History of the Compliance Division, by W.M. Galvin, J.J. Reinstein [and] D.Y. Campbell

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Title:
History of the Compliance Division, by W.M. Galvin, J.J. Reinstein and D.Y. Campbell
Series Title:
Work Materials ;
Physical Description:
252 p., 6 leaves : ; 27 cm.
Language:
English
Creator:
Galvin, W. M
Reinstein, Jacques
Campbell, D. Y
United States -- National Recovery Administration
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s.n.
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Washington
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Subjects / Keywords:
Industrial policy   ( lcsh )
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federal government publication   ( marcgt )
non-fiction   ( marcgt )

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General Note:
Includes tables.

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University of Florida
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All applicable rights reserved by the source institution and holding location.
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aleph - 020509591
oclc - 19447953
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OFFICE OF NATIONAL RECOVERY ADMINISTRATION

DIVISION OF REVIEW














HISTORY OF THE COMPLIANCE DIVISION

By

W. M. Galvin
J. J. Reinstein
D. Y. Campbell


WORK MATERIALS NO. 85


MARCH, 1936






MAGAZINES BOUND
By W. P. A:

flJB2









OFFICE OF NA.TIOI&L RECOV'2RY A.DIIHISTI1TION

DIVISION; OF REVIEW




















HISTORY OF THE COMPLIANCE DIVISION

By


M. Galvin
J. Reinstein
Y. Campbell


MARCH, 1936


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COLE :fS

PA.tT I I i&..LOVCTIOiN Pul-w

Chapter I. The Nature of the Compliance Problem .................. 1

Sec. 1. Background of tne pas.af.,e of the :,IRA ............... 1
Sec. 2. Scope of coipliEncc work ............................ 1

Chapter II. Manner of A.:roach .................................. 5

Sec. 1. The underlying theories of the compliance system .... 5
Sec. 2. The establishment of an administrative procedure .... 8

PART II GOVERILlENTAL C0iGAIIZATIOiI A:D PROCEDURE

Chapter III. The Administrative Settlement of Code Violations .... 11

Sec. 1. The need for correcting violations by adminis-
trative measures.................................... 11
Sec. 2. Source of authority for the administrative
settlement of complaints ............................ 12
Sec. 3. The function of the Compliance Division to adjust
complaints.......................................... 13
Sec. 4. Definition of adjustment............................. 13
Sec. 5. Purpose of adjustment ............... ..................... 15
Sec. 6. Evolution of an adjustment policy.................... 16
Sec. 7. The development of standards of adjustment........... 22
Sec. 8. Instructions issued to the field offices............. 24

Chapter IV. The Origin and Development of iield Offices........... 30

Sec. 1. The establishment of temporary offices............... 30
Sec. 2. Internal organization early development............ 32
Sec. 3. Development of internal organization under the
State Office system................................. 34
Sec. 4. Later development under the State Office system ..... 40
Sec. 5. Final development of organization under the
Regional Office system.............................. 43

Chapter V. Compliance Procedure in Field Offices.................. 49

Sec. 1. Complaints, the basis of orocedure................... 49
Sec. 2. Development of a new compliance procedure............ 62
Sec.A3. The development of the use of Field Adjusters........ 69
Sec. 4. The direction and supervision of Field Adjusters .... 73
Sec. 5. Technique of investigation........................... 82
Sec. 6. The technique of adjustment by conciliatory measures. 93
Sec. 7. Non-disclosure of the source of complaints........... 98
Sec. 8. Hearings by Local and State Adjustment Boards........ 102
Sec. 9. Coiamro,.ising and dropping of cases ................... 108


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Chapter VI. Co'?li'-nc' Division .-id eCgional Offices.............. 117

Sec. 1. Develop,.nnt of int rn.-l or.-n ri-ation ................ 117
Sec. 2. General aspects of insi:'ia. diaol.y ad removal ...... 121
Sec. 3. Nation;.l L.-bor Board cases ........................... 125
Sec. 4. The .:tionel Comrnliance 3oard and its successors..... 126
Sec. 5. Notice of .-carings................................... 128
Sec. 6. Procedure at hearings................................ 129
Sec. 7. Evidence............................................. 130
Sec. 8. Appeals .............................................. 131
Sec. 9. Development of analysiss and review procedure before
hearings -- Analysis Branch......................... 132
Sec.10. Reference of cases for litigation.................... 139
Sec.11. Contributions section................................ 146

PART III OUTSTANDI'.-- P0G3LE..;3 0F THE COaiLPLIA.i7C DIVISION

Chapter VII. The Method of Handling Complaints.................... 149

Sec. 1. The complaints basis of procedure-labor violations... 149
Sec. 2. Disadventages of and objections to the complaints
system .............................................. 149
Sec. 3. Practical difficulties in use of complaints system... 152
Sec. 4. Mass compliance as a proposed solution............... 155
Sec. 5. Mechanics of the mass compliEnce system .............. 158

PA4T IV- SUilA.r

Chapter VIII. Statistical Summarrr of the Activity of the Com-
pliance Division ............... ..................... ... 161


APPE. .DICES

These appendices ar not here reproduced except A-17, A-18, and
A-32. The others are in 'MA files under the caption 'I"RA Studies
Special Exhibits"- TJork Materials ::o. 85.

Appendix I. NRA State Office Complaint Statistics................ 237
List of tables

Appendix II. Exhibits.

A-l. Win. H. Davis, "N1A Plans for Code Compliance"
(December 5, 1933)

A-2. Release No. 1847

A-3. Letter from A. J. Altiyver to Counsel for Compli nce
Division (i1Arch 26, 1935)

A-4. "Regulations for the Adjustment by District Compliance
Directors of Complaints of Code Violations"
(October 19, 1933)


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A-5. "Foras to be used as mnoo.els by District Cop)liance
Director- in correso,:on '.c;..' on Co:,.pxli.its,"
(October h,, 1933)

A-6. Office Order 40

A-7. Liaison Circular 75

A-8. Office Order 92

A-9. Administrator's letter p-oointing District Conoli'.nce
Directors (Octob.-r 19, 1933)

A-10. Office Order 53

A-l1. Compaoliance Division 1eI-fornv.dun No. 4

A-12. Office Order 85

A-13. Office memorandum 180

A-14. Letter from John Swope, Chief, Field Branch to State
Compliance Directors (June 2, 1934)

A-15. Adjusters' report form and instructions

A-16. Office Order 74

A-17. Table of cases referred to State Adjustment Boards..... 249

A-18. Statistics on cases handled by State Adjustment
Boards ................................................. 250

A-19. Examples of summaries of compromise cases

A-20. Letter to Phil.delpha Office from Chief, Coordinating
Branch (.iebruci;r 2b, 1935)

A-21. Letter from Cornelius Coclirane to Harold Dotterer
re Service Trades complaints (September 6, 1934)

A-22. Compliance Division Memorandum I o. 1

A-23. Compliance Division i.Ieiflorandlum No. 24

A-24. Office Order 45

A-25. Office Order 90

A-26. Office Order 79

A-27. Office Order 105

A-28. Office Memoranduin 309


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A-29. Office :,'emora~idum .305

A-30. Meemorrndum fro', CoiL,,ian.' and Enforcement Director to
Chief, Comoliance Division (Dece;aber 8, 19SC4)

A-31. Memorandum from L. J. `icrtin to Lierton "mrson, Regional
Director (JPnUL'r, 1, 1935)

A-32. Statistical tables on cases referred to Regional
OfficE ................................................ 251

A-33. Letter from John Swope, Chief, Field Branch to State
Compliance Directors (April 27, 15$)

A-34. MLemorandumrn of meeting held in office of A. G. :IcKnight,
director of Litigation on April 3, 1934 (From files of
Counsel to Compliance Division)

A-35. Memorandum from A. G. i.ic[.-Light to Blackwell Smith
(April 23, 1934)

A-36. Compliance Division MIemorandum of June 4, 1934 re
Contributions Section

Ldix III. Office Manual (including all Executive and Adminis-
trative Orders)

tdix IV. Field Letters

Ldix V. Mass Compliance

A. Boot and Shoe survey

B. iviiscellAneous reports from State offices


Appear


Appear

Appear


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P;? L" I


I ,T rlr ProbeICm

Ch q )ter I The ?..,ture of the Co3mrl'iance Problem


Section 1 E:c,"zroand of rthe .,-,sr;o of The NT.tionr.l Iniuc.tri.-l
REcovvry Act. It is f.iviliar history that in the thr-c ad one-third
y-nars intervening betvwc..-nri the stock mar'cet cr.,sh of October, 1929 and
'Mi ch' -, 1953, the country had entered into a vast econo.nic and fin-.nci:.l
crisis. V'.hile not without precedent, the situation r3as dire, and far-
reacann; in its ef-fcts.

Almost iLnmediately following his inauguration on March 4,1933, the
President -:ted to quiet the hysteria of the country. For the first time
in nistoiy "no Prccident made use of the radio to talk informally with
the people. Tlie irmortance of this state of circumstances and of this
course of ac.tian to our suoject, lies not so much in its political aspects
as in the frct thpt through this medium there wvac welded tog:,ther-quickly
and effectively a tremendous iid forceful iuplic opinion. It was in this
almost unbelievable unification of public suoport that the National In-
dustrial Recovery Act, :ri:d the recrainder of the Recovery program, had
its foundation.

"It ws in this atmosphere of patriotic fervor, knowing little of
party lines and the strumg-.le of capital Pnd labor, and boin chiefly of
fr-ar of economic destruction, that the National Industrial Recovery Act
became a law and the President's Re.-:nrloyment Agre.emrnEnt and the codifi-
cation of industry were begun.

This terrmoer of the public, labor and industry, and the general
circurnstI- cs surrounding the p-ssage of the law cannot be overemina-
sized in importance. It w.is through these means that it was possible
to ed,.cfte the entire country to a program of national iridstrial
regulation ,-nd cooperation. On the other hand, as business bgran to
improve i;.d tiis temner cooled, public su-)ort waned and public opinion
suffered a reaction, so that during the lst few months of NRA many
individ.u..ls regLrded the progr--;:i as oppressive and a deterrent to the
country's r. turn to prosneritjf.

Tnis unstable basis of public opinion co:n-licated greatly the
inherently intricate and complex problem of adjusting business to the
nev regult.on by codes.

Section The scco& of Cormplisnce work. The work of the Compliance
Division i-r. collection with the enforcement of codes of fair competition
approved under the National Industrial Recovery Act was designed to meet
an admiini.trative problem distinctive-in the history of the Federal
Governrme.t. tUnier the authority of Section 3(a) of the Act, codes were
an.roved estopbl.saing minimum waoes, maximum hours, conditions of em-
ployment nand stndp.rds of fair comroetitive practice in 556 industries,
emoracin- 2,5.[>,000 e-.--loyers and giving emplo:rment to 18,600,000


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persons. (*)

The m--4gnituie of 6i:e sco-re of coJ3-s and th- complexity of the
regulations which they contained mad= t it lecess:,ry to develop a new
administrative technique for securi.i, compliance with code requirements,
in which educational and Dersuesive metnoas would be predominant. There
was sound precedent for tie use of this ar',ro-.ch to the administrative
problem presented by the codes. The introduction of law requiring sig-
nificant adjustments in business methods requires the establishment of a
general understanding of the substa:ce Pnd purpose of the law and the
manner of its administration. In i s report to Congress in 1889, the
Interstate Coirnc;rce Co.nmission stated:

"Undoubtedly tne first d'.uty of an administrative officer is to give
effecG to the law under which he PcGs. iMuch depends, however, on the
manner in whichc h tis is done, and misiirected energy may render a law
nugatory. A fanatical or sensi tion.al course rarely leads to good results,
but on the contrary, usually nrovokes a..,tagonism, and often tends to de-
fiance of the law itself.

"When a law relates to great basinicss interests intended to be gov-
erned by its provisions throughout the whole extent of a vast country
with many diverse ch-racteristics, great care is required to so administer
the law that it shall be respected nd obe.,-ed. In a matter of such mag-
nitude and importance .. many other things are required besides nrose--
cutions for violations. Careful interpretations of tLe provisions of the
law, correct knowledge of Ghe subjects to wliich it applies, and of any
distinctions in conditions that m v modify its annlication, are necessary,
in .order that it may be intelligently applied. A reasonable time was
also required to enable business interests generally to become familiar-
ized with the chai-ned methods unier the law and .... to adjust their
modes of business to the new requirements.

"It was deeried a matter of -orim-nnry i.nportance to bring the interests
affected into harmonious relations to the law, and to understand that,
waile it revolutionizes certain methods, it is something more than a mere-
ly punitive statute, defining crimes -ind rrovidin6 for their punishment,
and that its ultimate nurpose is the general :ood of the country .....
This may involve what is sometimes called an-educational process in deal-
ing with intelligent men, noL esse-ntiall.y bad or engaged in criminal pur-
suits, but whose faults w-ere in m-mv respects wrong methods in the conduct
of a legitimate business, in which they had too often been taught the
success L-ight be regarded as justifi-.-ii- the methods 'employed. A standard
of right n& wrong as well as of legal duty was to oDe set un, and con-
formity 6o this standard induced, if possible, by the conviction that



(*) Estimates are of the statistical section, -'.RA Division of Review
and Pre based on monthly employment reports of the Bureau of
Foreign and Domestic Commerce, derived in turn from the bureau
of Labor Statistics and other sources.


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tntir true interests would be better -roinot.d." (*)

It v.oul'u have been not only 'nImi.iistrntively unwise, but -oractic-
ally imn)ossible to have brou,:it eaca case of infraction of a code 'ro-
vision into the Federal Courts.

If thi-'e was precedent for the ;e'.ifral appro-ch to the problem of' '
code enforcement, there was little in the previous exoeri'ncr of govern-
mental -.,c-cies or in the Act which could serve as a guide to the methods
which might be followed. The Act provided methods of enforcement through
tne courts by injunction and by crimin-l action in the District Courts
of th- United States. Code standards were also made unfair methods of
competition within the me-uin, of the Federal Trade Commission Act and
enforceable by thile Commission through cc-se and desist orders. Neither
of these methods offered a solution to the' -oractical problem of correct-
ing a malss of iii.,or violations, many of them unintentional. The pro-
cedure followed by the Federal Trade Commission and other semi-judicial
bodies could not be followed by 1TIRA, which lacked their legal -powers
(in particular, the power to coi,)el the submission of evidence and to
issue orders enforceable in the Courts).

Furthermore, thie procedure of the Feaeral Trale Commission was
adapted to the s'ccialized handling of individual complaints. Under its
act the Cormmission was given the power to restrain acts of unfair com-
oetition. It was, however, left to the Commission in particular cases
to decide whether certain practices constituted unfair competition, after
a usually thorough-going investigation. 1,Teedless to say, the work of the
Commission tenc'ed to fall into certain well-established categories.

In contrast to this thie codes undertook to specify in advance what
particular acts were per se unfair -oractices. The list of prohibited
acts was not only inflexible, but was !r_. and varied. This enlarged
scope of thie tsk, at least insofar as trade practice violations were
concerned, served to multiply tne difficulties of administration and
enforcement because of its very comp*lexity. Certainly, the problems of
education wirc intensified, and because of the additional requirements'
placed on j3ust.-ent agencies a specialized, intensive handling of even
each tvre of violation was virtually precluded.

In the case of labor compliance the experiences of state labor
departments were somevwhat more analogous. Labor regulations, both under
state 1-ws and the codes, fell into fairly definite classes and there-
fore a similI-ity in problems of -)rocedure was present. There was, how-
ever, in the codes the additional element of considering labor -orovisions
as an item in fair competition. This naturally sunoerimposed the require-
ment of coordination of local with national problems, which again served
to magnify the task.


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(*) Third Re-port of the Interstate Commerce Commission, November 30,
12,r9, pp. 10'-105


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As a. result of the limitations on the aolicability of the ex-
periences derived in the administration of tdese other laws and regula-
tions, the development of new administrative methods for the -IRA codes
became essential.







Chant r II Mannnr of An'-ro.-clh


S-ction 1 Th` und-rlyinr th ori-_ of th comnlinnce sy:-tcm. The
preliminary administrative step tn',en in the enforcement of 'RA Codes
were based uoon two nre,:mise-. First, that there would be a substantial
number of violations, most of which could be corrected by conciliatory
and educational methods; and second, that nublic o-oinion both within
industries and on the Dart of the general public could be relied on to
support IRA standards. It was contemp'lated that the punitive
*rovisicns of the Act would be invoke. only where the se methods failed. (*)
This nrogr:-im stemmed directly out of the Administration's experience
with the President' "Reemployment Agreement, particularly in its use
of insignia for the purnose of distinguishing industry members
complying with and supnorting the Reemnlyient Program.

While previous experience with the Reemployment Agreement
furnished a definite orientation for the manner in which the problem
could be attacked, a findd-mental auesticn of policy immediately
developed: To what extent should administrative pDowers with respect
to enforcement be vested in Industrial Agencies?

During the first three months of ITRA's existence, the energies
of both the II'-A staff and the industry members who came to Washington
to -orescnt codes were concerned -orimarily with the formulation of
standards of fair pracciie and only to a small extent with their
administration. Through the -process of code formulation and the
gradual developm-nt of administrative provisions in codes, ran the
conce-ot of "ind-ustrial self-government". This notion was expressed
in code formulation by the reauirement that Codes (at least those
aonroved under Section 3 of the .IRA) be presented by a representative
ground of the industry members intended to be bound by the code.
The question which now -oresented itself was the manner in which
industry .should -narticipate'in the administration of the code.

In order to provide for continued representation for the industry
in its relations with SiA and for carrying out of some of the
administrative functions which' showed themselves necessary, the
idea of a "Code Authority" developed early in the process of code
formulation. The Code Authority was intended to be a legal entity.,
representative of the industry and vested under the code with adminis-
trative powers and planning and research functions. The Dowers
vested in th6se agencies under the early codes varied greatly. An
Industry Committee established by the original Cotton Textile Code
had as its functions only planning and the gathering of statistics.

Later codes vested in Code Authorities broad powers of determination
for the purpose of nutting into effect regulations for which the code



( ) Win. H. Davis, Mational Comnliance Director, "'RA Plans for Code
Compliance" (December, 5, 1933) p. 4; Bulletin No. 7, p. 7.


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only specified standards. Provisions dealing with enforcement, if
they sanoeared at nil, "-ere Fimilarly varied. The second code to be
a-unroved, the Wool Textile Coie, rorqvided for a system of mandatory
arbitration for the settlement of comnlrints of code violation. The
Men's Clothing Cce (V-umber 15) not only empowered the Code Authority
to make investigation of cI-irges of violation, but imposed union it
a positive obligation to io so.

By October, 1935, the problem of enforcement -began to make
itself felt in the form of individual instances of code violations
which could not be corrected by conciliatory efforts made in most
cases by Code Authorities or by Deputy Administrators. Because of
this fact the establishment of a definite nrocedure for the handling
of administrative work connected -ith enforcement stens became
annarent. While, as we have note tendency to vest administrative now-ers in Code Authorities, the Act
itself oiaced the responsibility for enforcement n-oroceedings in the
hands of the Government alone by limiting legal remedies to.the
Government. (*)

On November ??, 1953, General Johnson issued a statement of.
policy with a view to clarifying the question of res-nonsibility for
enforcement and defining the -oart which industry -ould nolay in code
administration. (**) He sta-tedl the rai.n of RiTA as being to give to
Code Authorities the widest n-oossible range of self-government.
However, the ultimate responsibility of code administration rested
with the Government and YPA would undertake to supervise code.
administration 6y Code Authorities. The Administrator segregated code
administration into two as-oects: one, "normal code administration",
extended to such functions as nianning, the collection of statistics,
the rendering of re-oorts on conditions in the industry, etc; the
other included educational and administrative steps taken with a view
to securing comnliance with code requirements. The Administrator's
definition of what has since come to be known as "Comnliance" may well
be ouoted here for the clarity with which it distinguishes this
aspect of code administration not only from normal code administration but
also from enforcement, the institution of legal proceedings to compel
comroliance with code requirements:

"(a) The instruction and education of those subject to the
code as to their responsibilities thereunder so as to
antici-onte and avoid complaints of non-comoliance..

(b) The adjustment of comnlaints of non-compliance by
education, fair findings of facts, and the pressure of
o-oinion within the Industry.



(*) See Section 3(c) of the national Industrial Recovery Act. See
also Purvis v. Bazemore, Western Powder Manufactuiring Co. v.
Interstate Coal Co., and other cases cited in Office Manual,
Part- V,- Se'ction V, "Jurisdiction and Parties. "

(** Release ITo. 1847 (November 22, 1933)


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(c) The adjustment of cc'nnlaints by arbitration, conciliation,
and mediation.

(d) The rendition of rLnorts to the enforcement agencies of
government in those cases where all other .ncins have failed.
Such reports should be ba.ed union adenuate findings of
fact," (*)

Industries which were sufficiently well organized to have agreed
unon a code were deemed to be prenqred to undertake functions of
normal code administration. In the field of comnlirnce, however,
industry was not nrenared ur equioned to deal with enforcement problems.
This function, it was declnrer', would be assumed by :'A until such
time as industry -as ortinized to carry it out. The following program
was laid down for the transfer :of comOliafice functions from the
Government to industry:

"As soon as a Cone Authority is '-set un and ready to function,
it will usually be well enough organizd to adjust most complaints
of violations' of the traCe rV' bice 'provisions of the code. Such
complaints involve the r- hts of one em-nloyer against another
emnoloyrr within -the--i-ndustry. Trcde. associations and other existing
agencies of industrial self-government are well suited to the
handling of this t,-oe of comTriaint, although, of course, the public
inter t must. be -ffgu- rdeed by gencrel governmental exercise of a
veto. This goveri;nintal veto' nower is the substitute for the
anti-trust laws inthis new set-un. In most cases, the government
representative on a Code Authority sits without vote, but with a veto.

"The function of securing compliance with the labor provisionss
of codes presents a much more difficult :problem of organization and
administration. Very few industries are organized at this time
along lines suitable to adjustment and fact finding in this tyoe
of case. Complaints of violations of labor, provisions should not
be referred to Code Authorities (or any agencies of industrial self-
government) unless such agencies have adequate labor representation
thereon. Most codes do not providee for such representation.

"The problem of Code Comoliance, by its very nature, requires
a regional system of fact finding and adjustment agencies a-Donro-orite
to the handling of labor comnolaints. -In order to protect the
interests and rights of an employee under a code, the employee must
be furnished with an agency convenient in location and impartial in
nature. The government has provided twenty-six regional ccmoliance
agencies, to which comnolaints of code violations may be referred where
there is no approved machinery within the industry to handle such
complaints.



(*) Ibid., o. 2.


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"This system will fill the blanks in' industrial self-government.
It will act for an industry while the industry is organizing to
handle such comnlirnce problems for itself; or where an industry in
a certain territory has no Pgerncies of industrial self-government;
or where an industry, though organized to handle trade -practice
complaints, has no rnm.chinery a-nroved to handle labor complaints;
or where an-oroved machinery has failed to adjust a complaint." (*)

The original -nrogram for compliance administration was followed
throughout the greater part of the existence of iNRA with little divergence
exce-ot upon two -noints, the cessation of efforts to organize industry
for the handling cf labur complaints and the attempt mnde late in the
development of cum-nliance administration tc shift the basis for compliance
work from merely acting on com-olpints to inspection. However, although
new legal instrumentalities were revised (such as the methods provided
for dealing with violations occurrirng in connection with government
contracts) and new administration agencies were established, the
fundamental ap-proach to the noroblem remained the same.

Section 2 The establishment of an administrative procedure. It has
been shown that the codificPtion of industry created a vast and novel
federal administrative problem. Such -orecedents and guides as did
exist did not furnish a strict analogy for an apnproach to the problem.
The procedure which was established, therefore, in October, 1933, was in
a sense in the nature of an ex-neriment for dealing with the problem. (**)

Inasmuch as emnrlorees had been taught to complain to Local
Comnoliance Boardc of PRA violations, and since so much reliance was
placed on -oublic Punrort, it was natural that the new code compliance
*norocedure ,was based entirely on the filing of complaints by employees,
com-oetitors and others. MTo facilities were provided in the new
governmental adjustment syctPmr for initiating compliance activities, since
the n-orocedure was nredictod-on the filing of a formal complaint which
had to meet certain reauircments as to legal sufficiency. In this
resocct the Drocodure resembled that of the Federal Trade Commission,
although it has been shown the problems of the latter were different.

There was develo-oed as the method of administering the codes the
"adjustment" of comriolaints. By this -ras meant the bringing about of
conformity to code provisions. It will be shown in the succeeding chapter
.that the application of this method cf codc administration was changed
and modified as the growing experience in gaining compliance indicated
the need for stress on particular phases of the work.



(*) Ibid., p. 2.

(**) The development of comolipncc. -roccdure is discussed in
Chapter V and VI, infra.


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Genrlly czr.'-.:-inr-, the i justment of cases inclidd l both the idr'a
of infor -in the r. : t ..ts -f their obli '- tions nd thus ette., ti ii
to ins' re ft Lure compliance, but also, with increasing i; orrtmnce as
time ps.ie6, the corr-'ction of tst viol tions by con e *s-tin; the
)'-rtic.i inr .-ed thereby. In labor violations j. rticvlsrly TOc the
latLer true.

-i-re there Ywas prccec(.ent. As outlined in a letter of liarch :6 195.
from .r. A. J. Altmeyer, oc-on'L s'istpnt Secretry of Te.ab,-.r, to the
Co'..nsel for the Co'.D'lince Division, the orrctice of obt"inin; wa -
restitations from violators of i*iinimoiJ L wua ;e lrws he,. been followe'c by
the st-:te labor (ejartimenits for a niaiber of years. (*) T}.c f.v .-:It'Ces
of rc'-.irin; this form of *r'. >istment were staiec ,p -s follows:

"(i) It snakes the Tiola.tor .;-y a .:one, aiou-nt on
Pcc'ount of p:Pst violations ,iore )romaptly than
if lc":al action were co.imenced.

(2) It holes over the violptor's heot. the possi-
bility of ;rosec..tion for .-st violEtions if
there are fut'are vio nations.

(3) It -ives an opoorttuiit' to the enforcement
.,-ei-icy to milake cle-r to thn violPtor the fincLa-
mental puroscs of the I'- since it illb.stretes
the fact t>- t the :overmn.ei-t is not qo much
interested in opuijitive imei'-ures tricin. the form
of orosec7ttioi: as it is in certainin that
the iUr c. e of te lawpv is carrico out.

"All Sv cessful -cuni-'tr'-tor. of 4t' t l7jt 7 Is 1a s ure
'.'oulC ree that the resitt is tihrt there i3 a greaterr
)ercent?-:e of '-illing co, )li.-nce, u on ich after all we
in.st ce *enC for the mscce!sf .1 o -er-tion of a law.." (**)

At this point is recelle( the two premises, heretofore mentioned,
on v,-. c-.ci the ciri,.liince oro rlrn ws ose.!ed, na.iely, that there would be
a lar e number of violations w'.ich coli Oe corrected by adjustment,
Fnf.. t!Lat Jublic su.,port '-oul& be .,iven to the ac.&ministrtion of the
cc( .e,-,. As a coroll-r-, to the first jremii.e, the f-re-t majority of
res..,on(.ente yer believed to act without -ny deliberate intent to
violate the law an- it was felt tAe-t the remaining few coul6 be ef-
tecti.ely dealt with through the lem el roces-es defined by the Act.
This, of course, .resuposed the enforceability and leal soundness
of the coces.



(F) In NRA Studies Special hxhibits Work h.'terisls # 77.

(* ) I dem.


3861








If the li rst jre..cse "sc 9 -rereo. site of s:. ec.iu.mtient machinery,
the scconc. ", s Lhe h:e;rt of the E..iiA1 trtivre syste.i. It 1'ss the cradle
tor t.ie usc of W-A in i nit, or t;,e relir nce on co.a-lpints as the basis
of )Jrnce&ure, ai. for t,"-e re ".iit o.tsic.e influ.,.ence needed for the
effco ive F.. hustl.ies .t -1i viol! tion..


3861





-11-


PAKIT II


CCO'ER.- AL C.Aic_'T A:I- PIO:CDU'j

Chalipter III The AC iLnistrctiveSettlemecnt of Code Violations


Section 1 The need. for correcti,- violations by- aCniniztrative
neansures. It is a fundr'.'.tal conce-t of industrial re,-lation and
lbor le,:islation, h.ed on thie e:-'ience of other 'overmnental
__;encies ela:.es oft e ," "
agencies e:~ed in the tCpniniotration of ne'? la's of r-ide and. far-
-reac'.,.in-' Dolication 'liclh eo not dea`'l vrith matters considered. as
malu c per co, -'.hat the successful o-eration of the statute ultimately
dLepenCs on t'*he e'.x.rtion of pocrsons af.fectec, by it to their obliga-
tions uncle- the la', .n&. on the presence of a stror-i: public opinion
frvori-,.; enforce:lent. (*) r'o0 fact ..r. reco.ni-e'. by the Interstate
Comerce Co':ission in its re-ort to Con~ross in lSSo,. (**) It is
clearly illustrate& ". the roy-e.'Tn'ent' s e::oerience in Prohibition Law
enforce:iont.

The nost obvious, anm.c )osribly the o-t effective n -etyhod of
education anC c'.evelopnent of support b- the monbos of inc-ustry ras
to correct the violations connitted, n to ri the eiploers
business operations into confor-ait, ''ith the coCes. Coupled rith
this there h.c to be the instruction of e players as to the ineanin7
of code provisions anc the exp::anation of the benefits to be derived
fro-i comTliance -rith the .T2- IroCr,".

AsiCe -fri fulfillin.- the f. a-.ent.al need. dCescribed above, the
use o: a system of "''.i.-iotrative -,ettle:-ent of code violations wTas
dictatedC. by the practical. limitations of the enforce -ent sstens
orovic.er. b- the Act. (***) This statement is so self-evi6ent that
it is i harcl:y necessary :.iore tlhn to mention th't aopro7-i.Lately 150,000
cormplp.ints of code violations ,,-ere d.ockete1 b;7b the field offices of
ti.e Co'Tix:-.Dce Divrision. Thi3 fijsa.re is e.:clusive of conrplaints
handle; b-' Code A'.thoritie- and co,-laints chair'in" violations of the
President's Ree.rDlo :.ient Agreerient. The volume of cases '-rould have
increasee. considerebl- had the Z.. activ-ely souht out violations,
unCe-: n:-- s--.ten si-.il.ar to lass co':rliance.


(*) This i," the vinderlyin'; theo:- of the a1justnent s3steu, see NRA
Bulletin :To. 7, P. 3, Code Ad inistrstion for cornolian.ce "includ-es: (a)
The inistrLtction;, anf education of' those subject to the code as to their
responsi-bilities thereunder so as to anticipate and. avoid co"rplaints of
nonco:.pliance, (b) The a.justient of co-.plaints of noncompoliance by
eCucatior., fin-ins of facts, and the -pressure of opinion within the
I ncustr- - .. t
(**) Suzra, P.2.
(***) Title I, section 3 para,:raphs (b), (c), (f), provided- respectively
for -roceedinjs ~ the Federal Trad-e Co:nission-under its organic act,
suits b- the various District Attbrneys to restrain code violations, and
prosecutions of cod-e violations as misdemeanors. The penalties were re-
st'ricted to transactions in or affectinC, interstate or foreign commerce.
9861








Section 2 Source of a.-horit- for the rC'niniktr.-.tive settlei-nent of
con-plaint s. Nowhere in the IT'..tion.l Indust'i.l .Recov;er: Act is there
an" e oresseC. cld.ele'atio.i o" s;o.er to Tne P-.eiC.en, or his &apoointed
agents to acbd.inister the .-r'io .s codes o":' fair co:-roetition, to handle
coToln.ints, or adjust c-.sen of viola ion, nor is there an: st-.tenent
of re.-s)on9,ibilit- to .o so.

However, wiithout enterif-: o--. a 6isc-.tssion oJf the let;al questions
involved, it is suf.-ficient to tre.rat the f i nction of a.C-'inistering. as
implied froi the ro'-r 'ron'.ed to ti-he, President to establish agencies,
amnoint -oersonnel, end to orescribe tbeir c.uties and authority (*) and
:, also fro:.i thie ora.cticn.l neceusit- o:' -.C.rinisterin.- the cod-es once they
w wnere aopprovec,.

Si Under Section 2(,) of :the Ac', ,) the Presi'ent delegated this
function '.'ith, others to the ACdiini.trvt.tor **) -7ho issued the regu-ala-
S ;tions for the na.just.cnrt o: ca..ses ( ) anC &anr.er -whiose direction the
;:'" Compliance Division -,as est.':licheC. an-. in-estedC-. "ith the -uty of ob-
.ii'i, tai-:inrg compliance wit> the various codes a.-; the Presi-'entls Recnploy-
;!, nent Agreement by the nenber-s of i--"'tr. (*****)


S(*) national In'ustricl Reccver: Act, titlee I Section 2(a) provides as
j, f01follo7s: "To effectuate the :olic: o.- this title, the President is here-
by athorizeC. to etiih SUC.i r--encies, to accept and utilize such
:' voluntar- anIC. unco:.;.pcnsa;:ed. se--vices, to ap.,oint, withoutt regard to the
:,' prrov-isions of the civil ser-.-ice lans, such officers and employees, and
to utilize such Federail officer? a-,CL employees, and, ,ith the consent of
'' the State, such State, c'.n Local o:"icerc anCL employees, as he may find
'i: necessary, to prescribe their authorities, duties, responsibilities, and
'i., tenure, and, withoutt re.-rz.ard to the Cl,.ssific!tion Act o- 1923, as amen-
... ded, to fi- th'e conpensation o" any office--s and. employees so appointed."
:i" (**) ITote (6), supra. Section 2(b) provi-.'es as fcllo.s: "The President
may Jele.uato e.' o" hio-- .-unctions .n' -co"er- unC.er this title to such
.; officers, a-ents, and cmplo:eec., as ho r.y .esi-,nate or appoint, and
may establish an industrial .lannin" .n-". resea.rchi agency to aid in
;' carrvi.-- out hi. f.-.nctioas. .'.:.er thi title."
.. :(***) E-xecutive Orde.F-. 3173 (June 13, 19-3), 6205-A (July 15, 1935).
.,: The lT.tional I.dustria. ieco-'er- .Corerd '-"s invested -iththe saiae -powoers
at the ti:ie of its app.int.ie:t b-v :-.ecutive Or.er 6$59 (Septe-iber 27,
1934) and S695 (]Ia-ch 21, l9-:).
(**>*) "Re.qnalations for the C..jr.3tneait b.- District Conoliance Directors"
of complaints o-" code violation." (October 1, 1933), si;necl b-: Hugh S'.
Johnson, Ac':iinistrator-, an. ,_,proved by -_c- Special Industrial Recovery
Board; Release ITo. Ig47 (ioveroner 22, I135), stptenent by General John-
son regprdin.-: code aC-iinistrrtion; 112a Bualletin To. 7, "IHanual for the
aIjustnent of co:rolaints b- State Directors and Code Authorities"
(January 22, 1934); Ad.ii;-nist:.'rtive Order X-'14 (April (, 1934);- Adnini-
strative Order X-29 (ila- 12, 1934); Office i.anual, I I-f100 et. seg.,
Compliance (Iarch 27, 1S35). See also Office Order 40 (October 25, 1933),
'7hich amoni,: other thin.js in e: ect deleccated to the Co .pliance Division
the poo-rer to issue instructions as to the .djustnent of cases.
S(*****) Office Order 40 (October 26, 1933).


9861


-12-






Section 3 The function nf the Co-"'lin-ncp Division to adjust comrrl:,ii. ts,
It was the duty of the Co:ipli'i-ce Division, as stated in Office Order 40
(*) establishin,; the Division, to endeavor to adjust all cor'}laints of
violations of codes of fair competition, rrnd of the President's Reemflo,'r -
ment Agreement. This function w-.- further stated by the Adrinistrator
as the adjustment of co-ipl.aints of non-compliance by education, fair
finr'ii;s of fact, and the pressure of opinion within the industry :mI'l by
arbitration, conciliation, and inediation. (**) There was provided an ad-
miListrative machinery for the h-ndling anu" adjustment of complaints
which had its climax in the procedure Yrovi.Iled for renov-il of IIRA insignia
fro..i violators an1i the reference of unadjusted cases to the law enforce-
ment agencies of the Government4 (***)

This idea of ,-Ijustment of cases of violations found precedent in the
established practices -of the Federal Traide Commission and the 'State
Labor Depart.nents. A report of the Womien's Bureau of the U. S. Depart-
ment of Labor su-.;'.ed up the administrative efforts of the various States
in obtaining compliance with their minimum wage laws, as follows:

"In enforcing the laws the couiissio.is have relied much more
on g; !ning compliance throuL..h setting rates that would comrnand
general support from the I,,rloyers than on forcing obedience
throu-.h widespread prosecution of non-compliance. When cases
of non-compliance have been found, every effort has been made
to adjust these cases inforn.ally between the employer and the
commission's agents." (****)

Part of the adjustrenits made by State Labor Departments included the
collection of back wages as well as obtaining the present conformity of
the employer's operations to the law.

Similarly, the Federal Trade Commission for several years prior to
the passage of the 'Tational Industrial Recovery Act pursued the practice
of dismissing cases on stipulation that the respondent would discontinue
the acts obnoxious to the Commission. (*****) While a close parallel
between this method of operation by the Federal Trade Commission and the
adjustment system of N4RA cannot be drawn, it is mentioned to show an
established method of administering the law where the volume of complaints
of violations is too large to be efficiently handled by the enforcement
system provided by the statute.

Section 4 Definition of adjustment. Although, as has been pointed out
in the two preceding sections, the functions of the Compliance Division
have been stated on numerous occasions to include primarily the adjust-
ment of complaints of violation, a thorough search of orders

(*) Hote (8), Suprra
(**) .Release 1847, ITovember 22, 1933, statement by General Hugh S.
Johnson with regard to code administration. This statement was later in-
corporated in Bulletin No. 7.
(***) The insignia removal procedure is described below in Chapter VI.
(****) Bulletin 61, "The Development of Minimum Wage Laws in the United
States, 1912 to 1927" (1928), 278-319, inclusive, give a detailed dis-
cussion of adni listrative measures employed by sample States; see also
pp. 381-. 390, inclusive, for a further discussion of the subject.
(*****) "Annual Report of the Federal Trade Commission" (1932) pp. 44,45


9861





-14-


ancd instructions pertaining" to the subject fails to reveal any attempt
to define "adjustment" until comparatively late date.(*)

Korever, the meaning. of the term can be arrived v.t 'by giving con-
side iati'ion to the common us-.eF of the '-o-k., together rith the various
official statements outlinin- the functions of the Cormlipnce Division
and the elements of code administration.

Thie ste-ndard dictionary definitions :-ive the meaning of the rord
"adjust" a. bein- to settle, or bring into harmony 7'ith the general
plan.(**) On the other h.miiC, the word hss been riven P special meaning
in business transactions, e.g. to settle claims, as in the insurance
business.

Thus, ",e see thaft the rnmeLriin:s credited to "adjustment" by usage
ernbod,:r the idea ol the p)n.mient of cl.ii.as or dmaages, i.e. restitution,
and the present correction of variations from the general scheme so as
to bi-ino conformity -ith the rule, ice. future compliance.

This application of the term is lent dignity by early utterances
rece.-Cing code admiinistreation and compliance. General Johnson in his
release regarding code administration (***) said,

"The term administrationn for com-oliance' is intended to include:
(a) The instruction and education of those subjects to the code as
to their responsibilities thereunder so as to anticipate and avoid com-
plaints of non-compliance.
(b) The adjustment of complaints of non-compliance by education,
fair findings of facts, end the pressure of opinion -ithin the Industry.
(c) The adjustment of complaints by arbitration, conciliation, and
meiatioiin,
(d) The rendition of 'e-jorts to the enforcement agencies of govern-
ment in those cases -'here all other means have failed. Such reports
should be based upron ade.uit.e fin-infs of fact."

The adjustment of cases by education and instruction of respondents
as to their codle obligations clerlyr implie- bringing the employers into
immediate compliance r'ith the codes so that continued future observation
of the code regulations might be virtually self-sustaining (except in
wilful cases). Stress "ras ltnid on buildin- a sound, basis for future
code co0;)lio'nce by industry.



(N) Field Letter 125 (June 13, 1934) stated certain standards of ad-
justment and indirectly defined the word; -ield Letter 193 (January
10, 193.5) crystallized the meariinos heretofore given the. term and
S-placedl them in definition form; Office Manual, II, 1518.221 and
1518.222 (November 21, 1934).
(**) Uebsterts New International Dictionary; Funk end Wagnalll'.s Ne'
Standard Dictionary; 'inston's Sim)lified Dictionary.

(***) ilote ^.13


9861





-15-


Reco-nition ris also ..:-iven to the f:'ct that some sort of recomrijcnse
should be sought for the dr-nn,-:e already done. This is a natural con-
clu.;i from rdjustment by arbitration, conciliation, -,nf m,:'Ji:,tion, cinco
in corn osinr.: the differsenhes between the parties to a coirrlaint, it is
u-1I.lv.y the aim to cc-,,,rnsate the :".. rieved bl'-on. This idea is, of
coa.-Fe, lore cle;.rly expressed, in violations of ra.'Es and hours provisions,
vTherf the employee may be paid the deficiency in vai'e or be compensated
for his overtime.

becausee of the almost limitless variety of situations arisin- uc'.er
code compliance, in vrhich no two ceses of violation were exactly li'c,
it is impnossible even after tP-o years of experience to dray a precise
definitio.i broad enough to cover all contingencies. However, there -'ere
developed e.efinitions 'which sufficiently embodied the principles and
basic elements of aj.itAinent to serve as a general guide in the handling
and settlement of cases by the field staff and the compliance councils.

Section 5 Purocse of adjustent,(*) 7Throughout the history of com-
pliance the underlying theory, of adjustment remained the same. The seem-
inc Cifference in iesnir.h -' .s (.' o (.0 the, changes in stress on particular
purposes sought to be bcco. x i -h.d by the cevidce, the g.rac~u-l evolution
of -djustr'-nt techniques and policies and the establishment of standards
to be fol?.-oed in handling crses as a result of actual experience.

The o.'iginel our o03 of this system of operation was primarily to
instr-adt &- loyers as to their obli nations under the codes and to make
them conform to the la? both for the present and the future. The idea
that this would serve as the soundest basis for permanent administration.
Thnile the value of this method of approach should not be underesti!'.c.ted,
it .-as found that something mere r"as needed to prevent recurrences of
violations by those employers less cooperative toward the program emand

(*) The evolution of the Compliance Division was an organic development.
It may be divided into four distinct periods: the District office period
from October, 1953 through January, 1934; the early State Director period
to June, 1934 (fnen Field Letter 125 and Suprlementary :,emorandum Io. 1
"ere issued and the system of reporting to 7ashin-ton was changed); the
later State Director period from June, 1934 to January, 1935 (when the
Regional office syst.rj began to function); and the final stage from
January, 1S35 (under the :-e:-ional system 'and when Field Letter 193 was
issued) to n'ay 27, 1935 (when the Supreme Court decision in the Schechter
Poultry case was announced). This was all presaged by the earlier period
of i2JA activity. Adjustment policies, internal organization, and com-
pliance procedure all developed together during these periods.


98G1





-16-


less receptive to education by instruction.

Adjustment then c-ea to have ?n anpprcntly different meaning. The
original idea of restitution merely to place the parties in status quo
was enlarged to include the element of a deterrent to future violations,
although in form ITRA still clung to +he first definition.(*) Thus, in
Field Letter 125 and in the Supplementary Icemorondumn No. 1 to Bulletin
NTo, 7, there was stated for the first time in form of -ritten instructions
that a higher rate, vary-inc, from time and one-third up-ard, must be paid
for illegal overtime in order to ef-ect a satisfactory adjustment.(**)
Lilke'-ise, in the absence of records, the field offices were told to accept
the emKloyees' statements at their face value withinn the discretion of
the offices) and to place on the respondents the burden of proof.(***)

This change in the purpose of adjustment is reflected in the de-
velopment of standards and rules of adjustment, discussed later.

Section 6 Evolution of an ad.iustment n.ollcy. In the beginning of
compliance activities and until June, 1934 there was little attention
paiL' to ,'.r. c restitv.tions in a, jut-:'. cascs. As .s beeoon stated
before, tie rinciral i.'.a in j: ti- ca.scs \ s to m?.-:c the resnon-
Cent bring hiA- b-asiness o-norationG- iLto co;for-:ity r"ith the coCae ro-
visions ?.n(. fircc to coi.ply in the ft-tu'e. While t.e instructions
for hcndlin, corn.la.ints contem-)lte'. the -ae.'mer.t of bac: waCos in
some c?.sas(****) tic restitiutior _-i-ci-le ha'." a very hazy an"'. in-
clefinito -?lace i/n [''.j.stnents. Th-e E. justmrent of c-.ses o' concilia-
tion, me '.iatio-.-I, an, arbitration, (*****) rnile imnlying restitution


(*) Offic-e >;-o.l, III, 4-100.2 (i:..rch '7, 1955) e.efine- restit,:.timn as fol-
lows: "'1I-:Lcstitvttin feo : vinlaetio. mcrrs eii. the c.mae caused
by the viole.tioia so far es is -racticable in the jv.,mcnt of liA and
in a m9n-cr consistent with "-'h I2,!, 'li c.-v.1" The latter oer-t of the defini-
tion co-nta.iis E,-h.ch' general auo.ificrations s.. to ma--e it unsatisfactory
as a gui .e to, fiel., offices for -'olic, ic .hanl.in._ cases.
(**) "Sup1cme1-n1t?.r ieior-;an..m :Io. 1, "-.clative to the Adjust. ent of Com-
nlaints", -. 5 (isFsued. attaci-e". to icl.'. Letter 125); Field. Letter 1!25,
"MIa;?nual for the Ha.ain of Labor Co !-.l?.ints"(June 15, 1934) p. 4.
(***) Sn.mlcroita.-- l.emorancrum iTo. 1, ,. 6, -iel,. Letter 125, p. 8 stated
the principal o .ly rith relation tj csos uhic'.cr coC.es requiring the
keeping of recordc.s. For further :'.evel-lmnc,-t ofthis ;,-actico see Chap-
ter V ?an_. tc- Pert of the Histo-y. de.voted. to a c'.iscussion of outstand-
in, problc.ms.
(****) Liason Circ-LiLr 75 (October -0, l'"3), ,ith which 'cerc transmitted the
initial i.:stuctions to District o,-.:liae-?cc Directors on ad'justing ce.ses,
Waic': "The;c ero circumstances -u,.z r which ?. furthi, adjustment is nec-
essary oth:0._ thn, P. imere exolanation of the cm-loyer's obligations."
For exarn)le, it st?.tcC. th?.t the '.oficicr.ncy s-houl.. be -DiG.. in minii..um
vae. violations. (p. p.r. C) It vent on to s-y that no restitution
coulc'. be ,ao'.e i-n chil:'. la.bor- violAtions, only a correction to conform
in the or-se:it ":.. future bcin. nocessar:'. (p. o, oar. H).
(*****) Uotc /%.'13


9861




-17-


-lz,. ,indicati-d that the amount of bjck w,,es wFs to be determin-' by
a .recw;'ut bct,'e,-n the parties !s to the facts.

This is stated in Iul.letin 0To.7 as follows:

"If the res ondent r.l'its the violation all e-r'i but furnishes
satisa'actory evidence tiilt he is now con l-:ing, is willing
to comply in the future r'nd. has w- de equitable restitution
for past violations, the case 'ill be considered as -d.just,.'
and th'e complainant and respondent will be so notified. "(*)

liany casE s, especially duLrinn the period before the establizih :ent
of the Sta.te office system in Janmary, .934, were adjusted and closed.
morely, on the a:n-ecnent of the respondent to comjl-)T in the future.
Little or io attempt waas maae to rectify past violations other thon 'c
e:.1laining the necessar- chanE s. in operation and obtaining a-reC-t:'e.-,ts
to comply in the f'uti'xe, Iwhich were often informal and oral. Restitu-
tion W7as re'-.uired only in infre-q.ic-t cases, where the complainant was
unusually sistent, "i tien x-,s or'inorily the result of copxDro-lise
betc.en co: .lainant n d respondent.

It muLt be remembered. in this connection that this was the ini-
tial period of e,-perimentatio.n. Th'. personnel, both in 7Washin-ton
ana.d in the field, was with few exceptions totally inexperienced in.the
administration of industrial regu3.tions. A direct result of the lack
of ex.oerience vas the .Dsernc3 of tIequate instructions and ,or]:i:..
policies, which could be successfully developed only from actual con-
tact with the problems of code a.i.iistra tion.

Added to this was the fact that the field offices were greatly
un6.ermannedl. The normal staff consisted of the District Compliuance
Director, his assistant, a Le,"al Adviser, and perhaps one other person
who divided his tire between the field office and the Local Corypliance
Board. There was also, of course, stenographic and clerical assist-
ance. In the Lissouri office, for example, there were but two people
actually hlndlin- the complaints which were pouring in at the rate of
about 70 to 80 per 7e.e\".

The lnck of an adequate, trained staff grew to be one of the
outstandiii- problems of the Compliance Division, both in Was"iin'ton
a.d in the field, and played an iroortant part in the formulation of
policies of orocedure.

With the adrded experience in obtaining compliance and. the in-
creased staff under the State office system, came a 2radual change in
the -adjustment policy. While this step in the development did- not be-
come reall.- apparent so as to be officially adopted byr the Compliance
Division un.il June, 1934, it r.'s w-ell recognized in the field several


9861


(*) Bulletin I:o. 7, p. 14, (Underlining supplied).





-13-

i.onfths before. (*)

Acting on taeir c'-.-_ initiative the state offices laicd nore and.
more stress on bac-: ryage rpltitutions -'.d formal assurances of .)re-
sent nd future cnrplia.nce. Ilistepd of the original policy, dictated
by necessit- of circu-istances, cf ta:in; tie repondent's assurance of
coo-eri-ation at its face value, stricter standards of adjustment rere
introduced. The requirement of convincing -oroof of present com:oliance
anid. pniyment of all bacd: ages cuLte to the complainant as well as to the
other employees of thie respondent, t.ndclud to become the polic-, of the
field offices in adjusting complaints. (**)
This change in a.djustnrient policy vas caused not only by experience in
hanCling cases, but b-by e::treme ip2essu:'e front labor and the more respon-
sible employers who sSw that this -a- t.ie onlyr feasible method of dea.el-
ill. with violations adminiztr,.tivel-.

Coincidentally with tie K.evelo-o.'-nt ta21ing place in the field,
and even slightly preced.ing it, the 7 optional Compliance Board. began


(*) This change in adju:tn.ent polici- did not occur uniformly
throughout the field. Some offices preferred to regard as
adjusted any complaint vhich had been properly cleared- from
the record in accordance With the reporting system then in
effect.

Thus, when a case was transferred to another agency, either a
Code Authority or the National Compliance Director for instance,
for further attempts at settlement, the obligation to adjust
the complaint was regarded as terminated. That this was a
spurious presumption. is clear when it is recalled that .Pany
such cases were returned to the State Offices still unadjusted
several months later. It was partially because the more pro-
gressive offices realized the fallacy of this definition of
adjustment that they gravitated toward a stricter police of ad-
justments in fact, rather than through a mere bookkeeping device.

This lack of hormegeneityr of the field offices in development of
their credos of adjustment and methods of operation was due to
variations in personalities and outside influences on the particu-
lar offices. This is discussed in more detail .'.under Chapter IV.

(**) One should avoid the inference th.t. the changes in adjustment
policy sketched in this section were sudden, or unknown to the
entire staff in Washington. Those persons who came in contact
with field work, even indirectly, were also cognizant of the
change and the necessity for it, although perhaps less vividly
so, It was only this fact that official recognition could be
accorded. The development was a matter of growth rather than a
sudden determination.


9861







to tend to'-:irdl : more strict adjustment policy. Unfortunately, the
policies ec blishcd by t.h.? Board. were not comrauiicated to the field,
e::cept in&di.ectly in isolated cases, until June, 19S4.

Trius, we sel the :7tion-J Compliaince Bor.-' a-loptin; the follow-
in; statcient of policy at its 33th meetifi :, on December 1-3, 19C, :

"The ITA Polic: is well established that the national
Compliance ?oard or a local Compliance Board :i.y properly
require an o djustnent b- restitution of back pay as a
condition to continued. display of the Blue Ea,-lo under
PRA or as a condition to restoration of the Blue E?.le.

"A number of local Cor,,liaoice Boards are on record as
refusing to put themselves in the position of collection
agencies. As a matter of practical P.d iinistration, we
may advise the local compliance boards to assist in re-
covering back p-y. The local compliance boards may adopt
the policy of withholdcinit recommendations for removal of
Blue Eagles from violators of PRA who make restitution
to emDloyees. t"

At the same meeti;., the Board established the principle that
restitution for overti-ne, in addition to assurance of future compliance,
was necessary for restoration of the Blue - -le. (*) Previously tihe
Board had established the practice of requiring formal agreements to
adjust and to comply in the future. (**) These two policies were
followed by the Board in handling; cases before it until its abolition
on L.ay 21, 1934 by Office Ord-er 90. (***)

Moreover, the '.-tion.al0 Coraplis-nce Board early recognized- the
penalty element in adjustiment nd. sh.oe5 its policies to include that
direction. In the True Form Corset Co. case, Dece.icer 6, 1933, it
required. as a part of the adjust-ient that the rEspondent poy the costs
of an audit to determine the amount of restitution and also pay a sum
to the Code Authority to rei3.burse it for investigational expenses,(****)

(*) Complaint against Consumers Food. Stores,Bricr1.uort,Conn., res-
pondent, oi.nutes of 3.th meeting, December 13,1933. See also
case against ::oro M'anufacturing Co. ,.Iei Orleans, La., respond-ent,
minutes of 29th meeting, December 15,1933. See Field Division
files.

(**) For example see minutes of hearing of True Form Corset Co.,
Philadelphia, Pa.,Dece.-c.Er 6, 1932. See Field Division files.
(***) These policies were carried on 'r 'the Advisory Council, shortly
changed to the Compliance Council, which Jas established by the
Con'liance Division pursuant to Office Order 90. The Ad-visory
Council took over the wvrork of the National Conmliance Board-
without a break. In fact the change was hardly known to persons
outside NIRA in Washington. See Cha-oter VI, infra, for a further
discussion.

(****) See Note (27), supra.
9861








This ic- bette-." illustra-te''. b, the follovi.. statement of r)olicy on
Feb:c 14"l:

"- io0 1 Co. r.-,'leL?.-:e r A r :.ds ea;-rnent of cost
O' .-'...it t-. r SOi-.o 0.. j t. ir r c. necesF .-. rt io
tCU? r',-. st I LL'tio.t. "(0 )

Tij o'bvious 'ur.'-o:-;e o_ thi0 V."., t''o-fol&.: to conserve cormpliance
facilities 0o1 tl- Co.li..-c.e fDiviE io J-: i- -e Coe. Au._thorities ene. to
c?.c an.n e:-t--.-r by.; e:n o.n the reE:.o-i.' eo t ir. rt.::.-'_ the a ..justrment so as to
ten". tcA -A..i.iLiie n:. futur-e ,esi-e to -iol?.te ax.ai.(*s)

In ,.zi1l. Letter 119 (Ju-ie ., .. te-' iaur tec. n
system sjf -.,o'tln. f"or:m the fiilil of'L-'ices to the Coorli.nce Division
in "las'ir *on. 3e 1inif-,: ''it, the -e.io of June 16 to June 23, 1934
the off7coes e--:te. t.- _.eo,..ts of "bU?.ck Vre.es -'ai b'" res-nonii"euits in
adjQusti i.,oth ?Pc A a.:..'. co e viol- tic3.s co.r.:,lr.ints. F-ro:i this tir.e on
(whe-n Ti 1' letter 11.5 -,n' Su::l- 1,melit?.-" >t:TIorU't..1 1a. 1 to Eullatin
No. 7 ..:-'e alb.o issuee,:) u.LTil thLe t.r. nir.? tio-- of coiilia,:ce activities
on .I..I.; ,, .C., .o.ti.ie.. et.rh-sis r2.% lai on va. restitutions in
mahi., C. j -iS ti.ent-,. The so-.Ez i-.o t",tz.s ati tuc have b een .iscussed.
in tnc o-.sco.in. section.

In th-_.s .conectio-' it is vo"Ui to io;.e th-t rn..'.er the nev, reporting
system tih- fieli offices vwee r3 r.ire' to show- 'ihich of the valiC'. com-
plaints >,:.. t-e-en ? ju.te.. b:.- t-e -.o._-r-ment of back: vra. es. 'Jhere the
recrtc t :ashin..ton sior'-e." comp)laints :ic, L-.:.'. be-n close', without
the res-:on.c:t mTimin r-estitu-tio: to his r.Toloyeees there v-as al-
ways th.- '.-.stir:ct :-ossibilit;--: of' t: office buein,i, cllec. to account
anc' bei-. .ia.L"e to .: ivc sometime.s en-b.-rrassi:, e.r7lanations of the
generate-.'. t.t the of icionc-- of t;.:- v-iioius offices '-oul.. be juC'.ged*.-
by the- ITV:-I'U_ of case Ae-o:tc'. -.E, -.jr,.sto'L n:'. tUhe e!.ount of restitu-
tion m'.-'.e h ,-,.l .. s to their ',.o--:crs tlirou'.Lh the effor-ts of the
rarticula.r office.

,,This served s a vry i,,r-o'nt y'.cho _loica-.l f-ctor in causing
all fi',l offices to raise t- i:i.-- i::iv- u-i r.ten. -'PLCs of a'."just..,ent
and to be ci.:! o. [ i ., activ-e -.' tahoroy ': in th. ar.rchi-( out



(*) Linutes- of ??t neetit b--u. c-.- n, .7.'.4. See 7i-l. Division files.

(**) The ..vclo,,,eit of th- io-*rc-.'s -.olic:. to require -'eonlt- rates in the
case of il.lei?. overtim.e '-ill be 'iscus 3,. in the subsequent sections
of this c.,-..tt. devote', to a t:,'oatmernt of the creation of stendar.s of
'Ju-istm.3nt.

LL ,


9861




-21-


-. cor 6e.Cui 0 of violtFtions of code labor )rOvisions.

4 .thou :7ot `ircctly traceable to it, nevertheless, it i' i:nter-
Lsti. to o0 e th.t t.is ofici il r .1-iI i'f-Sttion of ch;n o ia. aju. t-
r:icnL -olic; ,rs coi:cl.enteal 1'ith the crqtoipon of the office of
A, ,ist-i't .iatr to for ie!. ci:L'i"tL "ti -n. (*) Tte nev:l
.s...ii ... -o.ition carrie'. ith it tl.:c v--.tctions of su-orvision over
thc. :::..c,. ?io" c -f --olicies Love 'rnii. co. nlince, r.o.orceie:t, anl
c'oo autho't or ani.tion; the ccor..iation of the I'-,.stlri Divi-
sions rith tl. Coi.1ie.nce an. Liti atior Divisiolis; an the m.hin,
e:,.' e:-ecutio;:. of ooperati:, il'--.s fo: the Ievlo,'-.cnt of fie.l" corm-
**^lipince 7-n-. '1101. a,.oncies.

At abor-t' th's timeie also, th, vror" ."oApciiit?,ble" wa.B ,"rop0'0.. in
c.csc-'ibiin restitution.(*) Tiel". Letter 1. sceak's of "full
restitution."(***) T'- use of the vor,. "eoquitabloe" i:Li con-.oc';.iol
i ith re tti- :.to sorns to hove bee ricli;iously avoiC.e. by the Com-
fli-nce Elivis-cn: (exc:t i:i thosD fovz cases of extreme financial in-
-I)_10 f ttC rom that ti me
ability, etc. nhere coro.ss ..er-ttec&) (****) fror tht tiee
ol. (*****)

The -?oic" o" 0 Jutof 0n]t of cobinits v-as finaElly stated in
the Of-.ce ..al, III, 4111 (L>rch '7, 1'.;), -s follows: "To
case .,_'e fi.. as a.juste: uflles, restitution ha.s been made to,
the exte't -colie(' just a-n'.c qui table b.- tho, Cornnliance Division.

...It ha ,- boe shovr_, tlat the "e:-tent cerieeC just V and1
equitable by the Co.?lriance Division" -'as full restitution to all
ei1Dloyees, eoce t in-thosce extraorc inary cases lh-ere coirTnromise settle-
ments yere -itte.. (******) A exclusive, special procedure was
fi.e.lly eotablislhed for this latter type of adjustmentt.(******)


(*)Office Or-.er ". (early June, 19S;).

(**)See note page 18, supra.

(***)vFici Letter 12, p. 4.

(****)Discussej ii (1a:'-ter V, Section .

(*****)The term "equitable restitution" re-oc'urs in the Office :.anual, (Cole
xuthorit;y Oranization), III, 1i8;.22l, --liich states the policy to be,
."Uon .e teri.iition of a violitio:., the committee may. consider the
co.'.liant a.justecd if the reason ent- mrlnes equitable restitution andC
ives satisfactory assurance of 'recent an'U futU-re corTi:liance." Cor,-pare
this vith the st tement of policy, nreparec by the Comipliance Division,
con~aino2 in the Cffice annual III, 4100.S n1 4:111, mentionedC in the
text iima .e t ielte' follovin ,.

******)Sec notl o'.:e 20 su-pra.

*******)Fiel? Better 1`34,, 23, .

S861






-'4-


T.? or:.':,.tio: of this et--ict 7ol0k of adjustment ,-ill be
shown later v- -.ec. '. iscussiorn of te activece of c.ropping cases.
Section 7 Yhe '-, ,.yr,,ert o '-' t ..- .s. oFf ?. .jr.stment. I-aving
considered,. ti' .efi.iiLon a.:f ..-.tx.se, o-" the -".'justment and. the
dclevelo*,,.i-nt of -oli-ciAeF, It is eli to look et the; stan.ard.s which
were enl-:e..e to i'-i.su-re that thia hlin.: of con-rlaints -oul" be
fairly i.i:o:.T :ru .:.. in a.ccord rith the theory.

SThe st.temc:-.t of the i-ur.ction-s of the ConT i1.nce Division (*)
in itself Pevc(. Ps a general g..ide. 2 1y it the assu--.nce of present
and fut.ur2e co: olian-,ce ves m?.ta.e necess-_.ry in el! cases.

Asi.'.. f-or. t1e C'.efinition of e."jus trent (as skov-ni ik- sec-
tion 4 above) ;-'" the statement of the'- elemenIts a-n.1 functioais of a.-
ministr._..tticn 53- co: .,ll n..'.e ," encral Jo.rno.on,(**) there were no
definite st_.-,.ar.s 10" th. .l J ..tri.-rt of '-.aes Pnj. hours violation
atil Fi', letter 125. LfniLte stam.'p-',rs for the a ,'justment of
trac.e practice cases were nev.;r: ilnt:o--".-.ce.. (*** Hovwever, Liaison
CirculeLr 75 -?ve ind'icetions of t'L st-n.'itrds tc be followed'. in some
cases.

The only -_-::-'-equisite to a,.jrt.e-'t in. t-he foru- of a definite
itandarC co be net vas continue. in Ciod Letter '2 (December 22, 1933),
which provir.ded that whenever a comic'lt.int _.-o)eared to be justified,
and the colin ha..... lost hi-c job by reason of filing it, reemoloy-
ment shoul.'.d -e. a corndi.iio or-ecce-'.e-.t to closing, the case. This ",as
previoTusto T..:ecutive Or..er 6711, i..: 15, 1034, definitely prohibiting
&iscrimin.tioen ?g-ainst corpl.iin er:-,oyeces.

los; int:-'-_-C.:elD.ateC I,.'- thn M ,'e(velornment of the definition
and p-olicy o -I. a '.s.t.,aei'rt, there were evolvedC. standard.s for the closure
of c.rses 01 -'articulr te,"s2, of viol-.tiol-s. This has been treated
briefly in the forci;',oi, d seccioiL o;, the development t of .)olicy.

With the 4rowtP of the i.. c in ti field that it must be ad
unprofit?.1 1l t:, violate co..s, t2-e :' raE a n?.tural tightening of
requiremen-.,Ls for cor.sir'erin. a c.cs- sp.tisfactorily adjusted. For
example', ror-e attention ,.7as .ivon to restitution covering violations
as to all *-1 r lo:,ces. In cases of overtime violations, the adjustment
wav.'s required." to i-iclud.c py..ment a.t tire a-C'. ione-third, or the rate
specified. in the cod..e for overtime- )er-mitted in cases of emergencies,
etc., 7-.e lpttcr -ractice v.as adopted y the various field offices
in the h.:.'clin of individual cases, ithout definite instructions
3rescribir. -_,i overtime r-.te.



(*)See Note page 13 supra.

(**)See Note page 13 supra.

(***)Field Letter 193 (Jenuary 10, 1933), p. 9.


9861








h. i L cc', l 'o r c x'ls t, i, :.* liCr tr O:' ofT the ""tion 1l
Corr- i -.1-c .c -f sc c..Ss iii the socti -.Oreco*.in .. In cn of 2.h carl; c:.sos W.:erc rcstorat jon cf the
..luo.. &., ho a-, 0 also
i tio.i 1 Co.Yx: __?;e Di .', '.o., D, 0'es .L. th0 o oi-i_,n of th o 1or a s
bcliz tl.v I re-stitutioin '.in the enti:.o -,crio'. of no:i-coer-li-
F'icc sol'o.o,, t`o :.o J 0io e the inzi-':'ii ? r c r2storc?..

;' cc:T'.rtiv~ly carl;' tc t"fo, thtr- v;?s consi'.ero, tho
sctti l, o : st-i'.rc. for 110.,1.tm .;..t o l ; ovr vio rtie0 :,.
Th '.Tl tio:-" 1 Corl:a cc '-.--. "< 'i.'-p ov .. tle ,ctti:." of a c. `,inito
_.te of -';.,.:;'t for a" jw u l.i.t, a (.. nie rtc:. t':o ).'inciplc t}.t
no lesr tt:c, t r t,, 'ovo in thu- *o s for ic.-.1 overtirmc ;Oudl
be acreotc r st.tisfcto.:' a'j-t.t. (.**) The richt was rcscrvtc
to itcresu the :roir.ix in *)artic,.!aT ca es.

Sho tl .. .. "'-o ". y"a "ro e1. mo .ifice.-
tionl of t:e tr::"a:'-. tlat all rcstit.tio:. for i1!1e-i over-time
s;-.)ul'. be at a et hi:ah Ir th_:_. ta L t To' Lour tolora:icces ,rovi ', c.
ii th, co-'.o,.

This stam'.a.rC.. remrainieC in a use cctii A'--i! 26, 17-, whon the
ri-1, h .avi h consic'.ora-loi iitcrvor-l ;.h occrioncC i-. hanldling
cases, hel- in a case beoore it,

"A'jvi tmiet t 1.or overtinoc o)l..oyi eit of an
*r.)loyoe, -ho. o eiwlloy ic'i.t in oxco' of the i.x-
inn, ho.rs is a violation of th1 Co e should, al rys
;)rovi.c maymenet to iuch '_ oloCo at i, hlir' r ate
tha t t specified in the 3ce"o fo: overtimnc oCDloy-
meont of an en -rloyce :-ho is -erm,.tt&' by the Co.e to
'oL: ovewrtime." t(****)

Tho 0-ov- oef a-'.t t ar it then cn-o to include resti-
tution at ti. e and on.-.... fo ..: i"n. hour violations.



(*)Loft C .n-> S-'0ores, Inc. a.' i:- ton:, i. C., res-.ondent, minutes of 31st
me-tin n, eco-.or 5, 193'3. Soc also note page 18 rupra. See iel'
Division, lilcs.

minutesute s of 57th mcotinL, 7eo-ia:y y, y 7.. See riFil Division
file s.

"*):inutos of 71st meoctin, :r:r 15, l24 c See Fiol! Division
files.

**)American '.cat Co., Clovcland, Ohio, res-'onoent, minutes of 122nC.
meeting, It'il ,6, 1'34. Sco Fioe! Division filJs.


9861





-24-

This announcement of a st-ndp.rd of adjustment is especially signi-
ficant since the functions of the I,.ational Compliance Board had been
restated in Office Order 74 (.arch 26, 1934) as including furnishing
recomi..endations on gaimeral cormnliance policy and procedure to the "Wational
Compliance Director.

The 2oard's decision -:ai.s adopted b'7 the &omuliance Division in es-
sen-tisll- the same form and is3uec. to the field as instructions in -7ieldC
Lette-r 125 and Supplementary Iser-orrnLum 1 to Bulletin 7.(*)

2-- i,"cy, 1934, then, the National Corpliance 3oard and the State
Office., nad. cre--ted stanf.arn'.s oi adjustn-ient covering cases of violation
of the minimum ''age and maximu:,i hi,..rs pr-ovisions of the codes, in adc.ition -
to the instruction contained in Field Letter 28 that reinstatement of an
emolo- E d:.ischarged for comoT.inir,.p, -here the complaint was justified,
should. bo made t condition -o ece t ;. to filing the case as adjusted.(**)
Generall- speaking, as to trad.? practice violations and cases of non-
comoli-.:nco -rith labor provisions othsr than -'ages and hours, the only
requirements for adjustment '-er.e present confor-iity to the codes m-nd
formal agreements to comply in the future.

Ac a corrollary to the creation of standards of adjustment, was the
more active interest taken by the state offices and the National Com-
pliance Bo.erd in the obtaining of com.iliance through the adjustment of
cases. .'hus, even --here the complainant rithd-rew his complaint 'ith
assurances that conditions had been corrected, experience dictate&. the
necessity of continuing. to handle the case until convinced that a satis-
factory adjustment hai actually been Liade.(***)

We have traced the development of the definition and purposes of
adjustment and the evolution of the policy and standards to be follo-ed
in closing cases. Consideration should now be given to the instructions
issca.e, b,/ the Oompliance Division to its field offices regarding the
handling o, complaints.

Section 8 Instruction- is.uecL to the field offices.(****) The
issu.rncc of Field Letter 1.25 marked a ne'- era in administration for corn-
plipnce.. In it was contained what was, regarded then as a strict set of
rules fo.- the adjustment of cases. In f.ct, ho-ever, it ras really- a
collection of the'general principles previously developed in the field
and in cases

(*) 1Note (20), supra.
(**) SeF p. supra; see also City Brkery Co., De Queen, Ark. respondent,
national Compliance Board minutes, 51st meeting, January 22,'1934.
Se Yield Division files.
(***)Broadway Motors, Inc., Chicr.go, Ill., res.oxndent, N.ational Com-
pliance Board iLinutes, 97th m.:etinR, March 22, 1934. See Field
DiLvision files.
(****)The complete text of instructions issued to the field on st-andards
of adjustment may be found in Sunplementary iermorandum No. 1;
Field Letters 12., 143, 1:, 160, 193 and 194; and Office Manzual,
III, 4110 et seq., For obvious reasons this section is devoted
merely to a discussion of the general contents of those instructions.


9861




~^1-
--,. )*--


before the Thitional Cormo isnce Board, undpr which considerable discre-
tion '.'rs left in the field ocroon.el in the application of those stan-
darCs.

In reafinr. th-e "Tr nmu-.l for the H:ndli_: of Labor Comoplints" it is
importr.nt to remember t:,r.t, being based entirely on experience, it wn-:s
both sound and prr.tical, and was us.d as a bible by the field staff.

Under the heading '",hat Constitutes Satisfr.ctory Adjustment of
Complaints "I there were enumerated standards of adjustment for violations
of the labor provisions of the various codes.

In correctinfr a ninlmun wage violation the respondent was required
to make full restitution of back wages due, based on the code minim-un
for tVie entire period f:om the effective date of the code. (*). Li':e-
wise, in adjusting myia...-n hour violations restitution was made at a
higher rate than that for regular working hours. In the event overtime
was permitted by t,.e code in certain limited types of situations, such
as emergencies and brc. 'downs requiring the protection of life or ,re-
perty, for which an overtime rate r--; specified, the restitution rate
was supa:osed to be placed higher. (**). However, in practice the
field offices generally onl's placed the overtime restitution at time
and one-third.

Where the res.ondvent had employed "learners" in excess of the num-
ber oermittC.d by the code, or had im..ro.erly classified workers as'.!haa&i,-
capped," either failing to obtain the necessary permit (***) or exceed-
ing the allotted ratio, adjustment rvn.s made by paying the deficiency in
the code minimum wage to those em->lo:-ees necessary to bring the resoon-
dent into compliance with the code requirements. (****) Restitution was
made, in the case of "learners," usually on the b.sis of seniority in
expcoerience, and, in the case of "]:hndicr.pped workers," generally accord-
ing to actual earning capacity.

Discretion was placed in the field offices in the application of
the standards mentioned above in those cases where the employer seemed
financially unable to m--]e full restitution, or where other circumstan-
ces appeared2 to warrant an exemption from the standard requirements.
(f***I). in those special cases, adjustment for less than full resti-
tution had. to depend on the recommendation and approval of the State
Adjustment Boards, (******) whose organization and functions will be
treated fully under the subsequent chapter on compliance procedure in
the field.

Standards of adjustment were also stated for those types of cases in
which money. restitutions were not orr cticable.

(*) Field Letter 125, p. 4.
(**) Idem. "
(***) Under Executive Order 0606-F (February 17, 1934) "handicapped"
workers might be employed r.t less than the code minimum we-e
on the obtaining of individual permits issued under regulations
prescribed by the U.S. De-oartment'of.Labor,
(****) Field Letter 125, p. 6.
(*****) Field Letter 125, pp. 4 and 5.
(******) Ibid, pp. 4, 5 and 34.
9861






-2C-


Where the employee had been discharged for filing a complaint, ad-
justment included reinstatement and agreement not to discriminate against
him, or where reinstatement on a harr.onious b.sis seemeC impossible, the
cooperation of the respondent in secviring a new job for the employee. (*)

Where the violation was the failure to post code labor provisions,
(**) to o:eep proper records, (***) or the infraction of child labor, home-
work, sqfet-, :nd other labor provisions, (***) the standards of adjust-
ment did not genernll- require an:. form of restitution. The adjustment
of violations of productive hours restrictions (strictly speaking trade
practice provisions) was left entirely to the discretion of the field
personnel, there being only suggestions ns to several possible adjustment
devices. (***M*)

In addition to the particular standards set forth .bove, Field Letter
125 contained general st.-rndards a,-plicable to all cases. Thus, by full
restitution was meant adjustment a- to all employees, regardless of whether
or not the;- had complained.

moreover, there had to be a formJl s-qtement of compliance, covering
the points on a suggested form, and assurance that steps had been taken to
prevent recurrences of violations. (******)

The field offices were definitely' instructed not to file cases as
adjusted until all te.'ms of the adjus-tment had beni complied with, that
is, for instance, until. 1he pa-rrLent of the last -'i:tall.ient where resti-
tution w.qs made in sov-r".'. parents, unless sufficient security therefore
had been furnished. (*4*-**)

Also Field Letter 125 suTested that attempts be made to have the
respondents install and. ,.-,ree TC mr1intqin al.eaqato sets of records, so
as to help insure future co:m,:.liarnce. The ii,.port-nce of this will be
developed in later chapters.

The standards of adjustment contained in Field Letter 125 were re-
stat'ed and. included in Si.irple-nentar; 1'.einoranrdum :To. 1 to Bulletin No. 7,
issued at the same time. It further suminei up the standards of adjust-
ment b:- the following statement,

"If violations are discovered or cdrnitted, evidence of proper
adjustment must be secured as follows:

"A. Evidence that the hours and wages of ever;.- employee (or if
that is not practical, of certain sre-ified classes of employees)
have been verified for the period in question either by examination

(*) IBID, pp. 5 and 15.
(**) Ibid, p. 5.
(***). Ibid, p. 8.
(****) Ibid, p. 7.
(*****) Field Letter 125, p. 7.
(******) Ibid, pp. 16 and 17.
(*******) Ibid, p. 17,


9861







"of the employer's hours :*Id 'm;e records or of certified
copies t ,ereof. If the employer has not ke:t such records,
he should at least be required to file a certified copy
of his pn;,-roll,

"B. In all cases involving the ya; r,-ent of b;,ck w-oes,
evidCence that restitution has actually been made should
be required.

"C. The employer should be required to file a written
statement that he has corrected past violations and
that he will comply in the future." (*)

SWith a few minor amplifications of the instructions contained in
Field Letter 125 and Supplementary Temorandum No. 1, those standards
continued intact until the issuance of Field Letter 193 on January 10,
1935. In the meantime, of course, the further refinement of these
standards and the development of their application was continued through
the day by day experience of the Compliance Division in handling complaints.

Field Letter 193, to a large measure, repeated the instructions
theretofore issued, but placed them in more emphatic form and made ad-
herence to them more obligatory on the part of the State Offices.

A general rule of thumb was announced in the shape of a definition
of adjustment:

"A case is adjusted when the employer is in full compliance
and. restitution has been made." (**)

Simple as this definition was, read in the light of field exper-
ience and the development of the methods and policies of the Compliance
Division it was pregnant with meaning, It was taken literally and full
significance was given every word in denoting the basic policy of
adjustment.

At this time forms of certificates of compliance for both labor and
trade practice complaints, and agreement to make restitution in labor
cases, similar to those used by the old National Compliance Board and
the Co mTliance Council, were adopted for field use. ( )

Changes were made in the standards of adjustment in that one and one-
half times the regular rate of pay or the code minimum, whichever was
higher, was definitely stated to be the minimum rate in computing resti-
tution for violations of maximum hours; (****) and piece-workers were
required to be compensated for all plant hours during which they were on
their employers' premises and available for work, unless the respondents
were able to establish the employees' presence w!,- not required and they
had prior notice to that effect. (*****)

(*) Suw Yementary ":e.orandmm 1o. 1 to Bulletin No. 7, p. 4.
(**) Field Letter 193, p. 5.
(***) Field Letter 193 pp. 8, 9, 11, 12, 13, 14.
( ***) Ibid., p. 7
(*****) Ibid., p. 8


9861


- '17-







In Field Letter 194 (Januar;.! 18, 1935) a further restriction was
placed on the application of standards of adjustment. A new, definite
procedure was created for the adjustment of cases with less than full
restitution. (*) Under prior instructions s'-.ch special cases were left
to the discretion of the State Offices on recor-.endation and approval of
the State Adjustmenrt 3oards. (**) This new procedure, however, was ex-
clusive and was designed to strengthen the standards of adjustment by
making the exceptions to the usual requirements more difficult to obtain.(***)

However, since this procedure tended to interfere with the State
Offices' practice in suspending action on certain types of cases where
deemed advisable, and adversel:' affected the use of State and Local Ad-
justment Boards, it was not strictl;- followed by the field offices. (****)

In March, 1935 the instructions rr-eviously issued by the Compliance
Division were compiled and .ino-bidedrin the new Office Manual. (*****)
Inasmuch as there was no revision or change in the standards of adjust-
ment after Field Letter 194, a further discussion of the contents of the
Office Manual on this subject is not deemed necessary.

In the last few months of 1TRA there was a slackening of the strict
application of these stan4dards in certain types of cases. This was evi-
dne't in the service trades and in some other intrastate industries, es-
pecially in states wheie the co-urts were not favorably disposed toward
the codes. This appcarently backward steo in policy- was the product of
both expediency and e-Tmerience. A further di-cission of this aspect,
ho,,ever, is ..ostponed until consideration has been given to the procedure
developed -.nd followed anc stud. has been made of the various influences
entering, into the historical irov'th of the Com-Toliance Division.

(*) Field Letter 194, p. 2, et seq. Si:-iilar procedure was established
for the 'Regional Compliance Coumcils, Field Letter 193, pp. 6 and 7.
(**) Field Letters 125, 143,. 146, Supplementery memorandumum No. 1.
See also p. 26, supra.
(***) This was indicated as the purpose by the following quotation from
Field Letter 194, p. 2: "ADJUST, Z'7T OF CASES FOR LESS THAil FULL
ESTITuTIO0i. It is the' policy of the Compliance Division not to consider
violations of labor provisions adjusted except upon the payment of back
wages to employees in the full amount necessary to make restitution for
past violations,, in addition to securing present compliance. In some
cases it is not feasible to make adjustments upon this basis. The follow-
ing procedure will hereafter -overn the settlement of cases involving a
departure from the above policy."
(****) This is more fully discussed later, under those sections of
Chapter V: relating to the cdmrronmising and dropping of cases and
the use of Adjustment, Boards.
(*****) Office 1,anual, III, 4110 et seq.


9861









(Author'% note: In this c'Th:..ter little has been said concerning
the adjustment of trade practice violations. This w s done purposely
for several reasons. In the first place, standards of adjustment were
never developed for trade pr,'ctice c'.,e s and a far greater number of
such complbi.ts were handled by Code Authorities rather than by NRA
field office. In most cases in vhich they ,:erc concerned, the state
offices acted Qnly in an advisory capacity to -ind to supplement the
activities of the Code Authorities.

On the other hand, emnph:.sis has been laid on the labor phase of
compliance because:

(a) There were many more labor complaints than trade practice
complaints filed and therefore it was more necessary to develop policies
and procedure for this type of cnoe.

(b) Since labor violations fell into certain well-defined categories,
whereas unfair trade practices were variegated both in number and
character, it was more practical to have a set of general rules of pro-
cedure and broad policies for the former class.

(c) Closely akin to (b), is that there was no equitable or prac-
ticable way of making restitution for trade practice violations except
where the code had a provision for some sort of liquidated.damages.
Administratively, it was impossible to determine the amount of the
damage occasioned by a violation, and often difficult to ascertain who
were the injured parties. Restitution for labor violations, however,
was a matter of com-puting back wages due according to the prescribed
formulae. The aggrieved parties were the employee, who was theoretically
compensated, and the competitor, who gained indirectly where the com-
petitive advantage was removed by the respondent paying back wages.)






















1 o


9861





-30-


Chapter IV The Origin end Development of Field Offices

Section 1 The establishment of temn-orary offices. During the first
few months after the lNTatibnal Industrial Recoveit Act -as signed by the
Presic.ent on June 16, 19323, almost the entire energies of the NPA 'ere
devoted. to the task of cole making. Since it was soon seen that the
slo'7 processs of fonrmulating and aporoving codes for the various tr.-des
and. industries -ould take many months, there -as announced in July, 1933,
a tempoorary pro-ram known as the President's Reemuloyment Agreement.

As E -art of this NRA program there were necessary, first, an in-
tensive n-tional publicity cam-rjaign, and, second, a system of qiminis-
tration ifc- the handling of complaints and petitions for exemption from
the Agr'ee lent.

Both these objectives, it is clear, required a large field force.
Because of the enormity end emergency nature of the task the NRA, through
an arrangenent with the Department of Commerce, utilized as the core for
such organization the District Offices of the Bureau of Foreign and Domes-
tic Co:unerce, whlch had long- bcen engaged in activities for the promotion
of and assistance to trade -andC i.--stryo(*) The balance of the organi-
zation was then made .up of vola-cTacy workerss and agencies, including
State and District Recovery Doards, Local Compliance Boards, and various
local committees.

Through conferences and oral agreement bet-een the two Government
agencies, the District Office staffs of the Bureau were loaned to NRA
work. In this connection a liaison office was established in the Bureau
between IRA and the District Offices. In illustration of the activity
of the Bureau in the NRA program, it has been stated that un until Decem-
ber 2, 1933, employees of the Bureau worked 11,202 days for NRA at an
estimated annual cost of $150,0)0.(**)

In addition, many former employees of the Bureau of Foreign and
Domestic Commerce, whose services hed been terminated on July 15, 1933
for economy reasons, were recalled to work directly for NRA on its pay-
rolls.

On-July 11, 1933, the District managers were called to Washington
for a t-o -'eeks period for the purpose of instruction and training in the
new NBA p-oZram. It w'as during the latter part of this conference that
the 1RA campaign -as announced and actual responsibility for field organ-
izational activity was virtually placed on the District I;anagers for their
respective districts.(***) The -ork of the District Offices during this
period and. until the creation of the Compliance Division on October 26,
1933 b'" Office Order 40, was almost entirely of a promotional character.
It is to be remembered that the Local Compliance Boards for the handling
of ITRA complaints '"ere not begun to be established until after Septe.ber

(N) France, "Role of Bureau of Foreign and Domestic Commerce in NRA
Program" (December 6, 1933), pp. 1, 3. See files of K. H. Engle,
Assistant Director, Bureau of Foreign and Domestic Commerce.
(**) Ibid., p. 9.
(*'**) Ibid., p, 3.


9861








11, ].2, -nd thus the compli-'nce phase of the work began only about
one month before the District .anr ,ers were :i.-d. District Compliance
Directors, a week prior to Office Order 40. It was not until October
and iTovember of 1933 that most of the local Com:oliance Boards -'ere au-
thorized to operate.

Bearing in mind this history of activity of the District Offices
of the Burcru during the initial months of YRA, it is not surprising to
note th.-.t on October 19, 19.3, the Administration, with the approval of
the Sec-etary of Commerce, appointed the District Menaers as District
Compliance Directors in the field organization of t-enty-six offices of
the new Complianco Division which was about to be established.(*) At
this tine there was also issued a set of instructions to the new District
Compliance Directors on the h-,ndlin.g of code complaints. At the time
of their appointment as District Compliance Directors, the District Mlan-
agers were furloughed by the Bureau for three months and placed on VRA
payrolls. This arranger'ent was intended only to be temporary pending
the establishment of a pern-.nent government code compliance system, which
was fin'.ll, done in January, 1934. On the latter date there was created
a system of State 1NTRA Compliance Offices and State Directors were appoint-
ed from outside the existing organization. This new, system was initiated
",ith a meeting of all State Directors in Washington the first of February,
1934. At this meeting, which lasted several days and was composed of a
series of group conferences and discussions, the State Directors were
informece. as t the general outline of org-niza-tion and policies. Specific
questions with relation to compliance work were also taken up. In add-
ition, 6hc State Directors had been instructed in advance to bring with
them memoranda of local field problems for joint discussion. Whhile the
advantages of this type of meeting are obvious, most of the value was
lost because the State Directors 7:ere new to NFA compliance work and for
the uaain inexperienced in industrial regulation.

The reasons, other than the need for a full-time government agency
to adjust complaints, for the separation of UILA District Compliance
Directors from the Bureau of Foreign and Domestic Commerce are summed
up as follows:

"It is felt that as compliance directors the district managers
snoxild not be associated with Buforcom work and thus avoid any cri-
ticisnm which might be directed at these men if they continued as dis-
trict office managers while acting as compliance directors."(**)

This statement took recognition of the fact that the work of the
Bureau had been chiefly the promotion of trade and relations had been
almost entirely with industry rather than with labor, Also, in NRA
work, the Bureau offices had been active in stimulating the formation
of trade associations and other business groups, and it was therefore
felt that accusations of partiality might come alike from labor and
(') In JRA Studies Special Exhibit Work Materials -77.
(**) France, "Role of Bureau of Foreign and Domestic Commerce in IT?A
Program" (December 6, 1933), p. 75. See files of N. H. Engle,
Assistant Director, Bur.eau of Foreign and Domestic Commerce.


9861







those portions of industry mnot organized under these trade associations.

The ir.ioortqnce of the influence of the Bureau in shaping the poli-
cies s."d procedure of the CoraTliEnce Division -ill be sho-in in succeed-
ing sections of this and in the following chapters. It is sufficient
to point or.t here that prior to the State Oflice system the field vas
almost entirely staffeC. by former bureau employees. During the remainder
of compliance history r.sny key positions, both in the State and Regional
Offices, were filled by these men.

Section '. Internal Orgzanization Parly]. development. In order to
understm. properly the administrative efforts of 0RA it is important
to know the mechanics by r-hich it was sought to accomplish full corn-
plience izith the lar. For just as the successful administration of any
new anC. coTrop.ic:.ted set of "-efuleticns. such as the codes, must ultimately
defend on -,ublic underst.jndinr: pnr.i support, so aElso is it based on the
practical ssuects of application.

This naturally brings us to a conr-sideration of the internal work-
ings of zhe field offices, the pri.masry media of contact with business,
so as to view the facilities for ecduLcating employers and bringing them
into conformity with the cudes.

:ig:.essing for the moment, it is important to remember whet has
been noint.d out before, that the field 17as distinctly non-homogeneous.
Field. offices varied widely in their methods of sprroach to particular
problem's, their internal organization, and their very fundamental concept
of adjustment. Ihese variations, of course, rere due primarily to dif-
ferences in personalities, anc in social and economic outlooks. Theyr
were also caused by the nature of the offices' daily associations with
business, labor and other outside influences.

These differences in field offices were much more marked after the
creation of the State Director system, probably because the District
Con.rliaice Directors hai served together as District Lanagers of the
Bui-eaa of Forei.;n qnd Domestic Commerce, and therefore had a fairly
Sst-ncc rca.iz ed background.. (*)

MTene the District Compliance Offices were established by Office
Or.er io.0 (October 26, 195),(**) their personnel consisted in a District
Comp,)liance Director, his assistant, a legal adviser (to be appointed),
and clerical and stenographic heln.(***) Legal advisers were appointed
some two or three -ecks later.(****) Shortly thereafter the larger and
more i.yo-.tapnit offices --ere allowed. very slight increases in personnel,
usuall-/ in conjunction T-ith the local Compliance Boards. The appointments
(*) In spite of this heterogeneous quality, for the sake of convenience
the field must be spoken of as a unit, except in particular cases.
(**)The District Compliance Directors vere actually appointed on October
19, 19'3 by letters from tne Administrator. Instructions on adjust-
ment were issued the sane day rinmd amplifieJ, in Liaison Circular 75
(October 20, 191L3).
(*) Liaison Circular 75.
(****) Field Letter 5 (November 10, 1933).


9861








were all on a per diem basis since the system of organization was re-
garded as temporary.

At this time there was no clear definition of duties either by
Washington or by the field offices themselves. Generally specaking;, of
course, the Distridt Compliance Directors had been charged with the re-
sponsibility of obtaining compliance with the various codes and (working
in conjunction with the local Comoliance Boarc.s) with the Presidentts
Reemplo-eniit Agreement. (*)

Actually, the District Compliance Directors laid stress on public
relations work, rather than adjustment, Thus, their energies and the
time of their assistants, rere devoted primarily to fostering relations
with trade associations and other business groups, and to a lesser o6.e-
gree, labor organizations. They also spent considerable time in assist-
ing the organization of local code authorities and in publicizing through
the press, by radio, and by public addresses, the benefits and aims of
NRA, and in attempting to stir up a fervor among business men for sup-
port of the Recovery Program.

This idea of the District Office period that NRA compliance was
almost exclusively a selling campaign was a natural carry-over from the
earlier feverish days of the President's .Zeemployment Agreement drive.

because of the nature of this activity, and the lack of instructions
from Washington, it is next to impossible to determine with any degree
of accuracy the functions of the various field officials, except as
broadly stated above.

There is a partial exception to this lack of definitions of duties,
however. The Legal Adviser, it ras fairly clear, was to examine com-
plaints of code violations for legal sufficiency and to pass on all legal
questions arising in the offices, which did not require final interpre-
tation-;of codes. (**)

The assignment of responsibility to handle and adjust complaints,
which was properly the primary duty of the Compliance Division, was
left in a nebulous state of disposal. Adjustment of complaints was
usually left to members of the clerical staff, assisted sometimes by the
Legal Adviser, and the District Compliance Director or his assistant,
in a sort of hodge-podge arrangement. Again, practices in different
field offices varied so greatly that it is impossible to generalize with
more than a fair degree of accuracy.

(*) Office Order 40; Liaison Circular 75; "Regulations for Adjustment",
etc, (October 19, 1933); William K. Davis, "N.R.A. Plans for Code
Compliance" (December 5, 1933).

(*) "_Re;ulations for the Adjustment of District Compliance Directors"
etc. (October- 19, 1933), Office Order 53 definitely placing the
authority to issue interpretations in the Industry Divisions was
not issued until December 29, 1933, but it was generally under-
stood prior to the date of that order that there was no authority
in the field to issue final rulings or interpretations.


9861


*"-, I" -*




'"0


Suffize to say, that in the better field offices, which later -ere
to ,lay c, increasingly im-ortant role in shaping general policies of
adjustmene-t and procedure, although organization was undecided, a ztronoer
em:hc.sis cTs laic on the adjustment function. Thus, a few of the Le,-;al
Advisers -ent beyond their regular defined duties of advising on letal
questions, to delve into the actual adjustment of colrplaints. This -'aas
also true with a small minority of District Com-oliance Directors ?nd.
thei-; rcvsistants. This tact is im-oortant because from this class of
field. )er-sonniel were later drarn a number of the Labor Comriliance Officers
and ,Trade Practice Comrnliance Officers, and, with the inception of the
Regional system in December, 190,34, some members of the regional staffs.
This personnel angle is mentioned because it was probably the most im-
portant internal influence on the development of the Compliance Division.(

Section 5 Development of internal organization under the State Office
system.(**) following the creation of the State Office system, discussed
under Section 1, there was a marked development of the field staff.
This '-as forecast in a statement by the National Compliance Director on
Decer.ber 3, 19533(***) in rhich he described briefly the new organiza-
tion along state lines, sa:-in, that each State Director would have a suf-
ficient stcff of assistants rnd adjusters to develop the facts and. ad-
just the complaints rhich -ere filed. Unfortunately, the requisite full
complement of personnel vas never realized.

The staffs of the District Offices -ere absorbed by the new State
Offices. There '"as therefore, little difference between the two systems
at first, except in form. However, since the State Directors were
practically all local men, and chosen from many valks of life, the in-
jection o. new personalities soon mpde the State Ofilice system novel in
fac t.

The State Offices '-ere intended" to be a "permanent governmental
regional aC.justment s-,stem." (****) It is not surprising, therefore, to
note that the plcn provided for a more complete and-cot~lex organization.
The District Compl]iance Directors became Office i.anv,-ers in the old
offices aicl equivalent positions "ere cre-ted in the new offices; the
Legal Advisers and the clerical and stenographic str.fi s continued in
their sv..e capacities; and in dcd.ition, under the State Director, were
aLded the positions of Labor Comijliance Officer, Trade Practice Conolionce
Officer, auid several field adjustersl(*****) Thile these latter -oositions

(*) nevertheless, the salesmanship feature of comnoliance was always an
ir-,or'tent one. There was -qerely the question of placing it in its
pro-eer relationshiip to the adjustment of violations.

(**) ~he first instructions to State Directors, relative to their func-
tions and the internal organization of the field offices, -ere con-
taine&. in letters sent to them on their ap intentet by the Admin-
istration.

(***) illiam H. Davis, 111T2... Plans for'Code Compliance." In NRA
Studies Special Exhibits Work Materials #77.,
(****) Idem (*****) Bulletin No. 7, p. 11.



9861





"360


-J


Note: Compare this chart with the orgnisation schm as
later developed in its application (infra. pp. 59 62).


9861







*-f 6-


were c:eLtec2 at the be-inninri of the State Office system, in many in-
stances some were not fill-d for several tet:k rnd months after that,
and, in the case of smaller offices, the functions of several positions
were al'.:-'ys exercised by one man.

bulletin No. 7 marked the transition of the organic development of
the Compliance Division frorm the District Office stage to the second
period. The idea that the adjustment of complaints, as against a mere
sales cam-aign, v.as a necessary ingredient of compliance, was given real
impetus. In creating: an enlarged staff for the field offices, Bulletin
No, 7 described the functions of the various new positions in such a way
as to leave little room for mere public relations vork, except as inci-
dental to the adjustment of complaints. (*)

The Ste.te Office internal organization was provided in Bulletin iTo,
7, -'hich vras amplified by Field Letter 69, issued Februai'y 24, 1934. (**)

The plan provided that the staff was to be headed by the State Di-
rector, -ho served in a dual capacity as State Director of the National
Emergency Council and State NRA Cor1liance Director. In the latter posi-
tion he vas charged with the duty of obtaining compliance with all code
provisions and with the administrative responsibility of the office,(***)
although in actuality these functions were performed by the State Director
in but few offices.

i.ext in general authority to the State Director was the Office
Lanaw:er (.whose title was chned to Executive Assistant in Field Letter
69). His duties included overseein;' the general functioning of the of-
fice; hrzndlin,-: all matters of office routine and details as to space,
personnel and equipment; assisting' the State Director in maintaining
relations vith the press and in public relations work; serving as exe&-
utive secretary to the State Adjustment 7'oard; hanc'.lincc all trade prac-
tice compliance matters where there -'as no Trade Practice Compliance
Officer. (****)

(*) T.2..A. Bulletin No. 7, p. 11, "These State Directors are charged.
with the duty of adjusting, -henever possible, all code violations
not adjusted by Industry and to that end, under these Regulations,
will do everything within their power to secure compliance through
education and explanation"; also, "Until --(field adjusters are
appointed), the Labor Compliance Officer and the Trade Practice
Compliance Officer may act as their orn adjusters. The Office
'iana;er and the Legal Adviser may also act in this capacity."

(**) On the opposite pa'e is a chrrt showing the functional organization
which was established.

(***) 1I. .A. Bulletin No. 7, p. 11, "The State Director is responsible
for all action taken by his staff under these Regulations and may
.nake such office rules as he deems desirable for the supervision
of the activities of his staff."

(****) Field Letter 69, p. 1.


9861










The Labor Corrmnliance Gfxicer was charged with all matters concerning
conpmli,7ncc vith the labor provisions of the various codes, and reported
directly to the State Director(*).

Although not so definitely stated, it generally understood that the
Trade Practice Compliance Officer occupied a position similar to the
Labor Compliance Cfficer, with resppet to trade practice compliance
matters.

Under both labor ant trade practice compliance officers was a staff
of Field Adjustprs whoee duty it was to investigate and adjust all com-
plaints assigned t4 them by the Labor and Trade Practice Compliance
Officers. (**)

There was also a clerical and stenographic staff, which was under
the supervision of the Office.Manager or Executive Assistant.

The position of the Legal Adviser with relation to the two Compliance
Officers and the Office Manager was never clearly determined. Generally
speacinj-, he was supposed to report direct to the State Director, but
advised all members of the staff on legal matters. In addition to the
functions of rendering advice and opinions and examining complaints,(***)
his duties included the adjustment of complaints,-acting (****) as legal
adviser to the State Adjustment Board, (*****) and preparing all unad-
justed complaints for transmittal to the National Compliance Director
for further action, (*.***)

In addition to the regular staff, there was a State Adjustment
Board, composed of an impartial chairman and equal representation of
employees and employers. This body's chief function originally was to
hear appeals from decisions of the State Director's staff and to deter-
mine disputed questions of fact. It acted purely in an advisory capacity
to the State Director. It's members served without pay. The functions,
development and uses of the State Adjustment Boards will be treated in
detail later.

The members of the staff were stated by Field Letter 69 to have
distinct and separate duties. The State Director was charged with de-
ter.ii.in, the necessary lines of aCministrative authority to insure ful-
fillment of his responsibility of obtaining complete code compliance
within hit particular jurisdiction. Thus, it is seen that the original
plan of organization provided for a lator compliance division, a trade
practice compliance division, and an office management division, all
heading up to and under the direct supervision and authority of the State
Director. It should be understood that these divisions of internal or-
ganiza.tion related more to functions than personnel.
(*) Idem.
(**) vlletin No. 7, p. 19.
(***) Sunra, p. V3.
(****) 2tulletin No. 7. p. 11.
(*****) Ibid., p. 16.
(******) Ibid,, pp. 16, 17, providing for the procedure on unadjusted
cr.ses. It wes understood that this was the function of the Legal Ad-
viser.


9861





....- 38 ..... "".


The appointment of the new personnel, except the Labor' Compliance
Officer, was vested in the State Director, subject to the approval of
the Coxpliance Divis?--i in Wshiugtci. (*) The Labor Comipliance Officer
was selected by the :TRA and the U. S.'Derartm.nent of Labor jointly,the
latter agency largely influencing tae choices. Theoretically, the
appointment of Field Adjusters was .nnde by State Dfrectors upon the
advice and recommendations of the Labbr Comroliapce Officers. (**)
Actually, Field Adjusters were appointte b: some State Directors without J
such recommendations and without regard to the qualifications of tlhe
appointees to fill the positions.

It is quickly- apparent that such a situation was inherently trouble-
some for the Con.pliance Division. This first impression is justified,
for there later-developed out of this intangible conflict of authority
decided and serious rifts between the Labor Compliance Qfficer and the
State Director in many. of the offices.
1.
This internal disruption .was heightened by a sometimes violent dis-
agreement on adjustment policies.. Since the State Directors, by virtue
of their functions and general responsibilities, had little to. do with.
the every- day experience -of hnndli.ns complaints and making adjiu.stments,-
they tended to underemphasize the -im:portance of the rest'itutlon element.

This situation, of course, greatly hampered the efficiency of those
offices in which it existed. It was partially overcome by-oral instruc-
tions from NBA Field Representatives, traveling out of Washington,
virtually placing the entire responsibility and actual authority for the
selection of Field Adjusters in the Labor Complian'ce Officers. This
action occurred in the late sp-orinig of 1934, just preceding or about the
time of the issuance of Field Letter 125, vhich gave official recognition
to the importance of th6 restitution element in adjustment.. This develop-
ment, then, really belongs in the beinniing of the third phase of the
Compliance Division's history.

It must here'again be reiterated with emphasis that the metamorphosis
which has been just described did not take place,-in all the. field offices,
or probably even in a majority of them. It is important to remember
that in a fair proportion of the field offices- the staff was morB unified
in its policies of procedure and adjustment, which were realistically
defined. Selections of new personnel, particularly Field Adjusters, and
the administrative organization reflected the balanced judgment of the
entire executive staff. In contradistinction, a like..number of field -
offices did not fell in the first-mentioned "dissension classt1 because

(*) Field Letter 66 (February. 20, 1934), p. 1. '
(**) Letter of January 18, 1934, from Donald Renshap.w, Field& Li ason '
Officer, Compliance Division, to the various State NRA-Compliance
Directors, "We do not consider it advisable to appoint any'Field Adjustprs
for ;-our office until the Labor Compliance Officer has been assigned to
you. He should be of invaluable assistance to you in helping to select
proper personnel for this important phase of the work." In NRA Studies
Special Exhibits Work Materials i1o. 85.


9861








the Lc.bo" C.anliance Officers, or other subordinate inonbers of the staf',
were either '-e~ker in their convictions or not incline1 to a propcreszive
development of field techniques and field policies.

The rift bet%-een the Labor Compli-nce Officer and the State Director,
hov-ever, occurred in a sufficient number of offices to rank it as an
important situation since out of it came a major transformation in the
internal organization of the field.


98,31







-Cti -- L-. rr :.ovcl- c.t '-ir th. St-.;;r Cfr ice Sistei. iy the be-
.... ... ",. c 1-, t:C 1 :-J. nc Divisinm ".rc" ar .rcssedl
f i itc -'-..ic cv: i'.ti Itjt 'u. jut .:fficillyv tr:c:n cn;niz nce
;,f .... c en" s -. adjust: c-.t -o:,lic: ":p-". -rD'ui...tc. nt 'c. r 1. t 2 b
... n -E. r7 a.lz , JLL 0- ,C n" C 1 rD-S t; 3 "Dc
fol,.o" ,:'. b t::: fZ, 1 i. c.I :,..just .t -f c )..c vi rti -..s The e:-
.,e-'ic-;ce m '.TA '.., c: .,li:j'ce : ninist.".tw. r r t -, cr--st. lliv e
1-.ke t'.erscl]vc f,' it in ti csc a ,'. COl't-iAI :,t'lr cL ).rctc' r'ef r.s.

In ". sinnt .n, thler.- v, s .re..teC. t.-e f: -icc f As:.ist:r.t A'fniuis-
tr't:.- t r Iie]L'. A,"ministr ti-,ii, ;hh:' sc ut it :'c C; *u"-.orvi seo c3::rli.-m.ce
-c iviti .s c.L. t D C cur'.in. te ti- efforts Lc th C'rpliance Divisi.n with
t.- I'u't..- s.L Liti atil:.i Divisi: ; (*) :hIe s-ste:.- if tr'-?vcllir; iclc.
Fc'r..:, ..:: t -, :,f thcC ',.-,i. nce Divisi ,,, to n _r C cl sc 1y su'ervisc thLc
fi '. 1 ct-._ :A i' t, b..'i., i .. -::rc intimat- roJ.:ti :sn:h vit'i the Washi- to-
st:, ff \.-. .ovl ,'c -: ...v. c-1 ,e i t.t V1i7.i. use. Th- s, tihe W .s.i. t:i staff
Af ta: C'.'-,'1.iancc Divisi )n, as wecl ..,c .":.e r ,c .?..- r. vur'ters ;i -'"A t' a
le:-' r" r". c. c.-. ,.c t: :*'-.-- 1 "ze t: i.i :rt .ce '- the fiold tnK. t 1 la.y
m ,-r str,- fici", c;, ,eli- :cc w'-".
t-l,,~~~ t--. 4. ]" ".[ __' ; ';.C ':] C11E.--"C-S ill
T.o,.ct:__r." wit. tao-.sc t:i.'tCel ',_" cut- i '- -. t t : cmic CfE.L cs i
the fff t t. A.1 .. 7-U &P a 'ci t is -.-rcre crc .todl to
atte. .r:t fcr; a .a- p:9.' 11'",'f i'-.r -he invcsti-
*tiJ n .I ,c '- ci-'t:.'">.t- -f rvi 1 i -.

The r "-ic ... c.. 'ctivc --t r :'c t7, re-tr;_iin the sLtffs
1in t' 'i-s fid. i f"ic-. -:-' tiz quality, :f the existin;-
pcrs:,, .el. C:'-c.uen; l:,, s ,. re .l.:.cc.uLt i .- *... This inrorzverient
of tr,. qual' t,- 5-a. siz- : .7 fii -,1 -rsc)n_-el -,ccurred through the
SU_ er : F,. rl- 1 1-.",

In the .--:, inh.ic:'t -f .'er Fieol..'. justcr-;, th.c labor Compliance
Officers 'vc-'i :.iv. c. "- I v:icc, t.ti 'i t ,.: .uth:rit- t- ap; Mint persrm-nel,,
:n the *-', ir-.'.I. t. C.,r.-,Lin..ce 0 r'ivici .: in '...shi:rt..: re7ainc in the
St: -tc Di ( c t V.r -. As ..-' be ,.ra i .isl :. i t ,'. ut, ,- ..rc1 v.'.was a tendcnc-' i
,on t. v.... rt -f l 1 ,ie 1 -. -s -t tivca .n.:. i, ie.d Br: nch -,f the C,.z-
_,iE.'ic'. Li-i-ic:;'. to rm.r'.c t LCbt- Cm,,,li cc Ofiiceos aut o 1'"us i.:
th,:.'ir "rticil r ielO.. (**)

Th. `r'. i 1'tI'r c: ir, .-i cc st4.,i_ in the :r-anization of
th; ficl('. v.IF Cc Iic--C':. sec uy cn......c in th.- .;cr,..fs uf the v-rious offices.
Duc ... th, ci,:. ,;ri l )f ...ev: I -,..e-.t, frm ,t r u.hly June, 1934 -i, : uo
t :. the i.-.cr s- .. -:ctivit : .. . -Tati al B:..cr .cncy :.uncil, a number -f
State ircct ,6 scrve'. t"ici;- IA ,"o....cti c--s to c-.evotc thcir entire tine
to their : m"- C. "e, - : ember,
tl1t 3 ")T" :-tDc;:: .,crs,-nal re,._,cns. By iIovenber,
19, -- c:, ..:r civol:' s.n.:ll nl.' eJ :,'f 7, rigi-n i St, tc Director ap 'intocs


C*) ii'-i : ?, ' .. .: i- .. ,L "- ) 21! tu r.. -

(**) U'" .rt C "ii *'c: -'ivisi "D .. ,,. a", (-.,. ,,"cr 1 l23Z) ,vi-tt, rs
." c.,."...- ti i ,.l :-iz .,j "- '.- .r"-.-1 r: t bc r..fc.'e-&
., S.. ,:t" K, ; .":i..i t :;iv -. ., t... U -.:c- Office Or or 81
t; -.. l .
-(A i, 12.34) .te F.cl SLctL "i ; i n'e tlhe Ficl,' Li-anch; see alsc
Ofic ..emurora.nuci i8r, (April 1-, 1934).


9861






- '.-


renaine.

In filbiC, these v-c.-cics the Cxrwwoliace 7 division pursu'-:i. the
Policy of L1' .inti-i ;; thIe .aca If the of; ice fr)y ,veonb rs )f the staff.
Thus, Labor Compliance Officers, Tr-.dc F" ctice C o-liance Cfficers,
Executive Assistants, and, in s .:e cas s. Lectal Advisers were oplbccd in
char,"e of the various offices as State '-IRA Complijince directors and. litcr
as Stae 7T7a Compliance Officers, with resultant cha.'-cz in the rcfiai-icr
of the executive staff.

Since the rcplace.'ent ap"- ointments *':r'- ,ade on the recommendations
:f those persons in Wasrint "n who believed in c:m-hasis )n the laboor
compliance staffs, it was natur'.l that this idea should be carried out
in the revwn-oi.i, of the internal orjnizati )n of the field offices by
the new Directors.

Converscl /, added to this factor wvs the decreasing relative im-
portance of the Tr.Ce Practice Co-..liance 0'.icers. With the orijanization
of c)de authorities to handle trade -oractice violations, the functions of
the State Office, as to this ty-e of case, tencleC to beco:Ie advisory in
nature and sup::le.nentary to the code authorities' efforts.


9861





-42-

While the n-oositions in field offices remained virtually the same,
with increases in the number of .djusters, the scheme of organization
during this later period -umd-er the Stqte Office system came to be differ-
ent.

The State Director or State Compliance Officer carried the bulk of
public relations and Dress relations *work, together with general adminis-
trative responsibility. Nominally, the functions of this position did
not change.

So it was also with the Executive- Assistant and the Trade Practice
Compliance Officer, where there wes one, except that the functions of
the latter came to be centered chiefly in contacts with Code Authorities.

In some offices the position of Legal Adviser was for all practical
purposes abolished by the simple expedient of not filling vacancies.
Legal Advisers were definitely given the task of assisting the Labor
Compliance Officers in the exercise of their functions, in addition to
their -previous duties.

By virtue of the enlarged staff under them and the increased empha-
sis on this -phase of the corrnlisnce organization, the Labor Compliance
Officers became more executives, rather than adjustment officers. The
general function, to supervise and have direct res-oonsibility for all
labor compliance activities, remained the same. However, the bulk of
the Labor Comipliance Officer's time was spent in supervising and -planning
the activities of the Field Adjusters. The actual handling of cases for
adjustment necessarily was limited andi restricted to "key cases" in the
industry or state and cases involving determinations of compliance policy.
This change infunctions, it should be borne in mind, came relatively late
in the period and after the development of the idea of placing complete
direct authority and responsibility for labor comoliance on the Labor
Compliance Officer in each particular office. In some states, there were
created the positions of Assistrnt Labor Compliance Officer and Chief
Field Adjuster, to assist in the details of supervision and direction of
the Field Adjusters.

The number of Field Adjusters varied greatly according to the popu-
lation and industrial importance of the state in which each office was
located and the volume of work of the particular offices. The Adjusters,
contrary to the earlier scheme, were under the jurisdiction and authority
of the Labor Compliance Officers and consequently devoted the great majority
of their time to the investigation and adjustment of labor violations. (*)
At the discretion of the Labor Comoliance Officer the Field Adjusters
were sometimes used on trade practice cases.

On june 2, 1934, authority was given to the State Offices to station
Field Adjusters at strategic points throughout the state. These Resident
Field Adjusters were under the supervision and control of the Labor Com-
pliance Officers, but of necessity were placed more on their own respon-
sibility than the Field Adjusters stationed in the State Office itself. (**)

\
(*) Some Offices, however, had Trade Practice Adjusters assigned only to
trade practice cases.
(**) See infra, pp. 6",65 for a further discussion.


9861






Summing up, in this -eriod of develoic.nt, tne internal orrani-
zation of a field office consisted in a State Director, who was nominally
in charge of all activities, his Ececative Assistant, ':.;ho hi.ndlcd office
management, a Trade Pr. .ctice Coi.ulicnce Officer, a Le *al Adviser, who was
at least partially under the Labor Corpli,n,; Officcr, ,,nd a Labor Compli-
ance Officer, under whom were the Adjustrrs and otnr exclusively Labor
Compliance Personnel, and wno ;-is rce--'uocc as g-enerally on a par with
the State Director in authority over labor compliance activities. (*)

This scheme of organization differed from the original plan under
Bulletin No. 7, and Field Letter 69 in that more ei.,.hcsis 7as laid on the
labor phase of activities and both the authority and the responsibility
for labor compliance were centered in the Labor Compliance Officer. Thus,
while the type of organization in effect during this period of development
was loose and not adapted to the greatest efficiency, it was, nevertheless,
an improvement on the original plan and a step toward the more compact
and better-balanced administrative setup that follo:e:cd.

Section 5 Final development of organization under the Regional Office
system. The creation of the Regional Office system ;'mas announced in
Field Letter 190, issued December 28, 1934. Among the purposes of the
new Regional system, chief among which was the relief of the congestion
of unadjusted cases before the National Compliance Council, was the decen-
tralization of the Compliance Division organization with a consequent
closer supervision of the field. Together with other.functions and powers,
the Regional Directors were "to direct and be responsible for compliance
administration" and "to direct and supervise the State 1iRA Compliance
Directors in their Regions." (**)

At the same time that the new Regional system began to operate, in-
structions were issued more definitely stating the standards of adjustment
to be applied by the field offices. (***) Thus, by Field Letter 194
(January 18, 1935), all compromise cases were required to be submitted to
the Regional Directors for their approval before adjustment. (****)

The natural result of the creation of the Regional Office system
and the issuance of instructions making the standards of adjustment more
inflexible, was to draw the field together and to tie it more closely
into the Compliance Division organization.



(*) Because of the hazy lines of authority as indicated in the text,
it is not feasible to chart the functional organization as
developed during this period under the State Office System.

(**) Field Letter 190, p, 3.

(***) Field Letter 193 (January 10, 1934); supra, p. 27.

(''**) Supra, p. 27.


9861







The Regional Offices soon took steps to improve the efficiency of
their State Offices by introducing better methods of organization and
control. T' State Directors and State Compliance Officers were in-
structed th.,t they were the persons to whom the Regional Offices would
liok for the o-ceration of the comroliance program in their states. In
addition, ib was again stated that no docket.d labor or trade -ractice
comolaint should be closed without the anoroval of the Labor and Trade
Practice Comoliance Officers, respectively. The development of the
Labor Coimrlimance Officers1 jurisdiction over the Field Adjusters was
made clear, since when it became necessary to refer a trade practice
case to a Field Adjuster, the case had to be referred through the Labor
Compliauce Officer who assigned it to the individual adjuster.

Thus, it is seen that the type of organization finally nut into
effect in the fijd offices in the lest -;eriod of development was the
same, with one material difference, as that evolved under the later
State Office Period, from June, 1934, to January, 1935. That difference
was in clearly making the head of the office the focal point for all
relations betwe-en the State Offices end their respective Regions. (*)

The chart on the on-osite ra-e shovws that the Executive Assistant
was second in general authority to the State Comoliance Officer in addi-
tion to being responsible for office management. While the Trade Practice
and Labor Comoliance Officers reported on. their respective functions
directly to the State Comnliance Off'icer, they were also subject to the
general jurisdiction of the Executive Assistant, although the latter
status was never definitely: determined. Consequently, there existed in
some offices a conflict betve.oen the Executive Assistant and the Labor
Compliance Officer. This manifested itself according to the personali-
ties of the individuals holding theie -oositions in the particular offices.

The St-tc Adjustment Board continued to act in an advisory capacity,
although it.-, use declined after Field Letrer 194 (January 18, 1935),
which took awvay the Board's power to approve compromises.

In January, 1935, the State Legal Advisers were transferred to the
Legal Division and their titles were changed to "Compliance Attorneys."
(**) While continuing to advise the State Compliance Officers and State
Directors on legal matters, they were subject to the supervision and
authority of the Regional Attorneys of the Legal Division. At the time
of this transfer, however, some of the legal personnel were retained on
the Comoliance Division payroll in different capacities.

The functional organization of the field, of course, differed with
various offices. This was natural, because the personnel -oroblem had
not been solved. However,, for nurooses of illustration, it is deemed
appropriate here to describe the internal structure of several of the
field offices, which, it will be scan, differed only in minor details,
due chiefly to variations in size and in volume of work.


() A chart showing this form of organization is reproduced on the
opposite raep. With minor variations, a3 described in the body of
the text that follows, it is representative of the field offices.

(**) Field Letter 194.


9861





-45-


Clerical and
Stenographic
Staff


9861


-1
I
Complranoe
Attorney































a
I,

I.







The Bostonri, Iass.scl'.usotts State Office hiid an executive staff ro.a-
sisting of the State Compliance Officer, and Executive Assistant, a
Labor Comoliance Officer, arid a Trade Practice Comoliance Officer.

The Executive Assistant vac; in full chair;c of the office forr-e and
acted as Ex.ccutive Secretary of the State Adjustment Board, in addition
to assisting the State Cormoliance Officer in his general administrative
duties. Under the Executive Assistant was a stenog.rapher-clerk who v.was
in charge of the bulk of the stenograiohic and clerical staff, thu re-
mainder rep-orting directly to the Executive Assistant. A discussion of
the mechanic'.l details of the general staff's functions is not deemed
material.

Tne Trade Practice Compliance Officer was in charge of all trade
practice complaints and other matters closely allied with this -ohase of
compliance. He did most qf his owvn investigational arid adjustment work
and reported to the State Comoliance Officer.

The Labor Compliance Officer, directly under the supervision of the
State Compliance Officer, was responsible for obtaining compliance with
the labor provisions of the codes. Under him was an Assistant Labor Com-
pliance Officer who assigned complaints to the various adjusters for
handling. There was also a Chief Field Adjuster, who in reality acted
only as a Senior Adjuster. There were fourteen other Field Adjustors and
two Investigators, who did not make final adjustments. Some Field Adjus-
ters were assi-ned to particular codes, while others worked on complaints
arising in any industry.

There was also a supplementary investigational staff supplied by the
State Department of Labor, in cooperation with the State Office.

The Connecticut State Office executive staff consisted only of the
State Compliance Officer and the Labor Compliance Officer. The functions
of Executive Assistant, Trade Practice Compliance Officer, and E:-ecutive
Secretary to the State Adjustment Board were all exercised by the State
Compliance Officer together with his ovm duties.

Under the Labor Compliance Officer, who had the usual functions, were
an Office Adjuster and eight Field Adjusters, one of. whom was supplied by
the Federal Emergency Relief Administration. There was also another Office
Adjuster who handled both labor and trade practice cases. These Office
Adjusters had the function of handling complaint adjustments by conferences
in the State Office, as distinguished from Field Adjusters who also made
investigations.

The Rhode Island State Office organization is interesting because of
its uniqueness, the slan which was to have gone officially into effect on
June 1, 1935, not providing for either a Labor or Trade Practice Compliance
Officer.

The State Comoliance Officer and the Executive Assistant supervised
the general activities of the office as well as the compliance work, the
Eyecutive Assistant also acting as Executive Secretary to the State Ad-
justment Board.


9861


























































































































































I..








The general office stiff consisted in a Chief Clerk and nn Assist-
ant Clerk (both of .:horn hvmdlod details on imirsonn.l), two file clerks,
two docketing clerks, two receptionists (one of whom was also a file
clerk), .nd five steno. rr)hers (two of wvhomr havw been previously men-
tioned in other ccaocities).

Labor and trade practice cniolrmlints vere adjusted by a staff of
three Senior Coinolianu.e Adjusters, one of whom also acted as Field In-
vestigator, with seven other such investigators under him. Routine
correcnondence on conplr.ints v:ns handled by two members of the clerical
staff.

The internal structure of the :,is.ouri State Office followed the
same general lines as those described above, although it had a slightly
fuller organization more typical of the larger offices.

The State Comoliance Officer exercised general supervision over the
entire staff of the office, directing and controlling all activities
through a numbered series of mremoranda, setting forth general office
routine, office policies, assignment of duties, and general instructions.
These memoranda usually resulted from weekly conferences with members of
the executive staff and weekly meetings with the Field Adjusters. In
addition, the bulk of the work connected with relations with other Federal
and State agencies, Code Authorities, labor unions, and trade groups, as
well as all contact with the Regional and Washington offices, fell on the
State Compliance Officer. He also handled all matter of personnel, ex-
cept routine, on the advice of a Personnel Committee composed of the Execu-
tive Assistant, the Labor Compliance Officer, the special Adjuster, the
Compliance Attorney, and sometimes the Chief Field Adjuster. The actual
work connected with the issuance of homeworkerst and handicapped workers'
permits, with which he was charged, w3s delegated to the Special Adjuster.
Because he had formerly served as Labor Compliance Officer and had handled
the Apprentice Training program in the state, the State Compliance Officer
continued to carry this function, assisted by the Special Adjuster.

The Executive Assistant was responsible for the management of the
office and all matters of office routine, and supervised the general
clerical and stenographic staff. He also assisted the State Compliance
Officer in public relations work and acted as Trade Practice Compliance
Officer.

In direct charge of the office staff was the Chief Clerk, who also
handled -ersonnel details and sorted all incoming complaints for accept-
ance, rejection, or transfer to another agency. Where the proper primary
action was in doubt, the Chief Clerk referred the question either to the
Compliance Attorney or to the Labor Compliance Officer, who had formerly
served as Legal Adviser.

A member of the clerical staff, so classified because of budget
restrictions, acted as Trade Practice Adjuster, reporting to the Execu-
tive Assistant.

Thne Labor Compliance Officer directed all labor compliance activities,
including the planning of mass compliance surveys and the training, in-
struction and supervision of the Field Adjusters. Acting on suggestions
from members of his staff, he prescribed standards and policies of inspec-
tion and adjustment to supplement the general instructions from Washington.


9861


-47-




-.8-


He supervised the work of the Field Adjusters by reviewing case files
and dailJ reports.

The reviewing of case files and reports was also done by Special
Adjuster, 'h acted. a- a. Assistant Labor Compliance Officer and alsC.---
as a snecie' assistant to the State Compliance Officer, in addition to
her re'u1-r functions in connection with the issuance of permits for
handiciped and home workers.

The assignment of cases to and direct su-ervision of the Field Ad-
justers were delegated to the Chief Field Adjuster. hewer men were also
assigned to the Two Senior Field Adjusters for supervision and training.

The twelve Field Adjusters were charged with both the investigation
and adjustment of complat.nts, unlike the Rhode Island system, which split
up the:ze twvvo functions. More important cases were assigned to the Chief
Field Adjuster ana the two Senior Field Adjusters, but there was no
specialization of codes.

Cases involving adjustments which were important because of size or
Other factors, or containing q.iestions of policy or difficult interpreta-
tion were referred to the' Labor Compliance Officer for his personal at-
tention.

The Compliance Attorney acted as legal adviser to the State Compli-
ance Director, but reported to the Regional Attorney of the Legal Divi-
hion. Legal matters, questions of interpretation, and the preparation
of unadjusted cases for removal of the Blue Eagle and for litigation com-
prised his official functions. He also assisted the Labor Compliance
Officer in handling cases which ',ere likely to reach the District Attorney.

The last description of field office organization has been given in
considerable detail to more cleraly bring out the machinery established
in State Offices to carry out their functions. It is not to be supposed.
that the offices specially mentioned were other than convenient illustrar-
tions for a proper concept of the field organization.

The structures described represent those finally developed by May,
1935, By that time the field force had .been improved from, in most offices,
the original top-heavy organization to a fairly well-balanced, smoothly
operating staff. Daily experience in handling cases, and the better or-
ganization methods which were evolved had begun to combine and solve many
of the problems of inadequate personnel and of compliance procedure.
Counterbalanced against this v: as the ever-increasingly apparent weak legal
basis for the 1TRA program, which also served as a potent influence on
efforts to increase the efficiency of the compliance organization.




*9


9861






-49-


Cl.pter V Compliance Procedure in Field Offices

Section I Comlaints, thc bi of p'roc-,xure. The original "Rcgulations
for the Adjustment by District Compliance Directors of Complaints of Code
Violations" established tihe procedure to be followed by the field in
carrying out its functions'. Under this procedure, and that promulgated
for the Local Compoliance Boards in handling the President's Reemployment
Agreement, (*) the sole basis for activity in obtaining compliance was
the filing of complaints by employees, competitors or other interested
parties charging the particular respondent with committing a violation
of a code or the PRA.

(*) Bulletin No. 5, "Regulations on Procedure for Local NBA Compliance
Boards" (September 12, 1933), pp. 2-6, inclusive. The procedure
provided briefly was as follows: 'Ven a complaint of violation was
received, it was examined for legal sufficiency by the legal number
of the Board. In the event the complaint stated a prima facie viola-
tion, notice that it had been filed was given the employer. The
notice might be either written, telephonic or personal, and was
supo)osed to assume compliance and thatthe complaint was due to a
misunderstanding. Together with the notice, tie respondent was
furnished with copies of the PBA and official explanatory releases.
Tne provisions of the PRA were then explained to the employer by a
member or a representative of the Board in an informal personal
interview, and the respondent was allowed to explain the facts
alleged in the complaint and to make any necessary adjustments
in working conditions.

In the event the complaint was not adjusted by the foregoing pro-
cedure, the respondent was given an opportunity to appear before the
Board and state his case. Notice of opportunity to be heard before
tae Board was not in a prescribed form but had to '&e sent on ofi
ficial NRA stationery in a franked envelope, and was to include
copies of the PBA and official explanatory releases, unless pre-
viously furnished.

Hearings were to be conducted by the Board on an informal tone,
for the purpose of educating the employer and influencing him to
comply voluntarily. The Boards were instructed that they had no
power to compel the attendance of .the employer and witnesses, the
production of books-and papers, or the giving of testimony. Ques-
tions were to be confined to t.ile single purpose of determining the
validity of the complaint, and were to be used chiefly to aid the
respondent in making his voluntary statement. If the respondent
refused to answer a material question it was explained to him that
such was contrary to the spirit of the Agreement, and such refusals
were noted by the Board in making its report to NRA.

The Board then decided by majority vote whether or not the complaint
was -valied. *.iere no violation was found tie case was dropped.
Where a violation,:was fund, the employer was given an opportunity
to rectify conditions. In either event, w.-etaer thie complaint was
adjusted or rejected, tae respondent was given a Letter of Co.mpliance

(Footnote (*) continued on next epae)


9861




-50-


(Footnote (*) continued)

which ie night display' near his insignia.

.Ther: th-e respondent refused to adjust, thie Board forwarded a
report to IrRA tirouJh the Secretary of tie District Recovery
Board, signed by all members, with their votes indicated, which
included: the original complaint; a signed certificate by tie
legal memberr or other representative ti-at the )rocejure outlined
,,ad been followed; a summary cf tne ecnloyer's statement; any
additional pertinent facts; a recommendation for furth-ier action.

Progre.;" reports were made from time to time to tue Secretary
of the Jistrict Recovery Board.

All coi,',laintz ,ad to be in writing and signed by the complaining
party. The Boar,:Is' jurisdiction extended to all ?_A complaints
against employers in t.ieir particular co.mrunities.

Two cardinal rules of oroceIure were 1.ad do'.T.: (1) both the
fact tuat a complaint liJ. been filed against an employer and
the complainant' identity were to be kept confidential; (2)
the Board was' not an enforcement agency _n any sense of tie word,
but was to gain compliance t.irough education, explanation, and
conciliation.

The Board had no general investigaticnal or inquisitorial func-
tions, buat to tae contrary, was instructed not to use its re-
presentatives as investigation agents (p. 10).

Second offenders, where the action appeared to be wilful, were
to be ,iven no opportunity to adjust complaints.

(Uote the similarity between t.ie above described procedure and
that em ,l7,.ied. j District Coi.pliance Offices under t.ie October
19 Re,ulations and by the Stite Offices under Bulletin. No. 7,
which is discus-ed in the body of the text t-'-at follows. This
is madre especially interesting by the following quotation from
Bulletin ho 5, p. 4, which brings out tie differing bases of
the PRA and tue coles," - tue President's Reemployment
Agreement is not a statute to be enforce by lay but a voluntary
individual covenant.")


9861




-51-


Under the procedure cre.'.ted, conemlaints cf code violations had to
be in writing, preferably on tihe officially ,r1?cribed form. (*) The
instructions also stated tnat w.iere possible, C '.;jlaints sioull be sworn
to before a notary or witnessed by at lea~t one ,.-rson familiar with tihe
facts. However, this last wns never followed( extensively by the field
offices because, for th.e most 'i.irt, cni:ym.ia.in-n. employees were financially
unable to pa-j notaries' fees and fear of their identities as comilainants
becoming known precluded the pr,-cticability of requiring witnesses. Like-
wise, many corlplainants 'e,,re relatively uneducated 7nd unable to cope
with any technical requirements attac.iL'd to the filing of complaints.

The District Offices were given jurisdiction over all complaints
charging violations of approved codes by employers situated within their
respective districts,,(*') except were a code authority for the part-
icular industry had been organized and authorized to handle the type of
complaint filed.

Then a complaint was received, it was docketed and examined by the
Legal Adviser to determine viwhether or not the facts alleged therein, if
true, were sufficient to state a violation. If the finding was in the
negative the complaint was rejected and closed and the complainant so
notified, together with the reasons for holding it invalid. (***) Tow-
ever, if the complaint was determined to state a prima facie case of
violation, it was accepted and put through a regular procedure, described
below. (****)

It is important to note here the emphasis wiicdn was placed on legal
sufficiency, form, and a set procedure, since the tendency of the fi3d
was to interpret these instructions literally. This emphasis on form
was not without its purpose. The field offices were very much understaf-
fed, and even the limited. personnel was largely untrained for the work,
so that some device was necessary to conserve compliance facilities by
eliminating groundless and crank complaints. However, the placing of
formal requirements proved to be a two-edged sword, for many really had
cases of non-compliance went untouched, only to arise and plague the
field offices at a later date.

In illustration of this was the manner of treatment of anonymous
complaints. As pointed out in the footnote beginning on the first page
of this chapter, the instructions to Local Compliance Boards handling
tae PRA required all co -)plaints to be in writing and singed by the com-
plainant. (*****) This was caianged in tue instructions to District
Compliance Directors to the rule that anon.-.ous complaints might be act-
ed on at the discretion of the Directors. (******) In practice this re-
sulted in the majority of such complaints being rejected, since the
District Offices were looking.-for every possible '*sr to lighten their

(*) "Reulations for the Adjustment" etc. (October 19, 1935), p. 1

(**) "Regulations for the Adjustment," etc., p. 1.

(***) Ibid, p. 1

(****) Infra, pp. 52-53.

(*****) Office Manual, V-B-22, section 1, paragraph 2.
(******) "Refulations for tae Adjustment" etc., p. 1.
9B61




- 52 -..


own loads so that they could operate with some degree of efficiency.
Although this treatment of anonymous complaints was dictated by immediate
necessity, it later was proved to have been an undesirable method of
approach. While logic concluded that if a complaint were well-grounded
and m9de in :jood faith the complainant would sign his name, experience
showed that many complaints were filed anonymously and many violations
went unreported because the employees were afraid that the signing of
their names on a comrplaint form meant probable discharge, or at least
discri!-inAation on the part of the employer. (*)

However, before going further into the gradual modification of the
complaints basis of compliance activities, it is well to examine into
the procedure created for the handling of code complaints once they had
been accepted by the Leg.al Advisers.

It was originally provided that a complaint valid on its face should
take one oi two courses of action. If the Code Authority had been author-
ized to handle the particular tgpe of complaint, a copy was referred to
the authorized agency for adjustment within a specified time and the
parties were so notified. (") If within'the time specified the case
was not reported back as adjusted, the District Compliance Director
proceeded to treat it according to the second course of action. Where
the Code Authority made a report to the District Compliance Director
within the time limit, from which it appeared a satisfactory adjustment
of the complaint had been made, the case was filed as adjusted. (***)


(*) This fact was recognized, at least in part, at an early date.
Liaison Circular 64 (October 6, 1933), paragraph 3, quoted a
memorandum purportedly from the Compliance Division relative to
instructions to Local Compliance Boards, which read as follows: "The
instructions in Bulletin 1'To. 5 state that 'all complaints should be
in writing and signed by the person making the complaint.' This is
intended to protect the Compliance Board from following up malicious
and anonymous complaints.

"If a Board wishes to receive anonymous complaints, it may do
so -- ."11

iote that this memorandum was written some three weeks before the
Compliance Division was officially created by Office Order No. 40.

(**) "Regulations for the Adjustment" etc., p. 1

(***) "Relations for the Adjustment" etc., p. 1


9861









If the District Co,,.-ALiance Director -ad not been s'-cifically in-
structed to refer tie oZLrticular type .f c'-.,..)a.nt to a Code Authority,
it was handled in thie following .a,nner. (*) A letter of acknowlcdijent
was sent the complainant, and tie responrinnt was informed of tie nature
of the co.nplaint, was furnished a copy of the code andt an explanation
of pertinent provisions, and was invited to state his side of tie case.
(**)

In the event the first letter to..the respondent failed to evohe a
response, or the reply was unsatisfactory, a second letter was sent (***)
inviting the employer to the office for a personal interview. If this
method proved fruitless of adjustment, a form letter was sent informing
the respoondent that the "case would be sent to the National Compliance
Director if satisfactory evidence.of compliance were not furnished in
a stated number of days. Another letter wa then sent notifying the
respondent the case was bein, forwarded to JV.shinrton. After allowing
sufficient time for a reply', the file was forwarded to the National
Compliance Director for further action. (****)

District Compliance Directors were instructed to treat all com-
plaints confidentially, because of the d.in~sr of the complainant's dis-
cnarge on one ha.d, and the disastrous effect of adverse public opinion
on a respondent's business on thie other hand. (*****)

Likewise, it was emphasized thtat thie field officers were not en-
forcement agents but were to attain compliance through education, ex-
planation and adjustment. (******) The enforcement arms of the Govern-
ment were spoecified in the Act as being the Department of Justice and
the. Federal Trade Commission, (*******) and cases went to these two
agencies through the National Compliance Director and the National Com-
pliance Board. (********)

The treatment of second offenders was not mentioned in the "Re-
gulations,11 but in Liaison Circular 75 tie District Compliance Directors
were told only to substantiate the facts in taese cases, where they


(*) In NRA Studies Special ExMibits "'ork iIaterial #77. :

(**) "Reilations for tie Adjustment" etc., pp. 2, 3.

(***) See note (*) above

(****) "Reulations for tlie Adjustment" etc., p?. 2 and 3.

(****) "Realations for thie Adjustment" etc., p. 3.

l(******) bid, p. 3; Liaison Circular 75, p. 2.

(*******) NIRA, Title I, Section 3, paragraphss (b), (c), and (f);
see also Chapter III, note (3), p. 16.

(********) Office Order 40.


9861


- "It






-541"-


felt t-ie violations we-e wilful, and to give no opportunity to tie re-
spondent tc ar'.ju.st. (*)

This procedure contaned no olacs for field interviews or real
investigation. 17cr were tie field oc -.:ce? equipped to experiment in
this direction. (**) It is little wonder, therefore, that snall irm-
provement, except in isolated offices, was made in compliance pro-
cedure d.ur.ng tue e.,rl., days. T'ie pr-Tce .ure W.uiici was created was
so ill-adapted to practical use, thie facilities provided for t-ie field
so inadequate, that t.ie immediate valae of the field offices as real
compliance agencies was almost nil during tLe earliest stage. Their
use caaie more as experimental stations for tLie improvement of procedure
and organization and t'.e develoopment ~s %c.licics, :n-l as agencies for
educating industry to the values and benefits of iTRA, which did not make
itself felt until a later date. iMor .s this a criticism of the method
of approacnL to the gigantic or-anizati: n problem or of field offices
as a class. As has been pointed out in connection with the evolution
of an adjustment policy, (***) a workable compliance system can only
be developed-i successfully after actual experience in code Adninistration.
It was unfortunate that much time \was lost in the emergency job of ob-
taining compliance because such experience was lacking, or if it were
available from other similar systems of industrial regulation, because
its lessons were not utilized.

On January 22, 19.4, ttLere wa3 iLsued INRA Bulletin ITo. 7, "Manual
for thle Adjustment of Complaints by Stote Directors and Code Authorities."
which modified and expanded on the previous procedure Just about a
week prior to the iVsuance of t-iis "MianualJ" the State Directors were
appointed and tae Compliance Division's field organization was changed
from a system of twenty-six District Offices, ilerded by the former
District biana_'ers of tie Bureau of Foreign and Domestic Commerce, to
one of forty-eight, and later fifty-four, State Offices headed by the
new State 1iA Compliance Directors. ('***)

This transformation in organization and proced.lure reflected to
some degree th-e sad experiences of te District Offices resulting from
inadequate, untrained staffs and an inflexible, too limited procedure.

The new procedure was broader, -aid. contemplated some use of Field
Adjusters, but still remained m:iire cr less inflexible and contained
several objectionable features froi t.ie standpoint of practical applica-
tion.

(*) Liaison Circular 75, p. 2.

(**) Supra, Chapter IV, section 2, "Internal organization early
development" (of field offices).

(***) C-iapter III, "The Administrative Settlement .f Code Violations,"
p. 24.

(****) C-iapter IV, "The Origin and Development of _ield OfLices,"
supra.


9861





-55-


The underly ng theory of all compliance procedure wa- the speedy
elimination, by adjustmtint, of such noncompliance as was due to mis-
understand ns, and the prompt prosecution of all cases of wilful non-
compliance. (*) Bearing this in mind it is interesting to note the
c.ianges br.u,;st about in Bulletin No. 7.

At this point there should be recalled ti.e history of the .de-
velopment of te definition and policy of adjustment and the internal
organization of tie field offices, both of which nave been discussed
in previous cLapt;rs.

A sihble -rocedure was established ostensibly for all types of
cases. However, the organization of the offices with separate Com-
pliance Officers for labor and trade practice, and the application of
thie idea of industrial self-jovernment (**) chiefly to trade practice
cases, may be said to have split up this single system, in reality,
into two sj.parate procedures wviich overlapped to a certain, degree in
complaints arising under individual codes.

T-r.is brings us to a consideration of the definition of the terms
employed to prescribe the limits of each division of procedure. Com-
plaints w- ich dealt with violations of the labor provisions of the codes,
i.e., the regulations concernin, minimum wages, maximum 4iours, homework,
and other terms and conditions of employment, including the prohibition
of child labor, were designated as "labor complaints." Conversely,
"trade practice complaints" were defined to include those cases involv-
ing violations of all other provisions, such as, production control,
cost determination, regulation of trade terms, and'other prescribed rules
of conduct of members of industry among themselves. This last class
also included provisionss for t.ie administration of the codes by the
particular industries. (***)
(*'_ Bulletin No. 7, p. 7.
(i) Bulletin No. 7, p. 3 stated t.ie purpose of the Compliance Div-
ision to be to fill in the gaps of industrial self-government,
which was the ultimate aim to be accomplis-ied. Thus (continuing
on pp. 5 and 6) NRA would "act for an Industry while the In-
dustry is organizingg to handle compliance problems for itself;
or wv.iere an Industry in a certain territory has no Industrial
Adjustment Agencies; or where an Industry, though organized
to handle trade practice complaints, -ias no machinery to handle
labor complaints; or w.iere the Industry fails to carry through
in its efforts to adjust a complaint; or w-ere for any other
reason it is necessary for tie governmental rather than the
industrial system to act."
(***) Bulletin No. 7 p. 5.




-5C-


T.e definition c.f a t-ird class if complaints, "labor disputes,"
i, not g-ermane to th.lis discussion because they were early removed from
tlie jurisdiction of ITRA and placed under- the national Labor Board or
ot.ier s.-ecial agencies. (*)

Under Bulletin Ho. 7, coLmplaints hiad to be in writing, preferably
on t'.e ITRA complaint form, but were not required to be notarized or
witnessed. Anonymous complaints might be acted upon at the discretion
of t_.e State Director. (*t)

Complaints were ro.,uted, according to their nature, to the Labor
Ccxo.liance an.! Trade Practice Comoliance Officers, respectively. At
this ooint comes an essential departure from tie original procedure.
A com-oetitor making a labor complaint. against another employer might
elect to have it treated as a trade practice complaint, r.nd it was
thereafter to go troui the procedure for t.Le latter tyoe of case.
thereafter to go t'irou --
It would thus be referred to a 3oie ALuthority authorized to handle
trade practice, alt'-ouji not autlor'ized to tanile labor violati-ns.
(***)


If a Cole Aut i -rity (**w*) existed in tnie Industry and was auth-
orized to l-cndle the p-.:Articular tye of com)la.rit in the first instance,
the original comnplaint was referix&. to it wit-iout further action by the
State Office, unles', it ap:'er.red from the face cr substance of the corm-
pla",nt t-ihat it vas, purposel r filed with thie State Director. (*****)
A c.nmplainant alv.ays iad t.ia rie ,it to file a coti.plaint wvith the NRA,
rather t-an with an authorized Code Authority, in order to protect his
or the public interest. (******)

(*) Ibid, ). 1.2.

(**) bulletin :To. 7, p. 11.

(***) Ibid, p. 12.

(****) The term "Code Autacority" is us-ad .erain in order not to confuse
th-e reader, alt'iu., tie correct title perhaps sold be, "In-
rkustrial Adjustment Agency," v/-ihci is tme name given by Bul-
letin iTc,. 7, po. 4 to an agency of an industry for obtaining
covai) iance.

(*****) Bulletin 1o. 7, '. 12.

(******) Bulletin ITo. 7. This ri,"-t, however, meanit little because
jurisdiction over t-.e approval and appointment, as well as
the removal, of Code Authority remembers mand agents, together
with their authorization to handle complaints, was vested in
th.e Division and Deputy AcLininistrators, rst.ier t.ian in the
CoI .liance Division.


9861




-57-


This procedure was much more char-icteristic of trrle pr-ctice cases
than of 'labor co.nplaints. .`uiile after June, 1934 cbonlaints referred to
Code Authorities in the first instance vwer( not docketed by the State
Offices and 'ienco no c.):.plete fiyuros on the number of ca~es so referred
are available, general exoyrience showed taat t.e pre,)onlerant majority
of such complaints dealt with tr:Ade practice violations. In fact 69
Code Authorities were authorized to handle tr&de Ir,,.ctice complaints
as of -March 25, 1935, while but 21 were given jurisdiction over labor
complaints.

Complaints which came under the initial jurisdiction of thie State
Directors were then examined for legal sufficiency, all doubtful ques-
tions being referred to the Legal Advisers. This examination did not
differ from that provided in the original procedure, except that where
a complaint indicated a code provision might have been violated, but
failed to state sufficient facts, instead of being rejected the com-
plainant was requested to furnish the necessary additional informa-
tion. (*)

Where a Code Authority had been authorized to handle complaints
on reference (usually labor), a digest of tlie allegations was referred
to that body for adjustment within a.stipulated period not to exceed
two weeks, and the parties were so notified. If no report was made
within the time s-2ecified a Progress Report was requested by return
mail. If no satisfactory reply was then received the State Director
advised the Code Authority he would proceed to adjust the case on
tne assumption it had been unable to do so, unless immediate word
was received to the contrary. Sufficient time for a reply was then
allowed to elapse before action was actually started. If the com-
plaint was reported back to the State Director as unadjusted, it was
then put through a second course of procedure described below. On
the other hand, if the Code Authority reported the case as adjusted,
the State Office closed the case and so notified the complainant. (**)

The difficulty with tLis arrangement was t.'.iat, since the Code
Authorities were not under the full supervision and control of the
field offices or even the Compliance Division in Washington, their poli-
cies of adjustment and procedure natrually were different. An alarm-
ing number of cases had to be re-handled after being, reported back to
the State Offices as adjusted. The purpose of the plan was probably to
train the Code Authorities to be in a position to handle labor com-
plaints in the first instance. (***)

(*) Bulletin No. 7, p. 13.

(**) Bulletin ITo. 7, pp. 13 14.

(***) Ibid., p. 14, "The State Director will keep a record of all com-
plaints sent to Industrial Adjustment Agencies on reference and
when he believes that any such Agency is qualified to handle a
particular type of complaint in the first instance he will make
such a recommendation to the National Com;liance Director."


9861






-58-


The bulk of complaints filed in State Offices, and not immediately
transmitter in toto to another agency, were 'andlerd bor t.tem without re-
ference to Cjde Autitorl.ties. T e following procedure relating to cases
handled directly by Stats Off-ices, (*) t.:ermfo-re, will form the center
of the remainder of t-i_.s discussionn un coaL-plience procedure in the field.

The initial steps were virtually the same as Drovided in the original
"Regulations" issued to District Conpliance Diractors on October 19, 1933.
The respondent was informed of the nature cf t-e complaint; the applicable
part of the code was ex-plained to _irnim; he was ackei for a statement of his
position; itd h-e was furnished with copies -,f t-ie code and a- printed
statement entitled, "Information ftr Persons Chi.rged with Violation of an
ITRA Code," whiLc'. set fort-i in s-mple lnnOUaMPe a brief outline of the pro-
cedure and the respondent's rij.its. if no repl.. was received in a reason-
able time, a duplicate letter with L-nclosures Wc.s sent to the respondent
by registered mail.

If. fthe respondent ataitted tuie violation but furnished satisfactory
evidence of present compliance, willingness to comply in the future, and
equitable restitution (**) for oast violations, tie case was considered
as adjusted and the parties so notified.

In case the respondent denied tle facts, or admitted the facts and
denied they constituted a violation, or f.-iled to satisfy the Compliance
Officer that an adjustment hiad been made, hie was invited to be present
at an office interview. If this method were not feasible, or if it
failed to produce an adjustment, a Field Adjuster was sometimes sent to
visit the respondent. This tardy use cf the Field Adjuster indicates
that investigations in the field were of secondary importance in develop-
ing cases, an unsatisfactory a:piroach dictatedd larg.elr by budgetary con-
siderations which in turn was lue to the ,uhilosop)hy which" prevailed at
the tiine (early 1934) that most Code Authorities would in due course
take over the handling of comuioliance in t.eir re-pective trades and
industries.

.If the Field Adjuster 's report slowed no violation, the complain-
ant was so notified. If no further word was received fram the complain-
ant within a reasonable time (usually ten days to two weeks) the case
was filed as adjusted. vThere the Field Adjuster's report showed a will-
ingness on the ;art :f thle respondent to co:noly and to make equitable
restitution, the case was closed on receipt :.f evidence that that Alad
been done.

Unadjusted cases of violations were forwarded to the ITational Com-
pliance Director in the same manner, and after the three warning letters
to the respondent, as specified in the original procedure under the
"Regulations for the Adjustment by District Com-liance Directors," etc.

(*) The procedure described in the text was contained in bulletin
NTo. 7, pp. 14 18, inclusive.

(**) See Chapter III, section 6, "Evolution of an adjustment policy,"
supra.


9861







Bulletin No. 7 further t rovided that in case either the complainant
or respondent were dissatisfied with the decision of the ComPliance
Officer, be should be afforded an interview with the State Director. If
he were still dissatisfied, he L.ad the right to appeal the case to the
State Adjust:,ient Board, which made its findings in the form of a recom-
mendntion to the St-te Director.

All complaints had to be treated confidentially as to both parties.
(*) In the event an interpretation of the code were needed to proceed
with a case, a request for a ruling had to be made through the Washington
office to the proper Industry Division. (**) There was no power to con-
tinuo action on tihe complaint until such interpretation were issued,
sometimes months later.

It is apparent to even the casual observer that this system of
procedure was much too cumbersome to allow efficient operation of the
field. Bulletin No, 7 was so phrased as practically to preclude any
departures from it.

The whole system was fraught with delays and opportunities to
tle respondents to frustrate the compliance program. Cases usually
developed into correspondence battles, while the compliance situation
in the industry might be rapidly deteriorating without any real efforts
to check it. Tie provision for the use of Field Adjusters was a step
in the right direction, but by t-Ie time the case had reached that stage
much of the damae caused by the barrage of letters had been done.
This all resulted in a great deal of wasted effort and time, when by
the emergency nature of the job and the inadequacy of facilities to do
the work, every ounce of energy and every minute was precious.

The formality and inflexibility of the procedure, making the
filing of a complaint the sole basis for compliance activities, combined
with the limited facilities of the field to cause a tendency to restrict
adjustments to thie individual complaLinant and to accept in lieu of an
investigation a statement or affidavit from the respondent denying the
facts or claiming the required adjustment had been made. This last was
the product of necessity, since any desires to investigate a complaint
properly were successfully stalematediby the absence of a sufficient
staff for this purpose and the set procedure provided, which did not
allow for a free use of investigators. Consequently, without varying
from the prescribed line of action it was virtually impossible to educate
employers sufficiently to lay a firm foundation for healthy conditions
of compliance, or even to bring hpbout momentary present conformity and
to obtain restitution for past violations.

Bear in mind that the field offices were under constant, terrific
pressure from complainants, Code Authorities, business men, labor and
trade groups, and Washington to handle complaints and get them off the
books. In some of the weaker offices this combination of circumstances
served to bastardize their efforts to such an extent that they sought

(*) Bulletin No. 7, p. 7.


(**) Ibid, p. 8.




-------*F--- -


to close cases by all 3orts of devious reasonings and thle invocation of
technicalities. At t.is tuine t'-er3 was little or no stress laid on wage
restitutions. Consequently, the complaining employee was sometimes re-
garded as a disloyal "inf.rrmer" and was required to fully substantiate
his charges before they would be recoiized.

Fortunately, however, this intolerable situation so revolted the
larger nunb-r of field offices that t ley tL-rew off, bit by O-t.t, the
hamnoering restrictions of thle c.,mplaints plan of )rocedare. Consequently,
during the late spring of 1934, coincidentally with the rievelopment of
adjustment policies and staff organization, these field offices began
to cast about for and to find iinrovements in procedure, wvich finally
camTe to be passed on to the remainder of the field through the medium
of Field Letter 125 and the travelling Field Representatives.

Before passing on to a discussion of these departures from the pro-
cedure, there should be noted two shortcuts wnich were provided, in
order to take care o.f unusual cases requiring speedy action.

Bulletin INo. 7 provided that whenever tie State Director was con-
vinced that a complaint conclusively set forth a violation, which the
respondent showed no diiposition to correct cr adjust, then the State
Director iiign.t immediately refer t.ie entire record to the National Com-
pliance Director without following th-ie regular procedure. (*) While
this looked very go:d on paper, it had little effect in alleviating the
situation. In the first place, it applied onlj to unusual cases and
did not vary the regular procedure as to ti.e great bulk of the complaints
received.. Moreover, this provision for a shortcut erroneously presup-
posed an adequate investigating staff to irr-nediately pre)are the evidence
for tie file, since obviously Bulletin ITo. 7 could not mean the complaint
was to be referred to the Tational Compliance Director without any in-
vestigation. Aside from t-iese two difficulties, even though a case were
properly orenared and transmitted, it bore a likely chance of not being
acted on wii _out delay and possibly of being later returned to the State
Office for irt-ier investigation or attempts at adjustment. The lack of
a clear pol cy of action in ;ashin~ton, the mechanical difficulties of
advancing a complaint to the stage of Blue Eagle removal and 'reference
to the enforcement agencies, and t-ie even greater improbability of the
case being promptly and effectively litigated, all combined to complete
the task of turning this well-meant s:iort-cut of procedure into a mere
paper plan.


(*) Bulletin No. 7, p. 17.


9861




-61-


Of more value w.as Administrative Order X-14, issued April 6, 19,T4,
which amended the provision in Dul.etin No. 7 juct mentioned, by allowing
the State Directors to refer cases direct to U. 7W. Attorneys, rather t'.,an
to the ITational Compliancc Direct'r. (*) At thie time of the reference,
the respondent was notified and a transcript in triplicate was sent to
the Control Section of the Coi, rliance Division in --as.iinton.

This new power was exercised in varying degrees by different .offices,
but was generally found to be of practical u-e. It eliminiat,-d to some
extent the difficulties of mechanical delay in .7ashLinrton and the absnce
of a definite plan of action. It was the first major step in the de-
centralization of the Compliance Division, and therefore of prime importance.


(*) This constituted Amendment 1 to Bulletin No. 7, Order X-14 also
containe. Amendment 2, granting a similar ;ol.ur to code authorities,
and Amendmnent 3, providing that cases to be referred to the U. S.
Attorneys under X-14 might be first submitted to the State Adjust-
ment Boards for advice and recommendations. The power granted
State Directors by this order was to all intents and purposes re-
voked after the creation of thle Regional Office system, by Field
Letter 196 (February 2, 1935).


9861





-62-


Incidental to the improvement in procedure as to unadjusted cases,
X-14 h'-a the practical aspect of placing tnie State Offices in direct con-
tact withthe various District Attorneys. Turoup-rn this medium the field
adaad to its experience in the Drooer invcst:.gation :nd oreocration of
cases intended for actio.n b tne Depfrtaent of Justice. But, through
these contacts also tnece was oroug-it ho.ae to tie Stute Office personnel
witn increasing force the constitutional wvE.kncsses i;nd the legal diffi-
culties involved in the whole conoliA.ice progrLaM.

..ioreovrr, the amended procedure of X-li, by its vcry terms, was
limited to a small proportion of the cases nLndled. The vast majority
was still suoject to the regular procedure laid down in Bulletin -'o. 7.

Having considered in detail the lanr of oroceaure on tne basis of
complaints, it is interesting to recall tne underlying theory of com-
pliance procedure, expressed at the begini.ig of tnis discussion on
Bulletin Wo. 7, namely.

th.e speedy :liainrtion, by adjustment, of
such noncompliance as is due to ais-nderstanding, and the
prompt prosecution of all cases of wilful nonco.aliance." (*)

Tnis purpose failed of accomolisnient because of three aajor
reasons: a cumbersome, inflexible Drocedure, based solely on tne passive
policy of waiting for complaints to be filed and for unnealtny situations
to beco.,e so eggrevatea as finally to be reported; a lack of an
-dequ,-tely trained and sufficiently large field adjustment staff to
operate really successfully under any plan of procedure; and the inherent
absence of a sound legal basis for proceeding, concerning the improve-
ment of vrnich little was ever done to facilitate the final decision of
the Judiciary so that th- basis fight either be firmly established or
discarded for a constitutional one. In connection with the last basis
of failure, the weak-kneed and vacillating enforcement policy grew
finally to be looked uoon by industry, laoor and the public as a suffi-
cient roof that tne Administration was acting in bed faith.

The field offices, and tnose aemb.-rs of the 7asnington staff coming
into more or less direct contact witn field problems, strained every
effort to eliminate tne first cause by developing and adopting on their
own initiative improvements and modifications of the established pro-
cedure. These procedure developments did much toward putting the Com-
oliance Division on a sound operating basis. However, it was manifestly
beyond tneir power to remove thie second and tnird causes, both of which
were fundamental problems in compliance administration.

Section 2 Development of a ne"' compliance procedure. As experience
grew in the handling of cases, gradual changes were made in the pro-
cedure for action on complaints. As these changes became established in
practice they were usually m;nie known to the field as a whole in the
form of instructions in Field Letters.

(*) See lotep. 55 suora.




9861


___A







Thus, in Field Letter 48 (January 2--, 193') exioerionce with the
handling of ancn,.ocs cc'mi;ints reflected itself in the following
clarification of Bulletin :.'o. 7:

"Anonymous complaints will be subjected to a more
searching analysis before the, are acted upon than will signed
complaints. If, however, aft.r close cx.. ii-...tion an anon:,rmous
complaint appears on its f cce to be ,Enuine ind to state a code
violation it should be h&nduileu. is on! otner complaint."1 (*)

The field staff soon learned tne value of thoroughly investigating
c.nd fully Zd.justing a case. \djustment deoEnded to a 1 rge measure on
investiFation. If the activity oi tne office" ?was restricted to a single
employee ;"'ho nhd fil-d a complaint, there w, s likely to be later com-
plaints by other employees, 'hich 7,ouild necessitate the retracing of
steps. This was cle-rly an inefficient use of facilities. .urtner, it
tended to create resentment on the ort of the employvEr at being
supposedly singled out for persecution. Tnen also, under this method
viol tions tended to accumulate so that when the complaint reached the
adjustment stag-;, back ge restitutions vw'ere sometimes large 6nd burden-
some. This method also had tne additional disadvantage of not lending
itself to a program of educa.ting employers so as to anticipate future
cases of noncompliance.

Accordingly, it became the practice, as the use of Field Adjusters
increered, to investi:&cte tnhe entire payroll, so as to discover all the
violations 'which might exist. The various offices grew to require a
complete adjustment of back w.c es due all employees. This widened scope
of investigation and adjustment helped to alleviate some of the evils of
the complaints syste-a by removing the necessity for more than one in-
vestigetion, except in p. rticul, rly difficult cases and where the em-
ployers ,,ere p rsistent violators, and by furnishing an effective medium
for educating the employers to bring their operations into continued
compliance.. This new procedure wa.s also characterized by the placing of
more emphasis on the use of Field Adjusters.

It c.s also found necessary to make investigations on what appeared
to be bona fide rumors and u-ell-grounded suspicions. This was brought
about by the strong insistence of respondents that their competitors be
nmaae to conform also and b- the realization that a permanent compliance
program must be based on a thorough educational program among members of
industry and the protection of tne complying business men from his com-
petitor who violated the code. This was the germ' of a new idea of
operation known as "mass coinpliance"t, (**) that is, the direction of com-

(s) 1ield Letter 48, p. 1.

(') Discussed in detail below, p-:.rt III, Chapter 7711, as a solution
to the problems rising fro.i tne method of handling labor com-
plaints. Tnile mess compliance is spoken of here as a new idea,
it found ample porecedent in the administrative efforts of the
State Labor Departments, many of 1'iich used the inspection system
in enforcing labor la'-7s, (U.S. sept. of Lebor, "7omen's bureau
Bulletin 61, po. 20o-289, 307-308) and in the Trade Practice Con-
ference Procedure in vogue with tne -ederal Trade Commission,
(Annual reportt of .i'eeral TrL.de Commission, 1932, pp. 51-54).
98bl




4-1

pliance activities against a grouo as a self-initiated project, rather
tan L: single proceeding against one employer on the basis of a com-
plaint f filed by some tnird oDrty.

In Edition to rn.-ss co..oipliance activities, -nicn were usually in
tne form of a survey, anotn.-r v-riation from the complaints plan wvas
observable in isol ted in-estigetions, not connected with a survey or
plffnnea Qroject, and orig-in. ting withoutut tie formal filing of complaints.

Thus, there mignt co.ne to the attention of tLe field office a
rumor that a certain en.oloy-r .-7as in violation, or tie office might feel
strongly fro.ii its general knowledge of industr-.y conditions tnat a con-
dition of noncomoli;nce e-'isted. In such c.-ses, the a:).-)roori-.te Com-
pliance Officer caused investigations to be m,-.de by Field Adjusters,
exen though no foriqal co-nolaint had ever been filed. The procedure
followed in cddjusting violations foand by tiiese methods ras tnie same as
that used vnere action '..-s the result of con:laints being filed.

The ab. :e aescribei faults of tnGL co-'ol-s.ints system and the
correctional developments evc'Lved re more o.,olicable to labor com-
pliance than to tne tr,. ic :m.,t ice .7'nfse. 3. its very nature the letter
type of violation ".;s nore sutsce t-iL-e to treatment on a complaint basis.
There vere ,ide variations in, indiidusl c-ses, unlike labor violations,
which fell in certain fairly vell-defined classes. 2omolaints vere
usually controversies bet".een tne respondent and oarticulr competitors,
wnile nonco.nliwxce with labor provisions affected the total relations
of the employer v-itn his -.orkers and tended to cause a general disturbance
of the labor standards of the industry.

An interesting sidelight on the decreasing emphasis on the strict
complaints procedure at this juncture is fo..-ind in instructions to the
field regarding so-called "multiple complaints." () This term was de-
fined to include situations '.here more than one complaint was filed
against the same emoloycr charging tie same general violation, i.e.
failure to pay tne minimum wage to pieceworktrs, etc. Such "multiple
complaints," under the instructions, were to be bound together in one
file and pocketed as a single case.

Immediately following tnis instruction on "multiple complaints,"
the experiences of tne field '.rith the complaints olan of procedure, and
thie modifications of tne syste.n mentioned above, '.vere crystallized and
a definite break Os m-. de away from the strict complaints basis by the
issuance of Field Letter 125. As has been mentioned before, Field Letter
125 undertook to establish a complete, new framework for compliance
activities.

The har-ed procedure tnus cret ted recognized the need to discard
the cominplaits basis, ,nd recommnen.cd strongly the use of office com-
plaints to initiate activities. ( *) Tnese office complaints differed

(*) Field Letter 119 (June 6, 1934), p, 3

(**) Field Letter 125, pp. 9-10.


9861







from the er.rlier conception oi coinplr.ints, intiat the latter were filed
by third oprsons prcsuwiabl.y i.ving. a first-hc-nd knowledge of the vio-
lations. alleged, w-illc tL', former cliss of c,: 1jlaints originated with
members of tne co:r.jliance sti Lff a-'.fa were .'.d.c on hearsay, rumors, ;ifnd
suspicion. Irhilc the use of office comnlaints vas manifestly open to
abuse by over-zealous nembib-rs o.' the staff, sufficient safeguard existed
in the practical li it.tions of tnhe investi;Lational facilities of the
various offices.

Among the occasions -hsre the us:- of office complaints was
suggested were: '..ilere an e,n?loyeve reported a violation but, refused to
sign a comoilairnt for fear of aicniarge; "here a complaint h.d been re-
jected but the office considered the situation alleged. should be investi-
gated;, where the complaint r.ving been substantiated the adjuster be-
lieved tnit violations .:,robabl," existed in other establishments under
the same ,nanai'ement; -..-here repeated rumors existed- as to violations in
an establishment, industry, o01 locality; where the employer seeking in-
formation indicated tne existence of a violation. (*)

The grafting of tiis new type of complaint on the old procedure
served as sufficient endorsement of mass compliance. The new .theory/of
operation continued to expand '.:itn practice and the number of.its
adherents grew l.rger, so thr.t by the tine the Rtegional Offices .began,
to function in January, 1935, its use as a method of approach to the
solution of coinpli.'--tnce problems nad attained .fairly wide popularity and
was well-established among the v.rious field offices.

Closely allied witn tnis departure from the complaints basis was a
growing empnasis on tne use of Field Adjusters. The value of this type
of personnel vas recognized by the NILtional Compliance Board as early
as December 4, 1933. The minutes of the nineteenth meeting, held on
that dc-te, contain tne following statement:

"ir. Posner once more raised the question of oroceduire
where employees :ere discnc-rged for entering complaints against
their employers. Dr. Altmeyer,(later Second Assistant Secretary
of Labor and ?-t one time Criief of the Comoliance Division -
Autror's note) urged that field representatives were necessary
for this type of work. Hc added that considerable tact and
labor experience Ere necessary.1t

In May and early June, 1934 the Compliance Division begin to appoint
"Resident iield Adjusters", whno were stationed at various strategic
points outsic.e the cities in wv/hich the State Offices were located. 7hile
these "Resident Zield Adjusters .v:ere attached to the v..rious State
Directors' staffs, it vwas contemplated that they should exercise semi-
executive functions, in addition to the regular duties of Field Adjusters.
Thus, they :-ere gen,'rall.r given a comparitively free hand. in the planning
of their o-n compliance activities and in engaging in public relations

(*) See .ote p.64. suora.


9861







-6 -

w-ork. Because of the physical distance between tnair official stations
and the State Offices tncre was necessarily 1..irger reliance ontheir
individual discretion trCLIn in trie ca05c of ordi.,aar-y Field Adjusters.

The significance of tie t :,,oointmrnnt of resident i'-ield Adjusters in
connection ;itn the departure fro- tne comrlEaints basis of procedure is
to befound in the fol.o'.vin. e-zcerrt from ,.r. Swooc's letter of June 2,
1934 to St:te Directors on the subject:

"Undoubtedly. a resident field Adjuster .ill hear many rumors
of viol.. tion althou1t no written n .co:oll int micy have been filed.
If the rumor ru.joe.rs to n. ve substance the Field Adjuster should
mcke an investig--tion eve:,: in the absence of a specific complaint.
In only rc-re instances snoulc tne Wield Adjuster attempt to ad-
just it by writing L.. letter . .
"The (Resident) Field Ad.juster must spend the greater portion
of nis tiiae n outside wor1 :, contacting the employers and investi-
gating not only file. coni:laints, but also rumors of violation
vr ich may come to nim." (*)

This statement mes follo'ved eleven days later by the issuance of
Field Letter 125 and Supolem,.ntary memorandumm i1o. 1 to Bulletin N'o, 7,
which latter, in niodifyin-; the earlier .l.anual for State Directors, said:

"The State Director must use his own judgment in determining
the procedure which will be most effective and expeditious in a
pa-rticular case. Bulletin 7 does not lay dowin a set proceduree that
must be rigidly: observed in ,ll cases. For example, instead of
cErr'.rig on orelirninnry correspondence, it may be better to send
an C.djuster to interview the respondent or to ask the respondent
to acpeer at the office of the State Director." (**)

Field Letter 125 stressed the value of office and field interviews
in Adjustment work. It further suggested the elimination of a formal
notice to thie respondent giving the substance of the'complaint, and the
substitution tnerefor of a letter containing merely a brief invitation
to call at the Compliance Office. It likewise recommended the practice
of dispensing with all .preliminary correspondence, and making tne initial
contact cith the respondent by means of e field interview. (***)

(*) In NEA Studies Special Txhibits '7or': materialsls #77. Ibid, p. 5.

(*) "Supplementary iMemorandum ilTumber One Relative to Adjustment of
Complaints", p. 1 (underlining supplied). In spite of tne undter-
lined portion of tne quotation, it nas been oreviously'pointed
out that the converse is true. This '.,as clearly an attempt to
rationalize and to reconcile this memorandum, Field Letter 125
(both issued by the Compliance Division), and the actions of
various field officials with the procedure created by the Admin-
istrator in Bulletin No. 7.

(n') Field Letter 125, p.11.


9861




-.27-

In this connection Field Letter 12:- s3id:

"The oomnllinnce OfficEr is .unit.r no obligation to establish
the fact that a co.,iJlaint has been filed. .,'or the protection of
the complainant it is ..dviscble in nay instances not to inform the
employer that a specific comjilnt has been filed -rainst him." (*)
&
Field Letter 125 also provided a guide for the thoroughness of
investigation. A detailed account of the proper contents of the case
files was given, and a questionnaire form for interviews with employers,
as well as a form for abstractin(-r payrolls, were included. (**)

Thus, it is seen that, be-inninn with Pield Letter 125, June 13, 1934
and in the period of development that follo'.,ed, marked departures were
made from the cumbersome, inflexible, and largely ineffective procedure
established by the Regul tions of October 19, 1933 issued to District
Compliance Directors and by Bulletin *Io. 7, covering State Directors and
Code Authorities. Under the old procedure all co'loliance activity was
supposed to be predicated on complaints, which had to fulfill certain
technical requirements, and almost the entire burden of proof, as well as
the initiative, was thrown on the complaining employecEs Lnd competitors.

The new procedure was developed out of tne necessities of experience,
influenced greatly by the powerful psychological factor of a new reporting
system whereby field offices felt that their efficiency, value and
reputations were on constant judgment by the number of violations dis-
covered and adjusted and the amount of back wages collected, (***) Less
and less stress was laid on tne filing of complaints and on the important
place of the complainant in compliance procedure, except as one source
of information. The use of complaints as the basis of proceedings was
never entirely eliminated, although it was generally contemplated by
persons connected with compliance activities that a decided step would be
made in that direction after the passage of the new legislation which was
pending when the Supreme Court decision in the Schechter Poultry case
abruptly terminated all efforts at code compliance. However, it should
be noted in illustration of the final relative unimportance of complaints
that on May 21, 1935, in a letter to all Regional Directors, the Chief
of the Compliance Division placed a virtual statute of limitations on the
filing of complaints, leaving each office to exercise its own discretion,
according to certain standards, in determining whether or not the com-
plainant had been guilty of laches in failing to report the violation
promptly. (****)

(T) Ibid, p. 12.
(**) Ibid, p-op. 19-20, 24, 27.
(s*) See Chapter III, pp. 29-30, for a discussion of the effect of this
reporting system on the evolution of an adjustment policy. A
brief description of the system of reporting is there given.
( **) A copy of this letter is included in the appendices. It pro-
vided that the offices should be guided by the following general
rules of thumb: ordinarily, a complainant still employed ought
to report the violation within 60 days after it had occurred;
an employee who had been discharged or dismissed should file com-
plaint within 30 days thereafter.




-68-


Of course, bet'.-een June, 1S34 and i'ay 27, 1935 there were many
developments in compliance tecnrnique and in minor oracedural points.
However, for the sake of brevity at tris noint these developments are
left to discussion in subsz-uent sections "-:ncre tney will be treated in
detail..

One more modification of Bulletin -Io. 7 should be mentioned here
as having a noticeable effect on the movementt to discard the complaints
basis. By Admiqistrative Oruer the practice of sending complaints to
Code Authorities "on .reference" for adjustment ..as abolished as of June
15, 1934. (*) This class of complaints was thus added directly to the
onus of the field offices and it became, to a very slight degree, easier
to treat all complaints according to the newly formulated procedure.

The order further provided that Code Authorities which had been
authorized to handle .: rticular tynes of complaints "in the first in-
stance" would continue to operate in the same manner under the designation
"officially authorized". Tnis -;as important because the Code Authorities
which hcd been authorized to handle labor complaints were mainly organized
to operate on an inspection or mass compliance basis and, therefore,
indirectly additional impetus was given to the movement away from a
strict complaints system.



() Administrative Order X-29 (May 12, 1934).


9861





-69-


Section 3 4 The & veleprment of the use of Field Ad.justers. Under the
original procedure for District Compliance Cffices, as shown in the
first section of this': charter, the initial step in the actual handlinF
of an accepted ccmplnint was to notify the respondent of the substance
of the violation charp-ed and to invite his answer thereto. A copy of
the code mn& an explanation of pertinent provisions were also f'.rnishord.

This first contact, which was almost invariably by letter, had a
two-fold purpose. In the first place it was supposed to serve as an
easy, natural way to lead up to an adjustment. At that time adjustment
had as its gnal the obtaining of present conformity with the code and
the assurance of future compliance. Little attention was paid to re-
compense for past violations. Consequently, the simplest method of
approach was to say to the respondent, "It has been alleged that you
have violated the code for your industry by paying your night watchman
less than the minimum wage. The code provide tUp-t you must pay this
class of employee not less than at the rate of $1.00o per wrek. Of
course, if these facts aro true, we realize the violation was probably
due to ignorance or Inadvortence. Therefore, we invite you to furnish
us with your explanation of the above complaint, preferably in the form
of a sworn statement." (*C) The probably effect of such a letter on
the respondent in shaping his answer to the complaint is obvious.

In the second place, the notification sent to the respondent was
intended to fulfill certain legal requirements v-hich were supposed to
exist. It was felt that the constitutional prohibition against de-
priving a man of his property without due process of law (0*) made it
necessary to adopt a semi-judicial attitude and to furnish the re-
spondent with notice of the charges against him and an opportunity to
be heard in his' own defense. While common fairness supported the latter
part of this conclusion, it was found to be administratively unwise to
deal with violations in a manner so resembling judicial procedure.

This feeling toward the restrictions of due process of law was
closely allied with the dual presumption sf. the innocence if alleged
code violators and the lack of intent to violate where noncompliance
was established. This, in turn, lead to the logical conclusion that
the burden of proof should properly be on the complainant. The pre-
supposition, insofar as labor complaints were concerned, that the em-
ployer and employee stood on an actual rarity in ability to enforce
their levpl equality cf rights, seems to conflict with one of the
underlying theories of labor legislation. In an early leading case

(*'i This is a paraphrasing of the form letter actually used by
District Compliance Directors, See note p. 33 supra.

(*b) Constitution of the United States, Fifth Amendment, "No person
shall be deprived of life,: liberty or property without due
process of law."
Tne reasoning placing a strict application of this principle so
as to require a formal notice to the respondent in the initial
h neither the regulations-were.promulgated nor were administrative
sanctions invoked at this stage of proceeding.


9861


L--





-70-
-. a a
upholding thb right of a state under its police power to enact labor
legislation limiting the hours of employment of men workingg in mines.
and smelters, the Utnited States Supreme Court said:

"Tie legislature has also recognized the fact,which
the experience of legislators in many states has
corroborated, that the proprietors of these es-
tablishments and their operatives do not stand upon
ean equality, and that their interests are, to a
certain extent, conflicting. The former naturally
desire to obtain ;s much lIbor as possible from
their employees, while the latter are often in-
duced by the f-ar of discharge to conform to regu-
lations which their judgment, fairly exercised,
would pronounce to be.detrimental to their health
or strength. In other words, the proprietors lay
.o-n the rules and tuie la.borers are practically
contain ed-toj obey them. In such cases self-interest
is often an unsafe guide, and the legislature may
promptly interpose its authority." (*)

Originally, such investigation as was made had to be conducted
through correspondence end office interviews with the respondent. The
respondent usually denied the existence of the violation or pleaded
ignorance .and good faith and professed a desire to comply in the
future. On this basis the case was closed as adjusted.

Field offices were forced to accept at their face value state-
ments and. affidavits of respondents, which by experience and better
reasoning the field officials knew to be false. Conscientious members
of the field staff chafed and fretted under this spurious, legalistic
procedure and made varied attempts to improve the situation. The dis-
advantages of this system communicated themselves to the officials in
:/ashington, so that, in discussing the plan for a permanent govern-
ment al compliance machinery, the Iational Compliance Director said,

"Like the temporary arr;ngenment, this plan provides for
a regional system to aid. in the adjustment of complaints
of violations of approved codes. --- Like the temporary
arrangement, it is baaed upon the hypothesis that the
great majority of complaints are due to misunderstandings
which can be adjusted by education and information, by
correspondence and conference. It is also based upon
the hypothesis that to effect this, there must be ,ell
informed agents in the field --- to adjust the case
where it arises and to m.ke fair' findings of facts.---

"---These State Directo;s will have a sufficient staff
of assistants end adjusters to develop the facts and
adjust complaints by education and information at the
olace where the complaint arises, as far as is prac-
ticable." (**)
(*) Folde.x v. Hardy,, 169 U. S. 366, I.c.397, 42 L. Ed. 780 (1898).
See also Commons and Andrews, "Principles of Labor Legislation"
(Haroer and Prothers, 1916) po.28-30.
(**) William H. Davis, rational Compliance Director, "1TEA Plans for
Cod.e Compliance," December 5, 197.3.
9861




-71.-


It came then to be realized as a fund.a.mentrl conception of com-
rli:,.nce -.oninistration tiapt investigation and -.djustncnt vrerc inter-
deoenlent tnd inseoarat'le, and their combination "'[Ls an indispensable
element in the eiforceer.int of the coC.Les. The "or': of adjustment had
rs L o.rereouisitL -. t1 orou-!'. lao''lee a of tLe fPcts, rn.. inve.ti.-rtion
xas of little rmnae'-it .if th}e evils diuccvered *'erec not subsecucntly
corrected.

Tithi the, creation of Tic-id A'djuster tornitions ui.&er the St.'. te
Office syr'em, mn the -"owing. recognition of tl-e value of ten-sonal
contact wi 1i e::inlo._ers p ,'. of -ctive inve. tiv'at. on, the new class of
personnel .-oon c.ssumaed large i'-io.t,:nce n t.h3 or-.nizations of the
various of 'ices.

In the be--in-iin.-. Pild ACljusters wcr.-e lar.el. -untrained fo- their
''ork!, altlho-i.-h n n : practical business o:-oericnce or a rudimentary
1now ledge cr IP'- or ac -n rntinz. Ti-_u- use, at first, as provided in
Bulletin :'o. 7, v tas t- act as a s'uD-iem-.nt to corresronc ence ank-
office intervjie' s, in.-csticati.i- a:~. thos. cases whichh .-ere not ad-
justed b", the lat-':.r t'.-o met': .s. h'.)"e.'E-r, as ex-.erience rrcew in- the
use of field inst.ectiorts :in.'. -i'l, interviews, the compliance staff took
greater cognizance of tihe aJ.v-ntr.-cs of an arCe.uate, vell-trained -:roup
of field men. On t:h-e oart oi the ..roz:ressive ele.ient in the Compliance
Division, at last, there w7.s . correspon,.inc7 cont-cious effort to train
Field Adjusters and. to -.lace- sor.i& requirer.-mnts on the 7C-sitions, riich
bore a reasonable rel Ltion to t:.c ctermina..ion of the fitness of
applicants and incu.nbznts to fulfill tho f-uictions.

It has been alre-.md not-cc. 1.,-t by- Jurie, l',4 the u.e of Field
Adjusters in the initial inves-,i-Ltior. .r-c ad.j;,st.ient of comr'rlints had
been so increased th.t '.el. L:.ttr _.. sz.7- estsi the ab.ndonennt of the
first letter of notificaLtio, to t:s. rezn-on':ent in favor of pn infor'.ial
invitation to an. olfice in.tnrei-'.. r n lancnm.lno c.-C visit b- tle Field
Adjuster to th2. resronal.i's tl..ce of business. (*( In connection with
the latter alternative, Field Lett-r 125 s"id,,

"In tc res-."2tin-- inte-r'.'ie' ho-'rs of vor:k and. scale of
x'ares are dircus-01 r..i t... situation c-n Lbe cleared
or adjusted frn;-i': an-" without resentm:ent, since the
,-LLuster has th 1,oU- .,.
*&-Qustor 1r theC orortunit;, to s-e'C,: tiw en,-,lo:'erts
roorperrtion before he h-s built uu an attitude of
eseitnment Laio. defensiveness." ( **)

Thus, it is seen that Field L..tter 125 conteMnl-ted that the initial
steps toward the adjust.mncnt c.f cases should-. be ta:c-en by, the Field Ad-
justers. This attr..ins s iTrnificr.nce as a t o-en of the c':ances ,going on
in the Comoliance Division, its policies, methods of organization, vrhen
it is compared rithi thLe oricin-,l provision of Bulletin io. 7, previously
mentioned, and. office interviev.-s.


(*) Supra, p. 67 ; Field Letter 125, p. 11

(**) Ibid, p. 12.


9861






-7?2-
At this point, brief mention should be made of the appointment
of Resident Field Adjusters, as another evidence of the movement to
direct adjustment efforts as much as possible to inspections and in-
terviews at the sits of the violE.tion, the respondent's place of
business. This was in larnony with the statement of William H. Davis,
National Compliance Director,

"The plan provides for at least forty-eight State
Directors. In certain of the large states, it may be
necessary to have branch offices. These State Directors
will have r, sufficient staff of assistants and adjusters
to develop the facts an. adjust complaints by education
and information at the platcD ?-here the complaint arises,
as far as is practicable.---

"---it may become necessary for State Directors to place
representatives out i the field in co-imunities where
a great volume of mu.LaCjusted. complaints arise." (*)

The ideas embodied in the above quoted statement received recog-
nition after experience in code compliance vorlk had brought about the
realization on the part of field e:--ecutives that a proper under-
standing of compliance problems necessitated their becoming familiar
with actual employment and competitive conditions. While a part of
this process of attaining familiarity with the problems included actual
contact with employ-ers and norl-ers at the -olace of employment, and, in
the case of trade practices, with competing busin-ess men, the time
element involved in the exercise of executive functions precluded the
needed comp-ehens: onts being based entirely on first-hand knowledge.
Consequently, the State Offices were practically constrained to de-
pend largely on the reported experience of their field agents for their
factual backgrounds.

Therefore, afer the definite indorsement placed on their use by
Field Letter 125, it .-.s natural that the Field Adjusters were intrusted
with a large proportion of the public relations york, in connection with
the adjustment at cases. Included in this tera were the creation of in-
dustrial good will tc'--r d the State Office, nLnd the education of em-
ployers to their oblij-tio-is :.dr. to the ,i .s and benefits of NRA.. Many
offices instructed the0..7 .djs. ters to e;:ert themselves to create the im-
pressions of fairness en-. of C.esire to assist the employers in their
difficult ties. Likewise. it was a stan a:'. duty of Field Adjusters to aid
the employers in installing anL maintaining adequate sets of records. It
was also cua',;tomar:. to -dvise end help in preparing petitions for exemption,
etc., where co-'idc-jlL ":, the State Offif:e to be justified. It is not to
be underm-'ood by titis last thEt thl Sta?'e Offices tool: the initiative in
this res-ect, ot-hsr then by 5 -is.'g, respondents of their rights, where
necessary. By a careful, slow building up of a reputation for fairness,
and by the equally gradual creation of good will through education, the
State Offices pursuing, this policy were able to gain sufficient prestige
to partially offset a shifting public opinion and the enforcement failures
in the courts.

(*) Iote p.69 supra.


9861






As a part of the cyTcle of development, the ro',inc popularity of
tl'i mnss conplir-ncc system of operation necessarily )dJed weight to the
already( stron.:; emiha.is on the use of Field Adjusters.

IP Avist, 1-2`4, Field Adjuster.3 received an added minor f.ixnction.
By Office Order it was es.;.Tlivhcd that Divisional and Dej:ut,- Aiminis-
trators having before them petitions for .xrn options, etc., rmiht re-
quest the Chief of the (Comnliance Division to assign field investiga-
tors to discover nn, pertine-nt an*. desired factual data. (*) Althoigh
definite fi -ures concorninj this use of rield Adiusters arc not available,
it is not I liov2"d that this proc-.Lxrc ever attained real importcmnce
generally. It is rientionr.d chiefly as an illust,'tion of the trend
of o-pinion on this general subject.

Althou.-h the rain tendec s in conformity with the suggestion
in Field Letter 1:.., to initiate actica on a complaint by nncing a
field investigation, nevertheless c.,r:espondence and office interviews
continued to be used in a large number of the State Offices, mainly,
in connection with cases involving; the service trades and other in-
trastate industries where it was co.ire& to conserve the time of the
Field Adjusters in the intere.3,ts uf efficiency. In at least one office
L*) itw s tep a tie
(* it was the practice tch:rt h out the history of compliance ac-
tivities to rely chiefly on office interviews. However, this last was
due to unusual circumstances and. cannot be ta2:en as representative of
all the field offices.

Section 4 The direction and supervision of Field Adjusters. Closely
allied with the develcpaent of the internal organization of field
offices, dcliscussed in the precedi::' chapter, and the increased use of
Field Adjusters in compliance worl-, just mentioned, is the topic of the
control and supervision over the adju-stment staffs of the various
offices. It is. obvious that, in ar. or--.nization in which the actual
investigation ani adjustment of cases was delegated to subordinates,
on whoce individual judgment, discretion and tact much reliance was
necessarily placed, it w.s of prime importance that the executive staff
of the field office should devise some thorouih-7oing and workable
system of supervision and control. This problem of the direction and
supervision of the daily activities of Field Adjusters did not begin to
have significance until about the late spring of 1934, because the
occasion f -- the development of this phase of intra-office organization
had not ye arisen. (***) However, with the developments in compliance
procedure .'ich brought the use of Field Adjusters to the fore, the same
experience that had pointed out the fallacies in the original organiza-
tion scheme of Bulletin No. 7 sho-Ted the necessity nf the Labor

(*) Office Order 107 (A-u.ast 4, 1934). Reiterated in Office Manual,
I 1 -3233.3.
(**) The Hew Yor.: City Office. Here the extreme concentration of
industry in a relatively: small area, the presence of a large
number of Code Authority offices, and the existence of other
local factors and characteristics contributed' to'make this
the most effective procedure.
(**) For the reason tha.t few Field Adjusters were ;pp6inted before
that time.. See Chapter IV, "The Origin and Development of
Field ,Offices," supra.


9861


-73,





-74-


Compliance Officer's organizing, directing and supervising the efforts
of the persons under him, to vwhmr had been f.elegatcd the task of carrying
out his broad functions of obtaining labor compliance. (*)

However, even as early as Bulletin No. 7 some provision was made
which included the activities of Fiel-. Adjusters in the general organi-
zation plan. It was there provided thrt the Labor and Trade Practice
Compliance Officers should be responsible for the assignment rcf cnMr-
plaints to their Field Adjusters and for the sixoervision of their
activities in making; necessary investigations. Field Adjusters were
also to make daily and weekly surmaaries of their activities in addition
to reports on each complaint handled b,. them. (**) In addition to
these general instructions, there was prescribe. a form for the Ad-
juster's report.(***) This report fc,'-m included questions, concerning
the name and address of the ewalover, the naiae and position of the
person interviewed, the nature of thie records examined, a description
of the violation discovered, the ei.r'loyer's attitude andc any statements
made by- him, and the Adjuster's reconmendations for further disposition
of the case. There were also in Bulletin 1'To. 7 (**) and in the form
designated as "Instructinns to 1TRA Adjusters", (*'***) general state-
ments of the method of approach to be taken by Field Adjusters in in-
terviewin) employers. Theze instructions stressed the fact that the
Field Adjuster had no authority to require the production of records
or the furnishing of information.

At first glance, it appears that the provisions for the direction
- and supervision nf Field Adjusters, mentioned above, served as an
adequate treatment of tfe subject. However, it must be remembered in
this connection that there were few Field Adjusters on the State Office
staffs at this time andc. their use was limited by Bulletin No. 7 to
supplement the t',o more popular methods of adjustment, namely, corres-
pondence and office interviews. (**"***) It should be noted also that
there was no clear provision for a system of initially training Field
Adjusters and of critically reviewing their work. Because of the
relative unimportance of this class of personnel in the general corm-
oliance procedure provided in the early 'eriod under the State Office
system, and also due to the generally trese or-anization and the intra-
office jurisdictional difficulties existing durin- third tage of develop-
ment, little attention was actuallL,-' paid. by the Stat, CGTfices to the
previously- described instructions and to the use of the Adjuster's
report form.(*****)


(C*)






(**)
(* *)n
/ |<*** '


As pointed out in Chin tcr IV, Section 4, in the late spring
and earl- summer of 1934, whe-i the probler.i of supervising the
Field Adjusters beca-ic imnortan-t, the actual organization
of field offices hod bein chnnii-ed so that the Adjusters were
placed under the Lebor Ccm'l-ia.ce Officer, instead of under
him and the Trade Practice Com;n'liance Officer, as provided
in Bulletin ITo. 7, p. 19.
Bulletin No. 7, page 19.
In IT1A Studies Special Exhibits Work Materials #77
Bulletin No. 7, pages 19 and 2.
A copy of this form is included in the appendices. It was
largely a restatement of the provisions in Bulletin No. 7.
Section 3, "The development of the use of Field Adjusters,"
p. 69, supra. See also Bulletin No. 7, pp. 15, 18-20.
Chapter IV, pp. 54-58.


9861





-7 F-


Coincidentally with the development of the internal or.,rnization
of tI.e various field offices and thle incre?.s&dc. emphasiss on the use of
Field_ Adjusters, t?.. various State" offices b;L an to d. "clop make-
shift systems for rcvievin:- and sut "rvising the work of their Adjusters.
Inasnuch as Field. Adja' ":--. c..Te to be used more in the labor pli -) of
ccEliico, the Cu of 'evolvin- th.s methods of control fell --..on the
L-.bo Ccr.,-ia::ce Offic,.rs. Thus, in some of the states the Ldjcsters
were required to fill cut m&--e coir1rehcnzive reports than the question-
naire form originally u'p.jl:iecd. (*) L.-'ise, there came into use in a
few of the offices "closure sheets" which were placed on top of the file
and which '-ere desi--n-r to contain a brief snmin)y of the history of the
case and its didco.sition, These "closure sheet ;'" the more com-
prehensive case reports required, were cofibined with a critical review
of the h.anLling of L,-achl individual complaint. In some offices there
were initiat-d systems for g ig the productivit. of inividuial
Adjusters, whiic', UexL:r with the.ro.view of individual cases, served
as a concrete method. fr a"nal'rig1 the effectiveness of the adjustment
staff. Con': 9que'Vlr, ,, fairly ade-a-.-e ch1-i: on the application of
standards e .1 policies c' .?djtpo:'b ,.,;,d invest -'tion could be made,
which serve as a basis for constrac&ive in:'rovements in operating
efficiency.

This problem of supervision ano. control, which was primarily a
mechanical one, l.,:d recognition inr. Field Letter 125 which made use of
the individual attempts of development, just mentioned, and passed"
them on to all the 1'ield. offices in te form of--estions. Field
Letter 125 provi.,ed more definitely for the assignment of work to the
Field Adjusters by the Labor Co r-.liance Officers. It also created
certaiii requirements for the necessary records on each case and made
suggestions as to the proper technique of investigation.

The effect of Field Letter 125 im this respect was to crystallize
the standards of v..o-k of the Field Adjurstcrs anCL thus to establish a
general measLsurin- rod for ju*.-iin_, whetherr or not a case had been
properly handled.

Forms also wviere prcvided b-, this Field Letter covering the in-
formation to be obtained fion both complainants an.i respondents,
records of interview held on particular cescs, abstracts from payrolls
and time records, and ;. d-.ily record of the productivity of each Ad-
juster. It 1w.s further cont"roted that the csse files Ehould include
complete reports on the: history of the case and detailed descriptions
of its investigation arind ajust.:ient. (**)

7Thile these inr.tr-'ctions o-,-id forns incl-.dec, in Field Lettar 125
do not appear to vary -rea.tl.- frr.,; t!._? si-iil.-r provisions of Bulletin
N'o. 7 and Icrms issued in connection; therevith, the real distinction
lies in th. ,i'iff'-ient applictior.. B, June, l....-1, whX. en the latter
instruction, were issued, the princiocle :sd been developed that Labor
Comolianca ."ficers were in com:let,.. e}'-& c:f the Field Adjusters,
subject onl; to the no!in-n.l supervision of t:e St.-te Directors. (***)

(*) See :.Tugo 74: supra.
(**) Field Letter 125, pp. 10, 13, 19-20, 22, 24, 25, 27, 31.
(**.) See Chapter IV, pp. S- supra.

9861





-73-


radical departures had been initiated from the original complaints plan
of pr-ocedure in that there r-as substituted for the notice of violation
and ensuing correspondence? unannounced visits by the Field Adjusters
at the resoondentts place of business. (*) Moreover, the policy and
standards of adjustment hac- been developed to include stress on resti-
tution and a thorouglmness in correcting all violations discovered by
the investigation of the respondent's business. (**) It 'as natural
that due to t-hese ch.nnes in procedural technique, methods of organiza-
tion, aneC. philosophies of adjustment, the prescription of new in-
structions on the direction of Field Adjusters' activities should have a
novel significance.

A further method of perfecting efficiency cf organization of ad-
justment staffs was proposed by Field Letter 125 in the holding of
regular staff meetings. It was suraested that these meetings be con-
ducted b:- the Labor Compliance tffisers about once a week, outside
regular working hours. They -7ere to te in the nature of round-table
discussions of current practical coholiance problems. Through this
means experience could be interchan ed, and the Labor Compliance Officer
would be given an added opportunity to instruct his staff. (***) While
the value of this plan, as a method of supervision and for the purposes
o7 training and instruction., was apparent, but few of the offices were
able to put it actually into effect. The constant demands on the time
of the entire adjustment staffs in the various State Officers was so
great, that the development of the idea was retarded and it was pre-
vented from coming into universally regular use. Suffice it to say,
that its inchote worth in improving the compliance machinery was
generally recognized by the field offices, and, wherever possible, it
was adopted at least in modified form.

It was also suggested that particular codes be assigned to in-
dividual Field Adjusters. This was to give the Adjusters an opportunity
to specialize. It was realized that where warranted by local factors,
it was desirable for the Field Adjuster handling a case to be familiar
with conditions in the industry under the code and to have established
lines of information from labor union officials, trade associations,
etc. (****) This sp-ecialization idea was tried in a number of the
offices following the issuance of Field Letter 125. In some it was soon
abandoned as impracticable for local use, while in other State Offices
it received fairly intensive application thereafter.

In the period that succeeded June, 1934, the various State Offices
continued to improve on the su7gsstions embodied in Field Letter 125.
While in soue of the offices fap.irly,- adequate methods of control and
supervision over Field Adjusters were finally devised, the goal of a
standard system for training the personnel, and so directing and super-
vising the activities of th3 adjustment staffs a.s to attain the greatest
efficiency and results, was never reached.

(*) See Chapter V, oop. 1
(**) See Chapter III, pp. :-l%, !.
(***) Field Letter 125, p. 28
(****)Field Letter 125, p. 29; Supplementary Memorandum No.l, p. 2.


9861





-77-

It is, however, worthwhile to mention the Fcneral lines along which
the develo-r%.n:t of these methods for improving the effectiveness of the
adjustmient staffs took place. Because details varied greatly with
inc.ividual offices, depLriin.- on the size of the staff, the voli.ui'- of
wor.:, the Der.on-il q.i ties of members of the executive and adjustment
staffs, p:u. other oeatsilc iac'.cs, this dLscussion necessarily mnrust be based
on :;-cnarl e::.jerience with the efforts of the field offices in this
direction.

In or. *r to attempt to insure the provre a-prlication of the nevwlyr
created st.r.rA of a:j'.:ztment, it b3c -.c the ( .'.ral rule that labor
and trade p -actice complaints could b, clocPad only on the approval of
the Lebor a.-d Trade Frrctice Complinnce Officers, respectively.

1ecaua-ce of the c:'.i--'e in internal organization of the field offices
at this time (*) the Ld-Lcr Compliance Officers ', can efforts to train
Fieli Adjusters in the proer techniques of investigation and adjustment.
Both new ai'1c0. old adjusters were required to learn thoroughly the prin-
ciples of lhFndlinj cases as set for-th in Field Letter 125. However,
there was little c'.,nce for a careir-l, intensive training period, H"ost
offices had large numbers of complaints pending, many of them several
weeks old wtth no action ever having been taken on them other than a
mere acMknowledgment sent to the co:mlainant. Consequently many newly
appointed Field Adjusters during this period were assigned to the
handling of complaints after only a very brief drilling in the fundamentals
of 1-2A rid after reo.lir- through B-ulletin 1Io. 7, Field Letter 125 and
several of the c-ees. The great majority of this new personnel, like
most menbcrs of the already existing compliance staffs, were totally
untrained in the type of work they were to perform.

This method, dictated by necessity, of immediately injecting the
new Field A-justers into the work probably was in keeping with the
theory that a good compliance technique could blct be developed from
actual experience. However, this procedure was undoubtedly a costly and
inefficient use of the limited facilities provided for the investigation
and adjustment of an overwhelming volume' of complaints.

As the size of the adjustment staffs grew, the Labor Compliance
Officers fo .nd themselves with no alternative but quickly to improvise
some rfay of correcting the evils of the lack of initial training of the
Field Ad-jus ers.

Several means had been indicated by Field Letter 125. The use of
daily and meekly production records served as an indication of whether
or not the Field Adjusters ware distributing their time in such a way
as to obtain the maximum results in the adjustment of cases. As a
supplement to these activity'.reports, the Labor Compliance Officers re-
vierTed the case files and reports on complaints handled by the in-
divid0tl adjusters.

Since it is reiaembered that the Labor Compliance Officers were
required personally to handle a fair proportion of the more important
cases in' addition to the full time tasks of planning labor compliance

(*) Discussed supra, Chapter IV, pp. .;.:.


9861






-78-
activities and training end supervising their staffs of adjusters, it
is apparent that such an arrangement was not adequate to take care of
the situation.

In some of the larger offices, recognition was given to the fact
that it was humanly impossible for the Labor Compliance Officers to
perform fully all these duties. In order to alleviate the situation,
it became necessary to appoint Assistant Labor Compliance Officers
and Chief Field Adjusters to whom were delegated many of the details of
the training of the adjustment staff and the assignment and review of
cases. B-- so organizing his functions, the Labor Compliance Officer
was enabled to devote more of his time to instructing individual ad-
justers on the proper investigation and adjustment of cases.

Through the knowledge gained from experience in handling com-
plaints and aided by the slow impm vement of the functional organ-
ization of various field offices, the Labor Compliance Officers were
able to raise gradually the standards of work for Field Adjusters.
Thus, in varying degrees during the fall and winter of 1934, the in-
dividual field offices evolved fairly effective systems of operation.
In those larger offices having a more complete staff, provision was
usually made for the initial training of new Field Adjusters by placing
them under the tutelage of experienced members of the staff. The re-
view of the case work of both old and new Adjusters was carried on by
the Labor Compliance Officer or his Assistant by inspecting completed
files and also by observing individual Adjusters during various stages
of the handling of the case.

A few of the offices compiled their own manuals and compliance
handbooks which were used primarily as substitutes for initial training
courses. The majority of the State Offices, however, continued to in-
duct now Field Adjusters into the work with no real attempt at prepara-
tory training. Partially to offset the failure to comply with the
necessity of primary training, there grow to be a tendency to raise the
qualifications for Field Adjusters by requiring a knowledge of account-
ing and a familiarity with general business practices, as well as ex-
perience in meeting the public.

A few of the offices paid particular attention to the use of a
record of the number of cases handled and back wages collected by in-
dividual members of the staff during stated periods, usually coinciding
with the bi-weekly reports of the field offices to Washington. Averaged
over a number of weeks, this type of individual adjustment record, when
weighted by careful consideration of local factors and the review of in-
dividual cases served as a fairly accurate indication of staff efficiency.
Likewise, in some of the State Offices, there was adopted the policy of
returning for rehan-dling those cases w"-ich the reviewing officer doomed to
be unsatisfactorily adjusted. This policy had a double aspect. The
pointing out of mistakes in individual cases as they arose taught the
Field Adjusters the proper compliance technique in such a forceful manner
that the same errors were not likely to reoccur. Also, in most offices
a natural spirit of rivalry existed among the Adjusters. This was a
logical consequence of the field office reporting system, under which each
state office felt itself to be on.constant judgment on the number of cases


9861




F-7 I


han.leod an' t. amount of back vaa--s collect. In a few offices, to
acccntuntc thC phy.-vholo-'ic.al effect of cl1Isifying a c.,.s p.s an un-
s-tis -.cto- djustmo t, a 'Lc.'orm.c1'Ia statir:i the errors which hp.d
b .e.: commnitted in the process of haxilin&- Jr 3 insertLd and madc a
perim.ic-at part of the c -*e file, vh'_e it mi:-ht be zcn by any
W,.zhi.i:ton official l't-r i.soccting the office.

The use of a plan for creating a desire amonC: individual memb-.rs
of tni adjustment staff to establish records in the quantity of work
handled was made- i-ncssary by the over incr.-asin- numbC2rof old com-
pl-ints on hpnd in most of the offices. -r th,- >!ast fall Of 1934, when
this p-oractice became in vogue in some of the office, it h;"i become
gonc:i.-.ly recognized that in order to arrive at a sound, pcr.minent basis
for operation, the State Offices would need to be free to direct their
own efforts without the hampering restrictions of the complaints plan
of crocodure. (*)

Therefore, there 7x.s an addo. motive for laying stress on the
quantity of -.':orlk accori.i"A shLi, as woll as on the quality of adjustments,
since in order to put the new plan of procedure into operation, the
onerous burden of unaJjust . cciplaints had first to be removed.

The individual adjust.;!int record plan wvas applied in varying forms
by different offices. Aithojohi thj "alu-e of its use as a means of-
keeping check on indaivivlal efficiency, indicating needed personal
supervision and i:nrcp.sing the volccio of production, when properly
correlated uith s bt,.nCl.rds of quality, v s pOpa--.int, nevertheless, as
follo.vcd iL. some offices, the plan had n. quostio-nable effect on the
ac'o:3olislr:)n;t of the .o.l of imivorsal, lasting compliance. In this
connection there should be :ien-tio ied by way of illustration the plan
pursued by the San Fm.n:ioco and Los Anels, California State Offices.
In th-so two offices ala.ost the entire emphasis was laid on the amount of
back w.-ages collected by each Field Adjuster. In the San Francisco office
in particular there was maintai-.-31 a bulletin board on which was posted
the number- of c.ses handled and the amount of restitution secured by each
particular Adjuster. Obviously, the purpose of this was to promote the
natural competitive feeling of- members of the staff and to incite them to
increase their collection of bock wages so as to establish a record for the
office in this respect.

However, this practice was not followed to any considerable extent
in other State Offices because it wv-s generally believed that the amount
of b.ck r7ragos collected alone was an inaccurate gauge for individual
efficiency. Furthermor., it was felt- that by overemphasizing the resti-
tution feature of adjustment, there was a danger of tending to eliminate
two essential aspects of compliance work, namely, the creation of in-
dustrial good-will and the education of employers to their obligations
under the codes.

After the creation of the Recional Office system, the State Offices
were enabled to speed up the disposition of unadjusted cases. The new
procedure created for the handling of cases bearing recommendations for
the removal of NiRA insignia or for local action provided, that they
should be transmitted- by the State Offices to their re'sective Regional

(8) Supra, pp. 5:

9861





-80-

Offioes. (*) The close proximity of the Regional Offices to the field,
and the enlarged facilities for taking further actionn on unadjusted com-
plaints, tended to remove the previouss hesitancy of some of the State
Offices in referring cases to Washington. (**) As a result, there was
a relieving outlet for those large n-mbers of cases, in '-hich adjustment
efforts were unavailing, but which tiae field offices continued to carry
in their already too big inventories, because of a feeling of the practi-
cal uselessness of sending: them to 'Eshington for further action.

Thus also, being in fairly close touch with the Regional Directors
and the Regional Field Representatives' it was made easier to suspend
further effort on particular complaints or even entire trades or in-
dustries where a thorough knowledge of compliance conditions and past ex-
perience in adjustment work clearly indicated the probable futility of
further action. Included in this class were the service trades and other
strictly intra-state industries wnich had always been prolific sources of
complaints from employees, and which, under the inflexible complaints plan
of procedure had served to cause much wasted effort and misdirected use
of compliance facilities.

Through this latter modification of the official procedure, there
naturally came about a change in the standards of investigations and ad-
justment. This change manifested itself in further developments of the
plans in the various offices for the supervision and training of the Field
Adjusters. Thus, there tended to be a division in the assignment of cases
into classes which were rcted according to their relative importance to
the entire compliance program.

The cases which were important because of size, questions of policy
involved, or effect on the industry, were usually assigned to the most ex-
perienced and better Field Adjusters witn the Labor Compliance Officer
taking part in their actual handling. Complaints under unimportant and
intra-state codes, such as the service trades and the Retail Food and
Grocery Codes, were often handled by newer members of the staff or by
correspondence. The balance of the work, which may be called "routine"
cases, were assigned to the staff at lerge according to the plan in the
particular office.

Some field offices adopted definite classifications for types of cases
to effect an additional control over the time of the adjusters, the classi-
fication of any individual case, however, being subject to the recommenda-
tions of members of the staff. To further effectuate this purpose of
organizing the work so as to derive the maximum results in efficiency, a
few of the offices specified the amount of time to be spent on the different
types of cases. Thus, in the Missouri State Office, for example, im-
portant cases were given an "A" rating; cases in the service trades and
strictly intra-state industries, as well as in manufacturing and other im-
portant industries where less than five employees were involved, were
grouped under "C". All other cases were placed in a "B" class.

(*) Field Letter 190
(**) This hesitancy was due to the fact that there was much delay in the
disposition of cases sent to 7ashington and in some cases further
action took the form of referring the file back to the State Office,
perhaps months later, for new attempts at investigation and adjust-
ment. In such cases, the result of transmitting unadjusted com-
plaints to Washington often had a worse effect on compliance than if
the complaint were merely dropped, since it served to advertise the
fact that there was no practicable system for punishing violators.


9861




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