Approved Code No. 201-Supplement No. 18 Registry No. 619-06 

NATIONAL RECOVERY ADMINISTRATION 

SUPPLEMEN.TARY 

CODE OF FAIR COMPETITION 

FOR THE 

WHOLESALE PAINT, VARNISH, 

LACQUER, ALLIED AND KINDRED 

PRODUCTS TRADE 

(A Division of the Wholesaling or .Distributing Trade) 

AS APPROVED ON AUGUST 4, 1934 

WE DO OUR PART 

UNIV. OJr-FL LIi. 

DOC S 

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U.S. DE,a08'fTO. l 

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UNITED STATES 

GOVERNMENT PRINTING OFFICE 

WASHINGTON: 1934 

For aale by the Superintendent of Documents, Washington, D.C. - - -

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- - - Price 5 cents 
This publication is for sale by the Superintendent 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. 

Birmingham, Ala. : 257 Federal Building. 

Boston, Mass. : 1801 Customhouse. 

Buffalo, N.Y.: Chamber of Commerce Building. 

Charleston, S.C. : Chamber of Commerce Building. 

Chicago, Ill.: Suite 1706, 201 North Wells Street. 

Cleveland, Ohio : Chamber of Commerce. 

Dallas, Tex. : Chamber of Commerce Building. 

Detroit, Mich.: 801 First National Bank Building. 

Houston, Tex. : Chamber of Commerce Building. 

Indianapolis, Ind. : Chamber of Commerce Building. 

Jacksonville, Fla.: Chamber of Commerce Building. 

Kansas City, Mo.: 1028 Baltimore Avenue. 

Los Angeles, Calif. : 1163 South Broadway. 

Louisville, Ky.: 408 Federal Building. 

Memphis, Tenn. : 229 Federal Building. 

Minneapolis, Minn. : 213 Federal Building. 

New Orleans, La.: Room 225-A, Customhouse. 

New York, N.Y.: 734 Customhouse. 

Norfolk, Va.: 406 East Plume Street. 

Philadelphia, Pa. : 422 Commercial Trust Building. 

Pittsburgh, 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. 201-Supplement No. 18 

SUPPLEMENTARY CODE OF FAIR COMPETITION 

FOR THE 

WHOLESALE PAINT, VARNISH, LACQUER, 

ALLIED AND KINDRED PRODUCTS TRADE 

As Approved on August 4, 1934 

ORDER 

APPROVING SUPPLEMENT.ARY CODE OF F .AIR COMPETITION FOR THE 

WHOLESALE P.AI~TT, VARNISH, LACQUER, ALLIED AND KINDRED PRODUCTS '!'RADE 

A DIVISION o·F THE WHOLESALING OR DISTRIBUTING TRADE 

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 approval of a Supplemental Code of Fair Competition for the Wholesale Paint, Varnish, 

Lacquer, Allied and Kindred Products Trade to the Code of Fair 

Competition for the Wholesaling or Distributing Trade, and hearings having been duly held thereon and the annexed report on said 

Supplemental Code, containing findings with respect thereto, having 

been made and directed to the President: 

NOW, 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 Supplemental Code complies 

in aU respects with the pertinent provisions and will promote the 

policy and purposes of said Title of said Act; and do hereby order 

that said Supplemental Code of Fair Competition be and it 1s hereby approved; provided, however, that the provis_i~ns of Art~cle 

IV, Section 5 are approved only so long as the prov1s10ns of Article 

XX of the Code of Fair Competition for the Paint, Varnish, and 

Lacquer Manufacturing Industry as approved on October 31, 1933 

are effective. 

HUGH S. JOHNSON, 

Administrator for Industrial Recovery. 

Approval recommended: 

ROBERT L. HOUSTON' 

Division Administrator. 

w ASHINGTON, D.C., 

. August 4, 1934. 

78184e-1044-33-34--l (1) 
REPORT TO THE PRESIDENT 

The PRESIDENT, 

The lV hite House. 

Srn: This is a report of the Hearing on the Supplemental Code o:f 

Fair Competition of the Wholesale Paint, Varnish, Lacquer, Allied 

and Kindred Products Trade, conducted in the Green Room of the 

Raleigh Hotel, on May 4, 1934. The Supplemental Code, which is 

attached, was presented by a duly qualified and authorized representative o.f the Trade, complying with the statutory requirements, 

said to represent 15 per cent in number and about 50 per cent in 

volume of ,sales of the Trade which could be included in this Code. 

THE TRADE 

No adequate current statistics are available with respect to this 

Trade. According to the Census of Distribution, however, there were 

about 1,027 establishments handling paint with aggregate annual 

sales of $304,999,000; the total employees numbered 12,571. 

PROVISIONS OF THE CODE 

Since this Code is supplemental to the Code of Fair Competition 

for ~h~ Whole$aling or Distributing Trade, it contains no labor 

prOVlSlOnS. 

The provisions containing supplemental definitions are considered 

inclusive and accurate. 

The supplement to the Administrative provisions of the General 

Code establishes a Divisional Code Authority which is fairly and 

adequately representative of all the different elements in the Trade. 

The Trade Practices proposed are not considered in any way 

objectionable. 

FINDINGS 

The Deputy Administrator in his final report to me on said 

Supplemental Code having found as herein set forth and on the 

basis of all the proceedings in this matter; 

I find that 

(a) Said Supplemental Code is well designed to promote the 

policies and purposes of Title I of the National Industrial Recovery 

Act, including removal of obstructions to the free flow of interstate 

and foreign commerce which tend to diminish the amount thereof, 

and will frovide for the general welfare by promoting the organization o industry for the purpose of cooperative action among 

trade groups, by inducing and maintaining united action of labor 

and management under adequate governmental sanctions and supervision, by eliminating unfair competitive practices, by promoting 

the fullest possible use of the present productive capacity of in-

(2) 
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dustries, by avoiding undue restriction of production ( except as 

may be temporarily required), by increasing the consumption of 

industrial and agricultural products through increasing purchasing 

power, by reducing and relieving unemployment, by improving 

standards. of labor, and by otherwise r ehabilitating industry. 

(b) Said Trade normally employs not more than 50,000 employees 

and it is not classified by me as a.major industry. 

(c) The Supplemental 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 a trade association truly representative of 

the aforesaid Trade; and that said association imposes no inequitable 

restrictions on admission to membership therein. 

( d) The Supplemental Code is not designed to and will not permit 

monopolies or monopolistic practices. 

( e) The Supplemental 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 the approval of 

this Supplemental Code. 

For these reasons, the Supplemental Code has been approved. 

Respectfully, 

AUGUST 4, 1934. 

HUGH S. JOHNSON, 

Administrator. 
SUPPLEMENTARY CODE OF FAIR COMPETITION FOR 

THE WHOLESALE PAINT, .VARNISH, LACQUER, ALLIED AND KINDRED PRODUCTS TRADE 

A DIVISION OF THE WHOLESALING OR DISTRIBUTING TRADE 

ARTICLE I-PURPOSES 

To effectuate the _policies of Title I of the National Industrial 

Recovery Act, this Supplemental Code is established as a Code of 

Fair Competition for the Wholesale Paint, Varnish, Lacquer, Allied 

and Kindred Products Trade pursuant to Article VI, Section 1 ( c) 

of the General Code of Fair Competition for the Wholesaling or 

Distributing Trade, approved by the President of the United States 

on January 12 1934. All provisions of the said General Code which 

are not in conAict with the provisions of this Supplemental Code are 

hereby incorporated by reference in this Supplemental Code and 

made a part hereof. Such provisions of the General Code together 

with the supplementing provisions of this Code are the standards of 

fair competition for and are binding upon every member of said 

Wholesale Paint, Varnish, Lacquer, Allied and IGndred Products 

Trade. 

ARTICLE II-DEFINITIONS 

SUPPLEMENTING ARTICLE II OF THE GENERAL CODE 

' SECTION 1. Wholesaler or Distributor.-The term" wholesaler" or 

"distributor" as used herein shall mean any individual, partnership, 

association, corporation, or other form of enterprise, or a definitely 

organized division thereof, definitely organized to render and rendering a general distribution service, which buys and maintains at his 

or its place of business a stock of paints, varnishes, lacquers, allied 

and/ or kindred products, and which through salesmen, advertising, 

and/or sales promotion devices sells not less than seventy (70) per 

cent of his or its total volume of sales to retailers and/ or to institutional, commercial, and/ or industrial users. It is not the character 

of a concern's buying but the character of its selling which marks it 

as a wholesaler. 

SECTION ~- The Trade.-The term " the Trade " as used herein shall 

mean the business in which wholesalers or distributors as above 

defined are engaged. 

SECTION 3. Assoaiation.-The term "Association" as used herein 

shall mean the National Wholesale Paint Association. 

SECTION 4. Divisional OodJe Authority.-The term "Divisional 

Code Authority" as used herein shall mean the Divisional Code Authority for the Wholesale Paint, Varnish, Lacquer, Allied and Kindred Products Trade, a division of the Wholesaling or Distributing 

Trade. 

(4) 
5 

SECTION 5. General Oorle.-The term "General Code" as used 

herein shall mean the Code of Fair Competition for the Wholesaling 

or Distributing Trade. 

SECTION 6. Trade Sales.-The term "trade sales " as used herein 

shall mean all sales to jobbers, dealers, painters, automotive refinishing shops, institutions, hospitals, office buildings, apartment houses, 

and/ or other commercial enterprises not excluded under industrial 

sales and sales made directly to the ultimate consumer. 

SECTION 7. I ndustrial Sales.-The term "industrial sales" as used 

herein shall mean all sales to the fallowing classes of buyers covering products of the Trade used by such buyers on their products or 

for the finishing of their equipment and for the upkeep and maintenance of their plants, equipment, tenements, and for any other 

purposes: 

Industrial plants of all kinds (such as automobile manufacturers, 

furniture manufacturers, etc.). 

Transportation companies (including street railways, bus and air 

transportation companies). 

Car and locomotive builders. 

Public-service companies. 

Oil refiners and pipe-line companies. 

Packing houses. 

Steel manufacturers and those who fabricate their own products. 

Bridge builders and bridge operating companies. 

Coal or other mining operations. 

Steamship lines, shipyards, wharves, and docks. 

All departments of any State, County, Municipal, or other political subdivision, but only for the following products: Traffic paint, 

road paint, products used on bridges, trucks, and machinery; automobile license tag coatings; or materials for finishing furruture, or 

any other products manufactured in prisons or reformatories. All 

other business from State, County, Municipal and other political subdivisions, such as products used on buildings, institutions, etc., to be 

classified as " trade sales." 

All departments of the United States Government regardless of 

usage. 

ARTICLE III-ADMINISTRATION 

SUPPLEMENTING ARTICLE VI, OF THE GENERAL CODE 

SECTION 1 (a) The Divisional Code Authority for the Wholesale 

Paint, Varnish, Lacquer, Allied and Kindred Products Trade ( which 

may be incorporated, not for profit) shall be composed of eleven (11) 

members of the Trade, six (6) of whom shall be elected by the 

Association, and five ( 5) of w horn shall be selected from the members 

of the Trade not members of the AssociatioR, in the following proportion: 

One (1) member representing wholesale hardware concerns distributin O' paint. 

One (1) member repres~mting wholesale building materials (including lumber) concerns distributing paint. 

One (1) member representing wholesale wall paper concerns distributing paint. 
6 

One (1) member representing wholesale drug concerns distributing paint. 

One (1) member representing wholesale glass concerns distributing paint. 

No more than two (2) of the five (5) members of the Divisional 

Code Authority selected from among non-members of the Association shall be chosen from any one State. 

(b) The five ( 5) members to be selected from among non-members 

of the Association shall be nominated by the Administrator. The 

names of the five ( 5) persons so nominated shall be placed upon a 

ballot which contains, in addition, five ( 5) blank spaces for the 

inclusion of other names. These ballots shall be sent to ·an members 

of the Trade not members of the Association who can be discovered 

after diligent search. Each ballot shall be accompanie_d by a letter 

stating that no ballot will be counted unless it is accompanied by a 

certificate of assent to and compliance with this Supplemental Code 

and the General Code, and each vote in order to be counted shall be 

postmarked not later than ten (10) days after the ballots are mailed 

by the Association. 

Each member of the Trade voting for the Divisional Code Authority may vote for the five ( 5) nominees selected by the Administrator, 

or may write in on the ballot such additional names as he desires. 

All duly elected members of the Divisional Code Authority shall 

serve for a period of twelve (12) months. 

( c) The successor or any member of the Divisional Code Authority 

whether to fill an unexpired term or a full new term shall be elected 

in the same manner as provided in this Section. 

SECTION 2. The Divisional Code Authority shall have the :following duties and powers in addition to those prescribed in the General 

Code subject to such rules and regulations as may be issued by the 

Administrator: 

(a) To appoint a Trade Practice Committee, which shall meet 

with the Trade Practice Committees appointed under such other 

Codes as may be related to the Trade, except other Supplemental 

Codes to the General Code, for the purpose· of :formulating fair 

trade practices to govern the relationship between production and 

distribution employers under this Supplemental Code and under 

such other Codes, to the end that such fair trade practices may be 

proposed to the Administrator, as an amendment to this Supplemental Code and such other Codes. 

(b) To organize, elect officers, hire employees, appoint agents and 

per:f orm .such other acts as may be necessary for the proper administration of this Supplemental Code and of the General Code. 

(c) To appoint such Reo-ional Committees as it desires to aid in 

the administration of this Supplemental Code and the General Code i 

provided, however, that nothing herein contained shall be construed 

to relieve the Divisional Code Authority from its duties and liabilities 

as such. 

( d) To adopt by-laws and rules and regulations for its procedure. 

( e) To use such trade associations and other agencies as it deems 

proper for the carrying out of any of its activities provided for 

herein, provided that nothing herein shall relieve the Divisional 

Code Authority of its duties or responsibilities under this Supple-
1 

mental Code, and that such trade associations a:r;id agencies shall at 

all times be subject to and comply with the provisions hereof. 

( f) To obtain from members of the Trade such information and 

reports as are required for the administration of this Supplementa\ 

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

General Code Authority and to the Divisional Code Authority members of the Trade subJect to this Supplemental Code shall furnish 

such statistical information as the Administrator may deem necessary for the purposes recited in Section 3 (a) of the Act, to such 

federal and state agencies as he may designate; provided that nothing in this Supplemental Code shall relieve any member of the Trade 

of any existing obligations to furnish reports t-0 any government 

agency. No individual report shall be disclosed to any other member of the Trade or any other party except to such other governmental agencies as may be directed by the Administrator. 

(g) To appoint within one month after the effective date of this 

Supplemental Code a committee so constituted as to give producer, 

consumer, and governmental representation satisfactory to the Administrator. This committee shall make a study with a view to the 

establishment of classifications and standards of definitions of each 

class of staple products of the Trade wherever such standards are 

deemed :feasible. The findings and recommendations of this committee shall within six months be submitted to the Administrator 

and, after such hearings and investigations as he may designate, 

and upon approval by him shall be made a part of this Supplemental Code and be binding upon every member of the Trade. (h) To recommend to the Administrator any action or measures 

deemed advisable, including further fair Trade practice provisions 

to govern members of the trade in their relations with each other 

or with other trades, measures for industrial planning, and stabili-_ zation of employment; and including modifications of this Supplemental Code which shall become effective as part hereof upon 

approval by the Administrator after such notice and hearing as he 

may specify. 

SECTION 3. Nothing contained in this Supplemental Code shall 

constitute the members of the Divisional Code Authority partners 

for any purpose nor shall any members of the Divisional Code 

Authority be liable in any manner to anyone for any act of any 

other member, officer, agent, or employee of the Divisional Code 

Authority. Nor shall any member of the Divisional 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 Supplemental Code, except for his own willful misfeasance or 

nonfeasance. 

SECTION 4. If the Administrator shall determine that any action 

of the Divisional 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 :for further consideration by such Divisional Code Authority or agency, }?ending 

final action, which shall not be effective unless the Administrator 

approves or unless he shall fail to disapprove after thirty days' 
8 

notice to him of intention to proceed with such action in its original 

or modified form. 

SECTION 5 (a) . It being found necessary in order to support the 

administration of this Supplemental Code and to maintain the 

standards of fair competition established hereunder and to effectuate 

the policy of the Act, the Divisional Code Authority is authorized: 

1. To incur such reasonable obligations as are necessary and 

proper for the foregoing purposes, and to meet such obligations out 

of funds which may be raised as hereinafter provided and which shall 

be held in trust for the purposes of this Supplemental Code; 

2. To submit to the Administrator for his approval, subject to 

such notice and opportunity to be heard as he may deem necessary 

(1) an itemized budget of its estimated expenses for the foregoing 

purposes, and (2) an equitable basis upon which the funds necessary 

to support such budget shall be contributed by members of the Trade; 

3'. After such budget and b.asis of contribution have been approved 

by the Administrator, to determine and obtain equitable contribution 

as above set forth by all members of the Trade, and to that end, if 

necessary, to institute legal proceedings therefor in its own name. 

(b) Each member of the Trade shall pay his or its equitable contribution to the expenses of the maintenance of the Divisional Code 

Authority, determined as hereinabove provided, and subject to rules 

and regulations pertaining thereto issued by the Administrator. 

Only members of the Trade complling with this Supplemental Code 

and contributing to the expenses o its administration as hereinabove 

provided, unless duly exempted from making such contribution, shall 

be entitled to participate in the selection of members of the Divisional 

Code Authority or to receive the benefits of any of its voluntary 

activities or to make use of any emblem or insignia of the National 

Recovery Administration. · ( c) The Divisional Code Authority shall neither incur nor pay 

any obligation in excess of the amount thereof as estimated in its 

approved budget, except upon aI_>proval of the Administrator; and 

no subsequent budget shall contain any deficiency item for expenditures in excess of prior budget estimates except those which the Administrator shall have so approved. 

ARTICLE IV-TRADE PRACTICES 

SUPPLEMENTING ARTICLES VII AND VIII OF THE GENERAL CODE 

SEVIToN 1. Ewchange of Goods.-It shall be a violation of this 

Supplemental Code for any member of the Trade to take or allow to 

be taken in exchange for the product or products of one manufac- .~urer, any I_>roduct or products of any other manufacturer of the 

Paint, Varmsh, Lacquer, Allied and Kindred Products Industry, nor 

shall he give or permit the giving of any advice or assistance, in 

facilitating such exchange or replacement, nor shall he make or receive, or permit to be made or received, any concessions, allowances, 

or gifts of any kind to promote or facilitate such exchange, provided that the restrictions imposed by this Section shall not apply to 

any transaction and/ or sale made directly by a wholesaler or indirectly by him t~rough a dealer wherein the ultimate nonindustrial 

user is dissatisfied with the quality of the merchandise. In such 
9 

cases the product of one manufacturer may be replaced either directly by the wholesaler or by him through the dealer with the products of another manufacturer, provided that both manufacturers' 

products are stocked and distributed in the same territory at the same 

time by the same wholesaler. 

SECTION 2 (a). StandarrJ T erm,s amd Disoownt.-On and after the 

effective date, the terms granted by wholesalers and/ or distributors 

for products of the Paint, Varnish and Lacquer Manufacturing 

Industry as defined in their Code shall not exceed: 2% for cash in 

10 days, net 60 days, except artists' colors, on which the terms shall 

be 2% for cash in 10 days, net 30 days. Except that discount to 

Trade Sales Accounts may be extended to the tenth day of the month 

following purchase and the discount to Industrial Sales Accounts 

may be extended to the twentieth day of the month following purchase to customers who regularly discount in the month following 

purchase, and provided that no discount shall be allowed after the 

discount date. 

(b) Datings.-Except as specifically provided by this Article, 

members of the Tra.de shall not grant any advance datings on the 

sales of any products of the Trade. 

( c) Srrzrng Stock Orders.-Datings on orders excluding those for 

artists' colors to established dealer accounts shall be limited to datings on Spring Stock Orders for products of the Paint, Varnish and 

Lacquer Manufacturing Industry as defined in the Code of that 

Industry shipped at the ·distributor's convenience aftBr October 15, 

with an April 1st dating and regular terms; only one order on any 

one manufacturer's line to any one account. 

(d) New: Acoownts.-The maximum dating on trade sales initial 

stock orders for products of the Paint Varnish and Lacquer Manufacturing Industrt as defined in the Code of that Industry of any 

one manufacturers line to new dealer accounts shall be limited to 

four months from the date of shipment and with standard terms, pro- · vided that orders shipped between October 15 and December 1st in 

any year may be with an April 1st dating and regular forms. Datings on initial stock orders of artists' colors from new dealer and/or 

jobber accounts shall be limited to two months from date of shipment and shall be sold on standard terms. 

( e) Fal~ Stock Orders on Artists' Oolors.-Datings on orders to 

establish dealer and/or jobber accounts shall be limited to datings 

on fall stock orders and shipped at the wholesaler's convenience 

after April 1, with a September 1 dating, sold on regular terms and 

only one order to any one account. In the case of show-card colors 

and inks, which are subject to freezing, dating shall be limited on 

spring stock orders shipped at the wholesaler's convenience after• 

November 1st (or, in the event shipment is made by a water route, 

which is affected by the closing of navigation, this date may be advanced not to exceed ten days prior to the official closing of navigation over such route), with an April 1st dating and sold on 

regular terms and only one order to any one account. 

(f) Anticipated Discownts.-If any advance dating shall be permitted under this Article, an anticipation discount may be allowed to 

the extent of one half of one percent per month. 
10 

SECTION 3. (a) Price Guarantees.-Guarantees against price decline 

are prohibited except in the case of an order on which a dating has 

been allowed, as herein provided, when such price guarantee may be 

given for a time not t-o exceed the dating period granted. 

(b) Tfrne Guarantees.-Definite• time guarantees on the life and/or 

service of the products of the Trade are hereby prohibited. 

SECTION 4. 0 onsignment.-N o member of the Trade shall ship 

goods on consignment e·xcept under circumstances to be defined by the 

Divisional Code Authority, where peculiar circumstances of the 

Trade require the practice. 

SECTION 5. R etwrned Goods.-N o member of the Trade shall 

accept the return of merchandise from any customer without having 

given prior consent to the return thereof, except in the case of defective products or where in some other way the member of the Trade 

may be responsible. On such goods as are accepted for return in 

accordance with prior consent given by a member of the Trade, a 

reasonable charge-? not less than five ( 5) percent of the selling price 

shall be made anct the freight charges shall be charged to the shipper returning goods except in the case of defective products or where 

1n some other wa.y the member of the Trade may be responsible. 1 

SEOTION 6. (a) Selling B elow Oost.-Destructive price cutting 

is an unfair method of competition and is forbidden. Any sale 

shall be deemed prima fade destructive price cutting if the net sales 

price shall be less than the seller's net invoice cost plus cost of transportation; provided, however, that no sale · shall be deemed destructive :{)rice cutting if made in good faith t-o meet existing competition. 

(b) Clearance Sales.-Bona fide sales for the purpose of closing 

out discontinued, obsolete, or damaged merchandise may be made 

at such prices and upon such terms and conditions as may be necessary to effect their sale. Full details concerning such sales, including the amount of such merchandise on hand and the date of its 

purchase, must be reported to the Divisional Code Authority at 

least one week before the date of such sale. If the Divisional Code 

Authority shall so demand, any wholesaler making such sales shall 

furnish to it proof that such sales were made in good faith. If at 

any time the Administrator finds that the Divisional Code Authority 

is abusing the authority granted to it by this Section, he shall 

declare it inoperative either temporarily or permanently. 

(c) Free Goods.-No goods shall be given free by any member 

of the Trade either alone or in connect10n with the sale of other 

merchandise, except where such free goods are given by a manufacturer and merely passed on by the wholesaler to his customer. 

SECTION 7. Emergency Provision.-When the Divisional Code 

Authority determines that an emergency exists in this Trade and 

that the cause thereof is destructive price cutting such as to render 

ineffective or seriously endanger the maintenance of the provisions 

of this Supplemental Code, the Divisional Code Authority may 

request the Administrator, subject to such notice and hearing as he 

may require, to declare such emergency and determine a nnnimum 

markup to be added to the cost as established in paragraph (a), 

Section 6 of this Article. During the period of the emergency it 

shall be an unfair trade practice for any member of the Trade to 

1 See paragraph 2 of order approving this Code. 
-11 

sell or offor to sell any products of the Trade at such prices or upon 

such terms or conditions of sale that the buyer will pay less therefor 

than net invoice cost plus the minimum markup and cost of transportation, except as provided elsewhere in this Article. 

When it appears that conditions have changed, the Divisional 

Code Authority, upon its own initiative or upon the request of any 

interested party, shall cause such determination to be reviewed. The 

Administrator may at any time review such determination and 

modify or discontinue the operation of this Section. 

SECTION 8. Subterfuge.-It shall be an unfair trade practice for 

any member of the Trade to employ subterfuge directly or indirectly 

to avoid or attempt to avoid the provisions of this Supplemental 

Code, or of the General Code, or the purposes and intent of the 

National Industrial Recovery Act, which are to increase employment, provide better wages, promote fair competitive methods, 

better business conditions, and promote the public welfare. 

ARTICLE V-POWER OF PRESIDENT TO MODIFY 

This Supplemental Code and all the provisions thereof are expressly made subject to the right of the President in accordance 

with the provisions of Sub-section (b) of Section 10 of the Act, from 

time to time to cancel or modify any order, approval, license, rule 

or regulation issued under Title I of said Act. 

ARTICLE VI-EFFECTIVE DATE 

This Supplemental Code shall become effective ten (10) days after 

its approval by the Administrator. 

Approved Code No. 201-Supplement No. 18. 

Registry No. 619-06. 

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