NATIONAL RECOVERY ADMINISTRATION 

CODE OF FAIR c ,oMPETITION 

FOR THE 

ADVERTISING AGENCY 

BUSINESS 

AS SUBMITTED ON AUGUST 26, 1933 

REGISTRY No. 1702-17 

The Code for the Advertising Agency Industry 

in its present form merely reflects the proposal of the above-mentioned 

industry, and none of the provisions contained therein are 

to be regarded as having received the approval of 

the National Recovery Administration 

. ...- ..... 

, J I 0--• ,.. • .. "' . 

as applying to this industry 

WE DO OUR PART 

UNITED STATES 

GOVERNMENT PRINTING OFFICE 

WASHINGTON : 1933 

_ _J 

For sale by the Superintendent of Documents, Washington, D.C. - - - - - - - - Price 5 cents 

CODE OF FAIR COMPETITION FOR THE ADVERTISING 

AGENCY BUSINESS 

INTRODUCTION 

The following Code is respectfully submitted for sanction by the 

National Recovery Administration in a sincere effort to lend full 

support to Title I of the National Industrial Recovery Act during the 

period of this emergency by 

(a) Reducing and relieving unemployment in the advertising 

agency business. 

(b) Improving the standards of labor. 

(c) Eliminating practices destructive of the interests of the public, 

employes, and employers. 

DEFINITION OF TERMS u SED HEREIN 

The following definition of terms used in this Code shall indicate 

their true and intended meaning: 

The word ''.Code" shall mean this Code submitted under the 

National Industrial Recovery Act, and all amendments thereto. 

The word "President" shall mean the President of the United 

States. 

The word "Committee" shall mean the Committee on Planning 

and Fair Practice provided for hereinafter. 

The term '' agency commission'' means the standard commission 

allowed to advertising agencies by publishers and other media owners, to be deducted from invoices for space and time billed at gross 

rates, ordered by the agency, for account of a client. 

PARTICIPATING 

All advertising agencies shall be included within the provisions of 

this Code. 

An advertising agency, under this Code, is any organization, individual, corporation, or partnership engaged in the business of preparing and placing advertising for its clients, acting only in such capacity, 

and receiving commissions from advertising media owners or their 

representatives. 

EFFECTIVE DATE OF CODE 

This Code shall become effective on the first Monday following date 

approved by the President. 

This Code shall remain in effect until sixty days after the Industrial 

Recovery Act expires or is abrogated by proclamation of the President 

or by joint resolution of Congress, as provided by law. 

Any notice, demand, or request required or permitted to be given 

or to be made upon any advertising agency shall be sufficiently given 

8180--33 ( 1) 
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if mailed, postage prepaid, to such agency at its address on file at 

Headquarters of the American Association of Advertising Agencies, 

in New York. 

WAGES AND HOURS OF EMPLOYMENT 

The minimum wage paid to any employee of advertising agencies 

shall be $15 per week in cities of 500,000 and over, $14.50 in cities of 

250,000 and over and less than 500,000, $14 in cities of less than 

250,000. 

Messengers and learners, however, may be paid not less than 75% 

of the minimum wage for a period not to exceed the first six months 

of their employment. 

The maximum employment of all employees earning at the rate of 

$35 a week or under shall be an average of forty hours per week in 

any one month. 

No person under sixteen years of age shall be retained or employed. 

Any compensation now in excess of the minimum wage shall not 

be reduced because of any reduction in the hours of labor, but shall 

be maintained or increased by an equitable adjustment. 

All advertising agencies shall comply with the following requirements of Section 7 (a) of Title I of the National Industrial Recovery 

Act: 

(a) 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 agents, in the designation of such representatives, or in selforganization, or in other concerted activities for the purpose of collec- tive bargaining or other mutual aid or protection; 

(b) No employee and no one seeking employn1ent 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; 

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

minimum rates of pay, and other conditions of employment approved 

or prescribed by the President. 

AGENCY COMPENSATION 

Regardless of any increase in labor cost which this Code n1ay impose 

on agencies, no increase in the present basic agency comnussion will 

be sought during the period of this emergency. 

UNFAIR TRADE PRACTICES 

For the purposes of this Code, the following acts shall constitute 

unfair practices: 

(a) Preparing or handling any advertising of an untruthful, misleading, or indecent character, as specified by the following Copy 

Code formulated and approved by the American Association of Advertising Agencies in conjunction with the Association of National 

Advertisers: 

(1) False statements or misleading exaggerations. 

(2) Indirect misrepresentation of a product, or service, through dis- tortion of details, either editorially or pictorially. 
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(3) Statements or suggestions offensive to public decency. 

(4) Statements which tend to undermine an industry by attributing to its products, generally, faults and weaknesses true only of a few. 

(5) Price claims that are misleading. 

(6) Pseudo-scientific advertising, including claims insufficiently 

supported by accepted authority, or that distort the true meaning or 

application of a statement made by professional or scientific authority. 

(7) Testimonials which do not reflect the real choice of a competent witness. 

(b) Taking from any third party a profit, discount, or commission 

other than the regular agency commission allowed by publishers, 

unless known to the client and agreed to by him. 

(c) For any agency to rebate any part of its commission to an 

advertiser, or for any agency to be owned or operated for the financial 

benefit of any advertiser or group of advertisers and/or their employees 

who thus directly or indirectly obtain the equivalent of a rebate and 

circumvent the conditions of agency "recognition" required by media 

owners and/or their organized bodies. 

It shall be considered as rebating to place men in the service of the 

advertiser at the agency's expense or to assume all or part of the 

salary of any employee of the advertiser, or to pay any fee or compensation to any one connected directly or indirectly with the advertiser, or to any third party for obtaining or holding an account. It 

shall also be considered as rebating to agree to allow cash discounts 

not earned by prompt payment on cash discount dates. 

The practice of charging 16%% on net cost of total advertising 

volume shall not be construed as rebating. 

Such unfair practices and all other practices which shall be declared 

to be unfair under this Code, or by any amendment to the Code, 

shall be deemed to be unfair methods of competition in commerce 

within the meaning of the Federal Trade Commission Act as amended, 

and the use or employing of any of them shall be deemed a violation 

of this Code, and any member of the industry who shall directly or 

indirectly, through any officer or representative, knowingly use or 

employ any of such unfair practices, shall be guilty of a violation of 

the Code. 

ADMINISTRATION 

(a) To effectuate further the policies of the Act, a Committee on 

Planning and Fair Practice is hereby designated to cooperate with 

the Administrator in administering, supervising, and promoting the 

provisions of this Code. This Committee shall consist of: (1) Twelve 

representatives elected by the advertising agencies subscribing to 

this Code and/or contributing to the cost of its administration, such 

representatives to be elected by a method approved by the Administrator; (2) the President of the American Association of Advertising 

Agencies; (3) a representative or representatives, not to exceed 

three, without vote appointed by the President of the United Sta tes. 

(b) Said Committee shall cooperate with the Administrator in 

making investigations as to the functioning and observance of any 

provisions of this Code, at its own instance or on complaint by any 

person affected, and shall report the same to the Administrator. 
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(c) Said Committee may from time to time present to the Administrator recommendations based on conditions in the business which 

will tend to effectuate the operation of the provisions of this Code 

and the policy of the National Recovery Administration. Such recommendations shall, upon approval by the President or his duly 

authorized agent, become operative as part of this Code. 

(d) The Committee shall elect a Chairman and a Vice Chairman 

from among its own members. 

(e) The president of the American Association of Advertising 

Agencies shall act as the executive officer of the Committee in carrying out its policies and determinations, in contact with the Government and with advertising agencies. 

(f) The Committee shall appoint a Secretary who shall keep- the 

minutes of all meetings and such other records, other than financial, 

as may be required. 

(g) The Committee shall appoint a Treasurer, who shall be bonded 

and shall be responsible to the Committee. He shall have custody 

of, and have charge of the disposition of, all funds collected under 

the Code; and he shall keep proper books of account showing the 

collection and disposition thereof. 

(h) The Committee is empowered to hire such expert and/or clerical 

assistance as may be needed, at wages which it deems proper, and 

to incur any other expenses which in its judgment are necessary to 

the making, administering, and effectuating of this Code. 

(i) Seven members shall constitute a quorun1 at any meeting of the 

Committee regularly called, and a majority vote by those present 

shall govern. 

(j) ~The Committee shall meet at the call of the chairman, the vicechairman, or the executive officer, and must meet on the petition of 

three or more members, with at least three days' previous notice. 

(k) The Committee mPmbers shall act without compensation. 

(1) No member of the Committee shall be eligible to vote in any 

ease in which his agency or its personnel is involved. 

CosT OF ADMINISTRATION 

The cost of administering this Code shall be borne by the advertising agencies subscribing to it or electing to contribute to its cost. 

Immediately upon approval of this Code by the President, such 

agencies shall make payments of $10 each to the Treasurer, on the 

understanding that any funds remaining unexpended after the Code 

has been abrogated, shall be returned pro rata to the agencies contributing. If additional funds are needed by the Committee for any 

of the purposes herein described, further assessments of $10 may be 

made upon such agencies. 

ENFORCEMENT OF CODE 

Any violation of the Code shall be reported to the Committee, 

which shall then call on the violator to comply with the Code; in 

event of his refusal or failure to do so, after ten days' notice, the Committee shall report such violation to the authority designated by the 

ational Industrial Recovery Act. 
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Any agency charged with violating the Code shall, within ten days 

of receipt of notice, have a fair opportunity to 1nake a defense in writing and/or in person, before decision is made by the Committee and 

violation reported to the Administrator of the National Recovery Act. 

LIABILITY OF COMMITTEE MEMBERS 

·No member or officer of the Committee, in the proper discharge of 

his duties, shall be liable to any advertising agency or other party, 

because of any decision made or action taken by the Committee in 

connection with this Code. 

OBTAINING NECESSARY INFORMATION 

With a view to keeping the President informed as to the observance 

or nonobservance of this Code, every advertising agency shall furnish 

to the executive officer of the Committee, such full facts and information as the Committee may require, suoject to the approval of the 

Administrator, in order to effectuate the purposes of this Code. 

Any or all such information furnished to the executive officer of 

this Committee by any advertising agency shall, upon approval of the 

Administrator, be subject to checking for the purpose of verification 

by an examination of the books and accounts and records of such 

agency by any accountant or accountants designated by the Committee. The cost of such examination shall be treated as an expense 

of administering the Code. 

Failure to furnish required information, on request, shall constitute 

a violation of this Code, and untrue or false information shall also be 

a violation. 

Every advertising agency entitled to vote for representatives upon 

the Committee on Planning and Fair Practice shall furnish to the 

executive officer of the Committee its annual volume for the year 

1932, to establish vote classification; and should any such member fail 

to furnish its 1932 volume, it shall be flatly recorded as $1,000, excepting in case of members of the American Association of Advertising 

Agencies, who have reported their 1932 volume to the Association as 

a basis for classifying dues, and in such event the minimum volume 

for such classification shall be used. 

In figuring annual volume, all fees and retainers shall be converted 

into volume by multiplying by 6% and the amount included in total 

volume reported. 

Such information shall be held in strict confidence by the exec·utive 

officer of the Committee and his personal staff and not be divulged to 

anybody except as required by the Government for its own use, or 

by the Committee in performing its duties under this Code. 

GENERAL PROVISIONS 

This Code is not designed to promote a monopoly and shall not be 

availed of for that purpose. 

Its provisions shall not be so interpreted or administered as to 

eliminate or oppress small enterprises or to discriminate against them. 

This Code and all the provisions thereof are expressly made subject 

to the right of the President, in accordance with the provision of 
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Clause 10 (b) 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, and specifically to the right of 

the President to cancel or modify his approval of this Code or any 

conditions imposed by him upon his approval thereof. 

Such of the provisions of this Code as are not required to be 

included therein by the National Industrial Recovery Act may, with 

the approval of the President, be modified or eliminated as changes in 

the circumstances or experience may indicate. It is contemplated 

that from time to time supplementary provisions to this Code or 

additional codes will be submitted for the approval of the President 

to prevent unfair competition in price and other unfair and destructive 

competitive practices and to effectuate the other purposes and policies 

of Title I of the National Industrial Recovery Act consistent with the 

provisions thereof. 

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