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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 I ND USTRY 

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 c r Consumers 19 

-ii- 

9749 



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 o v- 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" r le Origination and Demand 34 

(c) Effect of Piracy on Distribution 35 

(d) The Consumer Interest 35 



9749 



-i - x- 



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 

-iv~ 



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 



_v- 



9749 



CHAP T EP III 
APKINISTRATIOK OP THE COD E 

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? T T5 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 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 



- IX- 



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 



-Mil- 



-1- 



CHAP!TBR I 

THE INDUSTRY 



5749 



CHAPTER I 

THE IliUUSTItY 

I. DIVI5I01TS OF TIG IIDUSJRY 

A. TH E 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^S IOJ jS 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 • • Custo m 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 b etw een 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 . CH ARACTERISTICS 0? THE INDUSTR Y 
A. P HYSICAL 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 retiree 1 , 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.7otwithstandin L 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^r p ement 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 coo n v 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- 

I T e 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 anc 1 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 sewin r 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 . .: terial s. 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 SE ASONAL FLUCTUATIONS 

1. Measurement of Seasona lity. 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 Val l eys . 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 Se aso ns. 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 Seasonali ty; 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 Depressio n 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 Ind u stries . 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 Unemploymen t. 

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 Mil linery 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 ikrii ings. 

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 Mor ale. 

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. univer sality of Sty l e Interes t. 

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 
Merchandisin g, 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. U tility . 

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 Influence s. 

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 i mmedi ate 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 Ec onomics 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 education 1 , 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 Cente r. 

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 Pa ris. 

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 Prod u cers to S tyl e 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 Trend s in Consumer D emand. 

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, p a ul 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 Organisa tion . 

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, O ther 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" r er prices. Resident buyers and the buying syndicates in 
particular have be r n 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 Contro l. 

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 lo r :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 ■ r ould 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 Control s . 

(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" r le -'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 v puld 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, " f ould 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 olio 1 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 t e~. 

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 >roces c . 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- 

fe 1 * 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 ,r n- 
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 tendenc 1 -- 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 



-47- 



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, it 1 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 mi n linery 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. 

(****) 3 e e 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 Indu stries. 

The decline in the purchasing power of millinery workers tended 
to depress the market for consumer's goods generally. Industries and 
trades supplying the milliner 1 / 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 T HE CODE PRIOR TO PUBLIC HEARING 

1 . Associations in the' Industry . 

(a) Associations in Gene ral. 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 Authorit3 r 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; 32 3 t^ 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 «oin S 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 a reement 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 similar 1 
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. 

■ . T h • 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 ax 1 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. OC CUPATIONAL CLASS 117 1 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 Classificatio n. 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 wa fc es 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 Cod e 

of ZT air Compet i tion 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. Tran script 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 



-71- 

(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 C o mpetition 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 as 1 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, T ranscr i pt of Hearing, Propo sed 
Code o f 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 
-p roductivity 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 milliner 1 ,' 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 Orga nization. 

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 Competi t ion 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 Work ers . 

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'oe cia l M illi nery 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 



-79- 

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 .VISIOIT S 

1 • As t o 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 wee 1 :; 
(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 difficult 1 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. Gene ral Labor Provisi on, 

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 . Advertisin g Allo wances . 

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 D i scounts . . 

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 Prac tic e 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 b r 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, F irst Annual Report , pa e 21. 

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

(***) T ranscript o " :!earin •, . .hiljnery Indus tr-' , August 1, 1933, age 305. 



?74 r . 



~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 ran 1 : 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 Comp etition for the t.hlli nery 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. ATTl nlPTS 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£c4 e ?- 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. rilTAKCH TC- 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 industry 1 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 C o de Au t hority b e reimburse d to the ext ent 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 Co r '.e, a ne r ' 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 
Book 1 .:• 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 (**) 



(*) 1 T RA 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 partialis 7- or indirectly concerned 
with con fliance. 

2. Inspection Policies . The conpliance activities of the Code Author- 
ity centered around t" r o 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 Inspect i ons . host factories in kew York City -'ere 
visited at least once each day by an inspector. In naiiy instances 
visits ,r ere 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 ■ Insme cticnr. . 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 b3 r the 
anal; r zation department. If no violation ls discovered, the transcript 
was forwarded to the statistica 1 department "here pertinent data v. T as 
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 abou v , 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. T J.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 Activi ties. During 1934 more than 
300,000 ins-iections rere :iade o± the 953 factories located in the 
lien Yorh metropolitan district (which included lie 1- ' 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 be b an to flow. in from all parts of the country. 
These wore referred immediately to the Special Board, which called 
a hearing in Hew Y D rk 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. L e 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 NB A. 

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 Dec i sion s. 

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 COIIGLUSI OH. 
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 -: r as 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,. 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 40 

(***) 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 bj r 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 these 1 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. # 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 
n I-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 P lit ..-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 Ce nsu s 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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-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 Manuf acture? : 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 
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17.1 

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11.4 
16.5 
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a/ Data compiled from (Code Authority,) First Annual Repor t, 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 

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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 Trad e 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 



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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 


75.3 


63.2 




32.2 


1926- 


■1934 


37.1 


31.4 




SI. 5 



a/ Bureau of Labor Statistics, Index of Employment and Payrolls 
1929 = 100. 

b/ Yearly averages. 



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-151- 
TABIC 30 

MILLIE3SH INDUSTRY 

Average An n ual 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 


<0 O « J <J 


36.16 


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 


r • *~i r i rj 


17. 3 


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.te s, "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. 



9749 



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97^9 



-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, 
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 State s, 

"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 
( thousand s ) 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 . 


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 22.02 c o 6.16f 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. TIETHCDO LQfTICA L APPEITDI X 



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 t v -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 Mat eri als No. 17, T entative Outlines and Summaries of 
Stu dies in P rocess , these materials are fully described) . 

I ndust ry S tud ies 

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 

T rade Prac tice Stu dies 

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 S tudies 

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 

Adm inistrative Stu d ies 

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 
Structure 1 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.