Supplementary code of fair competition for the wholesale hardware trade (a division of the wholesaling or distributing t...


Material Information

Supplementary code of fair competition for the wholesale hardware trade (a division of the wholesaling or distributing trade) as approved on July 30, 1934
Portion of title:
Wholesale hardware trade
Physical Description:
11 p. : ; 24 cm.
United States -- National Recovery Administration
United States Government Printing Office
Place of Publication:
Washington, D.C
Publication Date:


Subjects / Keywords:
Hardware industry -- Law and legislation -- United States   ( lcsh )
federal government publication   ( marcgt )
non-fiction   ( marcgt )


Additional Physical Form:
Also available in electronic format.
General Note:
Cover title.
General Note:
At head of title: National Recovery Administration.
General Note:
"Registry No. 1114-01."
General Note:
"Approved Code No. 201--Supplement No. 17."

Record Information

Source Institution:
University of Florida
Rights Management:
All applicable rights reserved by the source institution and holding location.
Resource Identifier:
aleph - 004952683
oclc - 63655195
System ID:

Full Text

or ale by the Sageriggendenrt of Doc~uments, WashingtonD.O. - Price 5 cents



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Aggeevraed Code No. 201-Spplement No. 17

Registry No. 1114--01







(A Division of the Wholesaling or Distributing Trade)



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This publiention is for sale by the Superintendent of Documents, Government
Printing Offic~e, Wa~shington, D.C., and by district offices of the Bureau of
Foreign and Domlestic Commerce.

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Seattle, Wash.; 809 Federal Office Building.

Approved Code No. 201--Supplement No. 17



As Approved on July 30, 1934 .



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 W~holesale Hardware Trade
to the Code of Fair Competition for the Wh~olesalinga 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, Admlinistrator for Indus'trial 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 Comlpetition be and it is hereby
approved; subject, however, to the condition that the provisions o
Article IV, Section 6 be deleted from said Code and the following
provisions substituted therefore:
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 mnvoice cost plus transportation charges to seller's
"L Notwithstanding the provisions 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 I1 1

Section or w~her~e such competitor is not subject to the provisions of
this Supplemnental Code.
Notwithsetanding the provisions of this Section it shall not be
deemed dlestr~uctive price cutt~ingr for a wholesaler to sell the follow-
ing: merchandise at less than net invoice cost plus transportation
ch~a~rges, as provided above: obsolete goods, bona, fide closeout mer-
chandise, damangedl merchandise, stocks being liquidated, merchan-
rlise sold for charitable purposes or to unemployment relief agencies,
annd such other merlchandisee as may be designated by the Divisional
Code Authority.
"(b') If thle Admlninistrator shall at anyr time 6ind (1) that an
emecrgenlcy hasi ariseni within the trade, adversely affecting small
enterprises or wauges or labor conditions, or tending toward monopoly
or other acute conditions which 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-
sury for a limnitecd period to correct the conditions constituting such
emergency and to effectuate the purposes of the Act, the Code
Authority may 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 Admninistrator mnay cause any determination hereunder
to be reviewed or reconsidered, and appropriate action taken."
Administrator for Imulustrial Recovery.
Approval recommended :
Division Administrator.
July 30, 1934.


The Whrbite House
Sm: This is a report of the Hearing on the Supplemental Code
of Fair Competition for the W7holesale Hardware Trade, a division
of the Wrholesaling or Distributing Trade, conducted in the Oak
Room of the Raleigh Hotel on Thursday, April 19, 19341. The Sup-
plemental Code, which is attached, was presented by duly qualified
and authorized representatives of 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.

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 WTholesaling 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 atccurate.
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.

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,

and w~ill p~rovidle 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 undecr adequate governmental sanctions and supervision,
b'y eliminatinga unfair competitive practices, by promoting the fullest
possible use of the present productive capacity of industries, by avoid-
Inga undue restriction of production (except as may be temporarily
requiredl, by increasingr the consumlption of industrial and agricul-
tural p rod ucts through inc~reasng uchsing power, by reducing
and relievingT unemployment, by,4 improving standards of labor, anc
by otherwise rehabilitation industry.
(b) Said Tradea normally employs not more than 50,000 employees
and~ it is not. classified by me as a major industry.
(c) The Supplemiental Code as approved complies in all respects
with the pertinent. p-rovisions of said Title of said Act., including
without limitation Subsection (a) of Section 3, Subsection (a) of
Section 7, andi Subsection (b) of Section 10 thereof; and that the
applicanlt association is a trade association truly representative of
the aforesaid Trade; and that said association imposes no inequitabjle
restrictions on admission to membership therein.
(d) The Supplemental Code is not. designed to and will not permit
monopolies or monopolistic practices.
(e) The Supplementatl Code is not designed to and will not elimi-
nate or oppressj small enterprises anid will not operate to discriminate
against them.
(f) Those engaged in other steps of the economic process have not
been deprived of t~he right to b~e heard prior to the approval of this
Supplemental Code.
For these reasons, the Supplemental Code has been approved.
Respect ful ly,
Hrson S. JoHNSON,
Ad m~inistrator.
JULY 30, 1934.


To effectuate the policies of Title I of the National Indust.rial
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 t~he Code of Fair Comp~etition 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 W~holesale Hardware Trade.


SECTION 1. FT'Rlaaleaer. 7The 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, advertisingr and/or sales
promotion devices, sells to retailers and/'or to institutional, com-
mnercial 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. The Tlrade.--The term "L Trade as used herein, shall mean
the business in which wrholesalers "~ as above defined, are engaged.
'SEC. 3. General cod~e.--The term '' General Code as used herein
shall mean the Code of Fair Competition for the W~holesaling or
Distributing Trade.
SEC. 4. S~uippem~ental code.-The term Supplemental Code "
as used hereini shall mean this Supplemental Code of Fair Compe-
ti~tion for the WTholesale Hardw~are Trade.
SEc. 5. Divisi'on1al code authori-ty.--The term DivTisional Code
Authority for the W~holesale Ha~rdware Trade, a Division of the
Wholesaling or Distributing Trade.

SEC. 6. COrrignanen-t.--The term consignment as used herein
shall mean dlelivering 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. Ki'ndr5ed linos.--The term kiindred lines as used herein
shall include all such lines as have heretofore customarily been car-
ried byr wholesale hardware distributors.



SECTION 1. The Divisional Code Authority shaUl be composed of
seventeen (17) members, one (1) member to represent each of thre
following ten (10) geographical areas:
1. New England : Manine, New Hampshire, Vermont, Massachu-
setts, Connecticut, Rhode Island,
2. North Middle Atlantic: New Y'orkr, New Jersey, Delaware,
3. South M~iddle Atlantic: Maryland, Virginia, North Carolina,
South Carolina, District of Columbia, Georgia,
4. Gulf : Florida, Alabama, Louisiana, Tennessee, M~ississippi,
5. Southwestern: Texas, Oklahoma, Arkansas,
6. Eastern Central: Ohio, West Virginia, Indiana, Kentucky,

(North and Wlest of a line drawn from Green Bay to La Crosse),
the Upper Peninsula of Miichigan,
8. West Central: Illinois, Iowa (East of a line drawn directly
North and South through Des MZoines and including Des Moines),
Miissouri (East of a line drawn directly North and South through
Fulton and including Fulton), ~isconsin (South and East of a line
drawn from La Crosse to Green Bay),
9. Mlissouri River: MvIissouri (WCest of a line drawn directly North
andl 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 Mloines), Nebraska, South Dakota,
10. Rocky Mlou~ntains and Pacific Coast: Colorado, Utah, Arizona,
California, Oregon, W1ashington, Idaho, Nevada, New Mexico,
Coming, and seven (7) members at large.
$EC. t2. 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 nominatg ballots to all
wholesalers discoverable by diligent search. Each ofthese 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

corinply with this Supplemental Code and the General Code.
Twenty (20) days after these ballots are 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 position of alternate in that area.
(c) The Executive Committees of the National WVholesale Hard-
ware Association and the Southern Hard ware Jobbers Association
shall nomlinate 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) dlays 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 comipli-
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 Administ~rator the
method in which it has conducted the election and the results of the
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 Authorityr, subject to the approval of
the Administrator.
rSEc. 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-
trati~on of this Supplemental Code and the General Code aend in
respect to the Act and any orders or regulations issued thereunder.
(b) To study the trade practice provlszons 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 bearing as he may prescie
shall become a part of this Supplemental Code and have full force
and effect as provisions thereof.

, (c) To appoint a Trade Practice Committee, which shall meet
writh 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 t~he end that such Fair Practices may be proposed to
the Administrator as amendments to this Supplemental Code and
such 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 G~eneral Code.
(f) To appoint a Special Committee on Overlapping which shall
meet with Trade Practice Committees and/or Special Committees
on Overlapping which meay be appointed by the General Code Au-
thority and/or by the Divisional Code Authorities administering
other Supplemental Wholesaling andDitribting Codens oering te
kindred lines and/or by the Cd uhrte diitrn te
basic codes covering the wholesaling and distributing of kindred
lines, for the purpose of formulating recommendations to be sub-
mitted to the respective Code Authonities and to the Administrator
for such modifications of this Supplemental Codie 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.
(g) To adopt bylaws and rules and regulations for its procedure.
I(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 shallfunh
such st~atist~icall information as the Administrator may deem necjes-
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 inl this Supplemental Code shall relieve any member of the
Trde~p of any e~xisting obligations to furnish reports to any gov-
ernment agency. No individual report shall be disclosed to any
other member of the Trade or any other party except to such other
governmental ageneles as may be directed by the Administrator.
SEC. 5. Nothing contained mn this Supplement~al 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-
undr, e labl toanyne or inaction or omission to act, under
this Supplemental Code exceptfohsow wiulmleaner
non feasance.
SEC. 6. If the Administrat~or 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, thle Administrat.or may
require that such action be suspended to at~ord 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 Administr~ator 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
SEc. 7. (a) It being found necessary in order to support the ad-
ministration of this Supplemental Code a~nd 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
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 therefore in its own name.
(h) 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 pa~y
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 itent for expendi-
tures in excess of prior budget estimates except those which the
Administrator shall have so approved.



The following practices are hereby declared to be unfair methods
of competition and are prohibited:
SECTION 1. To allow cashl 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 payment.
SEC. 2. TO 81 Ow 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. P. OT a WilOleSaler wvho, in addition to his definitely organ-
ized wholesale division, operates a retail store or division, to sell
likie 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 Aut.hority shall study the subject
of terms of payment and future dating in the Wholesatle Hardware
Trade for the purpose of recommending uniform terms of pay-
ment and dating 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 terms of payment or dattings other than those so
SEC. 6. (G) Co good8 BsEc~ bO Bold Or Off6Ted Ofo Batd at le88 thaG
the cost to the seller. Such cost shall be defined to mean the actual
set iwooiced purchase price or market price, whichever is lower,
plue transportation charges to seller's ra~rehoulse, pl~us the actual
wrages involved in the delivery of goods~ by the sele when such
wca~ges are determined in, accordance toi'th an accounting formula
developed by an impartial agency chosen, with the adv~ice of thle
Admi~nistrator anul published fromt time to tilme by the Divisional
Code Auth~ority after approval by. the Adcministrator.
(b) N~otwithetanding the pro~vasons of this Section, any wlhole-
sale~r may sell any arlticl2e of merclha~nd~ie at a price as lowo as the
price set by any competitor on merchandise which is identical or
essentially the same, and where such competitor's price does not
aioalate th~iS Section or where such competitor is not subject to the
provs'0'ions of this Supplemen~tal Code.
(c) Nlot0toitstan dingn the foregoing provisions of this Section a
wh~olesaler may sell the following merchandise at less than, the prices
established usader the said provisions: obsolete goods, bona fide close-
out merchandise, damaged merchandise, stocks being liq~uidatedl,
mnerchanzdise sold for charitable purposes or to unemployment relief
agencies, andtJ such other mzerchandiise as may be designated by the
Divisional Code Authority.'
1 Italicized section deleted and amended section inserted In Hien. Bee paragraph a of
order approving this Code.


It shall be an unfair trade practice for anyv member of the Trade
to employ subterfuge, directly or indirectly, to avoid or attempt to
avoid the provisions of this Supplement~al 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 compettitie methods, better business
conditions, and promote the public welfare.

This Supplemental Code and r
pressly made subject to the right o
the provisions of the Subsection(
time to time to cancel or mnodify
or regulation issued under Title I

all the provisions thereof are ex-
f the President in accordance with
:b) of Section 10 of the Act, from
any order, approval, license, rule
of said Aict.


This Supplemental Code shall become effective on the tenth day
after its approval by the Adlministrator.
Approved Code No. 201--Supplement No. 17.
Registry No. 1114--01.







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