Approved Code No. 202 Registry No. 214-1-04 

NATIONAL RECOVERY ADMINISTRATION 

CODE OF FAIR COMPETITION 

FOR THE 

CARPET AND RUG 

MANUFACTURING INDUSTRY 

AS APPROVED ON JANUARY 12, 1934 

BY 

PRESIDENT ROOSEVELT 

1. Executive Order 

2. Letter of Transmittal 

3. Code 

UNITED STATES 

GOVERNMENT PRINTING OFFICE 

WASHINGTON: 1934 

For sale by the Superintendent of Documents, Washington, D.C. • • • • • - • • Price 5 cents 
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(II) 
Approved Code No. 202 

CODE OF FAIR COMPETITION 

FOR THE 

CARPET AND RUG MANUFACTURING INDUSTRY 

As Approved on Janua1·y 12, 1934 

BY 

PRESIDENT ROOSEVELT 

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 the Carpet and Rug Manufacturing Industry, 

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 recommendations and findings with 

respect thereto, and the Administrator having found that the said 

Code of Fair Competition complies in all respects with the pertinent 

provisions of Title I of said Act and that the requirements of clauses 

(1) and (2) of 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 vested in me by Title I of 

the National ndustrial Recovery Act, approved June 16, 1933, and 

otherwise, do adopt and approve the report, recommendations and 

findings of the Administrator and do order that the said Code of 

Fair Competition be and it is hereby approved, subject to the condition that the provisions of Article VII, Section 19 (a) be stayed 

pending further investigation and determination by the Administrator of the issues raised with respect thereto. 

FRANKLIN D. ROOSEVELT. 

Approval recommended: 

HUGH s. JOHNSON, 

Administrator. 

THE WHITE HousE, 

January 12, 1934. 

32793°-313-71-34 (83) 
The PRESIDENT, 

The White House. 

Srn: This is the report on the Code of Fair Competition for 

the Carpet and Rug Manufacturing Industry as proposed by the 

Institute of Carpet Manufacturers of America, Inc. 

The hearing was conducted in Washington, D.C. on October 4, 

1933. Every person who requested an appearance was freely heard 

in accordance with statutory and regulatory requirements. The 

code was pre ented by duly qualified and authorized representatives 

of the industry representing 95 percent of the volume of business 

and 86 percent of the number of establishments. 

I. DESCRIPTION OF INDUSTRY 

At the present time the carpet and rug manufacturing industry is 

composed of 35 plants with a potential annual productive capacity 

of $215,000 000. Sales during 1933 are estimated at $60,000,000, 

which is a marked decrease from the sales of $167,000,000 that were 

obtained in 1928. Under these circumstances, it is entirely natural 

that there should be a similar decline in employment from 32,800 in 

the latter year to approximately 16,000 at the present. 

Several considerations set this industry apart from other enterprises in the textile manufacturing field. Although carpets and rugs 

are woven on looms, the principles of construction vary materially 

from any other type of weaving. The looms are extremely complex 

and certain types often cost as high as $35,000 apiece. It is generally 

true that the capital investment per productive employee is extremely 

high. 

Both large and small plants exist in the industry, but in this particular branch of textiles even a small plant is relatively large when 

compared with textile mills generally. The three largest manufacturers produce roughly 50 percent of the entire volume of the 

industry. 

Design and quality are of extreme importance. The industry 

naturally follows the trend in interior decoration and furniture design which, although variable, does not have the sharp swings found 

in the apparel trades. The proponents of the code stressed the necessity for minimum quality specifications and sub tantiated their contentions by citing numerous instances of fahrics, ingrain carpets for 

example, which actually passed out of existence, due to long-continued 

debasement of quality. Constant cheapening of both material and 

construction finally brought this product -into such extreme consumer 

distrust that it was no longer merchantable at any price. They 

pointed out that unless reasonable rr!inimum specifications were 

established and conscientiously adherfH·l to several of the currently 

manufactured items would disappear in the same manner. 

Those proposing the code presente1 a comprehensive set of fair 

trade practices which have the prartically unanimous approval of 

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the entire industry and have been very carefully reviewed by the 

Administration. At the hearing, strong objections were made to 

several 0£ these provisions as they were originally submitted and 

it is believed that most of these objections, when valid, have been 

met. The extreme decline in sales over the last five years was conclusive proof that destructive competitive practices among manufacturers, unless checked, would destroy a capital investment of over 

$200,000,000 and destroy the working opportunity for several thousand highly skilled workers. 

Intermediate distribution channels, it was claimed, had added 

further to the chaos brought about by the practices within the industry itself. The n1ills through their own direct sales to retailers 

and also through their branch warehouses, control the great majority 

of goods going to the retailer. For this reason, it is vital that intermediate distributors should be bound in their selling practices by 

the same conditions as the manufacturer in selling direct to retail 

channels. Otherwise no reforms could be effected. 

From the figures of productive capacity and sales previously cited, 

it is obvious that control of production is essential, but the sponsors 

of this code believed it impracticable to achieve this result by restricting machine hours. Any kind of machine-hour restriction that would 

allow the flexibility necessary to meet seasonal and sty le peaks would 

be unnecessarily involved and impossible of administration. Several 

of the leading firms in the industry made a careful study of their 

sales and production records over the last ten years. From this they 

evolved a production-control feature, which provides that at no time 

can a manufacturer maintain an inventory of more than one third 

of his sales for the previous twelve months. When the inventory 

reaches this allowable figure, the manufacturer is granted 120 days to 

readjust his inventory to the allowed figure before curtailing production. In this way, a mill may start building its stock two or three 

months before the anticipated peak demand and then can taper off 

production after the selling season. By this, it is hoped that there 

will be a leveling out of the peaks and valleys of production and 

hence :furnish more stable employment throughout the year. 

II. LABOR PROVISIONS 

Except £or learners and physically handicapped employees, the 

industry proposes to pay a minimum wage of 35 cents per hour in 

the North and 30 cents per hour in the South. Hours of labor are 

limited to 40 hours per week and 8 hours in any one day. To 

take care of peak periods, employees may be permitted to work up to 

48 hours per week :for a period o:f six weeks during any six months' 

period, in which case an employee may work up to 10 hours in any 

one day. 

III. ADMINISTRATION 

The provisions :for the administration 0£ this code are capable of 

providing the N.R.A. and the Carpet and Rug Manufacturing Industry with sufficient data to recommend any modifications or amendments that may be indicated by experience. 
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IV. Co:KcLusroN 

The Deputy ~ dmini trator in his final report to me on said Code 

ha1'ing found as herein et forth and on the basis of ::ill the proceedings in this matter. 

I find that: 

(a) Said Code is well cle~igned to promote the policies and purposes of Title I of the National Industrial Recovery Act, including 

remoYal of ob tructions to the free flow of interstate and forejgn 

commerce which tend to dimini ··h the amount thereof and provide 

for the general welfare by promoting the organization of industry 

for the purpose of cooperative action among the trade groups by 

inducing and maintaining united action of labor and management 

under aclequat governmental sandions and supervisions, by eliminating unfair competitiYe practices, by promoting the fullest possible utilization of the pre ent productiYe capacity of industries, by 

avoiding undue restriction of production (except as 1nay be temporarily required), by increasing the consumption of industrial and 

agricultural products through increasing purchasing power, by reducing and relieving unemployment, by in1proving standards of 

labor and by otherwise rehabilitating industry. 

(b) Said Industry normally employs not more than 50,000 employees; and is not classiied by me as a 1najor industry. 

( c) The Code as approved complies in all respects with the pertinent provisions of said Title of said Act, including without limitation Subsection (a) of Section 3, Subsection (a) of Section 7, and 

Subsection (b) of Section 10 thereof; and that the applicant association is an industrial association truly representative of the aforesaid Industry; and that ·aid association imposes no inequitabl1

e restrictions on admission to member hip therein. 

( d) The Code is not de igned to and will not permit monopolies 

or monopolistic practices. 

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

small enterprises and will not operate to discriminate against them. 

(f) Those engaged in other steps of the economic process have 

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

Code. 

For these reasons, I recommend that you approve this Code. 

Respectfully, 

J .ANUARY 11, 1934. 

·HuaH S. JonNsoN, 

Ad-ministrator. 
CODE OF FAIR COMPETITION 

FOR THE 

CARPET AND RUG MANUFACTURING INDUSTRY 

ARTICLE I-PREAMBLE 

To effectuate the policies of Title I o:f the National Industrial 

Recovery Act the :following provisions are submitted as a Code of 

Fair Competition for the Carpet and Rug Manufacturing Industry 

and upon approval by the President shall be binding upon every 

member thereof. 

ARTICLE II-DEFINITIONS 

1. The term " industry " as used herein means the manufacture 

and original sale of all woven floor coverings and the spinning of 

carded wool or worsted sales yarn for carpets and rugs. Woven 

floor coverings, the principal content of which is cotton, grass, or 

paper, are specifically excluded. 

2. The term "auto and airplane carpets" as used herein means 

those floor coverings manufactured for original sale to automobile 

manufacturers, to airplane manufacturers, to automobile body manufacturers, and to automobile carpet jobbers :for installation in automobiles and airplanes. 

3. The term "employee" as used herein includes anyone engaged 

in the industry in any capacity receiving compensation :for his services, irrespective of the nature or method of payment of such 

compensation. 

4. The term" employer" as used herein includes anyone by whom 

any such emploiee is compensated or employed. 

5. The term ' member of the industry " as used herein include::; 

anyone engaged in the industry as above defined, either as an employer or on his own behalf. 

6. The term "subscriber" as used herein includes that member of 

the industry who voluntarily and formally declares to the authority 

which shall administer this Code that he will be bound by its provisions and will bear his proportionate share of expense in the 

administration of this Code. 

7. The term "regular merchandise" as used herein means all merchandise other than mill seconds, drops, private patterns, samples, 

remnants, and mill ends. 

8. The term "wholesale distributor" as used herein means a firm 

or organization maintaining an establishment and performing a 

warehousing and distributing function by carrying a stock of rugs 

(87) 
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or carpets, and also maintaining a selling organization to contact 

floor covering outlets and assuming the credit risks involved in such 

distribution. 

9. The term "contract order" as used herein means an order in 

which the fabric is sold for a specific installation and not for a part 

of any dealer's stock. 

10. The term "automobile jobber" as used herein means a fi:rm 

or organization maintaining an establishment and performing a 

warehousing and distributing function by carrying a stock of automobile carpets and also maintaining a selling organization to contact automobile manufacturers and automobile body manufacturers 

and assuming the credit risks involved in such distribution. 

11. The term "low basis price" as used herein means the manufacturer's published list price, less maximum published trade discount only. 

12. The term" drops" as used herein means discontinued patterns. 

13. The term " perfect merchandise " as used herein means merchandise which is free from defects, as determined by the inspection department of the manufacturer. 

14. The terms "President", "Act", and "Administrator" as used 

herein shall mean respectively the President of the United States, 

Title I of the National Industrial Recovery Act, and the Administrator for Industrial Recovery. 

ARTICLE III-HOURS 

1. No employee shall be permitted to work in excess of forty (40) 

hours per week, nor more than eight (8) hours per day, provided, 

however, that during a period not to exceed six (6) weeks during any 

six months' period, employees may not work in excess of forty-eight 

(48) hours per week, but no more than ten (10) hours in any twentyfour (24) hour period. 

2. It is provided further, that the maximum hours prescribed above 

shall not apply to professional workers employed in their professional capacity or to any person on a managerial staff receiving in 

excess of thirty (30) dollars per week, or to watchmen. 

3. It is provided further, that a tolerance of ten (10) percent 

above the maximum hours prescribed above may apply to engineers, 

electricians, firemen, employees engaged on repair-shop or outside 

crews, or in the operation of shipping, except common labor. 

4. In any special case where restrictions of hours of highly skilled 

workers would unavoidably reduce the total employment in a plant, 

or where employees are engaged in emergency maintenance or repair 

work involving breakdowns or the protection of life or property, employees may be permitted to work in excess o:f the maximum hours 

prescribed above. Any emergency time shall be reported monthly 

to the Code Authority. 

5. All hours in excess of the maximum prescribed in the foregoing 

paragraphs of this Article shall be compensated -for at the rate of 

one and one third (l1/2) of the time or piece work rate. 
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ARTICLE IV--V..T AGES 

1. No employee in the northern section shall be paid less than at 

the rate of thirty-five (35) cents per hour, except as herein otherwise provided. 

2. No employee in the southern section shall be paid less than at 

the rate of thirty (30) cents per hour, except as herein otherwise 

provided. 

3. The southern section as used above shall include the states 

of Virginia, Kentucky, North Carolina, South Carolina, Georgia, 

Florida, Alabama, Mississippi and Tennessee. 

4. This article establishes a minimum rate of pay which shall 

apply irrespective of whether an employee is actually compensated 

on a time rate, piece work, or other basis. 

5. The dollar differentials in wages between skilled and unskilled 

employees as existing at August 15, 1933, shall not be decreased. 

This provision shall not be binding as to employees earning in excess 

of thirty (30) dollars for forty ( 4.0) hours of work. 

6. A person whose earning capacity is limited because of age or 

physical or mental handicap may be employed on light work at a 

wage below the minimum established by this Code. Each employer 

shall file with the Code Authority a list of all such persons employed 

by him, provided, however, that such class of employees shall not 

exceed five (5) percent of the total employees in any plant. 

7. Learners shall not be paid less than eighty (80) percent of the 

minimum wage, and shall not constitute more than ten ( 10) percent 

of the total number of employees in any plant. Learners are persons 

who have been employed in the industry not longer than six (6) 

weeks, except as listed below : 

Weavers, Pickers, Threaders, Spoolers, Spinners, and 

Dyers____________________________________________ two months 

Setters and Jacquard Creelers _______________________ four months 

ARTICLE V-GENERAL LABOR PROVISIONS 

1. No person under sixteen (16) years of age shall be employed 

in the industry. In any State an employer shall be deemed to have 

complied with this provision as to age if he shall have on file a 

certificate or permit duly issued by the Authority in such State 

empowered to issue employment or age certificates or permits show- ing that the employee is of the required age. 

2. In compliance with Section 7 (a) of the Act, it is provided: 

(a) That employees shall have the right to organize and bargain 

collectively, through representatives of their own choosing, and shall 

be free from the interference, restraint, or coercion of employers 

of labor, or their agent in the designation of such representatives or 

in self-organization or in other concerted activities for the purpose of 

collective bargaining or other mutual aid or protection. 

(b) That no employee and no one seeking employment shall be 

required as a condition of employment to join any company union or 

to refrain from joining, organizing, or assisting a labor organization 

of his own choosing, and 

32793°-313-71-34-2 
90 

(c) That employers shall comply with the maximum hours of 

labor, minimum rate. of pay, and other conditions of employment, 

approved or pre cribed by the President. 

3 .... o employer hall reclassify employees or duties of occupations 

performed for the purpo. e of defeating the provisions of the Act 

or of this Code. 

4. No proYision in this Code hall supersede any State or Federal 

law which imposes more stringent requirements on employers as to 

age of employees, wages hours of work, or as to safety, health, 

sanitary or general working conditions, or insurance, or fire protection. than :ire imposed by this Code. 

5. All employer hall post complete copies of this Code in consp1cuo11 plnces acce sible to employees. 

ARTICLE VI-ADMINISTRATION 

1. To prm-ide for the administration of this Code within the 

indu try a Code Authority is hereby established to consist of the 

Board of Trustees of the Institute of Carpet Manufacturers of America, Inc., or it nccessor organization. This Board shall have power 

to appoint any committees or delegate any of its powers to same 

and utilize any agencies it may deem best for the purpose of administering this Code. 

In the public interest and in order to carry out any of the powers 

of the President of the United States under the National Industrial 

Recovery Act, the President may appoint one or more representatives 

who may without cost to the Indu try attend meetings of the Code 

Authority, but without vote, or confer with the Code Authority as 

to methods or measures for the admini tration of the Code. 

2. Each trade or industrial association directly or indirectly participating in the election or activities of the Code Authority shall 

(1) impose no inequitable re trictions on membership for participation in the formation of this Code or in the adoption of any amendments thereto, or in its administration, and (2) submit to the Administrator any articles of the association's By-Law , regulations, and 

any amendment when made thereto, which in any way affect the purpose of the National Industrial RecoYery Act in the administration 

of the Code. 

3. In order that the Code Authority shall at all times be truly 

repre entative of the Industry and comply with the provisions of the 

Act, the Admini trator may prescribe such hearings as he may deem 

proper; and thereafter if he shall find that the Code Authority is 

not truly representative or does not comply with the provisions of 

the Act, may require the membership of the Industry to make an 

appropriate modification in the method of selection of the Code 

,Authority. 

4. Members of the Industry shall be entitled to participate in and 

share the benefits of the activities of the Code Authority and to participate in the selection of the members thereof by sustaining their 

reasonable share of the expenses of its admini tration; such reasonable share of the expenses of administration shall be determined by 

the Code Authority on the basis of such factors as may be deemed 

equitable. 
91 

5. Nothing contained in this Code shall con titute the members of 

the Code Authority partners for any purpose. Nor shall any member of the Code Authority be liable in any manner to anyone for 

any act of any other member, officer, agent, or employee of the Code 

Authority, nor shall any member of the Code Authority exercising 

reasonable diligence in the conduct of his duties hereunder be liable 

to anyone for any action or omission to act under this Code. 

6. The Code Authority shall have the following further powers 

and duties: 

To obtain from members of the Industry for use of the Code 

Authority, and for the information of the President, such reports or 

statistical information listed below, and/or any other reports or information as shall later be deemed necessary for such purposes. 

Such data shall be :furnished to an individual not in the Industry, 

to be designated by the Code Authority. · The source of such data 

shall not be disclosed to any member of the Industry, except where 

any such member specifically consents in respect to his own statistics, 

or where it is specifically provided for in this Code. Each member 

of the Industry shall :furnish: 

A. Such information on cost practices as will enable cost experts 

employed by the Code Authority to recommend a set of principles of 

cost practices as hereinafter provided. 

B. The following statistics: 

Monthly.- (1) Analysis of total shipments in square yards ofRegular Merchandise 

Drops 

Seconds 

Mill Ends 

Slow-Moving Merchandise; 

(2) Divided by carpets and rugs, also by weaves: 

Orders received in square yards, 

Production of finished goods in square yards 

Inventory of finished goods in square yards 

Shipments of finished goods in square yards 

Sales billed in dollar value of : 

(a) Regular Merchandise 

(b) Drops 

(c) Seconds 

( d) Mill Ends 

Se1niannually.-A certified report showing the proportion separately of dollar billed sales of drops, seconds, and mill ends, to the 

dollar billed sales of regular merchandise. 

7. The Code Authority shall have power to initiate, consider, and 

make recommendations for the modification or amendment of this 

Code. 

8. In addition to the information required to be submitted to the 

Code Authority as set :forth in this Article there shall be :furnished 

to Government agencies such statistical information as the Administrator may deem necessary for the purposes recited in Section 3 (a) 

of the Act. 

9. "\Vhere any member of the Industry finds that any other member of the Industry in his operation is presuming an interpretation 

of any provision of the Code which appears contrary to a proper 
92 

interpretation, he may complain to the Code Authority and all members of the Industry shall refrain from competitive action on such 

interpretation pending an interpretation from the Code Authority. 

10. The Code Authority upon receipt of a written complaint from 

any member of the Indu try shall, within two weeks, render an interpretation to be binding on all members of the Industry subject 

to appeal to the Administrator. 

11. Each member of the Industry shall file with the per on not in 

the Indu try, designated by the Code Authority the beginning and 

termination dates of any agreement or contract involving the sale 

of his product, to the terms of which he remained legally bound 

beyond the 24th day of November 1933. 

12. If the Administrator shall determine that any action of the 

Code Authority or any subdivision thereof is unfair or contrary to the 

public interest, the Administrator may require that such action be 

suspended for a period of not to exceerl thirty ( 30) days to a:ff ord 

an opportunity for investigation of the merits of such complaint and 

further consideration by the Code Authority pending final action 

to be taken only upon approval by the Administrator. 

ARTICLE VII-FAIR TRADE PRACTICES 

1. Inasmuch as the members of the Industry control a preponderant share of the distribution of carpets and rugs to retailers and 

consumers, which distribution is to be governed by the following 

trade practices, it shall be an unfair trade practice for any member of 

the Industry to distribute through intermediate channels in such a 

manner as shall create unfair competition as defined in Articles VII, 

VIII, and IX with members of the Industry distributing direct to 

the retailer and consumer. 

2. Control of Production.-The finished goods inventory of square 

yards of merchandise wherever located, owned by any member of the 

Industry shall not exceed one third ( 113) of his sales in square yards 

of merchandi e for the immediately preceding twelve (12) months. 

A member of the Industry whose inventory shall at the end of any 

month exceed the aforementioned allowed figure shall be allowed 

a period of one hundred twenty (120) days in which to restore the 

balance between his inventory and sales before curtailing production. Should any person or company enter the industry as a manufacturer or should any existing member of the industry have withdrawn or withdrew his lines from the market for a period of not 

less than three (3) months the above provisions shall be suspended. 

in their ca e for the period of twelve (12) months; during this 

tweh e (12) months such person or company may carry an inYentory 

of finished merchandise not to exceed that which is allowed to members of the Industry of commensurate capacity under the provisions 

of this Code. 

3. Selling B elow O ost.-N o member of the Industry shal'l sell any 

regular merchandise at a net price or net prices below his cost, excepting that any such member may sell under the provisions of this 

Code at a price below his cost (a) to meet current prices on regular 

merchandise of essentially equivalent grade and quality sold by any 

competitor complying with the provisions of this Code, or (b) where 
93 

the Code Authority gr ants him permission to ell bel1aw his cost 

because exceptional conditions have been present eel. The Code Authority shall, through expert cost acco untants, determine the principles of a cost practice, both as to the character of the items to be 

included and the method of their application to the finished products, and each member of the Industry shall set up and maintain records 

which will conform to the principles recommended and be governed 

thereby in all computations and reports required for the administration of this Code. 

4. Open Price Data.-(a) Each member of the Industry shall file 

with the Code Authority and publish to the trade certified lists of 

his prices and discounts and also any r e.vision of prices, which shall 

be im.mediately forwarded to all members of the Industry. I f any 

member of the Industry desires to revise any of his prices he shall 

file with the Code Authority any such revision which shall become 

effective not less than seven (7) days thereafter, exclusive of the 

<late of the filing thereof. Any such revision shall be forwarded 

immediately to all n1embers of the Industry, who, thereupon, may 

file any revision of prices which may become effective upon the 

date when the revised price f\rst filed shall go into effect. 

(b) No member of the Industry shall sell any regular merchandise 

for less than his published list prices, which shall be subject to no 

greater discount than his maximum trade discount as filed with 

the Code Authority. 

5. R ebates.-N o member of the Industry shall rebate to any purchaser any part of the purchase price either in the form of trade 

discounts, advertising allowances, or any other allowances, excepting 

allowances filed with the Code Authority. 

6. Donations.-N o member of the Industry shall make any donation or contribution in the form of cash, credit, advertising, or other 

gratuitous consideration to any purchaser. 

7. Oontracts.-No member of the Industry shall accept a contract 

order at less than his published list price, less his published trade 

discount. 

8. Quality Specifications.-Each member of the Industry accepts 

the minimum specifications for Axminster, Wilton, and Velvet fabrics, which have been adopted by the Institute of Carpet Manufacturers of America, Inc., which shall be filed with the Bureau of 

Standards at Washington, and shall not manufacture any Axm.inster, 

Wilton, or Velvet merchandise inferior to these specifications except 

to complete the weaving of any fabric in the looms. It is understood that automobile carpets and rugs and also carpets and rugs 

whereof the surface yarns are composed entirely of jute are excepted 

from the quality specifications above referred to. Any member of 

the Industry may require of the Code Authority an interpret ation 

regarding such specifications as to his product. 

9. Copying of Patterns.-No member of the Industry shall produce in an inferior grade a copy of a running line pattern by any 

other manufacturer. 

10. Invoicing and M arking.-All merchandise shipped to customers shall be correctly described and priced on the invoices which are 

issued covering such merchandise. Rugs other than " perfect " shall 

be plainly and permanently marked "mill seconds." 
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11. Return M erchandise.-All sales of merchandise shall be final, 

and no member of the Industry shall accept the return of any merchandise, either for exchange or credit, except where the quality of 

the merchandise is in question or where an error has been made in 

size or pattern, or for credit reasons, or where such return is authorized by the Code Authority or its agent. 

12. Credit Terms.-The following maximum credit terms will apply in all sales of merchandise with the understanding that any 

member of the Industry be permitted to exercise his option as to 

which terms best suit the needs of his company: 

(a) 4% 70 days from date of invoice, or 

(b) 4% 60 days from end of month. 

Abatement of discount beyond maturity date to be at the rate of 

one (1) percent a month, left to the option of each member of the 

Industry, but in no case should abatement of discount be permitted 

beyond thirty (30) days after maturity date of invoice. Any deviation from the above terms shall be only upon approval of the Code 

Authority. 

13. 0 ompensation for Losses.-N o member of the Industry shall 

guarantee any purchaser against, or compensate him for, any losses 

arising through the operation of his business. 

14. Protection.-No member of the Industry shall extend price 

protection or stock protection to purchasers other than wholesale 

distributors or firms performing a similar distributing function in 

the event of any decline in prices. 

15. Oonsignment.-No member of the Industry shall consign the 

products of his manufacture to retail dealers or consumers. 

16. Oonsumers.-No member of the Industry shall sell direct to the 

ultimate consumer or his agent, with the exception of sales to city, 

state, and federal governments, railroads, steamship companies, and 

common carriers or employees. Sales made through contract departments of wholesale distributors shall not be considered as being made 

to the ultimate consumer or his agent. 

17. Drops.-The dollar billed sales of drops by any member of 

the Industry shall not exceed ten (10) percent of his dollar billed 

sales of his regular merchandise at his regular published prices, for 

any calendar year, beginning January 1, 1934. In the case of any 

excess above the foregoing, then a subscriber shall pay to the Code 

Authority, as and for liquidated damages, the sum of twenty (20) 

percent of the amount of such excess, such sum to be devoted to 

meeting the expenses of the administration of this Code. 

18. Slow-Moving M erchandise.-Slow-moving merchandise which 

remains in stock after having been offered for sale as mill seconds, 

drops, and mill ends for a period of not less than three (3) months, 

may be sold at discounts necessary to move same, but such slowmoving merchandise shall be sold only during the months of June 

and December and without further price or stock protection. 

19. Allowances.-(a) Retail stores are to be credited or paid the 

volume allowances based only on merchandise invoiced to an individual company. No manufacturer shall pay or allow credit for 

any cost of re-shipping merchandise shipped and invoiced to a 

retailer.* 

• Provisions of this subsection stayed ; see paragraph 2 of Executiv~ Order approving this Code. 
95 

(b) All members of the Industry shall lodge with the person not 

in the Industry, designated by the Code Authority, at the beginning 

of ach season, schedules of all their allowance:., to wholesale distributors and to other purchasers. Allowances for dollar volume 

sha.11 be calculated and paid or credited to retailers for no less a 

period than six (6) months, and in accordance with the schedule 

filed as provided herein. Notification of any proposed revision in a 

schedule of allowances shall be given the person not in the Industry, 

designated by the Code Authority, not less than one (1) week prior 

to the date upon which any such revision shall become effective. 

ARTICLE VIII-AUTO AJ\"'D AIRPLANE CARPETS 

The following additional provisions shall apply to the sale of auto 

and airplane carpets : 

1. Off Goods.-:01erchandise consisting of seconds, returned goods, 

and overweavings may be offered to the automobile trade at any 

time, but if offered to the regular floor-covering trade a.11 provisions 

of the Code shall apply. 

2. Oonsignment.-No member of the Industry shall consign automobile carpets. 

3. Credit Terms.-Each member of the Industry shall abide by 

the following terms in the sales of his merchandise : 

(a) No cash discount or volume allowances to be allowed to purchasers of auto and airplane carpets; sales to jobbers on four ( 4) 

percent basis. 

(b) Terms of sale shall specify for payment for merchandise not 

later than the 25th of the month following the date of the invoice. 

(c) Shipments shall be f.o.b. mill. 

4. Filing of OrdeTs.-Each member of the Industry shall file with 

the person not in the Industry, designated by the Code Authority, 

certified copies of all orders received in excess of five hundred (500) 

dollars; such lists to be filed on the 12th of each month, showing the 

orders taken during the preceding month. Orders must show quantity, price, terms, life of such agreement and quality and construction 

specitications, consisting of all-over weight per square yard and pile 

weight per square yard. After a lapse of three (3) months specifications and price particulars of any order will be considered available for the information of any member of the Industry who may 

so request. Name of member of the Industry and purchaser shall 

not be disclosed unless in the opinion of the person not in the Industry, designated by the Code Authority, it is necessary in the event 

of a claim of unfair practice. 

5. Protection.-Price protection or stock protection shall not be 

extended to automobile manufacturers or to distributors or retail 

dealers in automobile carpets. 

6. Shipping Speci,fications.-All orders shall be specified quantities and stipulate the period during which the entire order must be 

released for shipment or billed. No goods shall be manufactured 

except against written orders. 
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ARTICLE IX-WOOL SALES y ARN 

The following additional provisions shall apply to those members 

of the Industry spinning carded and worsted wool sales yarn for 

carpets and rugs, with the understanding that Section 6 (b) of 

Article VI and Article VII of this Code, shall not apply to said 

members of the Industry: 

1. Oontrol of Production.-The finished yarns inventory of pounds 

of merchandise, wherever located, owned by any member of the 

Industry defined in this Article shall not exceed one sixth ( 1⁄4) of 

his sales in pounds of merchandise for the immediately preceding 

twelve (12) months. Since, however, seasonal variations require 

fluctuating inventories of finished yarns~ a said member of the Industry whose inventory shall at the end of any month exceed the 

aforementioned allowed figure shall be allowed a period of one 

hundred twenty (120) days in which to restore the balance between 

his inventory and sales, before curtailing production. Should any 

person or company enter the industry as a manufacturer or should 

any existing member of the industry have withdrawn or withdrew 

his lines from the market for a period of not less than three (3) 

months the above provisions shall be suspended in their case for the 

period of twelve (12) months; during this twelve (12) months such 

person or company may carry an inventory of finished merchandise 

not to exceed that which is allowed to members of the Industry o:f 

commensurate capacity under the provisions of this Code. 

In order to inform the President of the United States as to the 

regulation of production conformable with sales, a return shall be 

made each month to the person not in the Industry, designated by the 

Code Authority, by each said member of the Industry showing the 

sales in pounds for the month and the inventory of finished yarns at 

the end of the month. 

2. Standard Spinning Oontract.-The said members of the Industry, through the Code Authority, shall set up a standard contract 

for the sale of carpet yarns, which shall include a description of the 

yarn, a definite date, price, quantity, and a specific time for completion, and it shall be considered unfair practice to allow customers to 

specify deliveries which shall carry any contract past its completion 

date. All sales shall be final and any of the said members of the 

Industry shall not allow rebates of any sort, whether for stock protection, financial protection, or anything else that would change the 

terms of the contract. 

3. Arbitrations.-Upon any question arising under this Code which 

would involve dispute between any said member of the Industry and 

a weaver to whom he has sold yarn, the complaint of either may be 

brought to the attention of the Code Authority for its recommendation. If it is determined by said Authority that the contention of any 

said member of the Industry or of the weaver is without justification 

then the person not in the Industry, designated by the Code Authority, will be requested to seek an arbitration between the said member 

of the Industry and weaver involved. 

4. Options.-Options that are given in yarn purchases shall not 

exceed ten (10) days. 
97 

5. Seconds, Damaged, or Off-Colored 11! e1·chandise.-All merchandise sold at prices below the contracted price of such merchandise 

because of yardage, quality, or color, must be reported to the Code 

Authority monthly. Sales of such merchandise shall not exceed more 

than 21⁄2 % of the yearly sales in pounds of each said member of 

the Industry. This includes such item as inferior or damaged yarn, 

discontinued or slow-moving colors or any types of merchandise that 

might properly be classified under these headings. 

6. Donations.-It shall be considered as unfair competition for any 

said member of the Industry to make any donabon or contribution in 

the form of cash, credit, adYertising, or other gratuitous consideration to any customer in connection with any sale. 

7. Ter1ns.-Each said member of the Industry shall abide by the 

following credit terms in the sales of his yarn: 

31⁄2o/o-------------------------------------------------- lOdays 

Net 3o/o---------------------------------------------------- 30days ___________________________________________________ 60days 

f.o.b. shipping point. 

From date of invoice which shall be date of delivery. 

Interest shall be charged at the rate of one half of one (1⁄2 of 1) 

percent per month in excess of 60 clays. Any deviation from the 

above terms shall be only upon approval of the Code Authority. 

ARTICLE X-MomFICATION 

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 National Industrial Recovery Act, from time to time to cancel or modify any order, approval, license, rule, or regulation issued under Title I of said Act. 

2. This Code, upon recommendation to the Administrator by the 

Code Authority, based on conditions in the Industry which tend 

to effectuate the operation of this Code or the purposes of this Act, 

may be modified or amplified, except as to provisions required by 

the Act; such modification or amplification to have the same force 

or effect as any other provision of this Code after approval by the 

Administrator under such notice or hearing as the Administrator 

may specify. 

ARTICLE XI-MONOPOLIES 

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. 

ARTICLE XII-EFFECTIVE DATE 

This Code shall become effective the second day after date. 

Approved Code No. 202. 

Registry No. 214-1-0-!. 

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