Approved Code No. 60 — Supplement No. 1 Registry No. 501 — 07 NATIONAL RECOVERY ADMINISTRATION SUPPLEMENTARY CODE OF FAIR COMPETITION FOR THE BOOKSELLERS TRADE (A Division of the Retail Trade) AS APPROVED ON APRIL 13, 1934 WE DO OUR PART UNIV. OF FL Lit. f U.S. DEPOdTOKY UNITED STATES GOVERNMENT PRINTING OFFICE WASHINGTON: 1934 For sale by the Superintendent of Documents, Washington, D.C. ........ Price 5 cent 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 I'ost Office Building. Birmingham, Ala. : 257 Federal Building. Boston, Mass. : 1S01 Customhouse. Buffalo, N.Y. : Chamber of Commerce Building. Charleston, S.C. : Chamber of Commerce Building. Chicago, 111. : Suite 1706, 201 North Wells Street. Cleveland, Ohio : Chamber of Commerce. Dallas, Tex. : Chamber of Commerce Building. 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Wash. : 809 Federal Office Building. > Approved Code No. 60 — Supplement No. 1 Registry No. 501-07 ERRATA SHEET SUPPLEMENTARY CODE OF FAIR COMPETITION FOR THE BOOKSELLERS TRADE As Approved on April 13, 1934 Page 7 paragraph 5 line 2, the word "complaint" should be " compliance." Page 7 paragraph 5 line 5, the word " manufactures " should be " manufactured." 69350° 657—131 34 U. S. GOVERNMENT PRINTING OFFICE: I9SJ Digitized by the Internet Archive in 2011 with funding from University of Florida, George A. Smathers Libraries with support from LYRASIS and the Sloan Foundation http://www.archive.org/details/supplementarycod1334unit Approved Code No. 60 — Supplement No. 1 SUPPLEMENTARY CODE OF FAIR COMPETITION FOR THE BOOKSELLERS TRADE As Approved on April 13, 1934 ORDER Approving Supplementary Code of Fair Competition for the Booksellers Trade Schedule B a division of the retail 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 Schedule " B " for the Booksellers Trade to the Code of Fair Competition for the Retail Trade, and hearings having been duly held thereon and the annexed report on said Schedule " B ", 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 Schedule " B " complies in all respects with the pertinent provisions and will promote the policy and purposes of said Title of said Act; and do hereby order that said Schedule " B " be and it is hereby approved. Hugh S. Johnson, Administrator for Industrial Recovery. Approval recommended : W. A. Harriman, Acting Division Administrator. Washington, D.C., April 13, 1934. 52900° 482-68 34 (1) REPORT TO THE PRESIDENT The President, The White House. Sir: The hearing on Schedule "B" of the Retail Code for the Booksellers Division of the Retail Trade was held in the Depart- ment of Commerce Building, Washington, D.C., on February 3, 1034. The Schedule, which is attached, was presented by duly qualified and authorized representatives of the Trade, complying with statutory requirements, said to represent 70 per cent in dollar volume. In accordance with the customary procedure, everyone present who had filed a request for an appearance was freely heard in pub- lic, and all statutory and regulatory requirements were complied with. The provisions of this Schedule have been approved by the Con- sumers Advisory Board, Industrial Advisory Board, Labor Advisory Board, and the Legal Division. CONDITIONS IN THE TRADE The main fact brought out at the Public Hearing and at post- hearing conferences clearly indicated that the " loss limitation pro- vision " in the Retail Code did not afford protection to independent booksellers from predatory price cutting practices. Members of the Trade are facing an acute situation as a result of " loss leader " competition encountered from certain large department stores. Prior to the adoption of the Retail Code, a few titles of popular new books were placed on sale occasionally as "loss leaders" or " bait " by some department stores, but the base for price tutting has spread since the Retail Code has been in effect. Each competing depart- ment store knows that the other cannot sell below cost and the cut price competition is, therefore, spread over the whole buok depart- ment. Competition of this sort for the independent bookseller means eventual bankruptcy. It is a significant fact that the granting of a copyright of a title to an author or publisher creates a legal monopoly so far as that title is concerned. The holder of the copyright lias the right to sell the product not only to the retailer or distributor, but also directly to the consumer at whatever price he chooses. In view of this legal right, it is to be remembered that the book publisher can sell at fixed prices directly to the consumer through the medium of national ad- vertising or by the use of a coupon. The sale of books in this man- ner is in direct competition with the retail bookseller. PRICE MAINTENANCE PROVISION The destructive practice of price cutting now prevalent in this Trade by various large firms dealing in other merchandise than books has definitely oppressed small independent booksellers depending (2) solely upon the sale, of books for existence. The sale of books is as dependent upon a limited time factor as is the sale of newspapers and magazines about which no one would question the sale at the price fixed by the publisher and about which no one would expect competition by the retail distributor in the form of price cutting. This Schedule to the Retail Code contains in Section 3 (a) and (b) price provisions wherein the publisher's published price on any trade book or text book is to be maintained by the retail bookseller for the first G months after publication or if published before July 1st of any year until after the first of the following year. After the said 6 months period or after the first of the year following publication, as provided, prices for the sale of books are restricted by Section 1 of Article VIII of the Code of Fair Competition for the Retail Trade. This provision is designed to afford relief to the booksellers from predatory price cutting by members of the Trade interested pri- marily in the sale of other merchandise, with books as a possible bait or lure. Nothing short of publishers price protection as stated above can save the independent small bookseller from a destructive competitive battle in which he is handicapped at the start by not having other merchandise to which he can allocate his losses. After making a careful study of the problems confronting this Trade, the Consumers Advisory Board of the National Recovery Administration has approved the price provisions of this Schedule. administrator's price control committee At the request of the Trade there is created under this Schedule an Administrator's Price Control Committee for the purpose of main- taining a constant check on prices in the bookselling Trade to pre- vent abuses of the Price Maintenance Provision either by book pub- lishers or by booksellers. This Committee shall consist of the Con- sumers Advisory Board representative on the Code Authority, one representative of the National Booksellers Code Authority, one representative from the Trade Book Publishers Code Authority, and one representative of the Authors Guild of the Authors League of America. ADMINISTRATION The Bookselling Trade is designated a Division of the Retail Trade and shall be represented as such and as hereinafter specified in the National Retail Code Authority and in all its Local Retail Code Authorities. The administration of the provisions in this Schedule shall be by the National Booksellers Code Authority which shall consist of not more than 9 members, 4 of whom shall be appointed by the Board of Directors of the American Booksellers Association ; 1 to be appointed by the Board of Directors of the National Association of College Book Stores ; and 2 members to be designated or selected by booksellers who are not members of either of these associations in accordance with a plan to be approved by the Administrator. In addition, it is provided that there shall be 2 administration members to be appointed by the Administrator, one of whom shall be appointed upon the nomination of the Consumers Advisory Board. FINDINGS The Deputy Administrator in his final report to me on said Sched- ule "B" of the Retail Code for the Booksellers Division of the Retail Trade having found as herein set forth, and on the basis of all the proceedings in this matter; I find that: (a) Said Schedule "B" 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 How of inter-state and foreign commerce which tend to diminish the amount thereof and will provide for the general welfare by pro- moting the organization of industry for the purpose of cooper- ative action among the trade groups, by inducing and maintaining united action of labor and management under adequate govern- mental sanctions and supervision, by eliminating unfair competitive practice, by promoting the fullest possible utilization of the present production capacity of Industries, 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 unemploy- ment, by improving standards of labor, and by otherwise rehabil- itating industry. (b) Said Trade normally employs not more than 50,000 employees; and is not classified by me as a major industry- (c) Said Schedule "B " as approved, complies in all respects with the pertinent provisions of said Title of said Act including without limitation Sub-section (a) of Section 3, Sub-section (a) of Section 7, and Sub-section (b) of Section 10 thereof, and that the applicant associations are trade associations truly representative of the afore- said Trade ; and that the said associations impose no inequitable re- restrictions on admission to membership therein. (d) Said Schedule "B" is not designed to and will not permit monopolies or monopolistic practices. (e) Said Schedule " B " 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 Schedule " B " of the Retail Code. For these reasons, therefore, I have approved said Schedule '" B " of the Retail Code tor the Booksellers Division of the Retail Trade. Respectfully, Hugh S. Johnson, Administrator. April 13, 1934. SUPPLEMENTARY CODE OF FAIR COMPETITION FOR THE BOOKSELLERS DIVISION OF THE RETAIL TRADE Schedule B In addition to the provisions of the Retail Code, the following supplemental provisions shall apply to the Bookselling Establish- ments and to all Booksellers engaged in the Bookselling Trade. Section 1 — Definitions 1. Bookselling Trade. — The terms " Bookselling Trade " and " Trade " as used herein mean and include all selling to the con- sumer and not for the purposes of resale, and/or renting to the con- sumer, for a consideration, of trade books and/or text books as de- fined herein. 2. Bookseller. — The term " Bookseller " as used herein means and includes, but without limitation, any individual, partnership, asso- ciation, corporation, club, or public body, or an}' other form of en- terprise now or hereafter engaged wholly or partially, either as an employer or in his or its own behalf, in the bookselling trade. 3. Bookselling Establishment. — The term " Bookselling Estab- lishment " as used herein means and includes any store or depart- ment or section of a store used for or engaged in the bookselling trade and any establishment, office, or place of business engaged in the retail distribution of books including retail distribution de- partments of publishing companies, whether publishing books, mag- azines, periodicals, or other articles sold jointly with books. 4. Books. — The term " Books " as used herein means trade books and/or text books. 5. Trade Books.- — The term " Trade Book " as used herein means and includes an edition of any book manufactured or published for sale by bookstores. It does not include, however, editions of trade books manufactured for sale as the regular monthly selection of a Book Club, or editions manufactured and published exclusively for distribution by mail order and/or subscription booksellers. 6. Text Books. — The term " Text Books " as used herein means and includes an edition of any book manufactured and published primarily for class use in educational institutions. 7. Book Clubs.- — The term " Book Club " as used herein means and includes an individual or organization engaged in the sale, through mail or through outside salesmen, of books to bona fide sub- scribers who have bound themselves in writing to purchase a series of monthly selections, and for whom any bookseller may act as agent in the sale of such subscriptions, on the same commission rate as paid to any other agent of said Book Club, or on a rea- sonable percentage basis. (5) 8. Act cmd Administrator. — The term "Act" and "Administra- tor" as used herein shall mean respectively the National Industrial Recovery Act and the Administrator for Industrial Recovery. Section 2 — Effective Date This schedule shall become etfective on its approval by the Administrator. Section 3 — Trade Practices The following provisions supersede the provisions of Article VIII of the Retail Code, except as hereinafter specified, as to the sale of books : (a) Except as hereinafter specified, no bookseller shall sell or offer for sale any copy or edition of any book during the first six (6) months after the publication date thereof, or if published before July 1st in any year, until January 1st of the following } 7 ear, at a price lower than the publisher's published price thereof. (b) At any other time after publication date than the time speci- fied above, no bookseller shall sell or offer for sale any copy or any edition of any book at a lower price than provided in the preamble and paragraph number " 1 " or Section 1 of Article VIII of the Retail Code and any amendments thereto. EXCEPTIONS (1) Sales of books as bona fide clearance, or of bona fide discon- tinued books, if advertised, marked and sold as such ; provided, how- ever, that such books as are governed by Section 3 (a) shall first be offered by the bookseller for return to his source of supply at not more than the bookseller's invoice cost ; and, damaged " second-hand ", or shelf-worn books, if advertised, marked and sold as such; books sold on complete final liquidation of any business ; provided that no book shall be sold pursuant to the above exceptions contrary to any reg- ulations of trie National Bookseller's Code Authority which are approved by the Administrator. (2) Sales of books to public libraries, schools and school libraries, colleges and college libraries, church libraries, charitable organiza- tions, State reading circles and other public agencies for institu- tional and/or institutional library purposes only, provided that if the Bookseller's Code Authority snail at any time, with the approval of the Administrator, fix discounts for such sales, discounts in excess thereof shall not be allowed. Any such discount shall not be increased beyond that amount by special consideration. (3) Sales governed by State laws and/or contracts with a State or any political subdivision thereof, making it mandatory that the prices to the State or subdivision thereof by the bookseller shall not be more than the lowest price at which the bookseller currently ma k'es any other sale. (4) Sales of books to a bookseller's employees for the employee's personal use only. (5) The sale of publishers' remainders of books; the Booksellers' Code Authority shall issue such rules and regulations necessary to define "publisher's remainders" and to regulate sales of such pub- lisher's remainders. In the event of an alleged violation of this provision, it shall be prima facie evidence of complaint, if the book- seller has on file and submits an affidavit from his source of supply that the books in question are, in fact, publishers' remainders of books, and not manufactures specially for remainder sale. (6) Sales of books by a legally appointed referee or receiver in bankruptcy for the purpose of liquidating the assets of a bookseller for the benefits of his creditors, but only for the purpose of liquidation. (c) No bookseller shall give or offer to give any trade book and/or text book as an inducement for the purchase of any other book, not included in the definition above, or other merchandise, nor shall any bookseller give or offer to give any other such book or other merchan- dise as an inducement for the purchase of a trade book and/or text book, except that this provision shall not apply to qualified members of the Subscription and Mail Order Book Industry, as defined in the Code for that Industry, if such books offered or given by said mem- bers are special editions readily distinguishable in format from the regular trade edition or if they are trade editions originally pub- lished in the United States not less than two years before such offer. Section 4 — Administration The Bookselling Trade is hereby designated a Division of the Retail Trade and shall be represented as such and as hereinafter specified in the National Retail Code Authority and in all its Local Retail Code Authorities. Except as hereinafter expressly provided, the administration of this Code and of this schedule, as applying to the Bookselling Trade, shall be as provided in Article X of the Retail Code : There is created herein a National Booksellers' Code Authority, as follows : Four (4) members shall be appointed by the Board of Directors of the American Booksellers Association; one (1) member shall be appointed by the Board Directors of the National Association of College Book Stores; two (2) members shall be designated or selected by booksellers who are not members of either of these Asso- ciations in accordance with a plan to be approved by the Adminis- trator; two (2) Administration members shall be appointed by the Administrator, one of whom shall be appointed upon the nomina- tion of the Consumers' Advisory Board, but neither of whom shall have a vote and both of whom shall serve without expense to the National Booksellers Code Authority; and such other additional members as the Administrator may deem necessary to truly repre- sent the members of this trade. 1. National Booksellers Code Authority Committees. — The Code Authority shall, as soon as practical after the effective date of this Code, appoint from among its members or from representative mem- bers of the trade the following committees : (a) Committee on Premiums (b) Committee on Rental Libraries (c) Committee on Public Libraries (d) Committee on Bookseller: Jobbers Relations 8 (e) Committee on Booksellers — Mail Order and Subscription Booksellers. (f) Committee on Booksellers — Publishers Relations (g) Committee on State and Municipal Contracts and such other committees as may be necessary to assist the Code Authority in its recommendations and findings to the Administrator. The Committees above named shall, upon request of the Adminis- trator, or any member or members of the Code Authority, make such surveys, studies and reports as the Administrator may designate or find necessary, and in particular the Committee on Bookseller — Pub- lishers' Relations shall from time to time report to the Administrator on the wages and hours of labor employed by the retail distributing departments of publisher members of the Trade. On the basis of such surveys and reports of the said committees or any of them, the Code Authority shall if it deems necessary issue such rules and regu- lations as may be necessary to effectuate fair competitive practices be- tween such members of the industry and others as are included under such surveys. Such rules and regulations, when so issued by the Code Authority and approved by the Administrator, shall be made effective immediately or at such time as is specified by the Administrator, and when so effective, shall be made a part of this Schedule. 2. Administrator's Price Control Committee. — The Administrator shall immediately upon the effective date of this Code appoint a com- mittee to be known as the Administrator's Price Control Committee, which shall consist of (a) the Administration representative nom- inated by the Consumers' Advisory Board, (b) one (1) representa- tive of the National Booksellers Code Authority, (c) one (f) repre- sentative* from the Trade Book Publishers Code Authority, and (d) one (1) representative of the Authors Guild of the Authors League of America, designated by the President of said Guild; which com- mittee shall, upon the demand of the Administrator and/or any member of the Committee, immediately investigate and report to the National Booksellers Code Authority and to the Administrator any claim of unwarranted increase in publisher's list prices or de- crease in discount from the publisher's list price to anv bookseller or any other unwarranted increases in cost and/or prices caused by increased or changing costs due to the National Industrial Recovery Act. The Code Authority shall immediately after receipt of such in- vestigation and findings, submit a full report thereon, with recom- mendations, to the Administrator, who may after a hearing on due notice to all parties interested determine that unwarranted increases in the publisher's published price or decreases in the booksellers' discount on any book or books have been made. Upon such deter- mination the Administrator may suspend the operation of the Price Provisions of this Schedule in connection with the sale by booksell- ers of the book or books in question until such time as in the opinion of the Code Authority and the Administrator such unwarranted increases in publishers published price and/or decreases in dis- counts shall have been eliminated. 3. Code Coordinating Committee. — From the Code Authority created hereinabove, an equal number of representatives shall be designated to serve as the representatives of the Booksellers Trade with similarly designated representatives of any and all other code authorities created under allied Codes, insofar as such Codes con- tain reciprocal code coordinating provisions. Such representatives of the Booksellers Trade shall act, with such other duly designated representatives, as the Code Coordinating Committee of the Book- sellers Trade and Allied Industries. Such Code Coordinating Com- mittee shall assist the Administrator in the administering of this and other allied codes represented thereon, on all matters affecting the welfare of the members of this trade and other allied indus- tries, and such Code Coordinating Committee shall study and report on all matters brought before it. 4. Powers of National Booksellers Code Authority. — The Na- tional Booksellers Code Authority herein created shall have all powers necessary to assist the Administrator in the administering of the provisions of this Schedule and through the Local Booksellers Committees, or such separate Local Booksellers Code Authorities as may be authorized, shall have the sole power to assist the Adminis- trator in administering the price provisions of this Schedule. 5. Interpretations. — The Administrator may from time to time, after consultation with the National Booksellers Code Authority, issue such Administration interpretations of the provisions of this Schedule as will be necessary to effectuate its purpose, and such in- terpretations shall, unless the Administrator may specify otherwise, become immediately operative as a part of this Schedule. 6. Local Booksellers'' C ommittee. — The National Booksellers' Code Authority shall, with the approval of the Administrator, supervise the formation of a Booksellers' Committee in each authorized Local Retail Code Authority, which Booksellers' Committee shall have the power and authority to administer the provisions of this Schedule; and in conjunction with each Local Retail Code Authority, shall ad- minister the provisions of the Code of Fair Competition for the Retail Trade. Each such Booksellers' Committee shall include in its membership and shall designate from among its membership the representative or representatives of the bookselling trade on the Local Retail Code Authority in the respective trade areas. Provided, however, that upon application from the National Book- sellers' Code Authority advising the Administrator that separate Local Booksellers' Code Authorities are necessary to secure the ef- fective administration of this Schedule in metropolitan areas, the Administrator may authorize the formation of such Local Book- sellers' Code Authorities at any time after the effective date of this Schedule. Such separate Local Booksellers' Code Authorities shall assi-t in the administration of the Code of Fair Competition for the Retail Trade and of this Schedule in such areas as may be placed within their jurisdiction. 7. Expenses. — The expenses necessary for the agencies established, pursuant to Article X of the Retail Code and pursuant to this Section, insofar as borne by Booksellers, shall be equitably assessed against them in accordance with a plan to be devised by the National Book- sellers Code Authority, in consultation with the National Retail Code Authority and subject to the approval of the Administrator. Approved Code No. 60 — Supplement No. 1. Registry No. 501-07. O UNIVERSITY OF FLORIDA 3 1262 08856 0502