Approved Code No. 403 Registry No. 619-01 

NATIONAL RECOVERY ADMINISTRATION 

CODE OF FAIR COMPETITION 

FOR THE 

BLEACHED SHELLAC 

MANUFACTURING INDUSTRY 

AS APPROVED ON APRIL 21, 1934 

( \ 

\ \ \ \ \ 

WE DO OUR PART 

UNITED STATES 

GOVERNMENT PRINTING OFFICE 

WASHINGTON: 1934 

For sale by the Superintendent or Documents, Washinaton, D.C. - - - - - - Price 5 centa 

V 
This publication is for ale by the Superint nclent of Documents, Government 

Printing Office, Washington, D.C., and by district offices of the Bureau of Foreign 

and Domestic Commerce. 

DISTRICT OFFICES OF THE DEPARTMENT OF COMMERCE 

Atlanta, Ga . : 504 Post Office Building. 

Birmjngham, Ala.: 257 lJ.,ederal Building. 

Bo. ton, :\fas . : 1801 ustomhou e. Buffalo, N.Y. : Cham! er of Commerce Building. Charleston, , .C. : Chamb r of Commerce Building. 

Cl ic:aμ;o, Ill.: Suite 17C6. 201 North ,Yells Street. 

Cleveland. Ohio: l1arnb r of Commerce. 

Dalla ·, Tex. : Chamb r of Commerce Building. 

D tl'nit, l\1ich.: 801 First .r ational Bank Building. 

Hon;;ton, T x. : Chamber of Commerce Building. 

Indi.:t1. apolis, Ind. : lam er of Commerce Building. 

Jnc·lrnonville, Fla.: Chamber of Commerce Building. 

Kan!';a:-- City, Mo.: 1028 B· ltimore Avenue. 

Lo Angeles. Calif.: 1163 South Broadway. 

LouLville, Ky.: 40 Federal Building. Memphi ·, T un. : 2~9 Federul Building. 

Minne l Ji.' I\finn.: 213 Federal Building. 

Ne, Orlean!',, L,.: Room 225-A, Customhou e. Nnv York. J.Y. : 734 Customhou e. 

Norfollc Va.: 406 Ea::;t Plume Street. 

Philadelphia. Pa.: 422 C-Ommercial Trust Building. 

Pitt bm\,h, Pa. : Chamber of Commerce Building. Portland, Oreg.: 215 New Post Office Building. 

St. Louis, Mo.: 506 Olive Street. 

San Francisco, Calif. : 310 Customhouse. 

Seattle, Wash. : 809 Federal Office Building. 
Approved Code No. 403 

CODE OF FAIR COMPETITION 

FOR THE 

BLEACHED SHELLAC MANUFACTURING 

INDUSTRY 

As Approved on April 21, 1934 

ORI)ER 

APPilOYIXG CODE OF FA.IR COMPETITION FOR THE BLK.\CHED HELLAO 

l\fANUFAC'I'URING INDUSTTIY 

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 approYal of a Code of 

Fair Competition for the Bleached Shellac Manufacturing Industry, 

and hearings having been duly held thereon and the annexed report 

on said Code, containing findings with respect thereto, having been 

made and directed to the President: 

TOvV, THEREFORE, on behalf of the President of the United 

States, I, Hugh S. Johnson, Administrator for Industrial Recovery, 

pursuant to authority vested in me by Executive Orders of the President, including Executive Order No. 6543-A, dated December 30, 

1933, and otherwise; do hereby incorporate by reference said annexed report and do find that said Code complies in all respects 

with the pertinent provisions and will promote the policy and purpo es of said Title of said Act; and do hereby order that said Code 

of Fair Competition be and it is hereby approved; provided, however, that the provisions of Article VII, Sections 3-a, and 3b, insofar as they prescribe a waiting period between the filing with the 

ode Authority (i.e. actual receipt by the Code Authority) and the 

effective date of revised price lists or revised terms and conditions 

of sale be and they are hereby stayed pending my further order. 

HUGH S. JOHNSON, 

A.drninistrat01· for Industrial R ecovery. 

Approval recommended: 

GEO. L. BERRY' 

Division A.dmvnistrator. 

w ASHINGTON, D.C., 

April ~1, 1934. 

54392°-482-137-34 (423) 
REPORT TO THE PR~SIU~NT 

The PnESIDENT, 

The White H 011, e. 

SrR: This is a report of the hearing on the Code of Fair Competition for the Blea hed Shellac lVIanufacturing Industry, conducted 

in Washington on January 18, 1934, in accordance with the provisions of Title I of the ational Industrial Recovery Act. 

LABOR PROVI, IONS 

The Code proYides that no employee shall be permitted to work 

in exces of forty hours in any one week or eight hours in any 

twenty-four hour period; prm·ided, however, that for a total of six 

weeks in any six months' period beginning on January 1 and July 1, 

employee.::; may be permitte l to work forty-eight hours in any calendar ,Yeek in order to tak care of easonal requirement .' Any 

factory employee who work in exce , of forty hours per week or 

eight hours per day shall be pai<l time and a third for such overtime. 

F rom the aboYe provi, ion there are excepted: Employees en-

(Taged in an executive or upervi ory capacity: who receiYe not less 

than thirty-five lollars per week. and out 1de sale m n; also engineer , firemen, mainten· nee and r 0 pair employees who may not 

,vork more than forty-fiye hours Wl ~kly except by the payment of 

time and a third for oYertime in excess thereof; truckmen who may 

not work in ex ·ess of forty-eight hours per week except by pavment at the rate of time and a third for time in exces thereo~; 

,, at hmen who shall have one full day off in each even day p 0 riod. 

The Code proYides minimum wages of forty cents per hour except 

for cl rical employees (not including out ide sales1nen) who hall 

be paid not less than fifteen dollars per week except that office or 

f'rrand boy between the age of 16 and 18 years, and not to exceed 

one to each plant may be paid not less than twelve dollar per 

week. 

Applying to wages above the minimum the Code provides that no 

member of the Industry shall reduce the compensation for employment now in exces of the minimum wages herein fixed (notwithstanding that the hours worked in such employment may be hereby 

reduce<l) and the pay for such employment shall be increased by an 

equitable adjustment of pay schedule . 

The Code include the recommended standard clauses on child 

labor, piece work compensation, reclassification of employees, application of State law , posting of the Code and a satisfactory clause 

covering standards of safety and health. 

OTHER PROVISIONS 

Bleached hellac is largely used in the manufacture of shellac varnish which is competitive with oil varnishes and nitro-cellulose 

(424) 
425 

lacquers. It is also used in various types of plastic products and as 

a stiffening and waterproofing agent in hats, coated papers and playing cards. The demand is therefore largely affected by general business conditions and the respective prices of shellac and various possible substitute materials. 

All of the "orange gum" used in making bleached hellac is imported from India. Shellac is traded in on exchanges in Calcutta 

and London but not in the United States although about sixty per 

cent of the production is consumed in America. The material is 

extremely speculative and is subject to sudden and acute price fluctuations through manipulations on the foreign exchanges. 

Price in 1925 ranged between 46 and 63 cents per pound. The 

high price of 1930 was 32.5 cents per pound, the low of 1932, 9.5 cents 

per pound. In recent months the price has varied as much as from 

10 to 19 cents per pound ·within a 10-day period. 

Ina much as deliveries of shellac in New York may not be made 

until two or three months after date of order, and orders are accepted 

only when accompanied by firm bank letters of credit, there is considerable financial risk involved in any long time conlillitments and 

the general practice in the industry is to cover each sale by a purchase 

of the same date. That is, business is largely done on a replacement 

basis. ontracts limited to three months' duration are in general 

use since it is very difficult, if not impossible, to secure commitments 

of orange gum for more than three months in advance. 

Competition within the industry is usually keen for available 

business. An indication of this is given by the high mortality of 

the firm in this field. "\Vithin recent years about half the members 

of the industry, including some of the largest, have undergone forced 

financial reorganizations. Nearly one-third of the present concerns 

have been in business less than one year. 

The above conditions in the Industry are reflected in the detailed 

and lengthy Fair Trade Practice provisions which are a part of the 

Code. They are the results of the efforts of the Industry to restrain 

excessiYe speculation in shellac and to eliminate practices that have 

aggra,ated the Industry's serious financial difficulties during recent 

years. 

The authorization to use repl-acement cost of raw materials in 

computing costs seems to be fully justified in view of the fluctuations 

in the co t to members of the Industry of the imported raw materials 

which rep re ent a high percentage ( usually over fifty per cent) of 

the total co t of the manufacture of the products of the Industry, 

and al o in view of the limited number of other items which have 

been authorized to be included in the cost determination. 

The shipping points mentioned in Article VII refer to the locations of plants and warehousing, and not to artificial " basing 

point " 

ECONOl\JIC EFFECT OF THE CODE 

There are in this Industry twelve companies with an aggregate 

capital today of about $2,600 000 as compared with $3,600,000 in 1929. 

The report of the Division of Economic Research and Planning 

states that in 1929 approximately four hundred persons were employed in the Bleached Shellac Industry. Questionnair~ returns 
426 

indicate that the number of factory workers decreased about twenty 

per cent from 1929 to 1932, but increased during early 1933, and 

compliance with the P re iclent s Reemployment Agreement brought 

the number of wage earners in com arable establishments appreciably above the 1929 figures. ,v or king hour were reduced from 

-forty-eight to forty per week. 

Minimum and a erage earning although les in dol ars in 1933 

were approximately equivalent in purchasing power to tho e of 

1929, and payrolls were slightly higher than in 1929. 

Some further improvements are anticipated through general operation of the Code provisions. 

FINDINGS 

I find that: 

(a) Said code is well cle .... igned to promote the policies and purpo · . of Title I of the National Industrial RecoYery Act, including 

remo ·al of ob truction to the free flow of interstate and foreign 

commerc which tend to dimini h the amount th 0 reof and will provide for the general welfare by promoting the organization of industry for the purpose of cooperative action among the trade groups, 

by in lucing an 1 maintaining united action of labor and management 

under adequate go,·ernmental sanctions and supervision, by eliminating unfair competitiv0 practices, by promoting the fullest possible 

utilization of the present productiYe capacity of in lustries by 

avoiding undue restriction of production, by increasing the con- sumption of inclu. trial and agricultural products through increasing 

purcha ino· power, by reducing and relieYing unemployrn.ent, by 

improYing .... tanclar ]s of labor, and by otherwi e r habjlitating 

industrv. 

(b) Said Industry normally employs not more than 50 000 em- ployee ; and is not clas ified by n1e as a major industry. 

( c) The code as approved complies in all respects with the pertinent proYi ion of aid Title I of aid Act, including without limitation Subsection (a) of Section 3, Subsection (a) of Section 7, and 

Subse ·tion (b) of Section 10 thereof; and that the applicant association i an indu trial association truly repre entatiYe of the aforesaid 

Industry: and that sail association impo es no inequitable restrictions on admi ... ion to membership therein. 

(cl) The code is not designed to and will not permit monopolies 

or monopoli tic practices. 

( e) The code is not designed to and will not eliminate or oppress 

small enterpri es and will not operate to discriminate again t them. (f) Those engaged in other steps of the economic proce s have 

not been deprived of the right to be heard prior to approval of said 

code. 

For these reasons this code has been approved. 

Respectfully, 

HUGH s. JOHNSON, 

A dminis t? ·at or. 

APRIL 21, 1934. 
CODE OF FAIR COMPETITION FOR THE BLEACHED 

SI-IELLAC :MA~ F ACTURL. G INDUSTRY 

ARTICLE I-PURPOSES 

To effectuate the policies of Title I o.£ the National Industrial 

Recovery Act, the following provisions are established as a Code 

o:f Fair Competition £or the Bleached Shellac :Manufacturing Industry, and upon approval by the Admini trator shall be the standard 

0£ fair competition for uch industry and shall be binding upon 

every member thereof. 

ARTICLE II-DEFI~ITIO::\'S 

SE TION 1. The term "Indu. try ' as u,sed herein means and includes the business of directly or indirectly bleaching shellac gum 

and/or producing bleached shellac by any proces.s or in any form 

what oever. 

SECTION 2. The term "products ' means bleached shellac, and 

such other allied commodities as are manufactured, imported and/or 

sold by bleached shellac manufacturer.s and hereinafter defined in 

this Article. 

SECTION 3. The term "member of the Industry" means and includes any person firm, corporation, association, or other form of 

enterprise engaged in the Industry either as an employer or on his 

or its own behalf. 

SECTION 4. The term "employee", as used herein includes any 

and all persons engaged in the Industry, however compen ated, 

except a member of the Industry. 

SECTION 5. The term "employer", as used herein includes anyone 

by whom any such employee is compensated or employed. 

SECTION 6. The term " the Association " means the American 

Bleached Shellac ~1anu£acturers Association, Inc. 

ECTION 7. The term " the Boa.rd 0£ Directors " means the Board 

of Directors ( as from time to time constituted) of the Association. 

SECTION 8. The term "the Executive Secretary" means the Executive Secretary of the Association at the time in office. 

SECTION 9. The term" consumer" means and includes only a person, firm, or corporation who in the course 0£ his or its regular business uses, consumes, or applies products of the Industry in manufacturing or servicing another product or thing and who is not a 

dealer, broker, or agent within the meaning thereof as hereinafter 

defined. 

SECTION 10. The term "dealer" means a person, firm, or corporation who purchases any product of the Industry for resale in original 

form. 

SECTION 11. The term "broker'' means and includes only a person, firm, corpo~ation, or other :form of enterprise who is not d:rectly 

(427) 
428 

or indirectly retained by or connected with any member of the In- . dustry as agent or other-wi ·e, who doe~ not purchase or resell products for hi own account, but whose bu ine~consi t solely of acting 

as an in.dependent broker in negotiating ale: between members of 

the Industry and third partie ·. 

SECTION 12. The term " agent '' means and include only a person, 

firm corporation, or other form. of enterprise other than a consumer, 

dealer, or broker, who is employed by a member of the In h.l try to 

solicit order for the purcha e of the latter' products and -n-ho does 

not receive shipment of, purchase, or sell any product for hi own 

account. 

SECTION 13. The term ' bleached shellac ' means regular dry, 

bleached shellac, ometime called ' bone dry ' " kiln dry ' or ' vac 

dry , ( the standard quality of which contain not more than ix per 

cent moisture.) ' 

SE TION 14. The term .. refined bleached shellac " mean bleached 

shellac, the standard quality of which contain. not o-ver six per cent 

moisture, nor over t-n-o-tenths of one per cent of wax, anrl ,,hich is 

free of rosin. 

SECTION 15. The term ' A & R Free ' means orange gum, bleached 

shellac or cut hellac which is commercially free of ar enic and rosin. 

SECTION 16. The terms "bleached hank. " or "fresh ground" 

mean bleached shellac in such respective form., the standard quality 

of which contain not n1ore than twenty-five per cent moi ture. 

ECTIO::- 17. The term · orange gum ' mean and include. any 

orange hellac gun in its original form a customarily exported 

:from India. 

SECTIO,.T 1 . The term. ' T ~ mean. an orange gum of tandard 

color the tunda,rd quality of which contain. not over three per 

cent of rosin and not over three per cent of any content which is 

insoluble in alcohol. 

SEcTio,. - 19. The term ' Heart " means an orange gum of standard 

color which contain· no ro in and not over two and one half per cent 

of any content ·which is in oluble in alcohol. 

SECTION 20. Th" term "Superfine' me.ans an orange gum of 

standard color which contains no ro in and not over one and three 

quarter per cent of any content which i in. oluble in alcohol. 

SECTION 21. The terms "cut shellac" and "shellac varni h" mean 

that product which is comprised of bleached hellac or orange gum 

dissolved in alcohol without the pr ence of other re inou matter 

therein. 

SECTION 22. The terms "4-pound cut", "41⁄2-pound cut", "5-

pound cut", etc., when used with respect to cut shellac or shellac 

v.arnish mean that product which is produced by the dissolving 

0£ nothing except the indicated number 0£ pound of bleached 

shellac or orange gum in one gallon 0£ alcohol. 

SECTIO ~ 23. The term "President" "Act" and' Administrator", 

as used herein, mean respectively the President 0£ the United States, 

Title I 0£ the National Indu trial Recovery Act, and the Administrator for Ind us trial Recovery. 
429 

ARTICLE III-HOURS 

SECTION 1. M axim:u111, H oun.-Except as hereinafter provided, 

no employee shall be permitted to work in excess of forty (40) hours 

in any one week, or eight (8) hours in any 24-hour period beginning 

at mi lnight; provided, however, that for a total period of ix ( 6) 

week. in any six ( 6) months' period beginning on January 1 and 

July 1 to take care of seasonal requirements, employee may be 

permjtte l to work forty-eight ( 48) hours in any calendar week. 

Any factory employee who work in excess of forty ( 40) hours per 

week or eight (8) hour per da.y, ·hall be paid time and a third for 

such oYertime. 

SECTION ~- Exeniptions. as to H 01,1/r ·.-From the provisions of 

Section 1, the following classe · ·hall be exempted: 

(a) Employee enO'ao-ed in an executive or supervi ·ory capacity, 

who recei, e not less than $35.00 per week, and outside . alesmen. 

(b) Engineers, firemen, maintenance and repair employees, who 

may work not more than forty-five (45) hours weekly, except by 

payment at the rate of time and a third for time in excess thereof. 

( c) Truckmen who may work not in excess of forty-eight ( 48) 

hour. per week, except by payment at the rate of time and a third 

for time in exce s thereof. 

(cl) Watchmen who shall not be permitted to work more than one 

hundred and eight (108) hours in each two weeks and shall have one 

full day off in each even. SECTION 3. No employer shall knowingly permit any employee 

to work for any time which, when totalled with that already performed with another employer or employers, exceeds the amount 

permitted herein. 

ARTICLE IV-WAGES 

SECTION 1. Minimum TVages.-Except as hereinafter provided, 

no employee in this Industry, other than outside salesmen, shall be 

paid in any pay period less than at the rate of forty (40) cents per 

hour. 

SECTION 2. Accounting, clerical and other office employees shall 

be paid at the rate of not less than fifteen (15) dollars per week, 

except that office or errand boys between the ages of 16 and 18 years, 

not to exceed one to each plant may be paid not less than twelve 

( 12) dollars per week. 

SECTION 3. Piecewo1·k Oompensati'on-Minimwrn Waqes.-This 

Article establishes a minimum rate of pay which shall apply, 

irrespective of whether an employee is actually compensated on a 

time rate, piecework, or other basis. SECTION 4. Wages abo1Je Minimwm.-No member of the Industry 

shall reduce the compensation for en1ployment now in excess of the 

minimum wages herein fixed (notwith tanding that the hours worked 

in such employment may be hereby reduced) and the pay for such 

employment shall be increased by an equitable adjustment of pay 

schedules. 

SECTION 5. Female E11iployees.-Female employees performing 

substantially the sa.me work as ma.le employees shall receive the 

same rate of pay as mal employees. 

54392°-482-137-34-2 
430 

SECTION 6. Handicapped Persons.-A person whose earning capac- ity is limited becau e of age or phy ical or mental handicap may 

be employed on light work at a wage below the minimum establi hed 

by thi Code if the employer obtains :from the utate authority desig- nated by the United States Department of Labor a certificate author- izing his employment at such wages and £or such hour as shall 

be stated in the certificate. Each employer shall file with the Code 

Authority a list of all such persons employed by him. 

ARTICLE V-GENEHAL LABOR PROV! IONS 

SECTION 1. Child Labor.-No person under sixteen (lG) years of 

age , ·hall be employed in the Indu try. ~ o person un ler eighteen 

(1 ) years of age shall be employed at operations or occupations 

which are hazardous in nature or dangerou to health. The Code 

Authority shall ubrnit to the Admini. trator b 0 £ore ninety (90) 

day after approval of this Code a li t of such operation or occupa - tions. In any State an employer shall be deemed to ha-ve complied 

with thi pro-\ ision as to age if he shall have 0n file a certificate or 

permit duly siO'necl by the Authority in ~uch • tate empowered to 

i~ ue employment or age certificates or permits ho"·ing that the 

emplo ee is of the required age. 

SE TIO 2. In compliance with Section 7 a) of the Act it is 

provided: 

(a) That employees shall haYe the right to organize ancl bargain 

collectively through repre entatives ?f their own_ choo ·ing, and hall 

be free from the interference re tramt, or oerc1 n of employers of 

labor, or their aO"ents, in the desi 0 ·nation of uch repre entatives 

or in elf-oro·anization or in other concerted activities for the purpo.-e 

of collective bargaining or other mutual aid or protection. 

(b) That no employe and no one seeking mployment shall be 

required as a condition of employment to join any com pan.' union or 

to refrain from joining organizing, or a ·isting a labor organization 

of his own choo ing. 

(c) That employers hall comply "ith the maximum hour of 

labor, minimum rates of pay, and other condition· of employment 

a pp roved or pre. cribed by the Pre iclent. SECTIO:X 3. Reclassification of Emp!.oyers.-X o employer hall 

recla ify employ e or duties of occupations performed or ngage in 

any other subterfuge for the purpo e of lefeating the purp .-.es or 

provi ·ions of the Act or of this Code. 

ECTION 4. tandards for Safety and H altli.- EYery emplo. er 

shall make reasonable provision for the safety and health of his 

employees at the place and during the hours of their employment. SECTION 5. State Laws.-N o provision in this Code shall supersede any State or Federal law which impo es on em.ployer more 

stringent requirements as to age of employees, wages hour of work, or a to safety, health, sanitary or general working condition , or 

insurance or fire protection, than are impo ed by thi Code. SECTIO 6. Posting.- All employers shall post complete copies of 

this Code in conspicuous places accessible to en1ployees. 
431 

ARTICLE VI-ORGANIZATION, POWERS AND DUTIES OF THE CODE 

AUTHORITY 

OTIGANIZ~.\.TIO:N AND CONSTITUTION 

SECTION 1. There shall forthwith be constituted a Code Authority 

which shall con i t of ( a) the Board of Directors, and (b) the 

Executive Secretary, and to which may be added ( c) not more than 

three members, without vote and without expense to the Indu try, 

appointed by the Administrator. The administration of th,e Code 

shall be under the direction of the Code Authority which hall have 

all the powers and duties conferred upon it by the Code and generally all uch other po-wers an 1 dutie a. shall b~-necec:sury or proper 

to enable it fully to administer the Code and to effectuate it.· purpose. 

SECTION 2. Under the direction of the Code Authority, the Executive Secretary hall act as the executive officer with respect to the 

aclmini tration and enforcement of the Code; he shall keep all books 

( except books of account ·) and records under the Code and, except 

as such Code Authority ·hall otherwise provide, shall collect, file, 

and collate all stati tics and other information required by the Code 

Authority for the proper administration of the Code. 

SEcTrox 3. The Code Authority shall haYe power from time to 

time to appoint and remove and to fix the compensation of all uch 

other officers and employees and all such accountant·, attorneys, and 

exp rt as said Code Authority shall deem nece sary or proper for 

the purpose of admini tering the Code. 

SECTION 4. Members of the Industry shall b 0 entitled to participate in and share the benefits of the activities of the Code Authority 

by assenting to and complying with ihe requirements of this Code 

and su taining their equitable and proportionate share of the expense 

of maintaining the Code Authority and its activities. Such equitable and proportionate share of the expen ·es of maintaining the 

Code Authority and its activitie shall be c1 terminecl by the Code 

Authority, subject to review by the Administrator, on the ba ·is of 

Yolume of busine ·s and/ or uch other factors a may be deemed 

equitable. 

SECTION 5. The Cod Authority may from time to time appoint 

such committees as it shall deem necessary or proper in order to 

effectuate the purpo e · of the Act and the admini -tration of the 

.provisions of the Code, and it may delegate to the Executive Secre- tary and/ or any such committee generally or in particular instances 

uch of the powers and duties of the Code Authority under the Co le 

as such Code Authority shall deem nece sary or proper in ord·er to 

cff ectuate such purpose, provided that nothing herein shall relieve 

the Code Authority of its duties and respon. ibilities under this Code. 

Any member of such committee may be a member of the Code 

Authority or an officer or a director of a member of the Indu try 

or a, person not havina any official connection with any member of 

the Industry or with the A sociation as the Code Authority shall 

deem proper. 

SECTION 6. Nothing contained in this Code shall constitute the 

members of the Code Authority partners for any purpose. Nor 

shall any member of the Code Authority be liable in any manner 
432 

to any one for any act of any other member, officer, agent, or employee of the Code Authority. Nor hall any member of t?e Co_de 

Anthorit3 exercisino· rea.-onable diligence in the conduct of h1 duties 

hereunder: be liable to any one for any action or omi sion to act 

under thi · Cod , except for hi own willful misfeasance or nonfeasance. 

SECTION 7. The Code Authority shall h-ave power from time to 

time to require each member of the Indu~try to furni!=:h, and each 

member ·hall rurni. h, to the Executive Secretary or other neutral 

agency designated by the Code Authority ~ncl~ true _and accurate 

information and reports concerning the pr·ocluchon, lupment~, purchases ale . contracts. and unfilled orders of ·uch member and the 

hour of labor rates of pay and other concli ions of employment at 

the factory or factorie. of such member and suth other information 

as the Co le Authorit;\ hall deem necessary or proper in order to 

effectuate the purpose of the Code and the policy of the Act. The 

Code Authority may require that any such information be furni hed 

periodically at such time as it shall specify and may require that 

any and all information furnished be sworn to or otherwi e certified 

or authenticated a it shall prescribe. · Failure of an. member of the 

Industry to promptly furnish to the Executive Secretary or . uch 

other designated agency information required by the Code Authority, 

and sub tantially in the form prescribe l by it shall constitute a 

violation of the Code nnle the Administrator lecide that such 

information is not necessary for the proper admini tration of the 

Code. 

SECTION 8. Any and all information furni hed to the Executive 

Secretary or other designated agent by any member of the Indu try 

shall be ubj ect to checking for the purpo. e of verification, if a violation of the Co le be ...,uspected by an examination of the book. and 

account and records of . uch member by any accountant or ac ountants or other impartial person or per ons similarly qualified and 

designated by the Code Authority and ha.11 be so checked for such 

purpo ·e if the Code Authority shall require it, but if such member 

of the Indu try object to an examination being made by any uch 

de ignated agent, he shall have the option to reque t that such 

investigation be made by the Federal Trade Commission or other 

governmental agency approved by the Administrator, provided. ho-wever that thi provi ion hall not deprive any individual of his 

con titutional rio-hts under the 5th and 14th amendment of the 

Constitution of the l nited States. The co t of each such examination shall be treated a an expense of administering the Code· provided, however. that if upon such examination any such information 

shall be hown to have been incorrect or mi leading in any material 

respect, such cost hall be-paid by the member of the Indu try which 

furnished uch incorrect or misleading information. Any me.mber 

of the Indu try hall haYe the right to appeal to the Administrator 

as to the rea onable propriety of an examination of the character 

above referred to. 

SECTIO 9. (a) Any data or statistics, the character of which in 

the opinion of the Code Authority is of a confidential nature hall 

not be di eminated except in combination with other data and statistics of a like character so as not to disclose the data or statistics 
433 

of any individual companj, except in su h instance in which the 

Code Authority deems that uch di 1 ure is nece._· ·ary er proper 

for the proper admini tration of the Code or the effe ·tuation of the 

policies of the Act, and except as follows : 

(b) In addition to the information herein required to be submitted to the Code Authority, all per ons . ubject to this Code shall 

furnish such stati..,tical information as the Admini trator may leem 

necessary for the purpo es recited in ection 3 (a) of the · Act to 

uch Federal and State Agencies a the Administrator may de. ignate, 

nor hall anything in this Code relieve any person of existing obligations to furnish report to Go -e_rnment Agencies. 

POWER AND D 'TIE 

SECTION 10. The Code Authority al. o . hall have the f ollowing 

further power~ and dntie. : 

(a) To in ure the execution of the proYisions f thi Code ubject 

to rule and regulations approyecl by the Admini. trator and provide 

for the compliance of the Indu try -ith the proYi ions hereof. 

(b) To adopt by-la" and rules and regulation, for it procedure 

and for the admini tration and enforcement of the Code. 

( c) To use the A ociation or such other agents or committees for 

the carrying out of any of its activities provided for herein, provided 

that nothing herein shall relieve the Code Authorit:y of it duties 

or re ·ponsibilitie under thi Code. 

( d) To cooperate with the Administrator in regulating the n e of 

any N.R.A. insignia olely by those member of the Industry who 

liaYe a ~entecl to and are complying with thi. Code. 

( e) To recommend to the Admini trator further fair trade practice 

provi ions to govern member of the Industry in their relation. with 

each other or with other industrie and to recommend to the Administrator mea ures for industrial planning, including stabilizatiou of 

employment. 

(f) To cause to be prepared a uniform formula of cost finding 

within sixty (60) days of the approval of this Code, the use o:f 

which -will disclose the cost of manufacture and distribution of 

products. 

Upon the completion of th preparation of such uniform formula 

and it approval by the ode Authorit:y and the Administrator, 

every member shall use such cost formula. 

ECTION 11. To make recommendation to the \..dministrator for 

th coordination o:f the admini tration o:f this Code with such other 

co les, if any, a may be related to the Indu try or affect members 

of this Industry. 

SECTION 12. Each trade or industrial association directly or indirectly participating in the selection or activities of the Code Authority hall (1) impo. e no inequitable re triction on member hip, 

and (2) submit to the Administrator true copies of its articles of 

association, by-law , regulation , and any amendments when made 

thereto, together with such other information as to membership, 

organization, and activities as the Administrator may deem necessary 

to effectuate the purposes of the Act. 

SE TION 13. In order that the Code Authority shall at all times be 

truly representative of the Industry and in other respects comply 
434 

with the provisions of the Code and purposes of the Act, the Administrator may prescribe such hearings as he may deem proper; and 

thereafter if he shall find that the Code Authority is not truly 

repre entative or does not in other respects comply with the provisions of the Act, may r,equire an appropriate modification in the 

method of selection of the Code Authority. 

SECTION 14. If the Administrator shall determine that any action 

of the code authority or any agency thereof may be unfair or unjust 

or contrary to the public interest, the Administrator may require that 

such action be suspended to afford an opportunity for investigation 

of the merits of such action and further consideration by such code 

authority or agency pending final action which shall not be effective 

unless the Administrator approves or unless he shall fail to disapprove after thirty days' notice to him of intention to proceed with 

such action in its original or modified form. 

ARTICLE VII-SALES AND PUBLICATION OF PRICES 

SECTION 1. All products of the Industry shall be sold or contracted 

to be sold only on the basis of openly published and posted prices, 

terms, and conditions. 

SECTION 2. None of the members of the Industry shall make any 

sale of, or contract to sell, products at a prioo or on terms and conditions more favorable to the purchaser thereof than the prices, 

terms, and conditions established and published by such member, in 

the manner hereinafter provided, and in effect at the time of such 

sale or contract to sell. 

SECTION 3. (a) Each member of the Industry shall, within ten 

(10) days after the effective date of the Code, file with the Code 

Authority, or such person or agency as may be designated by it, a 

list showing the base prices for all of its products and all of the 

terms, conditions, differentials, and other sales particulars applicable 

thereto, and from and after the expiration of such ten ( 10) days 

such member shall at all times maintain on file with the Code 

Authority or such designated person or agency a list showing the 

base prices for all of its products and all of the terms, conditions, 

differentials, and other sales particulars applicable thereto, and shall 

not make any change in such base prices, terms, conditions, differentials, or other particulars except as herein provided. Each such 

list shall state the date upon which it shall become effective, which 

date shall be not less than three (3) nor more than five (5) days 

after the date of filing such list with the Code Authority or such 

designated person or agency; provided, however, that the first list of 

base prices, terms, conditions, differentials, and other particulars filed 

by any member of the Industry as above provided shall take effect 

on the date of filing thereof. None of the base prices, terms, conditions, differentials, or other particulars shown in any list filed by 

any member of the Industry as herein provided shall be changed 

except by the filing by s:uch member with the Code Authority or 

such designated person or agency of a new list of its base prices, 

terms, conditions, differentials, and other particulars which shall 

become effective on the effective date therein specified which shall 
-

435 

not be less than three (3) nor more than five ( 5) day after the date 

on which such new price list shall have been so filed. 1 

(b) N otwith tanding anything hereinabove contained, each member of the I ndustry who e last list of ba e price , terms, conditions, 

differentials, and other particulars so filed was filed prior to the 

filing by another member of the Indu try of a list containing new 

prices, terms, conditions differentials, or other particulars for the 

latter's products, shall haYe, in the intere t of full and fair competition, the right to file a new price list effective 1 ss than three (3) 

days after the filing thereof, but not sooner than the effe ctive date 

specified in the new price list of such other member. 1 

( c) Each member of the Industry shall continue to publish and 

file as hereinabove provi led and before any changes are made, the 

prices quoted and/or charged by it for products of the Inclu try, 

and all terms, condition. , differentials, and other particulars applicable thereto, in such manner a in the opinion of the Co le Authority 

will enable intere tecl member of the trade and the buying public 

to at all time obtain accurate information as to the price , terms, 

conditions, differentials, and other particular of uch member. 

SECTION 4. No member of the Intlu~try shall accept orders or make 

contr acts at old price , term , or differential following the effective 

date specified in such Ii t of changes as may be filed in accordance 

with the provisions of Article VII of the Code. 

SECTION 5. l' o member of the Indu try hall pay or allow to 

buyer of products ecret or unpublished commi ion , bonu es, rebates, refund·, credits, unearned discount , or subsidies of any kind, 

nature, or de cription, confidential prices, or use any device which 

tends to on-"eal, or mi 'lead as to the true consideration. Thjs al o 

applies to contract · for the exchange of such products for any other 

commodity or thing and/ or the concurrent or related sale thereof, 

and no eva ions or subterfuges shall be practiced or permitted under 

such o-uise. 

SEcTio 6. Tran portation charge con titute a mall percentage 

of the co t of product to the con umer but in many ctl e a large 

percentage of gro · profit to the manufacturer and the ab ·orption of 

uch charg by ome manufa turer often con titutes a de. trncti e 

method of competition. 

Therefor , all quotations, offers to sell contract of ale and ales 

made by any member of the Inclu try hall be matle f.o.b. one of 

the hipping poin . l ecified in its then current list filed in accordance with e,...tion 3 hereof and any and all tran portation charges 

from ·uch hipping point. hall be added to and not ab ,·orbecl or 

included in the publi ·hed frice thereof. 

SE TION 7. l\llembers o the Indu try cannot generally obtain 

definite commitments for the purchase of raw materials for more 

than three (3) months in advance. 

Therefore, commitments for the future sale and delivery of product hall be made or entered into by members of the Industry only 

by written contract containing all of the terms, conditions, and particular of sale; such contract hall be for a specified product, quantity and quality at a pecified price for delivery not later than the 

end of the third cal nclar month next following and hall be made· 

1 See paragraph 2 of order approving this Code. 
436 

and entered into in good faith between buyer and seller, strictly 

adhered to, and enforced and subject to no extension or cancelation 

save for legal cause. Orange gum, however, may be contracted to be 

sold for periods beyond those aforesaid. 

SECTION 8. No contract shall be postdated or predated except to 

conform to a bona fide agreement for the purchase and sale on the 

predate, nor shall contracts be written without authorization and 

definite commitments at the time the same are made by both parties 

thereto. 

SECTION 9. Options to purchase products shall not be granted. 

All quotations shall be made for a specified product at a specified 

price and subject to changes in price in accordance with the provisions of this Code. Negotiations for sales which are not definitely 

concluded at the effective date of a price change shall be contracted 

for only on the basis of new prices. 

SECTION 10. Differentials shall be uniform and publicly announced 

to the end that all customers entitled thereto shall receive the same 

fair treatment. Differentials shall be based only upon grade, the 

location of shipping points, the quantity contained in single deliveries to the same customer or upon the nature of the container. 

SECTION 11. Members of the Industry shall in all instances adhere 

to the terms of payment which have been standard in the Industry 

for many years and which are " 1 % discount for cash payment in 

10 days, 30 days net". The discount for early payment shall in no 

event exceed one per cent. Such discount period shall not exceed 

ten days from, and the period of free credit shall not exceed thirty 

days from, the date of shipment and invoice. 

ARTICLE VIII-UNFAIR TRADE PRACTICES 

For all purposes of the Code, the following ,i.cts or omissions shall 

constitute unfair practices: 

1. The sale of products by any member of the Industry for a price 

Jower than the cost thereof, as defined below, except that nothing 

herein contained shall, however, be construed as precluding any 

member of the Industry from selling products at a J?Ublished I?rice 

equally as low as that of any competitor whose price 1s not in v10lation of this Code. Such cost shall include at least (a) the total 

market replacement cost of all ingredients and materials consumed, 

based, insofar as orange gum is concerned, upon lowest actual daily 

quotations received by cable by the New York agents of Calcutta 

shippers, to be recorded by the Association and to be regarded as 

accurate within one-half cent a pound, unless a different tolerance is 

required or approved by the Administrator, and based, insofar as 

other or accessory raw materials are concerned1 upon market replacement cost as determined from published prices or actual market 

transactions, (b) containers, ( c} all direct processing costs such as 

power and labor, ( d) all other fac.tory labor, ( e) sales commissions, 

and (f) transportation charges when products are sold f.o.b. destination. However, after such time as the uniform cost accounting 

formula provided for in Section 10 (f) of Article VI has been approved, each member of the Industry shall use such uniform cost 
437 

accounting formula in determining his cost based upon the items of 

cost herein set forth. 

2. Whenever a price specified by a member of the Industry in a 

list published and filed pursuant to the provisions of Article VII 

of this Code is so low as to be, in the opinion of the Code Authority, 

less than its cost based on the above items, the Code Authority shall 

investigate such member's co ts and in connection th rewith it or its 

designated representative shall, in accordance with ancl subject to 

the limitations and conditions contained in Article VI, Section 8 of 

this Code, have the right of access to and examination of the books, 

papers and records of such member. If the inve tigation discioses 

the fact that such price is below such co t, the Code Authority shall 

so advise the member. If the member does not revise his price so as 

to comply with the provisions of this Code, the Code Authority shall 

present the matter to proper Government Agencies for hearing and 

appropriate action; provided, however, that nothing herein limits 

the power of the Code Authority to report a violation to Government 

Agencies at any time. 

3. Directly or indirectly discriminating or making Yarintions in 

the prices charged or terms made to different purchaser provided 

that nothing herein contained shall preYent di crimination in the 

prices charged on account of difference in the quantities contained 

in any single delivery, or that makes only due allowance for difference 

in the costs of tran portation or containers, or the charging of a 

higher price for special service or superior quality. 

4. No member of the Industry shall give, permit to be given, or 

directly offer to give, anything of value for the purpose of influencing 

or rewarding the action of any employee, agent or representative of 

another in relation to the business of the employer of such employee, 

the principal of such agent or the represented party, without the 

knowledge of such employer, principal or party. Commercial bribery 

provisions shall not be construed to prohibit free and general distribution of articles commonly used for advertising except o far as 

such articles are actually used for con1mercial bribery as hereinabove 

defined. 

5. Selling any product which is not in full compliance with legal 

and trade definitions and free from adulterations. Trade definitions 

include those contained in the Code or approved by the National 

Bureau of Standards and legal definitions include those pronounced 

by the Courts and those rulings of the Federal Trade Commission 

which provide that (a) the terms " shellac " or "pure shellac " shall 

not be used in describing any product unless such product consists 

solely of shellac, either dry or dissolved in alcohol, and that such 

terms mean that the product so described is free from adulterations, 

modification or reduction, and consists solely of shellac gum, either 

dry or dissolved in alcohol; (b) the terms "shellac compound", 

" compound shellac " or " shellac mixture " shall not be used in 

describing any product, compound, or mixture unless such product, 

compound, or mixture consists of alcohol in which has been dissolved 

resinous material only, of which resinous material not less than fifty 

percent by weight consists of pure shellac gum; ( c) any product, com-
438 

pound, or mixture the soluble content of which consists of less than 

fifty percent by weight of pure hellac gum shall be described only 

as " shellac sub titute." 

6. :Misbranding, the sale or offering for sale, of any product with 

the intent to, or under such circumstances as tend to deceive customers or prospective customers as to quantity, quality, cut, condition, or ingredients of such product, or the use of misleading or 

untruthful advertising or sales propaganda. 

7. ,vithholding from or inserting in any invoice facts which make 

such invoice a false or misleading record, wholly or in part" of the 

transaction represented on the face thereof or the dating ot an invoice as of some date other than the true date of the shipment 

reflected. therein. 

8. Inducing or a,ttempting to induce the breach of a contract 

between a competitor and his customer. 

9. Members of the Industry shall recognize the right of employees 

to use all honorable and reasonable efforts to better their conditions, 

but shall refrain from directly or indirectly soliciting or bidding 

for the services of the employee of another member. Only when such 

an employee takes the initiative shall a member of the Industry have 

the right to negotiate with hin1 about prospective employment. 

10. The defamation of a competitor by words or acts imputing to 

him dishonorable conduct, inability to perform contracts, or questionable credit standing, or the false disparagement of the grade or 

quality of his goods. 

11. The allowance or payment of any broker's or agent's commission or compensation to anyone except a broker or agent. 

12. Sales by members of the Industry, their agents or salesmen, 

of products for their own account, or for other members of the Industry, or for customers or purchasers, unless such sales are made 

at a price not lower than the lowest price then published, filed and 

effective pursuant to this Code. 

13. Storing products in customer's store or warehouse and allowing 

storage or other credits to the customer in regard thereto. 

14. No sale of products of the Industry shall be made by a member 

thereof to any dealer unless there be obtained in connection with such 

sale a binding stipulation on the part of such dealer that such products will not be resold at less than the lowest then effective price 

published by any member of the Industry pursuant to this Code. 

15. The practice of granting extensions of time in which to take 

delivery of products under contract, to buyers who have failed to 

fulfill their obligations thereunder and/or who have permitted such 

contracts to expire without fulfilling the provisions thereof as to such 

deliveries. 

16. Making advance shipments so as to arrive at a time or times 

other than within contract period. 

17. Whereas excessive commissions have, on occasion, been paid to 

agents and brokers for the sale of products of the Industry, which 

has resulted in such commissions or brokerage bein~ pai,d directly 

or indirectly to the buyers, the effect being- the publication of fictitious prices, the unfair extension of partiality to one customer as 

against another, and the inability of the trade to know at all times 

the actual market for such commodities. 
439 

Therefore, it is declar cl that the payment o:f excessive commissions is an unfair practice and any commissions in excess of the 

following shall prima facie be presumed to be excessi-ve, to wit: 

Orange gum __________________________________ 1⁄2 cent per pound. 

Bleached shellac ______________________________ 1 cent per pound. Cut shellac ______________________ __ ___________ 5 percent. 

An3 member of the Indu try may, however, pay to a bona fide 

agent or broker such other rate of commission as, after investigation 

to be made upon request, the Code Authority, subject to the disapproval of the Administrator, may determine to be not in fact 

excessive and not tending to frustrate the spirit of this Section. 

18. The inYoicing of proch1ct to any customer so as to entitle the 

latter to a publi heel quantjty differential \Yhile in fact actual deliveries are split or made in such a manner as not to make such differentials properly applicable thereto. 

19. Special allowances by \Vay of discount , brokerage, storage, 

or advertising; variations from openly announced and published 

prices, terms, delivery, or packag differentials; delayed bjlling. ; 

full or partial discounts in cases of delayed payment; and rebates or 

other allowances by any name or of any nature. 

20. Rendering special service to customer· without appropriate 

charges therefor. 

21. Consignment of products to any but authorized agents. 

22. The making of contracts with O'Uarantee against decline in 

price, and al. o the rewriting or modification of contracts after price 

reductions, because of such reduction . 

23. The deli, ery of products, transportation charges prepaid, at 

any place, unless such charges are given due consideration in determining the cost and selling price thereof and are added to the 

seller's published price for its hipping point neare t to such 

destination . 

. 24. The requiring that any goods be purchased or sold as a prerequisite to the purchase or sale of products of the Industry. 

ARTICLE IX-J\IomFICATION 

SECTION 1. This Code and all the provisions thereof are expressly 

made subject to the right of the President, in accordance with the 

provisions of subsection (b) of Section 10 of the Act, from time to 

time to cancel or modify any order, approval, license, rule, or regulation issued under said Act. 

SECTION 2. This Code, except as to provisions required by the Act, 

may be modified on the basis of experience or change in circumstances such modifications to be based upon application by the Code 

Authority or other interested parties, to the Administrator and such 

notice and hearing as he shall specify, and to become effective on 

approval of the President. 

ARTICLE X-J\1o ~oPoLrns, ETc. 

No provision of this Code shall be so applied as to permit monopolies or monopolistic practices, or to eliminate, oppress, or discriminate against small enterprises. 
UNIVERSITY OF FLORIDA 

440 11111111111 \I\ Ill Ill\\ \1\\11\ I\\\ 11111\ 11111\ 111\1111 \Ill\\ I\\\ I 

3 1262 08851 8070 

ARTICLE XI-EFFECTIVE D A TE 

This Code shall become effective on the second Monday after its 

approval by the President. 

Approved Code No. 403. 

Registry No. 619-01. 

0