Approved Code No. 201-Supplement No. 8-Reprint Registry No. 229-3-06
NATIONAL RECOVERY ADMINISTRATION
CODE OF FAIR COMPETITION
WHOLESALE DRY GOODS
(A Division of the Wholesaling or Distributing Trade)
AS APPROVED ON MAY 14, 1934
WE DO OUR PART
INCLUDES AMENDMENT NO. 1
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APPROVED CODE NO. 201--SUPPLEMENT NO. 8
SUPPLEMENTARY CODE OF FAIR COMPETITION
WHOLESALE DRY GOODS TRADE
As Approved on May 14, 1934
SUPPLEMENTARY CODE OF FAIR COMPETITION FOR THE WHOLESALE DRY
A DIVISION OF THE WHOLESALING OR DISTRIBUTING TRADE
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 Wholesale Dry Goods
Trade to the Code of Fair Competition for the Wholesaling or Dis-
tributing 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, Administrator for Industrial 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 annexed
report and do find that said Supplemental Code complies in all re-
spects 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 Competition be and it is hereby ap-
proved; provided, however, that the provisions of Article V are
approved for a period of ninety (90) days only, subject to further
order at that time as a result of study made of the operation of said
HUOH S. JOHNSON,
Administrator for Industrial Recovery.
H. O. KING
May 1,5 1934.
REPORT TO THE PRESIDENT
The White House.
SIR: This is a report of the Hearing on the Supplemental Code
of Fair Competition for the Wholesale Dry Goods Trade, con-
ducted in the Chinese Room of the Mayflower Hotel, on December
20, 1933. The Supplemental Code, which is attached, was presented
by a duly qualified and authorized representative of the Trade.
According to statistics furnished by members of the Wholesale
Dry Goods Trade, there are approximately 1071 establishments
with aggregate annual sales of $890,000,000. The Trade employs
about 26,000 persons. It should be noted that these figures include
what is known to the Trade as General Line Wholesalers.
PROVISIONS OF THE CODE
Since this Code is supplemental to the Code of Fair Competi-
tion for the Wholesaling or Distributing Trade, it contains no
The provisions containing supplemental definitions are consid-
ered inclusive and accurate.
The supplement to the Administrative provisions of the Gen-
eral Code establishes a Divisional Code Authority which is fairly
and adequately representative of all the different elements in the
The Trade Practices are not considered in any way objection-
able. The provision regarding sales below cost is designed to pro-
tect the producer as well as the members of this Trade. This pro-
vision has been thoroughly probed and it is felt that the result
gives very adequate consumer protection.
The Deputy Administrator in his final report to me on said
Supplemental 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 inter-
state 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 adequate governmental sanction and super-
vision, by eliminating unfair competitive practices, by promoting
the fullest possible use of the present productive capacity of indus-
tries, by avoiding undue restriction of production (except as may
be temporarily required), by increasing the consumption of indus-
trial 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 said 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 inequi-
table 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
eliminate or oppress small enterprises and will not operate to dis-
criminate against them.
(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.
IHUGHI S. JOHNSON,
MAY 14, 1934.
SUPPLEMENTARY CODE OF FAIR COMPETITION FOR
THE WHOLESALE DRY GOODS TRADE
A DIVISION OF THE WHOLESALE OR DISTRIBUTING TRADE
To further effectuate the policies of Title I of the National
Industrial Recovery Act the following provisions are established
as a Supplemental Code of Fair Competition for the Wholesale Dry
Goods Trade to the Code of Fair Competition for the Wholesaling
or Distributing Trade as provided by Article VI, Section 1 (c)
thereof and shall be considered a part of and in connection with
such Wholesaling or Distributing Code. Both Codes shall be bind-
ing upon every member of the Wholesale Dry Goods Trade.
SUPPLEMENTING ARTICLE II OF THE GENERAL CODE
Wholesaler or Distributor.-The term wholesaler or distrib-
utor as used herein, is defined to mean a person or firm or division
thereof, definitely organized to render and rendering a general
distribution service, which buys and maintains at his or its place of
business a stock of dry goods or of one or more lines of dry goods
(except when the provisions of Article VI become applicable) and
which through salesmen, advertising and/or sales promotion devices
sells to retailers and/or to institutional, commercial, and.'or indus-
trial users; but which does not sell in significant amounts to ultimate
Member of the Trade.-The term member of the Trade as used
herein, is defined to mean a wholesaler" or distributor" as
Dry Goods.-The term dry goods ", as used herein, is defined
to mean textiles, apparel, and the miscellaneous products of industry
generally classed as novelties, notions, and kindred lines.
National Wholesaler.-The term "national wholesaler ", as used
herein, is defined to mean a person or firm or division thereof, which
sells dry goods at wholesale predominantly in fifteen or more of the
states and/or territorial possessions of the United States.
Territorial Wholesaler.-The term "territorial wholesaler ", as
used herein, is defined to mean a person or firm, or division thereof,
which sells dry goods at wholesale predominantly in less than fifteen
of the states and/or territorial possessions of the United States.
Specialty Wholesaler.-The term specialty wholesaler ", as used
herein, is defined to mean a person, firm or division thereof, which
deals at wholesale in one or more lines of dry goods, but does not
deal in a general line.
Divisional Code Authority.-The term "Divisional Code Author-
ity ", as used herein, is defined to mean the Divisional Code Au-
thority for the Wholesale Dry Goods Trade, a division of the Whole-
saling or Distributing Trade.
General Code.-The term General Code ", as used herein, is de-
fined to mean the Code of Fair Competition for the Wholesaling or
Consignment.-The term consignment ", as used herein, is defined
to mean the delivery by a distributor to any person, agent, purchaser,
or otherwise under any agreement or understanding, expressed or
implied, pursuant to which the seller retains any lien upon or title
to or interest in the goods delivered for the primary purpose of allow-
ing such goods to be returned as unsold.
SUPPLEMENTING ARTICLE VI, SECTION 2 (E) OF THE GENERAL CODE
SECTION 1. (a) For the purpose of administration, the Dry Goods
Division of the Wholesale Trade may be sub-divided into specific
commodity subdivisions, the following being authorized upon the ap-
proval of this Supplemental Code:
1. A Hosiery and Underwear division.
2. A Piece Goods division.
3. A Notions division.
4. A Men's Furnishings division.
5. A Knitted Outerwear division.
6. A Ready-to-wear division.
7. A House Furnishings division.
Additional subdivisions may be made when and as approved by
(b) Each of these subdivisions, subject to the approval or consent
of the Administrator, shall be entitled to appoint a representative
on the General Code Authority established by the General Code.
SECTION 2. (a) The Divisional Code Authority for the Dry Goods
Division of the Wholesaling or Distributing Trade shall be composed
of not less than nineteen (19) nor more than twenty-one (21) mem-
bers; one for each of seven (7) territorial membership.zones as
established by the Wholesale Dry Goods Institute; one for each
of the subdivisions established in Section 1 (a) of this Article and
five (5) to be appointed by the Board of Directors of the Wholesale
Dry Goods Institute.
(b) The members of the Divisional Code Authority shall be
elected as follows:
1. The Board of Directors of the Wholesale Dry Goods Institute
shall send to every member of the Trade discoverable by diligent
search a nominating ballot upon which the member of the Trade may
enter nominations for the members of the Divisional Code Authority
for the territorial district and commodity subdivision to which he
belongs. To each ballot shall be attached a statement of assent and
compliance to this Supplemental Code and to the General Code.
2. Fifteen days after the mailing of such ballots the Board of
Directors of the Wholesale Dry Goods Institute shall publicly count
the votes then in its possession. Only those ballots which are ac-
companied by a signed statement of assent and compliance shall
be counted. The two persons in each territorial district and in each
commodity subdivision receiving the highest number of votes shall
be declared to be the nominees.
3. The Board of Directors of the Wholesale Dry Goods Institute
shall then prepare ballots including the names of these nominees.
The procedure followed in mailing these ballots shall be the same
as that described in subsection (b) 1, above.
4. Fifteen days after the mailing of such ballots the Board of
Directors of the Wholesale Dry Goods Institute shall publicly count
the votes then in its possession. Only those ballots shall be counted
which are accompanied by a signed statement of assent and com-
pliance or by a letter stating that the voter has previously filed such
a statement with said Board of Directors. The person in each ter-
ritorial district and in each commodity subdivision who receives the
highest number of votes shall be declared elected.
5. The Board of Directors of the Wholesale Dry Goods Institute
shall make certification to the Administrator of its compliance with
the above method of election and of the results thereof.
SECTION 3. (a) The Divisional Code Authority may appoint for
each commodity subdivision a Control Committee of five members
which shall include one representative of specialty wholesalers, one
representative of territorial wholesalers and one representative of
(b) The several Control Committees shall have such duties and
powers as may be delegated to them by the Divisional Code Author-
ity but nothing herein shall be construed to relieve the Divisional
Code Authority of any of its duties or responsibilities as such.
(c) The Divisional Code Authority may appoint a regional agent,
or agents, in each of such regions as it may establish, to assist it in
administering the Supplemental Code, provided however, that noth-
ing herein shall relieve the Divisional Code Authority of its respon-
sibilities as such.
(d) The Divisional Code Authority shall appoint a Trade Prac-
tice Committee, which shall meet with the Trade Practice Com-
mittees appointed under such other Codes as may be related to the
Trade, except those appointed under other Supplemental Codes to
the General Code, for the purpose of formulating fair trade prac-
tices to govern the relationships between production and distribution
employers under this Supplemental Code and under such others, to
the end that such fair trade practices may be proposed to the Admin-
istrator as amendments to this Supplemental Code and such other
(e) The Divisional Code Authority shall have power 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 General Code.
(f) (1) It being found necessary in order to support the adminis-
tration of this Code and to maintain, the standards of fair competi-
tion established hereunder and to effectuate the policy of the Act,
the Code Authority is authorized:
a. 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;
b. To submit to the Adrin itrator for his approval, subject to
such notice and opportunity to be heard as he may deem necessary
(1) an itenmiLed budget of its estimated c penses for the foregoing
purposes, and (2) an equitable basis upon which the funds nec-
essary to support such budget shall be continued by members of the
c. After such budget and basis of contribution have been approved
by the Administrator, to determinne 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.
(2) 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 n len-
bers of the Trade complying with the Code and contributing to the
expense of its administration as hereinabo-ve provided, unless duly
exempted from making such contributions, shall be entitled to
participate in the selection of members of the 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
(3) The Divisional Code Authority shall neither incur nor pay
any obligation substantially in excess of the amount thereof as esti-
mated in its approved budget, and shall in no event exceed the total
amount contained in the approved budget, except upon approval of
the Administrator; and no subsequent budget shall contain any
deficiency item for expenditures in excess of prior budget estimates
except those wh/ch the Administrator shall have so approved.?
SECTION 4. Any person or firm now or hereafter engaged in the
wholesale distribution of dry goods and related lines as herein
found is eligible for and shall be admitted to membership in the
Wholesale Dry Goods Institute upon payment of dues and agree-
ment to comply with the Constitution and the by-laws thereof.
SECTION 5. Nothing contained in this Supplemental Code shall con-
stitute the members of the Divisional Code Authority partners for
any purpose nor shall any members of the Divisional Code Author-
ity be liable in any manner to anyone for any act of any other mem-
bers, officers, agents, or employees 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 wilful misfeasance or nonfeasance.
SECTION 6. 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
1 Italicized words added by Amendment No. 1, approved Sept. 14, 1934.
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 Administrator 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
ARTICLE IV-TRADE PRACTICES
SUPPLEMENTING ARTICLE VII OF THE GENERAL CODE
The following practices constitute unfair methods of competition:
1. To deliver merchandise on any basis other than F.O.B. the city
in which the wholesaler is located or, in case of direct shipments,
F.O.B. city where factory is located.
Free deliveries of merchandise may be made by a wholesaler within
but not beyond the metropolitan area of the city in which the whole-
saler is located. The Divisional Code Authority may define the
metropolitan area in any specific case.
This rule does not apply to those items on which it is the trade
practice of the manufacturer to prepay transportation charges to the
retail store on goods sold by the wholesaler.
2. To place merchandise on consignment except under circum-
stances to be defined by the Divisional Code Authority when pecul-
iar circumstances of the Trade make the practice desirable.
3. To grant rebates, bonuses, trade discounts, buyers' expense al-
lowances, delivery allowances, storage allowances, overshipments
without charge, gifts, advertising allowances or other tangible in-
ducement or economic advantage to any customer unless such rebates,
bonuses, trade discounts, buyers' expense allowances, delivery allow-
ances, storage allowances, overshipments without charge, gifts, adver-
tising allowances, or other tangible inducement or economic advan-
tages are available to all other customers of the same class in all ter-
ritories on like terms and conditions.
4. To sell any merchandise unless the same shall bear a descriptive
number or name.
5. To allow or to refund personal transportation costs or any part
thereof to customers or prospective customers, or their agents or
6. To sell goods on terms which permit the extension -of net due
date, cash discount, special dating, or anticipation interest allow-
ances greater than those established for the several lines of merchan-
dise by the Divisional Code Authority and approved by the
7. (a) To sell any merchandise at less than a price which includes
net invoice purchase price, plus incoming transportation costs.
(b) Nothing herein shall prohibit sales made in good faith to
anticipate changing market conditions or to maintain clean and well
balanced stocks of merchandise. Such sales shall be immediately
reported to the Divisional Code Authority. Upon demand by the
Divisional Code Authority any wholesaler making such sale shall
supply proof that such sale was made in good faith.
ARTICLE V-PERMISSIVE TRADE PRACTICES 2
SUPPLEMENTING ARTICLE VIII OF THE GENERAL CODE
Section 1. (a) No wholesaler shall sell or offer to sell to any
purchaser of a product upon which the manufacturer thereof shall
have granted to such wholesaler a fair price differential as provided
by Article VIII Section 1 of the General Code, a lower price than
that quoted on such conunodity by said manufacturer to the same
class of purchasers.
(b) If such differential is greater than the operating cost of any
member of the Trade such member of the Trade shall be permitted,
upon furnishing proof of his lower operating cost to the Divisional
Code Authority, to sell at less than the differential so established
but not less than his invoice cost plus said operating cost.
(c) Any member of the trade may sell at a price lower than that
established in paragraph (a) of this Section in order to meet the
competition of any other member of the trade who is permitted
under paragraph (b) of this Section to reduce his price below that
established in paragraph (a) of this Section.
(d) The Administrator may, from time to time, collect statistics
of the operating expenses of the members of the Trade. If such
investigation shall show that the price differential established under
paragraph (a) above is in any way inequitable or unduly high in
relation to the wholesaler's operating costs, or tends to enhance the
price of the product to buyers or ultimate consumers, the Adminis-
trator may, after proper notice and hearing, suspend it or declare
it permanently inoperative.
(e) An exception to the rule in paragraph (a) of this Section may
be granted by the Divisional Code Authority in case a wholesaler
wishes to discontinue handling a manufacturer's line and has stock
on hand to be disposed of. In such case the manufacturer shall be
given the option of taking back at the manufacturer's then market
price the wholesaler's stock on hand or any portion thereof. If
the manufacturer fails to exercise this'option within ten days after
written notice by the wholesaler of his intention to discontinue han-
dling that line, the wholesaler may proceed to dispose of the stock at
any price he may desire.
ARTICLE VI-APPLICATION OF THIS SUPPLEMENTAL CODE
Whenever any Supplemental Code is approved for wholesalers who
specialize in a particular type of dry goods, such specialty whole-
salers shall no longer be subject to this Supplemental Code; provided,
that only upon order of the Administrator shall the sale of such
specialty products by wholesalers governed by this Supplemental
Code be governed by the trade practice provisions of such dry goods
specialty Supplemental Codes.
ARTICLE VII-EFFECTIVE DATE
This Supplemental Code shall become effective on the tenth day
after its approval by the Administrator.
Approved Code No. 201. Supplement No. 8.
Registry No. 229-3-06.
See paragraph 2 of order approving this Code.
UNIVERSITY OF FLORIDA
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