/ Approved Code No. 275 — Supplement No. 3 Registry No. 602—02 NATIONAL RECOVERY ADMINISTRATION SUPPLEMENTARY CODE OF FAIR COMPETITION FOR THE INDUSTRIAL ALCOHOL INDUSTRY (A Division of the Chemical Manufacturing Industry) AS APPROVED ON AUGUST 21, 1934 WE DO OUR PART UNITED STATES GOVERNMENT PRINTING OFFICE WASHINGTON: 1934 For sale by the Superintendent of Docuinenta, Washington, D.C. .--...•. Price 5 centa This publication is for sale by the Saperintendent 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. Birmingham, Ala.: 257 Federal Building. Boston, Mass. : 1801 Customhouse. Buffalo, N.Y. : Chamber of Commerce Building. Charleston, S.C. : Chamber of Commerce Building. Chicago, lU. : Suite 1706, 201 North Wells Street Cleveland, Ohio : Chamber of Commerce. Dallas, Tex. : Chamber of Commerce Building. 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Approved Code No. 275 — Supplement No. 3 SUPPLEMENTARY CODE OF FAIR COMPETITION FOR THE INDUSTRIAL ALCOHOL INDUSTRY As Approved on August 21, 1934 ORDER Approving Supplementary Code of Fair Competition for the Industrial Alcxdiiol Industry A division of the chemical manufacturing industry An application having been duly made pursuant to and in full compliance with the provisions of Title I of the National Recovery Act, approved June 16, 1933, for approval of a Supplemental Code of Fair Competition for the Industrial Alcohol Industry to the Code of Fair Competition for the Chemical Manufacturing Industry, 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 ap- proved; provided, however, that the last paragraph of Article V, Section 10 be and it is hereby stayed pending further consideration of the advisability of having uniform agency contracts provided for in codes of fair competition. Hugh S. Johnson, Administrator for Irvdustrial Recovery. Approval recommended: Geo. L. Berry, Division A dminis trator. Washington, D.C, August £1, 193Jf. 81811°— T— 1044-100 34 (1) REPORT TO THE PRESIDENT .The President, The White House. Sir : This is a report on the Supplemental Code of Fair Competi- tion for the Industrial Alcohol Industry, a Division of the Chemical Manufacturing Industry, the Public Hearing on which was held in .Washington, D. C, June 12, 1934, in accordance with the provisions of Title I of the National Industrial Recovery Act. General Statement The Industrial Alcohol Industry as represented by the Industrial Alcohol Institute, being truly representative of this Division of the Chemical Manufacturing Industry, has elected to avail itself of the option of submitting a Supplemental Code of Fair Competition as provided for in Articles XI and XII of the Basic Code for the Chemical Manufacturing Industry approved by you on February ^0, 1934. Resume of the Code labor and general provisions Article II states "All provisions of the Code of Fair Competition for the Chemical Manufacturing Industry, as approved by the President on February 10, 1934, are hereby incorporated by reference as though completely set forth herein." As the Code of Fair Competition for the Chemical Manufacturing Industry contains the labor provisions and general provisions which apply to the Chemical Industry as defined, these are labor and gen- eral provisions which apply to the Industrial Alcohol Industry Division thereof. OTHER PROVISIONS Article III gives the necessary definitions applicable to this Division of the Chemical Manufacturing Industry, The term " member of the Industry " is defined to mean any per- son holding a Federal Government permit to operate an industrial alcohol plant, any person producing isopropyl alcohol or methyl alcohol other than that produced from the destructive distillation of wood and any subsidiary or affiliate thereof who sells any product of the Industry as defined in Section 2. The producers of methyl alcohol by the destructive distillation of wood are excluded because they are covered by the Code of Fair Competition for the Hardwood Distillation Industry. (2) Article IV establishes a Code Authority of nine members, consist- ing of eight members to be elected by the Board of Directors of the Industrial Alcohol Institute and one representative of the members of the Industry who are not members of the Institute. The repre- sentative of the non-members of the Industrial Alcohol Institute may be elected by such members by a fair method of selection subject to the approval of the Administrator or appointed by the Administrator if they fail to elect. In addition to the above, the Administrator may appoint not more than three Administration Members who are to serve on the Code Authority without vote and without expense to the Industry. Article V provides the trade practice provisions which shall apply to the Industrial Alcohol Industry. Some of these provisions aimed at correcting the destructive price competition existing in this Indus- try have received a great deal of consideration in order to harmonize them with Administration policy. The provisions concerning the open filing of prices are in accord with the Administration's policy as announced on June 7, 1934. Section 2 of Article V provides as follows : "Inasmuch as certain products of the Hardwood Distillation In- dustry, namely, methyl alcohol for anti-freeze, are used for identical anti-freeze purposes, as ethyl, isopropyl and various types of methyl alcohol as covered by this Code, the filing of prices on the last named products under this Code, and all other provisions of Article V hereof, are not to become effective until and unless a provision for the filing of prices of the above named products which are covered by the Hardwood Distillation Industry Code, and the embodying of the other provisions of Article V hereof, are incorporated in that Code. When this is accomplished prices filed under each code shall be ex- changed under the same conditions as outlined above insofar as they apply to both the above named classes of products." The reason for this provision is explained therein. Obviously the open filing of prices by the Industrial Alcohol Industry on products which are directly competitive with almost identical prod- ucts produced by the Hardwood Distillation Industry would not be of any aid to them in reducing or knowing about destructive price competition unless the open filing of prices wxre adopted also by the Hardwood Distillation Industry for the products referred to. For the same reason the other fair trade practices are not to become effective in respect to the products of the Industrial Alcohol Industry which are competitive with methyl alcohol sold for anti- freeze by the Hardwood Distillation Industry unless the other trade practice provisions specified in Article V are also adopted by the Hardwood Distillation Industry. The Code Authority of the Hardwood Distillation Industry has conferred with the Code Committee of the Industrial Alcohol In- dustry and they were also represented at the public hearing on the Code for the Industrial Alcohol Industry. It is understood that as soon as the Code for the Industrial Alcohol Industry is approved the Code Authority of the Hardwood Distillation Industry will consider the fair trade practice provisions of the Code for the Industrial Alcohol Industry with a view to taking whatever action thereon with respect to a modification of their Code which the Code Authority votes on. The last paragraph of Article V, Section 10, provides that " The Code Authority by a two-thirds vote may at any time estab- lish a uniform agency contract subject to the approval of the Administrator." This provision is stayed pending further consideration by the Administrator of the advisability of having uniform agency con- tracts provided for in codes. FINDINGS The Deputy Administrator in his final report to me on said Supplementary Code having found as herein set forth and on the basis of all the proceedings in this matter : I find that: (a) Said Supplementary 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 and will provide for the general welfare by promoting the organiza- tion of industry for the purposes of cooperative action among the trade groups, by inducing and maintaining united action of labor and management under adequate governmental sanctions and super- vision, by eliminating unfair competitive practices, by promoting the fullest possible utilization of the present productive capacity of in- dustries, by avoiding undue restriction of production (except as may be temporarily required), by increasing the consumption of indus- trial and agricultural products through increasing purchasing power, by reducing and relieving unemployment, by improving standards of labor and by otherwise rehabilitating industry. (b) Said Industry normally emplo3''s not more than 50,000 em- ployees; and is not classified by me as a major industry. (c) The Supplementary Code as approved complies in all re- spects with the pertinent provisions of said Title of said Act, in- cluding without limitation Subsection (a) of Section 3, Subsection (a) of Section 7, and Subsection (b) of Section 10 thereof; and that the applicant Institute is an industrial association truly representa- tive of the aforesaid Industry; and that said Institute imposes no inequitable restrictions on admission to membership therein. (d) The Supplementary Code is not designed to and will not per- mit monopolies or monopolistic practices. (e) The Supplementary Code is not designed to and will not eliminate or oppress small enterprises and will not operate to dis- criminate against them. (f) Those engaged in other steps of the economic process have not been deprived of the right to be heard prior to approval of said Supplementary Code. For these reasons, therefore, I have approved this Supplementary Code. Respectfully, Hugh S. Johnson, Administrator. August 21, 1934. SUPPLEMENTARY CODE OF FAIR COMPETITION FOR THE INDUSTRIAL ALCOHOL INDUSTRY A DIVISION OF THE CHEMICAL MANUFACTURING INDUSTRY Article I — Purposes To further effectuate the policies of Title I of the National In- dustrial Recovery Act, the following provisions are established as a Supplementary Code of Fair Competition for the Industrial Al- cohol Industry, a Division of the Chemical Manufacturing Industry, and upon approval by the Administrator shall be, in conjunction with the basic Code for the Chemical Manufacturing Industry, the standard of fair competition for this division of the Chemical Manufacturing Industry. Article II — Labor and General Provisions All provisions of the Code of Fair Competition for the Chemical Manufacturing Industry are hereby incorporated by reference as though completely set forth herein. Article III — Definitions Section 1. The term " Industrial Alcohol Industry " or the " In- dustry " as used herein shall mean all manufacturers of ethyl alcohol for industrial purposes and all manufacturers of ethyl alcohol, isopropyl alcohol or methyl alcohol (other than that produced from the destructive distillation of wood) for anti-freeze purposes. Section 2. The term " products of the Industry " as used herein shall mean ethyl alcohol, denatured alcohol (including the product commercially known as " proprietary solvent ") sold for industrial purposes, and ethyl alcohol, denatured alcohol, isopropyl alcohol and methyl alcohol (other than that produced from the destructive distillation of wood), or any product containing 70% or more of any of these materials, or any product containing a combination of 70% or more of any of these materials, sold for anti-freeze purposes by any member of the Industry. Section 3. The term " person " includes, but without limitation, any individual, partnership, association, corporation or other form of enterprise. Section 4. The term " member of the Industry " as used herein shall mean any person holding a Federal Government permit to oper- ate an industrial alcohol plant, any person producing isopropyl alco- hol or methyl alcohol other than that produced from the destructive distillation of wood, and any subsidiary or affiliate thereof who sells any of the products of the Industry as defined in SectiMn 2 above. (5) Section 5. The term " subsidiary " as used herein shall mean any person over whom a member of the Industry has either, directly or indirectly, actual or legal control, whether by stock ownership or in any other manner. Section 6. The term " affiliate " as used herein shall mean any person who has either, directly or indirectly, actual or legal control of or over a member of the Industry or a subsidiary thereof, whether by stock ownership or any other manner. Section 7. The term " agent " as used herein shall mean any person (except officers or employees of members of the Industry), firm, corporation or other form of enterprise who acts under the supervision or control of a member of the Industry in selling the products of such member. Section 8. The term " Institute " as used herein shall mean The Industrial Alcohol Institute, Inc., a domestic corporation incor- porated pursuant to the Membership Corporations Law of the State of New York, having an office in the City of New York. Article IV — Administration Section 1. Nine members, eight of whom shall be elected by the Board of Directors of the Institute, and one representative of the members of the Industry who are not members of the Institute, who may be elected by such members by a fair method of selection sub- ject to the approval of the Administrator or appointed by the Ad- ministrator if they fail to elect, are hereby constituted as the Code Authority for administering and supervising the performance and observance of the provisions of this Code. Section 2. In addition to membership as above provided, the Ad- ministrator may appoint not more than three (3) Administration Members without vote and without compensation by the Industry to serve such terms as he may specify. Section 3. Each trade or industrial association directly or in- directly participating in the selection or activities of the Code Au- thority shall (a) impose no inequitable restrictions on membership and (b) submit to the Administrator true copies of its articles of association, by-laws, regulations, and any amendments when made thereto, together with such other information as to membership, organization, and activities as the Administrator may deem necessary to effectuate the purposes of the Act. Section 4. In order that the Code Authority shall at all times be truly representative of the Industry and in other respects comply with the provisions of the Code and of the Act, the Administrator may prescribe such hearings as he may deem proper, and, thereafter, if he shall find that the Code Authority is not truly representative or does not in other respects comply with the provisions of the Code and of the Act, may require an appropriate modification of the composition and method of selection of the Code Authority. Section 5. Nothing contained in this Code shall constitute the members of the Code Authority partners for any purpose. Nor shall any members of the Code Authority be liable in any manner to anyone for any act of any other member, officer, agent, or em- ployee of the Code Authority. Nor shall any member of the Code Authority, exercising reasonable diligence in the conduct of his duties hereunder, be liable to anyone for any action or omission to act under this Code, except for his own wilful malfeasance or nonfeasance. Section 6. If the Administrator shall determine that any action of the 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 investi- gation of the merits of such action and further consideration by such 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. Section 7. The Code Authority shall appoint, within thirty (30) days after the approval of this Code, a Trade Practice Committee which shall meet with the Trade Practice Committees appointed under such other codes as may be related to the Industry for the purpose of formulating fair trade practices to govern the relation- ships betw^een employers under this code and under such other codes to the end that such fair trade practices may be proposed to the Administrator as amendments to this code and such other codes. Section 8. All members of the Industry shall compile and submit monthly reports in gallons of the production, total sales, and in- ventory of ethyl and denatured alcohols, and sales of isopropyl alcohol and methyl alcohol (other than that produced from the destructive distillation of wood) for anti-freeze purposes, in such form as the Code Authority may require. Such reports shall be submitted by the members to an impartial and confidential statistical agency outside the Industry^ or to a certified, registered, chartered or any other lawful practitioner of public accountancy having no connection with any member or members of the Industry, said agency or firm to be designated by the Code Authority. Such agency or firm shall keep in strict confidence the individual figures sub- mitted, and shall submit to the Code Authority only compilations thereof, without disclosing any individual figures submitted by spe- cific members of the Industry. The Code Authority, upon receipt of this information, shall prepare a consolidated report which shall be furnished to each member of the Industry Avho is complying with the provisions of this Code; provided, however, that such members who are not engaged in the sale of ethyl alcohol for industrial pur- poses shall only receive reports relating to sales of ethyl alcohol, isopropyl alcohol and methyl alcohol (other than that produced from the destructive distillation of wood) for anti-freeze purposes. Section 9. All members of the Industry shall furnish to the Code Authority such information and reports, except data and statistics in relation to number of employees, hours of labor and rates of pay ^ which are collected by the Chemical Alliance, Inc.) as are required lor the administration of this Code. In addition to information re- quired to be submitted to the Code Authority, members of the Indus- try subject to this Code shall furnish such statistical information as the Administrator may deem necessary for the purposes recited in Section 3(a) of the Act to such Federal and State agencies as he may designate ; provided that nothing in this Code shall relieve any 8 member of the Industry of any existing obligations to furnish reports to any Government agency. No individual report shall be disclosed to any other member of the Industry or any other party except to such other Governmental agencies as may be directed by the Admin- istrator. Section 10. A. It being found necessary to support the adminis- tration of this Code, in order to effectuate the policy of the Act and to maintain the standards of fair competition established hereunder, the Code Authority is authorized : (1) To incur such reasonable obligations as are necessary and proper for the foregoing purposes and to meet such obligations out of funds which shall be held in trust for the purposes of the Code and raised as hereinafter provided : (2) To submit to the Administrator for his ajDproval, subject to such notice and opportunity to be heard as he may deem necessary: (a) An itemized budget of its estimated expenses for the fore- going purposes, and (b) An equitable basis upon which the funds necessary to support such budget shall be contributed by all members of the Industry entitled to the benefits accruing from the maintenance of such stand- ards, and the administration thereof; (3) After such budget and basis of contribution have been ap- proved by the Administrator, to determine and collect equitable con- tributions as above set forth, and to that end, if necessary, to insti- tute legal proceedings therefor in its own name. B. Each member of the Industry shall pay his or its equitable contribution to the expenses of the maintenance of the Code Author- ity as hereinabove provided and subject to rules and regulations pertaining thereto issued by the Administrator. Only members of the Industry complying with the Code and making such contribu- tion, unless duly exempted from making such contribution, shall be entitled to participate in the selection of the members of the Code Authority or to receive the benefits of its voluntary activities or to make use of any N. R. A. insignia. C. The Code Authority shall neither incur nor pay any obligation substantially in excess of the amount thereof as estimated in its approved budget, and shall in no event exceed the total amount con- tained in the approved budget, except upon approval of the Adminis- trator; and no subsequent budget ^hall contain any deficiency item for expenditures in excess of prior budget estimates except those which the Administrator shall have so approved. Article V — Fair Trade Practice PRO^^:sIoxs Section 1. Each member of the Industry shall file with a confi- dential and disinterested agent of the Code Authority or, if none, then with such agent designated by the Administrator, identified li^ts of all of his prices, discounts, rebates, allowances, whether guaranteed against decline in price, and all other terms or conditions of sale, hereinafter in this article referred to as price terms; which lists shall completely and accurately conform to and represent the individual pricing practices of said member. Such lists shall con- tain the price terms for all products of the Industry (as defined herein) as are sold or offered for sale by said member. Said price terms shall in the first instance be filed within five (5) days after the effective date of approval of this provision. Price terms and revised price terms shall become effective immediately upon receipt thereof by said agent. Immediately upon receipt thereof, said agent shall bj^ telegraph or other equally prompt means notify said member of the time of such receipt. Such lists and revisions, together with the effective time thereof, shall upon receipt be immediately and simulta- neously distributed to all members of the Industry and to all of their customers who have applied therefor and have offered to defray the cost actually incurred by the Code Authority in the preparation and distribution thereof and be available for inspection by any of their customers at the office of such agent. Said lists or revisions or any part thereof shall not be made available to any person until released to all members of the Industry and their customers, as afore- said; provided, that prices filed in the first instance shall not be released until the date this Code becomes effective. The Code Au- thority shall maintain a permanent file of all price terms filed as herein provided, and shall not destroy any part of such records except upon written consent of the Administrator. Upon request the Code Authority shall furnish to the Administrator or any duly designated agent of the Administrator copies of any such lists or revisions of price terms. Section 2. Inasmuch as certain products of the Hardwood Dis- tillation Industry, namely, methyl alcohol for anti-freeze, are used for identical anti-freeze purposes, as ethyl, isopropyl and various types of methyl alcohol as covered by this Code, the filing of prices on the last named products under this Code, and all other provisions of Article V hereof, are not to become effective until and unless a provision for the filing of prices of the above named products which are covered by the Hardwood Distillation Industry Code, and the embodying of the other provisions of Article V hereof, are incorporated in that Code. When this is accomplished prices filed under each code shall be exchanged under the same conditions as outlined above insofar as they apply to both the above named classes of products: Section 3. When any member of the Industry has filed any re- vision, such member shall not file a higher price within forty-eight (48) hours. Section 4. No member of the Industry shall sell or offer to sell any products of the Industry, for which price terms have been filed pursuant to the provisions of this Article, except in accordance with such price terms. The provisions of this Article, shall not apply to the transfer or sale of the products of the Industry to subsidiaries or affiliates or subsidiaries thereof, as defined herein, who use the products of the Industry in their own manufacturing operations, nor shall the provisions of this Article apply to sales for export from the United States or between members of the Industry. Section 5. No member of the Industry shall enter into any agree- ment, understanding, combination or conspiracy to fix or maintain price terms, nor cause or attempt to cause any member of the Indus- try to change his price terms by the use of intimidation, coercion, 10 or any other influence inconsistent with the maintenance of the free and open market which it is the purpose of this Article to create. Section 6. Wilfully destructive price cutting is an unfair method of competition and is forbidden. Any member of the Industry or of any other industry or the customers of either may at any time complain to the Code Authority that any filed price constitutes unfair competition as destructive price cutting, imperiling small enterprise or tending toward monopoly or the impairment of code wages and working conditions. The Code Authority shall within live (5) days afford an opportunity to the member filing the price to answer such complaint and shall within fourteen (14) days make a ruling or adjustment thereon. If such ruling is not concurred in by either party to the complaint, all papers shall be referred to the Research and Planning Division of N.R.A. which shall render a report and recommendation thereon to the Administrator. Section 7. It shall be a violation of this Code for any member of the Industry to give a commission or any other form of compen- sation to any person on the sale of any of the products of the Indus- try by such member to any buyer oi such products in which sucli person is financially interested or by whom he is employed. It shall also be a violation of this Code for any member of the Industry to employ any person financially interested in or employed by any buyer of the products of the Industry if such emploj^ment is made for the purpose of influencing the business of such buyer. Section 8. No member of the Industry shall secretly offer or make any payment or allowance to any buyer of any of the products of the Industry, of a rebate, refund, commission, credit, unearned dis- count or excess allowance, whether in the form of money or other- wise, nor shall a member of the Industry secretly offer or extend to any buyer of any of the products of the Industry, any special serv- ice or privilege not extended to all buyers of the same class, for the purpose of influencing a sale. Section 9. No member of the Industry shall give, permit to be given, or offer to give, anything of value for the purpose of influenc- ing or rewarding the action of any employee, agent, or representa- tive, of another in relation to the business of the employer of such employee, the principal of such agent or the represented party with- out the knowledge of such employer, principal or party. This pro- vision shall not be construed to prohibit free and general distributicpi of articles commonly used for advertising except so far as such articles are actually used for commercial bribery as hereinabove defined. Section 10. No member of the Industry shall allow a purchaser either directly or through an agent, any commission or other form of compensation which will result in the purchaser paying less for his products than the price filed by the said member pursuant to Section 1 of this Article. A list of the agents of each member of the Industry shall be filed with the Code Authority within five (5) days after the effec- tive date of this Code and any changes in the lists of such agents or any new agents created, shall be promptly reported to the Codo Authority whenever made. 11 The Code Authority by a two-thirds vote may at any time estab- lish a uniform agency contract, subject to the approval of the Administrator.^ Section 11. It shall be an unfair trade practice for any member of the Industry to employ subterfuge directly or indirectly to avoid or attempt to avoid the provisions of this Code or the purposes or intent of the National Industrial Recovery Act, which are to in- crease employment, provide better wages, promote fair competitive methods, and to promote the public welfare. Section 12. No provision of this Code shall be so applied as to per- mit monopolies or monopolistic practices, or to eliminate, oppress, or discriminate against small enterprises. Article VI Such of the provisions of this Code as are not required by the National Industrial Recovery Act to be included herein may with the approval of the Administrator be modified or eliminated as changed circumstances or experience may dictate. Article VII This Code shall become effective on the fifth business day after it shall have been approved by the Administrator. Approved Code No. 275 — Supplement No. 3. Registry No. 602-02. 1 See paragraph two of Order approving this Code. o UNIVERSITY OF FLORIDA ■■•111 3 1262 08584 2192