%^ Approved Code No. 201 — Supplement No. 17 Registry No. 1114 — 01 NATIONAL RECOVERY ADMINISTRATION SUPPLEMENTARY CODE OF FAIR COMPETITION FOR THE WHOLESALE HARDWARE TRADE (A Division of the Wholesaling or Distributing Trade) AS APPROVED ON JULY 30, 1934 WE DO OUR PART D0< U.S. V^r, UNITED STATES GOVERNMENT PRINTING OFFICE WASHINGTON: 1934 tor sale by the Superintendent of Documents, Washington, D.C. -------- Trice 5 cents This publication is for sale by the Superintendent of Documents, Government Printing Office, Washington, D.C., and by district offices of the Bureau of Foreign and Domestic Commerce. DISTRICT OFFICES OF THE DEPARTMENT OF COMMERCE Atlanta, Ga. : 504 Post Office Building. Birmiugham, Ala.: 257 Federal Building. Boston, Mass. : 1801 Customhouse. Buffalo, N.Y. : Chamber of Commerce Building. CTiarleston. S.C. : Chamber of Commerce Building. Chicago, 111. : Suite 1706, 201 North Wells Street. Cleveland, Ohio : Chamber of Commerce. 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Approved Code No. 201 — Supplement No. 17 SUPPLEMENTARY CODE OF FAIR COMPETITION FOR THE WHOLESALE HARDWARE TRADE As Approved on July 30, 1934 ORDER SUPPLEMENTART CoDE OF FaIR COMPETITION FOR THE WhOLESAUE Hardware Trade a division of the wholesaling or distributing trade An application having been duly made pursuant to and in full compliance with the provisions of Title I of the National Industrial Recovery Act, approved June 16, 1933, for approval of a Supple- mental Code of Fair Competition for the Wholesale Hardware Trade to the Code of Fair Competition for the Wliolesaling or Distributing Trade, and hearings having been duly held thereon and the annexed report on said Supplemental Code, containing findings with respect thereto, having been made and directed to the President: NOW, THEREFORE, on behalf of the President of the United States, I, Hugh S. Johnson, Administrator for Industrial Recovery, pursuant to authority vested in me by Executive Orders of the Presi- dent, including Executive Order No. 6543-A, dated December 30, 1933, and otherwise; do hereby incorporate by reference said an- nexed report and do find that said Supplemental Code complies in all respects with the pertinent provisions and will promote the policy and purposes ■ of said Title of said Act ; and do hereby order that said Supplemental Code of Fair Competition be and it is hereby approved; subject, however, to the condition that the provisions of Article IV, Section 6 be deleted from said Code and the following provisions substituted therefor : "Sec. 6 (a). Destructive price cutting is an unfair method of competition and is forbidden. Any sale shall be deemed prima facie destructive price cutting if the net sales price shall be less than the seller's net invoice cost plus transportation charges to seller's warehouse. " Notwithstanding the pro^dsions of this Section any wholesaler may sell any article of merchandise at a price as low as the price set by any competitor on merchandise which is identical or essen- tially the same, where such competitor's price does not violate this 77108° 829-169 34 (l) Section or where such competitor is not subject to the provisions of this Supplemental Code. " Notwithstanding the provisions of this Section it shall not be deemed destructive price cutting for a wholesaler to sell the follow- ing merchandise at less than net invoice cost plus transportation charges, as provided above : obsolete goods, bona fide closeout mer- chandise, damaged merchandise, stocks being liquidated, merchan- dise sold for charitable purposes or to unemployment relief agencies, and such other merchandise as may be designated by the Divisional Code Authority. "(b) If the Administrator shall at any time find (1) that an emergency has arisen within the trade, adversely affecting small enterprises or wages or labor conditions, or tending toward monopoly or other acute conditions w^hich tend to defeat the purposes of the Act, and (2) that the finding of a basis for determining minimum prices for all or any specified products sold by the trade is neces- sary for a limited period to correct the conditions constituting such emergency and to effectuate the purposes of the Act, the Code Authority maj'^ cause an impartial agency to investigate costs and to recommend to the Administrator a basis for determining minimum prices of said products. Thereupon the Administrator may fix a basis for determining the minimum price of any of said products for a stated period. During such period no member of the trade shall sell such products at a net realized price below the minimum price determined in accordance with the base so fixed. From time to time the Code Authority may recommend review or reconsidera- tion or the Administrator may cause any determination hereunder to be revieAved or reconsidered, and appropriate action taken." Hugh S. Johnson, Adminhtrator for Industrial Recovery. Approval recommended : Robert L. Houston, Division AdiTvlnistrator. Washington, D.C, July 30,193^ KEPORT TO THE PRESIDENT The President, The White House Sir: This is a report of the Hearing on the Supplemental Code of Fair Competition for the Wholesale Hardware Trade, a division of the Wholesaling or Distributing Trade, conducted in the Oak Room of the Raleigh Hotel on Thursday, April 19, 1934. The Sup- plemental Code, which is attached, was presented by duly qualified and authorized representatives of the Trade THE TRADE Due to the overlapping of this Trade with other trades, com- pletely accurate statistics are not available. According to data submitted by the Trade, in 1933 there were approximately 1,249 concerns with aggregate annual sales of $866,158,332. The Trade employed about 41,497 persons in 1930. PROVISIONS or THE CODE This Code contains no Supplemental Labor Provisions, the em- ployees being subject to the wage and hour provisions of the Code of Fair Competition for the Wholesaling or Distributing Trade. The Labor Advisory Board in its report protests against the non- inclusion of Supplemental Labor Provisions. In his final report to me the Deputy Administrator points out that the overlapping and intermeshing of competition exists in this Trade to a most unusual degree and for that reason it is essential that this Trade operate under the Code of Fair Competition for the Wholesaling or Distributing Trade. The provisions containing supplemental definitions are considered inclusive and accurate. The administrative provisions establish a Divisional Code Author- ity which fairly represents all the different elements in the Trade. The trade practices proposed are not considered to be objectionable. FINDINGS The Deputy Administrator in his final report to me on said Sup- plemental Code having found as herein set forth and on the basis of all the proceedings in this matter : I find that : (a) Said Supplemental Code is well designed to promote the policies and purposes of Title I of the National Industrial Recovery Act, including removal of obstructions to the free flow of interstate and foreign commerce which tend to diminish the amount thereof, (3) . and will provide for the general welfare by promoting the organi- zation of industry for the purpose of cooperative action among trade groups, by inducing and maintaining united action of labor and management under adequate governmental sanctions and supervision, by eliminating unfair competitive practices, by promoting the fullest possible use of the present productive capacity of industries, by avoid- ing undue restriction of production (except as may be temporarily required), by increasing the consumption of industrial and agricul- tural products through increasing purchasing power, by reducing and relieving unemployment, by improving standards of labor, ana by otherwise rehabilitating industry. (b) Said Trade normally employs not more than 50,000 employees and it is not classified by me as a major industi'y. (c) The Supplemental Code as approved complies in all respects with the pertinent provisions of said Title of said Act, including without limitation Subsection (a) of Section 3, Subsection (a) of Section 7, and Subsection (b) of Section 10 thereof; and that the applicant association is a trade association truly representative of the aforesaid Trade ; and that said association imposes no inequitable restrictions on admission to membership therein. (d) The Supplemental Code is not designed to and will not permit monopolies or monopolistic practices. (e) The Supplemental Code is not designed to and will not elimi- nate or oppress small enterprises and will not operate to discriminate against them. (f ) Those engaged in other steps of the economic process have not been deprived of the right to be heard prior to the approval of this Supplemental Code. For these reasons, the Supplemental Code has been approved. Eespectfully, Hugh S. Johnson, A dmimstrator. July 30, 1934. SUPPLEMENTARY CODE OF FAIR COMPETITION FOR THE WHOLESALE HARDWARE TRADE, A DIVISION OF THE WHOLESALING OR DISTRIBUTING TRADE Article I — Purposes To effectuate the policies of Title I of the National Industrial Recovery Act, this Supplemental Code is established as a Code of Fair Competition for the Wholesale Hardware Trade pursuant to Article VI, Section 1 (c) of the Code of Fair Competition for the Wholesaling or Distributing Trade, approved by the President of the United States on January 12, 1934. All provisions of the said General Code which are not in conflict with the provisions of this Supplemental Code are hereby incorporated by reference in this Supplemental Code and made a part hereof. Such provisions of the General Code together with the supplementing provisions of this Code are the standards of fair competition for and are binding upon every member of said Wholesale Hardware Trade. Article II — Definitions SUPPLEMENTING ARTICLE II OF THE GENERAL CODE Section 1. Wholesaler. — The term " wholesaler " as used herein shall mean any individual, partnership, association, corporation, or other form of enterprise, or an organized division thereof set up to render and rendering a general distribution service, which deals pri- marily in hardware and kindred lines, which buys and maintains at his or its place of business an adequate stock of hardware and/or kindred lines, and which, through salesmen, advertising and/or sales promotion devices, sells to retailers and/or to institutional, com- mercial and/or industrial users for manufacturing, equipment, sup- ply, and/or maintenance purposes only, but which does not sell in significant amounts to ultimate consumers. It is the character of a concern's selling rather than the character of its buying which distinguishes it as a wholesaler. Sec. 2. TJie Trade. — The term " Trade " as used herein, shall mean the business in which " wholesalers ". as above defined, are engaged. Sec. 3. General code. — The term General Code" as used herein shall mean the Code of Fair Competition for the Wholesaling or Distributing Trade. Sec. 4. Su'p'plc'mental code. — The term " Supplemental Code " as used herein shall mean this Supplemental Code of Fair Compe- tition for the Wholesale Hardware Trade. Sec. 5. Divisional code authority. — The term " Divisional Code Authority " for the Wliolesale Hardware Trade, a Division of the Wholesaling or Distributing Trade. (5) Sec. 6. Consignment. — The term " consignment " as used herein shall mean delivering or leaving merchandise with a customer, the title to remain in the wholesaler until such time as the retailer shall sell the merchandise. Sec. 7. Kindred lines. — The term " kindred lines " as used herein shall include all such lines as have heretofore customarily been car- ried by wholesale hardware distributors. Article III — Administration SUPPLEMENTING ARTICLE VI OF THE GENERAL CODE Section 1. The Divisional Code Authority shall be composed of seventeen (17) members, one (1) member to represent each of the following ten (10) geographical areas: 1. New England : Maine, New Hampshire, Vermont, Massachu- setts, Connecticut, Ehode Island, 2. North Middle Atlantic: New York, New Jerse}'', Delaware, Pennsylvania, 3. South Middle Atlantic : Maryland, Virginia, North Carolina, South Carolina, District of Columbia, Georgia, 4. Gulf : Florida, Alabama, Louisiana, Tennessee, Mississippi, 5. Southwestern : Texas, Oklahoma, Arkansas, 6. Eastern Central : Ohio, West Virginia, Indiana, Kentucky, Michigan (except the Upper Peninsula), T. Northwestern : Minnesota, Montana, North Dakota, Wisconsin (North and West of a line drawn from Green Bay to La Crosse), the Upper Peninsula of Michigan, 8. West Central : Illinois, Iowa (East of a line drawn directly North and South through Des Moines and including Des Moines), Missouri (East of a line drawn directly North and South through Fulton and including Fulton), Wisconsin (South and East of a line drawn from La Crosse to Green Bay), 9. Missouri River : Missouri (West of a line drawn directly North and South through Fulton but not including Fulton), Kansas, Iowa (West of a line drawn directly North and South through Des Moines but not including Des Moines), Nebraska, South Dakota, 10. Rocky Mountains and Pacific Coast : Colorado, Utah, Arizona, California, Oregon, Washington, Idaho, Nevada, New Mexico, Wyoming, and seven (7) members at large. Sec. 2. The members of the Divisional Code Authority shall be elected in the following manner: (a) The Executive Committee of the National Wholesale Hard- ware Association shall appoint two (2) members and the Execu- tive Committee of the Southern Hardware Jobbers Association shall appoint one (1) member of an Electoral Board of three persons to conduct the election. (b) The Electoral Board shall send out nominating ballots to all wholesalers discoverable by diligent search. Each of these ballots shall contain spaces in which the voter may write the names of his choices for the member of the Divisional Code Authority and an alternate member thereto, for his geographical area. To each nomi- nating ballot shall be attached a letter assenting to and promising to comply with this Suppleanental Code and the General Code. Twenty (20) days after these ballots arc sent out the Electoral Board shall publicly count the votes which are then in its possession. Only those ballots which are accompanied by a signed statement of assent and compliance shall be counted. The person in each area receiving the highest number of votes for the position of member of the Divisional Code Authority shall be declared to be a candidate for that position in that area. The person receiving the highest number of votes for alternate in each area shall be declared to be the candidate for the loosition of alternate in that area. (c) The Executive Committees of the National Wliolesale Hard- ware Association and the Southern Hardware Jobbers Association shall nominate seven (7) candidates at large and seven (7) alter- nates at large. (d) The Electoral Board shall prepare and mail to all wholesalers discoverable by diligent search ballots containing the names of all the candidates and alternates nominated according to the foregoing paragraphs. These ballots shall contain for each position a blank space in which the voter may write his personal choice. Wholesalers in all geographical areas shall vote for all members of the Divisional Code Authority and for all alternates. Twenty (20) days after the mailing of these ballots the Electoral Board shall publicly count the votes which it has received. Only those ballots shall be counted which are accompanied by a signed statement of assent and compli- ance or by a statement that the voter has previously submitted such a statement of assent and compliance. The candidates for member of the Divisional Code Authority and for alternate receiving the highest vote for each of the geographical areas and the seven (7) candidates at large and the seven (7) alternates at large receiving the highest vote shall be declared to be elected. (e) The Electoral Board shall certify to the Administrator the method in which it has conducted the election and the results of the same. Sec. 3. The terms of office of members of the Divisional Code Authority and the method of electing their successors whether for full new terms or for unexpired terms shall be established in the by-laws of the Divisional Code Authority, subject to the approval of the Administrator. Sec. 4. The Divisional Code Authority shall have the following duties and powers subject to such rules and regulations as the Ad- ministrator may prescribe : (a) To represent the Trade in conferring with the President or his agents or the General Code Authority, with respect to the Adminis- tration of this Supplemental Code and the General Code and in respect to the Act and any orders or regulations issued thereunder. (b) To study the trade practice provisions of this Supplemental Code and the operations thereof, and make such recommendations from time to time to the Administrator as it may deem desirable for modification of or addition thereto, which upon the approval of the Administrator or his agents after such hearing as he may prescribe, shall become a part of this Supplemental Code and have mil force and effect as provisions thereof. 8 (c) To appoint a Trade Practice Committee, which shall meet with the Trade Practice Committees appointed under such other Codes as may be related to the Trade except other Codes supple- mental to the General Code, for the purpose of formulating Fair Trade Practices to govern the relationships between production and distribution employers under this Supplemental Code and under such other Codes to the end that such Fair Practices may be proposed to the Administrator as amendments to this Supplemental Code and guch other Codes. (d) To appoint such regional committees and agents as the Divi- sional Code Authority may establish to assist the Divisional Code Authority in administering this Supplemental Code and the Gen- eral Code, provided, however, that nothing herein shall relieve the Divisional Code Authority of its responsibilities as such. (e) To organize, elect officers, hire employees, and perform such other acts as may be necessary for the proper administration of the Supplemental Code and the General Code. I (f) To appoint a Special Committee on Overlapping which shall meet with Trade Practice Committees and/or Special Committees on Overlapping which may be appointed by the General Code Au- thority and/or by the Divisional Code Authorities administering other Supplemental Wholesaling and Distributing Codes covering kindred lines and/or by the Code Authorities administering other basic codes covering the wholesaling and distributing of kindred lines, for the purpose of formulating recommendations to be sub- mitted to the respective Code Authorities and to the Administrator for such modifications of this Supplemental Code and/or such other Code or Codes as may be necessary to eliminate, insofar as possible, conflicts between the fair trade practice provisions of this Supple- mental Code and such other Code or Codes. I (g) To adopt bylaws and rules and regulations for its procedure. ! (h) To use such trade associations and such other agents or agencies as it deems proper for the carrying out of any of its activi- ties provided for herein, provided that nothing herein shall relieve the Divisional Code Authority of its duties or responsibilities under this Supplemental Code or under the General Code and that such trade associations and agencies shall at all times be subject to and comply with the provisions hereof. (i) To obtain from members of the Trade such information and reports as are required for the administration of this Supplemental Code. In addition to information required to be submitted to the General Code Authority and to the Divisional Code Authority mem- bers of the Trade subject to this Supplemental Code shall furnish such statistical information as the Administrator may deem neces- sary for the purposes recited in Section 3 (a) of the Act, to such federal and state agencies as he may designate; provided that noth- ing in this Supplemental Code shall relieve any member of the Trade of any existing obligations to furnish reports to any gov- ernment agenc}^ No individual report shall be disclosed to any other member of the Trade or any other partj" except to such other governmental agencies as may be directed by the Administrator. Sec. 5. Nothing contained m this Supplemental Code shall consti- tute the members of the Divisional Code Authority partners for any purpose nor shall any member of the Divisional Code Authority, exercising reasonable diligence in the conduct of his duties, here- under, be liable to anyone for any action or omission to act, under this Supplemental Code except for his own wilful malfeasance or nonfeasance. Sec. 6. If the Administrator shall determine that any action of the Divisional Code Authority or any agency thereof, may be unfair or unjust or contrary to the public interest, the Administrator may require that such action be suspended to afford an opportunity for investigation of the merits of such action and for further consid- eration by such Divisional Code Authority or agency, pending final action, which shall not be effective unless the Administrator approves or unless he shall fail to disapprove after thirty days' notice to him of intention to proceed with such action in its original or modified form. Sec. 7. (a) It being found necessary in order to support the ad- ministration of this Supplemental Code and to maintain the stand- ards of fair competition established hereunder and to effectuate the policy of the Act, the Divisional Code Authority is authorized. 1. To incur such reasonable obligations as are necessary and proper for the foregoing purpose, and to meet such obligations out of funds which may be raised and hereinafter provided and which shall be held in trust for the purposes of this Supplemental Code ; 2. To submit to the Administrator for his approval, subject to such notice and opportunity to be heard as he may deem necessary (1) an itemized budget of its estimated expenses for the foregoing purposes, and (2) an equitable basis upon which the funds necessary to support such budget shall be contributed by members of the Trade ; 3. After such budget and basis of contribution have been approved by the Administrator, to determine and obtain equitable contribution as above set forth by all members of the Trade, and to that end, if necessary, to institute legal proceedings therefor in its own name. (b) Each member of the Trade shall pay his or its equitable contribution to the expenses of the maintenance of the Divisional Code Authority, determined as hereinabove provided, and subject to rules and regulations pertaining thereto issued by the Administrator. Only such members of the Trade complying with the Supplemental Code and contributing to the expenses of its administration as here- inabove provided unless duly exempted from making such contribu- tion shall be entitled to participate in the selection of members of the Divisional Code Authority or to receive the benefits of any of its voluntary activities or to make use of any emblem or insignia of the National Recovery Administration. (c) The Divisional Code Authority shall neither incur nor pay any obligation in excess of the amount thereof as estimated in its approved budget, except upon approval of the Administrator; and no subsequent budget shall contain any deficiency item for expendi- tures in excess of prior budget estimates except those which the Administrator shall have so approved. 10 Article IV — Trade Practices supplementing article vii of the general code The following practices are hereby declared to be unfair methods of competition and are prohibited : Section 1. To allow cash discounts greater than 2 percent in anticipating the due date of any invoice. This shall not apply to those lines where manufacturers' terms provide for greater cash discounts in anticipating pa3'ment. Sec. 2. To allow cash discount on any note settlement or to accept a noninterest bearing note in payment of a matured obligation. Noninterest bearing notes may be accepted from insolvent debtors. Sec. 3. To ship any goods on consignment except products of manufacturers whose general plan of distribution is by consignment and not by sale for resale. Sec. 4. For a wholesaler who, in addition to his definitely organ- ized wholesale division, operates a retail store or division, to sell like commodities in the same quantities to retailer customers at a higher figure than such commodities are charged or billed to his retail store or division. Sec. 5. The Divisional Code Authority shall study the subject of terms of payment and future datings in the Wholesale Hardware Trade for the purpose of recommending uniform terms of pay- ment and datings for that Trade. When such recommendation shall have been approved by the Administrator after such hearing as he may prescribe, it shall be an unfair trade practice for any whole- saler to sell upon t^rms of payment or da^tings other than those so established. Sec. 6. {a) No goods shall be sold or offered for sale at less than the cost to the seller. Such cost shall be defined to mean the actual net in/voiced purchase 'price or market price., whichever is lower., plus transportation charges to seller^s warehouse, plus the actual wages involved in the delivery of goods by the seller when such wages are determined in accordan^ce with an accounting formula developed by an impartial agency chosen with the advice of the Administrator and published from time to time by the Divisional Code Authority after approval by the Adininistrator. (b) Notwithstanding the provisions of this Section., any whole- saler may sell any article of merchandise at a price as low as the price set by any competitor on merchandise which is identical or essentially the same., and where such competitor's price does not molate this Section or where such competitor is not subject to the provisions of this Supplemental Code. ((?) N otioithstanding the foregoing provisions of this Section a wholesaler may sell the following merchandise at less than the prices established under the said provisions: obsolete goods., bona fide close- out merchandise., damaged merchandise, stocks being liquidated, m.erchandise sold for charitable purposes or to unemployment relief agencies, and such ohher merchandise as may be designated by the Divisional Code Authority.^ 1 Italicized section deleted and amended section inserted in lieu. See paragraph 2 of order approving this Code. 11 Article Y — Subterfuge It shall be an unfair trade practice for any member of the Trade to employ subterfuge, directly or indirectly, to avoid or attempt to avoid the provisions of this Supplemental Code or of the General Code or the purposes and intent of the National Industrial Recovery Act, which are among other things to increase employment, provide better wages, promote fair competitive methods, better business conditions, and promote the public welfare. Article VI — Power of the President to Modify This Supplemental Code and all the provisions thereof are ex- pressly made subject to the right of the President in accordance with the provisions of the Subsection (b) of Section 10 of the Act, from time to time to cancel or modify any order, approval, license, rule or regulation issued under Title I of said Act. Article VII — Effective Date This Supplemental Code shall become effective on the tenth day after its approval by the Administrator. Approved Code No. 201 — Supplement No. 17. Registry No. 1114-01. O UNIVERSITY OF FLORIDA 3 1262 08856 0510