.NATIONAL RECOVERY ADMINISTRATION
CODE OF FAIR COMPETITION
;" AS SUBMITTED ON AUGUST 26, 1933
REGISTRY No. 1702--17
Y aie by the Superintendent of Documents, Washinglon, D.C. - Price 5 cents
The Code for the Advertising Agency' 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 DO OUR PART
GOVERNMENT PRINTING OFFICE
iODE OF FAIR COMPETITION FOR THE ADVERTISING
The following Code is respectfully submitted for sanction by the
National Recovery Administration in a, sincere effort to lend full
support to Title I of the National Industrial Recovery Act during the
period of this emergency by
(a) Reducing and relieving unemployment in the advertising
(b) Improving the standards of labor.
(c) Eliminating practices destructive of the interests of the public,
employes, and employers.
DEFINITION OF TERMS USED 11EREIN
The following definition of terms used in this Code shall indicate
their true and intended meaning:
The word Code shall mean this Code submitted under the
National Industrial Recovery Act, and all amendments thereto.
The word "President" shall mean the President of the United
The word Committee shall mean the Committee on Planning
and Fiair Practice provided for hereinafter.
The term "agency commission" means the standard conunission
allowed to advertising agencies by publishers and other media own-
ers, to be deducted from invoices for space a~nd time billed at gross
rates, ordered by the agency, for account of a client.
All advertising agencies shall be included within the provisions of
An advertising agency, under this Code, is any organization, indi-
vidual, corporation, or partnership engaged in the business of prepar-
ing and placing advertising for its clients, acting only in such capacity,
and receiving comnussions from advertising media owners or their
EFFECTIVE DATE OF CODE
This Code shall become effective on the first Monday following date
approved by the President.
This Code shall remain in effect until sixty days after the Industrial
Recovery Act expires or is abrogated by proclamation of the President
or by joint resolution of Congress, as provided by law.
Any notice, demand, or request required or permitted to be given
or to be made upon any advertising agency shall be suffciently given
if mailed, postage prepaid, to such agency at its address on fie at
Headquarters of the American Association of Advertising Agencies,
in New Y'ork.
WAGES AND HOUR Or EMdPLOYM6ENT
.The minimum wage paid to any employee of advertising agencies
shall be $15 per week in cities of 500,000 and over, $14.50 m cities of
250,000 and over and less than 500,000, $14 in cities of less than
Messengers and learners, however, may be paid not less than 75%J
of the minimum wage for a period not to exceed the fist six months
of their employment.
The maximum employment of all employees earning at the rate of
$35 a week or under shall be an average of forty' hours per week in
any one month.
No person under sixteen years of age shall be retained or employed.
Any compensation now~ in excess of the minimum wage shall not
be reduced because of any reduction in the hours of labor, but shall
be maintained or increased by an equitable adjustment.
All advertising agencies shall comply with the following require-
ments of Section 7 (a) of Title I of the National Industrial Recovery
(a) Employees shall have the right t~o organize and bargain collec-
tively through representatives of their own choosing and shall be
free from the interference, restraint, or coercion of employers of labor,
or their agents, in the designation of such representatives, or in self-
organization, or in other concerted activities for the purpose of collec-
tive bargaining or other mutual aid or protection;
(b) No employee and no one seeking employment shall be required
as a condition of employment to join a~ny company umion or to refrain
fromt joining, organizing, or assisting a labor organization of his own
(c) That employers shall comply with the maximum hours of labor,
minimum rates of pay, and other conditions of employment approved
or prescribed by the President.
Regardless of any increase in labor cost which this Code mlay impose
on agencies, no increase in the present basic agency commllission will
be sought during the period of this emergency.
UNFAIR TRADE PRACTICES
For the purposes of this Code, the following acts shall constitute
(a) Preparing or handling any advertising of an untruthful, mis-
leading, or indecent character, as specified by the following Copy
Code formulated and approved by the American Association of Adver-
tising Agencies in conjunction with the Association of National
(1) False statements or misleading exaggerations.
(2) Indirect misrepresentation of a product, or service, through dis-
tortion of details, either editorially or pictorially.
(3) Statements or suggestions offensive to public decency.
(4) Statements which tend to undermine an industry by attribut-
inig to its products, generally, faults and weaknesses true only of a few.
(5) Price claims that are misleading.
S(6) Pseudo-scientific advertising, including claims insufficiently
supported by accepted authority, or that distort the true meaning or
application of a statement made by professional or scientific authority.
(7) Testimonials which do not reflect the real choice of a, com-
(b) Taking from any third party a profit, discount, or commission
other than the regular agency commission allowed by publishers,
unless known to the client and agreed to by himt.
(c) For a~ny agency to rebate any part of its commission to an
advertiser, or for any agency to be owned or operated for t~he financial
benefit of any advertiser or group of advertisers and/or their employees
who thus directly or indirectly obtain the! equivalent of a rebate and
circumvent the conditions of agency "'recognition required by media
owners and/or their organized bodies.
It shall be considered as rebating to place men in the service of the
advertiser at the agency's expense or to assume all or part of the
salary of any employee of the advertiser, or to pay any fee or com-
pensation to any one connected directly or indirectly with the adver-
tiser, or to any third party for obtaining or holding an a~ccount. It
shall also be considered as rebating t~o'agree to allow cash discounts
not earned by prompt payment on cash discount dates.
The practice of charging 16%%0/ on net cost of total advertising
volume shall not be construed as rebating.
Such unfair practices and all other practices which shall be declared
to be unfair under this Code, or by any amendment to the Code,
shall be deemed to be unfair methods of competition in commerce
within the meaning of the Federal Trade Commission Act as amended,
and the use or employing of any of them shall be deemed a violation
of this Code., and any member of the industry who shall directly or
indirectly, through any officer or representattive, knowingly use or
employ any of such unfair practices, shall be guilty of a violation of
(a) To effectuate further the policies of the Act, a Committee on
Planning and Fair Practice is hereby designated to cooperate with
the Administrator in administering, supervising, and promoting the
provisions of this Code. This Committee shall consist of: (1) Twelve
representatives elected by the advertising agencies subscribing to
this Code and/or contributing to the cost of its administration, such
representatives to be elected by a method approved by the Adminis-
trator; (2) the President of the American Association of Advert~ising
Agencies; (3) a representative or representatives, not to exceed
three, without vote appointed by the President of the United States.
(bj) Said Committee shall cooperate with the Administra~tor in
making investigations as to the functioning and observance of any
provisions of this Code, at its own instance or on complaint by any
person affected, and shall report the same to the Adminilstrator.
(c) Said Committee may from time to time present to the Admin-
istrator recommendations based on conditions in the business which
will tend to effectuate the operation of the provisions of this Code
and the policy of the National Recovery Administration. Such ree-
ommendations shall, upon approval by the President or his duly
authorized agent, become operative as part of this Code.
(d) The Committ~ee shall elect a Chairman and a Vice Chairman
from among its own members.
(e) The president of the American Association of Advertising
Agencies shall act as the executive officer of the Committee in catrry-
ing out its policies and determiinations, in contact with the Govern-
ment and wlith advertising agencies.
(f) The Commlittee shall appoint a SecretaryT who shall keepcthe
minutes of all meetings and such other records, other than financial,
as may be required.
(g) The Committee shall appoint a Treasurer, who shaUl be bonded
and shall be responsible to the Committee. He shall have custody
of, and have charge of t~he disposition of, all funds collected under
the Code; and he shall keep proper books of account showing the
collection and disposition thereof.
(h) The Committee is empowered to hire such expert and/or clerical
assistance as may be needed, at wages which it deems proper, and
to incur any other expenses which in its judgment are necessary to
the making, administering, and effectuating of this Code.
(i) Seven members shall constitute a quoruml at a.ny meeting of the
Committee regularly called~, and a. majority vote by those present
(j) The Commit~tee shall meet at the call of t~he chairman, the vice-
chairman, or the executive officer, and must meet on the petition of
three or more members, with at least three days' previous notice.
(k) The Committee members shall act without compensation.
(1) No member of the Committee shall be eligible to vote in any
case mn which his agency or its personnel is involved.
CosT or ADMINISTRATION
The cost of administering this Code shall be borne by the adver-
tising agencies subscribing to it or electing to contribute to its cost.
Immediately upon approval of this Code by the President, such
agencies shatll make payments of $10 each t~o the Trea.surer, on the
understanding that any funds remaining unexpended after the Code
has been abrogated, shall be returned pro rata t.o the agencies con-
tributing. If additional funds are needed by the Commrittee for any
of the purposes herein described, further assessments of $10 may be
made upon such agencies.
ENFORCEMENT OF CODE
Any violation of the Code shall be reported to the Committee,
which shall then call on the violator t.o comply with the Code; in
event of his refusal or failure to do so, after ten days' notice, the Com-
mittee shall report such violation to the authority designated by the
National Industrial Recovery Act.
Any9 agency charged with violating the Code shall, within ten days
of receipt of notice, have a. fair opportunity to make a defense in writ-
inrg and/or in person, before decision is made by the Committee and
flinq~ttion reported to the Administrator of the National Recovery Act.
LIABILITY' OF COMMITTEE MEMBERS
-No member or officer of the Committee, in the proper discharge of
his duties, shall be liable to any advertising agency or other party,
because of any decision made or action taken by the Committee in
connection with this Code.
OBTAINING NECESSARY INFORMATION
With a view to keeping the President informed as to the observance
or nonobservance of this Code, every advertising agency shall furnish
to the executive officer of the Committee, such full facts and informa-
tion as the Commlittee me~y require, subject to the approval of the
Administrator, in order to effectuate the purposes of this Code.
Any or all such information furnished to the executive officer of
this Committee by any advertising agency shall, upon approval of the
Administrator, be subject to check~ing for the purpose of verification
by an examination of the books and~ accounts and records of such
agency by any ac~countant or accountants designated by the ComI-
mittee. The cost of such examination shall be treated as an expense
of administering the Code.
Failure to furnish required information, on request, shall constitute
a violation of this Code, and untrue or false information shall also be
Every advertising agency entitled to vote for representatives upon
the Committee on Planning and Fair Practice shall furnish to the
executive officer of the Committee its annual volume for the year
1932, to establish vote classification; and should any such member fail
to furnish its 1932 volume, it shall be flatly recorded a~s $1,000, exc~ept-
ing in case of members of the American Association of Advertising
Agencies, who have reported their 1932 volume to the Association as
a basis for classifying dues, and in such event the minimum volume
for such classification shall be used.
In figuring annual volume, all fees and retainers shall be converted
into volume by multiplying by 6% and the amount included in total
Such information shall be held in strict confdence by the executive
officer of the Committee and his personal staff and not be divulged to
anybody except as required by the Government for its own use, or
by the Committee in performing its duties under this Code.
This Code is not designed to promote a monopoly and shall not be
availed of for that purpose.
Its provisions shall not be so interpreted or administered as to
eliminate or oppress small enterprises or to discriminate against them.
This Code and all the provisions thereof are expressly made subject
to the right of the President, in accordance with the provision of
UNIVERSITY OF FLORIDA
6 31 26283185
Clause 10 (b) of the National Industrial Recovery Act, from t~inue~9 to
time to cancel or modify any order, approval, license, rule, or r
tion, issued under Title I of said Act, and specifically to the rght
the President to cancel or modify his approval of this CodZe or anyl
conditions imposed by him upon his approval thereof.
Such of the provisions of this Code as are not required; to be
included therein by the National Industrial Recovery Act majr, with
the approval of the President, be modified or eliminated as changes in
the circumstances or experience may indicate. It is contemplated
that from time to time supplementary provisions to this Code olr
additional codes will be submitted for t~he approval of the President.
to prevent unfair competition in price and other unfair and destructive
competitive practices and to effectuate the other purposes and policies
of Title I of the National Industrial Recovery Act consistent with the