IDA Compliance Division.

6. de;ional Of f ices. All of the foregoing functions relating to
inspection and compliance were also carried on from the regional of-
fices located in Atlanta, Donton, Chicago, Cleveland, Dallas,

(*) Die; ord, op. cit .

.

-99-

Los Angeles, San- Francisco, and St. Louir,. A tenth regional office for
New Jersey was about to be established at the tine of the invalidation
of the Act.

host oi these of: icos '-ere manned "by a single individual , who car-
ried the title of deputy code director and who performed all work of
auditing and inspecting, except that in the Chicago and Stl Louis
offices lie var assisted by a snail staff. The total personnel enployed
in regional offices was about 35. (*) Deputy directors '"'ere vested
with little discretionary power; their function was almost entirely
that of submitting facts obtained fron inspections to the Few Yorh of-
fice, "here findings were made and instructions issued to the deputy.
This procedure wa.s in process of modification by the establishment of
regional complaints committees at the time of the court decision.

7. Summary of Compliance Activities. During 1934 more than
300,000 ins-iections rere :iade o± the 953 factories located in the
lien Yorh metropolitan district (which included lie1-' Jersey and Connec-
ticut) anc" about 100,000 inspections T'ere made elsewhere (**) The
analyzation department checked an average of 5,600 payrolls every month.
1,235 hearings "ere held in the New Yorh district alone, and violations
fere established in 1,095 cases. A satisfactory adjustment was reached
in almost every instance. Complaints handled and adjustments effected
by the regional offices were roughly proportionate. (***) Only a very
small percentage of all corn-plaints of non-compliance ever reached
ERA. (****;

It is possible that the Code Authority was too zealous in its com-
pliance activities; but the fact that violations were confirmed in
about 90 per cent' of the complaints registered indicates that the ef-
fort "as not entirely unjustified. Individual establishments are small
and not always too responsible. The close association between employer
and employee made collusion j,sy and evasion difficult to discover.
Code enforcement was almost a game, the Code Authority trying to
catch manufacturers off side and the manufacturers when caught accepting
the penalty in good grace. All these factors considered, the elabor-
ate compliance machinery was not nearly so unwarranted as might at
first appear, nevertheless, substantially equal results could probably
have been achieved at somewhat less expense.

(*) millinery Code Authority, first Annual report.

(**)■ All facts set forth in this summarization are drawn from the
Code Authority' s First Annual Report, unless otherwise
specified.

(***) Except in Dallas, where compliance was never established

under the amended Code, and in Chicago, where there were a
la: e number of complaints of technical violation. See infra,
"Special "millinery Board."

(****) See report of J. J. Reiastein, FEA Compliance Division.

9749

-100-
III. THE SPECIAL MILLIIIERY 30ARD
A. II'TRODUCTICH
1. Creation of the 3oard.

The origin of the Special Board lies in the wages controversy
which attended the formulation of the original Code. As early as
July 31, 1933, in a conference preceding the public hearing, lead-
ers of the non-union group insisted that if classification were
considered at all it should he considered only on the hasis of
a fact finding survey. (*) During the succeeding months the
idea recurred again and again until, as a condition of his final
approval, the Administrator incorporated the following proviso
in the Executive Order:

"A special hoard shall he appointed hy the
Administrator for the purpose of determining after
notice and hearing whether the scales applying to
particular area, market, or member of the industry
should he stayed or modified because of great and
unusual hardship to such area, market, or member
of the industry by reason of the application of such
scales thereto." (**)

,0. Personnel.

The Administrator appointed as Chairman of the Special Board,
Mr. Max Meyer, a retired coat and suit manufacturer who had been
active in NBA matters affecting the needle trades. Mr. Meyer was
one of the founders of the original trade association in the Coat
and Suit Industry and one of the principal participants with Mr.
Louis D. (now Justice) Brandeis in the establishment of the first
collective agreement in the apparel industries. Ke is Chairman
of the 3oard of the New Ygrk City lleedle Trades High School and is
a member of the Hew York Minimum Wage Board. Withal he is more
than a little of a philosopher, keenly appreciative of the problems
and vievrooint of both management and la.bor. His entire background
eminently qualified him for the difficult position of chairman of
this Board.

As second member of the Board there was appointed Dr. Paul
Abelson, a prominent Hew York attorney, who for the past twenty
years has acted as impartial chairman and mediator in the fur, cap
and millinery industries. His experience in these capacities ^.vo
him an intimate knowledge of technical processes in the Industry,
details of shop organization, and other matters a full understand-
ing of which was necessary to the proper functioning of the Board.

(*) ITBA Milliner;: files, Central Records Section.

(**) Order Ho. 131-1, December 13, 1933. See supra, "Formulation
of the Code. "

9749

-101-

The third member, Mr. J. A. Stein, is head of the Fisher
Millinery Company, one of the largest distributors of millinery
in the country. ' With his knowledge of the various markets,
of comparative production costs, and of distributive problems, he
was an invaluable addition to the 3oard.

In November, 1934, Mr. Meyer became chairman and director
of the Code Authority. His place on the board was taken by Mr.
James P. Davis of the UFA Research and Planning Division.
Mr. Davis had been econcmic advisor on the Code since its incep-
tion and was intimately familiar with the various problems with
which the board was faced.

One of the most significant features of the Board was its
impartiality — an important de-oarture from the bi-partisan tradi-
tion of the trade union movement and from the bi-partisan precedent
established in other boards set up by ITBA. As emphasized above,
however, the problems with which the Board had to deal were not
amenable to horse- trading. The unsatisfactory aspects of the Code
which the Board was to correct had been a result of that process,
and a new ap-oroach was necessary.

3. Organization..

The Board maintained offices with the Coda Authority. Until
the approval of the amended Code, the salaries of the Board mem-
bers were paid by HBA, and all other expenses, including rent,
equipment, supplies, clerical assistance, etc., were borne by the
Code Authority. In the amended Code, however, provision was made
that the Code Authority assume the entire support of the Board.

The principal employee of the Board was its Secretary, Mr.
George V. 3rown. All members of the Board being principally en-
gaged in other occupations, administrative details fell largely to
Mr. Brown. In this work he was assisted by a small clerical staff.
The Board also employed an accountant, who had had considerable
experience as a manufacturer, to visit plants and markets- in
various sections of the country where claims of undue hardship
had been made, for the purpose of securing data on which the Board
might reach a decision. In addition to collecting this informa-
tion, an "industrial clinic" was usually held on the sp.ot,at which
the attention of the manufacturer was called to practices not con-
ducive to his best interests, the correction of which might obviate
the necessity for Code relief. Though one of the less publicized
features of the Board's work, this service was one of the most
constructive performed under the Code.

3. FUKCTIOHS OP THE BOARD

1. Judicial Functions.

The Special Board was set fen primarily to review and make
recommendations uponallegatioris of undue hardship. Under most Codes

9749

-103-

petitions on sucii matters might "be made either to the code auth-
ority or directly to SEA.. Experience indicated that code auth-
orities tended to recommend either approval or denial of applica-
tions on a blanket basis without much regard to the merits of
the individual case. In any event, the application would be passed
upon by the applicant's competitors and a fair appraisal was not
always possible. When requests for .relief were made directly to
1I2A, — or when they were referred there by the Code Authority —
unavoidable administrative delay often prevented the granting of
quick effective relief. Furthermore, because of its location in
Washington IIHA, found it difficult and often impossible to decure
reliable information on which to base its decisions. These
shortcomings in normal procedure were serious enough for industries
with simple code problems; they were impossible for an industry
such as millinery where the code problems were many and complex.

The Special Millinery Board was designed to make possible
an impartial approach to, and insure speedy handling of, appli-
cations for relief, it was independent of the Code Authority, and
its members, while thoroughly familiar with the problems of the
industry, had no connection, financial or otherwise, with any
manufacturing establishment. Hearings were held within a reasonable
distance of the petitioner's place of business, and in difficult
cases the Board sent its investigator to study the ;oroblem on the
spot. Tne volume of applications filed woulc! have clogged the
office of the deputy had he not been able to refer them automatically
to the Board. Because of its specialised function, the Board was
able to devote ample time to the consideration of each case, thus
making possible a f'irness and workability of decisions v/hich could
never in this case have been attained under normal USA procedure.

2. Legislative Functions.

The life of the original Code was limited by its order of
approval to May 15, 1934, but was extended by subsequent orders
until such time as the then pending amended Code should be approved.
Public hearings on the proposed amendments were held June 4 and 5,
1934, at which time serious objections were raised regarding wage
and hour proposals. Since these were matters with which the Special
Board was especially familiar, Deputy Howard suggested that the
Board study the problem and submit its recommendations to "gRA. At
a meeting of delegates from all markets on the evening of June 4 a
resolution was unanimously adopted requesting the Board to "submit
its findings to the Administrator" and agreeing to "abide by the
recommendations of the Special 3oard. " (*) An overwhelming majority
of the industry thus entrusted the re-writing of the Code to the Board
and bound itself implicitly in advance to abide by its decisions. The
step was unprecedented in LIRA history. It disclosed, incidentally,
the respect which tne Board had won for itself in its first six months

(*) See "Report to the President" , Code as approved November 9, 1934,

I 4.

9749

-io:

of operation.

In fulfillment of its charge, the Board conducted numerous
conferences and hearings, and on July 6 submitted its report. A
supplementary report was made on August 15 and a third report on
September* 20. (*) In the first of these a complete set of labor
provisions was recommended, objections to certain features of the
proposals were raised, however, when the report was published to
the Industry and further hearings and conferences were called,
which resulted in recommendation of minor modifications in the
two supplementary reports. An amended Code embodying the
Board's recommendations was approved ilovember 9.

During the succeeding, spring season the operation of the
revised Code was closely observed. Plans load been made for a
second major code revision > — again employing tne instrument of
the Special Board — but conferences had hardly begun when the
Act was invalidated.

3. Other Functions.

The Board was at all times a confidential adviser of the Dep-
uty. There was hardly a major code problem, within the jurisdic-
tion of the Board or otherwise, on which the advice of the Board
was not sought. Its location in How York, the intimate contact
of its members with the industry's leaders, and their detailed
knowledge of conditions made it Tossible for them to supply HHA
with iniormation and advice which could not have been secured
from any other source.

Under the amended. Code the administration of apprentice and
sub-standard worker regulations was vested in the Board instead
of in the Code Authority, because of tne Board's special Iniowledge
of the problems involved and in order to prevent abuse of the
only two exce.itior.s to the basic minimum wage requirements.

C. SUKAB.Y CI' BCAED ACTIVITIES

1. Ordinary Activities.

The activities of the Board may be classified as "ordinary"
and "extraordinary". The first category comprises all work done
mrs-uant to authority conferred by the Code; the second, work done
pursuant to informal request of the Code Authority or I'M.

(*) These throe reports are re >rod.uced in full in the "report to
tne President," Code as approved ilovember 9, 1931, page 3ff.

9749

-104-

The most important "ordinary" activity undertaken by the
Board was the major revision of wage differentials during the
first two months of 1934. Immediately upon the approval of the
original Cole, protests and demands for" relief from the original
differentials beban to flow. in from all parts of the country.
These wore referred immediately to the Special Board, which called
a hearing in Hew YDrk City for the first week in January. After
one or two days there, the hearings were adjourned to Washington,
where they continued through January 12. As a result of these
hearings, the Board recommended and H3A approved (l) a transfer
of lew Jersey from Area A to area B, (2) a transfer of Milwaukee
from area B to area C, (3) exemption of St. Paul and Minneapolis
from the wage schedules, and (4) an additional ten per cent toler-
ance for all the non-union markets. (*)

The granting of additional tolerance was a simple way of in-
creasing the differential — ten ner cent more tolerance "being
roughly equivalent to a seven )er cent reduction in wage schedules.
In a series of subsequent recommendations various forms of relief —
principally in the form of tolerance — were granted to individual
manufacturers and markets, until the close of the spring season,
when the Industry, including the Board, turned its attention to
the writing of the new Code. Many of the exemptions recommended
by the Board were incorporated directly in the amended Code, notably
those transferring markets from one wa.Le area to another. Bxemptions
involving tolderance, however, were not so incorporated, but provi-
sion was made tliat they be continued temporarily and that they be
made subject to further study and recommendation. Most of these
were subsequently made permanent. (**)

The second most usual type of exemption recommended by the
Board was permission to employ a greater proportion of apprentices
than ?/as permitted ''o:/ the Code. Sucii exemptions were limited to
localities in which there was a serious shortage in the supply of
skilled labor. In some cases also permission was granted to
employ as ap">renticus in one occupation persons who v/ere experienced
in otners, in order to prevent loss of employment because of style
changes necessitating changes in the proportions of employees in
the different crafts. During the 1935 spring season, the Board
several times recommended that additional overtime be permitted to
meet heavy production demand. In addition, to these main types,
many miscellaneous but individually unimportant forms of relief
were recommended.

2. Typical Cases.

A clearer idea of the 3oard,r-, work may be obtained by a brief

(*) See Administrative Order 'Ho... 131-7.
(**) See Administrative Order No. 151-41.

PVi'.i

-105".

examination of a few typical cases. One firm, for instance, applied
for an increased tolerance, on the ground that it was the only
employer of labor in a small community, that the majority of its
workers had "been with it for many years, and that a large percentage
were aged and could not earn the code minima. Dr. Abclson madn a
■.special grip to the applicant's plant and spent four days studying
the problem. Complete information was obtained as to earnings
prior to and under the President's Reemployment Agreement, which
the applicant had signed, as to conditions in the commnnity, and
as to production costs. The advice of local officials, leading
citizens, ministers, and social workers was sought, and the appli-
cant's employees were interviewed. As a result of this investigation
the 3oard reported to i-TRA that the Code as it stood imposed an un-
due hardsship on this particular manufacturer, that his direct
labor costs were higher than those of competing manufacturers, and
that additional tolerance was necessary, net only in the interests
of the firm itself but to permit the reemployment of a fairly large
number of workers who had been discharged because of low productive
capacity.

Another case presented to the Board involved a plant which
had begun operations in a small market two or three years prior to
the Code. The owner wished to increase the size of his organization,
but since he had employed all the skilled labor available it was
necessary to train apprentices, for .which the Code at that time made
no allowance. The Board, after a thorough investigation in which it
found that the firm's output was comparatively small and exclusively
for sale in the surrounding territory, recommended the granting of
permission to employ fifteen additional apprentices to be paid at
the rate of $3.30 per week for the .first four weeks of employment,
$13.00 per week for the next four weeks, and code wages thereafter.
The success of this special relief was such that the general text of
the Board's recommendation was incorporated in the amended Code and
made applicable to all members of the industry.

An old established jobbing firm,, which had set up a small
manufacturing unit shortly prior to the adoption of the Code, nade
application for relief from the classified minima on the ground that
it was the only manufacturing concern in a certain rural area, tot
the market for its product was limited, and that the labor available
was not sufficiently skilled to permit payment of code wages. An
investigation substantiated these contentions, and the Board recommended
that the firm be assigned to the next lower wage area and that its
tolerance allowance be increased by ten per cent.

An unusual case involved a furniture manufacturer who had loaned
$20,000 to a millinery manufacturer and who soon thereafter had to
take over the debtor's business in order to protect his advance.
The furniture manufacturer, finding himself in the millinery business,
requested an exemption from the wage provisions of the Code. The
Board in this instance refused to recommend the relief requested,
pointing out that the business itself was '.veil established and not
entitled to relief merely because it had come under an inexperienced

9749

.. -1Q6-

management. Another request .denied by the Board was one in which
a large concern .which had been closed for a short period wished to
reopen provided it was granted lower. wage rates than those paid "by
other members of the industry in the same area.

After the adoption of the amended Code several firms situated
in metropolitan centers closed their plants, discharged all their
employees, and moved to lower wage areas. In most cases such
concerns requested permission to employ in their new plants a larger
proportion of apprentices than that permitted "oy the Code. The Board,
though careful not to establish a general noli cy discouraging migra-
tion and the "discharge of old employees in favor of new', denied
relief in these cases on the theory that the need for relief was
created solely "oy the applicants and that the granting of the ex-
emptions requested would be detrimental to the interests of the
we'rkers previously employed and of other firms in the industry.
In other cases, however,' where transfer from one area to another
was necessitated by factors outside the manufacturer's control, re-
lief was granted.

3. Fxtraoi'dinary Activities.

The most important work performed by the Board outside its
normal functions was in the formulation of the amended Code. In
addition, however, 1IEA called upon the Board to assist it in solv-
ing several other snecial problems.

(a) The Chicago Situation.

The most important of these came to be known as "The Chicago
Situation," although it involved St. Louis and Milwaukee as well.
The problem was the result of a conflict between the Code and a
collective agreement: the Code specified an hourly minimum and the
agreement a piece-work minimum. An average employee working at
union piece-rates' ordinarily earned a weekly salary for in excess
of that required by the Code. However, since there are frequently,
especially during the slow season, a number of periods each day in
which vjork in a particular craft is temporarily held up, Employees
even at the higher piece-rates often failed to earn the minimum
hourly rate specified by the Code.

Local HHA offices filed a number of complaints in Chicago
to force manufacturers to make restitution to their employees on
the basis of the hourly minimum of the Code. The result was the
institution of an injunction suit in the Federal Court to restrain
the Code Authority and NRA from requiring any such action. A series
of conferences were held in Washington in an endeavor to reach a
solution. Amendments to the Code, special treatment by ERA
Compliance Division, temporary exemptions and other measures were
suggested, but none seemed to meet all the difficulties involved.

Finally, in April, 1935, NBA reqviestcd the Special Board to
try its hand. After a detailed study of the problem, the Board

0749

-10?a

recommended the issuance of an order providing that Chicago, Mil-
waukee, and St. Louis manufacturers, be relieved from the hourly
minimum so long as wares were "based on niece rates arrived at
through collective bargaining ana such ;oiece rates were roughly
equivalent to the hourly rates set forth in the Code. In order
to avoid discrimination a similar exemption was granted to non-
union manufacturers on condition that --dece-rates conformed to
prevailing market rates. (*) This was rather vague and indefinite,
but it was apparently the only solution possible in viewcof the fact
that Union rates are based on piece-work and detailed piece-rates
could not possibly be written into the Code. In any event, it
settled the immediate controversy to the satisfaction of all con-
cerned. Hoi" it woul"' have worked out over a period of time cannot
be said, for the Supreme Court decision was handed down shortly
after the issuance of the Order.

(b) The Dallas Situation.

Another significant work of the Board, outside its main line
of duty, was its attemot to solve a controversy which arose in the
Dallas market under the amended Code. The sixty-odd Dallas manu-
facturers served notice on the Code Authority and HPA that they would
not comply with the hours reduction (from 37^ to 35) and the wage
increase (about 7-| per cent) called for by the amendments, but would
continue to abide by the labor provisions of the original Code.
Attempts of the Code Authority to enforce the new Code were met with
open resistance, and an application was made in the Federal Court
for an injunction against the Couc Authority and NBA. A number of
conferences were held between representatives of the parties involved,
including HPA, but no effective solution could be reached.

In April, 1935, at the suggestion of the deputy, the Dallas
group agreed to a special investigation by the Board for the purpose
of determining the merits of its contention that compliance with
the amended Code would make it impossible for it to compete. The
findings and recommendations of the Board were agreed to in advance.
A detailed survey of conditions in the market was made, as a result of
which the Board recommended an increased tolerance allowance, on con-
dition that the amended code bo complied with in all respects. These
recommendations were about to be put into effect when the Schecter
Case was decided.

D. PBOCBDUhB 0E THB BOARD.
1. Hearings.

On receipt of an application for relief, the Board fixed a time

(*) See Administrative Order at), 151-54.
9749

-108-

and place of hearing and notified all parties who might in any way
bo interested. Hearings of minor' importance were usually conducted
"by a single member of the Board, but at more important hearings
all members were present. When an application of unusual signifi-
cance was heard. HBA would be representee] in the person either of
the Administration member or the assistant deputy. A representative
of the Code Authority was usually" present, as well as a representative
of labor. At most hearings the Board was assisted by legal counsel.
A stenographic transcript was taken of -?11 testimony, a copy of
which was filed with NBA. '

The Board's general 'procedure was established during its
first hearings in January,' 1934. An atmosphere of informality pre-
vailed. The applicant was permitted to present all facts which he
considered pertinent, and representatives of the Code Authority and
labor were permitted to interrogate all witnesses, as well as to
present any evidence they considered pertinent. At the close of
the hearing, the merits of the case v/ould be considered by the Board
in executive session. If more evidence were f ound to b c required, a
newlicerrfflng might be called, the petitioner required to answer a
questionnaire, or the Board's accountant be sent to make a detailed
survey.

2 . Policy of Unanimity.

The Board early adopted the principle of acting only on un-
animous agreement. The disintegrating influence of minority re-
ports was thus avoided. The otherwise admirable report of the
Fur Commission, for instance, was rendered largely useless because
the force of its recommendations was destroyed by a dissenting
opinion. If an unanimous agreement co"ald not be obtained, the
dissenting member, at least formally, acquiesced in the decision of
the majority. Thus the Board always presented an outward appear-
ance of complete agreement,

3. Relation to NBA.

The recommendations of the Board were submitted in writing to
"NBA. In the beginning the policy was followed of not supporting
sucn recommendations with argument or a summary of the evidence
presented. This policy was evidently derived from Dr. Abelson's
experience as imoartial chairman and the desire to avoid building
up a body of "common law". Subsequently, however, 1THA required
that the report fully substantiate the recommendations.

From the first MBA accepted the findings of the Board as
conclusive. The Board was wRA's creature and it va.s necessary
that its prestige be in no .way impaired. Moreover, the Board was
in an infinitely better 'position to reach a fair decision than 1TPA
could possibly have been. 1IBA therefore approved the Board's find-
ings except where fixed- policy required otherwise. In any event,
close contact at all times between the Board and the deputy's office
prevented any open disagreement'.' To 'the industry, NBA and the Board

9749

- 1 '' 9—

were always in complete accord!

4 . Basis of Board Decisions.

In reaching its decisions,- the Board took into consideration
all pertinent elements of the problem involved. Because most
matters handled "by the Board related to wage rates, it was es-
pecially interested in the question of direct labor costs, and
cost tables were always required. In cases where the application
was made on behalf of an entire max'Itet, the Board, with permission
of individual applicants, employed accountants to make a survey
of the plants and to report their findings as to production costs.
An unusually low ratio of labor costs to selling price was consider-
ed prima facie evidence that the applicant already enjoyed a
competitive advantage and that relief would increase that advantage
unfairly. Consideration was also given to the price range of the
applicant's product. To determine the need for additional apprentices
a study of the available labor supply was generally made. The rate
of the applicant's personnel turnover was also considered.

Special attention was paid to wage rates prevailing prior to
YiBA and to wage increases necessitated by the Code, together with the
effect of such increases on previous competitive relationships. In
view of the number of variables involved, tne Board required that all
data furnished it be broken down according to crafts. Consideration
was also given to type of labor relationship, and the sex, national-
ity and age of employees. It was found, for instance, that foreign
born employees were usually more efficient than native, and male
employees more efficient than female.

The applicant's methods of distribution were examined, and
determination was made of the localities in which his product came
to rest. The Board found it necessary to make an exhaustive study
of the labor laws of the various States in order to avoid making
recommendation which might in any way conflict therewith. Methods
of wage payment were considered. If employees were compensated
on a piece basis, great care was taken to determine how fairly the
rates were fixed — it was frequently found that the inability of
employees to earn the code minima was a result of piece-rates having
been fixed at an unjustifiably low level. Information was sought as to
whether methods of payment had been changed after the adoption of the
Code, and as to whether or not any changes made were for the purpose
of evading wage increases to which the employees might otherwise
have been entitled. Finally, consideration was given to methods of
production, the length of time the applicant had been engaged in the
industry, and the age of the market involved.

The determination of proper wage rates was an extremely com-
plicated affair. Obviously, 1T3A could never have given the hundreds
of cases handled by the Board the same ue.roe of consideration as
wa* hy this mea.ns possible. In some instances — such as the
Chicago situation — the Board gave a greater amount of consideration
to the applications before it than was sometimes Tjossible for NHA

9749

-lip-
to give to an entire code.
5. Policy in Cases involving iTon-Comiiliance.

During the initial period, applicants frequently deferred
compliance with the Code pending the Board's decision. This
practice was condemned by the Code Authority on the ground that
it encouraged non-compliance and greatly increased the difficulties
of enforcement. The Board therefore laid down a policy of refusing
to hear any petition unless the applica.it during the pendency of
the case conformed strictly to the requirements of the Code. The
only significant exceptions to this policy were in the Chicago
and Dallas situations, where the 3oard was specifically requested
by NBA' to take jurisdiction. The Board also refused to hear any
application in which the constitutionality of the Eecovery Act
was contested.

"Since this Board is created by the national
Recovery Administration under the National Industrial
Eecovery Act, for a person to claim that the: said
Administration or Act is unconstitutional is likewise
a claim that this Board is unconstitutionally appointed.
Therefore, ■ we have no oower to act." (*)

(*) Transcript of Hearing, Special Millinery Board, January 8, 1934.

9749

-111-

IV COIIGLUSIOH.
A. RESULT'S OF CODE OPERATIQh

1, General Trends ♦

. The valxie ' of the industry's --roduct advanced by 11*4 per cent in
1934 over its 1933 level; unit volume advanced "by 4.2 per cent. (*)
The discrepancy between these two rates of increase indicates an aver-
age price appreciation of 6.8 per cent, a result partly of increased
labor costs under the Code and partly of higher material costs. Cer-
tainly this pri'ce advance -:ras mot excessive , nor was it nearly so great
as occurred in , other industries with considerably less justification.

The industry's increased dollar volume was distributed unequally
between the various price ranges and the several areas* Manufacturers
selling in -price ranges between 512.00 and $24.00 per dozen enjoyed the
greatest increase — 49.3 per cent. Price ranges between $4.00 and
$12.00 advanced 27.0 per cent, and between $24.00 and $48.00, 17.3 .
per cent. The increase in price ranges between $48.00 and $72.00 was
only 4.1 per cent and over $72.00, only 3.5 per cent. A decrease of
1.6 per cent was recorded for the very cheap grades selling at less
than $4.00 per dozen.

Dollar volume for Hew York and Chicago increased by about 11.5
per cent, as compared ■ with 9.5 per cent for the T7est Coast' and 7.9
per cent for Baltimore* and Philadelphia. The greatest increase was
enjoyed by the Southern, Hew .England and TTest Central markets — 19.1
per cent, 18.2 per cent, and 16,. 0 per cent, respectively. In only
one area was a decrease recorded — 4,6 per cent. for* markets in the
East Central States. (**)

Dollar volume has been declining at an accelerating pace for the
entire period for which statistics are available. This downward trend
was not only halted but reversed under the code. To what extent this
result is attributable to the Code is problematical. Improved con-
ditions resulting directly fro:: the Code Probably did encourage pro-
duction. For the most Dart, however, the increased volume must be
credited to general economic improvement. But such general improvement,
in turn, was probably largely a result of the broad recovery program of
which the Millinery Code was a part.

2, Wages.

Millinery workers enjoyed a substantial wage increase under the Code*
Average hourly wages for the first six months of 1935 were only 36.2 cents.
With the widespread adoption of the President's Reemployment Agreement in
August, however, the figure increased to 46.3 for the second six months.
The adoption of the Code increased average hourly rates for 1934 to 57»2
cents, and the adoption of the amended Code brought about a further in-
crease to 62.0 cents for the first six months of 1935. (***) Between

(*) Code Authority, First Annua,! Report, page 22. -■■•
(**) Ibid, pp. 22-26. % '

(***) See Table 41

-113-

early 1933 and early 1935, therefore, average hourly rates advanced
by no less than 71.3 Per cent — a remarkable achievement. Average
weekly wages advanced from $15.11 in 1.933 to $19.45 in 1934. The
average of $21.26 for the first six months of 1935 was 33.4 per cent
greater than that for the first six months of 1933. (*) That these
advances rre attributable directly to the Millinery Code is indicated "by
the correspondence of dates. The first rise was simultaneous with the
adoption of PEA, the second with the adoption of the Code, and the
third with the adoption of a Code amendment increasing minimum rates.
The correspondence is too marked, to he fortuitous.

Considerable variations rre recorded in the rates of increase for
the various areas. The greatest increase, 29.6 per cent, (**) took place
in the ITest Central States. The advance of 21.1 per cent in the Sou-
thern States was next largest. The increase for Hew York and Hew Jersey
"as 17.7 per cent, for the North Central States 16.3 per cent, and for ■
the New England States 13.9 per cent. Advances of 8.2 per cent took
place on the ITest Coastj 4.2 per cent in the East Central States and
2.2 per cent in Baltimore and Philadelphia. ..

3. Stabilization of Labor Costs

The most significant single accomplishment of the Code was the
stabilization of labor costs by means of occupational minima. It was •
no longer possible for manufacturers to remove from the primary mar-
kets in search of cheap labor? it was no longer necessary for legiti-
mate manufacturers to cut wages and work excessive hours in order to .
compete with prices set by sub-standard markets. Labor costs became
as stable and as predictable as overhead, and on the whole as uniform
as material costs. Wages ceased to be, what they had become during the
depression, practically the sole basis of_ competition.

Professor Seligman in his Survey states that the industry's most
pressing need "as for the stabilization of labor costs, which, he holds,
is the only practicable means of meeting the industry's major problems. (***)

"From the point of vie" of labor, stability of wages
and employment represents the only practicable means
of avoiding the wasteful replacement of skilled wor-
kers by new hands who must be trained and will there-
after remain to compete for employment. Prom the ,
standpoint of management, the attainment of wage stab-
ility, both territorially and by types of manufactur-
ers, offers the most promising approach to stability . . ,
of prices, and hence to profitableness for the Indus-
try." (****)

(*) See Table 42

(**) These figures refer to payrolls. They are not directly compar-
able, to the Bureau of Labor Statistics data summarized above.
See Code Authority, First Annual Iteport. See also Table 400

(***) E. P. A. Seligman, The ililliner-- Industry; A Survey, p. 45.

(****) ifcia.j p. 12-13.

9749 . ,

-113

Professor Seligman goes on to state that the 'beginnings of this
stabilization had been made by the Code and that the provisions relat-
ing to wages vre re "intelligent pnd well-devised. " (*)

4. Employment.

The record of reemployment is not so bright. Although average
man-hours per week fell from 40.7 in 1933 to 32.7 in 1934, (**) the
Code Authority estimated an over-oil increase 'in employment of o nly
5.7 per cent. No new employment was created anywhere except in Hew
York, and in all other markets enroloyraent drooped, in some cases sharply.
Thus manufacturers in the East Central States engaged almost one-fourth
less workers under the Code than formerly, and manufacturers in the
Southern States about one-sixth less. Employment in the New England
States and on the West Coast fell off by more than one- tenth and in
Baltimore and Philadelphia "o-j 7.5 per cent. Die decrease was 3.8 per
cent in the esse of the West Central States and 2.0 per cent in the
case of the llorth Central. These decreases --'ere a result of the high
wage requirements of the Code. Manufacturers outside Hew York had pre-
viously employed a considerable body of relatively unskilled labor which
could not earn the code minima. Whenever possible such workers -'ere
dismissed find only the more skilled employee's retained, notwithstand-
ing these decreases in employment, however, total payrolls increased in
all markets, and unit and dollar sales in all markets except those in
the Erst Central States. 'An increase in the efficiency of plant
operation is therefore apparent. Markets which had for years been
content with slipshod methods found themselves suddenly in a position
where their economic existence defended on a more scientific management.
Increased management efficiency made possible greater returns not only
to employers but to labor as '-ell. The cases of Detroit, B\iffalo,
Cincinnati and Cleveland are exce ->tional , since their share of the
industry's total volume has been steadily decreasing over a period of
years. This tendency merely continued under the Code. Even in these
markets, however, total payrolls increased bjr 4.2 per cent. (***)

5. Seasonality.

It was hoped during the formulation of the Code that the limita-
tion of hours and overtime would have the effect of reducing the sev-
erity of seasonal fluctuations. The Code wa.s in operation during
three peak periods; spring and fall of 1934 and spring of 1935, So
far as may be judged from available data, however, no appreciable

(*) Ibid., p. 13. Eor a comparison of direct and i ndirect labor

costs as between the several areas under the Code, see Table 44.

(**) See Table 43.

(***) See Table 43.

9749

-114-

lengthening of the seasons occurred. The conclusion has therefore "been
reached in' certain quarters that the Code was wholly ineffective in
this respect.

It is true that no remarkable results should have "been exacted,
simply "because the limitation of hours touches only the surface of the
problem, nevertheless, if it had been carried on for a fairly ex-
tended period of time, this device would probably have tended to al-
leviate extreme fluctuations. The education of the distributor would
"be a necessary part of the process, and three lessons are hardly
sufficient. A feu more seasons, end some improvement would probably
have been registered. It must be remembered also that the wrge provisions
of the Code tended to increase seasonality. In many of the non-union
shops outside ITew York work was formerly carried on fairly steadily
throughout the year. High minimum rates, 'however, so materially in-
creased labor costs that in many instances shops '-'ere forced to shut down
for considerable periods and_ to operate only when there was a volume of
orders actually on the books, workers could no longer be carried during
dull times. Thus, the salutary effects of hours limitation were to
some extent nullified by other oode provisions. ■

6. Trade practices.

The achievements of the trade 'practice -provisions of the Code are
more difficult to appraise. The Code Authority, however, estimated
that these mea.sures collectively increased the industry '.s income dur-
ing 1934 ^oj more than $3,000,000. The greater jart of this increase
— $2j500,000 — was credited to the terms and discount provisions
alone. $250,CGOwas credited to the returned merchandise provisions,
$200,000 to the trade-name label provision, and about $100,000 to the
advertising allowances provision. (*)

These trade practices were extremely difficult to enforce, not '
only because df the' intensity of competition but because of the ease
of disguising transactions. It is u-obable also that in many cases
where the manufacturer refused to grant concessions prohibited by
the Code his buyer was able to force a corresponding adjustment in
price. Even this, however, -.'as a benefit, for it tended to make
the price structure more definite and to free it from the beclouding
effects of invisible price reductions, furthermore, the very ex-
istence of these provisions constituted a moral support to the in-
dustry and in sone measure, strengthened its bargaining capacity.

(*) Code Authority, First Annual Report.

9749

-115-

7, Other Benefits.

One of the most important results of the entire code -process was
the education of manufacturers on the -oroblems of the industry. Cer-
tainly this vas the most enduring result. The control of wages and
hours nay have been destroyed by ''the court decision, but the industry
wil] .never forget^rinat iW-1 earned about itself in formulating and ad-
ministering, its Code. The Code Authority was an effective forum where
industrial •problems were discussed and analyzed. This process was
furthered by the comprehensive statistical data collected by the Code
Authority staff. A corollary of this tendency, was a. start in the deve-
lopment of effective industrial leadership. .The very wranglings of
the Code Authority demanded and at the same time trained leaders.
The thinking of these leaders still inclines to the provincial, but
after all, a scant eighteen months is hardly sufficient to alter
completely the attitudes of a lifetime. Intangible as these1 benefits ,
are, they are nevertheless real, and in any full appraisal of the
Millinery Code they must be accorded recognition.

«<
t

9749

•116-

Vt. DEVEL.0pi.5nTS si:, "ci] juhe. 1955

Immediately after, the invalidation of the Code, leaders in the
industry attempted to salva :e its main features through the establish-
ment of a national trade association and the adoption of a voluntary
code under the substitute ERA legislation. A series of meetings were
held, culminating in a conference in Chic- ;o at which representatives
of all mrrkets were' present. The national Millinery Manufacturers'
Association was the result, Mr, Mas Meyer was named chairman and
Mr. A. H. • Barenboim, late of IDA, executive secretary. A central
office was to be maintained in ITew York, and "branch offices in all
markets of importance. Each market, however, was to remain practi-
cally autonomous.

The movement soon died out, largely because of factional differ- ■
ences. In the meantime, conditions in the industry went from bad to
worse. Discounts increased, sometimes to as high as 12 per cent. (*)
The volume of cancellations and returns became greater and greater,
pressure began to be exerted to force shipments on consignment and .
unwer rented allowances for advertising. Practically every market
outside Hew York City, whether under a collective agreement or not,
abandoned the 35-hour week. Union markets hrve generally been held
to 40 hours, but in non-union markets standard hours pre as high as
44 andL during the season frequently reach as high as 60. Hot much
change in wage standards has been evident where the union is in control*
In practically every market where it is not, however, the occupational
minima have been abandoned, although in some markets a single minimum
— usually about $12.00 — is maintained. Average weekly wages for the
record six months of 1935 were 7.3 per cent less than for the first six
months; average hourly rates fell, during the same oeriod, from 62.0
cents to 57.5. (**)

The already high bankruptcy rate is apparently on the increase.
Industrial migration has set in to an alarming degree. Between June
and December, 1935, 38 firms moved out of He" York City. Most of them
to Connecticut and Hew Jersey, leaving more than 2500 workers stranded.
In addition to the attractions of low wage and non-union labor, chambers
of commerce and other local organizations have offered special induce-
ments in the way of free rent, subsidies, etc. The Hew York Real Es-
tate Board has become seriously concerned over the movement because the
rental incomes of its members ha.s beer, impaired. A special -\-~"

(*) The information set forth herein was supplied by Messrs. 0# T7,

Pearson, Executive Secretary, Millinery Stabilization Board (see
infra.), and Joseph Heifer, Executive Secretary, Women's Head-
wear Group,

(**) See Tables 41 and 42.

9749

-117-
committee has "been set up to study the -problem.

Toward the latter part of 1935 Mr. Max Zaritsky, President of the
Union, erne to realize that something had to "be ions if the members of
hi;: organization were to retain their jobs. He therefore arranged a
series of conferences with industry leaders to see what could be accom-
plished. As a result it was decide! to establish an indeoendent agency
to be known as the Millinery Stabilization Commission, to consist of
three members having no connection with the industry. Mr. Max Meyer
was selected as chairman end Mr. 0. 17. Pearson, former administration
member of the Code Authority, as executive secretary. Dr. Paul F.
Brissenden of Columbia University, an UHA official, was selected as the
third member.

A supplementary collective agreement has been entered into binding
union shops in Hew York City to abide by the trade practice provisions
of the invalidated Code. A label to be issued by the Commission will
signify such compliance, as members of the union will refuse to work on
any hats to which labels are not affixed. The label:; are to be sold at
such a price as will finance the operations of the Commission. A set
of trade practice rules — substantially those of the old Code — are
now pending for approval before the Federal Trade Commission.

The Commission has received the practically unanimous support of
the Her York market. Hew Jersey has already opened negotiations look-
ing toward the Commission's extending its scope across the Hudson.
Chicago is especially interested. A number of meetings have been held
to discuss the establishment of an independent commission in that market,
and a committee is proceeding to How York to study what has already been
done. Within a. year similar agencies will probably exist in all union-
ized centers. For the time being at least, little effort will be made to
operate on a national basis. Inter-market antagonisms are still such
as to make a high degree of local autonomy imperative.

The stabilization commission idea, in spite of its obvious shortcom-
ings is the most -progressive step which is feasible for the industry
at this time. It will not be as effective as the Code, but it should
be able to check some of the worst tendencies which have followed the
invalidati .>n of the Code.

9749

•118-

APP1KDICES

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•Hi

TA3LE 3
nI-IS -.E;lJ'CaA IIOUST2IES
Value Of Product 3y Principal Glasses, 1229 a/

Per cent
Value of total

All Products $^52,725,355 -Z] 100.0

Millinery Products b/ 2^7, 591, USo 5H.7

Hat Products c/ 126, 963, 159 28.1

Cap and Cloth Hat

Products d/ 3^,831,878 7-7

Subsidiary Products 0/ H3, 33S.832 9«5

a/ Piftcenth Census of the United States: "Uanuf actures, 1929"; Vol II

b/ Includes triced hats, infants' headwear, custom nillincry, and
knitted he adtre ar «

c/ Includes Census Classifications of "Hats, Pur-Pelt", "Hats, !7ool-
Pelt", and "Hats, Straw, Men's."

d/ Includes Census Classification of "Hats and Caps, other than Pelt and
Straw, Mens."

e/ Includes Census Classifications of "jV - :; crs, Pluincs, and Manufactures
Thereof," "Hat and Cap Materials, lien's," and, under "Millinery,"
milliner;/ braids, trimmings, francs, linings, and other millinery
products.

f/ Does not include value of products not normally belonging to this

Industry, nor receipts for contract \70rk. Does include value of
products made as secondary products by other industries.

97^9

—134—

DABLE 5

EAT [^SUJACI-CaiiTG IdDUSTHY
Value oi Products, Principal Classes, 1939 a/

Class Value b/ Per cent

of total

All Products ,5126,963,159 100.0

fur-Felt Products, Total 3';, 370,085 74.9

Finished Tats 70,303,331 56.0

Eat Bodies 34,4-69,154 18.9

Straw Products, Total 22,539,484 17.9

Straw Braid Eats 13,333,8^7 10.5

TToven Body Hats 4,850,152 5.8

Harvest 4,479,485 3.6

wool-Felt Products, Total 9,055,590 7.2

Finished Hats 4,4-09,791 3.5

Hat Bodies , l,: ;v: 3.9

Other ■ 1,024,-45 0.8

Silk and Opera Hats c/ .

•J Plit ..-Litd. Census of the United 3t.:..tes; "Liuiufactures, 1929"; Vol.11

d 3ocs not a-jree with Ta le I, which includes recei its for contre t

work and value of products not normally belon in _, to this Industry.

c/ Ho n- rje;;r arable fro.: Census data; in any event negligible.

7

-125-

TA3L3 6
CAP AD CLOTH EAT INDUSTRY
production of Various Types of Caps a/

Type of Cap

All tyoes of Golf Caps
§0.25

0.39
0.50
0.59
0.69
0.79
1.00
1.50

Dozens Produced

Others b/

15.3,428

22,572

17,001

9,507

4,09 V

2d, 558

941

3,042

41 , 303

Per cent of total

100.0
14.8
11.1

6.3

2.3
16.1

0.6
19.3

2.0

27.0

a/ Source: Report of Special Commission for the Cai and Cloth Hat Industry
Source: Questionnaires sent out by the Industry Reporting Unit, Division
of Research and Plannin ;, National Recovery Administration; supple-
mentary questionnaires sent out by Special Commission; and Production
Reports made to Ca > and Cloth Hat Code Authority.

b/ Includes hunt in , uniform, shop', railroad and novelty caps.

9749

-123-
EA3LE 7
CAP AKD CLOTH HAT INDUSTRY

Value of Pro -diet;/, by Principal Classes , 1939 a/

Class Value Per, cent

oi total

All Hots anc Caps b/ ;36,330,775 c/ 100.0

Cloth Hats ant. Caps 34,138,155 94.0

Other Hats and Caps 673,723 d/ 1.9

Hats and Caps made as
secondary Products

in other Industries 1,4-98,897 4.1

a/ fifteenth Census of t;c United States; "iianufactures, 1929"; Vol.11

b/ ,J-he tern "Kats and Caps" is used for convenience. The correct

tern, nc cor din,' to the Census, is "Hats and Caps, except felt and
straw, men's."

c_/ This total does not agree with the figure for the Cap and Cloth Hat
Industry set forth in Table I, this latter figure including other
products not nornally belon ing to this industry ($1,413,696) and

receipts for contract worh ( 1,153,987), neither of which is included

in the total for this table, and excluding hats and caps roacle as secondary

products in other industries..

d/ This figure includes si lie and opera hats, this ;>roduct being included

hie Census Classification of "hats and caps, except felt and straw, ..len's".
-'or Code purposes, however, as well as for the i r ■ ses of this Report,
this product is ooxisidered a part of the Hat Han In Industry. See above.

: 3

-127-

IABLE 8
SUBSIDIARY HUAOTEAE INDUSTRIES

Value of Products, by Principal Classes, 1929 a/

Class of Product Value Per ccent

of Total

All Products ^42,952,000 100.0

Millinery/ Total 17,912,000 41.9

Feathers 755,000 1.8

Braids 3,969,000 9.4

IriimningB 2,465,000 5.8

Frames 890,000 2.1

Linings 7,429,000 17.2

Other !, 404, 000 5.6

Hat Manufacturing and

Caa and Cloth Hat, Total 25,030,000 58.1

Hatters' Fur 13,033,000 42.2

Sweafoands 1,730,000 4.1

Linings 2,094,000 4.8

Cap Fronts S8'.:,000 2.1

Stamping and Embossing b/ 637,000 1.4

Other 1,545/ 3.5

a/ Fifteenth Census of the United St. .tes; "Manufactures, 1929",

Vol.11 —

b/ A service, not a product

9749

-128-

TA13LE 9
MILLIH2HY IIEUSTRY
Value of Products by Principal Divisions oi
the Millinery Industry, 1929 aj

Division

Value of Product

Per cent of Total

All Divisions

Private or Home
Millinery

Custom Millinery

F .c t o ry Ml Hi ne ry

I nf an t s ' He adwaa r

Kh i 1 1 c d Ee adw e ar

Mi lline ry Lianui'ac tur ed
as Secondary Product by
other industries

$248,543,707 b/

sJ

65,000,000 d/
172, !30,099 e/
5,290,079
3,783,126

2, £0,443

100.0

£/
2G.1

fi9.3

2.1

1.5

1.0

a7 fifteenth Census of the United States; "Manufactures, 1929"; Vol.11

by Includes ^952,321 for value of products not normally belonging to
Millinery Industry; consequently does not agree with, figure r'iven
in Table IV.

c/ 'So data available, but inconsequential.

d/ Estimated by author from available information; see discussion in text,

ey Includes value of trimmed hats and value of products not normally
belonging to this Industry; does not include value of millinery
frames, linings, braids, trimmings, etc. (though much of such
products are manufactured by Millinery Industry proper), nor value
of millinery ma.ru ac tur ed as secondary product by other industries.

J 7^9

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1935 c/

-137-

T A B L 2 U

MILLINERY INDUSTRY

Number of Establishments, Number of
.Tage Earners, and Average Number of
Wage Earners per Establisliment,
1927"- 1935

Year Number of

Es tabl i sj irnen t s

Number of
Wage Earners

1,148

33,311

1, 293

32,206

1,129

26,612

834

22,574

1,373

30,954

Average Number of
lage Earners per Es-
tablisliment

29
25
24
27
22

a/ Fifteenth Census of the Units 1 States: " Manufactures, 1929", Vol. II

b/ Census of Manufacture? : 1933, "Wearing Apparel".

c/ Data submitted by Code Authority in connectiDn with proposed

CTde Authority Budget. Not directly comparable with Census data.

9749

-138-

TABLE 19

LULLIMSRT INDUSTRY

Mortality, by Areas, First Ten
Months of 1334 a/

Area

Failures

Members of
Industry in
Area

Percent of
Failures to
Members of Industry

All areas 281

Metropolitan New York 222

Denver, Kansas City,

St. Louis 6

Chicago, Minneapolis,

St. Paul, & Milwaukee 18

Connecticut, Massachusetts

and Rhode Island 4

Birmingham, Atlanta,
Oklahoma City, Dallas
and Richmond 4

Pacific Coast 19

Philadelphia and Baltimore 4

Detroit, Buffalo,
Cincinnati, and
Cleveland 4

1 , 353
926

53

105

45

35

115

34

35

20.8
24.0

10.3

17.1

3.9

11.4
16.5
11.8

11.4

a/ Data compiled from (Code Authority,) First Annual Report, January, 1935.

9749

-139-
T A 3 L 3 20

Monthly Percentage of Retail Sales of Millinery
to 1931 Total Sales of Millinery for 27 Retail
Stores North of Lie Ohio River Between Iowa and
Maine in Towns of Population of 30,000-120,000 a/

January 4.0 percent

February 4.8

March 11.7

April 14.8

May 9 . 8

June 10.3

July 4.8

August 3.0

September 11.9

October 9.3

November 5.5

December 5.1

100.00 nercent

a/ "Michigan Business Studies". (Via Code Authority)

9749

-141-
T A 3, L. 3 -21

Seasonal in the Retail Millinery Trade;
Based on a 20 Year Survey a/

January 5.0 percent

February 7.5

» * *

March o/ ' 12.5

April h/ lo.O

May ...-•• 9.0

June 7.5

July . " ' 6.7

August 5.0

September 12.5

October 9.. 5 • • ' "

November 3.3

December . • ■ "6J5

100.C -oercen't

a/ Millinery Trade Review: October 1930. (Via Code Authority)

b/ Easter determines the sales and the importance of the month,
Combined figures for the 2 months are usually • the- same.

9749

-142-

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' -144-

T A B L E 23

UILLIHEay INDUSTRY

Estimated Average Weekly Payrolls in 1,000''?
of Dollars, First and Second Six Months'
Periods, 1926-1934, with Calculated Percentages

of Yearly Activity Falling in Each Period, a/

Estimated Average "Jeehly Percentage Total Yearly

Payroll Activity

First Six Second Six Twelve First Six Second Six Twelve
Months Months Months Months Months Months

1926 860.3 776.1 813.2 52.6 47.4 100.0

1927 903.1 895.3 839.2 50.2 49.8 100.0

1928 949.4 823.6 886.5 53.5 46.5 100.0

1929 905.7 73G.7 821.2 55.1 44.9 100.0

1930 776.9 623.2 700.0 55.5 44.5 100.0

1931 666.2 535.0 625.6 53.2 46.8 100.0

1932 558.7 403.7 483.3 57.8 42.2 100.0

1933 400.1 376.9 388.5 51.5 48.5 100.0

1934 448.1 345.9 397.0 56.4 43.6 100.0

Average 718.7 619.0 663.3 54.0 46.0 100.0
a/ Compiled from Bureau of Labor Statistics, Estimated Veekly Payroll.

9749

-145-
T 4 '3 L 3 34

HI. LIVERY INDUSTRY

Variations in Degree of Seasonality,
By Areas - 1934
(Average leekly Jages, by Months, Reduced
to Percentage Basis; Each Areas' Average
for Year Equals 100) a/

New

York

New

Area

Area

Area

Area

Area

Area

Area

City

Jersey

II b/

III c/

IV 1/

V e/

VI f/

VII si

VIII h/

Jan.

86.5

96.3

97.2

95.3

93.6

84.3

96.5

33.1

85.4

Feb.

96.4

107.1

3J«o

116.1 •

102.2

109.5

99.5

79.4

107.3

March

127.2

128. 2

123.2

119.3

130.4

119.6

136.0

131.5

125.1

April

112.3

120.4

117.0

113.8 '

111.4

113.4

•104.2

113.3

108.2

May

103.9

128.0

109.1

109.5

95.0

97.3

93.4

98.0

103.1

June

91.5

100.7

31.7

69.1 ■

83.7

86.5

39.3

64.4

92.7

Jul y

75.4

79.5

34.0

87.8

89.6

97 . 6

38.5

79.6

80.1

Aug.

133.5

114.3

107.3

121.3 •

115.0

111.4

103.7

133.4

108.9

Sent.

135.5

118.4

101.5

114.6

102.7

115.5

111.6

130.1

98.3

Oct.

91.9

81.5

96.1

75.2 -

103.3

97.1

1C0. 6

110.1

104.1

Nov.

74.6

57 . 2

96.5

88.6

86.7

78.2

33.4

90.3

99.0

Dec.

71.3

67.9

32.1

83.9

91.4

89.1

93.3

87.0

37.8

Ratio of

LOW to

52.6

52.0

65.7

57.9

72.0

65.4

CI. 3

48.3

64.0

High

a/ Compiled from data submitted by Millinery Code Authority. Data does
not indicate full extent of fluctuations &s weekly averages are
calculated on basis of persons actually employed. Moreover, data
not entirely comparable as between areas because strongly unionized
markets employ device of equal division of work, thus unequally de-
pressing average weekly wajes per employee.

b/ Includes Denver, Kansas City, and St. Louis.

c_/ Includes Chicago, Minneapolis, St. Paul and Milwaukee.

d/ Includes Connecticut, Massachusetts, and Rhode Island.

_e/ Includes Birmingham, Atlanta, Oklahoma City, Dallas and Richmond.

f/ Includes Pacific Coast.

g_/ Includes Philadelphia and Baltimore.

h/ Includes Detroit, Buffalo, Cincinnati and Cleveland.

9749

-145-

TA3L3 25

Comparison of Seasonal Fluctuations In
Employment, Millinery, Fur-Felt Hat,
Dross Manufacturing and lien' s Clothing
Industries 1934 a/

Millinery Fur-Felt

Dre s s

Men' s

hat

Mfg.

Clothing

Jan.

104. j

98.7

98.1

95.5

Feb.

119.2

■ 103.8 •

105.1

105.5

'March

-122.5

106.0

105.2

105.9

April

■118.2

106.3

107.5

101.2

'May

110.7

105.3

109.2

88.8

June

• 91.8

93.3

39.4

91.9

July

• 71.2

95.9

68.0

93.2

Aug.

•.'to • *J

103.2

102.1

107.5

Sept.

107.8

104.7

110.3

108.4

Oct.

97.7

94.4

111.7

104.9

Nov.

84 . 2

91.3

95.5

95.9

Dec.

• '79.3

96.1

97 . 9

96.3 .

Ratio of

58.1

36.4

60.9

81.9

Low to high

a/ Bureau of 'Labor Statistics, Index of Zmploynient.
1934 basis by autnor.

Transposed to

9749

-147r-'

T A' j L

26

MILLINERY INDUSTRY

Part-Time Employment, as indicated by
ttie Relation Between the Index of Pay-
rolls and the Index of Employment,
1934 - 1933 a/

Year rnd
Month

Index of
Employment

Index of
Payrolls

Percentage Ratio
of Payroll Index
to Employment Index

1934

January

66.6

February

76.0

March

73.2

April

75.4

May

70.6

June

53.5

July

45.4

August

59.3

September

68.8

October

62.3

November

53.7

December

50.6

46.4
56.9

67.4

61.3

54.2

41

50.

47,

60,

43.

36.0

35.2

1

,1
.4

,3
,7

69.7
74.9
86.2
31.3
76.8
70.3
■ 66.
79.
37.
70.
67.0
69.6

.3
,9
.6
,1

1935

January

56.5

February

60.2

March

63.6

April

63.1

May

55.8

June

50.0

July

37.9

43.1
46.9
56.3
55 . 9
38.8
37.7
24.3

76.3

77.9
88.5
38.6
69.5
75.4
64.1

a/ Bureau of Labor Statistics, Indexes of Employment and
Payrolls, 1929 = ICO.

9749

-148-

T A 3 L

27

..ilLLIKSHY INDUSTRY

Part-Time Employment, as Indicated
by the Relation Between the Index
of Payrolls and the Index of 3npl oy-
ment, 1926-1934 a/

Percentage Ratio

Year

Index of

Index of

of

Payroll Index

Employment b/

Payrolls b/

to

Employment Index

1936

96.7

99.6

103.0

1927

103.5

109.5

105.3

1923

104.4

107.9

103.4

1929

100.0

100.0

100.0

1930

90.1

35.2

94.6

1931

82.7

76.2

.92.1

1932

73.0

53.3

30.5

1933

69.4

47 . 3

68.2

1934

63.3

48 . 3

75.7

Average

1926-

-1929

101.2

104.3

103.1

1930-

-1934

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TABIC 30

MILLIE3SH INDUSTRY

Average Annual Ja^es, by Areas
and Crafts, 1954 a/

All Block- Cutt- Opera- Trim- Others

Bmployees ers ere- tors in;rs

United states 11,106 $1 ,773 )1,764 $1,392 $762 $1,194

New York City 1,309 1,983 1,973 1,600 794 1,273

New Jersey 365 1,303 1,455 1,0 639 1,032

Denver,

Kansas City and

St. Louis • 394 1;320 1,283 1,060' 667 938

Chicago, Minnea-
polis, St. Paul,
and Milwaukee 931 1,754 1,653 1,158 076 1,112

Connecticut,

Massachusetts,

and Rhode Island—- 928 1,133 1,550 953 776 999

Birmingham,

Atlanta,

Oklahoma City,

Dallas and Richmond— 332 ...J., 092 1,016 345 676 966

Pacific Coast 930 1,312 1,070 992 316 1,071

Philadelphia and

Baltimore 930 1,652 1,541 1,129 597 1,002

Detroit, Buffalo,

Cinncinati and

Cleveland 342 1,138 1,373 934 670 1,033

a/ Compiled from data submitted by Millinery Code Authority. Based
on reports of approximately 60 % of Industry by volume of business.

9749

T A 3 L

MILLIIISRY INDUSTRY

Average 7eekly lages of Principal
Crafts By Cities of Three or More
Manufacturers, 1934 a/

Atlanta, Ga.
Baltimore, Md.
Boston, Mass.
Buffalo, N. Y.
Cnicago, Illinois
Cleveland, 0.
Dallas, Tex.
Detroit, Mich.
Elizabeth, N. J.
yioboken, N. J.
Jersey City, N. J.
Kansas City, Mo.
Los Angeles, Calif.
Milwaukee, .Yis.
New York. N. Y.
Pniladelpnia, Pa.
Portland, Ore.
Hichmond, Va.
San Prancijco, CaliJ
Seattle, Wasn.
St. Louis, Mo.
Union City, il. J.

31ockors

Cutters

Operators

Trimmers

)3l . 66

'516.22

$15.71

$12.97

21.33

19.74

20.13

13.85

33.92

23 . 54

17.53

13.43

1 . . 46

22.55

15.33

12.92

33.94

32 . 26

23.70

12.58

13.73

29.80

20.81

12.09

18.49

18.85

17.62

12.17

22 . 25

24.96

16.35

13.28

21 . 84

28.79

17.37

11.37

37 . 44

52.72

26.33

15.94

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20.11

10.85

19.31

19.39

17.17

14.65

23.91

23.33

19.95

13.93

■ !6 . 26

21.09

20.24

15.56

35.99

37.03

29.99

14.41

34.71

35.13

23.23

9.24

17.32

19.25

19.92

15.61

20.82

21.75

13.22

12.66

25.97

22.06

13.50

17.27

36.77

14.87

17.21

14.32

25 . 67

25.05

20 . 53

12.33

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25 . 54

14.29

'J Data submitted by Millinery Code Authority. Averages are for
52 weeks.

9749

-INS-
TABLE 32
VALUE OF KlODUCTj 1937-1 933 a/

Comparison of Liillinery Industry with All
Other Manufacturing Industries.

Year liillinery All Oth^r Percentage

Lianufac- Ratio
(Millions) turing

1927 $209 $62,718 0.33

1929 196 b/ 70,435 0.28

1931 145 ~ 41,205 0.35

1933 77 30,527 0.25

a/ Fifteenth Census of the United. Str.tes, "ilanuf actures: 1929", Vol.

II, pp. 15 and 327; Census of Ilanuf actures: 1931, "liillinery";

Census of ilanuf actures: 1933, "Ui s.ring Apparel."
h/ For 1929, manufacturers' soles, ( shipments or deliveries); for 1927

and 1931, production.

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-156-

MILLINERY INDUSTRY

V

Percentages Derived From Operating Statistics a/

1927

1S29

1931

Labor and Cost of Materials,
containers for products, fuel
and purchased electric energy.
-100$

Labor

Co-t of Materials, etc.

Labor and Cost of Materials,
containers for products, fuel,
and purchased electric energy
as 3 of Value of Products

31 . l;o

68.93

Labor

22.3$

Cost of Materials, etc.

49. Co

Mark-up as <3 of Value of

Products

28.3$

Mark-uo .on Cost

39.5$

30.3$
69.7$

21.8$

50.1$

28.0$
39.0$

31.2,0
68.83

22.5^b
49.7-1

27 .o'-o
38.5-3

a/ Fifteenth Census of the United States,
"Manufactures: 1929, "Vol. II.

9749

-157-

TABLE 36

1TUMBER OF WAGE '-"EARNERS , 1927—1933 a/

Comparison of Millinery Industry with All Other Manufac-
turing Industries

All Other
Year Millinery Manufac- Percentage

(average for year) turing Ratio

1927 $33,311 $8,349,755 0.4

1929 32,206 8,821,757 0.4

1931 26,612 6,506,701 0.4

1933 22,574 6,055,736 0.4

a/ Fifteenth Census of the United States,

"Manufactures: 1929, "Vol. II; Census of Manufactures; 1931, "Millin-
ery;" Census of Manufactures, 1933: "Wearing Apparel."

9749

-158-

TABLE 37

WAGES, 1927—1933 a/

Comparison of Millinery Industry with All Other
Manuf acturing Industries .

AH Other
Year Millinery Manufac- Percentage

(Millions) turing Ratio

1927 $46.8 410, 848.8 C.43

1929 42.7 11,621.0 0.37

1931 32.6 7,153.4 0.46

1933 20.3 5,806.8 0.35

a/ Fifteenth Census of the Vn i te d S t at < ■ s ,

'^Manufactures : 1929, "Vol. II, pp. 15 ana 327; Census of Manufactures,
1931; "Millinery;11 Census of . Manufactures , 1933: "Wearing Apparel."

9749

-153-

TABLE 33

KILLIKSRY INDUSTRY

Relationship Between Wages And Value Of Product
1927— 1933 a/

Year Wages V lue of Percentage Ratio

Products of Wages to Value
( thousands ) of Products

1927 $46,788 $209,495 22.3

1929 42,715 195,593 b/ 21.8

1331 32,565 144,575 " 22.5

1933 20,313 77,347 26.3

a/ Fifteenth Census of the United States, "Manufactures: 1329", Vol.11,
p. 327; Census of Manufactures: 1951, "Millinery"; Census of Manu-
factures: 1333, "Wearing Apparel."

h/ Figures for 1929 represent Manufacturers' sales (shipments or de-
liveries); for 1927 and 1931, production.

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-163-

TABLE 41

LIILLINERY INDUSTRY

Average Hourly Wages,
1932—1935
(Cents) a/

193£

1933

1934

1935

January
February
Mai ch

April

May

June

July

August

September

October

November

Decemoar

47 . 6

30.7

49.6

59.9

46 . 1

31.2

52.3

60.4

•-1".'

34.5

56.9

33.0

43 . 8

4; i . 8

56.8

65 . 3

...; . .

38.7

55.2

60 . 6

42 . 2

41.1

53.7

62.4

46.9

■ 38.5

53.5

55.1

48.1

4.5.6

61.6

59.1

40.8

47 . 7

65.4

58.0

43.1

48.6

61.7

55.5

39.2

48.9

59.1

59.0

40.7

43.5

57.3

58.1

Averages

7ir3t 5 Ho .
Second 6 IP.
Y( ar-

44.5

36.2

54.1

62.0

. .1

' 5.3

60.3

57.5

43; 8

• 41.2

• 57.2

59.3

a/ Bur ecu of Latror Statistics, ".unpublished d I

9749

-163-

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-164-

TABLS 43

MILLINERY INDUSTRY

Average Man Hours Per YJeek,
1932-1935 a/

1932 1933 1934 1935

January

February

March

April

May

June

July

August

September

Oc t obe r

November

December

Average 40.0 40.7 32.7 32.2

42.2

43.4

34.9

32 .5

43 . 0

45.6

35.7

32.3

45.7

41.9

36.8

34 . 1

42.5

. .42.9

35.5

35.9

35.8

44.0

33.6

29.7

38.3

43.1

30.3

30.4

35.9

44.2

31.2

29.3

37.6

40.0

32.2

34.0

44.8

39 . 6

■ 33 . 7

40.1

40 . 5

35.7

29.9

32.9

37.3

33.2

28.9

27.4

35.1

34.2

29.9

37.8

a/ Bureau of Labor Statistics, unpublished data

9749

-l as*

TAPLE 44

KILLIHBEY IlTDUSTkY

Percentage Of Direct And Indirect
Labor Costs To Sales, 1924 a/

Direct Labor b/ Indirect Labor c/ Total
Costs Costs .. Labor

Costs

Metropolitan lieu York,

including northern

New Jersey 22.02co 6.16f0 28.1Si

Denver, Urnsas City,

and 5t. Louis 20.66 5.37 26.03

Cli i c aa o , '. [inne apol is ,

St. Paxil, and Milwaukee 24.64 6.01 30.65

Connecticut,
Massachusetts, and

Rhode Iz}.;tlC. 22.46 5.54 28.00

Richmond, Atlanta,

Dallas, Oklahoma City

end Richmond 16.54 5.51 22.46

The Pacific Coast 24.24 5.47 29.71

Philadelphia and

Baltimore 21. oO 6.43 28.03

Detroit, Buffalo,

Cincinnati, end

Cleveland 24.37 5.92 3C .29

Average 22.12 5.80 27.92

a/ Code Authority, First Annual Report, P. 11.

b/ "Direct Labor" includes blockers, cutters, operators, and trimers,
c/ "Indirect Labor" includes factory, office, shipping, foremen, and
designers .

9749

-IS

II. treTITODOLOGIGAL AFPEITDIX

9749

-167-

H. TIETHCDOLQfTICAL APPEITDIX

Sourcee.

The principal source upon which this stud^ is based is the author's
personal knowledge of the industry gained through his part in fomulating
and administering its Code. Other important sources include the stat-
istical data compiled by the Code Authority and kindly made available to the
author by llessrs, Lleyer and Lipshie (see "Acknowledgements"); The
Millinery Ir histr?'-; A Survey, by E. R. A. Seligman (this study was fi-
nanced >p the Code Authority and pxxblished by it in mimeograph form in
1934); several unpublished papers on various industry problems prepared
by the Code Authority; and the UFA millinery files. The discussion of
style is based largely on Professor Kystrom's Economics of Fashion and
Fashion I'erchandisi.ir. Other sources are indicated in the text.

Suggestions for Further Rese-rcu .

The greatest deficiency of the present study lies in its failure to
treat adequately the industry's maladjustment in its raw material and
distributive relationships. This failure is due partly to the scarcity
of reliable data and parti"- to the fact that the fall implications of the
maladjustment did net become apparent until the study was completed. By
all odds, the most fruitful field for further research lies along these
lines. (See brief statement of -problem in n Summary. " )

The discussion of the industry's labor relations leaves much to be
desi"ed. It had original"':- been planned to outline in some detail the
history of the millinery union, and to treat comprehensively the subjects
of collective bargaini:im, 6 etermina.tion of wage rates, operation of ar~
bitrative machinery, structure of the union, administration of union af-
fairs, etc. The success of labor relations in this industry more than
warrants the thoroughness of the original plan. The preparation of this
phase of the study wa.s entrusted to hr. Joseph E. Brodins'-y, formerly of
the IIPA Labor Advisory Board. Completion of j'r. Brod.ins!-y' s 'work, how-
ever, was ifce i:iT)osp.ible by a personnel redu tion in December, 1935.
Fortunately, ne plans to embody the res Its of his research in a pub-
lication which he will issue privately.

Finally, attention is called to the great store of statistical data
contained in the files of the Code Authority. Limitations of time and.
personnel have made it impossible in the nresert study to make full use
of this materiel. As a part of its compliance activities, for instance,
the Code Authority received, periodical payroll reports from every member
of the industry. Tabulation of this material alone would, produce ex-
tremel'g valuable results. Other data, there on file would allow of a
comprehensive survey of practically every phase of the industry's problems.

974f

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 cf the /arious 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 Revie*.

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 cede 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 meabers 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-coapliance,
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 Histories, 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 ofiicially 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 code, the sponsoring group, the evidence advanced to sup-
port the proposal, the report of the Division of Research and Planning on the industry, the
recommendations of the various Advisory Boards, certain tv-pes 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 belo.v, grcuped according to the char-
acter of the materia] . (In Work Materials No. 17, Tentative Outlines and Summaries of
Studies in Process, these materials are fully described) .

Indust ry Studies

Automobile Industry, An Economic Survey of

Bituminous Coal Industry under Free Competition and Code Regulation, Economic Survey of

Electrical Manufacturing Industry, The

Fertilizer Industry, The

Fishery Industry and the Fishery Codes

Fishermen and Fishing Craft, Earnings of

Foreign Trade under the National Industrial Recovery Act

Part A - Competitive Position of tr.e 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,
192S to 1934

National Labor Income by Months, 1923-35

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

- Ill -

Women's Apparel Industry, Some Aspects of the

Trade Practice Studies

Commodities, Information Concerning: A Study cf 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 MRA Codes
Electrical Mfg. Industry: Price Filing Study
Fertilizer Industry: Price Filing Study

Geographical Price Relations Under Codes of Fair Competition, Control of
Minimum Price Regulation Under Codes of Fair Competition
Multiple Basing Point System in the Lime Industry: Operation of the
Price Control in the Coffee Industry
Price Filing Under NRA Codes
Production Control in the Ice Industry
Production Control, Case Studies in

Resale Price Maintenance Legislation in the United States

Retail Price Cutting, Restriction of, with special Emphasis on The Drug Industry.
Trade Practice Rules of The Federal Trade Commission (1914-1936): A classification for
comparison with Trade Practice Provisions of NRA Codes.

Labor Studies

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

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

Employment, Payrolls.- Hours, and Wages in 115 Selected Code Industries 1933-1935

Fur Manufacturing, Commission Report on Wa^es and Hours in

Hours and Wages in American Industry

Labor Program Under the National Industrial Recovery Act, The

Part A. Introduction

Part B. Control of Hours and Reemployment

Part C. Control of Wages

Part D. Control of Other Conditions of Employment

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

Administrative Studies

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

Administrative Interpretations of NRA Codes

Administrative Law and Procedure under the NIRA

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

Approve Codes in Industry Groups, Classification of

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

Code Authorities and Their Part in the Administration of the NIRA
Part A. Introduction
Part B. Nature, Composition and Organization of Code Authorities

9768—2.

- iv -

Part C. Activities of the Code Authorities

Part D. Code Authority Finances

Part E. Summary and Evaluation

Code Compliance Activities of the NRA

Code Making Program of the NRA in the Territories, The

Code Provisions and Related Subjects, Policy Statements Concerning

Content of NIRA Administrative Legislation

Part A. Executive and Administrative Orders

Part B. Labor Provisions in the Codes

Part C. Trade Practice Provisions in the Codes

Part D. Administrative Provisions in the Codes

Part E. Agreements under Sections 4(a) and 7(b)

Part F. A Type Case: The Cotton Textile Code
Labels Under NRA, A Study of

Model Code and Model Provisions for Codes, Development of

National Recovery Administration, The: A Review of its Organization and Activities
NRA Insignia

President's Reemployment Agreement, The

President's Reemployment Agreement, Substitutions in Connection with the
Prison Labor Problem under NRA and the Prison Compact, The
Problems of Administration in the Overlapping of Code Definitions of Industries and Trades,

Multiple Code Coverage, Classifying Individual Members of Industries and Trades
Relationship of NRA to Government Contracts and Contracts Involving the Use of Government

Funds
Relationship of NRA with States and Municipalities
Sheltered Workshops Under NRA
Uncodified Industries: A Study of Factors Limiting the Code Making Program

Legal Studies

Anti-Trust Laws and Unfair Competition

Collective Bargaining Agreements, the Right of Individual Employees 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.

THE EVIDENCE STUDIES SERIES

The Evidence Studies were originally undertaken to gather material for pending court
cases. After the Schechter decision the project was continued in order to assemble data for
use in connection with the studies of the Division of Review. The data are particularly
concerned with the nature, size and operations of the industry; and with the relation of the
industry to interstate commerce. The industries covered by the Evidence Studies acccunt for
more than one-half of the total number of workers under codes. The list ol those studies
follows:

Automobile Manufacturing Industry
Automotive Parts and Equipment Industry
Baking Industry

Boot and Shoe Manufacturing Industry
Bottled Soft Drink Industry
Builders' Supplies Industry
Canning Industry
Chemical Manufacturing Industry
Cigar Manufacturing Industry
Coat and Suit Industry
Construction Industry
Cotton Garment Industry
Dress Manufacturing Industry
Electrical Contracting Industry
Electrical Manufacturing Industry
Fabricated Metal Products Mfg. and Metal Fin-
ishing and Metal Coating Industry
Fishery Industry

Furniture Manufacturing Industry
General Contractors Industry
Graphic Arts Industry
Gray Iron Foundry Industry
Hosiery Industry

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

Leather Industry

Lumber and Timber Products Industry
Mason Contractors Industry
Men's Clothing Industry
Motion Picture Industry
Motor Vehicle Retailing Trade
Needlework Industry of Puerto Rice
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
Structure1 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, wajes, 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 usin^ the
data, the technical methods employed, ar.d the applicability of the material to the study of
the industries concerned. The following numbers appear in the series:
9768—5.

- VI -

Asphalt Shingle and Roofing Industry Fertilizer Industry

Business Furniture Funeral Supply Industry

Candy Manufacturing Industry Glass Container Industry

Carpet and Rug Industry Ice Manufacturing Industry

Cement Industry Knitted Outerwear Industry

Cleaning and Dyeing Trade Paint, Varnish, and Lacquer, Mfg. Industry

Coffee Industry Plumbing Fixtures Industry

Copper and Brass Mill Products Industry Rayon and Synthetic Yarn Producing Industry

Cotton Textile Industry Salt Producing Industry

Electrical Manufacturing Industry

THE COVERAGE

The original, and approved, plan of the Division of Review contemplated resources suf-
ficient (a) to prepare some 1200 histories of codes and NRA units or agencies, (b) to con-
solidate and index the NRA files containing some 40,000,000 pieces, (c) to engage in ex-
tensive field work, (d) to secure much aid from established statistical agencies of govern-
ment, (e) to assemble a considerable number of experts in various fields, (f) to conduct
approximately 25% more studies than are listed above, and (g) to prepare a comprehensive
summary report.

Because of reductions made in personnel and in use of outside experts, limitation of
access to field work and research agencies, and lack of jurisdiction over files, the pro-
jected plan was necessarily curtailed. The most serious curtailments were the omission of
the comprehensive summary report; the dropping of certain studies and the reduction in the
coverage of other studies; and the abandonment of the consolidation and indexing of the
files. Fortunately, there is reason to hope that the files may yet be cared for under other
auspices.

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

L. C. Marshall,
Director, Division of Review.
9768—6.