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Code of fair competition for investment bankers as approved on November 27, 1933 by President Roosevelt

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Title:
Code of fair competition for investment bankers as approved on November 27, 1933 by President Roosevelt
Portion of title:
Investment bankers
Creator:
United States -- National Recovery Administration
Place of Publication:
Washington, D.C
Publisher:
United States Government Printing Office
Publication Date:
Language:
English
Physical Description:
p. 509-516 : ; 24 cm.

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Subjects / Keywords:
Investment bankers -- Law and legislation -- United States ( lcsh )
Genre:
federal government publication ( marcgt )
non-fiction ( marcgt )

Notes

General Note:
Cover title.
General Note:
At head of title: National Recovery Administration.
General Note:
"Registry No. 1707-04."
General Note:
"Approved Code No. 141."

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Source Institution:
University of Florida
Rights Management:
This item is a work of the U.S. federal government and not subject to copyright pursuant to 17 U.S.C. §105.
Resource Identifier:
004930897 ( ALEPH )
645148988 ( OCLC )

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NATIONAL RECOVERY ADMINISTRATION






CODE OF FAIR COMPETITION

FOR



INVESTMENT BANKERS


AS APPROVED ON NOVEMBER 27, 1938
BT

PRESIDENT ROOSEVELT


1. Executive Order

2. Letter of Transmittal

3. Code


;L.`. UNITED STATES
GOVERNMENT PRINTING OF ICB
!c : WASHIJNGTON: 1983




Mar's nle byte Superintendent of Documents. Washingston, D.O. - Price 5 cents


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This publication is for sale by the Superintendent of Documents, Government
Printing Ofice, Washington, D.C., and by district offices of the Bureau of Foreign
and Domestic Commerce.
DISTRICT OFFICES OF THE DEPARTM~ENT OF COMM~ERCE

Atlanta, Ga.: 504 Post Ofi~ce Building.
Birminghamll, Ala.: 257 Federal Building.
Bostoni, M~ass.: 1801 Customhouse.
Buffalo, N.Y~.: Chiamiber of Commerce Building.
Chiarleston, S.C.:r Chamlber of Commerce Building.
Chicago, Ill.: Suite 1706, 201 North WVellsj Street.
Cleveland, Ohio: Chamber of Commeree.
Dallas, Tex.; Chambiler of Commerce Building.
Detroit, Mlichl.: 2213 First National Bank Building.
Boluston, Texs.: Chamnber of Commerce Building.
Indialnapolis, Ind.: Chamber of Commerce Building.
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Seattle, Wazsh.: 809 Federal Building.














Approved Code No. 141
CODE OF FAIR COMPETITION
FOR THE

INVESTMENT BANKERS

As Approved on November 271, 1933
BY

PRESIDENT ROOSEVELT


I


Executive Order

An application having been duly made, pursuant to and in full
compliance with the provisions of title I of the National Industrial
Recovery Act, approved June 16, 1933, for my approval of a Code
of Fair Competition for Investment Bankers, and hearings having
been held thereon and the Administrator having rendered Ihis report
containing an analysis of the said code of fair competition, together
with his recommendations and findings with respect thereto, and the
Administrator having found t~ha.t the said code of fair competition
complies in all respects with the pertinent provisions of title I of
the said act and that the requirements of clauses (1) and (2) ofE
subsection (a) of section 3 of the said Act have been met:
NOW, THEREFORE, I, Franklin D. Roosevelt, President of the
United States, pursuant to the authority vcested in me by title I of
the Nation~al Indust~rial Recovery Act, approved June 16, 1933, and
otherwise, do adopt and approve the report, recommendations, and
findings of the Administ~rator and do order that the said code of
fair competition be and is hereby approved.
FRANKLIN D. ROOSEVELT.
Approval recommended :
Hvoo S. rJOHNSON,
A administrator.
THE 77HITE HOUSE,
Novlemlber 27, 1933.


237i90"-244--1-09---- 33


(;T09)















NOVEMB~En 20, 1933.
The PRESIDENT,
The Wh'ite H~ouse.
Smn: I hiave thle honor to trainsmit herewith the report of the
Heal~rin on the Clode of Falir Comlpetition for Investment Bank-
ers condiuctedl in accordance withl the requirements of the National
Recovery Admlinistration, in the A~udlitorium, United States Chamber
of Commeirce B~uildingp, on November 6, 1933. The sponsor of this
Code is thle Investment Bankercs Associationn of America. Although
its present membershiip consists of only 302 out of some 6376 security
dealers, these members comprise the leading investment houses of the
UTnited States aind Canadla. For the yecar 1932 thie business of mem-
bers of the Association approximatedd 90 percent of the total volume
according to reliable r~ecords.
It is important to note that thle uinderriliting business of invest-
mient bankilingr has dleclinied to a negligible amiount at thiis time. This
may b~e attributable to various causes and particularly to the excess
flotation of new securities during the years culminating with 1929.
In tha~t p'eriodt undterwriting houses kieenly competed in combing the
fieldl for new issues and abnormanlly large sales or~ganizations were
created by the dealers to dispose of the securities. Trade practices
developed which resulted in the enactment of the Securities Act of
1933. The investment bankers definitely r~ealize the need for fair
pract ice provisions to govern their business and at their recent annual
convention decided that aldeqluate prov-isions be made a part of the
Code. They have voluntarily agreed to submit Fair Practice pro-
visions in a supplemnentary codle within ninety days of your approval
of this Code.
To this end a National Commnittee, comiposed' of twenty-two out-
standiing investment bankers under w~homi are seventeen regional
Group C'hirmien, is working ini conjunction with the officers and the
Bo0ardl of Governors of the Investment Bankers Association of
America. In addition invitations have been issued to a number of
Stalte Secur~ityr Comlmissioners andl others to collabora~te with the
National Committee. Trade Practices which will be filed will assure
the operations of thle Codle and will place the investment banking
business on a far coundter andl fairer basis thlan it has been in the
panst.
If in your judgmrent the Fair Tradle Pr~actice Provisions when sub-
mlittedl either eliminate enitirecly or correct thle abuises that affect the
pu"blic interest. thle f-low oif investmecnt capiital into business and
mnduitryv, which is nol essential elemlent. in thle Ircovery program, will
have been expedited.
(510)









Supplementary data submitted by the Association in regard to
employment and watges revealed a startling contrast to the prevadl-
ing inactivity in the investment field. A wide and thorough canvas
of members as of November 1, 1933, who were in business on Novem-
ber 1, 1929, showed that there were 15,070 employees in these houses
on November 1 this year as compared to 24,406 employees on the
corresponding. date in 1929, or a reduction in numbers of 38%~.
The canvas further showed a wide divergence for a. number of
groups in the average reduction in wages of employees receiving,
$150.00 per month or less on November 1, 1929, compared with the
amounts they received on November 1, 1933. One group reported
average increases of from 1,/2%0 to 45%, while the lowest group rec-
ported decreases over 30%0. On the basis of the complete survey it
seems reasonably clear that the average net reduction in wages of
all employees receiving $150.00 per month or less on November 1,
1929, will not exceed 15%7.
The Labor provisions of this Code coincide with those of the
Code for Stock Exchange Firms because of the inseparable rela-
tionship of the two businesses. Here again the provision for over-
time payment is, in fact, of minor importance compared to the
known generosity of employers to employees during prosperous
periods.
The only available record as to the volumne of the investment
banking: business is in the compilation of capital issues publicly
offered. Using figures taken from the table submitted, the 1929 vol-
ume of such financing exceeded $;11,500,000,000 as against a possible
$1,000,000,000 for 1933. The severity of this shrinkage in business
may be better understood when it is realized that t.he estimated
$1,000,000,000 of publicly offered issues is only 25%0 of the volume
done in 1920, the low point of the previous depression, and only
about 10%o of the average volume of t~he years 1927, 1928 and 1929.
In no year since 1919, except 1932 and 1933 has the volume been
less than $4,000,000,000, hence it is reasonable to assume that the
normal annual capital requirement of the country is somewhat in
excess of that figure.
From a summary of the foregoing, it will be seen that although
the volume of recorded business decreased over 90%0 in the past four
yers he number o~f emprloyPee deP~cnrea butlr 38~, and the wages
of employees mentioned decreased on an average only 15%. Prob-
ably no other business in the country finds itself in a comparable
position. The members do not hesitate to say that the average
investment banker is today maintaining an organization far in
excess of his present needs, due partly to the need for technically
trained employees, even though their retention has not been justified
during the past two years.
No objectors from the business or from the public appeared at
the Hearing, nor have any objections since been filed.
The Code has been accepted by the Investment Bankers Associa-
tion of America and has received the approval of the several Ad-
visory Boards of the National Recovery Administration with the
exception of a qualification by the Consumers' Advisory Board,
included in this report.


1;
i"'
.*


i:Ii


511






512

I find that the Code complies with the pertinent provisions of
clauses (1) and (2), subsection (a) of Section 3 of the National
Industrial Recovery Act. I r~ecomlmend, therefore, that you approve
the Clode of Fair C~ompetition for Investment Bankers as submitted
herewith.
Respectfully,
Hnaa S. JoHNson,
Ad ministrator.










CODE OF FiAIR COMPETITION
FOR THE
INVESTMENT BANKERS


PREA6BL;E

To effectuate the policy of Title I: of the National Industrial Re-
covery Act, the following provisions rare established as a Code of
Fair Clompetition for Investment Ba~nkers.
ARTICLE i- DEFINITIONS

(1) The term investment banking business as used herein shall
mean the business of underwriting or distributing issues of bonds,
stocks, or other securities, or of purchasing such securities and offer-
ing the same for sale as a dealer therein, or of purchasing and selling
such securities upon the order and for the account of others; pro-
vided, however, that the term "L investment banking business shall
Snot include transactions on regulal organized exchlanges but such:
term shall include all business reatn to such transactions to the
extent that such business is not conducted by a member of such'
exchange or by any person or organization having the privilege of
any such exchange for itself or any of its partners or executive
offcers.
(2) The termn employer as used herein shall include every
natural person, co-partnership, corporation, association, or other
entity that is engaged in doing any investment bankingg business.
If the major part of the business of a~ny employer consists of any
business other than investment banking business which other busi-
ness is governed by any other code or codes, such employer shall not
be bound as to his investment banking business by the wage and
hour provisions of this Code, but shall be governed as to his invest-
ment banking business by the wage and hour provisions of such
other code or codes; but all other provisions of this Code shall apply
to such employer as to his investment banking business.
(3) The term emplZoyee as used herein shall mean anyone
employed by any employer, regardless of the nature or method of
payment of his compensation.
~(4) The term "Administrator as used herein shall mean the
Adnunistrator appointed by the President of the United States under
the National Industrial Recovery Act.
(5) Population for the purposes of this Code shall be determined
by reference to the 1930 Federal Census.
ARTICLE II--LABOR PROVISIONS

(1) ~(a) Employees shall have the right to organize and bargain
collectively through representatives of their own choosing, and shaHl
(513)






514


be free from the interference, restraint, or coercion of employers of
labor, or their agents, in the designation of such representatives or
in self-organization or in other concerted activities orthe purpose
of collective bargaining or other mutual aid or protection.
(b) No employee and no one seeking employment shall be required
as a condition of emlploymlent to join any company union or to re-
frain from joining, organizing, or assisting a labor organization of
his own choosing. I
(c) Employers shall comply with the maximum hours of labor,
minimum rates of pay, and other conditions of employment, ap-
proved, or prescribed by the President of the United States.
(2) No person under sixteen years of age shall be employed by
any employer; provided, however, where a state law requires higher
m1inmum age, no person below the age so specified shall be employed
within that state.
(3) (a) No employer shall employ any person for more than 40
hours in any one weekr, provided, however, that in order to meet
contingencies which cannot be anticipated and over which t~he em-
ployers have no control, the said hours of employment may be in-
creased, to meet such contingencies, but in no event shall such em-
ployees work more than a total of 44 hours per week averaged over
a period of four (4) months without the payment of overtime.
(b) The maximum hours fixed in the foregoing paragraph (a)
shall not apply (1) to guards and watchmen employed at night to
safeguard securities or assets (provided such guards and watchmen
do not wvork more than six (6) days each week), or (2) to partners
in any copartnership, or (3) to outside salesmen, or (4) to employees
in a managerial or executive capacity or 2n any other capacity of
distinction or sole responsibility who receive more than $35 per wmeek.
(c) No employee, except outside salesmen working solely on a
commission basis, shall be paid (1) less than $16 per week in any
city of over 2,000,000 population; (2) less than $15 per week in any
city between 500,000 and 2,000,000 population; (3) less than $14.50
per week in any city between 250,000' and 500,000 population; (4) less
than $14 per week in any city between 2,500 and 250,000 population;
and (5) in any town of less than 2,500 population all wages of em-
ployees shall be increased by not less than 20%0 provided that this
shall not require the payment of wages in excess of $19 per week;
provided, however, that where a State law provides a higher mini-
mum wage than is provided in this Code, no person employed within
that State shall be paid a wage below that required by such State
law.
(d) All employees, except employees mentioned in paragraph (b)
above, if employed for more than a total of 44 hours per week aver-
aged over a period of four (4) months, shall be paid for all such
excess time of employment at the rate of 1331/3ro of tlhe regular
hourly rate at which such persons shall then be employed; but re-
gardless of the calculation of such overtime averaged over a four
months' period, all such employees if employed for more than 48
hours mn any one week shall be paid for such timle in excess of 48
hours at t~he rate of 1331m% of the said regular rate. The amount
paid for overtime for any weekly period shall be credited on the
amount of overtime paid at the end of any four months' period, and






515


in computing the amount of overtime to be paid as herein provided
the regular hourIy rate at which anly person shall be employed shall
bea determiried by? dividing the amount per week wluich he shall regu-
larlyv be paid by 40o. .
(e) The 'wages of employ~ees exceptt employees mentioned mn the
foregoing subdivisions (2), (3), and (4) of paragraph (b)) being
psid on September 1, 1933, in excess of the established mmlmum
shall not be decreased, notwithstanding that the hours worked mn such
employment may be hereby reduced.
ARTICLE III-AlDMINISTRATION

(1) To cooperate withl the Administration in the administration
of this Code there is hereby constituted an Investment Bankers Code
Committee. Such Commnittee shnUl consist of three members ap-
pointed by the President of the Investment Bankers Association of
Amnerica; two members chosen by a fair method approved by the
ALdministrator to represent employers not members of the Invest-
ment Bankers A~ssociation of America; and a representative or repre-
sentatives without vote appointed byv the President of the United
States. The five voting members of said Comumittee shall be ap-
pointed or.chosen from assenting~ employers.
(2) The Investment Bankters Code Committee herein provided for
shall be the representative, body from the employers subject to this
Code, to act on their behalf in t~he administration and enforcement
of this Code, and shall hafve, in addition to the specific powers herein
provided for, all general powers necessary for such administration
rand enforcement; such general and specific powers shall be at all
times subject to the right of the Aldministrator to veto or modify any:
action taken by such Clommittee.
(3) The Invest~ment Bankers Code Committee may from time to
timle appoint such committee or committees as it mlay deem necessary
or proper to carry out its p~owers andi duties under the Cod n
may delegate to any such committee such of its powFers and duties
as it mlay deemn necessaryl and prouper to effectuate such purposes.
The representative or representatives appointed by the President of
the United States shall be given notice of all meetings of any com-
mitee r cmmites apoitedbythe Investment Bankers Code
Committee and shall have the righ opriiae ihu oei
the activities of such committtee or committees.
(4) The Investment Banklers Code Conulnittee may from time to
time present to the Administrator recommendations which will tend
to effectuate the administration of the provisions of this Code and
the policies of theNational Industrial Recovery Act.
(5) In order to keep the Pr~esident of the Ujnited States and the
Administrator informed as to the observance or nonobservance of this
Code, each employer shall prepare and file with the Investment
Bankers Code Conuinittee, at such time and in such mn~nr~lc as said
Committee may prescribe, statistics covering the numil~. ofi persons
employed, wage rates, hours of woorkring, and such1 other dat3Por
information as the Investment Bankers Code Committee mlay required
provided such other data or information shall also be required by the
Administrator. All information so furnished shall be treatedl as
confidential and used only for thle sole purpose hierein set forth.







516


(6) The expenses of administering this Code shall from time to
time be equitably assessed and collected by the Investment Bankers
Code Committee from employers assenting to this Code in accord-
ance with a. plan to be approved by thle Ad~ministrator; but no such
employer shall be liable for any payment in excess of said assessment.
(7) Any employer may voluntarily assent to this Code by signing
and filing his assent with the Investment Bankers Code Committee,
No. 33 South Clark Street, Chicago, Il'linois.
AnnICLE IV-FAIR TRADE PRACTICEs
WVithin 90 days after the approval of this Code, the Investment
Bankers Code Committee shall submit, in accordance with the pro-
cedure set forth in paragra h (1) of Article V, supplementary
provisions relating to fair tra e practices.
AnnIcLE V--AMENDMENTS AND TERMINATION
(1) Any employer assenting to this Code that may hereafter desire
to have the Code amended or any supplementary provisions added
shall take the following procedure: Propose the amendmlent to the
Investment Bankers Code Clommittee which shall, if a majority of
the Committee shall approve the proposed amendment, submit; it to
a meet~ingr of the eployerC~PPs anssntingr to this Code especially called
for that purpose upon due notice; and if at any such meeting a
majority of such employers shall be present or represented and if
a majority of such employers as are present or represented at said
meeting shall vrote in favor of the adoption of such proposed amend-
ment, such amendment shall be submitted by the Investment Bankers
Code Committee to the President of the Unitedl States for approval,
and such proposed amendment. shall take effect as a part of this Code
upon such approval thereof by the President of the United States.
Employers voting on such amendments as above provided may vote
in person, by proy in wEriting, or may vote in writing without being
personally~ present.
(2) This Code shall continue in effect as long as the National
Industrial Recovery Act shall be in effect, but in no event after
June 16, 1935, and shall in all respects be subject to the provisions
and conditions of the National Industrial Recovery Act.
(3) This Code and all the provisions thereof are expressly made
subject to the right of the President of thle UInitedl Stat~es, in accord-
ance with the provisions of subsection (b) orf section 10 of the Na-
tional Industrial Recovery Act, from time to time to cancel or
modify any order, approval, license, rule, or regulation issued under
Title I: of the National Industrial Recovery Act, and specifically,
but without limitation, to the right of the President of the United
States to cancel or modify his approval of this Code or any condi-
tions imposed by him upon his approval thereof.
ARTICLE VI-EFFECTIVE DATE
This Code shall become effective on the second Mondlay after its
approval by the President o~f the United States.
Approvedl Code No. 141.
Registry No. 1707-04.






















M 11





UI VERI T OF FLORIDA111 11111111111111111111111




Full Text

PAGE 1

Approved Code No. 141 Registry No. 1707-04 NATIONAL RECOVERY ADMINISTRATION CODE OF FAIR COMPETITION FOR INVESTMENT BANKERS AS APPROVED ON NOVEMBER 27, 1933 BY PRESIDENT ROOSEVELT UN,v. 011•FL L\1-1. Executive Order 2. Letter of Transmittal 3. Code UNITED STATES GOVERNMENT PRINTING OFFICE WASHING TON : 1933 For sale by the Superintendent of Documents, Washlngto!l, D.C . -Price 5 cents V

PAGE 2

Thi publication i . for sale by the Superintendent of Documents, Government Printing Office, 1\ ashington, D.C., and by district offices of the Bureau of Foreign and Dome tic C ommerce. DISTRICT OFFICES OF THE DEPARTMENT OF COMMERCE Atlanta, Ga.: 504 Po t Office Building. BirminO'lrnm, Ala.: 257 l!"'ederal Building. Bostou, Ma. . : 1801 Cu tornhouse. Buffalo, L '.Y.: hamber of Commerce Building. Charle o n, S.C. : Chamber of Commerce Building. Chica0o, Ill. : Suite 1706 , 201 'orth Wells Street. Cl eveland, Ohio : Chamber of Commerce. Dallas, T e x. : Chamber of Commerce Building. D etroit, l\I ich.: _:...13 First National Bank Building. Hou ton, Tex. : Chamber of Commerce Building. Indianapolis, Ind.: bamber of Commerce Building. Jac k onv ille, Fla.: Chamber of Commerce Building. Kan a City, l\10.: 1028 Baltimore Avenue . L o Ancle , Calif.: 1163 South Broadway. Louisville, Ky. : 408 F ederal Building. M mphi., Tenn.: 229 Federal Building. l\I inn apoli. , Minn. : 213 Federal Building. New Orlean , L a.: R oo m 225-A Customhous e. 1 ew York, N.Y.: 734 Cu tomhouse. Norfolk, Va.: 406 East Plume Street. Philadelphia, Pa.: 933 C ommercial Trust Burldi.ng. Pitt burgh, Pa. : Cbamb r o f Commerce Building. P ortlanc1, Oreg. : _15 N w Po t Office Building. St. L o u is, Mo. : 506 Olive Street. Sau Francisco , Calif. : 310 Custo1Phouse. S eattle, Wash.: 809 Federal Buihling.

PAGE 3

Approved Code No. 141 CODE OF FAIR COMPETITION FOR THE INVESTMENT BANKERS As Approved on November 27, 1933 BY PRESIDENT ROOSEVELT Executive Order An application having been duly made, pursuant to and in full complian c e with the provis ions of title I of the National Industrial Recovery Act, approved June 16, 1933, for my approval of a Code of Fair Comp etition for Investment Bankers, and hearings having been held thereon and the Administrator having rendered his report containing an analysis of the said code of fair competition, together with his r e comm endations and findings with respect thereto, and the Administrator having found that the said code of fair competition complie s in all r es pe c t s with the pertinent provis ions of title I of the said act and that the require m ents of clau s es (1) and (2) of sub s e ction (a) of se ction 3 of the s aid Act have been m et: No,v, THEREFORE, I , Franklin D. Roo s evelt, President of the United Sta t es, pursuant to the authority vest e d in m e by title I of the National Industrial Rec ov ery A c t , approv ed June 16, 1933, and otherwi se , d o adopt and approve the report, recomm e ndations, and fin lings of the Administrator and do orde r tha t the said code of fair com peti tio n b e and i s h e r e b y approve d. FRANKLIN D. ROOSEVELT. A pproval r ecommended : H UGH S . ,J OHXSO X Ad11iinis trator. THE vV HITE H o C-S E N ov e mb e T P,7, 1 9 33 . 23790-:M4 1 0 9 -33 ( 5 0 9 )

PAGE 4

N OYEl\CB}~R ,., 1933 . The RE IDEA:rT The n hite House. m: I hav:, th h nor to tran mit h r , ith the r p rt f the Hearing on the od of Fair ompetition for I1n :tment Bank-r onclu c t l in a ordance with the requir 111 nt f the .,. ational Reem-r \. lministration, in the Au litorium, nited tat s hamber of omn~er e Building on N ovemb r G 1933. The pon r of thi Code i the In-, e tment Bankers Association of meri a. Although its pre ent membership con i ts of only 392 out of om 6 76 se urity deale r~, the member com1 ri e th 1 ading inv tm nt hou. N of the Unite l tates and Cana la. For the} c, r 19 3 2 the bu ine of member f the A ssociati n ap1 roximated 90 per ent of the total volume ac or
PAGE 5

511 Supplementarv data submitted by the A ssociation jn regard to employment ancf wages revealed a startling contrast to the prevailing inactivity in the investment field. A wide and thorough canvas -of members as of November 1, 1933, who were in busine ss on November 1, 1929, showed that there were 15,070 employees in these houses on N overnber 1 this year as compared to 24,406 employees on the corresponding date in 1929, or a reduction in numbers of 38%. The canvas further showed a wide divergence for a number of groups in the average reduction in wages of employees receiving, $150.00 per month or l ess on November 1, 1929, compared with the amounts they received on November 1, 1933. One group reported average increases of from . % to 45%, while the lowest group reported decreases over 30% . On the basis of the complete survey it seems reasonably clear that the average net reduction in wages of all employees receiving $150.00 per n1onth or less on November 1, 1929 , will not exceed 15% . The Labor provisions of this Code coincide with those of the Code for Stock Exchange Firms because of the inseparable relationship of the two businesses. Here again the provision for overtime payment is , in fact, of minor importance compared to the known generosity of employers to employees during prosperous periods. The only available record as to the volume of the investment banking business is in the compilation of capital issues publicly offered. Using figures taken from the table submitted, the 1929 vol ume of such financing exceeded $11,500,000,000 as against a possible $1,000 , 000,000 for 1933. The severity of this shrinkage in business may be better understood when it is realized that the estimated $1,000,000,000 of publicly offered issues is only 25% of the volume done in 1920, the low point of the previous depression , and only about 10 % of the average volume of the years 1927, 1928 and 1929. In no year since 1919, except 1932 and 1933 has the volume been le ss than $4 , 000 ,000, 000, hence it is reasonable to assume that the normal annual capital requirement of the country is somewhat in excess of that figure. From a summary of the foregoing, it will be seen that although the volume of recorded business decreased over 90% in the past four years, the number of emp loye es decreased but 38%, and the wages of employees mentioned decreased on an average only 15% . Probably no other business in the country finds itself in a comparable position. The members do not hesitate to say that the average investment banker is today maintaining an organization far in excess of his present needs, due partly to the need for technically trained employees, even though their retention has not been justified during the past two years. No objectors from the bus ine ss or from the public appeared at the Hearing, nor have any objections since been filed. The Code has been acc ep t e d by the Investment Bankers A ssoc iation of America and has r ece ived the approval of the severa l Advi ory Boards of the National R ecovery Administration with the exception of a qualification by the Consumers' Advisory Board, included in this report.

PAGE 6

12 H H . J TIT .L Aclm ,ini frator .

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CODE OF FAIR COMPETITION FOR THE INVESTMENT BANKERS PREAMBLE To effectuate the policy of Title I of the National Industrial Re covery Act, the following provisions are established as a Code of Fair Competition for Investment Bankers. ARTICLE I-DEFINITIONS (1) The term "investment banking business" as used herein shall mean the business of underwriting or distributing issues of bonds, stocks, or other securities, or of purchasing such securities and off ering the same for sale as a dealer therein, or of purchasing and selling such securities upon the order and for the account of others; provided, however, that the term. "investment banking business" shall not include transactions on regularly organized exchanges, but such term shall include all business relating to such transactions to the extent that such business is not conducted by a member of such exchange or by any person or organization having the privilege of any such exchange for itself or any of its partners or executive officers. (2) The term "employer" as used herein shall include every natural person, co-partnership, corporation, association, or other entity that is engaged in doing any investment banking business. If the major part of the business of any e mployer consists of any business other than investment banking business which other busi ness is governed by any other code or codes, such em.ployer shall not be bound as to his investment banking business by the wage and hour provisions of this Code, but shall be governed as to his investment banking business by the wage and hour provisions of such other code or codes; but all other provisions of this Code shall apply to such employer as to his investment banking business. ( 3) The term " employee " as used herein shall mean anyone employed by any employer, regardless of the nature or method of payment of his compensation. ( 4) The term "Administrator " as used herein shall mean the Administrator appointed by the President of the United States under the National Industrial Recovery Act. ( 5) Population for the purposes of this Code shall be determined by reference to the 1930 Federal Census. ARTICLE II-LABOR PROVISIONS (1) (m) Employees shall have the right to organize and bargain collectively through representatives of their own choosing, and shall (513)

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51~ be free fr m th int rf r n e r traint or r ion of employers of lal r. or their agent in th d . io-nati n f . uch r I r s ntutiye: or in If-r0anizati n or in oth r on rt 1 activiti for th purprn:P of oll tiv baroaining r oth r mutual a; l r I rot ti on. (b) o mpl an l no one, kino-mpl ym nt :hall b r quir d a a onditi n of mploym nt t j in an compan uni n or to refrain from joining, or;anizing, r a i tin a lab r rcranization of hi own choo in o-. (c) Employ r shall comply with th maximum hours of labor, minimum rat of pay and oth r on li ions of emplo m nt approved, or prescribed by the Pre id nt of th United tate . (2) o person under sixteen years of age hall b employed by any mplo er; provided however, where a tate law requires hiO'her minimum age, no person below the age so specifi d shall be employed within that state. (3) (a) No employer shall employ any person for more than 40 hours in any one week, provided, howe, er, that in order to meet contingencies which cannot be anticipated and ver which the em ployers have no control, the said hours of employment may be in creased. to meet such contingencies, but in no event shall uch em ployees work more than a total of 44 hours per week averaged over a period of four ( 4) months without the payment of overtim . ( b) The maximum hours fixed in the foregoing paragraph (a) shall not apply (1) to guards and watchmen employed at night to safeguard ecurities or assets (provided such guards and watchmen do not work more than six (6) days each week), or (2) to partners in any copartnership, or (3) to outside salesmen, or (4) to employees in a managerial or executive capacity or in any other capacity of distinction or sole responsibility who receive more than $35 per week. ( c) No employee, except outside salesmen working solely on a commi sion basis, shall be paid (1) less than $16 per we k in any city of over 2,000,000 population; (2) less than $15 per week in any city between 500,000 and 2,000,000 population; (3) less than 14.50 per week in any city between 250 000' and 500 000 population; ( 4) le s than $14 per week in any city between 2,500 and 250,000 popnlation; and ( 5) in any town of less than 2,500 population all wage of employe e s shall be increa ed by not less than 20 % proYid cl that this shall not require the payment of wages in exce of $1Z per week; provided, however, that where a State law proYide s a higher minimum wage than is provided in this Code, no per on mployed within that State shall be paid a wage below that required by such State law. (d) All employee , except employees mentioned in paragraph (b) above, if employed for mor than a total of 44 hours per we k averag 1 ov r a period of four ( 4) month , hall be pai l for Rll uch ex c ss time of mploym nt at the rate of 133 % of the r gular hourly rate at whi h u h p e rsons shall then be mployed but regardle . of he alculati n of such overtim av rao-cl o r a four month ' period, all uch employees if emplo. ed f r more than 4 hour in any one we k . hall b pai 1 for s u h time in ex e . of 48 hour at the rat of 133 1/ so/c of th saicl r gular rat . Th amount paid for oYertime for any w eld I e rio 1 . hall b credited on the am unt of overtime paid at the ncl f any f ur months' period and

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515 in computino-the amount of oYertime to be paid as herein provided the reaular hourly rate at which any person shall be employed shall be det~rmined by dividing the amount per week which he shall regularly be paid by 40. ( e) '.I'he wag~s. ~f em12lo yees ( except employees mentioned in ~he foregoing subd1v1s10ns (2), (3), and (4) of paragr~ph (b)) _being paid on September 1, 1933, in excess of the e tablished ml!lunum shall not be decreased, notwithstanding that the hours worked 1n such employment may be hereby reduced. ARTICLE III-Ao:inNISTRATION (1) To cooperate "ith the Administration in the administration of this Code there is hereby constituted an Investment Bankers Code Committee. Such Committee shall consist of three members appointed by the Pre ident of the Investment Bankers Association of America; two members chosen by a fair method approved by the Administrator to represent employers not members of the Investment Bankers Association of America; and a representative or repre sentative without vote appointed by the President of the United States. The five voting members of said Committee shall be appointed or chosen from assenting employers. (2) The Investment Bankers Code Committee herein provided for shall be the representative body from the employers subject to this Code, to act on their behalf in the administration and enforc ement of this Code, and shall have, in addition to the specific powers herein provided for, all general powers nece ary for such administration and enforcement; such general and specific powers shall be at all times subject to the right of the Administrator to veto or modify any action taken by s uch Committee. (3) The Inve tment Bankers Code Committee may from ti111e to time appoint such committee or committees as it may deem necessary or prop"'r to carry out its powers and duties under the Code and may delegate to any such committee uch o-f its powers and duties as it may deem necessary and proper to effectuate such purposes . The representative or representati,Tes appointed by the President of the United States shall be given notice of all meetings of any com mittee or committee s appointed by the Investment Bankers Code Committee and shall have the right to participate without vote in the activities of such committee or committee N . ( 4) The Investment Banke rs Code Committee may from time to time present to the Administrator recommendations which will tend to effectuate the administration 0 the provisions of this Code and the policies 0 the National Industrial Recovery Act. ( 5) In order to keep the President 0 the United tates and the Adinini trator informed a to the obserYance or nonobsenance of this Code ea c h emp loyer shall prepare and file with the Inve tment Bankers Code Committee, at uch time and in su c h ma1~11er as said Committee may pr cribe stati tics covering the nurnL , of persons employed wage rates hour of working, an 1 ~uc h othe r data or information a the Investment Banker Code Committee ma require, provided such other data or information hall al s o be required by the Ad1-:.1ini trator. All information o furnis hed shall be treated as confidential and u sed only or the sol e purpose herein set forth.

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516 \\ ithin 90 day after the approval of this Code the Inve tment Banker Cod ommittee hall ubmit in ac ordance with th pro cedure set forth in paragraph (1) of Article V, uppl m ntary proYi ions relating to fair trade practice . ARTICLE V-AMENDMENT AND TERMINATION (1) Any employer a sen ting to this Code that may hereafter de ire to have the Code amended or any upplementary provi ions added shall take the following procedure: Propose the amendment to the In e tment Bankers Code Committee which shall, if a majority of the Committee shall approve the proposed amendment, submit 1t to a meeting of the emptoyers assenting to this Code especially called for that purpo e upon due notice; and if at any such n1eeting a majority of such emplo ers shall be present or repre ented and if a majority of such employers as are present or repre entecl at aid meetina shall vote in favor of the adoption of such propo eel amendment uch amendment shall be submitted by the In, e tment Bankers Code Committee to the President of the United State for approval and s uch proposed amendment shall take effect as a part of this Code upon such approval thereof by the Pre ident of the United States. Employers voting on such amendments as above provided may vote in person, by proxy in writino-, or may , ote in writing without being per onally present. (2) This Code shall continue in effe c t a long as the ational Industrial Recovery Act shall be in effect but in no e,ent after June 16 1935, and shall in all re p ct s b a ubject to the provi. ions and conditions of the National Indu trial R e covery Act. ( 3) This Code and all the pro vi ion . th r of are ex pres ly made subj ect to the right of the President of th 1'nite 1 t a t in accor lance with the J?rovi ion . of s ub e t i o n ( h ) of ~ e tion 10 of the ational Inclu trial Reco very A c t fro m bnL to time to cancel or mo lify any order approval, licen e rul o r r egulation i uecl nn 1er Titl I of the ational Indu trial Re OY ry Act ancl pe ifi c ally but without limitation to the right of the Pr id nt f th nite l States to cancel or modify his approval of thi Cod or an condi tions impo ed by him upon hi appro, al thereof. ARTI LE 1-EFFE TIVE DA TE This ode hall be m e eff tiv on th approval by th Pre ident of th Unit c1 Approyecl 'od ~o. Hl. R e gi try N o . 1707 4. 0 ncla after its

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