NATIONAL RECOVERY ADMINISTRATION
CODE OF FAIR COMPETITION
COTTON TEXTILE INDUSTRY
AS APPROVED ON JULY 17, 1934
,I. -- .
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Approved Code No. 1-Amendment No. 8
Registry No. 299-25
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Approved Code No. 1-Amendment No. 8
AMENDMENT TO CODE OF FAIR COMPETITION
COTTON TEXTILE INDUSTRY
As Approved on July 17, 1934
MODIFICATION OF CODE OF FAIR COMPETITION FOR THE COTTON TEXTILE
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 Code of
Fair Trade Practices for the Cotton Thread Manufacturinf Branch
of the Cotton Textile Industry, and hearing having been duly held
thereon and the annexed report on said 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
President, 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 Code complies in all respects
with the pertinent purposes of said Title of said Act, and do hereby
order that said Code of Fair Trade Practices be and it is hereby
approved, and that the previous approval of the Code of Fair Com-
petition for the Cotton Textile Industry is hereby modified to in-
clude an approval of said Code in its entirety as modified; provided
however, that the provisions of Section 3 and Section 4 of said
Code of Fair Practices in their entirety be and they are hereby
stayed pending my further order.
HUGH S. JOHNSON,
Administrator for Industrial Recovery.
ROBERT L. HOUSTON,
July 17, 1934.
REPORT TO THE PRESIDENT
The White House.
SIR: This is a report on the Code of Fair Trade Practices gov-
erning the merchandising of the products of the Cotton Thread
Manufacturing Branch of the Cotton Textile Industry, conducted
in Washington, D.C., on February 2, 1934.
In accordance with the customary procedure every person who
filed a request for appearance was freely heard in public, and all
statutory and regulatory requirements were complied with.
The Code which is attached was presented by the duly qualified
and authorized representatives of the Industry, the Cotton Textile
Industry Committee, which is the Code Authority for the Cotton
The Deputy Administrator in his final report to me on said Code
having found as herein set forth and on the basis of all proceedings
in this matter:
I find that:
(a) The Fair Trade Practices of the Cotton Thread Branch of the
Cotton Textile Industry and the Cotton Textile Code as amended
are well designed to promote the policies and purposes of Title I
of the National Industrial Recovery Act including the 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 organization of industry for the
purpose of cooperative action among trade groups, by inducing
and maintaining united action of labor and management under ade-
quate governmental sanction and supervision, by eliminating unfair
competitive practices, by promoting the fullest possible utilization
of the present productive capacity of industries, by avoiding undue
restriction of production (except as may be temporarily required)
by increasing the consumption of industrial and agricultural prod-
ucts through increasing purchasing power, by reducing and reliev-
ing unemployment by improving standards of labor, and by other-
wise rehabilitating industry.
(b) The Cotton Textile Code as so amended complies in all re-
spects with the pertinent provisions of said Title of said Act, includ-
ing without limitation Subsection (a) of Section 3, Subsection (a)
of Section 7 and Subsection (b) of Section 10 thereof.
(c) The Cotton Textile Industry Committee is empowered to pre-
sent the aforesaid Code of Fair Practices on behalf of the Industry
as a whole.
(d) The Code of Fair Practices and the Cotton Textile Code as
so amended are not designed to and will not eliminate or oppress
small enterprises and will not operate to discriminate against them.
(e) The Code of Fair Practices and the Cotton Textile Code as
so amended are not. designed to and will not permit monopolies
or monopolistic practices.
(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
For the above reasons this Code of Fair Practices has been ap-
proved by me.
HUGH S. JOHNSON,
Adm.i.istrator for Industrial Recovery.
JULY 17, 1934.
AMENDMENT TO CODE OF FAIR COMPETITION FOR
THE COTTON TEXTILE INDUSTRY
FAIR TRADE PRACTICES GOVERNING THE MERCHANDISING OF THE PRODUCTS
OF.THE COTTON THREAD MANUFACTURING BRANCH
1. National Industrial Recover'y Act.-Each member of the In-
dustry who is entitled to display the Blue Eagle of the National
Recovery Administration shall affix to all invoices, in accordance
with regulations of the Code Authority, a stamp stating that the
mill where the goods were made is operating under the Cotton
Textile Code, which regulations and stamp shall be subject to the
approval of the Administrator.
2. Definitions.-The following definitions shall apply to this Code
of Fair Trade Practices hereinafter set forth.
(a) The term "industry means the cotton thread manufactur-
ing branch of the Cotton Textile Industry, which is defined as the
manufacture of sewing, crocheting, embroidery, and,'or darning
(b) Whenever the term "thread or "threads" is used, it shall
refer to cotton thread, which is defined to include all products com-
posed of one or more cotton yarns, single or braided or twisted
together, and sold for use in any sewing, crocheting, embroidering,
or darning operations, in the natural, white or colored state, with
the exception of:
(1) Cotton articles usually defined in the trade as twine ", "sew-
ing twine ", "bag twine ", "bag closing twine, "broom twine ",
and "tuifting twine", which are made of carded yarns of a yarn
count of 20s or coarser.
(2) Cotton looping and seaming yarns used in the hosiery trade.
For the purposes of this Code of Fair Trade Practices certain
cotton yarns, commonly and variously known as schiffli ", schiffli
yarn" and "embroidery yarns ", as made and sold for use only on
Schiffli and Swiss hand embroidery machines shall be considered as
coming within the foregoing definition of thread.
(c) The term "manufacturers' threads" refers to those threads
generally used in the manufacturing or industrial trades, and the
term "household threads" refers to those threads generally used in
the home or for domestic purposes.
(d) The term "Sub-Committee on Thread shall mean the Sub-
Committee on Thread of the Code Authority of the Cotton Textile
(e) Unless otherwise specified, all provisions of this Code of Fair
Trade Practices shall apply both to manufacturers' or industrial
threads and household or domestic threads.
3. Publishing Prices and Terms of Sale.-(a) Each member of
the industry shall furnish to and file with The Thread Institute
copies of price lists showing all current prices and quantity discounts
to all classes of trade on branded goods. This information shall be
kept up to date in the future by furnishing The Thread Institute
with all changes in prices and quantity discounts on branded goods
on the same day on which they go into effect. All such information
filed with The Thread Institute shall be available to all members of
(b) Each member of the Industry shall have the right individually
to file new prices from time to time not inconsistent with the pro-
visions of the Cotton Textile Code as amended or this Code of Fair
(c) Members of the Industry shall report to the Cotton-Textile
Institute every four weeks, the total of all sales of nonbranded goods
made by them during said four weeks' period. The units in which
such sales shall be reported, the detail of said reports, and the dis-
position of same, shall be as designated from time to time by the
Sub-Committee on Thread.
(d) The Sub-Committee on Thread shall have power to establish
rules and regulations for the orderly administration of the provisions
of this Section, 3. Such rules and regulations shall be subject to
review by the Cotton Textile Industry Committee.
4. Selling Below Cost.-(a) The selling of goods by any member
of the Industry below cost of production is an unfair trade practice
except where the sale is made to meet bona fide competition.
(b) The provisions of paragraph 4 (a) shall not become effective
until the definition of cost of production and a method of uniform
cost accounting have been approved by the Administrator, and such
further period thereafter, not less than three months, as may be
fixed by the Sub-Committee on Thread with the approval of the
Cotton Textile Industry Committee and of the Administrator.
(c) Nothing herein contained shall prevent the sale of damaged
goods, job lots, and discontinued lines below cost of production,
provided, such merchandise is clearly invoiced as such, and that a
complete record thereof is kept by the seller, open to inspection by
The Thread Institute or its authorized agents.
(d) The Thread Institute, through a disinterested agency ap-
pointed by its Board of Directors, is designated as an agency to
gather all necessary information as to a method of uniform cost
accounting. Such agency shall report the results of such investiga-
tion to the said Board in statistical form, and said Board is desig-
nated as an agency to determine the appropriate method for uniform
cost accounting, and to recommend such method and a definition of
cost of production through the Sub-Committee on Thread for the
action of the Cotton Textile Industry Committee and reconunenda-
tion to the Administrator. Such recommendation, after such notice
and hearing as the Administrator may specify, shall become effective
subject to the provisions of paragraph 4 (b) on approval by the
Administrator or the President.
5. Credit Terms.-(a) Except either as otherwise provided in
paragraph (b) of this section, or under emergency conditions found
to exist in any particular case, no more favorable credit terms shall
be extended by any member of the Industry, in connection with any
sale or transactions completed within the continental limits of the
United States than the following:
Net 60 days.
2% 10 days E.O.M. (End of Month).
(b) The provisions of paragraph 5 (a) shall not apply to sales
of thread for use on Schiffli and Swiss hand embroidery machines,
on which sales no more favorable terms shall be extended than-
Net 60 days.
2% 30 days.
3% 10 clays.
(c) No extra dating shall be allowed, except that goods shipped
from the 25th to the end of the month may be regarded for dis-
count purposes as having been shipped as of the 1st of the following
month, and except also that an additional dating of thirty days on
the invoice may be allowed for discount purposes on shipments
from points east. of the Mississippi River to points west of the
longitude of Denver, Colorado.
(d) No shipment shall be made on consignment to any person,
firm or corporation other than to a bona fide sales agent.
6. Secret Rebates.-(a) The payment or allowance of secret
rebates, refunds, or unearned discounts, whether in the form of
money or otherwise, resulting in discrimination between customers
of the same class, is an unfair trade practice.
(b) Nothing in this paragraph shall preclude the payment of a
reasonable commission to any jobber for bona fide services in dis-
tribution of goods.
7. Mutuality of Contracts.-(a) All contracts not for immediate
delivery made by members of the Industry for the sale of their prod-
ucts shall be in writing for definite quantities, and duly executed
by the respective parties thereto. Forms for such contracts shall
be filed with The Thread Institute as soon as effective and shall be
available to all members.
(b) All contracts for manufacturers' threads shall stipulate that
the delivery specifications calling for the shipments against the
contracts shall be distributed fairly and equitably throughout the
term of said cont ract.
(c) All contracts should be performed according to their terms by
all the parties thereto, in the absence of a legal or equitable excuse
for nonperformance. The willful failure of a member of the Indus-
try to enforce the same is an unfair trade practice. Nothing herein
contained shall prevent the use of usual clauses in contracts as to the
effect of force majeure, acts of God, and similar events beyond the
control of either party.
(d) Predating an order or contract with the intent or effect of
giving either buyer or seller any advantage or benefit which would
not accrue if such order or contract were correctly dated, is an
unfair trade practice.
SAny such emergency condition shall be reported at once to The Thread Institute
together with the terms allowed to meet said emergency.
(e) Make and hold orders for manufacturers' threads shall
only be accepted as contracts. Under such contracts the terms must
provide that the buyer must accept, delivery of the full quantity
specified within the contract period.
(f) Wilfully inducing or attempting to induce the breach of
any contract between a competitor and his customer or wilfully in-
terfering with or obstructing the performance of the same is an
unfair trade practice.
(g) Contracts for manufacturers' threads not for immediate de-
livery shall be for periods not to exceed three months.
8. Samples.-Whereas, the giving of free samples to customers
for the purpose of obtaining business is not in itself a trade abuse,
it is an unfair trade practice if samples are given as an integral
part of a sale or as a means of making a specific sale.
9. Advertising Allowance.-No advertising allowance shall be of-
fered or given to induce or consummate a sale. This paragraph
shall not be construed so as to prevent proper expenditures or al-
lowances for advertising or displays actually made or furnished.
10. Group Buying.-No member of the Industry shall accept
orders or contracts from any person, firm, corporation, or associa-
tion who has combined to pool orders or purchases of sewing threads
for the purpose of obtaining the benefit of any discount or other
concession allowed on the quantity purchased or agreed to be pur-
chased unless the person, firm, corporation, or association in whose
name the sale or contract shall be made actually establishes a sound
financial basis for any credit involved and assumes sole financial
responsibility. The failure of any member of the Industry to con-
form to the requirements of this paragraph shall be an unfair trade
11. Fal.e and Misleading Advertising.-The making or causing
or permitting to be made or published any false or deceptive state-
ment by way of advertisement (whether printed, radio, display, or
of any other nature) or otherwise concerning the grade, quality,
quantity, substance, character, nature, origin, size, or preparation of
any product of the Industry which is misleading or inaccurate in
any material particular or which may mislead or deceive purchasers
or prospective purchasers, or which may injuriously affect the
business of competitors, is an unfair trade practice.
12. Marking Thread.-(a) No member of the Industry shall sell
or offer for sale any thread, put up on spools, tubes, cones, bobbins,
or in balls, skeins, or other similar packages, unless there is affixed to
or impressed upon a conspicuous part of each such spool, tube, cone,
bobbin, ball, skein, or other similar package of such thread a label or
stamp which shall be plain and conspicuous, and which shall plainly
indicate either its net weight in avoirdupois pounds and ounces or
its length in yards; Provided, That when any such spool, tube, cone,
bobbin, ball, skein, or other similar package of such thread contain-
ing a net weight of less than two avoirdupois ounces is sold or offered
for sale, then such label or stamp shall indicate its length in yards;
provided further, That where from the shape, size, or character of
the spool, tube, cone, bobbin, ball, skein, or other similar package it
is impossible so to affix or impress such label or stamp, a label or
stamp shall be affixed to the box or other container in which such
packages are put up, stating the number of units contained therein
and the net weight or yardage of each, as hereinbefore prescribed.
(b) It shall be an unfair trade practice if any member of the
industry shall sell or offer for sale such thread on any such spool,
tube, cone, bobbin, or in any such ball, skein or other similar package
or box, without a label or stamp specifying the net weight or num-
ber of yards of thread contained thereon, as provided in the first
paragraph of this section, or if any such member of the industry
shall sell or offer for sale such thread on any such spool, tube, cone,
bobbin, or in any such ball, skein, or other similar package or box,
weighing or measuring more than five per centum less or more
than the net weight or number of yards that the label or stamp
Each member of the industry shall file with The Thread Institute
a list of all brands and trade marks used on cotton threads pro-
duced by or for him for his own distribution and sale, and. also
shall keep The Thread Institute informed of all changes and
It shall be an unfair trade practice if any member of the industry
shall sell or offer for sale any thread which, in addition to being
labeled or stamped with a statement of contents as provided in the
first paragraph of this section, does not bear a firm name, brand,
or trade mark by which it may be clearly identified by The Thread
The provisions of the foregoing paragraphs of this section shall
not apply to thread sold for use on Schiffli and Swiss hand embroid-
13. Misbranding and Mislabeling.-The false marking or false
branding of products with the effect of misleading or deceiving
purchasers with respect to the quantity, quality, grade, or substance
of the products purchased is an unfair trade practice.
14. False In voicin.g.-Withholding from or inserting in the invoice
statements which make the invoice a false record wholly or in part,
of the transaction represented on the face thereof, is an unfair trade
15. Commercial Bribery.-No member of the Industry shall give,
permit to be given, or directly offer to give, anything of value for
the purpose of influencing or rewarding the action of any employee,
agent, or representative of another in relation to the business of the
employers of such employee, the principal of such agent or the
represented party. This provision shall not be construed to prohibit
free and general distribution of articles commonly used for advertis-
ing except so far as such articles are actually used for commercial
bribery as hereinabove defined.
16. Substitution of Merchandise.-(a) Shipping or delivering
products which do not conform to the samples submitted, or represen-
tations made prior to securing an order and with the effect of
deceiving or misleading the purchaser, is an unfair trade practice.
(b) The sale of an inferior quality of product in this industry
at a price appropriate for such product, with the understanding
that a product of superior quality selling at a higher price will be
delivered, is an unfair trade practice. A seller acting in good faith
and because of an actual unforeseen shortage of the product sold,
may, in order to service the customer, deliver a product of a quality
superior to the product sold.
17. Imitation of Trade Marks, etc.-The imitation or simulation
by a member of the Industry, of another's trade marks, trade names,
slogans, and other marks of identification, including labels and the
dress of the goods, so as to deceive purchasers or prospective pur-
chasers, or result in commercial disadvantage to the owner of an
already established put-up is an unfair trade practice.
18. False Disparagement of Competitors.-The defamation of
competitors by falsely imputing to them dishonorable conduct, in-
ability to perform contracts, questionable credit standing, or other
false representations, or the false disparagement of the grade or
quality of-their goods, is an unfair trade practice.
19. Use of Competitor's Mercltand(ise.-No member of the indus-
try shall by purchase or exchange acquire another manufacturer's
merchandise from any customer or prospective customer for the
purpose of substituting his own merchandise or influencing the sale
of merchandise to such customer or prospective customer, Provided
however, it shall not be an unfair trade practice to acquire a sample
of a competitor's merchandise for the purpose of comparison or
20. Aiding or Abetting Another in the Use of Unfair Trade
Practices.-The wilful aiding or abetting of another in the use of
unfair trade practices is an unfair trade practice.
21. Modification.-(a) The Board of Directors of the Sub-Com-
mittee on Thread shall give consideration to any proposed change
or changes in this Code of Fair Trade Practices which may be pro-
posed to it either by any member or members of The Thread Institute
having collectively not less than twenty-five votes therein, provided,
however, that where such proposed change or changes would affect
manufacturers supplying thread for use on Schiffli and Swiss hand
embroidery machines, such change or changes may be proposed by
any member or members of The Thread Institute whose principal
business is supplying such thread, having collectively not less than
five votes therein.
(b) The provisions of this Code of Fair Trade Practices shall
govern all members of the Industry. Any provision of this Code
of Fair Trade Practices may be revoke or modified by the Board
of Directors or the Sub-Coninmitte.e on Thread, subject to the ap-
proval of the Cotton Textile Industry Committee and the Adminis-
trator. This Code of Fair Trade Practices is subject to the right
of the President, in accordance with subsection (b) of Section 10
of the National Industrial Recovery Act from time to time to
cancel or modify any order, approval, rule, or regulation issued
under said act.
22. Nothing in this Code of Fair Trade Practices shall be deemed
to constitute any of the members of the Industry partners for any
purpose. No member shall be liable in any manner to anyone for
any act of any member or agent of the Code Authority lawfully
and properly performed pursuant to the provisions of this Code
of Fair Trade Practices, nor shall any member or agent be liable
to anyone or in any manner other than as provided in the National
Industrial Recovery Act or in the Cotton Textile Code or this Code
of Fair Trade Practices for any act performed in accordance with,
or for any failure to act required by, the provisions of said Code
and Code of Fair Trade Practices.
Approved Code No. 1-Amendment No. 8.
Registry No. 299-25.
UNIVERSITY OF FLORIDA
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