Approved Code No. 16-Amendment No. 6 Registry No. 241-42
NATIONAL RECOVERY ADMINISTRATION
CODE OF FAIR COMPETITION
AS APPROVED ON APRIL 6, 1935
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Approved Code No. 16-Amendment No. 6
Registry No. 241-02
This publication is for sale by the Superintendent of Documents, Government
Printing Office, Washington, D. C., and by the following N. R. A. offices:
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Approved Code No. 16-Amendment No. 6
AMENDMENT TO CODE OF FAIR COMPETITION
As Approved on April 6, 1935
APPROVING AMENDMENT OF CODE OF FAIR COMPETITION FOR THE
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 an amend-
ment to the Code of Fair Competition for the Hosiery Industry, and
hearings having been duly held thereon, and the annexed report on
said amendment containing findings with respect thereto, having
been made and directed to the President:
NOW, THEREFORE, on behalf of the President of the United
States, the National Industrial Recovery Board, pursuant to author-
ity vested in it by Executive Orders of the President, including Ex-
ecutive Order No. 6859, dated September 27, 1934, and otherwise;
does hereby incorporate, by reference, said annexed report and does
find that said amendment and the Code as constituted after being
amended comply in all respects with the pertinent provisions and
will promote the policy and purposes of said Title of said Act, and
does hereby order that said amendment be and it is hereby approved,
and that the previous approval of said Code is hereby amended to
include an approval of said Code in its entirety as amended.
NATIONAL INDUSTRIAL RECOVERY BOARD,
By W. A. HARRIMAN, Administrative Officer.
M. D. VINCENT,
Acting Division Admiinistrator.
WASHINGTON, D. C.,
April 6, 1935.
REPORT TO THE PRESIDENT
The White House.
SIR: An application has been duly made pursuant to and in full
compliance with the provisions of Title I of the National Industrial
Recovery Act for certain amendment to the Code of Fair Competi-
tion for the Hosiery Industry, and Hearings have been duly con-
Article 8, Section 1 of the amendment prescribes uniform condi-
tions of sale; Section 2 prohibits price guarantees; Section 3 pro-
hibits bonuses, rebates, honor, and credits, etc. This Section also
deals in customers' subsidies, return of merchandise, special services,
cooperative advertising, etc. Section 4 .prohibits the sale of mer-
chandise below the low cost and deals also in the billing of sam-
ples, the marking of close-outs, and with cost finding; Section 5 pro-
hibits shipments on consignment; Section 6 prohibits commercial
bribery; Section 7 prohibits the return of merchandise for refinish-
ing unless the Manufacturer is compensated for the actual cost
therefore; Section 8 deals with the classification of hosiery; Section
9 prohibits substitutions without the knowledge or consent of the
purchaser; Section 10 prohibits the misbranding and misrepresenta-
tion of materials; Section 11 prohibits the imitation of competitors'
marks; Section 12 deals with the observance of the Code; Section 13
deals with arbitration.
The Deputy Administrator in his final report on said amendment
to said Code having found as herein set forth and on the basis of
all the proceedings in this matter:
The National Industrial Recovery Board finds that:
(a) The amendment to said Code and the 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 ob-
structions to the free flow of interstate and foreign commerce which
tend to diminish the amount thereof, and will provide for the gen-
eral welfare by promoting the organization of industry for the
purpose of cooperative action of labor and management under ade-
quate governmental sanction and supervision, by eliminating un-
fair competitive practices, by promoting the fullest possible utiliza-
tion of the present productive capacity of industry, by avoiding
undue restriction of production (except as may be temporarily re-
quired), by increasing the consumption of industrial and agricul-
tural products through increasing purchasing power, by reducing
and relieving unemployment, by improving standards of labor, and
by otherwise rehabilitating industry.
(b) The Code as amended coi.plies in all respects with the perti-
nent provision of said Title of said Act, including without limitation
subsection (a) of section 3, subsection (a) of section 7, and sub-
section (b) of section 10 thereof.
(c) The Code empowers the Code Authority to present the afore-
said amendment on behalf of the industry as a whole.
(d) The amendment and the Code as amended are not designed
to and will not permit monopolies or monopolistic practices.
(e) The amendment and the Code as amended are not designed
to and will not eliminate or oppress small enterprises and will not
operate to discriminate against them.
(f) Those engaged in other steps of the economic process have
not been deprived of the right to be heard prior to approval of said
For these reasons this amendment has been approved.
For the National Industrial Recovery Board:
W. A. HARRIMAN,
APRIL 6, 1935.
AMENDMENT TO CODE OF FAIR COMPETITION FOR
THE HOSIERY INDUSTRY
Amend Article VIII by deleting Sections 1, 2, 3, 5, 6, 7, 8, 9, 10,
11, 12, 13, 14, 15 and 16 and Section 4 (b), (c) and (d) of the present
Article, and substituting therefore the following:
1. Uniform Conditions of Sale.-The following conditions of sale
shall be binding on all members of the Hosiery Industry:
(a) All orders are subject to acceptance by the mill.
(b) All orders are accepted subject to delays, partial delivery
and non-delivery caused by labor difficulties, or conditions beyond
control of the seller. In such cases, the seller shall promptly notify
the buyer, and the buyer shall have the right to cancel any unde-
livered or unfinished portion of the order. Failure of the buyer
to either cancel or confirm within ten (10) days after receipt of notice
shall be construed as cancellation.
(c) (1) Anticipation of payment, if allowed, shall not be at a
rate in excess of six per cent (6%) per annum.
(2) Any invoices not paid on due date shall be subject to interest
at the rate of six per cent (6%) per annum.
(3) Dating in excess of seller s established terms shall be subject
to interest at the rate of six per cent (6%) per annum.
(4) A discount becomes unearned discount" and is forfeited
upon failure of payment of invoices on the due date, according to
(d) Cancellation may be effected only:
(1) By the buyer, because of failure of the seller to make deliver-
ies on the specified delivery dates, provided the buyer has furnished
details in keeping with contract commitments, and provided the
buyer has given the seller at least ten (10) days written notice,
(either before or after due date) of his intention to cancel past due
eliveries. Until or unless a past due delivery is cancelled in the
manner provided herein, the commitment of the buyer therefore re-
mains in force.
(2) By the seller, because of impairment of customer's credit.
3) In accordance with sub-section (b) of this section.
(e) Any controversy or claim arising out of or relating to this
contract or the breach thereof, shall be settled by arbitration, in
accordance with the rules, then obtaining, of the American Arbitra-
tion Association, and judgment upon the award rendered may be
entered in the highest court of the forum, state or federal, having
jurisdiction; provided this provision for arbitration shall not have
been deleted by the purchaser upon, or prior to, the execution of
2. Price Guarantees.-To guarantee prices against decline, whether
by lowering the price of an existing contract, cancellation of an.
existing order and the substitution therefore of a new order at lower
prices, or by any other means, is an unfair trade practice.
3. Bonuses, Rebates, Discounts, Etc.-(a) It is an unfair trade
practice to allow a customer commissions, bonuses, rebates, refunds,
unearned credits and unearned discounts.
(b) It is an unfair trade practice to allow a customer subsidies
of any kind, whether in the form of money, merchandise, payment
of any part of the wages of a customer's employees, or advertising,
or premiums, or otherwise, that are not specifically permitted in other
paragraphs of this Section.
(c) All sales of merchandise shall be final and no member of the
Industry shall accept the return of any merchandise except for mill
imperfections or for failure to make legal delivery of the goods in
accordance with the terms of the order.
(d) It is an unfair trade practice to extend to a customer special
services which are not extended to all customers under like terms and
conditions. This provision is not intended to conflict with the provi-
sions of subsection e of this section, nor with any specific pro-
hibitions in this Code.
(e) Hosiery manufacturers selling merchandise having their own
brands, may enter into agreement for cooperative advertising of
such brands upon the following conditions:
(1) Agreements for cooperative advertising shall be separate from
agreeThents of sale of merchandise, and shall define the amount to
be contributed by the manufacturer, which shall not exceed fifty
per cent (50%) of the amount actually spent. The nature and
amount of advertising and the period to be covered shall be specifi-
cally set forth in the agreement. Cooperative advertising agree-
ments shall be restricted to newspaper or radio advertising and
printed matter, and the name of the manufacturer or of his brand
must appear along with the name of the customer.
No cooperative advertising agreement shall be used as a rebate,
refund, or merchandise allowance, but shall be for advertising
only. The manufacturer shall pay his share of such advertising
only upon receipt of proper evidence of the amount actually so
spent, and his share shall in no case exceed fifty per cent (50%')
of the total expended.
(2) Full records of all cooperative advertising agreements shall
be kept by hosiery manufacturers, so as to permit auditing at any
time of such expenditures and their use. Accurate reports, based
on such records, shall be furnished when required by the Code
(3) The above restrictions on cooperative advertising are not
meant to exclude the furnishing of display materials, signs, or
cards, etc., of branded lines, provided the customer is in no way
compensated or subsidized thereby.
(f) Hosiery manufacturers selling merchandise bearing their own
brands may offer on such branded hosiery exchange merchandise
services, provided such services are part of their regular and estab-
lished merchandising methods and are available to all of their
(g) Returns made under "exchange merchandise services" men-
tioned in subsection (f) shall not be credited to customer's account
until effect by an additional order for immediate delivery for mer-
chandise of at least an equal value. The per dozen value of the
returned goods, as well as the replacement order, shall be at the
price prevailing the day the replacement order is invoiced.
4. Selling Belvw Cost, etc.-(b) The billing of customer's sample
requirements at less than regular stock prices is an unfair trade
(c) (1) All closeouts of discontinued styles, and/or broken assort-
ments, if sold below cost, shall be visibly marked on each hose with
an indelible transfer reading:
or DISCONTINUED PATTERN
or DISCONTINUED STYLE
or DISCONTINUED FIRST QUALITY
Such transfers shall be in full face type letters of not less than
1/%" in height, except for infants' hose, where smaller size type must
be used. These transfers must be ordered through the Hosiery
(2) If any hosiery cannot be marked with transfers or in other
indelible manner, it shall be marked in such manner as the Hosiery
Code Authority shall prescribe after consultation with the Advisory
Committee of the branch of the Industry affected.
(d) Each manufacturer shall determine costs in accordance with
the principles of Cost Accounting adopted by the Code Authority
and approved by the National Industrial Recovery Board.
5. Shipments on Consignmennt.-To ship hosiery on consignment,
on memorandum, or any basis other than outright sale, is an unfair
6. Commercial Bribery.-No member of the Industry shall give,
permit to be given, or offer to give anything of value for the pur-
pose of influencing or rewarding the action of any employee, agent,
or representative of another in relation to the business of the em-
ployer of such employee, the principal of such agent or the repre-
sented party, without the knowledge of such employer, principal or
party. This provision shall not be construed to prohibit free and
general distribution of articles commonly used for advertising ex-
cept so far as such articles are actually used for commercial bribery
as hereinabove defined.
7. Return of Merchandise for Refnishing.-To repair, re-condition,
refinish, or re-dye merchandise belonging to a customer without
charging actual cost therefore, is an unfair trade practice.
8. Classification of Hosiery.-(a) Hosiery shall be classified as
(1) Firsts: There shall be only one classification of firsts for any
(2) Other than firsts (Imperfects): Under this heading there
may be the following sub-classifications only:
A mill choosing not to have four classifications may eliminate
classifications of either Irregulars" or "Seconds."
(b) The sale of a lot of hosiery, containing more than one of the
above given classifications, as Mill Runs ", is an unfair trade
(c) All hosiery which is not first quality shall be stamped or
transferred either "Irregulars ", Seconds ", or "Thirds" on the
toe, sole, or outside the welt of each hose according to classification.
All such marking must be visible and indelible, in full face type
letters of not less than ?2" in height, except that in the case of
infants' hose the letters may be 1," in height.
(d) The end label of all boxes, containing goods other than first
quality, shall be marked in accordance with the stamping of the
goods therein, in full face type letters of not less than in height.
9. Substitution.-To ship or deliver hosiery which does not con-
form in quality and value to the samples submitted or representa-
tions made prior to securing the order, without the knowledge or
consent of the purchaser to such substitution, is an unfair trade
10. Misbranding and .Misepre e''Anttion of M,'tttrials.-(a) To sell
hosiery marked, or branded, falsely with the effect of misleading, or
deceiving, purchasers, or buyers, with respect to price, quantity,
quality, gauge, grade, substance or value of the merchandise, is an
unfair trade practice.
(b) If any definite section or sections of the iho'e be made of a
material entirely different from that of the bulk or body of the
stocking, when such material gives the appearance of silk, the hose
must be stamped with the names of both materials.
(c) No material content shall be stamped on any hose unless it
represents at least 5 percent (5%) of the hose by weight. When
two or more contents exist, if any content is stamped on the hose
all contents constituting five percent (5o) or more of the weight
of the hose shall be stamped and in the order of the major content.
In hosiery having an all-silk, or all-rayon, or a mixture of rayon
and silk body or boot, with cotton top and,'or cotton toe, heel, sole
and highsplicing, the weight." referred to in this paragraph shall
exclude the weights of the cotton portions mentioned. Such hosiery
may be marked respectively "silk ", rayon "' or rayon and silk "
without reference to the cotton content.
(d) If hosiery is marked with any material content in terms of
percentage, the percentage of each material content must be shown.
11. Imitation of Competitor's Marks.-The imitation of trade
marks, trade names, slogans or other marks of identification of
competitors, having the tendency to mislead or deceive any buyer
is an unfair trade practice.
12. Observance of Code.-The failure to observe any rule in this
Article of the Code, even if it does not contain the words unfair
trade practice", is a violation of the Code.
Approved Code No. 16-Amendment No. 6.
Registry No. 241-02.
UNIVERSITY OF FLORIDA
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