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ANNUAL REPORT
OF THE

FEDERAL

TRADE COMMISSION
FOR THE

FISCAL YEAR ENDED JUNE 30

1935

UNITED STATES
GOVERNMENT PRINTING OFFICE
WASHINGTON: 1935
For Sale by the Superintendent of Documents, Washington, D. C - - - Price 15 cents (Paper cover)

FEDERAL TRADE COMMISSION
Ewin L. Davis, Chairman 1
Charles H. March, Vice Chairman
William A. Ayres
Garland S. Ferguson, Jr.
Robert E Freer 2
Otis B. Johnson, Secretary
FEDERAL TRADE COMMISSIONERS--1915-36
Name
Joseph E. Davies
William J. Harris
Edward N. Hurley
Will H. Parry
George Rublee
William B. Colver
John Franklin Fort
Victor Murdock
Huston Thompson
Nelson B. Gaskill
John Garland Pollard
John F. Nugent
Vernon W. Van Fleet
Charles W. Hunt
William E. Humphrey
Abram F. Myers
Edgar A. McCulloch
Garland S. Ferguson, Jr.
Charles H. March
Ewin L. Davis
Raymond B. Stevens
James M. Landis
George C. Mathews
William A. Ayres
Robert E. Freer

State from which appointed
Wisconsin
Georgia
Illinois
Washington
New Hampshire
Minnesota
New Jersey
Kansas
Colorado
New Jersey
Virginia
Idaho
Indiana
Iowa
Washington
Iowa
Arkansas
North Carolina
Minnesota
Tennessee
New Hampshire
Massachusetts
Wisconsin
Kansas
Ohio

Period of service
Mar.16, 1915-Mar. 18, 1918.
Mar.16, 1915-May 31, 1918.
Mar.16, 1915-Jan. 31, 1917.
Mar.16, 1915-A p r. 21, 1917.
Mar.16, 1915-May 14, 1916.
Mar.16, 1917-Sept. 25, 1920.
Mar. 16, 1917-Nov. 30,1919.
Sept. 4, 1917-Jan. 31, 1924.
Jan. 17, 1919-Sept. 25, 1926.
Feb. l. 1921-Feb. 24, 1925.
Mar. 6, 1920-Sept. 25, 1921.
Jan.15, 1921-Sept. 25, 1927.
June 26, 1922-July 31, 1926.
June 16, 1924-Sept. 25,1932.
Feb.25, 1925-Oct. 7, 1933.
Aug. 2, 1925-Jan. 15, 1929.
Feb.11, 1927-Jan. 23, 1933.
Nov.14, 1927,
Feb. 1, 1929.
May 26,1933.
June 26, 1933-Sept. 25, 1933.
Oct.10, 1933-June 30, 1934.
Oct.27, 1933-June 30,1934.
Aug. 23,1934.
Aug.27, 1935.

EXECUTIVE OFFICES OF THE COMMISSION
2001 Constitution Avenue NW.,
Washington
BRANCH OFFICES
45 Broadway,
New York
608 South Dearborn Street,
Chicago

544 Federal Office Building,
San Francisco
801 Federal Building
Seattle

Chairmanship rotates annually. Commissioner March will become chairman in January 1936.
2 Mr. freer was appointed to the Commission in August 1935, subsequent to the close of the fiscal year.
1

II

LETTER OF SUBMITTAL
To the Congress of the United States:
I have the honor to submit herewith the Twenty-second Annual Report of the Federal
Trade Commission for the fiscal year ending June 30, 1936.
By direction of the Commission:
EWIN L. DAVIS, Chairman
III

CONTENTS
INTRODUCTION
Page
Powers and duties of the Commission
General legal activities
Trade-practice conferences
Commission activities under National Industrial Recovery Act
General investigations
Transfer of the securities work
Commissioners and their duties
How Commission work is handled
Commission publications
Recommendations

3
5
6
8
9
10
11
12
13
14

PART I. GENERAL INVESTIGATIONS
Electric and gas utilities
Textile
Milk
Chain stores

19
28
30
32
PART II. GENERAL LEGAL WORK

Description of procedure
Chart
Legal investigation
Legal work under National Industrial Recovery Act
Consolidations and mergers
Cases settled by stipulation
Representative complaints
Complaints on relation of National Recovery Administration
Orders to cease and desist
Types of unfair competition
Cases in the Federal courts
Tabular summary of legal work

43
Facing p. 43
46
47
48
50
51
57
58
67
71
82

PART III. TRADE-PRACTICE CONFERENCES
History and purpose of procedure
Wholesale drug conference
Rules accepted by industries
Outline of procedure
Group I and group II rules

93
94
94
95
96

PART IV. SPECIAL PROCEDURE IN CERTAIN TYPES OF ADVERTISING
CASES
Newspaper, magazine, and radio advertising

101
V

VI

CONTENTS
PART V. FOREIGN-TRADE WORK

The Export Trade Act (Webb-Pomerene law)
Functions of a Webb-Pomerene law group
Forty-three associations file papers
Exports during 1934
Trust laws and unfair competition abroad

Page
107
108
109
110
111

FISCAL AFFAIRS
Appropriations, allotments and expenditures

121

EXHIBITS
Federal Trade Commission Act
Sherman Act
Clayton Act
Export Trade Act
Rules of practice
Investigations, 1913-35
Index

127
133
134
138
140
147
159

INTRODUCTION
POWERS AND DUTIES OF THE COMMISSION
GENERAL LEGAL ACTIVITIES
TRADE PRACTICE CONFERENCES
COMMISSION ACTIVITIES UNDER N. I. R. A.
GENERAL INVESTIGATIONS
TRANSFER OF THE SECURITIES WORK
COMMISSIONERS AND THEIR DUTIES
HOW COMMISSION WORK IS HANDLED
COMMISSION PUBLICATIONS
RECOMMENDATIONS

1

ANNUAL REPORT
OF THE

FEDERAL TRADE COMMISSION
INTRODUCTION
POWERS AND DUTIES OF THE COMMISSION
The Federal Trade Commission herewith submits its report for the fiscal year 193435. Organized March 16, 1915, under its organic act, approved September 26 1914 the
Commission is an administrative body exercising quasi-judicial functions. These
functions are chiefly, (1) to prevent unfair methods of competition in interstate
commerce; (2) to make investigations at the direction of Congress, the President, the
Attorney General, or upon its own initiative; (3) to report facts in regard to alleged
violations of the antitrust laws; (4) to prevent price discriminations, exclusive dealing
contracts, capital stock acquisitions, and interlocking directorates in violation of the
Clayton Act; and (5) to prevent unfair methods of competition in export trade in
violation of the Federal Trade Commission Act as extended by the Webb-Pomerene
Act. (Export Trade Act.)
Under the Federal Trade Commission Act 1 the duties of the Commission are divided
into two broad classes, legal and economic.
Legal activities have largely to do with the prevention and correction of unfair
methods of competition in accordance with section 5 of the Commission‘s organic act,
in which it is declared that “unfair methods of competition in commerce are hereby
declared unlawful.” This phrase is not further defined in the act. In the first case in
which the Supreme Court had occasion to consider this language, namely, that of
F.T.C. v. Gratz (253 U. S. 421), the Court associated with the phrase those practices
“opposed to good morals because characterized by deception, bad faith, fraud, or
oppression, or as against public policy because of their dangerous tendency unduly to
hinder competition or create monopoly.” In the latest case in which it had occasion to
consider the phrase (F. T. C. v. R. F. Keppel & Bro., Inc., 291 U.S. 304), the Supreme
Court upheld, as involving an unfair method of competition, the Commission’s order
pro1 Copies of the Federal Trade Commission Act, Sherman Act, Clayton Act, and Export Trade Act may
be obtained on application to the Federal Trade commission or Government Printing Office, Washington,
D. C. Texts of these acts also appear beginning at p.127 of this report.

3

4

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

hibiting the sale of candies largely for ultimate resale through schemes of chance. The
Court pointed out that in defining the powers of the Commission Congress advisedly
adopted this phrase, “which, as this Court has said, does not admit of precise
definition, but the meaning and application of which must be arrived at by what this
Court elsewhere has called ‘the gradual process of judicial inclusion and exclusion.’”
2

In this general connection, it should be observed that under the provisions of section
5 of the Federal Trade Commission Act the Commission is to proceed only if it
appears to it that the particular proceeding would be “to the interest of the public.” It
accordingly does not concern itself with purely private competitive controversies, with
no public significance.
Besides its organic act, the Commission enforces sections 2, 3, 7, and 8 of the
Clayton Act dealing, respectively, with unlawful price discriminations, so-called
“tying” contracts, stock acquisitions which lessen competition or tend to create a
monopoly, and interlocking directorates
The Commission also administers the Webb-Pomerene law, or Ex-port Trade Act.
This act is intended to promote export trade and exempts associations of American
exporters engaged solely in export trade from the provisions of the anti-trust laws.
The economic work of the Commission arises chiefly under section 6 (a) (b) and (d)
of the organic act giving the Commission power-(a) To gather and compile information concerning, and to investigate, from time to time, the
organization, business, conduct, practices, and management of any corporation engaged in
commerce, excepting banks, and common carriers, * * * and its relation to other corporations
and to individuals, associations, and partnerships.
(b) To require, by general or special orders, corporations engaged in commerce, excepting
banks, and common carriers subject to the Act to regulate commerce, * * * to file with the
commission in such form as the commission may prescribe annual or Special, or both annual and
special, reports or answers in writing to specific questions, furnishing to the commission such
information as it may require as to the organization, business, conduct, practices, management,
and relation to other corporations, partnerships, and individuals of the respective corporations
filing such reports or answers in writing. * * *
(d) Upon the direction of the President or either House of Congress 3 to investigate and
report the facts relating to any alleged violations of the antitrust Acts by any corporation.
Typical methods of competition condemned by the Commission as unfair are described on p. 67.
Public, No. 78, 73d Congress, approved June 16, 1933, making appropriations for the fiscal year
ending June 30, 1934, for the “Executive Office and sundry independent executive bureaus, boards,
commissions”, etc., made the appropriation for the Commission contingent upon the provision (48 stat.
291; 15 U. S. C. A., sec. 46a) that “hereafter no new investigations shall be initiated by the Commission
as the result of a legislative resolution, except the same be a concurrent resolution of the two Houses of
Congress.”
2
3

GENERAL LEGAL ACTIVITIES

5

Also under section 6 (h) of the Federal Trade Commission Act, the Commission has
power-to investigate, from time to time, trade conditions in and with foreign countries where
associations, combinations, or practices of manufacturers, merchants, or traders, or other
conditions, may affect the foreign trade of the United States, and to report to Congress thereon,
with such recommendations as it deems advisable.

Concerning the Commission, the Supreme Court recently said that-it was created with the avowed purpose of lodging the administrative functions committed to it
in a “body specially competent to deal with them by reason of information, experience, and
careful study of the business and economic conditions of the industry affected”, and it was
organized in such a manner, with respect to the length and expiration of the terms of office of
its members, as would “give to them an opportunity to acquire the expertness in dealing with
these special questions concerning industry that comes from experience.”

GENERAL LEGAL ACTIVITIES
Under authority of the Federal Trade Commission Act and those sections of the
Clayton Act which it administers, the Commission, during the last fiscal year, has
continued to direct its efforts toward the correction and elimination of unfair methods
of competition and other unlawful practices.
It made preliminary investigations in 1,384 individual cases initiated under these acts
and settled by stipulation a total of 391 cases, of which 151 were of a special class in
which false and misleading advertising in newspapers, magazines, or by radio
broadcasts was the principal practice involved. During the fiscal year last preceding
272 cases were settled by stipulation.
The stipulation procedure is usually employed in cases where the methods of
competition complained of are not so fraudulent or vicious that protection of the public
interest requires resort to the procedure of a formal complaint and issuance of a cease
and desist order. This procedure provides an opportunity for the prospective
respondent to enter into a stipulation of the facts and voluntarily to agree to cease and
desist from the alleged unfair methods set forth therein.
During the last fiscal year the Commission issued 280 complaints against companies
and individuals, alleging various forms of unfair competition or other, practices, this
number having been an almost threefold increase over the 97 complaints issued during
the year last preceding. In 125 cases the Commission served upon respondents its
orders to cease and desist from unfair practices which had been alleged in complaints
and which were found to have been engaged in by the respondents. This was also a
substantial increase over the number of orders issued during the fiscal year 1934.
Representative cases are described at pages 52 and 58.

6

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

The Commission was sustained in 10 cases during the year by various United States
circuit courts of appeals, and reversed in none. No cases were pending in the Supreme
Court of the United States.
A number of American associations engaged solely in export trade filed with the
Commission statements provided for by the Webb-Pomerene Law or Export Trade Act
and thereby became entitled to the benefits and exemptions provided by that act.
Radio advertising.--During July 1934 the Commission began to review advertising
copy broadcast over the radio, the procedure adopted being the same in principle as
that employed for the elimination of false and misleading advertising from newspapers
and magazines. The volume of returns and character of the announcements indicated
that a satisfactory, continuous scrutiny of current broadcasts could be maintained by
adopting a plan of grouping stations for specific periods. Consequently, beginning in
September 1934, calls have been issued to individual stations according to their
locations in the five radio zones established by the Federal Communications
Commission. Up to June 30, 1935, 439,253 radio continuities were received by the
Commission. Of these a preliminary review was completed of 376,539, resulting in
38,873 being referred for further consideration and possible action.
TRADE PRACTICE CONFERENCES
The trade practice conference work of the Commission was instituted in 1919. By
1926 the work had grown to such importance that the Commission established what
is now known as the Division of Trade Practice Conferences.
The trade practice conference affords a means by which industry members may
voluntarily agree and cooperate in the establishment of a code of fair trade practices
and eliminate unfair methods of competition, trade abuses and evils prevailing in the
industry. This function is performed under the statutory authority of the Federal Trade
Commission Act under which the Commission isempowered and directed to prevent persons, partnerships, or corporations, except banks, and common
carriers Subject to the Acts to regulate commerce, from using unfair methods of competition in commerce

and by which it is also empoweredto make rules and regulations for the purpose of carrying out the provisions of this Act.

The Commission had sponsored conferences and approved trade practice agreements
for about 150 industries before the creation of the National Recovery Administration.

TRADE PRACTICE CONFERENCES

7

Since termination of the National Recovery Administration codes, the President has
by Executive Order No. 7192, of September 26, 1935, delegated to the Commission
all his authority under the National Industrial Recovery Act, as extended, to approve
trade practice provisions of voluntary agreements. Thus two courses are open to
industry under the Federal Trade Commission for voluntary cooperation and
agreement in establishing codes of ethics and eliminating unfair methods of
competition or trade abuses. In both the trade practice conference under the Federal
Trade Commission Act and the voluntary agreement under the National Industrial
Recovery Act, as extended, the functions and purposes are similar and they substantially occupy, within the law, the field covered by the trade practice provisions of
the former National Recovery Administration codes.
Voluntary agreements under the National Industrial Recovery Act as extended, must
contain labor provisions. Such provisions need not be included under the trade practice
conference procedure. Voluntary agreements require Commission approval as to trade
practice provisions and Presidential approval as to labor provisions. Commission
approval only is required in the case of a trade practice conference. Voluntary
agreements carry certain stated exemptions from the antitrust laws. These apply only
to the labor provisions and to such trade practice provisions as do not offend against
existing law. Likewise, assurance against infraction of the antitrust laws is afforded
in the trade practice conference in that it is the policy and duty of the Commission not
to sanction or approve a rule or provision which is contrary to law or, in other words,
which offends against existing law.
The rules established under the trade practice conference procedure are classified
into two groups. In group I are placed all rules which proscribe practices that are
illegal as constituting unfair methods of competition or which otherwise offend against
laws administered by the Commission. A greater part of the rules fall into this group,
and the Commission has jurisdiction to enforce the same regardless of whether the
offender has signed the agreement or otherwise agreed to abide thereby. In group II are
placed rules relating to practices which are not illegal per se, but which the industry
deems desirable and are not contrary to the public interest. Enforcement of group II
rules is brought about mainly through agreement and voluntary cooperation among
industry members.
The Executive order by which the President delegated authority to the Commission
to approve trade practice provisions of voluntary agreements under the National
Industrial Recovery Act, as amended, is as follows:

8

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
EXECUTIVE ORDER
Delegation of authority to the Federal Trade Commission to approve certain
trade practice provisions

By virtue of and pursuant to the authority vested in me by section 2 (a) and section 2 (b) of
title I of the National Industrial Recovery Act (48 Stat. 195), certain provisions of which title
were extended until April 1, 1936, by the joint resolution of June 14, 1935 (Public Resolution
No.26, 74th Cong.), I hereby delegate to the Federal Trade Commission all authority vested in
me by said act and resolution to approve such trade practice provisions as are permitted by
clause numbered 2 of the proviso of section 2 of said joint resolution and submitted in voluntary
agreements pursuant to section 4 (a) of said title of said act: Provided, That such approval shall
not be given by the Federal Trade Commission unless such agreements contain labor provisions
putting into effect the requirements of section 7 (a) of the said National Industrial Recovery Act
and after such labor provisions have received my approval.
FRANKLIN D. ROOSEVELT.
THE WHITE HOUSE,
September 26, 1935.

COMMISSION ACTIVITIES UNDER NATIONAL INDUSTRIAL
RECOVERY ACT
Prior to the Supreme Court’s decision in the Schechter case (295 U.S. 495, May 27,
1935), additional duties had devolved upon the Commission as a result of the passage
of the National Industrial Recovery Act, approved June 16, 1933. Section 3 (b) of that
act provided that violations of codes set up as standards of fair competition by the
National Recovery Administration were to be deemed unfair methods of competition
within the meaning of the Federal Trade Commission Act. Under this section, the
Commission, in the event the provisions of a code were violated, was required to
proceed in the same manner as with regard to violations of section 5 of the Federal
Trade Commission Act. In order to avoid duplication of effort and overlapping of
work, the Federal Trade Commission and the National Recovery Administration cooperated in handling complaints of this nature. As a rule, the Commission did not
proceed with formal action until it had first consulted the National Recovery
Administration and made an effort through that organization to obtain compliance with
codes.
Section 6 (c) of the National Industrial Recovery Act provided that the Federal Trade
Commission, upon request of the President, should make such investigations as might
be necessary to enable the President to enforce the provisions of the act.
During the last fiscal year, 336 cases were referred to the Commission by the
National Recovery Administration for investigation. At the time of the Schechter
decision, 321 of these had been completed.

GENERAL INVESTIGATIONS

9

GENERAL INVESTIGATIONS
In pursuance of section 6 of the Federal Trade Commission Act, the Commission
may gather information concerning corporations and investigate their organization and
operations and may, at the request of the President, the Congress, the Attorney
General, or upon its own initiative, conduct general investigations of alleged violations
of the antitrust laws. It may also make reports in aid of legislation.
Approximately 80 general inquiries or fact-finding studies have been conducted
during the Commission’s existence, most of them in pursuance of congressional
resolutions, although several have been conducted pursuant to Presidential orders and
others on the Comission’s initiative.3 It may be said that they have supplied not only
valuable information bearing on conditions, developments, and trends in interstate
trade and the Nation’s business, but have thrown important and necessary light on the
need and wisdom of further legislation for corrective action. The public need for such
fact finding studies in this increasingly complex economic era grows greater, quite
irrespective of different economic and political philosophies.
The status of each investigation in progress at the close of the fiscal year is described
as follows:
Electric and gas utilities.--During the fiscal year reports were placed in the record
at public hearings on companies in the following holding company groups: Associated
Gas & Electric Co., Byllesby Engineering & Management Co., Central & South West
Utilities Co. (Insull interests), Central Public Service Co., Cities Service Co.,
Commonwealth & Southern Corporation, Duke Power Co., Electric Bond & Share Co.,
Electric Management & Engineering Corporation (Insull interests), General Water,
Gas & Electric Co., Midland United Co. (Insull interests), Niagara Hudson Power
Corporation, Stone & Webster, Inc., and subsidiaries, and Tri-Utilities Corporation (G.
L. Ohrstrom interests).
The inquiry, from its inception to June 30, 1935, covered 21 holding companies with
total corporate assets of $4,722,542,502; 42 sub-holding companies with total
corporate assets of $3,155,030,623, and 96 operating companies with total assets of
$4,081,221,303. On September 12, 1935, the record of the hearings in this
investigation had been printed in 79 volumes, including 4 volumes covering the
Commission’s report on the inquiry, all published as parts of Senate Document 92,
Seventieth Congress, first session. Seven additional reports were in process of printing.
As of September 12, approxi3

A list of these investigations begins at p. 147.

10

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

mately 48,000 typewritten pages of testimony and 6,400 exhibits had been introduced
in the public hearings held during this investigation. Final summary reports on the
inquiry, with conclusions and recommendations concerning the holding company and
other utility problems, were submitted to Congress. During the last fiscal year the
Commission has examined the affairs of several natural gas companies. The
Commission will transmit to Congress in January 1936 a report on this investigation
covering the natural gas industry.
Textile inquiry.--Undertaken pursuant to an Executive order of September 26, 1934,
this inquiry involves investigation and report on labor costs, profits, and investments
of companies and establishments of the textile industries in order to show what effect
increased wages and other costs might have on such industries. A preliminary report,
based on 765 companies, was issued in six parts, and, pursuant to a letter from the
President dated January 25, 1935, the Commission extended its investigation to cover
the 6-month period ending December 31, 1934.
Milk investigation.--A report was transmitted to the Congress and printed as House
Document No. 152, Seventy-fourth Congress, first session, showing results of the
Commission’s investigation in the Connecticut and Philadelphia milk sheds. At the
close of the fiscal year, Commission examiners were obtaining data on the production
and marketing of milk in the Chicago area, a report on which will be submitted to
Congress at its next session.
Chain-store inquiry.--Final report on this investigation, including recommendations
and conclusions of the Commission, was transmitted to the Senate in December 1934
and was printed as Senate Document No.4, Seventy-fourth Congress, first session.
Among other recommendations, the Commission suggested amendments to the
Clayton and Federal Trade Commission Acts to clarify the sections relating to price
discriminations, corporate acquisitions of stock, and unfair practices in commerce.
TRANSFER OF WORK UNDER THE SECURITIES ACT
During the first 2 months of the last fiscal year, July and August 1934, the Federal
Trade Commission completed its administration of the Securities Act of 1933 and
transferred these activities to the Securities and Exchange Commission, as provided
in the Securities Exchange Act of 1934, approved June 6, 1934.
The Federal Trade Commission gave every assistance possible to the new
Commission in organizing its personnel and getting started with its work. A number
of the regular personnel of the Federal Trade Commission were detailed temporarily
to the new Commission to assist in its formation and operation. As of September 1,
1934,

COMMISSIONERS AND THEIR DUTIES

11

115 persons engaged on securities work were transferred to the Securities and
Exchange Commission.
During the year and few days between the passage of the Securities Act of 1933
(approved May 27, 1933) and the Securities Exchange Act of 1934 the Federal Trade
Commission had organized an& developed into an efficiently functioning unit a.
division for the administration of the Securities Act. The Commission’s administration
of this act, extending from May 27, 1933, to September 1, 1934, is detailed in its
Annual Report for 1933-34.
THE COMMISSIONERS AND THEIR DUTIES
The Federal Trade Commission is composed of five Commissioners appointed by
the President and confirmed by the Senate. Not more than three of the Commissioners
may belong to the same political party.
The term of office of a Commissioner is 7 years, as provided in the Federal Trade
Commission Act. The term of a Commissioner dates from the 26th of September last
preceding the time of his appointment (September 26 marking the anniversary of the
approval of the act in 1914) except when he succeeds a Commissioner who relinquishes office prior to expiration of his term, in which case, according to the act, the
new member “shall be appointed only for the unexpired term of the Commissioner
whom he shall succeed.”
At the close of the fiscal year, June 30, 1935, the Commission was composed of the
following members: Ewin L. Davis, Democrat, of Tennessee, chairman Charles H.
March, Republican, of Minnesota, vice chairman; William A. Ayres, Democrat, of
Kansas, and Garland S. Ferguson, Jr., Democrat, of North Carolina. There was one
vacancy, caused by the resignation of Commissioner George C. Mathews, Republican,
as of June 30, 1934, to become a member of the Securities and Exchange Commission.
This vacancy was filled subsequent to the close of the fiscal year by President
Roosevelt’s appointment of Robert Elliott Freer, Republican, of Ohio, as of August 24,
1935. Mr. Freer entered on duty August 27.
Commissioner Davis was chosen by the Commission as its chair-man for the
calendar year 1935, succeeding Commissioner Ferguson. Each January a member of
the Commission is designated to serve as chairman for that calendar year. The position
rotates so that each Commissioner serves as chairman at least 1 year during his term
of office. The chairman presides at meetings of the Commission, supervises its
activities, and signs the more important official papers and reports at the direction of
the Commission. The Chairman of the Commission is a member of the National
Emergency Council.
20442---35-----2

12

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Official activities of the Commissioners are generally similar in character, although
each assumes supervisory charge of a different division of the Commission’s work.
Chairman Davis has supervisory charge of the chief counsel’s division and the special
board of investigation; Commissioner March of the chief examiner’s division;
Commissioner Ferguson of the chief trial examiner’s division and the trade-practice
conference division; Commissioner Ayres of the administrative division, and
Commissioner Freer of the eco-nomic division. Every case that is to come before the
Commission is first examined by a Commissioner and then reported on to the
Commission. All matters under the jurisdiction of the Commission are acted upon by
the Commission as a whole.
The Commission meets regularly for the transaction of business every business day
at its offices in Washington. The Commissioners hear final arguments in cases before
the Commission as well as arguments on motions of counsel for the Commission or
respondents. Besides these duties and their conferences with persons discussing
official business, the Commissioners have a large amount of reading and study in
connection with the numerous cases before them for decision and the various reports
to be made by them.
The Commissioners usually preside individually at trade-practice conferences held
for industries in various parts of the country, and also have numerous administrative
duties incident to their positions.
The secretary of the Commission is its executive officer.
At the close of the fiscal year, the Commission had a total personnel of 535,
including the Commissioners.
HOW THE COMMISSION WORK IS HANDLED
The work of the Federal Trade Commission may be divided broadly into the
following general groups: Legal, economic, and administrative.
The legal work of the Commission is under the direction of the chief counsel, the
chief examiner, and the chief trial examiner.
The chief counsel acts as legal adviser to the Commission, and has charge of legal
proceedings against respondents charged with unfair methods of competition as
prohibited by the Federal Trade Commission Act, with acts or practices in violation
of the Clayton Act, with violations of the Federal Trade Commission Act as extended
by the Webb-Pomerene Act, and with the trial of cases before the Commission and in
the courts.
The chief examiner has charge of legal investigations of applications for complaint
alleging violations of the laws over which the Commission has jurisdiction. When the
Commission undertakes investigations in response to Congressional resolutions, or
under

COMMISSION PUBLICATIONS

13

section 6 of the Federal Trade Commission Act, the chief examiner supervises such
pars of such investigations as may be assigned to his division by the Commission.
Members of the chief trial examiner’s division are appointed to preside at the trial
of formal complaints and at the taking of testimony in investigations conducted by
executive direction, pursuant to congressional resolutions, upon the Commission’s
own initiative, or at the request of the Attorney General of the United States. They also
arrange settlement by stipulation of applications for complaint, subject to approval of
the Commission, which method is usually employed in cases where the practice
complained of is not so fraudulent or vicious that the protection of the public interest
demands the more drastic procedure of complaint.
There are also the division of trade-practice conferences, the special board of
investigation for cases involving false and misleading advertising, and the export-trade
section handling foreign-trade work under the Export Trade Act and section 6 (h) of
the Federal Trade Commission Act.
The economic division, under the chief economist, conducts certain of the general
inquiries of the Commission. This division has conducted that part of the electric and
gas utility inquiry which deals with the financial structure, organization, and
management of the utilities, although the chief counsel’s division conducted the public
hearings and had charge of the propaganda phase of the investigation. The
investigation of the textile industry has been in charge of the economic division. The
milk investigation has been conducted by the chief examiner’s division and by the
economic division, while the public hearings were in charge of the chief counsel’s
division.
Responsible directly to the assistant secretary of the Commission, the administrative
division conducts the business affairs of the Commission and is made up of units such
as are usually found in Government establishments, the functions of such units being
covered largely by general statutes. These units are as follows: Accounts and
personnel, disbursing office, docket section, publications, mails and files, supplies,
stenographic, hospital, and library.
The Commission has a public relations and editorial service for the distribution of
information, for the preparation and editing of reports, and the answering of inquiries.
PUBLICATIONS OF THE COMMISSION
Publications of the Commission, reflecting the character and scope of its work, vary
in content and treatment from year to year, especially documents relating to general
business and industrial inquiries. Such studies are illustrated by appropriate charts,
tables, and statistics. These fact-finding studies, reports, and recommenda-

14

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

tions deal not only with current developments, possible abuses, and trends in an
industry, but contain scientific and historical back-ground. Considered as a whole, they
have supplied economists and students of affairs and government, the Congress, and
the public with information not only of general interest but of great value as respects
the need or wisdom of new and important legislation, to which they have frequently
led, as well as corrective action by the Department of Justice and private interests
affected. The Supreme Court has at times had recourse to them, and many of them
have been designated for reading in connection with university and college courses in
economics and law.
Findings and orders of the Commission, as published, contain not only interesting
but important material regarding the conduct of business and industry. They tell, case
by case, the story of unfair competition, exclusive-dealing contracts, price
discriminations, capital-stock acquisitions, interlocking directorates in violation of the
statutes which the Commission administers, and of the measures taken by the
Commission to prevent and correct such violations of law.
The Commission’s decisions are printed first in the form of advance sheets with
permanent volume number and pagination, and later as bound volumes.
Regarding the Commission’s publications, the Federal Trade Commission Act,
section 6 (f), says the Commission shall have power-to make public from time to time such portions of the information obtained by it hereunder,
except trade secrets and names of customers, as it shall deem expedient in the public interest;
and to make annual and special reports to the Congress and to submit therewith
recommendations for additional legislation; and to provide for the publication of its reports and
decisions in such form and manner as may be best adapted for public information and use.

RECOMMENDATIONS
As an outgrowth of experience in particular cases during administration and
enforcement of the laws committed to its jurisdiction, and of its experience in
conducting various investigations directed by congressional authority, the Commission
has from time to time suggested amendments designed to make the laws referred to
more effective. The Commission deems it appropriate in submitting this annual report
to review its various suggestions previously made and to submit its present views as
to the desirability of such amendments.
Amendments recommended to Federal Trade Commission Act.--The Commission
recommends that section 5 be amended so as to specifically prohibit not only unfair
methods of competition in commerce but also unfair or deceptive acts and practices
in commerce.

RECOMMENDATIONS

15

This recommendation is made in order to give the Commission clear jurisdiction over
a practice which is unfair or deceptive to the public and is not necessarily unfair to a
competitor. There are times when such a practice is so universal in an industry that the
public is primarily injured rather than individual competitors. In such cases it is very
difficult, if not impossible, to show injury to competitors, but the injury to the public
is manifest.
The Commission’ therefore recommends that the first two paragraphs of section 5
be amended to read as follows:
SEC. 5. Unfair methods of competition in commerce and unfair or deceptive acts and
practices in commerce are hereby declared unlawful.
The Commission is hereby empowered and directed to prevent persons, partnerships, or
corporations, except banks, and common carriers subject to the acts to regulate commerce, from
using unfair methods of competition in commerce and unfair or deceptive acts and practices
in commerce.

It would be necessary, of course, to make appropriate modifications in the remainder
of section 5 to meet the procedural requirements of the foregoing proposed
amendment.
In the interest of simplicity and uniformity of enforcement procedure, the
Commission also recommends a number of other amendments to the procedural
requirements of section 5. Among the more important of such recommendations the
Commission recommends the insertion of appropriate language to provide that it shall
not be necessary to establish a violation of its orders issued under section 5 as a
condition precedent to obtaining the court review provided for and to provide that
when the Commission’s order is affirmed the court shall thereupon issue its own order
commanding obedience to the order of the Commission.
The Commission further recommends that section 5 be amended so as to provide that
if a respondent does not take advantage of the opportunity for court review within 60
days after issuance of the Commission’s order, the order shall become final and
conclusive and the court may punish violation thereof as a contempt of court.
Amendments recommended to Clayton Act.--Section 2 now provides that nothing
therein contained shall prevent discrimination in price “on account of differences in
the grade, quality, or quantity of the commodity sold, or that makes only due
allowance for difference in the cost of selling or transportation * * *.” If this be interpreted to mean that any difference in quantity justifies any amount of discrimination
it is plain that the section may be readily evaded and gives no substantial protection
against the evil denounced. For the purpose of clarifying and promoting a more
effective enforcement of the section, the Commission recommends that the section be
amended to clearly define the discrimination in price intended to be forbidden.

16

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

The situation disclosed in its chain-store inquiry, involving the frequent making of
special discounts and allowances by manufacturers to chain stores without any definite
relation to cost of selling, leads the Commission to suggest that consideration be given
to the enactment of legislation supplementing section 2 so as to require all
manufacturers of merchandise, other than perishables, selling in interstate commerce,
to report promptly to the Federal Trade Com-mission whenever they make special
discounts and allowances which are not openly and generally made and published to
the trade; failure to make such reports or the making of willfully incorrect reports to
be subjected to penalty. However, it is readily apparent that the volume of work
flowing from the requirements of such reports would necessitate substantial
appropriations to properly administer this provision.
Section 7 now prohibits acquisition by one corporation engaged in commerce of
stock in a competing corporation so engaged where the effect may be to substantially
lessen competition between such corporations. If the section is to accomplish the
general purpose of preventing monopoly, it should be amended to prohibit acquisition
of assets, not only indirectly through use of stock unlawfully acquired but also direct
acquisition of assets independently of stock acquisition. The Commission therefore
recommends that both the direct and indirect acquisition of assets be prohibited where
the effects are the same as those already prohibited by the section. Such amendments
would also call for an amendment of section 11 to make the procedural remedy as
broad as the things prohibited.

PART I. GENERAL INVESTIGATIONS
ELECTRIC AND GAS UTILITIES
TEXTILE
MILK
CHAIN STORES

17

PART I. GENERAL INVESTIGATIONS
ELECTRIC AND GAS UTILITIES
INQUIRY CONDUCTED IN RESPONSE TO SENATE RESOLUTIONS

Pursuant to Senate Resolution 83, Seventieth Congress, first session; Senate Joint
Resolution 115, Seventy-third Congress, second session; and also pursuant to section
6 of the Federal Trade Commission Act,1 the Commission continued its investigation
of large utility holding companies, subholding companies, management, construction,
service and finance companies, and typical operating companies.
Senate Joint Resolution 115 directed the Commission to proceed under Senate
Resolution 83 “until it has investigated such of said corporations as in its judgment
should be investigated”, and provided that “the investigation shall be completed and
the Commission’s final report, with recommendations, shall be submitted to the
Congress not later than the first Monday in January 1986.” The purpose of this
extension was to make possible a more comprehensive survey of the natural-gas
industry.
In compliance with the foregoing resolution, extensive fieldwork was begun on the
accounts and other records of corporations engaged in the production, pipe-line
transportation, and wholesale and retail distribution of natural gas. During most of the
fiscal year the Commission concentrated its work on natural-gas companies, and at the
close of the year accounting examinations were in progress on natural-gas companies
in all but one of the large groups doing an interstate business, and several reports on
natural-gas systems were made the subject of public hearings. However, emergency
work in connection with the Commission’s investigation of the textile industry
retarded the field accounting work in connection with the utility investigation for about
3 months. The inquiry was also continued with respect to certain companies in the
electric light and power field.
Reports were placed in the record of public hearings on companies in the following
holding-company groups: Associated Gas & Electric Co.; Byllesby Engineering &
Management Co.; Central & Southwest Utilities Co. (Insull interests) ; Central Public
Service Co.; Cities Service Co.; Commonwealth & Southern Corporation; Duke Power
1

See p. 127 for full text.

19

20

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Co.; Electric Bond & Share Co.; Electric Management & Engineering Corporation
(Insull interests); General Water, Gas & Electric Co.; Midland United Co. (Insull
interests); Niagara-Hudson Power Corporation; Stone & Webster, Inc., and
subsidiaries; and Tri Utilities Corporation (G. L. Ohrstrom interests).
TOTAL ASSETS OF COMPANIES INVESTIGATED

The inquiry, from its inception to June 30, 1935, covered 21 holding companies with
total corporate assets of $4,722,542,502, 42 subholding companies with total corporate
assets of $3,155,030,623, and 96 operating companies with total assets of
$4,081,221,303.
Public hearings were held during the fiscal year on companies and groups as of the
dates listed below:
COMPANIES CONCERNING WHICH HEARINGS WERE HELD
Company
Hearings
Company
Hearings
beganbeganAmerican Gas & Electric
Insull group:
American Gas & Electric Co.
West Texas Utilities Corpora(interstate transmission)
Dec. 13, 1934
tion
July 11, 1934
Associated Gas & Electric Co. group:
Public service Co. of Oklahoma
July 17,1934
Associated General Electric
Southwestern Gas & Electric
Corporation
Sept 21, 1934
Co
Do.
Associated Gas & Electric Co.
Central Power & Light Co
July 18,1934
(intercorporate relations)
Sept. 27,1934
Electric Management & EngiGeneral Gas & Electric Corponeering Corporation
Oct. 16, 1934
ration
Do.
Midland United Co. (interstateCities Service Co. group:
transmission)
Feb. 5,1935
Cities Service Power & Light
Niagara Hudson Power Corporation
Co
Dec. 18, 1934
group:
Columbia Gas & Electric CorporaThe Power Corporation of New
tion group
York
July 13,1934
Columbia Gas & Electric CorNiagara Hudson Power Corpo
portation (engineering)
July 18,1934
ration
Dec. 11, 1934
Commonwealth& Southern Corpo
Power & Electric Securities
ration group:
Corporation, The
Jan. 28,1935
The Commonwealth & SouthNiagara Hudson Power Corpoern Corporation (New York)
Apr. 19, 1935
ration (engineering)
Mar. 4, 1935
The Commonwealth & SouthPeoples Light & Power Corporation
ern Corporation (New York)
group:
(interstate transmission)
Do.
Peoples Light & Power Corpo
Allied Engineers, Inc
Do.
ration
Aug. 22,1934
The Commonwealth & southTri Utilities Corporation
Aug.13, 1934
ern Corporation (Delaware)
May 16, 1935
Tri Utilities Corporation (interDuke Power Co. group:
state transmission)
Do.
Duke Power Co. (interstate
Standard Gas & Electric Co. group:
transmission)
Mar.28, 1935
Merchandising electric and gas
Duke Power Co. (intercorpousing appliances by subsidirate relations)
Do.
aries Standard Gas & ElecDuke Power Co
Do.
tric Co
Nov. 7, 1934
Southern Public Utilities Co
June 11, 1935
Byllesby Engineering & ManElectric Bond & Share Co. group:
agement Corporation
Do.
Tennessee Public Service Co
Sept. 6, 1934 Stone & Webster, Inc., group:
Dallas Power & Light Co
Do.
Engineers Public Service Co.,
Federal water Service Corporation
Inc
July 11, 1934
group:
Stone & Webster, Inc. (interSouthern Natural Gas Corporacorporate relations)
July 5, 1934
tion
Apr. 16,1935
Stone & Webster, Inc. (manGas Utilities group:
agement division)
Sept. 27, 1934
American Natural Gas CorpoStone & Webster Inc. (manage-

ration Apr. 15,1935
General Water, Gas & Electric
Co. group (International Utilities
Corporation):
General Water Works & Electric Corporation
Texas-Louisiana Power Co

Feb. 5, 1935
Do.

ment, supervision, and servic
ing contracts)
July 5, 1934
Stone & Webster service Corporation
Sept. 27, 1934
Virginia Electric & Power Co
Sept. 26, 1934
Miscellaneous: Growth of naturalas operations by holding company group in United States
Aug. 15, 1934

21

ELECTRIC AND GAS UTILITIES
LIST OF COMPANIES AND REPORTS CONCERNING THEM
Company
American Gas & Electric Co. group:
American Gas & Electric Co
American Gas & Electric Co. (interstate transmission)
Appalachian Electric Power Co
Indiana & Michigan Electric Co
Ohio Power Co
The Scranton Electric Co
Associated Gas & Electric Co. group:
Associated Electric Co
Associated Gas & Electric Co. (intercorporate relations)
Associated Gas & Electric Co
Associated Electric Co
Binghamton Light, Heat & Power Co
Clarion River Power Co
Consumers Construction Co
Eastern New York Electric & Gas Co
Erie Lighting Co
Harlem Valley Electric Corporation
J. G. White Management Corporation
Johnstown Fuel Supply Co
Lockport Light, Heat & Power Co
Management Holding Corporation
Metropolitan Edison Co
New England Gas & Electric Association
Cambridge Electric Light Co
Cambridge Gas Light Co
Cape & Vineyard Electric Co
Dedbarn & Hyde Park Gas & Electric Co
Derry Electric Co
Middlesex County Electric Co
New England Electric Securities Co
New Hampshire Gas & Electric Co
West Boston Gas Co
Worcester Gas Light Co
New York Electric Co
New York State Gas & Electric Corporation
Pennsylvania Electric Co
Citizens Light, Heat & Power Co
Penn Electric Service Co
Penn Public Service Co
Northwestern Electric Service Co. of Pennsylvania
Venango Public Service Corporation
Pennsylvania Electric Corporation
Staten Island Edison Corporation
Utilities Purchasing & Supply Corporation
Utility Management Corporation (Delaware)
Western New York Gas& Electric Corporation
West Virginia Light, Heat & Power Co
Youghiogheny Hydro-Electric Corporation
Associated Gas& Electric Securities Co., Inc
Associated Properties, Inc
Associated Utilities Investing Corporation (Delaware)
Associated Utilities Merchandising Co., Inc
Associated General Electric Corporation
Broad River Power Co
Lexington Water Power Co
The W. S. Barstow Management Association, Inc
W. S. Barstow & Co. (Delaware)
General Gas & Electric Corporation
W. S. Barstow & Co (New York)
Central Public Service Co. group:
Central Public Service Co
Central Gas & Electric Co
Central Public Service Corporation
Southern Cities Public Service Co
Cities Public Service group:
Arkansas Natural Gas Corporation
Arkansas-Louisiana Pipe Line Co
Little Rock Gas & Fuel Co
Public Utilities Corporation of Arkansas
Reserve Natural Gas Co. of Louisiana
Southern Cities Distributing Co
Cities Service Securities Co
Cities Service Co. System (interstate transmission)
Cities Service Co. (vol.1)
Cities Service Gas Co

Testimony and
exhibits

Pts. 21 and 22.
Pt. 72.
Pts. 21 and 22.
Do.
Do.
Do.
Pt. 48.
Pt. 70.
Pts. 45 and 46.
Pt. 46.
Do.
Do.
Do.
Do.
Do.
Do.
Do.
Do.
Pt. 50.
Pt. 48.
Do.
Do.
Do.
Do.
Do.
Do.
Do.
Do.
Do.
Do.
Pt. 48.
Do.
Pt. 48.
Do.
Do.
Do.
Do.
Do.
Pt. 48.
Do.
Do.
Do.
Do.
Do.
Do.
Pt. 64.
Pt. 48.
Pt. 64.
Pt. 46.
Pt. 70.
Pt. 64.
Do.
Pt. 57.
Do.
Pt. 70.
Pt. 57.
Pt. 52.
Pt. 56.
Pt. 52.
Pt. 53.
Pt. 55.
Do.
Do.
Do.
Do.
Do.
Pt. 53.
Pt. 83.
Pt. 66.
Pt. 67.

Cities Service Gas Pipe Line Co
Cities Service Power & Light Co
Kansas City Gas Co
The Gas Service Co
Lakeside Construction Co
Public Service Co. of Colorado

Do.
Pt. 73.
Pt. 67.
Do.
Pt. 55.
Do.

22

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
LIST OF COMPANIES AND REPORTS CONCERNING THEM--Continued

Testimony and
Company
exhibits
Columbia Gas & Electric Corporation group:
Columbia Gas & Electric Corporation
Pt. 47.
Columbia Gas & Electric Corporation (engineering)
Pt. 68.
American Fuel & Power Co
Pt. 52.
Cincinnati Gas Transportation Co
Pt. 49.
Columbia Corporation
Pt. 47.
Columbia Engineering & Management Corporation
Do.
Columbia Gas Construction Co
Do.
Columbia Securities Co
Do.
Huntington Gas Co
Pt. 49.
Manufacturers Light & Heat Co., The
Pt. 47.
Ohio Fuel Corporation
Do.
Union Gas & Electric Co., The
Do.
United Fuel Gas Co
Pt. 49.
Commonwealth & Southern Corporation group:
The Commonwealth & Southern Corporation (New York)
Pt. 77.
The Commonwealth & Southern Corporation (interstate transmission)
Do.
The Commonwealth & Southern Corporation (Delaware)
Pt. 78.
Allied Engineers, Inc
Pt. 77.
Duke Power Co. group:
Duke Power Co
Pt. 76.
Duke Power Co. (interstate transmission)
Do.
Duke Power Co. (intercorporate relations)
Do.
Southern Public Utilities Co
Pt. 79.
Electric Bond & Share Co group:
Electric Bond & Share Co
Pts. 23 and 24.
American Power & Light Co
Do.
Inland Power & Light Co
Pt. 35.
Minnesota Power & Light Co
Pt. 26.
Nebraska Power Co
Pt. 41.
Northwestern Electric Co
Pt. 35.
Pacific Power & Light Co
Do.
Washington Water Power Co
Pt. 29.
Electric Bond & Share Securities Corporation
Pts. 23 and 24.
Electric Investors, Inc
Do.
Electric Power & Light Corporation
Do.
Arkansas Power & Light Co
Pt. 42.
Dallas Power & Light Co
Pt. 69.
Idaho Power Co
Pt. 35.
Louisiana Power & Light Co
Pt. 43.
Mississippi Power & Light Co
Pt. 42.
Utah Power & Light Co
Pt. 45.
Western Colorado Power Co
Do.
National Power & Light Co
Pt. 25.
Carolina Power & Light Co
Pt. 26.
Tennessee Public Service Co
Pt. 69.
Phoenix Utility Co
Pts. 23 and 24.
Phoenix utility Co. (Minnesota operations)
Pt. 35.
Two Rector Street Corporation
Pts. 23 and 24.
Electric Bond & Share Co. (Operating expenses and cost of service)
Pt. 62.
Report on sale of common stock to officers and other employees or Electric Bond Pt. 66.
& Share Co. subsidiaries.
Supplemental financial statements to report on Electric Bond & Share Co
Do.
Federal Water Service Corporation group:
Southern Natural Gas Corporation
Pt. 77.
Foshay, W. B. Co., group.
W. B. Foshay Co. (Minnesota)
Pt. 25.
W. B. Foshay Co. (Delaware)
Do.
Foshay Building Corporation
Do.
Investors National Corporation
Do.
Public Utilities Consolidated Corporation (Arizona)
Do.
Public Utilities Consolidated Corporation (Delaware)
Do.
Gas Utilities Co. group:
American Natural Gas Corporation
Pt. 77.
General Water Gas & Electric Co. group International Utilities Corporation):
General Water Works & Electric Corporation
Pt. 74.
Texas-Louisiana Power Co
Do.
Insull group:
Middle West Utilities Co. (to Sept. 30, 1930)
Pt. 38.
Middle West Utilities t. 30, 1930, to Apr.14, 1932)
Pt. 59.
Central Illinois Public Service Co.
Pt. 44.
Central & South West Utilities Co
Pt. 62.
Central Power & Light Co
Pt. 68.
Public Service Co. or Oklahoma
Do.
West Texas Utilities Co
Pt. 67.

Central & South West Utilities Co. (intercorporate relations)
Corporation Securities Co. of Chicago
Do. 1

Pt. 62.
Pt. 67.
Pt. 50.

1 The material in these reports was taken from reports by auditors to the receivers of the respective companies.

23

ELECTRIC AND GAS UTILITIES

LIST OF COMPANIES AND REPORTS CONCERNING THEM--Continued
Company
Testimony and
exhibits
Insull group--Continued.
Middle West Utilities Co. (from Sept 30 1930, to Apr.14, 1932)--Continued.
Electric Management & Engineering Corporation
Do
Insull, Son & Co., Inc. 1
Insull Utility Investment, Inc. 1
L. E. Myers Co
Midland United Co
Midland United Co. System (intercorporate relations)
Midland United Co. (interstate transmission)
Midland Utilities Co
Mississippi Valley Utilities Investment Co. 1
National Electric Power Co
Do. 1
National Public Service Corporation
National Public Service Corporation, 1
Florida Power Corporation
Florida Power Corporation (engineering)
Georgia Power & Light Co
Tidewater Power Co
Tidewater Power Co. (properties and operation)
New England Public Service Co
National Light, Heat & Power Co
Twin State Gas & Electric Co., The
North West Utilities Co
United Public Service Co
United Public Utilities Co
Peabody Coal Co
Preliminary report, Insull Utility Investments, Inc. 1
Public Service Trust 1
Seaboard Public Service Co
Second Utilities Syndicate Inc. 1
South West L. E Myers Co
Southwestern Gas & Electric Co
Natural Gas Pipeline Co. of America group:
Chicago District Pipeline Co
Natural Gas Pipeline Co. of America
Texoma Natural Gas Co
New England Power Association group:
Connecticut Valley Power Exchange
New England Co
New England Power Association
Deerfield Construction Co
International Paper & Power Co
New England Power Construction Co
Power Construction Co
Sherman Power Construction Co
Niagra Hudson Power Corporation group:
The Niagara Hudson Power Corporation
Adirondack Power & Light Corporation
Adirondack Realty Holding Corporation
Buffalo General Electric Co
Buffalo, Niagara & Eastern Power Corporation
Cohoes Power & Light Corporation
Malone Light & Power Co
Mohawk Hudson Power Corporation
Municipal Gas Co. of City of Albany
New York Power & Light Corporation
Niagara Hudson Power Corporation (engineering)
Niagara Hudson Power Corporation System (interstate transmission)
Niagara, Lockport & Ontario Power Co
Northeastern Power Corporation
Northern New York Utilities, Inc
Oswego River Power Corporation
Peoples Gas & Electric Co. of Oswego
St. Lawrence County Utilities, Inc
St. Lawrence Securities Co
St. Lawrence Val ley Power Corporation
Syracuse Lighting Co
The Power C Corporation of New York
The Power & Electric Securities Corporation
The Niagara Falls Power Co
Utica Gas & Electric Co
North American Co. (The) group
North American Co
Central Mississippi Valley Electric Properties
City Utilities Co
Cleveland Electric Illuminating Co. (engineering only)
Edison Securities Corporation
Great Western Power Co. of California
Midland Counties Public Service Corporation
Mississippi River Power Co

Pt. 40.
Pt. 71.
Pt. 50.
Do.
Pt. 38.
Pt. 60.
Do.
Pt. 74.
Pt. 60.
Pts. 38 and 50.
Pt. 40.
Pt. 50.
Pt. 40.
Pt. 50.
Pt. 41.
Pt. 42.
Do.
Pt. 41.
Pt. 44.
Pt. 42.
Pt. 44.
Do.
Pt. 38.
Do.
Do.
Pt. 58.
Pt. 50.
Do.
Pt. 51.
Do.
Pt. 65.
Pt. 68.
Pt. 62.
Do.
Do.
Pts. 31 and 32.
Do.
Do.
Pts. 31 and 32.
Do.
Do.
Do.
Do.
Pt. 72
Pt. 59.
Pt. 63.
Pt. 62.
Pt. 56.
Pt. 59.
Pt. 62.
Pt. 60.
Pt. 59.
Pt. 63.
Pt. 75.
Pt. 62.
Pt. 54.
Pt. 65.
Pt. 60.
Pt. 66.
Pt. 59.
Pt. 67.
Pt. 53.
Pt. 67.
Pt. 50.
Pt. 67.
Pt. 74.
Pt. 63.
Pt. 53.
Pts. 33 and 84.
Do.
Do.
Do.
Do.
Pt. 39.
Do.
Pts. 33 and 34.

1 The material in these reports was taken from reports by auditors to the receivers of the respective companies.

24

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

LIST OF COMPANIES AND REPORTS CONCERNING THEM--Continued
Testimony and
Company
exhibits
North American Co. (The) group--Continued. North American Co.--Continued.
North American Edison Co
Pts. 33 and 34
North American Utility Securities Corporation
Do.
Pacific Gas & Electric Co (engineering only)
Pt. 39.
Power Operating Co
Pts. 33 and 34.
San Joaquin Light & Power Corporation (engineering only)
Pt. 39.
Union Electric Light & Power. (Illinois)
Pts. 33 and 34.
Union Electric Light & Power Co. (Missouri)
Do.
West Kentucky Coal Co
Do.
Western Power Corporation
Do.
Western Power Corporation (engineering)
Pt. 39.
60 Broadway Building Corporation
Pts. 33 and 34.
North American Light & Power Co. group:
North American Light & Power Co
Pt. 39.
North American Light & Power Co. (engineering)
Pt. 50.
North American Light & Power Co. (supplemental engineering)
Pt. 62.
Peoples Light & Power Corporation group:
Peoples Light & Power Corporation
Pt. 69.
Tri-Utilities Corporation
Pt. 68.
Tri-Utilities Corporation (interstate transmission)
Do.
Southeastern Power & Light Co. group-Control, Management and Service Relations of Southeastern Power & Light Co Pt. 27.
Southeastern Power & Light Co
Do.
Alabama Power Co
Pt. 30.
Appalachian Development Co
Pt. 27.
Dixie Construction Co
Do.
Georgia Light, Power & Railways Co
Pt. 28.
Georgia Power Co
Do.
Southeastern Engineering Co
Pt. 27.
Southeastern Fuel Co
Do.
Southeastern Realty Co
Do.
Southeastern Securities Co
Do.
Standard Gas & Electric Co. group:
Standard Gas & Electric Co
Pt. 36.
Byllesby Engineering & Management Corporation
Pt. 71.
Ivyton Oil & Gas Co. (Delaware)
Pt. 37.
Ivyton Oil & Gas Co. (Kentucky)
Do.
Kentucky Coke Co
Do.
Kentucky Pipe Line Co. (Indiana)
Do.
Kentucky Pipe Line Co. (Kentucky)
Do.
Louisville Gas & Electric Co. (Delaware)
Do.
Louisville Gas & Electric Co. (Delaware) and subsidiaries
Do.
Louisville Gas & Electric Co. (Kentucky)
Do.
Louisville Gas & Electric Securities Co. (Kentucky)
Pt. 37.
Louisville Hydro-Electric Co
Do.
Madison Light & Power Co. (Indiana)
Do.
Minneapolis General Electric Co
Pt. 43.
Northern States Power Co. (Delaware)
Do.
Northern States Power Co. (Minnesota)
Do.
Northern States Securities Corporation
Do.
Oklahoma Gas & Electric Co
Pt. 36.
Merchandising electric-and-gas using appliances by subsidiaries, Standard Gas Pt. 71.
& Electric Co.
Stone & Webster, Inc., group:
Engineers Public Service Co.,
Pt. 66.
Engineers Public Service Co. (Delaware)
Pt. 67
Virginia Electric & Power Co
Pt. 70.
Hydraulic Engineering Co
Pt. 67.
Stone & Webster Engineering Corporation
Pt. 66.
Stone & Webster, Inc. (Delaware)
Do.
Stone & Webster, Inc. (management and supervision)
Pt. 67.
Stone & Webster, Inc. System (interstate transmission)
Pt. 66.
Stone & Webster, Inc. System (intercorporate relations)
Pt. 67.
Stone & Webster Service Corporation
Pt. 70.
The United Corporation group:
The United Corporation
Pt. 52.
The United Corporation (engineering)
Do.
The United Corporation (intercorporate relations)
Do.
The United Gas Improvement Co. group:
The Northern Connecticut Power Co
Pt 51.
The United Gas Improvement Co
Do.
Allentown-Bethlehem Gas Co
Do.
American Gas Co., The
Do.
American Gas Co. of New Jersey, The
Pt. 54.
Connecticut Electric Service Co., The
Do.
Connecticut Electric Syndicate
Do.
Connecticut Light & Power Co., The
Do.
Connecticut Railway & Lighting Co
Do.
Eastern Connecticut Power Co., The
Do.
Gas Securities Co
Pt. 51.
Philadelphia Gas Works Co., The
Do.

ELECTRIC AND GAS UTILITIES

25

LIST OF COMPANIES AND REPORTS CONCERNING THEM--Continued
Company
Testimony and
exhibits
The United Gas Improvement Co. group--Continued.
The United Gas Improvement C o.--Continued.
Rockville-Willimantic Lighting Co., The
Pt. 54.
United Engineers & Constructors, Inc
Do.
Waterbury Gas Light Co., The
Do.
The United Gas Improvement Co. group (intercorporate relations)
Pt. 55.
Utilities Power&Light Corporation group:
Utilities Power & Light Corporation
Pt. 54.
Utilities Power & Light Corporation (intercorporate relations)
Pt. 63.
miscellaneous:
Growth of Natural Gas Production, Distribution an Interstate Movement
Pt. 68.

PROCEDURE AND SCOPE OF INVESTIGATION

The facts developed in this inquiry were obtained principally from the corporate
books and records of the companies examined by the Commission’s accountants,
engineers, and economists. Prior to public hearings, the reports are carefully checked
to correct errors or any misinterpretation of facts.
The testimony presented is chiefly that of the Commission’s own examiner experts,
who have personally examined the accounting and other records of the various
company groups and Studied such records and the financial and engineering practices,
as well as the supervising control by the holding companies over their operating
companies under various forms of supervision contracts. On certain occasions, officers
of the corporations have also been called to testify on specific points. At all hearings,
counsel representing the corporations whose records and transactions have been under
discussion, have been permitted to appear with full privilege to present objections, to
cross-examine and to offer testimony in behalf of such corporations.
Records of the hearings, including transcripts of testimony and reports and charts
introduced as exhibits in accordance with the Senate resolution, are transmitted to the
Senate on the 15th of each month, and later printed as part of Senate Document No.92.
REPORTS AND RECOMMENDATIONS SUBMITTED TO CONGRESS

During the fiscal year the Commission submitted to the Senate its report on the
utilities inquiry as to the electric light and power industry, printed as parts 72A and
73A of its reports to the Senate. It also submitted to the Senate a compilation of
proposals and views for and against Federal incorporation or licensing of corporations,
and a compilation of State constitutional, statutory, and case law concerning
corporations, with particular attention to public-utility holding and operating
companies, printed together as part 69A; and a report on association publicity and
propaganda activities of the

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

electric-power and gas industries, printed as part 71A of the reports to the Senate. The
chapter titles of part 72A which constitutes the final report on the economic, financial,
and corporate phases of holding and operating companies of electric and gas utilities,
and of part 73A, which relates to legal phases and recommendations, read as follows:
CHAPTER HEADINGS OF FINAL REPORTS
Volume 72A
I. Origin and Scope of the Inquiry.
II. Growth and Importance of Electric and Gas Industries.
III. Competition and Combination Affecting the Control of the Electric and Gas Utility
Industry.
IV. Organization, Structure, and Basis of Holding Companies and Methods of Controlling
Operating Companies.
V. Growth of Capital Assets.
VI. Security Issues and Other Liabilities.
VII. Income, Expenses, and Surplus of Holding and Operating Companies.
VIII. Methods of Marketing Securities and of Influencing the Course of Their Market Prices.
IX. Public Utility Servicing and Servicing Costs.
X. Physical Properties and Operating Methods of Electric Utility Companies.
XI. Advantages and Disadvantages of Holding Companies to the Public.
Volume 73A
XII. Survey of State Laws and Regulations Regarding Utilities and Their Holding Companies.
XIII. The Present Extent of Federal Regulation of Utility Holding Companies, and the Need
and Feasibility of its Enlargement.
XIV. Conclusions and Recommendations.
HOLDING COMPANY ADVANTAGES AND DISADVANTAGES

In its final report the Commission said with respect to the value or detriment to the
public of holding companies:
Many claims are made as to the advantages and functions of these holding companies. It is
claimed that they afford advantages of super management by staffs of highly skilled experts
which independent operating companies cannot afford. It is also claimed that advantages result
from group financing and from group purchasing. A large part of these claims have been
seriously challenged. Some existing independent operating companies, both privately owned and
municipal systems, particularly among the larger ones of each class, stand as contradictions to
practically all such claims. Moreover, holding companies have acquired control of operating
companies so large that the argument of the latter’s inability to provide such services for
themselves obviously has no application. The Commission is of the opinion on the whole that
the detriment of utility holding companies to the public has exceeded, thus far, their value to the
public.
Summed up, the abuses of the holding company fall chiefly into two classes:
(1) Unsound and/or needless financial structures and practices which are a detriment and
frequently a menace to the investor or the consumer, or both.

ELECTRIC AND GAS UTILITIES

27

(2) The milking of operating companies through the device of numerous forms of contracts
and arrangements. The Federal Trade Commission’s investigation has disclosed that the tributes
and profits thus exacted have in some instances ranged from 50 percent to over 300 percent on
the cost of such services. (See Appendix L-5.)
The holding company, as such, performs no producing function. For that reason, in the utility
field it has not been treated as a utility company and there fore has not been subject to
regulations as such. Is it usually subject to no regulation or control whatever. Operating utilities
are the companies to which the Commonwealths have granted the charters to perform a general
public utility service. These grants imply and definitely impose reciprocal duties, but as a result
of holding-company control and management, many operating companies, under the compulsion
of holding-company control, have contracted away the real performance of their principal
charter functions to the holding company or to other companies designated by the holding
company, thus leaving only a hollow corporate shell within the jurisdiction of the State where
the operating company does business. The entire holding-company problem has grown up under
the enactment of statutes which abrogated the common-law rule which forbade one corporation
to acquire and own stock in another. Corporations, including holding companies, have traveled
a long way from the time when a few persons incorporated for the benefit of their combined
resources and combined ownership, with the combined advice and management of the owners.
Holding-company corporations have stretched this still further until often there has been
practically complete divorcement of ownership from management and responsibility. In fact,
the very nomenclature now adopted illustrates this. The public is no longer invited to buy an
interest in the control and management of the corporation. They are invited to “invest.” Much
of the induced investment is of nonvoting stock, and even when it is of voting stock, the wide
dispersion thereof makes practically Impossible any combined action against any managerial
group that has once acquired control. Thus instead of the corporation, on the one side, and the
public, on whom it will depend for trade and revenue, on the other, as was the case originally,
we have a third party of minority ownership but with management and control which may be
likened to absentee landlordism. Obviously, whenever this managerial group becomes swayed
with lust for power and greed for excessive profits, the many other stockholders are treated as
having few, if any, rights. In many instances, such managerial groups have failed to act as
trustees for their corporations and other stockholders, as in equity they are supposed to do.

The report also said:
If the Congress does not regard the suppression of the holding-company system as a feasible
and on the whole a preferable policy, the necessity of strict regulation becomes all the more
apparent. If holding companies are to be permitted to continue to control and manage groups
of operating or producing companies,, there are three methods which seem especially to
commend themselves for the exercise of Federal jurisdiction. They are:
(1) The taxation method.
(2) Direct statutory inhibitions.
(3) A compulsory Federal licensing act. There should also be mentioned(4) A permissive Federal incorporation act.
The suggested methods are not conflicting. Any 1, 2, or 3, or all may be employed.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

The Commission’s recommendations were summarized as follows:
The Federal Trade Commission respectfully recommends utility holding company legislation
along the lines hereinbefore discussed, pursuant to whatever general policy Congress may see
fit to adopt. The order of presentation of the four groups of recommendations, namely (1)
taxation, (2) direct prohibitive legislation, (3) compulsory Federal licensing, and (4) permissive
Federal incorporation, represents the Commission’s views as to their respective relative
advantages.

The Commission primarily recommends the first two methods--first, taxation, and,
second, direct prohibitive legislation. In response to Senate Joint Resolution 115, the
Commission will submit to Congress in January 1936, its supplemental final report on
the investigation of power and gas utilities.
TEXTILE INDUSTRIES
Origin of the inquiry.--The Commission’s textile inquiry was undertaken pursuant
to an Executive order of September 26, 1934, which directed the Commission to
investigate and report on the labor costs, profits and investments of companies and
establishments in the textile industries in order to show what effect increased wages
and other costs might have on such industries, and to make public the results at the
earliest possible moment. The Commission was directed to give this work priority over
other investigations. The Commission limited its inquiry to the spinning, weaving, and
finish
cotton, wool, silk and rayon yarns and woven goods, and the manufacture of thread,
cordage, and twine, for specified periods from January 1, 1933, to August 31, 1934.
The Commission at once requested the National Recovery Administration code
authorities and trade association executives, represent the branches of the industry
which it was proposed to cover, and also the Bureau of Labor Statistics of the United
States Department of Labor, to furnish lists of manufacturers. After eliminating
duplications among the lists, and the names of knit-goods manufacturers, jobbers of
yarn, fabrics and thread, and concerns engaged in preparatory processes, such as wool
garnetting, carding and combing, there remained a list of approximately 2,600
concerns.
With the limited time, personnel, and funds available, it was obviously impracticable
to obtain information from so many companies by direct audits. It was, therefore,
decided to rely on information filed by the companies on a carefully drawn and
comprehensive schedule prepared by the Commission. In order to assure the maximum
degree of reliability in the results reported, this schedule requested that returns be
made under oath in accordance with the terms of the Federal, Trade Commission Act,
which also provides fines and imprisonment for wilfully making false entries or state-

TEXTILE INDUSTRIES

29

ments in reports. This schedule requested data as to the number of spindles and looms
in place and operated; balance sheets; a combined expense, income, and surplus
statement, and raw material and finished-goods inventory statements. These data were
requested for three 6-month periods beginning January 1, 1933, and for a 2-month
period from July 1, to August 31, 1934. These periods were selected because they
reflect the operations for the 6-month period just preceding the adoption of the codes,
the 6 months during which. the codes became effective, a 6-month period after the
codes became fully effective and the 2-month period immediately preceding the textile
strike of September 1934.
Cooperation of industries with the Commission.--Cooperation of the industries with
the Commission was excellent. A large proportion of the concerns furnished their
reports with exceptional promptness, considering the amount of work involved. More
than 2,300 replies were received. Measured by the reports of the Bureau of the Census
of the United States Department of Commerce, more than 90 percent of the spindles
and looms of the cotton and woolen and worsted industries, and about two-thirds of
the silk and rayon industries were covered by these reports. This general cooperation
was no doubt influenced by the favorable attitude of trade associations of the various
branches of the industries.
Within less than 2 months from the date of the Executive order, reports containing
usable data for each of the four periods had been received from 765 companies, and
tabulations for a preliminary report were closed November 24, 1934.
The preliminary report based on these 765 companies was issued in six parts. As
rapidly as these parts were completed, copies were forwarded to the President, the
Labor Advisory Board, and other interested Government officials, textile trade
associations, and labor executives, and made available to the press and the public. The
titles of these parts are:
TITLES OF PRELIMINARY REPORT
I.
II.
III.
IV.
V.
VI.

Investment and Profit.
The Cotton Textile Industry.
The Woolen and Worsted Textile Industry.
The Silk and Rayon Industry.
Thread, Cordage, and Twine Industries.
Tabulations Showing Financial and Operating Results for Textile Companies According
to Rates of Return on Investment, Rates of Net Profit or Loss on Sales, and Amount
of Investment.

Under the original plan only the first five of these parts were contemplated.
However, the Cabinet Committee on Textiles requested the Commission to show the
results for companies grouped according to rate of return on investment, net profit on
sales, and amount of

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

textile investment, as well as a number of other analyses of the returns received.
In further compliance with the Executive order of September 26, 1934, and a letter
from the President dated January 25, 1935, the Commission extended its investigation
to cover the 6-month period ending December 31, 1934.
The preparation of the tables for part VI of the report, mentioned above, somewhat
delayed completion of a report covering the four 6-month periods. However, by the
end of the fiscal year practically all of the tables had been completed and considerable
progress bad been made on the text for this latter report.
MILK INVESTIGATION
REPORTS ON CONNECTICUT AND PHILADELPHIA MILKSHEDS
This investigation was made in compliance with House Concurrent Resolution 32,
Seventy-third Congress, second session. This resolution directed the Commission to
inquire into conditions with respect to the sale and. distribution of milk and other dairy
products-* * * within the territorial limits of the United States by any person, partnership, association,
cooperative, or corporation, with a view to determining whether any such person, partnership,
association, cooperative, or corporation is operating within any milkshed of the United States
in such a manner as to substantially lessen competition or tend to create a monopoly in the sale
or distribution of such dairy products, or is a party to any conspiracy in restraint of trade or
commerce in any such dairy products, or is in any way monopolizing or attempting to
monopolize such trade or commerce within the United States or any part thereof, or is using any
unfair method of com petition in connection with the sale or distribution of any such dairy
products, or is in any way operating to depress the price of milk sold by producers.

In response to this resolution, the Commission investigated conditions in the
Connecticut and Philadelphia milksheds. Commission attorneys, examiners, and
accountants made an examination of the files and records of farmers’ cooperative
associations, milk distributors’ associations and many of the large distributors, and
interviewed a large number of farmers. Commission accountants and auditors
inspected and analyzed the financial and operating records of the principal distributors
in Hartford, Bridgeport and Philadelphia. They made abstracts of the record showing
the individual settlements made by these dealers with the milk producers. They also
collected information of a general nature regarding production and distribution of
milk.
Public hearings were held in Hartford, Conn., December 12 to 21, 1934, and in
Philadelphia from February 5 to 27, 1935. Witnesses representing all phases of the
milk industry testified.

MILK INVESTIGATION

31

Report submitted to Congress.--The report, entitled “Sale and distribution of milk
products, Connecticut and the Philadelphia milksheds”, which was transmitted to
Congress, April 5, 1935, was based on the field investigation by attorneys and
accountants and upon the evidence submitted at the public hearings.
It was estimated that farmers shipping milk to dealers in Philadelphia and certain
cities in Connecticut were underpaid by an amount exceeding $600,000 during 1934,
through practices of certain distributors for most of which it is difficult to find
justification.
Prices of milk and milk products to consumers, as well as prices paid the farmer for
milk, were fixed by agreements arrived at through negotiation by farmers’ cooperative
organizations and milk dealers in both the Connecticut and Philadelphia milksheds.
Under these agreements, while prices paid the producers and those charged to the
consumers fluctuated, the gross margin to the dealer on milk sold for fluid
consumption remained substantially the same over a number of years.
In both areas investigated, large milk distributors have been able to substantially
lessen competition by the acquisition ad absorption of independent dealers.
The investigation disclosed that serious conditions existed among many milk
producers in both the Connecticut and Philadelphia milksheds. Many farmers who
depended largely upon receipts for their milk for a livelihood were reduced to financial
distress, due at least in part to the low-average price received for their milk Some
farmers were in default in the payment of interest on mortgages, and others abandoned
dairy farming and disposed of their herds.
Milk dealers in both areas made smaller rates of return, on the total capital employed
in the milk and milk-products business during the years 1932 to 1934 than they did
during 1929 to 1931. However, some of the large distributors were able to pay high
salaries and substantial dividends throughout the period covered the investigation.
Evidence was developed indicating that in both Connecticut and Philadelphia
milksheds, distributors have at times been, at least in part, responsible for the creation
of a. milk surplus by the importation of milk from other producing areas mostly in the
form of cream, which has tended to depress the price of milk to local producers.
The five States shipping milk into Philadelphia have enacted laws and regulations
governing the sanitary conditions under which milk is produced and marketed, some
of which conflict and have worked hardships on the producers. Municipal and other
local sanitary regulations haven added to this burden. Duplication of inspection by the
several agencies, including State, city, and other local author-

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

ities, as well as dealers, and the requirement upon the producer to meet the different
interpretations of the varying regulations, have worked considerable hardship. on the
producers in the Philadelphia milkshed
Work is begun in Chicago area.--The Commission is continuing the milk
investigation, having sent investigators into the Chicago sales area where field work
was still in progress at the close of the fiscal year. A report dealing with conditions in
the sale and distribution of milk and other dairy products in the Chicago area will be
submitted to the Congress at its next session.
CHAIN-STORE INQUIRY
FINAL REPORT WITH CONCLUSIONS TRANSMITTED TO THE SENATE

In December 1934 the Commission sent to the Senate its final report on the chainstore investigation, conducted in response to Senate Resolution 224, Seventieth
Congress, first session. This report briefly summarizes many of the important features
of earlier reports on the inquiry and also presents certain conclusions and
recommendations.
Recommendations and conclusions.--When the Commission came to consider the
social and economic advantages and disadvantages of chain-store merchandising from
the legal standpoint, it was evident that many of the economic advantages possessed
by the chains were of character that is in conformity with existing law. Such
advantages as those flowing from the integration of production and of wholesale and
retail distribution, from the savings involved in avoiding credit and delivery service,
and from the ability of chains to realize the benefits of large-scale advertising areas all
plainly beyond the present scope of statutory law. Nor did the Commission recommend
any change in the law in order to eliminate such advantages. Such a program would
involve radical interference with the rights of private ownership and initiative, virtual
abandonment of the competitive principle, and destruction of the public advantage
represented by lower prices and lower cost of living.
As to the competitive advantages of the chains inhering in their ability to average the
profits of their various branches, this frequently is the outgrowth of their ability to
average prices and thus may involve price discrimination in the same or different
localities. Under section 2 of the Clayton Act, however, price discrimination in good
faith to meet competition is lawful and the Commission obtained no evidence that the
discrimination disclosed was not of that character. Considering also the jurisdictional
doubt that resales to the local consumer are in the course of interstate commerce, it
appeared that prevention of price discrimination in such

CHAIN-STORE INQUIRY

33

sales is the province of the States, 31 of which have antiprice-discrimination laws.
Proposed amendments to Clayton and Federal Trade Commission Acts.--There was
only one part of the chains’ competitive advantage in lower selling prices which the
Commission thought should be canceled by force of Federal law. It consisted of the
discrimination in prices and terms by manufacturers against independents and in favor
of chains, a practice accounting for a most substantial part of the chains’ ability to
undersell independents and coming within the general principle of an existing statutory
provision, i.e., section 2 of the Clayton Act. It was concluded that many of the low
buying prices of the chains had little, if any, relation to differences in quantity or cost
of selling. For that and other reasons, the Commission recommended an amendment
of section 2 which would eliminate the provisos regarding such differences and other
permissible discriminations, substitute a broad prohibition of unfair and unjust
discrimination, and thus make it a judicial rather than a legislative matter. This would
also facilitate a constitutional test of the question whether discrimination may be
prohibited which is in good faith to meet competition. At the same time it was
suggested that even discriminations justifiable on account of quantity or cost of selling
might, nevertheless, in the long run lead to monopoly.
The Commission also recommended amendment of section 5 of its organic act so as
to prohibit, not only unfair methods of competition, as at present, but unfair or
deceptive acts or practices in or affecting interstate commerce.
The report reviewed the history of the attempts made to enforce section 7 of the
Clayton Act prohibiting acquisition of stock in competing corporations. It was pointed
out that the section does not even purport to prohibit combination of competing
corporations through acquisition of their physical assets and that most of the chainstore mergers had been of that character. Under decisions of the Supreme Court, if the
stock acquired in violation of section 7 is voted so as to effectuate a merger of the
physical properties before the Commission issues its order of divestiture, the
Commission lacks the power to order any divestiture of such assets.
Accordingly the Commission recommended amendment of Section 7 to prohibit
acquisition of either stock or assets of competing corporations where it may have the
effect already forbidden by the section, namely, “to substantially lessen competition”
between the acquiring and the acquired corporations, or “to restrain such commerce
in any section or community, or tend to create a monopoly of any line of commerce.”
It also recommended an amendment of the section to prohibit the voting of stock for
the purpose of merging

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

assets after the issuance of complaint by the Commission. In order to make the remedy
as broad as the evil denounced by section 7, an amendment of section 11 was proposed
in order to give the 5 Commission power to order divestiture of assets illegally acquired
as well as of stock.
The following reports have been issued as a result of this inquiry:
LIST OF CHAIN-STORE STUDIES
Cooperative Grocery Chains.
Wholesale Business of Retail Chains.
Sources of Chain-Store Merchandise.
Scope of the Chain-Store Inquiry.
Chain-Store Leaders and Loss Leaders.
Cooperative Drug and Hardware Chains.
Growth and Development of Chain Stores.
Chain-Store Private Brands.
Short Weighing and Over Weighing in Chain and Independent Grocery Stores.
Sizes of Stores of Retail Chains.
Quality of Canned Vegetables and Fruits (under Brands of Manufacturers, Chains, and Other
Distributors).
Gross Profit and Average Sale per Store of Retail Chains.
Chain-Store Manufacturing.
Sales, Costs, and Profits of Retail Chains.
Prices and Margins of Chain and Independent Distributors, Washington, D. C. Grocery.
Prices and Margins of Chain and Independent Distributors, Memphis-Grocery.
Prices and Margins of Chain and Independent Distributors, Detroit--Grocery.
Chain-Store Wages.
Chain-Store Advertising.
Chain-Store Price Policies.
Special Discounts and Allowances to Chain and Independent Distributors-Tobacco Trade.
Invested Capital and Rates of Return of Retail Chains.
Prices and Margins of Chain, and Independent Distributors, Cincinnati--Grocery.
Special Discounts and Allowances to Chain and Independent Distributors--Grocery Trade.
Service Features in Chain Stores.
The Chain Store in the Small Town.
Special Discounts and Allowances to Chain and Independent Distributors-Drug Trade.
Prices and Margins of Chain and Independent Distributors, Cincinnati Drug.
Prices and Margins of Chain and Independent Distributors, Detroit-Drugs. Prices and Margins
of Chain and Independent Distributors; Memphis Drugs.
Prices and Margins of Chain and Independent Distributors, Washington, D. C.--Drug.
Miscellaneous Financial Results of Retail Chains.
State Distribution of Chain Stores.
Final report.

CHAIN-STORE INQUIRY

35

Selling prices.--After careful Study of the subject, the Commission concluded that
the great expansion of the chain-store system of distribution was more than anything
else due to the lower selling prices of chain stores as compared with independent
retailers. In part, these lower chain selling prices were due to low chain buying prices,
but the advantages of chain stores as compared with other systems of distribution were
not to be found in this or any other single element of advantage.
Chain-store prices on comparable standard-brand items of grocery and drug
merchandise were on the average substantially below those of independent retailers.
This does not mean that the prices of the chains averaged lower than those of the
independents for every item compared, nor does it necessarily mean that the chain
aggregate of average prices for all commodities combined was lower than the
aggregate of the average prices of these same commodities for every independent
establishment.
Service.--An important factor in the differences in chain and in dependent store retail
price is the difference in the degree of service rendered. Exactly how much the
differences in service mean in the form of retail selling prices to consumers cannot be
determined. A study of the prices of grocery independents and cooperative chain
retailers in Washington, D. C., according to the extent of service, indicates that in this
business the greater degree of service rendered by independents may account for as
much as 20 percent of the difference in the selling prices between chains and
independents.
The Commission’s study of wages in chain and independent stores tends to indicate
rather definitely that at the time of the study the wages of chain n-store selling
employees were lower than those paid by independent stores. Excluding the
department stores, the weighted average weekly wage of full-time store selling
employees in independent stores was $28.48 as compared with $21.61 in chain stores.
In the department stores, however, the full-time store selling employees of chains
received a weekly wage of $19.80 per week as compared with $19.24 for the
independents. On a weighted average basis, the weekly wage paid by the independent
stores, including department stores was $23.45 as compared with $21.22 for the chain.
in a simple average of the weekly wages in each kind of business, the independents
showed a figure of $27.12 and the chains one of $23.37.
The Commission’s study of wages in 30 small towns also shows quite definitely that
the independents in those towns, as a rule, paid higher wages than the chains. This
study included several hundred employees of chain and independent stores in 30 Of
the smaller towns and cities of 5,000 population or less in 11 different lines of
business. Except in furniture, the weekly wages paid by the inde-

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

pendent establishments averaged appreciably higher in every one of the lines of
business found in those towns.
Considering the fact that salaries, wages, and bonuses represented from 40 to 60
percent roughly of the total operating expenses of chain-stores, depending upon the
type of chain, and averaged something over half of the total operating costs for all
chains combined, the higher wages of independent stores may be regarded as a further
partial explanation of the higher selling prices in such establishments.
Rent.--It is probable that the chain stores pay a very much higher rental than the
independent stores, on the average. The predilection of the chains, at least in the past,
for corner locations in densely populated sections has been more or less notorious, and
there are indications that these organizations have frequently been made to pay amply
for such locations.
Special discounts and allowances.--The lower selling prices of chains as compared
with independent distributors are largely possible because of the lower buying prices
enjoyed by the chains as compared with the independent wholesaler, cooperative
chain, or the independent retail buyer in those cases where the retailers buy directly
from the manufacturer. In these lower buying prices, special discounts and allowances
play an important part.
In the first place, the Commission’s figures indicate that more manufacturers make
allowances to chains than to wholesalers. Secondly, although the number of wholesale
customer accounts involved in the Commission’s study of discounts and allowances
was far greater than the number of chain accounts, the proportion of chain accounts
carrying allowances was far greater than the proportion of wholesale accounts.
Third, in all three of these lines of business, the percentage rates of allowances were
very much higher on sales to chains than on those to wholesalers, whether the base to
which the allowances were applied was the total sales of all manufacturers reporting
or only the sales of the manufacturers making allowances. In 1930, for example, the
rate of special allowances on total sales of all re porting manufacturers to tobacco
chain was 3,57 percent, as compared with 0.71 percent to wholesalers. In the grocery
trade it was 2.02 percent for chains, as compared with 0.91 percent for wholesalers ;
and in drugs, 5.19 percent compared with 1.11.
Finally, the total amounts of the allowances made by all the manufacturers to chains
greatly exceeded the amounts given to wholesalers. The interest of this last statement
lies in the fact that the proportion of the total allowances paid to the chains was much
higher, and that paid to the wholesalers was much lower, relatively,

CHAIN-STORE INQUIRY

37

than the total quantities bought by each of these types of distributors, respectively.
Total chain buying advantage.-The total buying advantage of the chain is not always
represented by special discounts and allowances because the terms of the regular trade
and quantity discounts and allowances offered may be such as to permit the chains by
reason of their larger buying power, or otherwise, to obtain lower buying prices on the
average even before the deduction of special discounts and allowances. The chains
apparently bought groceries to much better advantage than the wholesalers before
considering special discounts and allowances, but this was not the case in the drug
trade.
For groceries and drugs in certain cities, it is possible to estimate how much of the
difference in selling prices between chain and independent distributors was
represented by the differences in the buying prices. Based on the unweighted figures
of grocery items purchased by consumers at chain and independent stores, it would
appear that as high as 45 percent of the difference in favor of the chains between chain
and independent selling prices on standard grocery items may have been due to the
differences in buying prices in favor of the chains on these items.
In the drug trade the total buying advantage of the chains was apparently very much
less than in the case of groceries.
Data procured by the Commission in the grocery trade indicates that an appreciable
proportion of the buying advantages of the chains cans be overcome by fairly large and
well-organized cooperatives. For example, the difference in the cooperative-buying
price of the D. G. S. stores of Washington, D. C., and that of all independents except
cooperatives was equivalent to 23.6 percent of the difference of 05.72 cents between
the aggregate of the average buying prices of the independent retailers and of the chain
showing the lowest net purchase-cost. A similar result was found in Memphis.
Leaders and loss leaders.--Closely related to the question of the lower selling prices
of the chains as compared with the independent stores is the use of leaders and loss
leaders and the problems relating thereto. Of 1,458 chains reporting on the sale of
leaders (other than private brands) at less than net purchase cost, only 174 chains
operating a total. of 8,056 stores admitted that they engaged in this practice in the
latest of the 2 years for which the information was requested. A total of 827 chains
operating in excess of 35,000 stores reported on the question of whether they sold in
the last week of 1 year leaders below total cost (at less than the actual net purchase
cost of the goods plus the operating costs of the chain for that year) in this case 97, or
11.7 percent, of the chains operating 12,949, or

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

over one-third of the stores, reported that they had employed this practice during the
period in question.
On leaders sold below total cost, including the cost of doing business, du ring a
representative week the average loss reported by grocery and grocery and meat chains
was approximately 10 percent and that reported by the drug chains was 14 percent.
Eighteen percent of these items in grocery and meat chains, 13 percent of those in
grocery chains’, and over 40 percent of those in drug chains carried losses of 16
percent or more.
Short weighing.--The Commission’s study of short and over weights in the grocery
trade indicates that probably some small part of the lower selling prices of the chain
as compared with the independent retailer was due to weighing in the case of
commodities bold by weight. According to these analyses, (1) the chains weighed
exactly a far higher proportion of the purchases made from them (15.6 percent than the
independents’ (8.4 percent); (2) somewhat higher proportions of the purchases from
chains than from independent retail stores were short weight; and (3) somewhat lower
proportions of the’ purchases from chains than from independent retailers were
overweight. In the four cities studied, 50.3 percent of the total purchases from all
chains combined were short weight and only 34.1 percent over weight as compared
with 47.8 short and 43.8 over weight from independent and cooperative retailers
combined.
On the average, therefore, the consumer seems somewhat more likely to get short
weight than over weight in a chain than in an independent store and appreciably more
likely to get excess weight in the latter than in the former establishment.
Private brands.--Another advantage to chain-store systems in various lines of
business as compared with independents may result from the distribution of
merchandise under their own private brands or labels.
The advantage of these private brand items, from the point of view of the chain store,
lies in the fact that most of the chains handling this type of merchandise are apparently
able to mark it up by a percentage over cost as high, or higher, than competing
standard-brand merchandise, but tend to sell it either as low in prices, or lower, the
competing standard-brand items.
Quality of private brands.--As regards the relative merits of private and competing
standard brand merchandise from the point of view of quality of the products, it may
be inferred from the Commission’s one detailed study of this subject in canned
vegetables and fruits, that there is probably little to choose on the average between the
quality of chain-store private brands and manufacturers’ brands. In the combined
figures for canned fruits and vegetables in

CHAIN-STORE INQUIRY

39

this study, however, the chains averaged substantially lower than the national
advertising manufacturers in the proportions of both “fancy” and “choice” (or “extra
standard”) grades. In canned vegetables the national advertisers averaged a somewhat
better quality than the chains, but on canned fruits the reverse was true.
Wholesaling.--Many chains engaged in wholesaling, and insofar as there are profits
in the wholesale business for any chains, such profits either result in a higher total
dollar net profit than the chain earns from its retail business, or these profits may be
used to reduce prices or absorb losses upon merchandise sold through its retail stores.
Advertising.--An other advantage of the chains over the independents comes many
lines to advertise from the ability of chains extensively and to much better advantage
than their independent competitors. This was particularly the case in such lines of
business as groceries, grocery and meat, and drugs, but was not so true of the
department store business.
Variability of chain-store prices.--One of the interesting features of chain-store
prices as indicated by the Commission’s price and margin studies in groceries and
drugs was the degree of variability of chain-store prices from the headquarters prices
in the same city. Although the instances of these variations are, as a rule, rather evenly
distributed above and below the headquarters prices, the range is from more than 20
percent above to more than 20 percent below. No less than 700 price quotations were
20 percent or more above the headquarters prices and 262 quotations were 20 percent
or more below this price. Only 2 percent, however, of the total 82,213 quotations were
10 percent or more above headquarters prices and a total of 3 percent were 10 percent
or more below the headquarters prices.
Prices and operating results of large and small chains.--Based on an analysis of the
gross profits on retail sales and average net retail sales per store for the years 1921-30,
both separately and combined, there is little evidence of any close general relationship
between the size of the chain and either the average sales per store or the size of the
spread between the cost of merchandise to the chain and the selling price to the
consumer, commonly known as the “gross margin.”
A somewhat similar result to the foregoing is shown by the gross margin and
operating expense percentages on sales for various kinds of chains consolidated for 8
years according to the number of stores operated. These figures are subject to the
qualification of including the entire operating results of the chains, thus taking into
account wholesaling and manufacturing operations in addition to retail selling.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

In the case of operating expenses, chains in 11 kinds of business show only
indeterminate results, according to the number of stores operated, those in the
remaining lines being about evenly divided between chains showing a tendency for
operating expenses to increase and those showing a tendency for operating expenses
to decrease with the size of the chain.
Similar indeterminate results are shown for percentages of net profit on sales and
inventory turnover.
Finally, an examination of the comparative selling prices of the larger and smaller
grocery and drug chains in various cities fails to furnish very strong evidence that the
large chains sold at lower prices than the smaller, at least so far as standard-brand
merchandise is concerned. The figures on which this analysis is based are unweighted
and weighting by the actual quantities purchased might conceivably change the results
shown. They also take no account of prices on private-brand items either purchased
or manufactured by the chains. It does seem to be true that larger proportions of the
large than of the small chains owned private brands, but it is not so clear that the larger
chains sold very much larger proportions of such merchandise than the smaller ones.

PART II. GENERAL LEGAL WORK
DESCRIPTION OF PROCEDURE
LEGAL INVESTIGATION
LEGAL WORK UNDER N. I. R. A.
CONSOLIDATIONS AND MERGERS
CASES SETTLED BY STIPULATION
REPRESENTATIVE COMPLAINTS
COMPLAINTS ON RELATION OF’ N. R. A.
ORDERS TO CEASE AND DESIST
TYPES OF UNFAIR COMPETITION
CASES IN THE FEDERAL COURTS
TABULAR SUMMARY OF LEGAL WORK

41

PART II GENERAL LEGAL WORK
DESCRIPTION OF PROCEDURE

A case before the Federal Trade Commission may originate in any one of several
ways. The most common origin is through complaint by a consumer, a competitor, or
from public sources other than the Commission itself. However, the Commission may
initiate an investigation to determine if the laws administered by it are being violated.
No formality is required for anyone to make application for a complaint. A letter
setting forth the facts in detail is sufficient, but it should be accompanied by all
evidence in possession of the complaining party in support of the charges made.
INFORMAL PROCEDURE

When an application for complaint is received, the Commission, through its chief
examiner, considers the essential jurisdictional elements. Under section 5 of the
Federal Trade Commission Act it must be shown that a proceeding involves the use
of an unfair method of competition and that such proceeding “would be to the interest
of the public.” The provisions of section 5 are also extended to foreign trade of
American exporters by the Export Trade Act. Sections 2, 3, 7, and 8 of the Clayton Act
make unlawful, under the circumstances therein set forth, discrimination in price, tying
and exclusive dealing contracts, agreements, or understandings, corporate acquisitions
of stock in competing companies, and interlocking directorates. The Federal Trade
Commission, the Interstate Commerce Commission, the Federal Communication
Commission, and the Federal Reserve Board are empowered to enforce compliance
with such sections in the respective fields of those agencies.
It must also appear that the practice complained of is one over which the Federal
Trade Commission has jurisdiction. Frequently it is necessary to obtain additional data
by further correspondence or by a preliminary field investigation before deciding
whether to docket an application for complaint.
When an application for complaint has been docketed, it is assigned by the chief
examiner to an attorney for investigation. The investigation is then made and the facts
regarding the matter are developed. The attorney to whom the application is assigned
interviews
20442---35-----4

43

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

the party complained against, advising of the charges, and requesting the submission
of such evidence as is desired in defense or in explanation. In making an investigation
it is not the policy of the Commission to disclose the identity of the complainant. If
necessary, competitors of the respondent are interviewed to determine the effect of the
practice from a competitive viewpoint. It is often desirable to interview consumers for
the purpose of developing facts to assist in determining whether the practice alleged
constitutes an unfair method of competition and also to establish the requisite public
interest.
After developing the facts from all available sources, the examining attorney
summarizes the evidence in a report, reviews the law applicable thereto, and makes
recommendations as to what action the Commission should take.
The entire record is then reviewed by the chief examiner, and, if found to be
complete, is submitted, with a brief statement of facts and his conclusions and
recommendations, to the Commission for its consideration. The chief examiner may
recommend: (1) Dismissal of the application and closing of the case for lack of
evidence in support of the charge or for the reason that the practice does not violate
any law over which the Commission has jurisdiction, or (2) closing of the application
upon the signing by the respondent of a stipulation of the facts and an agreement to
cease and desist from the unlawful practice as charged, or (3) issuance of formal
complaint.
If, after consideration of the chief examiner’s recommendations, the Commission
decides that formal complaint should issue, the case is transmitted to the chief counsel
for preparation of formal complaint and trial of the case. Or, if the Commission should
direct stipulation, the case is referred to the chief trial examiner for negotiation of such
agreement.
Cases involving unfair methods of competition are, in some instances, referred to the
director of trade-practice conferences for report in lieu of formal complaint if they
relate to an industry which has had or which contemplates having a trade-practice
conference for consideration of the unfair practices in point.
All proceedings prior to issuance of formal complaint or publication of a stipulation
are confidential.
FORMAL PROCEDURE

Only after most careful consideration of the facts and evidence developed by the
investigation does the Commission issue a complaint. The complaint and the answer
of respondent thereto and subsequent proceedings are a public record.

DESCRIPTION OF PROCEDURE

45

A complaint is issued in the name of the Commission acting in the public interest.
It names a respondent and charges a violation of law, with a statement of the charges.
The party complaining to the Commission is not a party to the formal complaint issued
by the Commission, nor does the complaint seek to adjust matters between parties;
rather, the prime purpose of the proceedings is to prevent, for the protection of the
public, those unfair methods of competition forbidden by the Federal Trade
Commission Act and those practices prohibited by the Clayton and Export Trade Acts.
The Commission’s rules of practice and procedure provide that in case the
respondent desires to contest the proceedings he shall, within 20 days from service of
the complaint, file with the Commission an answer to the complaint. The rules of
practice also specify a form of answer for use should the respondent decide to waive
hearing on the charges and not contest the proceeding.
Failure to appear or to file an answer within the time specified-shall be deemed to be an admission of all allegations of the complaint and to authorize the
Commission to find them to be true and to waive hearing on the charges set forth in the
complaint.

In a contested case, the matter is set down for taking of testimony before a trial
examiner. This may occupy varying lengths of time, according to the nature of the
charge or the availability and number of witnesses to be examined. Hearings are held
before a member of the Commission’s staff of trial examiners, who may sit anywhere
in the country, the Commission and the respondent each being represented by its own
attorneys.
After the taking of testimony and the submission of evidence on behalf of the
Commission in support of the complaint, and then on behalf of the respondent, the trial
examiner prepares a report of the facts for the information of the Commission, counsel
for the Commission, and counsel for the respondent. Exceptions to the trial examiner’s
report may be taken by counsel for either side.
Within a stated time after the trial examiner’s report is made, briefs are filed, and the
case is set for final argument before the full Commission. Thereafter the Commission
reaches a decision sustaining the charges made in the complaint or dismissing the
complaint or closing the case.
If the complaint is sustained, the Commission states its findings as to the facts and
conclusion that the law has been violated, and there-upon an order is issued requiring
the respondent to cease and desist from such violation.
If the complaint is dismissed or closed, an appropriate order is entered.
These orders constitute the final functions of the Commission as far as its own
procedure is concerned.

46

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
CASES MAY BE TAKEN TO FEDERAL COURTS

No penalty is attached to an order to cease and desist, but a respondent against whom
it is directed is required within a specified time, usually 60 days, to report in writing
the manner in which the order is being obeyed. If the respondent fails to obey an order
while it is in effect, the Commission may apply to a United States Circuit Court of
Appeals for enforcement of its order. Also the respondent may petition for review. The
statutes provides that “such proceedings in the circuit court of appeals shall be given
precedence over other cases pending therein, and shall be in every way expedited.”
The circuit court has power to affirm, modify, or set aside an order of the Commission,
but either party may apply to the United States Supreme Court for a writ of certiorari,
through which, if granted , there may be obtained a review of the decision and
judgment of the court of appeals and final adjudication of the matter at issue.
LEGAL INVESTIGATION
PRELIMINARY INQUIRIES PRIOR TO FORMAL COMPLAINT

The legal investigation work of the Commission is directed and supervised by the
chief examiner, and includes the investigation of applications for complaints
preliminary to formal action for the correction of unfair methods of competition or
other practices under the laws administered by the Commission.
At the beginning of the fiscal year for which this report is submitted, there were
pending 760 applications for complaint in preliminary or undocketed cases of alleged
unfair methods of competition. During the fiscal year, investigation was made in 1,384
such cases. At the close of the fiscal year, June 30, 1935, there were pending for
investigation 391 such applications for complaint.
Of the preliminary investigation cases, 454 were docketed as regular Commission
applications for complaint. These, with the 159 Commission applications pending at
the beginning of the year, totaled 613 docketed applications. There were disposed of
during the year 393 docketed applications, leaving 220 such cases still pending at the
close of this fiscal year.
Several attorneys on the chief examiners staff usually assigned to the investigation
of applications for complaints were engaged during a part of the year on the milk
investigation which was begun near the close of the last fiscal year pursuant to House
Concurrent Resolution No.32, Seventy-third Congress , second session.
The chief examiner also conducts, by direction of the Commission or on request of
other units of the Commission, supplemental investi-

LEGAL WORK UNDER N. I. R. A.

47

gations (1) in matters originating with the Special Board of Investigation (for false and
misleading advertising) ; (2) where additional evidence is necessary in connection with
formal complaints; (3) where it appears or is argued that cease-and-desist orders of the
Commission are being violated ; and (4) where it appears or is charged that
stipulations entered into between the respondent and the Commission wherein the
respondent agreed to cease and desist from certain unfair competitive practices are not
being observed in good faith.
The legal investigation work of the Commission is directed from its central office
in Washington and conducted through that office and four branch offices, located at
45 Broadway, New York City ; 433 West Van Buren Street, Chicago .544 Market
Street, San Francisco; and 801 Federal Building, Seattle. During a part of the year
additional regional offices were maintained to facilitate the handling of matters
submitted to the Commission by the National Recovery Administrator as well as the
regular legal investigations of complaints in the several localities. These offices, which
were of a temporary nature, were located in Boston, Atlanta., New Orleans, Memphis,
Minneapolis, Kansas City, Mo., and Dallas. Business men could confer at those
offices with representatives of the Commission regarding cases in which they were
interested and with reference to rulings made by the Commission. Excepting the New
Orleans office, these temporary branch offices, which were under the direction and
super vision of the chief examiner, have been closed since the Supreme Court decision
in the Schechter case.
LEGAL WORK UNDER THE NATIONAL INDUSTRIAL RECOVERY ACT

Section 6 (c) of the National Industrial Recovery Act provided that the Federal Trade
Commission, upon request of the President, should make such investigations as might
be necessary to enable the President to carry out the provisions of the act. Pursuant
thereto, the National Recovery Administration referred numerous cases to the Federal
Trade Commission for investigation. A great majority of these related to alleged code
violations. In some instances, however, a general survey of some specific industry was
required. At the beginning of the fiscal year, there were 24 investigations pending.
During the year, 336 matters were referred to the Commission by the National
Recovery Administration for investigation. At the time of the Schechter decision 321
of these investigations had been completed, and the work then in progress on the other
39 cases was discontinued

48

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

CONSOLIDATIONS AND MERGERS
CASES ARISING UNDER SECTION 7 OF THE CLAYTON ACT

The year was probably more important with respect to corporate activities relating
to recapitalization and internal reorganization than with respect to acquisitions,
consolidations, and mergers. It appears that a number of corporate reorganization
proceedings were instituted under section 77B of the bankruptcy laws of the United
States as amended by the Seventy-third Congress (Public, No.296 Approved June 7,
1934).
Section 7 of the Clayton Act in substance makes it unlawful for a corporation to
acquire capital stock in a competing corporation and for a holding company to acquire
the capital stock of two or more corporations competing with one another, where the
effect of such acquisitions may be to substantially lessen competition between the
corporations involved, restrain commerce in any section or community, or tend to
create a monopoly of any line of commerce. The section. however, does not prevent
consolidations or mergers of competing corporations brought about by the acquisition
of the physical assets of such competing corporations. Both the Commission and the
Department of Justice have jurisdiction in the enforcement of section 7 of the Clayton
Act. The Commission’s power by way of enforcement is to enter an order to cease and
desist from further violations and to require the corporation guilty of violating the section to divest itself of the capital stock illegally acquired. The Department of Justice
is empowered by section 15 of the act to institute proceedings in equity to prevent and
restrain violations of section 7 and of all of the other sections.
Because of the fact that important consolidations of competing corporations have
been consummated through acquisition of physical properties rather than through the
acquisition of capital stock, the Commission, in December, 1934, recommended to
Congress that section 7 of the Clayton Act be amended so as to prohibit the acquisition
or consolidation of assets to the same extent that stock acquisitions and consolidations
are prohibited, and on the same grounds.
Review of the Commission’s work discloses that 14 preliminary inquiries involving
acquisitions, consolidations, and mergers were pending at the beginning of the year.
Twenty-three new inquiries were instituted during the year and 7 inquiries were
pending at the close of the year, indicating a disposition of 30 such matters.
Twenty-five of the 30 matters disposed of were filed without docketing, 2 were
docketed as applications for complaint, 1 was placed on the suspense calendar, and 2
were referred to the Department of Justice.

CONSOLIDATIONS AND MERGERS

49

Three of the 25 matters filed without docketing pertained to proposed acquisitions,
consolidations, or mergers which failed of consummation, 12 involved acquisitions of
assets, and 10 involved acquisitions of capital stocks.
All of the matters involving the acquisition of capital stock were filed without
docketing because the acquisitions did not result in a substantial lessening of
competition, restraint of trade, or tendency toward monopoly. In 5 of the 10 matters
so filed the products were sold in noncompetitive territory, in 2 there was no
competition due to the community of interest between or among the corporations involved prior to the acquisition, and in 1 the acquired company was in process of
liquidation.
During the year two matters pertaining to acquisitions, consolidations, and mergers
were docketed as applications for complaint, of which one was subsequently
dismissed, while the other went to complaint. No docketed applications were pending
at the close of the year.
One complaint involving section 7 was pending before the Commission at the
beginning of the year, 1 was issued during the year, and 1 was dismissed, leaving 1
pending at the close of the year.
No orders of divestiture of capital stock were issued, nor were any cases involving
capital-stock acquisitions pending in the courts at the close of the year.
At the beginning of the year, there was pending before the Commission the
complaint against Crown-Zellerbach Corporation of San Francisco, occupying an
important position in the paper and paper products industry on the Pacific coast. This
complaint was dismissed during the year.
The Commission issued a complaint against the Van Kannel Revolving Door Co. of
New York City, engaged in the manufacture and sale of revolving doors and occupying
an outstanding position in its field. This complaint was pending at the close of the
year.
On appeal of the Vanadium Alloys Steel Co., of Latrobe, Pa., the Commission
approved and entered an order extending the time for the sale of the capital stock of
Colonial Steel Co. to August 6, 1935. An order of divestiture had been issued against
Vanadium Alloys Steel Co. on February 3, 1934.
CASES SETTLED BY STIPULATION
PROCEDURE PROTECTS THE CONSUMER FROM UNFAIR PRACTICES

The stipulation procedure provides an opportunity for an individual, partnership, or
corporation to enter into a stipulation of the facts and voluntarily agree to cease and
desist forever from the

50

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

alleged unfair methods set forth therein. The question of whether a respondent shall
be permitted to sign a stipulation is entirely within the discretion of the Commission,
as the disposition of a case by stipulation is not a right but a privilege extended by the
Commission.
Should a potential respondent decide to abandon a practice of which complaint has
been made rather than go through with trial and other formal procedure, and the
Commission approve such a course, the respondent may sign an agreement to “cease
and desist forever” from the alleged unfair practice. This is done with the
understanding that should the respondent resume such practice, the facts as stipulated
may be used in evidence against him in the trial of a complaint which the Commission
may issue.
The Commission believes that its stipulation procedure is protecting the American
consumer from numerous unfair methods of competition which, in the aggregate, are
all important consideration, reaching, by reason of the simplicity and economy of the
procedure, a very much larger number of abuses than the Commission could reach
through proceeding solely under the formal procedure already outlined. It is apparent
also that large sums of money that other-wise would be spent in litigation are being
saved the public.
CASES AFFECT WIDE VARIETY OF BUSINESSES

Unfair trade practices discontinued as a result of stipulations comprise a wide variety
of misleading representations affecting a large number of businesses. These practices
are usually of a type which can be readily corrected through such a procedure. One of
the most common practices appearing in these cases is for a distributor to advertise or
purport to be a manufacturer so as to induce the purchaser to believe that in trading
with such distributor he is saving a middleman’s profit and getting factory prices. This
practice extends in similar application to many different lines; sometimes to a jobber
of fabrics or dress goods advertising itself as a factory, or to a dealer in medicinal
preparations calling itself a “laboratory” , or a correspondence school announcing
itself as an “institute”, or “civil-service training bureau”, thereby implying untruthfully
by the last designation that it has a Government connection.
Since repeal of the eighteenth amendment the Commission has approved stipulations
with certain brewing companies for discontinuance of misrepresentations of their
processes and products, while, under its regular complaint procedure, it has had
numerous cases in

CASES SETTLED BY STIPULATION

51

which liquor dealers not operating distilleries nevertheless unfairly used the word
“distilleries “ to describe their business.
Other typical instances include: A knit-goods mill stipulates that it will no longer
designate garments composed only partly of wool as “100 percent pure wool “ or “100
percent virgin. wool”; an importer of shoestrings agrees not to label them as
“mercerized “ unless they have actually gone through that process, while the shoes in
which they might be strung will not be stamped for example as “Dr. Mercer “ to
indicate untruthfully that they are designed according to special orthopedic standards,
and so on.
Some firms have entered into stipulations because they marked their domestic-made
products as imported and others because they labeled their foreign-made goods “Made
in U. S. A.”, the degree of misrepresentation depending on the consumer preference
and good will created for a domestic-made or a foreign-made article.
The range of commodities mentioned in stipulation proceedings and other legal
proceedings before the Commission suggests a list almost as wide and varied as the
material needs of humanity itself.
TOTAL NUMBER OF STIPULATIONS
Stipulations in which van oils individuals and companies agreed to cease and desist
from unlawful practices charged were approved and accepted by the Commission
during the fiscal year in 240 cases, in addition to 151 stipulation% in cases involving
false and mi leading advertising.1
During the 9½ years in which the stipulation system had been in effect on June 30,
1935, a total of 2,257 stipulations had been approved and accepted by the Commission,
of which 1,420 were of the general class and 837 were of the special false and
misleading advertising class. In 14 of the total number of cases stipulated, action had
been rescinded.
In February 1934 the Commission made a change of policy regarding publicity for
stipulations, namely, that “all such stipulations shall be altogether for the public record
of the Commission”, where, thereto fore, with certain exceptions, only the facts in each
has had been made public and the names of the parties ommitted.
REPRESENTATIVE COMPLAINTS
MAJORITY OF CASES INVOLVE UNFAIR METHODS OF COMPETITION

Complaints issued during the current fiscal year show a large increase in number
over the previous year, the total for the year ending
1 The Commission’s procedure ID false and misleading advertising cases is described beginning on
p.101.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

June 30, 1935, having been 280 as against 97 for the year ending June 30, 1934.
All but one of these 280 complaints charged the use of unfair methods of
competition in violation of section 5 of the Federal Trade Commission Act. The
remaining complaint charged the respondent with violation of section 7 of the Clayton
Act, prohibiting acquisition of the capital stock of competing companies. No
complaints were issued during the year under sections 2, 3, or 8 of the Clayton Act,
involving, respectively, price discrimination, tying contracts, and interlocking
directorates. No complaint was issued under section 5 of the Federal Trade
Commission Act as extended by section 4 of the Export Trade Act.
Herewith are presented brief summaries of the charges contained in a few of the
complaints issued by the Commission during the fiscal year. Unless otherwise
indicated, the practices charged are violative of the Federal Trade Commission Act.2
These complaints are fairly representative.
ALLEGED ACQUISITION OF CAPITAL STOCK OF COMPETING
CORPORATIONS

In a complaint issued in May 1935 the Commission charged a certain corporation,
engaged in the manufacture and sale, in interstate commerce, of revolving doors, with
the acquisition of all of the capital stock of a corporation which it had caused to be
organized to take over the assets, of a competing corporation, and , later, with the
acquisition of a majority of the outstanding capital stock of another competitor, both
in the same line of business. The complaint also alleged that, as a result of the
acquisition of these two competitors, the respondent now occupies a dominant position
in the wood and metal revolving-door industry, controlling the manufacture and sale
of more than 60 percent of the volume of sales of these doors in use in buildings in the
entire United States-all in violation of section 7 of the Clayton Act.
GOODYEAR TIRE & RUBBER CO. CASE

The complaint in this case was issued during the fiscal year 1933-34, but because of
its importance reference is made in this report to developments during the current year.
The charge was that the Goodyear company violated section 2 of the Clayton Act by
discriminating in the price at which it sold automobile tires to Sears,
2 Many of these complaints are pending; consequently, the Commission has reached no determination
as to whether the law has been violated therein.

REPRESENTATIVE COMPLAINTS

53

Roebuck & Co. as compared with the price at which it sold tires to independent tire
dealers, and that the effect of this discrimination has been to suppress competition and
tend to create a monopoly.
The Commission’s attorneys began to take testimony in January, 1934, at Akron,
Ohio, and also conducted hearings in Chicago, Cincinnati, Memphis, St. Louis, Kansas
City, St. Paul, Washington, and New York City, at which hearings a large number of
witnesses testified and exhibits were introduced. The Commission’s case-in-chief was
closed on April 30, 1934.
After a recess, counsel for the respondent began to take testimony in Akron, June 25,
1934. hearings were also conducted in Cleveland, Chicago, Washington, and New
York City. At these hearings, the respondent examined numerous witnesses and introduced a very large number of exhibits, closing its case on December 15, 1934.
The Commission attorneys introduced. rebuttal testimony in New York City, Akron,
and Washington, at which hearings several additional witnesses testified and
additional exhibits were introduced. The Commission closed its rebuttal on March 18,
1935.
The trial examiner submitted his report, June 22, 1935, and it was expected the case
would be finally disposed of in the fall of 1935.
Some idea of the importance in the tire industry of the arrangement between
Goodyear and Sears, Roebuck & Co. may be gained from the fact that from 1926
through 1933, Goodyear sold to Sears, Roebuck & Co. more than 19,000,000
automobile tires and 17,000,000 automobile tubes, receiving therefor more than
$100,000,000 for the tires and approximately $15,000,000 for the tubes.
This case is also important because there are other industries where so-called costplus contracts have been entered into between manufacturers of nationally advertised
articles and mail-order houses and chain stores at prices lower than these
manufacturers sell to their ordinary and regular customers.
RADIO SETS AND RADIO TUBES-ALLEGED APPROPRIATION OF GOOD
NAME OF OTHERS

The Commission changed various groups of persons, partnerships, and corporations
selling radio sets and radio tubes in interstate and foreign commerce with
appropriating and using prominent, well-established and favorably known names long
in use by others, as marks on brands on radio sets and radio tubes manufactured and
sold by respondents. It was alleged that surnames of individuals

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

and brand names of concerns well known and established in the electric, sound
transmission, and radio fields had been appropriated by respondents without the
consent of the persons or concerns whose surnames or brand names had been so used,
and that the alleged appropriation of such names and brands placed in the hands of
respondents and others the means whereby trade was unfairly diverted from those
whose names and brands were so applied, with resultant injury to the purchasers of
radio sets and radio tubes so falsely branded.
ALLEGED MISUSE OF THE TERM “DISTILLERS”

Eighty-three complaints have been issued charging rectifiers and other wholesalers
of alcoholic liquors with violation of section 5 of the Federal Trade Commission Act
through use of such words as “distillers”, “distilling” or “distilleries” in their corporate
or trade names.
Most of these respondents had no stills. The complaints charged that this practice
gave them an unfair competitive advantage because a substantial portion of the
purchasing public prefers to buy liquors prepared by distillers. Some of the
respondents had stills which they used in making gin by redistilling purchased alcohol
over juniper berries and other aromatics. The complaints alleged that such process was
not “ distilling “ in the sense commonly accepted and understood by those engaged in
the liquor trade and by the public, and that it was not “ distilling “ in fact, because such
gins were not produced by a process of original and continuous distillation from mash,
wort, or wash, through continuous closed pipes and vessels until the manufacture
thereof was compte. Also among such cases were those where a respondent is alleged
to have mis-represented itself as a “ brewery “ and where a respondent has designated
and labeled artificially carbonated still wines as “champagne.”
ALLEGED BOYCOTT AND PRICE FIXING

The Commission issued a complaint February 4, 1935, against an association of
candy jobbers charging the association with having boycotted nonmembers by means
of alleged “white” lists and pledges secured from manufacturers not to sell to
nonmembers. In addition, the complaint charged the association , members with price
fixing and with the adoption of the means, among others, of carrying out the pricefixing program by denying to price cutters the privilege of membership in the
association.

REPRESENTATIVE COMPLAINTS

55

ALLEGED RESALE PRICE MAINTENANCE

A manufacturer and distributor of various proprietary remedies and drug sundries
was charged with inaugurating and enforcing a resale price-maintenance system. The
Commission’s complaint charged that the respondent announced the inauguration of
its system to its direct customers, both wholesale and retail and to all, retailers
handling those products, and that it then Sought to bring about the observance of the
prices fixed by securing promises and assurances from its customers that they would
maintain them; by seeking and securing the cooperation of some of its customers in inducing others of its customers and other dealers to observe and maintain these prices;
by asking its customers to report others selling below these prices; by keeping a list of
those who had failed to observe the fixed prices and seeking the cooperation of its
other customers in preventing its goods from getting into the hands of those appearing
on this list; resuming business relations with those on the list only when they had given
assurance that thereafter they would maintain the prices fixed, and seeking and
obtaining promises from cooperative and other joint buying associations that they
would not indirectly reduce the minimum price to their constituent dealers by paying
them a dividend based upon the amount of their purchases.
ALLEGED MISREPRESENTATION OF THERAPEUTIC PROPERTIES OF
MEDICINE

Complaints were issued during the year involving many charges of misrepresentation
of the therapeutic properties of so-called “ patent medicines “ and like preparations
and appliances, as well as other misrepresentations regarding them. These cases related
to various commodities, including a hair remover, an epilepsy remedy, preparations
for dandruff and baldness, face creams and cosmetics, reducing preparations, body
braces, a device for the treatment of prostate gland troubles, a salve for colds and
coughs, gland tonics, an herb tea, a treatment for venereal diseases, and many other
preparations represented as being remedial for various and sundry diseases and
ailments. One dealer in such a commodity was charged with representing that a device
offered for sale would make for perfect vision, and would remove all eye troubles,
including astigmatism, cross-eyes and failing vision, and that it would enable the user
thereof to dispense with eyeglasses, that it was a scientific discovery developed by
certain named scientists, when such were not the facts.
ALLEGED DISPARAGEMENT OF COMPETITORS

Disparagement of competitors was alleged as an unfair method of competition in a
complaint issued against a publisher of books

56

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

and other matter printed and published for advertising purposes. The respondent was
charged with publishing a certain book on refrigeration and selling it principally to
dealers in ice, who resold or otherwise disposed of it to the public. It was alleged that
respondent’s book falsely represented that foods kept in electric refrigerators lost their
nutritive properties to such an extent that distorted diets and disarranged food balances
would result, leading to indigestion, constipation, and numerous other ailments.
Also, it was alleged that the book falsely represented that gases and other volatile
matter and odors given off from foods kept in electric refrigerators contaminated other
foods, rendering them insanitary and dangerous to health. Such misrepresentations
were detrimental to the sellers of electric refrigerators, according to the complaint.
VARIETY APPEARS IN ALLEGED FALSE ADVERTISING CASES

False and misleading advertising was alleged in a larger number of complaints issued
during the year than any other practice. These complaints referred to a great variety
of commodities and alleged misrepresentations, most of the commodities being articles
for use in furnishing homes or for the personal use of those who live in private homes.
They included articles of furniture, bathroom accessories, chinaware, silver ware,
earthenware, glassware, silver-plated ware and hollow ware, baking powders, flavoring
extracts, canned tomatoes , toothpicks, coffee, coffee substitutes, olive oil, fur coats,
garments, lingerie, sportswear, knit goods, hosiery, narrow ribbons, hats and caps,
military uniforms, suits, shoes containing mercerized laces, cosmetics, perfumes, rugs,
carpets, upholstery fillings, radio receiving sets, magazines, stogies, cigars, pipes,
encyclopedias, history books, maps, atlases, motion picture films, cleaning fabrics,
soap, beer taps,. self-heating irons, metal measuring tapes, paints, roof coatings, red
cedar shingles, flower seeds, field and grass seeds , crushed shell for poultry,
automobile replacement parts and accessories, new tires and tubes, reconditioned tires,
reconditioned spark plugs, spark-plug cable sets and chamois skins.
MISCELLANEOUS CASES

In one such case it was alleged that the respondent purchased machine-made rugs
and then employed a few blind persons to do the “ fringe tying “ thereon. It was
alleged that respondent represented by the name under which the business was
conducted, and otherwise, that such rugs were made wholly by the blind, when such
was not the fact. It was also alleged that the respondent made represent-

COMPLAINTS ON RELATION OF N. R. A.

57

tins indicating that it was a charitable institution for the blind, or association for the
blind, when such was not the fact.
In another such case the respondents were charged with misrepresenting monuments
and memorials manufactured by them as being made from Barre granite, when they
were not manufactured from granite quarried from that part of the State of Vermont
where the granite known as “Barre granite” is produced.
A manufacturer of stogies was charged in a complaint issued during the year with
making misleading use of the words “Wheeling”, “hand-made”, and “Habanas” to
describe stogies not made in Wheeling, W. Va., and which were not made by hand and
not made from tobacco grown in Cuba. It was alleged that the word “Wheeling”, when
used to describe stogies, denoted those made in Wheeling, and that a large part of the
trade and purchasing public preferred stogies made in that city.
Another complaint raised the question of the sale of crushed freshwater mussel
shells under a misleading label and designation, allegedly indicating. that the product
was crushed oyster shell. It was alleged that crushed oyster shell was used by poultry
raisers for the purpose of supplying calcium carbonate in the diet of hens, on account
of its effect in eggshell formation, and that many purchasers prefer crushed oyster shell
to other feed containing calcium carbonate.
PENDING CASES AT THE CLOSE OF THE YEAR

At the end of the fiscal year there were pending on the formal public record 218
cases, in which complaints had been issued involving, for the most part, charges of
unfair methods of competition in violation of section 5 of the Federal Trade
Commission Act. In a few cases there had been alleged corporate acquisition of stock
of a competing company in violation of section 7 of the Clayton Act and
discrimination in price with a tendency to create monopoly and substantially lessen
competition in violation of section 2 of the Clayton Act.
COMPLAINTS ISSUED ON RELATION OF NATIONAL RECOVERY
ADMINISTRATION

As in the preceding fiscal year, the Commission, at the request of the National
Recovery Administration, issued complaints charging violation of codes of fair
competition established under the provisions of the National Industrial Recovery Act.
Under section 3 (b) of that statute, any violation of “the standards of fair competition”
established by such a code for a trade or industry, “in any transaction in or affecting
interstate or foreign commerce shall

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

be deemed an unfair method of competition in commerce within the meaning of the
Federal Trade Commission Act.” In such cases the complaints charged violation of
section 5 of the Federal Trade Commission Act by and through the violation of the
provisions of the several codes of fair competition , and recognized counsel for the
National Recovery Administration to have charge of the prosecution of such
complaints.
Trial of the case against the Purity Ice Co. and others (Docket No.2203), commenced
in the previous fiscal year, was concluded, and the matter presented to the Commission
upon briefs and oral argument. The Commission found the acts charged in the complaint did not involve transactions in or affecting interstate or foreign commerce within
the meaning of section 3 (b) of the National Industrial Recovery Act, and, for this
reason, the case was dismissed.
Other complaints issued by the Commission at the request of National Recovery
Administration, and on its relation were prosecuted by counsel for National Recovery
Administration, but none had been presented to the Commission for decision prior to
the Supreme Court’s decision in Schechter Poultry Corporation, and others, v. United
States (295 U. S. 495), on May 27, 1935, which involved the scope of the provisions
of the National Industrial Recovery Act and the powers vested thereby in officers
charged with the enforcement of the codes of fair competition established under such
Act. Following the Supreme Court decision, counsel for the National Recovery
Administration recommended to the Commission that all pending complaints issued
on relation of National Recovery Administration be dismissed. This recommendation
was approved, and orders of dismissal were entered in such cases.
ORDERS TO CEASE AND DESIST
UNFAIR TRADE PRACTICES PROHIBITED IN 125 CASES

The Commission issued orders to cease and desist from unfair methods of
competition and other practices in 125 cases during the fiscal year. They are listed as
follows:
LIST OF RESPONDENTS
Respondent
Akron Candy Co
Akron Lamp Co
American Drug Corporation
American Memorial. Co
American Merchandise Co., Inc., and others
Aqua Seal Corporation, and others
Battle Creek Appliance Co., Ltd., and others
Bayer Co., Inc

Location
Akron, Ohio.
Do.
St. Louis.
Atlanta, Ga.
New York City.
Do.
Battle Creek, Mich.
New York City.

ORDERS TO CEASE AND DESIST
Respondent
Bayonne-Newland Fur Dressers and Dyers, Inc
Beich Co., Paul F
Bleecker Shoe Co., Inc
Bolon Cigar Co., John F
Bonita Co
Boyer, D. E
Briarwood Corporation
Brilliant Brothers Co
Butterick Publishing Co., and others
Cadillac Paint Manufacturing Co., and others
Carlton Mills Co., Inc
Chicago Dentists, and others
Civil Service Training Bureau, Inc
Creomulsion Co., Inc
Dante Candy Co., Inc
DeWan Laboratories, Inc
Diamond Paper and Box Co
Dispensary Supply Co
Duralith Corporation, and others
Eagle Supply Co
Eopa Co
Evans Fur Co., and others
Eyesight Normalizing Co., and others
Fairyfoot Products Co
Federal Auto Products Co
Field & Co., Marshall
First National Nurseries, Inc., and others
Fox Shoe Co
Geographical Publishing Co
Globe Automatic Sprinkler Co. of Pennsylvania
Gordon, H
Grayban, Inc
Great Northern Fur Dyeing & Dressing Co., Inc. and others
Griffin Grocery Co., and others
Hair-Tex Corporation
Heller & Son, Inc., L., and others
Hill Shoe Co
Hofeller, Bob, and others
Hoffman Engineering Co
Hollander & Son, Inc., A., and others
Hollander, Inc., Joseph
Holloway & Company, M. J
Home Research, Inc
Howard Co., Gordon
Hudson Fur Dyeing, Inc
Iceland Fur Dyeing Co
Interstate Clothing Co., and others
Jefferson Island Salt Co., Inc
Johnson Candy Co., Walter H
Jordeau, Inc., Jean, and others.

59
Location
Jersey City, N. J.
Bloomington, Ill.
New York City.
Bethesda, Ohio.
Fond du Lac, Wis.
Belmont, Ohio.
Cleveland.
Boston.
New York City.
Detroit.
New York City.
Chicago.
Cleveland.
Atlanta, Ga.
Chicago.
Do.
Philadelphia.
New York City.
Do.
Do.
San Francisco.
Chicago.
New York City.
Chicago.
Do.
Do.
Rochester, N. Y.
Philadelphia.
Chicago.
New York City.
Do.
Do.
Long Island, N. Y.
Muskogee, Okla.
Cleveland.
New York City.
Philadelphia.
Chicago.
New York City.
Newark, N. J.
Do.
Chicago.
Atlanta, Ga.
Kansas City, Mo.
Newark, N. J.
Brooklyn, N. Y.
New York City.
Louisville, Ky.
Chicago.
South Orange, N. J.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
Respondent
Location
Kahn Corporation, Edward M
New York City.
Kaumagraph Co., and others
Do.
Leipzig Importing Co
Newark, N. J.
Lincoln Extension University. Inc
Cleveland, Ohio.
Magic City Candy Co
Birmingham, Ala.
Maid-O-Best, Inc., and others
St. Paul, Minn.
Mallory Clothes, Inc
New York City.
McLean and Son, A
Chicago.
Meadow Brook Candy Co
Moline, Ill.
Mendoza Fur Dyeing Works, Inc
New York City.
Metro Manufacturing Co
Brooklyn, N. Y.
Mixer Medicine Co., and others
Hastings, Mich.
Moffett Medicine Co., C. J
Columbus, Ga.
Morton Salt Co
Chicago.
Moss Manufacturing Co., M. E., and others
Hartford, Conn.
Munk, Eugene
New York City.
Myles Salt Co., Ltd
New Orleans, La.
Nachman Spring-Filled Corporation
Chicago.
Nacto Cleaner Corporation
New York City.
National Association of Ladies’ Handbag Manufacturers, and others
Do.
National Civil Service Institute
Muncie, Ind,
New Art Plating Co., and others
New York City.
Norwood Pharmaceutical Co., Inc
Chicago.
Norwood Pharmaceutical Laboratories
Philadelphia.
Oakland Fur Dyeing, Inc
Brooklyn, N. Y.
Odora Co
New York City.
Old Hickory Mills, and others
Nashville, Tenn.
Ossola Bros., Inc
Pittsburgh.
Pabst Chemical Co
Chicago.
Peanut Specialty Co
Do.
Preferred Toiletries, Inc., and others
New York City.
Progressive Education Society, and others
Madison, Wis.
Puritan Stationery Co
Philadelphia.
Queen Anne Candy Co
Hammond, Ind,
Raffy Parfurns, Inc
New York City.
Riviere Perfumes, Inc., Jules V
Do.
Rock-Oha Manufacturing Corporation
Chicago.
Ross, B. M
Do,
Ryan Candy Co
Dallas, Tex.
Schultz & Hirsch Co
Chicago.
Schwartz & Co., Inc
Philadelphia.
Schwartz & Sons, A
Do.
Scientific Products, Inc
St. Louis.
Sifers Confection Co
Kansas City, Mo.
Singer & Bro., Inc., Philip A
Newark, N. J.
Southern Crushed Shell Co
Sioux City, Iowa.
Southern Milling Co
Nashville, Tenn.
Southern New York Candy Distributors Association and others
Binghamton, N. Y.
Southington Remedy Co., Dr
Kansas City, Mo.
Standard Handkerchief Manufacturing Co
New York City.

ORDERS TO CEASE AND DESIST
Respondent
Stempel Bros., Inc
Sutton Brothers, Inc
Thayer Pharmacal Co., and others
Thinshell Candies, Inc
Ucanco Candy Co., Inc
Union Concession Co
United Remedies, Inc
United States Envelope Co
Universal Parts Manufacturing Corporation
Universal Theatre Concession Co
Van Dye Way Corporation
Wallace Co., Hugh
Washington Sea Food Dealers Association , and others
Weiss Shirt Co
Wolfson Trading Co
York Radio Co
Ziegler Co., George

61
Location
New York City.
Do.
Chicago.
Do.
Davenport, Iowa.
Chicago.
Do.
Springfield, Mass.
Chicago.
Do.
New York City.
Detroit.
Washington, D. C.
New York City.
Do.
Do.
Milwaukee, Wis.

Representative cases resulting in orders to cease and desist issued during the fiscal
year are described below. Unless otherwise indicated, these orders pertain to
violations of the Federal Trade Com mission Act.
INTERFERENCE WITH CONTRACTUAL RELATIONS

Globe Automatic Sprinkler Co. of Pennsylvania, New York City.--The respondent
in this case is one o£ a number of companies manufacturing an d installing complete
automatic-sprinkler systems as a protection against fire. Other members o£ this
industry, so-called “independents”, manufacture only certain automatic devices which
are a part o£ such systems The members o£ this latter group do no installation work
and their customers are principally local installing contractors. It is their custom, and
has been for many years, to enter into term contracts with these local contractors under
which the contractor agrees to purchase and use only the devices o£ that particular
manufacturer. An installation contractor under such a contract is generally known in
the trade as a “licensee” of the manufacturer.
The respondent was ordered to cease from maliciously interfering with the
contractual relationship between its competitors and their licensees by selling or
offering to sell devices to the licensees at reduced or cut prices for the purpose of
injuring competitors and suppressing competition.
MISREPRESENTATION AS MANUFACTURER

Schwartz & Co., Philadelphia.--A rule o£ the Official Classification Committee of
the Eastern Railroads provides that goods offered for transportation packed in fiberboard boxes take a higher freight

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

rate unless the box has stamped thereon a certificate o£ the boxmaker to the effect that
it meets certain standard strength tests.
Respondent, a dealer in, but not the manufacturer of, fiber-board boxes, was found
to be purchasing fiber-board boxes from a manufacturer upon which it caused the
manufacturer to stamp this “Certificate of boxmaker” in the name of the respondent.
Respondent then sold the boxes bearing this false certificate to shippers. Respondent
was ordered to cease and desist buying and selling in inter-state commerce boxes so
falsely stamped, or from in any other manner representing itself to be the maker of
boxes made by others.
INTERFERENCE WITH SOURCE OF SUPPLY OF DEALERS IN BACK-NUMBER
MAGAZINES

Butterick Publishing Co. and others, New York City.-The respondents in this case
were a group of eight publishers and distributors of magazines and other periodicals
with headquarters in Greater New York. Their combined issues exceeded 12 million
copies at each issue. Their distribution was to the wholesaler, who in turn sold to
newsstands and other retail dealers.
Publishers and distributors of magazines for several years had followed the practice
of supplying the wholesaler, and the wholesaler in turn had supplied the retailer with
a liberal number of copies to meet the probable demand, with the understanding that
the wholesaler would reimburse or credit the retailer in the amount of the purchase
price o£ all copies remaining unsold at the end of the current period, and the publisher
in turn would so adjust with the wholesaler. The custom also had been to return to the
wholesaler and to the publisher only the cover of the unsold magazine which was
considered as evidence that the copy remained unsold at the end of the current period.
The wholesaler and retailer were then privileged to sell for their own accounts as waste
paper the body of the magazines, known as “coverless” magazines or “returns.”
In the fall of 1932, these respondents, with several other distributors no longer in
business, met and formed the special committee on magazine distribution to take
action on what they considered the “ menace” of back-number magazines being
offered for sale by the news dealers along with current issues.
The retail dealers’ sources o£ supply of back-number magazines were certain
concerns which made a business of collecting back-number, second-hand copies,
principally from waste-paper dealers, the Salvation Army, and similar organizations,
and distributing them to dealers, usually those already engaged in the retail magazine
business. The retail sale price of the back-number magazine was but a fraction o£ its
price while current.

ORDERS TO CEASE AND DESIST

63

The special committee demanded o£ the wholesalers, particularly those located in
eastern Massachusetts, that they in form the retail dealers to whom they supplied
current issues that they could no longer handle both current and back-number
magazines, and that if the retailers did not cease handling the back numbers further
supplies of current issues would be denied them. The result was that approximately
half the dealers in back-number magazines in that area discontinued handling them.
The special committee also sought to interfere with the sources o£ supply of the
distributors of back numbers.
The Commission ordered the respondents to cease and desist from preventing or
seeking to prevent, by agreement, combination or concert of action, any person, firm
or corporation from selling to distributors thereof or dealers therein second-hand or
back-number magazines lawfully owned by them, or seeking to prevent, or causing
wholesalers to prevent, retailers o£ magazines from buying and selling second-hand
or back-number magazines.
A proviso was added to the order that nothing therein should prevent the respondents
from taking such action against wholesalers and retailers of their magazines as might
be reasonably necessary to prevent the placing on sale of the coverless magazines or
returns for which the publishers had reimbursed the wholesalers and retailers.
PRICE FIXING BY CONSPIRACY

National Association of Ladies’ Hand Bag Manufacturers, and others, New York
City.--On February 20, 1935, the Commission issued an order against the National
Association of Ladies’ Hand Bag Manufacturers, its officers, executive committee, and
a majority of its members, requiring them to cease and desist from carrying out a
policy which they entered upon in May 1934, to fix and maintain uniform prices
charged by them for ladies’ hand bags sold to retailers and to fix and maintain uniform
prices to be charged the purchasing public by retailers of hand bags purchased £rom
the respondent manufacturers.
MISREPRESENTATION IN SALE OF SHOES

H. Gordon, New York City.--In an order issued March 9, 1935, the Commission
required the respondent, owner of a wholesale shoe business, to discontinue use of the
word “Doctor”, or the abbreviation “Dr.” in the advertising or designation of shoes
sold by him, or in any way which might have a tendency or capacity to confuse,
mislead, or deceive purchasers into the belief that such shoes were made in accordance
with the design or under the supervision of a

64

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

doctor, or contained special scientific or orthopedic features which were the result of
medical advice, or services, when such was not the fact.
The Commission found that this respondent had caused the words “ Doctor Gordon’s
Health-O-Pedic” to be stamped on the sole of a certain brand of shoes sold by him in
interstate commerce, and that he caused two other brands to be labeled as “Dr. Gray’s
Style-Fit Health Shoe”, and “Dr. Williams’ Arch Support.”
It was further found that these shoes were not made in accordance with any design
or under the supervision of a doctor and did not contain special orthopedic or scientific
features that were the result of medical advice, nor was such footwear manufactured
or constructed for the purpose of correcting or alleviating any foot trouble or weakness
of the feet.
MISLEADING ADVERTISING--BRIAR PIPES

The Briarwood Corporation, Cleveland.--The Commission, in a proceeding against
this corporation, found that smoking pipes manufactured and sold by it were fabricated
from ground briar root, to which a binder had been added, the resulting plastic mass
then being molded under pressure into various desirable shapes; and that, while the
wood content of the pipes so fabricated consisted of genuine ground briar root, the
pipes so constructed were not made from the briar root in its natural form; and that the
representations made by the respondent in aid of the sale of its pipes were exaggerated
and misleading, and had the capacity and tendency to mislead and deceive purchasers
into the erroneous belief that the pipes in question were made from natural grown briar
root and carved or fashioned from the solid block.
The Commission’s order prohibited use of such expressions as “ Made from genuine
imported briar root” and “ Briar Kobs”, unless these phrases were used in conjunction
with the word “ ground “ or some other word of like import conspicuously displayed.
EXAGGERATED CLAIMS FOR CARDBOARD “ CEDAR” CHESTS

Odora Co., New York City.-Unfair methods of competition in the sale of storage
chests were prohibited in an order issued by the Commission, November 5, 1934,
against this company, a manufacturer of cardboard chests.
Among the methods of competition enjoined was the representation of cardboard
storage closets and chests as “cedar” or “cedarized”, unless the closets and chests were
so built that they would keep out

ORDERS TO CEASE AND DESIST

65

clothes moths, and also unless they maintained a concentration of vapor from cedar oil
sufficient, as a fumigant, to kill young moth larvae during any part of a 7-month
storage period.
Certain competitive chests, according to the findings, were made substantially
airtight and of red cedar wood in the body proper, ranging from a minimum of 70
percent of three-quarter inch thick-ness of this wood up to 100 percent.
Chests containing the 70 percent minimum of red cedar wood were found to furnish
an atmosphere that prevented moth larvae from developing into clothes moths. It was
brought out that even air-tight wood chests of the same size as Odora cardboard chests,
if they contained only 40 percent of three-quarter inch cedar board, did not prevent
eggs of clothes moths from developing into larvae which would damage stored clothes.
Storage receptacles manufactured by Odora were made of kraft corrugated
cardboard, each chest containing a piece of paper called a cedar retainer which was
sprayed with one ounce of cedar and pine oil compound. According to the findings,
cardboard is permeable to air and to gas or vapor from the cedar and pine oils and, in
addition, the chests have openings at their joints large enough for air and moths to
enter.
MISBRANDING AND MISLABELING-- HUDSON SEAL”

Great Northern Fur Dyeing & Dressing Co., Inc., Long Island, N. Y., and others.-The Commission, on May 16, 1935, entered a modified cease and desist order
directing nine respondents engaged in the dressing and dyeing of furs in New York
City and vicinity to cease and desist from certain misleading representations.
The modified order provides that the term “Hudson Seal” may be used to describe
the color or character of the dye of muskrat fur, such as “Hudson Seal-dyed Muskrat”,
but the word “Hudson , alone or in connection with other words, may not be used to
describe dyed cony (rabbit) fur. The order provides that the description for cony dyed
to simulate seal shall be “Seal-dyed Cony.”
The modified order applies to the following respondents: Great Northern Fur Dyeing
& Dressing Co., Inc., and others, Long Island, N. Y.; Mendoza Fur Dyeing Works,
Inc., and Van Dye Way Corporation, of New York City; Oakland Fur Dyeing, Inc., and
Iceland Fur Dyeing Co., of Brooklyn, N. Y.; Bayonne-Newland Fur Dressers & Dyers,
Inc., Jersey City, N.J.; A. Hollander & Son, Inc., and others, Joseph Hollander, Inc.,
and Philip A. Singer & Bro., Inc., all of Newark, N. J.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
USE OF EXCESSIVE MARK-UP LABELS

Nachman Spring--Filled Corporation and the Schultz & Hirsch Co., both of
Chicago.--During the fiscal year, cease and desist orders were issued by the
Commission against both of these concerns, the former being a manufacturer and
distributor of spring units, known as "Nachman Springs “, for use in and as part of
inner-spring mat-tresses and box-spring mattresses or upholstered box Springs; and
Schultz & Hirsch Co. being a manufacturer and distributor of the finished mattresses.
In both instances, the complaint charged the respondents with using excessive markup labels which, in the hands of the dealers, it was alleged, had a tendency to deceive
purchasers into believing that the articles were being offered at greatly reduced prices,
when this was not true.
Both respondents waived hearing on the complaints and consented to the issuance
of cease and desist orders. These orders required that no price marks or labels shall be
used which do not represent a. true estimate of the price at which the finished
mattresses are to be offered for resale in order to prevent ultimate purchasers from
being given a wrongful impression as to price concessions.
MISREPRESENTATION-COUNTRY OF ORIGIN

United states Envelope Co., Springfield, Mass.--This company, a manufacturer and
importer of paper used in printing books and for stationery, was charged by the
Commission with using trade names which had a tendency to deceive the purchasing
public into believing that paper made in the United States was manufactured in certain
foreign countries and imported. The Commission’s order directed the respondent to:
Cease and desist from the use of the words “Japan”, and “Oxford” and from the use of each of them, and
of any other word or words which may imply or import foreign origin of the paper, as the brand name or
as part of the brand name or designation of paper made in the United States, either in the watermark of
the paper or in advertisements in news-papers, periodicals, sample books or other publications, or
otherwise, unless and until the words or phrase “Made in U. S. A.” be printed in legible letters
immediately in connection therewith.

FALSE AND MISLEADING ADVERTISING--DEPILATORIES

Jean Jordeau, Inc., South Orange, N. J., and Bertha E. Lefrie, New York City.-Selling a wax-like substance called “Zip Epilator” and “Zip Depilatory Cream”, these
respondents were directed to cease advertising or otherwise representing that either
product, by

TYPES OF UNFAIR COMPETITION

67

application for removal of superfluous or other hair from the body, will cause such hair
to be removed, so that, after its removal, hair will not again grow at the place where
either of the depilatories was applied.
Jean Jordeau, Inc., manufactures its products in South Orange, N. J., selling them in
various States and maintaining a salon for their sale in New York City. This place of
business is in charge of Bertha E Lefne, vice president of Jean Jordeau, Inc., who is
known to patrons as “Madame Berthe.”
These respondents were also ordered to discontinue representing that their
preparations destroy the cause of the growth of hair, or that application brings lasting
results in preventing growth of superfluous or other hair. They were also not to assert
that “Zip Epilator “is pleasant to use or that “ Zip Depilatory Cream “ is safe or
harmless and leaves no irritation of the skin. Relying on medical opinion, the
Commission reported that the two products would not accomplish the things attributed
to them, but that the “Zip Epilator “ would cause pain to some persons, while the
cream was not safe and harmless in all cases and might cause irritation of the skin from
which dermatitis might result for some persons.
TYPES OF UNFAIR COMPETITION
PRACTICES CONDEMNED IN ORDERS TO CEASE AND DESIST

The following partial list shows unfair methods of competition condemned by the
Commission from time to time in its orders to cease and desist issued under section 5
of the Federal Trade Commission Act. These do not include Clayton Act violations,
which, under the jurisdiction of the Commission, embrace, subject to the various
provisions of the statute, price discrimination (sec. 2, Clayton Act), tying and
exclusive contracts or dealings (sec. 3, Clayton Act), corporate-stock acquisitions (sec.
7, Clayton Act), and inter-locking directorates (sec. 8, Clayton Act).
The list is as follows:
1. The use of false or misleading advertising, calculated to mis-lead and deceive the
purchasing public to their damage and to the injury of competitors.
2. Misbranding of fabrics and other commodities respecting the materials or
ingredients of which they are composed, their quality, purity, origin, source. or
qualities, properties, history or nature of manufacture, and selling them under such
names and circumstances that the purchaser would be misled in these respects.
3. Bribing buyers or other employees of customers and prospective customers,
without the latter’s knowledge or consent, to secure or hold patronage.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

4. Procuring the business or trade secrets of competitors by espionage, or bribing the
employees, or by similar means.
5. Inducing employees or competitors to violate their contracts and enticing away
employees of competitors in such numbers or under such circumstances as to hamper
or embarrass the competitors in the conduct of their business.
6. Making false and disparaging statements respecting competitors’ products, their
value, safety, etc., and competitors’ business, financial credit, etc., in some cases under
the guise of ostensibly disinterested and specially informed sources or through
purported scientific but in fact misleading demonstrations or tests.
7. Widespread threats to the trade of suits for patent infringement arising from the
sale of alleged infringing products of competitors, such threats not being made in good
faith but for the purpose of intimidating the trade and hindering or stifling competition,
and. claiming and asserting, without justification, exclusive rights in public names of
unpatented products.
8. Trade boycotts or combinations of traders to prevent certain wholesale or retail
dealers or certain classes of such dealers from procuring goods at the same terms
accorded to the boycotters or conspirators, or to coerce the trade policy of their
competitors or of manufacturers from whom they buy.
9. Passing off goods or articles for well and favorably known products of
competitors through appropriation or simulation of such competitors’ trade names,
labels, dress of goods, etc., with the capacity and tendency unfairly to divert trade from
the competitors, and/or with the effect of so doing to their prejudice and injury and
that of the public.
10. Selling rebuilt, second-hand, renovated, or old products or articles made from
used or second-hand materials as and for new.
11. Paying excessive prices for supplies for the purpose of buying up same and
hampering or eliminating competition.
12. Using concealed subsidiaries, ostensibly independent, to secure competitive
business otherwise unavailable.
13. Using merchandising schemes based on a lot or chance.
14. Cooperative schemes and prices for compelling wholesalers. and retailers to
maintain resale prices fixed by a manufacturer or distributor for resale of his product.
15. Combinations or agreements of competitors to enhance prices,. maintain prices,
bring about substantial uniformity in prices or to divide territory or business, to cut off
competitors’ sources of sup-ply, or to close markets to competitors, or otherwise
restrain or hinder free and fair competition.
16. Various schemes to create the impression in the mind of the prospective
customer that he or she is being offered an opportunity

TYPES OF UNFAIR COMPETITION

69

to make a purchase under unusually favorable conditions when such is not the case,
with capacity and tendency to mislead and deceive many of the purchasing public into
buying products involved in such erroneous belief, and/or with the effect so to do, to
the injury and prejudice of the public and of competitors, such schemes including-(a) Sales plans in which the seller’s usual price is falsely represented as a special reduced
price made available on some pretext for a limited time or to a limited class only.
(b) The use of the “free goods” or service device to create the false impression that
something is actually being thrown in without charge, when, as a matter of fact, it is fully
covered by the amount exacted in the transaction taken as a whole.
(c) Use of misleading trade names calculated to create the impression that a dealer is a
manufacturer or grower, importer, etc., selling directly to the consumer with resultant savings.
(d) Use of pretended, exaggerated retail prices in connection with or upon the containers of
commodities intended to be sold as bargains at lower figures.

17. Imitating or using standard containers customarily associated in the mind of the
general purchasing public with standard weights or quantities of the product therein
contained, to sell to the public such commodity in weights or quantities less than the
aforementioned standards, with capacity and tendency to deceive the purchasing public
into believing that they are purchasing the quantities generally associated with the
standard containers involved, and/or with the effect of so doing, and with tendency to
divert trade from and otherwise injure the business of competitors who do not indulge
in such practices, and/or with the effect of so doing, to the injury of such competitors
and to the prejudice of the public.
18. Concealing business identity in connection with the marketing of one’s product,
or misrepresenting the seller’s relation to others; e. g., claiming falsely to be the agent
or employee of some other concern or failing to disclose the termination of such a
relationship in soliciting customers of such concerns, etc.
19. Misrepresenting in various ways the advantages to the prospective customer of
dealing with the seller, with the capacity and tendency to mislead and deceive many
among the consulting public into dealing with the person or concern so
misrepresenting, in reliance upon such supposed advantages, and to induce their
purchases thereby, and/or with the effect of so doing, to the injury and prejudice of the
public and of competitors, such as-(a) Seller’s alleged advantages of location or size.
(b) False claims of being the authorized distributor of some concern.
(c) Alleged endorsement of the concern or product by the Government or by nationally
known business organizations.
(d) False claim by a dealer in domestic products of being an importer, or by a dealer of being
a manufacturer, grower or nursery, or by a manufacturer of some product of being also the
manufacturer of the raw material entering into the product.

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(e) Being manufacturer’s representative and outlet for surplus stock sold at a sacrifice, etc.
(f) Representing that the seller is a wholesale dealer, grower, producer, or manufacturer,
when in fact such representation is false.

20. Use by business concerns associated as trade organizations or otherwise of
methods which result, or are calculated to result, in the observance of uniform prices
or practices for the products dealt in by them, with consequent restraint or elimination
of competition, such as use of various kinds of so-called standard cost systems, price
lists or guides, exchange of trade information, etc.
21. Obtaining business through undertakings not carried out and thorough dishonest
and oppressive devices calculated to entrap and coerce the customer or prospective
customer, with the result of deceiving the purchasing public and inducing purchases
by many thereof, and of diverting and tending to divert trade from competitors who do
not engage in such false, misleading, and fraudulent representations, all to the
prejudice and injury of the public and competitors, such practices including(a) Securing by deceit prospective customer’s signature to a contract and promissory note
represented as simply an order on approval
(b) Obtaining agents to distribute the seller’s products through promising to refund the money
paid by them should the product prove unsatisfactory. and through other undertakings not
carried out; and
(c) Obtaining business by advertising a “ free trial “ offer proposition when, as a matter of
fact, only a “ money-back “ opportunity is offered the prospective customer.

22. Giving products misleading names so as to give them a value to the purchasing
public or to a part thereof which they would not otherwise possess, with the capacity
and tendency to mislead the public into purchasing the products concerned in the
erroneous beliefs thereby induced, and with the tendency to divert and/or with the
effect of diverting business from and otherwise injuring and prejudicing competitors
who do not engage in such practices, all to the prejudice of the public and of
competitors, such as names implying falsely that-(a) The particular products so named were made for the Government or in accordance with
its specifications and of corresponding quality, or are connected with it in some way, or in some
way have been passed upon, inspected, underwritten, or endorsed by it; or
(b) They are composed in whole or in part of ingredients or materials, respectively, contained
only to a limited extent or not at all; or
(c) They were made in or came from some locality famous for the quality of such products;
or
(d) They were made by some well and favorably known process, when, as a matter of fact,
they were only made in imitation of and by a substitute’ for such process or

CASES IN THE FEDERAL COURTS

71

(e) They have been inspected, passed, or approved after meeting the tests of some official
organization charged with the duty of making such tests expertly, disinterestedly, or giving such
approval; or
(f) They were made under conditions or circumstances considered of importance by a
substantial part of the general purchasing public; or
(g) They were made in a country, place or city considered of importance in connection with
the public taste, preference or prejudice.

23. Selling below cost, with the intent and effect of hindering, stifling, and
suppressing g competition.
24. Dealing unfairly and dishonestly with foreign purchasers and thereby
discrediting American exporters generally, with the effect of bringing discredit and
loss of business to all manufacturers and business concerns engaged in and/or seeking
to engage in export trade, and with the capacity and tendency to so do, to the injury
and prejudice of the public and of the offending concerns’ export-trade competitors.
25. Coercing and enforcing uneconomic and monopolistic reciprocal dealing.
26. Entering into contracts in restraint of trade whereby foreign corporations agree
not to export certain products into the United States in consideration of a domestic
company’s refusal to export the same commodity or sell to anyone other than those
who agree not to so export the same.
27. Giving products a purported unique status or special merits or properties through
pretended but in fact misleading and ill founded demonstrations or scientific tests, or
through misrepresenting the history or circumstances involved in the making of the
products or associated therewith, so as to give them a value to the purchasing public
or to a part thereof which they would not other-wise possess, with the capacity and
tendency to mislead the public into purchasing the products concerned in the erroneous
beliefs thereby engendered, to the prejudice and injury of competitors and the public,
as hereinabove set forth.
CASES IN THE FEDERAL COURTS
COMMISSION ACTIONS IN THE UNITED STATES COURTS

Federal Trade Commission cases pending in the United States courts for final
determination during or at the close of the fiscal year are reviewed in alphabetical
order in the pages immediately following. 3
During the year, the Commission was sustained in 10 cases before the United States
Circuit Courts of Appeals and reversed in none.
3

United States Circuit courts of appeals are designated First Circuit. Second Circuit, etc.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

There were no cases pending in the Supreme Court of the United States.
Eight of the ten cases in which the circuit courts sustained the Commission were
formal affirmances. In two cases the Court dismissed the applications for enforcement
On joint motions of the Commission and the defendants because the latter had made
satisfactory compliance with the Commission’s orders to cease and desist. These two
cases were: L. A. Crancer and G. B. Fleischman, of. St Louis, and George H. Lee Co.,
Omaha. The eight cases in which the courts affirmed the Commission‘s orders were:
Armand Co., Inc., of Des Moines; Civil Service Training Bureau, Inc., Cleveland; Er
Griffiths Hughes, Inc., Rochester, N. Y.; Inecto, Inc., New York City; Ironized Yeast
Co., Atlanta; Walter H. Johnson Candy Co., Chicago; Maisel Trading Post, Inc.,
Albuquerque, N. Mex.; and E J. Wallace, of St. Louis.
Armand Co., Inc., Des Moines, Iowa.--This corporation, engaged since 1916 in the
manufacture, preparation, and sale in interstate commerce of toilet articles and
cosmetics, on October 8, 1934, filed with the second circuit (New York City) its
petition to review and set aside the Commission’s order to cease and desist in this case.
The Commission’s order, based on extensive findings supported by evidence,
required the company, “ its officers, agents, representatives, and employees, in
connection with the sale or offering for sale of its products in interstate commerce
between and among the several States of the United States and in the District of
Columbia”, to cease and desist from-(1) Entering into or procuring either directly or indirectly from wholesale or retail dealers
contracts, agreements, understandings, promises, or assurances that respondent’s products, or
any of them, are to be resold by such wholesale or retail dealers at prices specified or fixed by
the Armand Co., Inc.
(2) Entering into or procuring either directly or indirectly from wholesale dealers contracts,
agreements, understandings, promises, or assurances that Armand products are not to be resold
by such wholesalers to price cutting retail dealers.

The case was argued June 7, and decided in favor of the Commission July 1, 1935
(78 F. (2d) 707). The Court after summarizing the facts found by the Commission,
concluded:
It was found as a fact by the Commission that the chief objective of petitioner’s merchandising
policy was the maintenance of the wholesale and retail prices suggested by the petitioner for its
products, and that the direct effect of petitioner’s practices had been and now is to suppress
competition among wholesalers and between retail dealers engaged in the distribution and sale
of petitioner’s products. The further effect was the constraint imposed upon wholesale and retail
dealers in selling petitioner’s products at prices fixed by the petitioner, and the preventing of
sale by such dealers of petitioner’s products at prices which such dealers desired, thereby
depriving the ultimate purchaser of petitioner’s products of that advantage of price which
otherwise

CASES IN THE FEDERAL COURTS

73

would be theirs in a natural and unobstructed flow of commerce under free competition.
The Commission concluded that the petitioner’s practices were to the prejudice and injury of
the public and constituted unfair methods of competition in commerce and a violation of section
5 of the Trade Commission Act. The findings of the Commission are amply supported by the
evidence. The evidence supports the finding that by agreements between petitioner and its
dealers it maintained prices and prevented those who would not do so from securing petitioner’s
products.
*
*
*
*
*
*
*
This petitioner dealt with 39,000 retail druggists out of a total of 56,000, and 247 wholesale
druggists out of a total of 550. The wholesalers and retailers were in competition with each other
in the sale of petitioner’s products. This is a kind of competition between wholesalers and
retailers of a product of a single manufacturer which was intended by the decisions of the courts
to be free and open. The policy in question had a tendency to stifle competition and was
unlawful.

Battle Creek Appliance Co., Ltd., Battle Creek, Mich.--This concern, January 11,
1935, filed with the sixth circuit (Cincinnati) a petition to review and set aside the
Commission’s order to cease and desist in this case.
The order in question, which is based on findings of facts sup-ported by evidence,
was directed against what the Commission found to be false, misleading, and deceptive
statements and representations concerning respondent’s treatment for goiter. Among
other things, it directed respondent to cease and desist from representing in any
manner-testimonials, endorsements, newspaper and magazine advertising, radio
broadcasts, etc.-(1) That goiter can be or has been correctly diagnosed by said respondent from answers made
by the laity to questions propounded by respondent through the mails;
(2) That the presence of goiter can be determined or the type of goiter can be diagnosed
without personal examination of a patient by a skilled physician;
(3) That said respondent can or has successfully treated goiter by mail;
(4) That said respondent can or has successfully treated goiter patients in their homes without
the personal supervision and services of a skilled physician in such treatment.

At the close of the fiscal year the record had been printed and the case was awaiting
briefs and argument.
Civil Service Training Bureau, Inc., Cleveland.--Application for the enforcement of
its order to cease and desist in this case was filed by the Commission March 9, 1935,
with the sixth circuit (Cincinnati). Also, there was filed a printed transcript of the
record. The Commission’s brief was filed March 27.
The order directed the corporation, which is engaged in selling, in interstate
commerce, correspondence courses designed to prepare students for civil-service
examinations, to cease and desist from the

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

use of “Civil Service” and “Bureau” in its name, and prohibited the use of any other
word or expression implying or suggesting a connection with the United States Civil
Service Commission or the United States Government, as well as other misleading
representations.
The respondent’s brief was filed May 16, and the case argued June 3, 1935. The
court, June 29, 19359 handed down its opinion (citation not available) which was, in
the main, a complete affirmance of the Commission’s order. Concerning respondent’s
contention that the Commission was without jurisdiction because it was constituted for
the purpose of dealing with cases involving the sale of commodities in interstate
commerce, and that, while the respondent conducted an interstate business, it was not
dealing in commodities, but was selling a service, the court said:
The first contention is untenable. The act applies to unfair methods of com petition “in
commerce”, commerce being defined as including “commerce among the several states.” * * *
In International Textbook Co., v. Pigg (217 U. S. 91, 107), the court held that intercourse or
communication between persons in different States by means of correspondence through the
mails is commerce among the States within the meaning of the Constitution, especially where
such intercourse and communication relate to regular continuous business and to the making of
contracts and the transportation of books, papers, etc., pertaining to such business. That decision
squarely involved the selling of service by a correspondence school in interstate transactions,
and is controlling here.

Concerning the use of “ Civil Service “ and “ Bureau “ in respondent’s name, the
court said:
The similarity of the name “ Civil Service Training Bureau, Inc.”, with that of the United
States Civil Service Commission in itself operates to create the false impression that this private
institution has a governmental connection. A number of witnesses testified in substance that the
name made them think that the school was an adjunct of the Government. These facts Justified
the Com mission in issuing that part of its order embodied in paragraphs 1 and 3.

L. A. Crancer and G. B. Fleischman, St. Louis--The Commission, January 2, 1935,
filed with the eighth circuit (St. Louis) an application for the enforcement of its order
to cease and desist against L. A. Crancer and G. B. Fleischman, of that city. There
were also filed a transcript of the proceedings before the Commission and a brief on
the merits.
The application disclosed that Messrs. Crancer and Fleischman, copartners engaged
in selling pipe fittings in interstate commerce, were trading under the names of MidValley Steel Co., General Machine & Foundry Co., Western Steel & Castings Co., and
National Fittings Co., in simulation of the names of large corporations engaged for a
long time in the manufacture and sale of products adapted to the same purpose and use.
Among other things, the

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75

Commission’s order forbade representations to the effect that respondents, or any
company the name of which might be employed by them, were manufacturers, and that
purchasers from them would save the middleman’s profit, when such was not the fact.
On joint petition filed by counsel for the Commission and respondents, March 20,
1935, the court entered an order dismissing, without prejudice, the Commission’s
application for enforcement. The petition recited that since the institution of the suit,
the respondents had filed with the Commission a supplemental report showing
compliance with the order for the enforcement of which the proceeding was instituted.
Upon this basis, the Commission joined with respondents and asked for withdrawal
of the suit (76 F. (2d) 1008).
Fairyfoot Products Co., Chicago.--This corporation, on January 14, 1935, petitioned
the seventh circuit (Chicago) to set aside the Commission’s order concerning the
company’s sale and distribution of a medicated pad called “Fairyfoot “ as a treatment
for bunions. The Commission found that respondent’s representations had the capacity
and tendency to and did deceive retail merchants and the using public, and diverted
business from competitors honestly representing their products and preparations.
The Commission order directed the respondent, and its officers, agents, and
employees, to cease and desist from representing in advertising matter circular letters,
radio broadcastings, or otherwise, in connection with the interstate sale of its product:
That the treatment is approved by leading physicians and surgeons; that, by the use of
“Fairyfoot”, bunions are dissolved, pain is stopped instantly, or almost instantly, and permanent
relief follows; the foot again resumes its natural appearance and shape; bunion suffering is ended
completely, the normal functions are stimulated; the absence of irritation and the continuous
massage of the plaster plus the special “Fairyfoot “ formula gradually reduces the bunion hump;
that “Fairyfoot “ gently dissolves the swelling caused by inflammation and should restore the
foot to its normal appearance; it brings sure and certain relief from bunion suffering and the user
can know the pleasure of bunion-free feet, etc.

At the close of the year, the record had been printed, and petitioner’s brief filed.
Hires Turner Glass Co., Philadelphia.--On August 24, 1934, the Commission filed
with the third circuit (Philadelphia) an application for the enforcement of its order in
this case. There were also tiled the printed transcript and brief for the Commission.
The order directed the respondent to cease and desist from designating mirrors
having thereon a protective coating consisting of a mixture of shellac and powdered
copper, by such descriptions as copper back “ mirrors, “ copper backed “ mirrors,
mirrors “backed with copper”, or by other word, words, or expressions of the same
meaning or like import.
20442---35-----6

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

The Commission found the respondent to be in competition in interstate commerce
with the makers of the electrolytic type of copper-back “ mirrors and also with the
makers of ordinary mirrors. The findings held that “the representations of respondent
as aforesaid in regard to its said mirrors have had and do have the tendency and
capacity to confuse, mislead, and deceive the trade and members of the purchasing
public into the belief that such mirrors are backed with a continuous sheath or film of
solid metallic copper which is adherent to the reflecting medium or that it is backed
with such a film of copper deposited thereon by the electrolytic process. “ Such
erroneous beliefs, it was found, had a capacity and tendency to induce the purchase of
respondent’s mirrors and to divert trade to respondent from competitors engaged in
selling ordinary mirrors and also “copper back “ mirrors made by the electrolytic
process.
Respondent’s brief was filed September 27, 1934, and the case was argued October
10, 1934. At the close of the fiscal year, it was awaiting decision.
E. Griffiths Hughes, Inc., Rochester, N. Y.--This company, on September 15, 1933,
filed with the second circuit (New York City) its petition asking that the Commission’s
order to cease and desist be annulled and set aside. The Commission’s order was based
on findings to the effect that this concern, engaged in the sale in interstate commerce
of proprietary preparations known as “Kruschen Salts “ and “Radox Bath Salts”,
falsely represented its Kruschen Salts as a cure or remedy for obesity, and that its
Radox Bath Salts, when used in the bath and as otherwise directed, radiated oxygen
in great quantities and sufficiently to produce an invigorating and energizing effect.
Developments during the fiscal year have been: Filing of the printed transcript and
briefs for both parties, argument on May 9, 1935, and decision of the second circuit,
June 3, 1935 (77 F. (2d) 886), affirming the Commission’s order.
Referring to the product “Kruschen Salts”, the court said that “the evidence
sufficiently supports the finding that it would not reduce fat or act as a remedy for
obesity”, and that-The public had an interest because of false advertising and misstatements ns to the qualities
and the results of the use of these salts. Such practice may be restrained. Fed. Trade Comm. v.
Winsted Hosiery Co., 258 U. S. 483, 493; Fed. Trade Comm. v. Raladam Co., 283 U. S. 643.
Such unfair methods of competition Justify the order entered when the public has an interest in
its prevention.

Concerning “Radox Bath Salts”, the court asserted that “there was no warrant for the
exaggerated statement that ‘it radiates great quantities of oxygen’, or the implication
that it has thera-

GASES IN THE FEDERAL COURTS

77

peutic effect and that the use of Radox at home would produce results equal to
treatment at spas.”
In conclusion, the court said:
Petitioner’s methods have been found to be unfair in that its representations in regard
to its products are misstatements of fact and are misleading. The products are sold in
interstate commerce and in competition with the products of other manufacturers.
Selling by the use of false and misleading statements necessarily injures or tends to
injure petitioner’s competitors. Fed. Trade Comm. V. Winsted Hosiery Co., supra;
Fed. Trade Comm. v. Artloom Corp., 60 Fed. 2d. 36. Such injury to competitors or
tendency to injure, fully establishes the public interest. Therefore, there was
jurisdiction under section 5 of the Federal Trade Commission Act.
The petitioner has announced its intention of applying to the Supreme Court for a
writ of certiorari to review the decision of the Court of Appeals.
Inecto, Inc., New York Cit y.-The Commission’s case against this hair-dye
manufacturer was concluded, February 18, 1935, by entry of a consent decree in the
second circuit (New York City). The proceeding was instituted June 15, 1933, when
the Commission filed with the court an application for enforcement of its order tor
cease and desist.
The decree affirmed the Commission’s order and prohibited the corporation from
advertising that its hair dye, theretofore sold as “Inecto Rapid Notox “, and also
referred to as “Notox”, “Inecto”, or “Inecto Rapid”, was safe and harmless or was
nontoxic or nonpoisonous or that it did not contain toxic, poisonous, or deleterious
ingredients or properties. Use of the “Notox” designation and of purported consumer
testimonials and endorsements which were not genuine, were also forbidden.
The decree was made subject to a provision that it was not to be construed as barring
Inecto, Inc., from representing that the hair dye formerly sold under the name “Notox”
might be used with reasonable assurance of safety by those who were in good health
and had no scratch or abrasion on the scalp and showed no unfavorable reaction to the
“behind-the-ear” test for toxic reaction or skin irritation and had no idiosyncrasy or
susceptibility to dyes of this character. It was provided, however, that in connection
with such representation the company was also to set forth prominent cautioning and
warning to the public that the product was harmful and injurious in its effects upon
various persons and that, before using, the “behind-the-ear” test for toxic reaction and
skin irritation should be made in determining whether it would be safe for the
individual to use the product on her hair.
Ironized Yeast Co., Atlanta, Ga.--J. G. Dodson and Mrs. C. M. Dodson (his wife),
a partnership trading under the name and style

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of Ironized Yeast Co., on September 19, 1934, filed with the sixth circuit (Cincinnati)
a petition to review and set aside the Commission’s order to cease and desist entered
against them.
The Commission’s order, which was based on findings supported by evidence,
required the respondents to cease and desist from making certain extravagant
assertions concerning the medicinal proper-ties of their product “Ironized Yeast” i. e.,
that the use of this product would cause to vanish over night, indigestion, constipation,
nervousness, the tired feeling, or skin eruptions; that skinny or scrawny persons or
those deficient in shape or from could by use of this product develop well-rounded
and curved limbs and otherwise become transformed into shapely persons, and similar
representations.
The case was argued May 17, 1935, and on June 3, 1935, the court affirmed the
Commission’s order.
Walter H. Johnson Candy Co., Chicago.--Petition to review and set aside the
Commission’s order of November 5, 1934, prohibiting lottery methods in the sale of
candy, was filed by this corporation, December 17, 1934, with the seventh circuit
(Chicago).
After briefs and argument (May 15, 1935), the court., on June 29, 1935 (78 F. (2d)
717), affirmed the Commission’s order. Pertinent excerpts from the opinion follow:
It is contended by petitioner that the order which it challenges rests upon a record from which
much of the evidence offered by petitioner was improperly excluded.
*
*
*
*
*
*
*
The Commission properly excluded this evidence as irrelevant to the issues before it. Several
manufacturers had testified that they felt the practice of selling these candies to be unscrupulous
and that they could not descend to such a practice and were therefore put to an unfair
disadvantage in their business. That not all manufacturers believed the practice to be dishonest
or that these manufacturers were mistaken in their beliefs was clearly Immaterial and irrelevant.
The very recent case of Federal Trade Commission v. Keppel & Bro., 291 U. S. 304, involved
facts strikingly similar to those here. The court there said:
“ * * * a trader may not, by pursuing a dishonest practice, force his competitors to choose
between its adoption or the loss of their trade. A method of competition which casts upon one’s
competitors the burden of the loss of business unless they will descend to a practice which they
are under a powerful moral compulsion not to adopt, even though it is not criminal, was thought
to involve the kind of unfairness at which the statute was aimed.”

George H. Lee Co., Omaha, Nebr.--The Commission, on February 5, 1935, filed
with the eighth circuit (St. Louis) an application for enforcement of its order in this
case, accompanied by the printed transcript of the record and brief.
The Commission’s order, issued January 20, 1933, directed the corporation of this
name, and its agents etc., in connection with the sale or offering for sale in interstate
commerce of products of the

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79

same composition as those designated as “Germozone” and “Gizzard Capsules”, to
cease and desist from directly or indirectly representing:
(1) With reference to “Germozone” that its use alone constitutes a proper and sufficient
treatment or remedial or preventive measure for those certain specific diseases and conditions
in poultry known as bacillary white diarrhoea, pullorum disease, blackhead, limber neck,
coccidiosis, diphtheria, and aspergillosis, and
(2) With reference to “ Gizzard Capsules” that their use alone will serve to rid fowls of either
pin worms or tape worm heads.

On joint motion of the parties, April 10, the court entered an order dismissing the
application for enforcement (76 F. (2d) 1008).
Dismissal was requested because the Lee company, since issuance of the order, “has
made substantial changes in the constituent ingredients of the certain remedial
preparation referred to in said order to cease and desist, to wit : Gizzard Capsules, for
the purpose of increasing the efficacy thereof, according to the joint motion. These
changes were deemed to have “removed said product from the scope of the terms of
said order to cease and desist”, and it was said that “there is no public interest to be
served by the further prosecution of this case.”
Maisel Trading Post, Inc., Albuquerque, N. Mex.--The Commission, on November
1, 1934 filed with the tenth circuit (Denver, Colo.) an application for enforcement of
its order in this proceeding, also the certified transcript of record, with original
exhibits, and a printed condensation of the record ordered by the court.
After briefing the case was argued on the merits, January 30, 1935, and the court,
May 1, 1935 (77 F. (2(1) 246) affirmed the Commission’s order prohibiting the
description of silver jewelry products made partly by machinery as “Indian”, or
“Indian-made”, unless it was shown in such description whether the products so
described had been rolled, pressed, or partly ornamented by machinery.
The court broadened the Commission’s order so as to include specification by the
respondent of additional mechanical processes used in the production of the jewelry,
saying, in this connection, thatif the public is entitled to be advised along the line of distinguishing articles made through
primitive methods and those manufactured through more modern methods, the field should lie
covered thoroughly. While we believe in a technical sense that the evidence is sufficient to
support and sustain the order of the Commission in its general purpose and intent, yet surely it
should be modified ill such a way as to show, through label, stamp, catalog, or advertisement,
that the process of manufacture is performed by Indians and to specify the steps in which there
is a use of modern machinery as distinguished from the primitive methods.

Hearing on motion for modification of the decree was held June 25, 1935.

80

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Walker’s New River Mining Co., Elkins, TV. Va.-The Commission filed with the
fourth circuit (Richmond), April 20, 1935, an application for enforcement of its order
to cease and desist in this case, also a printed transcript of the record, and brief for the
Commission.
According to the Commission’s findings of fact, the term “New River” is applied to
a coal field or district in West Virginia within the counties of Fayette, Raleigh, and
Greenbrier, near the New River, and numerous operators produce from mines in this
field coal of a distinctly high grade, which they have advertised and sold for many
years as “New River” coal. Because of its reputation, the name “New River”, has
become an asset of great value to the operators in this field. The respondent extracts
coal from the Cheat Mountain coal field, in Randolph County, W. Va., but sells it in
interstate commerce as “New River”, coal. The Commission’s order was to stop such
practice.
The respondent’s answer to the application for enforcement was filed May 20, and
its brief on June 11. The case was argued at Asheville, N. C., June 13, and, at the close
of the fiscal year, awaited decision.
E J. Wallace, St. Louis.--Application for enforcement of its order to cease and desist
issued in this case, together with typewritten transcript of the record, was filed by the
Commission on March 28, 1934, in the eighth circuit (St. Louis).
The order, based on findings supported by evidence, required this respondent, among
others, to cease and desist from undertaking and cooperating together and acting in
concert in hindering and preventing, or attempting to hinder and to prevent, directly
or indirectly, the purchase and sale of coal in interstate commerce by and between
producers, jobbers, and wholesale dealers therein, and individuals, firms, corporations,
farm clubs, cooperative societies, church organizations, or others, consumers of coal
or dealers therein, by the following methods, among others:
(1) Arbitrarily classifying sellers and purchasers of coal and shipments thereof as
“Snowbird” shippers, “Snowbirds” and “Snowbird”, shipments, respectively, or by any
similar or other terms because of or according to the extent or degree of equipment
owned by the said purchasers or employed by them in the sale, movement, or
distribution of coal, or causing any such classification to be published in any trade
paper, or other publication, or to be communicated to others or among themselves, in
that or any other manner.
(2) Designating or causing to be designated, in articles or editorials in any trade
paper or other publication, or in any other manner or by any other means, any
individual, firm, corporation or

CASES IN THE FEDERAL COURTS

81

association, or groups thereof, as the vendor or purchaser of coal, or designating or
causing to be designated, their shipments of coal, by using or causing to be used
denunciatory, scurrilous, abusive, or derogatory language of and concerning them or
either of them.
After argument, the court, on February 9, 1935, in a unanimous decision, after
modifying the Commission’s order so as to make it more effective, affirmed it, and
entered a decree of enforcement in accordance with the terms thereof.
During the course of its opinion, the court made the following observations (75 F.
(2d) 733):
There can be little doubt that a combination among retail dealers to prevent competitors from
engaging in business, anti from procuring the commodities essential to the conduct of such
business, by means of threats and intimidation, is a violation of the letter and spirit of section
5 of the Federal Trade Commission Act, provided interstate commerce is thereby affected.
*
*
*
*
*
*
*
It is not a prerogative of private parties to act as self-constituted censors of business ethics,
to install themselves as judges and guardians of the public welfare, and to enforce by drastic and
restrictive measures their conceptions thus formed.
In the consideration of this case we have examined the code exhibited by respondent, and we
find in it nothing to support his contention that the action of the Federal Trade Commission upon
the facts found is in conflict with the aims and purposes of the National Industrial Recovery Act.
*
*
*
*
*
*
*
It would be difficult to frame language more descriptive of the practices condemned by the
Federal Trade Commission in the order sought to be enforced. Respondent receives no support
in his appeal to the National Industrial Recovery Act. Nor do we find any impairment of the
Federal Trade Commission Act under which the Commission is seeking to prevent any
obstruction, through unfair methods of competition, to the free and natural flow of trade in the
channels of interstate commerce.
*
*
*
*
*
*
*
The act requires this court, upon application for enforcement, to enter a decree affirming,
modifying, or setting aside the order as the situation may warrant. In case of affirmance or
modification that decree should be broad enough to give effective relief and to prevent evasion.
*
*
*
*
*
*
*
The respondent was made a party individually and as a commissioner of the Midwest Retail
Coal Association. Accordingly to conform to the proofs, to give effective relief, and to prevent
evasion, the order to cease and desist will be modified by inserting the words “or as individuals”
in the opening clause thereof, which will then read as follows: “Cease and desist from
undertaking and cooperating together and acting in concert, or as individuals, in hindering and
preventing, etc.”

82ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
TABLES SUMMARIZING LEGAL WORK OF THE COMMISSION AND COURT
PROCEEDINGS, 1915-35
TABLE 1.--Preliminary inquiries.

1915

1916

1917

1918

1919

1920

1921

1922

1923

1924

Pending beginning of
year
0
4
12
32
19
29
61
68
147
102
Instituted during year
119
265
402
611
843 1,197
1,070
1,223
1,234
1,568
Total for disposition
119
269
474
643
862 1,136
1,131
1,291
1,381
1,670
Closed after
investigation
3
123
259
292
298
351
500
731
897 1,157
Docketed as applications
for complaints
112
134
153
332
535
724
563
413
382
322
Total disposition during
year
115
257
442
624
833 1,075
1,063
1,144
1,279
1,479
Pending end of year
4
12
32
19
29
61
68
147
102
191
1925 1926 1927 1925 1929 1930 1931 1932 1933 1934 1935
Pending beginning of
year
191
176
298
328
224
260
409
307
423
478
760
Instituted during year 1,612 1,483 1,265 1,331
1,469
1,505
1,380
1,659
1,593
2,151 847
Total for disposition 1,803 1,659 1,563 1,659
1,693
1,765
1,789
1,966
2,016
2,629 1,607
Closed after
investigation
1,270 1,075 942 1,153
1,049
1,050
1,150
1,319
1,274
1,597
935
Docketed as applications
for complaints
357
256
293
282
384
296
332
224
264
272
487
Total disposition during
year
1,627
1,361 1,235 1,435
1,433
1,356
1,482
1,543
1,538
1,869
1,422
Pending end of year 176
298
325
224
260
409
307
423
478
760
185
CUMULATIVE SUMMARY TO JUNE 30,1935
Inquiries instituted
Closed after investigation
Docketed as applications for complaints
Total disposition
Pending June 30, 1935

24,797
17,465
7,147
24,612
185
TABLE 2.--Export trade investigations

Pending beginning of year
Instituted during year
Total for disposition
25
35
52
44
16 29 42
40 27

1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935
53 35
79
43
10
16 29 42
40
27
17 8 40
0
10 79
16
11
52 54 68 20
11
7
2 1 0
0
63 114 95
54 62 70 97
62 51 34 19
9 4 0 Disposition during year
46 41 55
22 24 17
11 5 4 0
Pending end of year
35
79
43
17
8 4 0 0
CUMULATIVE SUMMARY TO JUNE 30, 1936

Investigations instituted
Total disposition
Pending June 30,1936

384
384
0

10

TABULAR SUMMARY OF LEGAL WORK83
TABLE 3.--Applications for complaints

1915

1916

1917

1918

1919

1920

1921

1922

1923

1924

1925

104
134

130
153

188
332

280
535

389
724

554
426

467
382

458
416

572
377

555
340

0

Pending beginning of year 0
Applications docketed
112
Rescissions:
To complaints
0
Settled by stipulations to
cease and desist-C. T. E 0
Settled by stipulations to
cease and desist- S. B. I 0
Settled by acceptance of
T. P. C. rules
0
Dismissed for lack of
merit
0
Closed for other reasons1 0
Total for disposition 112

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

1

1

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0
0
238

0
0
283

0
0
520

0
0
815

0
0

0
0
980

5
0
854

6
0
880

4
0
954

3
0
909

1,113

To complaints
0
3
16
80
125
220
156
104
121
143
118
Settled by stipulations to
cease and desist--C. T. E 0
0
0
0
0
0
0
0
0
3
5
Settled by stipulations to
cease and desist--S. B. I 0
0
0
0
0
0
0
0
0
0
0
Settled by acceptance of
T. P. C. rules
0
0
0
0
0
0
0
0
0
0
0
Dismissed for lack of merit 8
105
79
160
301
339
357
292
187
243
298
Closed for other reasons 1 0
0
0
0
0
0
0
0
0
0
0
Total disposition during
year
8
108
95
240
426
559
513
396
308
389
421
Pending end of year
104
130
188
280
389
554
487
458
572
565
488
1926 1927 1928 1929 1930 1931 1932 1933 1934 1935
Pending beginning of
year
Applications docketed
Rescissions:
To complaints
Settled by stipulations to
cease and desist-C. T. E
Settled by stipulations to
cease and desist-S. B. I
Settled by acceptance of
T. P. C. rules
Dismissed for lack of
merit
Closed for other reasons1
Total for disposition
To complaints
Settled by stipulation to
cease and desist-C.T.E
Settled by stipulations to
cease and desist-S.B.I
Settled by acceptance of
T.P.C. rules
Dismissed for lack of
merit
Closed for other reasons1
Total disposition during
year
Pending end of year

488
292

420
334

457
679

530
535

843
511

753
378

754
404

440
376

476
913

469

0

273

0

0

0

2

2

0

0

0

0

1

0

2

2

3

5

3

3

1

6

0

0

0

0

0

0

0

0

3

4

0

0

4
0
766

0
0
712

57

3

185
0

127
0

846
457

48
32

3
0
859

52

123

96

1
1

1,394
98

111

85

0

90

259
228

129

5

158
0

369
753

90

209

0

0
0
850

1,136
110

160

0

1
0

1,277

31

268
843

4

171
244

134
0

0

0

1,389

17

118
0

255
530

3

100

0
19

2

0

118

0

2

0

1,212

68

0

3

0
58

80

0

1

0
0
793

45

102

420

0

6

3

0

205
0

268
0

138
0

0

77

374
469

390
634

636
754

523
440

696
475

1
91

66

CUMULATIVE SUMMARY TO JUNE 30, 1935
Applications docketed
8,626
Rescissions:
To complaints
7
Settled by stipulations to cease and desist-C. T. E 2
28
Settled by stipulations to cease and desist-S. B. I
7
Settled by acceptance of T. P. C. rules
6
Dismissed for lack of merit
34
Closed for other reasons’
4
Total for disposition
8,709
To complaints
2,126
Settled by stipulations to cease and desist-C. T. E
1,338
Settled by stipulations to cease and desist-S. B. 1
587
Settled by acceptance of T. P. C. rules
88
Dismissed for lack of merit
3,859

760

Closed for other reason
Total disposition
Pending June 30, 1935

77
8,075
634

1 This classification includes such reasons as death, business or practice discontinued, private controversy, controlling court decisions, etc.
2 C T. 0. designates stipulations concerning general unfair practices negotiated for the Commission by its chief trial examiner. S. B. I. means stipulations
handled by the special board of investigation in cases of false and misleading advertising. T. P. C. indicates trade practice conference.

84

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
TABLE 4.--Complaints
1915

Pending beginning of
year
Complaints docketed
0
Orders to cease and desist:
Contest
Consent
Default
Settled by stipulation,
to cease and desist
Settled by acceptance
of T.P.C rules
Dismissed for lack of
merit.
Closed for other
reasons 1
Total for disposition 0
Complaints rescinded
0
Orders to cease and deist:
Contest
Consent
Default
Settled by stipulations
to cease and desist
0
Settled by acceptance of
T.P.C rules
Dismissed for lack of
merit
Closed for other
reasons 1
Total disposition during
year
Pending end of year
0

1916

0
0
0
0

0

Complaints rescinded
Orders to cease and desist:
Contest
Consent
Default
Settled by stipulations to
cease and desist
Settled by acceptance of
T.P.C rules
Dismissed for lack of
merit
Closed for other reasons
Total disposition during
year
Pending end of year

10
135

86
308

133
177

287
111

312
144

257
154

232
132

0
0
0

0
0
0

0
0
0

0
0
0

0
0
0

0
0
0

0
0
0

4
1
0

0

0

0

0

0

0

0

0
0
0
0

0

3

71

0
0
0

0

0

0

0

0

0
0

0

7

0

1927

1928

78
133
1929

1930

1931

1932

0

75

1933

8

88

0
36

97

0

166
232

1934

43
0

0

0

153
257

30
47
0

0

0

154
312

45

0

37

0

54
0

0

0

88
287

28

0
0

0

0

17
0

0

44

0

4
86

74

0
13

0

0
10

0

0
396

0

0
0

0

0
392

0

116

0
1

0
402

0

0
0
0

0
1

0

0
0

0

1

0
0
5

0
0

0

423

264

0

0

0

0
0

0

0

465

110

0
0

0

1

0
75

0
0

1925

0

0
441

0

1924

0

0
221

0

1923

0

0

0
164

0

1922

0

0

0
14

1921

0

0

0
5

1920

0

0

0

1919

5

0

1926

Closed for other reasons
Total for disposition

154

0
0
0

0

Pending beginning of
year
Complaints docketed
Orders to cease and desist:
Contest
Consent.
Default
Settled by stipulations
to cease and desist
Settled by acceptance
of T.P.C rules
Dismissed for lack of
merit

1918

0
9

0
5

1917

170
264

0
128
220

176

1935

220
76

152
84

147
149

136
172

198
110

275
92

225
53

208
97

144
280

115

0
0
0

0
0
0

1
0
0

0
0
0

0
0
0

0
0
0

0
1
0

0
0
0

0
0
0

0
0
1

82

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0
229

0
212

0
285

0
370

0
385

0
318

0
261

0
241

0
396

0
282

1

0

0

0

28
16
0
3

0

34
18
0

3

38
8
2

1

3

2

56
7
4
3

1

36
11
1
3

3

87
14
7
4

0

39
18
6
2

39
61
11

1

1

5

5

1

0

1

0

83
0

24
0

20
0

16
0

41
0

45
0

44
0

41
1

82
136

76
198

87
275

95
225

147

160

110
208

0

38

126

178

115

218

CUMULATIVE SUMMARY TO JUNE 30, 1935
Complaints
Orders to cease and desist:
Contest
Consent
Default
Settled by stipulations to cease and desist
Settled by acceptance of T.P.C. rules
Dismissed for lack of merit
Closed for other reasons 1
Total for disposition
Complaints rescinded
Orders to cease and desist:
Contest
Consent

0

13
13

117
144

54
70
2
1

6

130
152

0

37
25
4

0

0

0

2,484
5
2
1
0
0
4
0
2,496
9
1,000
409

Default

37

1 This classification includes such reasons as death, business or practices discontinued, private
controversy, controlling court decisions, etc.

85

TABULAR SUMMARY OF LEGAL WORK
CUMULATIVE SUMMARY TO JUNE 30, 1935--Continued
Settled by stipulations to cease and desist
Settled by acceptance or TPC rules
Dismissed for lack or merit
Closed for other reasons 1
Total disposition
Pending June 30, 1935

28
18
763
14
2,278
218

1 This classification includes such reasons as death, business or practices discontinued, private
controversy, controlling court decisions. etc.

COURT PROCEEDINGS--ORDERS TO CEASE AND DESIST
TABLE 5.--Petitions for review--lower courts
Pending beginning of year
Appealed
Total for disposition
Decisions for Commission
Decisions for others
Petitions withdrawn
Total disposition during year
Pending end of year

1919 1920 1921 1922 1923 1924 1925 1925 1927
0
2
8
13
9
4
14
9
8
4
9
18
5
5
15
6
5
4
4
11
26
18
14
19
20
14
12
1
0
1
4
5
1
6
5
4
1
3
11
5
4
4
3
1
2
0
0
1
0
1
0
2
0
3
2
3
13
9
10
5
11
6
9
2
8
13
9
4
14
9
8
3

Pending beginning of year
Appealed
Total for disposition
Decisions for Commission
Decisions for others
Petitions withdrawn
Total disposition during year
Pending end of year

1928 1929 1930 1931 1932 1933 1934 1935
3
3
35
3
8
15
2
1
4
34
1
10
22
3
1
5
7
37
36
13
30
18
3
8
3
1
4
3
1
2
2
3
1
1
26
1
11
13
0
0
0
0
3
1
3
1
0
0
4
2
33
5
15
16
2
3
3
35
3
8
15
2
1
3

CUMULATIVE SUMMARY TO JUNE 30,1935
Appealed
Decisions for Commission
Decisions for others
Petitions withdrawn
Total disposition
Pending June 30, 1935

151
46
87
15
148
3

This table lists a cumulative total of 87 decisions against the Commission is the United States Circuit
Courts of Appeals. However the Grand Rapids furniture (veneer) group (with 25 different docket
numbers) is in reality 1 case, with 25 different subdivisions. t was tried briefed, and argued as 1 case, and
was so decided by the court of appeals. The same holds true of the curb-pump group (with 12 different
subdivisions), the Royal Milling Co. group (with 6 different subdivisions), and the white Pine cases (12
subdivisions), In reality. therefore, these 55 docket numbers mean but 4 cases and, if cases and not docket
numbers are counted, the total of adverse decisions would be 36.

86

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
TABLE 6.--Petitions for review--Supreme Court of the United States

Pending beginning of year
Appealed by Commission
Appealed by others
Total for disposition
Decisions for Commission
Decisions for others
Petitions withdrawn by Commission
Certiorari denied Commission
Certiorari denied others
Total disposition during year
Pending end of year

1919 1920 1921 1922 1923 1924 1925 1921 1927
0
0
1
3
3
1
0
4
6
0
2
2
4
5
0
5
2
1
0
0
0
0
2
1
1
3
1
0
2
3
7
10
2
8
0
8
0
0
0
2
0
0
0
0
8
0
1
0
0
5
1
0
0
2
0
0
0
0
1
0
0
0
0
0
0
0
2
1
0
1
2
1
0
0
0
0
2
1
1
1
1
0
1
0
4
9
2
2
3
7
0
1
3
3
1
0
4
8
1

Pending beginning of year
Appealed by Commission
Appealed by others
Total for disposition
Decisions for Commission
Decisions for others
Petitions withdrawn by Commission
Certiorari denied Commission
Certiorari denied others
Total disposition during year
Pending end of year

1928 1929 1930 1931 1032 1933 1934 1935
1
0
1
0
0
0
1
0
0
0
1
1
0
8
12
0
0
2
0
0
1
0
1
0
1
2
2
1
1
8
14
0
0
0
0
0
0
6
13
0
0
0
1
1
0
0
1
0
0
0
1
0
0
0
0
0
0
0
0
0
0
1
0
0
1
1
0
0
1
0
0
0
1
1
2
1
1
7
14
0
0
1
0
0
0
1
0
0

CUMULATIVE SUMMARY TO JUNE 30, 1935
Appealed by Commission
Appealed by others
Total appealed
Decisions for Commission
Decisions for others
Petitions withdrawn by Commission
Certiorari denied Commission
Certiorari denied others
Total disposition
Pending June 30, 1935

43
12
55
24
12
2
8
9
55
0

TABLE 7.--Petitions for enforcement--Lower courts
Pending beginning of year
Appealed
Total for disposition
Decisions for Commission
Decisions for others
Petitions withdrawn
Total disposition during year
Pending end of year

1919 1920 1921 1922 1923 1924 1925 1926 1927
0
0
0
0
0
0
1
0
2
0
0
0
0
1
1
1
8
2
0
0
0
0
1
1
2
3
4
0
0
0
0
1
0
2
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
1
0
0
0
0
1
0
2
1
1
0
0
0
0
0
1
0
2
3

87

TABULAR SUMMARY OF LEGAL WORK
TABLE 7.--Petitions for enforcement--lower courts--Continued

Pending beginning of year
Appealed
Total for disposition
Decisions for Commission
Decisions for others
Petitions withdrawn
Total disposition during year
Pending end of year

1928 1929 1930 1931 1932 1933 1934 1935
3
2
5
3
2
1
2
2
3
9
4
3
0
2
3
6
6
13
9
6
2
3
5
8
1
5
4
4
0
0
3
4
1
0
1
0
1
0
0
0
2
1
1
0
0
1
0
2
4
6
6
4
1
1
3
6
2
5
3
2
1
2
2
2

CUMULATIVE SUMMARY TO JUNE 30, 1935
Appealed
Decisions for Commission
Decisions for others
Petitions withdrawn
Total disposition
Pending June 30, 1935

38
24
4
8
36
2

TABLE 8.--Petitions for enforcement--Supreme Court of the United States
Pending beginning of year
Appealed by Commission
Appealed by others
Total for disposition
Decisions for Commission
Decisions for others
Certiorari denied others
Total disposition during year
Pending end of year

1919 1920 1921 1922 1923 1924 1925 1926 1927
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
1
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
1
0

Pending beginning of year
Appealed by Commission
Appealed by others
Total for disposition
Decisions for Commission
Decisions for others
Certiorari denied others
Total disposition during year
Pending end of year

1928 1929 1930 1931 1932 1933 1934 1935
0
0
1
0
0
0
0
0
0
1
0
0
0
0
0
0
1
0
1
0
0
0
0
0
1
1
2
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
1
0
1
0
0
0
0
0
1
0
2
0
0
0
0
0
0
1
0
0
0
0
0
0

CUMULATIVE SUMMARY TO JUNE 30, 1935
Appealed by Commission
Appealed by others
Total appealed
Decisions for Commission
Decisions for other,
Certiorari denied others
Total disposition
Pending June 30, 1936

1
3
4
0
2
2
4
0

88

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
TABLE 9.--Court proceedings-miscellaneous lower courts

Pending beginning of year
Appealed by Commission
Appealed by others
Total for disposition
Decisions for Commission
Decisions for others
Petitions withdrawn by Commission
Petitions withdrawn by others
Total disposition during year
Pending end of year

1919 1920 1921 1922 1923 1924 1925 1926 1927
0
1
4
5
6
4
4
4
4
1
2
0
3
5
0
1
0
1
1
2
2
3
0
0
0
1
1
2
5
6
11
11
4
5
5
6
1
0
1
3
0
0
0
0
1
0
1
0
1
7
0
0
0
0
0
0
0
0
0
0
1
1
0
0
0
0
1
0
0
0
0
0
1
1
1
5
7
0
1
1
1
1
4
5
6
4
4
4
4
5

Fending beginning of year
Appealed by Commission
Appealed by others
Total for disposition
Decisions for Commission
Decisions for others
Petitions withdrawn by Commission
Petitions withdrawn by others
Total disposition during year
Pending end of year

1928 1929 1930 1931 1932 1933 1934 1935
5
3
2
1
1
2
1
0
0
2
0
1
0
1
0
0
2
1
2
0
2
0
2
0
7
6
4
2
3
3
3
0
1
4
1
1
1
2
2
0
1
0
1
0
0
0
0
0
2
0
0
0
0
0
0
0
0
0
1
0
0
0
1
0
4
4
3
1
1
2
3
0
3
2
1
1
2
1
0
0

CUMULATIVE SUMMARY TO JUNE 30, 1935
Appealed by Commission
Appealed by others
Total appealed
Decisions for Commission
Decisions for others
Petitions withdrawn by Commission
Petitions withdrawn by others
Total disposition
Pending June 30,1930

16
19
35
17
11
4
3
35
0

TABLE 10.--Court proceedings-Miscellaneous--Supreme Court of the United States
Pending beginning of year
Appealed by Commission
Appealed by others
Total for disposition
Decisions for Commission
Decisions for others
Certiorari denied Commission
Certiorari denied others
Total disposition during year
Pending end of year

1919 1920 1921 1922 1923 1924 1925 1926 1927
0
0
0
0
0
6
4
1
1
0
0
0
0
6
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
6
6
4
1
2
0
0
0
0
0
0
0
0
1
0
0
0
0
0
2
3
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
2
3
0
2
0
0
0
0
8
4
1
1
0

89

TABULAR SUMMARY OF LEGAL WORK

TABLE 10.--Court proceedings-Miscellaneous--Supreme Court of the
United States--Continued

Pending beginning of year
Appealed by Commission
Appealed by others
Total for disposition
Decisions for Commission
Decisions for others
Certiorari denied Commission
Certiorari denied others
Total disposition during year
Pending end of year

1928 1929 1930 1931 1932 1933 1931 1935
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
1
0
0
0
1
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
1
0
0
0
1
0
0
0
1
0
0
0
0
0
0
0
0
0

CUMULATIVE SUMMARY TO JUNE 30, 1935
Appealed by Commission
Appealed by others
Total appealed

7
2

Decision for Commission
Decisions for others
Certiorari denied Commission
Certiorari denied others
Total disposition
Pending June 30, 1936

1
5
1
2

9

9
0

PART III. TRADE-PRACTICE CONFERENCES
HISTORY AND PURPOSE OF PROCEDURE
WHOLESALE DRUG CONFERENCE
RULES ACCEPTED BY INDUSTRIES
OUTLINE OF TRADE CONFERENCE PROCEDURE
GROUP I AND GROUP II RULES

20442---35-----7

91

PART III. TRADE-PRACTICE CONFERENCES
HISTORY AND PURPOSE OF TRADE-PRACTICE CONFERENCE PROCEDURE

The trade-practice conference is the logical development of the efforts of the Federal
Trade Commission, cooperating with industry, to protect the public against unfair
methods of competition and to raise the standards of business practices.
The Division of Trade -Practice Conferences, which was created by the Commission,
Apr il 19, 1926, is charged with the duty of coordinating and facilitating the work
incident to holding trade practice conferences, an of encouraging cooperation between
business as a wholes and the Commission in serving the public. As early as 1919, the
Commission utilized the procedure of holding conferences with industry for the
purpose of eliminating unfair methods of competition and trade abuses.
The trade-practice conference affords a means whereby representatives of an
industry may voluntarily assemble and, under the auspices of the Federal Trade
Commission, consider prevailing un-fair trade practices and collectively agree upon
and provide for their abandonment in cooperation with the Commission, thus placing
all members of the industry concerned on an equally fair competitive basis insofar as
unfair trade practices are concerned. Under this procedure a business or industry takes
the initiative in establishing self-government by making its own rules of business
conduct, subject to approval by the Commission.
Through trade-practice conferences the same results are achieved as by the issuance
of formal complaints by the Commission, but without bringing charges, or employing
any compulsory process. The procedure is predicated on the theory that the primary
concern of the Federal Trade Commission is the interest of the public. Its importance
to the public consists of the immediate wholesale relief from the harmful effects of
unfair methods of competition which otherwise could not be accomplished in years,
and the conservation of public funds which might otherwise be spent in conducting
trials of cases, while to industry it means the saving of the, expense, annoyance, and
unfavorable publicity incident to the trial or stipulation of numerous complaints.
Since the inauguration of this activity by the Commission, more than 150 tradepractice, conferences have been held under Commission auspices for industries of
varied character, comprising memberships of from several hundred to many thousands.
93

94

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.
WHOLESALE DRUG CONFERENCE IN CHICAGO

During the last fiscal year, an important conference was held, namely, that for
members of the wholesale drug industry, in Chicago, December 6, 1934.
Commissioner Charles H. March presided, assisted by George McCorkle, director of
the Commission’s division of trade-practice conferences. Rules adopted by the
industry, and later approved by the Commission, were published and released to all
members of the industry on December 13, 1934.
Based on the annual volume of business, almost 90 percent of the industry was
represented at the conference, more than 400 concerns in the industry having had
delegates present or having been other-wise rep resented at the conference. It was
reported at the time of the conference that the annual volume of merchandise
distributed by wholesale druggists amounted approximately to a half billion dollars,
and that more than 25,000 persons were employed in various capacities in this branch
of the drug industry.
In the relatively short the since these rules became effective, several hundred
members of the industry have filed individual acceptances with the Commission
pledging themselves to observe the rules. Several cases which had previously been
suspended by the Commission pending this trade-practice conference were removed
from the suspense calendar and the proceedings closed by the Commission because the
parties concerned hard accepted the rules of the conference.
Among trade practices which the wholesale drugs industry condemned at this
conference were the following: Selling below cost with intent and effect of injuring
competitors; using false and mis-leading statements by way of advertisement or
otherwise; commercial bribery; defamation of competitors and disparagement of
competitors’ products; unlawful price discrimination; posing as a wholesale druggist
when not qualified to be so classified; imitation of trade marks, trade names, or other
identifying marks of competitors; using “marked-up” or “fictitious” p rices;
representing certain prices and terms as “special” when in fact they are “regular”
prices and terms; substitution, without permission, of drugs or allied products for those
ordered by customers, the practice having a tendency to mislead purchasers, and
constituting a method dangerous to the public health.
RULES ACCEPTED BY INDUSTRIES

Trade-practice conference rules approved by the Commission as a result of
conferences held under Commission auspices were accepted during the fiscal period
by 450 individuals, firms, and corporations. This is tantamount to saying that these
persons and organizations signed acceptances to observe rules of fair competition be-

TRADE PRACTICE CONFERENCES

95

cause the rules by which they agreed to abide were designed to eliminate many unfair
trade practices complained of in the industries concerned.
During the fiscal year, only 34 complaints of alleged violations of trade-practice
conference rules were filed with the Commission of these, 20 were adjusted through
correspondence, and 14 referred to the Commission’s chief examiner for investigation.
OUTLINE OF PROCEDURE

The first requisite of a trade-practice conference is an expression of desire on the
part of a substantial majority of the members of an industry to eliminate unfair
methods of competition and trade abuses and to improve competitive conditions. The
procedure is as follows:
I. Method of applying for a trade- practice conference.--In authorizing a tradepractice conference, the Commission must first be assured that the holding of such
conference is desirable and to the best interest of the industry and the public. An
application, in the form of a petition or informal communication, should contain the
following information:
1. A brief description of the business for which the conference is intended, stating
also the products manufactured or the commodities distributed; the annual volume of
production, volume of sales, capitalization of the industry, or like items should be
approximated in order to furnish an idea of the size and importance of the industry.
2. The authority of the person making the application must also be shown. If the
application is made by an association executive, a resolution showing the action of the
association should be submitted, together with a statement showing the percentage of
the entire industry represented by the association membership, which may be given on
the basis of volume of business, or numerically, or both. If the application comes from
an unorganized group, the percentage of the entire industry represented by the group
applying for the conference should be indicated.
3. The application should state whether the conference is intended for all branches
of the industry, or is to be limited to a particular branch or branches thereof. If the
resolutions adopted by manufacturers, for example, are confined to practices which do
not materially affect distributors, there would be no particular reason for including
distributors; however, if the proposed action involves distribution, the distributors
should be included.
4. The application should also set out the various unfair methods of competition,
trade abuses, and uneconomic and unethical practices which exist in the industry at the
time the application is filed and which the industry desires to eliminate through the
medium

96

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

of a trade-practice conference. This, however, does not limit discussion at the
conference to the particular subjects thus proposed, as the conference itself constitutes
an open forum wherein any practice existing in the industry may be brought forward
as a proper subject for consideration. Any resolutions submitted by a committee or
member of the industry prior to the holding of a trade-practice conference are tentative
and their introduction does not prohibit other members of the industry from presenting
new or different resolutions.
If convenient, the application should be accompanied by a complete and accurate list
of the names and addresses of all firms in the industry, or such list may be furnished
shortly thereafter. This list should be divided or symbolized to indicate the types of
concerns; i. e., manufacturers, distributors, etc., which are to be included in the
conference.
II. Procedure following authorization the Commission.--After a conference has
been authorized by the Commission, a the and place are arranged and anyone engaged
in the industry may participate. Resolutions are introduced at the conference, freely
discussed, and, if necessary, amended.
Following the conference, the proceedings are reported to the Federal Trade
Commission with appropriate recommendations. If the rules are approved by the
Commission, they are sent to a committee of the industry appointed to cooperate with
the Commission, with the request that this committee report to the Commission
whether it is willing to accept, on behalf of the industry, the rules as approved by the
Commission. Following acceptance of the rules by such committee, every member of
the industry is furnished with a copy of the Commission’s action, tog ether with a form
for his acceptance.
After a trade-practice conference has been held, the Commission retains an active
interest in the observance of the rules adopted by the industry and approved by the
Commission.
GROUP I AND GROUP II RULES

Rules approved by the Commission relate to practices violative of the law and are
designated group I. Other resolutions adopted by the industry, and received by the
Commission as expressions of the trade on the subjects covered, are classified as group
II.
Explanation of group I rules.--The unfair trade practices which are embraced in
group I rules are considered to be unfair methods of competition within the decisions
of the Federal Trade Commission and the courts, and appropriate proceedings in the
public in-

TRADE PRACTICE CONFERENCES

97

terest will be taken by the Commission to prevent the use of such unlawful practices
in or directly affecting interstate commerce.
Explanation of group II rules.--The trade practices embraced in group II rules do not
per se, constitute violations of law. They are considered by the industry either to be
unethical, uneconomic, or otherwise objectionable; or to be conducive to sound
business methods which the industry desires to encourage and promote. Such rules,
when they conform to the above specifications and are not violative of law, will be
received by the Commission, but the observance of said rules must depend upon and
be accomplished through the cooperation of the members of the industry concerned,
exercised in accordance with existing law. Where, however, such practices are used
in such a manner as to become unfair methods of competition in commerce or a
violation of any law over which the Commission has jurisdiction, appropriate
proceedings will be instituted by the Commission as in the case of a violation of group
I rules.

PART IV. SPECIAL PROCEDURE IN CERTAIN TYPES OF
ADVERTISING CASES
NEWSPAPER, MAGAZINE, AND RADIO ADVERTISING

99

PART IV. SPECIAL PROCEDURE IN CERTAIN TYPES OF
ADVERTISING CASES
NEWSPAPER, MAGAZINE, AND RADIO ADVERTISING

False and misleading advertising matter as published in newspapers and magazines
and as broadcast over the radio is surveyed and studied by a special board set up by the
Federal Trade Commission in 1929. This board, known as the Special Board of
Investigation, consists of three Commission attorneys designated to represent the
Commission at preliminary hearings and specialize in this type of cases.
Misrepresentation of commodities sold in interstate commerce is a type of unfair
competition with which the Commission has dealt under authority of the Federal Trade
Commission Act since its organization in 1915. By 1929 it had become evident that
misrepresentation embodied in false and misleading advertising in the periodical field
was of such volume that it should receive specialized attention from the Commission.
Since that the time Commission, through its special board, has examined the
advertising columns of newspapers and magazines, noting misleading representations,
and has received complaints of false and misleading advertising from competitors and
consumers. Each instance has been carefully investigated, and where the facts have
warranted, and informal procedure has not resulted in the prompt elimination of
misleading claims and representations, formal procedure has been resorted to and the
cases tried. While a number of orders have been issued requiring the respondents to
cease and desist from advertising practices complained of, in a majority of cases the
matters have been adjusted by means of the respondent signing a stipulation agreeing
to abandon the unfair practices.
The Commission believes its work in this field has contributed to ward the general
improvement noticeable in the last few years in the character of newspaper, magazine,
and radio advertising.
Newspaper and magazine advertising.--In its work of reviewing advertisements in
current publications, the Commission, through its special board, has found it advisable
to call for some periodicals on a continuous basis, due to the persistently questionable
character of the advertisements published. However, as to publications generally, it is
physically impossible to review, continuously, all advertisements of a doubtful nature;
also, it is found unnecessary to re101

102

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

view all the issues of publications of a high ethical standard where the publishers
carefully censor all copy before acceptance.
With this situation in mind, the special board has found it of material value to
procure periodicals in cognate groups as to type or class, volume of circulation, and
character of field of distribution such as agricultural, fiction, information, movie fan,
trade, sales promotion, and the like. Advertisements of similar character, purpose and
appeal are thus assembled and reviewed to advantage in a related manner.
Between January 1 and June 30, 1935, magazines having a combined circulation of
27,220,061 copies were received. Up to June 30, 1935, a discerning preliminary
scrutiny of 1,126 individual current advertisements had been performed, resulting in
284 being referred to the board members for special consideration as possibly false and
misleading.
When the Commission receives complaints or notes the existence of apparently false
and misleading representations in advertising, it initiates an investigation. A
questionnaire is sent to the advertiser requesting samples of all advertising copy
published or broadeast by radio during the year past, together with copies of all
booklets, folders, circulars, form letters and other advertising literature, and, if
practicable, a sample of the article advertised, and, if the article is a compound, the
quantitative formula.
Upon receipt of the material, the sample, formula, and advertising claims and
representations are submitted for medical or scientific opinion to such other
Governmental agencies as the Public Health Service, Bureau of Standards, or Food and
Drug Administration.
Upon receipt of such official opinions the Commission, through its special board,
carefully examines all claims and representations, and makes such excerpts as appear
to require justification or explanation. Copies of such excerpts and medical or other
scientific opinions are then sent to the advertiser, and an opportunity given him to
submit such evidence as he may desire to justify or explain the claims and
representations scheduled.
If all such claims and representations are justified, the matter is closed without
further procedure, and all the data filed for future reference, but if the claims or
representations are not justified, the Commission may order the docketing of an
application for complaint against the offending advertiser. The entire matter is then
referred to the special board for negotiation of a stipulation wherein the advertiser
agrees to cease and desist from making such claims and representations as are deemed
misleading by the Commission. If such stipulation is executed by the advertiser and
accepted by the Commission, the matter is closed, subject to reopening at any the by
the Commission if occasion arises. If no stipulation is procured

NEWSPAPER, MAGAZINE, AND RADIO ADVERTISING

103

from the advertiser, the Commission institutes proceedings against the advertiser by
the issuance of a formal complaint under the law.
In a large majority of cases, advertisers have entered into stipulations with the
Commission to cease and desist from publishing the misleading statements. In only a
relatively few cases do advertisers refuse to stipulate, making it necessary for formal
complaints to be issued.
In many cases the advertiser immediately cancels all advertising complained about
upon receipt of the first communication from the Commission, and does not advertise
again until his matter has been adjudicated.
Radio advertising.--The Commission began its review of advertising copy broadcast
over the radio at the beginning of the fiscal year 1934-35. At the outset the
Commission, through its special board of investigation, made a survey of all
commercial continuities, covering the broadcasts of all radio stations during July 1934.
The volume of returns received and the character of the announcements indicated
clearly that a satisfactory continuous scrutiny of current broadcasts could be
maintained with a limited force and at small expense, by adopting a plan of grouping
the stations for certain specific periods.
Consequently, starting in September 1934, calls have been issued to individual radio
stations according to their location in the five radio zones established by the Federal
Communications Commission These returns cover specified 15-day periods.
National and regional networks, however, respond on a continuous weekly basis,
submitting copies of commercial continuities for all programs wherein linked hook-ups
are used involving two or more affiliated or member stations.
To complete the observation of radio advertising, the producers of electricaltranscription recordings submit regular weekly and monthly returns of typed copies of
the commercial portions of all recordings manufactured by them for radio broadcast.
As the actual broadcast of a commercial recording is not always known to the
manufacturer of the commodity being advertised, the Commission’s knowledge of
current transcription programs is supplemented by special reports from individual
stations from the to the, listing the programs of recorded transcriptions with essential
data as to the name of the advertiser and the article sponsored.
The combined material received from the individual stations for specified periods,
from the weekly returns on regional and national network broadcasts, and from the
special transcription reports, furnishes the Commission with representative and
specific data on the

104

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

character of radio advertising which has proven of great value in its efforts to curb
false and misleading trade representations.
Up to June 30,1935, 439,253 radio continuities had been received by the
Commission. Of these a preliminary review had been completed on 376,53 resulting
in 38,873 being referred, as possibly false and misleading, to the members of the board
and their legal assistants for further consideration and possible action.
In all cases where false and misleading advertising is detected in radio broadcasts,
the Commission is applying substantially the same procedure as is followed in cases
of false and misleading advertising in newspapers, magazines, or other periodicals.
This scrutiny of radio advertising is being conducted with a minimum of expense to
the Government as well as to the industry because of the cooperation of members of
the industry and the system of procedure developed.
In its examination of radio continuities, as well as of newspaper, magazine, and other
periodical advertising, the Commission‘s sole purpose is to curb unlawful abuses of
the freedom of expression guaranteed by the Constitution. It does not undertake to
dictate what an advertiser shall say, but rather indicates what he may not say.
Jurisdiction is limited to cases which have a public interest as distinguished from a
mere private controversy, and which involve practices held to be unfair to competitors
in interstate commerce.
Effective cooperation has obtained throughout the last year as for many years, with
other departments of the Government. Cases involving what appear to be fraudulent
schemes in violation of the postal laws are referred to the Post Office Department.
Action by the Commission in such cases as are found to be under investigation by that
Department is suspended pending the outcome of such proceedings. Valuable
scientific opinions have been rendered by the Food and Drug Administration, Bureau
of the Public Health Service, and the Bureau of Standards. Also analyses and
comments regarding the therapeutic properties of various preparations have been
furnished by the Food and Drug Administration. In a number of cases, Commission
action against advertisers of medical preparations has been undertaken at the request
of the Department of Agriculture.

PART V. FOREIGN-TRADE WORK
THE EXPORT TRAD E ACT (WEBB-POMERENE LAW)
FUNCTIONS OF A WEBB-POMERENE LAW GROUP
FORTY-THREE ASSOCIATIONS FILE PAPER
EXPORTS BY ASSOCIATIONS DURING 1934
TRUST LAWS AND UNFAIR COMPETITION ABROAD

105

PART V. FOREIGN-TRADE WORK
Foreign-trade work of the Commission includes administration of the Export Trade
Act and inquiries into trade conditions in foreign countries under section 6 (h) of the
Federal Trade Commission Act. This work is done by the Commission’s export trade
section under direction of the chief counsel.
THE EXPORT TRADE ACT (WEBB-POMERENE LAW)

The Export Trade Act, commonly known as the “Webb-Pomerene law”, was passed
by Congress, April 10, 1918, for the promotion of export trade. Exemption from
antitrust laws is granted to a combine or association which, under the terms of the act,
must be entered into for the sole purpose of engaging in export trade, and actually
engaged solely in such export trade.
An export association organized under the act files with the Commission a first
report and copies of its organization papers, including certificate of incorporation, if
it is incorporated, articles of association, bylaws, membership agreement, or other
contracts and regulations under which the group proposes to operate. These papers are
placed on file in the export trade section, together with annual reports and such other
reports or information as the Commission may require as to its organization, business,
conduct, practices, management, and relation to other associations, corporations,
partnerships, and individuals.
If the Commission has reason to believe that a Webb-Pomerene law association or
an agreement or act done by such association is in restraint of trade within the United
States or in restraint of the export trade of any domestic competitor of such
association, or that an association, either in the United States or elsewhere, has entered
into any agreement, understanding, or conspiracy, or done any act which artificially
or intentionally enhances or depresses prices within the United States of commodities
of the class exported by such association, or which substantially lessens competition
within the United States or otherwise restrains trade therein, it may resort to the procedure provided in section 5 of the law, including investigation and recommendations
for readjustment of the business. In case of failure to comply with the Commission’s
recommendations, the findings and recommendations may be referred to the Attorney
General.
20442---35-----8

107

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ANNUAL REPORT OF The FEDERAL TRADE COMMISSION

FUNCTIONS OF A WEBB-POMERENE LAW GROUP
The Commission is frequently asked just what the associations do and how they
operate.
The two general types of organization are the central selling agency corporation,
selling in foreign markets for the member companies, and the more loosely drawn
group that leaves the actual negotiation of sales to the. member companies, but still is
engaged in export trade work for the member companies. The two types may be
combined if the association proposes to negotiate sales in some foreign markets but not
in others, or if diminished business in some parts of the world make it necessary or
desirable to pool orders through all association agent rather than maintain separate
agencies for the individual companies. The more numerous the functions adopted by
a Webb-Pomerene law group, the more economy may be effected in operating cost.
Several years ago the Commission published a list of functions adopted by WebbPomerene law groups. This list is repeated in revised form as follows, although no one
association may adopt all of these functions:
Serving as export sales agent for the member companies in all foreign markets or in certain
markets to be agreed upon.
Maintaining a quota system agreed upon by the members, under which the export business
of the association is divided among them in equal or other determined proportions. (Some
associations do not agree upon quota.)
Recording and allocating export orders and sales of the members; keeping copies of invoices
and other documents.
Agreeing upon price for export, terms of sale, sales policies in foreign markets. and adopting
uniform forms of contracts. In some cases only a minimum price is agreed upon; in others,
members are free to quote price but are required to report to the association any change in price.
Establishing rules and regulations for packing mind ship ping the goods in export.
Standardizing products for export and improving the quality of the goods.
Arranging for freight rates, cargo space, and shipping dates; consolidating the export
shipments of the members, effecting economy in shipping expense. Taking out insurance and
shipping documents.
Providing for storage during transit and warehousing abroad.
Appointing agents in foreign markets, or instructing and advising agents of the members
abroad.
Exploitation of members’ products abroad, especially introducing them in new markets. Joint
advertising and use of joint trade marks in export trade.
Maintaining inspection service in this country under which all the goods exported are
subjected to inspection at seaport before shipment. Employing claims agents and arranging for
settlement of disputes over export sales; arranging for arbitration proceedings.
Collecting and disseminating trade information as to market conditions abroad, foreign
credits, stocks available for export by the members, the exchange situation, tariff requirements,
foreign laws that affect our export trade, etc.

FORTY-THREE ASSOCIATIONS FILE PAPERS

109

FORTY-THREE ASSOCIATIONS FILING PAPERS WITH THE COMMISSION

Forty-three Webb-Pomerene law groups were on file with the Federal Trade
Commission, June 30, 1935. These include three associations organized during the last
fiscal year, as follows: Carbon Black Export, Inc., with offices in New York City;
Pacific Forest Industries, exporting plywood and other forest products, with offices
in Tacoma, Wash. and the Inter-America Exporters, Inc., exporting fruits, with offices
in New York. The list is as follows :
American Hardwood Exporters, Inc.,
Queen & Crescent Building, New
Orleans, La.
American Locomotive Sales Corporati on, 30 Church Street, New York
City.
American Paper Exports, Inc., 75
West Street, New York City.
American Pitch Pine Export Co.,
Pere Marquette Building. New Orleans,
La.
American Provisions Export Co., 80
East Jackson Boulevard, Chicago, Ill.
American Soda Pulp Export Association, 230 Park Avenue, New York City.
American Spring Manufacturers Exeport Association, 30 Church Street,
New York City.
American Tire Manufacturers Ex
port Association, 80 Church Street,
New York City.
California Dried Fruit Export Association, 1 Drumm Street, San Francisco, Calf.
Carbon Black Export, Inc., 500 Fifth
Avenue, New York City.
Cement Export Co., The, 270 Broadway, New York City.
Copper Exporters, Inc., 26 Broadway, New York City.
Douglas Fir Exploitation & Export
Co., Henry Building, Seattle, Wash.
Durex Abrasives Corporation, 82
Beaver Street, New York City.
Electrical Apparatus Export Association, 541 Lexington Avenue, New York
City.
Export Petroleum Association, Inc.,
67 Wall Street, New York City.
Export Screw Association of the
United States, Box 1242, Providence,
R. I.

Florid Hard Rock Phosphate Export Association, Savannah Bank &
Trust Building, Savannah, Ga.
General Milk Co., Inc., 19 Rector
Street, New York City.
Goodyear Tire & Rubber Export Co.,
1144 East Market Street, Akron, Ohio.
Grapefruit Distributors, Inc., Davenport, Fla.
Hawkeye Pearl Button Export Co.,
601 East Second Street, Muscatine,
Iowa.
Inter-America Exporters, Inc., 11
Broadway, New York City.
Metal Lath Export Association, 11
West Forty-second Street, New York
City.
Northwest Dried Fruit Export Association, Title & Trust Building, Portland, Oreg.
Pacific Flour Export Co., care of
Fisher Flouring Mills Co., Seattle,
Wash.
Pacific Forest Industries, Tacoma
Building, Tacoma, Wash.
Phosphate Export Association, 393
Seventh Avenue, New York City.
Pipe Fittings & Valve Export Association, 1421 Chestnut Street, Philadelphia, Pa.
Redwood Export Co., 405 Montgomery Street, San Francisco, Calif.
Rubber Export Association, 19 Goodyear Avenue, Akron, Ohio.
Shook Exporters Association, Stahlman Building, Nashville, Tenn.
Signal Export Association, 74 Trinity
Place, New York City.
Standard Oil Export Corporation 30
Rockefeller Plaza, New York City.
Steel Export Association of America,
75 West Street, New York City.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Sugar Export Corporation, 120 Wall
Street, New York City.
Sulphur Export Corporation, 420
Lexington Avenue, New York City.
Textile Export Association of the
United States, 320 Broadway, New
York City.
United States Alkali Export Association, Inc., 11 Broadway, New York
City.

United States Handle Export Co.,
Piqua, Ohio.
Walnut Export Sales Co., Inc.,
Twelfth Street and Kaw River, Kansas City, Kans.
Walworth International Co., 60 East
Forty-second Street, New York City.
Western Plywood Export Co., Tacoma Building, Tacoma, Wash.

Webb-Pomerene law exports in 1934 are tabulated as follows:
ASSOCIATION EXPORTS DURING 1984 TOTAL $115,800,000
Metal and metal products, copper, iron and steel, metal lath, zinc,
machinery, rail-way equipment, pipes and valves, screws, electrical apparatus, and signal apparatus
Products of mines and wells, crude sulphur, phosphate rock, petroleum products, and carbon black
Lumber and wood products, pine, fir, redwood, walnut, hardwood,
plywood, tool handles, barrel shooks
Foodstuffs such as milk, meat, sugar, flour, fresh fruit, canned
fruit, and dried fruit
Other manufactured goods, rubber, paper, abrasives, cotton goods,
buttons, and chemicals
Total

$27,000,000
53,000,000
8,500,000
21,300,000
36,000,000
145,800,000

The above totals indicate improvement in some lines and decreased business in
others. The value was $2,800,000 more than total exports by Webb-Pomerene law
groups in 1933, but the volume would show a smaller increase because prices were
higher in 1934.
The upward curve of prices in this country, in some cases made necessary by higher
costs, placed American exporters at a disadvantage in markets where costs had not
risen and prices were falling, and made it difficult to meet the competition of foreign
producers who were in agreement or under Government direction to lower their prices.
The general effort among nations to balance exports and imports, through exchange
control boards, quota systems, or increased duties, proved the chief source of difficulty
to Webb-Pomerene law exporters. There was, however, a noticeable renewal of
interest in export organization during the first 6 months of 1935, and when this report
was closed on June 30 a number of new groups were negotiating agreements in
anticipation of export activity.
One group advised the Commission that at such a time “operation as an association
is essential in order to reap the greatest benefits in the export market.”

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TRUST LAWS AND UNFAIR COMPETITION IN FOREIGN COUNTRIES

In accordance with section 6 (h) of the Federal Trade Commission Act, the
Commission notes the following legislative, judicial, and administrative measures in
foreign countries and in international trade, for the regulation of business and the
suppression of unfair competition.
Australia.--The Companies Act, December 6, 1934, included provisions to safe
guard the sale of shares of stock. An ordinance issued by the Federal Government gave
power to investigate the affairs of any companies the operation of which the attorney
general may consider injurious to the interests of the general public. The New South
Wales Royal Commission Act, 1934, extended authority to inspect books and
documents, and similar laws authorizing investigations have been passed in Victoria
and South Australia. The Raw Cotton Bounty Act was passed August 4, 1934, and the
Wheat Bounty Act, December 27, 1934.
Austria.--A law dated October - 26, 1934, supplemented and amended the Austrian
Unfair Competition Act of 1923 by providing for bureaus of arbitration within the
commerce courts to handle cases involving ruinous price cutting.
Belgium.--The unfair competition decree, December 23, 1934, de-finned certain
actions which are contrary to honest commercial or industrial practice, and empowered
the president of then commercial court to order immediate cessation of such actions
as may be found to constitute unfair competition. This was amended and strengthened
by a decree on January 24, 1935. Decrees dated January 13 and February 26 , 1935,
under administration of the Minister of Economic Affairs; forbade the use of gifts or
premiums in the sale of an article or service, and included measures to prevent unfair
com petition in liquidation sales.
Bolivia.--A decree published January 20, 1935, provided for a general board of
national consumption, under direction of the Ministry of Defense, for the purpose of
controlling imports and exports, regulating the profits of merchants and industrialists,
establishing a rationing system, improving standards of living by lowering prices of
foodstuffs and articles of first necessity, fostering national production of essential
articles, and restricting or prohibiting the production, sale, or consumption of articles
considered unessential in the of war.
Brazil.--Under the newly adopted constitution published July 16, 1934, the Union
shall be empowered to monopolize an industry if by reason of public interest this shall
be authorized by law; measures shall be taken toward nationalization of banks of
deposit and enter-

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

prises of insurance; mines or other riches of the subsoil shall be subject to federal
authorization or concession; and the government shall encourage assistance to
production, and shall establish conditions of labor.
A federal foreign-trade council to promote exports was created by a decree of June
20, 1934. A new mining code was established under a decree, July 10, 1934. A decree
dated June 29, 1934, regulating industrial designs and models, commercial names and
titles of establishments, provided for criminal or civil action in repression of unfair
competition and lists certain practices that shall be considered unfair.
Canada.--The Companies Act effective on October 1, 1934, repealed the Companies
Act of 1927 and substituted new rules to safeguard investors, shareholders, and
creditors. The Canadian antidumping law is amended by an act to amend the Customs
Tariff, July 3, 1934 The Economic Council Act, April 17, 1935, provided for an
advisory council on social and economic matters, with power to investigate, report,
and advise upon questions relating to the general trend of social or economic
conditions, or to any special problem relating thereto.
Trade and Industry Commission Act, July 5, 1935, provided for establishment of a
commission which shall administer all Dominion laws for the regulation of business
and prohibition of unfair trade practices including the Combines Investigation Act, the
Unfair Com-petition Act, the Natural Products Marketing Act the various inspection
acts, certain laws regulating specific industries such as the certain Grain Act, the Dairy
Industry Act, etc., and sections of the criminal code. The Commission may conduct
“fair-trade conferences” and may approve agreements for control of production and
regulation of prices. A director of public prosecutions will be appointed to assist the
commission in its investigations and to institutes criminal proceedings for violations
of the laws under administration.
The wheat law, July 5, 1935, provided for a board with authority to fix a minimum
price to be paid to wheat growers, to take over existing wheat stocks, purchase wheat’
whenever the growers cannot sell in the open market at or above the fixed price, store,
transport, and sell or dispose of wheat, and, to investigate the operations of grain
exchanges.
Under the Combines Investigation Act and section 498 of the criminal code,
importers of British anthracite coal , were convicted of a conspiracy in restraint of
trade, and fines imposed, under judgments rendered by the court of Kings Bench at
Quebec in October 1934 and January 1935. Under the Natural Products Marketing Act
of 1934, 14 marketing schemes are in operation.
New laws in the Provinces, for regulations of intraprovincial trade, include the
Natural Products Marketing Act of British Columbia; the Saskatchewan Coal Mining
Industry Act, Milk Control

TRUST LAWS AND UNFAIR COMPETITION ABROAD

113

Act, and Labor and Public Welfare Act; the Alberta Trade and Industry Act; the
Manitoba Unfair Trade Practices Act; the Ontario Milk Control Act; the Public
Enquiries Act in Nova Scotia; and laws in Nova Scotia and New Brunswick to limit
competitive practices in the oil industry.
Chile.--Law No. 5454, July 31, 1934, authorized an emergency plan for the
economic reconstruction of the country, and organization of an industrial company of
the State, and a Mineral company of the State.
Cuba.--Law No.14, March 16, 1935, established control of imports; raw materials
and other articles of prime necessity are exempt. A special antidumping committee
may recommend increases in tariff duties to offset bounty or exchange dumping. Law
No. 148 published on April 18, 1934, prohibited the exchange of trade coupons in sale
of cigarettes. Decree Law No.486, published September 15, 1934, established the
Cuban Coffee Stabilization Institute to study all matters relating to the production and
sale of coffee.
Czechoslovakia.--A law passed on June 21, 1934, effective until June 30, 1935,
extended the enabling act of 1933, giving to the Government absolute power during
the economic crisis to pass economic legislation by decrees, including authority to
change duties, and control prices. Under the Cartel Act of 1933, 712 agreements were
in force on May 1, 1935. A compulsory cartel act was under consideration.
France.--An interministerial economic committee was deliberating a plan for the
organization and regulation of French industry, through trade agreements for the
control of production, working hours, and disposition of stocks. The existing
syndicates of producers would be maintained and encouraged and their resolutions
made binding by law. A law to regulate joint stock companies, in order to protect
investors, was also under consideration in France.
Germany.--The law of February 27, 1934, for the reconstruction of industry and
commerce, led to formation of a Federal Chamber of Economy; and further legislation
on November 27, 1934, included an elaborate plan for coordination of the various
branches of industry into organized groups, each under direction of a leader.
In the summer of 1934, measures were taken for the purpose of encouraging the
voluntary transformation of so-called “capital enterprises “ into enterprises with higher
personal responsibility, or those in which there exists the individual responsibility of
the entrepreneur. Two laws were passed on July 5, 1934; the second, later
supplemented by executive decrees, provided lighter taxes for those concerns that
availed themselves of the reorganization plans set out in the first law.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Under the Compulsory Cartel Act of 1933, official action was taken in a number of
industries during 1934. But in November 1934 a new cartel regime was made effective
by creation of the office of Federal Price Commissioner under direct control of the
Chancellor. A series of decrees grouped together in a law dated December 11, 1934,
authorized the Commissioner to protect the public from undue price increases by
fixing prices and price margins on all goods and serv ices except wages and salaries.
The formation of compulsory cartels was abandoned, price-fixing activities of some
cartels changed, and some were dissolved. The maximum and minimum prices formerly in effect were replaced by a “guiding price” arrived at by the Price
Commissioner, with the intention of permitting fluctuations to meet competitive
conditions.
Government control of stock exchanges was increased by a law of March 5, 1934.
A series of economic measures adopted in February 1935 included a decree
authorizing the Labor Minister to issue obligatory labor passports for all workers, and
a law transferring the administration of mines from the states to the central government.
Agricultural groups were under control of the Minister of Agriculture, by a law
passed in September 1933 authorizing formation of an organization to regulate
production, marketing and prices of agricultural products. The Price Commissioner has
also issued orders affecting agricultural prices.
Foreign trade was under control of the Reich Minister of Economics. An ordinance
for trade in commodities, based on the law for trade in industrial raw and half-finished
materials of March 22, 1934, gave to the Minister authority to supervise and regulate
trade in commodities and to issue regulations concerning their provision, distribution,
storage, sale and consumption. Import control boards have been established to take the
place of the former exchange boards. Export cartels were encouraged, and a plan
proposed whereby a common fund may be created by contributions from various
industries, for the granting of subsidies to exporters.
Great Britain.--A board of trade committee was appointed to consider and report
measures necessary at the expiration in 1936 of the duties imposed in protection of key
industries, under part I of the Safeguarding of Industries Act, 1921, as amended by the
Finance Acts. The Petroleum (Production) Act of 1934 vested in the Crown the
property rights in petroleum and natural gas within Great Britain; and provided for
searching, boring and producing petroleum and natural gas.
Greece.--Law No.6099, 1934, created a national organization of export trade for the
purpose of developing exports, regulating imports, and improving the balance of
accounts with foreign countries.

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115

Guatemala.--Decree No. 1580, September 18, 1934, amended the mining law and
declared the mining industry to be a public utility, providing for government
concessions to individuals.
International.--Ratifications of the treaty for elimination of double taxation, between
the United States and France, Signed in April 1932, were exchanged at Paris, April 9,
1935.
A little entente 4-year plan has been concluded which provides for an exchange of
goods between Czechoslovakia, Rumania, and Yugoslavia, to open the way to an
eventual customs union between those countries.
An agreement on industrial property, between Czechoslovakia and Russia, effective
April 15, 1935, provided for reciprocity in cases of unfair competition and in the
protection of patents and trade marks.
Swedish adherence to the International Convention for the Protection of Industrial
Property became effective July 1, 1934, and Japanese adherence on January 1, 1935.
Trade agreements under the United States Trade Reciprocity Act of 1934, were
concluded by the United States with Cuba on August 24, 1934, effective on September
3, 1934; with Brazil on February 2, 1935; with Belgium on February 27, 1935,
effective on May 1, 1935; with Haiti on March 28, 1935, effective on June 3, 1935;
and with Sweden on May 25, 1935, effective on August 5, 1935.
Among international industrial and trade agreements signed in 1934, are the
German-Chilean nitrate compensation agreement effective from July 1, 1934, joined
by the Japanese producers in 1935; the: German chemicals and Rumanian grain barter
agreement; the Russian trade agreements; and the naval stores compacts entered into
by Greece, Japan, Rumania, and Yugoslavia.
Japan.--A trade-control law, effective April 28, 1934, included provisions for
investigations by a dumping committee and the imposition of duties: (1) In case of
bounty dumping, or (2) in case an important industry in Japan were threatened with
injury by the importation of unreasonably cheap articles or the sale of imported,
articles at unreasonably low prices.
Lithuania.--A price-regulation law; published March 5, 1935, directed appointment
of a price commissar with authority to protect the public welfare by determining (1)
prices of merchandise and compensation for services, (2) distribution of merchandise,
prices of individual grades, covers, weights, measures, and markings on goods and
their containers, and (3) other conditions of production, trade, service, and
compensation insofar as they may affect prices of goods and salaries paid.
Mexico.--A law dated July 17, 1934, modifying the Monopolies Act of 1931, placed
petroleum and its derivatives in the classifica-

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

tion of “articles of prime necessity”, the prices of which may’ be fixed by the Ministry
of National Economy. The mining law of 1930 was amended by a decree Dated August
28, 1934. The law of business organizations, August 28, 1934, and regulations
thereunder, provided for a new type of “public interest “ business organization to
operate under supervision of the Minister of National Economy. A decree published
January 23, 1935, provided fines and prison penalties for infringement of the law of
trade marks, advertisements, and commercial names of June 26, 1928.
Netherlands.--Recent legislation in Netherlands provided for industrial codes for
regulation of wages and industries, under administration of the Minister of Economic
Affairs. The Import Restrictions Act was supplemented by the Currency Clearance
Act, 1934. A law effective from May 20, 1934, to January 1, 1937, authorizes special
tariff orders to make effective agreements with foreign powers, or to prevent the ruin
of Dutch industries by foreign measures which threaten their existence.
Newfoundland.--An Act Concerning Public Inquiries, No.10, of 1934, empowered
the governor in commission to make inquiry into and concerning any matter connected
with the peace, order, and good government of the colony, or the conduct of any part
of the public business thereof, or the administration of justice therein, or into any of
the industries of the colony, or into any other matter as to which he deems it to be for
the public good.
New Zealand--The Agricultural (Emergency Powers) Act, November 1934, set up
an executive commission of agriculture with drastic powers of control over production
and trade in primary products, inducing the licensing of dairy factories and imposition
of levies on milk products.
Rhodesia.-- The Customs and Excise Amendment Act, 1935, included provisions for
duties to be imposed on imports in case of ordinary, freight, bounty, or exchange
dumping.
Rumania.--A commission for the direction and supervision of foreign trade was
created under a decree of October 25, 1934, revising the regulations for control of
exports, imports, and foreign exchange, and limiting total imports from all countries
to 60 per cent of actual previous exports of Rumanian goods.
Spain.--The wheat law published on March 3, 1935, conferred wide powers upon the
Minister of Agriculture to regulate the production and marketing of wheat, prevent the
planting of new areas to cereals, control the opening of mills, and to provide for the
storing of wheat.
Union of South Africa.--The Trade Coupons Act, 1935, effective July 1, prohibited
the offering or giving, selling, or publication of trade coupons or benefits. The
Tobacco Control Amendment Act,

TRUST LAWS AND UNFAIR COMPETITION ABROAD

117

1935, supplementary to the act of 1932, provided for a control board to administer
regulations issued by the Minister of Agriculture and Forestry, and to distribute
bounties to exporters.
Uruguay.--The mining law was modified by a decree dated January 12, 1935,
declaring that all mineral deposits belong to the nation in imprescriptible and
inalienable ownership.
Yugoslavia.--Under an antitrust law and regulations issued there under on August
18, 1934, cartels were forbidden in Yugoslavia unless the Minister of Commerce and
Industry, in agreement with the Council of Ministers, might find such a cartel
warranted by economic reasons or the public interest, in which case the Minister might
authorize the cartel for the regulation of the production and sale of goods, or for the
definition of business conditions and the fixing of prices or tariffs. Approved
agreements were to be subject to inquiry by the Minister who might order them
modified or canceled if they were found to be detrimental to public or economic
interests or a menace to national industry or the general welfare.

FISCAL AFFAIRS
APPROPRIATIONS, ALLOTMENTS, AND EXPENDITURES

119

FISCAL AFFAIRS
APPROPRIATIONS, ALLOTMENTS, AND EXPENDITURES

Appropriations available to the Commission for the fiscal year ended June 30, 1935,
under the Independent Offices- Act approved March 28, 1934, $672,163.24; under the
Deficiency Act approved June 19, 1934, $30,000; -under the Deficiency Act approved
March 21, 1935 $110,000; under the act of February 13, 1935, $81,040.01; in all,
$1,893,203.25. This sum was made up of three separate items: (1)$50,000 for salaries
of the Commissioners, (2) $1,809,203.25 for the general work of the Commission, and
(3) $34,000 for the printing and binding.
In addition there was allotted funds from the National Recovery Administration the
sum of $139,194.76; from the Agricultural Adjustment Administration the sum of
$5,000; by the President from Emergency Relief and Public Works Fund, $60,000; a
total of $204,194.76 in allotted funds.
Appropriations, allotments, expenditures, liabilities, and balances
Amount
available

Amount
expended

Liabilities

Expenditures and
liabilities

Balance

Federal Trade Commission, 1935:
Salaries, Commissioners,
and all other authorized
expenses
$1,859,203.25 l $1,681,925.83 $58,280.50 $1,740,206.33 2 $118,996.92
Printing and binding
34,000.00
22,222.20 11,777.80
34,000.00
Allotments from National Recovery Administration
139,104.76
121,069.36 8,055.47
129,124.83 10,069.93
Allotments from Agricultural
Adjustment Administration
5,000.00
747.11
747.11
4,252.89
Allotments from Emergency
Relief and Public Works
Fund
80,000.00
52,235.07
52,235.07
7,76493
Total fiscal year 1935
2,097,397.01 1,878,199.57 78,113.77 1,956,313.34 141,083.67
Unexpended balance:
1934
38,772.76
38,510.08
82.83
38,632.91
139.85
1933-34
809.46
550.15
560.15
259.31
1933
4,526.61
8.80
58.12
66.92 4,459.69
1932-33
334.46
1.75
12.15
13.90
320.58
Total
2,141,840.30 1,917,310.35 78,266.87 1,995,577.22 146,263.08
1 Includes the following transfers:
To Securities and Exchange Commission
$264,337.80
To chief disbursing officer, Treasury Department
4,000.00
Total
268,337.80
2 $110,000 was made available during the fiscal years 1935 and 1936; since none was expended during
the fiscal year 1035. the total amount will be used during the fiscal year 1936

121

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
Detailed statement of costs for the fiscal year ending June 30, 1935
Travel
expense

Salary
Commissioners
Clerks to Commissioners
Messengers to Commissioners
Total
Administration:
Office of secretary
Accounts and personnel section
Docket section
Hospital
Labor
Library section
Mail and files section
Messenger service
Public relations.
Publications section
Purchases and supplies section
Stenographic sect ion
Communications
Court charge
.Equipment
Miscellaneous
Rents
Repairs
Reporting service
Supplies
Transportation of things
Witness fees
Total
Legal:
Application for complaints
Complaints
Export trade
National Recovery Administration
Preliminary inquiries
Trade practice conferences
Total

$37,232 95
10,346.69
5,127.34
52,706.98

Transferred to chief disbursing officer,
Treasury Department

$65.68

Total

$37,298.63
10,346.69
5,127.34
52,772.66

65.68

38,138.43
21,987.12
27,708.16
1,555.27
2,886.75
11,808.50
13,709.89
10,161.73
13,217.29
23,191.83
8,801.63
51,567.67

38,138.43
21,987.12
27,708.16
1,555.27
2,886.75
11,808.50
13,709.89
10,161.73
13,217.29
23,191.83
8,801.63
51,567.67
$8,525.83
8,525.83
l 90.00 l 90.09
39,268.09 39,268.09
617.21
617.21
5,751.13
5,751.13
1,187.28
1,187.28
9,851.92
9,851.92
29,289.95 29,289.95
751.28
751.28
1,335.00
1,335.00
96,487.69 321,221.96

224,734.27

86,984.80
12,323.13
539.12 99,847.05
184,025.50
24,939.08
356.34 209,314.92
6,410.77
6,410.77
124,081.72
20,251.19
731.80 145,064.71
176,511.16
12,352.82
491.59 189,355.57
13,446.51
385.25
13,831.76
591,460.46
70,251.47
2,112.85 663,824.78

General investigations:
Agricultural Adjustment Administration.
2,593.49
Amended steel code
9,074.21
Building materials
2,038.61
Cement industry
821.85
Cement
1,010.10
Chain stores
1,936.49
Milk investigation
97,335.85
Power and gas
278,557.55
Price bases
5,884.63
Resale price maintenance
235.05
Salaries for executives
823.90
Securities
48,605.32
Senate bread Inquiry
684.14
Steel industry codes
2,172.57
Tennessee Valley Authority
219.14
Textile
48,983.50
Total
500,976.46
Printing and binding
Transferred to chief disbursing officer, Treasury
Department
Securities and Exchange Commission
Summary:
Commissioners
Administration
Legal
General investigations
Printing and binding

Other

52,708.98
224,734.27
591,460.46
500,976.46

339.60
604.78
271.53

21,502.64
39,763.33

1,078.68
19.50

63,580.06

33.85
31.60

2,933.09
9,712.84
2,341.74

821.85
1,010.10
1,936.49
.56 118,139.05
1,575.32 319,896.20
5,884.63
235.05
823.90
185.92 49,869.92
684.14
2,192.07
219.14
1,224.64 50,208.20
3,051.89 567,608.41
43,544.74 43,544.74
4,000.00
4,000.00
264,537.80 264,337.80

65.68
70,251.47
63,580.96

52,772.66
96,487.69 321,221.96
2,112.85 663,824.78
3,051.89 567,608.41
43,544.74 43,544.74

4,000.00

4,000.00

Securities and Exchange Commission
Total
l

Credit.

1,369,878.17

133,897.21

264,337.80 264,337.80
413,534.97 1,917,310.35

APPROPRIATIONS, ALLOTMENTS, AND EXPENDITURES

123

Recapitulation of costs by divisions
Travel
Other
Total
expense
$95.67 $128.935.51 $415,732.99
52,460.09
2,796.86 425,700.26
17,014.88 11,334.53 197,720.59
55,981.97
1,874.24 439,817.00
30,066.00
6,929.24
69,326.59
385.25
24.71
22,403.51
1,030.11
231.32
48,205.61

Salary
$286,701.81
370,443.31
169,371.18
381,960.79
30,066.00
62,397.35
21,993.55
46,944.18

Administrative
Economic
Chief counsel
Chief examiner
special board of investigation
Trial examiner
Trade practice conferences
Securities
Transferred to chief disbursing officers,
Treasury Department
Securities and Exchange Commission
Total
1,369,878.17

4,000.00
4,000.00
264,337.80 264,337.80
133,897.21 413,534.97 1,917,310.35

Appropriations available to the Commission since its organization, and expenditures
for the same period, together with the unexpended balances, are shown by the
following table:
Year

1915
1916
1917
1918
1919
1920
1921
1922
1923
1924
1925

Appropriations
$184,016.23
430,964.08
567,025.92
1,608,865.92
1,753, 530.75
1,305,708.82
1,032,005.67
1,026,150.54
974,480.32
1,010,000.00
1,010,000.00

Expendi
tures

$90,442.05
379,927.41
472,501.20
1,462,187.32
1,522,331.95
1,120,301.32
938,659.69
956,116.50
970, 119.66
977,018.28
1,008,998.80

Balance

$93,574.18
51,036.67
94,524.72
156,678.60
231,198.50
186,407.80
93,345.98
70,034.04
4,360.66
32,981.72
1,001.20

Year

1926
1927
1928
1929
1930
1931
1932
1933
1934
1935

Appropriations
1,008,000.00
$997,000.00
984,350.00
1,163,192.62
1,495,821.69
1,863,348.42
1,817.382.49
1,426,714.70
1,314,013.49
2,097,397.01

Expenditures

Balance

996,745.58 11,254.42
$960,654.71 $36,345.29
972,966.64 11,383.96
1,169,459.76
3,732.77
1,494,619.69
1,202.00
1,861,971.72
1,376.70
1,778,427.88 38,954.61
1,393,427.90 33,286.80
1,313,614.33
399.16
1,956,313.34 141,083.67

EXHIBITS
FEDERAL TRADE COMMISSION ACT
SHERMAN ACT
CLAYTON ACT
EXPORT TRADE ACT
RULES OF PRACTICE
INVESTIGATIONS, 1913-1935
125

FEDERAL TRADE COMMISSION ACT
AN ACT To create a Federal Trade Commission, to define its powers and duties, and for
other purposes
Be it enacted by the Senate and House of Representatives of the United States of America in Congress
assembled, That a commission is hereby created and established, to be known as the Federal Trade
Commission (hereinafter referred to as the Commission) , which shall be composed of five commissioners,
who shall be appointed by the President, by and with the advice and consent of the Senate. Not more than
three of the commissioners shall be members of the same political party. The first commissioners
appointed shall continue in office for terms of three, four, five, six, and seven years, respectively, from the
date of the taking effect of this Act, the term of each to be designated by the President, but their successors
shall be appointed for terms of seven years, except that any person chosen to fill a vacancy shall be
appointed only for the unexpired term of the commissioner whom he shall succeed : Provided, however,
That upon the expiration of his term of office a commissioner shall continue to serve until his successor
shall have been appointed and shall have qualified. The Commission shall choose a chairman from its own
membership. No commissioner shall engage in any other business, vocation, or employment. Any
commissioner may be removed by the President for inefficiency, neglect of duty, or malfeasance in office.
A vacancy in the Commission shall not impair the right of the remaining commissioners to exercise all the
powers of the Commission.
The Commission shall have an official seal, which shall be judicially noticed.
SEC. 2. That each commissioner shall receive a salary of $10,000 a year, payable in the same manner
as the salaries of the judges of the courts of the United States. The commission shall appoint secretary who
shall receive a salary of $5,000 a year, payable in like manner, and it shall have authority to employ and
fix the compensation of such attorneys, special experts, examiners, clerks, and other employees as it may
from time to time find necessary for the proper performance of its duties and as may be from time to time
appropriated for by Congress.
With the exception of the secretary, a clerk to each commissioner, the attorneys, and such special
experts and examiners as the Commission may from time to time find necessary for the conduct of its
work, all employees of the commission shall be a part of the classified civil service, and shall enter the
service under such rules and regulations as may be prescribed by the Commission and by the Civil Service
Commission.
All of the expenses of the Commission, including all necessary expenses for transportation incurred by
the commissioners or by their employees under their orders, in making any investigation, or upon official
business in any other places than in the city of Washington, shall be allowed and paid on the presentation
of itemized vouchers therefor approved by the Commission.
Until otherwise provided by law, the commission may rent suitable offices for its use.
The Auditor for the State and Other Departments shall receive and examine all accounts of expenditures
of the Commission. 2
SEC. 3. That upon the organization of the Commission and election of its chairman, the Bureau of
Corporations and the offices of Commissioner and Deputy Commissioner of Corporations shall cease to
exist; and all pending investigations and proceedings of the Bureau of Corporations shall be continued
by the Commission.
All clerks and employees of the said bureau shall be transferred to and become clerks and employees
of the Commission at their present grades and salaries. All records, papers, and property of the said bureau
shall become records, papers, and property of the Commission, and all unexpended funds and
appropriations for the use and maintenance of the said bureau, including any allotment already made to
it by the Secretary of Commerce from the contingent appropriation for the Department of Commerce for
the fiscal year nineteen hun-

127

128

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

dred and fifteen, or from the departmental printing fund for the fiscal year nineteen hundred and fifteen,
shall become funds and appropriations available to be expended by the Commission in the exercise of the
powers, authority, and duties conferred on it by this Act.
The principal office of the Commission shall be in the city of Washington, but it may meet and exercise
all its powers at any other place. The Commission may, by one or more of its members, or by such
examiners as it may designate, prose-cute any inquiry necessary to its duties in any part of the United
States.
SEC. 4. That the words defined in this section shall have the following meaning when found in this
Act, to wit :
“Commerce” means commerce among the several States or with foreign nations, or in any Territory of
the United States or in the District of Columbia, or between any such Territory and another, or between
any such Territory and any State or foreign nation, or between the District of Columbia and any State or
Territory or foreign nation.
“Corporation” means any company, or association incorporated or unincorporated, which is organized
to carry on business for its own profit and has shares of capital or capital stock, and any company, or
association, incorporated or unincorporated, without shares of capital or capital stock or certificates of
interest, except partnerships, which is organized to carry on business for its own profit or that of its
members.
“Documentary evidence” means all documents, papers, and correspondence, in existence at and after
the passage of this act.
“Acts to regulate commerce” means the Act entitled “An Act to regulate commerce,” approved February
fourteenth, eighteen hundred and eighty-seven, and all Acts amendatory thereof and supplementary
thereto and the Communications Act of 1934 and all Acts amendatory thereof and supplementary thereto.
“Antitrust Acts” means the Act entitled “An Act to protect trade and commerce against unlawful
restraints and monopolies,” approved July second, eighteen hundred and ninety; also sections 73 to 77,
inclusive, of an Act entitled “An Act to reduce taxation, to provide revenue for the Government, and for
other purposes,” approved August twenty-seven, eighteen hundred and nintey-four; also the Act entitled
“An Act to amend sections 73 and 76 of the Act of August twenty-seven, eighteen hundred and ninteyfour, entitled ‘An Act to reduce taxation, to provide revenue for the Government, and for other purposes,’”
approved February twelveth, nineteen hundred and thirteen; and also the Act entitled “An Act to
supplement existing laws against unlawful restraints and monopolies, and for other purposes,” approved
October fifteenth, nineteen hundred and fourteen.
Sec. 5. That unfair methods of competition in commerce are hereby declared unlawful.
The Commission is hereby empowered and directed to prevent persons, partnerships, or corporations,
except banks, common carriers, subject to the acts to regulate commerce, from using unfair methods of
competition in commerce and unfair or deceptive acts or practices in commerce.
Whenever the commission shall have reason to believe that any such person, partnership, or corporation
has been or is using any unfair method of competition in commerce, and if it shall appear to the
commission that a proceeding by it in respect thereof would be to the interest of the public, it shall issue
and serve upon such person, partnership, or corporation a complaint stating its charges in that respect, and
containing a notice of a hearing upon a day and at a place therein fixed at least thirty days after the service
of said complaint. The person, partnership, or corporation so complained of shall have the right to appear
at the place and time so fixed and show cause why an order should not be entered by the commission
requiring such person, partnership, or corporation to cease and desist from the violation of the law so
charged in said complaint. Any person, partnership, or corporation may make application, and upon good
cause shown may be allowed by the commission to intervene and appear in said proceeding by counsel
or in person. The testimony in any such proceeding shall be reduced to writing and filed in the office of
the commission. upon such hearing the commission shall be of the opinion that the method of competition
in question is prohibited by this Act, it shall make a report in writing in which it shall state its findings as
to the facts, and shall issue and cause to be served on such person, partnership, or corporation an order
requiring such person, partnership, or corporation to cease and desist from using such method of
competition. Until a transcript of the record in such hearing shall have been filed in a circuit court of
appeals of the United States, as hereinafter provided, the commission may at any time, upon such notice
and in such manner as it shall deem proper, modify or set aside, in whole or in part, any report or any order
made or issued by it under this section.

FEDERAL TRADE COMMISSION ACT

129

If such person, partnership, or corporation fails or neglects to obey such order of the commission while
the same is in effect, the commission may apply to the circuit court of appeals of the United States, within
any circuit where the method of competition in question was used or where such person, partnership, or
corporation resides or carries on business, for the enforcement of its order, and shall certify and file with
its application a transcript of the entire record in the proceeding, including all the testimony taken and the
report and order of the commission. Upon such filing of the application and transcript the court shall
cause notice thereof to be served upon such person, partnership, or corporation and thereupon shall have
jurisdiction of the proceeding and of the question determined therein, and shall have power to make and
enter upon the pleadings, testimony, and proceedings set forth in such transcript a decree affirming,
modifying, or setting aside the order of the commission. The findings of the commission as to the facts,
if supported by testimony, shall be conclusive. If either party shall apply to the court for leave to adduce
additional evidence, and shall show to the satisfaction of the court that such additional evidence is material
and that there were reasonable grounds for the failure to adduce such evidence in the proceeding before
the commission, the court may order such additional evidence to be taken before the commission and to
be adduced upon the hearing in such manner and upon such terms and conditions as to the court may seem
proper. The commission may modify its findings as to the facts, or make new findings, by reason of the
additional evidence so taken, and it shall file such modified or new findings, which if supported by
testimony, shall be conclusive, and its recommendation, if any, for the modification or setting aside of its
original order, with the return of such additional evidence. The judgment and decree of the court shall be
final, except that the same shall be subject to review by the Supreme Court upon certiorari, as provided
in section two hundred and forty of the Judicial Code.
Any party required by such order of the commission to cease and desist from using such method of
competition may obtain a review of such order in said circuit court of appeals by filing in the court a
written petition praying that the order of the commission be set aside. A copy of such petition shall be
forth-with served upon the commission, and thereupon the commission forthwith shall certify and file in
the court a transcript of the record as hereinbefore provided. Upon the filing of the transcript the court
shall have the same jurisdiction to affirm, set aside, or modify the order of the commission as in the case
of an application by the commission for the enforcement of its order, and the findings of the commission
as to the facts, if supported by testimony, shall in like manner be conclusive.
The jurisdiction of the circuit court of appeals of the United States to enforce, set aside, or modify
orders of the commission shall be exclusive.
Such proceedings in the circuit court of appeals shall be given precedence over other cases pending
therein, end shall be in every way expedited. No order of the commission or judgment of the court to
enforce the same shall in any wise relieve or absolve any person, partnership, or corporation from any
liability under the antitrust acts.
Complaints, orders, and other processes of the commission under this section may be served by anyone
duly authorized by the commission, either (a) by delivering a copy thereof to the person to be served, or
to a member of the partnership to be served, or to the president, secretary, or other executive officer or a
director of the corporation to be served; or (b) by leaving a copy thereof at the principal office of place
of business of such person, partnership, or corporation; or (c) by registering and mailing a copy thereof
addressed to such person, partner-ship, or corporation at his or its principal office or place of business.
The verified return by the person so serving said complaint, order, or other process setting forth the
manner of said service shall be proof of the same, and the return post-office receipt for said complaint,
order, or other process registered and mailed as aforesaid shall be proof of the service of the same.
SEC. 6. That the commission shall also have power-(a) To gather and compile information concerning, and to investigate from time to time the organization,
business, conduct, practices, and management of any corporation engaged in commerce, excepting banks,
and common carriers subject to the act to regulate commerce, and its relation to other corporations and
to individuals, associations, and partnerships.
(b) To require, by general or special orders, corporations engaged in commerce, excepting banks and
common carriers subject to the act to regulate

130

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

commerce, or any class of them, or any of them, respectively, to file with the commission in such form as
the commission may prescribe annual or special, or both annual and special, reports or answers in writing
to specific questions, furnishing to the commission such information as it may require as to the organization, business, conduct, practices, management, and relation to other corporations, partnerships, and
individuals of the respective corporations filing such reports or answers in writing. Such reports and
answers shall be made under oath, or otherwise, as the commission may prescribe, and shall be filed with
the commission within such reasonable period as the commission may prescribe, unless additional time
be granted in any case by the commission.
(c) Whenever a final decree has been entered against any defendant corporation in any suit brought by
the United States to prevent and restrain any violation of the antitrust acts, to make investigation, upon
its own initiative, of the manner in which the decree has been or is being carried out, and upon the
application of the Attorney General, it shall be its duty to make such investigation. It shall transmit to the
Attorney General a, report embodying its findings and recommendations as a result of any such
investigation, and the report shall be made public in the discretion of the commission.
(d) Upon the direction of the President or either House of Congress to investigate and report the facts
relating to any alleged violations of the antitrust acts y any corporation.
(e) Upon the application of the Attorney General to investigate and make recommendations for the
readjustment of the business of any corporation alleged to be violating the antitrust acts in order that the
corporation may thereafter maintain its organization, management, and conduct of business in accordance
with law.
(f) To make pulic from time to time such portions of the information obtained publicly it hereunder,
except trade secrets and names of customers, as it shall deem expedient in the public interest; and to make
annual and special reports to the Congress and to submit therewith recommendations for additional
legislation and to provide for the publication of its reports and decisions in such form and manner as may
be best adapted for public information and use.
(g) From time to time to classify corporations and to make rules and regulations for the purpose of
carrying out the provisions of this act.
(h) To investigate, from time to time, trade conditions in and with foreign countries. where associations,
combinations, or practices of manufacturers, merchants, or traders, or other conditions, may affect the
foreign trade of the United States, and to report to Congress thereon, with such recommendations as it
deems advisable.
SEC. 7. That in any suit in equity brought by or under the direction of the Attorney General as provided
in the antitrust acts, the court may, upon the conclusion of the testimony therein, if it shall be then of
opinion that the complainant is entitled to relief, refer said suit to the commission, as a master in chancery,
to ascertain and report an appropriate form of decree therein. The commission shall proceed upon such
notice to the parties and under such rules of procedure as the court may prescribe, and upon the. coming
in of such report such exceptions may. be filed and such proceedings had in relation thereto as upon the
report of a matter in other equity causes, but the court may adopt or reject such report, in whole or in part,
and enter such decree as the nature of the ca se may in its judgment require.
SEC. 8. That the several departments and bureaus of the Government when directed by the President
shall furnish the commission, upon its request, all records, papers, and information' in their possession
relating to any corporation subject to any of. the provisions of this act, and shall detail from time to time
such officials and employees to the commission as he may direct.
SEC. 9. That for the purposes of this act the commission, or its duly authorized agent or agents, shall
at all reasonable times have access to, for the purpose of examination, and the right to copy any
documentary evidence of any corporation being investigated or proceeded against; and the commission
shall have power to require by subpoena the attendance and testimony of witnesses and the production of
all such documentary evidence relating to any matter under investigation. Any member of the commission
may sign subpoenas, and members and examiners of the commission may administer oaths and
affirmations, examine witnesses, and receive evidence.
Such attendance of witnesses, and the production of such documentary evidence, may be required from
any place in the United States, at any designated place of hearing. And in case of disobedience to a
subpoena the commission

FEDERAL TRADE COMMISSION ACT

131

may invoke the aid of any court of the United States in requiring the attendance and testimony of witnesses
and the production of documentary evidence.
Any of the district courts of the United States within the jurisdiction of which such inquiry is carried
on may, in case of contumacy or refusal to obey a subpoena issued to any corporation or other person,
issue an order requiring such corporation or other person to appear before the commission, or to produce
documentary evidence if so ordered, or to give evidence touching the matter in question; and any failure
to obey such order of the court may be punished by such court as a contempt thereof.
Upon the application of the Attorney General of the United States, at the request of the commission,
the district courts of the United States shall have jurisdiction to issue writs of mandamus commanding any
person or corporation to comply with the provisions of this Act or any order of the commission made in
pursuance thereof.
The commission may order testimony to be taken by deposition in any proceeding or investigation
pending under this Act at any stage of such proceeding or investigation. Such deposition may be taken
before an y person designated by the commission and having power to administer oaths. Such testimony
shall be reduced to writing by the person taking the deposition, or under his direction, and shall then be
subscribed by the deponent. Any person may be compelled to appear and depose and to produce
documentary evidence in the same manner as witnesses may be compelled to appear and testify and
produce documentary evidence before the commission as hereinbefore provided.
Witnesses summoned before the commission shall be paid the same fees and mileage that are paid
witnesses in the courts of the United States, and witnesses whose depositions are taken and the persons
taking the same shall severally be entitled to the same fees as are paid for like services in the courts of the
United States.
No person shall be excused from attending and testifying or from producing documentary evidence
before the commission or in obedience to the subpoena of the commission on the ground or for the reason
that the testimony or evidence, documentary or otherwise, required of him may tend to criminate him or
subject him to a penalty or forfeiture. But no natural person shall be prosecuted or subjected to any penalty
or forfeiture 'for or on account of any transaction, matter, or thing concerning which he may testify, or
produce evidence, documentary or otherwise, before the commission in obedience to a subpoena issued
by it: Provided, That no natural person so testifying shall be exempt from prosecution and punishment for
perjury committed in so testifying.
SEC. 10. That any person who shall neglect or refuse to attend and testify, or to answer any lawful
inquiry, or to produce documentary evidence, if in his power to do so, in obedience to the subpoena or
lawful requirement of the commission, shall be guilty of an offense and upon conviction thereof by a court
of competent jurisdiction shall be punished by a fine of not less than $1,000 nor more than $5,000, or by
imprisonment for not more than one year, or by both such fine and imprisonment.
Any person who shall willfully make, or cause to be made, any false entry or statement of fact in any
report required to be made under this Act, or who shall willfully make, or cause to be made, any false entry
in any account, record, or memorandum kept by any corporation subject to this Act, or who shall will-fully
neglect or fail to make, or cause to be made, full, true, and correct entries in such accounts, records, or
memoranda of all facts and transactions appertaining to the business of such corporation, or who shall
willfully remove out of the jurisdiction of the United States, or willfully mutilate, alter, or by any other
means falsify any documentary evidence of such corporation, or who shall willfully refuse to submit to
the commission or to an y of its authorized agents, for the purpose of inspection and taking copies, any
documentary evidence, of such corporation in his possession or within his control, shall be deemed guilty
of an offense against the United States, and shall be subject, upon conviction in any court of the United
States of competent jurisdiction, to a fine of not less than $1,000 nor more than $5,000, or to
imprisonment for a term of not more than three years, or to both such fine and imprisonment.
If any corporation required by this act to file any annual or special report shall fail so to do within the
time fixed by the commission for filing the same, and such failure shall continue for thirty days after notice
of such default, the corporation shall forfeit to the United States the sum of $100 for each and every day
of the continuance of such failure, which forfeiture shall be payable into the Treasury of the United States,
and shall be recoverable in a

132

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

civil suit in the name of the United States brought in the district where the corporation has its principal
office or in any district in which it shall do business. It shall be the duty of the various district attorneys,
under the direction of the Attorney General of the United States, to prosecute for the recovery of
forfeitures. The costs and expenses of such prosecution shall be paid out of the appropriation for the
expenses of the courts of the United States.
Any officer or employee of the commission who shall make public any information obtained by the
commission without its authority, unless directed by a court, shall be deemed guilty of a misdemeanor,
and, upon conviction thereof, shall be punishable by a fine not exceeding $5,000, or by imprisonment not
exceeding one year, or by fine and imprisonment, in the discretion of the court.
SEC. 11. Nothing contained in this act shall be construed to prevent or interfere with the enforcement
of the provisions of the antitrust act or the acts to regulate commerce, nor shall anything contained in the
act be construed to alter, modify, or repeal the said antitrust acts or the acts to regulate commerce or any
part or parts thereof.
Approved, September 26, 1914.

SHERMAN ACT

SECTION 1. Every contract, combination the form of trust or otherwise, conspiracy, in restraint of
trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal.
Every person who shall make any such contract or engage in any such combination or conspiracy, shall
be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding
five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the
discretion of the court.
SEC. 2. Every person who shall monopolize, or attempt to monopolize, or combine or conspire with
any other person or persons, to monopolize any part of the. trade or commerce among the several States,
or with foreign nations, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be
punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by
both said punishments, in the discretion of the court.
SEC. 3. Every contract, combination in form of trust or otherwise, or conspiracy, in restraint of trade
or commerce in any Territory of the United States or of the District of Columbia, or restraint of trade or
commerce between any such Territory and another, or between any such Territory or Territories and any
State or States or the District of Columbia, or with foreign nations, or between the District of Columbia
and any State or States or foreign nations, is hereby declared illegal. Every person who shall make any
such contract or engage in any such combination or conspiracy shall be deemed guilty of a misdemeanor,
and, on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by
imprisonment not exceeding one year, or by both said punishments, in the discretion of the court.
SEC. 4. The several circuit courts of the United States are hereby invested with jurisdiction to prevent
and restrain violations of this act; and it shall be the duty of the several district attorneys of the United
States; in their respective districts, under the direction of the Attorney General, to institute proceedings
in equity to prevent and restrain such violations. Such proceedings may be by way of petition setting forth
the case and praying that such violation shall be enjoined or otherwise prohibited. When the parties
complained of shall have been duly notified of such petition the court shall proceed, as soon as may be,
to the hearing and determination of the case; and pending such petition and before final decree, the court
may at any time make such temporary restraining order or prohibition as shall be deemed just the premises.
SEC. 5. Whenever it shall appear to the court before which any proceeding under section four of this
act may be pending, that the ends of justice require that other parties should be brought before the court;
the court may cause them to be summoned, whether they reside in the district in which the court is held
or not; and subpoenas to that end may be served in any district by the marshal thereof.
SEC. 6. Any property owned under any contract or by any combination, or pursuant to any conspiracy
(and being the subject thereof) mentioned section one of this act, and being in the course of transportation
from one State to another, or to a foreign. country, shall be forfeited to the United States, and may be
seized and condemned by like proceedings as those provided by law for the forfeiture, seizure, and
condemnation of property imported into the United States contrary to law.
SEC. 7 Any person who shall be injured in his business or property by any other person or corporation
by reason of anything forbidden or declared to be unlawful by this act, may sue therefor in any circuit
court of the United States in the district in which the defendant resides or is found, without respect to the
amount in controversy, and shall recover threefold the damages by him sustained, and the costs of suit,
including a reasonable attorney’s fee.
SEC. 8. That the word “person”, or “persons”, wherever used in this act shall be deemed to include
corporations and associations existing under or authorized by the laws of either the United States, the laws
of any of the Territories, the laws of any State, or the laws of any foreign country.
Approved, July 2, 1890.
133

SECTIONS OF THE CLAYTON ACT ADMINISTERED BY
THE FEDERAL TRADE COMMISSION
AN ACT To supplement existing laws against unlawful restraints and monopolies, and
for other purposes
Be it enacted by the Senate and House of Representatives of the United States Of America in Congress
assembled, That “antitrust laws,” as used herein, includes the Act entitled “An Act to protect trade and
commerce against unlawful restrains and monopolies,” approved July second, eighteen hundred and
ninety: sections seventy-three to seventy-seven, inclusive, of an Act entitled, “An Act to reduce taxation,
to provide revenue for the Government, and for other purposes,” of August twenty-seventh, eighteen
hundred and ninety-four; an Act entitled “An Act to amend sections seventy-three and seventy-six of the
Act of August twenty-seventh, eighteen hundred and ninety-four, entitled ‘An Act to reduce taxation, to
provide revenue for the Government, and for other purposes,’” approved February twelfth, nineteen
hundred and thirteen; and also this Act.
“Commerce,” as used herein, means trade or commerce among the several States and with foreign
nations, or between the District of Columbia or any Territory of the United States and any State, Territory,
or foreign nation, or between any insular possessions or other places under the Jurisdiction of the United
States, or between any such possession or place and any State or Territory of the United States or the
District of Columbia or any foreign nation, or within the District of Columbia or any Territory or any
insular possession or other place under the Jurisdiction of the United States: Provided, That nothing in
this Act contained shall apply to the Philippine Islands.
The word “person” or “persons” wherever used in this Act shall be deemed to include corporations and
associations existing under or authorized by the laws of either the United States the laws of any of the
Territories, the laws of any State; or the laws of any foreign country.
SEC. 2. That it shall he unlawful for any person engaged in commerce, in the course of such commerce,
either directly or indirectly to discriminate in price between different purchasers of commodities, which
commodities are sold for use, consumption, or resale within the United States or any Territory thereof or
the District of Columbia or any insular possession or other place under the jurisdiction of the United
States, where the effect of such discrimination may be to substantially lessen competition or tend to create
a monopoly in any line of commerce: Provided, That nothing herein contained shall prevent discrimination
in price between purchasers, of commodities, on account of differences in the grade, quality, or quantity
of the commodity sold, or that makes only due allowance for difference in the cost of Selling or
transportation, or discrimination in price in the same or different communities made in good faith to meet
competition: And provided further, That nothing herein contained shall prevent persons engaged in selling
goods, wares, or merchandise in commerce from .selecting their own customers in bona fide transactions
and not in restraint of trade.
SEC. 3. That it shall be unlawful for any person engaged in commerce, in the course of such commerce,
to lease or make a sale or contract for sale of goods, wares, merchandise, machinery, supplies or other
commodities, whether patented or unpatented, for use, consumption, or resale within the United States or
any Territory thereof or the District of Columbia or any insular possession or other place under the
jurisdiction of the United States, or fix a price charged therefor, or discount from, or rebate upon, such
price, on the condition, agreement, or understanding that the lessee or purchaser thereof shall not use or
deal in the goods, wares, merchandise, machinery, supplies or other commodities of a competitor or
competitors of the lessor or seller, where the effect
134

CLAYTON ACT

135

of such lease, sale, or contract for sale or such condition, agreement, or understanding may be to
substantially lessen competition or tend to create a monopoly in any line of commerce.
*
*
*
*
*
*
*
SEC. 7. That no corporation engaged in commerce shall acquire, directly or indirectly, the whole or any
part of the stock or other share capital of another corporation engaged also in commerce, where the effect
of such acquisition may be to substantially lessen competition between the corporation whose stock is
so acquired and the corporation making the acquisition, or to restrain such commerce in any section or
community, or tend to create a monopoly of any line of commerce.
No corporation shall acquire, directly or indirectly, the whole or any part of the stock or other share
capital of two or more corporations engaged in commerce where the effect of such acquisition, or the use
of such stock by the voting or granting of proxies or otherwise, may be to substantially lessen competition
between such corporations, or any of them, whose stock or other share capital is so acquired, or to restrain
such commerce in any section or community, or tend to create a monopoly of any line of commerce.
This section shall not apply to corporations purchasing such stock solely for investment and not using
the same by voting or otherwise to bring about, or in attempting to bring about, the substantial lessening
of competition. Nor shall anything contained in this section prevent a corporation engaged in commerce
from causing the formation of subsidiary corporations for the actual carrying on of their immediate lawful
business, or the natural and legitimate branches or extensions thereof, or from owning and holding all or
a part of the stock of such subsidiary corporations, when the effect of such formation is not to substantially
lessen competition.
Nor shall anything herein contained be construed to prohibit any common carrier subject to the laws
to regulate commerce from aiding in the construction of branches or short lines so located as to become
feeders to the main line of the company so aiding in such construction or from acquiring or owning all or
any part of the stock of such branch lines, nor to prevent any such common carrier from acquiring and
owning all or any part of the stock of a branch or short line constructed by an independent company where
there is no substantial competition between the company owning the branch line so constructed and the
company owning the main line acquiring the property or an interest therein, nor to prevent such common
carrier from extending any of its lines through the medium of the acquisition of stock or otherwise of any
other such common carrier where there is no substantial competition between the company extending its
lines and the company whose stock, property, or an interest therein is so acquired
Nothing contained in this section shall be held to affect or impair any right heretofore legally acquired:
Provided. That nothing in this section shall be held or construed to authorize or make lawful anything
heretofore prohibited or made illegal by the antitrust laws, nor to exempt any person from the penal
provisions thereof or the civil remedies therein provided.
SEC. 8. * * * That from and after two years from the date of the approval of this Act no person at the
same time shall be a director in any two or more corporations, any one of which has capital, surplus, and
undivided profits aggregating more than $1,000,000 engaged in whole or in part in commerce other than
banks, banking associations, trust companies, and common carriers subject to the Act to regulate
commerce, approved February fourth, eighteen hundred and eighty-seven, If such corporations are or shall
have been theretofore, by virtue of their business and location of operation, competitors, so that the
elimination of competition by agreement between them would constitute a violation of any of the
provisions of any of the antitrust laws. The eligibility of a director under the foregoing provision shall be
determined by the aggregate amount of the capital, surplus, and undivided profits, exclusive of dividends
declared but not paid to stockholders, at the end of the fiscal year of said corporation next preceding the
election of directors, and when a director has been elected in accordance with the provisions of this Act
it shall be lawful for him to continue as such for one year thereafter.
When any person elected or chosen as a director or officer or selected as an employee of any bank or
other corporation subject to the provisions of this Act is eligible at the time of his election or selection to
act for such bank or other corporation in such capacity his eligibility to act in such capacity shall

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

not be affected and he shall not become or be deemed amenable to any of the provisions hereof by reason
of any change in the affairs of such bank or other corporation from whatsoever cause, whether specifically
excepted by any of the provisions hereof or not, until the expiration of one year from the date of his
election or employment.
*
*
*
*
*
SEC. 11. That authority to enforce compliance with sections two, three, seven, and eight of this Act by
the persons respectively subject thereto is hereby vested: in the Interstate Commerce Commission where
applicable to common carriers subject to the Interstate Commerce Act, as amended; in the Federal
Communications Commission where applicable to common carriers engaged in wire or radio
communication or radio transmission of energy; in the Federal Reserve Board where applicable to banks,
banking associations, and trust companies; and in the Federal Trade Commission where applicable to all
other character of commerce, to be exercised as follows:
Whenever the commission, authority, or board vested with jurisdiction thereof shall have reason to
believe that any person is violating or has violated any of the provisions of sections two, three, seven, and
eight of this Act, it shall issue and serve upon such person a complaint stating its charges in that respect,
and containing a notice of a hearing upon a day and at a place therein fixed at least thirty days after the
service of said complaint. The person so complained of shall have the right to appear at the place and time
so fixed and show cause why an order should not be entered by the commission, authority, or board
requiring such person to cease and desist from the violation of the law so charged in said complaint. Any
person may make application, and upon good cause shown, may be allowed by the commission, authority,
or board, to intervene and appear in said proceeding by counsel or in person. The testimony in any such
proceeding shall be reduced to writing and filed in the office of the commission, authority, or board. If
upon such bearing the commission, authority, or board, as the case may be, shall be of the opinion that
any of the provisions of said sections have been or are being violated, it shall make a report in writing in
which it shall state its findings as to the facts, and shall issue and cause to be served on such person an
order requiring such person to cease and desist from such violations, and divest itself of the stock held or
rid itself of the directors chosen contrary to the provisions of sections seven and eight of this Act, if any
there be, in the manner and within the time fixed by said order. Until a transcript of the record in such
hearing shall have been filed in a circuit court of appeals of the United States, as hereinafter provided, the
commission, authority, or board may at any time, upon such notice and in such manner as it shall deem
proper, modify or set aside in whole or in part, any report. or any order made or issued by it under this
section.
If such person fails or neglects to obey such order of the commission, authority, or board while the same
is in effect, the commission, authority, or board may apply to the circuit court of appeals of the United
States, within any circuit where the violation complained of was or is being committed or where such
person resides or carries on business, for the enforcement of its order, and shall certify and file with its
application a transcript of the entire record in the proceeding, including all the testimony taken and the
report and order of the commission, authority, or board. Upon such filing of the application and transcript
the court shall cause notice thereof to be served upon such person, and thereupon shall have Jurisdiction
of the proceeding and of the question determined therein, and shall have power to make and enter upon
the pleadings, testimony, and proceedings set forth in such transcript a decree affirming, modifying, or
setting aside the order of the commission, authority, or board. The findings of the commission, authority,
or board as to the facts, if supported by testimony, shall be conclusive. If either party shall apply to the
court for leave to adduce additional evidence, and shall show to the satisfaction of the court that such
additional evidence is material and that there were reasonable grounds for the failure to adduce such
evidence in the proceeding before the commission, authority, or board, the court may order such additional
evidence to be taken before the commission, authority, or board and to be adduced upon the hearing in
such manner and upon such terms and conditions as to the court may seem proper. The commission,
authority, or board may modify its findings as to the facts, or make new findings, by reason of the
additional evidence so taken, and it shall file such modified or new findings, which, if supported by
testimony, shall be conclusive, and its recommendations, if any, for the modification or setting aside of
its original order, with the

ROBINSON-PATMAN ANTI-PRICE DISCRIMINATION ACT

137

return of such additional evidence. The Judgment and decree of the court shall be final, except that the
same shall be subject to review by the Supreme Court upon certiorari as provided in section two hundred
and forty of the Judicial Code.
Any party required by such order of the commission, authority, or board to cease and desist from a
violation charged may obtain a review of such order in said circuit court of appeals by filing in the court
a written petition praying that the order of the commission, authority, or board be set aside. A copy of such
petition shall be forthwith served upon the commission, authority, or board, and thereupon the
commission, authority, or board forthwith shall certify and file in the court a transcript of the record as
hereinbefore provided. Upon the filing of the transcript the court shall have the same jurisdiction to affirm,
set aside, or modify the order of the commission, authority, or board as in the case of an application by
the commission, authority, or board for the enforcement of its order, and the findings of the commission,
authority, or board as to the facts, if supported by testimony, shall in like manner be conclusive.
The Jurisdiction of the circuit court of appeals of the United States to enforce, set aside, or modify
orders of the commission, authority, or board shall be exclusive.
Such proceedings in the circuit court of appeals shall be given precedence over other cases pending
therein, and shall be in every way expedited. No order of the commission, authority, or board or the
judgment of the court to enforce the same shall in any wise relieve or absolve any person from any liability
under the antitrust Acts.
Complaints, orders, and other processes of the commission, authority, or board under this section may
be served by anyone duly authorized by the commission, authority, or board, either (a) by delivering a
copy thereof to the person to be served, or to a member of the partnership to be served, or to the president,
secretary, or other executive officer or a director of the corporation to be served; or (b) by leaving a copy
thereof at the principal office or place of business of such person; or (c) by registering and mailing a copy
thereof addressed to such person at his principal office or place of business. The verified return by the
person so serving said complaint, order, or other process setting forth the manner of said service shall be
proof of the same, and the return post-office receipt for said complaint, order, or other process registered
and mailed as aforesaid shall be proof of the service of the same.
*
*
*
*
*
*
*
Approved October 15, 1941.

EXPORT TRADE ACT
An Act to promote export trade, and for other purposes
Be it enacted by the Senate and House of Representatives of the United States of America in Congress
assembled, That the words “export trade” where-ever used in this Act mean solely trade or commerce in
goods, wares, or merchandise exported, or in the course of being exported from the United States or any
Territory thereof to any foreign nation; but the words “export trade” shall not be deemed to include the
production, manufacture, or selling for consumption or for resale, within the United States or any Territory
thereof, of such goods, wares, or merchandise, or any act in the course of such production, manufacture,
or selling for consumption or for resale.
That the words “trade within the United States” wherever used in this Act mean trade or commerce
among the several States or in any Territory of the United States, or in the District of Columbia, or
between any such Territory and another, or between any such Territory or Territories and any State or
States or the District of Columbia, or between the District of Columbia and any State or States.
That the word “Association” wherever used in this Act means any corporation or combination, by
contract or otherwise, of two or more persons, partnerships, or corporations.
SEC. 2. That nothing contained in the Act entitled “An Act to protect trade and commerce against
unlawful restraints and monopolies,” approved July second, eighteen hundred and ninety, shall be
construed as declaring to be illegal an association entered into for the sole purpose of engaging in export
trade and actually engaged solely in such export trade, or an agreement made or act done in the course of
export trade by such association, provided such association, agreement, or act is not in restraint of trade
within the United States, and is not in restraint of the export trade of any domestic competitor of such
association: And provided further, That such association does not, either in the United States or elsewhere,
enter info any agreement, understanding, or conspiracy, or do any act which artificially or intentionally
enhances or depresses prices within the United States of commodities of the class exported by such
association, or which substantially lessens competition within the United States or otherwise restrains
trade therein.
SEC. 3. That nothing contained in section seven of the Act entitled “An Act to supplement existing laws
against unlawful restraints and monopolies, and for other purposes”, approved October fifteenth, nineteen
hundred and fourteen, shall be construed to forbid the acquisition or ownership by any corporation of the
whole or any part of the stock or other capital of any corporation organized solely for the purpose of
engaging in export trade, and actually engaged solely in such export trade, unless the effect of such
acquisition or ownership may be to restrain trade or substantially lessen competition within the United
States.
SEC. 4. That the prohibition against “unfair methods of competition” and the remedies provided for
enforcing said prohibition contained in the Art entitled “An Act to create a Federal Trade Commission,
to define its powers and duties, and for other purposes”, approved September twenty-sixth, nineteen
hundred and fourteen, shall be construed as extending to unfair methods of competition used in export
trade against competitors engaged in export trade, even though the acts constituting such unfair methods
are done without the territorial jurisdiction of the United States.
SEC. 5. That every association now engaged solely” in export trade, within sixty days after the
passage of this Act, and every association entered into hereafter which engages solely in export trade,
within thirty days after its creation, shall file with the Federal Trade Commission a verified written
statement setting forth the location of its offices or places of business and
138

EXPORT TRADE ACT

139

the names and addresses of all its officers and of all its stockholders or members, and if a corporation, a
copy of its certificate or articles of incorporation and by-laws, and if unincorporated, a copy of its articles
or contract of association, and on the first day of January of each year thereafter it shall make a like
statement of the location of its offices or places of business and the names and addresses of all its officers
and of all its stockholders or members and of all amendments to and changes in its articles or certificate
of incorporation or in its articles or contract of association. It shall also furnish to the com-mission such
information as the commission may require as to its organization, business, conduct, practices,
management, and relation to other associations, corporations, partnerships, and individuals. Any
association which shall fail so to do shall not have the benefit of the provisions of section two and section
three of this Act, and it shall also forfeit to the United States the sum of $100 for each and every day of
the continuance of such failure, which forfeiture shall be payable into the Treasury of the United States,
and shall be recoverable in a civil suit in the name of the United States brought in the district where the
association has its principal office, or in any district in which it shall do business. It shall be the duty of
the various district attorneys, under the direction of the Attorney General of the United States, to prosecute
for the recovery of the forfeiture. The costs and expenses of such prosecution shall be paid out of the
appropriation for the expenses of the courts of the United States.
Whenever the Federal Trade Commission shall have reason to believe that an association or any
agreement made or act done by such association is in restraint of trade within the United States or in
restraint of the export trade of any domestic competitor of such association, or that an association either
in the United States or elsewhere has entered into any agreement, understanding, or conspiracy, or done
any act which artificially or intentionally enhances or depresses prices within the United States of
commodities of the class exported by such association, or which substantially lessens competition within
the United States or otherwise restrains trade therein, it shall summon such association, its officers, and
agents to appear before it, and thereafter conduct an. investigation into the alleged violations of law. Upon
investigation, if it shall conclude that the law has been violated, it may make to such association
recommendations for the readjustment of its business, in order that it may thereafter maintain its
organization and management and conduct its business in accordance with law. If such association fails
to comply with the recommendations of the Federal Trade Commission, said commission shall refer its
findings and recommendations to the Attorney General of the United States for such action thereon as he
may deem proper.
For the purpose of enforcing these provisions the Federal Trade Commission shall have all the powers,
so far as applicable, given it in “An Act to create a Federal Trade Commission, to define its powers and
duties, and for other purposes.”
Approved, April 10, 1918.

RULES OF PRACTICE
I. SESSIONS
(a) The principal office of the commission at Washington, D. C., is open each business day from 9 a.m.
to 4:30 p.m. The commission may meet and exercise all its powers at any other place, and may, by one or
more of Us members, or by such examiners as it may designate, prosecute any inquiry necessary to its
duties in any part of the United States.
(b) Sessions of the commission for hearing contested proceedings will be held as ordered by the
commission.
(c) Sessions of the commission for the purpose of making orders and for the transaction of other
business, unless otherwise ordered, will be held at the office of the commission at Washington, D. C., on
each business day at 10.30 a. m. A majority of the membership of the commission shall constitute a
quorum for the transaction of business.
(d) All orders of the commission shall be signed by the Secretary.
RULE II. APPEARANCE
(a) Any individual or member of a partnership which is a party to any proceeding before the
Commission may appear for himself, or such partnership upon adequate identification, and a corporation
or association may be represented by a bona fide officer of such corporation or association upon a showing
of adequate authorization therefor.
(b) A party may also appear by an attorney at law possessing the requisite qualifications, as hereinafter
set forth, to practice before the Commission. Upon application and for good cause shown, the
commission, in its discretion, may permit a party to be represented by any person having requisite
qualification to represent others.

RULE III. PRACTICE BEFORE THE COMMISSION
(a) Attorneys at law who are admitted to practice before the Supreme Court of the United States, or the
highest court of any State or Territory of the United States, or the Court of Appeals of the Supreme Court
of the District of Columbia, may be admitted to practice before the Commission. No register of admitted
attorneys is maintained.
(b) The Commission may, in its discretion, deny admission, suspend, or disbar from practice before it,
any person, who, it finds, does not possess the requisite qualifications to represent others, or is lacking in
character, integrity, or is guilty of unprofessional conduct. Any person who has been admitted to practice
before the Commission may be disbarred of suspended from practice for good cause shown, but only after
he has been afforded an opportunity to be heard.
RULE IV. COMPLAINTS
(a) Any person, partnership, corporation or association may apply to the Commission to institute a
proceeding in respect to any violation of law over which the Commission has jurisdiction.
(b) Such application for complaint shall be in writing, signed by or in behalf of the applicant and shall
contain a short and simple statement of the facts constituting the alleged violation of law and the name
and address of the applicant and of the party complained of.
(c) The Commission shall investigate the matters complained of in such application, and if upon
investigation made either on its own motion or upon application, the Commission shall have reason to
140

RULES OF PRACTICE

141

believe that there is a violation of law over which the Commission has jurisdiction, and if it shall appear
to the Commission that a proceeding by it in respect thereof would be to the interest of the public, the
Commission shall issue, and serve upon the party complained of, a complaint stating its charges and
containing a notice of a hearing upon a day and at a place therein fixed, at least 80 days after the service
of said complaint.
RULE V. ANSWERS
(a) In case of desire to contest the proceeding the respondent shall, within 20 days from the service of
the complaint, file with the Commission an answer to the complaint. Such answer shall contain a concise
statement of the facts which constitute the ground of defense. Respondent shall specifically admit or deny
or explain each of the facts alleged in the complaint, unless respondent is without knowledge, in which
case respondent shall so state, such statement operating as a denial. Any allegation of the complaint not
specifically denied in the answer, unless respondent shall be deemed to be admitted to be true and may
be found by the Commission.
(b) In case the respondent desires to waive hearing on the charges set forth the complaint and not to
contest the proceeding, the answer may consist of a statement that respondent admits all the material
allegations of the complaint to be true. Any such answer shall be deemed to waive a hearing thereon, and
to authorize the Commission, without trial and without further evidence, or other intervening procedure,
to make, enter, issue, and serve up on respondent:
(c) In cases arising under section 5 of the act of Congress approved September 26, 1914, entitled “An
act to create a Federal Trade Commission, to define its powers and duties, and for other purposes “ (the
Federal Trade Commission Act), or under sections 2 and 3 of the act of Congress approved October 15,
1914, entitled “An act to supplement existing laws against unlawful restraints and monopolies, and for
other purpose” (the Clayton Act,) or under section 2 of the aforesaid Clayton Act as amended by “An act
to amend section 2 of the act entitled ‘An act to supplement existing laws against unlawful restraints and
monopolies, and for other purposes’ approved October 15, 1914, as amended (U.S. C., title 15, sec. 13),
and for other purposes”, approved June 19, 1936 (the Robinson-Patman Act), findings of fact and an order
to cease and desist from the violations of law charged in the complaint
(d) In cases arising under section 7 of the said act of Congress approved October 15, 1914 (the Clayton
Act), findings of fact and an order to cease and desist from the violations of law charged in the complaint
and to divest itself of the stock found to be held contrary to the provisions of said section 7 of said Clayton
Act;
(e) In cases arising under section 8 of the said act of Congress approved October 15, 1914 (the Clayton
Act), findings of fact and an order to cease and desist from the violation of law charged in the complaint
and to rid itself of the directors found to have been chosen contrary to the provisions of said section 8 of
said Clayton Act.
(f) Failure of the respondent to file answer within the time above provided for shall be deemed to
admission of all allegations of the complaints and to authorize the Commission to find them to be true and
to waive hearing on the charges set fourth in the complaint.
(g) Three copies of answers shall be furnished. All answers shall be signed in ink, by the respondent
or by his attorney at law, or by a duly authorized agent with appropriate power of attorney affixed, and
are required to show the office and post-office address of the signer. All answers are required to be typewritten or printed. If type-written, they are required to be on paper not more than 8 ½ inches wide and
not more than 11 inches long. If printed, they are required to be on paper 8 inches wide and 10 ½ inches
long.
RULE VI. SERVICE
(a) Complaints, orders, and other processes of the Commission, may be served by the Commissions
secretary by registered mail, (except whenever otherwise method specifically ordered by the Commission),
and in those instances where service cannot be made by such method, service may be made by anyone duly
authorized by the Commission, or by any examiner of the Commission, either (a) by delivering a copy of
the thereof to the person served, or to a member of

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

the partnership to be served, or to the president, secretary, or other executive officer or a director of the
corporation to be served; or (b) by leaving a copy thereof at the principal office or place of business of
such person, partnership, corporation, or association; or (c) by registering and mailing a copy thereof
addressed to such person, partnership, corporation, or association at his or its principal office or place of
business. The verified return by the person so serving said complaint, order, or other process, setting forth
the manner of said service, shall be proof of the same, and the return post-office receipt for said complaint,
order, or other process, registered and wailed as aforesaid, shall be proof of the service of the same.
VII. INTERVENTION.
(a) Any person, partnership, corporation, or association desiring to intervene in a contested proceeding
shall make application in writing, setting out the grounds on which he or it claims to be interested. The
commission may, by order, permit intervention by counsel or in person to such extent and upon such terms
as it shall deem just.
(b) Applications to intervene must be on one side of the paper only, on paper not more than 8 ½ inches
wide and not more than 11 inches long, and weighing not less than 16 pounds to the ream, folio base, 17
by 22 inches, with left-hand margin not less than 1 ½ inches wide, or they may be printed in 10 or 12 point
type on good unglazed paper 8 inches wide by 10 ½ inches long, with inside margins not less than 1 inch
wide.
VIII. WITNESSES AND SUBPOENAS.
(a) Witnesses shall be examined orally, except that for good and exceptional cause for departing from
the general rule the commission may permit their testimony to be taken by deposition.
(b) Subpoenas requiring the attendance of witnesses from any place in the United States at any
designated place of hearing may be issued by any member of the commission.
(c) Subpoenas for the production of documentary evidence (unless directed to issue by a commissioner
upon his own motion) will issue only upon application in writing, which must be verified and must
specify, as near as may be, the documents desired and the facts to be proved by them.
(d) Witnesses summoned before the commission shall be paid the same fees and mileage that are paid
witnesses in the courts of the United States, and witnesses whose depositions are taken, and the persons
taking the same, shall severally be entitled to the same fees as are paid for like services in the courts of the
United States. Witness fees and mileage shall be paid by the party at whose instance the witness appear.
IX. TIME FOR TAKING TESTIMONY.
Upon the joining of issue in a proceeding by the Commission the examination of witnesses therein shall
proceed with all reasonable diligence and with the least practicable delay. Not less than 5 nor more than
10 days’ notice shall be given by the Commission to counsel or parties of the time and place of examination of witnesses before the Commission, a commissioner, or an examiner.
X. OBJECTIONS TO EVIDENCE.
Objections to the evidence before the Commission, a commissioner, or an examiner shall, in any
proceeding, be in short form. starting the grounds of objections relied upon, and no transcript filed shall
include argument or debate.
XI. MOTIONS.
A motion in a proceeding by the Commission shall briefly state the nature of the order applied for, and
all affidavits, records, and other helpers upon which the same is founded, except such as have been
previously filed or served in the same proceeding, shall be filed with such motion and plainly referred to
therein.

RULES OF PRACTICE

143

XII. HEARINGS ON INVESTIGATIONS.
(a) When a matter for investigation is referred to a single commissioner for examination or report, such
commissioner may conduct or hold conferences or bearings thereon, either alone or with other
commissioners who may sit with him, and reasonable notice of the time and place of such hearings shall
be given to parties in interest and posted.
(b) The chief counsel or one of his assistants, or such other attorney as shall be designated by the
commission, shall attend and conduct such hearings, and such hearings may, in the discretion of the
commissioner holding same, be public, unless otherwise ordered by the Commission.
RULE XIII. HEARINGS BEFORE TRIAL EXAMINERS
(a) Where evidence is to be taken in a proceeding upon complaint issued by the Commission, a trial
examiner shall be designated by the Commission for that purpose. It shall be the duty of the trial examiner
to complete the taking of evidence with all due dispatch and he shall state the place, day, and hour to
which the taking of evidence may from time to time be adjourned.
(b) All hearings before the Commission or trial examiners on complaints issued by the Commission
shall be public, unless otherwise ordered by the Commission.
(c) The trial examiner shall, within 15 days after the receipt of the steno-graphic report of the testimony,
make his report on the facts, and shall forthwith serve copy of the same on the parties or their attorneys,
who, within 10 days after the receipt of same, shall file in writing their exceptions, if any, and said
exceptions shall specify the particular part or parts of the report to which exception is made, and said
exceptions shall include any additional facts which either party may think proper. Seven copies of
exceptions shall be filed for the use of the Commission. Citations to the record shall be made in support
of such exceptions. Where briefs are filed, the same shall contain a copy of such exceptions. If exceptions
are to be argued, they shall be argued at the final argument on the merits.
(d) The report of the trial examiner is not a decision, finding, or ruling of the Commission, and is not
a part of the record in the proceeding. The Commission's findings as to the facts are based upon the
record.
(e) When, in the opinion of the trial examiner engaged in taking evidence in any formal proceeding, the
size of the transcript or complication or importance of the issues involved warrants it, he may of his own
motion or at the request of counsel, at the close of the taking of evidence, announce to the attorney for the
respondent and for the Commission that the examiner will receive, at any time before he has completed
the drawing of the trial examiner's report upon the facts, a statement in writing (one for either side) in terse
outline setting forth the contentions of each as to the facts proved in the proceeding.
(f) These statements are not to be exchanged between counsel amid are not to be argued before the trial
examiner.
(g) Any such statement submitted by either side shall be submitted within 5 days after the closing of
the taking of evidence and not later, which time shall not be extended.
RULE XIV. DEPOSITIONS
(a) The Commission may order evidence to be taken by deposition in any proceeding or investigation
pending at any stage of such proceeding or investigation. Such depositions may be taken before any person
designated by the Commission and having power to administer oaths.
(a) Any party desiring to take the deposition of a witness shall make application in writing, setting out
the reasons why such deposition should be taken, and stating the time when, the place where, and the name
and post office address of the person before whom it is desired the deposition be taken, the name and
postoffice address of the witness, and the subject matter or matters concerning which the witness is
expected to testify. If good cause be shown, the Commission will make and serve upon the parties, or their
attorneys, an order wherein the Commission shall name the witness whose deposition is to be taken and
specify the time when, the place where, and the person before whom the witness is to testify, but such time
and place, and

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the person before whom the deposition is to be taken, so specified in the Commission’s order, may or may
not be the same as those named in said application to the Commission.
(c) The testimony of the witness shall be reduced to writing by the officer before whom the deposition
is taken, or under his direction, after which the deposition shall be subscribed by the witness and certified
in usual form by the officer. After the deposition has been so certified, it shall, together with three
additional copies thereof made by such officer or under his direction, be forwarded by such officer under
seal in an envelope addressed to the Commission at its office in Washington, D. C. Such deposition, unless
otherwise ordered by the Commission for good cause shown, shall be filed in the record in said proceeding
and a copy thereof supplied to the party upon whose application said deposition was taken, or his attorney.
(d) Such depositions shall be typewritten, on one side of only of the paper, which shall not be more than
8 ½ inches and not more than 11 inches long and weighing less than 16 pound to the ream, folio base 17
by 22 inches, with left handed margin not less than 1 ½ inch.
(e) Unless notice be waived, no depositions shall be taken except after at least 6 day’s notice to the
parties, and where the deposition is taken in a foreign country, such notice be at least 15 days.
XV. DOCUMENTARY EVIDENCE.
Where relevant and material matter offered in evidence is embraced in a document containing other
matter not material or relevant and not intended to be put in evidence, such immaterial or irrelevant parts
shall be excluded, and shall be segregated insofar as parcticable.
RULE XVI. BRIEFS
(a) All briefs must be filed with the secretary of the Commission, and briefs on behalf of the
Commission must be accompanied by proof of the service of the same as hereinafter provided, or the
mailing of same by registered mall to the respondent or its attorney at the proper address. Twenty copies
of each brief shall be furnished for the use of the Commission unless otherwise ordered. The exceptions,
if any, to the trial examiner's report must be incorporated in the brief. Every brief, except the reply brief
on behalf of the Commission, hereinafter mentioned, shall contain in the order here stated:
(b) A concise abstract or statement of the case.
(c) A brief of the argument, exhibiting a clear statement of the points of fact or law to be discussed,
with the reference to the pages of the record and the authorities relied upon in support of each point.
(d) Every brief of more than 10 pages shall contain on its top flyleaves a subject index with page
references, the subject index to be supplemented by a list of all cases referred to, alphabetically arranged,
together with references. to pages where the cases are cited.
(e) Briefs are required to be printed in 10- or 12-point type on good unglazed paper 8 by 10½ inches,
with inside margins not less than 1 inch wide, and with double-leaded text and single-leaded citations.
(f) The reply brief on the part of the Commission shall be strictly in answer to respondent's brief.
(g) The opening brief in support of the complaint shall be filed within 20 days of the date of the service
upon the trial attorney of the Commission of the trial examiner's report. The brief on behalf of the
respondent shall be filed within 20 days from the service upon the respondent or his attorney of the brief
in support of the complaint. A reply brief in support of the complaint shall be filed only when
recommended by the chief counsel and then within 10 days after the filing of respondent's brief. A reply
brief on behalf of respondent will not be permitted to be filed. Appearance of additional counsel in a case
shall not constitute grounds for extending the time for filing brief or for final hearing.
(h) Briefs not filed with the Commission on or before the dates fixed hereunder will not be received
except by special permission of the Commission.
(i) Briefs on behalf of the Commission may be served by delivering a copy thereof to the respondent's
attorney or to the respondent in case respondent be not represented by attorney, or by registering and
mailing a copy thereof addressed to the respondent's attorney or to the respondent in case respondent

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be not represented by attorney, at the proper post-office address. Written acknowledgment of services,
or the verified return of the party making the service, shall constitute proof of personnel services
hereinbefore provided and mailed shall constitute proof of the service of the same.
(j) Oral arguments may be had only as ordered by the Commission on written application of the chief
counsel or of respondent filed not later than 5 days after expiration of time allowed for filing of reply brief
of counsel for the Commission
RULE XVII. FILING MOTIONS, ANSWERS, ECT.
All matter required to be filed with the Commission shall be filed with the secretary.
RULE XVIII.--REPORTS SHOWING COMPLIANCE WITH ORDERS
In every case where an order is issued by the Commission for the purpose of preventing violations of
the law, the respondent or respondents therein named shall file with the Commission, within the time
specified in said order, a report, in writing, setting forth in detail the manner and form in which the said
order of the Commission has been complied with.
RULE XIX.--REOPENING PROCEEDINGS
In any case where an order to cease and desist, an order dismissing a complaint, or other order disposing
of a proceeding has been issued by the Commission, the Commission may, at any time within ninety (90)
days after entry of such order, for good cause shown, in writing, and on notice to the parties, reopen the
case for such further proceeding as to the Commission may seem proper.
RULE. XX CONTINUANCES AND EXTENSION OF TIME
The Commission may, in its discretion, grant continuances, or, good cause shown in writing and prior
to the expiration of the time fixed, extend the time fixed in these rules.
XXI. ADDRESS OF THE COMMISSION.
All communications to the commission must be addressed to Federal Trade Commission, Washington
D. C., unless otherwise specially directed.

INVESTIGATIONS, 1913-35
Antidumping Legislation in the United States and Foreign Countries (on motion of the
Commission).--The inquiry was begun in the spring of 1933 when amendments to the antidumping laws
of this country were under consideration by Congress. Authority for this study is found in sections 5 and
6 (h) of the Commission’s organic law. The several recognized types of dumping-(1) real or ordinary
dumping, (2) bounty dumping, (3) freight dumping, (4) dumping of materials, (5) consignment dumping,
(6) exchange dumping, and (7) social dumping, were studied, as well ns more general provisions which
may be used to prevent the dumping of goods from foreign countries. International action in suppression
of dumping was briefly mentioned, and the legislation of each country was studied separately. The study
was ordered printed on January 11, 1934, as Senate Document No.112, Seventy-third Congress, second
session.
Book Paper (S. Res. 269, 64th Cong., 1st sess., Sept. 7, 1916. See also Newsprint Paper.) --The inquiry
into book paper, which was made shortly following the newsprint inquiry, had a similar origin and
disclosed similar restraints of trade, resulting in proceedings by the Commission against the manufacturers
involved therein to prevent the enhancement of prices. The Commission also recommended legislative
action to repress restraints of trade by certain associations. Reports transmitted June 13, 1917, and August
21, 1917.
Bread (S. Res. 163, 68th Cong., 1st sess., Feb.16, 1924. See also Flour Milling) --This resolution
directed the Commission to investigate the production, distribution, transportation, and sale of flour and
bread, showing costs, prices, and profits at each stage of the process of production and distribution; the
extent and methods of price fixing, price maintenance, and price discrimination; concentration of control
in the milling and baking industries: and evidence indicating the existence of agreements, conspiracies,
or combinations in restraint or trade. Two preliminary reports were issued, dealing with competitive
conditions in flour milling and bakery combines arid profits. The final report showed among other things
that wholesale baking in recent years had been generally profitable. It disclosed also price-cutting wars
by big bakery combines and subsequent price-fixing agreements. Reports transmitted May 3, 1926, February 11, 1927, and January 11, 1928. Supplementary report covering data with-held during court
proceeding (Millers’ National Federation against Federal Trade Commission) transmitted May 28, 1932.
Calcium Arsenate (S. Res. 417, 67th Cong., 4th sess., Jan.23, 1923) --The high prices of calcium
arsenate, a poison used to destroy the cotton boll weevil, led to this inquiry from which it appeared that
the cause was due to the sudden increase in demand rather than to any restraints of trade. Report
transmitted March 3, 1923.
Cement Industry (S. Res. 448, 71st Cong., 3d sess., Feb.16, 1931) .--This resolution instructed the
Commission to investigate competitive conditions and distributing processes in the cement industry to
determine the existence, if any, of unfair trade practices or violations of the antitrust laws. The Commission submitted its report on Julie 9, 1933 (printed as S. Doc. No.71, 73d Cong., 1st sess.) . The report
indicated that rigid application to the multiple basing-point price system, universally used in the industry,
tended to lessen price competition and destroy the value of sealed bids; that manufacturers in concert with
dealer organizations had engaged in activities which strengthened the system’s price effectiveness and that
dealers’ associations had engaged in practices designed to restrict sales to those recognized as legitimate
dealers by the associations. It was indicated such practices also tended to control sales terms. This report
reiterated certain findings and conclusions of the Commission’s earlier report on the cement industry made
as a part of the price bases inquiry. (See Price bases report below.) The investigation revealed no
evidence of monopoly.
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Chain Stores (S. Res. 224, 70th Cong., 1st Sess., May 12, 1928)--Under the resolution the Commission
was directed to ascertain the advantages and disadvantages of chain-store distribution as compared with
other types of distribution and how far the increase in the former system depended upon quantity prices
and whether or not such quantity prices were in violation of law and what legislation, if any, should be
enacted regarding them. The resolution also called for a report upon the extent to which the chain stores
had tended to monopoly or concentration of control, the existence of unfair methods, and agreements in
restraint of trade. The factual data have been submitted in 33 separate reports and are now available as
Senate documents. These reports include detailed statistical analyses of nearly all phases of chain-store
operations. The final report was transmitted on December 14, 1934, and printed as Senate Document 4,
Seventy-fourth Congress, first session.
Coal, Anthracite (S. Res. 217, 64th Cong., 1st sess., June 22, 1916, and S. Res. 51, 65th Cong., 1st
sess., Apr.30, 1917) --The rapid advance in the prices of anthracite at the mines, compared with costs, and
the overcharging of anthracite jobbers and dealers were disclosed in the inquiry in response to these
resolutions. Current reports of operators’ and retailers’ selling prices were obtained, and this was believed
to have substantially benefited the consumer. Reports transmitted May 4, 1917, and June 20, 1017.
Coal, Anthracite (on motion of the Commission).--The report on this inquiry dealt with premium prices
of anthracite coal charged by certain mine operators and the premium prices and gross profits of
wholesalers in the latter part of 1923 and early in 1924. The report discussed also the development of the
anthracite combination and the results of the Government’s efforts to dissolve it. Report dated July 6,
1926.
Coal, Bituminous (H. Res. 352, 64th Cong., 1st sess., Aug.18, 1916) .--While this resolution aimed
originally at the investigation of the alleged depressed condition of the bituminous-coal industry, the
inquiry had not long been under way before there was a great advance in prices, and the commission, in
its report, suggested various measures for insuring a more adequate supply at reasonable prices. War-time
price control was soon afterward established. Reports transmitted May 4, 1917, May 19, 1917, and June
20, 1917.
Coal, Bituminous (on motion of the Commission).--The reports on investment and profit in soft-coal
mining were prepared and transmitted to Congress in the belief that the information would be of timely
value in consideration of pending legislation regarding the coal trade. The data covers the years 1916 to
1921, inclusive. Reports dated May 31, 1922, and July 6, 1922.
Coal, Reports on Cost of Production.--Before the passage of the Lever Act in August 1917, the
Commission was called upon by the President to furnish information to be used by him in fixing coal
prices under the said act. On the basis of the information furnished the prices of coal were fixed by
Executive order. The work of the Commission in determining the cost of production of coal was
continued by obtaining monthly reports. This information was compiled for the use of the Fuel
Administration in continuing the control of prices. Detailed cost records were collected from January
1917, through December 1918, for about 99 percent of the anthracite tonnage production and for about
95 percent of the bituminous coal production, This information was summarized, after the war, min a
series of reports for the principal coal producing States or regions.
Commercial Bribery (on motion of the Commission) --The prevalence of commercial bribery of
employees was brought out in a special report to Congress, dated May 15, 1918. The report carried with
it recommendations for legislation striking at this practice.
Commercial Feeds (S. Res. 140, 66th Cong., 1st sess., July 31, 1919) -This inquiry into commercial
feeds aimed to discover whether there were combinations or restraints of trade in that business; and though
it disclosed some association activities in restraint of trade, it found no important violation of the antitrust
laws. Certain minor abuses in the trade were eliminated. Re-port transmitted March 29, 1921.
Cooperation in American Export Trade (on motion of the Commission) --An extensive investigation
of competitive conditions affecting Americans In international trade. The report disclosed the marked
advantages of other nations in foreign trade by reason of their superior facilities and more effective organi-

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149

zations. The Webb-Pomerene Act authorizing the association of manufacturers for export trade was
enacted as a direct result of the recommendations em-bodied in the report. Reports dated May 2, 1916,
and Tune 30, 1916.
Cooperation in Foreign Countries (on motion of the Commission).--The report on cooperation in
foreign countries was the result of studies of the cooperative movement in 15 European countries, and
concluded with recommendations for further developments of cooperation in the United States. Report
dated December 2, 1924.
Cooperative Marketing (S. Res. 34, 69th Cong., special sess., Mar.17, 1925).--An inquiry on the
development and Importance of the cooperative movement in the United States and illegal interferences
with the formation and operation of cooperatives. The report included also a study of comparative costs,
prices, and marketing practices as between cooperative marketing organizations and other types of
marketers and distributors handling farm products. Transmitted April 30, 1928.
Copper.--One of the first products for which the Government established a definite maximum price
during the war was copper. The information upon which the price was fixed was primarily the cost
findings of the Federal Trade Commission, and a summary of this cost information was published in a report issued in 1919.
Cotton Merchandising Practices (S. Res. 252, 68th Cong., 1st sess., June 7, 1924).--Abuses in
handling consigned cotton were discussed in the report on this inquiry, and a number of recommendations
designed to correct or alleviate existing conditions made. Transmitted January 20, 1925.
Cottonseed (H. Res. 439, 69th Cong., 2d sess., Mar. 2, 1927) --Alleged fixing of prices paid for
cottonseed. The Commission found considerable evidence of cooperation among the State associations,
but the evidence as a whole did not indicate that prices had been fixed by those engaged in crushing or
refining cottonseed in violation of the antitrust laws. One of the main causes of dissatisfaction to both the
producer of cottonseed and those engaged in its purchase and manufacture was found to be the lack of a
uniform system of grading. Report transmitted March 5, 1928.
Cottonseed Industry (S. Res. 136, 71st Cong., 1st sess., Sept.30, 1929, and S. Res. 147, 71st Cong.,
1st sess., Oct: 30, 1929) --These resolutions instructed the Commission to investigate practices of
corporations operating cottonseed-oil mills to determine the existence of unlawful combinations seeking
to lower and fix prices of cottonseed, and seeking to sell cottonseed meal at a fixed price under boycott
threat. The Commission was also to determine whether such corporations were acquiring control of cotton
gins for the purpose of destroying competitive markets as well as for depressing or controlling prices paid
to seed producers. The final report was submitted on May 19, 1933.
Cotton Trade (S. Res. 262, 67th Cong., 2d sess., Mar. 16, 1922) --The inquiry into cotton trade
originated by this resolution was covered in part by a preliminary report issued in February 1923, which
discussed especially the causes of the decline in cotton prices in 1922 and left the consideration of the
other topics indicated to be treated hum connection with an additional and related inquiry called for by
the Senate at that the. Reports transmitted February 26, 1923, and April 28, 1924.
Cotton Trade (S. Res. 429, 67th Cong., 4th sess., Jan.31, 1923) .--The inquiry in response to this
second resolution on the cotton trade was combined with the one mentioned above and resulted in a report
which was sent to the Senate in April 1924. This report recommended that Congress enact legislation pro
viding for some form of southern warehouse delivery on New York contracts, and as a part of such a
delivery system the adoption of a future contract which would require that not more than three adjacent
or contiguous grades should be delivered on any single contract. The Commission also recommended a

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revision of the system of making quotations arid differences at the various: spot markets and the abolition
of deliveries on futures at New York. The special warehouse committee of the New York Cotton Exchange
on June 28, 1924, adopted the recommendations of the Commission with reference to the southern
delivery on New York contracts, including the contiguous grade contract. Report transmitted April 28,
1924.
Cotton Yarn (H. Res. 451, 66th Cong., 2d sess., Apr. 5, 1920) .--The Commission was called upon,
in this resolution, to investigate the very high prices of combined cotton yard, and the inquiry disclosed
that there had been an unusual advance in prices and that the profits in the industry had been extraordinarily large for several years. Report transmitted April 14, 1921.
Du Pont Investments (on motion of the Commission, July 29, 1927) .--The reported acquisitions of
E. l du Pont de Nemours & Co. of the stock of the United States Steel Corporation, together with the
previously reported holdings in the General Motors Corporation, caused an inquiry into these relations
with a view to ascertaining the real facts and their probable economic consequences. Report dated
February 1, 1929.
Electric and Gas Utilities.--See Electric Power, interstate Power Transmission, and Utility
Corporations.
Electric Power (S. Res. 329, 6th Cong., 2d sess., Feb. 9, 1925) --Two reports. on the electric-power
industry were made pursuant to this resolution. The first dealt with the organization, control, and
ownership of commercial electric-power companies, and showed the extreme degree to which pyramiding
had been carried in superposing a series of holding companies over the underlying operating companies.
The second report related to the supply of electrical equipment and competitive conditions existing in the
industry. The dominating position of the General Electric Co. is clearly brought out. Reports. transmitted
February 21, 1927, and January 12, 1928.
Empire Cotton Growing Corporation (S. Res. 317, 6th Cong., 2d sess., Jan.27, 1925) --This inquiry
concerned the development, methods and activities of the Empire Cotton Growing Corporation, a British
company. The report discussed world cotton production and consumption and concluded that there was
little danger of serious competition to the American cotton grower and that it would be many years before
there is a possibility of the United States losing its position as the largest producer of raw cotton.
Transmitted February 28, 1925.
Export Grain (S. Res. 133, 67th Cong., 2d sess., Dec.22, 1921) .--The low prices of export wheat gave
rise to thus inquiry, which developed extensive-and harmful speculative manipulation of prices on the
grain exchanges and. conspiracies among country grain buyers to agree on maximum prices for grain
purchased. Legislation for a stricter supervision of grain exchanges was recommended, together with
certain changes in their rules. The com mission also recommended governmental action hooking to
additional storage facilities for grain uncontrolled by grain dealers. Reports transmitted May 16, 1922,
and June 18, 1923.
Farm Implements S. Res. 223, 65th Cong., 2d sess., May 13, 1918.)--See also. Independent
Harvester.)--The high prices of farm Implements led to this inquiry, which disclosed that there were
numerous trade combinations to advance prices and that the consent decree for the dissolution of the
International Harvester Co. was inadequate. The Commission recommended a revision of the-decree and
the Department of Justice proceeded against the company to that end. Report transmitted May 4, 1920.
Fertilizer (S. Res. 487, 62d Cong., 3d sess., Mar. 1, 1913) .--This inquiry, begun by the Bureau of
Corporations, disclosed the extensive use of bogus independent fertilizer companies for purposes of
competition, but through conferences with the principal manufacturers agreements were reached for the
abolition of such unfair competition. Report transmitted August 19, 1916.
Fertilizer (S. Res. 307, 67th Cong., 2d sess., June 17, 1922) .--The fertilizer inquiry developed that
active competition generally prevailed in the industry in This country, though in foreign countries
combinations controlled some of tine-most Important raw materials. The Commission recommended
constructive legislation to improve agricultural credits and more extended cooperative action in the
purchase of fertilizer by farmers. Report transmitted March 3, 1923.

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Flags (S. Res. 35, 65th Cong., 1st sess., Apr.16, 1917) .--This inquiry resulted from unprecedented
increases in the prices of American flags due to the wartime demand. Report transmitted July 26, 1917.
Flour Milling (S. Res. 212, 67th Cong., 2d sess., Jan. 18, 1922. See also Bread Y.-A report on the
inquiry into the flour-milling industry was sent to the Senate in May 1924. It showed the costs of
production of wheat flour and the profits of the flour-milling companies in recent years. It also discussed
the disadvantages to the miller and consumer arising from an excessive and con fusing variety in the sizes
of flour packages. Transmitted May 16, 1924.
Food Canning.--As a part of a general food investigation ordered by the President in 1917, the
Commission made a study of canned food, and in 1918 published two reports, one entitled “Canned
Foods: General Report, Canned Vegetables and Fruits”; and another entitled “Canned Foods: Canned
Salmon.” Also, the Commission, in connection with its general war-time cost finding activity, obtained
a large amount of cost data for the use of the War and Navy Departments, including data on canned foods.
A report was published in 1921, entitled “ Canned Foods, 1918: Corn, Peas, String Beans, Tomatoes, and
Salmon.”
Food Inquiry (authorized by the President, Feb. 7, 1917. See also Meat-Packing Profit Limitations)
.--The general food investigation, undertaken with a special appropriation of Congress, resulted in 2 major
series of reports, namely, meat packing and the grain trade. In addition brief separate reports were issued
on flour milling, canned vegetables and fruits, and canned salmon. The Commission recommended
divorcing the packers from the control of the stockyards, a recommendation subsequently adopted in the
Packers and Stock-yards Act, their exclusion from non-related lines of business, and acquisition by the
Government of meat packer private car lines. These reports also resulted in the prosecution of the packers
for a conspiracy in restraint of trade by the Department of Justice resulting in the so-called “Packer
consent decree”, which provided for the withdrawal of the packing companies from unrelated lilies, a
matter subsequently contested in court. (See Packer consent decree below.) A half dozen reports were
issued on the grain trade including the first detailed statistical analysis of the incidents and results of future
trading. The Commission recommended that the quotations of the various exchanges should he made up
and published on a more uniform basis and that railroads should be required to operate public elevators
for the convenience of their shippers or that there should be governmental operation of storage elevators
to permit small dealers to compete more nearly on an equality with the large elevator merchandisers.
Gasoline (S. Res. 457, 63d Cong., 2 sess., Sept.-28, 1914) .--Acting under this resolution, the
Commission published a report on gasoline prices in 1915, which discussed the high prices of petroleum
products and showed how the various Standard Oil companies had continued to maintain a division of
marketing territory among themselves. The Commission suggested several plans for restoring effective
competition in the oil industry. Transmitted April 11, 1917.
Gasoline (authorized by the President, Feb. 7, 1924) .--At the direction of the President, the
Commission undertook an inquiry into a sharp advance in gasoline prices. The report on this inquiry was
referred by the President to the Attorney General.- Report dated June 4, 1924.
Gasoline--Importation of Foreign Gasoline at Detroit (S. Res. 274, 72d Cong., 1st sess., July 16,
1932) .--This investigation had its inception in complaints filed against four major oil companies operating
in Detroit alleging price discrimination due to zoning divisions in which different retail prices prevailed.
This situation was the result of a fifth company selling Rumanian gasoline at retail prices below those
prevailing in Michigan. The possibility that foreign gasoline was being dumped into the Detroit market
prompted the Senate resolution. The Commission transmitted its report February 27, 1933. It found no
tangible evidence of collusion among the four companies to establish zones or determine prices, also that
the companies acted in good faith to meet competition.
Gasoline Prices (S. Res. 166, 73d Cong., 2d sess., Feb. 2, 1934) .--This resolution directed the
Commission to inquire into the causes of increased gasoline prices during the 6-month period preceding
the’ resolution’s adoption and the effect

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of such increases on gasoline consumers. The report, submitted May 9, 1984, was printed as a Senate
document (no. 178, 73d Cong., 2d sess.). The inquiry extended to 272 cities and towns, supplemented by
data from leading oil companies. The report revealed an average price increase of 2 cents about the time
of the effective date, September 2, 1933, of the petroleum code. Sub sequent declines resulted in an
average net increase of 1.04 cents. The Commission estimated consumers were paying an increased
annual rate of approximately. $160,550,000 on January 31, 1934. Except for a short period following the
code’s effective date, gasoline prices were comparatively low due to price wars in a number of markets.
Sales taxes, the report also indicated, represented 27 percent of the simple average price or approximately
$700,000,000 annually.
Grain Trade. (See Food inquiry above.)
House Furnishings (S. Res. 127, 67th Cong., 2d sess., Jan. 4, 1922) .--The Commission investigated
the alleged consistent high level of prices for house furnishing goods prevailing since 1920, as compared
to the price declines in other lines. Three reports were issued on the subject, dealing with household
furniture, household stoves, kitchen furnishings, and domestic appliances. These reports showed that
extensive conspiracies existed to inflate the prices of such goods. Reports transmitted January 17, 1923,
October 1, 1923, and October 0, 1924.
Independent Harvester Co. (S.- Res. 212, 65th Cong., 2d sess., Mar.-11, 1918). (See also Farm
Implements.).--This resolution called for an investigation of the organization and methods of operation
of the company which had been formed several years before to compete with the “Harvester Trust.” The
company passed into receivership and the report disclosed that mismanagement and insufficient capital
brought about its failure. Report transmitted May 15, 1918.
Interstate Power Transmission (S. Res. 151, 71st Cong., 1st sess., Nov. 8, 1929.) (See also Electric
Power and Utility Corporations.).--This resolution provided for the Commission’s filing, within 30 days
after passage, and at least once each 90 days thereafter until completion of the investigation, statements
of the quantity of electric energy used for development of power Or light, or both, generated in any State
and transmitted across State lines, or between points within the same State but through any place outside
thereof. Report transmitted December 20, 1930.
Leather and Shoe Industries (on motion of the Commission).--The general complaint about the high
prices of shoes in the latter part of 1917 as compared with the low prices of country hides led the
Commission to undertake this investigation.- No justification for the high prices of shoes could be found
and recommendations were made for the relief of this condition. Report dated August 21, 1919.
Lumber Trade Associations (authorized by the Attorney General, Sept. 4, 1919).--An extensive survey
of lumber manufacturers’ associations throughout the United States. The information obtained was
presented in a series of reports revealing the activities and attitude of lumber manufacturers toward
national legislation, amendments to the revenue laws, elimination of competition of competitive woods,
control of prices and production, restriction of reforestation, and other matters.- In consequence of the
Commission’s findings and recommendations the Department of Justice initiated proceedings against
certain of these associations for violations of the antitrust laws. Reports dated January 10, 1921, February
18, 1921, June 9, 1921, and February 15, 1922.
Lumber Trade Associations (on motion of the Commission). (See also Open price Associations.).--An
investigation of the activities of five large lumber trade associations bringing down to date the study made
at the request of the Attorney General in 1919-20. This inquiry was conducted in conjunction with the
inquiry into open-price associations. Transmitted February 13, 1929.
Meat-Packing Profit Limitations (S. Res. 177, 66th Cong., 1st sess., Sept. 3, 1919. (See also Food
Inquiry.).--The inquiry into meat packing profit limitations had as its object the study of the system of wartime control established by the Food Administration; certain changes were recommended by the
Cornmission including more complete control of the business and lower maximum profits.- Report
transmitted August 24, 1919.
Milk (S. Res. 431, 65th Cong., 3d sess., Jan. 31, 1919).--This inquiry into the fairness of milk prices
to producers and of canned milk to consumers, and whether they were affected by fraudulent or
discriminatory practices, resulted

INVESTIGATIONS, 1913-1935

153

in a report showing marked concentration of control and of questionable practices in the buying and
handling of cream by butter manufacturers, many of which have since been recognized as unfair by the
trade itself. Report transmitted June 6, 1921.
Milk Investigation (H. Con. Res. 32, 73d Cong., 2d sess., Feb. 5, 1984.).--An inquiry into the existence
of questionable trade practices in the milk industry and the tendency toward a monopolistic control of the
milk supply. The Commission’s first report, dealing with the Philadelphia and Connecticut milk sheds,
was transmitted April 5, 1935, and printed as Senate Document 152, Seventy-fourth Congress, first
session. Monopolistic practices in both areas were indicated as well as existence of agreements between
producer-cooperatives and distributors fixing consumer prices. However, Philadelphia margins were found
to have remained substantially the same over a period of years although prices charged consumers and
paid to producers varied widely. It was estimated on the basis of audits of the books of the distributors that
the dairy farmers in these two sheds incurred losses of several hundred thousand dollars a year “through
practices of certain distributors for most of which it is difficult to find justification.” A survey of the
Chicago milk shed was begun.
National Wealth (S. Res. 451, 67th Cong., 4th sess., Feb. 28, 1923).--This resolution called for a
comprehensive inquiry into national wealth and income and specially indicated for investigation the
problem of tax exemption and the increase in Federal and State taxes. Two reports were made. The first
was a discussion of taxation and tax exemption, which among other things comprised an elaborate estimate
of the amount and ownership of tax-exempt securities by different classes of corporations and persons,
and examined the significance of these facts with respect to the great increase in the burdens of taxation.
The second report was devoted to national wealth and income, estimating the former to be
$353,000,000,000 in 1922 and the national income in 1923 at $70,000,000,000. The nature of the wealth
and income and its distribution among various classes were also given. Reports transmitted June 6, 1924,
and May 25, 1926.
Newsprint Paper (S. Res. 177, 64th Cong., 1st sess., Apr. 24, 1916).--The newsprint-paper inquiry
resulted from an.-unexpected advance in prices.- The reports of the Commission showed that these prices
were very profitable, and that they had been partly the result of certain newsprint association activities
which were in restraint of trade. Through the aid of the Commission distribution of a considerable quantity
of paper to needy publishers was obtained at comparatively reasonable prices. The Department of Justice
instituted proceedings in consequence of which the association was abolished and certain newsprint
manufacturers indicted.- Reports transmitted March 3, 1917, and June 13, 1917. Following this inquiry
the Commission established a system of monopoly reporting of current figures dealing with production,
stocks, sales, and the like which was continued for several years.
Newsprint Paper (S. Res. 337, 70th Cong., 2d sess., Feb.27, 1929).--An inquiry to determine the
presence of an alleged monopoly among manufacturers and distributors of newsprint paper in the
supplying of paper to publishers of small daily and weekly newspapers. Report transmitted July 3, 1930.
Open-Price Associations (S. Res. 28, 69th Cong., special sess., Mar.-17, 1925). (See also “Lumber
Trade Associations.”).--This resolution called for an investigation to ascertain the number and names of
so-called “open-price associations”, their importance in the industry, and the nature of their activities, with
particular regard to the extent to which uniform prices were maintained among members to wholesalers
or retailers.- Report transmitted February 13, 1929.
Packer Consent Decree (S. Res. 278, 68th Cong., 2d sess., Dec. 8, 1924). (See also “Food Inquiry”
and “Meat-packing Profit Limitations.”).--In response to this resolution a report was made reviewing the
legal history of the consent decree and the efforts made to modify or vacate it. A summary was given of
the divergent economic interests involved in the question of packer participation in unrelated lines. The
report recommended the enforcement of the decree against the Big Five packing companies. Transmitted
February 20, 1925.
Peanut Prices (S. Res. 139, 71st Cong., 1st sess., Oct.22, 1929) -Under direction of this resolution the
Commission sought data concerning an alleged combination of peanut crushers and mills for price-fixing
purposes in violation of

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

the antitrust laws as well as information with respect to an alleged arbitrary decrease in prices. Report
transmitted June 30, 1932.
Petroleum (on motion of the Commission) -Complaints of several Important producing companies in
the Salt Creek oil field led to this investigation. The report covered the production, pipe-line
transportation, refining, and wholesale marketing of crude petroleum and petroleum products in the State
of Wyoming. Report dated January 3, 1921.
Petroleum (on motion of the Commission) .--A special report directing the attention of Congress to
conditions existing in the petroleum trade in Wyoming and Montana. Remedial legislation was
recommended by the Commission. Report dated July 13, 1922.
Petroleum Industry, Foreign Ownership in (S. Res. 311, 67th Cong., 2d sess., June 29, 1922) .--The
acquisition of extensive oil interests in this country by the Dutch-Shell concern, and alleged discrimination
practiced against Americans in foreign countries, provoked this inquiry which developed the situation in
a manner to promote greater reciprocity on the part of foreign governments. Report transmitted February
12, 1923.
Petroleum, Pacific Coast (S. Res. 13S, 66th Cong., 1st sess., July 31, 1919).--The great increase in the
prices of gasoline, fuel oil, and other petroleum products on the Pacific coast led to this inquiry, which
disclosed that several of the companies were fixing prices. Reports transmitted April 7, 1921, and
November 28, 1921,
Petroleum (on motion of the Commission, Oct. 6, 1926) .-An inquiry into conditions in the Panhandle
(Texas) oil field was made in response to requests of crude-petroleum producers. The report revealed that
a reduction of prices late in 1926 was largely a result of difficulties of handling and expenses of marketing
this oil because of peculiar physical properties. Report dated February 3, 1928.
Petroleum Prices (S. Res. 31, 69th Cong., 1st sess., June 3, 1926) .--A comprehensive study covering
all branches of the industry from the ownership of oil hands and the production of crude petroleum to the
conversion of petroleum into finished products and their distribution to the consumer. The report described not only the influences affecting the movements of gasoline and other products, but also discussed
the organization and control of the various important concerns in the industry. No evidence was found of
any understanding, agreement, or manipulation among the large oil companies to raise or depress prices
of refined products. Report transmitted December 12, 1927.
Petroleum Prices (H. Res. 501, 66th Cong., 2d sess., Apr. 5, 1920).--A short inquiry into high prices
of petroleum products. The report of the Commission pointed out that the Standard companies practically
made the prices in their several marketing territories and avoided competition among themselves. Various
constructive proposals to conserve the oil supply were made by the Commission. Transmitted June 1,
1920.
Pipe Lines (S. Res. 109, 63d Cong., 1st sess., June 18, 1913).--The report on this inquiry, which was
begun by the Bureau of Corporations, showed the dominating. importance of the pipe lines in the great
mid-continent oil fields, and that the pipeline companies, which were controlled by a few large oil
companies, not only charged excessively high rates for transporting petroleum but also evaded their duties
as common carriers by insisting on unreasonably large shipments, to the detriment of the numerous small
producers. Report transmitted, February 28, 1916.
Power and Gas Utilities.--See “Electric Power”, “Interstate Power Transmission”, and “Utility
Corporations.”
Price Bases (on motion of the Commission, July 27, 1927). (See also “Steel Code Inquiry” and “Steel
Code as Amended “).-The Commission initiated this investigation for the purpose of studying methods
in use to compute delivered prices on industrial products for the purpose of determining what factual and
potential influences such methods might have on competitive markets and price levels. The study also
included factors which determined the methods used. This survey extended to more than 3,500 reporting
manufacturers representing practically every industrial segment. The first report “The Basing-point
Formula and Cement Prices” was submitted to Congress on March 26, 1932. The study revealed this
system contributed to a “very imperfect price competition”, and tended to establish an unhealthy
uniformity

INVESTIGATIONS, 1913-1935

155

of delivered prices from the competitive standpoint together with a lack of price flexibility over variable
periods of time. “Cross-haul” or cross-freighting was found to be one of the industry’s economic evils and
to be generally admitted as such by the industry itself.
Radio (H. Res. 548, 67th Cong., 4th sess., Mar. 4, 1923).--As a result of this investigation it was found
that a large number of patents were owned by and cross licensed among a number of large companies. At
the conclusion of the investigation the Commission instituted proceedings against these companies
charging a monopoly of the radio field. Report transmitted December 1, 1923.
Raisin Combination (authorized by the Attorney General, Sept.30, 1919).--Allegations of a
combination among raisin growers in California were referred to the Commission for examination by the
Attorney General pursuant to the Federal Trade Commission Act. The Commission found that it was not
only organized in restraint of trade but was being conducted in a manner that was threatening financial
disaster to the growers. The Commission recommended changes to conform to the law, which were
adopted by the raisin growers. Report dated June 8, 1920.
Resale Price Maintenance (on motion of the Commission).--The question whether a manufacturer of
standard articles, identified by trade mark or trade practice, should be permitted to fix by contract the price
at which the purchasers could resell them, led to this inquiry. The Commission recommended to Congress
the enactment of legislation permitting resale-price maintenance under certain conditions. Reports dated
December 2, 1918, and June 30, 1919.
Resale Price Maintenance (on motion of the Commission, July 25, 1927).--A further investigation into
this subject was ordered by the commission on July 25, 1927. The study was conducted from the point of
view of its economic advantages or disadvantages to the manufacturer, distributor, and consumer, the
effects on costs, profits, and prices, and the purpose and results of price cutting. Part I of the report was
transmitted to Congress January 30, 1929; part II (final), June 22, 1931.
Salaries Inquiry (S. Res. 75, 73d Cong., 1st sess., May 5, 1933).--This resolution requested a report
from the Commission showing the salary schedules of executive officers and directors of corporations
engaged in interstate commerce (other than public utilities corporations) having capital and assets of more
than a million dollars, whose securities were listed on the New York Stock Exchange or the New York
Curb Exchange. The investigation was confined to the 5-year period, 1928~32, and was necessarily
limited to a comparatively small proportion of corporations coming within the Commission’s jurisdiction.
The report was transmitted on February 28, 1934, in 14 volumes containing 877 salary schedules.
Shoe Costs and Prices (H. Res. 217, 66th Cong., 1st sess., Aug.19, 1919).--The high price of shoes
after the war led to this inquiry, and the investigation of the commission attributed such prices chiefly to
supply and demand conditions. The economic waste due to the excessive variety of styles and rapid
changes therein was emphasized. Report transmitted June 10, 1921.
Sisal Hemp (S. Res. 170, 64th Cong., 1st sess., Apr. 17, 1916) .-In response to a resolution calling on
the commission to assist the Senate Committee on Agriculture and Forestry by advising how certain
quantities of hemp, promised hy the Mexican Sisal Trust, might be fairly distributed among American
manufacturers of binder twine, the commission made an inquiry and submitted a plan of distribution,
which was followed. Report transmitted May 9, 1916.
Southern Livestock Prices (S. Res. 133, 66th Cong., 1st sess., July 25, 1919).The low prices of
southern livestock, which gave rise to the belief that discrimination was being practiced, were investigated,
but the alleged discrimination did not appear to exist. Report transmitted February 2, 1920.
Steel Code Inquiry (S. Res. 166, 73d Cong., 2d sess., Feb. 2, 1934).--This resolution directed the
Commission to investigate the N. R. A. code for the steel industry with particular reference to price fixing,
increased prices of steel products and “other such matters as would give a full presentation of he facts
touching the industry since it went under the code.” The inquiry entered largely upon the effects of the
multiple basing-point system, influence if code limitations, composition of selling prices which the code
required and general summary of price increases. The Commission found the code enforced violation by
some producers of a cease and desist order issued some
20442--35----11

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

years ago against the basing-point system in what is known as the “Pittsburgh Plus” case. The report was
transmitted on March 19, 1934. Certain modifications of the steel code were approved by the President
on May 30, 1934.
Steel Code as Amended, Effects of Multiple Basing-Point System Thereunder (Executive order,
May 30, 1934).--This order directed the Commission and the National Recovery Administration to
undertake a joint study of the effect of the multiple basing-point system under the amended steel code,
particularly within the realm of the system’s influence on prices to consumers, permitting or encouraging
price fixing and “providing unfair competitive opportunities for producers or disadvantages for consumers
not based on natural causes.” The order called for “recommendations for revisions of the code.” It also
directed the study to be concluded within 6 months. The Commission’s report was transmitted on
November 30, 1934. It recommended code revisions eliminating provisions giving sanction to the multiple
basing point system in aid of price fixing and relating to the regulation of production and new capacity.
Stock Dividends (S. Res. 304, 69th Cong., 2d sess., Dec. 22, 1926).--This resolution called for a list
of the names and capitalization of those corporations which had issued stock dividends, together with the
amount of such stock dividends, since the decision of the Supreme Court, March 8, 1920, holding that
stock dividends were not taxable. The same information for the equal period prior to that decision was
also called for. The report contains a list of 10,245 such corporations and a brief discussion on the
practice of declaring stock dividends, concluding it to be of questionable advantage as a business policy.
Transmitted December 5, 1927.
Sugar (H. Res. 150, 66th Cong., 1st sess., Oct. 1, 1919).--The extraordinary advance in the price of
sugar in 1919 led to this inquiry. The price advance was found to be due chiefly to speculation and
hoarding in sugar. Certain recommendations were made for legislative action to cure these abuses. Report
transmitted November 15, 1920.
Textile Industry (authorized by Executive order, Sept. 26, 1934).--The order instructed the
Commission to inquire into the industry’s labor costs, profits, and investment structure to determine
whether increased wages and reduced working hours could be sustained under prevailing economic
conditions. It also established “The Textile Labor Relations Board” and directed the Department of Labor
to report on actual hours of employment in the industry, employees’ earnings and general working
conditions. Five reports have been submitted: (1) Investment and Profit (Dec.31, 1934), (2) Cotton and
Textile Industry (Mar. 8, 1935), (3) Woolen and Worsted Textile Industry (Jan.24, 1935), (4) Silk and
Rayon Textile Industry (Feb.22, 1935), and (5) Thread, Cordage, and Twine Industries (Feb. 18, 1935).
Conditions prevailing in the 20 months preceding the 1934 textile strike were studied. These were divided
into three 6-month periods and a 2-month period-January-June 1933, before N. R. A. codes became
effective; July-December 1933, covering their effective dates; January-June 1934, while codes were
functioning; and July-August 1934, the 60-day period prior to the strike. Due to the desirability of an early
report, essential information was obtained by means of a comprehensive schedule, subscribed to under
oath and forwarded to approximately 2,600 textile manufacturing companies. Material for immediate
comparable results was transmitted by 765 concerns, with an aggregate investment of slightly less than
$1,200,000,000 The investigation is being continued.
Tobacco Marketing, Flue-Cured Leaf (on motion of the Commission).--This investigation was
instituted upon complaint of representative groups of North Carolina tobacco farmers charging the
existence of territorial and price agreements among the larger manufacturers to control cured leaf tobacco
prices. In 1929 the price to growers was approximately 25 percent below cost of production. The inquiry
was broadened to included the entire flue-cured belt extending from southern Virginia through north
central Florida. The Commission found no evidence of price agreements. It recommended curtailing
production, improved marketing processes, a standardized system of grading, and greater cooperation
between manufacturers and growers. It also recommended enactment of legislation similar to the Cotton
Standardization Act which would make mandatory existing classification under the Tobacco Stocks and
Standards Act. The report was released May 23, 1931.
Tobacco Prices (H. Res. 533, 66th Cong., 2d sess., June 3, 1920).--An inquiry into the prices of leaf
tobacco and the selling prices of tobacco products. The

INVESTIGATIONS, 1913-1935

157

unfavorable relationship between them was reported to be due in part to the purchasing methods of the
large tobacco companies. As a result of this inquiry the Commission recommended that the decree
dissolving the old Tobacco Trust should be amended and alleged violations of the existing decree
prosecuted. Better Systems of grading tobacco were also recommended by the Commission. Report
transmitted December 11, 1920.
Tobacco Prices (S. Res. 129, 67th Cong., 1st sess., Aug. 9, 1921).--This inquiry was also directed to
the low prices of leaf tobacco and the high prices of tobacco products. It disclosed that in the sale of
tobacco several of the largest companies were engaged in numerous conspiracies with their customers-the
jobbers-to enhance the selling prices of tobacco. Proceedings against these unlawful acts were instituted
by the Commission. Report transmitted January 17, 1922.
Tobacco (S. Res. 329, 68th Cong., 2d sess., Feb. 9, 1925).--The report on tills investigation related to
the activities of the American Tobacco Co. and the Imperial Tobacco Co. of Great Britain. The alleged
illegal agreements, combinations, or conspiracies between these companies did not appear to exist
Transmitted December 23, 1925.
Trade and Tariffs in South America (authorized by the President, July 22, 1915).--This inquiry was
an outgrowth of the First Pan American Financial Conference which met at Washington, May 229, 1915.
Its immediate purpose was to furnish the American branch of the International High Commission,
appointed as a result of this financial conference, with information to assist in the deliberations of the
International High Commission. Tariff characteristics of Brazil, Uruguay, Argentina, Chile, Bolivia, and
Peru were discussed in the report The investigation established the prevalence of a decided protective
tariff tendency in some of the South American countries as against the erroneous impression that had been
created in this country that all the Latin American tariffs were devised purely for revenue. Report dated
June 30, 1916.
Utility Corporations (S. Res. 83, 70th Cong., 1st sess., Feb. 15, 1928, and S. J. Res. 115, 73d Cong.,
21 sess., June 1, 1934). (See also Electric Power and Interstate Power Transmission.)--The first resolution
directed the Com mission to investigate electric and gas utility holding companies, operating companies,
and construction and other affiliated companies; their financial structures; growth of their capital assets
and liabilities, methods and costs of issuing and marketing the various types of stocks and other securities;
capitalization in engineering and management and other types of supervisor and con trolling contracts;
methods of creation of capital surplus and the payment of dividends therefrom, etc. The resolution also
directed the Commission to ascertain the facts with respect to propaganda hostile to public ownership, and
to suggest legislation to correct abuses found to exist in the organization or operation of holding
companies. The resolution required monthly reports. The first of these was dated March 15, 1928. The
second resolution directed the Commission to conclude the investigation and submit its final report by the
first Monday in January 1936. Reports have been printed in approximately 80 volumes as Senate
Document 92, Seventieth Congress, first session; also the following summaries: Compilation of proposals
advocating or antagonistic to Federal incorporation or licensing together with State constitutional,
statutory, and case law relating particularly to utility and holding companies (S. Doe. 92, Pt. 69-A, 70th
Cong., 1st sess.) ; financing and scope of public-utility publicity and propaganda activities and their
objectives (S. Doc. 92, Pt. 71-A, 70th Cong., 1st sess.); economic, financial, and corporate phases of
holding and operating companies of electric and gas utilities (S. Doc. 92, p 72-A, 70th Cong. 1st sess.)
; and efforts of States to control holding companies, the extent to which holding companies have been
regulated by the Federal Government, need for enlargement of such regulation, and the Commission’s
recommendations in this premise (S. Doc. 92, Pt. 73-A, 70th Cong., 1st sess.)
War-Time Cost Finding (authorized by the President, July 25, 1917).--The numerous cost
investigations made by the Federal Trade Commission during the war into the coal, steel, lumber,
petroleum, cotton-textile, locomotive, leather, canned foods, and copper industries, and scores of other
important industries on the basis of which prices were fixed by the Food Administration, the War
Industries Board, and purchasing departments like the Army, Navy,

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Shipping Board, and Railroad Administration, were all done under the President’s special direction, and
it is estimated that they helped to save the country many billions of dollars by checking unjustifiable price
advances. Subsequent to the war a number of reports dealing with costs and profits were published based
on these war-time inquiries. Among these were reports on steel, coal, copper, lumber, and canned foods.
Wheat Prices (authorized by the President, Oct.12, 1920) .-The extraordinary decline of wheat prices
in the summer and autumn of 1920 led to a direction of the President to inquire into the reasons for the
decline. The chief reasons were found in abnormal market conditions, including certain arbitrary methods
pursued by the grain-purchasing departments of foreign governments. Report dated December 13, 1920,
Woolen Rag Trade (on motion of the Commission).--This report contains certain information gathered
during the war at the request of the War Industries Board for its use in regulating the prices of woolen
rags. The compilation of the data and the preparation of the report was authorized by the Commission on
June 30, 1919.

INDEX
[Index includes only those electric and gas company groups examined during fiscal year and not the
complete list of such companies occupying pages 20-25, inclusive. It does not include names of
respondent. in orders to cease and desist listed at pages 51, inclusive, other than those cases specially
treated in the report, nor of export-trade associations listed at page 109, nor of trust laws and unfair
competition in foreign countries presented at page 111, nor the general list of investigations from 1933-35
listed at page 147]

Advertising cases:
False and misleading
Special procedure in
Agricultural Adjustment Administration
Appropriations, allotments and expenditures
Armand Co., Inc., Des Moines
Artloom Corporation case
Attorney General of the United States
Ayres, William A., Commissioner
Back numbers magazine case
Bankruptcy laws, as amended
Battle Greek Appliance Co., Ltd., Battle Creek, Mich
Boycott and price fixing
Briarwood Corporation, Cleveland
Bureau of the Census
Bureau of Labor Statistics
Bureau of Standards
Butterick Publishing Co., New York City
“Cedar” chests, cardboard
Chain store investigation
Civil Service Training Bureau, Cleveland
Clayton Act:
Amendments to, suggested
General references to
Partial text of
Colonial Steel Co., Pittsburgh
Complaints
Contractual relations, interference with
Court cases:
Digests of
Tabular summary
Cranzer, L. A., St. Louis, court case
Crown-Zellerbach Corporation, San Francisco
Davis, Ewin L., Chairman, Federal Trade Commission
Deficiency Acts
Department of Agriculture
Department of Justice
Disparagement of competitors

Page
5, 6, 51, 56, 64, 66, 101
101
121
121
72
77
3, 9, 13, 107, 152, 155
11, 12
62
48
73
54
64
29
28
102
62
64
10, 32, 148
72, 73
10, 15, 32, 33
3, 4, 5, 12, 43, 45, 48, 52, 57, 67
134
49
5, 51, 140
61
71
82
72, 74
49
11, 12
121
104
14, 48, 150, 151, 152, 153
55
159

160

INDEX

Distillers, alleged misuse of term
Dodson, J. G. and Mrs. C. M., Atlanta, court case
Electric & Gas Utilities:
General description
Associated Gas & Electric Co
Byllesby Engineering & Management Co
Central & South West Utilities Co
Central Public Service Co
Cities Service Co
Commonwealth & Southern Corporation
Duke Power Co
Electric Bond & Share Co
Electric Management & Engineering Corporation
General Water, Gas & Electric Co)
Midland United Co
Niagara. Hudson Power Corporation
Stone & Webster, Inc
Tri-Utilities Corporation (G. L. Ohrstrom Interests)
Emergency relief and public works fund
Executive order:
No.7192, September 26, 1935
Of September 26, 1934
Export Trade Act:
Cooperation in export trade
Enactment of
Foreign trade work under
Investigations under, table
Text of
Trade associations
Fairyfoot Products Co., Chicago
Federal Communications Commission
Federal Reserve Board
Federal Trade Commission:
Administrative division of
Branch offices
Chief counsel
Chief economist
Chief examiner
Chief trial examiner
Commissioners
Economic work
Export trade section
Fiscal affairs
Functions of
Legal activities
Publications
Public relations and editorial service
Recommendations of
Rules of practice
Secretary
Special board of investigation
Trade practice conference division

Page
51, 54
77
9, 19, 150, 157
9, 19
9, 19
9, 19
9, 19
9, 19
9, 19
9, 19
9, 20
9, 20
9, 20
9, 20
9, 20
9, 20
9, 20
121
7, 8
10, 28, 29, 30
148, 149
149
8, 4, 6, 12, 43, 45, 52, 107
82
138
109
75
6, 48, 103
43
12
47, 140
12
13
12, 46
13
11, 12
3, 12
13, 107
121
3
3, 5, 12, 43, 82
13
13
14, 25, 32
140
12
13, 101
6, 12, 13, 93

INDEX

161

Federal Trade Commission Act: Page
Amendments to, suggested
10, 14, 33
General references to
3,
4, 5, 6, 11, 12, 13, 14, 19, 28, 43, 45, 52, 57, 58, 61, 67, 81, 101, 107, 111, 155
Text of
127
Ferguson, Garland S., Jr., commissioner
11, 12
Fleischman, G. B., St. Louis, court case
72, 74
Food and Drug Administration
102
Foreign trade work
13, 107
Freer, R. E., commissioner
11, 12
Fur cases
65
Globe Automatic Sprinkler Co. of Pennsylvania, New York City
61
Goodyear Tire & Rubber Co. case
52
Gordon, H., New York City
Gratz case
3
Great Northern Fur Dyeing & Dressing Co., Inc., Long Island, N.Y., and others
65
Hires Turner Glass Co., Philadelphia
75
House Concurrent Resolution No.32, 73rd Cong., 2d Sess
30, 46
House Document No.152, 74th Cong., 1st Sess
10
Hughes, Inc., E Griffiths, Rochester, N. Y
72, 76
Independent Offices Act
121
Inecto, Inc., New York City
72, 77
Interstate Commerce Commission
43
Investigations:
General, during fiscal year
9, 19
General, 1913-35
147
Hearings on legal
143
Preliminary legal
5, 46
lronized Yeast Co., Atlanta
79, 77
Jean Jordeau, Inc., South Orange, N. J
66
Johnson Candy Co., Walter H., Chicago
72, 78
Keppel case
3, 78
“Kruscben Salts” case
76
Labor Advisory Board
29
Lee Co., George H., Omaha, Nebr
72, 78
Lefrie, Bertha E., New York City
66
Maisel Trading Post, Inc., Albuquerque, N. Mex
72, 79
March, Charles H., vice chairman, Federal Trade Commission
11, 12, 94
Mathews, George C., former commissioner
11
McCorkle, George, director, Trade Practice Conferences
94
Midwest Retail Coal Association
81
Milk investigation
10, 30, 153
Misbranding and mislabeling
65
Misrepresentations, alleged
55, 56, 61, 66
Nachman Spring-Filled Corporation, Chicago
66
National Association of Ladies’ Handbag Manufacturers, New York City
63
National Emergency Council
11
National Industrial Recovery Act
7, 8, 47, 57, 58, 81
National Recovery Administration
6, 7, 8, 28, 47, 48, 57, 58, 121, 156
“New River” Coal case
80
Newspaper and magazine advertising
101

162

INDEX

Page
Odora Co., New York City
64
Orders to cease and desist
5, 58
Practices condemned in
67
Post Office Department
104
Power and gas utilities. (See Electric and Gas Utilities.)
President of the United States
3, 7, 8, 9, 10, 11, 29, 30, 121, 151, 157, 158
Price bases investigation
154
Price fixing by conspiracy
63
Public Health Service
102
Purity Ice Co., Lakeland, Fla
58
Radio advertising
6, 103
Radio sets and tubes
53
Raladam Co. case
76
Resale price maintenance
55
Roosevelt, Franklin D. (see also President of the United States)
8, 11
Salvation Army
62
Schechter decision
8, 48, 58
Schultz & Hirsch Co., Chicago
66
Schwartz & Co., Philadelphia
61
Sears, Roebuck & Co
53
Securities Act of 1933
10, 11
Securities Exchange Act of 1934
10, 11
Securities and Exchange Commission
10, 11
Senate Documents:
No.4, 74th Cong., 1st sess
10, 148
No.92, 70th Cong., 1st sess
9, 25, 157
Senate Joint Resolution No. 115, 73d Cong., 2d sess
19, 157
Senate Resolutions:
No. 83, 70th Cong., 1st sess
19, 157
No.224, 70th Cong., 1st sess
32
Sherman Act
3
Text of
133
Shoe cases, use of word “Doctor”
51, 63
Steel code investigation
155, 156
Stipulation procedure
5, 13, 49, 50, 51
Stock acquisition, alleged illegal
48, 52
Supreme Court
3, 4, 5, 8, 14, 16, 46, 72, 86, 87, 88, 89, 156
Textiles, Cabinet Committee on
29
Textile inquiry
10, 28, 156
Trade practice conferences
6, 12, 13, 93
Trial examiners, bearings before
143
Trust laws and unfair competition In foreign countries
111
Unfair methods of competition:
In foreign countries
111
Types of
67
United States Circuit Court of Appeals:
Commission may apply to for enforcement of its orders
46
Commission sustained in 10 cases
6, 71
Eighty-seven decisions handed down in
85
Second Circuit, New York City
72, 76, 77
Third Circuit, Philadelphia
75
Fourth Circuit, Richmond
80

INDEX
United States Circuit Court of Appeal continued
Sixth Circuit, Cincinnati
Seventh Circuit, Chicago
Eighth Circuit, St. Louis
Tenth Circuit, Denver
United States Envelope Co., Springfield, Mass
Vanadium Alloys Steel Co., Latrobe, Pa
Van Kannel Revolving Door Co., New York City
Walker’s New River Mining Co., Elkins, W. Va
Wallace, E J., St. Louis
Webb-Pomerene Act. (See Export Trade Act.)
Wholesale drug conference
Winsted Hosiery Co. case

163
Page
73, 78
75, 78
74, 78, 30
79
66
49
49
80
72, 80
94
76, 77


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