AS SUBlulTTED ON AUGUST 25, 1933
REGISTRY No. 698 "2-23
The Code for the Wholesale Drug Industry
in its present form merely reflects the proposal of the above-mentioned
industry, and none of the provisions contained therein are
to be regarded as having received the approval of
the National Recovery Administration
as applying to this industry
EDO OUR PART
GOVERNMENT PRINTING OFFICE
O'or sale by the Superintendent of Documents, Washington, D.C. - Price 5 cent
NATIONAL RECOVERY ADMIINISTRATION
CODE OF FAIR COMPETITION
COD~E OF FiAI[R COMPETITION OF THIEI WHi~OLESAILE
SECTION 1. The Code is adopted pursuant to Title I of the
~National Ind'ustrial Recovery A~ct.
SEc. 2. The purpose of the Code is to effzctunte thle policy
Title I of the National Indtustr~ial Recover~1y Act insofar as it is
applienble to WCiholesale Druggists.
SECTION 1. The term "W7holesale Druggist is defined in accord-
ance with the definition adop~tel bly the Bureau of Industrial Al-
cohol, UJ.S. Treasury Department, Regulations N'o. 2 Article 15i,
Section 1501 (e), issued A5pril 1, 1931, as follows:
"'L WVHOLESALE DRTIGGIST meanS a person. who is engaged inl the
business of selling at wholesale a representative assortment of
pharmaceuticals and other articles and materials such as drugs, oils,
chemicals, proprietary medicines, and drluggists' sulndr~ies, and who
carries a stock of representative pharmalnce~uticals and ,such other
articles and materials in such. assortme~nts and quantities as will
enable him regularly to supply froin stock, from. day to da~y, thec
usual and inunedliate medical requirements of retail druggists, phar-
macists, physicians, hosp~it,7k, and dlispensu~~ries, and who is d-uly
qualified under the laws of the State in which he does business to
carry on such. business."
W~herevrer in this Code the worclds "Wholesale Druggist or em-
ployer or words of similar import are used, they are intended
to refer to a W~holesale Druggist as hereinbefore defined-.
SEC. 2. The w~ordc "merc~handli- c as used in this Code is defined
to mean: (a) drugs and (b) cosmeltics and toilet preparations.
(a) T~he term drug "means and includles all p~harmaceuticalcn
products, including substances and preparationsi recognized in the
United S states Pharm~acopoeia or National Formulary or any sup-
plements ther~eto and all substances,, preparations and dev-ices in-
tendedl for use! in the cure, mitigation, treatment or prevention of
disease in, or the pr~eservaftion or en~halncemlent of bodily or mental
comfort, or condition of, man or other animals anrd all substances
and preparations, other than food (but including medicinal or
quasi-medticinal preparations, such as those sold or produced pri-
:marily for their vitamlin content), and all substances, preparations
and devrices, intendledi to affect the structure or any function of the
body of man or other animals.
(b) The term cosmeticss and the term toilet p~reparations "
means and includes perfumes, toilet w~Faters, face powders, face
8192--33 11 1
Creams, rouges, shav\ing~ creams~.i, dentrifices, soaps, and similar sub-
stances and preparationsi designed and intended for application to
the person for the purp'lose of eleansmng, improv'\ing thle appearance
of, refr~eshing.r or pr~eserving the person(,I.
ARTICLE I 11-nlEMBERSrIl
Any, WIholesale Drlruggit is eligible for mem~ber~ship in th Code.
and inny7\ betComell a nwmbelllfr of the Code by signing andl delivering
to the Seicretary of thel Drug Institute of America, Incorporated,;
330 W~est 42nd( Stlreet, New9 York, N.Y., a letter slb~stantiallyr in
the form anrnexedc here~tto.
ARTICLE IV-H-ounsR or L;ABOR, RATES OF PAY-, AND OTHER CONDITIONS
SECTION iP1. Ellmlant to subsction (a) off Section 7 of the NTa-
tionni! Indlstr~ial Re~covery Ac~L~t, the ode shall be subject to th
following conditions :
(a) That employees shall have the r~i ht to org anize and bargain
collec~tively through rcpresent~tatives of their owFn choosing, and shall
be free from the interlferencer resitra;int, or coerrcion of emlploy~ers of
Ilabor, or their agents, in the dlesiignation of such. representatives or
in self-or~ganizationl oi- in. other tjc<1neted~ activities for the purpose
of collective bargbnining or other mutual aid or p~rotec~tio~n;
(b) Thal~t, no employee and no one seeklinlg emlploymente shall be
requ~iretd as a condition of employmllenlt to join anly company union
or to recfranin from jommig, o-rg~n~izing,r or assist i ng a labor orgami-
zation o~f his own choosing; and
(c) That empllloyers shall comply with thre maximum hours of
labor, mlinimnum rates of pa,n' and other conditions of employment,
approved or pres~icribed bly the Pres~ide~nt of the United S3tates.
SEc. 2. On and after the effective date of this Code, no Whole-
sale Druggist shall ecmployT anry employee for more -than a max-
imum of for~ty-fivPe (45) hours in anyi o~ne week; excepting,v how-
ever, all execult ive, a dmi nist rative, andi sup~ervisoryr employegtes who
receive $3~.-> per~~ week or more, and all rale~mel anld de~li\very and
mainttelnance men. all of whom-l1 shall1 be exemptrlcRl from this renla
tion; ad provide thatthe empoyees o hlsl rggss
who are necessarily tech~niel~y tra Inlll or whose~t serv\ices shall other-
w~ice be requjilred for the purpose,. shall be exempllt from~n the operation
of this section. durIing peid feegnY o pdme r
that there may be no lundule delay in Ilwet~ing~ th~e demandsr of the
meIdical profession. hosp1-itnls. dlispcn nl~csurils, an thle general public
t~hrough~l the rectail phar~1mneies.s
No e-mpl'oy~er shall perm~it ar~En emloye!e who shall aIlso hnave pcr-
for~med~ work~ for one or morle mother emplllo~yer to workl suchL number
of total hours for ali l employees :1 would resullt in a violation of
this Codel had~ all sm-h.1 workl' h~een prclformdc~ forl one emplloyecr.
Mir~e. 3. On and after1 thne clhe~ctive clate( of th~is C"olle eachi Whole-
per wee'ck in any c~ity w\ith a popu~lllationl of 100,000~l o.r more1';an
under which no emnploy~ee (other than appren~tices) shall be paid
less than $12 pe week~ in any city with a populattionr of less than
100,000;. and under which apprentice em~ploy)eces shall be paid not
less than. $2 per week under these miinlimumlll wageCS. TheC population
in each case shall be determined by the United Sotates census of 1980.
SEC. 4. PNO p)erson under isiteenI (1_6) years of age shall be emp-
ployed,, except thnat p:er~sons between fourteen (14) and sixteen (16)
ylear~s of agie may bec3 emp~loyed not to exceecd three (3) hours per
dtay, between 7:00 a.m. and 7:00 p.m. in ~suchl work as will not
inter~fere with the hours of daytime schloolilg.
ARTICLE V-P-IRICE AND TERM:JS OF PAYMENT
SECTION 1. From time to time after the effective date of this Code,
the Drug In st itulte of Amnerica, Incorporated, shall publish. or cause
to be published and shall furnish or cause to be fur~nishedc- to each
Who~lesale Druggrist. who is a member of the Code, lists speci-
fying the cost-sold of as many items and groPl's~l of item1s
of merchandise as practicable. and floro time to time shall
publish or cause to be published and shall furnishn or enus~le to be
fur~nishedl to each member of the Code as promptly as practicable
any amendment of the cost-sold of any such items and groups
of items of mnerchandiset when and as cir~cums;tannces require such
amedmet. he cost-sold of any suchn item or grroup of eitems
of m~erchandisee shall be calculated by the Drug Institute ofAein
In~co~por~ated:, in. consultation with the Statistical Division of the
~Nationa~l Wholesale Druggists Association and the Federal W1hole-
sale D~ruggists Association on the basis of their own research and
thle economics, statis~ticl, and necouna~ting reports submitted to thleml
from, time to time by the members of the Code. In calculating the
"Ccost-sold'" of any' merchandise, the cost to the entire WT;holesale
Drug Industry shall be approximately determ~ined,. including cost of
acquisition or replacement of the merrchandisc~ handling charges,
the allocable portion of overheadl including all general and adminis-
t~rative expense and ta xes, the cost of sales and deliveries, and any
other appropriate charges, all determined.- in accordance with good
accounting practice. The "L cost-sold ") of an~y mer1chandise may, in
the discretion of the Drug Institute of Ameerica, Incorporated, be
published in the form of manufneturers's list prices with. specified
maximum d~iscou~nts ind-icated-. The "cost-sold of any specified
merchlandise, or any amnend~ment of such cost-sold ", shall go into
e~fftect on the tenth~ day follow\ing its pub~lication, as above provided;
and no mlembler of the Code shall sell anly such speccified merc~handl~ise
at a price or pric~es below the "L cost-sold therefore in effect at th~e
time of the sale or of contracting to sell. All discounts allow~ed~ by
members of the Code shall be! cash. discounmts and shall be allowed
only if paid within the customar~y cash discount period; andmc no dis-
count whatever shall be alllowted which brings the net selling price
to the p~urchaser of any mercha~ndrise below the "'cost-sold l" then in
effect; for such merchlandlise.
SEC. 2. Subject, to such r~egu~lationsi as may be adopted in a Code
for the entire Drug Industry: (ac) Wnholesale Druggists shall have
the right to contract w-Pith manufacturers to observe the resale prices
of proprietary and/or tradte-mark~l e d merchandise at all times during
the operation, of this Code; and (b) Wholesale D~ruggists shall have
the right to contract with retail dr~ugg~ists or othetrr distributors of
merchandise to observe the resale prices of proprietary and/'or trade-
marked merIcha~ndise as established by thne mannufactu r~er.
ARTICLE VI. -UwFBRm PRACTICES
Fior all purposes of the Code the following described acts shall
constitute unfair pranctices:
SEcT~ioN 1. Making or promising to any purchaser or prospective
purchaser of anyT products, or to any officer, employee, agent, or
retprese~"ntative of any such purchaser or prospectivee purchaser, anly
bribe, gratuity-, gift, or other payment or remlunelration, directly
SEc. 2. Procuring, otherwise than with the consent of any member
of the Industry, any informl~ntion co-ncer~ning the business of such
member which. is properly regarded byg it as a trade secret or confi-
dential within its orga~nizaltion, other than information relating to a
violation of any provision of the Code.
SEC. 3. TH11tating or simulating any design, style, mark, or brand
used by any otherl metmber of the Industry or knowingly selling or
passing off anyT product with anly such imlitatedl or simullatedi design,
style, marlk, or brand.
SEC. 4. USing or irubstitulting any material or product different in
brand, kind, or quality from tha~t s'ec~ified by- the purlchanser thereof.
SEc. 5. Using or sub1:stitutingc anyT mlter~ial or anly method of manr-
u~factur~e, distribution, mar~lketing, or sale not in accordl~ with any
applicable law, rule, or regulation of any gover~nmelnta nuthorit~y.
SEc. 6., The secret payment or allowance of rebates, refunds, con-
cessionls, advertising allowancnies, or unearned dliscounts, whether in
the formn of money or othcrw~ise, or secretly extend-ing to certain
pulrc-haserls special services or privileges not extendled to all pur-
chansers under like terms and conditions.
SEC. 7. 7C0 pre'Ventf by uninvited persuasion, dispa~raginga innu-
endo, or by concealment, a customer or prospective customer fromt
purch~asing a particular product which he hans r~equestel--
The unin~vitel dlissuadmg~c~ or the attempt to dlissuade a customer
or prospective customer from liurchasing an article of a particlar
bra3nd, trade mark or t!ype, wihlCh suIch (cu-tOmler hais r~equested, and
persuad'ing or attempting to persuade such customer to purchase
an article calculated andl designed to serve the same purpose. but
of a different brand, trade mark or type than the article requested,
unless the? vetndlor has not available for sale the, article so, r~equested,
andi unless such fact is so disclosed to such customer or prospective
SEC. 8. To permit the substitution of at pr~odulct. for one wFhich the
cus~r~lltomer believes hre is purchansing, inlclluinig the sale andc for deliv-
ery? to a person of an article of a different, type, brand or trade
markl'l from that which thne culstomle r or p~rospectiv-e customer believes
he is pur'chaingil~ unless suchl fact be dlisclosed at th~e timie of sale
or offeri forn sale b~y the vcndlor to the customer or prospective
SEC. ~9. rDisnemina~ting,~ publishingr or circulatingr any false or mis-
leading informantion relative to any membel~r of tbhe Indcusitry or to
any product or price for any product manufactured or sold by
any members of the Industry (including one's own business or prod-
ucts), or the~ credit standing, business conduct or abilityr of any
mremb~er thereof to manufacture any product, or to the conditions
of employment among the employees of any member thereof.
SEC. 10. All advertising or statements made to promote the sale
of drugs, cosmetics and toilet preparations, whether wr~ittenl or oral,
including all forms of printed or oral recommendation of one's
good-s under the control of the maanufacturer, such as publicity of
all kinds, including newspaper and mangazine advertisingr, circulars,
la7bels, bookrlets, radio advertising, and statements made orally in the
promotion of sales of such products by salesmenr or ojthlers employed
directly or indirectly by any member of the Industry, must be
truthful and shall not be false dir~ectly, or by ambiguity or in~fer'ence
tend to create a misleading impression. Thle truth of an advertise-
ment shall be judged by its intended effect. as well as by a literal
,SEC. 11. Inducing or attempting to induce by any means any
pa rty to a contract with a member of the Industry to violate such
SEC. 12. Aiding or abetting any person, firm, business trust, asso-
eiation or corporation in any unfair practice.
SEc. 13. Making any sale or contract of sale of any product
undler anyJ description which does not fully describe such product
in terms customnaril~y used in the Industry and conforming to any
applicable lawFP, rule or regulation of any governmental authority.
SEC. 14. Any violation of an~y State or IFederal lawFp nowcs or here-
after in force relating to the manufacture anod sale or adv\er~tising
of the products of the Industry.
SEC. 15. A~ny violation of any other provision of the Code, wh~fether
or not therein expressed to be such, or using or employing any prac-
tice not hereinabove in this Article described which the Committee
shall have declared to be a practice that would tend to defeat the
policy of Title I of the National Industrial Recove~ry Act and, there-
fore, an unfair practice, and of which determination by the Comm-
mitteee its Secretary shall have given notice to the members of the
Code anld to the President of the United States.
ARTICLE TTII--IREPORTS AND STATISTICS
The Drug Inst~itute of America, Incorporated, 330 West 42nd
Street, New York, N.Y., and the Statistical D~ivision of the N~ational
Wholesale Druggists' Arssociation, 51 Maniden L~ane, New -York, N.~Y.,
and the F~ederal WTjholesale D~rugg~ists' ALssociation, 123 Ma~rket Place,
Baltimore, MLd., are hereby constitu!ted as agencies of the Industry
to conduct research for all purposes of the Code, andi to collect, re-
ceive, and tr~ansmnit to the President of the United SCtates such reports
concerning pages, hours of labor, cost-sold a nd unfair methods
of competition as the Committee may deem advisable or as may be
required by the President under the provisions of thle NJational In-
dlustrial Recovery Act, unless and until any other agencies are se-
lected byy th~e Committee.
SECTION 1. The administration of this Code shall be under the
direction of a Conunittee of sevel nmemnbers~, four of wrhomn shall be
elec~tdc- annually by the Board of Contr~ol of the NEiatio~nal Wholesale
Drugg~Ii.sts' Association, two of whom shall be e~lec~ted~ anrnually by then
Executive Commlllittee of the Fiiederal W;ho-lesa-:le DIlruggists' Atssocia-
tion and the ;t\eventh of whom shllnl be elected annually byT the other
six mnrlembes of the Commiiitteet from the pro-prietors or executive
offi~cers of compan:"'ie~s in the group of Wholesale Druggists wTho are
memb~lers of the Code bult who~ do not belong to either the lNational
-Wholesale Dr1uggit sts Associntion or thle Feeral~rl Wholesale D1Crug-
SEc. 2. The Commrittee sha1 'll hve all such powers and duties as
may be necessary! alnd prloper'', in its d~iscretio~n. to enable it fully to
administer and ell'ectuante the purllposes of the Co~de.
TJhe Committee shall also hanve the pow-er to make such assessmlents
against. the mlbember of this Code as may" be necessarnly to defray~ the
expenses~ of admlinistrlt io~n. Such assessmentslti shall be mad-e. onl
su~ ch eqitabler basis as the Com~mittee many from time to time dleter-
mine, giving some consideration to thle relative gross sales during
the pr(ecding calenl: 1 ine l yer madet and reported by eacht mnembller of
the Code; and the agrrelate aI.c.4ces.-menlS madef noninslt. any oner memb-
berr in respect of any one calendar year shall nrot exceed $250. Thel
failure of any mnemberl1 of the Code to paly any such assessment for
a per~io-d of thirty (30) days after the dlate on which it becomes
payable shall constitute a violation of the Code.
ARTICLE IX-i: GENERAL IPI;OV.IInSI
S.CrTrc ls 1. No provici-lns of this Code: 1hall be interrt ed,~e~~l ap-
pliedl or penelt iced in such manner as to p,romo~te or permit mlonop>-
oly or monopolistic prne~tices~, or to elimnina~te or opplress smalnl enlter-
pr'isesc, or to disc~r~imirnate agaiin-t them.
SE~c. 2. T'he! violation of anyl! of the ~prov\isionsl of this Codle or of!
any rule or r~eglaltio~n issued~t therelndecr app~~-lrove by\ the Pr>Iesidtent
of th~e UnTlitdc- States~ shall1 be doomedlt(- to be( an unfair me~cthlod of
SE~C. 3. None of the prov,\isio~ns of this Colie shalll heramnle effteeive
until the Code is ap~pr~ovel by thle PIresidctnt of ther Unitcll Si~tate.
SoIc. 4. If any3~ prov~\iscion of thi-; Codle her dwicllred invalid o~r ulnen-
forcrmabl,'c thze remlnining~r provisionsi shanll neve~~r~thlclc; con~tinuie in
full fo-rr~c and e~ffect thle same1(` as if theC\ hadC` bee~n separal~telyp presented~
for approval.;1 and app"',rovl by\ thle ]Pre~ident oft the~ United-States.
EC'. 5. This Code1~ shall h~ lin effcc-t beg~Linnling~ ten (10) dla!s after
its approva'\l by! the PI'~~residt of ther Unlited~ States and1. shall remain
in effect unless and until mrnllifie!d or revoked,~11 andl until the expira-
tioni of thce Nationnj~lc1 InclusitrinI Recovrtiy Act.
,CFc-. 6i. Exs~cept as may1! he( u11Vlawspentlfy\ at forth(1 inl a speeletj or1
supp1,Cllemntar y Expen-tl~ Codelr for the Inslll11n trylth prov"'isios of this
('0.10c Ino' or herlenfterl rneloted~ wuith regarlld to p~~rice. clisrcounts,
of .1I :l, ae no(t to apply'1! to direct csxport :nles or to~ sales inl coure
materials used in th mannufactullre of products for export. Tlhe term
'"export"' shall include in, addition to shipments to folrein o-
tries, shipments to such Unitedl States' possessions as may be defined
byT the Indust ry, but shall exclude thre re-imnportation of any export
SEc. 7. If any m-lembler of' the Code, whepther his capacity be thant
of a, manulflc~turer, wcholesaler, or retailer, acts in addition there~to
in any other capacity or enpacities, the business conducted by such
member sh-all be gover~ned in each of the capacities in w\hich1 hne may
so act by the~ provisions of the Code applicable to any capacity or
capacities in which uc~h member's business may. be condlucte~d.
ARTIG I3;LL X-A EN DMIENTS
SCEc. 1. This Code and all the provisions hereof are expr~essly made
subject to the powerr of th~e President of the United States. in ac-
cordlance with the provision of Clause 10 (b) of the Natio-nal In-
dustrial Recov-er~y ~ALct from1 time to timne to cancel or modc'ify any
order, approval, license, rule, or regulation issuerd under Title I of
said Acit and specifically to the power of the President to recent or
modify his approval of this Code or any conditions imposed by him
upon, his approval hereof.
SEC. 2. Such of the provisions of this Code as are not requ~ir~ed to
be :included therein by the National Industr~ial Recovery ~Act may,
with. the approval of the Pe~sident, be modified or eliminated, as
changes in cir~cumstances or exp~eriences may indicate, by methods
to be outlined by the Committee. It is contemplated that `from time
to time supplementary provisions to this Code or additional Code<~.
not inconsistent with the provisions hereof, will be submitted for
the approval of the 1Presidlent to prevent unfair competition in price
and other unfair and destructive competitive practices and to effee-
tua~te the other purposes and policies of Title I of the ~National
Indust rial Recovery Act.
FOR31T OF L-ETTER or ASSENT TO THBE COrDE
To the Secretary of
The Drug Institute of America, Incorpornated~,
330 W~est 42nd St., NTe w York, N.Y.
Dear Sir: The ulnd~ersigned~, desiring to be~omelt a member of the
Code of F'air Compe~ttition of thle Whlolesale Drug Ind~ustry, dated
----_~---- ___--___, 1933, a copy of which has been received by
the undlersigned, her~by assents to all of the provisions of said
Code and by so dloing hereby becomes a member of the Code. This
assent becomes effective as of the dlate on wChich the Code shall
have been. applrov-ed by the Piresident of the Ufnitedl tStates of
Amerien as therein provided, or as of the dlate on which the Code
shall have been delivered if such date shall be subsequent to the
approval of the Code b- t~he 1President as aforesiaidf.
For all purposes of the Code, thre address of the under~signed,
until it shall file with. you written .notice of a change of such.
address, shall be as set forth at the foot of this letter.
Very truly yours,
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