Approved Code No. !-Amendment No. 8 Registry No. 299-25 

NATIONAL RECOVERY ADMINISTRATION 

AMENDMENT TO 

CODE OF FAIR COMPETITION 

FOR THE 

COTTON TEXTILE INDUSTRY 

AS APPROVED ON JULY 17, 1934 

WE DO OUR PART 

UNITED STATES 

GOVERNMENT PRINTING OFFICE 

WASHINGTON: 1934 

For sale by the Superintendent of Documents, Washingjen, D.C. - - - • - - - - Price 5 cents 
f 

J 

This publicat:~on 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 COMMEBCB 

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, l\lich.: 801 First National Bank Building, 

Houston, Tex.: Chamber of Commerce Building. 

Indianapolis, Ind.: Uhamber 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 O-live Street. 

San Francisco, Calif. : 310 Customhouse. 

Seattle, Wash.: 809 Federal Office Building. 
Approved Code No. !-Amendment No. 8 

AMENDMENT TO CODE OF FAIR COMPETITION 

FOR THE 

COTTON TEXTILE INDUSTRY 

As Approved on July 17, 1934 

ORDER 

MoDIFICATION OF CoDE OF FAIR CoMPETITION FOR THE CoTTON TEXTILE 

INDUSTRY 

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 Code of 

Fair Trade Practices for the Cotton Thread Manufacturine- Branch 

of the Cotton Textile Industry, and hearing 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: 

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 Code com plies in all respects 

with the pertinent purposes of said Title of said Act, and do hereby 

order that said Code of Fair Trade Practices be and it is hereby 

approved and that the previous approval of the Code of Fair Competition for the Cotton Textile Industry is hereby modified to include an approval of said Code in its entirety as modified; provided-1 

however, that the provisions of Section 3 and Section 4 of said 

Code of Fair Practices in their entirety be and they are hereby 

stayed pending my further order. 

HuGH S. JoHNsoN, 

Administrator for Industrial Recovery. 

Approval recommended : 

RoBERT L. HousTON, 

Division Adn~inistrator. 

wASHINGTON D.C., 

July 17, 1934. 

74226°----829-89----34 (1) 
REPORT TO THE PRESIDENT 

The PRESIDENT, 

The lV hite House. 

SIR: This is a report on the Code o£ Fair Trade Practices governing the merchandising o£ the products o£ the Cotton Thread 

Manufacturing Branch o£ the Cotton Textile Industry, conducted 

in vVashington, D.C., on February 2, 1934. 

In accordance with the customary procedure every person who 

filed a request £or appearance was freely heard in public, and all 

statutory and regulatory requirements were complied with. 

The Code which is attached was presented by the duly qualified 

and authorized representatives o£ the Industry, the Cotton Textile 

Industry Committee, which is the Code Authority £or the Cotton 

Textile Industry. 

FINDINGS 

The Deputy Administrator in his final report to me on said Code 

having found as herein set forth and on the basis o£ all proceedings 

in this matter : 

I find that: 

(a) The Fair Trade Practices o£ the Cotton Thread Branch o£ the 

Cotton Textile Industry and the Cotton Textile Code as amended 

are well designed to promote the policies and purposes o£ Title I 

o£ the National Industrial Recovery Act including the removal o£ 

obstructions to the free flow o£ interstate and foreign commerce 

which tend to diminish the amount thereof, and will provide £or the 

general welfare by promoting the organization o£ industry £or the 

purpose o£ cooperative action among trade groups, by inducing 

and maintaining united action o£ labor and management under adequate governmental sanction and supervision, by eliminating unfair 

competitive practices, by promoting the fullest possible utilization 

o£ the :present productive capacity o£ industries, by avoiding undue 

restrictwn o£ production (except as may be temporarily required) 

by increasing the consumption o£ industrial and agricultural products through increasing purchasing power, by reducing and relieving unemployment by Improving standards o£ labor, and by otherwise rehabilitating industry. (b) The Cotton Textile Code as so amended complies in all respects with the pertinent provisions o£ said Title o£ said Act, includ-: 

ing without limitation Subsection (a) o£ Section 3, Subsection (a) 

o£ Section 7 and Subsection (b) o£ Section 10 thereof. 

(c) The Cotton Textile Industry Committee is empowered to present the aforesaid Code o£ Fair Practices on behalf o£ the Industry 

as a whole. 

(2) 
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(d) The Code of Fair Practices and the Cotton Textile Code as 

so amended are not designed to and will not eliminate or oppress 

small enterprises and will not operate to discriminate against them. 

(e) The Code of Fair Practices and the Cotton Textile Code as 

so amended are not designed to and will not permit monopolies 

or monopolistic practices. 

(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 the above reasons this Code of Fair Practices has been approved by me. 

Respectfully, 

JULY 17, 1934. 

H UGH s. JOHNSON' 

Administrator for Industrial Recovery. 
AMENDMENT TO CODE OF FAIR COMPETITION FOR 

THE COTTON TEXTILE INDUSTRY 

F Aill TRADE PRACTICES GOVERNING THE MERCHANDISING OF THE PRODUCTS 

OF . THE COTTON THREAD MANUFACTURING BRANCH 

1. National lndlustrial Recovery Act.-Each member of the Industry who is entitled to display the Blue Eagle of the National 

Recovery Administration shall affix to all invoices, in accordance 

with regulations of the Code Authority, a stamp stating that the 

mill where the goods were n1ade is operating under the Cotton 

Textile Code, which regulations and stamp shall be subject to the 

approval of the Administrator. 

2. Definitions.-The following definitions shall apply to this Code 

of Fair Trade Practices hereinafter set forth. 

(a) The term " industry " means the cotton thread manufacturing branch of the Cotton Textile Industry, which is defined as the 

manufacture of sewing, crocheting, embroidery, and/or darning 

cotton thread. 

(b) Whenever the term "thread" or "threads" is u~ed, it shall 

refer to cotton thread, which is defined to include all products composed of one or more cotton yarns, single or braided or twisted 

together, and sold for use in any sewing, crocheting, embroidering, 

or darning operations, in the natural, white or colored state, with 

the exceptwn of : 

(1) Cotton articles usually defined in the trade as "twine", "sewina twine" "bag twine " "bag closing twine" "broom twine" 

b ' ' ' ' ' and " tufting twine ", which are made of carded yarns of a yarn 

count of 20s or coarser. 

( 2) Cotton looping and seaming yarns used in the hosiery trade. 

For the purposes of this Code of Fair Trade Practices certain 

cotton yarns, commonly and variously known as " schi:ffli ", " schiftli 

yarn " and " embroidery yams ", as made and sold for use only on 

Schiftli and Swiss hand embroidery machines shall be considered as 

coming within the foregoing definition of thread. 

(c) The term "manufacturers' threads" refers to those threads 

generally used in the manufacturing or industrial trades, and the 

term " household threads " refers to those threads generally used in 

the home or for domestic purposes. 

(d) The term " Sub-Committee on Thread " shall mean the SubCommittee on Thread of the Code Authority of the Cotton Textile 

Industry. 

(e) Unless otherwise specified, all provisions of this Code of Fair 

Trade Practices shall apply both to manufacturers' or industrial 

threads and household or domestic threads. 

(4) 
5 

3. Publishing Prices and Terms of Sale.-(a) Each member of 

the industry shall furnish to and file with The Thread Institute 

copies of price lists showing all current prices and quantity discounts 

to all classes of trade on branded goods. This information shall be 

kept up to date in the future by furnishing The Thread Institute 

with all changes in prices and quantity discounts on branded goods 

on the same day on which they go into effect. All such information 

filed with The Thread Institute shall be available to all members of 

the Industry. 

(b) Each member of the Industry shall have the right individually 

to file new prices from time to time not inconsistent with the provisions of the Cotton Textile Code as amended or this Code of Fair 

Trade Practices. (c) Members of the Industry shall report to the Cotton-Textile 

Institute every four weeks, the total of all sales of nonbranded goods 

made by them during said four weeks' period. The units in which 

such sales shall be reported, the detail of said reports, and the disposition of same, shall be as designated from time to time by the 

Sub-Committee on Thread. 

(d) The Sub-Committee on Thread shall have power to establish 

rules and regulations for the orderly administration of the provisions 

of this Section 3. Such rules and regulations shall be subject to 

review by the Cotton Textile Industry Committee. 

4. Selling :Below Oost.-(a) The selling of goods by any member 

of the Industry below cost of production is an unfair trade practice 

except where the sale is made to meet bona fide competition. 

(b) The provisions of paragraph 4 (a) shall not become effective 

until the definition of cost of production and a method of unifor-m 

cost accounting have been approved by the Administrator, and such 

further period thereafter, not less than three months, as may be 

fixed by the Sub-Committee on Thread with the approval of the 

Cotton Textile Industry Committee and of the Administrator. 

(c) Nothing herein contained shall prevent the sale of damaged 

goods, job lots, and discontinued lines below cost of production, 

provided, such merchandise is clearly invoiced as such, and that a 

complete record thereof is kept by the seller, open to inspection by 

The Thread Institute or its authorized agents. 

(d) The Thread Institute, through a disinterested agency appointed by its Board of Directors, is designated as an agency to 

gather all necessary information as to a method of uniform cost 

accounting. Such agency shall report the results of such investigation to the said Board in statistical form, and said Board is designated as an agency to determine the appropriate method for uniform 

cost accounting, and to recommend such method and a definition of 

cost of production through the Sub-Committee on Thread for the 

action of the Cotton Textile Industry Committee and recommendation to the Administrator. Such recommendation, after such notice 

and hearing as the Administrator may specify, shall become effective 

subject to the provisions of paragraph 4 (b) on approval by the 

Administrator or the President. 
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5. Credit Terms.-(a) Except either as otherwise provided in 

paragraph (b) of this section, or under emergency conditions 1 found 

to exist in any particular case, no more favorable credit terms shall 

be extended by any member of the Industry, in connection with any 

sale or transactions completed within the continental limits of the 

United States than the following: 

Net 60 days. 

2% 10 days E.O.M. (End of Month). 

(b) The provisions of paragraph 5 (a) shall not apply to sales 

of thread for use on Schiffii and Swiss hand embroidery ma-chines, 

on which sales no more favorable terms shall be extended thanNet 60 days. 

2% 30 days. 

3% 10 days. 

(c) No extra dating shall be allowed, except that goods shipped 

from the 25th to the end of the month may be regarded for discount purposes as having been shipped as of the 1st of the following 

month, and except also that an additional dating of thirty days on 

the invoice n1ay be allowed for discount purposes on shipments 

from points east of the Mississippi River to points west of the 

lon,gitude of Denver, Colorado. 

(d) No shipment shall be made on consignment to any person, 

firm or corporation other than to a bona fide sales agent. 

6. Secret Rebates.-(a) The payment or allowance of secret 

rebates, refunds, or unearned discounts, whether in the form of 

money or otherwise, resulting in discriminations between customers 

of the same class, is an unfair trade practice. 

(b) Nothing in this paragraph shall preclude the payment of a 

reasonable c01nmission to any jobber for bona fide services in distribution of goods. 

7. Mutuality of Oontracts.-(a) All contracts not for immediate 

delivery made by 1nembers of the Industry for the sale of their products shall be in writing for definite quantities, and duly executed 

by the respective parties thereto. Forms for such contracts shall 

be filed with The Thread Institute as soon as effective and shall be 

available to all members. 

(b) All contracts for manufacturers' threads shall stipulate that 

the delivery specifications calling for the shipments against the 

contracts shall be distributed fairly and equitably throughout the 

term of said contract. 

(c) All contracts should be performed according to their terms by 

all the parties thereto, in the absence of a legal or equitable excuse 

for nonperformance. The willful failure of a member o:f the Industry to enforce the same is an unfair trade practice. Nothing herein 

contained shall prevent the use of usual clauses in contracts as to the 

effect of force majeure, acts of God, and similar events beyond the 

control of either party. 

(d) Predating an order or contract with the intent or effect of 

giving either buyer or seller any advantage or benefit which would 

not accrue if such order or contract were correctly dated, is an 

unfair trade practice. 

1 Any such emergency condition shall be reported at once to The Thread Institute 

together with the terms allowed to meet said emergency. 
7 

(e) " Make and hold " orders for manufacturers' threads shall 

only be accepted as contracts. Under such contracts the terms must 

provide that the buyer must accept delivery of the full quantity 

specified within the contract period. 

(f) ""\Vilfully inducing or attempting to induce the breach of 

any contract between a competitor and his customer or wilfully interfering with or obstructing the performance of the same is an 

unfair trade practice. 

(g) Contracts for manufacturers' threads not for immediate delivery shall be for periods not to exceed three months. 

8. Samples.-Whereas, the giving of free samples to customers 

for the purpose of obtaining business is not in itself a trade abuse, 

it is an unfair trade practice if samples are given as an intogral 

part of a sale or as a means of making a specific sale. 

9. Advertising Allowance.-No advertising allowance shall be offered or given to induce or consummate a sale. This paragraph 

shall not be construed so as to prevent proper expenditures or allowances for advertising or displays actually made or furnished. 

10. Group Buying.-N o member of the Industry shall accept 

orders or contracts from any person, firm, corporation, or association who has combined to pool orders or purchases of sewing threads 

for the purpose of obtaining the benefit of any discount or other 

concession allowed on the quantity purchased or agreed to be purchased unless the person, firm, corporation, or association in whose 

name the sale or contract shall be made actually establishes a. sound 

financial basis for any credit involved and assumes sole financial 

responsibility. The failure of any member of the Industry to conform to the requirements of this paragraph shall be an unfair trade 

practice. 11. False and Misleading Advertising.-The making or causing 

or permitting to be made or published any false or deceptive statement by way of advertisement (whether printed, radio, display, or 

of any other nature) or otherwise concerning the grade, quality, 

quantity, substance, character, nature, origin, size, or preparation of 

any product of the Industry which is misleading or inaccurate in 

any material particular or which may mislead or deceive purchasers 

or prospective purchasers, or which may injuriously affect the 

business of competitors, is an unfair trade practice. 

12. llfarking Thread.-(a) No member of the Industry shall sell 

or offer for sale any thread, put up on spools, tubes, cones, bobbins, 

or in balls, skeins, or other similar packages, unless there is affixed to 

or impressed upon a conspicuous part of each such spool, tube, cone, 

bobbin, ball, skein, or other similar package of such thread a label or 

stamp which shall be plain and conspicuous, and which shall plainly 

indicate either its net weight in avoirdupois pounds and ounces or 

its length in yards; Provided, That when any such spool, tube, cone, 

bobbin, ball, skein, or other similar package of such thread containing a net weight of less than two avoirdupois ounces is sold or offered 

for sale, then such label or stamp shall indicate its length in yards; 

provided further, That where from the shape, size, or character of 

the spool, tube, cone, bobbin, ball, skein, or other similar package it 

is impossible so to affix or impress such label or stamp, a label or 

stamp shall be affixed to the box or other container in which such 
8 

packages are put up, stating the number of units contained therein 

and the ne.t weight or yardage of each, as hereinbefore prescribed. 

(b) It shall be an unfair trade practice if any member of the 

industry shall sell or offer for sale such thread on any such spool, 

tube, cone, bobbin, or in any such ball, skein or other similar package. 

or box, without a label or stamp specifying the net weight or number of yards of thread contained thereon, as provided in the first 

paragraph of this section, or if any such member of the industry 

shall sell or offer for sale such thread on any such spool, tube, cone, 

bobbin, or in any such ball, skein, or other similar package or box, 

weighing or measuring more than five per centum less or more 

than the net weight or number of yards that the label or stamp 

thereon specifies. 

Each member of the industry shall file with The Thread Institute 

a list of all brands and trade marks used on cotton threads produced by or for him for his own distribution and sale, and . also 

shall keep The Thread Institute informed of all changes and 

additions. 

It shall be an unfair trade practice if any member of the industry 

shall sell or offer for sale any thread which, in addition to being 

labeled or stamped with a statement of contents as provided in the 

first paragraph of this section, does not bear a firm name, brand, 

or trade mark by which it may be clearly identified by The Thread 

Institute. 

The provisions of the foregoing paragraphs of this section shall 

not apply to thread sold for use on Schifiii and Swiss hand embroidery machines. 

13. Misbranding and Mislabeling.-The false marking or false 

branding of products with the effect of misleading or deceiving 

purchasers with respect to the quantity, quality, grade, or substance 

of the products purchased is an unfair trade practice. 

14. False /nvoicing.-Withholding from or inserting in the invoice 

statements which make the invoice a false record wholly or in part, 

of the transaction represented on the face thereof, is an unfair trade 

practice. 

15. Commercial Bribery.-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 

employers of such employee, the principal of such agent or the 

represented party. This provision shall not be construed to prohibit 

free and general distribution of articles commonly used for advertising except so far as such articles are actually used for commercial 

bribery as hereinabove defined. · 

16. Substitution of Merchandise.-(a) Shipping or delivering 

products which do not conform to the samples submitted, or representations made prior to securing an order and with the effect of 

deceiving or misleading the purchaser, is an unfair trade practice. 

(b) The sale of an inferior quality of product in this industry 

at a price appropriate for such product, with the understanding 

that a product of superior quality selling at a higher price will be 

delivered, is an unfair trade practice. A seller acting in good faith 
9 

and because of an actual unforeseen shortage of the product sold, 

may, in order to service the customer, deliver a product of a quality 

superior to the product sold. 

17. Imitation of Trade Marks, etc.-The imitation or simulation 

by a member of the Industry, of another's trade marks, trade names, 

slogans, and other marks of identification, including labels and the 

dress of the goods, so as to deceive purchasers or prospective purchasers, or result in commercial eli advantage to the owner of an 

already established put-up is an unfair trade practice. 

18. False Disparagem-ent of Oompetitors.-The defamation of 

competitors by falsely imputing to them dishonorable conduct, inability to perform contracts, questionable credit standing, or other 

false representations, or the false disparagement of the grade or 

quality of··their goods, is an unfair trade practice. 

19. Use of Competitor's 111 ercltanclise.-N o member of the industry shall by purchase or exchange acquire another manufacturer's 

merchandise from any customer or prospective customer for the 

purpose of substituting his own merchandise or influencing the sale 

of merchandise to such customer or prospective customer, Provided 

however, it shall not be an unfair trade practice to acquire a sample 

of a competitor's merchandise for the purpose of comparison or 

analysis. 

20. Aiding or Abetting Another in the Use of Unfair Trade 

Practices.- The wilful aiding or abetting of another in the use of 

unfair trade practices is an unfair trade practice. 

21. frf odification.-(a) The Board of Directors of the Sub-Committee on Thread shall give consideration to any proposed change 

or changes in this Code of Fair Trade Practices which may bo proposed to it either by any me1nber or members of The Thread Institute 

having collectively not less than twenty-five votes therein, provided, 

however, that where such prOilOsed change or changes would affect 

manufacturers supplying thread for use on Schiffii and Swiss hand 

embroidery machines, such change or changes may be proposed by 

any member or members of The Thread Institute whose principal 

business is supplying such thread, having collectively not less than 

five votes therein. 

(b) The provisions of this Code of Fair Trarle Practices shall 

govern all members of the Industry. Any provision of this Code 

of Fair Trade Practices may be revoked or modified by the Board 

of Directors or the Sub-Committee on Thread, subject to the approval of the Cotton Textile Industry Com1nittee and the Administrator. This Code of Fair Trade Practices is subject to the right 

of the President, in accordance with subsection (b) of Section 10 

of the National Indu trial Recovery Act from time to time to 

cancel or modify any order, approval, rule, or r egulation issued 

under said act. 

22. Nothing in this Code of Fair Trade Practices shall be deemed 

to constitute any of the members of the Indu try partners for any 

purpose. No member shall be liable in any manner to anyone for 

any act of any member or agent of the Code Authority lawfully 

and properly performed pursuant to the provisions of this Code 

of Fair Trade Practices, nor shall any member or agent be liable 
10 

to anyone or in any manner other than as provided in the National 

Industrial Recovery Act or in the Cotton Textile Code or this Code 

of Fair Trade Practices for any act performed in accordance with, 

or for any failure to act required by, the provisions of said Code 

and Code of Fair Trade Practices. 

Approved Code No. 1-Amendment No. 8. 

Registrv No. 299-25. 

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