NATIONAL RECOVERY ADMINISTRATION
CODE OF FAIR COMPETITION
(A Division of the Wholesaling or Distributing Trade)
AS APPROVED ON AUGUST 24, 1934
WE DO OUR PART
GOVERNMENT PRINTING OFFICE
Ibr gale by the Superintendent of Documents, Washington, D.C. Price 5 cents
Approved Code No. 201-Supplement No. 23
Registry No. 231-11
REPORT TO THE PRESIDENT
The IVhite House.
SIR: This is a report of the Hearing on the Supplemental Code
of Fair Competition for the Wholesale Embroidery Trade conducted
in the Green Room of the Raleigh Hotel on Saturday, May 5, 1934.
The Supplemental Code which is attached was presented by a duly
qualified and authorized representative of the Trade complying with
the statutory requirements.
According to statistics furnished by members of the Wholesale
Embroidery Trade, it is estimated that there are approximately sev-
enty-five (75)" concerns with aggregate annual sales of approximately
$7,000,000. These concerns employ approximately four hundred
(400) persons. According to the statements of the Industry, em-
ployment has not been reduced since 1929.
PROVISIONS OF THE CODE
Since this Code is supplemental to the Code of Fair Competition
for the Wholesaling or Distributing Trade, it contains no labor pro-
The provisions containing supplemental definitions are considered
inclusive and accurate.
The supplement to the Administrative provisions of the General
Code establishes a Divisional Code Authority which is fairly and
adequately representative of all the different elements in the Trade.
The Trade Practices proposed are not considered in any way
The Deputy Administrator in his final report to me on said Sup-
plemental Code having found as herein set forth and on the basis
o,f 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 will provide for the general welfare by promoting the organ-
ization of trade for the purpose of cooperative action among trade
groups, by inducing and maintaining united action of labor and
management under adequate governmental sanction and supervision,
by eliminating unfair competitive practices, by promoting the fullest
possible use of the present productive capacity of industries, by
avoiding undue restriction of production (except as may be tempo-
rarily required), by increasing the consumption of industrial and
agricultural products through increasing purchasing power, by
reducing and relieving unemployment, by improving standards of
labor, and by otherwise rehabilitating industry.
(b) Said Trade normally employs not more than 50,000 employees
and it. is not classified by me as a major industry.
(c) The Supplemental Code as approved complies in all respects
with the pertinent provisions of said Title of .-aid Act, including
without limitation Subsection (a) of Section 3, Subsection (a) of
Section 7 and Subsection (b) of Section 10 thereof; and that the
applicant association is a trade association truly representative of
the aforesaid Trade; and that said association imposes no inequitable
restrictions on admission to membership therein.
(d) The Supplemental Code is not designed to and will not permit
monopolies or monopolistic practices.
(e) The Supplemental Code is not designed to and will not elimi-
nate or oppress small enterprises and will not operate to discriminate
(f) Those engaged in other steps of the economic process have
not been deprived of the right to be heard prior to the approval of
this Supplemental Code.
For these reasons, the Supplemental Code has been approved.
HUGH S. JOHNSON,
A'dm.in t rat or.
AUGUST 24, 1934.
SUPPLEMENTARY CODE OF FAIR COMPETITION FOR
THE WHOLESALE EMBROIDERY TRADE, A DIVISION
OF THE WHOLESALING OR DISTRIBUTING TRADE
To effectuate the policies of Title I of the National Industrial
Recovery Act, this Supplemental Code is established as a Code of
Fair Competition for the Wholesale Embroidery Trade, pursuant to
Article VI, Section 1 (c) of the General Code of Fair Competition
for the Wholesaling or Distributing Trade approved by the President
of the United States on January 12, 1934. All provisions of the
General Code which are not in conflict with the provisions of the
Supplemental Code are hereby specifically incorporated by reference
in this Supplemental Code and made part hereof. Such provisions
of the General Code, together with the provisions of the Supple-
mental Code, are the standards of fair competition for,.and are bind-
ing upon every member of the said Wholesale Embroidery Trade.
JPPLEMENTING ARTICLE II OF THE GENERAL. CODE
SECTION 1. The term embroidery merchant" or member of the
Trade as used herein, is defined to mean any individual, partner-
ship, association, corporation or other form of enterprise or definitely
organized division thereof, other than a. manufacturer, which sells to
retailers and,'or to institutions, commercial and,,'or industrial users,
the products of the Schiffli and other embroidery machines except
Bonnaze. Any person who sells to institutional, commercial and/or
industrial users for resale to the ultimate consumer, or in significant
amounts to ultimate consumers, shall be considered a wholesaler only
to the extent of that part of his business which fulfills the qualifica-
tions stated in the preceding sentence. It is the character of a con-
cern's selling rather than the character of its buying which distin-
guishes it as a wholesaler.
SECTION 2. The term the Trade as used herein is defined to mean
the business in which embroidery merchants are engaged.
SECTION 3. The term Association as used herein is defined to
mean the Embroidery Merchants Association, Incorporated.
SECTION 4. The term Divisional Code Authority as used herein
is defined to mean the Divisional Code Authority for the Wholesale
Embroidery Trade, a division of the Wholesaling or Distributing
SECTION 5. The term General Code as used herein is defined to
mean the Code of Fair Competition for the Wholesaling or Dis-
SECTION 6. The term "consignment" as used herein shall include
the delivery by any embroidery merchant as agent, purchaser, or
otherwise, under any agreement or understanding, expressed or im-
plied, pursuant to which the seller retains any lien upon or title to
or interest in the goods delivered, or pursuant to which the customer
may at his option return any of the goods or claim any credits with
SUPPLEMENTING ARTICLE VI, OF THE GENERAL CODE
SECTION 1. The Divisional Code Authority for the Wholesale Em-
broidery Trade shall be composed of five (5) representatives of such
Trade, four (4) of whom shall be selected from the Association in
accordance with a plan to be approved by the Administrator, and
one (1) to be appointed by the Administrator from members of the
Trade who are not members of said Association.
SECTION 2'. The Divisional Code Authority shall have the follow-
ing duties and powers in addition to those prescribed in the General
Code, subject to such rules and regulations as may be prescribed by
(a) To organize, elect officers, hire employees, and perform such
other acts as may be necessary for the proper administration of this
(b) To adopt by-laws, rules and regulations for procedure.
(c) To use such trade associations and other agencies as it deems
proper for the carrying out of any of its activities, provided that
nothing herein shall relieve the Divisional Code Authority of its
duties or responsibilities under this Supplemental Code, and that
such trade associations and agencies shall at all times be subject to
and comply with the provisions hereof.
(d) To appoint a Trade Practice Committee, which shall meet
with the trade practice committees appointed under such other
Codes of Fair Competition as may be related to the Trade, except
such other Supplemental Codes of Fair Competition to the General
Code, for the purpose of formulating fair trade practices to govern
the relationship between production and distribution employers un-
der this Supplemental Code and under such others, to the end that
such fair trade practices may be proposed to the Administrator, as
an amendment to this Supplemental Code and such other Codes.
(e) 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,
members of the Trade subject to this Supplemental Code shall fir-
nish 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 Supplemental Code shall relieve any member of the
Trade of any existing obligations to furnish reports to any govern-
mental agency. No individual report shall be disclosed to any other
member of the Trade or any other party except to such other gov-
ernmental agencies as may be directed by the Administrator.
(f) It being found necessary in order to support the administra-
tion of this code and to maintain the standards of fair competition
established hereunder and to effectuate the policy of the Act, 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 may be raised as hereinafter provided and which
shall be held in trust for the purposes of the Code;
(2) To submit to the Administrator for his approval, subject to
such notice and opportunity to be heard as he may deem necessary
(a) an itemized budget of its estimated expenses for the foregoing
purposes, and (b) 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 ap-
proved by the Administrator, to determine and obtain equitable
contribution as above set forth by all members of the Trade,. and.tp
that end, if necessary, to institute legal proceedings therefore in its
(g) Each member of the Trade shall pay his or its equitable con-
tribution to the expenses of the maintenance of the Code Authority,
determined as hereinabove provided, and subject to rules and regu-
lations pertaining thereto issued by the Administrator. Only mem-
bers. of the Trade complying with the Code and contributing to the
expenses of its administration as hereinabove provided, unless d(J
exempted from making such contributions, shall be entitled to par-
ticipate in the selection of members of the Code Authority or to re-
ceive the benefits of any voluntary activities or-to makn e use of aa
emblem or insignia of the National Recovery Adninistra-tion.
(h) The Code Authority shall neither incur nor pay any obliga-
tion in excess of the amount thereof as estimated in its approved
budget, except upon approval of the Administrator; and no subse-
quent budget shall contain any deficiency item for expenditures in
excess of prior budget estimates except those which the Admainistra-
tor shall have so approved.
SECTION 3. Nothing contained in this Supplemental Code shall
constitute the members of the Divisional Code Authority partners
for any purpose nor shall any member of the Divisional Code Au-
thority be. liable in any manner to anyone for any act of any other
member, officer, agent, or employee of the Divisional Code Authority.
Nor shall any member of the Divisional 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 Supplemental
Code, except for his' own willful malfeasance or non-feasance.
SECTION 4. If the. Administrator 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, the Administrator
may require that such action be suspended to afford an opportunity
for investigation of the merits of such action and for further con-
sideration by. such Divisional Code Authority or agency, pending
final action, which shall not be effective. unless the Administrater
approves or unless he shall fail to disapprove after thirty (30) days'
notice to him of intention to proceed with such action in its original
or modified form.
SECTION 5. The Divisional Code Authority shall have the power
to devise and set up a design registration service for the embroidery
merchants, including branches where necessary, and to adopt such
rules and regulations, with the approval of the Administrator, as
may be necessary to carry out the provisions of Article IV, Section 5
ARTIcLE IV-TRADE PRACTICES
SUPPLEMENTING ARTICLE VII Or THE GENERAL CODE
The following practices constitute unfair methods of competition
and the act of any member of the Trade, directly or indirectly,
through an officer, employee, agent or representative, knowingly us-
ing, employing or permitting to be employed any such unfair prac-
tices, shall constitute a violation of this Supplemental Code:
SECTION 1. To deliver merchandise to any customer beyond the
metropolitan area of a city within which the member of the Trade is
located, unless such merchandise shall be shipped f.o.b. seller's ware-
house. The Divisional Code Authority is empowered to define the
term "metropolitan area" subject to the approval of the
SEcTION 2. To sell or place merchandise on consignment except
when permitted by the Divisional Code Authority in cases where a
member of the Trade shall certify by registered mail that damaged
goods must be disposed of by the consignment method. The Divi-
sional Code Authority shall act upon such certification within one
(1) week after its receipt, and shall approve the sale unless it finds
that there is in fact. no necessity for the disposal of such damaged
goods or that the goods are not in fact damaged goods. If the Divi-
sional Code Authority shall not approve the sale it shall at once
notify the member of the Trade of its action and shall also notify
the Administrator, who may prohibit the sale. If the proposed
consignment sale is not prohibited by the Administrator within ten
(10) days after the receipt of notice from the Divisional Code
Authority, the member of the Trade shall have the right, at the
expiration of said ten (10) day period, to proceed to sell or place
the damaged goods on consignment.
SECTION 3. TO ship sample pieces on memorandum, except under
the following terms and conditions: Such shipment not to contain
more than one piece of any one pattern of one color and not to be for
a period of more than ten (10) days and with the understanding and
declaration that in the event such goods are not returned within ten
(10) days they are to be charged as of the date of shipment.
SECTION 4. To grant terms or cash discounts greater than those
(a) Either eight per cent (8%) ten (10) days at E.O.M., or six
per cent (6%) ten (10) days, sixty (60) days extra, on trimmings
and neckwear; and three per cent (3%) ten (10) days or two per
cent (2%) ten (10) days, E.O.M., sixty (60) days extra, on all em-
broideries. No additional dating shall be given on any bills.
(b) These terms shall include no greater discount than those above
mentioned, except, however, that where payment is made on the basis
of ten (10) days E.O.M., it shall be permissible to grant dating as
of the first (1st) of the following month on shipments made on and
after the twenty-fifth (25th) of the month.
(c) Anticipation of the payments may be allowed at a rate of not
more than six per cent (6%) per annum, or the.legal rate, whichever
SECTION 5. To make or cause to be made a colorablee imitation"
of an original design of any other embroidery merchant.
This Supplemental Code and all the provisions thereof are ex-
pressly made subject to the right of the President in accordance with
the provisions of Sub-section (b) of Section 10 of the Act, from
time to time to cancel or modify any order, approval, license, rule
or regulation issued under Title I of said Act.
ARTICLE VI-EFFECTIVE DATE
This Supplemental Code shall become effective on the tenth (10th)
day after its approval by the Administrator.
Approved Code No. 201-Supplement No 23.
Registry No. 231-11.
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