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3 9999 06542 007 5 






Work Materials No. 17 falls into the following parts: 



Industry Studies 



Labor Studies 



Trade Practice Studies 



Administrative Studies 



Legal Studies 



Contributory Materials 

December, 1935 

■J.. ..y.<tx 

(;•»■<; uiu i.. :^, 



19 3 5 


In order that those working on one study may secure access to 
allied materials in-other studies, these TENTATIVE OUTLINES AJ\TD SUM- 
MARIES are made availal)le for corif idential use within the Division 
of Review, 

Since these documents were prepared from work that is now in 
process, they are highly tentative. The outlines are the present 
operative tables of contents of the studies, tut they are of course 
subject to change as the work progresses. The summaries are, in 
some cases, forecasts rather than actual summaries of developed manu- 
scripts. Notvdthstanding their tentative character, the documents 
will serve to indicate in some detail the subject matter of the studies 
now in process in the division. No one will think of these materials 
as "findings" or "reports" in the usual sense of those terras. 

It is expected that these TENTATI^/E OUTLINES AND SUMMARIES 
will result in many conferences, both formal and informal, among 
those working on the studies — -to the ends that effective coordina- 
tion of the studies may occur and duplication of effort will be 
reduced to a minimum. 

L. C. Marshall 
Director, Division of Review 

IZ My 38 g ' 

9347 .. -i- 


Administrative Studies 

il.R.A. organization William W. Bardsley, Coordinator 

Code Administration Harry Weiss, Coordinator 

Foreign Trade Studies Section H. D. G-resham, Coordinator 

Industry Studies Section M. D. Vincent, Coordinator 

Lator Studies Section A. Howard Myers, Coordinator 

Legal Studies Section Angus Roy Shannon, Coordinator 

Enforcement Studies R. S. Denvir, Coordinator 

Research Studies C-. W. Kretzinger, Jr., Coordinator 

Special Studies Section G. C. G-arable, Coordinator 

Statistics Study Section W. J. l.Iaguire, Coordinator 

Trade practice Studies Section Co rwin Edwards, Coordinator 

December, 1935, 

9347 ~ii- 




Gener al T able of Content s 


1. Eorev/ord "by Section Attorney 557 

2 . The Commerce Clause 562 

TalDle of Content s 563 

Summary 566 

3. Post Offices and Post Roads 571 

Table of Contents 572 

Summary 573 

4. Possibility of Use of Flexible Tariff Provisions to 

Secure Proper Standards of Wages and Hours 578 

Table of Contents. 579 

Sujnmary 580 

5. Federal Regulation Tiirough the Joint Emplo;^'Tnent of the 

Pov/er of Taxation and The Spending Power 582 

Table of Contents 583 

Summary 585 

6. The Treaty-LIaking Poi/er of the United States 591 

Table of Contents 592 

Summary 594 

7. Possibility of Child Labor Regulpotion Under Federal 

War Power.- 59C 

Table of Contents 599 

Summary , , 600 

8. Trade Practices and the Anti-Trust Laws 602 

Table of Contents. 603 

Summary. 605 

9. Delegation of Legislative Power 610 

Table of Contents 611 

Summary 613 

10. Due Process as Applied to Federal Regulation of 

Economic Conditions ' 618 

Table of Contents 619 

Summary , 620 

11. Possible Use of Government Contracts Provisions as a 

Means of Establishing Proper Economic, Standards 621 

Table of Contents 622 

Summary , 623 

12. Srimmary of Preliminary Findings as to State Recovery 
Legislation 624 

Table of Contents 625 

Summary , , 626 




The Legal Studies Section, Division of Review, 
comprises th.r,ee s-tud^'' gro"a2:s, namely, Legal Re- 
search Studies., Enforcement Studies, and Legal 
Labor Studies. ,, This Section was created to co- 
ordinate and. develop research into important 
'legal questions .raised oy- the administration 
of the National Recovery Act and the 
decision. The scope of the work of each study 
group may be found hy reference to the tables 
of contents and summaries to he found under the 
'title of each group. . • • ■ • 

Attention is here. called to the fact that the 
Legal Labor Study is being conducted in con- 
junction with the Labor Studies 'Section. The 
'detailed Tahlo of. Contents and Summary of Find- 
ings of this Legal Labor Study is to he found 
in tart B. 

The materials of .the Logal- Studies Section fall 
ih't'o three groups: 

1. Studies of the Legal- Research' Section 
■ '2. Studies of i;he .Enforoement Studies Section 

3. Legal Aspect of Labor Studies 






The studies of this Section are directed to the one purpose of 
possible utility for legislative use — that is, to furnish legal material 
for whatever governmental authority nay desire to avail itself of the 
legal research covered "by them. "For convenience they have "been divided 
into two classes: 

A. Studies of the constitutional powers v/hich indicate any degree 
of protalDle legal "basis for any federal legislation concerning wages, 
hours, child laoor and fair trade practices; and, 

B. Studies in other legal fields that may be useful for any such 

Whether or not an^^ legislation upon the topics of these studies 
should "be undertalien, and if so in what forii, is a matter of policy out- 
side the scope of our consideration, 


A. Commerce , 

The purpose of this stud:^ is to determine the extent of 
regulation of the employer-employee relationship) permissible under 
the cominerce clause. (I'air trade practices as a matter of 
convenience constitute a separate study descrihed "below under the 
heading, II, A; except such possi"ble fair trade practices as ma2^ 
"be employed in the regulation of the emploj^'er-employee relation- 
ship. ) 

Fnile this study is directed to the whole field of regulation 
of this relationship not adequately covered "by existing legisla- 
tion, tlie immediate and most important pro"blem for solution is 
whether and to what extent wages and hours may "be governed 'by any 
federal legislation, not only in transactions in or directly and 
substantially affecting interstate commerce, "but throughout indus- 
tries engaged to such a predominant extent, if not exclusively, 
in such commerce that their intrastate activities cannot be 
separated from this predominant portion and therefore require the 
same single regulation. 

This latter question of industrial regulation subdivides 
into the categories of business affected v;itli a public interest 
(v;hich in turn has many degrees), and of other business. 



Solutions that will "be mentioned in the separate simnarj'" 
of findini-^s point to the particular usef-ulness and necessit3'' of 
the studj^ of possi"ble re^jolation as to the following limited 
aspects where a direct effect on interstate commerce can "be 
actuall;^ proved. 

(a) Lator onrest which may dislocate, divert or o"b struct 
interstate commerce; 

("b) The sweatshop or less than fair value for services 
. rendered which, wlien reflected in the sales price of goods in 
interstate commerce, m^ay prevent the sale of other interstate 
goods in competition in interstate markets; 

(c) Or that may permit articles in interstate commerce 
manufactured "•.mder these sweatshop conditions to move into states 
which, whether "by statute or local practice, have higher ajid 
fairer \7age "bases, and thus force the fairer manufacturers down 
to the lower level, 

(d) If Congress should pass a statute which only "becomes 
effective upon the adiierence 'oy a su"bstantial nuin"ber of mem"bers 
of ind.ustr3-, and which deals with regulation of wages, hours and 
trade practices which will promote interstate commerce as well as 
remove restraints, upon such adiierence thereafter "by a su"bstan- 
tial nuifoer of persons in an industrj^ in the way of a written 
agreement to o"bserve the stanC^rds as to wages, hours and trade 
practices approved "by this statute, may Congress "b;;^ such adherence 
acq-aire jurisdiction over these matters and prevent, through 
proper adiainistrative action and "by some form of cease and desist 
order, interference with the operation of such agreements on the 
part of the minor it:^ not so adhering? 

'This study — the commerce power — may prove the most 
useful undertaken "by this Section. 

Its particular utility lies in the fact tliat while there 
appear to "be other legally possible and practica"ble methods of 
regulation, such as those under the taxing and spending and under 
the treat3'' power, nevertheless the commerce power, if available 
and to the extent constitutionally legal, offers the most direct 
approach to any desired regulation. As the stud;^'- progresses, its 
potential va^lue stands out more clearly, and warrants the fullest 
development that time and personnel permit, 

B, Post Offices and Post R oads. 

Tlie purpose of this stud^^ is to determine how far, if at all, 
the power given to Congress over post offices and post roads may 
"be employed in any feature of industria,l regulation. 

It may prove of some use for filling one or more gaps 
left "b--^ the other powers in the matter of federal regulation, if 
desired at any time, of industries employing the facilities of 
either ^ost offices or -oost roads. 


.- -559- 

C. Tariff ?o \ier . . ' • 

Tills stud^'- concerns "the possfbility of variations in 
tariff rates to secin-e proper standards ' of wages and hoiirs". 

The possiliilit:' of erroloying the tariff power "by way of 
flexible tariff rates — since protective tariffs have "been large- 
ly enacted and supported on the plea of securing Anerican later 
against the low standards of living under which foreign labor 
exists, — indica.tes its possitle utility only as an aurciliarj,'- 
scheme of regulation. It is United "by the difficulty of guard- 
ing those who maintain proper standards, since the results of 
tariff variations rea.ct against all suhject to such tariffs, 
whether or not maintaining fair standards, 

D. Taxing a nd Spending Powers . . 

The piu-pose of this stud;^'' has heen to deten:iine the 
possihility and limits of and the conditions upon the use of the 
taxing and spending powers of Congress to promote observo.nce of 
proper standards set up hj'- federal legislation in wages, hours, 
child lahor a.nd fair trade practices, 

Tiie resi^J-ts of the-) study indicate that these powers, 
particularly/^ the spending power, may "be of vitility toward these 
ends, provided that any aropropriate legislation under the taxing 
power he confined to a hill or hills sejparate from and v/ithout 
reference to, an^* hills providing for the exercise of the spend- 
ing power. It would appear a,lso that the taxing power alone may 
"be of some usefulness. 

Conditional grants, however, could extend existing gains 
in some states into all states as to those regulations of hours, 
and aholition of child lahor in hazardous occupations as have 
heen sustained h;- the Supreme Coiu't, It would also appear that 
conditional grants might he legally employed hy Congress to in- 
duce the states to enact legislation providing maximum hours 
Y/ith overtime as to certain categories of lahor, and minimum 
wages for women and minors, 

E. Treaty. 

This study has "been directed to the investigation of the 
degree to which the treaty power might he used for general or 
particular industry regiilation, particularly in the matter of 
wages, hours and diild lahor hy adiierence to the lahor conven-^* 
tions re wages a,nd hours now in effect at Geneva or oy mutual 
pacts with foreign nations imder which each would undertalce to 
carr^r out provisions for such regulation through appropriate 
legislation (if legislation were required to ca.rry out the terms 
of the treaty), 

Tlie results of this research liave proven especially 
valiiahle as fairly assuring the legal use of this pov/er in the 



matter of hour regulation and possibly'- also of child lator, with 
a question still reuodnin.^ as to the extent of nage regulation. 
Tlie political objections may limit its utility to treatment of 
onlj'' a pa.rticular industry'' "by treaty (as opposed to adherence to 
the lalDor conventions) T7ith another country, when that industry 
is suffering fron serious foreign competition. 

F. War Po wer. 

This study has "been undertalien to determine whether or 
not the war power can support a federal law prohibiting child 

Its -potential utilitjr lies in the fact that no other con- 
stitutional power has appeared definitely capahle of supporting 
child la"bor legislation, so far as revealed "by the present stage 
of the several studies (passing for the moment the possi"bility 
of indirect legislation through the taxing ana spending power). 
But since the war power is exclusively federal and carries with 
it its own appropriate police power, all the ohjections hitherto 
fatal to previous statutory atteripts at such regulation appear 
likel^'- to he overcome in ajiy legislation toward this end under 
this particular power, if the factual has is can he adequately 


A. Anti-Tri ist and Fair Trade Prg ^ct ices . 

This studjr does not pretend to cover the large field 
indicated "by its title, hut is limited to the investigation of 
the more important so-called fair trade practices which, with- 
out violating the principles of the anti-trust acts, may he the 
subject of appropriate legislation for the safe—guarding both 
of industry'" and the consumer. 

It is closely linked with the economic studies along 
the same lines, and would seem to be especially useful towards 
legislation siipplementing the present so— called- anti-trust acts 
and perfecting their application", Idj filling the gaps that 
judicial intemretation has shown to exist, and indicating the 
necessai^^ legal standards. 

B. Delegation of Pow er. 

This study was undertaken to determine not only the extent 
to which the legislative i30wer required for the administration 
of any new recovery legisla.tion might constitutionally be 
delegated, but the so-called standards or primar:^'- principles or 
lines of policy required to render any such delegation legally 

Its utility lies in the indispensable necessity of proper 
standards in any legislation that delegates any portion of the 




legislativG poT/er, or of pOTrer in the nature of legislative 
authoritv, to any person or iDody; since legislation, otherwise 
useful, ma''' go into the discard, perhaps after raonths or years 
of operation, for lack of standards meeting constitutional 
requireLients, (As a separate study, however, "beyond estatlish-' 
ing first principles, the suhject is perhaps "best considered in 
connection with anj.'- particular legisl^.tion that na^j from time 
to tine "be suggested. ) 

C. Dnie Process . 

The research upon this topic may he characterized, so 
far as concerns continuance of the study as a separate title 
heyond the initial stage, in much the same manner as the preced- 
ing (Delegation of Power), It is devoted to the determination 
of how far the due process clause mdj restrict legislation for 
the regulation of wages, hours, child lahor and fair trade 
practices generally, including anj' cogne^te matters of industrial 

Its utility will he evident upon review of the many 
attempts at v;age and hour regulation that have hitherto "been held 
invalid "because rerougnant to the due process clause, 

D . G overnme nt Contract Pro visi ons a s a Mee jis of Industria l 

R egu3.ati on , 

The title of this stud3r indicates its purpose — the legality 
of employing contracts which the government may hereafter maize 
with memhers of industr^^, as vehicles of regulation of hours, 
wages, child lahor or fair trade practices, to he accomplished 
where desirahle through provisions in such contracts that will 
opera-te as conditions not merely' on the suhmission of hids or en- 
try into aziy such contractual ohligation, hut on the right to 
carry the contract heyond amy stage where the required conditions 
have not heen fulfilled, 

Tiie study so far indicates f easihle and legal methods 
of such enforcement v;ithin the limited area of the government 
contract field, and is so far usef-ul. 

E. State_aecpvery Legislation. 

This stud;;,'' lias prohed the defects in previous state legis- 
lation enacted either in aid of the national Industrial Recovery 
Administration or independently, and the conditions -under which 
the several states could enact such legislation consistent with 
the federal Constitution and generally with their own. 

Its particular utility lies in the exposition of the extent 
to which the several states nay go in su^^porting federal legisla- 
tion of any of the t^npes of regulation mentioned in the studies 
set forth in this memorandum, and in the demonstration that this 
extent ma.y he hoth considerahle a.nd useful, 

George W, Kretzinger, Jr, 




(Employer-Employee Helationship) 

George W. Kretzinger, Jr. 




TalDle of Contents 

The niimlDering and order of this TalDle do not 
correspond with those of the Siimmary since 
the Tahle covers the study in the order of 
its development, while the Summary merely 
gives the synthesized findings (tentative) 
gathered from many different factors of the 
study hlended. into one. 



I. General conditions affecting the right of Congress to Regulate 

A. Movement, or its equivalent, across state •'borders as the "basis 
for federal control. 

1, The "flow" or "stream of interstate commerce", suhject to 
federal regu]_ation, 

2, Pre-motion and post-motion phases (production and distrihu- 
tion) , ordinarily local - intrastate - and so not suhject 
to federal regulation except when directly and suh st ant i al- 
ly effecting interstate cormnerce. 

B. The part -played "by "intent" in extending the "flow" or motion 
of interstate commerce to either post-, or pre-motion phase, 
and thus rendering production or local distrihution activities 
subject to federal control. 

1. "Intent" as element of penal or civil liability, dis- 
tinguished from, 

2« "Intent" to affect interstate commerce, which, plus certain 
other factors, may "extend federal regulation to operations 
in themselves wholly local. 

C. It is not necessary that the thing regulated constitutes a 
matter of commerce in and of itself; it suffices that it af- 
fects to a degree calling for regulation a commerce that may, 
all subject to the Fifth Amendment, be within the reach of the 
commerce clause. 

D. The group or industry conce-ot as against the individual trans- 
action concept, as subject to regulation. 

E. Total effect of a practice -determining -factor ns creating 
cumulative results which may change the indirect effect of any 
individual act which is -part of the practice to a direct and 
substantial effect on interstate commerce. 

1. Reasonable apprehension on the part of Congress as to re- 
sults of such acts or -practices. 

2. Effect of legislative findings. 

"Fm Extent to which business "affected with a public interest" may 
be regulated because so affected. 



1» Meaning and history of the characterization "affected uith 
a public interest" . 

2, Modern doctrine, liberalizing the scope of this term 
(Nebhia v. New York, 291 U.S. 502). 

3, Degrees to which "businesses or industries may be affected 
with a public interest and subject to regulation. 

(a) Public utilities generally. 

(b) Necessities. 

(c) Natural resourcer, 

(d) Other classes. 

G-* Conditions under which other business may be regulated. 
1. Abuses (Adams v. Tanner, 244 U.S. 590, 594) 
2» Where shown to be accompanied by evil results as ordinary 

incidents (Fairmont Creamery Co. v. Minnesota, 274 U.S. 

1, 9) 

II. The Commerce Clause and the Employer^ Employee Relationship. 

A, Extent to which Congress may regulate the working conditions 
of employees. 

1. The federal police power is limited to the exercise of the 
powers expressly delegated to the federal government by 
the states, 

2. Safety appliances and other conditions as security against 
accident may be the subject of reasonable legislation by 

• Congress as to employees engaged in interstate -commerce or 
in duties that directly or substantially affect such com- 

(a) To the full extent reasonably deemed appropriate by 
Congress, in certain classes of business (e.g., rail- 
roads,) affected with a public interest. 
3# Health of employees is normally not the subject of .federal 
regulation exce-ot where their health may affect interstate 
commerce (including the public, e.g., passengers, or v/here 
such employees are otherwise subject to federal jurisdic- 

4, Other factors affecting employees and their safe-guards, 
. not including wages and hours, 

B, Extent to which Congress may regulate wages and hours, 

1, Classes of employees and employers within domain of the 
commerce clause (without regard to the operation of the 
Fifth Amendment). 

2. Regulation of wages, generally, inhibited by the Fifth 
Amendment, except, 

(a) Fxiere such a breakdown on account of labor troubles 
exists or threatens as to imperil the public interest 
(Wilson V. New, 243 U.S. 322) 

(1) This exception may be limited to business affected 
with a public interest. 

(2) Even then the regulation appears permissible only 
pending agreement, 

(b) Possibly in the case of minors. 

(c) Possibly' also through price, where sweatshops (less- 
than- subsistence) wages in one state, as an element of 
price of goods in competition in interstate commerce, 



(1) BreaJc domi fair v/age standards in the state or com- 
munity of the market. 

(2) Divert or destroy the lines of such commerce moving 
from states or communities of higher (fair) stand- 

(3) Through voluntary agreements on the part of a sub- 
stantial proportion of an industry, adhering to 
standards provided in some federal statute in pro- 
motion of commerce and effective only upon such ad- 

3. Regulation of hours is subject to similar inhibition, except 
that under the police power, state or federaJ. (see II, A, l) 
limitation of hours may be established 

(a) Where the public safety is involved. 

(b) In the circumstances mentioned under 2, (a), probably 2, 
(b), ajid possibly 2, (c), above, 

(c) Possibly for certain classes by reason of health or oc- 
cupation factors. 

(This Table of Contents, regardless of the form of expression employed 
in some instances, must not be considered as asserting or implying any 
opinion as to the validity of any of the several theories or bases men- 
tioned as possible in connection v;ith any new legislation. All these 
are tentative merely, for further probing. This caution applies equally 
to the Suramar;^'' of Preliminary Findings.) 




Simimary of Findinir:s inr^on the Cornraerce Clause 
re Emi?lo7'er-Ein"oloyee Relationahi-n 

Tl-is stv.o.y "bv the L:gal Rosearch Section is devoted to investigation 
of the critcnt of regulation of the era"olo3rer-emi^loyee relationship -^er- 
nissiole imder that constitutional ;oo'"er, ei-xliisive of fair trade 
"oractices v;hich constitute a se-!:iarate study; hut including such fair 
trade ir.'ctices as lia.y "be found useful in such re.:-:ulation# Tlie nost 
iraoortant :-roolem for solution is ^/hether :i.nd to vhat extent '"'ages rnd 
hours :.ay he governed by any federal legislation, not only in transactions 
in or diructlj" and su'octantially affecting interst.-.te commerce, hut in 
particular industries as such, v.^hich pre engaged to such a predominant 
extent in such commerce that their intrastate activities cannot he 
seorTated from this predominant portion c-md therefore require single 
regiilation. Related questions such as the right to regulate safety and 
other .orldng conditions of em'oloyees, or to guaTtintee the right to har« 
gain collectively or to ;")ass mediation acts and to what extent such 
mediation can he carried -are only considered incidentally because of 
their effect upon or illustre.tion of the orinciiDal puroose. 

The following conclusions have been tentatively reached (though 
generally requiring additional exploration). It vjill be noted that 
certain questions here stated have as yet no definite ansvrer even in- 
dicated, although sufficiently important and "oronising as to warrant 
adequate research, Thej'- cure based, however, upon the analogy of decisions 
rendered and facts presented to date» 

1» i,ii:.iing, manufacturing and "jpoduction ''.o not constitute nor 
come within the definition of interstate coiiimerce, nor ordinarily \-a th- 
in the dominion of the commerce clause. Hor do commodities or the 
o-oerations u 'on those commodities a'^t the terminal end of interstate 
trans-oortation after delivery and the so-called breaJcing of bulk come 
\7ithin the federal jurisdiction, e-.ce^Tt in certain instances such as 
when the federal nolice lower has ''oeen exercised (see keeping channels 
of com :erce cleaxn, paragraph 12). This police "lO-.-'er has been confined., 
to the err^ressly delegated "oov/ers, such as the coi.rierce "oower, and ma.y 
not be ex.ercised exceot in connection with the eziercise of those pov/ere. 

2. TI-.3 commerce clause V;ill not su-T:.ort aiy blanket regulation 
of all industry generally, from producti-^n to distribution inclusive. 
It may support T^artic^ilar industry regulation or particular unfair 

practice regiilation. 

G. "Bie same conclusion orobaoly raroears r:o-rranted as to regula- 
tion of wa.ges, hours and child labor ar'licable to industry generally. 
It ;oes not necessarily apply to unfair trade -n-actices excei^t so far 
as the lattGT affect trade -rarely intrastate, and even there the matter 
of competition may, as sho\^-n later (paragraph 7, below) draw these 
practices I'ithin the federal regulative oower. 



4. The ri.^ht to contract for both the value and hoiirs of em-oloy- 
ment has "been protected as a oroperty right by the Fifth and Fourteenth 
Amehdments, with few exce^otions from all interferences heretofore 
attenrot ed* 

5« So fa.r this protection has yielded,' as to wages and hours, with 
the approval of the Supreme Court, only because of emergency conditions, 
and of considerations of safety, health and Korals» 

6# 'The reti£,u.lation of wpges ''oj the Federal Government under the 
commerce power is subject to two constitutional considerations — the 
comnerce clause and the due process cla.use. Tnile these are often con- 
sidered Jointly, they should be separately treated. 

In order that the United States mo^Y regulate, the subject of the 
regulation, i«e», the "oayment of ^"'ages, must be in or directly affect 
interstate com.rierce. The payment of wages is ordinarily not a trans- 
action in interstate commerce. Interstate comiierce itself is, accord- 
ing to mc?iiy decisions, roughly limited to the ohysical transfer of goods 
and commodities across state lines and is ordinarily held to begin after 
the manufacturing "orocess and to cease when the goods or commodities 
have reached their original destination across the state line, 

"When the em-jloyer-em-oloyee relationship does not involve the 
purchase, sale or transmission of goods across state lines (usual case), 
it is ordinarily not in interstate comjnerce. The real question in re- 
gard to the possibility of reg"alating wages is whether a.nd when they so 
directly and substantially affect interstate commerce, as to^ justify 
federal regulation. 

?• The economic effect of wages u;;on or in relation to goods or 
commodities actually flowing across state lines co,n arise in at least 
three particular cases: 

(a) Through the pi^ysical obstruction (or shifting,) of the 
flow of goods across state lines which ub-y occur when the failure to 
agree on vrages may lead to an actual or threatened strike or labor dis- 
pute interfering with the flow of interstate goods. 

(b) Through the sale price of" goods moving in interstate 
coraF-erce reflecting the wages "-aid and hence having an effect on com- 
petition in interstate commerce. Thus if the sale price of goods sold 
in interstate commerce reflects in their price the cost of labor, the 
wages ma" have an effect on the "orice of the goods. Price often is the 
main factor in the sale of goods in com-iDetition, and where price im- 
Droperlj^ affects competition, it may be re.'mlated. Where the goods 

are sold in competition 'the successful competitor may secijire the business 
while the -unsuccessful com-oetitors in interstate commerce are TDrevented 
from selling their goods just as effectually as if a physical bar were 
created. (The Su'^reme Court in the Schechter case refused to find a, 
direct effect of v-ages since the "orice v/hich was there regulated was an 
intrastate price in an intrastate market, wiiile the price discussed 
here is an interstate price.) 



(c) '^ae-n the ^7a/;3s paid are reflected in the sale -orice of 
the jzooi' s and sales occijr in such OTirjitities as to \mdeririine the srle 
of goods bv local mrnufacturers in a state which has ^w.'^:e standards, it 
would seem that a \7e.y j;i.<^ht :fet "be fo-und to regulate interstate com^nerce 
so as to -prevent its breaking do^vn proper state standards. (Cf., hovr- 
ever, 1st Child Labor Case), If the iii?nufacturers of goods in a regu- 
lated st'^^te suffer in the connerce in that state from the com^oetition 
of -goods shroped from soiae unre^'Tulated st,ate, a brealido^Tn of the 
standards of the regulr.ted state may be caused. Tliis might give rise 
to the United Sts-tes so regulating interstate commerce as to prevent 
such an occujrrence, 

8» Hot only must there be an effect on interstate comiierce \7hich 
is direct or substantial but it would seem that the cause must be some- 
thing v.'hich Congress reasonably can regulate. The sole fa.ct that the 
economic effect of intrastate ■oractices upon interstate comm.erce is 
economically bad is Torobably insufficient under the existing cases as a 
ground of Congressional regijilation where the remedy'- is the interference 
with the hig]aly protected right of contra.ct betv;een employers and employees. 
It is probable that not only must the economic effect upon interstate 
commerce be harm.f'o]. but that in addition the cause raiist be something 
which is in the category of illegal or unethical or immoral causes 
against nhich the Suoreme Court so far has felt it reasonable for Con- 
gress to legislate. 

(i.iuch research '7ill still be required u;oon the above "joints, here 
stated in the .vay of tentative, findings. Tlie decision of the Supreme 
Court of the United States in Story Parchment Co . v. Pater son Parchment 
Paoer Co .> 282 U'.S. 555 (1931), holding the cutting of orices by a 
group of corqpetitors against another who had just entered the field in 
order to preserve their existing monopoly and force the closing of his 
plant, to be within the federal jurisdiction and a. violation of the 
Sherman Act, a.s well as certain other reasons and ^^recedents, indicate 
a solution favorable to federal jurisdiction over selected industries 
under some of the conditions noted p^bove that ina.y prove sufficient in 
scops to wa.rrant regulation if Congress should adopt such a policj^.) 

9» TThere there is a ;'.;efi:iite intent (which may in certain 
circumstances be im-olied from the acts of the -oarties concerned or 
effects of such acts) to bui'den, obstruct, interfere vrith or restrain 
interstate com.merce, the effect uoon interstate commerce of the acts of 
these parties coupled with this intent may be, and usually is, held to 
be direct and substantial, thus bringing them \7ithin federal jurisdic- 
tion and the exercise of the commerce -oov.'er. 

As was said by Mr. Justice Cardozo in pronouncing the opinion of 
court in Baldwin v. Seelig, 55 S. Ct. 497, at P.50C: 

"... ITice distinctions have been made a^t times 
between direct a,nd incirect burdens. Tliey are 
irrelevant when the avowed p-'or-pose of the ob^t 
struction, a.s well as its necessary tendency, i s 
to suppress or the conseouences of 
competition betv^een the states. Such an obstruc- 



tion is direct by the very terms of the hypothesis. " 
( scoring;: siipio] ied) 

This is -oarticularl" true in the case of strikes, primary and 
secondary "boycotts, and keeping out of interstate commerce at the one 
end, or at the other preventing, the use of materials which would other- 
wise move or actually have moved in interstate transportation* , This 
forms part of the "basis of the research into and the statement of the 
subject of the finding numbered 7» It may also play a part in strengthen- 
ing legislation that might, without accounting for this factor, find a 
narrower interpretation. 

10. \7here a certain act, in and of itself without substantial or 
direct effect upon interstate commerce, may repeatedly occur and there 
is basis for an apprehension or reasonable fear of the harmful effect 
of constant recurrence, then acts of this nature may be made the subject 
of regulation under the commerce povv'er because their cunulative effect 
would become direct and substantial. Tliis forms a portion of the basis 
for the research carried on in the statement of possible federal juris- 
diction under the corincrce norver in finding numbered 11« 

11« There is some possibility of valid regulation ''oy voluntary 
agreement on the following bases: 

(a) Congress -aight pass a statute setting up standards for 
wages, hours and fair tr.pde -practices, which in its judgraent, supported 
by proper findings, and a reasonable factual basis, "would promote inter- 
state commerce as well a.s remove restraints in s'pecified industries; but 
;providing that these standards v.'ould -become effective only u'oon definite 
adherence to them in the vray of a v/ritten agreement by and between a 
substantial stated number of members of industry, 

(b) U^on such adherence by a. substantial number of members, 

in units and volume, Congress might thereby be clothed with jurisdiction, 
and the members so adhering become bound not merely by virture of their 
agreement, but by force of the statute to which ''oy the terms of this 
agreement they had subjected themselves, because the cumulative action 
so produced might be found in certain instances to have a. direct and 
substantial effect upon interstate commerce, which individual unrelated 
actions would not produce. 

(c) Congress having once acquired j-^virisdiction over wages, 
hours and fair trade contracts involved in the business of these ad- 
herents, might prevent goods manufact'ored either ''oy the minority not 
adhering or by any violators of these wage, etc, compacts from unduly 
interfering with. the operation of these agreements in the channels of 
interstate commerce, by a cease and desist order issued upon proper 
notice ajad hearing before an administrative body provided for that 
purjDose. This is upon the theory that the subject— matter once having 
come v/ithin federal control, undue interference might be prevented 
(not compliance required) in the same way as any other obstruction to 
interstate commerce* 

12» That Congress has the power to keep the channels of interstate 



commerce clean pud as part of this to prevent or control by proper reg- 
ulation the novement, barter and sale in interstate comnerce of things 
either containing uithin themselves their Irck of health or elements 
renugnant to the moral sense of the general public or which tend to 
promote or to sustain practices or lines of business or conduct contrary 
to such morality. As a corollary to this it should be added that Con- 
gress has also the right in such cases to protect those v7ho do business 
on a higher plane from being dra^Tn to the lower level through interstate 
corrpetition; "but it must be remembered that both these principles and 
their application, under cases decided to date, are limited to matters 
either criminal, fraudulent, deceptive, immoral or generally recogni^.ed 
by the community as contrary to good morals and decency. 

If a payment of less than subsistence rages at any time falls into 
this category by the general consensus of opinion, these principles 
will most probably ap-olyj and to some extent they ma^y be used in 
connection 'with the lineof regulation now under research and set forth 
more fully in finding nombered ?• : 

15. Business affected with a public interest is subject to a. 
stricter and more complete regulation than may be constitutionally ex- 
ercised over business not so affected, and offers the more assured 
field of regulation as to hcjrs and, in such limited areas as come with- 
in the scope of findings 7 and 11 (;orice and strike cases) as to wages* 
Tills is based on the supposition that such regulation is supported by 
the established facts of direct a.nd substantial effect upon interstate 
commerce so as to bring it within the jurisdiction of the commerce 
clause, as more fully set out in the several foregoing findings* 

As ras said in Nebbia. v. ICew York , 291 U.S. 502, "It is clear that 
there is no closed class or category of businesses affected with a public 
interest, * * * The phrase 'affected with a public interest^ can, in the 
nature of things, mean no more than that an industry, for adequate reason, 
is subject to control for the public good. * * * But there can be no 
doubt that upon proper occasion and by ap-oropriate measures the state 
may regulate a business in sna^r of its aspects, including the prices to be 
charged for the products or commodities it sells*" 

ihe degree of regulation, therefore, will depend on the nature of 
the business, the manner of its operation, its necessity to the public 
and the reasonable terms of any legislation required to meet that 

14, If it be assumed that the federal government may regulate 
employer-employee relationships in industries in interstate commerce or 
as separate transactions in such commerce, then emoloyer-employee rela- 
tionships in intrastate commerce which substantially affect, or are 
inextricably intermingled with interstate transactions, may also be 
regulated upon the -orinciTole of the Minnesota Ilate <> Wisconsin Hailroad 
Commission , and Public Utilities of Illinois cases. 




Earle C. Calhoim 


This table of contents and siMmary of pre-- 
liminarj^ findings are ]irimarily an explora- 
tion of the field as a "basis for further work, 
!fot all material in it has as yet "been verified 
and checked, nor does it present a roiinded treat- 
ment of the subject. 


Table of Contents 

I. The Historical Backfjround of the Post Office and Post Road Poi/er 

II. The Hat-ore of the Power 

1. E^icliisive or concurrent? 

2. Constitutional limitations on the power 

3. The prohibition of private agencies 

4. The case of Sx parte Jackson considered 

5. Other cases considered 

6. The exclusion of lottery tickets from the mails 

7. The exclusion oi publications from mail privileges 

8. Delegation bv Congress to the Postmaster General of 
the power to designate places v/here the mails shall 
be received and delivered 

9. The right to use the mails as a right to carry on business 

10. The pov/er to police the mails 

11. The case of Hcminer v. Dageniiart 

12. Instances where prohibitions against use of the mails were 
sustained by tne Supreme Court 

13. Pranchises to construct natural high'.vays and bridges 

14. The First, Fourth and Fifth Amendments as limitations 

III. The Enforcement of the Power Consistently with the Reserved 
Rights of the States and People 

IV. The Use of the PostriL Power in the New Deal Legislation to 
Effect Regulatory Purposes. 

1. Section 5a of the Securities Act of 1933. 

2. Section 4a of the Public Utility Act of 1935. 

3. The cases of Jones v. Securities and Exchange 
Commission and In the Matter of American States 
Public Service Co., debtor, considered. 

4. The state blue sky laws considered as a precedent for 
Section 5 (a) 

5. The due process inliibition of the Fifth Amendment 

v. General Considerations Underlying the Validity of Legislation 
Prohibiting the Use of the Mails or Post Roads to Employers 
Who Fail to Comply with Federal Regulatory Statutes as to Hours, 
Wages and Fair Practices. 




S'ummary of Eindings 


I, Statement of 'facts ; 

Article I, Section 8, Clause 7 of the Constitution empowers Congress 

"to estalDlish post offices and post roads". Article I, Section 8, Clause 

18 authorizes Congress to enact all laws necessary and proper for carrj''- 
ing such power into execution, 

II, Q.uestion . 

Can Congress utilize its postal power as a "bosis for legislation 
prohi^oiting use of the mails "by communications or parcels of industries 
which fail to comply vdth federal regulation of hours or wages of indus- 
try emplo3"eeG, or trade practices of industries, 

III, Discussion . 

I. Preliminary statement. 

A, llo other constitutional grant is clothed in words expressing so 
poorly its object, or so feebly indicating the particular meas- 
ures which may be adopted to carry out its design. 

Little discussion occurred during constitutional convention 
covering postal provisions of the Constitution, Existing pro- 
visions are same as contained in Constitution as adopted by con- 
stitutional convention. 

Supreme Court has held postal provisions of the Constitution 
should be construed as designed to meet new conditions and cir- 
cumstances and to keep pace with the progress of the country, 

II, Tlie iDOstal clause of the Constitution grajits complete, plenary power 
to Congress, which pre-empts the field and excludes state authority, and 
is subject only to constitutional limitations imposed upon the exercise 
by Congress of its enumerated -oowers. 

Governments almost always monopolize postal iDOwer, The Supreme 
Court hs.s upheld constitutionality of prohibiting private or state pos- 
tal agencies. But establishm.ent of federal postal system is dependent 
upon enablinfi statues v/hich have been enacted. 

Two op'oosite opinions have been advocated as to proper interpreta- 
tion of postal provisions of the Constitution, One opinion is that 
Congress cbji only direct where -^lost offices should be established and 
maintained, and on which roads nails shall be carried. The second op- 
inion, approved by the Supreme Court, is that postal power of Congress 
is plenary" and pre-empts the field, and includes the power among others, 
to determine mail matter that may be excluded, 



Congress may delegate to the post master general the power to desig- 
nate "olaces '..'here :nails shall be received and delivered. 

Congress has power under the postal clause of the Constitution to 
construct or to authorize individuals to "build railroads to "be used as 
post roads across states c.nd territories, 

Oiience of robbing nails may be made punishable by federal lar: 
enacted by Congress. Act of Congress is constitutional which provides 
that forceable entr^"" into a post office, or an attempt to do so, with 
intent to connit larcency or' other depreda.tion shall constitute a federal 
crine rnd sliall be punisliable by the federal government. 

Congress has power to raaJie it a federal crime to open a letter even 
after it iia.s passed from actual control of the post office department 
and before :nanual delivery to addressee, 

A state statute requiring a fast mail train to turn aside from direct 
interstate route and run to specified stations and back again in order 
to receive and discharge passengers is an unconstitutional obstruction 
of the nails, 

Unactnent of all regulatory legislation essential to enforcement of 
postal pouer of Congress is within scope of that power subject only to 
constitutional limitations. 

Exclusion from mails is more easily defended thr.n exclusion from 
interstate com.nerce, 

night to lawful use of postal service and conditions upon which it 
may be exercised rests whollj;- upon con^Tessional legislation. Power to 
police mails is an incident of postal power. 

Congress nay exclude from mails matter which is da.ngerous or which 
carries on its face immoral expressions, thre^.ts or libels. The diffi- 
cult'- attempting such arises, not from vant of power in Congress to 
prescribe regiilations as to what shall constitute nc?.il natter, but from 
necessity of enforcing them consistantly with rights reserved to the 
people of far greater importance than transportation of mail, 

pLegulation excluding matter' from mails cannot be enforced in way 
to require or permit exanination into letters, or sealed packages sub- 
ject to letter posta-ge without warrant issued upon oath or affirmation, 
but that nay be enforced uoon competent evidence of violations obtained 
in other ways. Same rule a-oplies to objectionable printed matter. 

Congress nay exclude from y.iails comnunications concerning lotteries; 
espiona:;e; obscene, lewd, lascivious, or indecent matters; information 
concernin , a'^ortions; libelous or threatening matter; matter concerning 
schemes to defraud; poisons; insects; reptiles; ex;Qlosives; intoxicat- 
ing liquors; natter of a character to incite arson, murder or assassins^ 
tion; natters violating 'copja*ight laws; prize fight films; matter solicit- 
ing order for intoxicating lia_iiors in prohibition states. This power 
exists at every step of postal service from first deposit in mail until 
final delivery to addressee, 



Tlie Supremo Court, in H amnier v. Do.g:enhart , 247 U.S. -251 (1918), 
helci tliat Con/^-ress has no po^.-^er to exclude commodities from interstate 
comiierce, irrespective of their intrinsic character or the conditions 
of their -oroduction or consumption. 3ut that case is not authority for 
a conclusion that Congress does not possess discretionary power, subject 
to constitutional limitations, to exclude matter from the mails under 
i'ts posta.1 power. 

Railroads are "by federal statute declared post roads. The same 
fullness of control exists over artificial highways, such as railroads 
and public highways as over v/aterways. The federal government, under 
its right of eminent domain, may compel postal service from railroads. 
The federal government may construct highways for transportation of nail 
and charge tolls for their use; also own and operate carriers and en- 
gage in business of a private nature in connection with its postal ser- 

Congress has authority to grant franchises authorizing corporations 
to construct highways and bridges to be used as post roads. Federal 
charters to railroads and bridge companies may be based upon the postal 
power of Congress, as may grants of rights of way through states, 

III, Constitutional limitations upon the postal pov/er of Congress, 

A, JFreedom. of the press; 

Eeal . interference with freedom of the press is not permisible 
under the First Amendment, Any attempt by Congress to place a 
serious restraint upon the press, or even to deny the press postal 
facilities vrould receive a judicia-1 veto, 

B, Security from un^'e as enable search and seii-ure ; 

llo valid law of Congresi? can authorize the postal authorities 
to invade the secrecy of letters Fnd sealed packages in the nail. 
All postal regulation adopted rslo.tive to mail matter mst be in 
su.bordination to the Foiirth ATr.ondment, This limitation 0T)3rates 
• chiefly upon administrative officials who attem"ot to obtain evi- 
dence of violations reg'j.lating matters excD.uded from the mails. 
Any unlawful opening of mail is dealt "dth criminally. 

C, i)ue Process; 

In determining whether a federal statute contravenes the due 
process g-ua.ranty of the Fifth Anendment to the Constitution, the 
guiding principle is that the la\7 shall not be unreasonable, arbi- 
trary, or : capricious, and that the means selected shall have real 
and substantial relation to the object sought to be obtained, 

A3.1 exclusions from the mails upheld by the Supreme Court can be 
justified as so-called federal police -povieT regulations. The ex- 
cluded articles are either inherently injurious, inimical to the 
health, safety and well-being of the recipients, or the use of the 
nails has been denied because such use would be in furtherance of a 
design that is condemned by moral considerations, or is against 
public policy, 



If legislation to re.e;iLlate hoiirs pnd wages of industries should 
simoly na'-e matter relating to unanproved hours and wages non-mailahle , 
and should penalize any attempt to use the postal service for its carriage, 
such legislation would he less ohjectionahle than legislation purporting 
to deny delino^uent industries mail facilities for all of its mail matter. 

Congressional control of the mails may not "be used as a lawful means 
to conoel performance or non-performance of local acts, such as estahlish- 
ment of specified hours and wages hy industries unless direct federal 
control is first established pursiiant to some power of Congress other 
than its -oostal power, uoheld as constitutional. 

If industries violated a constitutional lav; enacted "by Congress 
relating to hours and wages, Congress would have the right to exclude 
their nail ma.tter from the mails, since it "'ould he anonolous for the 
federal government to aid through its instriunentalities such as the post- 
al service, -oersons or corporations violating valid laws. 

Congress may exercise the right to exclude all matter from the ua.ils, 
r:hen to do so constitutes a necessary and reasonable means of rendering 
effective a policy which in itself is one which Congress has the consti- 
tutional right to enforce. The commodities clause of the Hep'burn Act of 
1306 repi^esents this tj'pe of exclusion from the standpoint of interstate 
coimierce . 

The postal power of Congress is "broader than its commerce power, 

IV. Conclusions, 

A- Tlie postal clause of the Constitution delegates complete plenary 
power to Congress which -Dre-emT^ts the field and excludes state 
authority. That power is suoject only to the constitutional limita- - 
tions imposed upon the exercise hy Congress of its enumerated powers, 

B, Altho-Qgh the postal power of Congress is plenary, extending to 
the classification and exclusion of articles presented for trans- 
nission through the mails, that pbwer is subject to limitations, (1) 
as to freedom of the press guaranteed by the First Araendinent , (2) 

as to security from unreasonable search and seizure ;oursuant to the 
Fourth Amendment, (3) as to due process required by the Fifth Anend- 

C, The courts have not vet determined the exact limits which Con- 
gress i.iust not transgress in excluding matter from the mails. It clear, however, that in making such exclusions from the mails 
Congress may not arbitrarily, unreasonably, or capriciously deny 
the public rights guaranteed by the First, Fourth ejid Fifth Amend- 
nents, even in the exercise of the so-called federal police power; 
further, that Congress may not indirectly through its postal power 
interfere with or over-ride constitutional guarantees when to do so 
would be uncons'titutional if attempted directly, 

D, Congress, under the guise of an exercise of its postal power, 
i.!?.y not reg-alate matters not otherv.dse within its powers to regu- 
late. However, Congress, in the exercise of an acknowledged power, 
nay indirectly a result --hich it is not constitutionally author- 
ized to reach directly. It may enact Constitutional legislation 



provicling that mail matter of industries thst violate a law, based upon 
the Coixi.erce Clause or any other constitutional provision upheld by the 
courts as valid, re^^ating hours and wages of industry employees, or 
trade practices of industries, shall "be denied the postal service. Con- 
gress may exclude matter from the mails, when to do so would constitute 
a necessa,ry and reasonable yneans of rendering effective a policy which, 
in itself, is one which Congress has the constitutional right to enforce. 
Therefore, an Act of Congress held constitutional by the courts, regu- 
lating hoTji-s and wages of industry employees, or trade practices of in- 
dustries, nay contain a constitutional provision excluding matter of de- 
linauent industries from the mails. 






James W. Irwin 


This Table of contents a^id 
sTJjnmary of prelirainary findings 
are primarily an exploration of 
the field as a basis for further 




Ta"bl9 of Contents 

I. Two Lines of Approach. 

A- One "based on standards of importer of foreign goods. 
B, The more practical, *- "based on standards of domestic 
producers of conpeting goods, 

II. The Logical Appropriateness of Application of Such a Plan to 
Tariff Beneficiaries. 

III. Constitutionality of such a Plan.. 

A. "flexible" provisions of Tariff Act of June 17, 1930. 

B, Upheld in Hainpton case and other decisions, 

IV. Extent of Legislation Required to Effectuate policy, 

A. Theoretical view that none is required, 

B, practical need for changes in law, 

V. Collatera.1 purposes of Legislation. 

A. Cases showing that announced purposes may not be merely 

B, showing collateral purposes beyond the constitutional 
authority of Congress, do not necessarily invalidate legislation, 

VI. Vulnerability of Proposal. 

A. plan could at most be auxiliary, 

B. Other olans seem better. 

C. Inpossibility of applying with uniform justice. 





P reliminary Summary of Finding;s 

1. The. idea of "flexilDle tariff provisions to secure proper 
standards of wages a.nd ho-urs" is subject to two interpretations. The 
one with greater color of practica'bility is this: The legislative 
imposition on the Executive Department of the duty of raising and lower- 
ing tariff schedules in proportion as the industry "benefited "by the 
schedules in question maintains legislatively prescribed economic 

2. Such a plan would "be logically appropriate because of the 
argument made by beneficiaries of the protective tariff, that it is 
for the benefit of America,n labor. 

3. The proposal appears to be constitutional, the Supreme Court 
having already sustained the principle of a "flexible tariff" for the 
purpose of equalizing domestic production costs with those abroad. 

4. Theoretically it might be possible to proceed under existing 

5. practically, if such proceedings are to be attempted new 

legislation would be essential. 


6. A law along the line suggested would not be valid, if in its 
revenue raising aspect it were merely a colorable pretense. 

7. A collateral purpose in legislation, even beyond the con~ 
stitutioncl limits of federal authority, v/ould not necessarily in- 
validate the lav7. 

8. From the standpoint of general regulation of economic condi« 
tions, such a law at most could, only be auxiliary. 

9. There are other plans nov; challenging attention, having in 
view the same general object to be sought under the proposal consider- 
ed in this memorandun. From among these plans probably some better 
method or methods could be selected. 

10, Even as an auxiliary plan, such a measure would be of question- 
able practicability, because of various obstacles, e.g. the limited 
scope of its effect; general administra-tive difficulties (such as in 
1926 let a Senate committee to advise the repeal of the existing 
flexible tariff law); and the violent protest which it may be assumed 
would be leveled at what would be alleged to be the indirection and 
subterf-uge of the plan. 




11. Possi'bi'bly the chief of all obstacles is that the economic 
standards of all memters of any industry v^ould not coincide, Varia- 
tions in tariff rates vrould result in the "benefit or detriment of all 
members of industry. ("The rain falls on the just and unjust alike.") 





Victor E. Cappa 


This table of contents and summary of -prelim- 
inary findings are primarily an exploration 
of the field as a "basis for further \7ork. 
Legally possible plans for nevr legislation 
are suggested merely as examples of the appli- 
cation of the 'orinciples and v/ithout reference 
to -oolicy. 




I:EDEEAI. regulation through the joint EICPLOYlvIENT 

Table of Contents 


Law Reviev7 Articles 
Lav; Review Notes 
Cases Cited 
Statutes Cited 
Summary of Argument 

A. Judicial limitations on Regulatoi^^- Taxing Statutes based on the 
Reserved Powers of the States 

1. Statutes sustained by S'upreme Court 

2. Statutes invalidated by Supreme Court 

3. General Principles of these cases 

4. Use of Taxing Devices in New Deal Statutes 

5. Proposed Taxing Measures in N.R.A. Legislative Piles 

B. Judicial limitations on Reasonableness of Classification 

1. Source of the pov/er to levy excises 

2. The use of a practical point of view in determining reason- 

3. A difference of social and economic consequences as a basis 

C. The Spending Power and the Cases of Massachusetts & Frothingham 
V. Mellon 

1. The source of spending pov/er 

2. The H.amiltonian-Madisonicii controversy on the general wel- 
fare clause 

3. The unassailability of the spending power as the practical 
result of Massachusetts v. Mellon 

4. The fifty-fifty or cooperative grants-in-aid statutes 

5. The Massachusetts & Frothingham v. Mellon cases considered 
in detail 

6. Broad delegations of power and regulatory features in spend- 
ing bills 

7. Federal control of state action through coopera.tive grants- 
in-aid statutes 

D. A Four Plan Approach 

1. The pure taxing -poxrer approach 

2. The two bill approach 

3. A non-corr3lative taxing ejid spending bill approach 

4. The use of miscellaneous ancillary devices 

E. The Two Bill Pl,an 

1. The disassociation of the taxing bill from the appropriation 

2. The probability that the Supreme Court may read the two bills 

3. The case of Gregg Dyeing Co. v. Query 

4. The use of the two bill plan in the recent railroad retire- 
ment act 



F. Specific Heconunendations Under the Four Plan Approach anc. Ttto 
Bill Plan 

1. Pour different excise taxes on four labor privileges 

2. The rates of tax to "be imposed 

3. The method of administrative determination of subsistence 
wa^es and maximum periods of labor - advantages and disad- 

4. The question of legislative standards 

5. The inapplicability of the objections of the Supreme Court 
in the Child Labor Tax Case 

6. The bases of classification for the four excise taxes on 
labor privileges 

7. Criticism of prooosed IJ.R.A. bills in legislative files 

8. The plan of a coopera,tive II. R. A. between the federal govern- 
ment rJid the states 

9. Grants to states on condition of enactment of N.R.A. legis- 

10. The payment of direct bounties to complying employees- 

11. The denial of deductions from gross income for substandard 







S" uiimiary of Findin£;s 

The Supreme Court has sustained many taxing statutes v/hose primary 
purpose :7as regulatory rather than revenue raising. Other statutes of 
this type have "been invalidated, particularly the child labor tax. The 
general principle of the decided cases in that the courts will not in- 
quire into the collateral motives of Congress in enacting such measures 
where they do not disclose on their face any greater regulatory scheme 
than is incidental to the collection of the revenue to he raised thereby. 

Slight differences have sufficed as "bases of classification for tax 
purposes. 'Thus differences of social and economic consequences have been 
held to be sufficient. 

It is believed that the economic and social consequences in periods 
of depression of certain labor practices such as the employment of child 
labor, the payment of sub- standard wages ajid the employment of laborers 
more than a reasonable maximum of hours may justify bases of classifica- 
tion for tax purposes. 

The objections of the SLiprome Court in the Child labor tax case and 
in other cases may be met by a simply drawn statute which contains no re- 
cital of purposes, bases of classification or detailed regulatory scheme 
beyond that incidental to the collection of the tax, and which eliminates 
any penalty element and is directlj^ pro-portioned to the extent of the 
privilege taxed and the frequency of its use. 

The type of ta:ves which may be utilized either singly or in conjunc- 
tion with the others for regulatory purposes to achieve N.R.A. purposes 

First: a tax of 25 per cent on that part of payrolls which repre- 
sents payments to children under fourteen years of age; second, a tax of 
20 per cent on that part of payrolls \/hich represents child labor between 
fourteen and sixteen years of age; third, a tax of 25 per cent on the dif- 
ferential between the sub-minimum wage paid to each employee and a minimum 
living wage determined administratively; and fourth, a tax of 50 per cent 
on that portion of payrolls which represents compensation for services 
rendered in excess of certain maximum hours of labor similarly determined. 

In addition a federal bounty systen may be inaugurated to make pay- 
ments to complying units of industry or grants-in-aid to the states to 
finance the cost of administration of state N.R.A. agencies, or to their 
educational funds, on condition that they enact such social legislation 
as has been sustained by the Supreme Court in cases like Bunting vs. Oregon 
(ten hour day for all employees of mills, factories, and manufacturing es- 
tablishments), Kolden vs. Hardy, etc. The monies for these bounties can 
be raised by extending the present list of excises on the sale or use of 
certain commodities to include others, jDcrhaps even to the extent of a 



general sales tax. These monies rrould "be paid into the general treasury 
and then disbursed ty a separate appropriations bill. 

Tlie importance of having tro separate bills is that under the doc- 
trine of the companion cases of Massachusetts v. Kellon and Frothini^ham 
V. Mellon (infra) a taxpa^'^er cannot attack e. spending bill, as his inter- 
est in the treasurj'- funds is too remote. The device of tuo bills keeps 
that interest remote. Wiile there is some possibility that the Supreme 
Court may read these bills together, it is believed that the disinclina- 
tion of that Court to pass on the spending power together with the rule 
of construction consistently adhered to by it in cases involving the val- 
idity of tax statutes makes it improbable that it will do so. 

The device may be further used to secure compliance with H.R.A. 
standards as follows: A taxing bill would lev^'- a five to ten per cent 
tax on the gross profits of all industry which tax would be remitted by 
a separate appropriation bill to those units of industry.' which comply with 
federal standards administratively determined. Ancillary devices such as 
the denial of the right to deduct sub-minimum wages may also be employed 
in aid of the main Dlans. 


Austin F. Macdonald - Federal Aid - 1928 

Austin F. Macdonald - Federal Subsidies to the States - 1925 

Federalist (Lodge ed. ) 1902 

Stor3^ - Commentaries on the Constitution of the United States - 1891 

Hamilton - ¥orks (Lodge ed, ) 

Edward S. Con7in - The Twilight of the Supreme Court - 1934 

Law Review Article s 

E. W. Perkins - Discriminate rj.^ License Classifications - North 
Carolina Lav/ Review (Dec. 1931) 

K. Brewster - Is the Process Tax Constitutional - American Bar 
Association Journal (July, 1933) 

Edward S. Convin -- The Spending Power of Congress Apropos the 
Llaternity Act - 36 Harvard Law Review 543 (1923) 

Abraham J, Levin - Does the Power to Involve the Right to 
Destroy a Lawful Business - U. S. Law Review (Sept. 
1953. Oct. 1953) 

Edward S. Convin - Congress' Power to Prohibit Commerce - 16 
Cornell Law Quarterly 477 (1953) 

Thomas Reed Pov/ell - Child Labor, Congress and the Constitution 
1 North Carolina Law Review 61 (1922) 

Robert E. Cushman - The National Police Power Under the Taxing 

Clause of the Constitution - 4 Minnesota Law Review 247 

M. G-raves - Federal Sales Tax With Allocation of Share of Proceeds 
to the States - Tax Magazine (Oct. 1933) 

Walter Barton - Direct and Indirect Taxes - 3 Nat. Income Tax 
Magazine 366 (1925) 

Walter Barton - Constitutional Limitations on Direct and Indirect 
Taxes - 4 Nat. Income Tax Magazine 96 (1926) 

A. S. Gold - Jurisdiction of the Supreme Court Over Political 
Questions - Cornell Law Quarterly (Dec. 1923) 

Paul E. Douglas - The Development of a System of Federal Grants 
in Aid - Political Science Quarterly (June 1920) 



Sobert E. Cushman - Social and Economic Control Through Eederal 
Taxation - Ivlinnesota Law Review (June, 1934) 

S. D. Beecher - Emergency Eeliei Sales Tax - Dickinson Law Review, 
(January, 1933) 

Arthur W. Mechen, Jr. - The Strange Case of Florida v. Mellon, 
13 Cornell Law Quarterly 531 (1928) 

T. A. Lee - An Unconstitutional Diversion of Tax Funds - Journal 
Bar Associa.tion Kansas (Fe'bruar^'', 1934) 

Samuel Becker and Robert A. Hess - The Chain Store License Tax 
and the Fourteenth Amendment - 7 North Carolina Law 
Review 115 (1929) 

Walter E. Barton - The Federal Taxing Power - 99 Cont. L. J. 57 

Walter E. Barton - The Scope of the Federal Taxing Power - 2 
National Income Tax Magazine 297 (1924) 

Bar^bara Armstrong - The Federal Social Security Act - American Bar 
Association Journal (December, 1935.) 

Law Review ITotcs 

Constitutionality of State Chain Store Tax Based on Total Number 
of Stores - Yale Law Journal (Februarj^, 1935) 

The Sales Tax - Harvard Law Reviev; (March, 1934) 

Constitutional Limitations on Sales Taxes - C. P. R, Michigan Law 
Review (February', 1935) 




Veazie Bank v. Pernia. 75 U. S. 533 (1869) 

Billings V. United States, 232 U. S. .261 (1914) 

Ma^ano v. Hamilton, 292 U. S. 40.(1934) 

KcGray v. United States, 195 U. S. 27 (1904) 

In re Kolloch, 165 U. S. 526 (1896) 

United States v. Boremus, 249 U. S. 86 (1918) 

Liggett Co. V. Lee, 288 U. S. 517 (1932) 

State Board of Tax CoLimissioners v. Jackson, 283 U. S. 527 (1931) 

Bailey v. Drexel Furniture Co., 259 U. S. 20 (1922) 

Hill V. Wallace, 259 U. S. 44 (1922) 

License Tax Cases, 5 Wall, 462 (1865) 

United States v. Baiigherty, 269 U. S. 360 (1925) 

Hammer v. Dagenhart , 247 U. S. 251 (1913) 

Lindner v. United States, 266 U. S. 5 (1925) 

Alston V. United States, 274 U. S. 289 (1927) 

Fox V. Standard Oil Go. of II. J., 294 U. S. 87 (1935) 

Q,uong Wing v. Kirkendell, 223 U. S. 59 (1912) 

American Sugar Refining Co. v. Louisiana, 179 U. S. 89 (1900) 

South?7estem Oil Co. v. Texas, 217 U. S. 114 (1910) 

Sproles V. Binford, 286 U. S. 374 (1931) 

Stephenson v. Binford, 287 U. S. 251 (1932) 

Flint V. Stone Tracy Co., 220 U. S. 107 (1910) 

Thomas v. United States, 192 U. S. 363 (1903) 

Evans v. Gore, 253 U. S. 245 (1921) 

Metropolis Tlieatre Co. v. Chicago, 228 U. S. 61 (1913) 

Klein' V. Board of Supervisors, 282 U. S. 19 (1930) 

Tyler v. United States, 281 U. S. 497 (1929) 

Barclay v. Edwards, 267 U. S. 442 (1924) 

Massachusetts v. Mellon, 262 U. S. 447 (1922) 

Frothingham v. Llellon, 262 U. S. 447 (1922) 

Gregg Eyeing Co. v. i^uery, 286 U. S. 472 (1931) 

Federal Farm Loan Banks Case, 255 U. S. 180 (1920) 

Railroad Retirement Board v. Alton, 55 S. Ct. 758 (1935) 

Allen V. Smith, 173 U. S. 389 (1898) 

United States v. Realty Co., 163 U. S. 427 (1895) 

Burnett v. Thompson Oil e, Gas Co., 283 U. S. 301 (1930) 

New Colonial Ice Co. v. Helvering, 292 U. S. 436 (1934) 

Helvering v. Indiana Life Insurance Co., 292 U. S. 371 (1934) 

Adliins V. Children's Hospital, 261 U. S. 525 (1923) 

Bunting v. Oregon, 243 U^. S. 426 (1917) 

Holden v. Hardy, 169 U. S. 366 (1897) 

Muller V. Oregon, 208 U. S. 412 (1907) 

Riley v. Massachusetts, 232 U. S. 671 (1914) 

Miller v. Oregon, 236 U. S. 373 (1914) 

Sturges V, Beauchamp , 231 U. S. 320 



Tlie Maternity Act, 42' Stat. 224 
Tiie laorrill Act, 12 Stat. 503 
The Smith Lover Act, 3S Stat. 372 
The Smith Hughes Act, 39 Stat. 929 
Federal Highway Act, 42 Stat. 212 
Vocational Rehabilitation Act, 41 Stat. 735 
National Firearm Act of 1934, 48 Stat. 1236 
Fed-eral Highway Act of 1934, 48 Stat. 993 




Abraham C. Wcinfeld 


This table of contents and siirainary of results 
of investigation are primarily an explora- 
tion of the field as a "basis for further \7ork. 



Table of Contents 



I. Are Labor Conditions a Proper Subject of International 
Negotiations and Treaties? 

II. Have the States Poner, vrith Consent of Congress, to Enter 

into Agreements or Compacts T;ith Foreign Nations Regulating 
Labor Conditions? 

III. Has the Federal Govrrnment Pouer to Enter into Treaties vrith 
Foreign Nations Regulating Labor Conditions in Businesses, 
the Regulation of Which has been Reserved to the States? 

IV. Has the Federal Government Pouer to Enter into Treaties uith 
Foreign Nations Regulating Labor Conditions in Businesses, 
the Regulation of TThich has been Delegated to Congress? 

V. Is tho Due Process Clause of the Fifth Anendment a Limitation 
on the Power of the Federal Govurnment to Enter into Treaties? 
A» Iviinimum Wages 
B« Ma::im-um Hours of Labor 
0, Prohibition of Child Labor 

VI,. Does a Treaty that Regulates Labor Conditions Require Legisla- 
tion to Become Effective? 

VII. Ratification by the United States of Conventions Adopted by the 
International Labor Conference 
A. Obligations of the United States uith Reference to Draft 

B« Conventions Adopted by the International Labor Crganiza- 

tion Prior to the United States Becoming a Member Thereof 

and Those Adopted Later 
C. Advisability of Ratifying Conventions Drafted by the 

International Labor Organization 

1, Conventions adopted in June 1935 

2. Conventions adopted prior to June 1935 

(a) Hours of Work 

(b) Child Labor 

(c) Labor Conditions of Seamen 

(d) Protection of Women 

( e ) Agr i cul ture 

(f) Social Insurance 

(g) Unemployment 
(h) Forced Labor 



(i) Pee Charging Employment Agencies 

(j) Emigrants 
D# SiimmsLry of Arguments For and Against R/itif ication of Conven- 
tions of the International Labor Organization 
1, Arguments pro 
2» Arguments contra 

VIII. Canadian Constitutional Problems in Connection '.vith Ratification 

of Conventions of the International Labor Organization. Comparison 
'.7ith Problems in the United States 

IX. Suggestions as to Treaties v;ith Canada Abolishing Child Labor and 
Limiting Hours of Labor 
At Hours of Labor 
B, Child Labor 



LEG.M ?j:si:;lRCK section 


Summary of Prelini n ary FindiiiiRis 


In 1934 the United States "became a member of the International 
Labor Organization, v/hich i s com~30sed of about 60 nations, and has its 
headquarters in Geneva, Switzerland© Each year delegates of the members • 
meet in an International Labor Conference and approve drafts of inter- 
national conventions and recommendations dealing with labor conditions. 
There is no obligation on any member to ratify any of the conventions - 
or to coi.iply with the recommendations, but there is an obligation to 
submit them to the competent authorities for such action as they may 
choose to take thereon. In June 1935, several conventions and recom- 
mendations v.'ere adopted by the International Labor Conference in which 
the United States was represented. It is, therefore, the duty of the 
United States to submit those draft conventions and recommendations to 
the competent autnorities in this country for such action as they may 
choose to take thereon* 


In the I'-st thirty years numerous treaties have been entered into 
between and among nations for the piirDOse of regulating labor conditions. 
Conspicuous among them are the conventions adopted by International 
Labor Conferences after the World War of which about 35 have been ratified 
by numerous nations* Whether or not a matter is a TDroper subject of a 
treaty depends on whether it is actually dealt with in treaties in the 
ordinary intercourse of nations* Labor conditions have been so dealt with 
and therefore are a proper subject for international negotiations and 


Though the United States Constitution pernits States, with consent 
of Congress, to enter into agreements or compacts with foreign nations, 
that power does not extend to agreements or compacts regulating labor 
conditions. Tlie agreements or compacts contem-olated by the Constitution 
involve settlement of boundary lines and matters connected therewith. 


The treaty-making -cower is by the exoress language of the Con- 
stitution superior to State laws; it therefore extends to matters 
ordinarily reserved to the States. This is the effect of an unbroken 
line of decisions of the Supreme Court of the United States construing 
the Constitution. 


A treaty v/hich is self-e::3cuting, that is, a treaty which shows 
an intention that it be enforced without i'urther le^^islation, stands 
on an equal footing with an r,ct of Congress© Such a treaty nay repeal 
an act of Congiress dealing with the same subject-matter and an act of 
Congress may repeal a treaty; whichever is later in time prevails. 


Proceedings in the State conventions called to ratify the federal 
Constitution shov/ that the people when ratifying the federal Con- 
stitution did so v/ith the understanding that' the Constitution vrould 
not encroach on their personal liberties. Tae due orocecs clause is 
suoposed to protect those liberties. Exroressions by the Suorerae Court 
of the United States in cases not involving treaties indicate that the 
Supreme Court v;ill orobably apoly the due process test to treaties. 
In view of A3.kins v. Children's Eos'oital , 261 U.S. 525 (1923) ando^s lone, ac 
that case is law, the due process clause neens to je a barrier V7hich 
precludes entering into treaties fixing niriimura './ages. On the other 
hand, the due process clause seems not to "bar entering into treaties 
prohibiting child labor. The Supreme Cdirt has never held such 
prohibition to violate due orocess, while it ha.s hold tlriat prohibition 
of child labor in hazardous occupations does not violate due process. 
Similarly, there seems to be no legal barrier to entering into a treaty 
regulating mazzim-'jm hours of labor; the Supreme Court has held that a 
statute fixing maximuin hours in any rail, factory or manufacturing 
establishment did not violo.te due process and thus practically overrijled 
an earlier decision to the effect that limiting ho-iirs of labor in a 
bakery violated due process. 


A treaty to regulate labor conditions ratast necessarily leave a 
vast field of regulation of details to the legislatiires of the contract- 
ing parties. Normally, therefore, a treaty of that 'na-ture cannot be 
self— executing. For that reason no treaty regulating labor conditions 
should be expected to become effective until it is made effective by 
legislation. All conventions of the International Labor Organization 
call for legislation by the signatory states by way of giving effect to 
the conventions. 


Though under Article 405 of the Constitution of the International 
Labor Organization, a federal state the pov/er of v/hich to enter into 
labor conventions is subject to limitations may treat a draft convention 
as a recommendation only, the United States is not in position to avail 
itself of tha,t orivilege; the power of the United States government to 



enter into lator conventions is not subject to limitations contemplated 
"by the frainers of Article 405. If the government had the right to treat 
a draft convention as a recommendation only, it would be under obligation 
to do no more than to forv^^ard a copy of the draft convention to the Con- 
gress and to the 48 legislatures! they- to enact such legislation in 
conformity with. the recoromendation as they might choose to» 

Since the United States must treat a draft convention as a draft 
convention} it is under obligation to submit to : the Senate and to the 
House of Representatives the conventions adopted at the June 1935 con- 
ference. If those conventions or any of them obtain the ap-oroval of 
two- thirds of the Senate and the consent of the majority of the House 
of Representatives, the President may ratify them» Thereafter it will 
be up to Congress to enact legislation to give effsct to the conventions 
that shall have been ratified. 

The United States is under no duty to act on the conventions adopted 
by the International Labor Organization prior to June 1935, but it may 
ratify them, the -orocedure being the same as outlined with reference to 
the conventions adopted in June 1935» Each convention should first be 
passed upon by e:?oerts in the field- covered by the convention, and if it 
is found adapted to Am.erican conditions, the convention may^be submitted 
to the Senate and to the House. 

In favor of ratification of the conventions of the International 
Labor Organization, it may be that a^ statute passed pursuant to a 
convention would be binding throughout the country and would, therefore, 
not result in undue advantages or disadvantages to various states* Such 
a statute would express the populr.r will since it would have the backing 
of the House and of the Senate. Bad working conditions in other countries 
tend to the conditions here, while raising conditions in other 
countries tends to support or even to raise conditions in this country* 
The International Labor Organization is not necessarily tied to the 
League of Nations, It has several members who are not members of the 
League and could function even if the League should cease to exist. 

Against ratification it nay be said that the country dislikes 
foreign entanglements, and also that if another party to a convention 
should complain that the United States has= failed to dive up to Its 
obligations under' a convention, such complaint might ultimately come 
before the Permanent Court of International Justice, It is to be borne 
in mind, however, that membership in the International Labor Org-anization 
contemplates the possibility of ratification by the United States of at 
least some of the International Labor Organization conventions. Eat.ifica- 
tion necessarily carries with it the possibility of a complaint being 
made 'oy another member , and ultimately coming before the Permanent Court, 
and the further passibility that the Cohort might indicate "measures of an 
econom.ic character" which other members "would be justified in adopting 
against a defaulting government." So far none of the 61 members of the 
International Labor Organization has ever made a complaint against 
another member. 





The procedure "by ,;hich tre-tii^G are raacie on behclf of Grenada, is 
so difierent from the procedu?.^e pursued in the United States, thr,t 
there is no "basis for comparison. As to distribution of legislative 
pov/ers, in Canada the Provinces enjoy legislati^/e ipov/ers ^7hich are 
exclusively enumerated as "belonging to the provinces, vrhile .:,11 other 
powers rest with the Dominion iroverni.ient. Tnough the method of distri- 
bution of legislative '.-jov/er is the very opposite of the netJiod in the 
United Sta.tcs, IralDor conditions c^re normal'iy v/ithin the jurisdiction 
of the Provinces, just rs they are normally within the jurisdiction of 
the States in the United States. 

There is no due process limitation in Canada.. 

Several conventions drafted "by the International Labor Qrganirjation 
and relating to le.'bor conditions of searaen have "been ra.tified on "behalf 
of Canada, and have been follo'Ted by legislation passed oir the Doninion 
parlia-raent. That body has jurisdiction over labor conditions of sea-inen, 
irrespective of international engagements. 

As to those conventions of the Internr^tional Labor Qrgani'sation 
v/hich regulate labor conditions in fields norma.lly v/ithin the jurisdiction 
of the Provinces, the procedure v/as, until recently, to refer the con- 
ventions to the Provinces and to the Dominion Parliajnent for such action 
as they might choose to take thereon within the scope of their norma.l 
legislative oowers. In 1931 and 19";2 decisions of the highest constitu— 
tionL-2 court in the British Empire eniohasi'-ied the oower of the Canadian 
PcJTliament to enact legislation by way of giving efiect to internationG.l 
conventions. In line '..-ith those decisions, m 1935 the Canadian 
government caused to be ratified several conventions which regulate 
labor conditions normally within Provincial jurisdiction, and the 
Parlia;ient of Canada enacted legislation to give effect to those con- 
ventions in June and July 1935, 


Since the standards fixed in the Internationa.l Labor Organi-zation 
conventions are generally too low for an industrially advanced country 
like the United States, the treaty power might be used to establish higher 
standards by a separate treaty with one or ^lore po^.'ers as, for instance, 
by a treaty with Canada. Such a treaty would not be open to the objection 
of involving a tie-up with the permanent Court of International Justice, 
Sptcif icaily, attention ma-y be directed to the economic and political 
possibilities of a treaty with Canada limiting the age of admission of 
children to employment to 15, or perhrps 16 years, and li^iiting the 
hours of labor to 8 in the day and 40 m the \:eek. 





James ¥, Irrrin 


This trlDle of contents ajid siiin- 
mary of preliininarj'- findings are 
prinariljr an exploration of the 
fiold. as a "oasis for further work. 




Table of Contents 

I, Constitutional Provisions (from Art, J, Sec. 8) 

II» Factual Aspects 

A. National physique as related to military necessity 
B» Authorities as to effect of child labor. 

[II. Previous Federal Action on Child Labor 
A» Three legislative attempts 

B. Proposed constitutional amendment 

IV, Ari^uments against regulation under war power 

A, As drawn from previous child labor decisions 

B. From other sources 

C» PsycholOj.rical considerations 

V. Arguments for Reguls.tion under War Power 

At Based on fo^jindration of "in{.)lied po'./ers. " 

3. National sovereignty supreme in ;nllitary realm. 

G. Liberr.l constitutionr^l construction heretofore applied to 

statutes based on war power, 
D. Validity of • legislation not necessarilj'- affected by collateral 
purposes, even beyond the scope of federal authority, 

1, Cases establishing rule 

2, Cases showing that the asserted constitutional purpose 
must not be merely colorable 

VI, Conclusion: A reasonable probability of constitutionality 


Siimma.ry of Preliminary Findings 

(1) The constitutional f oiindati'on ;;f o;r such a proposal lies in 
Article I, Section 8, Su"bsections 1, 11, 12, 13, 14, 15, 16 and 18: more 
particularly in Subsection 1, 14, 16 and 18. 

(2) If authority for Federal child labor legislation exists, it is 
on the theory that regulation or prohibition of child labor is a reason- 
able means toward providing a strong and efficient soldiery, 

(3) A more exacting statement i/ould be that such authority would 
exist only if child labor legislation be "necessary and proper" (Subsec- 
tion 18 above referred to) to exercise of the express vxar. powers. But in 
considering that terminology, it must be borne in mind that "necessary" 
as here used has never been considered to connote absolute compulsion, 
but that the \7ord "necessary" is construed in connection with the word 

(4) The proposal appears neu, since so far as the writer has pro- 
gressed in his ntudy, no discussion has been found anjT/here of the pos- 
sibility of child labor regulation under the federal war power. On the 
contrary, leadin^'^; advocates of child labor regula.tion have expressed the 
opinion that the efforts alrea.c3;^'- made have exhausted the federal arsenal 
of weapons. However, the problem is not one of nev/ basic principles, 
but of new applications of principles. 

(5) The novelty of an idea, however, should. not condemn it; ajid the 
memoranduTi will attempt to present ideas both for and against the pos- 
sibility of such a plan, • ' ■ 

(6) The factual aspect of the question, i.e., whether a strong 
can be made for the practical military advantage of abolition or reguiLa— 
tion of child labor, is logically the first consideration. A strong af— 
finaative argument could be presented on this phase of the question, 

(7) The continuing interest of Congress and the public in the 
general field of child labor regulation has been evidenced by three 
legislative efforts, and a proposed constitutional amendment, 

(8) The failure of the three legislative attempts, and the pre- 
carious status of the constitutional proposal, suggest the pertinency 
of consideration of whether there is another approach. 

(9) Hov/ever, in connection with the above, analysis of the argu- 
ments that the constitutional proposal is legally dead , indicates the 

(10) For the legal arguments against regulation under the war j)ower, 
we nay turn first to the decisions invalidating previous child labor 



legislatiorij as the new proposal would inevitably meet the same line of 

(11) In "brief that attack would "be that child In/bor control is a 
power reserved to the states (or "to the people") and that Congress' can 
not usurp the right "by subterfuge, 

(12) Owing to the novelty of the proposal, support for it must 
necessarily be based to a considerable degree upon theoretical discussion 
of constitutional interpretation. However, certain phases of the D,rgu- 
ment may be well buttressed with cases. 

(13) Ample authority may be cited for the proposition that the courts 
have heretofore been liberr.l in construction concerning federal authority 
under the war power, 

(14) Numerous cases may be cited also to show that collateral pur- 
poses (even going bej^-ond the scope of constitutional authority) do not 
necessarily invalidate legislation. 

(15) The federal sovereignty is supreme in the realm of war powers, 

(16) Congress has, without challenge, assumed the right to define 
"the militia" so as to include the military man power of the country, 
whether or not under arms or in military organization; so it may reason- 
ably be argued that the right of definition can be further extended, 

(17) Conclusion: The proposal would meet most formidable obstacles. 
Yet there is a reasonable possibility that a measure regulating child 
labor could be drawn under the war power, which •would be held consti- 





W. A. Wliittlesey 


This table of contents anc" summary of preliminary- 
findings are primarily an exploration of the field 
as a "basis for fiirther work. Not all material in 
it has as yet heen verified and checked, nor does it 
present a rounded treatment of the subject. 



Tatle of Contents 

I, Price Fixing, 

A, All price fixing illegal, whether reasonalile or unreasonalDle, 
1, Reasons for such a rale. 

B, Methods used to fix prices. 

Note! This study has not progressed beyond the collection of 
material dealing with this subject . 

II, Resale Price Maintenance, 

A, Existence of Restrictions as to resale price maintenance. 

B. Validity of various devices employed to control resale price, 

1, In general. 

2, The rebate system. 

3, The control system, 

(a) In general, 

(1) Essential validity. 

(2) Under state and federal ant i- trust laws, 

(b) Patented articles, 

(c) Copyrighted productions, 

(d) Trademarhed goods, 

(e) Goods made by secret process 

4, The agency system, 

5, Refusal to sell to price cutters, 

III. Price Discrimination a.nd Customer Classification, 

A, Quantity discounts legal, 

B, Discrimination between seller and his competitors, 

C, Discrimination betv/een buyer and his competitors. 

Note: This study is in progress and requires additional v/ork be- 
fore a proper summary can be made, 

IV, Destructive Price Cutting and Below Cost Selling, 

A. General restrictions, 

B. Loss leaders, 

C. Price cutting by combination is illegal, 

V, Tying Contracts and Full Line Forcing, 

Note: No work has been done on this subject and it is impossible 
to make a table of contents, 

VI, Guarantee Against Price Decline, 
A, Not illegal. 

Vri. Production Control. . 

Note; No work has been -done on this subject and it Is impossible 
to nake a table of contents, . . 



VIII. Capital ComlDinations and Mergers, 

llote: This subject is in process and will be completed later. No 
table of contents can be prepared at this time. 

IX, Price and Information Filing, 
A, Filing of past prices. 
E. Filing of future prices. 
C, Miscellaneous information filing, 
ilote: Aside from the collection of the material no work has been 

done on this study. It is impossible to make a summary at 

this time, 

X, Cooperative Credit information. 

llote: Aside from the collection of material no work has been 
done on this study. It is impossible to make a summary 
at this 'time, 

XI, Boycotts. 

A, General restrictions and definition. 
E, Boycotts and open comr>etition. 
C. Boycotts and due process, 

XII. Basing Point &y.stems, ■ 

Subject not capable of being indexed, 

XIII. Uniform Cost Accounting. 

No work has been done on this subject and it is impossible to 
make a summary at this time. 

XIV. False and Misleading Advertising, Misrepresentation, Deceptive 
and Fraudulent Trade Practices. 

No work has been done on this subject and it is impossible to 
maize a summary at this time, 

XV« Predatory and Coercive Trade Practices. 

No work has been done, on this subject and it is impossible to 
make a summary at this time, 

XVI, Exploitation of Labor as an Unfair Trade Practice, 
A, Deception in labor practices. 



Summary of Pr el iminary Fi ndings 

In General - Scope and Eztent of Study . 

This study is not a symposium of the anti-trust laws but relates 
only to those trade practices hereinafter listed. No attempt has "been 
made to consider the question of constitutional jurisdiction; the study 
has "been predicated upon the assumption that interstate commerce has 
"been sufficiently proven to warrant federal jurisdiction. Nor does 
this study attempt to show what is advisable - it merely attempts to 
distin^ish between that v/hich is legal and that which is illegal and 
the reasons therefor. The study, v/hen completed, will not suggest 
legislation of any description; it will be a source material that may 
be used as a reference. 

Students of the anti-trust laws seldom consider them ideal. Such 
a prominent authority as J, A, McLaughlin advances the theory that they 
represent a certain minimum protection of the public interest subject 
always to reexamination and modification by legislation or court judg- 
ment, which should be retained in the absence of any alternative method 
of control. Many of the attacks on the anti-trust laws have been in- 
stigated by loose-knit organizations who contend that the anti-ti-ust. 
decisions have caused capital combinations and mergers resulting in the 
gigantic corporations and multiple holding companies prevalent today. 
Whatever merit their argument may have, it is true that the anti-trust 
laws have, generally speaking, failed to provide that modicum of pro- 
tection for the consumer and for what is known as the little inde- 
pendent. Since the decision of the United States Steel Case many of 
the prosecutions and equity actions undertaken have been instituted 
against these loose-knit organizations, possibly because evidence show- 
ing a combination or a conspiracy was more easily obtained than against 
the corporate structural type. 

Perhaps, as some writers contend, the failure of the anti-trust 
laws to achieve the desired ends is due to the inherent restrictions 
placed upon the anti-trust laws by the Constitution, On the other 
hand, many writers contend that the Supreme Court itself, by its own 
interpretations, drastically restricted the operation of the anti-trust 
laws. One of the bases of their argument is the fact that many of the 
judicial decisions interpreting additional legislation say that such 
legislation is merely declaratory of present existing law. Then too, 
W. J, Donovan in 1932 said that if the Sherman Act were repealed busi- 
ness men would soon find that the limitations on them do not arise 
from the Act but "from the inability of the leaders of business to act 
constructively when a common interest is at stake". Whether or not the 
"self-government of industry" idea (or perchance ideal) was successful 
under the N,R,A, is not within the scope of this study. 



A subject too often ignored ic that of the consumers' interest. 
Thou';h enc.cted to preserve the independent and protect the general pul>- 
lie, the anti- trust laws have 1)6001116 industrial legislation. Many times 
the courts refer to the "protection of the public", "the public interest," 
but too often these phrases appear to be after- thought 5; mere windoT 
dressing for the decision, 

'Tlie trade practices hereinafter considered are those that form the 
founda-tion for any consideration of the anti-trust la^s. These practices 
will be considered in ful] detail in the study proper, when it is con- 
pleted, irhen such trade practices are under consideration it must be 
remembered at all times that conspiracy, combination, or common law de- 
ception form the fundamental background for the statutes upon which the 
decisions are predicated, 

Atteintion is called to the fact that a few of the • trade practices 
treated in the study (notably exploitc? tion of labor as an unfair trade 
practice) have been prepared in reply to specific questions submitted, 

I, Price IPixing, 

Price fixing has been uniformly condemned by the courts, regardless 
of the form by which it was presented. T-his condemnation persists des- 
pite any question of reasonableness or imreasonableness of the prices so 
fixed, for price control, reasonable today, may become unreasonable to- 
morrow, llD,ni' of the cases involving price fixing are important because 
of the continued assertions by the court that lorice fixing is inimical 
to the Public interest . This is one point decided on the ground of 
public interest. So ae writers imnly that the Suoreme Court has changed 
the Shernan Act from a law against combination to a law against fixing 
prices, llone of the cases cojisidered under the anti-trust laws treat 
the subject of governiaental control of, prices. Such cases do not come 
within the sco-oe of the anti- trust laws and involve different constitu- 
tional principles than those woon which the anti- trust laws are based. 
Note: Tlie subject of price fixing has not' progressed beyond the collec- 
tion of material dealing with this subject', 

II. Resale Price I.laintenance, 

P.egardless of any prescription of the anti- trust laws, a manufactur- 
er ca,nnot sell goods, imposing; conditions thereon as to the price at 
which goods m-ay be resold, which conditions follow the goods into the 
hands of persons with whom he has no contractual relation. Such condi- 
tions are obnoxious to the public interest", and repugnant to the absolute 
title conveyed. • 

Nor may sellers of <-oods, whether manufacturers, distributors, or 
retail dealers, combine to maintain prices on goods, as such a combina- 
tion is a restraint of trade within the meaning of the anti-trust acts, 

■Pour methods of resale price maintenance have been considered by the 
courtg, Tiiese are described as- ithe contract system, the rebate system, 
the agenc3r system, and the. plan of refusing to sell .to. those v/ho fail to 
maintain s.n indicated price. In general, only the contract system is 



ille.-ial. Hovever, the a.s;encY systera raust Throve to be a true a^^enc-r - 
not a c>lS;:,XLised sale; and a refusal to sell must not "be accoHn^anierl "b^ 
such activities as were condemned in the Beechnut Case , .^57 U.S. 441, 
66 L.Sd, 307. Patented, . copyrighted, trade-marked, or secretly process- 
ed goods do not occupy any better position tlian other goods v/hen involved 
in resale -orice control plans. 

The Federal Ant i- trust Laws have not been able to completely prevent 
resale price control. The iniierent freedom of individuals that in some 
measui-e lir.iits resale price control also has an opposing corollary that 
aids resale price control. In other words, the free alienation of 
property may not be restricted by resale conditions; yet opposing this 
proposition is the right to establish and maintain agencies, which 
agencies uay maintain prices, • 

Despite these inherent limitations, the anti-trust acts have ef- 
fectively eliminated many resale price plans, and in so doing rendered 
valuable aid to the protection- of comTDetition, 

III# Pi'ico Discrimination and Customer Classification^ 

Price discrimination based upon a quantity discount is exuressljT- 
exempted under the anti-trust laws. Otherwise, it has been held tlis^t 
the Clayton Act declares unlav;ful any discrimination which 
lessens competition not only between the seller and his competitors, but 
also between the buyers and his comr)e titers. Attention is drawn to the 
words of the Clayton Act requiring that the lessening of competition 
must be substantial. Note; This study is in progress and requires ad- 
ditional work before a proper summary can be made, 

IV, Destru.ctive Price Cuttin^: and Below Cost Selling. 

Under our present laws every phase of destructive price cuttin-; can 
not be prohibited. An individual may sell his goods at what "orice he 
desires or he may give them away. On the other hand, he may refuse to 
sell, buy or deal witK any person he desires. The lower federal coiu-ts 
have specif ica.lly helt,- ^hat there is no prohibition against sales below 
cost, i.e., loss leaders, and a person may make almost any type of con- 
tract for the sale of goods regardless of the economic soundness of th^t 
contract. However, destructive price cutting is illegal when used by a 
group as a weapon to drive out competitors. 

V, Tying Contracts and Pull Line Forcing. 

Note: No work has been done on this study £aid it is impossible at 
this tine to make a summary. 

VI, Guarantee Against Price Decline, 

The practice of guaranteeing the price of a commodity against de- 
cline is not in and of itself an unfair method of competition, 

VII, Production Control, 

The Production control referred to in this study i.ieens control by 


combination or agreement "by those persons in that industry; not govern- 
mentcil control. Note ; No ^^ork has "been done on this topic. It is im- 
possible to predict what the s-oiinnary will he, 

VIII. Caoital Corahinations and Mergers 

This study is in process and will be completed within the ne::t two 
weeks, No sijramary can be made at this time, 

IX. P:-'ice and Information ?iling. 

The filing of past prices has been approved; the filing of future 
nrices hc.s been condemned. The disclosure of future prices plus the 
disclosure of intimate details of business management bestY^een competi- 
tors lias "oee-:! condemned by the courts. Filing of prices ^7ith a govern- 
mental agency will not be considered in this memorandum. Note ; Aside 
from the collection of the material no work has been done on this study. 
It is impossible to a summe^ry at this time, 

X. Cocpera^tive Credit Information, 

Aside from the collection of material no work has been done on tliis 
study. It is impossible to nalce a suinmary at this time, 

XI. Boycotts, 

IThile not all boycotts are illegal, the courts under the anti-trust 
acts liave condemned all boycotts that restrain interstate commerce, even 
peaceful ones, 

XI I • Basing Point Systems. 

Basing point systems - a method of computing and correlating, mill 
prices ajid freight rates so that only delivered prices are quoted - are 
usually confined to use in heavy commodity industries. The cases in- 
volving basing point systems do not decisively establish their legality. 
The ITederal Trade Commission has condemned them, 

XIII, Uniform Cost Accounting, 

No \7or:: has been done on this subject and it is impossible to make 
a sumna,r3- at this time. 

XIV, False and Misleading Advertising, Misrepresentation, Deceptive and 
Fraudr2ent Trade Practices, 

No work has 'been done on this subject and it is impossible to make 
a sum-iar-.T- at this time, 

IIV. Predatory and Coercive Trade Practices. 

No vrork has been done on this subject and it is impossible to make 
a sum: :ary at this time. 

XVI. I]:q^loitation of LalDor as an-Unfair Trade Practice, 

This study was made for purposes of making a replj'- to specific 
questions subnitted. So many f-ondainentals must be ass-L^ined or evaded in 
the treatr.iont of this subject that no summary'- is possiole. 





EmazLuel BulDlick 


This ta-ble of contents and suminary of 
preliuinary lindings are primarily an 
exploration of the field c.s a hasis for 
further work. Not all material in it 
has as yet "been verified and checked, 
nor does it present a rounded treatment 
of the subject. 


Table of Contents 

I. Definition of Trade and Labor practices in the Federal Legislative 

A. The Extent to Which Congress Must Define. 

B. Distinction Between primary Standards for the practices and 
the Filling in of Details. 

1. Rules and Regulations. 

2. Administrative Interpretations. 

3. Findings of Fact. 

4. Analogy to Flexible Tariff provisions, 19 U.S.C. 156, 
Bituminous Coal Conservation Act of 1935, Ellenbogen Bill, 
H.R. 9072, 74th Congress. 

C. Classifications in Connection with Labor Standards. 

II. Coverage of Industrial Activity. 

A. Delegation to Administrative Agency to Determine "direct 
prejudicial effect" upon Interstate Commerce. 

1, Scope of Application of such Delegation. 

(a) Determination when a Transaction is: 

(1) In Interstate Commerce; 

(2) In the Stream of Interstate Commerce; 

(3) Intermingled with Interstate Commerce. 

(b) Determination when an Industry is: 

(1) In Interstate Commerce; 

(2) In the Stream of Interstate Commerce; 
(,3) Intermingled with Interstate Commerce. 

( c) Determination when a Transaction or Industry is a 
Burden upon or Prejudicial to Interstate Commerce or 
the Current of Interstate Commerce, 

2, Analogy to Federal Trade Commission and National Labor 
Relations Act, 

3, Criticisms of such Delegation as Being too Broad, 

B. The Enumeration of Industries. 

1. Distinction Between a Finding That a Transaction is in 
Interstate Commerce or in the Current of Interstate Commerce 
and the Finding that a Transaction Burdens or prejudicially 
Effects the Current of Interstate Commerce. 

2. Effect as Dispensing with Questionable Delegation of a 
Legislative Function, 

3. Weight of Congressional Finding of Fact, 
'4, Criticism - Lack of Flexibility, 

5. Analogy to provisions of Bituminous Coal Conservation Act, 
5. Problem of a Comprehensive Description of Industries 

-512- - 

C. Standards Based on Economic Analysis. 

1. When requirement of Detailed Economic Research. 

2. problem of Formulation of Theory of Economic Effect 
of Trade or Labor practice. 

3. Necessity of Expressing the lueasurable Economic Effect 
as Standards. 

4. Avoidance, of En"ameration of Industries. 

5. Application of Schechter end Panama Decisions. 
S. Feasibility. 

III. Mcuiner of Fujictioning of Administrative Body. 

A. Investigation. 

3. Reports. 

C. Eearings. 

D. I^ules of procedure. 

E. Findings and Orders. 

F. 'Review, 





Summary of preliminary Findings 

Ner; Industrial Legislation mil not "be secure from constitutional 
attack on the ground that it involves an invalid delegation of power 
unless the Act: (l) clearly describes trade practices (and lator prac- 
tices and conditions) which Congress determines and finds that it wants 
regulated — i.e., what it wants done? (2) clearly sets forth the oc- 
casion when it wants the trade practices (and laoor practices) regu- 
lations invoked, i.e., when it is to he done? 

The delegation of the code-making power was held invalid in the 
Schechter case "because the act to "be performed was not definite and 
"because "the necessity, tine, and occasion of performance have heen 
left in the end to the discretion of the delegate". 

Efequirement (l) and requirement (2) each involves a pro'blem of 

To conform. with requirement one, Congress can enumerate certain 
trade and la"bor practices which it regards as a "burden on interstate 
commerce, e.g. selling below cost, or paying a su"b-standard wage. The 
difficulty "becomes apparent when we reflect the Act has not sufficiently 
descrilDed the practice against which it is legislating unless the defi- 
nition of what its concept of "selling "below cost" or a "su"b- standard 
wage" is, TJTere the Act merely to recite that "selling below cost" or 
payment of a " sub- standard wage" are the objectives against which it is 
aimed and leave to the President or a^drainistrative body the determination 
of what constitutes "selling below cost" or a "sub-standard v;age" , the 
Supreme Court would, in all probability, hold that Congress had not 
sufficiently defined its legislative objective. Yet, of course. Congress 
could not be expected to define the cost of production of each commodity 
or the standard wage of each t^'pe and variety of employment. The Act 
must indicate generally the mode of finding the cost of production or the 
standard wage, i.e., the theory at least must be expounded. Taking the 
sales below cost as an illustration, the Act must first of all specify 
whether the cost of production of the individual producer is intended or 
whether, some average is intended. 

The formula proscribed in connection with the procedure for finding 
the equalized production cost in United States and coi-Tpeting country, 
the stavtute 19 li.S.C. 156 mentions only "wages, cost of materials and 
other items of cost of production". The Bituminous Coal Conservation 
Act of 1935 recited: Many more factors to be talcen into consideration 
in determining cost, i.e.; '^the cost of labor, supplies, power, taxes, 
insurance, workmen's compensation, royalties, depreciation, and de- 
pletion (as determined by the Bureau of Internal Revenue in the compu- 
tation of the Federal income tax) and all other direct expenses of pro-* 
duction, coal operators' association dues, district board assessments 
for Board operating expenses only levied under the code, and reasonable 
costs of selling and the cost of Administration." 



It a^Tjears irapossiMe to state in ^7het detail all the factors that 
are to constitute the cost of production must lae specified in the statute. 
All tlir.t can safel7 bo concluded is that the leadin^g factors must he 
specified and the scope of many additional ninor factors should be ind.i- 
cated. The test is, has Congress riven an intelligible definition of 
cost of production? — Docs the Act supoly criteria enoiogh to give a 
fair notion of r^liat it wants? wTiile such a test seeras va.gue , it is the 
only one that can fairly be gathered from the decided cases and it appears 
to oe the yard-stick ap-olied by the Suprerao Court, 

ITiien the statute has defined its understanding of cost of production 
it mcz'' instruct aji administrative agency to establish a procedure for the 
formula to determine production cost in accordance with the legislative 

In the matter of ^•.^age regulation, it will be necessary for Congress 
to set forth a standard for the administrative agency to apply. The 
legislative standard may be that of a subsistence minimum, or living wage, 
a variable cost of living index; prevailing wage, percentage of profits 
to the entrepreneur or one of several other standards. The choice of 
alternative theory of wage control must be left to the economist rather 
than the lav/yer. The standards laid d.o\?n 'by the Act \7ill have to be 
suff icieiitly clear that the administrative agency can proceed to put the 
same into effect v/ithout its evolving theories of wage control. The 
delegate of the power can be authorized to investigate the facts and 
hold heo/i-ings and establish rates according to the formula urged by 
Congress, The delegate or administrative body may be directed to es- 
tablish classifications ac-;ording to skill md historic differentiations 
in the ind-ustrj/-. This latter d.elegation viill probably be upheld on the 
grouid that if Congress has laid down the standard for the basic minimum 
wage, the differentiation of skill it-, a technical matter to be determined 
by tecimical and expert evidence, Tnile specific reference has been 
raad.e in the above dincusaion to two practices only, namely, the trade 
practice of selling below cost and the labor nractice of minimum wage, 
the "orinciole holds true for each pra.ctice soiight to be regulated by 
Congress; to clearly identify each -nractice against which the Act is 
directed £:n6. the regulation it seeks to impose, 

We have d.iscussed above the requirement that Congress define ade- 
q"uately wl'iat it wants to be done, i,e, the incidents of trade or labor 
practices over which it is exerting jurisdiction. This is designated by 
Mr, Justice Cardoza in the Schechter case "as the act to be perfor:ied"# 
We no\! to a discussion of the question of delegation in relation to 
wiiat Mr, Justice Cardoza. ca,lls "the necessity, time and occasion of per- 
foriance". In other words, if the Act does adequately portray what it 
means ''cr-r cost of production or minimum wage it will in addition have to 
provide in what industries or under what circumstances such practices 
shall be proscribed or such regulations imposed. The question as to the 
delega,tion of the occasion when Federal control shall vest is fraught 
with great d^ifficulty and is subject to some differences of opinion, 

I rx: presenting below the tv;o leadin; contentions each of which has 
its a.dherents amongst those who lia^ve studied the question, 

1, The functional, a-o^j roach, 



Congress finds certain activities to be inherently -uneconomic and 
bad (such, for instance, as sellin.'^ below cost). In order" to keep the 
channels of interstate commerce healthy and clean, it instructs it's 
administrative agency to prescribe rules for the determination of cost, 
settin;;^' forth in the Act in a general way the factors upon which the 
promulgation of such rules may be based. The issuance of those rules , 
however, will be conditioned upon the jurisdiction al requirement that 
they shall be applicable only as to individuals, firms or corporations 
whose selling below cost is found to have a direct prejudicial effect 
upon the nature and extent of commerce among the staTes^ 

In pursu^.nce of such an act, the administrative agency will study 
selling;; below cost practices in all industries, and will publish the 
rules it formulates. Complaint will be filed that a named corporation 
is selling below cost in such a way as to prejudicially affect inter- 
state commerce. The a:^'ency will hold hearings similar to those conduct- 
ed by the Federal Trade Commission, and if it finds tha.t the selling op- 
erations of the respondent (vrhatever his industry affiliation) directly 
affect interstate commerce, the punitiye provisions of the bill should 
be applico.ble to him. 

Tlie coverage intended in such a bill would be for all activities 
within the scope of the commerce clause (disregarding industry) with 
Congress leaving it to the Delegate to determine which activities are 
within the comm.erce clause, and to formulate the regulations intended 
to apply to such activities within the standards prescribed. 

It has been contended that this type of delegation is valid provid- 
ed that a procedure be set up for a judicial review of the decisions of 
the administrative agencies; that such a set-up has been approved in the 
Federal Trade Commission Act; and that the Wagner Labor Disputes Act 
follov^s this procedure, 

2, The Individual Industry Approach, 

The advocates of this theory question the conclusion of the adher- 
ents of the functional approach theory that the plan based on the latter 
satisfies the requirement for a proper delegation of power. The con- 
tention is made that delegation to an administrative body of authority 
to make a finding that particular instances of selling below cost or that 
the selling belov/ cost activities of particular individuals, firms or 
corporations, have a "direct prejudicial effect" upon interstate com- 
merce is too broad a delegation of power to be likely to be sustained by 
the Courts. To obviate the necessity of making the administrative body 
the judge of what is or is not directly prejudicial to interstate com- 
merce, it is suggested that Congress in the Act enumerate industries and 
incidents of trade practice and labor control which it wishes to impose 
in the industry so far as the interstate power of the Federal government 
can go, to wit: ^^) The Act will enumerate one industry and provide 
that in that indu.stry there shall be a prohibition of sales below the 
cost of production; will enumerate another industry and provide that 
for thr,t industry, there shall be a minimum wage established; will enrjner- 
ate a third industry and provide that for that industry there shall be 
both a prohibition of sales below cost of production and the minimum 
wage control. To the administrative agency will be delegated questions 
of fact only, i,e,, the finding that one of the prescribed practices in 


the industry e,.'^, , selling telo^T cost, has been proved in the partic-ular 
instance. (2) That the said Act or practice is in interstate commerce, 
in the flov of interstate, or directly affects interstate commerce. It 
would not he necessary for the administrative agency to determine whether 
the selling helov; cost constitutes a burden upon or is harmful to in- 
terstate comnerce, — that selling below cost in that industry is a bur- 
den UDon and harmful to interstate commie rce has already been decided and 
fouiid by Congress in the Act. 

A problem which is partly that of the draft sinan ajid partly of the 

economist is tha,t the Act must contain a comprehensive description of 

each industry en-umerated, so as to leave no legitimate doubt as to who 
or uhat is included in the industry. 

The individual industry approach is close to the t,ype of legisla^ 
tion illustrated by the Bituminous Coal Conservation Act of 1935 cind the 
bill for regTilation of the textile industry known as .the Ellenbogen Bill 
H.R. 9072. 

Uliile the individual industry aoproach appears to hurdle the problem 
of delegation, it has the practical disadvantage of prohibition of each 
instance of the practice through the interstate commerce field of the 

Tliere is another aoproach '^hich i-^ould dispense nith the enumeration 
of industries, achieve greater flexibility and yet not fall under the 
condemnation of invalid delegation. This aiiiproach reo^uires. an exoosi- 
tion by Congress in the Act of the economic phenomena accompanying or 
resulting from the practices which it is seeking to denounce. To 
illustrate - if selling below cost is a burden upon and an obstruction 
to interstate comnerce because it causes the bankruptcy and failure of 
many members of an industry, then Congress may delegate to the adminis- 
trative agency the duty of prohibiting sales beloT^/ cost upon a finding 
that sales below cost, in a certain industry are causing bankruptcies 
and failures; or if selling below cost is a burden upon interstate 
commerce because it cauces the diminution of the amount of interstate 
shipments, Congress may delegate to the adm.inistrative agency the duty 
of prohibiting sales below cost upon its finding that sales below cost in 
a certrdn industry are reducing the amoimt of interstate shipments. The 
findings of fact of the administrative agency under these hypotheses 
would be a real finding unon factual data, not a determination by the 
deleg:ate of a matter of legislative policy. 

The difficu3.ty ?/ith the third approach is that it requires exhaus- 
tive economic research and the formulation in the Act of a theoretic basis 
for each trade practice or labor regulation which can be practically 

Upon consideration of these three suggested approaches to the prob- 
lem of adequate legislative standards for the application of the pres- 
cribed practices, it '^ould appear that the "economic-analysis apiproach", 
that is the third approach, would be the easiest to sustain from the 
standpoint of the problem of delegation of legislative power - but there 
appears to be a question as to its economic feasibility,- The "function- 
al approach" requires what may be held to be an illegal delegation of 


of legislative power. The "en-'-imerated industries ap'oroach" lacking some- 
?/hat in ilexibility seems fairly secure from attack upon the ground of 
illegal delegation. 




James W, Irv/in 


This strtoment in lieu of s"annary of findings, and 
tentative table of contents for memor.andiim is pri- 
marily an e:-rolor;..tion of the fiild as s. "basis for 

further work. 




I, Genesis of the due process idea 

A. The English "Law of the Land^' 

B. The Fifth Anendment - its purposes 

C. The Fourteenth Amendment - its purposes 

II. A basic conflict: The substantive against the procedural theories 
of due process. 

III. Details on the procedural side of due process 

A, Notice 

1, In judicial proceedings 

2« In administrative proceedings 

B, Jury trial ' ' 

IV. Results of adopting the substantive theory of due iDrocess 

A» Under the restricted definition "Reasonable means towa.rd a lav/- 

ful end." 
B« Under the expansive definition '\That which does not infringe 
on elemental rights." 

V. Application of due process to hours of labor 
A» Of women and children 

B. In dangerous occupations 

C, Generally 

VI. Application to minimum wages 

A. Generally 

B, As to women and children 

VII. Application to oublic utilities 

VIII. Application to trade practices 

IX. Application to "economic planning." 

X.- Conclusion: ",hat would the Supreme Court have said, if it had 
.t reated th e ex?3res sly excluded contentions of Schechter on due 
-process Y 





Statement in Lieu of SiU - imary of !Findine:s, nnd 
Tentative Ta"ble of Contents 

Owing to contrr.ction of -oersonnol in the Legal Research Section," 
the iindersigned \;as recently directed to nake a study of the topic "Due 
Process" previously p.ssigned to mother attorney. There having been 
several ;prior general s^ssignraents, v/ork on this to'oic is in rji inchoate 
conditions, and in lieu of the requested "findings", there can at this 
time only "be given a sta.teraent of the "orojected scope of study. 

The first question presenting itself is, v/hat aspects of the gen- 
eral topic are most applicable for consideration as a problem for II.R.A.? 
This leads to the subject stated "Due Process as Applicable to Federal 
Regulation of Economic Conditions." * 

* This to 'Die has such a great srieei, that it may appear desirable to 
contract it further. 

From this skeletonized subject I have alrea,dy taicen one rib, and 
have mrde rJid handed in a com-oleted ^jreliminary draft on "DUE PROCESS DOC- 
TRIIE OF TEE ADKINS CASE" (AdJiins vs. Children's Hospital, 261 U.S. 525). 
In other words, I treated there in the topic of the possibility of" refcu- 
l ation of maximum hours of labor for women under the theory of protecting 
health and morals . Tiie mejnorandum on this small segment of the Due Pro- 
cess topic consisted of about tv/entj/^-five pages. 

In v:orking on due -orocesG there \/ill be found a, profusion of cases, 
many of which have invalidated, and many of '..'hich have sustained, legisla- 
tive acts under attack as violative of due lorocess. 

Some of those decisions are considered landm.arks. Among the early 
ones were those establishing the right of governnontal regulation of pub- 
lic utilities. It may be ex^^ected that a great battle-ground of the im— 
media.te future will concern attempted extensions of these eajrly decisions. 

Tliere will also be found m.any cases centering around due process as 
applica.ble to varying a.s'oects of control of economic conditions. Tlie con- 
flict over the concept of due "orocess has become increasingly vigorous 
during the New Deal period, with the line fluctuating back and forth from 
the time of the Nebbia decision on milk control to Judge Coleman's recer.t 
decision on the Utilities Act. 

The following is submitted as a tenta^tive outline for a memorajidum, 
pre-oaration for v/hich is under ^'ry, covering the a.spects of "Due Process" 

which aAToeaJ* most vital for N, R. a, stud2'". 





James W,, IrTrin 


This summary of prelrminary findings 
and tatle -of contents are primarily an 
exploration of the field as a "basis 
for further work. 




Ta'ble of Contents 

I. Introductory, 

A» The ends under consider-^.tion. 

1, Primarily pertainin..^ to v.ages, hours, and child lator, 

2, Fossitility of includin;'^ other economic conditions, 

7), The Walsh Bill as illustrative of the restricted scope; 
Executive Orders 6246 and 6646 of the expanded scope. 
B» Present Status of Walsh 3111 • 

II. Situr.tion in Ahsence of Legislation. 

A. Section 3709 E. S. and interpretations thereof as necessitating 
statutory change before G-overn.nent can attempt control of econ- 
omic conditions throu,gh contract provisions. 

III. T.eYievj of Rulings. 

A» Rulings of Attorney General- 'be.?j:ing out foregoing statement. 

B. Rulings of Comptroller General. 

IV. Constitutional Authorization of Statutory Control, 

V, Desirability of the Plan, 

A» Opinions on policy, no^ purpose of Memorandum. 

VI. Must Congress Fix the Standards? 

Am O;pinions holding this necessary, 

B» Conclusion of I.Iemoranda against necessity, 

VII. Executive Discretion, 

A, C-eneral recognition of necessity, 

B, Consideration of the ijlace of executive discretion in the Walsh 





preliminary S'uir/.nary of Eindin£:s 

!• A plan of federal government regulation of economic conditions 
through contract ^^i^ovisions in government contracts, might theoreti- 
cally extend to a v/ide scope of regulatory conditions. Hovever, popular 
discussion of the proposal seens to "be limited to problems of ^ages, 
hours, and child labor. This restrictive point of view is illustrated 
by the ^alsh Bill while the broader aspect was illustrated by Executive 
Orders 6246 and 6646. 

2. No such control is practicable under existing laws because of 
Section 3709 R, S. and the interpretations thereof. 

3» It is scarcely subject to question that a law may constitution- 
ally be enacted which will enable the federal government to include in 
its contracts provisions calculated to control the economic standa.rds in 
the businesses of the parties being brought into privity of contract 
with the government. 

4. The law could also permit the requirement that such contracting 
parties require similar standards from those contracting with them in 
regard to the subject matter of the government contracts. 

5. If the federal government is to attempt any control of conditions 
pertaining to wages, hours, and child labor, legislation similar to the 
Walsh Bill seems worthy of serious consideration. 

6. A serious constitutional question is whether Congress must 
"fix the standards" of such contract provisions. The \7riter of this 
memorandum is of' the opinion that this is not necessary, whatever may 

be wiser as a matter of policy. The opinion is expressed that the Exec- 
utive Department in representing the government's own business may in- 
clude in its contracts any reasonable requirements as to the economic 
standards of the other contracting parties, if only the existing bar of 
Section 3709 be removed, 

7. Broad executive discretion such as is provided in the Walsh 
Bill appears necessary under such a plan. Such executive discretion 
should extend to the granting of exemptions from and modifications of 
such requirements, or it appears that the whole scheme would be too rigid 
to be practicable. 





Emanuel Bub lick 

This suin:nar7 of preliminary findings E^nd 
table of contents is prima,rily an exploration 
of the field as a basis for further \7ork. Not 
all material in it has as yet 'been verified 
and checked, nor does it present a roimded 
treatment of the subject. 




Ta"ble of Contents 

I. Theories of National Recovery Administration for State Cooperation 
prior to Schechter Case. 

II. State Legislation AdOjpted Pursuant to These Theories 

1. Eate of the State legislation — State Courts 

2. Effect of Schechter Case on this legislation 

III. Attenipts of Individual State Legislation to Improve on NRA Models 

IV. Defects of NRA I.Iodels and the State Legislation 

1. Delegation of Power 

2. Incorporation "by reference 

V. Sta.te Legislative Adoption of Federal and Foreign State Standards 
in Fields Other Than Industrial Recovery Compared. 

1. Prohibition 

2. Air — Navigation 

3. Food and Drugs 

4. Agriculture 

5. Ta::ation 

6. Insurance 

VI. Essentials for Validity of State Legislation in View of Schechter, 
Panajno- and State Decisions. 

VII. The Concurrent Jurisdiction of State and Federal Pov/er Over 
Transactions affecting Interstate Commerce 

1. The Federal Exclusive and Non-exclusive Jurisdiction of 
Interstate Commerce 

2. Double Jeopardy 

3. Utilization "by State and Federal Government of 
Instrumentalities of Each Other. 

VIII. The Necessity of Hearings, Findings and provisions for Review 

IX. Federal Statutes Cited 

X. State Recovery Legislation Cited 

XI. Cases Cited 

XII. Bituminous Coal Conservation Act of 1935 
Ellenbogan Bill H.R. 9072; - Compared. 


Preliminary Su-irnnrry of Eindinff s 

1. To ma^ce intrastate transactions which can not be reached by 
Federal power subject to the same regulator^'- provisions as transr-ctions 
of the same industries \7hich are v/ithin Federal power on the ground' that 
the latter are in or affect interstate commerce. 

2. To restrain and punish by State law offenses within the state •"•' 
againnt interstate commerce. 


Au.tOLiatic conformity of transactions not affecting interstate 
comi.ierce to the Federal regulations for business and trade affecting 
interstate commerce .cannot be achieved l^y fiat as attempted by many State 
Recover-,- Acts of the past tv/o years. The State legislature must itself 
lay dovm the standards of business conduct. It can lay down for intran- 
state business the identical standards that the Federal Act sets forth 
for interstate business. The State standards borrox^ed from the Federal 
Act will not be valid unless the Federal standards are valid, i.e., un- 
less the delegation of power in the latter is not too broad. Fhatever 
rule-.mal<:ing or regulatory power the Federal Act may properly delegate, 
the State Act may delegate. Many state constitutional provisions or 
state decisions p rohibi t the adoption Qj reference and the incorporation 
by reference of the laws of another state or the Federal government. 
Such provisions or decisions safeguard only the legislative function — 
they do not prohibit tho adoption or incorporsition of proper administra- 
tive rules, regulations, or fact finding. T7hatever function the State 
Act could delegate to a state administrative body, it can adopt from a 
federal administrative body. Havinf; set up adeq-aate standards and 
proper criteria for administrative action, the State Act can provide 
tha.t such regulations, rules, and fa,ct findings of the federal body v/hich 
conform to the criteria should be the law of the State. 

For practical administration of the State Act, one suggestion 
which seems legally practical is to nominally make the delegation to a 
state officer or bod;/ and direct him to promulg3.te such rules, regular- 
tions, and finding of fact of the federal 'bod.y which conform to the 
said criteria. 

The Federal Act will, it seems, have to enuiaerate industries and 
well defined incidents of regulation. The State Act will also have to 
enumerate industries and incidents of regulation. The State Act may 
omit certain industries or incidents of regulation. TThatever incidents 
or industries are included must be defined by the statute identically 
with the Federal statute, so that the administrative act will conform 
ith the criteria of both the Federal and State Act. 




The regulation industries to be covered in the State Act v/ill 
have to stciid the test of due process - The regulation of some industries 
enumerated in the State Act Liay fail as not being affected with a public 
interest — others will survive. It is assumed that the recent more 
liberal criterion of the ITebbia Case will be applied. The need of uni- 
forLiit7 with federal regulation of interstate transactions of the 
industr;^ will be a strong argument in favor of the necessity of sts.te 
regulation of the intrastate transactions of the industry. It is not, 
however, a necessary conclusion that states can regulate internally 
industries, the interstate aspects of which the federal government cen 
regolate on the ground that the industry is affected with the national 
public interest. An industr^r may be affected with the national public 
interest, giffected with a state public interest in some states and not 
affected with a state public interest in others. Although it may be held 
that the federal governnent can regulate the Bituminous Coal Industry, it 
does not follow that a state ceji fix a minimum wage in the production of 
coal in the mines of the state. 

Ir.e aoGve coriclusicns are directed towards the efforts of a state 
to inpose regj.laticns (similar to the federal imposition upon transactions 
in the industries which affect interstate commerce) upon transactions 
within the state T,-hich do not affect interstate cozirierce. 

The sta-te can also aid Congress in making the federal offenses 
committed within the state, against interstate commerce a state offense 
subj'ect to state punishment or restraint. ?or exercising its power in 
this respect two requirements must be met: 

1, There must be a specific provision in the federal 
statute giving the state pov/er to concurrently ef- 
fect'oate the federal legislation. 

2. Zne regulation which the state seeks to enforce 
must be within the scope of the police power of 
the state. 

The mechanism for this aspect of state cooperation would be the 
sa^e as tha,t sketched for the first field of state aid, namely, the sta,te 
enactment of legislation identical with the federal regulation and the 
adoption of s-ach acts of the federe^l administrative agency as conform to 
the state standards. Tnis node of state cooperation is available in 
connection with federal legislation extending the scope of power of the 
Federal Trade Commission; federal legislation based on strikes and leJbor 
disputes pertaining to interstate commerce; federa-l legislation ba.sed 
upon the effect upon the national price of a commodity — in faj^t the 
connection with any federal legislation based on the commerce clause, 
Fnile the res-ult of this state legislation wauld be to maize a state of- 
fense of any act which the Jederal Iiidustrigl Act has declared and the 
federal administrative agency has found to be zn offense against inter- 
state commerce, the state will not oe in th.e position of ceding argr of 
its legislative rights (a,s in prior State ?.ecover;r Acts) but will itself 
be definir^ the elements of and the contingencies for the offenses, 
(See State Statutes creating offense of counterfeiting federal coinage). 



As to state aid to federal industrial legislation based upon 
any pov;er other than interstate coinraerce, e. g. , taxing, spending, uar. 
post-roads and post-offices, et cetera, the method discussed above is 
feasible in some instances and not feasible in others. What is the most 
expedient method in each instance can be answered only upon the individ- 
ual study of each proposed plan under each of the powers. 



■jttTj'ORCEMSNT 'studies SECTION 

Tatles of Content 





G-eneral Ta"ble of Contents 


FOiffiVirOED 631 


Table of Contents 633 

Foreword 638 

Sumnaiy 639 


Tatle of Contents 642 

Foreword 646 

SToninary 647 

" Federal Conmission 647 

" Federal Power Cor;jiiission 649 

" Grain Futures Act 649 

" Interstate Conmerce Coinmission 651 

" Packers and Stockyards Act 652 

" Railway Labor Acts 656 

" River and Harbors Act 657 

" United States Shipping Board 658 

" United States Tariff Commission 658 


Table of Contents 660 

Foreword 662 


Use of Liquidated Damage Provisions in 

Voluntary Agreement s 662 

G-overnment Sanctioned "Boycotts" and 

Publicity Devices 662 

Imposition of Conditions Upon the 

Letting of Government Contracts 663 


Table of Contents 664 

Foreword 666 

Summary 666 


Foreword 669 

Summary 669 


Foreword 671 

Table of Contents 672 






The purposes of the Legal Enforcement Studies are: 

(1) By a case review of certain selected cases under the 

I National Industrial Recover^/- Administration to studj" and analyze the 
I vegale^toTj and administrative features set up within the Administration 
I in connection with the enforcement provisions of the Act, including the 
penalty provisions and enforcement powers given to or assumed "by 
administrative officers or agents independent of the courts; the enforce- 
ment powers given the courts; the rights and administrative remedies 
used in the administration and enforcement of the National Industrial 
Recovery Act; the rights and court remedies granted to those subject to 
the law; the administrative and enforcement machinery set up within the 
Administration to determine the legal, factual, mechanical and economic 
difficulties and problems, from an. enforcement standpoint, which were 
encountered in attempting to enforce the National Industrial Recovery Act, 

(2) To study and analyze other governmental agencies and "burea,us 
having kindred regulatory powers. with the view of contrasting their 
experiences and difficulties v/ith that of the National Recovery Adminis- 
tration v/ith respect to the particular matters set out in (1), supra, and 
in addition thereto to study and analyze the organic law creating the 
governmental "bureau or agency; the history of the time indicating the 
demand or the necessity for the law; the evils sought to be remedied or 
the purpose to be accomplished by said law; the subject matter of the law 
(the persons, activities or things subject thereto); the constitutional 
provisions authorizing the enactment of the law; the remedies adopted by 
amendment or otherwise to meet the difficulties and problems encountered; 
amendments to the law made necessary for efficiency of administration or 
through failure of the original act to include powers necessary for 
efficient enforcement, or made necessary as a result of decisions by the 
courts, actions of the courts in the following particulars; 

(a) Condemning the provisions of said law as 
authorizing constitutional provisions and 
hov; remedied; 

(b) Sustaining the constitutional provisions 
thereof assailed in court; 

(c) Condemning administrative action or methods 
of enforcement or administrative action as 
arbitrary and how remedied; 

(d) Sustaining administrative methods assailed 
in court. 



A 'very valuable part of tliis phase of the study relates to ajnendnent s 
to these various laws with the underlying reasons therefor. It will "be 
noted tha.t these amendments comprise not only omissions from the original 
acts "but enlargements also, as well as those amendments which were passed 
to meet court objections as to the form or manner of the exercise of the 
powers provided. 

(3) To study and analyze the legal, factual, mechanical and 
economic aspects of the use of devices and methods of enforcement other 
than those ordinarily used in the enforcement of regulatory laws such as 
the use of insignia, labels and liquidated damages, etc. 

(4) To survey and analyze the laws of foreign countries relating 
to the regulation of business combinations and labor legislation which 
have been enacted by the various foreign countries in an effort to improve 
the industrial structure and the labor conditions of said countries, to- 
gether with a study of the economic conditions which led to the enextment 
of such laws and the administrative and enforcement difficulties ajn.6. 
problems which have been encountered in attempting to enforce said laws. 

The further purposes of the studies in (2), (3) and (4), supra, 
are to weigh the experiences and difficulties of the other agencies in 
their operation under the enforcement devices and methods set out in the 
lav/s creating same and those of the foreign countries with a view of 
determining possible methods and means of enforcement which might be used 
effectively to enforce such legislation. 

The usefulness of these studies is three-fold: 

i. It will give a complete picture of the problems and 
difficulties encountered in the enforcement of the 
National Industrial Hecovery Act in a,ll its various 

ii. Since it is a disinterested study of the other govern- 
mental agencies and bureaus, it will point out the. 
various wealcnesses of the present m3ans, methods and 
devices used in enforcing the Federal laws, together 
with suggested possibilities of improvement; 

iii. It will contrast the means and methods of enforcement 
used in this country with those of foreign countries 
together with the resultant experiences of the use of 
saa'iie by the various countries. Further, these studies 
will serve as useful research material for Congress 
and state legislatures in the enactment of legislation 
in which it is desired to include the most effective 
methods of enforcement as the results will state 
concisely the "pros" and "cons" of the various enforce- 
ment devices and methods now in use in this country 
and in foreign countries. 






Table of Contents 




I. Enforcement Provisions of the National Industrial Re'covery Act 

A. Civil Remedies 

1, J-urisdiction Vested in District Courts 

2, District Attorney's Duty to Enforce 

B. Criminal Penalties 

C. Pederal Trade Commission Vested viith power to make Investiga- 

D. President Authorized to Establish Rules and Regulations En- 
forceable by Criminal Penalties 

II. National Recovery Administration's Relation with the Department of 

A. Early Problems of Enforcement 

1, New and Novel Legislation 

2, District Attorneys required to Obtain Consent of the 
Attorney General before Instituting Proceedings 

3, District Attorneys overburdened with Routine Matters 

B. Conference of March, 1934 Between the National Recovery Adminis- 
tration and the Department of Justice 

1, National Recovery Administration Attorneys to Assist Dis- 
trict Attorneys in Preparation and Presentation of Cases, 

C. Department of Justice Circular No, 3538, April 9, 1934 

D. Enforcement Division of the National Recovery Administration 

1, National Recovery Aojninis tration Attorneys appointed Special 
Assistants to the Attorney General to Assist District 
Attorneys in the Trial of Cases 

(a) Difficulties Encountered in the Appointment of Nation- 
al Recovery Administration attorneys, 

2, Preparation and Trial of Cases by National Recovery Adminis- 
tration Attorneys 

3, Confidential instructions From the Department of Justice 
Contrary to Department of Justice Circular No. 2538. April 
9, 1934 

(a) District Attorneys Refused to Prosecute National Re- 
covery Administration Cases 

4, Department of Justice's Refusal to Appoint National Recovery 
Administration Attorneys as Special Assistants to the Attorney 

E. Department of Justice Circ\i2ar No. 2613, October 3, 1934 

1. Tenor and Construction Placed on the Department of Justice 
Circular No. 2613 By District Attorne3^s Contrary to Agree- 
ment of March, 1934 Conference 



2. National Recovery Administration Attorneys Coniined to 
Preparation of Cases 

3, District Attorneys not Prepared to Answer ::)uestions Pro- 
poimded "by Courts 

(a) Embarrassing and Prejudicial to G-overnment Counsel 
P. Conference Between the National Recovery Administration and the 
Deioartment of Justice at the Request of the President 

1. Conference of Octo"ber 9, 1934 et sequens 

(a) New Assistant Attorney General To 3e A^^pointed 

2. New Assistant Attorney General Responsible for the Enforce-* 
ment of the National Industrial Recovery Act 

3. Appointment of National Recovery Administration Attorneys 
to Assist District Attorneys 

G. Aropointment of New Assistant Attorney General 

l/ Request for National Recovery Administration Attorneys to 

Assist District Attorneys Denied by the Department of Justice, 
2. Effective Enforcement of the National Industrial Recovery 
Act Handicapped Because of Failure to Appoint National Re- 
covery Administration Attorneys as Special Assistants to 
the Attorney General 
H. Important National Recovery Administration Cases Placed in Char^re 
of Inexperienced Attorneys on the Staff of the Department of 
J, Appointment of New Assistant Attorney General Showed no Material 

1. New Assistant Attorney General Handicapped "by Red Tape 

2. Anti-Trust Division of the Department of Justice Policies 
and Those of the National Recovery Administration in Direct 

K. National Recovery Administration Cases still Novel 

1, District Attorneys Anxious to Have the Assistance of the 
National Recovery Administration Attorneys 

L, Failure to Prosecute Caused Industry to Doubt the Administra.- 
tion^s Sincerity for Enforcement 
1» Attitude of District Judges 

2. Attitude of Some District Attorneys 
5, General Breakdown in Compliance 

III. National Recovery Administration's Relations With the. Federal Trade 

A. Investigations by the Federal Trade Commission 

1. Routines Established 

2. Difficulties Encountered 

(a) Time Element 

(b) Impossibility of Obtaining Evidence 

(c) Lack of Trained Investigators 

(d) Difference in views and policies 

B. Federal Trade Commission Investigations Thorough and Competent 

1, Trained Investiga-tors 

2. Adequate Supervision 

C. Statistical Results of Activities of Federal Trade Commission 




I, Patent AmlDiguities in Codes 

A. Codes' Containing Patent Ambiguities 

B. Causes of Ambiguities 

C. Effect of Ambiguities on the Balance of the Code Provisions 

D. Tjrpes of Ambiguities 

E. Resulting Handicaps to Effective Enforcement ; .'• 

II. Illegal Delegations of Authority to Code Authorities in Codes 

A, Codes Containing Illegal Delegations to Code Authority 

B, Effect of Illegal Delegations on the Balance of the Code Pro« 

C, Types of Illegal Delegations 

D, Resulting Handicaps to Effective Enforcement 

III. Attempts to Clear Ambiguities and Illegal Delegations 

A, Amendments 

1, Procedure 

2, Time Element ' 

B, Interpretations 
1, Procedure 

2# Time Element 

3, Interpretations not Binding on Courts 

IV. Interstate Commerce as a Problem 

A. Factual Difficulties 

1, Violations by Sraall Operators 

(a) Local Operation Only 
(i) Statistical Chart 

(b) Size of Cities 

(i) Statistical Chart 

(c) Number of Employees 
(i) Statistical Chart 

(d) Annual Volume of Business 

(e) Importance of Violators and Geographical Location 
3, Difficulties Segregating Employees Engaged in Interstate 

Commerce from those Engaged in Intrastate Commerce 
(a) Examples 
3, Difficulties in Tracing the Finished Products into Inter- 
state Commerce 
(a) Examples 

B. Investigation Difficulties 

1, No Authority to Examine Books and Records 

2, Untrained Investigators 

3, Insufficient Time to Devote to one Case 

4, Umvillingness of Employees to make Statements 

5, Vast Number of Complaints 

V. Procedural Problems 

A, Com-oliance Division 


-636- . 

1, Complaints Investigated "by State Offices 

2, Complaints Referred to the Compliance Coimcil 
(a) procedure Tithin the Organization 

(i) Time Element - ■ 

3, Some Complaints Referred Directly to the District Attorneys 
— Others to the Enforcement Division 

(a) Proof of Violation 

(h) District Attorneys Not Equipped to Investigate 

(c) Examples 

4, Compliance Coimcil 

(a) No Power to Subpoena or to Swear Witnesses 
(h) Power merely to recommend 
(c) Difficulties Encountered 

(i) Effect of Blue Eagle Removal 

(ii) Statistical Chart 

5, Time Element 

(a) Cases Too Told to Teiie Immediate Court Action Thereon 

When Referred to the Enforcement Division 
(h) New Investigation Necessary 

(c) Enforceifient Division to Equipped to Malie Investigations 

(d) Cases Referred too the Eederal Trade Commission 
(i) Tiiae Element 

VI, Code Authorities' and Trade Associations' Part in Enforcement 

A. Trade Practice Complaints Committees 

1. Duties 

2. Hearings 

(a) Transcripts not Complete 

(i) No Interstate Comnerce 
(ii) Statements Not Sworn To 

B, As Investigation Agencies 

1, Untrained personnel 

2, Improper Approach to Violators 

3, Investigation Under Lumher Code as Typical 
0. Cooperation With the Enforcement Division 

1, Inability to Supply Evidence 

2, No Facilities for Obtaining Evidence 

VII. Government Contracts. Division' s Part in Enforcement 

A. Tyjies of Cases Referred to the Enforcement Division 
1, Those in Which Contracts Had Been Completed 

B. Condition of Piles When Referred to Enforcement Division 

1, Lack of Interstate Commerce 

2, Lack of Evidence of Interstate Commerce 

3, Evidence of Violation Not in Proper Form 

VIII* Cases Referred to the Enforcement Division 

A, Condition of Piles 

1. Not Properly Prepared 

2. Lacked Evidence and Not in Proper Form 

3. Seldom Contained Evidence of Interstate Comr^.erce 

B, Forms of Evidence 

1, Statistical Chart 

C, Cases Rejected by the Enforcement Division 
1, Reasons for Rejection 



IX. Troublesome Provisions in Codes 

A. Sales Below Minim-um Cost 

1, Difficulties Encoimtered. in Attempting to Prove Violations 

(a) Cost Systems Not Uniform 

(b) Evidence Mostly Opinions 

2, Difficult to Show Effect on Interstate Commerce 

B, 'Open Price Filing 

1, Difficulties Encountered in Attempting to Prove Violations 
of Selling Below Piled Prices 

(a) Customers Unwilling to Testify 

2, Difficult to Show How Failure to File Affected Interstate 

C . Wage s and Hour s . ■ . 

1, Not Difficult to prove Violations 

2, Difficult to Show Effect Upon Interstate Commerce 

3, Difficult to Trace the Finished Product into Interstate 

4, Difficult to Show Effect Upon Interstate Commerce 

D. Other Trade practice Provisions 

E, Frequency of Violations 
1, Statistical Charts 

F, Unvrorkahle Code Provisions 

X, Difficulties in Regional Offices 

A. Conflicting Instructions From Compliance and Enforcement Divi- 
sions Sent to the Field 

1, Misunderstandings Arising as to the Functions of Personnel 
Assigned to the Regional Offices 

2, Efficiency of the Staffs Impaired 

(a) Much Time Spent in Attempting to Reconcile Instructions 
Instead of Concentrating on Enforcement Problems 

(b) Led to Friction Between Regional Staff Members 



This study is an analysis of the Enforcement Division files to as- 
certain some, if not all, of the difficulties and proulems encountered 
in enforcing the Codes. There were two thousand and sixty-four (2,064) 
cases referred t6 the Enforcement Division and a,t the inception of this 
study it T7as intended to analyze each and every case in order to have a 
true picture of the many peculiar situ^r.tions arising under a code system 
for industry, Hov/ever, due to the volr^jTiinous oino]iint of material to he 
read in connection nith each case in order to compile the necessary data, 
it v/rs realized that \7ith the shortage of personnel and the limited per- 
iod nithin v/hich to conplete the study that the -plen vrould ha^ve to he 
somewhat modified. Therefore certain cases involving codes of the major 
industries wore selected as tj'pical cases and to date four hundred a.nd 
eighty-eight (488) cases lir^ve heen analyzed involving forty-five (45) 
codes . 

In this Gtudy v.-e have analyzed the regulatory and administrative 
features set up within the Adiiinistration in connection with the en- 
forcement provisions of the Act, including the penalty provisions sjid 
enforcement powers given to or assumed "by a-dministrative officers or 
agents independent of the courts; the enforcement powers given the court.;; 
the rights and administrative remedies used in the adi.iinistration and 
enforcement of the lIa,tional Industrial Recovery Act; the rights and 
court remedies granted to those subject to the law; the administrative 
r.nd enforcement ma,chinery set up v/ithin the Adjninistration to determine 
the legal, factual, mechojiical and economic difficulties and problems 
from an enforcement standpoint which -'ere encountered in attempting to 
enforce the iJational Industrial Recovery Act. 


-639- ■ 

At the outset enforcement of the National Industrial Recovery Act 
and the Codes v;as left to the Department of Justice. This did not 
prove sativ'factory and subsequently an Enforcement Division was estab- 
lished within the National Recovery Administration to prepare the cases 
under the National Industrial Recovery Act and to a.ssist the district 
attorneys in the prosecution of the same. Such an agreement was reached 
v;ith the Department of Justice in March, 1934. However, hy Octoher, 
1934, it had "been nullified in practice as the Department of Justice 
failed to appoint National Recovery Administration attorneys in many 
instrjices as special assistants. This militated against effective en- 
forcement "because the district attorneys were swamped with routine mat- 
ters and did not have adequate opportunity to familiarize themselves 
v/ith the factual conditions surrounding this new and novel legislation ■ 
so as to adequately present the cases to court. 

As a result of a conference arranged at the request of the Presi- 
dent in Octoher, 1934, an Assistant Attorney General was appointed whose 
responsihility was effective enforcement of the National Industrial Re- 
covery Act and the Codes. The appointment of saad Assistant Attorney 
GeneraJ did not relieve the situation as his duties were so interwined 
v/ith departmental procedure that he could not effectively perform them. 

The investigations conducted by the Federal Trade Commission were 
always thorough and competent. However, due to the time consumed in 
arranging for the appointment of an investigator and the necessity of 
returning to WavShington to make the report a considerable amount of un- 
necessary time was consumed. 

The case study of the files discloses that sixteen (16) of the 
forty-five (45) codes studied to date contained ambiguities which hind- 
ered effective enforcement. 

Twenty-one (21) of the codes contained .illegal delegations of 
authority to the code authority or delegations of authority which were 
so questionable that the enforcement officials were hesitant in bring- 
ing BUY action in cases where these provisions Y/ere involved. 

The Act did not contain provisions authorizing the Administration' 
to issue subpo.enas or to swear witnesses. This left the Administration 
without effective means to establish the true facts in the case prior 
to attempts to prosecute in courts. In some instances the code author- 
ity held preliminary hearings prior to making recommendations to the 
Na.tional Recovery Administration. However, code authorities seemed to 
lack direction and proper advice as to the nature and sufficiency of the 
evidence required for the institution of court action. 

The Compliance Division established within the National Recovery 
Administration was handicapped in the conduct of investigations because 



in the main MA investi£:atcr3 and. adjusters ^-ere not trained men and did 
not fully appreciate the necessity of sec-oring- evidence in the proper 
form. As a result vhen the case v/as referred to the Enforcement Divi- 
sion no action could "be 'brought thereon '7ithoLit a fui^ther investigation. 
The procedure established vithin the Compliance Division vas not adaptable 
to thorough investigation of cases prior to reference to the Enforce- 
ment Division due mainly to the great number of cases v/hich were referred , 
to the Compliance Division. 

During the year 1954 the average time cons'iomed "oy the Compliance 
Division in attei.ipting to effect compliance before the case was referred 
to the Enforcement Division was six and one-half (&|-) months. In some 
instances the cases were not referred to the Enforcement Division for 
over a 3''ear. Consequently, ^-'hen said cases v^ere referred to the Enforce- 
ment Division the violations complained of had been committed so long in 
the past that for the purpose of court action the case was valueless and 
a new investigation had to be made to bring the file up to date. 

Many of the respondents v.'ere small operators located in small towns 
and cities, were not enga.^ed in interstate com;nerce, nor did their trans- 
actions have any direct effect upon interstate commerce. This proved to 
be an insurmounta,ble obsta.cle as it was absolutely essential to show 
that the respondent v/as either engaged in interstate commerce or that his 
activities had a direct effect upon the same. 

After the establishmont of the regional offices- in January, 1935, 
the average time consumed by the Compliance Division v;as reduced to 
three and one-half (3-^) months. 

As was pointed out above, at the outset the enforcement of the Act 
rested solely with the Department of Justice, and although, after the 
Enforcement Division of the National Recovery Administration was es- 
tablished, routines were set up for the handling of cases, these rou- 
tines did not adeauately meet the situation nor did they give the en- 
forcement officials of NEA a clear prospective of the enforcement prob- 
lems confronting them. 

The state directors were authorized to refer cases directly to 
the district attorneys. This resulted in many cases being referred to 
the district attorneys who were not properly prepare;! and not being 
equipped to investigate and. prepare said cases took no action thereon, 
with the result that two agencies often found themselves working at 
cross purposes. 

The code author! ties -although cooperative in assisting HRA attorneys 
in developing the cases did not fully .understand the legal problems 
involved and consequently were of little. cr no assistance. 

In some instances the district attornej'-s v/ere not in sjTupathy with 
the Act and did not cooperate v/ith the ITHA attorneys in attempting to 
enforce the Codes and the Act, In other instances district judges not 
in s;^'Tnpathy v-ith the Act refused to entertain notions for restraining 
orders and prelim.inary injunctions. Said judges demanded the case be 
set down for hearing on its merits- and as the court dockets were crowded 


-641- • 

this resulted in an indefinite postponement of all action. Where the 
judges \7ere known to "be unfavorable in their attitude toward the national 
Recovery Act the Enforcement Division was loath to hring actions "before 
said judges unless the case was unusually strong. This resulted in many 
cases "being held up indefinitely. 

In certain codes where the sweatshop conditions v/ere prevalent the 
members of the industry resorted to all ingenious and unscrupulous means 
and methods known in order to frustrate the authorities in their attempts 
to enforce the codes. 

The wage and hour provisions were the most often violated as 55^ 
of the complaints involved ws^es, while 4670 involved hours. In determin- 
ing whether there was a violation of the wage and hour provision, diffi- 
culties were encountered where more than one code was involved as in some 
plants it was impossible to segregate the duties of the employees. 

Violation of the trade practice provisions were involved relatively 
less than the wage and hour provisions - "sales below minimum price" 
being the trade practice provision most frequently violated. 

The following is a summary of the court action taken by the 
Enforcement Division; 


Total il-ujnber of Cases Docketed 2,064 

Criminal cases lost 9 

Criminal cases won 22 
Criminal cases Pending, Discontinued 

Moot or Settled 83 

Equity cases lost 26 
Equity cases won . 234 
Equity cases Pending, Discontinued 

Moot or Settled 190 

Total number of cases litigated 

in Federal Courts 564 

Total number of cases before 

Federal Trade Commission 42 

Number of cases not litigated 1,458 

2,064 2,064 


-642- ' 

TalDle of Contents 



I. Eederal . Trade Commission 

A. History and Backgro-und of The Eederal Trade Commission 

B. procedure of The Federal Trade Commission 

1. Chief Co-unsel 

2. Administrative Division 

3. Economic Division 

4. Trade Practice Conference? 

C. Existing Substantive Pov/ers of The Federal Trade Cororaission 

D. Statutory Power Necessary to Supplement present Legislation 

1. Unethical and Uneconomical Trade Practices 

2. Registration of Interstate Trade 

3. Exeni^tion Prom Anti-Trust Laws 

II. Federal Power Commission 

A. purposes of the Act of June 10, 1920 

B. Po\7Grs Granted to Commission 

C. History of Acts 

1. River and Harhors Act of 1884 

2. Act of 1899 (30 Stat, llol) 

3. Act of June 21, 1906 (34 Stat. 386) 

4. Act of 1910 (36 Stat. 593) 

5. Act of 1896 (29 Stat. 120) 

6. Act of 1901 (51 Stat. 790) 

7. Act of 1920 (41 Gtat. 1077) 

D. Act of 1920 (41 Stat. 1077) 

1. persons and Activities G-overned 

2. Exception of Application to Prior Licensees 

E. Enabling Constitutional Provisions of Act 

1. Commerce Clause 

2. Rules and Regulations Concerning The Public Domain 

3. Treaty Making Power 

F. Administration 

1. Power to Prescribe Rules and Regulations 

2. Power to Inspect and to Require Reports 

3. Power to Investigate 

4. Uniform Accounting System 

5. Right to Hold Hearings and to Subpoena TTitnesses 
G-. Penal Provisions 

III. Grain Futures Act 

A-. Purpose of Act is To Prevent Speculation and lianipulation 
B. Transactions in Grain Fu.tures Only Are Regulated 



C. The Act is Based On Use Of The Mails and Commerce Clause 

D. Reflation Effected Thro-ogh Licensing of Contract Markets 

E. Broad Powers of Visitation and Investigation 

P. Permissive Self-Regulation — TJith Administrative and 

Judicial Enforcement 
G-. Principal Function is To Collect and Compile Information 
H. Conclusions 

IV. Interstate Commerce Commission 

A. History and Aitecedents of Federal Legislation 
1. Ineffectiveness of State Regulation 

B. Intersta,te Commerce Act of 1887 
1. Substantive Provisions 

C. Administrative Functions of Commission 

D. History of Administration 1887-1903 
1. Enforcement Under Original Act 

E. Elkins Act of 1S06 and Hepburn A'liendment of 1906 

1. The Rate MsJcing Power Under the Amendment 

2. Decisions of Supreme Court Construing Amendment 

F. McJin Elkins Act of 1901 

1. Curtedlment of Judicial Review « I.C.C. v. Illinois Central 

2. The Commerce Court 

G-. Decisions of The Supreme Court 

1. Long and Short Haul - The Shreveport Case 

2. Control Over Discriminatory Intrastate Rates - The Rate Cases 

3. Control of Pipe Lines 

4. Burden of Proof Established on petitioner 
H. The Federal Control Act 

J. Transportation Act of 1920 

1. Control of Intrastate Rates Upheld by Supreme Court 

2. Recapture Clause 
K. The Denison Act 

1. Rate Malcing Without Hearing in Advance Sustained 
L. Act of February 28, 1933 

1. Delegation of Authority 

V. Packers and Stockyards Act 

A. Objects and Purposes 

B. Constitutional Basis for the Law 

C. Persons and Activities Subject to the Law 

1. provisions Relating to Packers 

(a) Packers Activities Regulated 

(b) Regulatory and Enforcement provisions 

(l) Requirement of Keeping Certain Records 

(c) Power to Issue Cease and Desist Orders 

(d) Power to Require Reports 

(e) procedural Provisions 

2. provisions Relating to Stockyards 

(a) Activities Regulated 

(b) Regulatory and Enforcement Provisions 

(1) Requirement of Registration 

(2) Rate Regulation 

(3) Regulation of Unfair, Dis criminatory'- or 
Deceptive Practices 



(4) power to Require E.eports 

(5) ProcGdiiral Provisions 

D. Enforcement lietliods 

E. Comiients and Conclusions 

VI. Hc.ilwaj Labor Acts 

A. Purposes of Acts 

B. History of Acts 

1. Act of August 1, 1883 

2. Erdman Act of Jime 1, 1898 

3. llewlands Act, July 15, 1C13 

4. Adarason Act, 1915 

5. Pederal Control of Railroads 

5. General Labor Policies Durinc'^ World War 

7. Transportation Act of 1920 

8. Railway Labor Acts of 1926 

9. Federal BanJcruptcy Act as AJ.iended in 1933 

10. Emergency Tra,nsportation Act of 1933 

11. Acts of Federal Coordinator of Transportation 

12. Railway Labor Act of 1934 

C. Persons and- Activities Co.ncerned 

D. Administration 

1. National' Mediation Board ■ 

2. Jurisdiction and lunctions of National Mediation Board 

3. National Railroad Adjustment Board 

4. Arbitration Boards 

E. Penal Provisions 

F. Civil Remedies 

G. Power to Investigate 

H. HoTU-s of Service Act of 1907 and Adarason Act of 1915 

J. Constitutional Issues 

I[. public Consideration in Railway Labor Acts and Its Effect 

Upon Effectiveness of Machinery' Set Up to Insure Industrial 

L. Conclusions 

VII. River rjid Harbors Act 

A. Antecedent History to Ratification of the Constitution 
1. Origin, Conflict, National and State Interest with 

Public and Private Interests 

B. Ratification of the Constitution 

1. Transfer of Power Regulatory process of Commerce to 
That of the Sovereign Power of the Federal Government 

C. Congress Vested With Supreme Authority to Assert and Conserve 
All Rights of Navigation 

1. PoT;er to Regulate all Navigable Waterways as 
Natural Media of Commerce 

D. Decisions of Gibbons V. Ogden; Gilman v. Phila,delphia; 
United States v. Banister 

1. Decisions of Sv.preme Court Defining Control of 
Navigable Waterways 



E. Enforcement of Obstriictions to Navigation 

1. Congressional Power Lorraazit for Century J'ollowing 
Eatification of Constitution Prohi'bitory Action 
Relative Obstructions 

2. River and IIar"bors Act March 3, 1899 

E. Congress Deterraines national and State Responsibility 
of Waterways Intrastate and Interstate 

1. T7ar Department - Chief of Engineers and Secretary of 
War to Approve All projected Waterways Structures 

2. Validity and Constitutionality of Bridge Laws 
Established By Supreme Court Decisions 

3. Union Bridge Company v. United States; 
Llonongahela Bridge v. United States 

(a) Authority of These Two Cases, the Union and 

Monongahela Bridge cases followed "by later casesj 
Southern Pacific v. Olympic 
Louisville Bridge v. United States 
United States v. Norfolk 
Angola T and P; Davis vs. G-ulf. 

VIII. United States Shipping Board 

A. Regulation and Enforcement of Act 

1. Scope 

2. Rules and Regulations of Board 

3. Piling of Contracts 

4. Rebates 

5. Publishing and Filing of Tariffs 

6. Reasonableness of Rates 

7. Reparation Provisions 

8. Jurisdiction of Intersta.te Commerce Commission 
and of Shipping Board 

IX. United- States Tariff Commission 

A. Background and Legislative History 

B. Tariff Act of 1909 

C. Act of September 8, 1906 

D. 122 Tariff Law 42 Stat. 941 

E. Act of June 17, 1950 (46 Stat. 696) 

1. provisions 

2. Procedure 



Tlie s"ain;iaries of this study are an analyses of other governmental 
agencies and "bureaus hrving kindred regulatory poTvers rjith those of the 
National Recovery Administration, In this Unit we have studied these 
agencies with the view of contrasting their experiences and difficulties 
with those of the National Recovery Administration with respect to the 
particular matters set out in the ''Foreword" of Unit I, and in addition 
thereto to study and anal^'^ze the organic law creating the governmental 
bureau or agency; the history of the time indicating the demand or the 
necessity for the law; the evils sought to "be remedied or the purpose to 
be accomplished by said lav\';" the subject matter of the la\7 (the persons, 
activities or things subject thereto); the constitutional provisions 
authorizing the enactment of the law; the remedies adopted by amendment 
or otherwise to meet the difficulties and problems encountered; amendments 
to the law ma,de necessary for efficiency of administration or thro'ugh 
failure of the original a,ct to include powers necessary for efficient en- 
forcement, or made necessary as a result of decisions by the courts, ac- 
tions of the courts in the following particulars 

(a) Condemning the provisions of said law as authorizing constitu- 
tional provisions and how remedied; 

(b) Sustaining the constitutional provisions thereof a.ssailed in 
coLirt ; 

(c) Condemning ad-mini strative action or methods of enforcement or 
administrative action as arbitrary and how remedied; 

(d) Sustaining administrative methods assailed in court, 

A very valuable part of this phase of the study relates to amendments 
to these various laws with the underlying reasons therefor. It will be 
noted that these amendments comprise not only omissions from the ariginal 
acts but enlargements also, as well as those amendments which were passed 
to meet court objections as to the form or manner of the exercise of the 
powers provided. 



Preliminary Sijamary of Findin^^s 


The Fed.era.1 Trade Comnission Act was enacted to suppienent the 
Shermciji-Anti- Trust law by the creation of a Commission to eliminate un- 
fair methods of competition. In addition to the -cower s conferred by 
the Federal Trade Comnission Act the Comnission administers supr^lemental 
powers under the Clayton Act and the Webb E^cport Trade Act, 


The enforcement provisions of the Federal Trade Comnissioft Act 
Thereby either party can appeal to the circuit courts of appeals to en- 
force, set aside, or modify the cease and desist orders of the Commission 
is a ss-tisfactory way of enforcing cand of obtaining judicial review of the 
Commission's orders. 


In revie\7ing the decisions of the Commission the Courts have invax- 
iably confined the definition of "unfair methods of competition" to 
those methods in which there appear some element of fraud, misrepresenta- 
tion or deceit. 

By limiting its Jurisdiction under the Federal Trade Commission Act 
to those practices which are fraudulent, false or misleading, the CoLimis— 
sion has 'been stymied in any effort to raise the standards of industrial 
competition by prohibiting those methods of competition which a. particu- 
lar industry may consider unethical unocononical or otherwise objection- 
able, or by encouraging methods which a particular industry may consider 
conducive to sound business. 

Unethical, uneconomical or otherwise objectionable methods can be 
reached only when the practices are utilized in violation of the Sherman 
lavj or the Clayton Act. 

The only way in v/hich the Federal Trade Commission has been able to 
affirmatively promote fair trade 'oractices has been through Trade Practice 
Conferences. The industries voluntarily dra.w up Agreements or Rules of 
Fair Trade Pra^ctices and the Federal Trade Commission approves the rules 
so drawn. These rules are classified by the Commission into Group I and 
Group II rules. 

The Grou-13 I rules cover those trade "oractices \7hich are unfair be- 
cause fraudulent, false or misleading. They are enforceable by the Com- 
mission ajid the Courts because unfair "oer se. 



Tiie Group II rules constitute practices v/hich are condemned by the 
industry because un.ethical, ULieconomica-l , or otherv.'ise objectionable; or, 
practices approved by the industry because conducive to sound business 
methods which the industry;- desires to encourage and promote. Hie Grouo 
II practices depend entirely on voluntarj?- cooperation of industry members 
as they cJ^e not violative of existing law and can not be enforced by the 
Courts unless usod in an illegal manner. 

[The efforts of the Federal Trade Commission to engender a higher 
norm of business ethics has been more or less futile because of (l) lack 
of any statutory basis for approving voluntary agreements and (2) lack 
of any power to enforce the practices r.pproved under C-roup II rules. 



There is need for the enactnent of legislation to give the Federal 
Trade CoLimission pov»'er to determine that practices, altho"ugh not proved 
to be fraudulent, false and misleading, are unfair iractices because un- 
ethical, uneconomical or otherwise objectionable. 

This -DOwer could be conferred by enlarging the provisions of Section 
5 so e.s to em-po\7er txie Coranission to prohibit any trade practice tha-t is 
unethical, uneconomical or otnorv/ise objectionable. An increase in the 
power of the Federal Trade Conmission was contemplated by the Senate Com- 
mittee which considered the original Federal Trade Commission Act, It 
was stated that, "If conditions demonstrate and warrant, there will be a 
natuL-cil grov/th in the oov/er of this bod^^". Tne situation with respect 
to the Federal Trade Coi.imission is analogous to the development of the 
Interstate Commerce Commission la\7. At first the Interstate Commerce 
Commission had the power only to declare that a rate was unfair. Later, 
under the Hepburn Amendment of 1906 ^ exolicit delegation of power to de- 
clare and fix a fair rate v/as conferred upon the Interstate Commerce Com- 
mission, S:qperience with IIRA in raising the standards of industry demon- 
strate the wisdom and eqr'lty of having an cadministrative body which can 
declare and enforce fair standards. 

This povrer c.nn also be conferred by giving the Federal Trade Com- 
mission statutory a.uthority to approve Agreements or Codes of Fair Trade 
Practices* The of the statute should ex^-^ressly include rules 

referred to a^bove as "G-rouo II" rules, 


The enactment of legislation requiring any "oerson, partnership, cor- 
poration or association engrged in interstate commerce to register with 
the Federal Tl'ade Comidssion vrauld not be unreasonable. A precedent, by 
analogy, for such legislation exists in Section 5 of the Webb Export Trade 
Act which reqiures registration of all persons, etc. engaged in export 




The enactment of a provision modeled along the lines of the Anti- 
Trust exemption in Section 2 of the '/ebl) Export Trade Act, would tend 
to eliminate any conflict or inconsistency 'bet\7een any fair trade riile 
approved by the Commission and the prohibitions of the SherraRn and Clay- 
ton Acts. For instance, there is no statutory base for the Trade 
Practice Conforcnces so the Commission declines to approve rules which 
may be used to stabilize markets or prices (such as firm bidding, guaran- 
teeing against price declines, anti-dumping, free samples, f.o.b, quota- 
tions and shipments) but if a provision such as Section 2 were included 
in the statute, the approval of such rules XTOuld be qualified consistent- 
ly with the Ant i- Trust Laws. 


Licensees under the Act are subject to regulation in the resale 
power, where the same enters interstate commerce, or where they are engag- 
ed in intrastate business in a state having no regulatory agency. Such 
regulation -is in the nature of a limitation v/here the original license is 
granted to the licensee. 

Licensees are subject to the rules and regulations for the establish- 
ment of a S3^s tern of accounts and for the maintenance of such system. 'The 
Commission is given the right to inspect and examine books and .: accounts 
and ha.s the power to require licensees to report in full detail all infor- 
mation as to their financial set-up cost, methods of depreciation, etc. 

The Act provides that false entries on the books or accounts of the 
licensees, or to make any false statement or report in response to a re- 
quest or order from the Commission for statements on reports. It is sub- 
mitted that such provision be considered in the drafting of any new legis- 
lation for the 11.5:. A. 

The Commission is given the right to hold hearings and testimony to 
be taken "by deposition, and' to require by subpoena, the a.ttendance and 
testimony of witnesses and the production of documentary evidence, and 
may invoke the aid of the United States District Courts in obtaining obed- 
ience to its subpoenas. This provision, m th properly' created machinery 
providing for hearings and the right of review thereof ^ are governed by 
the applicable provisions of the Interstate Commerce Commission Act, and 
might be incorporated in any legislation. 



The purpose of the Grain Fut^ores Act is to prevent speculation or 
gambling in grain futures involving manipulation and sudden unreasonable 
fluctua^tion in "orices. Trading in grain futures in interstate comm.erce 
is forbidden except under certain conditions. 

Cash transactions be ovmers or actual growers. 




Gra„in futtire transaction - contracts to sell - neither "b-uyer nor 
seller have act"ual ownership. 


The Act is "based on the pov/er of Congress to regulate the nails 
and interstate coinmerce. The "mail" clause has not been passed on "by 
the Courts. The "interstate" clause has been u:oheld bv the Supreme 
Court on the theory that grain- exchanges are- a necessary local instru- 
mentality required in the national distribution of grain. 


The regulatory feature of statute is the licensing (or designation) 
of any bureau or board of trade that meets requirements of the Act as 
a "contract market". 

Any contract market violating the reqiiirements or conditions of its 
license subjects itself to suspension or revocation of license. 

Disciplinary action against individual traders is eff9cted by \7ith- 
drawal of license from contract market. Legislation has been suggested 
but never enacted to provide that cease or desist orders should issue 
against individuals and no n- compliance with such order should subject 
market to penalty or fine. 


The Secretary of Agriculture has broad powers of visitation and 
investigation. Business of contract market is clothed with public inter- 
est aiid inspection of books and records, even though no transgression of 
law is suspected, is not in violation of Fifth Anendment* 

The Secretary is authorized to promulgate rules and regulations, 
including rules governing the filing of reports. 


Regulation under Act is in effect permissive self-regulation of the 
business affected and enforcement comes through the Exchange itself. 

If aJi individual trader or a contract market is believed to be vio«? 
lating the law the Secretary of Agriculture or the Attorney General may 
hold a hearing thereon. If either is found in violation an appeal may 
be taken to any United States Circuit Court of Appeals. 


The principal function of Grain Futures Administration is to collect, 
collate and compile informafion from daily reports required to be filed 
by the rules and regulations of the Administration. 



Tlie Act regulates certain -riitif air trade practices, in addition to 
the manipulation of prices, atteriipted monopolies through corners, and 
the dissemina,tion of false or misleading information concerning croiD or 
market conditions. '•- '■'' • 

The malcing of false reports, statements or records, and cheating or 
defrauding, are. not prohibited "by the Act, Ihe Regulation of such prac- 
tices has ^oeen left to the disciplinary action of the grain exchange. 


Governmental supervision has aided the grain exchajige in enforcing 
regulations for the better conduct of the grain business. This particuloj- 
tjrpe of industrial regialation cannot be effected except in a similarly 
highly orgcinized industry. 

Ihe compilation and publishing of detailed information concerning 
the operation of the exchanges has had a beneficial effect. 

The Sivoreme Court, in upholding the la?/ as constitutional, did not 
go so far as to hold that the Act regulated the daily affairs of grain 
traders. Ihe opinion is confined to the operation of a national distri- 
bution system, 


The primary standards of regulation of carriers are that railroad 
rates shall be just and reasonable, non-discriminatory and non-prejudi- 
cial. Since these standards were found constitutional in the broadest 
sense by the Supreme Court it is suggested that any legislation might in- 
corporate in substance these standards. The advantage of incorporating 
the standards already declared constitutional is obvious, and,' further- 
more, these standards have the advantage of appearing to be broad enough 
to broadly regulate wages, hours, production, prices, limitation of pro- 
duction or of machine hours, and to do anything generally with reference 
to trade and industry that is in or affecting interstate commerce. 

It is suggested that legislation might employ appropriate words not 
only in the title thereof, but also in the body of the Act, in order that 
the Supreme Court could not fail to declare the new legislation remedial 
in nature, so that the same might be broa.dly construed and interpreted. 
Acts remedial in nature have received broader interpretation by the Su- 
preme Court than other types of legislation. 

Since the Elkins Act which made both partios to a violation subject 
to fine and imprisonment, enforcement by the Interstate Commerce Commis- 
sion has ^oeen excellent. • Similar -.enforcement provisions in legislation 
would prove to be an excellent deterrent to violation and very effective 
in securing compliance. 

Creation of an administrative body exercising quasi legislative powers 
as well as quasi judicial powers is not repugnant to the Constitution of 
the United States and has been so adjudicated. iDy the Supreme Court, and 
such powers may be combined in any new administrative organization. 


Q3ie provision of the Act, Section 15, pp.ra^^raph 7, providing for 
the placing of the 'b-arden of proof on violr^.tors of the Act to establish 
their innocence oefore the Commission roiild apper.r to be most helpf'cGL 
in the enforcemont of lGgisl«;tion> 

'Hie provisions of the Interstate' Conraerce Commission Act in re- 
qiiiring registration of all carriers, iTipe line conrpames, etc with the 
Interstate Commerce Commission might be ema,lated in any legislation 
for the registration of trade ajid industry. 



A. OBJECTS AND PUPJ'OSES objective sought by the enactment of the Packers and Stock- 
yards Act was the establishment of public supervision over the industry 
comparable to Federal supervision of railroads. 


Tills Act is an exercise of the powers of Congress under the 
Commerce Cla.use, The stockyaxds are an interstate coramierce agency 
associated v;ith the interstate movement of the livestock and such 
business is vithin the r^over of national regulation. 


1. Packers. 

2« Stockyards, m-rket agencies, and dealers in such stock- 


Packers are defined by the Act as those dealing in inter- 
state commerce who buy livestock for slaughter: manufacture 

:,.ieat products; manufacture non-edible livestock products unf-er 
certain conditions; and, ma,rketers oi such products. 

(a) Packers Activities Regrulated 

Those within the definition of packers automatically 
become subject to the Act© 

The Act makes unlawful, unfair, unjust and dis- 
criminatory x>ractices; preferential or prejudicial 
practices; pooling of supplies; manipulation of prices; 
apportionment of territory; and aiding or abetting any 
such Acts. 

(b) Regulatory and Enforcement Provisions 


( i ) Req-ugrement of Re Registration - 

Every packer is required to keep records to dis- 
close all transactions, including true stock ovmer- 
ship. The Secretary of Agriculture is empowered to 
prescrilDe the form of keeping records* He may not 
examine records, however, unless he has reason to 
"believe that the pa..cker is violating the law» 

(c) Power to Issue Cease and Desist Orders 

Tlie Secretr\ry is emoovrered to issue cease and desist 
orders a.fter holding a hearing and making findings of fa.ct* 
The order is final unless packer a'opeals xdthin thirty 
days to the Circuit Court of Appeals* If an appeal is 
talcen the Secretary may ask that a temporary restraining 
order be entered oending final decision. 

( d) Fc^&r to Require Reports 

The Secretary is vested with the same "oower as is 
conferred upon the Federal Trade Commission to require the 
filing of reports, ansvrers to questionaires, etco 

(e) Procedural Provisions 

If a packer notes an appeal from a cease and desist 
order, it is suspended. The Secretary nust file a tran- 
script of the complete record in the Court which becomes 
the evidence in the case. New evidence ma.y be taken. If 
the Court affirms j the decree operates as an injunction* 
If certiorari issues from the Supreme Court the injunc- 
tion is not suspended unless it is specifically ordered* 


The second part of the Act relates to stockyards, 
dealers and market agencies. Stockyards are defined as "public 
markets"© The owner of a "private" market maj?" be subject to 
the Act as a "packer" although not subject to the "stockyard" 
features of the Act. 

(a) Activities Regulated 

Stockyards are treated sinilcir to railroa.ds under the 
Interstate Commerce Commission Act* 

Stockyard owners and market agencies must: 

(i) Furnish reasonable services* 

(ii) At just, reasonable, and non-discriminatory 

(iii) Esta.blish and enforce rea.sonable regulation* 


(iv) Keep Gccoimts, records and nenoranda. 

( "b ) Regalrtorv and Suforcenent Provisions 

( i) Heqiiirement of Registration 

Stockyards are not subject to Act 
witil notified by the Secretary. After 
■jublic notice is given, the stoclcyard must 
register \7ith the Secretary and "oost "bond 
for faithful oerformance of obligations. 

(ii) Rate Regulation 

All stockyards and market agencies 
must publish rate schedule for services fur- 
nished. The povror of supervision over rates 
is lodged in the Secretary. He has the 
oo\?er to determine whether any ro.te is un- 
just, unfair or discriminatory and he may 
prescribe the rate to be charged thereafter. 
Ihe burden of oroof is on the Secretary. 
It ha,s been suggested tha,t the Act be amended 
so as to conform to the Interstate Commerce 
Commission Act which specifically Tjlaces 
the burden of proving the validity of any 
r^.te upon the carrier. 

The Secretarj^ is also empowered to pre- 
scribe the rate for stockyard services in 
intrastate transactions so as to remove any 
advantage, preference or discrimination 
against intersta.te commerce transactions. 

A court crn inquire only into whether 
the rate is fair, and that only as to (l) 
v^fhether the statutory -nrocedure v/as folloi?- 
ed; and (2) if there was substantial 
evidence to smroort the findings. 

(iii) Regrulaticn of Unfair, PiscriEinatory or 
DeceT)tive Frp.ctices 

The Secretary, upon complaint or orm 
initative, .'-.fter full hearing ma.y issue 
cease and desist order against any practice 
m.ade unlawful by the Act. The question as 
to vhijit is an unfair trade practice is a 
question of law to be deternined ultimately 
by the courts. 

(iv) Power to Require Reports 


-6.55- . 

Stockyard owners, market pgencies and 
dealers as well as packers are required to 
keep accTirate accounts, records, and memor- 
anda. The '.Secretary can require written ans- 
wers to questionnaires. Such re'oorts are 
necessary to determine fsj.r rates. It ap- 
pears that the _ Secretary has full power to 
require any information that may "be needed 
to administer the Act, 

(v) Procedural Provisions 

The statute is specific with respect to 
investigations and hearings concerning the reg- 
ulation of rates. The statute does not set 
forth the kind of notice or hearings, to he 
held in connection v/ith unfair, discriminatory 
or deceptive practices. The Act imposes cer- 
tain duties sjid creates certain private rights* 
Any aggrieved "oerson may bring a direct civil 
suit in a.ny District Court for damages or the. 
Secretary may order re-oaration. The order of 
the Secretary may he enforced in the District 
Court . 


The enforcement provisions with res"oect to the Packers are wealc 
and differ from the enforcement -orovis-ions with res;oect to the control 
of stockyards, market agencies and dealers. 

Tlie Act provides for no enforcemen^t "by the Secrettiry of his orders 
against the packers except "by v/ay of criminal prosecution (sec. 195). 

In the case of stockyards, market agencies and dealers, the Secre- 
tary or the Attorney General may apply to a District Court for enforce- 
ment of .the order (Sec. 216), Failure to comply v/ith aji order of the 
Secretary also- subjects the offender to criminal prosecution (Sec. 215). 

The Secretary is given power to make rules and regulations to carry 
out the provisions of the Act hut the statute provides no penalty for 
violation of any rule or regulation. 

As 0. matter of fact the Secretary has found that trade practice com- 
plaints, can he satisfactorily disposed of through cooperative efforts of 
the industry. 


1. The Administrative Head of ajiy hody regulating industry 



should have pov/er similar to authority conferred by this Act 
to require reports, etc., concerning details of the activities 
to he regulated, 

2. The investigatory authority should include -jo^^er of in- 
s'oection and visitation, Ihe power of inspection should he 
limited to cases where there is a showing of probable cause» 

3« 'The power of subpoenaing v;itnesses, necessarj?- records, etc., 
should be included in the Act» 

4, The hearings provided for in this Act are based on 
provisions of the Interstate Commerce Commission Act. 

5» The Act should not only invest District Courts with juris- 
diction to compel obedience to subpoenas but the failure to 
obejr should be made a misdemeanor subject to a fine without 
the necessity of apTDl2i'ing to a court for an order of obedience* 


A, The various Railroad Labor Acts were administratively weak 

1» Boards were inadeou^ite in number 

2. Boards were unable to act on ovm initiative 

3« Boards did not have adequate public representation 

4-« Too much reliance v/as placed upon disputants to compose 
their own differences* 

5» Fo-ilure to iirovide sufficient neutral members on various 
boards led to hopeless deadlocks. ( Questions involving 
wages and hours are in a sense, questions involving class 
distinctions and interested parties can seldom a,gree« 
Settlements were seldom if ever satisfactory to both 


1. Force of oublic opinion was relied upon to bring about 
compliance and even in a field such as this where the 
public was vitally interested this did not have the desired 

2. Boards and interested parties did not have pov;er to en- 
force orders and awards. 

5« Boards did not have oower to sub-ooena witnesses or records 
or administer oaths. 

4« None of provisions were penal. 



In drafting any "bills designed to regulate labor and competitive 
problems in industrj?-, consideration should "be given to the administrative 
defects and the compliance difficulties encountered as disclosed "by a 
study of these acts. 

Assuming that new legislation is to take the same or a similar form 
to the old National Industrial Recover^^ Act, the following provisions and 
enforceable regulations of the various railroads acts could, in my opinion, 
be adopted and used to good advantage: 

1. Sections giving to interested parties right to file petitions 

in United States District Courts to enforce awards and orders of 

2. Sections giving boards right to file orders with United States 
District Courts,- 

3. Sections giving boards power to administer oaths and subpoena 
witnesses and records (through United States District Courts). 

4. Regulations requiring carriers subject to hours of service act 
to submit monthly reports under oath showing persons worked more 
than number of hours permitted and reasons therefor. 

5. Sections giving right to boards to delegate power to local boards. 

Consideration should also be given to the need for adequate public 
representation on all administrative boards or tribunals as satisfactory 
rulings and compliance therewith is dependent in large part upon such 
adequate representation. 


The River and Harbors Act of September 19, 1890, under which the 
Secretary.' of War has issued rules, regulations and permits exercises gen- 
eral authority over the subject assumed. 

Permits are granted for the establishment of harbor lines, preserva- 
tion and protection of harbors, for the raising of sunlren wrecks, wharves, 
dams and breakwaters. 

The standard for the issuance of permits, in any given case, is that 
a structure or operation must not seriously interfere with navigation. 

If it is desired to enroll industrj'- and then license or issue per- 
mits, the River and Harbors- Act affords a perfect precedent. 

The thought of regimentation of industry to such measures and extent, 
in the writer's opinion, is suggestively impractical and little con be 
gained from this study of an affirmative help in drafting new legislation. 

In connection with due process, however, it is thought that a study 
of the two leading cases, the Union and Llonongahela Bridge cases, is pe- 
culiarly pertinent and helpful. 



Under consideration of the contention of the Union Bridge Company 
and Honongahela Bridge cases, that the statute was imlawful as delegating 
complete legislative power to the Secretary of War a8 well as judicial 
power. In answer the United States Supreme Court in substance said: 

"The.t Congress cannot delegate to the President or any one else the 
power to make a lavv^ as such delegation wo-old he in contravention of 
the Constitution. But that Congress can make a law to delegate a 
power to some administrative officer or board to find a fact upon 
which the rule declared by Congross in the la?/, will operate." 

The authority of these two cases, the Union and lionongahela Bridge 
cases, has been consistently followed by later cases, such as Southern 
Pacific vs. Olympic, 260 U. S. 205; Louisville Bridge vs. United States, 
242 U. S. 409; United States vs. ITorfolk, 29 Ped. (2d) 115; Angola vs. 
T. and P., 275 U. S. 534; Davis vs. Q-olf, 31 Ped. (2d) 109. 

. The method of enforcement is interesting but it is thought that the 
study of the navigation laws of the United States will relate more spe- 
cifically to this phase of suggestion. 

The disclosure of the several cases, supra, in the report affirm the 
fact that when national interest and concern appears, the power of Cong- 
ress is paramount, adequate and plenary to accomplish the national inter- 


Inasmuch as the Shipping Act is quite similar in its general scope 
and purpose, as well as its terms, vdth the Interstate Commerce Commission 
Act, it is thought that the same conclusions made in respect of the Inter- 
state Commerce Commission Act vrould apply to this study and should not be 
repeated again. 

This study, however, has brought out the question of special con- 
tracts that were in existence prior to the enactment of the statute. The 
manner in which the statute has dealt with these special existing con- 
tracts is most helpful in drafting ne;? legislation. 

The Shipping Act provided that the special contra,ct would continue 
to be valid and in full force and effect until the Board decided other- 
wise. It would seem therefore that in new legislation a clause might be 
incorporated similar to the clause in the Shipping Act, v.hich has been 
referred to in the study; and to the. effect that, all special contracts 
concerning wages and hours, prices, disco-unts, shall be subject to be 
annulled or set aside by the Administration set up by the new legislation, 


•■ The United States Tariff Commission acts as an agent of Congress and 
is in the nature of a quasi-legislative body. TOiile provision is made in 
the Tarifx Act for hearings and reviev/ of the findings of the Commission, 
there appears to be very little in this Act which may be used to advantage 
in the prepa.ration of any new legislation, 



The courts have held that such hearings as are held "by the Commission 
are legislative in nature and thp.t a hearing is merely a privilege "be- 
stowed by the Act or Commission. It is to be noted that even where a 
hearing is not required as a matter of law under the procedure as pro- 
vided for in this Act, both the Act and the Commission have in nearly all 
instances provided for such hearing, and a right to appeal, in certain 
instances, to the Court of Customs and Patent Appeals and in other in- 
stances to the Circuit Court of Appeals. Any hearings held by a proposed 
administrative body which would be in the nature of quasi- judicial or 
quasi-legislative nature, should make provisions for hearing, review or 
right to appeal. 





Ta ble of Contents 



I. The Use of Liquidated Damage Provisions in Volimtary Industry 

A. Asswaptions 

B. Private Agreements 

C. Liquidated Damages and Penalties Defined and Distinguished 

1, Canons of Inter»oretation 

2, Decisions in State Courts 

3, Decisions in Federal Courts 

D. Liquidated Damages Under N.I.R.A. 

E. Damages in Anti-trust Suits 

P. Liq.uidated Damages in Cooperative Marketin;'-; Agreements 
G, Legislative Regulation of Remedies 
E. Conclusions 

II. C-overir^.ent SrJictioned "BoArcotts" and Publicity Devices 

A. Definition of the Term "Boycott" 

B. T""ijes of N. R, A. Insignia 

1. Blue Eagle Under President's Reemployment Agreements 

2. Consumer's Blue Sa.^^le 

3. The Code Eagle 

4. Labels 

C. Origin and IJature of the Blue Eagle and the Consumer' s Blue 

D. Code Eagle Created by Administrative Order X-22 

E. Label Provisions in Code of Pair ComiDetition for Men's Cloth- 
ing Industry 

P. Distinctions Between Voluntary and Compulsory Use of Insi;'^ia 
C-. Voluntary Use of Insignia 

1. The Right of the Government to Devise and Regulate the Use 
of Insignia 

2. The Legality of Boj^cotts (With Citations of Authority) 

3. Publicity 

H, ComiDulsory Use of Insignia 

1, Limitations on Congress to Compel Use of Insignia 

2. Governmental Boycott Under Compulsory System 

J« lliB Issuance of Labels and the Withdrawal of Label Privileges 
K. Economic Value of the Use of Labels 
L. Problems 

1. Une of Insignia to Indicate Com^:)liance or Non-Compliance 

2. Universal or Partial Application of Insignia 

3, The Government's Responsibility to Avoid Deception in the 
Use of Insignia 

4, Conflict Between Governmental and other Insignia 



III. The Imposition of ConcLitions Upon the Letting of Government Contracts 

A, Executive Orders Requiring Contractors Bidding on Government 
Proposals to Comply With Codes 

B. Government Contracts Division 

1, Organization 

2, Powers 

3, Relation With Other Divisions 

4, Examj)les 

C, Economic Features 

1, Conditions in Government Contracts as a Primary Means of 
Enforcing Labor Standards 

2, Discussion of Extent of Government Purchases of Material 

3, Industries Affected 

D. Ualsh Government Contracts Bill (S 3055) 

1. Committee Reioort 

2. Analysis of Bill 

3. Scope of Bill 

4. Criticism and Suggestions 

5. Legality 






Tills study is an analysis of the legal, factual, raechajiical and 
econonic aspects of the use of devices and methods of enforcement other 
than those ordinarily used in the enforcement of re^latory la\7S such 
as the use of insignia, laoels and liquidated damages, 


Preliminary Summary of Findings 

An Agreement made in advance of a breach fixing the damages there- 
for is not enforceable as a contract and does not affect the damages re- 
covera"b].e for the breach, unless the amount so fixed is a reasonable 
forecast of just compensation for the harm that is caused by the breach, 
and the harm that is caused hy the breach is one that is incapable or very 
difficult of accurate estimation. 

In T/eighing the practices with respect to liquidated damages a,s em- 
r)lo-'ed in codes under the National Industrial Recovery Act against the 
princi;oles enumerated, it is difficult to avoid concluding: in relation 
to code violations (a) that the amounts agreed upon and the administra- 
tion of the same were literally rienalties to enforce compliance; and 
(b) that under the doctrine tiiat ^.?here a ner? duty is im-^osed by statute, 
if a remedy be given by the same statute for its non-ioerforraance, the 
remedy given is exclusive, no legal sanction for such a remedy, as the 
provisions generally emplo^'ed in the codes, was permissible under the 

Liquidated damages as a means of "self-enforcement" in voluntary 
agreements can be introduced effectively by adequate provision in a sta- 
tute -purs.£;.nt to which authority exists for the making of such agreements, 


The right of the C-overnment to devise insignia indicating compliance 
with P.R.A, and to take measures to prevent the imiDroper use of such in- 
siiTnia is be;'/-ond question. 

The extent to which the Government may a-oply the economic pressure 
of boycott to secure voluntary comiDliance de-oends upon the ends sought 
to be obtained and the reasonableness of the means to attain those ends. 

The right of Congress to require the use of labels as indicating 
compliance \.'ith a statute is not subject to serious doubt, provided Con- 
gress had the constitutional power to pass the statute in question and 
the label requirements are reasonable. 


-663- : 

If it is contemjjlated that ujider le.5islation lalDel.s or insignia 
are to "be used, provision therefor shoiO-d te made in the Act, 

Any statute establishing the voluntary or cora-oulsory use of insig- 
nia or la"bels should make clear provision for the removal of insignia 
and Is^hel 'privileges under rules, regulations, and procedure in conform- 
ity ^7ith due process requirements, 



The imposition of conditions in the letting of Government contracts 
under Executive Orders 6246 and 6646 was an effective means of enforcing 
the provisions of the N. R. A. codes in certain industries. 

The effectiveness of the Government Contracts Division v/as some- 
what hampered hy the lack of cooperation of other Government departments. 

The im'oosition of conditions in the letting of Government contracts 
is soimd in principle althoug'h, as a primary means of establishing nage 
and hour standards, it uould be effective only in a limited field. 

The imposition of conditions in the letting of Government contracts 
will be a valuable aid in enforcing any legislation designed to maintain 
wa-ge ond, hour standards or any general plan to that end. 

The TZalsh Government Contracts Bill (S 3055) as passed by the 
Senate is generally satisfactory, but is susceptible to amendment con- 
tained in the re-oort. 

Under the authorities there is no doubt as to the right of the 
CTOvernment to prescribe the conditions upon which it will permit public 
work to be done on its behalf. 






Table of Contents 



I, Factory and Workshop Acts of England 
A. La^.vs of England 
3. Voluntary Compliance, English Experience With 

C. Aciiiinistrative Machinery of England's System 

D. Co:Toarative Analysis of the Factory and Workshop Laws of England 

1, Constitutional Limitations in the United States 

2, Intrastate Activities, Congress may Regulate Those Things 
Only Which Directly Affect Interstate Conmerce 

3, Legislative Authority of the Parliament of England 

E. ;.;esume of the Factor5'- and Workshop) Act of England 
Part I 

1, Classification and Definition 

(a) The Basic Act is the Factory ajid Workshop Act of 1901 
(h) Numerous acts Pertaining to the Subject Matter of the 
Basic Act and to Related Matters Constitute the 
"Factor^'- and Workshop Acts", 
(c) Intrastate activities only are defined in the Factory 
and Workshop Acts. 
Part II ■ ^ 

1. Health and Sanitary Conditions 

(a) Subject matter of this section is within the field of 
intrastate legislation 
Part III 
1, Provisions as to Machinery and Accidents 

(a) Subject matter of this section is within the field 
of intrastate legislation 
Part IV 
1, Dangerous and Unheo^lthy Industries 

(a) Subject matter of this section is ^rithin the field of 
state legislation 

(b) Application of Act and possibility of using methods 
applied, in the United States in the event new NRA 
legislation is enacted. 

Part V. 

1. Conditions as to Employment and Remuneration 

(a) This section is within the field of sta.te legislation 
See cases of 

Adicins V, Children's Ho-spital 
Child Income tax case 
Hammer v. Dagenhart 
Part VI. 

1, Administration and Penalties 


(a) Val-ua'ble as Dointing the 7;'a^v to administrative help 

only after a new legislative theory has "been developed. 
Part VII. 
1, Shops 

(a) Resembles codes of fair competition 

("b) Applicable to shoos specified and such additional shops 
as Secretary of State finds either advisable or necess- 

II, Study of the Legislation, Regulation and Administration of In- 
dustrial and Labor Problems in the Dominion of Canada 
A, Historical Development of Canadian Legislation 
3, Regulations and Control of Trusts and Industrial Coml)inations, 

Customs Tariffs, the Excise Tax and Inland Revenue 
C. Laus and Court Decisions 

III. Study of combinations and Government Regulation of Industry in 

A. Combinations in England 

B. He organization 

1, The British Iron and Steel Industry 

2, The Cotton Industry of Great Britain 

C. The Coal Mining Industry and the Coal Mines Act 

IV, Stud3- of Combinations and Government Re;giJLLation of Industrjr in 

A. Piistorical Division of Australian Legislation 

3, Study of La^, Court Decisions and Comparison of Cases With Those 
of the United States 

V. German Cartel System 


n r* r* 


Jore^ Tord 

This str.dy is a survey and analysis of the laus of foreign co"antries 
relating to the regulation of "business combinations and lator legisla- 
tion uhich have been enacted "by the various foreign countries in an ef- 
fort to inrorove the industrial structure and the la'bor conditions of 
said countries, together \7ith a study of the economic conditions ^^hich 
led to the enactment of such laws btiQ). the administrative and enforcement 
difficulties and problems '7hich have been encountered in attempting to 
enforce srdd laws, 


Summary of Preliminary'' Findings • 

Divergent philosophies of jurisprudence existin.-^ in the United 
States and England render the laws of England of little value as a guide 
to drafting ne?/ legislation. 

Voluntar]'- compliance with lav.-s im;oosing no penalties failed in 
Englajid and history indicates "tliat voluntary agreements in the United 
States v/ill fail for the same reason that they failed- in England, name- 
ly iprofittn. 

Possible methods of administration under English system which could 
be adapted and which seem to be superior to those formerly used by the 
National Recovery Administration, 




A comparison between the form of government of the United States, 
in the light of the Supreme Court Decisions, and the form of government 
existing in England, indicates tiiat the possibility of help from the so- 
called "emergency powers" of the Federal Government cannot be utilized 
as it is in England, 


Congress may regulate only those things \7hich directly affect con- 
raerce and imder the decisions of the Supreme Court it is doubtful thr.t 
hours and T:a es have any direct relation to interstate commerce. Acts of 
Congress are subject to judicial interpretation in respect of constitu- 
tional liriitctions, while the Acts of Parliament of England are not, be- 
cause the po-;ers of Parliament are not defined by law and it is bound by 
no chc-rtei- or constitution. This fundamental difference between the 
governments of the United States and of England makes it difficult to 



aDply ajij- oi the provisions of the Factory and Wor'-plio- ^ Acts of En^jland 
to the present situation existin^g; in the United States. 


The Factory and Workshop Act of EngLand was adopted in 1901, since 
which tine there liave "been enactiaents of other lav;s relating to the sul>- 
ject and these Acts to-^ether are Imovni as the Factory and Workshop Acts. 

The Industries to ".'hich the Act applies are specified in each Act 
and the definitions of these indiis tries are such that under the United 
States Supreme Court decisions they '.'ould he considered to he "intran- 
state activities" not directly effecting interstate conmerce, and cannot 
he controlled hy Federa,l statutes. 


The suhject matter covered hy this part of the Factory and Work- 
shop Acts of England is within the field of intranstate activities. 


The suhject matter covered hy this section is also within the field 
of intrastate activities. 


The suhject matter of this section is wholly within the field of 
state legislation. 

It is stiggested that henefits may he derived hy anyone in drafting 
future re.gulatory legislation in the United States 'h'f noting the manner 
in which the law is applied. The Act specif icall-r sets out the ohjects 
to he accoimlished and provides that "the Secretar'7 of State may, hy 
special order, apply the ahove provisions to any other disease occurring 
in a fact,)ry or workshop". Before the Secretarj^ of State raakes any re- 
gulations he must publish notices and ohjections may thereafter he filed, 
A hearing is thereupon had at which the questions in dispute may he ru.led 
upon ^oir the -oerson appointed to hold the hearing, and a report must he 
made ''oy him to the Secretary of State. Regulations made pursuant to 
this procedure must he laid hefore hoth houses of parliament and the 
same, or an^'- number, ma,y he annulled hy either hours within forty days. 
Regulations aj'ply only for the benefit of persons who are employed in 
the trade for which they are made, 


This section, too, is within the field of state legislation as has 
heen determined hy the cases of Adkins vs. Children's Hospital, Child 
Income Ta^x Case, Hammer vs. Dagenhart. 


This section contains many possible administrative and enforcejaent 
devices adaptable under our system of government, 



Tliis section reseintles codes of fair competition adopted under the 
N. R. A. ?Jid applies to all classes of shops that the Secretary of State 
finds either desirable or necessary. 






This report represents the vork and .conclusions of an enforcement 
committee' set up by the Na.tional Industrial Recovery Board to routiniz^ 
and expedite the enforcement of NRA cases by United States Attorneys. 

It analyzes all major codified industries and selects therefrom 
those ;orovisions which were determined enforceable in accordance './ith a 
report and analysis or guide made by th'^ chairman of the committee prior 
to the estcJblishment of the committee proper. The -orovisions thus 
selected uere r^ady for release to enforcement agencies and accompanying 
them this committee devised a standard form of investigator's report 
and a basic legal bric»f covering the- wage and hour Drovisions in 


1. Th<» Committee? for routinization of enforcement was established 
in the early part of February, 1935. 

2# Its purpose was to simplify and routinize the enforcement of 
NRA code violations by United States attorneys, and to secure greater 
cooperation from the Federal Trade Commission in the handling of com- 
plaints peculiarly adapted for enfor'~'''ment by "cease and desist" orders 
of th» Commission. 

An agreement was reached by the committee with the Commission 
whereby NRA code violations would be tried by the Commission ^-.'ithin thirty 
days folloT/ing the filing of a complaint by NRA. 

3, The committee selected for study those industries deemed to be 
interstate in character, and as to which it could be plausibly argued that 
all their activities were so interstitially interwoven as tf necessarily 
affect such commerce. 

4, The selection of these industries was made by the committee in 
cooperation with and upon the advice of the Division of Research and 
Planning, tho Labor Advisory Board, and the Deputy Administrators and 
Code Legal Advisers. 



5, The code provisions r;ere thereu"oon analyzed by the committee 
and only one "A" provisions from an enforcement standpoint vrere selected. 
These selections represented the unanimous views of the committf^e and 
the reasons therefor appear in the body of the report. As to all other 
provisions not selected for enforcement, recommendations were made to 
various coordinate branches of MA to either revise poorly drawn pro- 
visions, or completely eliminate the unenforceable ones. Only those 
provisions which were believed to be sustainable by Toositive court rulings 
either in WSA cases or Federal Trade Practice cases were retained for 
immediate consideration, 

6« To accompany these orovisions which rendered themselves readily 
for enforce: :ent, a standard form of investigator's report was prepared 
by the committee for use by field adjusters in order to enable them to 
adequately prepare cases and to gather the evidence necessarily required 
to establish a code violation and the jurisdictional effects of inter- 
state commerce, 

7, This standard form of investigators report covered only wage 
and hour violations because it was considered wise to test results this 
report would bring before standardizing the investigations of violations 
other than the wage and hour provisions, 

8, A basic legal brief was drawn purporting to uphold the con- 
stitutionality of the wage and hour provisions. The release of enforce- 
able wage and hour provisions, together with a standard form of report 
and basic le^al brief vrere the oriraary accomplishments of the committee. 
These results up to the time of the Schechter case were merely ground 
plan to which additions were contemplated f rom . time to time to cover 
trade -oractice violations and other codified industries until eventually 
all enforcement would be expeditiously handled. 





Perhaps the most sweeping changes engendered by the National In-- 
dustrial Recovery Act occurrod in the field of labor law. Prior to the 
Act, v^age fixing by states iinder the police power for v/omen in -orivate 
industry had been declared -unconstitutional by the United States Supreme 
Court. Wage fixing for men had not been attempted by the states. 

State enactments of maximum hours were sustained by the courts only 
UT3on the basis of their direct relation to the health and safety of the 
people. Regulations of maximum hours were, therefore, enacted and sus- 
tained in only those occu-pations which were found by the legislators 
and the juo^'es to be injurious to health or hazardous in nature. The 
regulations enacted in each state varied from those of every other state, 
and depended ur^on the degrees of recognition of legislators and Judges 
of the economic and social desirability of legisla.tion upon this subject. 
The same lack of uniformity in state legislation was evident in the regu- 
lation of child labor, the sweat shop and collective bargaining. Sta.te 
legislators recognizing the competitive advantages of less stringent 
regulation in these fields were loath to enact any but the most elastic 

The National Industrial Recovery Act not only authorized the fixing 
of maximum hours, the lorohibition of child labor, the sweat shop and 
recognized collective bargaining, but it brought a degree of uniformity 
to the law which it hitherto lacked. 

The Schechter decision raised the question of the degree to which 
it forced a return to the pre-K.I.R.A. labor law. In the consideration 
of this question there arose the subsidiary question as to the extent 
of the power of the state legislatures and the Congress of the United 
States to enact legislation in these fields. Implicit in this question 
is the extent to which neither the state legislatures nor the Congress 
have the power to regulate. 

To ansT/er these questions it was necessary to conduct a re-survey 
of regula-tion in these fields. The study of the legal aspects of labor 
problems was, therefore, undertaken with the stated purpose of delimit- 
ing the field within which the legislatures and the Congress have legis- 
lated on minimum wages, maximum hours, the sweat shop, child labor and 
the enforcement of collective bargaining agreements, of analyzing court 
decisions arising out of such legislation, evaluating the effects of such 
decisions to determine the extent to which such legislation has been 
rendered nugatory thereby, and of determining the exrcnt to which coujrt 

* NOTE ; The detailed Tables of Contents and Summaries of Findings of the 
separate Legal Labor Studies are to be found in Part D, 
pages 408 - 556. 



decisions have circiimscribed the zone vrithin which the legislatures 
and the Congress are empowered to legislate on these subjects. 

The limitptions of time and nersonnel permitted a study of only 
these, the most outstanding fields. An analysis of enactments and 
decisions covering -Qublic works and ■■^rivate industry is being undertalcen, 
discussing the extent of the occupations and industries covered by 
such legislation, specific statutory reference to sex, the extent to 
which such legislation has been sustained or rejected, and the constitu- 
tional basis for such decisions* 


Table of Contents 



A. i.iiniraum V/rges in Public Y'orks 

1« Analysis of all State and Federal legislation thereon 
2. Analysis of Court decisions to determine the extent to 

which such legislation has been sustained or rejected; 

and the constitutional bases for such decisions 

B. "i.iinimum TTpges in Private Industry 

It Analysis of all State and Federal legislation thereon 
2# Analysis of Court decisions to determine the extent 
to which such legislation has been sustpined or re- 
jected; and the constitutional bases for such decisions 

C. Comparative Discussion of State and Federal legislation 
decisions on minimum wages with special, reference to the 
police power of the states to enact legislation on minimiJin 
wages when considered with the 14th Amendment to the 


A. Maximum Hours on Public Works 

1. Analysis of all State and Federal legislation thereon 

2. Analysis of Court decisions to determine the extent to 
which such legislation has been sustained or rejected; 
and the constitutional bases for such decisions 

B. Ivloxinum Hours in Private Industry 

1. Analysis of all State ?nd Federal legislation thereon 

2, Analysis of Court decisions to determine the extent to 
which such legislation has been sustained or rejected; 
and the constitutional bases for such decisions 



C. Comparative discussion of Stpte and Federal legislation 
decisions on maxiiavja hours with SDecial reference to the 
police Dov/er of the states to enact legislation on maximum 
hours when considered uith the 14th Amendment to the 


A« The Homevrork Problem 

B. State Legislation and Court decisions 

C. Federal Legislation and Court decisions 
!)• Conclusions and Recommendations 


A.* The Child Lahor Problem 

B. State Legislation and Court decisions 

C. Federal Legislation and Court decisions 

D. Conclusions and Recommendations 



A. The trend of State decisions toward the sustaining of 
employees' rights to enforce provisions of collective 
bargaining agreements 

B« The theories underlying the employee's right to enforce 
such agreement 

C» Summary of the present state of the law 


A. The extent of regulation enacted under the authority of 

the National Industrial Recovery Act on the subjects of 

'.7ages, hours, child '^abor and homework. 
B« An analysis of the Schechter decision for the purpose of 

examining the effect of this decision uron Federal and 

State legislation on these subjects 
C. Discussion of the effect of the Schechter decision upon 

Federal and State Dov/er to legislate on these subjects 




Table of Cases 

9453 # 











cons HISTORIES '. 684 




Table of Contents 690 

Summary 694 



Table of Content s 69i 

Summary 697 


Table of Contents 693 

Summary 699 



Table of Contents 700 

Summary'- 702 


Table of Contents 703 

Summary 704 


. -575- 

In the spring of 1935 the Research and. Planning Division -undertook 
to pre-oare for a selected list of industries a series of compilations of 
figures and descriptive text, which Vvould "be accessible N.R.A. legal 
representatives as evidence in pending court cases. After the suspension 
of the codes the project was completed in connection with the studies of 
the Division of Review ojid as convenient soui'ces of information Oii the 
industries concerned. 

These Evidence Studies were based on a uniform outline, and supply 
more or less the same information regarding the various industries, so 
far as data were available. The figures appear, in large part, in public 
ce^tions of other government agencies, but are here conveniently assembled 
\vith reference to specific industries. 

The industries covered by the Evidence Studies accotmt for well 
above one-half cf the total voliirae of employment Uxider codes. 

The full list of the Evidence Studies is as follows: 

1. Automobile Manufacturing 23. 

2. Boot and Shoe 24. 

3. Settled Soft Drink 25. 

4. Builders' Supplies 26. 

5. Chemical Ivianufacturing 27. 

6. Cigar l.ifg. Industry 

7. Construction Industry 28. 

8. Cotton Garment 29. 

9. Dress Manufacturing 30. 

10. Electrical Contracting 31. 

11. Electrical LIfg. Industry 32. 

12. Fabricated Metal Products 33. 

13. Fishery Industry 34. 

14. Furniture Mfg. 35. 

15. General Contractors 36, 

16. Graphic Arts 37, 

17. Gray Iron Foundry 33. 

18. Hosiery 39, 

19. Infants' and Children's Wear 40. 

20. Iron and Steel Industry 41. 

21. Leather 42. 

22. Lumber and Timber Products 43. 


Mason Contractors 

Men's Clothing Industry 

Motion Picture 

Motor Bus Mfg. Industry (DP.OPPED) 

needlework Industry of 

Puerto Rico 

Painting and Paperhanging 

photo Engraving Industry 

Plumbing Contracting 

Retail Food (SEE KO. 42) 

Retail Lumber 

Retail Solid Fuel (DROPPED) 


Rubber Mfg. 

Rubber Tire Mfg. 

Silk Textile 

Structural Clay Products 



¥a s t e M'a t er i 3,1 s 

Wholesale & Retail Food (SEE 110. 31) 

VJh.olesale Fresh Fruit and Vegetable 

Wool Textile Industry 

In ao.dition to the studies brought to completion, certain materials 
have been assembled for other industries. These IvIATERIALS ?-re included 
in the series, as follows: 


Automotive Parts 
Bcking Industry 
Canning Industry 
Coat 3Jid Suit 
Household Goods and 
Storage, etc. (DROPPED) 


50. Motor Vehicle Retailing 

51. Retail Tire and Batterer Trade 

52. Shipbuilding 

53. Wholesaling or Distributing- 
Trade (DROPPED) 




The Statistics Section, in su"ool.ying the requirements of 
individiial stiidy units, collected a considerable amo"unt of statisti*^ 
cal naterial for a selected list of industries. These hrve been 
nuTnhered to correspond with the codes of the industries concerned, 
Dete.iled and specialized data not likely to "be of general interest 
have been excluded. 

The materials include data on estahlishraents, firms, em- 
ploji.ient , paj'-rolls, wages, hours, production, capacities, 'shipments, 
sales, consumption, stocks, -rices, material costs, failures, ex- 
ports and imports. Tliey also include notes on the principal qualifi- 
cations thrt should be observed in usin^ the data, the technical 
methods err-^loyed, and the applicability of the material to the study 
of the industries concerned. 

The following are the industries for vfhich the Statistical 

Materials included in this Series have thus fc-r been issued. 

Cleaning and Dyeing Trade (I'o. 101) 

Copper and Brass Mill Products (No, 81) 

Cotton Textiles (No. 1) 

Electrical Manufacturing (No. 4) 

Fertilizer Industry (No. 67) 

Funeral Sunoly (No. 90) , 

Ice Industry (No, 43) 

Knitted Outer^vear (No. 164) ■ 

Paint, Varnish and Lacquer Ivifg. Ind, (No. 71) 

Rayon and S'^nithetic Yarn Producing Ind. (No. 14) 




As tl'iG ivork of the Division of Review has developed, 
a ninnlDer of preliminary and special studies and compilations 
of data have been made available to the staff, -under the name 
of Work I.Iaterials, They were circulated as materials for in- 
terna.1 use. 

The following is a full list of the items thus far 
issued in this Series of Work Llaterials, 

1, Ant i- Trust Laws ajid Unf::iir Com;^::)etition 

2. Summary of Analj'-sis of Trade practice P2.^o visions 
5. in N.R.A. Codes 

3-11 (Price Studies pre-oared under the Committee on 
Price Policy) 

12, List of Statistical Tables on Labor Provisions 

in the Codes 

13, Classification of Approved Codes in Industry 


14, Cases on Intrastate Activities Which So Affect 

Interstate Commerce as to Bring Them Under the 
Commerce Clause 

15, Production, Prices, Employment and Payrolls in 

Industry, Agriculture and Railway TransDorta- 
tion, January, 1923, to Date 

16, Resale Price Maintenance Legislation in the 

United States 

17, Tentative Outlines and Sum.naries of Studies in 


18, Contents of Code Histories 

19, History of the Review Division, February 8, 1934, 

to June 16 , 1935 

20, Policy Statements Concerning Code Provisions and 

Related Subjects 

21, The Possibility of Variation in Tariff Rates to 

Secure Proper Standards of Yla>^5 and Hours 

22, Industrial Homework 

23, The Right of Individ^jal Employees to Enforce Pro- 

visions of Collective Bargaining Agreements 

24, The Treaty Making Power of the United States 

25, Federal Regu.lation Throu.h the Joint Employment 

of the Power of Taxation and the S"i^ending Power 
27, Extra Judicial Methods of Enforcement ■ 



The Files for the Following '• Industrie s ^have "been consolidated and are available in 

the Central Hecords Section. 

Advertising Metal Sign and Display- 
Advertising Specialty Mfg. 
A^Ti cultural and Dairy Machinery 
Agricv-ltural Insecticide and Fungicide 
Air Filter • 

Air Trsji sport 

Air-applied Concrete Contracting 
Aircraft Mfg. 
All lietal Insect Screen 
A]-uninum Cooking Utensils 
Aiii:.ial Soft Hair 

Architectural Ornamental Iron,- etc. 
Art lTeedlei7ork ■' V' ' " ' 

Artistic Lighting 
Athletic Goods Mfg. 

Aiv.^i^" Bit and Tool ' ■ 

Auto Hot ITater Hec?.ter 
Automotive ReDuilding and Refinishing 
Autonotive Bumper Mfg. 
Automotive Pressed Metal 
Autonotive Shop Equipment 

Salierj'- Equipment 

Batting and Padding 

Beater and Jordan and Allied Products 

Bedding Mfg. 

Beer Equipment 

Beverage Dispensing Equipment 

Bias Tape 

Bird Cages and Stands 

Bituminous Coal 

Bituminous Hoad Material Distributing 

Blue Print and Photo Print 

Boot and Shoe 

Brake Beam 

Brass Forging 

Bright Wire Goods 

Broom I-ifg, 

Buff and Polishing Wheel 

Can llf g, 

CaJining Indus try 

Carhon Dioxide 

Carburetor Mfg. 

Card Clothing 

Cast Iron Boiler and Cast Iron Radiator 

Cast Iron pressure Pipe 

Ce-ster ojid Floor Truck Mfg. 

Chain i.Ifg. 

Chemical IJlfg, 



Chilled Car Wlieel 

Cinders, Ashes and Scavenger 

Coal Cutting Machine 

Coal Dock 

Goal Liine Loadin^^ Machine 

Coated Abrasives 

Conynercial Avia.tion 

Co.:-iercial Vehicle Body 

CoiTolete T/ire rnd Iron Fence 

Concrete Mixer 


Conveyor and Material Preparation 

Coo]:in'i; and Heating Appliance Mfg. 

Corn Col) Pipe 

Corset and Brassiere 

Corset Steel 

Cosmetic Container 

Cotton Converting 

Cotton Garment 

Cotton Textile 

Cut Tack, Wire Tack and Small Sta-ole 

Cutlery, Manicure Implement, Painters & Paperhangers Tool Mfg. 

Dairy Equipment 

Diamond Core Drill 

Die Casting 

Diesel Engine Mfg, 

Display Equipment 

Dome 2 tic Freight Porv/arding 

Drapery and Carpet Hardware 

Dredge and Flo -^ ting Plant 

Drop Forging 

Electric and Neon Sign 

Electric Industrial Truck Mfg. 

Electric Lighting and Heflecting Devices Hfg, 

Electric Overhead Crane 

Electric Plating - Metal Polishing & Rust Proofing 

Electro Pla-ting 


Envelope Mc-chinery 

S::tended Surface Industry 

Faoricc^ted Metal Products 
File I.Iig. 

Fireplace Furnishings 
Fleniole Insulation 
Fle::iole Metal Hose and Tubing 
Fly S^-c-.tter 
Food ?;nd J.Ieat Chopper 
Food Service Equipment 
Forged Tool Mfg. 
Fo-ondries end Machine Shops 
Foundry Supply- 
Fountain pen and Mechanical Pencil 


• -680- 

!H'"anera.l Vehicle and Am'bulance 

Galvanized Ware 

Giis Pouered Industrial Truck 

Gas Turing Mf::rs. 

tesliet llfg. 

Qolo. Leaf Mfgrs, 

Greonhouse llfg. 

Greenhouses (Operators) 

liacl: Sav7 Blade Ivtfg. 

Hair and Jute Felt 

Hair Clipper and Allied Products 

Hand Bag Frame 

llerA Chain Hoist Mfg. 

Hand Lam Mower 

Ha,rdv7are - Hardware Builders 

" - Hinges, etc, 

" - Reversible Window 

" - Store Fixtures 

Heating SuT)'olies - Radiator Enclpsui'es 
Hog and Ringer- 
Heist Bu.ilders 
Hoisting Engine 

House FiiTniture - Thermos I-ottles hold Goods Storage and Moving Trade 
Household Ice Ref riger••^tion 
Hydraulic Hoist, Dump Bodies rnd Cargo Mfg. 
Hydraulic i.iachinery 

Industrial Alcohol 

Industrial Wire Cloth 

Insect Uire Screen Cloth 

Insecticide and Disenfectant 

Internal Comoustion Engine 

Iron and Steel 

Iron and Steel i'roducts - Lead Head Nails 

Iron and Steel - Metal Industries 
" " " - Metal Products 

" » " - Sheet and Coil 

" " " - Store Front Mfgrs. 

Jach Mfg. 

Joh Galvanizing 

Kiln, Cooler and Drier 

Ladies Handbag 

Land Development and Home Building 

Leaf Spring Mfg. 

Lift Truck and Portable Elevator 

Lightning Rod 

Lock and Builders Hardware 

Locomotive Aropliance 

Locomotive Mfg. 

Lu'^';age and Fancy Leather Goods 



I.u^cliine Scre^"' Mfg. 

I.iacliinists snd Ivlachine Slio-os - Met-l S"oinners 

l.Iarliing Devices 

l.ieclianical LulDricators 

I.Iec'-ianical Press Ivifg. 

Lion's Clothing 

Lie tal Compartment 

Lietal Decorating 

Lie tal Ho ST) i tal Furniture 

Lietal Jacketed Jugs 

Lietal Lathe 

Lietal Partitions - Lietal Doors 

" " - Steel window Guard 

Lietal P.oof Deck 
Lietal Safety Tread 
Lietal Specialties - Pire Slide 

" " - Mail Boxes 

Lietal Spinning and Stanping 
Lietal Stamping - Perforated Lietal 
Lietal Tank 
Lietal Treating 
Lietal T/indow 
l.ietal.lic Display Rack 
Lie tall ic ",/all Structure 
I.Iilk ojid Ice Cream Csn 


Liill SupTJlies 

l.Iillinerj'- and Dress Trimming Braid and Textile 

Mine Car Mfg. 

l.Iine Tool 

Motion Picture 

Motor Vehicle Peta.iling 

Motorcycle Mfg. 

Multiple V-Bolt Drive 

Natural Organic Products 
l>Ton-Perrous Hot "Jater T8,nl-: Mfg. 
l\!on-Perrous Fo-undry 
notions - Hairpins 

" - Hook and Eye Ts."De . ■. • ■. ■ 

ilottingham Lace Curtain 

Office Equipment 
Oil Filter Mfg. 
Oil Spray Mfg. 
Open Steel Flooring 

Paper and Pulp 

Prper Sag Mfg. 

Perforating Mfg. 

Photographic and Photof inishing 

Pipe and Pipe Fittings - Coil Mfg. 

" " " II ~ Steel Pipe 

Pipe Tool 
Piston Ring Mfg. 
Plain TiJasher 



Pla-^-groTind and Pool Apparatus 

Porcelain Breakfa,st Furniture 

Porcelain Znameling 

Portrait Painting 

Powdered Metal Bearing 

Power Transmission 

Precious Jewelry producing 

Printin_; Equipment 

Prison Equipment 

PulDlic Seating 

Pulp and Paper Machinery 

"" " " Mill ITire Cloth 

Pulverizing Machinery and Equipment 

Hac.iator Mfg. 

?.ailv/-a3'- and Industrial Spring'.ray A^TOliance Mig. 

2ail\7ay Brake Beam 

'RD.ilrEij Car Building 

3.c.iluDy Hand Br alee 

Haw peaiiut Milling 

Reacy Cut House 

lie claimed llu'b'bir iufg. 

'2e due t i n i Machine ry 

Pteplacenent Axle Shaft 

2.eplaceMent Piston Mfg. 

Hepla-cement Valves and Valve Parts 

Ilestaurant and Hotel Supplies 

'J,oclz end. Ore Crusher 

?LOller and Silent Chain 

Ilolling Steel Door 

Hoofing Granule 

Hoofing Materials - Metal Shingles 

Sai*et3- Hazor and Safety Hazor Blade Mfg. 
Saw r.iill Machinery 
Scale and Balance 
Screw Machine Products 
Sheet Metal Contractors 

" II _ Fabrication of Sheet Metal Products 

Shoe Shanlc Mfg. 
Shower Curtain 
Silk Textile 
Silverware Mfg. 
Siphon Industry 
Si.iall Locomotive 
Snap Fastener Mfg, 
Socket Screw Products Mfg. 
Sclder Fittings 
Spark PI log Mfg. 
Specialty Accounting Supply 
Spring Mfg. 
Sprocket Cliain Mfg. 
Stecn Engine 
Steel Barrels - Ash Cans 

" " - Metal Containers 


Steel Package Mfg. 

Steel Tire Mfg. 

Steel Tuting 


Stc--c-r i.Iachinery Mfg. 

Sur.i'i cal Dre s s ing 

Taxlile Block Mfg. 

Tf::tile I.Iachinery 
Toll Bridge 
Traffic Control 
Trailer Mfg. 
TiT-nsit Industry- 
TulDular Split and Outside pronged Rivet Mig, 

Upholstery Spring and Accessory 

Upuard Acting Door 

Used Textile Machinery and Pistrituting 

Valve and Valve Fittings Mfg. 

Vise Mfg. 

Vitreous Enameled Ware 


VJarra Air Furnace Mfg. 

ITarin Air Furnace Pipe and Fittings 

T/ashing and Ironing Machine Mfg. 

Uarhing Machine Parts Mfg. 

■fatch Case Mfg. 

Water Softener and Filter 

'.Tee. the r Strip 

•Jelt Mfg. 

"ITneel and Rim Mfg. 


Wholesale Automotive Trade 

Wire Goods - Hangers, Clothing 

" " - Wire Frames 

" " - Wrought Wire 
Wire Machinery 
Wire Reinforcement 

Wire Screens - Fly Screens - Weather Strip 
Wood Screw Mfg. 
Wood Working Machinery 
Wool Textile 
' Wrench Mfg. 




The Code Histories are documented accoiints of the formation and 
adnini strati en of the codes. They contain: the definition of the indus- 
try and the principal products thereof; the classes of nemhers in the 
industry; the history/ of code formation including an account of the 
sponsorir>g organizations, the conferences, negotiations and hearings 
which vjere held, and the activities in connection with obtaining -ap- 
proval of tiie code; the history of the administration of the code, 
covering the organization and operations of the code authority, the 
difficu.lties encountered in administration, the extent of compliance or 
non-coi.vpliance, and the general success or lack of success of the code; 
and azi ana.lysis 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, hut also in terms of the experiences of the deputies and others 
concerned with code formation and administration. 

The following Code Histories have heen completed and are filed in 
tne Central Hecords Section; 

Name of Code . ' 

1. Ahrasive Grain 

2. Agricultural Insecticide & 

3. Air Applied Concrete 

4. Air Transport 

5. Air Valve 

6. All Letal Insect Screen 

7. Alloys Industry 

8. AluBinum Industry 

9. American Latch Industry 

10. Animal Soft Hair 

11. Anti-Hog Cholera Serum, etc. 

12. Art needlework 

13. Asphalt & Mastic Tile 

14. Asphalt Shingle & Roofing 

15. Assemhled Watch 

16. Athletic Goods lifg. 

17. Atlantic I^ackerel Fishing 

18. AtLction & Loose Leaf Tohacco 

19. Auto Hot Water Heater Mfg. 

20. Automohile Manufacturing 

21. iji-tomo t i ve parts & Equipment 

22. Ball Clay prbdaction 

23. Bank <S: Security Vault Mfg. 

24. Batting cS: padding 

25. Beauty cL Barter Distributing 

26. Beet Sugar industry 

22. Bias Tape Industry 

28. Bicycle Manufacturing 

29. Bituminous Coal 

30. Blackboard & Blackboard 
Erasers Mfg. 

31. Blouse & Skirt Mfg. 

32. Blue Crab Industry 

33. Book publishing Industry 

34. Bottled Soft Drink Industry 

35. Bowling & Billiard Equipment 

36. Brattice Cloth Mfg. 

37. Brewing Industry 

38. Buff & Polishing Wheel 

39. Builders Supplies 

40. Building Granite 

41. Bulk Drinking Straw, etc. 

42. Bituminous Road Material 
Dist. Ind. 

Mfg43, California Sardine proc. 

44. Candy lifg. 

45. Ccin Manufacturing 

46. Canning Industry 

47. Canvas Stitched Belt Mfg. 

48. Cap & Closure 

49. Cap Screw Mfg. 

50. Card Clothing Industry 


Name of Coc^e (Cont'd ) 


51. Carpet & Rag Mfg. Industry 95. 

52. Caster & Floor Truck I.Ifg. 95. 

53. Cast Iron Eoiler & Radiator 97. 

54. Cement Industry 98. 

55. Chain Lfg. ' 99. 

56. Charcoal <£; Package Fuel 100, 

57. Ci^ar Container Industry 

58. Cigarettes, Snuff, Chevjing & 
Smoking Tot a ceo 

59. Cigar Lfg. 101. 

60. Cinder?, Ashes & 102. 
Scavenger Trade 103. 

61. Clock Mfg. Industry 104. 

62. Coat & Suit 105. 

63. Cocoa & Chocolate Mfg. Ind, 106. 

64. Coin Operated Mach. Mfg. Ind. 107. 

65. Collapsible Tu"be Ind. 108. 

66. Comaercial Aviation 109. 

67. Co/iniercial Breeder & Hatchery 110, 

68. Co:-i:aercial Fixture Ind, 

69. Co^-i.iercial Stationery, etc' 

70. Couple te T7ire & Iron Fence 

71. Concrete pipe Mfg. Ind. 

72. Construction Mach, Dist, 111. 

73. Cooking & Keating Appl. Mfg, 112. 

74. Copper & Brass Mill Prod. Dec 113, 

75. Copper, Brass, Bronze, etc. 114. 

76. Copper Industry 115. 

77. Cork Insulation Contractors 

78. Corn Cob Pipe Industry 

79. Corset £, Brassiere Ind, 

80. CosLietic Container 116. 

81. Cotton pickery 117. 

82. Country G-rain Elevator 118. 

83. CiUshed Stone, Sand, C-ravel, 119, 
etc. 120. 

84. Curled Kair Mfg. Ind. 121. 

85. Cutlery & Manicure, etc. 122. 


Earthenware Mfg. Ind, 
Electric Industrial Truck 
Electrical Hfnolesale Trade 
Electrotype & Stereotype 
Elevator Mfg. 
Excelsior & Excelsior Products 

Farm Equipment Industry 
Feed Manufacturing 
Feldspar Industry 
Fire Extinguishing\Appliance 
Fibre Wall Board Industry 
Fisheries Industry 
Fishing Tackle Industry 
Flexible Metal Kose 
Folding Paper Box Industry 
Fuller' s Earth prod. & 

C-as j^pliances & j^paratus 
G-rain Exchanges & Members 
G-raphic Arts in Hawaii 
G-rinding TJheel Industry 
G-ypsum industry 

Hair & Jute Felt Industry 
Hand Chain Hoist 
Handkerchief industry 
Heating piping & Air Condi t. 
Hog Ring & Ringer lifg. 
Hosiery Industry 
Hotel Industry 
Household G-oods Stor. & Moving 

86, Dental Goods & Equipment, etc. 

87, Diesel Engine Mfg, 124. 
83. Distilled Spirits Ind. 125. 

89. Dog Food Industry 

90, Domestic Freight Forwarding 126. 

91, DoTrel pin Manufacturing 127. 

92. Drapery & Upholstery Trimming 128. 

93. Dress Manufacturing 

94, Dry Goods Cotton Batting 

Industrial Safety Equip. 

Industrial Supplies & 

Mach. Dist, 

Ingot Brass & Bronze 

Inland "i^ater Carrier Trade, etc, 

Insulation Contractors 



Name of Coo-e (Cont'd ) 

129. Lace l.fg. Industry 

130. ■ Ladder I.fg. Indiistry 

131. Licorice Industry 

132. Lift Truck 8: portable 

133. Liiie Industry 

134. Linseed Oil Hfg. Industry 

135. Liquefied Gas 

136. Liouid Fuel j^pliance 

157. Live Poultry in New York City 

138. Luggage & Fancy Leather G-oods 

139. Lui-iter & Tinter Products 

140. liacaroni Industry 

141. ::achine Tool & Equip. 
Dist. Trade 

142. ]'achine Tool & Forging Idch, 

143. machined Waste Kfg. 

144. ::alt Industry 

145. Ilason Contracting Industry 

146. '.Merchandise Warehousing Trade 

147. i.erchant &. Custom Tailoring 

148. iletal Tank. Indus try 

149. L'ica Industry 

150. liilk Filtering IMaterials, 

151. ::ilk & Ice Cream Can Kfg. 

152. ;:illinery & Dress Trimming, 

153. i;otor Bus. Industry 

154. iMotor Fire j^paratus Mfg, 

155. :.:otor Vehicle ".Maintenance 

156. l.iotor Velucle Retailing 

157. : Music Publishing 

158. ilarrow Fatrics 

159. ITatural Cleft Stone 

160. ITatural Organic products 

161. i'euspaper printing press 

162. irorthirest, Alaska Fish, 
prep, & Wholesaling 

163. Office Equipment Lfg, 

164, Ornsjnental [.Moulding, Carving, 


165. package L processed Cheese 

166. Package M Medicine Industry 

167. paint, Varnish & Lacquer MMfg. 

168. Paper Distrilutiirg Trade 

169. Paper llalcers Felt 

170. Paper Making l.Iach, MBuilders 

171. Perforating Kfg, 

172. photo-Engraving Industry 

173. photographic & photo Finishii: 

174. photographic l-.Ifg. 

175. picture l.Mould & picture Frame 

176. pipe ITipple I.ifg. 

177. Plastering & Lathing 

178. Plumhago Crucible Ind. 

179. plumbing Contracting 

180. plumbing Fixtures 

181. pottery Supplies £; Backrrall, 

182. powder MPuff ' Ind, 

185. preformed plastic products 
184, pretzel Industry 

165. prison Equipment Lifg. 

186. private Home Study School 

187. pulverizing Mach. & Equipment 

188. Railway Safety Appliance Ind. 

189. EaT" peanut I.Milling 

190. MRayon & Silk Dyeing & 

191. Rayon & Synthetic Yarn 

192. Ready-I.Mixed Concrete 

193. Reclaimed Rubber IMfg. 

194. Refrigerating ^Machinery 

195. Replacement Axle Shaft Kfg. 

196. Restaurant Industry 

197. Retail Farm Equipment 

198. Retail Food & Grocery 

199. Retail Jerrelry 

200. Retail Lumber, Lumber 
Prod. , etc. 

201. Retail I.Meat Trade 

202. Retail Kosher i'Meat 

203. Retail llonument Industry 

204. Retail Solid Fuel 

205. Retail Trade 

206. Retail Trade in Hawaii 

207. Rock (?: Ore Crasher 

208. Rock ez Slag Wool Mfg. 

209. Rock Crusher Mfg, 

210. MRabberTire Mfg. 



Name of Cocie (Cont ' d) 

211. Sri'ety Razor & Blade, etc. 

212. S^Jn.^. Stone Ind. 

213. School Supplies & Equipraent 

214. Scientific Apparatus 

215. Screp-Iron, Non-Ferrous 
Iletals, etc, 

216. Screw liachine prod. 

217. Secondary Aluminum Industry 

218. Seed Trade 

219. Sheet l.'etal Distributing 

220. Shoe Last 

221. Shoe rori.1 

222. Shoulder Pad Hfg. 

223. Shovel, Dragline ez CrsJie 

224. Silk Textile 

225. Slate Industry 

226. Sinall Locomotive Lfg. 

227. Sioking Pipe Mfg. Industry 

228. Soft Lime Hock 

229. Solid Braided Cord 

230. Southern Rice liilling 

231. Spray Painting & Finishing 
Eqv.ip . 

232. Stained £.- Leaded C-lass 

233. Steam Heating Equip. Ind. 

234. Steel Plate Fabricating Ind. 

235. Stone Setting Contra.cting 

236. Structural Clay Products 

237. Sulphonated Qil Ivlfg. 

238. Surgical Dressing 

239. ja,lc & Soapstone 

240. Trjnk Car Service 

241. Tapioca Dry Products 

242. Textile Machinery IvIfg, 

243. Throvdng Industry 

244. Tile Contractors 

245. Toll Bridge 

246. Toy & playthings 

247. Transit Industry 

248. Tru-cking Industry 

249. Undergarment cc ITegligee 

250. Upholstery <?-. Decorative Fabrics 

251. Upholstery & Drapery Textile 

252. Used Machinery & Equip. Dist, 

253. Used Textile Bag 

254. Used Textile Mach. & 
Access, Dist, 

255. Valve & Fittings Mfg. 

256. Velvet Industry 

257. Venetian Blind 

258. Padding industry 

259. Warm Air Furna.ce 

260. Washing & Ironing Mach. Mfg. 

261. Washing Machine Parts Mfg. 

262. Waste Paper Trade 

263. Watch Case Mfg, 

264. Welt Mfg. 

265. Wheat Flour Milling 

266. Wholesale Automotive Trade 

267. Wholesale Coal 

268. Wliolesale Confectioners' 

269. Wholesale Dry Goods 

270. "Tnolesale Fresh Fruit e-. 

271. ^iOlesale Iresh Fruit & Veg. 

272. Wholesale Hardware 

273. Wliolesale Jewelry 

274. Wholesale Millinery 

275. Wholesale Mon^jmental C-ranite 

276. Wliolesale or Distrib, Trade 

277. Wholesale paint, Varnish, etc. 

278. Wholesale pranbing prod. 

279. Wholesale Stationery 

280. Wholesale Tobacco Trade 

281. Wholesale Wallpaper 

282. Wire, Rod and Tube Die 

283. Wooden Insulator pin &^ Bracket 

284. Wood Heel Industry 

265. Wood preserving Industry 

286. Wood Turning <?: Shaping 

287. Wool Trade 

288. Woven Wood Fabric Shade 


The follor-/ing Division Histories have "been corapleted and filed in Central 
Records Section: 

1. Area Asreement ~ Const ru.ction Division 

2. Insignia Section 

3. DistriDuting Trade 

4. Air i^^lied Contracting Division of Construction 

5. Correspondence Division 

6. General N.R.A. Code Aiithority 





The State Relations Division is preparing "A Treatise on Legisla- 
tive PossilDilities under each of the State Constitutions". The 
puroose of this ^.7ork: is to show the degreee of cooperation that each 
State could give to Federal legislation requiring State cooperation. 
The follovdng fields are covered: 

1, Delegation of Legislative Authority 

2, Legislation "by Reference 

3, lue Process 

4, Impairment of Right of Contract 

5, Police Pov^er 

The method being used is to quote or cite each case decided in the 
various States under each of the ahove headings. In this manner some 
indicrtion is secured of the weight of authority to he given each. 




Table of Contents 

I, The Code Authority System 
A. Small Code-Industries 

1. Introductory 

(a) Each Industry Self-G-overned 

("b) Example of a Tlypical Small Code-Industry 

(c) Normal Organization Included a Paid Staff and a 
Complaints Committee 

(d) Besides Small Code-Industries There Can he Distin- 
guished Large Unitary Industries and Large 
Industry Federations 

2. Characteristics of Small Code-Industries 
(a) Employees Averaged Less than 5,000 

(h) Size and Number of Concerns Varied Widely 

(c) Separate Codes Result of Sponsors' Wish for 

(d) Result was to Hamper Administr£^tion 
B» Large Unitary Codes 

!• DescriTotion and Examples 

(a) Basic Manufacturing Industries 
("b) Importance of Large Concerns 
(c) Unitary Apparel Codes 
C. Large Federations 

1, Functional Divisions 

(a) Supplementary Codes 

(h) Other Commodity Divisions 

2, Geographical Divisions 

(a) Local ^encies Numerous 

(b) State, Segional , and District J^encies 

(c) A Major Part of Industry was Included in Such Loose 
Federations of Small Groups 

3, Borderline and Special Cases 

(a) Shifts in Employment made Size-Groups Uncertain 
("b) Some Cbdes Partly Tedera^ed 

(c) Freak Situations Were Common 

(d) One Quarter of Industry was Well-Organized, One Half 
Loosely Organized, and One (Quarter Disorganized 

II. Povrers and Duties of Code Authorities 
A. Advisory Powers Leas*-- Important 

1. Po^^ers in General 

(a) Povrers Reduced by N.R.A. Policies 

(b) Considerable Negative Discretion Remained 

2. Advisory Povrers Frequent But Mild 

(a) Examples 

(b) Legal Effect Unimportant 



B» General Po^'^ers of All Code Authorities 

1. To Administer the' Code 
(a) One of Eight Types 

("b) General Aoministration 

2. To Issue Regulations for Procedure and Details 

3# To Divide Industry into Districts or Functional Groups 

4, To Appoint Administrative Agencies 

(a) Trade Associations and Autonomous Divisions 

(b) Agencies Organized Like Parent Code Authority 

(c) Branches Set Up hy and from National Agencies 

(d) Special Agencies for Special Purposes 

(e) Arbitration and Coordinating Committees 

5, To Investigate and Adjust Complaints 

(a) Collection of Evidence 

(b) Procedure and Decisions at Hearings 

(c) Appeals Always Lay to N.R.A. 

6, To Collect Statistics though this was not Universal 

7, To Budget E^rpenses, Plan and Collect Assessments 

8, With Respect to Anendments, Exemptions and Interpretations 

(a) Anendments Approved by N.R.A* Like Ne\7 Codes 

(b) Exemptions Required Local Report on Facts and 
Approval of N.R.A. 

(c) Interpretations Usually by N.R.A* - Rarely by Code 

C. Special Powers and Duties Not in All Codes 

1. Povier to Sell Labels 

(a) One of Six Powers for Enforcement 

(b) Drastic Enough to Require N.R.A. Supervision 

2. Power of Inspection of Members' Records 

3. Duty to Select Confidential Agent 

4. Power of Assessment of Costs of Investigations and 

5. Right to Make Liquidated Dajnages Agreements 

6. Duty to Make Special Reports 

(a) By Industry Members to Code Authority 

(b) From Code Authority to N.R.A. 

(c) Examples of Controversial Subjects 

(d) Delay in Reporting Yery Common 

D. Discretion ALlov/ed Code Authorities 

1. Some Cases the Granting of Extreme Discretion 

(a) All Acts Were Subject to N.R.A. Disapproval 

(b) Less Discretion Granted in Later Codes 

(c) Certain Steel Codes Illustrate Peaks of Discretion 

(d) Description of Discretionary Powers 

(e) Exercise of Discretion Checked by N.R.A. 
2« Grant of Normal Discretion More Common 

(a) Code Authorities Made Rules and Granted Exceptions 
on Minor Points 

(b) Practice Common in Related Codes 

(c) Examples in Wholesaling, Machinery and Allied 
Products, and Paper Codes 

(d) All Such Powers Were Limited by N.R.A. Interpreta- 



III, Methods of Selection of Co'de Authorities 

A. Trade Association Selected Ail Members 

1, One Association Selected All Members 

(a) Men Chosen Must "be Apioroved by N.R.A. 

(b) Bnlance Sought Bet^^een Efficiency and Democracy 

(c) Trade Associations Lent Funds,- Staff and 

(d) Code Authority Selected from Trade Associ-tion in 
Various Ways 

(e) Associations Often Instrlled Temporarily as Code 

2, Two or More Associations Selected Members 

(a) Examples. of Complicated Representation 

(b) Hampered the Representation of Minorities 

B. General Industry Elections 

1. Such Elections Were Superficially Lemccratia 

2. Eemocrary Needed 

(a) Trade Associations Controlled by Large Firms 

(b) Elections in Industry not Quite Like Political 
. Elections 

3. Trade Association Influence 

(a) Might .Run .Cvrn Slate as Political Party 
■ . .. .(b) Often G-ranted Right to Supervise Elections 

(c) Trade Associrtion Officials Often Ex-Officio 
Members of Code Authority 

4. Voting Conditions Peculiar to Industry 

(a) Suffrage Limited to Assenting or Paid-Up Members 
, (b) Votes Often Weighted by Volume of Production 
(c) Result vras to Place Control With Large Firms 

C. Proportional Representation Guaranteed 

1, More Democratic Than Elections 

(a) Both Major and Minor Groups Represented 

(b) N.R.A. Interested in Non-Association and Extra- 
Industry Groups 

2, Guaranteed Representation for Non-Association Members 

(a) . Minorities, if Informed, Could Appeal to N.R.A. 

(b) . Representatives Were Selected Either by Selves, by 

Industry or by N.R.A. 

3, Extra-Industry Groups Rarely Represented 

(a) Administration Members on Most Code Authorities 
• -(b) Labor Representation in j^parel Codes 

(c) Consumer Representation Very Rarc^ 

(d) Other Code-Industries Represented on Four Code 

.. . D.. Minor Methods of Selecting Code Authority Members 

1. Appointment by IT.R.A. if Industry was Divided 

2. j^pointment by Divisional Code Authorities 

(a) Simple Appointment Comuon in Largo Codes 

(b) Double Appointment in Certain Codes 

(c) Effect was to Eliminate Minority Members 

(d) Other N.R.A. Methods of Representing Divisions 



IV. Definition and Classification of Industry 
A» Definitions of Code Industries 

1, General Problem of Defining Industrial Groups 

(a) Census and Trade Associ- tions Escape the Dilemmas 
("b) N.R.A. Groups kust Not Overlap 
2» Definitions for N.R.A. Codes 

(a) Described Principal Processes or Products 

(b) Indicated Limits of Jurisdiction 

(c) Listed^ Article",. Included 

3, Conflicts Wer». a Persistent Problem 

(a) Early Definitions Were Based on Use as Well as on 

(b) Classification Section Set Up to Correct Conflicts 

B, Specific Controversions Adjusted by N.R.A. 

1. Classification of Individual Concerns ' 

(a) Necessary Even Though- No Overlap Existed 

(b) Examples of Borderline Cases 

(c) Individuals and Organized Groups 

2. Multiple Coverage of one Concern by Many Codes 

(a) No Hardship if Work Was Segregabl^! 

(b) Non-Segregable Work Called for Exemptions 

(c) Unequal ComToetition a Constant Danger 

3. True Overlapping of Code Definitions 

(a) Main Source of Such Errors 

(b) Spies by Both Manufacturers and Wholesalers 

(c) Definitions Ba.sed on Both Materials and Purposes 

(d) Codes for.processes Which Were Parts of a Complete 
Process, . 

(e) Conflicts in Graphic Arts Industry an Example 

C. Classification of Cede Industries into Larger Industry 

1, First Set of Industry Divisions 

(a) General Plan Needed to Meet -Conflicts 

(b) Eirst Grouping of Codes into 22 Divisions 

(c) N.R.A. Organization Adjusted 

2, Last Theoretical Groupings 

(a) Summary of 1935 Charts 

(b) Their Limitations 

(c) Plnns for Administrative Consolidation 




Pr elimingi-y Sumnarj of Findings 

This study is primarily a siMiiary of code' administrative provisions* 
To the tallies and digests of code rules it adds only such facts and com-* 
raent as are needed to exp-)lain their significance. It deliberately avoids 
the history of the administration of code provisions and any conclusions 
as to future legislation. 

The Code Authority System 

From the standpoint of Code Authority administration one-quarter, 
roughly, of all industry was organized under 20 to 30 unitary codes with 
only one Code Authority'-, Half of all industr-/, employing 10 to 12 mil- 
lion \7orkers, v;as loosely organized into 30 to 40 huge federations, com- 
posed of 5,000 local Code Authorities and over 1,000 State, regional, 
product and comr.odity divisions. The remaining quarter hardly deserved 
to "be described as organized, since it V7as split into 500 small Indus- ' • 
tries, 01 v/hich a majority had less than 5,000 workers each, 

Good or "bad administration in one of the giant code industries af- 
fected more v;orkers than were employed in ten or a hundred of the dwarf s# 

The Powers ajid Duties of Code Authorities 

Code Authorities actually exercised less pov/er than the early codes 
prescribe, "because of the checks imposed "by N,R»A. policies. These poli- 
cies developed in the direction of increasing 1T,R,A, supervision, as sho\7n 
"by the mild provisions of later codes. 

Code Authority discretion in minor matters might, however, "be con- 
siderable in the aggregate. Code Authorities exercised great influence 
through their recommendations. They could neglect to take action on un- 
popular ruJLes, and they conoid adjust the details of many institutions to 
suit their own convenience. Examples are the appointment of their own 
employees or those of trade associations as "confidential agents," ajnd 
the postponement of reports required by the codes on controversial sub- 

The Methods of Selection of Code Authorities 

Practically all methods of selecting Code Authorities gave a major- 
ity of seats to trade association members. Sixty percent of all codes 
did this expressly. Fourteen per cent of the 35 largest codes, which 
covered half of all industry, and 34 per cent of all codes and divisions, 
prescribed general elections; but these were so restricted, by limiting 
suffrage to assenters, by weighted voting, and by seats granted ex-of- 
ficio to association officers, that the large association members prob- 
ably got majorities in such elections. Appointment by divisional Code 
Authorities had the same result, 

Hepresentation, then, must largely be judged by the presence or 
absence of minority members, N,R,A» accepted this principle and insisted 



on non-associetional minorities in 17 per cent of the 35 largest codes 
and 37 per cent of all codes and divisions. Representation of geograrjhi- 
cal r-'AL. lunctionpl minorities V7as regularly demanded and arranged "by the 
sponsorin-.;,- associations. Representation of extra-industry interests - 
that is, of coxisioners and of other industries - uas negligible. Lator 
representatives r;ere authorized in 42 codes, 25 of which were in the 
apparel industries. 

Definition g.nd Classification of Industry 

Any division of industry into groups is artificial, "because the whole 
constitutes a single we"b of related processes. Paper descriptions of 
industrjT' have compensated for this "by maicing several groupings - one, 
say, of factories grouped according to their products, and' another "based 
on the states in wnich they are located. Trade associations met the 
issue "by allowing volijntary and overlapoing mem"bership« 

il.R.A, started with trade association definitions, "but found them 
inconsistent with its own fundamental principle that the "boundaries of 
Code Authority jurisdictions must not overlap. When one industry was 
defined to cover all cigar containers, and another to cover all paper 
"boxes, it was impossi"ble to escape a conflict of jurisdiction with re- 
spect to paper "boxes used to contain cigars. Logic was no help where 
premises r/ere inconsistent, 11. R. A. could only placate the rival Code 
Authorities "by compromise, and plan to review fundamental premises and 
principlest This course was pursued "by the iJ. R«A. Classification Seo* 
tion, as exemplified "by its routine of decisions on specific cases, and 
"by its ela"borate charts, which classified all industries into a rational 
hierarchy of related groups. 




TalDle of Contents 

I» Purpose of the Report 

II. The Data 

A, Limited Data Available 
• Bm SiJecial Survey of Lajtiufacturing Industries (Bureau of La-lDor 
■ Sta-tistics in Cooperation v/ith NRA) 

1, The Schedule 

2, Method of TalDulatioii 

3, ltamt>er of Codes per Estatlishraent 

C, Non-IIanuf acturing Industries 

D, Technical Methods Used 

E, Size of Samples 
P* Chart Markings ■ 

III. Comments 

A. June - SeptemlDer 19-33 period 

1, Average Hours and Avera^je .Haurly Wages 

The Scissors Movement 
2« Employment and Payrolls 

B, The Post-Schechter Decision Period 

1, Average Hourly Wages 

2, Average Hours 

IV. To.lDles and Charts 


I, Average Size of Samples, 1933 and 1934 
II. Number of Codes per Establishment 
III, Bureau of Labor Statistics Schedule 789A 




SViirnary of Freliininary Findings 

The report is primarily a tabular and £;raphic presentation of the 
movements in certain la'oor series in 115 Code industries for v/hich materi" 
al could he obtained from the existing Bureau of Lahor Statistics data. 
The series covered are employment, payrolls, total man-hours, average 
weeldy wages, average hourly wages and averngs hours ^vorked per v;eek. 

The material indicates that while there. was considerable variation 
from industry to industry'-, the tjrpical "behavior of average hours and aver- 
age hourly wages "between May or June and August or Septem"ber 1933 was the 
"Scissors, jviovement," average hours declining sharply and average hourly 
wages increasing sharply* During this same period it may "be said that 
generally employment and payrolls increased sharply. To what extent the 
latter phenomena may he attri'outed to NHA Codes is, of course, problemati- 

Inuring the period folio-wing the Schechter decision, hourly wages do 
not ajDpear to have changed significantly except for a few industries. 
Average hours, hov/ever, seem to have increased in a ntmber of industries, 
although in rela.tively few cases are such increases marked. 



Tatle of Contents 

I. Preliminary Planning for the Census 

A. PSA plan of July 1933 

B. Pollow-up check, NovemlDer 1933 

C. Cooperation of other government statistical agencies 

II. The Q;aestionnaire 

A» Porm and content 

B, Method of distribution 

III. Analysis: Editing, Classifying, Coding and Tabulating "by the 
Bureau of the Census 
A,, Analysis "by states 

1, Changes in emplo;^'Tnent June-Octo"ber 1933 
2* Changes in payroll June-October 1933 

B, Analysis "by cities over 250,000 population 

1, Changes in emplo^nnent June-October 1933 

2. Changes in payroll June-October 1933 

C, Analysis by industry groups 

1, Cha-nges in emplo^nnent June-October 1933 

2. Changes in payroll June-October 1933 

IV, Validity of Results 

A. Q;u.estion of reliability of returns 

1, Intrinsic bias 

2. Gaps in returns 

B, Check against other data 
1» BLS sample 

2m Regular 1933 Census 

V# Conclusions 

A, Employment and payroll changes by states 

B, Emioloyment and payroll changes by industries 

C, Employment and payroll changes by size of establishment 
1, Thrc?». states 

a. Massachusetts 

b. Ohio 

c. ITorth Carolina 

2m 1929, 1933, Census of Manufactures 

D, Significant relations to independent measurements of man-hours, 
production a.nd wage rates suggesting effectiveness of NIRA plan 


S"ummary of Eindin^^s 

This study is an analysis of the retiirns of the PEA "post card" 
census covering about 75^ of the industrial employment for the weeks ^f 
June 17 and October 14, 1933, The returns for 643,000 establishments 
were analyzed showing aa increase of 15,6^ in employment and 13.5^ in 
payrolls. These values are checked quite well by the corresponding ii%- 
dications of the ELS sample and the regular 1933 Census, by states and 
by industry groups. 

The non-manufacturing industries covered S6fo of the establishments, 
5lfo of the employment and 55^ of the payrolls. For the manufacturing 
industries the coverage is, establishments 14^, employment 48^, payrolls 
43^. The increase in eraplojinent between June and October was 12.7^ in 
non-manufacturing and 18, 6*;^ in manufacturing industries. The corres- 
ponding changes in payroll were 15.3^ and 22.4^-. The changes by states 
and regions, and for individual industries, show significant variations 
from these averages, 

Eor three states, an analysis of these changes was made by size of 
establishment. The variations of employment and payroll with size of 
concern were found to be similar in form to those shown by the 1929, 
1933 Census data for these states. 




Ta"ble of Contents 


A. Factors Affecting Plant Location 
1« Prinary factors 

2, Secondarv factors 

B. Factors Affecting Relocation 
1« Shift of population 

2, Shift of industry 

3, G-routh of labor unions 

4, Social legislation ' 

5, Other factors 


A. Iligra.tion and Its Relation to iJFA. 

1» Statements of me^iters of industry that ITRA had 

a significant effect on migration 
2. Statements of members of industry that IIRA has 

had no significant effect on members of industry 

B. Tne Needle Trades Defined 
1» l^earing Apparel 

(a) Clothing (except \7ork clotning), men's, youth's, and 
boys', not else^^There classified 

(b) Clothing, uork, men's 

(c) Clothing, vromen's, not elswhere classified 

(d) Corsets and allied garments 

(e) Furnishin;:: goods, men's, not elsev\rhere classified 

(f) C-loves and mittens, cloth or cloth and leather 
combined, made from purchased fabrics 

(g) Handlcer chiefs 
(h) Shirts 

(i) Suspenders, garters, and other elastic woven goods, 
made from purchased webbing 
2» Leather Goods 

(a) Boots and shoes, other than rubber 

(b) Gloves and mittens, leather 

(c) Pocketbooks, purses, and cardcases 

(d) Saddlery, harness, and whips 

(e) TrurJcs, suitcases, and bags 

(f) Leather goods, not elsewhere classified 
3« Hats and Millinery 

(a) Hat and cap materials, men's 

(b) Hats and caps, except felt and straw, men's 

(c) Hats, fur-felt 

(d) Hats, straw, men's 

(e) Hillinery 

(a) Embroideries 

(b) Flags and banners 

(c) Fur goods 

(d) House- furnishing goods, not elsewhere classified 

(e) Regalia, robes, vestments, and badges 




C« I.Iigratiort of Industry Lefined 
1, Direct migration 
2» Indirect migration 


A. Emigration 

1, General (covering the shift of industry in c-^eneral statistics, 
nev.' locations, causes) 

2, Needle trades (covering the shift in the IJeedle Trades, statis- 
tics, net;' locatiOiis, causes, "and case histories) 

B. Iniir.igration 

1, In general 

2, In the Needle Trades 

Ao Limitations of the Census Data 

1» Reioresentativeness of the Data 

2. Changes in classificcation 

3« Intra- state movement 

4. Non-cojnpa.ra"bilit2/ of the data 
B, The Hela^tionship of New York State to the United States 

(Number of esta'Dlishments, -wage earners, and value of products) 

1. 1929 - 1933 

2, 1927 - 1933 

G. The Shift, iDy Groups, 1927-1933 
1« Wearing app^arel 
2, Le^;,ther goods 
3« Hats and millinery 
4, Miscellaneous 

D, Sumnarj'- of the Movement Within Groups, 1927-1933 

E, The Shift, "by Industries, 1927-1933 

F, Migration Between New York State and Adjoing States 


A. Critical Trea^tment of the Issues and the Data, Involved 

B. Findings 

1« General 
2, Sioecific 


. -702- 


ST^immary of Preliminary Findinv^s 

The study, which was undertaken in an atte:.i]-)t to prove or disapprove 
the complaints of members of industry that the NRA vras causing migration 
from New York State, presents data, and evidence which proves that a 
migration of industry did talce place in Hew York, but that the movement 
was both into and out of the Sta.te, The study is based on basic material 
and statistics collected from many sources. The statistics come, in the 
main from Census data, published and unpublished, and from a report, on 
"Industrie! Development in the United States and Canada" published co- 
operatively by the national Electric Light Association and the Metropoli- 
tan Life Insurance Coi.ipany. Other material and data are chosen from the 
many books, articles, papers, reports a.nd transcripts that were studied. 

From these readings and from conversations with government officials, 
it has been noticed th-,t a considerable division of thought exists on 
the subject of vzliether any significant migration has occurred. At pres- 
ent, definite conclusions have not yet been reached, but the evidence 
collected with probably tend to show that for the period covered the 
emigr-tion ha,s slightly exceeded the immigration in New York. Even this 
preliminary conclusion must be qualified somewhat because the study, at 
present, only touches slightly upon the ITSA aJid post-lTEA periods, 

A continuance of the research and collection of materia.1 of more 
recent date night lead to different conclusions. Master ial covering these 
later periods are available in the various Code Authority studies aJid 
also in recent articles and papers. A bibliography of the latter is 






Tattle of Contents 

I, Introduction to certain prolDlems in automobile employment 

A. Aj;e as a basis for discrimination in employment 

1, The claims of labor 

a. Appraisal and analysis 

2. Tiie claims of the Automobile Manufacturers Association 
a. Appraisal and analysis 

B. The locations and occupations from which the. automobile indus- 
try draws its worlzers 

1. The claims of labor 

a. Appraisal and analysis 

2. The claims of the automobile manufacturers 
a. Appraisal and analysis 

C. The shift of a,utomobile workers from auto to non-auto work dur- 
ing each of the years 1931 to 1934 

1, Interrelation with 3 above 

II. Inscription of the study of the occupational histories of 75,000 

I.Iichi:;aji Automobile TTorkers from A^iril 1, 1930 to January 14, 1954 

A, Cooperation of Michigan Unemplo^/ment Census 

B. Hethod of sampling in Michigan Unemployment Census 

C. Hethod of sampling in lOA study 

D, General description of tables 

III. Ai'e as a basis for discrimination in automobile employment 

A. Definite evidence of discrimination between April 1, 193C> and 
Jajiuary 14, 1934 

1, Difference between occuioations 

2. Difference between years 

3, Lack of positive evidence indicating any change in the policy of 

di scriraination 
C. Evidence from Census data 

1. Comparison -.-Ith other industries 

IV. Tlie locations of occupations from which the Auto Industry draws its 

A. Assumptions used 
B« Evidence for each year, 1932, 1933 and 193^^ 

1. Workers coming from outside of Michigan from within Michigan. 

2. workers coming from agriculture, mechxanical industries, etc, 

Y. The sliift of auto ~orkers from auto to non-auto work during each of 
the depression years 1931-1954 





APRIL 1930 TO JAMJARY, 1935 

Siimmary of Preliminary Findings 

From the original schedules of the Michigan Unerariloyment Census 

75,000 persons were selected covering males and females who had "been 

employed at some time during the period April 1, 1930 to January 14, 

1935 in an automobile, automobile "body, or automobile parts plant 

for a period of one month or more. Information on the occupational 

histories of these persons during the period from A-nril 1930 to 

January 1935 has been tabulated to throw light on the following questions: 

1. Is age a basis for discrimination in automobile employment? 

2m From what locations and occupations does the automobile in- 
dustry recruit its workers? 

o. What was the extent of the shift of automobile workers from 
automobile to no n- automobile work in each of the years 1931 to 

The results indicate that discrimination on the basis of age does 
exist to a substantial degree. There is some indication, although no 
positive proof, that the discrimination has decreased in intensity be- 
tween 1930 and. 1934, In general, the material indicates that approxi- 
mately 5 per cent of the new workers came from outside Michigan in 
1932, 1953, and 1934. The tab\ilation of data -oertaining to the third 
question has not been completed.