NATIONAL RECOVERY ADMINISTRATION
CODE OF FAIR COMPETITION
AS SUBMITTED ON AUGUST 11, 1933
REGISTRY No. 1404-3-14
The Code for the Wholesale Automotive 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
WE 0OUR PART
J. I JE__
GOVERNMENT PRINTING OFFICE
WASHINGTON : 1933
For sale by the Superintendent of Documents, Washington, D.C. -
- Price 5 cents
Digitized by the Internet Archive
in 2011 with funding from
University of Florida, George A. Smathers Libraries with support from LYRASIS and the Sloan Foundation
A CODE OF FAIR COMPETITION APPLICABLE TO THE
WHOLESALE AUTOMOBILE INDUSTRY
(1) Statement of Principles.
(4) Trade Practice Rules.
(5) Organization and Administration.
ARTICLE I-STATEMENT OF PRINCIPLES
This Code of Fair Competition, applicable to all wholesalers of
automotive parts, equipment, tools, accessories, supplies, and service
in the United States of America, is based on the following principles:
(1) The Wholesale Automotive Industry is an industry in and
of itself within the meaning of the National Industrial Recovery Act,
and qualifies for recognition because of that fact and because of the
essential services it performs.
(2) The Wholesale Automotive Industry desires to assist the
President of the United States in his program of Industrial rehabil-
itation as embraced in the policies set forth in the National Indus-
trial Recovery Act.
(3) The proper nuintenance of automotive vehicles in the interest
of public safety should be carefully governed both as to character
(4) Automotive wholesalers distributing products not allied to
the automotive industry should fully subscribe to and operate under
codes of fair competition a,, approved by the President governing
such products; and that any and all persons, firmni, and/or corpora-
tions engaging in the Wholesale Automotive Industry shall be sub-
ject to the provisions of this Code when same shall have been
approved by the President of the United States.
This Code of Fair Competition governing the Wholesale Auto-
motive Industry is adopted to effectuate the policies set forth in the
National Industrial Recovery Act, as applying to the wholesale dis-
tribution of automotive parts, equipment, tools, accessories, supplies,
and service in order:
(1) to assist in removing obstructions to the free flow of Inter-
state Commerce which tend to diminish the amount thereof;
(2) to assist in enlarging the purchasing power of persons related
to this industry through increase in employment and the payment
of adequate wages to those employed;
(3) to aid in the rehabilitation of the industry by
(a) the elimination of unfair and destructive competitive prac-
tices within the Wholesale Automotive Industry; by
(b) the elimination of the sale of goods below the cost of produc-
tion and distribution; and by
(c) the stabilization of prices that are fair alike to the consuming
public and to producers and distributors.
This Code of Fair Competition shall be applicable to any and all
persons, partnerships, and/or corporations in the United States of
_A eri;ia and its possessions, qualifying under a reasonable interpre-
tation of the following definition of an Automotive Wholesaler:
An Automotive Wholesaler is a person, partnership, and/or cor-
poration actually engaged in the buying of automotive merchandise
and in the reselling of such merchandise to retailers, who maintains
a regularly established place of business, who carries a merchandise
inventory enabling him or it to supply the reasonable demands of the
clientele served, and who generally performs the recognized func-
tions of a wholesaler in a manner acceptable to his or its suppliers
on the one hand and to his or its customers on the other.
In the co i-tiruction of the above definition, the following rules
shall apply together with such other nonconflicting rules as the Na-
tional Administrative Committee, hereinafter provided for, may
(1) The buying of merchandise in wholesale quantities for the
purpose of and the reselling of same to retailers is the distinguishing
mark of the Wholesaler.
(2) Whenever a person, firm, and/or corporation engaged in the
production of automotive merchandise assumes the recognized func-
tions of the wholesaler of such merchandise, the buying of materials
out of which products which he wholesales are fabricated constitutes
" buying of automotive merchandise in wholesale quantities within
the meaning of the above definition, and, insofar as related to the
sale to retailers of said products, his status shall be of the Wholesaler.
(3) Transfer of automotive merchandise in wholesale quantities
between and among subsidiaries and affiliated concerns for the pur-
pose of reselling same to retailers shall constitute buying of auto-
motive merchandise in wholesale quantities ", as contemplated in
(4) The machining of automotive products, as generally per-
formed in machine shop operations of automotive wholesaler estab-
lishments for the retailing customers of said such establishments and
the supplying of same to said retailing customers shall be deemed
doing a wholesale automotive business within the meaning of the
(5) The term automotive merchandise shall not be construed to
include the completed car, truck or other automotive vehicle, tractor,
trailer, stationary internal combustion engine, aeroplane, and marine
engine, but the sale of accessories attached to the car, truck or other
automotive vehicle, tractor, trailer, stationary combustion engine,
aeroplane and marine engine, separately priced and charged for,
shall, insofar as the sale from the wholesaler or distributor or from
the manufacturer of the completed car, truck or other automotive
vehicle, tractor, trailer, stationary internal combustion engine, aero-
plane and marine engine, direct to the retailer is concerned constitute
wholesaling within the meaning of this definition of an automotive
(6) The term automotive merchandise" shall include any and
all parts equipment, tools, accessories, and iipplies used in the repair
and maintenance of automotive vehicles, tractors, trailers, stationary
internal combustion engines, and aeronautic and marine engines,
excepting tires and petroleum products and such other products
related to the automotive industry as may be governed by Codes
applying to the wholesale distribution of same separately approved
by the President of the United States; and excepting buildings and
building appliances used in connection with the repair and main-
tenance of automotive vehicles. It shall include Shop Equipment "
and Tools ", as those terms are commonly understood and as fur-
ther enlarged within the meaning of Rule #1, Article V of the Code
for the Petroleum Industry; and the sale of such to any and all
automotive repair and maintenance establishments shall be deemed
wholesaling of same.
(7) The term "retailer" shall be construed to include any and
all persons, partnerships, and 'or corporations regularly engaged in
the sale of automotive merchandise and or service connected with
the repair and maintenance of automotive vehicles, as defined or
expanded in sections 5 and 6 of this Article, to the consuming public,
and as enlarged or embraced in that Trade Practice Rule of this
Code entitled Classification of Customers."
(8) This definition of an automotive wholesaler, nor no part or
section of it, shall be construed in such manner as to interfere with
the free flow or exchange of merchandise from one wholesaler to
(1) On and after the effective date of this Code employers in the
Wholesale Automotive Industry shall adopt a maximum work week
for employees which shall not be in excess of an average of 44 hours
per week for any twelve months' period, and the maximum hours of
work for any one week shall be 48 hours. From this rule shall be
excepted traveling sales people and executives, provided that the
latter, in working beyond the stipulated 48 hours per week, do not
perform the work or take the place ordinary performed or taken
by employees subject to this code.
On and after the effective date the minimum wage that shall be
paid by any employer to any employee engaged in the wholesaling of
the products of the Wholesale Automotive Industry and in labor
operations directly incident thereto shall be 350 per hour. And pro-
vided further that incidental labor and learners may be paid not less
than 300 per hour, but the total amount paid to such incidental labor
and learners shall not exceed in any calendar month 10% of the
total wages paid to all labor by such employer.
No person under 16 years of age may be employed in this indus-
try. However, any employer in this Industry, located in a section
of the country where a lower minimum wage rate has been pre-
scribed and accepted by the President in the Code of another indus-
try for employees in the same crafts or classifications of labor em-
ployed in this Industry shall have the right to employ such crafts or
classifications of labor at such lower rate.
Nothing in this Code shall prevent various district and local
groups of this industry, as provided in the administrative plan under
this Code, from setting higher rates of minimum wages or a lower
number of maximum hours per week in their individual Codes of
Fair Competition should such be deemed necessary to effectuate the
policies of the National Industrial Recovery Act.
(2) Employees in the Wholesale Automotive Industry shall have
the right to organize and bargain collectively through representatives
of their own choosing, and shall be free from any interference, re-
straint, or coercion, in the designation of such representatives, or any
(3) No employee in the Wholesale Automotive Industry, and no
one seeking employment, shall be required as a condition of employ-
ment to join any organization, including a company union, or to
refrain from joining a labor organization of his own choosing.
(4) Employers and employees of labor in the Wholesale Automo-
tive Industry shall comply with the maximum hours of labor, mini-
mum rates of pay, and other working conditions approved or pre-
scribed by the President of the United States.
(5) The employers in the Wholesale Automotive Industry pro-
pose to continue the open-shop policies heretofore followed in which
unusually satisfactory and harmonious relations with the employees
have been maintained.
(6) The maximum hours of any store or service operation in
wholesale-automotive establishments shall be sixty-six (66) hours
in any one week between the hours of 7 A.M. and 6 P.M., excluding
Sunday and national holidays, as follows: New Years Day, Wash-
ington's Birthday, Decoration Day, July 4, Labor Day, Thanksgiv-
ing and Christmas, and/or such other days as are universally
observed in any given district.
Emergency calls may be cared for in hours not specified in the
preceding section, provided any and all emergency operations shall
be reported immediately to the secretary or other designated agency
of the local group of the locality in which such emergency opera-
tions are performed.
What constitutes emergency service shall be determined by the
(1) There shall be established for the Wholesale Automotive In-
dustry a basic chart of standardized account headings suitable for
and applicable to wholesale automotive establishment ts. This basic
chart, when completed, shall become a part of this Code and shall
include cost of material, handling, hauling, machining, freight, sell-
ing, management, rent, overhead, insurance, and imputed interest on
investments at 6%.
The following listing is intended to illustrate the nature of said
basic chart of standardized account headings, which may be modified
by the National Administrative Committee hereinafter provided for
in such manner as to best achieve the purpose for which same is
Gross sales including shop labor.
Cost of goods and labor sold.
Warehouse and delivery expenses.
Machine shop expenses.
Other expenses, including interest on investments.
The purpose of this basic chart of standardized account headings
is to determine an average, fair, and reasonable cost of doing business
in the Wholesale Automotive Industry.
(2) Sales below such ascertained average, fair, and reasonable cost
shall be deemed unfair competition and in violation of this Code,
when same shall have been approved by the President of the
(3) Each person, partnership, and/or corporation in the Whole-
sale Automotive Industry shall make available to the Secretary
or other designated person of the district or local group in the area
in which he or it is located, a complete list of prices at which he
intends to sell his products.
ARTICLE TT-TRADE PRACTICE RULES
Upon approval by the President of the United States of this Code
of Fair Competition, the following Trade Practice Rules shall apply
to automotive wholesalers as embraced in the definition of same con-
tained in this Code:
(1) Misbranding.-Marking or branding of products should be
done in every instance possible. Such marking, branding. or failure
to brand done for the purpose or effect of misleading or deceiving
purchasers or prospective purchasers with respect to the quantity,
quality, size, grade, or substance of the product purchased is an
unfair method of competition.
(2) Misrepresentation.-Selling or offering to sell any automotive
product with intent, to deceive purchasers or prospective purchasers
as to quantity, quality, size, grade, or substance of such products is
an unfair method of competition.
(3) Classification of Cu'stfomewr..-To prevent unfair methods of
competition, a fair and equitable classification of customers shall he
made by each district or local group and such classification shall be
strictly adhered to by all operating in that group. The above classi-
fication of customers shall include fleet owners, car distributors, car
(lealers. independent repair shops. machine shops not qualifying as
wholesalers, service stations, filling stations, battery and tire shops,
electrical repair shops, governmental agencies, or subdivisions thereof
including State, County, or Municipal, chain stores, mail-order
houses, accessory and supply stores, and other forms of retail units
as may appear.
(4) Branded Products.-We submit that a manufacturer of a
branded product who, through ingenuity, expenditure of money, ad-
verti-si g, and other means, builds up public acceptance and public
dteemanld for his product should be entitled to a property right in the
good-will attaching to that product, which should be shared by his
distributors and retailers; when this principle is dettermiiljed upon by
government policy it shall be deemed unfair trade practice for any
outlet to deviate from the price established by the manufacturer of
such branded product.
(5) Discrimination Between Territories.-The quoting of prices or
the selling of merchandise to customers in one territory at a price
lower than is offered to cu:-to lers- of similar classification in other
territories for the same quantity, grade, quality, or style, due allow-
ances being made for difference in transportation costs, is an unfair
method of competition, except that transportation costs may be
equalized as between recognized jobbing points.
(6) Discr;imination in Credit Termns.-Unwarranted granting of
credit, usually results in large bad debt losses which are an economic
waste. iSuch losses constitute a portion of operating expenses and
are reflected in selling prii~s, thus placing an unfair burden on those
customers who pay bills when due. Discrimination in credit terms
between customers is an unfair method of competition and tends to
prevent employers from maintaining the wage scale contemplated in
the Recovery Act.
(7) Discrimination in Pr;-i._ as RegardJ. Split Ship menOts.-The
acceptance of orders for large quantities of merchandise by whole-
salers and then making smaller delivcri-' at the large quantity price
is an unfair method of competition. It should be noted that where
contracts with customers, which are matters of general knowledge,
provide for rebates on quantity purcha-es, these are an exception to
the above rule.
(8) Special Close-Out Prices.-When a wholesaler deems it nec-
essary to liquidate a surplus slow-moving stock of merchandise and
wishes to offer such merchandise for sale at prices less than his regu-
lar prices, he shall file with the Secretary of the regional group in
which he is located, a statement showing the quantity, sizes, and
styles of merchandise so offered for sale and his reason for such
liquidation. On the first of each month, thereafter, he shall file
with this Secretary a report showing current sales of such merchan-
dise and the remaining quantities on hand to be liquidated. On such
sales, all invoices for merchandise so sold shall plainly display the
following wording: Special Close-Out Prices." Failure to ob,('rve
this rule, or increasing such stock during liquidation at the special
prices is an unfair method of competition. It is reconmmneided with
reference to the above rule that any wholesaler finding himself in
this position should first offer the surplus of merchandise to the man-
ufacturer thereof, and, failing disposal of such merchandise by this
method, should offer same to his competitors in the regional group.
(9) Consignments.-We believe that the consigning of merchan-
dise by wholesalers is to be deprecated and should be avoided. If
a wholesaler should offer merchandise on consignment to a pur-
chaser, the line of merchandise, the price, and conditions under
which it is consigned, and the name of the cn. rignee shall be re-
ported to the Secretary of the Regional Group, in order that the
competitors in the group may have full cognizance of the consign-
ment so that no undue advantage be derived from the effect of this
consignment. Violation of the above is unfair competition.
(10) C'ommerciol b/'icbery.-Directly or indirectly to give or per-
imit. to be given, or offer to give money or anything of value, to
agents, employees, or representatives of customers or prospective
customers or to agents, employees, or representatives of competitors'
ciietomers or prospective customers, without the knowledge of their
employers or principals, as an inducement to influence their em-
ployers or principals to purchase or contract to purchase from the
proffer of such gift or offer, or to influence such employer or prin-
cipal from contracting to deal with competitors is an unfair method
The practice of giving or permitting to be given, or holding one-
self as giving, so-called "Free Deals and free mechanical service
in connection with the sale of merchandise or mechanical service
by wholesale automotive establishments is unsound practice for the
reason that the cost of such so-called "Free Deals" and "free"
mechanical service generally must be and is included in the price
charged for merchandise or mechanical service in connection with
which the so-called "Free Deal" and "free" mechanical service is
alleged to be given.
(11) Price stabilization.-The principle of price stabilization
should apply to wholesale distribution. Just as the manufacturer
should have the right to name and enforce his resale schedule, which
because of competitive influences will generally represent reasonable
prices based on the cost of labor and material, wholesalers should
be permitted, in their respective zone or area, to stabilize prices on
merchandise and service, such stabilization being based on the prin-
ciple that merchandise and/or service should not be sold below a
fair. reasonable, and average cost, as provided in Section 2, Article
V. When this has been done, violation of the ruling is unfair
(12) Uncthical practices.-Unethical or offensive practices not
otherwise specified in this Code may and shall be stopped by deci-
sion of a majority of the wholesalers in the regional group of the
region in which the offense occurs: Proviled, That appeal from the
decision may be made to the National Administrative Committee.
(13) Cocrcion.-The practice of coercion in the wholesale distri-
bution of automotive products in any form whatsoever or through
the instrumentality of any devices whatsoever is unfair competition
and it obstructs the full flow of interstate commerce, assurance of
which we understand to be a purpose of the Recovery Act.
(14) Bulk selling.-Bulk sales in the Wholesale Automotive In-
dustry shall be done in such manner as not to constitute deviation
from the rules of fair competitive practices, as embraced in this
Code when approved by the President. and the National Adminis-
trative Committee, hereinafter provided for, shall have authority
to prescribe procedure governing bulk selling in such way as to
accomplish the application of fair competitive practices as contained
(15) Unfair Adr,'1 tis;ig and Selling Practit'f..-Any and all
practices in advertising and selling merchandise and/or -erv\ice in
the Wholesale Automotive Industry which may have the capacity or
tendency to undermine public confiden,'e in advertising announllce-
ments or other sellingg representations generally, or the effect of in-
juring unfairly the sales or goodwill of a competitive product or
service are unfair and against the public interest. Specifically, prac-
tices coming within the scope of such unfair practices are Mislead-
ing Advertising, Deceptive Statements, Unfair Competitive Claims,
Disparagement of Competitors, Underselling Claims, and Bait '
ARTICLE VII-ORGANIZATION AND PRO( EDIliE
(1) The Administrative Committee for the operation of the
Wholesale Automotive Industry under this Code will consist of five
(5) representatives, including the Preqident of the Motor and Equip-
ment Wholesalers Association; five (5) representatives, including the
Chairman of its Wholesaler's Division of the National Standard
Parts A.-ncinltion; three (3) members, including the Pre-idlent, of
the National Aut:,llIootive Parts Association; three (3) members,
including the President of the Automotive Engine Rebuilders' As-
sociation; three (3) rmelmbers, including the Chairman of its Dis-
tributor's Division of the Automotive Electric Association; and, in
addition, the Coliiinii..ss.ioner of the Automotive Whole.'ale s Research
The committee shall select a chairman who shall have and exercise
such authority as may be delegated to him by the Committee, which
shall have charge of all communications and conferences between the
Wholesale Automotive Industry and the President of the United
States, or his agents, concerning the approval or amendment of this
Code or any of the provisions or rules relative thereto.
The National Administrative Committee shall have the authority
to increase its number by such additions as may be needed from
time to time, provided that the ratio of representation as here estab-
lished shall remain constant.
Each association shall have authority to fill and shall fill vacanicies
occurring in its division of the committee.
(2) The National Administrative Committee shall be the general
admnini.- trativre, planning, and coordinating committee for the Whole-
sale Automotive Industry in relation to any and all matters connected
with the National Industrial Recovery Act. It shall have the author-
ity to caiie to exist such district or area organization as imiay be
nece.-.ary for the efficient administration of this Code of Fair Com-
petition when same shall have been approved by the President of
the United States.
In line with the preceding there shall be established throughout the
United States 12 Districts, coinciding with the Federal Reserve
Districts, designiiited as Nira Wholesale Automotive District-, which
may be modified, expanded as to number, or otherwise changed as
in the judgment of the committee may be necessary for the efficient
adiiniistration of this code.
In each of said districts shall be established such local groups as
may be found necessary.
The National Administrative Committee shall provide such plan
of organization and procedure for the district and local group as in
its judgment may be necessary for the efficient functioning of said
(3) The committee shall be specifically clothed with authority to
request any and all information relative to the carrying out of the
provisions of the code from any person, firm, and/or corporation
subject to this Code.
(4) The Committee may form, or cause to be formed, any and all
committees which it deems advisable to effectuate cooperation in the
administration of this code, the National Industrial Recovery Act,
and the rules and regulations thereunder. Each association shall
have the authority to fill and shall fill any and all vacancies occurring
among its membership on any and all committees.
(5) Members of all committees shall serve until June 15, 1935,
when their terms shall expire, unless the emergency under which the
National Industrial Recovery Act has been enacted shall have been
declared by the President of the United States to have ceased to exist.
(6) The National Administrative Committee shall determine from
time to time the number of its members requisite to a quorum. It
shall also determine the number of members requisite to a quorum
of any and all coniniittees created under its authority.
It shall adopt rules of procedure for such committees and for the
National Administrative Committee.
(7) Each committee shall fix its own meeting dates and places of
meetings. Members of committees may delegate alternates to act
for them at the meetings of the committees.
(8) The National Administrative Committee shall have authority
to select from its membership a National Administrative Executive
Committee consisting of five (5) per-ons, one of whom shall be
Chairman of the National Administrative Committee, who shall
also be Chairman of the National Administrative Executive Com-
mittee. The National Administrative Executive Committee shall
have all the authority and powers of the National Administra-
tive Committee in the interim between meetings of the National
(9) The National Administrative Committee shall have the au-
thority to make, and shall make, such assessments as may be necessary
to cover the actual expense of the administration of this Code. All
such assessments shall be on a fair and equitable basis, considering
the nature and extent of operations carried on in the Wholesale Au-
tomotive Industry by those subject to assessments, and assessments
shall be paid promptly by those assessed when due.
An offending party shall be subject to an assessment as shall be im-
posed by the trial body in an amount not to exceed the provisions
of the Industrial Recovery Act as approved by Act of Congress
June 13, 1933.
All such assessments shall be distributed as directed by the Na-
tional Administrative Committee for the purpose of assisting in de-
fraying the actual expenses of the administration of this code.
ARTICLE VIII--AM N D 1 N: T.s
This Code of Fair Competition may be amended as follows:
(1) The Prit.-ideiit of the United States may by virtue of au-
thority granted to him, on occasion, cancel or modify any order,
approval, license or regulation is-utd, made, or approved thereunder
as provided in Section 10-B of the National Industrial Recovery Act.
(2) It may be amended by a two-thirds vote of the entire mem-
bership of the National Admiinistrative Committee, and the amend-
ment shall take effect when approved by the President, provide
that reasonable public notice of the proposed amendment shall have
been given for ten days to the Wholesale Automotive Industry, and
provided that any of its provisions may be canceled or modified
and any approved rule is--ued tlheriiundl r shall ie ineffective if such
be necessary to conform to any action by the President in Section
10-B of the National Industrial Recovery Act.
To secure the adoption of this Code Competition, and to give
full effect to its provisions when same shall have been approved by
the President of the United States, the following shall apply:
(1) There shall be formulated a statement, de-cribed as Exhibit
"A", showing the names of the organizations cooperating in the
presentation of this Code to the proper governmental authorities,
the purpose for which they exist, the organization plan through
which they operate, and the extent of their operations in the
Wholesale Automotive Industry. The specific purpose of this
;-ttemienit shall be to show that said organizations are representative
of the Wholesale Automotive Industry and they are specifically em-
powered to assemble any and all data for the accoulpli.lhnmelit of
(2) At the earliest possible time, the various groups established
in the several districts shall file a statement with the National
Administrative Co iiiiittee hereinlbefore provided for, giving the
(a) Copy of Constitution and By-laws.
(b) Names of all committees having to do with any and all
provisions of this Code and its administration in the several
(c) Schedule of maximum hours of labor applicable to employees
of wholesale automotive e-,tabli-h1ments in the districts.
(d) Schedule of wage rates applying to employees in wholesale
automotive establishments in the districts.
(e) Procedure developed by the district or local group for the
adlliniitration and the enforcement of this Code, and of any and all
rules and regulations pertaining thereto, as prescribed by the Presi-
dent of the United States.
(f) Any and all information bearing upon the application of
this Code which may from time to time be reqiue.ted by the National
(3) In the event that any district group fails to submit within a
reasonable time information as required in Section 2 above, the Na-
tional Administrative Committee, if it deems it nece.- ;ary, is
authorized to act for said district group, and iupun its own initiative,
to assemble from the membership of said district group such in-
formation as is provide for in Section 2 above.
(4) No provision in this Code shall be interpreted or applied in
such manner as to promote monopolies, permit or encourage unfair
competition, eliminate or oppress small enterprises, or discrimiinate
against small enterprises.
(5) The effective date of this Code shall be the tenth day after
the date of its approval by the President of the United States.
UNIVERSITY OF FLORIDA
IIIll3 1262 08584 347111I
3 1262 08584 3471