(See front cover)
Having waved over mine, shop and factory, the magic wand of the NRA was last week poised for its last big sweep, over the retail stores of the land. After public incantations which began in August and backstage sorcery continued all through September, the Retail Code was nearly ready for the President to approve and invoke.
Nearly, but not quite, for besides being the biggest of all codes in point of persons affected, it involved consequences even more far-reaching, politically as well as economically, than the codes for basic coal, cotton, oil, steel, motors, lumber, leather, wool. It touched 1,000,000 stores, 5,000,000 employes and $30,000,000,000 of yearly trade by each & every U. S. citizen who can afford to buy so much as a pin. Upon it depended the Cost of Living.
Awaiting the settlement of the Retail Code, governing department stores, mail order houses and general retailers of all sorts large & small, were two collateral codes, the Drug Code and the Food Code. For into them was to go the Retail Code's key clause—or the principle it laid down —on price-cutting. The question of hours & wages was no issue; that had been settled by the President's blanket code. Labor was no problem. The nation's salespeople are wholly unorganized. The essence of the proposed magic was to end forever the blight of cutthroat competition which always reacts balefully upon merchant, manufacturer, laborer and ultimately consumer. In Article VIII Section I of the Retail Code resided its prime significance:
"In order to check predatory and destructive price-cutting and to minimize retail operating losses resulting therefrom ... no retailer shall offer for sale, sell, exchange or give away any merchandise . . . below a minimum price which shall not be less than 10% above the manufacturer's net invoice delivered price to the retailer on all purchases direct from the manufacturer and not less than 7% above the net wholesale invoice delivered price on all purchases made through intermediary channels performing wholesaling functions. It is provided, however, that any retailer may meet any competitor's price on identical articles in his trade area which is set in conformity with the foregoing provision."
This was the way it would work: if a merchant bought a. lamp from a manufacturer for $1 he might not retail it for less than $1.10. If any other store in that merchant's trade area was able to get that lamp for 90¢ from a manufacturer, however, the merchant was permitted to use 90¢ as his base price and retail the lamp for 99¢. even though that meant selling 1¢ below his own wholesale cost.
If the merchant bought the lamp from a wholesale house (which would presumably take a profit of at least 3% for itself) for $1. he must mark it up to $1.07. The price would nevertheless be stabilized within narrow limits. So that a store's stocks might not become frozen through the operation of this provision, bona fide clearance sales, disposal of perishable goods and discontinued lines, genuine liquidation, were permitted at any prices a merchant chose to fix.