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ANNUAL REPORT
OF THE

FEDERAL

TRADE COMMISSION
FOR THE

FISCAL YEAR ENDED JUNE 30

1945

UNITED STATES
GOVERNMENT PRINTING OFFICE
WASHINGTON : 1945

For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington 25, D. C.
Price 25 cents

FEDERAL TRADE COMMISSION
EWIN L. DAVIS, Chairman 1
GARLAND S. FERGUSON
CHARLES H. MARCH
WILLIAM A. AYRES
ROBERT E. FREER
OTIS B. JOHNSON, Secretary
FEDERAL TRADE COMMISSIONERS-1915-45
Name
Joseph E. Davies
Edward N. Hurley
William J. Harris
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. Fleet
Charles W. Hunt
William E. Humphrey
Abram F. Myers
Edgar A. McCulloch
Garland S. Ferguson
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
Illinois
Georgia
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-Jan. 31, 1917.
Mar.16, 1915-May 31, 1918.
Mar.16, 1915-A 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. 1, 1920-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, 1920-Jan. 15, 1929.
Feb.11, 1927-Jan. 23, 1933.
Nov.14, 1927.
Feb. 1, 1929-Aug. 28, 1945.
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
Pennsylvania Avenue at Sixth Street, Washington 25, D. C.
BRANCH OFFICES
45 Broadway, New York 6

55 New Montgomery Street, San
Francisco 5
433 West Van Buren Street,
801 Federal Office Building,
Chicago 7.
Seattle 4.
150 Baronne Street, New Orleans 12

1

Chairmanship rotates annually. Commissioner Ayres will become Chairman in January 1946.

II

LETTER OF SUBMITTAL
To the Congress of the United States :
I have the honor to submit herewith the Thirty-first Annual Report of the Federal
Trade Commission for the fiscal year ended June 30, 1945. A limited number of copies
of the report is being printed by the Federal Trade Commission.
By direction of the Commission:
EWIN L. DAVIS, Chairman.
III

CONTENTS
INTRODUCTION
Duties of the Commission
Summary of legal activities
Proceedings suspended because of war
General investigations
The Commissioners and their duties
Assignment of work among the staff
Publications of the Commission
Recommendation to Congress

Page
1
2
3
3
4
5
6
8

PART I. GENERAL INVESTIGATIONS
Methods and costs of distribution
Advertising as a factor in distribution
Milk distribution, prices, spreads, profits
Cooperative study of fish production and distribution
Cost of production and distribution of fish in the Great Lakes area
Cost of production and distribution of fish in New England
Cigarette shortage
Priorities investigations
Wartime activities

10
10
11
14
14
17
23
24
25

PART II. GENERAL LEGAL WORK
Description of procedure
Legal investigation
Disposition of cases by stipulation
Formal complaints
Orders to cease and desist
Types of unfair methods and practices
Cases in Federal courts
Tabular summary of legal and court work

27
30
34
34
37
45
52
59

PART III. TRADE PRACTICE CONFERENCES
Unfair competitive practices prevented through rules of fair competition
Group I and Group II rules defined
Trade practice conference activities during year
Industry rules and their administration
Types of practices covered in approved rules
Informative labeling

63
64
65
65
66
67

VI

CONTENTS

PART IV. WOOL PRODUCTS LABELING ACT
Informative labeling for protection of industry and the public

Page
69

PART V. RADIO AND PERIODICAL ADVERTISING
Special procedure provides continuous survey of published and broadcast matter

72

PART VI. MEDICAL AND SCIENTIFIC OPINIONS
Commission utilizes such data in considering cases relating to food, drugs, devices,
and cosmetics

76

PART VII. FOREIGN TRADE WORK
The Export Trade Act
Exports in 1944
Associations formed during fiscal year
Export associations on file with Commission
Commission inquiries under Export Trade Act
Congressional inquiries
Trade regulation and unfair Competition abroad

77
77
77
78
79
80
81

PART VIII. FISCAL AFFAIRS
Appropriation act providing funds for Commission Work
Appropriations and expenditures for fiscal year
Detailed statement of costs for fiscal year
Appropriations and expenditures, 1915-45

82
82
83
84

APPENDIXES
Federal Trade Commission Act
Titles of other acts administered by the Commission
Statement of policy
Investigations, 1915-45
Index

85
93
93
94
111

ANNUAL REPORT
OF THE

FEDERAL TRADE COMMISSION
FOR THE

FISCAL YEAR ENDED JUNE 30, 1945
INTRODUCTION
DUTIES OF THE COMMISSION
The Federal Trade Commission herewith submits its report for the fiscal year July
1, 1944, to June 30, 1945.
The Commission is an administrative agency of the Federal Government. It was
organized March 16, 1915, under the Federal Trade Commission Act, which was
approved September 26, 1914, and amended March 21, 1938.
The duties of the Commission fall into two categories: (l) Legal activities in the
enforcement of the laws it administers and (2) general investigations of economic
conditions in interstate and foreign commerce.
In addition to discharging these duties the Commission during the fiscal year
conducted special wartime investigations and surveys for the War Production Board
and other war agencies.
Legal activities of the Commission embrace administration of (l) the Federal Trade
Commission Act, which declares that unfair methods of competition and unfair or
deceptive acts or practices in commerce are unlawful; (2) section 2 of the Clayton Act,
as amended by the Robinson-Patman Act, prohibiting price and other discriminations,
and sections 3, 7, and 8 of the Clayton Act dealing with tying and exclusive-dealing
contracts, acquisitions of capital stock, and interlocking directorates, respectively; (3)
the Export Trade Act, also known as the Webb-Pomerene Law, which, for the purpose
of promoting foreign trade, permits the organization of associations to engage
exclusively in export under stated restrictions; and (4) the Wool Products Labeling Act
of 1939, designed to protect industry, trade and the consumer against the evils
resulting from the unrevealed presence of substitutes and mixtures in wool products.
The general investigations arise chiefly under section 6 (a), (b), and (d) of the
Federal Trade Commission 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.

1

2

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

(b) To require, by general or special orders, corporations engaged in commerce, excepting
banks, and common carriers * * * 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 1 to investigate and report
the facts relating to any alleged violations of the antitrust acts by any corporation.

SUMMARY OF LEGAL ACTIVITIES
The Commission during the fiscal year issued 164 formal complaints alleging
violations of the laws it administers; issued 140 orders directing respondents to cease
and desist from such violations; and accepted 286 stipulations to discontinue unlawful
practices, 66 pertaining especially to radio and periodical advertising.
During the fiscal year the Commission had 29 cases in the United States courts.
Results favorable to the Commission were obtained in 27 cases, 2 of which were in the
Supreme Court, 19 in United States circuit courts of appeals, and 6 in United States
district courts. The Commission’s orders to cease and desist were affirmed by the
circuit courts of appeals in 16 cases, 4 of them with modifications. Three petitions for
review were dismissed by the circuit courts of appeals for want of prosecution, leaving
the Commission’s orders to cease and desist in effect. In the 2 Supreme Court cases
the Court sustained orders of the Commission directed against the use by 2 glucose
manufacturers of the basing point system of delivered prices. In 6 cases district courts
entered judgments for civil penalties totaling $10,182.72 for violation of Commission
orders to cease and desist which had become final.
Commission orders to cease and desist were reversed in two cases in the circuit
courts of appeals, in one of which the reversal was without prejudice to reopening the
proceeding and offering additional evidence.
Twenty-four petitions for review of Commission orders were filed by respondents
du ring the fiscal year in circuit courts of appeals. The Commission filed applications
for enforcement of two of its orders.
During the year, 429 hearings were held for taking testimony in formal cases
instituted by mission. A majority of the hearings were held in Washington and nearby
cities. In the same period, trial of the issues was begun in 126 such cases and taking
of testimony was completed in 86.
More than 150 industries operate under trade practice rules approved by the
Commission. Approved rules were promulgated during the year for the following
industries: Button jobbing, hearing aid, low-pressure refrigerants, razor and razor
blade, water heater, wood-cased lead pencil, and tuna (revised and extended rules). All
rules were administered in consonance with the war effort.
1

The Independent Offices Appropriation Act for 1934 provided that future investigations by
the Commission for Congress must be authorized by concurrent resolution of the two. Houses.
Under the appropriations act of 1046, funds appropriated for the Commission are not to be spent
upon any investigation thereafter called for by Congressional concurrent resolution “until funds
are appropriated subsequently to the enactment of such resolution to finance the cost of such

investigation.”

GENERAL INVESTIGATIONS

3

The Wool Products Labeling Act was given wide application during the year. Field
inspections were made of more than 11 ½ million articles subject to the labeling
provisions of the act, and covered the labeling practices of several thousand
manufacturers, distributors, and other marketers.
The Commission conducted several investigations as to operation of export
associations, under the Export Trade Act. Investigation of the Florida Hard Rock
Phosphate Export Association was completed, and recommendations for the
readjustment of the business of the association were issued. At the close of the fiscal
year, 49 export associations were registered with the Commission.
PROCEEDINGS SUSPENDED BECAUSE OF WAR
During the fiscal year, the suspense of work on many cases was continued because
of war conditions. The suspended cases involve a wide range of products, including
precision instruments, machinery, chemicals, construction materials, and automobile
tire chains. Proceedings in such cases had been suspended until the end of the war at
the request of the Secretary of War and the Secretary of the Navy. The requests were
made pursuant to an arrangement worked out between the War and the Navy
Departments and the Commission April 28,1942, providing for the postponement of
any proceeding at the request of those departments when, in the opinion of the
Secretary of War and the Secretary of the Navy, the continuation of such proceedings
would seriously interfere with the war effort. 2
GENERAL INVESTIGATIONS
Four parts of the Commission’s report based on its study of methods and costs of
distributing important consumer commodities were transmitted to Congress under the
titles: Part V--Advertising as a Factor in Distribution: Part VI--Milk Distribution,
Prices, Spreads and Profits: Part VII--Cost of Production and Distribution of Fish in
the Great Lakes Area: and Part VIII--Cost of Production and Distribution of Fish in
New England. The survey of the fish industry was undertaken in cooperation with the
Office of the Coordinator of Fisheries, Department of the Interior.
An investigation of the shortage of cigarettes in the civilian market was undertaken
by the Commission after it had received complaints from the public and distributors
concerning the scarcity and a request from the Chairman of the Senate Interstate
Commerce Committee that such an inquiry be made. The Commission reported that
the shortage was caused principally b y the diversion of a high percentage of total
cigarette production to the armed forces and the Allies and was not attributable to
violations of any laws under its jurisdiction.
During and prior to the fiscal year the Commission completed surveys of some 4,300
companies in 24 essential industries to ascertain the facts concerning their compliance
with priorities orders issued by the War Production Board. The Board had requested
the Commission to make the surveys.
2 On August 17 1945, the War Department, and on August 20.1945, the Navy Department,
withdrew their requests with respect to proceedings suspended by the Federal Trade
Commission on the ground of interference with war production under the arrangement of April

28, 1942. The commission immediately announced the lifting of its suspension of these matters
and stated it would proceed with them as expeditiously as possible.

4

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

(The investigations and surveys referred to above are reported in more detail
beginning on p.24.)
In connection with its regular survey of commercial advertising, the Commission
analyzed for and reported to the War Production Board such advertisements as
contained pertinent references to war production, price rises or trends, rationing, and
other war-related subjects, or possible violations of the Board’s policies with respect
to advertising in wartime. (See p.25.)
During the war emergency numerous branches of the Government, especially the
war agencies, have utilized the basic factual accounting, statistical, and economic data
covering important national industries which were gathered by the Commission in the
approximately 135 general investigations and 370 special cost studies it has conducted
during its existence. 3
A majority of these general investigations were authorized by Congressional
resolutions, some were conducted pursuant to Presidential orders,. a number were
made at the request of other branches of the Government, and others On the initiative
of the Commission. Many of these inquiries have supplied valuable information
bearing on competitive conditions and trends in interstate trade and industrial
development and have shown the need for, and wisdom of, legislative or other
corrective action.
Investigations conducted by the Commission have led, directly or indirectly, to the
enactment of important laws, including the Export Trade Act, the Packers and
Stockyards Act, the Securities Act of 1933, the Public Utilities Holding Company Act
of 1935, the Natural Gas Act of 1938, and the Robinson-Patman Anti-discrimination
Act of 1936, which amended section 2 of the Clayton Act.
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 may belong to the
same political party.
As provided in the Federal Trade Commission Act, the term of office of a
Commissioner is 7 years, dating from the 26th of September 4 last preceding his
appointment, except when lie succeeds a Commissioner who relinquishes office prior
to the expiration of his term, in which case the act provides that the new member “shall
be appointed only for the unexpired term of the Commissioner whom he shall succeed.” Upon the expiration of his stated term of office, a Commissioner continues to
serve until his successor shall have been appointed and shall have qualified.
As of June 30, 1945, the Commission was composed of the following members:
Ewin L. Davis, Democrat, of Tennessee, Chairman; Garland S. Ferguson, Democrat,
of North Carolina; Charles H. March, 5 Republican, of Minnesota; William A. Ayres,
Democrat, of Kansas; and Robert E. Freer, Republican, of Ohio.
The chairmanship of the Commission rotates annually among its members.
Commissioner Davis is serving as Chairman during the

3 An alphabetical list and brief description of the investigations conducted by the Commission
ap pear in the appendix, beginning at p.94.
4 September 26 marks t he anniversary of the approval of the Federal Trade Commission Act
in 1914.
5 Commissioner March died in office on August 28,1945. He was succeeded by Hon. Lowell
B. Mason, of Illinois, who took office October 15, 1945.

ASSIGNMENT OF WORK AMONG THE STAFF

5

calendar year 1945, having succeeded Commissioner Freer. Commissioner Ayres will
become Chairman in January 1946. Through this method of rotating the chairmanship,
each Commissioner serves as Chairman at least once during his term of office. The
Chairman presides at meetings and signs the more important official papers and reports
at the direction of the Commission.
In addition to the general duties of administering the statutes committed to the
Commission for enforcement, each Commissioner has supervisory charge of the work
of One or more of the divisions of the Commission. Chairman Davis has supervisory
charge of the Trial and Appellate Division; Commissioner Ferguson, of the Trial
Examiners Division and the Division of Trade Practice Conferences; Commissioner
March, of the Legal Investigation Division; Commissioner Ayres, of the Medical
Advisory Division and the several Administrative Divisions; and Commissioner Freer,
of the Radio and Periodical Division and the Division of Accounts, Statistics and
Economic Investigations. The Secretary of the Commission is its executive officer.
Each case coming before the Commission for consideration is assigned to a
Commissioner for examination and report before it is acted upon by the Commission.
The Commissioners meet each work day for the transaction of business, including the
bearing of oral arguments in cases before the Commission. They usually preside
individually at the trade practice conferences held for industries, perform numerous
administrative duties incident to their position, and direct the work of a staff which,
as of June 30, 1945, numbered 451 officials and employees, including attorneys,
economists, accountants, and administrative personnel stationed in Washington and
in 5 branch offices. In addition, 130 members of the staff were on military furlough
and serving in the armed forces of the Nation.
ASSIGNMENT OF WORK AMONG THE STAFF
The Chief Counsel acts as legal adviser to the Commission, has charge of the trial
of formal cases before the Commission and in the courts, and supervises the foreigntrade work of the Commission conducted pursuant to the Export Trade Act.
The Division of Accounts, Statistics, and Economic Investigations conducts the
general inquiries of the Commission as distinguished from those primarily legal in
nature. Such general inquiries in recent years have included surveys of methods and
costs of distributing important commodities; studies of costs, prices, and profits in
various industries; and compilations of financial reports of corporations operating in
strategic material industries. These recent inquiries were made, for the most part, at
the request of war agencies, and in all cases the data gathered were made available to
them. Aside from its investigational activities, the division cooperates with the legal
divisions of the Commission with respect to price-fixing and other types of restraintof-trade cases and to cost-accounting work required in Robinson-Patman Act cases.
The Chief Examiner is the principal legal investigating officer of the Commission
and exercises supervisory direction over the investigation of applications for complaint
filed with the Commission alleging violation of any of the laws administered by it. The

Chief

6

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

Examiner also conducts general investigations primarily of a legal nature.
Members of the Trial Examiners Division preside at hearings for the reception of
evidence in formal complaint proceedings and in certain of the general investigations
conducted by the Commission. Other members of the division negotiate settlements
by stipulation of applications for complaint, subject to the approval of the
Commission.
The Division of Trade Practice Conferences conducts the activities relating to trade
practice rules for industries, including the holding of hearings and industry
conferences, administration and enforcement of rules, and other staff duties incident
to the trade practice conference procedure. Through this division the Commission also
administers the Wool Products Labeling Act and the rules and regulations promulgated
thereunder.
The Radio and Periodical Division conducts office investigations in cases involving
allegations of false and misleading advertising. Such cases usually result from the
division’s continuing examination of radio and periodical advertising and, in a
majority of instances, arc disposed of by stipulation. The division also carried on a
special continuing examination of war-related advertising for the War Production
Board.
The Medical Advisory Division furnishes the Commission or any of its divisions
with professional opinions in matters involving medical, chemical, or scientific
questions relating to food, drugs, cosmetics, and devices arising in connection with
investigations or the trial of cases instituted under the provisions of the Federal Trade
Commission Act.
The Legal Research and Compiling Division and the Library Division function as
professional adjuncts in aid of the professional staff.
Administrative services are rendered and the business affairs of the Commission are
conducted by the following divisions: Budget and Finance, Personnel Supervision and
Management, Records, and Publication and Procurement.
PUBLICATIONS OF THE COMMISSION
The Federal Trade Commission Act, section 6 (f), provides that 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.
For the period of the war emergency the Commission has limited the number and
size of its publications. Publications issued during the fiscal year were:
Annual Report of the Federal Trade Commission for the Fiscal Year Ended June 30,
1944. House Document No. 10, Seventy-ninth Congress, first session, January 11,
1945; 108 pages. Available from Superintendent of Documents, Government Printing

Office, at 20 cents a copy while the supply lasts.
Federal Trade Commission Decisions:
Volume 37, July 1, 1943-December 30, 1943, 874 pages, $1.75.

PUBLICATIONS OF THE COMMISSION

7

Volume 38, January 1, 1944-June 30, 1944, 969 pages.
Statutes and Decisions, 1939-43, 785 pages, $1.75. All available from
Superintendent of Documents, Government Printing Office, while the supply lasts.
Trade Practice Rules for the following. industries: Hearing Aid Industry, December
30, 1944, 9 pages; Water Heater Industry, January 11, 1945, 12 pages; Razor and
Razor Blade Industry, June 19, 1945; 9 pages; Tuna Industry, June 23, 1945 (revised
and extended rules), 11 pages; Wood Cased Lead Pencil Industry, June 29, 1945, 9
pages Low Pressure Refrigerants Industry, June 30, 1945, 9 pages; Button Jobbing
industry, June 30, 1945, 8 pages. Available from Federal Trade Commission without
charge while the supply lasts.
Distribution Methods and Costs, Part V, Advertising As a Factor in Distribution,
October 30, 1944: 50 pages. Available from Superintendent of Documents,
Government Printing Office, at 20 cents a copy while the supply lasts. Summary, 9
pages, available from Federal Trade Commission without charge while the supply
lasts.
Distribution Methods and Costs, Part VI, Milk Distribution, Prices, Spreads and
Profits, June 18, 1945: 58 pages. Available from Superintendent of Documents,
Government Printing Office, at 15 cents a copy while the supply lasts. Summary, 7
pages, available from Federal Trade Commission without charge while the supply
lasts.
Distribution Methods and Costs, Part VII, Cost of Production and Distribution of
Fish in the Great Lakes Area, June 30, 1945: 59 pages. Available from Superintendent
of Documents, Government Printing Office, at 15 cents a copy while the supply lasts.
Summary, 22 pages, available from Federal Trade Commission without charge while
the supply lasts.
Distribution Methods and Costs, Part VIII, Cost of Production and Distribution of
Fish in New England, June 30, 1945; 118 pages. Available from Superintendent of
Documents, Government Printing Office, at 20 cents a copy while the supply lasts.
Summary, 35 pages, available from Federal Trade Commission without charge while
the supply lasts.
The Cigarette Shortage, February 13, 1945; 33 pages. Available from Federal Trade
Commission without charge while the supply lasts.
The publications of the Commission reflect the character and scope of its work and
vary in content and treatment from year to year. Important among them are those
presenting fact-finding studies, reports and recommendations relating to general
business and industrial inquiries. Illustrated by appropriate charts and tables, these
books and pamphlets deal with current developments, possible abuses, and trends in
an industry, and contain scientific and historical background of the subjects discussed.
They have supplied the Congress, the Executive agencies of the Government, and the
public with information not only of specific and general value but of especial value as
respects the need or wisdom of new and important legislation, to which they have
frequently led as well as to corrective action by the Department of Justice and private
interests affected. The Supreme Court has at times had recourse to them, and many

have been designated for reading in connection with university and college courses in
business administration, economics, and law.
The 38 published volumes of Federal Trade Commission Decisions contain (l) the
findings of fact and orders to cease and desist issued

8

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

by the Commission throughout the ears; (2) the stipulations accepted by the
Commission wherein respondents years agree to cease and desist from unlawful
practices; and (3) the decisions of the courts in Commission cases for the different
periods covered by the different volumes. They constitute a permanent and
authoritative record of the remedial measures taken by the Commission to stop
violations of the laws it administers. The decisions establish for industry, business, and
the individual the guideposts of fair competitive dealing. They also tell, case by case,
the story of the multiplicity of unlawful practices which have been found to be
detrimental to the public interest and of the accomplishments of the Commission in the
prevention of such practices.
Decisions of the Federal courts reviewing Commission cases also from time to time
are published in separate volumes and may be purchased from the Superintendent of
Documents, Government Print-trade practice rules the regulations under the Wool
Products Labeling Act, and the Rules of Practice before the Commission are published
in pamphlet form. These may be obtained from the Commission without charge.
RECOMMENDATION TO CONGRESS
A few months before the United States entered the war there was concluded the most
recent and authoritative as well as the most extensive and intensive survey of our
economic system ever undertaken. The Temporary National Economic Committee
created by joint resolution of Congress for the purpose of that survey filed its final
report in March 1941, after nearly 3 years of study and public hearings with sworn
testimony. In submitting its final report the Committee recognized that public attention
had been “diverted momentarily from the study of the problems of economic
concentration” for which the Committee had been created, but pointed out that war
conditions “served only to emphasize the need for readjustments after the present crisis
is over.” The Committee declared its faith in the competitive system of private
enterprise as a solution for the problems of postwar depression and unemployment and
made a number of specific recommendations for legislation designed to preserve and
improve that system. It declared such system could be preserved only through a
vigorous effort to decentralize industry and to implement and enforce the antitrust
laws.
Although the representatives of the Federal Trade Commission on the Temporary
National Economic Committee concurred in the various recommendations. made by
the latter body, the Commission, in deference to the absorption of Congress and the
public with the war, has reiterated but one of the Committee’s recommendations. That
was a recommendation which the Commission had been making since 1930 with
regard to an amendment of section 7 of the Clayton Act and designed to stay more
effectively the increasing consolidations of competing corp orations. More
specifically, the Commission recommended the prohibition of the corporate
acquisition. of another corporation’s properties under the same conditions that
acquisition of its capital stock had been declared unlawful by Congress in 1914. The

Commission also concurred with the recommendation of the Tem-

RECOMMENDATION TO CONGRESS

9

porary National Economic Committee for prior governmental approval of acquisitions
by corporations with German over a certain size.
With the wars wit Germany and Japan victoriously concluded, the Commission
recommends that the Congress now take up for serious concrete consideration the
various recommendations for legislation submitted by the Temporary National
Economic Committee in March 1941, and by President Roosevelt when urging the
formation of that Committee in April 1938. In this connection the Commission calls
attention to the following statement by Senator Joseph C. O’Mahoney, Chairman of
the Temporary National Economic Committee, submitted with the Committee’s report
in March 1941:
The termination of the war effort, putting to an end, as it may very suddenly, the industrial
activity now gaining tremendous momentum, will bring with it problems more critical and more
fraught with danger than those which followed the collapse of 1929. Unless the democratic
society of America shall have prepared in advance for this hour there will be no alternative
except government action, which will necessarily be as inconclusive as the action which has
heretofore been taken. The unsolved problems of postwar depression will be heaped upon the
unsolved problems of prewar depression and it is difficult to see how, in these circumstances,
democracy can survive unless democracy prepares for peace now.

PART I. GENERAL INVESTIGATIONS
METHODS AND COSTS OF DISTRIBUTION
COMMISSION REPORTS TO CONGRESS ON ITS STUDIES DEALING WITH
ADVERTISING, MILK AND MILK PRODUCTS, AND FISH

Within the past few years there has been widespread interest on the part with the
general public, the Congress and among manufacturers with respect to the cost of
distribution. The Commission’s series of reports on Methods and Costs of
Distribution, four of which were published during the fiscal year, have been in great
demand and have been reprinted in various trade publications. There is wide
recognition of the fact that the maximum postwar employment can only be attained by
elimination of many uneconomic practices tending to higher price levels and
contributing to inflation. The results of wartime transportation restrictions that have
materially reduced delivery expenses, and economies resulting from War Food Order
No.1 in the baking industry, have focused the attention of businessmen and students
of distribution on the possibilities of distribution economies.
Reports on methods and costs of distribution of important food products, cement,
lumber, paints and varnishes, petroleum products, automobiles, rubber tires and tubes,
electrical household appliances and agricultural implements were published during the
last preceding fiscal year. In the fiscal year ended June 30, 1945, reports on production
and distribution costs were submitted to the Congress, as follows :
Part V--Advertising as a Factor in Distribution; Part VI--Milk Distribution, Prices,
Spreads and Profits; Part VII--. Cost of Production and Distribution of Fish in the
Great Lakes Area; and Part VIII-Cost of Production and Distribution of Fish in New
England.
ADVERTISING AS A FACTOR IN DISTRIBUTION
Without attempting to cover comprehensively the field of advertising as an
established and effective method of selling goods, the report on Advertising as a
Factor in Distribution summarizes data respecting advertising expenditures in relation
to sales for 2,716 manufacturing corporations reporting under the Commission’s
Corporation Reports project as well as more detailed information respecting media
used and expenditures made by 548 manufacturing corporations compiled in
connection with the distribution methods and cost study. It also covers 439 wholesalers
grouped to represent 9 principal commodities handled, and 1,527 retailers, similarly
grouped by lines.
The report recognizes that advertising may be so used in some of its forms as to
result in sales at relatively high consumer cost and also ma y be the means of
bolstering and perpetuating the strong position of large concerns at the expense of
small, less financially strong competitors. The report gives special attention to the

somewhat controversial subject of the type of advertising and sales promotion known
as cooperative advertising, in which individual manufacturers make
10

MILK DISTRIBUTION, PRICES, SPREADS, PROFITS

11

special allowances for advertising and sales promotion with some but with all of their
customers. In some instances, allowances are not given to immediate customers, but
are made to subsequent owners farther down in the distribution chain.
In 1940, the advertising expenditures of 2,716 manufacturers with aggregate sales
of about $30,000,000,000 in 91 different lines of production varied widely from 0.06
cent per dollar of sales for 16 shipbuilding companies to 13.94 cents per dollar for 20
drug and medicine manufacturers. Of the 91 industry groups studied, 64 spent, on the
average, less than 2 cents per dollar of sales; 19 spent from 2 to 5 cents, and 8 spent
from 5 to 13.94 cents per dollar of sales. The 6 groups spending most heavily per
dollar of sales were drugs and medicines, cereal preparations, cigarettes, soaps and
cooking fats, distilled liquors and malt beverages, all of which spent more than 8.9
cents per dollar of sales.
Measured in terms of percentages of total advertising expenditures, the 6 types of
advertising most extensively used by 548 manufacturers of 17 lines of consumer
goods, including food, clothing, building materials, farm machinery, and petroleum
products, whose aggregate advertising expenditures were $71,498,607, were: Radio,
18.3 percent; national magazines, 17.4 percent; newspapers, 15.2 percent; material
furnished to dealers, 13.3 percent; outdoor posters, 7.3 percent; and joint advertising
with dealers, 6.4 percent. The remaining 22.4 percent was distributed among mailed
material; trade journals, indoor posters, and miscellaneous other forms of
manufacturers’ advertising.
The range in the cost of advertising for 439 wholesalers in 9 lines of trade, having
net sales of $439,216,000 and advertising expenditures of $1,552,000, was from a
minimum of 0.03 cent per dollar of sales for men’s and boys’ clothing, to 1.08 cents
per dollar of sales for paints and varnishes.
Retailers’ advertising costs, for 1,527 retailers in 9 important lines of trade, with
aggregate sales of $481,156,000, and advertising expenditures of $6,823,000, were:
Lumber, 0.59 cent; chain store grocers, 0.66 cent; independent grocers, 0.73 cent;
motor vehicle tires and tubes, 1.28 cents; petroleum products, 1.37 cents; paints and
varnishes, 1.59 cents; electrical appliances and carpets and rugs, 2.53 cents; men’s
clothing, 3.61 cents; and women’s clothing, 4.33 cents for each dollar of sales.
MILK DISTRIBUTION, PRICES, SPREADS, PROFITS
The Commission made a study of Milk Distribution, Prices, Spreads and Profits in
which it was found that the average prices paid by milk distributors in 1940 ranged
from 3.34 cents per quart in Shawano, Wis., to 8.23 cents per quart in Richmond, Va.
Shawano is located in territory where much of the milk is used for manufacturing
purposes, farmers in the Richmond area sell milk largely for resale as fluid milk.
666956m--45----2

12

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

About half of the distributors paid from 4.75 to 6.50 cents per quart in different
markets. These are average cost prices at the point the distributor took title to the milk,
and include intercompany purchases and, consequently, are somewhat higher than the
average prices received by producers.. In general, distributors east of the Allegheny
Mountains paid prices that averaged from 1.5 to 2 cents higher per quart for milk than
those operating in the less densely populated agricultural and dairying areas from the
Alleghenies to the Missouri River. In a considerable part of this area the bulk of milk
production is sold in the lower-priced processors’ market (I. e., for cheese, butter,
condensed and evaporated milk, ice cream, etc., production) so that higher prices are
not necessary to induce production adequate to supply the retail fluid milk market as
in the East and South.
Prices paid for milk, by distributors operating in any given distribution area, also
vary with the amount of assembling, processing, and transportation performed before
it is purchased by the distributor. The distributor who buys directly from farmers may
obtain his supply in different regions for 5 cents or less per quart, while distributors
who operate in areas of small fluid milk production or purchase milk shipped in by
assemblers may pay prices of 6 or even 8 cents per quart in a considerable number of
markets.
Retail delivered prices vary widely from market to market. The average retail prices
realized for quarts in glass sold by 44 distributors in 30 markets ranged from a low of
9.57 cents for a distributor in Nashville, Tenn., to a high of 16.79 cents for a
distributor in Norfolk, Va. The Nashville distributor paid 5.01 cents per quart for his
milk while the Norfolk distributor paid 8 cents. The Nashville distributor’s margin was
4.56 cents per quart, or nearly one-half cent less than the average price paid for the
milk, while that of the Norfolk distributor was 8.79 cents, or 0.79 cent more than the
price the distributor paid for his milk.
Margins realized on fluid cream sold by 20 distributors, some of whom sold only at
wholesale, varied with the type of trade served. Retail sales by 9 distributors at average
prices ranging from 45.63 cents per quart for 20 to 25 percent butterfat cream in
Nebraska, to 80.57 cents per quart for 40 percent cream in Massachusetts, yielded
retail spreads ranging from 11.46 to 46.87 cents per quart of cream sold.
Wholesale sales by 18 companies yielded average prices ranging from 25.83 cents
per quart for 25 to 30 percent cream to 58.9 cents per quart for 30 to 35 percent cream
and yielded average margins for different sellers ranging from 2.05 to 23.78 cents per
quart.
Average gross margins or spreads between the cost and selling price of butter varied
from a loss of 13.85 cents per pound for a company in New York City that
manufactured butter only from milk and cream returned from retail routes, to a
maximum of 10.02 cents per pound. In most instances, the spread per pound of butter
fell within a range of 2 to 7 ½ cents per pound.
The average rates of net profit, exclusive of income from outside investments , on
the business investment-that is, the total investment less outside investment--were as
follows, for five groups of dairy product concerns:

MILK DISTRIBUTION, PRICES, SPREADS, PROFITS

13

Rates of return on investment
Business

Number of

Average

rate
companies
Evaporated and condensed milk
Ice cream
Butter
Cheese
Fluid milk distributors

18
27
13
4
82

of return
Percent
20.1
16.7
10.4
13.1
5.4

The 62 processors of milk averaged 14.7 percent On their investment, compared with
5.4 percent for the 82 distributors of fluid milk.
Further evidence of the superior earning capacity of milk products manufacturers,
in 1940, is to be noted in the fact that only 2 of the 62 milk products manufacturers
reported losses as compared with 21 of the 82, or roughly 1 in 4, of the milk
distributors. The highest rate of profit for the year among the 62 products
manufacturers was 146 percent as compared with 26.9 percent for 1 company among
the 82 milk distributors.
The normal relationship between prices paid to producers for milk for retail fluid and
manufacturing uses in any milkshed is that the farmer receives a higher price for milk
sold at retail as fluid milk than for milk purchased for certain manufacturing uses. The
average price received by the farmer, therefore, varies with the proportions of his milk
that are sold for different uses.
The spread between the price paid to the farmer, the farmer’s cooperative, or a
wholesale milk dealer who had bought the milk from the farmer, varied widely in
different sections of the country and for different milk distributors. Data were
obtained, for 1940, from distributors operating in 34 cities located in 18 States and the
District of Columbia. Most distributors sold both at retail and wholesale and the results
are for the total business; consequently, they are somewhat less than the total spread
from farmer to fluid milk consumer.
Summary Of spreads between the average cost of milk, per quart, to milk distributors
and their average sale price for 44 companies, by states, in 1940

State or district
spread

Average
cost
(cents)

Average
spread

Average A ea e
vrg
State or district
c o s t

(cents)

(cents)

( c

ents)
Alabama
6.81
California
4.88
District of Columbia 7.70
Florida
8.20
7.47
Illinois
4.40
Kentucky
5.53
Maryland
5.83
Massachusetts
6.65

6.66
5.63
5.07
6.39
7.32
5.36
5.59
5.03
4.37

North Carolina
Ohio

Pennsylvania

5.99
6.64
4.34
4.95
5.75
4.98
5.46
5.74
5.54

6.05
7.86
5.33
6.30
5.17
4.80
6.29
5.11
4.96

7.00
6.12
5.90
7.36
4.48
6.06
6.68
5.89
5.93
7.24
5.36
Tennessee
4.50
Michigan
6.68
2.70
5.01
4.56
4.80
4.66
Minnesota
4.01
6.00
Virginia
8.17
Missouri
4.90
5.40
8.23
5.16
5.49
8.00
5.23
6.33
Wisconsin
5.27
Nebraska
4.70
5.10
5.77
6.95
5.24
4.71
New York
7.01
5.39
3.34
14
ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

5.40
5.60
5.56
4.47
3.43
5.81
5.72
5.70
8.08
5.18
5.58
5.06
6.58

COOPERATIVE STUDY OF FISH PRODUCTION AND DISTRIBUTION
The Commission’s study of the methods of distribution and cost of production and
of distribution of fish was undertaken at the request of the Office of the Coordinator
of Fisheries of the United States Department of the Interior, which is charged under
Executive Order 9204 with the responsibility for developing and assuring sustained
production of aquatic food supplies essential to the conduct of the present war; and is
called upon to make proper recommendations to other Government agencies which
administer certain phases of fishery economics; for example, to the Office of Price
Administration in the field of price regulation and to the War Manpower Commission
in the field of manpower and labor.
The Federal Trade Commission likewise had a broad interest in making a
comprehensive survey of the marketing methods and production and distribution costs
in the principal fishing areas because there is a constant conflict of economic interests
among fishermen, boat operators, primary and secondary fish wholesalers in the
different fishing areas, and between the fish wholesalers in the fishing areas and the
wholesale and retail trade.
The Commission appreciates the valuable assistance it received from the
Coordinator of Fisheries and his assistants in the Washington office and from the
personnel in the regional offices of the Great Lakes and New England areas.
COST OF PRODUCTION AND DISTRIBUTION OF FISH IN
GREAT LAKES AREA
Approximately 1.75 percent of the quantity and 5.5 percent of the total value of the
fish catch in the United States in 1941 was caught in the Great Lakes region. The totals
for that year in this region were 78,065,000 pounds, valued at $6,470,300. In 1940,
5,142 fishermen were employed on the Great Lakes, and 499 fishing vessels and 1,785
fishing boats were in operation. A wide variety of fish is caught in the Great Lakes
region. In 1942, in excess of 500,000 pounds of each of 16 species were caught.
Most of the fish caught are taken in gill nets, trap nets, and pound nets. In 1938, the
Fish and Wildlife Service reports 47.1 percent caught by gill nets, 28.3 percent by trap
nets, and 11.1 percent by pound nets; or a total of 86.5 percent by these three methods.

The average proceeds, average cost and average profit per pound, for a number of
boats engaged in each of the three types of fishing, for 1941, 1942, and 1943, were:
Average proceeds, cost, and profit (Great Lakes area)
Proceeds per pound
Cost per pound

Profit

Year

1941
1942
1943

Gill
net
Cents
16.53
18.94
23.00

Trap
net
Cents
7.30
7.51
10.98

Pound
net
Cents
7.44
13.74

Gill Trap Pound Gill Trap
Pound
net net net
net net
net
Cents Cents Cents Cents Cents
Cn
et
13.60 6.00
2.93 1.30
12.56 6.17 7.00
6.38 1.34 0.38
15.38 7.45 7.47
7.62 3.53 6.27

COST, PRODUCTION, DISTRIBUTION OF FISH, GREAT LAKES AREA

15

The costs, proceeds, and profit per pound were all much higher for gill-net operators
than for either trap-net or pound-net operators. The gill-net fisheries are compensated
for their higher costs by higher proceeds for the choicer varieties of fish caught in the
deeper water.
Wages and cost and maintenance of nets constituted the major items of cost of
production for each method of fishing in each of the years 1941-43. These average
costs, in cents per pound, were:
Average costs, in cents per pound, of wages and maintenance Of nets, 1941-43
(Great Lakes area)
Wages
Maintenance
Type of fishing
1941
1942
1943
1941
1942
1943
Cents Cents Cents
Cents Cents Cents
Gill net
6.74
7.54
10.47
4.09
2.32
2.32
Trap net
3.19
3.27
4.15
1.01
1.09
1.23
Pound net
4.55
4.90
1.53
1.34

Gill net
Trap net
Pound net

40.77
43.70

Percent of proceeds
39.81 45.52
24.74
43.54 37.80
13.84
61.16 35.66

12.25
14.51
20.56

10.09
11.20
9.75

The increase in labor costs is accounted for by the higher daily wage now paid to
fishermen who work for wages and by the increase in volume and value of the catch
to those who work on shares. For example, in one case, the daily wages paid to gill-net
fishermen in 1943 and 1944 was from $9 to $10 a day as compared with $5 to $6 a day
during 1940 and 1941. The earnings of the crew of another boat who were paid on the
basis of the share in the catch increased from an average of $1,342 per man in 1941,
to $2,246 in 1943.
Information concerning the cost of distribution was obtained from a representative
number of wholesalers and retailers of fresh fish and seafoods in the Great Lakes and
inland areas of the United States. The wholesalers include concerns that are located
on the various lake fronts and purchase fish directly from the fishermen and sell to
other wholesalers located in inland cities who in turn sell to retailers, hotels,
restaurants, and other food purveyors in their respective localities. These two types of
wholesalers are termed primary wholesalers and secondary wholesalers. The primary
wholesaler also performs the function of the secondary group to some extent, and both
groups sell some fish at retail.
The facts with respect to the cost of distribution of fish by primary and secondary
wholesalers and through chain store retailers in 1941, 1942, and 1943 are summarized
in the following table:

16

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945
Cost of fish distribution by primary and secondary wholesalers and through chain
store retailers, 1941-43
PRIMARY WHOLESALERS

Increase, 1943
over 1941
(percent)
Quantity sold in pounds
12,205,823
12,996,834
13,089,301
7.2
Net sales
$1,129,197
$1,536,533
$2,156,398
91.0
Cents
Cents
Cents
Average cost per pound
7.33
9.47
13.47
83.8
Average sale price per pound
9.25
11.82
16.47
78.1
Average cost of distribution per pound 1.81
2.17
2.33
28.7
Net profit per pound before Federal
income taxes
.11
.18
.67
509.1
Item

1941

1942

1943

SECONDARY WHOLESALERS
14 companies 13 companies 14 companies
38,666,414
38,621,728
43,863,842
$6,807,468
$8,953,364
$12,270,857
Cents
Cents
Cents
Average cost per pound
14.60
19.45
23.47
Average sale price per pound
17.61
23.18
27.97
Average cost of distribution per pound
2.64
2.89
2.97
Net profit per pound before Federal
income taxes
.37
.84
1.53
Quantity sold in pounds
et sales

13.4
80.3
60.8
58.8
12.5
313.5

CHAIN STORE RETAILERS
Quantity sold in pounds
Net sales

14,676,745
$2,760,904
Cents
Average cost per pound
13.24
Average sale price per pound
18.81
Average cost of distribution per pound
3.76
Not profit per pound before Federal income
taxes
1.81

16,710,128
19,051,569
29.8
$3,895,198
$5,897,503
13
1.
Cents
Cents
17.35
24.45
84.7
23.31
30.96
64.6
3.89
4.69
24.7
2.07

1.82

.6

The greater increase in the average price received per pound over the increase in
costs gave both classes of wholesalers marked increased profits per company, as
shown in the following statement for the Great Lakes area:
Year

1941
1942
1943

Primary wholesalers
Per
pound
Per company
Cents
0.11
$2,751.22
.18
4,595.47
.67
17,539.60

Secondary wholesalers Year
Per
pound
Per Company
Cents
0.37
$10,108.90
.84
25,084.38
1.53
48,077.81

Secondary wholesalers located in cities having a population of 500,000 or over

operated on smaller gross margins of profit than secondary wholesalers located in
smaller cities. The gross margin in cents per pound and per dollar of sales was also
much lower for secondary wholesalers operating in cities in New York and Pennsylvania than for those in the Lake Region of Illinois and Michigan, or in Indiana,
Kentucky, Iowa, and Minnesota, or Nebraska, ColoCOST OF PRODUCTION, DISTRIBUTION OF FISH IN NEW ENGLAND

17

rado, and Utah. The highest gross margin in cents per pound was found in Nebraska,
Colorado, and Utah for 1941 and 1943, and in Indiana, Kentucky, Iowa, and Minnesota
in 1942. In cents per dollar of sales, the highest margin was for cities in Indiana,
Kentucky, Iowa, and Minnesota for each of the 3 years.
The cost of distribution, including provision for bad debts, was much lower for
wholesalers operating in New York and Pennsylvania both in cents per pound and in
per dollar of sales, in each of the 3 years, than for any of the other three regions. The
highest cost in cents per pound and in per dollar of sales was for wholesalers operating
in the States of Indiana, Kentucky, Iowa, and Minnesota.
The increase in demand for fish and the more rapid increase in selling prices over
costs resulted in large increases in the net profits to both the fishermen and
distributors. Profits to gill-net fishermen increased 160 percent in 1943 compared with
1941; and for trap-net fishermen the increase in 1943 compared with 1941 was 171
percent. The results for primary and secondary wholesalers were even more
impressive. In 1943 the profits to primary wholesalers increased 509 percent over
1941, and for secondary wholesalers the increase was 314 percent. For chain store
retailers there was only a l percent increase in net profit in 1943 over 1941.
COST OF PRODUCTION AND DISTRIBUTION OF FISH
IN NEW ENGLAND
The New England fishing industry, in 1940, employed some 18,500 men to operate
about 650 large boats and some 8,500 small ones using a wide variety of fishing gear,
including various types of lines, trap nets, purse seines, gill nets and with the advent
of power boats, the otter trawl net dragged along the ocean bottom. The fishing
grounds range from the shore line of New England to the Newfoundland banks.
The New England industry is highly organized. Boat owners have a trade association
known as Federated Fishing Boats of New England and New York, Inc. Ownership of
boats eligible to membership in the association ranged from individuals and
partnerships owning one or more boats to fleets of trawlers, or other types of boats
often owned in whole or in part by large concerns such as Gorton Pew Fisheries Co.,
Ltd., General Seafoods Corp., and Booth Fisheries Corp., all of which com bine
production with the processing and wholesaling of fresh and frozen fish and the
canning, smoking and distribution of tinned and dried fish and fishery products.
The labor force, including both crew and shore labor, is quite extensively unionized.
The boat crews work under definite partnership contracts known as lays, under which
they receive their compensation in the form of a predetermined share of the proceeds
from the sale of each fishing trip. The predominant type of lay divides the catch into
a specified number of shares, of which the boat owner, who may also be the captain,

receives a specified number, while the remaining shares are divided, one to each
member of the crew, with specified premiums or extras for the captain and certain
other crew members.
The distribution function for fresh fish begins with the landing at the shore line.
Wholesalers buy from the boats and may perform some

18

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

or all of the various functions of boxing, icing, and sale to other wholesalers or to
retailers in the form fish are landed from boats, or the fish may be frozen whole and
stored, or filleted and sold unfrozen, or frozen and stored, or they may be cut, smoked,
dried, salted, or canned for storage and distribution later. Other purchasers of fresh fish
at the shore line include what are known as secondary wholesalers of fresh and frozen
fish Who normally distribute to purveyors of meals and also sell at retail, and retailers,
ranging from the push-cart fish peddler and the exclusive fish retailer through a great
variety of food stores ranging from the meat market to grocery chains and food
supermarkets. The distribution of canned, smoked, and dried fish is largely through
staple grocery wholesalers to retailers of various types.
Boston has the most extensively organized wholesale fish market in the United
States in the form of the New England Fish Exchange, an organization of wholesalers
dealing on the Boston Fish Pier. The Exchange leases the pier, determines the rules
under which fish will be landed and sold thereon and conducts daily open market
auctions at which boat owners, or their captains, sell their fish to members of the
exchange, and to others holding cards authorizing them to buy thereon.
At New England landing ports other than Boston, which do not have organized
exchanges or auctions, sales are matters of negotiation between individual boat
captains, who represent the interests of both the boat owner and the crew, and the
different Wholesalers dealing in the market. The interest of the crews in the selling has
caused the union to set up rules to govern unorganized market selling in markets such
as New Bedford and Gloucester. These market rules are separate from the union
agreement with boat owners. The union’s power to enforce them lies in its ability
under its closed shop contracts to withdraw crews from ununionized boats and refuse
to replace them.
Out of this welter of criss-crossed market interests, and also because fish production
is highly seasonal, with market gluts when fish are running, it follows that there would
be much friction and disagreement among the sometimes parallel and sometimes
divergent interests of crew members, boat owners, and wholesalers. In times of low
prices and glutted production, boat owners, because of their mutual interest in
maintaining or increasing prices, have, on occasion, joined with the union in efforts
to limit production either by limiting the maximum catches which may be taken per
trip, or by lengthening lay-overs in ports, or by agreeing with crews on the minimum
prices at which they will land fish of particular varieties in specified ports. Such joint
agreements have been developed in times of market gluts. The union is in a position
to enforce them by withdrawing crews from boats or by bringing about refusal of
unionized shore labor to unload fish or service boat s whose captains do not observe
the agreements.
When war broke out in 194 l , the Government commandeered a number of the
larger fishing vessels, thereby reducing the New England industry’s production
capacity. At the same time, increased wartime demands for meats and seafoods threw
an extra burden on the fisheries industry and by 1943 the prices of the principal
varieties of fish landed in New England were from about 1.8 to 3 or more times what
they were in 1940. In July 1943, the Government stopped the spiraling of fish prices
in New England by fixing ceiling prices at the landing docks,

COST OF PRODUCTION, DISTRIBUTION OF FISH IN NEW ENGLAND

19

and maximum prices for fresh fish when sold by wholesalers of four types: Primary
wholesalers; retailer-owned cooperative wholesalers; cash-and-carry wholesalers; and
service-and-delivery wholesalers. Also, effective on January 27,1944, fixed maximum
retail mark-ups in cents per pound were announced for 45 kinds of fresh fish and 3
kinds of seafood when handled respectively by 4 classes of retailers. The net effect of
fixing ceiling prices for producers and wholesalers and maximum margins for retailers
was to reduce the wholesale and retail prices of fish from the high levels prevailing
during the first 6 months of 1943, but to leave them still distinctly higher than they
were in 1940 or 1941.
In fixing New England prices ex-vessel, the same maximum prices were applied to
all landing ports, whereas, under normal operating conditions, prices on the exchange
at Boston were somewhat higher than those at other ports. The effect was that so long
as a sellers’ market prevailed and sales could be made at ceiling prices, it was a matter
of indifference to boat owners and crews whether they sold in Boston or in other ports.
Therefore, boats put into whatever port was nearest to the grounds where they were
fishing. Boston got less fish and ports such as Gloucester and New Bedford got more
fish than would normally be delivered at those points. The basis for new wholesalers
was laid especially in outlying ports. Boston experienced little change in the number
of wholesalers, but in New Bedford and Gloucester mushroom growth of both
wholesalers and filleters developed.
Another effect to be noted was that since no one could bid higher than the ceiling at
any port, competitive buying was practically suspended so long as ceiling prices
prevailed If a captain had a bid of ceiling price from several wholesalers, he closed
his sale by handing his ticket to the wholesaler of his choice. Under these conditions,
his choice might be influenced by a side payment, or the giving of something of value
on the side. By the middle of 1944 quantities of fish and scallops were being landed,
especially in the markets where new wholesalers had been established, but little of
these quantities was available to the regular shore line wholesale and retail trade.
The fact that the wholesale prices fixed carried differentials between primary,
retailer-owned cooperative, cash-and-carry and service-and delivery wholesaling, made
it advantageous to wholesale who normally did two or more of this types of business
to sell as much as possible in the higher margin brackets. The result was that the
wholesalers tended to move at least one step toward the consumer in the distribution
chain in pricing their fish. On the supply side, some wholesalers bought or chartered
boats outright, took shares in boats or otherwise sought to obtain control over the
disposition of fish landed.
When retail margins were fixed, independent retailers (I. e., other than chain and
very large retail fish dealers) were permitted to add higher retail margins in
determining their ceiling prices than the larger dealers. Since the smaller dealers
normally purchase in small quantities from cash-and-carry or service-and-delivery
secondary wholesalers, they would pay higher prices for their fish than chain stores
and large retailers purchasing in larger quantities from primary wholesalers. The
addition of the small dealer’s higher retail margin to his higher wholesale price for fish

would result in ceiling prices for the small dealer materially higher than those of the
chain store. If, for any reason, the chain store saw fit to price below its ceiling, the

20

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

handicap of the independent retailer would be correspondingly increased.
In addition, the tendency for certain kinds of fish and seafood to disappear at the
shoreline and reappear through devious channels at black-market prices produced a
situation under which a considerable number, particularly of smaller retailers, in
reporting retail prices to the Massachusetts Department of Agriculture, Division of
Markets, in May 1944 stated that they were unable to buy fish of certain kinds and
styles at wholesale prices except at a loss.
The study of the New England area covered the average cost of producing fish of all
varieties caught by several different methods of fishing, and the average cost per
bushel of herring caught with stop nets. The average pounds caught per boat, the
average cost of production per pound subdivided as between the remuneration of
captain and crew, and all other operating expenses, and the average selling price and
profit per pound for fish caught with the different types of gear, are shown in the
following tabulation:
Average cost of production, selling price, and profit per pound for fish caught with
different types of gear, 1941-43 (New England area)
MEDIUM OTTER TRAWLERS
Average per pound
Year

Average
pounds
caught
per boat
Pounds

1941
1942
1943

2,023,035
1,902,284
2,089,778

Captain
and crew
share
Cents

1.066
1.395
1.629

1.084
1.945
2.850

Other operating
Total
costs
cost
Cents
Cents
2.150
3.340
4.479

Average
profit
per boat

Cents

Average
selling
price
Cents

0.093
.334
.642

2.243
3.674
5.121

$1,881
6,362
13,402

0.070
.266
.127

2.118
3.397
5.579

$752
2,535
737

Profit

SMALL OTTER TRAWLERS
1941
1942
1943

1,076,186
952,087
580,545

1.127
1.883
3.142

0.921
1.248
2,310

2.048
3.131
5.452

COMBINATION OTTER TRAWLERS AND SEINERS
1941
1942
1943

1,280,718
1,633,997
1,963,942

1.738
3.481
4.147

0.757
.787
.898

2.495
4.268
5.045

0.292
.908
1.225

2.787
5.176
6.270

$3,740
14,837
24,058

2.381
3.931
5.745

0.820
1.922
1.308

3.201
5.853
7.053

$10,140
27,470
10,962

GILL NETS
1941
1942
1943

1,269,550
1,429,245
838,106

1.311
2.513
3.172

1.070
1.418
2.573
TRAP NETS

1941
1942
1943

721,519
576,427
730,632

0.805
1.890
1.805

0.506
.900
.862

1.311
2.790
2.667

0.204
.791
.713

1.515
3.581
3.380

$1,472
4,560
5,209

HERRING CAUGHT WITH STOP NETS 1

1941
1942

Bushels
6,579
14,591

40. 00
39.99

17.27
17. 11

57.27
57.10

2.73
2.91

60.00
60.01

$179
425

1943

5,811

60.67

1 All data in bushels and cents per bushel.
2 Loss

31.86

92.53

2 1.53

91.00

289

COST OF PRODUCTION, DISTRIBUTION OF FISH IN NEW ENGLAND

21

It will be noted that the average selling prices, or proceeds, more than doubled from
1941 to 1943 for all types of fishing and gear except herring. Costs per pound likewise
increased sharply, but not in the same proportion for different types of boats and
fishing gear, and profits per pound likewise increased quite sharply for all types of
gear, except for herring caught with stop nets, for which 1943 operations showed a
loss of 1.53 cents per bushel.
When the average profits per pound are applied to the average poundage caught per
boat, as has been done in the last column of the table, the fact is strikingly brought out
that 1943 was more profitable to boat owners than 1941 for all types of gear except
small otter trawlers and stop net herring fishermen. The result was that the owners of
medium sized trawlers costing before the war from $40,000 to $50,000 each increased
their earnings about sevenfold; with the result that the total cost of a boat would be
returned in profit in about 4 years at the 1943 rate. Combination otter trawlers and
seiners, which often were boats of smaller size representing smaller capital
investments, would get their investment back in profit at the 1943 rate in even less
time, as would also gill netters and trap netters who use small boats sometimes costing
only a few thousand dollars each. Herring fishermen, however, showed little profit in
any year, and in 1943 operated at an average loss of about $89 per boat.
The facts with respect to the average cost of distribution of fish by primary and
secondary wholesalers and through independent fish retailers in the New England area,
in 1941, 1942, and 1943, are summarized in the following tabulation:
Data with respect to average cost of distributing fish by primary wholesalers, secondary
wholesalers, and independent retailers, in New England, 1941-43
PRIMARY WHOLESALERS
Increase or
Item
1941
1942
1943
decrease (--)
1943 over
1941
Percent
Total net sales
$545, 160.21
$725, 591.02
$1,266, 610.68
132.3
Profit per company before Federal taxes 2,785.71
2,250.00
14,001.17
42
0.
6
[In cents per dollar of sales]
Cost of fish
86.96
88.75
88.31
l.5
Distribution cost
12.02
10.49
9.48
- 1l
2.
Net profit before Federal taxes
1.02
.76
2.21
116.7
SECONDARY WHOLESALERS
Total net sales
$498,471.48
$607,317.96 $947,297.15
90.0
Profit per company before Federal taxes
4,840.33
5,840.55
14,689.48
203.5
[In cents per dollar of sales]
Cost of fish
76.66
78.88
81.16
5.9
Distribution cost
18.49
16.31
11.09
-40.0
Net profit before Federal taxes
4.85
4.81
7.75
59.8
INDEPENDENT RETAIL DEALERS
Total net sales
$124,033.19
$150,185.33
$234,319.67 88.9
Profit per company before Federal taxes: 1 692.20
2,592.02
13,076.18 2
404.5

Cost of fish
Distribution cost
Net profit before Federal taxes
1
2

Loss.
1943 over 1942.

[In cents per dollar of sales]
61.46
39.65
1 l.11

64.63
31.92
3.45

67.32
21.52
11.16

9.5
-5
4.
2 223.
5

22

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

The striking fact shown in the above statement is the large increase in profits arising
from an increase in volume of sales and a reduction of distribution costs per dollar of
sales resulting therefrom. As already pointed out, wages, which are the largest factor
in both production and distribution costs, increased greatly but overhead and other
fairly stable costs per dollar of sales were reduced. For primary wholesalers, an
increase in net sales of 132 percent, accompanied by a decrease in distribution costs
of 21 percent per dollar of sales, resulted in an increase in the average amount of profit
per company of over 402 percent For secondary wholesalers, a 90 percent increase in
net sales, accompanied by a 40 percent decrease in distribution costs per dollar of
sales, yielded an increase of over 203 percent in profits per company. For independent
retail dealers, an increase of approximately 89 percent in net sales, accompanied by
a reduction in distribution costs of nearly 46 percent, converted a loss in 1941 to
profits in 1942 and 1943, the 1943 profit per company being nearly 405 percent greater
than that for 1942. This showing emphasizes the necessity of having the facts
respecting volume of business, costs, and total investment, so that sound conclusions
may be arrived at concerning the profitableness of business operations.
The average total cost of distribution of fish for the 3 years, 1941-43, in the New
England area, (l) from the fisherman’s boat to the primary wholesaler to the retail
dealer to the consumer, and (2) from the fisherman’s boat to the primary wholesaler
to the secondary wholesaler to the retail dealer to the consumer, is summarized in the
following tabulation:
Distribution of cost of fish and cost of distribution from primary wholesaler through the
retailer to
the consumer, and through the primary and secondary wholesalers to the retailer to the
consumer (New England area)
Through priThrough pri
mary wholemary and secItem
saler to retailer
ondary wholeto consumer
salers to
retailer
to consumer
Cents per dollar
Cents per dollar
of sales
of sales
Cost of fish
57.39
45.56
Distribution expenses:
Wages and salaries
20.28
24.01
Rent
3.56
4.08
Barrels, boxes, paper, etc
2.30
3.28
Delivery expenses
2.79
3.10
Ice and storage
1.31
1.63
Insurance
.85
1.09
Corporate taxes
.83
1.08
Heat, light and power
.69
.93
Depreciation
.54
.90

Telephone and telegraph
Advertising
Repairs and maintenance
Miscellaneous
Total cost
Wholesalers and retailers profits
Cost to the consumer.

.41
.36
.47
1.33
35.72
6.89
42.61
100.00

.67
.50
.45
2.02
43.74
10.70
54.44
100.00

INVESTIGATION OF CIGARETTE SHORTAGE

23

The showing is that the inland consumer’s retail dollar purchased distinctly less fish
than the dollar spent by the consumer near the New England coast fishing areas. This
was due both to the interposition of an additional wholesaler and to additional
transportation handling and other costs involved in distributing fresh fish to more
distant markets.
INVESTIGATION OF CIGARETTE SHORTAGE
COMMISSION FINDS SCARCITY NOT DUE TO LAW VIOLATIONS BUT
PRINCIPALLY TO HEAVY SHIPMENTS TO ARMED FORCES AND ALLIES

As a result of complaints received by the Commission, and on request of the
Chairman of the Interstate Commerce Committee of the Senate, the Commission
undertook an inquiry to determine whether the cigarette shortage, particularly in the
civilian trade was attributable in any degree to price fixing or other trade restraints or
agreements in the industry. Additional information was obtained as to the causes of the
shortage, and particularly whether the scarcity of cigarettes was attributable to the
crop-control program of the Department of Agriculture, to regulations of the Office of
Price Administration with respect to prices, or to regulations applied to the industry
by the War Production Board and the War Manpower Commission.
The investigation was conducted during the latter part of 1944, and the Commission
made its report February 13, 1945. It covered activities of 10 leading manufacturers
producing more than 95 percent of all cigarettes manufactured and sold in the United
States; jobbers in New York, Pennsylvania, Maryland, Ohio, Michigan, and Illinois;
and retailers and retailer associations.
Statistical and other information was secured from the records of several State tax
departments, the Bureau of Internal Revenue, Department of Agriculture, War
Manpower Commission, Office of Price Administration, and War Food
Administration.
The Commission found and reported, substantially, that (l) the cigarette shortage was
not attributable to illegal contracts or understandings as between manufacturers or
jobbers or retailers, or to the violation of any law under the jurisdiction of the
Commission; (2) that certain undesirable practices such as hoarding and tie-in selling
had developed in marketing cigarettes; (3) that the crop control plan as administered
by the Department of Agriculture was not a contributing factor in the shortage; (4) that
restrictions imposed by the War Manpower Commission, War Production Board, and
Office of Price Administration, although curtailing in some measure the rate of
increase of production, had not prevented a substantial increase in the aggregate
number of cigarettes manufactured; and (5) that the shortage was directly attributable
to the volume of cigarettes moving to the armed services and to the Allies, plus an
increased demand from the domestic market. The report made suggestions for
improvements in the self-imposed rationing plans of manufacturers and wholesalers.

24

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

PRIORITIES INVESTIGATIONS
SURVEYS OF INDUSTRIES ENGAGED IN ESSENTIAL WAR PRODUCTION
CONDUCTED FOR WAR PRODUCTION BOARD

In January 1942, the War Production Board, pursuant to Executive orders,
designated the Federal Trade Commission as an agency to conduct investigation of
certain basic industries to ascertain the facts concerning their compliance with the
Board’s orders relative to the allocation of the supply and the priorities of delivery of
materials.
In furtherance of the Government’s program to divert from civilian uses certain
materials essential to the successful prosecution of the war, the Commission, at the
request of W. P. B, has made investigations to determine whether thousands of
companies in 24 industries producing critical materials were complying with the rules
and regulations governing priorities. The Commission conducted these investigations
through its Legal Investigation Division.
Surveys undertaken for the Board (and its predecessor, the Office of Production
Management) during and prior to the fiscal year ended June 30, 1945, are summarized
in the following table:
Priority compliance surveys conducted for War Production Board
Number of
Industry surveyed
companies
surveyed
Steel industry
31
Copper, primary fabricators of
94
Copper base alloy ingot makers
76
Chromium and nickel, processors of
717
Jewel bearings, consumers of
172
Metal-working machines, invoicing and distribution of
406
silverware, manufacturers of
19
Aluminum, foundries using
940
Contractors, prime, forward buying practices of
38
Tin
381
Quinine, manufacturers and wholesalers of
38
4
Glycerin, users of
244
Capital equipment
42
Electric lamps, manufacturers of
166
Fuse manufacturers
19
silverware manufacturers and sliver suppliers
26
3
Commercial cooking and food and plate warming equipment, manufacturers of
71
Furnaces, hot air, household
53
Costume jewelry y , manufacturers of
45
Antifreeze solutions, manufacturers of
7
Textile mills, cotton
60
Paint, varnish, and lacquer manufacturers
86
Fruit growers and shippers
19
Insignia, manufacturers of
32
Total number of companies surveyed
1 4,302
l total does not include subsidiary companies. If subsidiaries were included the number of
companies actually surveyed would be larger than that shown in the table.

Reports made to War Production Board.--Reports on each of the investigations were
made by the Commission directly to the War Production Board. The investigations
were of a highly confidential nature for use by the Board in enforcing compliance with
its orders and regulations and in further consideration of its policies relating to
production for war purposes. Where deliberate and willful violations were disclosed,
the cases concerned were prepared for possible criminal prosecution. The War
Production Board has advised that the Commission, in conducting investigations
relating to war activities, had

OTHER WARTIME ACTIVITIES

25

rendered highly beneficial service to the Board in its effort to achieve maximum
production of war materials.
WARTIME ACTIVITIES
War-related advertising analyzed and reported.--The Commission during the fiscal
year surveyed, analyzed, summarized, and periodically reported. to the War Production
Board at its request such advertising as appeared to contain any pertinent war-related
references to price rises or trends, rationing, textiles, upholstered furniture, furs, and
other selected commodities; advertisements advising the public to “buy now” or
containing statements that materials are or will be scarce or that the quality of new
materials or products offered for sale is equivalent to or better than merchandise
formerly offered; and other war-related subjects.
In connection with the Commission’s regular advertising survey, that advertising
which might be violative of the announced advertising policies of the War Production
Board was collated, analyzed, and summarized for that agency in 11 analytical reports
covering newspaper advertising g in 21 metropolitan areas on 5 groups of critical
merchandise; and 7 additional analytical summarizations and reports respecting radio
advertising practices as they pertained to the same 5 groups of merchandise. The radio
and newspaper advertising projects for W. P. B. required a selected assembly and
transfer to that war agency of some 1,798 marked published advertisements and 2,629
commercial radio continuities.
The reports thus furnished related to the improper use in wartime of advertising
appeals of doubtful nature and were based upon the normal survey of commercial
advertising conducted by the Commission, as described on page 72.
Interdepartmental service.--For more than 40 years the Commission (and itspredecessor, the Bureau of Corporations) has been collecting and maintaining a vast
fund of information concerning the Nation’s important industries. The Commission
has been called upon to furnish to regular Government departments, and especially to
the agencies created during the war emergency, an increasing amount of these data,
and frequently it has been requested to prepare special reports as the basis for the
actions of the war agencies responsible for economic controls.
Trade practice rule work in wartime.--Trade practice rules issued by the
Commission for industries engaged in war production, as well as production or
distribution for essential civilian needs, bad an important effect in maintaining a fair
competitive balance in the respective industries and trades and in affording an overall
stabilizing influence considered helpful to advancement of the war effort and to
protecting the public interest in the prevailing economy of scarcity and stress. The
substantial results achieved in this respect were brought about at small cost.
Rules of fair trade practices promulgated by the Commission for more than 150
industries, besides affording material contribution to the war program, place the
respective industries in an advantageous position to meet the impact of postwar
conditions. Such fair trade practice provisions are designed to foster and promote free
enterprise on a fair competitive basis without monopolistic or discriminatory

26

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

trade restraints which stifle small businesses and suppress competition to the detriment
of the public.
Wool Act an aid to war program.--Effective support of the war program was
afforded by the Wool Products Labeling Act which is administered by the
Commission. The act requires that products containing or purporting to contain wool
shall be labeled to reveal their true content, thus protecting the consumer as well as
producers, manufacturers, and distributors from the unrevealed presence of substitutes
and mixtures and preventing the evils of misbranding. Wool being a critical war
material and essential to the health and well-being of the entire population, it is a
matter of far-reaching importance that not only shall clothing and other necessary
products containing wool be equitably distributed to meet essential needs, but also that
manufacturers, distributors, dealers, and the buying public shall be protected from the
fraud, deception, and unfair competition flowing from misbranding, concealment, or
misrepresentation of true content of product. The statute and its operation affords such
protection.
Membership on wartime committees.--The Chairman of the Federal Trade
Commission is ex officio a member of the Price Administration Committee of the
Office of Price Administration and serves as the Commission’s representative in its
continuing relationships with the Foreign Economic Administration, the Bureau of
Industrial Conservation of the War Production Board, and the committee for the
development and utilization of the country’s present and future petroleum resources
and facilities, of which the Petroleum Coordinator for War is Chairman. The Chairman
also represents the Commission on the Advisory Committee of the House Committee
on Agriculture, which, pursuant to House Resolution 38, Seventy eighth Congress,
first session, was authorized to study the marketing and distribution of agricultural
commodities.
The Commission was represented by Commissioner Freer on the Interdepartmental
Committee on Financial Statistics and by its Chief Economist on the Interdepartmental
Cartel Committee and the Treasury Department Committee on Incentive Taxation , the
latter organized to discuss ways of stimulating postwar production and employment.
The Medical Advisory Division of the Commission served on request as advisor to
the Medical and Health Supply Section of the Division of Civilian Supply, War
Production Board. The director of the division also performed liaison duties for the
Commission in connection with the work of the National Research Council’s Committee on Drugs and Medical Supplies, which serves in an advisory capacity to the
War Production Board.

PART II. GENERAL LEGAL WORK
DESCRIPTION OF PROCEDURE
A case before the Federal Trade Commission may originate in any one of several
Ways: Through complaint by a consumer or a competitor; from Federal, State, or
municipal sources; or upon observation by the Commission. The Commission itself
may initiate an investigation to determine whether the laws administered by it are
being violated.1 No formality is required in making application for complaint. A letter
setting g forth the facts in detail is sufficient, but it should be accompanied b y all
evidence in possession of the complaining party in support of the charges made.
INFORMAL PROCEDURE
Upon receipt of an application for complaint, the Commission through its Legal
Investigation Division or Radio and Periodical Division, as the case may be, considers
the essential jurisdictional elements before deciding whether it shall be docketed.
When docketed, it is assigned to an attorney for the purpose of developing all the
essential facts. The general procedure is to interview the party complained against,
advise him of the charges, and request such information as he may care to furnish in
defense or in justification. It is the policy of the Commission not 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 standpoint.
Often it is desirable to interview consumers and members of the general public to
obtain their assistance in determining whether the practice alleged constitutes an unfair
method of competition or unfair or deceptive act or practice, and also to establish the
existence of the requisite public interest.
After developing all the facts the examining attorney summarizes the evidence in a
report, reviews the law applicable, , and makes recommendations as to what action he
believes the Commission should take. The record is reviewed by the Chief Examiner
or the Director of the Radio and Periodical Division and, if found to be complete, is
submitted, with a statement of facts together with his conclusions and
recommendations, to the Commission for its consideration.
The Chief Examiner or the Director of the Radio and Periodical Division may
recommend to the Commission (l) that the case be closed without further action
because of lack of evidence or because the practice does not violate any law
administered by the Commission; (2) disposition of the application by the respondent
signing a stipulation as to the facts and an agreement to cease and desist from the practices as set forth in the stipulation; or (3) issuance of formal complaint.
If the Commission decides that a formal complaint should issue, the case is referred
to the Chief Counsel for preparation of the complaint
1

A brief statement of the provisions of these laws appears on p. l.

666956 m--45----3

27

28

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

and trial of the case. Should the Commission permit disposition by stipulation, in lieu
of formal complaint, the case is referred to the Chief Trial -Examiner or to the Director
of the Radio and Periodical Division for negotiation of stipulation and submission
thereof to the Commission for approval.
All proceedings prior to issuance of a formal complaint or stipulation are
confidential.
PROCEDURE UPON FORMAL COMPLAINTS
Only after careful consideration of the facts developed by the investigation does the
Commission issue a formal complaint. The complaint and the answer of the
respondent thereto and subsequent proceedings are a public record.
A formal complaint is issued in the name of the Commission acting in the public
interest. It names the respondent, Or respondents, alleges a violation of law, and
contains a statement of the charges. The party complaining to the Commission is not
a party to the formal complaint and the complaint does not seek to adjust matters
between parties; rather, the prime purpose of the proceeding is to prevent, for the
protection of the public, those unfair methods of competition and unfair or deceptive
acts or practices forbidden by the Federal Trade Commission Act and those practices
within the Commission’s jurisdiction which are prohibited by the Clayton Act, as
amended by the Robinson-Patman Act, the Export Trade Act, and the Wool Products
Labeling Act of 1939.
The rules of practice before the Commission provide that a respondent desiring to
contest the proceeding shall, within 20 days from service of the complaint, file answer
admitting or denying each allegation.
Where evidence is to be taken either in a contested case or in one where the
respondent has failed to file answer, the matter is set down for hearing before a trial
examiner, which hearing may be held anywhere in the United States, the Commission
being represented by one of its trial attorneys and the respondent having the privilege
of appearing in his own behalf or by attorney.
After the submission of evidence in support of the complaint and on behalf of the
respondent, the trial examiner prepares a report of the evidence for the information of
the Commission, a copy being furnished counsel for the Commission and counsel for
the respondent. Exceptions to the trial examiner’s report may be taken by either
counsel.
Briefs may be filed within a stated time after the trial examiner s report is made, and,
in the discretion of the Commission, upon the written application of the attorneys for
the Commission or for the respondent, oral argument may be had before the
Commission. Thereafter, the Commission reaches a decision either sustaining the
charges of the complaint or dismissing the complaint, sometimes without prejudice.
If the complaint is sustained by the evidence, the Commission makes its findings as
to the facts and states its conclusion that the law has been violated, and thereupon an
order is issued requiring the respondent to cease and desist from such violation. If the

complaint is dismissed, an appropriate order is entered.

DESCRIPTION OF PROCEDURE

29

Up to and including the issuance of an order to cease and desist, there is no
difference in procedure whether the case is under the Federal Trade Commission Act,
the Clayton Act, or the Wool Products Labeling Act, but the Clayton Act provides a
procedure for enforcement of cease and desist orders different from the other two acts.
Under the Federal Trade Commission Act and the Wool Products Labeling Act, an
order to cease and desist becomes final 60 days after date of service upon the
respondent, unless within that period the respondent petitions an appropriate United
States circuit court of appeals to review the order. In case of review, the order of the
Commission becomes final after affirmance by the circuit court of appeals or by the
Supreme Court of the United States, if taken to that Court on certiorari. Violation of
an order to cease and desist after it shall have become final and while it is in effect
subjects the offender to a civil penalty of not more than $5,000 for each violation,
recoverable by the United States.
Under the Clayton Act, an order to cease and desist does not become final by lapse
of time. The order must be affirmed by a United States circuit court of appeals on
application for review by the respondent or upon petition of the Commission for
enforcement. Thereafter, appropriate contempt proceedings may be brought in the
particular court of appeals for violation of the court order.
Under all three acts, the respondent may apply to a circuit court of appeals for
review of an order and the court has power to affirm, or to affirm after modification,
or to set aside the order. Upon such application by the respondent and crossapplication by the Commission, or upon application by the Commission for
enforcement of an order under the Clayton Act, the court has power to enforce the
order to the extent it is affirmed. In any event , either party may apply to the Supreme
Court for review, by certiorari, of the action of the circuit court of appeals.
PROVISIONS OF WHEELER-LEA AMENDMENT TO FEDERAL TRADE
COMMISSION ACT FOR PREVENTING DISSEMINATION OF FALSE
ADVERTISEMENTS

Sections 12 to 15, inclusive, of the Federal Trade Commission Act, which were
added by the Wheeler-Lea Act, approved March 21,1938, make specific provision for
the prevention of the dissemination of false advertisements of food, drugs, devices
(meaning devices for use in the diagnosis, prevention, or treatment of disease), and
cosmetics. The act as amended also empowers and directs the Commission to prevent
advertisers of food, drugs, devices, or cosmetics which may cause injury when used
under prescribed or customary conditions, from disseminating advertisements that fail
affirmatively to reveal that such products are dangerous or that their use under certain
conditions may cause bodily injury.
In addition to the regular proceeding by way of complaint and order to cease and
desist, the Commission may, in a proper case, bring suit in a United States district
court to enjoin the dissemination of such false advertisements, whenever it has reason
to believe that such a proceeding would be to the interest of the public. These
temporary injunctions remain in effect until an order to cease and desist has been
issued and become final, or until the Commission’s complaint is dismissed by the

Commission or set aside by the court on review.

30

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

Further, the dissemination of a false advertisement of a food, drug, device, or
cosmetic, where the use of the commodity advertised may be injurious to health or
where the act of disseminating is with intent to defraud or mislead, constitutes a
misdemeanor, and conviction subjects the offender to a fine or not more than $5,000,
or imprisonment of not more than 6 months, or both. Succeeding convictions may
result in a fine of not more than $10,000, or imprisonment of not more than l year, or
both.
LEGAL INVESTIGATION
INQUIRIES PRIOR TO FORMAL COMPLAINT OR STIPULATION

The Commission makes legal investigation of all applications for complaint
preliminary to instituting formal action for the correction of unfair methods of
competition or other acts or practices violative of the laws it administers.
Investigation of cases in initial stages includes the general preliminary legal
investigating work of the Commission under the several acts and the continuing survey
of radio and periodical advertisements with the object of correcting false and
misleading representations.
Cases thus developed, unless closed without action, progress upon direction of the
Commission to the status of either formal complaint Or stipulation to cease and desist.
At the beginning of the fiscal year, in addition to cases pending as the result of the
continuing survey of radio and advertising (see pp.72 to 75), there were pending for
investigation 2 111 preliminary or un-docketed cases, and 199 additional applications
of this character were received during the year, making a total of 310 on hand, of
which 214 were investigated. Of the investigated matters, 209 were docketed for action
and 5 closed without docketing because of lack of jurisdiction or other reasons. There
remained 96 preliminary cases of this type pending for investigation at the end of the
fiscal year.
Two hundred and twenty applications for complaint which had been docketed
without preliminary investigation were pending for regular investigation at the
beginning of the year. Subsequently, 375 additional cases of this type were received,
making a total of 595 such cases docketed for investigation. Of these, 288 were
investigated and transmitted to the Commission for action, leaving 307 cases of this
character pending for investigation at the chose of the year.
During the year, 322 further investigations were made, including inquiries into
alleged violations of cease and desist orders and stipulations, investigations for the
Chief Counsel, and others of a supplemental and special nature. At the end of the year,
103 such matters awaited completion of investigation.
Thus, the legal investigation staff completed 824 investigations under the laws
administered by the Commission, and also disposed of 9,769 pieces of incoming and
outgoing mail, involving varying degrees of research and study.
Price fixing and other trade restraints.--One of the fundamental purposes behind the
passage of the Federal Trade Commission Act in

2 Statistics reported on pp.73 to 75, and pp.30 to 34, concerning the legal investigation work
are division records and not the consolidated record of the Commission, and therefore do not
coincide with the figures reported in the tabular summary of the legal work for the entire
Commission appearing on pp.59 to 62.

LEGAL INVESTIGATION

31

1914 was the establishment of an agency to detect and eliminate illegal trade
restraints in their incipiency before they had developed into monopolies. At the
beginning of the fiscal year, 31 cases of this were either awaiting investigation or
being investigated. During year, 66 new cases were instituted, making a total of 97
restraint-of-trade matters on the calendar. In the same period, 41 investigations of
this type were completed for consideration and disposition by the Commission,
leaving 56 pending on the active investigational calendar as of June 30, 1945.
Price fixing continues to be the most frequently recurring charge among the
restraint-of-trade cases, although practically the whole category of trade restraints
will be found among the charges in the cases pending before the Commission
during the fiscal year. These include such practices as conspiracy to boycott, or
threats of boycott; interference with sources of supply; collusive bidding; coercive
practices; commercial bribery; threats of infringement suits not made in good faith;
full line forcing and tying contracts; various forms of delivered-price and zoning
systems; and the misuse of patents for monopolistic purposes.
The following general classifications of commodities involved are listed to
convey an idea of the widespread nature of restraint-of-trade investigations:
Automotive equipment; beverages; building materials and supplies; chemicals;
cosmetics; dental supplies and equipment; dresses; dry ice; films; fire
extinguishers; fruit and vegetables; furniture; furs; groceries; jewelry; milk; paper
and paper products; plumbing and heating equipment; publications; rubber
products; school supplies; sea food; straw; textiles; tobacco; trimmings and
novelties; twine, cord and yarn; and veterinarian medicines.
In addition to the original investigations undertaken during the year, 20 matters
were completed which involved formal docketed cases. These consisted of a variety
of matters, many requiring complete investigation to determine whether the terms
of Commission cease and desist orders were being observed. In the event violations
occurred, evidence was procured in appropriate form to support an action for civil
penalties. Investigations of this nature are as extensive as those made in the original
development of a case, and in some instances, more difficult. At the close of the
fiscal year, 5 cases of this nature were pending on the investigational calendar.
Of the 97 restraint-of-trade investigations in progress during the fiscal year, 3
resulted from applications for complaint filed by Federal, State, or municipal
agencies; 3 were submitted by trade associations; and 22 were initiated by the
Commission on its own motion. The majority, however, continued to originate as a
result of complaints made by individuals and concerns whose business was being
jeopardized by alleged unfair and illegal practices. The group last mentioned was
responsible for 69 of these applications.
Clayton Act, section 2, as amended by Robinson-Patman Act.--The RobinsonPatman Act, approved June 19, l936, amended section 2 of the Clayton Act and
restated in more inclusive form the basic principle of prohibiting price
discriminations which injuriously affect competition. It also prohibits per se certain
classes of discrimination which may involve price only indirectly, without regard to

their competitive effects in specific cases, thus supplementing and strengthening
the previous legislation.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

Matters involving possible violations of the act are generally quite complicated. An
effort is made by the Commission in preliminary stages of an investigation to
determine not only whether the practice in question involves prima facie violation of
the act but whether the defenses available under the act are present in the particular
matter. This frequently necessitates the checking of competitive prices and pricing
policies and undertaking cost studies in cooperation with the parties charged with
violations.
Experience in the administration of the act has made it possible for the Commission,
through the development of certain information by preliminary inquiry, more readily
to clear up misunderstandings among complainants as to the scope of the act and its
application to specific situations, as well as to make a more accurate selection for
investigation of matters involving probable violation of law. The Commission has
endeavored, in view of limited funds and personnel available, to confine
investigations, insofar as feasible, to matters of substantial importance and to eliminate
the expenditure of time and money in the investigation of those which preliminary
inquiry discloses possess little practical importance. The necessary diversion of
personnel for work in connection with the war program has necessitated further
emphasis on this effort.
During the year the Commission instituted field investigations of alleged violations
of the Robinson-Patman Act in 65 cases and completed investigations in 60. At the
beginning of the year, 52 matters were on hand for investigation, and at the close of
the year, 57. As in previous years, the administration of the statute touched widely
varied fields of industry and commerce and involved many classes of commodities.
The proceedings of the Commission and the decisions of the courts in RobinsonPatman Act cases have served as useful guides for members of industries in
determining their pricing and distribution policies. It is apparent that these guides have
been beneficial both in effecting the voluntary elimination of unlawful or doubtful
practices before they become the subjects of investigation and in discouraging the
inception of such practices.
Stock acquisitions, mergers, and consolidations.--Under section 7 of the Clayton
Act, the Commission is vested with authority to prohibit the acquisition by one
corporation engaged in commerce of the capital stock of a competing corporation
similarly engaged, or the acquisition by a holding company of the capital stock of two
or more corporations, engaged in commerce, when the effect may be to substantially
lessen competition, restrain commerce in any section or community, or tend to create
a monopoly in any line of commerce. The Commission however, is without authority
under the statute to prevent the acquisition by one corporation of the property and
assets of a competing corporation or corporations. 3
The Commission considered five preliminary matters and three applications for
complaint under section 7 during the fiscal year. Commodities involved included
evaporated milk, prefabricated homes, upholstery fabrics, watches, lamps and
directional signals, malt beverages, crushed stone and gravel, and groceries. Four of
the preliminary matters were closed after investigation and one was pending at the

close of the year. One complaint was issued and five
3

See recommendation to Congress, pp. 8 and 9.

LEGAL INVESTIGATION

33

applications for complaint were pending at the close of the year. The complaint,
involving malt beverages, was in course of trial at the close of the year.
Investigations involving food, drugs, devices, and cosmetics.4 --The Wheeler-Lea
amendment to the Federal Trade Commission Act greatly enlarged the preexisting
need for medical and other scientific and expert opinion and evidence. In aid of this
need the Commission established the Medical Advisory Division. In the administration
of the Wheeler-Lea amendment, special attention is given to therapeutic
representations made concerning, and pharmacological actions of, medicinal
preparations, the use of which might be injurious, and to devices likely to be injurious
to health.
Since enactment of the Wheeler-Lea amendment, the Commission has completed
2,199 field investigations of alleged violations of section 12 of the Federal Trade
Commission Act, which relates to false advertising of food, drugs, devices, and
cosmetics. Of these, 168 were completed during the fiscal year. This number includes
new cases as well as old cases reinvestigated to determine whether Commission cease
and desist orders, and stipulations executed by advertisers and accepted by the
Commission, were being violated, and whether additional practices not previously
prohibited were being carried on in contravention of the law.
At the close of the year, 173 applications for complaint respecting alleged false
advertising of food, drugs, devices, and cosmetics were under investigation, 27 of
which related to drug and cosmetic preparations and devices alleged to be injurious to
health.
Wool Products Labeling Act.--Investigations of applications for complaint alleging
violations of the Wool Products Labeling Act and of the regulations promulgated
thereunder present many complex problems, particularly to accurately identify the true
fiber content of wool products, the labeling of which is questioned, and to ascertain
whether the false and improper labeling is willful and with intent to violate the
criminal provisions of the law. In many instances the products must be traced through
the various classes of traders handling them in order to determine who is primarily
responsible for the alleged infractions or violations. It is also necessary in most cases
to study and examine the books and records of manufacturers and others to accurately
identify the various constituent fibers, and their weights, which actually make up the
products under investigation, and frequently laboratory tests are required.
Generally, violations of the Wool Act are coupled with false advertising,
misrepresentation and other unfair or deceptive acts or practices or unfair methods of
competition, necessitating investigations and proceedings under both the Wool
Products Labeling Act and the Federal Trade Commission Act.
Since the effective date of the act, there have been completed 176 field
investigations of applications for complaint involving alleged false and improper
labeling, 52 during the fiscal year.
At the close of the fiscal year, 31 such applications were m process of investigation.
(For details concerning administration and enforcement of the Wool Act, see p.69.)

4 Additional statements and statistics covering the work of the Commission relating to radio
and periodical advertising cases involving food, drugs, devices, and cosmetics are given on
pp.72 to 75.

34

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

Investigations under Export Trade Act.--In line with its responsibility of
administering the Export Trade (Webb-Pomerene) Act, the Commission directed the
Legal Investigation Division to make periodic investigations of the organization and
operation of export trade associations organized and functioning under the act, and in
particular to ascertain from time to time whether the associations (a) are artificially or
intentionally enhancing or depressing domestic prices; (b) are used to eliminate
competition in the purchase of raw materials in the United States; (c) are in any way
restraining trade within the United States; and (d) are engaging in unfair methods of
competition in foreign trade.
Preliminary investigations were completed of the activities and operations of 19
export trade associations whose members are important producers and distributors of
coated abrasives, cement, copper, carbon black, dried milk, dried and fresh fruits,
electrical apparatus, lumber, metal lath, phosphate, pipe fittings, railway equipment,
screws, sulphur, soda pulp, and textiles. Investigation of 4 other associations was
pending at the close of the year. (For further details of the administration of the
Export Trade Act, see p.77.)
DISPOSITION OF CASES BY STIPULATION
Under certain circumstances the Commission, instead of disposing of cases by the
formal complaint and trial method, affords respondents the privilege of signing a
statement of fact and an agreement to cease and desist from unfair methods of
competition and unfair or deceptive acts or practices in commerce.
A total of 286 such stipulations in which individuals, firms and corporations agreed
to discontinue unlawful practices were approved by the Commission during the fiscal
year. These included 220 general stipulations which were negotiated by the Trial
Examiners Division, and 66 pertaining especially to radio and periodical advertising
cases which were negotiated by the Radio and Periodical Division.
The policy of the Commission with respect to the circumstances under which cases
may be disposed of by stipulation is set forth in the Commission’s Statement of Policy
on page 94.
FORMAL COMPLAINTS
During the fiscal year the Commission issued 164 formal complaints alleging
violations of the laws it administers. Of this total, 128 charged violation of the Federal
Trade Commission Act; 22, violation of the Clayton Act; 1, violation of the Federal
Trade Commission and Clayton Acts; and 13, violation of the Wool Products Labeling
and Federal Trade Commission Acts.
I. COMPLAINTS UNDER FEDERAL TRADE COMMISSION ACT
A. ALLEGED COMBINATIONS TO RESTRAIN TRADE AND FIX PRICES

(Complaints referred to are identified by accompanying docket numbers)

The Commission issued two complaints in which the respective respondents were
charged with combining and conspiring to restrain

COMPLAINTS UNDER FEDERAL TRADE COMMISSION ACT

35

trade and suppress competition in the sale of their products. One complaint (5311) was
directed against a trade association and its officers and members en g aged in the sale
of dried prunes. The other (5324) involved several trade associations and their officers
and members engaged in the sale of furniture. In each complaint it was alleged that the
agreements and practices of the respective respondents had the effect of enhancing
prices for their products and tended to eliminate competition and to create monopoly.
In another complaint (5253) seven corporations controlling more than 85 percent of
all the white lead produced and sold in the United States were charged with combining
and conspiring to promote and maintain monopolistic and noncompetitive prices and
conditions in connection with the sale of their products. The complaint alleged that,
among other unlawful practices, they maintain a zone-delivered pricing system
whereby their price offers to all purchasers of a class throughout any one of the zones
are matched. (This complaint also charged six of the respondent corporations with
price discriminating in violation of the Robinson-Patman Act. See p.36.)
B. FALSE ADVERTISING AND MISREPRESENTATION

A total of 112 complaints charged false and misleading advertising. They may be
classified broadly as follows, although some involved more than one classification:
Thirty complaints alleged false and misleading representations with respect to the
therapeutic properties of medicinal preparations and in some cases the advertisements
also were alleged to be false and misleading because they failed to reveal the potential
danger from the use of the products advertised; 8 charged misrepresentation
concerning the properties of cosmetics; 35, misrepresentation as to the origin, com
position, condition, quality, ingredients, price and quantity of the products advertised
16, misrepresentation as to results to be obtained through the use of the products; 9,
misrepresentation as to business status; 7, misrepresentation of correspondence school
courses; 1, disparagement of competitors’ products; 4, misleading and deceptive use
of trade names; and 1, misrepresentation of so-called “armored” Bibles and prayer
books claimed to afford protection from injury and death to members of the armed
forces.
C. MISCELLANEOUS COMPLAINTS

Complaints classified under this heading covered such practices as supplying and
using lottery devices to promote the sale of merchandise; deceptive practices in the
sale of photographic enlargements; oppressive and coercive methods by a wholesaler
to compel retail liquor dealers to purchase a stipulated quantity of sparkling wine in
order to obtain still wine; misrepresentations with respect to baby chicks; failure to
disclose rayon fiber content in fabrics simulating silk; and failure to properly label
various grades of window glass.

36

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

II. COMPLAINTS UNDER WOOL PRODUCTS LABELING ACT
Thirteen complaints alleged that wool products were misbranded in violation of the
Wool Products Labeling Act of 1939 and the rules and regulations promulgated
thereunder, in that they did not have labels attached disclosing the kinds and
percentages of the different fibers of which the fabrics were made, including the
respective percentages of wool, reprocessed wool, or reused wool, together with the
identity of the manufacturer or distributor or reseller of the products. (For details
concerning administration and enforcement of the act, see p.69.) Some of these
complaints also charged false and misleading advertising in violation of the Federal
Trade Commission Act. (5198, 5218, 5242, 5254, 5261, 5263, 5280, 5315, 5322, 5327,
5344, 5345, 5350).
III. COMPLAINTS UNDER CLAYTON ACT
A. ALLEGED VIOLATION OF SECTION 2 (a) OF CLAYTON ACT AS AMENDED
BY
ROBINSON-PATMAN ACT

One complaint (5253) charged six. producers of white lead with violation of section
2 (a) of the Clayton Act, as amended by the Robinson-Patman Act, which prohibits
discrimination in price when it may have adverse effects on competition. Each of the
respondents was charged with systematically selling white lead to many purchasers at
a price higher than that at which it sells white lead of like grade and quality to other
purchasers. (See p.35 for that portion of the com-plaint alleging violation of the
Federal Trade Commission Act.)
B. ALLEGED VIOLATION OF SECTION 2 (c) OF CLAYTON ACT AS AMENDED
BY
ROBINSON-PATMAN ACT

Seventeen complaints alleged violation of section 2 (c) which prohibits the granting
or acceptance of brokerage fees except for services rendered in connection with the
interstate sale or purchase of merchandise. Ten of the complaints (5189, 5197, 5228,
5267, 5279, 5284, 5285, 5296, 5297 and 5303) involved sea food products; 5 (5217,
5270, 5273, 5282 and 5295) involved other food products; l (5333) involved
turpentine, linseed oil, etc.; and l (5338), women’s wearing apparel.
C. ALLEGED VIOLATIONS OF SECTIONS 2 (d) AND 2 (e) OF CLAYTON ACT AS
AMENDED BY ROBINSON-PATMAN ACT

Two complaints were issued under sections 2 (d) and 2 (e) which prohibit,
respectively, a seller paying anything of value to a customer for services or facilities
rendered unless such payment is made available to all competing customers on
proportionally equal terms; or furnishing a customer any services or facilities not
accorded to all customers on proportionally equal terms.
One of these complaints (5226) charged that a large corporation producing cellulose
acetate rayon fabrics secretly paid its “prestige” customers, including garment
manufacturers and their retailer customers, varying sums of money as Compensation

for advertising and promoting the sale of women’s wearing apparel made from the respondent corporation’s fabrics and sold under its widely advertised

ORDERS UNDER FEDERAL TRADE COMMISSION ACT

37

trade-mark. Such payments allegedly were not made available on proportionally
equal terms or on any terms to other garment manufacturers or their retailer
customers competing with the respondent’s “prestige” customers. The complaint
also alleged that the respondent discriminated in favor of certain purchasers by
entering into cooperative advertising arrangements with them and by not according
such services to all other customers on proportionally equal terms.
The second complaint brought under sections 2 (d) and 2 (e) contained similar
allegations and was directed against a corporation engaged in converting acetate
rayon fabrics into finished materials which it sells to garment manufacturers for use
as linings in wearing apparel (5243).
D. ALLEGED VIOLATION OF SECTION 3 OF CLAYTON ACT

Two manufacturers of rubber prophylactics were named respondents in separate
complaints alleging violation of section 3 of the Clayton Act, which prohibits the
negotiation of exclusive-dealing contracts where the effect may be to substantially
lessen competition or tend to create a monopoly. The complaints charged that the
respective respondents sell their products to wholesale drug organizations and retail
drug chains on the condition that they shall not deal in competitive products nor
sell the respondents’ products to any purchaser other than retail drug stores (5277
and 5278).
E. ALLEGED VIOLATION OF SECTION 7 OF CLAYTON ACT

One complaint charged a brewery with acquiring the capital stock of a competing
brewery, in violation of section 7 of the Clayton Act, which prohibits such capital
stock acquisitions where the effect may be to substantially lessen competition,
restrain trade, or tend to create a monopoly of any line of commerce (5187).
ORDERS TO CEASE AND DESIST
The Commission during the fiscal year issued 140 orders to cease and desist from
the use of unfair methods of competition and other violations of the laws it
administers. The following cases are illustrative of the orders issued:
I. ORDERS UNDER FEDERAL TRADE COMMISSION ACT
A. PRICE-FIXING AND RESTRAINT-OF-TRADE CASES

Bidders on Government contracts.--Nine orders were directed against more than
a score of respondents found to have participated in collusive and fraudulent
bidding on contracts for supplying materials to rehabilitate the shipyards of the
Cramp Shipbuilding Co., Philadelphia, where the Government had authorized a
Navy shipbuilding program. The orders involved the sale of electrical equipment,

mill-work and lumber building materials, metal fencing, and machinery. The
Commission found that the general contractor, Charles F. Rohleder, and the
respondent sellers cooperated in the preparation of fictitious and noncompetitive
bids and price quotations and submitted them to the Cramp company and the Navy
Department for consideration and approval as genuinely competitive bids and price
quotations.
Six of the orders were issued, respectively, against J. R. Duffy Manufacturing
Co., Philadelphia, and others (4801); American Steel

38

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

& Wire Co. of New Jersey, Cleveland, and others (4802); Delta Equipment Co.,
Philadelphia, (4803): Grater-Bodey Co., Norristown, Pa., and others (4804); The
O’Brien Machinery Co., Philadelphia (4805); and Charles F. Rohleder, Philadelphia,
and others (4806). Under identical orders, the respondents in each of the six groups
were directed to cease and desist from entering into or continuing any conspiracy or
planned common course of action to submit collusive or fictitious noncompetitive
bids; to interfere with tho procurement or consideration of competitive bids by the
prospective purchaser; to present a false appearance of competition among bidders; or
to file a bid by one person when the prices and terms therein are deter-mined by
another or when the bid is not bona fide.
In the other three proceedings orders were entered against Westinghouse Electric
Supply Co., New York (4798); Grater-Bodey Co., Norristown, Pa., and others (4799);
and J. P. Rainey & Co., Philadelphia (4800). These orders were similar in character
to the six set out above and in general required the respondents to cease and desist
from continuing or engaging in the procuring, preparation, or submission of fraudulent
bids or price quotations to any Federal agency or other buyers.
Rudolf Lesch Fine Arts, Inc., New York, and others .--Six corporations engaged in
the sale of art pictures and allied products were ordered to cease and desist from
entering into or continuing any conspiracy or planned common course of action to fix
uniform discounts for their products or discounts based upon classifications of
customers; to circulate lists showing such classifications; or to hold meetings to fix
uniform discounts or to make such classifications (4693).
Eastman Kodak Co., Rochester, N. Y.--This company was ordered to cease and desist
from entering into any contract or understanding with its dealer-customers which
requires such dealer-customers to resell its magazine and Kodachrome film at not less
than the minimum prices fixed by the company--such film not being in free and open
competition with commodities of the same general class 4322).
Graphic Arts Club of Charlotte, Inc., Charlotte, N. C., and others.--The respondent
club and its directors, officers and 13 member commercial printers were ordered to
cease and desist from conspiring to fix uniform prices, discounts, or terms of sale for
their products; to quote prices or make bids predicated upon schedules in the Franklin
Printing Catalog or other similar publication; to file with the club or any other agency
proposed price quotations or bids, or to otherwise exchange information as to prices
to be quoted (4517).
Auburn Die Co., Inc., Auburn, Maine, and others.--Eleven firms manufacturing steel
cutting dies used in shoe manufacturing were ordered to cease and desist from
conspiring to fix uniform prices for, or uniform charges for alterations or repairs to
dies; to publish or use common price lists; or to discuss such subjects at meetings for
the purpose of establishing or maintaining uniform prices or charges (4921).
Liquid Tight Paper Container Association, Philadelphia, and others.--This
association and eight manufacturers of cylindrical liquid tight paper containers were
ordered to cease and desist from entering into or continuing any conspiracy to engage
in the following practices: Fixing percentage quotas of business for each member
manufacturer; fixing uniform delivered prices, discounts, or terms of sale; fixing

ORDERS UNDER FEDERAL TRADE COMMISSION ACT

39

standard uniform sizes, colors, and quality of materials for the purpose of restraining
competition; using delivered price zones and fixing uniform price differentials
between zones; and fixing resale prices and refusing to allow usual jobber discounts
to those jobbers who do not soil at the manufacturers’ prices and terms (4675).
Utah Wholesale Grocery, Salt Lake City, and others.--Four wholesale grocers in
Utah were ordered to cease and desist from conspiring to boycott manufacturers and
jobbers who sold to their competitors; by coercion, to cause them to divert to others
shipments in transit to such competitors; and to reduce prices on merchandise handled
by both the respondents and their competitors so as to cause the competitors to sustain
a loss (4643).
National Retail Tea & Coffee Merchants Association, Inc., Chicago, and others -This association and its 170 members known as “home service merchants” were
prohibited from conspiring to induce or coerce manufacturers to discontinue selling
to competitors of the respondents; to communicate among themselves for such
purpose; to use any scheme to prevent a competitor from freely purchasing merchandise usually handled by him, or to prevent anyone from entering into business in
competition with the respondents (4776).
Lemuel Firth, Gloucester, Mass., and others.--Nineteen owners and masters of
fishing boats operating out of Gloucester were ordered to cease and desist from
entering into or carrying out any planned common course of action or agreement
restricting the quality of fish to be caught and sold to dealers; fixing the prices at
which fish are to be sold to dealers in any market or establishing or maintaining any
price differential among different markets; prescribing the length of time a boat
carrying fish to market shall remain in port; holding meetings for the purpose of
reaching agreements governing the quantity of fish to be caught or the price at which
they are to be sold; or engaging in any practice substantially similar to the foregoing,
with the purpose or effect of establishing or maintaining uniform prices for fish
(5065).
B. FALSE ADVERTISING OF DRUGS, DEVICES, AND COSMETICS

Healthaids, Inc., Jersey City, N. J., and others--An order to discontinue
disseminating false advertisements concerning the therapeutic properties of “Serutan,”
a laxative, was issued against Health-aids, Inc., the manufacturer of the preparation;
The Journal of Living Publishing Corporation, New York, and Victor H. Lindlahr, who
is editor of Journal of Living and is employed by Healthaids, Inc., to promote the sale
of the preparation by articles in the magazine and by radio lectures. The respondents
were ordered to cease and desist from representing that the preparation is a cure or
remedy for constipation, will restore or maintain natural elimination, promote normal
or regular action by the digestive or eliminative organs or muscles, or has any
therapeutic value in the treatment of constipation in excess of the temporary relief
afforded by its laxative action (4332).
The Carlay Co., Chicago, and others.--In connection with the sale of “Ayds,” a so-

called weight-reducing product which the Commission found was nothing more than
caramel candy enriched with certain vitamins and minerals, the respondents were
ordered to cease disseminating any advertisement which represents that excess weight
may be removed through use of the product in conjunction with the

40

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

respondents’ weight-reducing plan without the necessity of restricting the diet. The
order also prohibits the disseminating of any advertisement which represents that the
respondents’ product and plan aid in the remove excess weight unless the
advertisement discloses clearly that the plan includes adherence to a restricted diet and
that such adherence is essential to weight reduction (4898).
Giljan Medicine Co., Inc., and The Key Advertising Co., both of Cincinnati.--Giljan
Medicine Co. manufactures and markets a laxative preparation under the names
“Giljan” and “Giljan Laxative Compound,” and the advertising company prepares and
disseminates advertising for the preparation, which was represented as a “new,
scientific formula of juices made from 18 of nature’s finest health-giving herbs.” The
Commission found that, with 4 exceptions, none of the 18 ingredients was present in
sufficient quantity to have any therapeutic value. The respondents were ordered to
cease and desist from disseminating advertisements representing that the formula for
the preparation is new or scientific, that it is a remedy or cure for some 20 diseases and
symptoms named by the respondents in their advertising, or that it has any therapeutic
value beyond that of a laxative. The order further directed the respondents to
discontinue disseminating any advertisement which fails to reveal that the preparation
should not be used in the presence of symptoms of appendicitis; provided, however,
that such advertisement need only contain the statement: “CAUTION: Use only as
directed,” if the directions for use on the label or in the labeling contain a warning to
the same effect (5216).
Royal Lee, trading as Vitamin Products Co. , Milwaukee.--The order directed the
respondent to discontinue representing that his vitamin preparations designated
Catalyn, Vitamin A Complex, Vitamin B Complex, Vitamin C Complex , and Vitamin
D Complex constitute competent nutritional or corrective treatment for the prevention
or cure of numerous and diverse diseases and ailment enumerated in his
advertisements; or that the preparations designated Vitamin E Complex, Vitamin F
Complex, and Vitamin G Complex are a competent nutritional treatment for or
preventive of many conditions and ailments listed in his advertising matter. The
respondent was also ordered to cease representing that a synthetic vitamin is incapable
of curing or relieving diseases or symptoms of vitamin deficiency as effectively as a
like vitamin obtained from his preparations. The Commission found that certain
representations concerning the effectiveness of other of the respondent’s preparations
in the treatment of various ailments and conditions were false and misleading and
ordered them discontinued (4733).
Mayo Bros. Vitamins, Inc., and others, Los Angeles.--An order to discontinue
unqualified use of the words “Mayo Bros.” in a trade or corporate name or as a name
for medicinal preparations was issued against this corporate respondent, which traded
as Mayo Bros., and its officers, Irby L. Mayo, Oran Frank F. Mayo, and Paul T. Murry.
The preparations involved were advertised and sold under the names Mayo Bros.
Vitamin B1, Mayo Bros. Vitamin B Complex and Mayo Bros. Family Formula. The
Commission found that the respondents through their various uses of the name “Mayo
Bros.”, represented’ falsely that their preparations were produced or sponsored by the
Mayo Clinic of Rochester, Minn. The order permits use of the

ORDERS UNDER FEDERAL TRADE COMMISSION ACT

41

name “Mayo Bros.” if the respondents unequivocally disclose in their advertising that
they are not connected with the Mayo clinic. The respondents also were directed to
discontinue certain false misrepresentations concerning the therapeutic properties of
their products (5044).
Ed. W. Arnold Co., Logansport, Ind., and others.--These respondents were ordered
to cease and desist from disseminating advertisements which represent falsely that an
electrically heated bath cabinet they sell is a cure or remedy for or possesses
therapeutic value in the treatment of diabetes, blood disorders, asthma, kidney trouble,
colds, heart trouble, and numerous other ailments; that it is a cure or remedy for
rheumatism, lumbago, or neuritis; or that it reduces obesity and builds up people who
are under weight. The Commission found that the therapeutic value of the bath cabinet
is limited to such temporary benefits as may result from the application of heat and
that substantially the same results may be obtained from an ordinary warm tub bath
The respondents also were ordered to discontinue representing that a mechanical
massaging device they market reduces body weight, relieves constipation, induces
sleep, or affords to the surface of the body benefits equivalent to those produced by
exercise (4818).
L. R Kallman & Co., Chicago.--Engaged in the sale of cosmetics , this respondent
was ordered to cease representing that the preparation known as “Chin-Ep” will
prevent flabbiness along the throat line and cause the user to have or retain a youthful
throat line; and that the product designated “Digitite” will tighten the skin of the hands
and give them a youthful appearance (4966).
C. UNFAIR PRACTICES OTHER THAN MISREPRESENTATION OF DRUGS,
DEVICES, AND COSMETICS

Hastings Manufacturing Co., Hastings, Mich.--The order in this case directed the
respondent corporation to cease and desist from certain unfair trade practices designed
to persuade distributors to discontinue handling piston rings other than those
manufactured by the Hastings company. The order prohibited the company from
purchasing distributors’ stocks of competing piston rings, making loans to distributors
of Hastings rings, or guaranteeing to distributors increased profits, when such practices
are for the purpose of inducing distributors to handle the Hastings line exclusively
(4437).
Fountain pen manufacturers.--W. A Sheaffer Pen Co., Fort Madison, Iowa (4337);
The Parker Pen Co., Janesville, Wis. (4338); Eversharp, Inc., Chicago (4590), and L.
E. Waterman Co., New York (4617), were ordered to cease making unqualified
representations that their fountain pens are unconditionally guaranteed for the life of
the user or for any other designated period, when a service charge, usually 35 cents,
is made for repairs or adjustments. The respondents were ordered to discontinue using
such terms as “Lifetime,” “Guaranteed for Life,” “Life Contract Guarantee,”
“Guaranteed Forever,” or “Guaranteed for a Century” to describe or refer to their pens,
and representing that the pens are unconditionally guaranteed for any designated
period of time, unless the respondents, without expense to the user, make repairs or
replacement of parts which may be necessitated during the designated period by any
cause other than willful damage or abuse. The orders did not prohibit the respondents
from

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

representing truthfully that the service on their pens (as distinguished from the pens
themselves) is guaranteed for life or other designated period, even though a charge is
imposed in connection With such servicing, providing the terms of the guarantee,
including the amount of the charge, are clearly and conspicuously disclosed in
immediate conjunction with such representations.
Arthur Von Senden Co., Inc., Pittsburgh.--This respondent, selling so-called
“armored” Bibles and prayer books for use by men in the armed forces, was ordered
to cease and desist from representing that such metal-covered books are capable of
stopping or deflecting bullets, shrapnel, or bayonet thrusts, or of affording physical
protection to the persons carrying them (5154).
“Free goods” offers.--Orders in 16 so-called “free goods” cases were modified by
the Commission, after hearings, so as to prohibit the use of the word “free” or any
similar term to designate, describe, or refer to merchandise which is not a gift or
gratuity and delivered unconditionally. Typical of these modified orders was one in
which the respondents were directed to cease representing, designating , or describing
watches or other articles, delivered only upon the condition that some other articles be
purchased and paid for as “free,” “included free” or “included free of extra charge,”
or m any other manner indicating that the watch or other article is a gift or gratuity
(3461).
II. ORDERS UNDER WOOL PRODUCTS LABELING ACT
This act and the rules and regulations thereunder provide that woolen or purported
woolen merchandise shall have attached thereto a stamp, tag, label, or other means of
identification showing the kinds and percentages of the different fibers of which the
product is made, including the respective percentages of wool, reprocessed wool, or
reused wool; the maximum percentage of any nonfibrous loading or adulterating
material used; the name of the manufacturer of the product, or the manufacturer’s
registered identification number and the name of the qualified distributor or reseller.
The label or a proper substitute must be on the article when it is delivered to the
consumer. The Commission issued three orders under the act, as follows:
Benjamin Chaitt, Elmira, N.Y.; Isaac Chaitt, Harrisburg, Pa.; Max Chaitt,
Lancaster, Pa., and Elizabeth Carl, Lebanon, Pa.--The Commission found that these
respondent operators of retail clothing stores, after certain garments were delivered to
them and before they were offered for sale, mutilated, or removed labels which had
been affixed by the manufacturers and which purported to show the information
required by the Wool Act and the rules and regulations promulgated thereunder. They
were ordered to cease and desist from causing or participating in the mutilation or
removal of any label purporting to show the required information (5041).
Samuel Rudovsky and Max Braunstein, trading as Rudd Manufacturing Co., New
York.--The respondents, manufacturers of men’s and boys’ clothing, were found to
have misbranded wool products by failing to securely attach to them a tag or label
showing conspicuously the information required by the Wool Act and the rules and
regulations issued thereunder. The order directed them to discontinue such

misbranding (5047).

ORDERS UNDER THE CLAYTON ACT

43

Ceil Malk, Inc., Brooklyn.--In this case a retailer of women’s garments was ordered
to cease and desist from misbranding wool products by not attaching the required
labels, and from mutilating labels which had been placed on the products by the
manufacturers (5138).
III. ORDERS UNDER THE CLAYTON ACT
A. VIOLATION OF SECTION 2 (a) OF CLAYTON ACT As AMENDED BY
ROBINSON-PATMAN ACT

Morton Salt Co., Chicago.--The Commission ordered the respondent to cease and
desist from discriminating in the price of salt among wholesale and retail dealers,
when the differences in price are not justified by differences in the cost of
manufacture, sale or delivery resulting from differing methods by, or quantities in,
which such product is sold, (a) by selling to some wholesalers and to some retailers at
prices different from the prices charged other wholesalers and retailers, respectively,
who compete in selling such product, provided, however, that this shall not prevent
price differences of less than 5 cents per case which do not tend to lessen competition;
and (b) by selling to a retailer at prices lower than those charged wholesalers whose
customers compete with such retailer (4319).
Caradine Hat Co., St.- Louis.--This respondent was ordered to cease and desist from
discriminating in price between different purchasers of hats of like grade and quality
(where the differences in price are not justified as set out in the next preceding case)
by selling such products to some purchasers at prices lower than the prices charged to
other customers competing with the favored ones (5151).
B. VIOLATION OF SECTION 2 (c) OF CLAYTON ACT AS AMENDED BY
ROBINSON-PATMAN ACT

Sixteen orders were directed against violations of the so-called brokerage section of
the Robinson-Patman Act, which prohibits the payment or acceptance of brokerage
fees except for services rendered in connection with the interstate sale or purchase of
merchandise.
Food dealers paying unlawful brokerage to buyers.-- Respondents in six orders were
directed, in connection with the interstate sale of their merchandise, to cease and desist
from paying to any buyer anything of value as a commission, brokerage or other
compensation, or any allowance or discount in lieu thereof, upon purchases made by
such buyer for his own account. The respondents named in such orders, and the
principal commodities they sell, are:
B F. Shriver Co., Westminster, Md., canned vegetables (5217); L. P. Maggioni &
Co., Savannah, Ga., canned seafood (5129); Funsten Co., San Francisco, and others,
canned sea food (5131); Coast Fishing Co., Wilmington, Calif., canned sea food
(5197); Marine Products Co., San Diego, Calif., canned sea food (5137); and The

Halfhill Co., Los Angeles, canned sea food (5267).
The respondents in four of these cases (5131, 5197, 5137, and 5267) also were
ordered to discontinue making such unlawful payments to any agent or intermediary
acting for or subject to the direct or indirect control of the purchaser to whom the sale
is made.
Food dealers accepting unlawful brokerage from sellers -In eight orders the
following respondents, in connection with their interstate

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

purchases of merchandise, were directed to cease and desist from accepting from any
seller anything of value as a commission, brokerage or other compensation, or any
allowance or discount in lieu thereof, upon purchases made for their respective
accounts:
Austelle-Flintom Co., Orangeburg, S.C., canned fruits and vegetables (5130);
Southgate Brokerage Co., Inc., Norfolk, Va., food products (4821); Fraering Brokerage
Co., Inc., New Orleans, canned food and fish (4823);Glover & Wilson, Little Rock;
Ark., canned fruits and vegetables (4835); W. M. Meador & Co., Inc., Mobile, Ala.,
food products (4928); H. D. Childers Co., Mobile, Ala., food products (4938);
Hutchings Brokerage Co., Mobile, Ala., food products (5059); and Britt-McKinney
Co., Greenville, S. C., canned food and fruits (4792).
Jasper W. Efird, New York, and others.- Jasper W. -Efird is purchasing agent for 38
incorporated department stores, also respondents in the proceeding, which he and
members of his family control and operate in 3 Southern States. The Commission
found that he accepted unlawful commissions, brokerage and lump payments from
sellers and manufacturers of department store merchandise and that such payments
were used by him for the sole benefit of the corporate respondents to maintain a
buying office in New York. Efird was ordered to cease accepting anything of value as
brokerage, commission or other compensation, or any allowance or discount in lieu
thereof, from any seller, when the purchases are made for his own account, or when
he is acting as buying representative of the purchaser, or when in making such
purchases he is acting for or subject to the control of the purchaser. The order also
prohibited the 38 corporate respondents from receiving such unlawful payments upon
purchases made for their own accounts (3955).
Arthur M. Florman and Leo Florman, trading as A. M. Florman & Bro., New York.The Commission found that while acting as resident buying agents of millinery for,
and when under the control of, about 40 retail stores throughout the country, these
respondents accepted remuneration in the form of unlawful commissions or brokerage
fees from the sellers from whom they purchased millinery for their clients. The order
directed against such practice was similar to the one issued against the individual
respondent Jasper W. Efird in the case described immediately above (4227).
C. VIOLATION OF SECTION 2 (d) OF CLAYTON ACT AS AMENDED BY
ROBINSON-PATMAN ACT

Holzbeierlein & Sons, Inc., Washington, D. C-This baking com-pan y was ordered
to cease and desist from paying anything of value to District Grocery Stores, Inc., or
any other customer , for advertising services furnished by the customer, unless such
payment is available to all other competing customers on proportionally equal terms
(5020).
D. VIOLATION OF SECTION 2 (e) OF CLAYTON ACT AS AMENDED BY
ROBINSON-PATMAN ACT

Elizabeth Arden, Inc., New York, and others.--The Commission ordered these
manufacturers and distributors of cosmetics and toilet preparations to cease
discriminating among competing purchasers by furnishing demonstrator or other
services to any retailer when such

TYPES OF UNFAIR METHODS AND PRACTICES

45

services are not accorded on proportionally equal terms to other retailer purchasers
located in the same city or who resell such products in competition with retailers who
receive such services (3133).
E. VIOLATION OF SECTION 2 (f) OF CLAYTON ACT AS AMENDED BY
ROBINSON-PATMAN ACT

Associated Merchandising Corp., New York, and others.--This respondent and its 21
member corporations operating large retail department stores in Various cities were
ordered to cease and desist from knowingly inducing or receiving discriminations in
price through discounts, rebates, or other allowances on purchases from any manufacturer or seller greater than the discounts or other allowances currently allowed by
such manufacturer or seller to competitors of the respondents; from knowingly
inducing or receiving any such discriminations based upon the total purchases of the
respondents as a group, by or through respondent Associated Merchandising Corp.,
which are not currently allowed to the individual competitors of the respondents; from
knowingly purchasing from manufacturers at prices lower than those charged the
respondents’ competitors, and from using collective action to induce manufacturers
to make such discriminations. The order also prohibited the respondents from inducing
any manufacturer to make such discriminations by employing A. M. C. or other agency
to secure such discriminations by giving preference to those manufacturers who grant
such discriminatory prices; by refusing to deal with manufacturers who refrain from
granting the discriminations; or by giving preference in the resale of merchandise of
those manufacturers who grant discriminator y prices (5027).
E. J. Brach & Sons, Chicago -The order in this case directed that the respondent, in
connection with the purchase of glucose used in the manufacture of its candy, cease
and desist from knowingly purchasing from any seller at prices lower than those
charged by such seller to the trade generally; from inducing the sale by any seller at
prices known to be less than the seller charges to the trade generally; and from
knowingly inducing or receiving any discriminations in price prohibited by section 2
(a) of the Clayton Act as amended (4548).
TYPES OF UNFAIR METHODS AND PRACTICES
TYPICAL METHODS AND PRACTICES CONDEMNED IN ORDERS TO
CEASE AND DESIST

The following list illustrates unfair methods of competition and unfair or deceptive
acts and practices condemned by the Commission from time to time in its orders to
cease and desist. The list is not limited to orders issued during the fiscal year. Because
of space limitation it does not include specific practices outlawed by the Clayton Act
and committed to the Commission’s jurisdiction, namely, various forms of price
discrimination, exclusive and tying dealing arrangements, competitive stock

acquisition, and certain kinds of competitive interlocking directorates.
1.The use of false or misleading advertising concerning, and the misbranding of,
commodities, respecting the materials or ingredients of which they are composed, their
quality, purity, origin, source attributes, or properties, or nature of manufacture, and
selling them

46

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

wider such name and circumstances as to deceive the public. An important part of
these include misrepresentation of the therapeutic. and corrective properties of
medicinal preparations and devices, and cosmetics and the false representation,
expressly or by failure to disclose their potential harmfulness, that such preparations
may bo safely used.
2. Describing various symptoms and falsely representing that they indicate the
presence of diseases and abnormal conditions which the product advertised will cure
or alleviate.
3. Representing products to have been made in the United States when the
mechanism or movements, in whole or in important part, are of foreign origin.
4. Bribing buyers or other employees of customers and prospective customers,
without the employer’s knowledge or consent, to obtain or hold patronage. the
business or trade secrets of competitors by espionage, or by bribing their employees,
or by similar means.
6. Inducing employees of competitors to violate their contracts and enticing them
away in such numbers or under such circumstances as to hamper or embarrass the
competitors in the conduct of their business.
7. Making false and disparaging statements respecting competitors’ products and
business, in some cases under the guise of ostensibly disinterested and specially
informed sources or through purported scientific, but in fact misleading,
demonstrations or tests.
8. Widespread threats to the trade of suits for patent infringement arising from the
sale by competitors of alleged infringing products, not in good faith but for the purpose
of intimidating the trade and hindering or stifling competition, and claiming ‘ without
justification, exclusive rights in public names of unpatented products.
9. Conspiring to maintain uniform selling prices, terms and conditions of sale
through the use of a patent-licensing system.
10. 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 through coercion to influence the trade
policy of their competitors or of manufacturers from whom they buy.
11. Passing off goods for products of competitors through appropriation or
simulation of such competitors’ trade names, labels, dress of goods, or counter-display
catalogs.
12. Selling rebuilt, second-hand, renovated, or old products, or articles made in
whole or in part from used or second-hand materials, as new, by so representing them
or by failing to reveal that they are not new or that second-hand materials have been
used.
13. Buying up supplies for the purpose of hampering competitors and stifling or
eliminating competition.
14. Using concealed subsidiaries, ostensibly independent, to obtain competitive
business otherwise unavailable, and making use of false and misleading
representations, schemes, and practices to obtain representatives and make contacts,

such as pretended puzzle-prize contests purportedly offering opportunities to win
handsome prizes, but which are in fact mere “come-on” schemes and devices in which
the seller’s true identity and interest are initially concealed.
15. Selling or distributing punchboards and other lottery devices which are to be or
may be used in the sale of merchandise by lot or

TYPES OF UNFAIR METHODS AND PRACTICES

47

chance; using merchandising schemes based on lot or chance, or on a pretended
contest of skill.
16. Combinations or agreements of competitors to fix, enhance, or depress prices,
maintain prices, bring about substantial uniformity in prices, or divide territory or
business, to cut off or interfere with competitors’ sources of supply, or to close
markets to competitors; or use by trade associations of so-called standard cost systems,
price lists, or guides, or exchange of trade information calculated to bring about these
ends, or otherwise restrain or hinder free competition.
17. Intimidation or coercion of producer or distributor to cause him to organize, join,
or contribute to, or to prevent him from organizing, joining, or contributing to,
producers’ cooperative association, or other association, advertising agency, or
publisher.
18. Aiding, assisting, or abetting unfair practice, misrepresentation, and deception,
and furnishing means or instrumentalities therefor and combining and conspiring to
offer or sell products by chance or by deceptive methods, through such practices as
supplying dealers with lottery devices, or selling to dealers and assisting them in conducting contest schemes as a part of which pretended credit slips or certificates are
issued to contestants, when in fact the price of the goods has been marked up to absorb
the face value of the credit slip, and the supplying of emblems or devices to conceal
marks of country of origin of goods, or otherwise to misbrand goods as to country of
origin.
19. Various methods to create the impression that the customer is being offered an
opportunity to make purchases under unusually favorable conditions when such is not
the case, such devices including
(a) Sales plans in which the seller’s usual price is falsely represented as a special
reduced price for a limited time or to a limited class, or false claim of special terms,
equipment, or other privileges or advantages.
(b) The use of the “free goods” or service device to create the impression that
something is actually being thrown in without charge, when it is fully covered by the
amount exacted in the transaction as a whole, or by services to be rendered by the
recipient.
(c) Use of misleading trade names calculated to create the impression that a dealer
is a producer or importer selling directly to the consumer, with resultant savings.
(d) Offering of false “bargains” by pretended cutting of a fictitious “regular” price.
(e) Use of false representations that an article offered has been rejected as
nonstandard and is offered at an exceptionally favorable price, or that the number
thereof that may be purchased is limited.
(f) Falsely representing that goods are not being offered as sales in ordinary course,
but are specially priced and offered as a part of a special advertising campaign to
obtain customers, or for some purpose other than the customary profit.
(g) Misrepresenting, or causing dealers to misrepresent, the interest rate or carrying
charge on deferred payments.
20. Using containers ostensibly of the capacity customarily associated by the

purchasing public with standard weights or quantities

48

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

of the product therein contained, or using standard containers only partially filled to
capacity, so as to make it appear to the purchaser that he is receiving the standard
weight or quantity.
21. Misrepresenting in various ways the necessity or desirability or the advantages
to the prospective customer of dealing with the seller, such as-(a) Misrepresenting seller’s alleged advantages of location or size, or the branches,
domestic or foreign, or the dealer outlets he has
(b) Making false claim of being the authorized distributor of some concern, or
falling to disclose the termination of such relationship, in soliciting customers of such
concerns, or of being successor thereto or connected therewith, or of being the purchaser of competitor’s business, or falsely representing that competitor’s business has
been discontinued, or falsely claiming the right to prospective customer’s special
consideration through such false statements as that the customer’s friends or his
employer have expressed a desire for, or special interest in, consummation of seller’s
transaction with the customer.
(c) Alleged connection of a concern, organization, association, or institute with, or
endorsement of it or its product or services by, the Government or nationally known
organization, or representation that the use of such product or services is required by
the Government, or that failure to comply with such requirement is subject to penalty.
(d) False claim by a vendor of being an importer, or a technician, or a diagnostician,
or a manufacturer, grower, or nursery-man, or a distiller, or of being a wholesaler,
selling to the consumer at wholesale prices; or by a manufacturer of being also the
manufacturer of the raw material entering into the product, or by an assembler of being
a manufacturer.
(e) Falsely claiming to be a manufacturer’s representative and outlet for surplus
stock sold at a sacrifice.
(f) Falsely representing that the seller owns a laboratory in which the product
offered is analyzed and tested.
(g) Representing that ordinary private commercial seller and business is an
association, or national association, or connected therewith, or sponsored thereby, or
is otherwise connected with noncommercial or professional organizations or
associations, or constitutes an institute, or, in effect, that it is altruistic in purpose,
giving work to. the unemployed.
(h) Falsely claiming that business is bonded, or misrepresenting its age or history,
or the demand established for its products, or the selection afforded, or the quality or
comparative value of its goods, or the personnel or staff or personages presently or
theretofore associated with such business or the products thereof.
(I) Claiming falsely or misleadingly patent, trade-mark, or other special and
exclusive rights.
(j) Granting seals of approval by a magazine to products advertised therein and
misrepresenting thereby that such products have been adequately tested, and
misrepresenting by other means the quality, performance, and characteristics of such
products.

TYPES OF UNFAIR METHODS AND PRACTICES

49

22. Obtaining business through undertakings not carried out, and not intended to be
carried out, and through deceptive, dishonest, and Oppressive devices calculated to
entrap and coerce the customer or prospective customer such practices including-(a) Misrepresenting that seller fills orders promptly, ships kind of merchandise
described, and assigns exclusive territorial rights within definite trade areas to
purchasers or prospective purchasers.
(b) Obtaining orders on the basis of samples displayed for customer’s selection and
failing or refusing to respect such selection thereafter in filling of orders, or promising
results impossible of fulfillment, or falsely making promises or holding out guarantees,
or the right of return, or results, or refunds, replacements, or reimbursements, or
special or additional advantages to the prospective purchaser such as extra credit, or
furnishing of supplies or advisory assistance; or falsely assuring the purchaser or
prospective purchaser that certain special or exclusively personal favors or advantages
are being granted him.
(c) Concealing from prospective purchaser unusual features involved in purchaser’s
commitment, the result of which will be to require of purchaser further expenditure in
order to obtain benefit of commitment and expenditure already made, such as failure
to reveal peculiar or nonstandard shape of portrait or photographic enlargement, so as
to make securing of frame there for from sources other than seller difficult and
impracticable, if not impossible.
(d) Obtaining by deceit prospective customer s signature to a contract and
promissory note represented as simply an order on approval.
(e) Making use of improper and coercive practices as means of exacting additional
commitments from purchasers, through such practices as unlawfully withholding from
purchaser property of latter lent to seller incident to carrying out of original commitment, such as practice of declining to return original .photograph from which
enlargement has been made until purchaser has also entered into commitment for
frame therefor.
(f) Falsely representing earnings or profits of agents, dealers, or purchasers, or the
terms or conditions involved, such as false statement that Participation by merchant
in seller’s sales promotion scheme is without cost to merchant, and that territory
assigned an agent, representative, or distributor is new or exclusive.
(g) Obtaining agents or representatives to distribute the seller’s products through
falsely promising to refund the money paid by them should the product prove
unsatisfactory, or promising that the agent would be granted right to exclusive or new
territory would be given assistance by seller, or would be given special credit or
furnished supplies, or overstating the amount of his earnings or the opportunities
which the employment offer.
(h) Advertising a price for a product as illustrated or described and not including in
such price all charges for equipment or accessories illustrated or described or
necessary for use of the product or customarily included as standard equipment, and
failing to include all charges not specified as extra.

50

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

23. Giving products misleading names so as to give them a value to the purchasing
public which they would not otherwise possess, such as names implying falsely that-(a) The products were made for the Government Or in accordance with its
specifications and of corresponding quality, or that the advertiser is connected with the
Government in some way, or m some way the products have been passed upon,
inspected, underwritten, or endorsed by it; or
(b) They are composed in whole or in part of ingredients or materials which in fact
are present only to a negligible extent or not at all, or that they have qualities or
properties which they do not have; or
(c) They were made in or came from some locality famous for the quality of such
products, or are of national reputation; or
(d) They were made by some well and favorably known process; or
(e) They have been inspected, passed, or approved after meeting the tests of some
official organization charged with the duty of makings such tests expertly and
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 or city, or locality considered of importance in
connection with the public taste, preference, or prejudice; or
(h) They have the usual characteristics or value of a product properly so designated,
as through use of a common, generic name, such as “paint” to designate a product
lacking the necessary ingredients of paint; or
(I) They are of greater value, durability, and desirability than is the fact, as labeling
rabbit fur as “Beaver”, or
(j) They are designed, sponsored, produced, or approved by the medical profession,
health and welfare associations, hospitals, celebrities, educational institutions and
authorities, such as the use of the letters “M.D.” and the words “Red Cross” and its
insignia and the words “Boy Scout.”
24. Selling below cost or giving product without charge, with intent and effect of
hindering or suppressing competition.
25. Dealing unfairly and dishonestly with foreign purchasers and thereby
discrediting American exporters generally.
26. Coercing and forcing uneconomic and monopolistic reciprocal dealing
27. Entering into contracts in restraint of trade whereby foreign corporations agree
not to export certain products to the United States in consideration of a domestic
company’s agreement not to export the same commodity, nor to sell to anyone other
than those who agree not to so export the same.
28. Employing various false and misleading representations and practices attributing
to products a standing, merit, and value to the

TYPES OF UNFAIR METHODS AND PRACTICES

51

purchasing public, or a part thereof, which they do not possess, such practices
including-(a) Misrepresenting, through salesmen or otherwise, products’ composition, nature,
qualities, results accomplished, safety, value, and earnings or profits to be had
therefrom.
(b) Falsely claiming unique status or advantages, or special merit therefor, on the
basis of misleading and ill-founded demonstrations or scientific tests, or pretended
wide spread tests, or of pretended widespread and critical professional acceptance and
use
(c) Misrepresenting the history or circumstances involved in the making and offer
of the products or the source or origin thereof (foreign or domestic), or of the
ingredients entering therein, or parts thereof, or the opportunities brought to the buyer
through purchase of the offering, or otherwise misrepresenting scientific or other facts
bearing on the value thereof to the purchaser.
(d) Falsely representing products as legitimate, or prepared in accordance with
Government or official standards or specifications.
(e) Falsely claiming Government or official, or other, acceptance, use, and
endorsement of product, and misrepresenting success and standing thereof through use
of false and misleading endorsements or false and misleading claims with respect
thereto, or otherwise.
(f) Making use of a misleading trade name and representing by other means that the
nature of a business is different than is the fact, such as a collection agency engaged
in tracing alleged delinquent debtors representing itself as being connected with a
Government agency, a delivery system, or in search of missing heirs.
(g) Misrepresenting fabrics or garments as to fiber content; and, in the case of wool
products, failing to attach tags thereto indicating the wool , reused wool, reprocessed
wool or other fibers contained therein, and the name of the manufacturer or qualified
reseller, as required by the Wool Products Labeling Act, or removing or mutilating
tags required to be affixed to the products when they are offered for sale to the public.
29. Failing and refusing to deal justly and fairly with customers in consummating
transactions undertaken through such practices as refusing to correct mistakes in filling
orders or to make promised adjustments or refunds, and retaining, without refund,
goods returned for exchange or adjustment, and enforcing, notwithstanding agents’
alterations, printed terms of purchase contracts, and exacting payments in excess of
customers’ commitments.
30. Shipping products at market prices to customers or prospective customers or to
the customers or prospective customers of competitors without an order and then
inducing or attempting by various means to induce the consignees to accept and
purchase such consignments.
31. Inducing the shipment and sale of commodities through buyer’s issuance of
fictitious price lists and other printed matter falsely representing rising market
conditions and demand and leading seller to ship under the belief that he would receive
prices higher than the buyer intended to or did pay.

52

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

CASES IN FEDERAL COURTS
COMMISSION ACTIONS IN THE UNITED STATES SUPREME, CIRCUIT, AND
DISTRICT COURTS

During the fiscal year there were 29 cases in the United States courts in which the
Commission was a party. Results favorable to the Commission were obtained in 27
cases, of which 2 were before the Supreme Court, 19 before circuit courts of appeals,
and 6 before district courts.
In a case of outstanding importance, the Supreme Court granted the only petition for
certiorari sought by the Commission and subsequently reversed the judgment of the
lower court setting aside the Commission’s order. (See A E. Staley Manufacturing Co.,
p.55.)
In another important case it granted the respondent’s petition for certiorari and
uphold the judgment of the lower court affirming the Commission’s order. (See Corn
Products Refining Co., p. 53.) It denied five petitions for certiorari Sought by
respondents in instances where circuit courts of appeals had affirmed Commission
orders.
Circuit courts of appeals affirmed 16 orders to cease and desist issued by the
Commission (4 with modifications) and dismissed respondents’ petitions for review
in 3 cases. One order was reversed without prejudice to the right of the Commission
to reopen the proceeding and offer additional evidence. In another case where a
Commission order was reversed, the Commission will seek review by the Supreme
Court through writ of certiorari. In 6 cases district courts entered judgments for civil
penalties totaling $10,182.72 for violation of Commission cease and desist orders
which had become final.
Twenty-four petitions for review and two applications for enforcement of
Commission cease and desist orders were filed during the year.
PETITIONS TO REVIEW CEASE AND DESIST ORDERS

Petitions in United States Circuit Courts of Appeals to review cease and desist
orders issued under section 5 of the Federal Trade Commission Act and sections 2 and
3 of the Clayton Act are summarized below.
(Except where otherwise indicated, cases involve violations of the Federal Trade Commission Act United States Circuit Courts of Appeals are designated First Circuit (Boston), etc.)
CASES DECIDED BY THE COURTS

American Drug Corp., St. Louis.--A Commission motion to dismiss the petition for
review of its order vacating a previous cease and desist order was denied by the Eighth
Circuit (St. Louis) (149 F. 2d 608.)
A P. W. Paper Co., Inc., Albany, N.Y.--With one judge dissenting, the Second Circuit
(New York) reversed a Commission order banning the company’s use of the words
“Red Cross” and the symbol of the Greek red cross to falsely indicate approval of its
products by the American National Red Cross. The court construed an act of Congress
to permit the petitioner to continue the use of the words and symbol because of their

lawful use prior to January 5, 1905. The court said “the Commission may not
absolutely forbid the use of the words and symbol to pre-1905 lawful users, but may
require them

CASES IN FEDERAL COURTS

53

to state, so plainly as to avoid the creation of misleading inferences by such use, that
the goods are not sponsored, approved, or in any manner connected with the American
National Red Cross” (149 F. 2d 424.) The Commission will apply to the Supreme
Court for a writ of certiorari to review this decision. (Petition for certiorari granted
October 8, 1945.)
Associated Laboratories, Minneapolis-The Eighth Circuit (St. Louis) denied
rehearing of its decision unanimously upholding a Commission order proscribing
unwarranted claims for the therapeutic value of an apparatus used in colonic irrigation
known as the “Gordon Detoxifier” (143 F. 2d 316).
Atlantic Packing Co., Philadelphia.--A Commission order directed against misuse
of the word “Packing” petitioner’s trade name was affirmed without dissent by the
Third Circuit (Philadelphia) (150 F. 2d 757).
The Cement Institute, Chicago, and others.--The Seventh Circuit (Chicago) rejected
the contention of the petitioner Marquette Cement Manufacturing Co., Chicago, that
the Commission was disqualified from trying and deciding the issues involved in this
(The Cement Institute) case (147 F. 2d 589). The proceeding involves a Nationwide
combination to restrain competition in the price of Portland cement through the agreed
use of a multiple basing-point delivered-price system.
Charles of the Ritz Distributors Corp., New York.--Unanimous affirmation of a
Commission order prohibiting unwarranted claims for benefits to be derived from use
of certain cosmetics was given by the Second Circuit (New York) (143 F. 2d 676).
Corn Products Refining Co. and Corn Products Sales Co., New York.--With one
judge dissenting in part only, the Seventh Circuit (Chicago) slightly modified and in
all other respects affirmed and enforced a Commission order directing the cessation
of price discriminations and restrictive-dealing contracts in connection with the sale
of glucose, in violation of sections 2 and 3 of the Clayton Act (144 F. 2d 211). A
petition for rehearing was denied. “Because the questions involved are of importance
in the administration of the Clayton Act in view of the widespread use of basing-point
price systems,” the Supreme Court granted certiorari (323 U. 5.706). After hearing, it
concluded that the violations of sections 2 (a) and (e) of the Clayton Act, found by the
Commission and sustained by the court below, fell within the prohibitions of that
statute and that the Commission’s conclusions were “amply supported by its findings
and the evidence.” The judgment of the Seventh Circuit was unanimously affirmed
(324 U.S. 726).
Dearborn Supply Co., Chicago.--A Commission order condemning the failure of the
petitioner’s advertisements to reveal the harmful consequences that may result from
indiscriminate use of “Mercolized Wax,” a cosmetic preparation containing
ammoniated mercury, was vacated and set aside by the Seventh Circuit (Chicago), but
without prejudice to the Commission’s right to reopen the proceeding s and offer
additional proof (146 F. 2d 5).
Decker; Products Co., and others, Pelham, N. Y.--After denial by the court of
appeals (Washington, D. C.) of their petition for rehearing, these petitioners sought a
review by the Supreme Court of the decision of the lower court dismissing their
petition for review of a Com-

54

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

mission order denying their motion to dismiss a Commission complaint. The Supreme
Court denied their petition for certiorari. The complaint charged false and misleading
advertising in connection with the Sale of an exhaust muffler attachment advertised
as a device to save gasoline and effect other economies in the operation of automobiles
(323 U.S. 786).
Joan Clair Gelb, known as Joan C. Vaughan, Leon A. Spilo, Stamford, Conn., and
Morris Gelb, New York.--The Second Circuit (New York) modified in one particular
a Commission order directed against misrepresentation of hair dyes and affirmed it as
so modified (144 F. 2d 580).
Gulf Oil Corp., Pittsburgh.--Unqualified endorsement of a Commission order
forbidding misrepresentation of the effectiveness of an insecticide known as “Gulf
Livestock Spray” was given by the Fifth Circuit (New Orleans) (150 F. 2d 106).
Houbigant, Inc., Cheramy, Inc., and Houbigant Sales Corp., New York.--The
Supreme Court (323 U. S. 763) denied petition for certiorari by which these petitioners
sought a review of the decision of the Second Circuit (New York) affirming
unconditionally a Commission order prohibiting the misrepresentation of domestically
compounded perfumes as imported (139 F. 2d 1019).
Howe & Co., Seattle.--In this case the Ninth Circuit (San Francisco) granted the
Commission ‘ s motion to clarify its cease and desist order (by defining the term
“Hollywood”) and unanimously affirmed and enforced it as so modified (148 F. 2d
561). A petition for rehearing was denied. The order forbade the misleading use of the
terms “Hollywood” and “Favorite of the Stars” in advertising and selling cosmetics not
manufactured in Hollywood. (Petition for certiorari granted October 8, 1945.)
Lekas & Drivas, Inc., New York.--After a slight modification, the Second Circuit
(New York) without dissent upheld a Commission order banning misrepresentation of
the therapeutic properties of olive oils(145 F. 2d 976).
Michel Lipman and Jack Silverman, trading as Chief Statistician and as J.
Silverman & Associates, San Francisco, and William Edgar Spicer, Washington, D.
C.--Based upon a stipulation providing for the disposition of this case in accordance
with the court’s decision in a companion case (See Jack Silverman and others, p. 55),
the Ninth Circuit (San Francisco) entered its decree affirming and enforcing a
Commission order directing the petitioners, in connection with their business of selling
and distributing mailing cards designed for use in obtaining information concerning
debtors, to cease and desist making misrepresentations as to the nature of their
business and their alleged connection with the United States Government (148 F. 2d
823).
Lottery case.--The only Commission case of this type to reach the courts during the
year involved Modernistic Candies, Inc., Chicago, which petitioned the Seventh
Circuit (Chicago) for review of a Com-mission order directed against lottery methods
in the sale of chewing gum. The court unqualifiedly endorsed the Commission’s order
(145 F. 2d 454).
Andrew J. Lytle and Richard Carl Lytle, trading as Vocational Placement Bureau,
Debtors Finance Bureau, and Bureau of Records of Employment, Akron, Ohio, and
William Edgar Spicer, Washington, D. C.--Because of the failure of these petitioners
to prosecute their

CASES IN FEDERAL COURTS

55

petition for review, the Sixth Circuit (Cincinnati) dismissed the case. The
Commission’s order proscribed misrepresentations suggesting connection with the
United States Government by the petitioners in their business of selling and
distributing mailing cards designed for use in obtaining information concerning
debtors.
Modern Marketing Service, Inc., Chicago, and others--The Seventh Circuit
(Chicago) unanimously affirmed a Commission order directing the cessation of price
discriminations in violation of section 2 (c) of the Clayton Act (149 F. 2d 970).
Samuel H. Moss, Inc., New York.--Unqualified approval of a Commission order
prohibiting discrimination in price of made-to-order rubber stamps in violation of
section 2 (a) of the Clayton Act, was given by the Second Circuit (New York) (148 F.
2d 378). (Petition for certiorari granted October 8,1945.)
Parke, Austin & Lipscomb, Inc., and Smithsonian Institution Series, Inc., New York.- Following unanimous affirmation by the Second Circuit (New York) of a
Commission order forbidding misrepresentation, in connection with the sale of books,
of the petitioners’ relationship with the Smithsonian Institution (142 F. 2d 437), the
Supreme Court denied petition for certiorari filed by the petitioners (323 U.S. 753).
Post Institute Sales Corp., and others, New York.--This case was dismissed by the
Second Circuit (New York) on the motion of the Commission, for failure of the
petitioners to prosecute. The order of the Commission involved what it found to be
false and misleading advertising of hair and scalp preparations.
Preparatory Training Institute, Trenton, N. J.--Because this petitioner failed to
prosecute its petition for review, the Third Circuit (Philadelphia), on motion of the
Commission, dismissed the case. The Commission order in question directed the
cessation of misrepresentations concerning a correspondence course for preparing
students for United States civil service examinations.
Segal Lock & Hardware Co., Inc., New York, and others.--The Second Circuit (New
York) gave its unconditional approval to a Commission order directed against
misrepresentation of the “pickproof” qualities of petitioners’ locks (143 F. 2d 935). A
petition for certiorari was denied (323 U.S. 791).
Jacob Siegel Co., Philadelphia.--A Commission order directed against the
misleading use of the name “Alpacuna” to designate overcoats and topcoats containing
no vicuna fiber was unanimously affirmed by the Third Circuit (Philadelphia) (150 F.
2d 751).
Jack Silverman , trading as J. Silverman & Associates, General Forwarding System
and Commercial Pen Co., San Francisco.--Without dissent, the Ninth Circuit (San
Francisco) gave its unqualified endorsement to a Commission order directing the
petitioners, in connection with their business of selling and distributing mailing cards
designed for use in obtaining information concerning delinquent debtors, to cease and
desist from making various misrepresentations with reference to the nature of their
business (145 F. 2d 751).
A E. Staley Manufacturing Co. and The Staley Sales Corp., Decatur, Ill.--After
rebriefing and reargument in connection with the Commission’s modified findings as
to the facts, the Seventh Circuit (Chicago), with one judge dissenting, vacated the
Commission’s order directing the petitioners to cease and desist from discriminating

in the delivered

56

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

price of glucose in violation of Section 2 (a) of the Clayton Act, as amended by the
Robinson-Patman Act (144 F. 2d 221). The Supreme Court granted the Commission’s
petition for certiorari (323 U.S. 702), and unanimously reversed the judgement of the
Seventh Circuit and remanded the case with instructions to enforce the Commission’s
order (324 U.S. 746).
Standard Education Society, and others, Chicago .--The Commission filed with the
Second Circuit (New York) its report as special master concerning alleged violations
of a Commission order to discontinue misrepresentation of encyclopedias, previously
approved by the Supreme Court (302 U. S. 112). Subsequently the Second Circuit, on
motion of the Commission, entered an order discharging the Commission as special
master and denying its application for a decree of enforcement; A motion by the
respondents to amend the court’s decree of May 20, 1938, affirming the Commission’s
order, was denied (148 F. 2d 931).
Stetson Felt Mills, St. Paula-Unconditional approval was given by the Eighth Circuit
(St. Louis) to a Commission order banning misrepresentations in connection with the
sale of rugs (144 F. 2d 737).
Surveying-Drafting-Coaters Section of Scientific Apparatus Makers of America,
Philadelphia, and others.--After unanimous approval by the Seventh Circuit (Chicago)
of a Commission order directed against a combination in restraint of trade (142 F. 2d
321), the Supreme Court denied petition for certiorari filed by Eugene Dietzgen Co.,
New York, one of the concerns affected by the Commission’s order (323 U.S. 730).
Products used by engineers, surveyors, and draftsmen were involved in the case.
J. E. Todd, Inc., Kenmore, N. Y.--By a unanimous decision, the court of appeals
(Washington, D. C.) upheld a Commission order prohibiting false claims for the
therapeutic value of a medicinal preparation designated "Todd’s Capsules” (145 F. 2d
858).
Ultra-Violet Products, Inc., Los Angeles .--The Ninth Circuit (San Francisco)
handed down a decision fixing the form of decree modifying, affirming and enforcing
a Commission order proscribing misrepresentations of the therapeutic value of an ultra
violet ray lamp designated “Life bite.”
United. States Alkali Export Association, Inc., New York, California Alkali Export
Association, Oakland, Calif , and others, v. United States.--The Supreme Court
affirmed an order of the district court (New York) denying a motion to dismiss a suit
brought by the Attorney General against petitioners for violation of the Sherman
Antitrust Act. The Supreme Court held that the district court has jurisdiction of a
complaint under section 4 of the Sherman Act when the complaint shows upon its face
that the charges therein relate exclusively to acts done by, or under the leadership of,
an export trade association registered with the Federal Trade Commission under the
Webb-Pomerene Export Trade Act, although there is no allegation that the
Commission has referred findings and recommendations to the Attorney General under
section 5 of the Webb-Pomerene Law for such action thereon as he may deem proper.
United States Steel Corp., American Bridge Co., Carnegie-Illinois Steel Corp.,
American Steel & Wire Co. of New Jersey, and Tennessee Coal, Iron & Railroad Co.-The Third Circuit (Philadelphia) denied the Commission’s motion to strike certain
portions of petitioners’

CASES IN FEDERAL COURTS

57

petition for review of the Commission’s order, which was directed against the use of
“Pittsburgh plus” prices for rolled-steel products in violation of the Clayton and
Federal Trade Commission Acts.
Zenith Radio Corp., Chicago.--The Seventh Circuit (Chicago) denied petitioner’s
motion that an order be entered approving its report on compliance with the court’s
decree affirming and enforcing a Commission order forbidding advertisements
exaggerating the range of receptivity of radio receiving sets. The report had been
rejected by the Commission.
CIVIL PENALTIES UNDER FEDERAL TRADE COMMISSION ACT

Six cases which had been certified to the Attorney General of the United States
under section 16 of the Federal Trade Commission Act were disposed of, and
judgments for civil penalties in the sum of $10,182.72 were entered, as follows:
Rogers Redemption Bureau, and others, Minneapolis --District Court for the District
of Minnesota; judgment for $400.
Lanteen Laboratories, Inc., and others, Chicago.--District Court for the Northern
District of Illinois; judgment for $2,526.22.
Kongo Chemical Co., New York.--District Court for the Southern District of New
York; judgment for $200.
Irving Roy Jacobson, Madison, Wis.--District Court for the Western District of
Wisconsin; judgment for $1,000.
G. Leach & Co., Reading, Pa.--District Court for the Eastern District of
Pennsylvania; judgment for $1,033.40.
Rango Tablet Co., Los Angeles.--District Court for the Southern District of
California; judgment for $5,023.10.
CASES PENDING IN THE COURTS

Acme Asbestos Covering & Flooring Co., Chicago, and others.--Sixth Circuit
(Cincinnati), price-fixing combination in insulating materials.
American Association of Law Book Publishers, Rochester, N. Y., and others.-Second Circuit (New York), price-fixing combination in law books and legal
publications.
American Drug Corporation, St. Louis.--Eighth Circuit (St. Louis), false and
misleading advertising of medicinal preparation “Sinasiptec” as a cure for sinus
trouble.
Associated Laboratories, Inc., Long Island City, N. Y.--Second Circuit (New York),
misrepresentation of benefits to health and figure to be derived from use of “Kelp-AMalt Tablets.”
S. Buchsbaum & Co., Chicago.--Seventh Circuit (Chicago), misuse of term “ElastiGlass” to designate or describe merchandise made of vinylite or any other similar
synthetic resinous compound.
The Carlay Co., and others, Chicago.--Seventh Circuit (Chicago),
misrepresentations in connection with sale of a candy product “Ayds” for removal of
excess weight.
The Cement Institute, Chicago, and others.--Seventh Circuit (Chicago) , Nation-wide
combination to restrain competition in the price of Portland cement through the agreed

use of a multiple basing-point delivered-price system.
Dearborn Supply Co., Chicago.--Seventh Circuit (Chicago), failure to reveal the
harmful consequences that may result from indiscriminate

58

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

use of “Mercolized Wax,” a cosmetic preparation containing ammoniated mercury.
The case is pending before the Commission after taking of additional testimony as
result of court’s decision. (See p. 53)
Eastman Kodak Co., Rochester, N. Y.--Second Circuit (New York), suppression of
competition by petitioner’s resale-price-maintenance policy.
Eli Eghan, trading as Ox’o-Gas Co., New York.--Second Circuit (New York)
misrepresentation of solution designated “Ox’o”, advertised and sold as capable of
increasing the efficiency of automobile engines or mileage.
Elizabeth Arden, Inc . , Elizabeth Arden Sales Corp., and Florence N. Lewis, New
York.--Second Circuit (New York), violation of section 2 (e) of the Clayton Act by
discrimination in the furnishing of demonstrator services to retailers.
Lemuel Firth , and others, Gloucester, Mass --First Circuit (Boston), restraint of
competition in catching and selling fish.
General Seafoods Corp., Boston, and others.--First Circuit (Boston), advertising and
selling rosefish as “Ocean Perch Fillets.”
Hastings Manufacturing Co., Hastings, Mich.--Sixth Circuit (Cincinnati), various
unfair practices resulting in suppression of com-petition in sale of automobile piston
rings.
Jack Herzog & Co., New York.--Second Circuit (New York), on application by the
Commission for enforcement of order banning price discrimination in violation of
section 2 (c) of the Clayton Act in connection with sale of furs.
Lottery device cases.--One case involving the use of lottery methods concerns
Charles Deer and Jack Deer, trading as Savoy Manufacturing Co., engaged in the sale
of miscellaneous merchandise, pending in the Second Circuit (New York). The case
of Nelson C. Brewer, trading as Chas. A. Brewer & Sons, and Everett B. Brewer;
Chicago, the world’s largest manufacturers of punchboards and push cards, now
pending in the Sixth Circuit (Cincinnati), involves the sale of punch-boards and other
lottery devices for use by others in the sale of miscellaneous merchandise.
Manhattan Brewing Co., Chicago.--Seventh Circuit (Chicago), mis-leading use of
the word “Canadian” in brand or trade name for beer or ale not brewed in Canada.
The Milk & Ice Cream Can Institute, Cleveland, and others.--Seventh Circuit
(Chicago), price-fixing combination.
Morton Salt Co., Chicago.--Seventh Circuit (Chicago), price discrimination in
violation of section 2 (a) of the Clayton Act.
National Crepe Paper Association of America, Philadelphia, and others.--Seventh
Circuit (Chicago), price-fixing combination.
Parker Pen Co., Janesville, Wis.--Seventh Circuit (Chicago), misrepresentation of
fountain pens through use of statements such as “Guaranteed for Life” and “Life
Guaranteed.”
Progress Tailoring Co., Chicago.--Seventh Circuit (Chicago), false and misleading
advertising in connection with the sale of men’s clothing.
Rigid Steel Conduit Association, New York, and others.--Seventh Circuit (Chicago),
price-fixing combination.
Scotch Woolen Mills, Chicago.-Seventh Circuit (Chicago), misleading use of the

words “Scotch” and “Mills” in trade name.

TABULAR SUMMARY OF LEGAL WORK

59

Southgate Brokerage Co., Norfolk.--Fourth Circuit (Richmond), price discrimination
in violation of section 2 (c) of the Clayton Act.
Judson L. Thomson Manufacturing Co., Waltham, Mass.--First Circuit (Boston),
violation of section 3 of the Clayton Act in connection with the sale of rivets and rivetsetting machines.
United States Maltsters Association, Chicago, and others.--Seventh Circuit
(Chicago), price-fixing combination.
United States Steel Corp., American Bridge Co., Carnegie-Illinois Steel Corp.,
American Steel & Wire Co. of New Jersey, and Tennessee Coal, Iron & Railroad Co.-Third Circuit (Philadelphia) and Fifth Circuit (New Orleans), use of “Pittsburgh plus”
prices for rolled-steel products in violation of the Clayton and Federal Trade
Commission Acts.
Vacu-Matic Carburetor Co., Wauwatosa, Wis.--Seventh Circuit (Chicago),
misrepresentations concerning benefits to be derived from use of mechanical device
for attachment to automobile engines.
David M. Weiss, New York.--Second Circuit (New York), on application by the
Commission for enforcement of order directed against price discrimination in violation
of section 2 (c) of the Clayton Act in connection with sale of furs.
TABLES SUMMARIZING LEGAL WORK OF THE COMMISSION
AND COURT PROCEEDINGS, 1915-45
TABLE 1.--Applications for complaints
FISCAL YEAR ENDED JUNE 30, 1945
1915, TO

CUMULATIVE SUMMARY, MAR. 16,
JUNE 30, 1945

Pending beginning of year
828
Applications docketed
683
19,671
Previous action reconsidered:
To complaints
0
Settled by stipulation to cease and desist 0
Settled by acceptance of TPC rules
0
Dismissed
0
Closed without further proceedings 1
3
Total for disposition
1,514
To complaints
142
4,858
Settled by stipulations to cease and desist 248
Settled by acceptance of TPC rules
0
Consolidated with other proceedings
7
Dismissed
0
Closed without further proceedings 1
247

Applications docketed
Previous action reconsidered:
To complaints
1
0
Settled by stipulations to cease
and desist
23
2
Settled by acceptance of TPC rules
6
Dismissed
81
Closed without further proceedings 1 45
Total for disposition
20,036
To complaints
Settled by stipulations to cease and
desist
6,461
Settled by acceptance of TPC rules 9
7
Consolidated with other proceedings
19
3
Dismissed
3,863

Total for disposition
3,748
Pending end of year

1,514
870

Closed without further proceedings
Total disposition
Pending June 30,1945

1

19,186
80
7

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

666956m---45-----5

60

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945
TABLE 2.--Complaints

FISCAL YEAR ENDED JUNE 30, 1945
16, 1915,

CUMULATIVE SUMMARY, MAR.
TO JUNE 30, 1945

Pending beginning of year
448
Complaints docketed
164
Previous action reconsidered:
Orders to cease and desist
2
Settled by stipulations to cease and desist
0
Dismissed
0
Closed without further proceedings 1
0
Closed without further proceedings 1
2
Total for disposition
614
Complaints rescinded
0
Orders to cease and desist
140
Settled by stipulations to cease and desist
4
Settled by acceptance of TPC rules
7
Dismissed
15
Closed without further proceedings 1
4
196
Total disposition during year
170
Pending end of year.
444

Complaints
5
,
Previous action reconsidered:
Orders to cease and desist
66
Settled by stipulations to cease and
desist
1
Dismissed
11
Total for disposition
5
,
Complaints rescinded
12
Orders to cease and desist
3
,
Settled by stipulations to cease and
desist
62
Settled by acceptance of TPC rules 31
Dismissed
938
Closed without further proceedings 1
Total disposition
Pending June 30, 1945

4
,
44
4

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

TABLE 3.--Court proceedings--orders to cease and desist--petitions for review
to circuit court of appeals
FISCAL YEAR ENDED JUNE 30, 1945
MAR.16, 1915,
Pending beginning of year.
Appealed
Total for disposition
Decisions for Commission
Decisions for others
Petitions withdrawn
JUNE 30,
Total disposition during year
Pending end of year
Total for disposition

CUMULATIVE SUMMARY,

TO JUNE 30, 1945--continued
33
16
Petitions withdrawn
59
49
Total disposition
337
16
Pending June 30, 1945
27
3
3 10-YEAR SUMMARY, JULY 1, 1935, TO
22
27
216

CUMULATIVE SUMMARY, MAR. 16, 1915,
TO JUNE 30, 1945
Appealed
Decisions for Commission
Decisions for others 1

364
179
99

1945
Pending July 1, 1935
Appealed
Total of disposition
Decision of Commission
Decisions for others
Petitions withdrawn
Total disposition
Pending June 30, 1945

3
23
1
216
13
3
1
2
4
4
189
27

1

This table lists a cumulative total of 99 decisions in favor of respondents in Commission
cases before the United States Circuit Courts of Appeals. However, the Grand Rapids furniture
(veneer) group (with 25 different docket numbers) was in reality 1 case, with 25 different
subdivisions. It was tried, briefed, and argued as 1 case and was so decided by the court of
appeals. The same held 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 decisions in favor of the respondents would be 48.
NOTE.--During the fiscal years 1919-45, inclusive, 58 petitions by the Commission for
enforcement of orders to cease and desist were passed upon by courts. Of these proceedings, 54
were decided in favor of the Commission; 4 in favor of adversaries. Petitions for enforcement
of orders issued under the Federal Trade Commission Act were made unnecessary by
amendment of the Federal Trade Commission Act (Mar.21, 1938) making orders finally
effective unless review is sought by respondents within 60 days after service of an order.

TABULAR SUMMARY OF LEGAL WORK

61

TABLE 4.--Court proceedings-orders to cease and desist-petitions for review
to the Supreme Court of the United States
FISCAL YEAR ENDED JUNE 30, 1945
1915,

CUMULATIVE SUMMARY, MAR. 16,
TO JUNE 30, 1945--continued

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 0
JUNE
Certiorari denied others 4
Total disposition during year
Pending end of year

0
1
5

Decisions for others
13
Petitions withdrawn by Commission 2
6
Certiorari denied Commission 9
2
Certiorari denied others
39
0
Total disposition
92
0
Pending June 30, 1945
0
10-YEAR SUMMARY, JULY 1, 1935, TO

6
0

CUMULATIVE SUMMARY, MAR.18, 1915, TO
JUNE 30, 1945
Appealed by Commission
Appealed by others
Total for disposition
Decisions for Commission

47
45
92
29

30, 1945
Pending July 1,1935
Appealed by Commission
Appealed by others
Total for disposition
Decisions for Commission
Decisions for others
Certiorari denied Commission
Certiorari denied others
Total disposition
Pending June 30, 1945

0
4
33
37
5
1
1
30
37
0

TABLE 5.--Court proceedings--mandamus, injunction, etc.-district courts and
circuit courts of appeals
FISCAL YEAR ENDED JUNE 30, 1945
MAR.16, 1915,

CUMULATIVE SUMMARY,
TO JUNE 30, 1945--continued

Pending beginning of year
Instituted by Commission
Instituted by others
Total for disposition
Decisions for Commission
Decisions for others
Petitions withdrawn by Commission
Petitions withdrawn by others
TO
Total disposition during year
Pending July 1,1935
Pending end of year

0
1
1
2
0
0
1
0

10-YEAR SUMMARY, JULY 1, 1935,
1

0
1

CUMULATIVE SUMMARY, MAR.18, 1915, TO
JUNE 30, 1945
Instituted by Commission
1
Instituted by others
Total for disposition

Decisions for others
18
Petitions withdrawn by Commission 5
Petitions withdrawn by others
7
Total disposition
112
Pending June 30, 1945
1

72
41
113

JUNE 30, 1945
Instituted by Commission
55
Instituted by others
22
Total for disposition
77
Decisions for Commission
64
Decisions for others
7
Petitions withdrawn by Commission
Petitions withdrawn by others
Total disposition

4
76

Decisions for Commission

82

Pending June 30, 1945

1

62

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945
TABLE 6.--Court proceedings--mandamus, injunction, etc.--Supreme Court of the
United States

FISCAL YEAR ENDED JUNE 30, 1945
MAR.16, 1915,

CUMULATIVE SUMMARY,
TO JUNE 30, 1945--continued

Pending beginning of year
Appealed by Commission
Appealed by others

0
0

Decisions for others
Certiorari denied Commission
Certiorari denied others

1

Total for disposition

5
1
4

1
Total disposition

Decisions for Commission
Decisions for others
Certiorari denied Commission
Certiorari denied others 1
TO

0
0

Pending June 30, 1945

Pending end of year

0

1, 1935,

JUNE 30, 1945
Pending July 1,1935
Appealed by Commission
Appealed by others

CUMULATIVE SUMMARY, MAR. 16, 1915,
TO JUNE 30, 1945

Total for disposition
Decisions for Commission

0

10-YEAR SUMMARY, JULY

Total disposition during year 1

Appealed by Commission
Appealed by others

12

0

0
1
2

Total for disposition
Decisions for Commission
Decisions for others
Certiorari denied others

8
4
12
2

3
1
0
2

Total disposition
Pending June 30,1945

3

PART III. TRADE PRACTICE CONFERENCES
UNFAIR COMPETITIVE PRACTICES PREVENTED THROUGH
RULES OF FAIR COMPETITION
The trade practice conference procedure has for its purpose the establishment, by the
Commission, of trade practice rules for the protection of industry, trade, and the
purchasing public against unfair competitive practices, monopolistic restraints, and
other trade evils in conflict with laws administered by the Commission. Under this
procedure, conferences are conducted for industries and effective means are made
available for groups or other interested or affected parties to participate voluntarily
with the Commission in making provision for the elimination of such trade abuses.
Thus, cooperative action among business competitors within the law and with the aid
of Commission supervision may properly be taken to end unfair trade practices.
Representatives of consumer groups are likewise afforded means for participating in
the establishment and carrying out of rules in the interest of the public.
The different practices or methods, which under the statutes and the various
decisions of the courts or the Commission are considered to fall within the inhibitions
of the law, are clarified and listed in the form of specific rules applicable to the
particular conditions existing in the industry concerned. Such clarification and
codification of legal requirements and the organization of cooperative endeavor under
supervision of the Commission in the elimination of undesirable practices and the
maintenance of fair competitive conditions are vastly important to industry, to the
public, and to the Government. It leads to the wholesale elimination and abandonment
of unfair or illegal practices or methods of competition, thereby bringing to scrupulous
business and to the purchasing and consuming public relief and protection from
harmful exploitation and the waste and burdens of such practices or methods. Such
voluntary cooperation in the elimination of harmful practices also results in substantial
saving to the Government and to business in the expense which otherwise might
necessarily be incurred in instituting a multiplicity of compulsory legal proceedings
against individual offenders to require cessation of the practices in question.
Rules appropriate for the Commission’s approval may include not only provisions
for the elimination of practices which are illegal per se, or are contrary to the general
public interest, but also provisions for fostering and promoting practices which are
designed to aid fair competition and to raise the standards of business ethics in
harmony with public policy.
The substantial good achieved by the trade practice rules now in effect for more than
150 industries points to the possibilities of future developments in this field for the
benefit of the national economy. To this end numerous additional industries are
directing their atten63

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

tion to the matter of the establishment of trade practice rules as an effective means of
insuring fair competition in the postwar period.
Trade practice conference procedure --The procedural steps and requirements
applicable to industry proceedings for the establishment of trade practice rules are
covered in the Commission’s Rules of Practice These are made available in leaflet
form to persons concerned. Any interested party or group in an industry, large or small,
may apply to the Commission for conference proceedings to establish rules of fair
practices. No special formality is required in making such application. A letter or other
communication requesting that the Commission initiate conference proceedings will
suffice.
Prior to making application for conference proceedings, trade committees, industry
members, or other parties in interest may meet with the Commission’s staff for the
purpose of obtaining a full understanding of the proceedings and their objectives. After
application is made, similar preliminary discussions are usually had with members of
the Commission’s staff, thus providing guidance and assistance in working out
constructive solutions of the various competitive problems. In the course of the
proceedings industry-wide conferences are held and, before final approval by the
Commission of any rules, public hearings on proposed rules are had to afford all
interested or affected parties opportunity to present their views, suggestions, or
objections, and to appear and be heard.
Trade Practice Conference Administration.--The various activities relating to trade
practice rules, the holding of industry conferences, administration and compliance
work, and all other duties incident to the trade practice conference procedure are
conducted by the Commission through the Trade Practice Conference Division. This
division is also charged with the duties relating to administration of the Wool Products
Labeling Act and the rules and regulations promulgated thereunder (See p.69.)
GROUP I AND GROUP II RULES DEFINED
Trade practice rules as finally promulgated are classified by the Commission as
Group I and Group II rules, respectively:
Group I rules.--The unfair practices which are embraced in Group I rules are
considered to be unfair methods of competition, unfair or deceptive acts or practices,
or other illegal practices, prohibited under laws administered by the Federal Trade
Commission, as construed in the decisions of the Commission or the courts; and
appropriate proceedings in the public interest will be taken by the Commission to
prevent the use, by any person, partnership, corporation, or other organization subject
to its jurisdiction, of such unlawful practices in commerce.
Group II rules.--These rules embrace the wholly voluntary or recommended industry
practices as distinguished from mandatory requirements. No such industry rule is
received by the Commission unless the provision is in harmony with law and the
public interest and is constructively in support of the maintenance of fair competitive
conditions in the industry.

INDUSTRY RULES AND THEIR ADMINISTRATION

65

TRADE PRACTICE CONFERENCE ACTIVITIES DURING YEAR
The trade practice conference work of the Commission is divided into two general
divisions: (1) Activities pertaining to the establishment and promulgation of new rules
for various industries and (2) administration of existing rules promulgated during the
current and previous years.
New rules promulgated during fiscal Year.--Trade practice rules for the following
seven industries were promulgated during the fiscal year: Button jobbing, hearing aid,
low pressure refrigerants, razor and razor blade, tuna, water heater, and wood-cased
lead pencil. Rules promulgated for the tuna industry represent a revision and extension
of the rules previously issued. These industries have an estimated annual volume of
business of over $280,000,000 in the aggregate. In 1944 the razor and razor blade
industry produced about 3 ½ billion blades, the wood cased lead pencil industry well
over 1 billion pencils, and the water heater industry more than 2 million water heaters.
In accordance with the usual procedure and prior to promulgation of rules for the
industries, drafts of the proposed rules were made available to all interested or affected
parties, affording them opportunity to present; for the consideration of the
Commission, such pertinent views as they might desire to offer and to be heard in the
premises.
Pending Trade practice proceedings.--Trade practice proceedings also were under
way for other industries and were pending in various stages of progress at the close of
the fiscal year. Respecting some of these, the general industry conferences had been
assembled and held for the purpose of considering and formulating proposed rules.
In some instances the proposed rules had been released by the Commission and public
hearings held thereon. In other cases where the proceedings were less advanced, the
necessary preliminary study and consideration had been undertaken preparatory to
further action.
Besides the various industries for which the Commission had approved trade
practice rules, or for which proceedings had been instituted and were pending at the
close of the fiscal year, other groups contacted the Commission to explore the
possibilities of establishing rules for their respective industries.
INDUSTRY RULES AND THEIR ADMINISTRATION
Administration of rules.--This work covers the necessary compliance activities,
interpretation of rules, and their application to specific situations arising in different
industries. It concerns not only rules promulgated during the fiscal year but also those
issued in prior years and remaining in effect.1 The codified provisions aggregate many
hundreds of rules.
The necessary correspondence was conducted throughout the year in regard to
existing rules, particularly as affecting compliance with the provisions and in general
affording assistance to industry members in the proper application and observance of
rules. Likewise, members of industries and other interested parties or groups
frequently conferred with representatives of the Commission where necessary or
desirable in connection with the operation of the rules. In many

1

Rules when promulgated for an industry are issued in pamphlet form and are available to
interested parties upon request to the commission.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

cases of alleged objectionable practices in conflict with the rules, correction or
adjustment was effected through cooperative effort. Results obtained demonstrated a
primary objective of the trade practice rules, namely, the wholesale elimination of
unfair competitive methods without the expense of litigation. However, in the few
cases where compulsory proceedings were necessary to effect correction, appropriate
action was taken.
Constructive and widespread compliance with approved rules on the part of
members of industry was indicated throughout the year, with increasing benefit to the
public and to business.
TYPES OF PRACTICES COVERED IN APPROVED RULES
Following are illustrations of the variety of subjects covered by trade practice rules
now in effect:
Misbranding; misrepresentation in various forms, including false or misleading
advertising; deceptive packaging; defamation of competitors or disparagement of their
products; impersonation or mis representation to obtain competitors’ trade secrets;
price discriminations to injure, prevent, or destroy competition; discriminations and
harmful practices in matters of rebates, refunds, discounts, allowances, credits,
brokerage, commissions, services, facilities, returns, etc.; commercial bribery in
purchasing or selling supplies; inducing breach of competitor’s contract; false
invoicing; imitation of competitor’s trade-marks, trade names, brands, etc.; substituting
inferior products for those ordered; passing off substandard or defective products as
and for regular or first-quality merchandise; deceptive use of so-called “free goods”
deals; deceptive pricing; lottery schemes; use of consignment distribution to close
competitors’ trade outlets; use of deceptive types of containers simulating standard and
generally recognized types; use of deceptive depictions (photographs, engravings,
cuts, etc.) in describing industry products; selling below cost with the purpose and
effect of suppressing competition, restraining trade, or creating a monopoly; and use
of “loss leaders” as a deceptive or monopolistic practice.
Other subjects embraced in the rules are: Enticing away employees of a competitor;
giving “push money,” “gratuities,” etc., under circumstances involving commercial
bribery, deception, or restraint of trade; use of deceptive or misleading guarantees,
warranties, price quotations, price lists, terms of sale, etc.; deception in use of
competitors’ containers; full-line forcing as a monopolistic weapon; combination or
conspiracy to fix prices, suppress competition, or restrain trade; unfair bidding
methods; misrepresentation as to possible earnings or opportunities afforded on
completion of correspondence school courses, or as to Government connection with,
or endorsement. of, any school, or respecting any training or services offered by such
school; falsely representing offers as “special” or “limited”; deceptive sales of regular
lines as “closeouts” to induce belief bargains are available; representing products as
conforming to recognized industry standards when such is not the fact; misuse of such
words or terms as “perfect,” “perfect cut,” “commercially perfect,” “real,” “genuine,”
“natural,” etc., in describing precious stones or their imitations; misuse of term
“Crookes” as applied to sun glasses; misrepresenting kind, quality, thickness, or
backing of mirrors; use

INFORMATIVE LABELING

67

of fictitious animal designations in descriptions of furs; misrepresenting character,
extent, or type of business engaged in; representing retail prices as wholesale; use of
false or deceptive testimonials; use of “blind” advertisements in such manner as to
mislead or deceive.
Also, misuse of terms “pullorum tested,” “blood tested,” etc., as applied to baby
chicks; deceptive use of the terms “waterproof,” “water repellent,” “dustproof,” or
“warpproof,” as applied to luggage or related products; false representations respecting
tube capacity of radio sets and their range or receptivity; misuse of such terms as “allwave,” “world-wave,” “world-wide wave,” etc.; misuse of words “bristle,” “pure
bristle,” etc., in sale of toilet brushes; deceptive use of “help wanted” or other
employment columns in publications; interfering with competitor’s right of purchase
or sale; representing domestic products as imported, or imported products as domestic;
use of misleading or deceptive representations in procuring sales representatives; use
of deceptive titles or names in selling books under the subscription plan; misusing
terms relating to types of construction or weave of textiles; misuse of terms “extra
fancy,” “extra select,” “extra quality,” “deluxe,” “choice,” etc., to describe tuna fish
products; misuse of words “lisle cotton,” “cotton lisle,” “crepe,” etc., to describe
hosiery products; deceptive use of terms “hand spun,” “hand woven,” “hand loomed,”
“hand painted,” and “hand embroidered” in describing linen products;. and various
other forms of misrepresentation, including false or misleading advertising and
deceptive labeling respecting .-the quantity, quality, grade, size, material, content,
composition, origin, use, manufacture, preparation, or distribution of any industry
product; and aiding or abetting another in the use of an unfair trade practice.
Various other rules provide for disclosure of fiber content and proper marking of
textile merchandise made of rayon, silk, or linen, or of two or more fibers containing
either rayon, silk, or linen; disclosure as to remaining shrinkage in so-called preshrunk
merchandise; disclosure of fact that apparently new products are not new, but are
second-hand, rebuilt, or renovated; disclosure that products are artificial or imitations
and not real or genuine; disclosure of country of origin of imported products;
prevention of marketing of substandard or imitation products as and for the standard
or genuine, and the specification of minimum requirements for standard or genuine
products; proper nomenclature for industry products; disclosure as to true composition
of paint and varnish brushes, as to imperfect or defective merchandise, as to use of
adulterant or substitute for linseed oil in respect to putty products, as to presence of
metallic weighting in silk or silk products, as to minimum yardage of ribbons, as to
true functions of radio parts and accessories, and as to quality, quantity, and size of
ripe olives packed in cans and other opaque containers.
INFORMATIVE LABELING
Informative labeling enters extensively into the work of the Commission under the
trade practice conference rules. It is also a primary objective of the Wool Products
Labeling Act, which is administered by the Commission (see p.69). Fiber
identification, or what is generally referred to as “Truth in Fabrics,” forms a large part
of such informative labeling work. While consumer goods containing or

68

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

purporting to contain wool are subject to Wool Act labeling, similar fiber
identification of other textiles, and informative labeling of various lines of
merchandise outside the field of textiles, are covered by trade-practice conference
rules.
The object of informative labeling is twofold: (1) to aid intelligent purchasing and
to prevent deception by informing consumers what they are to receive for their money,
thus enabling them to be in a better position to judge quality and to buy according to
their needs or preferences; and (2) to protect business from the unfair commercial
practices attendant upon the sale of competing articles under conditions of misleading
representations or deceptive concealment of the facts.
Constructive results of far-reaching character flow from the informative labeling
rules established under trade practice conference procedure.
Products containing rayon in whole or in part are covered by the rules for the rayon
industry, promulgated October 26, 1937. Those containing silk in whole or in part are
covered by the rules for the silk industry, issued November 4, 1938. Corresponding
rules for linen and part linen merchandise were promulgated February 1, 1941.
Informative labeling for all types of hosiery is the subject of trade practice rules for the
hosiery industry, issued May 15,1941. Similar rules covering fur garments and fur
products generally were promulgated June 17, 1938. informative labeling provisions
on the subject of shrinkage of woven cotton merchandise were put into effect on June
30, 1938. Other textile provisions are found in the rules promulgated for the infants’
and children’s knitted outerwear industry, June, 1939; uniform industry, May 18,
1940; and ribbon industry, 30, 1942.
Established informative labeling provisions also are contained in the different sets
of trade practice rules promulgated for the following indus tries on the dates
mentioned: Rubber tire, October 17, 1936; toilet brush manufacturing, December 31;
1937; wholesale jewelry, March 18, 1938; paint and varnish brush manufacturing,
January 14, 1939; putty manufacturing, June 30, 1939; mirror manufacturing, July 19,
1939; curled hair, January 12, 1940; luggage and related products, September 17,1941;
sun glass, December 23,1941; razor and. razor blade, June 19, 1945; and wood cased
lead pencil, June 29, 1945.
Rules providing for informative disclosure in advertising and selling methods also
have been issued for such industries as macaroni, noodles and related products, July
7, 1938; tomato paste manufacturing, September 3, 1938 ; sardine, March 5, 1940;
tuna (revised and extended rules), June 23, 1945.

PART IV. WOOL PRODUCTS LABELING ACT
INFORMATIVE LABELING FOR PROTECTION OF INDUSTRY
AND THE PUBLIC
The Wool Products Labeling Act of 1939 was enacted by Congress to enable
purchasers to know the true content of articles which are made or appear to be made
in whole or in part of woolen fiber and to safeguard producers, manufacturers,
merchants, and the public generally against the deception and unscrupulous
competition arising from nondisclosure of content and misbranding. Approved by the
President October 14,1940, and effective July 14,1941, the act provides for its
administration and enforcement by the Federal Trade Commission.
Products required by the act to show, by stamp, tag, label, or other means of
identification, their fiber content are those which contain, purport to contain, or are
represented as containing “wool,” “reprocessed wool,” or “reused wool” and which
are manufactured for, or introduced into, “commerce” as defined by section 2,
excepting carpets, rugs, mats and upholsteries exempted by section 14.
The act requires that the label disclose the kind and percentage of each different
fiber contained in the product, including the respective percentages of “wool,”
“reprocessed wool” and “reused wool.” Disclosure of maximum percentage of loading
and adulterating material, if any, and the name of the manufacturer of the wool product
or the name of the qualified distributor or reseller, is also to be made on the label.
This label or a proper substitute therefor specified by the statute is to remain and be
on the merchandise when it is delivered to the consumer.
Products to which the act applies embrace in general all articles of clothing or
wearing apparel, blankets, etc., made or purporting to be made in whole or in part of
wool; also the yarns and fabrics of the wool textile industry and the products of
manufacturing industries using such yarns and fabrics. The products covered are
indispensable to the daily needs of the entire’ population and essential to health and
well-being. Honesty and fair dealing in the manufacture and distribution of such vital
commodities are necessarily matters of prime importance to the public. These products
come from approximately 70 industries and are marketed through distributor and
dealer outlets estimated to number in excess of 250,000.
Rules and regulations under the Wool Act.--The act authorizes and directs the
Commission to make such rules and regulations as may be necessary and proper for
its administration and enforcement. Comprehensive rules and regulations were issued
by the Commission, effective July 15, 1941. They are published in booklet form and
available to all concerned. They afford instruction and guidance as to how
manufacturers, distributors, dealers, and others may proceed in various situations and
assure themselves of being within the re69

70

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

quirements of the law in its application to merchandise covered by the act.1
Collaboration of industry members and other interested parties was invited in the
preparation of the rules and regulations. Hearing were held and all concerned were
afforded opportunity to contribute their views and suggestions in arriving at rules
which would be of maximum assistance to business and be consonant with law, and
would also afford full protection of the public interest. The cooperation of members
of industry and others was of material assistance to the Commission.
Manufacturers’ registered identification numbers--Under rule 4 of the regulations,
the Commission affords manufacturers of wool products residing in the United States
opportunity to have assigned to them manufacturers’ registered identification numbers.
Such a number may be used upon the manufacturer’s label in lieu of his name as a
means of identifying the manufacturer when the label carries the name of the dealer
or reseller. At the close of the fiscal year, 5,329 registered identification numbers had
been assigned to manufacturers pursuant to their applications duly filed under this rule.
Numbers may be canceled when the firm goes out of business or changes its form of
organization or for other sufficient reasons. Up to the close of the fiscal year, a total
of 1,112 manufacturers’ registered identification numbers had been canceled.
Continuing guaranties.--As a means of protecting distributors, dealers, and other
resellers from the charge of misbranding when relying in good faith upon the
manufacturer’s statement of content, provision is made in section 9 of the act whereby
such protection may be afforded by a guaranty on the part of the supplier. It may be
either (1) a separate guaranty specifically designating the wool product guaranteed, or
(2) a continuing guaranty filed with the Commission applicable to all products handled
a guarantor and in such form as the Commission may prescribe. The form prescribed
by the Commission is set forth in rule 33 of the rules and regulations. This rule also
provides for renewal of the continuing guaranties annually and whenever any change
in ownership or management of the guarantor is made. At the close of the fiscal year,
5,659 continuing guaranties had been properly filed with the Commission. These have
been duly recorded and are maintained as documents open to public inspection.
Enforcement.--In cases of alleged violation requiring corrective action by formal
proceedings, the use of the cease and desist order procedure under the Federal Trade
Commission Act, which is authorized by the Wool Act, has been utilized and has
proven adequate and effective without resorting to the supporting peremptory remedies
specifically provided by the Wool Act. Such peremptory remedies are avail able when
needed, and in cases of deliberate or wilful violation misdemeanor proceedings may
be applied.
Administrative compliance work includes inspections, examinations, and correction
of labeling practices of specific concerns. Inspections of labeling during the year
concerned manufacturers, distributors, and other marketers to the extent of several
thousands. Field inspections covered in excess of 11 ½ million articles. Compliance
in
1

The Commission has issued a publication (w31)setting forth Illustrations, with explanatory

matter, of certain forms of labels and tags which are acceptable under the act. Manufacturers,
distributors, dealers, and other interested parties may obtain the leaflet upon request to the
Commission.

INFORMATIVE LABELING

71

cases of improper labeling under the act was for the most part effected through
cooperative effort and voluntary action on the part of the respective concerns involved,
thus avoiding the necessity of resorting to compulsory remedy to protect the public
interest. Relatively few eases have arisen in which voluntary cooperative action has
not been sufficient to effect correction and where it has been necessary to invoke
mandatory relief.2 The administrative compliance work proved both effective and
economical in the large volume of instances arising.
Wool Act administration--The general administration of the Wool Products Labeling
Act and of the rules and regulations issued thereunder is carried out by the
Commission through its Trade Practice Conference Division under the supervision of
the Director thereof. Duties thereunder include supervision and direction of the field
inspection work, the issuance of rules and regulations as may be required from time
to time, the recording of continuing guaranties for public record under section 9 of the
act, issuance and revocation of manufacturers’ registered identification numbers,
general application of the provisions of the act and the regulations, and supervision of
the administrative compliance work.
2 For complaints alleging violations of the Wool Products Labeling Act, see p.36 ; for
Commission orders directed against such violations, see p. 42.

PART V. RADIO AND PERIODICAL ADVERTISING
SPECIAL PROCEDURE PROVIDES CONTINUOUS SURVEY OF
PUBLISHED AND BROADCAST MATTER
The Commission maintains its Radio and Periodical Division to provide a direct and
expeditious handling of certain cases involving false and misleading advertising,
violative of the provisions of tho Federal Trade Commission Act. 1
Advertisers, publishers, broadcasting stations, and advertising agencies may reach
agreements to cease and desist in such cases as are appropriate for negotiating a
stipulation, thereby disposing of the issue involved and obviating the necessity of
formal trial.
When the survey of advertising was inaugurated by the Commission in 1929, it was
limited to magazines and newspapers. Expanded in 1934 to cover commercial
continuities broadcast by radio, the survey since 1939 also has included mail-order
catalogs, almanacs and foreign-language newspapers. Questioned advertisements
noted in these surveys form the bases of prospective cases not previously investigated
and also provide a means of determining whether advertisers who have been ordered
by, or have stipulated with, the Commission to discontinue false and misleading
representations are complying.
In cases where the advertising is determined by the Commission to be false or
misleading and circumstances warrant, the advertisers are extended the privilege of
disposing of the matters through an informal procedure, more fully explained on page
94, which permits their executing stipulations to cease and desist from the use of the
acts and practices involved. A large majority of the cases are adjusted in this manner.
In certain cases involving drugs, devices, and cosmetics, the Commission negotiates
stipulations inhibiting the publication of advertisements which do not disclose the
potential harmful effects which may be experienced from the use of the products. In
lieu of the publication in the advertising of a full statement of such harmful effects,
these stipulations generally permit the publication of the statement, “CAUTION: Use
Only As Directed,” if and when the directions for use which appear on the label or in
the labeling carry an adequate disclosure of the probable harm.
In cases where advertising agencies have prepared or participated in the preparation
of advertisements found objectionable, they are included as parties to the stipulation.
In this phase of its activity, the only object of the Commission is to prevent false and
misleading advertisements. It does not undertake to dictate what an advertiser shall
say, but merely indicates what he
1 Statistics reported on pp.73 to 75, and pp. 30 to 34 concerning the legal investigation work
are division records and not the consolidated record of the Commission, and therefore do not
coincide with the figures reported in the tabular summary of the legal work for the entire
Commission appearing on pp. 59 to 62.

72

RADIO AND PERIODICAL ADVERTISING

73

may not say under the law. The Commission believes its work in this field has
contributed substantially to the improvement that has been evident in recent years in
the character of all advertising.
Newspaper and magazine advertising.--In examining advertisements in current
publications it has been found advisable to call for some newspapers and magazines
on a continuous basis due to the persistently questionable character of the
advertisements published. However, as to publications generally, of which there are
some 19,360, it is physically impossible to survey continuously all advertisements of
a doubtful nature; also it has been found unnecessary to examine all the issues of
publications of recognized high ethical standard whose publishers carefully censor
copy before acceptance.
Generally, copies of current magazines and newspapers are procured on a staggered
monthly basis, at an average rate of three times yearly for each publication, the
frequency of the calls for each publication depending upon its circulation and the
character of its advertisements.
Through such systematic calls during the fiscal year ended June 30, 1945, the
Commission procured 1,430 editions of representative newspapers of established
general circulation and 765 editions of magazines and farm and trade journals of
interstate distribution. Among these periodicals were included 173 issues of farm
journals, 63 issues of trade journals and specialty publications, and 43 issues of
domestic foreign-language publications.
In these newspapers, magazines, and farm and trade journals, 286,744
advertisements were examined, of which 16,551 were noted as containing
representations that appeared to warrant investigation as to the facts.
Mail-order advertising.--The Commission procured mail-order catalogs and
circulars containing an aggregate of 14,361 pages, examination of which resulted in
709 advertisements being marked as containing possibly false and misleading
representations. Of the 53 mail-order houses included in the survey, 5 had combined
annual sales in excess of $1,712,599,700.
Radio advertising.--For the duration of the war, the Commission issues calls twice
yearly for each individual radio station instead of four times yearly, as formerly.
National and regional networks respond on a continuous weekly basis, submitting
copies of the commercial advertising parts of all programs wherein linked hook-ups
are used involving two or more stations. Producers of electrical transcription
recordings each month submit typed copies of the commercial portions of all
recordings produced by them for radio broadcast. This material was supplemented by
periodic reports from individual stations listing the identities of recorded commercial
transcriptions and related data.
The Commission received copies of 559,700 commercial radio broadcast
continuities and examined 562,260. The continuities received amounted to 1,329,534
typewritten pages and those examined totaled 1,334,584 pages, consisting of 556,540
pages of network script, 760,044 pages of individual station script, and some 18,000
pages of script representing the built-in advertising portions of transcription recording
productions destined for radio broadcast thorough) distribution of multiple pressings
of such recordings to individual stations. An average of 4,263 pages of radio script was

read each

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

working day. From this material 10,574 advertising broadcast statements were marked
for further study as containing representations that might be false or misleading.
Cooperation of radio and publishing industries.--In general, the Commission has
received the cooperation of the 4 Nation-wide network chains, 19 regional network
groups, and transcription producers engaged in preparing commercial radio recordings;
and of 850 commercial radio stations, 503 newspaper publishers, and 446 publishers
of magazines, farm journals and trade publications. It has observed a desire on the part
of these broadcasters and publishers to aid in the elimination of false and misleading
advertising.
Sources of radio and periodical cases.--During the fiscal year 90 percent of the radio
and periodical cases resulted from the routine survey of advertising material as
described above and 10 percent from complaints by or information received from other
Government agencies, competitors, and other members of the public.
Analysis of questioned advertising.--An analysis of the questioned advertisements,
which were assembled by cases and given legal review, discloses that they pertained
to 1,114 commodities in the proportions indicated below:
CLASSIFICATION OF PRODUCTS
Commodity
Food, drugs, devices; cosmetics:
Food (human)
Food (animal)
Drugs
Cosmetics
Devices

Percent
3.9
1.9
67.9
18.6
2.1
94.4

Other products:
Specialty and novelty goods
Automobile, radio, refrigerator, and other equipment
Home study courses
Tobacco products
Miscellaneous, including apparel, fuels, house furnishings, building materials
Total

.9
.2
.4
.2
3.9
5.6
100.0

Owing to the war emergency, attention during this fiscal year was directed
principally to the advertising of food, drugs, devices, cosmetics, and rationed
commodities.
Number of cases handled.2--During the fiscal year contact letters were sent to
advertisers in 200 cases, and the Commission accepted 66 stipulations involving radio
and periodical advertising, of which 5 were supplemental and 4 were amended
stipulations. The 66 stipulations included 10 in which advertising agencies signed
jointly with the advertisers.
A total of 234 cases was disposed of by various methods of procedure. Of this
number, 60 were considered settled upon receipt of reports or other evidence showing
compliance with previously negotiated stipulations; 70 were closed without prejudice
to the right of the Commission to reopen if warranted by the facts, 13 of them for

2 Additional statements and statistics covering the work of the Commission in investigating
cases Involving false advertising of food, drugs, devices, and cosmetics are given on p.33.

RADIO AND PERIODICAL ADVERTISING

75

lack of jurisdiction or lack of evidence sufficient to establish a violation of law, 46
because of discontinued practices or insufficient public interest, 8 because of
corrective action by the Post Office Department and 3 because the proposed
respondents were not responsible for the advertising; 2 were referred to the Chief
Counsel for such consideration as was deemed appropriate in connection with pending
cases. In 16 cases the Commission directed the issuance of complaint, 13 because
advertisers failed to stipulate, 2 because of violation of previous stipulations and 1
because the privilege of stipulation was not extended to the advertiser. Field
investigations were ordered in 17 cases.
The Commission filed without action 21 applications for complaint and referred 7
to the Post Office Department.
At the close of the year 688 Cases were pending as compared with 722 at the close
of the previous fiscal year.
Procedure in advertising cases.--If it appears to the Commission that a published
advertisement may be misleading, a contact letter is sent to the advertiser and request
is made for a sample of the product advertised, if this is practicable, and the
quantitative formula if the product is a compound. Representative specimens of all
advertising copy containing all claims made for the product during a 6-month period
also are requested.
Upon receipt of these data, scientific opinions are obtained based upon the sample
and formula. Upon receipt thereof, a list of such claims as then appear to be false or
misleading is sent to the advertiser, together with a statement based upon the scientific.
opinion. The advertiser is invited to submit informally by letter or in person or by
counsel any evidence lie chooses in support of his claims.
If, after a consideration of all available evidence at hand, including that furnished
by the advertiser, the questioned claims appear not to be false or misleading, the
division reports the matter to the Commission with the recommendation that the case
be closed. If it appears from the weight of the evidence that the advertising is false or
misleading, the matter is referred to the Commission with recommendation either that
complaint issue or that the negotiation of an appropriate stipulation be authorized,
provided the advertiser should desire to dispose of it by such voluntary agreement to
cease and desist from the use of the acts and practices involved.
If the Commission so authorizes, a stipulation is prepared and forwarded to the
advertiser for execution. Should he object to any of its provisions; he may discuss
them by mail or in person. If and when he agrees to the terms of the stipulation and
signs and returns it, the matter is again reported to the Commission wit recommendation that the stipulation be accepted and the case closed without prejudice to the right
of the Commission to reopen the matter at any time the facts so warrant. If the
Commission accepts and approves the stipulation, the advertiser is required to submit
within 60 days from the date of acceptance a report in writing showing the manner and
form in which he is complying with the provisions of his agreement. Further
compliance reports may be required by the Commission from time to time as may seem
warranted.

666956m--45----6

PART VI. MEDICAL AND SCIENTIFIC OPINIONS
COMMISSION UTILIZES SUCH DATA IN CONSIDERING CASES
RELATING TO FOOD, DRUGS, DEVICES, AND COSMETICS
Scientific facts and opinions concerning the composition of and claims made for
food; drugs, devices, and cosmetics are furnished to the Commission by its Medical
Advisory Division, which arranges for analyses of samples of products under
investigation and gathers information with respect to their nature.
Medical opinions and scientific information useful in the preparation of complaints
issued and stipulations accepted by the Commission, and in the trial of formal cases
involving such products, are provided by the division. During the fiscal year its
members prepared 176 formal written medical opinions and, in addition, rendered a
great many verbal opinions of the same character. They also devoted a substantial part
of their time to assisting the legal staff in its preparation for and trial of cases where
questions of science were involved.
Because of the wide, direct influence of advertising on the public health, many
outstanding experts in the medical sciences are interested in c aims made by
advertisers for food, drugs, devices, and cosmetics. Fifty-nine such experts served
without compensation as Commission witnesses at hearings during the year, their
testimony being essential to a determination of the scientific facts involved.
The Commission also maintains contact with, and makes full use of the facilities
offered by other departments of the Government to which it refers matters for
scientific opinions and information. It extends cooperation to and receives effective
cooperation from such agencies as the United States Public Health Service, National
Bureau of Standards, Food and Drug Administration, and the Department of
Agriculture’s bureaus relating to agricultural chemistry, entomology, plant industry,
animal industry, dairy industry, and home economics; as well as from nongovernment
hospitals, clinics, and laboratories.
76

PART VII. FOREIGN TRADE WORK
EXPORT TRADE ACT
The Export Trade Act (Webb-Pomerene Law) of April 10, 1918, provides for the
organization of export groups or associations which shall not be deemed in violation
of the Sherman Act if the associations comply with provisions of the Export Trade
Act.
Such an association must be entered into for the sole purpose of engaging in export
trade and must actually so engage; and it may not restrain the trade of a domestic
competitor; artificially or intentionally enhance or depress prices in this country,
substantially lessen competition or otherwise restrain trade in the United States.
The law provides that export associations shall file reports and documents with the
Federal Trade Commission. There are now 49 associations filing papers with the
Commission, representing 496 member companies.
EXPORTS IN 1944 TOTAL $75,738,416
Operation of the Webb law associations has been vitally affected by war conditions.
Their exports dropped from $307,354,000 in 1940 to $162,036,000 in 1942 and to
$75,738,416 in 1944. Dissolution of the steel export association in 1943 contributed
to the reduction in exports for 1944. Shipments by export associations during the past
three years were:
Commodity
Metals and metal products
263
Products of mines and wells
11,582,586
Lumber and wood products
10,071,372
Food products
Miscellaneous products
29,257,770
Total
75,738,416

1942
1943
$116, 028,502 $73,146,380
7,552,138

11,208,013

7,332,569

1944
$19, 445,

8,751,203

18,733,390 21,383,615
12,389,401 20,303,789
162,036,000

5,381,425

134,793,000

ASSOCIATIONS FORMED DURING FISCAL YEAR
New associations formed during the fiscal year, and the months in which they filed
papers with the Commission, are:
Door Export Co., Tacoma,, Wash., representing 8 door manufacturers in Washington
and Oregon, September 1944; Steam Locomotive Export Association, Inc., New York,
representing 2 manufacturers in New York and Philadelphia, November 1944; Friction
Materials Export Association, Inc., New York, representing 11 manufacturers in New

York, New Jersey, Connecticut, Pennsylvania, Ohio, Illinois, and Michigan, January
1945; U. S. International Book Association, Inc., New York, representing 13 book
publishers in New York, Boston, and Philadelphia, March 1945; and AMTEA Corp.
(American Machine Tool Export Association), New York, representing 4
manufacturers in Wisconsin, Ohio, and Pennsylvania, April 1945.
77

78

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

EXPORT ASSOCIATIONS ON FILE WITH THE COMMISSION
The 49 associations filing papers with the Commission at the close of the fiscal year were:
American Box Shook Export Association,
308 Barr Building,
Washington, D. C.
American Hardwood Exporters, Inc.,
901 Carondelet Building,
New Orleans.
AMTEA Corp. (American Machine
Tool Export Association),
Empire State Building,
New York.
American Provisions Export Co.,
80 East Jackson Boulevard,
Chicago.
American Soda Pulp Export Association,
230 Park Avenue,
New York.
American Spring Manufacturers Export Association,
30 Church Street,
New York.
American Tire Manufacturers Export
Association,
30 Church Street,
New York.
California Alkali Export Association,
608 Latham Square Building,
Oakland, Calif.
California Dried Fruit Export Association,
1 Drumm Street, Goodyear
San Francisco.
California Prune Export Association,
1 Drumm Street,
San Francisco.
California Raisin Export Association,
1 Drumm Street,
San Francisco.
Carbon Black Export, Inc.,
500 Fifth Avenue,
New York.
Copper Exporters, Inc.,
50 Broadway,
New York.
Door Export Co.,
1212 Washington Building,
Tacoma, Wash.
Douglas Fir Export Co.,
530 Henry Building,
Seattle.

Easco Lumber Association,
216 Pine Street,
San Francisco.
Electrical Apparatus Export Association,
70 Pine Street,
New York.
Electrical Export Corp.,
122 East Fifty-first Street,
New York.
Export Screw Association of the United
23 Acorn Street,
Providence, R. I.
Flints Export Agency,
50 Broad Street,
New York.
Florida Hard Rock Phosphate Export
Association,
Lakeland, Fla.
Flour Millers Export Association,
859 National Press Building,
Washington, D. C.
Friction Materials Export Association,
Inc.,
370 Lexington Avenue,
New York.
General Milk Co., Inc.,
19 Rector Street,
New York.
Tire & Rubber Export Co.,
The,
1144 East Market Street,
Akron, Ohio.
Metal Lath Export Association, The,
Room 1504,
205 East Forty-second Street,
New York.
Pacific Forest Industries,
1219 Washington Building,
Tacoma, Wash.
Pacific Fresh Fruit Export Association,
333 Pine Street,
San Francisco.
Pencil Industry Export Association,
37 Greenpoint Avenue,
Brooklyn.
Phosphate Export Association,
393 Seventh Avenue,
New York.
Pipe Fittings & Valve Export Associa-

Durex Abrasives Corp.,
63 Wall Street, 347
New York.

tion, The,
Madison Avenue,
New York.

FOREIGN TRADE WORK
Potash Export Association, Inc.,
420 Lexington Avenue,
New York.
Redwood Export Co.,
405 Montgomery Street,
San Francisco.
Rubber Export Association, The,
1185 East Market Street,
Akron, Ohio.
Steam Locomotive Export Association, Inc.,
Room 1624,
30 Church Street,
New York.
Sulphur Export Corporation,
420 Lexington Avenue,
New York.
Texas Rice Export Association,
407 Jensen Drive,
Houston, Tex.
Textile Export Association of the
United States,
40 Worth Street,
New York.
Typewriter Manufacturers Export Association,
1611 Forty-fourth Street NW.,
Washington, D. C.
United States Alkali Export Association, Inc.,
11 Broadway,
New York.

79

United States Insulation Board Export
Association,
120 South LaSalle Street,
Chicago.
United States International Book
Association, Inc.,
347 Fifth Avenue,
New York.
Walnut Export Sales Co., Inc.,
540 Postal Station Building,
Indianapolis.
Walworth International Co.,
60 East Forty-second Street,
New York.
Washington Evaporated Apple Export
Association,
709 First Avenue, North
Yakima, Wash.
Wesco Lumber Association,
Room 500, 2 Pine Street,
San Francisco.
Wine & Brandy Export Association of
California,
85 Second Street,
San Francisco.
Wire Rope Export Trade Association,
The,
c/o Wm. P. Laseter, Chairman,
Room 2006,19 Rector Street,
New York.

COMMISSION INQUIRIES UNDER EXPORT TRADE ACT
The Commission conducted investigations during the year as to operation of several
export associations, under section 5 of the Export Trade Act.
Summonses and bills of particulars were issued to the Florida Hard Rock Phosphate
Export Association, Phosphate Export Association, Carbon Black Export, Inc., General
Milk Co., Inc., Electrical Apparatus Export Association, and Sulphur Export Corp.
Hearings were held in the phosphate, carbon black and sulphur inquiries but had not
been reached in the milk and electrical association cases at the close of the fiscal year.
One of these inquiries was completed and resulted in the Commission making
recommendations for the readjustment of the business of the Florida Hard Rock
Phosphate Export Association. These recommendations provide:
1. That Florida Hard Rock Phosphate Export Association withdraw from and rescind its
agreements with Phosphate Export Association and the North African Group (Office Cherifien
des Phosphates of Rabat, Morocco, Comptoir des Phosphates D’Algerie et de Tunisie, of Tunis)
and with Phosphate Export Association, the North African Group and Curacao
(Mijnmaatschappij Curacao of Amsterdam) requiring that deductions for shipments of Florida
Hard Rock phosphate from the United States made by American nonmembers of the Association
be made from the quota of American shipments of hard rock phosphate to Europe stipulated for
in said agreements, and that said Association refrain from entering into like or similar covenants

in the future.

80

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

2. That Florida Hard Rock Phosphate Export Association withdraw from and rescind any and
every agreement or understanding with C. & J. Camp, Inc., a corporation, and Mutual Mining
Co., a corporation, the owners of Fernandina Terminal at Fernandina, Fla., which confine or
restrict in any way the use of said terminal, for the processing and shipment of hard rock
phosphates, solely to the members of said Association. That said association refrain in the future
from entering into any negotiations, arrangements or understandings with the Seaboard Airline
Railway or any other common carrier with reference to bard rock phosphate shipments made or
to be made by non member producers or shippers, or the rates quoted or to be quoted on such
shipments, or the availability or use of terminal facilities to accommodate such shipments.
3. That Dunnellon Phosphate Mining Co., Societe Anonyme La Floridienne, J. Buttgenbach
& Co., and C. & J. Camp, Inc., the members of Florida Hard Rock Phosphate Export
Association, rescind and cancel their intra-association agreement requiring the deduction of the
tonnage of hard rock phosphate sold by each member in domestic trade in the United States
from the European quota therein allotted to the seller, and to refrain in the future from entering
into or effectuating any like or similar agreements or understandings.
4. That C. & J. Camp, Inc. and Societe Anonyme La Floridienne, J. Buttgenbach & Co.,
rescind and cancel their agreement requiring that the tonnage of hard rock phosphate sold by
either of these members in the domestic market of the United States be deducted from the quota
of European shipments allotted to such member under the agreement referred to in the preceding
paragraph hereof, and that they refrain in the future from entering into or effectuating any like
or similar agreements or understandings.
5. That Florida Hard Rock Phosphate Export Association, in the future, seasonably file with
the Commission all information required by the Export Trade Act to be filed annually, and
furnish all information and documentary evidence requested or required by the Commission,
pursuant to said act, whether called for by report forms, by questionnaires or communications,
by personal visitation or otherwise.

The California Alkali Export Association and the United States Alkali Export
Association, each organized under the Export Trade Act, are defendants in a, civil suit
brought by the Department of Justice in the District Court of the United States for the
Southern District of New York. The complaint, filed in March 1944, alleges violation
of the Sherman Anti trust Act. (See p.56 for Supreme Court ruling in this case.)
CONGRESSIONAL INQUIRIES
During the fiscal year several Congressional committees have been interested in
Webb law operation.
In 1945 a joint session of the Senate Special Committee Investigating Petroleum
Resources and a Subcommittee of the Senate Judiciary Committee gave consideration
to S. 11 (79th Cong., 1st sess.), which provided for registration of international cartel
agreements. Representatives of the Federal Trade Commission testified at the
Committee hearing on May 18, 1945.
The Subcommittee on Foreign Trade of the Senate Special Committee to Study
Problems of American Small Business held hearings in 1945 on S. Res. 28 (79th
Cong., 1st sess.). Upon request of the subcommittee, the Commission prepared a report
on Operation of the Export Trade Act, with special reference to the extent of small
business participation in export associations, and submitted it to the subcommittee in
June 1945.

FOREIGN TRADE WORK

81

TRADE REGULATION AND UNFAIR COMPETITION ABROAD
The Commission has continued its observation of measures adopted by other
countries looking to the regulation of trade and industry and the suppression of unfair
competition. Space does not permit a detailed discussion, but a few of the more
important measures may be briefly noted:
Argentina.--Presidential Decree No.20262, August 1, 1944, created a Department
of Industry and Commerce to take over supervision of industry, commerce, power,
technology, trade statistics, national defense, the National Rationing Council, and the
special commodity commissions.
Canada.--Act for the Support of the Prices of Agricultural Products during the
Transition from War to Peace was passed on August 15, 1944.
Colombia.--Presidential Decree No. 2300, September 26, 1944, created the National
Supply Institute to facilitate production, importation and distribution of articles of
prime necessity and to regulate exportation and prices thereof.
Cuba.--Presidential Decree No. 1934 of July 1, 1944, declared infractions of
resolutions of the Office of Price Regulation and Supply and of the Director General
of the Cuban Coffee Stabilization Institute-to be crimes of disobedience and subject
to penalties. Decree No 3877 on October 30, 1944, fixed penalties for noncompliance
with profiteering orders. A decree on August 19, 1944, required general wage
increases for persons engaged in commercial, industrial and agricultural activities, to
meet the increased cost of living.
Ecuador.--Legislative decree on December 4,1944, established price control for food
and articles of prime necessity through creation of local Food Price Control Boards,
and prescribed measures to regulate their distribution through a National Distributing
Agency.
Mexico.--Decree on June 1, 1944, created a Federal Industrial Development
Commission to plan, finance, organize, and establish industries indispensable to the
national industrialization of the country.
Uruguay.--Law of June 15, 1944, authorized the President to acquire the corn crop
from the farmers in order to set up buffer stocks to prevent a fall in prices, to buy thin
pigs and sell them at cost to corn producers, and to take steps to obtain better
processing, storage and use of grain and meat.
Venezuela.--Presidential Decree on August 15, 1944, created the National Supply
Commission to take over functions of the National Price Regulation Board, the
National Transport Board, and the Import Control Commission.

PART VIII. FISCAL AFFAIRS
APPROPRIATION ACT PROVIDING FUNDS FOR COMMISSION WORK
The Independent Offices Appropriation Act, 1945 (Public Law 358, 78th Cong.),
approved June 27,1944, provided funds for the fiscal year 1945 for the Federal Trade
Commission as follows:
FEDERAL TRADE COMMISSION
For salaries and expenses of the Federal Trade Commission, including personal services in
the District of Columbia; contract stenographic reporting services; supplies and equipment,
lawbooks, books of reference, periodicals, garage rentals; traveling expenses, including not to
exceed $900 for expense of attendance, when specifically authorized by the Commission, at
meetings concerned with the work of the Federal Trade Commission; newspapers not to exceed
$500, foreign postage, and witness fees and mileage in accordance with section 9 of the Federal
Trade Commission Act; $2,011,070, of which not less than $172,410 shall be available for the
enforcement of the Wool Products Labeling Act: Provided, That no part of the funds
appropriated herein for the Federal Trade Commission shall be expended upon any investigation
hereafter provided by concurrent resolution of the Congress until funds are appropriated
subsequently to the enactment of such resolution to finance the cost of such investigation.
For all printing and binding for the Federal Trade Commission $43,000.
Total, Federal Trade Commission, $2,054,070.

APPROPRIATIONS FOR FISCAL YEAR
Appropriations available to the Commission for the fiscal year ended June 30, 1945,
under the Independent Offices Appropriation Act approved June 27, 1944, amounted
to $2,054,070. This sum was made up of two items: (1) $2,011,070 for the general
work of the Commission, and (2) $43,000 for printing and binding.
In addition to this sum, a working fund of $5,000 was made available from
appropriations of the Department of the Interior to provide for the cost of an
investigation of the Fishing and Fish-processing Industries, undertaken at the request
of the Coordinator of Fisheries; in all; $2,059,070.
Appropriations, allotments, expenditures liabilities, and balances for the fiscal year
ended June 30, 1945
Amount
Amount
LiabiliExpendiavailable
expended
ties
tures and
Balances
liabilities
Federal Trade Commission, 1945salaries, Commissioners and
all other authorized expenses
$2,011,070.00 $1,905,462.37 $48,261.59 $1,954,724.26 $56,345.
74

Printing and binding, Federal Trade
Commission, 1945
43,000.00
7,701.35 32,027.34
39,728.72
3,271.28
Working fund, Federal Trade
Commission, 1945
5,000.00
1,078.70
2,015.35
3,094.05
1,905.95
Total fiscal year 1945
2,059,070.00 1,915,242.45 82,304.55 1,997,547.03
61,522.97
Unexpended balances:
Federal Trade Commission, 1944
52,713.96
12,445.54
3,044.40 15,490.24
57,223.72

Printing and binding, Federal Trade
Commission, 1944
29,267.71
Working fund, Federal Trade
Commission, 1944
62,305.73
Federal Trade Commission, 1943
133,579.95
Printing and binding, Federal Trade

18,941.97

8,025.00

26,966.97

2,300.74

6,550.01
884.25

205.10

6,785.11
884.25

55,523.62
132,695.73

Commission, 1943
16,963.90
16,963.00
Working fund, Federal Trade
Commission, 1943
14,024.43
111.78
111.78
13,912.55
Working fund, Federal Trade
Commission (emergency
management), 1942 and 1943
4,365.63
1 16.80
1 16.80
4,352.43
Federal Trade Commission, 1942
1 166.74
1 271.24
1 271.24
104.50
Federal Trade Commission, 1941
5.60
1.30
1.30
4.30
Repayments, lapsed appropriations
1 136.11
1 136.11
136.11
Total
2,402,133.20
1,953,783.45 93,579. 08 2,047,362.53
354,770.67
1 Denotes red figure.
82

83

FISCAL AFFAIRS
Detailed statement of costs for the fiscal year ended June 30, 1945
Salary
Commissioners
Offices of commissioners
Office of the secretary
Total

$49.999.20
43,842.04
36,807.42
130,048.66

Administration:
Budget and finance
Legal research and compiling
Library
Mail and files
Personnel supervision and management
Information service
Publication and procurement
Records
Stenographic
Communications
Contract service
Equipment
Rents
Supplies
Transportation of things
Travel expense
Total
Legal:
Preliminary inquiries
Applications for complaint
Complaints
Export trade associations
Trade practice conferences
Wool Products Labeling Act
Legal aids to the Commission
Total

Summary:
Commissioners and secretary
Administration
Legal
General investigations
Work for other Government agencies
Printing and binding
Total

339.87

20,196.15
12,880.93
14,272.75
11,833.88
28,913.71
15,597.53
65,699.06
46,234.68
66,250.09

281,878.78

132,735.56
350,341.33
596,702.36
29,030.25
33,544.08
121,089.14
27,487.57
1,290,930.29

General investigations:
Export trade study
Food industry financial reports
Cigarette inquiry
Total
Work for other Government agencies
Printing and binding

Travel
Expense
$339.87

50.00
50.00

6,658.22
21,198.53
46,721.72
1,129.76
1,080.64
10,559.89
87,348.76

Other
Total
$1.55
$50,340.62
43,842.04
36,807.42
1.55
130,990.08

20,196.15
12,880.93
14,272.75
11,833.88
28,913.71
15,597.53
65,699.06
46,234.68
66,250.09
11,337.48
11,337.48
2,170.21
2,170.21
6,583.54
6,583.54
6,557.95
6,557.95
8,756.33
8,756.33
427.74
427.74
50.00
35,833.25 317,762.03

278.78 139,672.56
988.39 372,528.25
33,187.89 676,611.97
14.74
30,174.75
8.42
34,633.14
220.94 131,869.97
27,487.57
34,699.16 1,412,978.21

33,999.82
1,406.75
17,072.02
52,478.59
9,041.12

99.40

.22

34,099.44
1,406.75
17,990.74
53,496.93
11,912.85
26,643.35

902.23
1,001.63
2,268.88

16.49
16.71
2.85
26,643.35

130,648.66
281,878.78
1,290,930.29
52,478.59
9,641.12

339.87
50.00
87,348.76
1,001.63
2,268.88

1,765,577.44

91,009.14

1.55
130,990.08
35,833.25 317,762.03
34,699.16 1,412,978.21
16.71 53,496.93
2.85 11,912.85
26,043.35
26,643.35
97,196.87 1,953,783.45

RECAPITULATION OF COSTS BY DIVISIONS
Commissioners and secretary
Chief counsel
Accounts, statistics, and economic
investigations
Chief examiner
Trial examiner
Radio and periodical
Medical Advisory
Trade practice conferences
Legal aids to the Commission
Administrative
Printing and binding
Total

$127,171.78
346,076.06

$632.12
26,711.38

118,344.50
452,557.07
121,148.90
113,754.67
22,632.90
150,991.59
27,487.57
285,412.34

3,929.88
31,583.31
14,059.28
1.50
2,414.38
11,627.29

1,765,577.44

91,009.14

50.00

$4.80 $127,808.70
13,706.94 386,494.38
51.77 122,326.15
691.66 484,832.04
5.73 135,213.91
113,756.17
131.01 25,178.35
228.16 162,847.04
27,487.57
55,733.45 341,195.79
26,643.35 26,643.35
97,196.87 1,953,783.45

84

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

APPROPRIATIONS AND EXPENDITURES, 1915-45
Appropriations available to the Commission since its organization and expenditures
for the same period, together with the unexpended balances, are:
Year

1915
1916
1917
1918
1919
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
1944

Nature of appropriations

Lump sum
Printing and binding
Lump sum
Printing and binding
Lump sum
Printing and binding
Lump sum
Printing and binding
Lump sum
Printing and binding
Lump sum
Printing and binding
Lump sum
Printing and binding
Lump sum
Printing and binding
Lump sum
Printing and binding
Lump sum
Printing and binding
Lump sum
Printing and binding
Lump sum
Printing and binding
Lump sum
Printing and binding
Lump sum
Printing and binding
Lump sum
Printing and binding
Lump sum
Printing and binding
Lump sum
Printing and binding
Lump sum
Printing and binding
Lump sum
Printing and binding
Lump sum
Printing and binding
Lump sum
Printing and binding
Lump sum
Printing and binding
Lump sum
Printing and binding
Lump sum
Printing and binding
Lump sum
Printing and binding
Lump sum
Printing and binding
Lump sum
Printing and binding
Lump sum
Printing and binding
Lump sum
Printing and binding
Lumpsum

Appropriations
Expenditures
and liabilities
$184,016.23
12,386.76
430,964.08
15,000.00
542,025.92
25,000.00
1,578,865.92
30,000.00
1,693,622.18
14,934.21
1,206, 587.42
28,348.97
938,609.94
37,182.56
952,505.45
22,801.73
952,020.11
22,460.21
990,000.00
20,000.00
990,000.00
20,000.00
990,000.00
18,000.00
980,000.00
17,000.00
967,850.00
16,500.00
1,135,414.83
27,777.69
1,440,971.82
35,363.58
1,932,857.81
39,858.73
1,808,097.19
30,000.00
1,421,714.70
30,000.00
1,273,763.49
40,250.00
2,063,398.01
34,000.00
1,998,665.58
36,800.00
1,895,571.94
43,353.95
1,950,000.00
46,000.00
2,236,795.00
46,700.00
2,285,500.00
60,000.00
2,240,000.00
60,000.00
2,373,822.00
60,000.00
2,237,705.00
50,250.00
2,040,050.00

$90,442.05
9,504.10
379,927.41
14,997.55
448,890.66
23,610.54
1,412,280.19
11,114.06
1,491,637.39
14,934.21
1,007,593.30
28,348.97
842,991.24
37,182.56
878,120.24
22,801.73
948,293.07
22,400.21
900,020.93
19,419.25
988,082.37
19,866.14
976,957.02
18,000.00
943,881.99
17,000.00
951,965.15
16,500.90
1,131,521.47
27,777.69
1,430,084.17
35,363.58
1,808,463.35
39, 858.73
1,749,484.00
30,000.00
1,378,973.14
20,000.00
1,273,006.38
40,250.00
1,922,313.34
34,000.00
1,788,729.76
32,996.05
1,850,673.82
43,353.95
1,895,519.47
46,000.00
2,150,474.40
46,709.00
2,214,889.07
60,000.00
2,167,256.24
59,000.00
2,296,921.13
42,000.00
2,100,783.09
32,210.75
1,917,307.50

Balance
$93,574.18
2,882.60
51,636.67
2.45
93,135.26
1,389.48
166,585.73
18,885.94
201,984.97
0
198,994.12
0
95,618.70
0
74,385.21
0
3,727.04
0
29,979.07
580.75
1,917.63
133.86
13,042.98
0
36,118.01
0
15,884.85
0
3,893.36
0
10,887.65
0
124,454.46
0
58,612.59
42,741.56
10,000.00
157.11
0
141,084.67
0
209,935.82
3,803.95
44,898.12
0
54,480.35
0
86,320.60
0
70,610.93
0
72,743.76
1,000.00
76,900.87
18,000.00
138,921.91
18,039.25
122,742.50

1945

Printing and binding
Lump sum
Printing and binding

43,000.00
2,016,070.00
43,000.00

39,848.47
1,957,818.31
39,728.72

3,151.55
58,251.69
3,271.23

APPENDIXES
FEDERAL TRADE COMMISSION ACT
(15 U.S. C., Secs. 41-58)
AN ACT To create a Federal Trade Commission, to define Its powers and duties,
and for
other purposes
Sec. 1. 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, 1
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
The salary of the secretary is controlled by the provisions of the Classification Act
of 1923, approved March --49-, 1923, 42 Stat. 1488.
2 Auditing of accounts was made a duty of the General Accounting Office by the Act
of June 10, 1921, 42 Stat. 24.
1

85

86

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

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 hundred 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. 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” shall be deemed to Include any company, trust, so-called Massachusetts trust, or association, incorporated or unincorporated, which is organized to
carry on business for its own profit or that of its members, and has shares of capital or
capital stock or certificates of interest, and any company, trust, so-called
Massachusetts trust, 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” includes all documents, papers, correspondence, books of
account, and financial and corporate records.
“Acts to regulate commerce” means the Act entitled “An Act to regulate commerce,”
approved February 14, 1887, 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 2, 1890; 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 27, 1894; also the Act
entitled “An Act to amend sections 73 and 76 of the Act of August 27, 1894, entitled
‘An Act to reduce taxation, to provide revenue for the Government, and for other
purposes,’” approved February 12, 1913; and also the Act entitled “An Act to
supplement existing laws against unlawful restraints and monopolies, and for other
purposes,” approved October 15, 1914.

Sec. 5. (a) Unfair methods of competition in commerce, and unfair or deceptive acts
or practices 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, air carriers and foreign air carriers subject to the Civil Aeronautics Act of
1938, 3 and persons, partnerships, or corporations subject to the Packers and
Stockyards Act, 1921, except as provided in section 406 (b) of said Act, from using
unfair methods of competition in commerce and unfair or deceptive acts or practices
in commerce.
3 By subsection (f), Section 1107 of the “Civil Aeronautics Act of 1938,” approved June 23, 1938,
Public No.706, 75th Congress, Ch. 601, 3d Sess., S. 3845, 52 Stat. 1028, Section 5 (a) of the Federal
Trade Commission Act was amended by inserting before the words ] persons” (and following the words
“to regulate commerce”), the following: “air carriers and foreign air carriers subject to the Civil
Aeronautics Act of 1918.”

FEDERAL TRADE COMMISSION ACT

87

(b) 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 or
unfair or deceptive act or practice 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. If upon such hearing the Commission shall be of the opinion
that the method of competition or the act or practice 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 or such act or practice. Until the expiration of the time
allowed for filing a petition for review, if no such petition has been duly filed within
such time, or, if a petition for review has been filed within such time then until the
transcript of the record in the proceeding has 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. After the
expiration of the time allowed for filing a petition for review, if no such petition has
been duly filed within such time, the Commission may at any time, after notice and
opportunity for bearing, reopen and alter, modify, or set aside, in whole or in part, any
report or order made or issued by it under this section, whenever In the opinion of the
Commission conditions of fact or of law have so changed as to require such action or
if the public interest shall so require: Provided, however, That the said person,
partnership, or corporation may, within sixty days after service upon him or it of said
report or order entered after such a reopening, obtain a review thereof in the
appropriate circuit court of appeals of the United States, in the manner provided in
subsection (c) of this section.
(c) Any person, partnership, or corporation required by an order of the Commission
to cease and desist from using any method of competition or act or practice may obtain
a review of such order in the circuit court of appeals of the United States, within any
circuit where the method of competition or the act or practice in question was used or
where such person, partnership, or corporation resides or carries on business, by filing
in the court, within sixty days 4 from the date of the service of such order, a written
petition praying that the order of the Commission be set aside. A copy of such petition
shall be forthwith served upon the Commission, and thereupon the Commission
forthwith shall certify and file in the court a transcript of the entire record in the
proceeding, including all the evidence taken and the report and order of the
Commission. Upon such filing of the petition and transcript the court shall have

jurisdiction of the proceeding and of the question determined therein, and shall have
power to make and enter upon the pleadings, evidence, and proceedings set forth in
such transcript a decree affirming, modifying, or setting aside the order of the
Commission, and enforcing the same to the extent that such order is affirmed, and to
issue such writs as are ancillary to its jurisdiction or are necessary in its judgment to
prevent injury to the public or to competitors pendente lite. The findings of the
Commission as to the facts, if supported by evidence, shall be conclusive. To the
extent that the order of the Commission is affirmed, the court shall thereupon issue its
own order commanding obedience to the terms of such order of the Commission. 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 reason4 Section 5 (a) of the amending Act of 1938 provides :
SEC. 5. (a) In case of an order by the Federal Trade Commission to cease and desist, served on or
before the date of enactment of this Act, the sixty-day period referred to in section 5 (c) of the Federal
Trade Commission Act, as amended by this Act, shall begin on the date of the enactment of this Act.

88

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

able 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 evidence,
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 240 of the Judicial Code.
(d) The jurisdiction of the circuit court of appeals of the United States to affirm,
enforce, modify, or set aside orders of the Commission shall be exclusive.
(e) 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 or judgment of court to enforce the same shall in any wise relieve or
absolve any person, partnership, or corporation from any liability under the Antitrust
Acts.
(f) 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 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 residence or the
principal office or place of business of such person, partnership, or corporation; or (c)
by registering; and mailing a copy thereof addressed to such person, partnership, or
corporation at his or its residence or 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.
(g) An order of the Commission to cease and desist shall become final-(1) Upon the expiration of the time allowed for filing a petition for review, if no
such petition has been duly filed within such time; but the Commission may thereafter
modify or set aside its order to the extent provided in the last sentence of subsection
(b) ; or
(2) Upon the expiration of the time allowed for filing a petition for certiorari, if
the order of the Commission has been affirmed, or the petition for review dismissed
by the circuit court of appeals, and no petition for certiorari has been duly filed; or
(3) Upon the denial of a petition for certiorari, if the order of the Com-mission has
been affirmed or the petition for review dismissed by the circuit court of appeals; or
(4) Upon the expiration of thirty days from the date of issuance of the mandate of
the Supreme Court, if such Court directs that the order of the Commission be
affirmed or the petition for review dismissed.
(h) If the Supreme Court directs that the order of the Commission be modified or set
aside, the order of the Commission rendered in accordance with the mandate of the
Supreme Court shall become final upon the expiration of thirty days from the time it
was rendered, unless within such thirty days either party has instituted proceedings to

have such order corrected to accord with the mandate, in which event the order of the
Commission shall become final when so corrected.
(I) If the order of the Commission is modified or set aside by the circuit court of
appeals, and if (1) the time allowed for filing a petition for certiorari has expired and
no such petition has been duly filed, or (2) the petition for certiorari has been denied,
or (3) the decision of the court has been affirmed by the Supreme Court, then the order
of the Commission rendered in accordance with the mandate of the circuit court of
appeals shall become final on the expiration of thirty days from the time such order
of the Commission was rendered, unless within such thirty days either party has
instituted proceedings to have such order corrected so that it will accord with the
mandate, in which event the order of the Commission shall become final when so
corrected.
(j) If the Supreme Court orders a rehearing ; or if the case is remanded by the circuit
court of appeals to the Commission for a rehearing, and if (l) the time allowed for
filing a petition for certiorari has expired, and no such petition has been duly filed, or
(2) the petition for certiorari has been denied, or (3) the decision

FEDERAL TRADE COMMISSION ACT

89

of the court has been affirmed by the Supreme Court, then the order of the
Commission rendered upon such rehearing shall become final in the same manner as
though no prior order of the Commission has been rendered.
(k) As used in this section the term “mandate,” in case a mandate has been recalled
prior to the expiration of thirty days from the date of issuance thereof, means the final
mandate.
(l) Any person, partnership, or corporation who violates an order of the Commission
to cease and desist after it has become final, and while such order is in effect, shall
forfeit and pay to the United States a civil penalty of not more than $5,000 for each
violation, which shall accrue to the United States and may be recovered in a civil
action brought by the United States.
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 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 5 House of Congress to investigate
and report the facts relating to any alleged violations of the antitrust Acts by 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 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.
(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
5

See footnote on p. 2

90

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION ACT

such exceptions may be filed and such proceedings had In relation thereto as upon the
report of a master 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 case 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 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 Untied 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 depositions may be taken before any 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.

FEDERAL TRADE COMMISSION ACT

91

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 willfully
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 any 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 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 punished 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 Acts 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.
SEC. 12. (a) It shall be unlawful for any person, partnership, or corporation to
disseminate, or cause to be disseminated, any false advertisement-(l) By United States mails, or in commerce by any means, for the purpose of
inducing, or which is likely to induce, directly or indirectly, the purchase of food,
drugs, devices, or cosmetics ; or
(2) By any means, for the purposes of inducing, or which is likely to induce
directly or indirectly, the purchase in commerce of food, drugs, devices, or cosmetics.
(b) The dissemination or the causing to be disseminated of any false advertisement
within the provisions of subsection (a) of this section shall be an unfair or deceptive
act or practice in commerce within the meaning of section 5.
SEC. 13. (a) Whenever the Commission has reason to believe--

(l) that any person, partnership, or corporation is engaged in, or is about to engage
in, the dissemination or the causing of the dissemination of any advertisement in
violation of section 12, and
(2) that the enjoining thereof pending the issuance of a complaint by the
Commission under section 5, and until such complaint is dismissed by the
Commission or set aside by the court on review, or the order of the Commission to
cease and desist made thereon has become final within the meaning of section 5,
would be to the interest of the public,
the Commission by any of its attorneys designated by it for such purpose may bring
suit in a district court of the United States or In the United States court of any
Territory, to enjoin the dissemination or the causing of the dissemination of such
advertisement. Upon proper showing a temporary injunction or restraining order shall
be granted without bond. Any such suit shall be brought in the district in which such
person, partnership, or corporation resides or transacts business.

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(b) Whenever it appears to the satisfaction of the court in the case of a news-paper,
magazine, periodical, or other publication, published at regular intervals-(l) that restraining the dissemination of a false advertisement in any particular
issue of such publication would delay the delivery of such issue after the regular time
therefor, and
(2) that such delay would be due to the method by which the manufacture and
distribution of such publication is customarily conducted by the publisher in
accordance with sound business practice, and not to any method or device adopted for
the evasion of this section or to prevent or delay the issuance of an injunction or
restraining order with respect to such false advertisement or any other advertisement.
the court shall exclude such issue from the operation of the restraining order or
injunction.
Sec. 14. 6 (a) Any person, partnership, or corporation who violates any provision of
section 12 (a) shall, if the use of the commodity advertised may be injurious to health
because of results from such use under the conditions pre-scribed in the advertisement
thereof, or under such conditions as are customary or usual, or if such violation is with
intent to defraud or mislead, be guilty of a misdemeanor, and upon conviction shall be
punished by a fine of not more than $5,000 or by imprisonment for not more than six
months, or by both such fine and imprisonment; except that if the conviction is for a
violation committed after a first conviction of such person, partnership, or corporation,
for any violation of such section, punishment shall be by a fine of not more than
$10,000 or by imprisonment for not more than one year, or by both such fine and
imprisonment : Provided, That for the purposes of this section meats and meat food
products duly inspected, marked, and labeled In accordance with rules and regulations
issued under the Meat Inspection Act approved March 4, 1907, as amended, shall be
conclusively presumed not injurious to health at the time the same leave official
“establishments.”
(b) No publisher, radio-broadcast licensee, or agency or medium for the dissemination of advertising, except the manufacturer, packer, distributor, or seller of the
commodity to which the false advertisement relates, shall be liable under this section
by reason of the dissemination by him of any false advertisement, unless he has
refused on the request or the Commission, to furnish the Commission the name and
post-office address of the manufacturer, packer, distributor, seller, or advertising
agency, residing in the United States, who caused him to disseminate such
advertisement. No advertising agency shall be liable under this section by reason of
the causing by it of the dissemination of any false advertisement, unless it has refused,
on the request of the Commission, to furnish the Commission the name and post-office
address of the manufacturer, packer, distributor, or seller, residing in the United States,
who caused it to cause the dissemination of such advertisement.
SEC. 15. For the purposes of section 12, 13, and 14-(a) The term “false advertisement” means an advertisement, other than labeling,
which is misleading in a material respect ; and In determining whether any
advertisement is misleading, there shall be taken into account (among other things) not
only representations made or suggested by statement, word, design, device, sound, or
any combination thereof, but also the extent to which the advertisement fails to reveal
facts material in the light of such representations or material with respect to
consequences which may result from the use of the commodity to which the

advertisement relates under the conditions prescribed in said advertisement or, under
such conditions as are customary or usual. No advertisement of a drug shall be deemed
to be false If it is disseminated only to members of the medical profession, contains
no false representations of a material fact, and includes, or is accompanied in each
instance by truthful disclosure of, the formula showing quantitatively each ingredient
of such drug.
(b) The term “food” means (l) articles used for food or drink for man or other
animals, (2) chewing gum, and (3) articles used for components of any such article.
(c) The term “drug” means (l) articles recognized in the official United States
Pharmacopoeia, official Homeopathic Pharmacopoeia of the United States,
Section 5 (b) of the amending Act of 1938 provides :
Sec. 5 (b) Section 14 of the Federal Trade Commission Act, added to such Act by
section 4 of this Act, shall take effect on the expiration of sixty days after the date of
the enactment of this Act.
6

STATEMENT OF POLICY

93

or official National Formulary, or any supplement to any of them ; and (2) articles Intended for
use In the diagnosis, cure, mitigation, treatment, or prevention of disease In man or other
animals ; and (3) articles (other than food) intended to affect the structure or any function of the
body of man or other animals ; and (4) articles intended for use as a component of any article
specified in clause (l), (2) , or (3); but does not Include devices or their components, parts, or
accessories.
(d) The term “device” (except when used In subsection (a) of this section) means instruments,
apparatus, and contrivances, including their parts and accessories, intended (l) for use In the
diagnosis, cure, mitigation, treatment, or prevention of disease in man or other animals ; or (2)
to affect the structure or any function of the body of man or other animals.
(e) The term “cosmetic” means (l) articles to be rubbed, poured, sprinkled, or sprayed on,
introduced into, or otherwise applied to the human body or any part thereof intended for
cleansing, beautifying, promoting attractiveness, or altering the appearance, and (2) articles
intended for use as a component of any such articles ; except that such term shall not include
soap.
Sec. 16. Whenever the Federal Trade Commission has reason to believe that any person,
partnership, or corporation is liable to a penalty under section 14 or under subsection (l) of
section 5, It shall certify the facts to the Attorney General, whose duty it shall be to cause
appropriate proceedings to be brought for the enforcement of the provisions of such section or
subsection.
SEC. 17. If any provision of this Act, or the application thereof to any person, partnership,
corporation, or circumstance, Is held invalid, the remainder of the Act and the application of
such provision to any other person, partnership, corporation, or circumstance shall not be
affected thereby.
SEC. 18. This Act may be cited as the “Federal Trade Commission Act.”
Original act approved September 26, 1914.
Amended act approved March 21, 1938.

OTHER ACTS ADMINISTERED BY THE COMMISSION
In addition to the Federal Trade Commission Act, the Commission also administers
section 2 of the Clayton Act (15 U.S. C., sec. 13), as amended by the Robinson-Patman
Anti-discrimination Act, and sections 3, 7, and 8 of the Clayton Act (15 U.S. C., secs.
14, 18, and 19); the Export Trade Act (15 U.S. C., secs. 61-65) ; the Wool Products
Labeling Act (15 U. S. C., sec. 68); and certain sections of the Trade-Mark Act of
1946 (15 U.S. C., secs. 1051-1072, 1091-1096, and 1111-1127).
RULES OF PRACTICE
The rules of practice before the Commission Act, the Commission also administers
section 2 of the Clayton Act (U. S. C., title 15, sec. 12), as amended by the RobinsonPatman Anti-discrimination Act, and section 3, 7, and 8 of the Clayton Act; the Export
Trade Act (U. S. C., title 15, sec. 610, and the Wool Products Labeling Act (U. S. C.,
title 15, sec. 68).

STATEMENT OF POLICY
STATUS OF APPLICANT OR COMPLAINANT
The so-called “applicant” or complaining party has never been regarded as a party
in the strict sense. The Commission acts only in the public interest. It has always been

and now is the rule not to publish or divulge the name of an applicant or complaining
party, and such party has no legal status before the Commission except where allowed
to intervene as provided by the statute.
POLICY AS TO PRIVATE CONTROVERSIES
It is the policy of the Commission not to institute proceedings against alleged unfair
methods of competition or unfair or deceptive acts or practices where the alleged
violation of law is a private controversy redressable in the courts, except where said
practices tend to affect the public. In cases where the alleged injury is one to a
competitor only and is redressable in the courts by an action by the aggrieved
competitor and the interest of the public is not involved, the proceeding will not be
entertained.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

SETTLEMENT OF CASES BY STIPULATION
Whenever the Commission Shall have reason to believe that any person has been or
is using unfair methods of competition or unfair or deceptive acts or practices in
commerce, and that the interest of the public will be served by so doing, it may
withhold Service of complaint and extend to the person opportunity to execute a
stipulation satisfactory to the Commission, in which the person, after admitting the
material facts, promises and agrees to cease and desist from and not to resume such
unfair methods of competition or unfair or deceptive acts or practices. All such
stipulations shall be matters of public record, and shall be admissible as evidence of
prior use of the unfair methods of competition or unfair or deceptive acts or practices
involved in any subsequent proceeding against such person before the Commission.
It is not the policy of the Commission to thus dispose of matters involving intent to
defraud or mislead; false advertisement of food, drugs, devices, or cosmetics which are
inherently dangerous or where injury is probable; suppression or restraint of
competition through conspiracy or monopolistic practices; violations of the Clayton
Act; violations of the Wool Products Labeling Act of 1939 or the rules promulgated
thereunder; or where the Commission is of the opinion that such procedure will not be
effective in preventing continued use of the unlawful method, act, or practice. The
Commission reserves the right in all cases, for any reasons which it regards as
sufficient, to withhold this privilege.
REPORTS OF TRIAL EXAMINERS
The policy of the Commission is that reports of trial examiners shall not be open to
public inspection or to publication until after the publication of the Commission’s
decisions in the cases in which such reports are made. During this time they are open
only to the Commission, to counsel and to parties respondent in such cases.
WOOL PRODUCTS LABELING ACT
In the handling of cases before the Commission arising under this act, the practice
and procedure of the Commission, insofar as applicable, will be as provided in cases
arising under the Federal Trade Commission Act.
INVESTIGATIONS BY THE COMMISSION, 1915-45
Since its establishment in 1915, the Federal Trade Commission has conducted
numerous general inquiries which are alphabetically listed and briefly described in the
following pages under more than 125 different headings.1 They were made at the
request of the President, the Congress, the Attorney General, establishments such as
the War Production Board, the Office of Price Administration, or other Government
agencies, or on motion of the Commission pursuant to the Federal Trade Commission
Act.
Reports on these inquiries in many instances have been published as Senate or
House documents or as Commission publications. Printed documents, unless indicated
as being out of print, 2 may be purchased from the Superintendent of Documents,
Government Printing Office, Washington, D. C. Processed publications are available
without charge from the Federal Trade Commission while the supply lasts.

Agencies initiating or requesting investigations are indicated in parentheses in the
headings below. For wartime inquiries, 1917-18 and 1941-45, see paragraphs headed
“Wartime.”
Accounting Systems (F. T. C.).--Pointing the way to a general improvement in
accounting practices, the Commission published Fundamentals of a Cost System for
Manufacturers (H. Doc. 1356, 64th, 31 p., 7/1/16) and A System of Accounts for Retail
Merchants (19 p., o. p., 7/15/16).
Accounting Systems.--See Distribution Cost Accounting, and Production Cost
Accounting.
Advertising as a Factor in Distribution.--See Distribution Methods and Costs.
1

The wartime cost-finding inquires, 1917-1918 (p. 109), include approximately 370
separate investigations
2 documents out of print (designated “o. p.”) are available in depository libraries.

INVESTIGATIONS BY THE COMMISSION, 1915-45

95

Agricultural Implements.--See Farm Implements and Distribution Methods and
Costs.
Agricultural Implements and Machinery (Congress).3--Prices of farm products
reached record lows in 1932 but prices of many farm implements, machines, and repair
parts maintained high levels resulting in widespread complaints in the next few years.
The Commission investigated the situation (Public Res. 130, 74th, 6/24/36) and,
following submission of its report, Agricultural Implement and Machinery Industry
(H. Doc. 702, 75th, 1,176 p., 6/6/38), the industry made substantial price reductions.
The report criticized certain competitive practices on the part of the dominant
Companies which the companies later promised to remedy. It showed, among other
things, that a few major companies had maintained a concentration of control which
resulted in large part from their acquisition of the capital stock or assets of competitors
prior to enactment of the Clayton Antitrust Act in 1914 and thereafter from their
purchase of assets of competitors rather than capital Stock. 4 (See also under Farm
Implements and Independent Harvester Co.)
Agricultural Income (Congress).--Investigating a decline in agricultural income
and increases or decreases in the income of corporations manufacturing and
distributing wheat, cotton, tobacco, livestock, milk, and potato products (Public Res.
61, 74th, 8/27/35), and table and juice grapes, fresh fruits and vegetables (Public Res.
112, 74th, 6/20/36), the Commission made recommendations concerning, among other
things, the marketing of commodities covered by the inquiry; corporate consolidations
and mergers;5 unbalanced agricultural-industrial relations; cooperative associations;
production financing; transportation; and terminal markets. Its recommendations for
improvement of the Perishable Agricultural Commodities Act were adopted by
Congress in amending that act (Public 328, 75th) in 1937. [Report of the F. T. C. on
Agricultural Income Inquiry, Part I, Principal Farm Products, 1,134 p., 3/2/37
(summary, conclusions and recommendation, S. Doc. 54, 75th, 40 p) Part II, Fruits,
Vegetables and Grapes, 906 p., 6/10/37; Part III, Supplementary Report, 154 p.,
11/8/37; and interim reports of 12/26/35 (H. Doc. 380, 74th, 6 p.), and 2/1/37 (S. Doc.
17, 75th, 16 p.)]
Agricultural Prices.--See Price Deflation.
Aluminum, Foundries Using (W. P. B.), Wartime, 1942-43.--Details were obtained for the War Production Board, at its request, from aluminum foundries
throughout the U. S. covering their operations for May 1942 and their compliance with
W. P. B. Supplementary Orders m-1-d, m-1-c and m-1-f.
Antifreeze Solutions, Manufacturers of (W. P. B.), Wartime, 1943-44.--War
Production Board Order L-258 of 1/20/43 prohibited production of salt and petroleum
base antifreeze solutions. While production of these products had ceased, great
quantities were reported to be still in the hands of producers and distributors To
enable W. P. B. to determine what further action should be taken to protect essential
automotive equipment from these solutions, it requested the Commission to locate
producers’ inventories as of 1/20/43, and to identify all deliveries made from such
inventories to distributors subsequent to that date.
Automobiles.--See Distribution Methods and Costs, and Motor Vehicles.
Bakeries and Bread.--See under Food.
Beet Sugar.--See under Food-Sugar.
Building Materials.--See Distribution Methods and Costs.

Calcium Arsenate (Senate).--High prices of calcium arsenate, a poison used to
destroy the cotton boll weevil (S. Res. 417, 67th, 1/23/23), ap p eared to be due to
sudden increased demand rather than trade restraints (Calcium Arsenate Industry, S.
Doc. 345, 67th, 21 p., 3/3/23).
Capital Equipment (W. P. B.), Wartime, 1942-43.--For the War Production Board
a survey was made in connection with Priorities Regulation No.12, as amended
10/3/42, of concerns named by it to determine whether orders had
3 Inquiries desired by either House of Congress are now undertaken by the Commission as a result of
concurrent resolutions of both Houses. For further explanation, see footnote on p.2.
4 F. T. C. recommendations that section 7 of the Clayton Act be amended to declare unlawful the
acquisition of corporate assets under the same conditions that acquisition of corporate stock has been
unlawful since 1914, are discussed in Chain Stores--Final Report on the Chain Store Investigation S. Doc.
4, 74th, 12/14/34), p.96 Summary Report on Conditions With Respect to the Sale and Distribution of Milk
and Dairy Products (H. Doc. 94, 75th, 1/4/37), p 38: Report of the F. T. C. on Agricultural Income
Inquiry, Part I (3/2/37), p. 26 Agricultural Implement and Machinery Industry (H. Doc. 702, 75th,
6/6/39). p. 1038; and F. T. C. Annual Reports 1938, pp.19 and 29; 1939. p.14; 1940, p.12; 1941, p.19;
1942, p. 9; 1943, p. 9; 1944, p.7; 1945, p.8.
5 See footnote 4, above.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

been improperly related to secure capital equipment or whether orders that had been
related had been extended for the purpose of obtaining capital equipment in violation
of priorities regulations.
Cement (Senate).--Inquiry into the cement industry’s competitive conditions and
distributing processes (S. Res. 448, 71st, 2/16/31) showed that rigid application of the
multiple basing-point price system 6 tended to lessen price competition and destroy the
value of sealed bids; concerted activities of manufacturers and dealers strengthened
the system’s price effectiveness; and dealer associations’ practices were designed to
restrict sales to recognized “legitimate” dealers (Cement Industry, S. Doc. 71, 73d, 160
p., 6/9/33).
Chain Stores (Senate).--Practically every phase of chain-store operation was
covered (S. Res. 224, 70th, 5/12/28), including cooperative chains, chain-store
manufacturing and wholesale business, leaders and loss leaders, private brands, short
weighing and overweighing, and sales, costs, profits, wages, special dis-counts and
allowances, and prices and margins of chain and independent grocery and drug
distributors in selected cities. (For subtitles of 33 reports published under the general
title, Chain Stores, 1931-33, see F. T. C. Annual Report, 1941, p.201.)
In the Final Report on the Chain-Store Investigation. (S. Doc. 4, 74th, 110 p., o. p.,
12/14/34), legal remedies available to combat monopolistic tendencies in chain-store
development were discussed.7 The Commission’s recommendations pointed the way
to subsequent enactment of the Robinson-Patman Act (1.936) prohibiting price and
other discriminations, and the Wheeler-Lea Act (1938) which amended the Federal
Trade Commission Act so as to broaden the prohibition of unfair methods of
competition in section 5 to include unfair or deceptive acts or practices in interstate
commerce.
Chromium, Processors of (W. P. B.), Wartime, 1942-43.--For the War Production
Board, the Commission investigated the transactions of the major chromium
processors to determine the extent to which they were complying with Amendment
No.2 to W. P. B. General Preference Order No. m-18-a, issued 2/4/42. The
investigation was conducted concurrently with a survey of nickel processors.
Cigarette Shortage (F. T. C. and Senate Interstate Commerce Committee
Chairman), Wartime, 1944-45--In response to complaints from the public and a
request from the Chairman of the Senate Interstate Commerce Committee (letter dated
12/1/44), the Commission investigated the cigarette shortage and reported, among
other things, that the scarcity was directly traceable to the large volume of cigarettes
moving to the armed forces and the Allies; that it was not attributable to violations of
laws administered by the Commission; but that certain undesirable practices such as
hoarding and tie-in sales had developed. (Report of the F. T.C. on the Cigarette
Shortage, 33 pages, processed, 2/13/45.) (See p.23.)
Coal (Congress and F. T. C.), Wartime, 1917-18, Etc.--From 1916 through the
first World War period and afterward, the Commission at different times investigated
anthracite and bituminous coal prices and the coal industry’s financial condition.
Resulting cost and price reports are believed to have substantially benefited the
consumer. Among the published reports were: Anthracite Coal Prices, preliminary (S.
Doc. 19, 65th, 4 p., o. p. 5/4/17); Preliminary Report by the F. T. C. on the Production
and Distribution of Bituminous Coal (H. Doc. 152, 65th, 8 p., o. p., 5/19/17);
Anthracite and Bituminous Coal Situation, summary (H. Doc. 193, 65th, 29 p., o. p.,

6/19/17); and Anthracite and Bituminous Coal (S. Doc. 50, 65th, 420 p., o. p.,
6/19/17)-pursuant to S. Res. 217, 64th, 6/22/16; H. Res. 352, 64th, 8/18/16, and S. Res.
51, 65th, 5/1/17; Washington, D. C., Retail Coal Situation (5 p., release, processed, o.
p., 8/11/17)-pursuant to F. T. C. motion; Investment and Profit in Soft-Coal Mining
(two parts, 5/31/22 and 7/6/22, 218 p., S. Doc. 207, 67th)--pursuant to F. T. C. motion;
and Report of the F. T. C. on Premium Prices of Anthracite (97 p., 7/6/25)-pursuant
to F. T. C. motion.
Coal, Cost of Production (F.T.C.), Wartime, 1917-18--President Wilson fixed
coal prices by Executive order under the Lever Act (1917) on the basis of information
furnished by the Commission. For use of the U.S. Fuel Administration in continuing
price control, the Commission compiled monthly cost production reports, collecting
cost records for 1917-18 for about 99 percent of the anthracite and 95 percent of the
bituminous coal production (Cost Reports of the F. T. C Coal, 6/30/19, summarized
for principal coal-producing States or regions: (1)
6 Basing-point systems are also discussed in the published reports listed under “Price Bases,” “Steel
Code,” and “Steel Sheet Pilling” herein.
7 See footnote 4, p.95.

INVESTIGATIONS BY THE COMMISSION, 1915-45

97

Pennsylvania, bituminous, 103 p., o. p.; (2) Pennsylvania, anthracite, 145 p., o. p.; (3)
Illinois, bituminous, 127 p.; (4) Alabama, Tennessee, and Kentucky, bituminous, 210
p.; (5) Ohio, Indiana, and Michigan, bituminous, 288 p.; (6) Maryland, West Virginia,
and Virginia, bituminous, 286 p.; and (7) trans-Mississippi States, bituminous, 459 p.).
Coal, Current Monthly Reports (F. T. C.).--The Commission (December 1919)
initiated a system of current monthly returns from the soft coal industry similar to
those compiled during the World War, 1917-18 (Coal-Monthly Reports on Cost of
Production, 4/20/20 to 10/30/20, Nos. 1 to 6, and two quarterly reports with revised
costs, 8/25/20 and 12/6/20, processed, o. p.). An injunction to prevent the calling for
the monthly reports (denied about seven years later) led to their abandonment.
Combed Cotton Yarns.--See Textiles.
Commercial Bribery (F. T. C.).--Investigating the prevalence of bribery of
customers’ employees as a means of obtaining trade, the Commission published A
Special Report on Commercial Bribery (H. Doc. 1107, 65th, 3 p., o. p., 5/15/18),
recommending legislation striking at this practice; Commercial Bribery (S. Doc.
unnumbered, 65th, 36 p., o. p., 8/22/18); and Commercial Bribery (S. Doc. 258, 66th,
7 p., o. p., 3/18/20.
Commercial Cooking and Food and Plate Warming Equipment, Manufacturers
of (W. P. B.), Wartime, 1942-43.--The commission conducted an investigation for
the War Production Board to determine whether manufacturers of commercial cooking
and plate warming equipment were complying with W. P. B. Limitation Orders L-182
and L-182 as amended 3/2/43; Conservation Orders M-126 and M-9-c, as amended;
and Priorities Regulation No. 1.
Contractors, Prime, Forward Buying Practices of (W. P. B.), Wartime, 194243.--The matter of procurement, use, and inventory stocks of critical materials
involved in the operation of major plants devoting their efforts to war production were
inquired into for the information of the War Production Board. Items such as
accounting, inventory, control, purchase, practices, etc., formed a part of the inquiry.
Cooperation in American Export Trade.--See Foreign Trade.
Cooperation in Foreign Countries (F. T. C.) .--Inquiries made by the Commission
regarding the cooperative movement in 15 European countries resulted in a report,
Cooperation in Foreign Countries (S. Doc. 171, 68th, 202 p., o. p., 11/29/24),
recommending further development of cooperation in the U. S.
Cooperative Marketing (Senate).--This inquiry (S. Res. 34, 69th, 3/17/25) covered
the development of the cooperative movement in the U. S. and illegal interferences
with the formation and operation of cooperatives; and a comparative study of costs,
prices, and marketing methods (Cooperative Marketing, S. Doc. 95, 70th, 721 p., o.
p., 4/30/28).
Copper.--See Wartime Cost Finding, 1917-18.
Copper Base Alloy Ingot Makers (W. P. B.), Wartime, 1942-43.--This investigation was designed to ascertain the operations, shipments, and inventories of copper,
copper alloys, copper scrap, and copper base alloy ingot makers and was conducted
for the purpose of determining the extent to which they were complying with
governing W. P. B. Preference and Conservation Orders M-9-a and b, and M-9-c.
Copper, Primary Fabricators of (W. P. B.), Wartime, 1941-42.--A survey and
inspection of a specified list of companies which used a large percentage of all refinery
copper allocated and at the same time represented a fair cross-section of the industry,
were made to ascertain the degree of compliance accorded to preference,

supplementary and conservation orders and regulations of the Director of Priorities,
Office of Production Management (later the War Production Board).
Corporation Reports.--See Industrial Corporation Reports.
Cost Accounting.--See Accounting Systems.
Cost of Living (President), Wartime, 1917-18.--Delegates from the various States
met in Washington, April 30 and May 1,1917, at the request of the Federal Trade
Commission, and considered the rapid rise of wartime prices and the plans then being
made for the Commission’s general investigation of foodstuffs. [See Foods
(President), Wartime, 1917-18, herein.] Proceedings of the conference were published
(High Cost of Living, 119 p., o. p.).
Cost of Living (President).--President Roosevelt, in a published letter (11/16/37),
requested the Commission to investigate living costs. The Commission (11/20/37)
adopted a resolution undertaking the inquiry and a few months thereafter submitted a
confidential report to the President.

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Costume Jewelry, Manufacturers of (W. P. B.), Wartime, 1943-44.--Because it
appeared that vast quantities of critical metals were being diverted illegally from war
use to the manufacture of costume jewelry and similar items the War Production
Board requested the Commission to investigate 45 manufacturers to ascertain the facts
concerning their compliance with W. P. B. Orders M-9-a, M-9-b, M-9-c, M-9-c-2, M43, M-38, M-11, M-11-b, M-126, L-81, L-131, and L-131-a, all as amended.
Cotton Industry.--See Textiles.
Cottonseed Industry (House).--Investigating alleged price fixing (H. Res. 439,
69th, 3/2/27), the Commission reported evidence of cooperation among State
associations but no indication that cottonseed crushers or refiners had fixed prices in
violation of the antitrust laws (Cottonseed Industry, H. Doc. 193, 70th, 37 p., 3/5/28).
Cottonseed Industry (Senate).--Two resolutions (S. Res. 136, 10/21/29, and S. Res.
147, 11/2/29 71st) directed the Commission to determine whether alleged unlawful
combinations of cottonseed oil mill corporations sought to lower and fix prices of
cottonseed and to sell cottonseed meal at a fixed price under boycott threat; and
whether such corporations acquired control of cotton gins to destroy competitive
markets and depress or control prices paid to seed producers (Investigation of the
Cottonseed Industry, preliminary report, S. Doc. 91, 71st, 4 p., o. p., 2/28/30, and final
report, 207 p., with 11 vols. testimony, S. Doc. 209, 71st, 5/19/33.)
Distribution Cost Accounting (F. T. C.). --To provide a guide for current
legislation and determine ways for improving accounting methods, the Commission
studied distribution cost accounting in connection with selling, warehousing, handling,
delivery, credit and collection (Case Studies in Distribution Cost Accounting for
Manufacturing and Wholesaling, H. Doc. 287, 77th, 215 p., 6/23/41).
Distribution.--See Foods-Mass Foods Distributors.
Distribution.--See Millinery Distribution.
Distribution Methods and Costs (F. T. C.), Wartime, 1941-45.--This inquiry into
methods and costs of distributing important consumer commodities (F. T. C. Res.,
6/27/40) was undertaken by the Commission pursuant to authority conferred upon it
by section 6 of the F. T. C. Act. Seven parts of the F. T. C. Report on Distribution
Methods and Costs were transmitted to Congress and published under the subtitles:
Part I. Important Food Products (11/11/43, 223 p.); Part III. Building MaterialsLumber, Paints and Varnishes and Portland Cement (2/19/44, 50 p.); Part IV.
Petroleum Products, Automobiles, Rubber Tires and Tubes, Electrical Household
Appliances, and Agricultural Implements (3/2/44, 189 p.); Part V. Advertising as a
Factor in Distribution (10/30/44, 50 p.); Part VI. Milk Distribution, Prices, Spreads
and Profits (6/18/45, 58 p.); Part VII. Cost of Production and Distribution of Fish in
the Great Lakes Area (6/30/45, 59 p.); and Part VIII. Cost of Production and
Distribution of Fish in New England (6/30/45, 118 p.). The inquiries relating to fish
were undertaken in cooperation with the Coordinator of Fisheries, Interior Dept.
Special reports of the study of distribution of some 20 commodity groups were made
for confidential use of O.P. A. and other war agencies. (See pp.10 to 23 for details of
Parts V to VIII, inclusive.)
Du Pont Investments (F. T. C.).--The Report of the F. T. C. on Du Pont Investments (F. T. C. motion 7/29/27; report, 46 p., processed, 2/1/29) discussed reported
acquisitions by E. I. du Pont de Nemours & Co. of U.S. Steel Corp. stock, together
with previously reported holdings in General Motors Corp.
Electric and Gas Utilities, and Electric Power.--See Power.
Electric Lamps, Manufacturers of (W. P. B.), Wartime, 1942-43.--At the direc-

tion of the War Production Board, an investigation was made of the activities of
manufacturers of portable electric lamps whose operations were subject to the
restrictions imposed by W. P. B. Limitation and Conservation Orders L-33 and m-9-c.
Electrical Household Appliances.--See Distribution Methods and Costs.
Farm Implements (Senate), Wartime, 1917-18.--The Report of the F. T. C. on the
Causes of High Prices of Farm Implements (inquiry under S. Res. 223, 65th, 5/13/18;
report, 713 p., o. p., 5/4/20) disclosed numerous trade combinations for advancing
prices and declared the consent decree for dissolution of International Harvester Co.
to be inadequate. The Commission recommended revision of the decree and the
Department of Justice proceeded to that end.
Feeds, Commercial (Senate).--Seeking to determine whether purported
combinations in restraint of trade existed (S. Res. 140, 66th, 7/31/19), the Commission
found that although some association activities were in restraint of trade, there

INVESTIGATIONS BY THE COMMISSION, 1915-45

99

were no substantial antitrust law violations (Report of the F. T. C. on Commercial
Feeds, 200 p., 3/29/21).
Fertilizer (Senate).--Begun by the Commissioner of Corporations 8 (S. Res. 487,
62d, 3/1/13), this inquiry disclosed extensive use of bogus independent fertilizer
companies for competitive purposes (Fertilizer Industry, S. Doc. 551, 64th, 269 p., o.
p., 8/19/16). Agreements for abolition of such unfair competition were reached.
Fertilizer (Senate).--A second fertilizer inquiry (S. Res. 307, 67th, 6/17/22)
developed that active competition generally prevailed in that industry in the U. S.,
although in some foreign countries combinations controlled certain important raw
materials. The Commission recommended improved agricultural credits and more
extended cooperation by farmers in buying fertilizer (Fertilizer Industry, S. Doc. 347,
67th, 87 p., o. p., 3/3/23).
Fertilizer and Related Products (O. P. A.), Wartime, 1942-43.--At the request of
O. P. A. (June 1942), the Commission investigated costs, prices, and profits in the
fertilizer and related products industries. The inquiry developed information with
reference to the operations of 12 phosphate rock mines of 11 companies, and 40 plants
of 24 companies producing sulphuric acid, superphosphate, and mixed fertilizer. One
of the principal requirements of the inquiry was to obtain information concerning
costs, prices, and profits for 103 separate formulas of popular-selling fertilizers during
1941 and 1942.
Fish.--See Distribution Methods and Costs.
Flags (Senate), Wartime, 1917-18--Unprecedented increases in the prices of U. S.
flags in 1917, due to wartime demand, were investigated (S. Res. 35, 65th, 4/16/17).
The inquiry was reported in Prices of American Flags (S. Doc. 82, 65th, 6 p., o. p.,
7/26/17).
Flour Milling.--See Food, below.
Food (President), Wartime, 1917-18.--President Wilson, as a wartime emergency
measure (2/7/17), directed the Commission “to investigate and] report the facts
relating to the production, ownership, manufacture, storage, and distribution of
foodstuffs” and “to ascertain the facts bearing on alleged violations of the antitrust
acts.” Two major series of reports related] to meat packing and the grain trade with
separate inquiries into flour milling, canned vegetables and fruits, canned salmon, and
related matters, as listed below.
Food (President) Continued--Meat Packing.--Food Investigation-Report of the F.
T. C. on the Meat-Packing Industry was published in six parts: I. Extent and Growth
of Power of the Five Packers in Meat and Other Industries (6/24/19, 574, p., o. p.); II.
Evidence of Combination Among Packers (11/25/18, 294 p., o. p.); III. Methods of the
Five Packers in Controlling the Meat-Packing Industry (6/28/19, 325 p., o. p.); IV. The
Five Large Packers in Produce and Grocery Foods (6/30/19, 390 p., o. p.); V. Profits
of the Packers (6/28/19,110 p., o. p.); VI. Cost of Growing Beef Animals, Cost of
Fattening Cattle, and Cost of Marketing Livestock (6/30/19, 183 p., o. p.); and
summary (H. Doc. 1297, 65th, 51 p., o. p., 7/3/18).
The reports first led] to antitrust proceedings against t he Big Five Packers, resulting
in a consent decree (Supreme Court of the D C., 2/27/20), 9 which had substantially
the effect of Federal legislation in restricting their future operations to certain lines of
activity. As a further result of the investigation, Congress enacted] the Packers and]
Stockyards Act (1921), adopting the Commission’s recommendation that the packers
be divorced from control of the stockyards. (The meat-packing industry is further
referred to under Meat Packing Profit Limitations, p.101).

Food (President) Continued-Grain Trade.--Covering the industry from country
elevator to central market, the Report of the F. T. C. on the Grain Trade was published
in seven parts: I. Country Grain Marketing (9/15/20, 350 p., o. p.); II. Terminal Grain
Markets and Exchanges (9/15/20, 333 p., o. p.-); III. Terminal Grain Marketing
(12/21/21, 332 p., o. p.); IV. Middlemen’s Profits and Margins (9/26/23, 21 5 p., o. p.);
V. Future Trading Operations in Grain (9/15/20, 347 p., o. p.); VI. Prices of Grain
and Grain Futures (9/10/24, 374 p.); and] VII. Effects of Future Trading (6/25/26, 419
p.). The investigation as reported in Vol. V, and testimony by members of the
Commission’s staff (U. S. Congress House Committee on Agriculture, Future Trading,
hearings, 67th, April 25-May 2,
8 The Commission was created September 26, 1914, upon passage of the Federal Trade Commission
Act. sec. 3 of which provided that “all pending investigations and proceedings of the Bureau of
Corporations [of the Department of Commerce] shall be continued by the Commission.”
9 The legal history of the consent decree and a summary of divergent economic interests involved in
the question of packer participation in unrelated lines of food products were set forth by the Commission
in Packer Consent Decree (S. Doc. 219, 68th, 44 p., o. p., 2/20/25), prepared pursuant to S. Res. 278,
68th, 12/8/24.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

1921) was an important factor in enactment of the Grain Futures Act (1921). Further
reference to the grain trade is made under Grain Elevators, below; Grain Exporters,
p.101; and Grain Wheat Prices, p.101.)
Food (President) Continued--Bakeries and Flour Milling.--One F.T.C. report was
published by the Food Administration (U. S. Food Administration, Report of the F. T.
C. on Bakery Business in U.S., pp.5-13, o. p., 11/3/17.) Other reports were: Food
Investigation, Report of the F. T. C. on Flour Milling and Jobbing (4/4/18, 27 p., o.
p.) and Commercial Wheat Flour Milling (9/15/20.118 p., o. p.).
Food (President) Continued--Canned Foods,10 Private Car Lines, Wholesale
Food Marketing.--Under the general title Food Investigation were published Report
of the F. T. C. on Canned Foods-General Report and Canned Vegetables and Fruits
(5/18/18, 103 p., o. p.); Report of the F. T. C. on Canned Foods-Canned Salmon
(12/27/18, 83 p., o. p.); Report of the F. T. C. on Private Car Lines, regarding
transportation of meats, fruits, and vegetables (6/27/19, 271 p., o. p.); and Report of
the F. T. C. on Wholesale Marketing of Food (6/30/19, 268 p., o. p.),. which
recommended that a wholesale dealer in perishable food products should] be required
to procure a Federal license and that Federal inspection and standards should be
provided. Provisions in accordance with these recommendations were incorporated]
in the Perishable Agricultural Commodities Act (1930).
Food--Biscuits and Crackers (O. P. A.), Wartime, 1942-43.--As requested by the
Office of Price Administration, the Commission investigated costs and profits in the
biscuit and cracker manufacturing industry and] submitted] its report to that agency
3/25/43. The survey of 43 plants operated by 25 companies showed, among other
things, that costs were lower and profits higher for the larger companies than for the
smaller ones.
Food--Bread Baking (O. E. S.), Wartime, 1942-43.--This investigation was
requested (10/23/42) by the Director of the Office of Economic Stabilization and was
conducted to determine what economies could be made in the bread baking industry
so as to remove the need for a subsidy for wheat, to prevent an increase in bread
prices, or to lower the price of bread to consumers. Essential information on more
than 600 representative bakeries’ practices, costs, prices, and profits was developed]
and reported to O. E. S. (12/29/42). The report also was furnished to the Secretary of
Agriculture and special data gathered in the inquiry was tabulated for O.P. A.
Food--Bread Baking (O. P. A.), Wartime, 1941-42.--In the interest of the low
income consumer, for whom it was deemed necessary the price of bread should be held
at a minimum, the Commission investigated costs, prices, and profits of 60
representative bread-baking companies, conveying its findings to O.P. A. (Jan. 1942)
in an unpublished report.
Food--Bread and Flour (Senate).--Reports on this inquiry (S. Res. 163, 68th,
2/26/24) were: Competitive Conditions in Flour Milling (S. Doc. 97, 70th, 140 p., o.
p., 5/3/26); Bakery Combines and Profits (S. Doc. 212, 69th, 95 p., 2/11/27);
Competition and Profits in Bread and Flour (S. Doc. 98, 70th, 509 p., 1/11/28); and
Conditions in the Flour Milling Business, supplementary (S. Doc. 96, 72(1, 26 p.,
5/28/32).
Food--Fish.--See Distribution Methods and Costs.
Food--Flour Milling (Senate).--This study of costs, profits, and other factors (S.
Res. 212, 67th, 1/18/22) was reported] in Wheat Flour Milling Industry (S. Doc. 130,
68th, 130 p., o. p., 5/16/24).

Food--Flour Milling (O. E. S.), Wartime, 1942-43.--Requested by the Director of
the Office of Economic Stabilization, this inquiry covered practices, costs, prices and
profits in the wheat flour milling industry, its purpose being to provide the Director
with facts to determine what economies could be effected in the industry so as to
eliminate the need for a wheat subsidy, without reducing farmers’ returns, or to reduce
bread prices. The report was made to O. E. S. and] a more detailed report was
prepared for O. P. A.
Food--Grain Elevators (F. T. C.), Wartime, 1917-18.--In view of certain bills
pending before Congress with reference to regulation of the grain trade, the
Commission, in a preliminary report, Profits of Country and Terminal Grain Elevators
(S. Doc. 40, 67th, 12 p., o. p., 6/13/21), presented certain data collected during its
inquiry into the grain trade ordered by the President (see p.99).
10 In connection with its wartime cost finding inquiries, 1917-18. p.109 herein, the
Commission published Report of the F. T. C. on Canned Foods) 1918--Corn, Peas,
String Beans, Tomatoes, and Salmon (86 p., 11/21/21).

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101

Food--Grain Exporters (Senate).--The low prices of export wheat in 1921 gave
rise to this inquiry (S. Res. 133, 67th, 12/22/21) concerning harmful speculative price
manipulations on the grain exchanges and alleged conspiracies among country grain
buyers to agree on maximum purchasing prices. The Commission recommended
stricter supervision of exchanges and additional storage facilities for grain not
controlled by grain dealers (Report of the F. T. C. on Methods and Operations of
Grain Exporters, 2 vols., 387 p., 5/16/22 and 6/18/23).
Food--Grain, Wheat Prices (President).--An extraordinary decline of wheat prices
was investigated (President Wilson’s directive, 10/12/20) and found to be due chiefly
to abnormal market conditions (Report of the F. T. C. on Wheat Prices for the 1920
Crop, 91 p., 12/13/20).
Food--Important Food Products.--See Distribution Methods and Costs.
Food--Mass Foods Distributors (F. T. C.).--The system of delivering foods to
large chain store warehouses and the older system of delivery to individual retail stores
were compared from an economic viewpoint (F. T. C., Res., 4/20/41).
Food--Meat Packing Profit Limitations (Senate), Wartime, 1917-18.--Following
an inquiry. (S. Res. 177, 66th, 9/3/19) involving the wartime control of this business
as established by the U. S. Food Administration in 1917-18, the Com-mission
recommended greater control and lower maximum profits (Maximum Profit Limitation
on Meat Packing Industry, S. Doc. 110, 66th, 179 p., o. p., 9/25/19).
Food--Milk.--See Distribution Methods and Costs.
Food--Milk and Milk Products (Senate), Wartime, 1917-18.--Covering an inquiry
(S. Res. 431, 65th, 3/3/19) into fairness of milk prices to producers and of canned milk
prices to consumers, the Report of the F. T. C. on Milk and Milk Products 1914-18
(6/6/21, 234 p.) showed a marked concentration of control and questionable practices
many of which later were recognized by the industry as being unfair.
Food--Milk and Dairy Products (House).--Competitive conditions in different
milk-producing areas were investigated (H. Con. Res. 32, 73d, 6/15/34). Re-suits of
the inquiry were published in seven volumes: Report of the F. T. C. on the Sale and
Distribution of Milk Products, Connecticut and Philadelphia Milk-sheds (H. Doc. 152,
74th, 901 p., 4/5/35); Report of the F. T. C. on the Sale and Distribution of Milk and
Milk Products (Connecticut and Philadelphia milksheds, interim report, H. Doc. 387,
74th, 125 p., 12/31/35); Chicago Sales Area (H. Doc. 451, 74th, 103 p., o. p 4/15/36);
Boston, Baltimore, Cincinnati, St. Louis (H. Doc. 501, 74th, 243 p., 674/36); Twin City
Sales Area (H. Doc. 506, 74th, 71 p., 6/13/36); and New York Milk Sales Area (H. Doc.
95, 75th, 138 p., o. p., 9/30/36). The Commission reported that many of the industry’s
problems could only be dealt with by the States and recommended certain legislation
and procedure, both State and Federal (Summary Report on Conditions With Respect
to the Sale and Distribution of Milk and Dairy Products, H. Doc. 94, 75th, 39 p., o. p.,
1/4/37). Legislation has been enacted in a number of States carrying into effect all or
a portion of the Commission’s recommendations.
Food--Peanut Prices (Senate).--An alleged price-fixing combination of peanut

crushers and mills was investigated (S. Res. 139, 71st, 10/22/29). The Commission
found that an industry-wide decline in prices of farmers’ stock peanuts during the
business depression was not due to such a combination, although pricing practices of
certain mills tended to impede advancing and to accelerate declining prices (Prices and
Competition Among Peanut Mills, S. Doc. 132, 72d, 78 p., 6/30/32).
Food--Raisin Combination (Attorney General).--Investigating allegations of a
combination among California raisin growers (referred to F. T. C. 9/30/19), the
Commission found the enterprise not only organized in restraint of trade but conducted
in a manner threatening financial disaster to the growers. The Commission
recommended changes which the growers adopted (California Associated Raisin Co.,
26 p., processed o. p., 6/8/20).
Food--Southern Livestock Prices (Senate).--Although the low prices of southern
livestock in 1919 gave rise to a belief that discrimination was being practiced, a
Commission investigation (S. Res. 133, 66th, 7/25/19) revealed the alleged
discrimination did not appear to exist (Southern Livestock Pr ices, S. Doe.- 209, 66th,
11 p., o. p, 2/2/20).
Food--Sugar (House).--An extraordinary advance in the price of sugar in 1919 (H.
Res. 150, 66th, 10/1/19) was found to be due chiefly to speculation and hoarding. The
Commission made recommendations for correcting these abuses Report of the F. T. C.
on Sugar Supply and Prices, 205 p., 11/15/20).

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

Food-Sugar, Beet (F. T. C.).--Initiated by the Commissioner of Corporation,11 but
completed by the F. T. C., this inquiry dealt with the cost of growing beets and the cost
of beet-sugar manufacture (Report on the Beet Sugar Industry in the U. S., H. Doc.
158, 65th, 164 p., 6. p., 5/24/17).
Foreign Trade--Antidumping Legislation (F. T. C.).--To develop information for
use of Congress in its consideration of amendments to the antidumping laws the
Commission studied recognized types of dumping and provisions for preventing the
dumping of goods from foreign countries (Antidumping Legislation and other Import
Regulations in the United States and Foreign Countries, S. Doc. 112, 73d, 100 p.,
1/11/34; supplemental report, 111 p., processed, 6/27/38).
Foreign Trade--Cooperation in American Export Trade (F. T. C.) .--This inquiry
related to competitive conditions affecting Americans in international trade. The
Export Trade Act, also known as the Webb-Pomerene Law, authorizing the association
of U. S. manufacturers for export trade, was enacted as a result of Commission
recommendations (Cooperation in American Export Trade, 2 vols., 984 p., o. p.-,
6/30/16; also summary, S. Doc. 426, 64th, 7 p., o. p., 5/2/16; and conclusions, 1916,
14 p., o. p.).
Foreign Trade--Cotton Growing Corporation (Senate).--The report of an inquiry
(S. Res. 317, 68th, 1/27/25) concerning the development of this British company,
Empire Cotton Growing Corporation (S. Doc. 226, 68th, 30 p., o. p., 2/28/25), showed
there was then little danger of serious competition with the American grower or of a
possibility that the United States would lose its position as the largest producer of raw
cotton.
Fruit Growers and Shippers (W. P. B.), Wartime, 1943-44.--This investigation
was requested by the War Production Board to determine whether 7 grape growers and
12 grape shippers, all located in California, were in violation of W. P. B. Order L-232
with respect to quotas affecting the use of lugs (wooden shipping containers).
Furnaces, Hot Air, Household (W. P. B.), Wartime, 1943-44.--The Commission
made a Nation-wide survey for the War Production Board of the operations of one of
the largest manufacturers in the United States of household hot air furnaces, to
determine whether its practices in selling and servicing domestic beating plants were
in violation of Orders L-79 and P-84, and other applicable regulations and orders of
W. P. B.
Fuse Manufacturers (W. P. B.), Wartime, 1942-43.--For the War Production
Board the Commission investigated and reported on the activities of representative
fuse manufacturers whose operations were subject to W. P. B. Limitation Orders L158 and L-161, as amended.
Gasoline.--See Petroleum.
Glycerin, Users of (W. P. B.), Wartime, 1942-43.--At the request of the War
Production Board, paint and resin manufacturers, tobacco companies, and other large
users of glycerin were investigated to determine whether they had improperly extended
preference ratings to obtain formaldehyde, paraformaldebyde or
hexamethylenetetramine, to which they were not otherwise entitled.
Grain.--See Food.
Guarantee Against Price Decline (F. T. C.).--Answers to a circular letter
(12/26/19) calling for information and opinions on this subject were published in
Digest of Replies in Response to an Inquiry of the F. T. C. Relative to the Practice of
Giving Guarantee Against Price Decline (68 p., 5/27/20).

House Furnishings (Senate).--This inquiry (S. Res. 127, 67th, 1/4/22) resulted in
three volumes showing concerted efforts to effect uniformity of prices in some lines
(Report of the F. T. C. on House Furnishing Industries, 1018 p., 1/17/23, 10/1/23, and
10/6/24).
Household Furniture (O. P. A.), Wartime, 1941-42.--Costs, prices, and profits of
67 representative furniture companies were studied to determine whether, and to what
extent, price increases were justified.- A study was also made to deter-mine whether
price-fixing agreements existed and whether wholesale price increases resulted from
understandings in restraint of trade. Confidential reports were transmitted to O. P. A.
in Sept. 1941.
Independent Harvester Co. (Senate), Wartime, 1917-18.--After investigation (S.
Res. 212, 65th, 3/11/18) of the organization and methods of operation of the company
which had been formed several years before to compete with the “harvester trust,” but
which had passed into receivership, the F. T. C. Report to the Senate on the
Independent Harvester Co. (5 p., release, processed, o. p., 5/15/18) showed the
company’s failure was due to mismanagement and insufficient capital.
11

See footnote 8, p. 99.

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103

Industrial Corporation Reports (F. T. C.), Wartime, 1941-43.--The Commission
obtained corporation financial reports for 1939 and 1940. It published in combined
form significant economic facts developed in the 1939 series relating to 76 industries
which embraced 780 corporations (Industrial Corporation Reports, 77 vols., incl.
summary, 10/15/40 to 6/30/41, approximately 1,500 pp., processed; titles listed in F.
T. C. Annual Report, 1941, p. 24). In 1939 these corporations had an average total
investment (after deduction of reported appreciation of assets) of more than
$28,000,000,000. The 1940 series, coordinated with wartime work for other
Government agencies, was expanded to cover 4,500 corporations representing
consolidated operations of more than 7,000 corporations operating in 86 principal
strategic materials industries and to provide O. P. A. with approximately 12,000 annual
reports of earlier years and quarterly reports of subsequent operations. The 1940
series was prepared for the confidential use of war and other agencies of the
Government.
Insignia Manufacturers (W. P. B.), Wartime, 1944-45.--Preliminary studies made
by the War Production Board disclosed the probability that certain insignia
manufacturers had acquired larger quantities of foreign silver than necessary to fill
legitimate orders] and diverted the balance to unauthorized uses. In response to W. P.
B.’s request the Commission surveyed the acquisition and use of foreign silver by such
manufacturers to determine the degree of their compliance with Order M-199 and
checked the receipt and use of both domestic and treasury silver, as well as the
manufacture of insignia, as controlled by Orders L-131 and M-9-c.
Jewel Bearings, Consumers of (W. P. B.), Wartime, 1942-43.--For the War
Production Board, users of jewel bearings were investigated to determine the extent
to which they were complying with W.P. B. Conservation Order m-50, which had been
issued to conserve the supply and direct the distribution of jewel bearings and jewelbearing material.
Leather and Shoes (F. T. C. and House), Wartime, 1917-18.--General complaint
regarding high prices of shoes led to this inquiry, which is reported in Hide and
Leather Situation, preliminary report (H. Doc. 857, 65th, 5 p., o. p., 1/23/18), and
Report on Leather and Shoe Industries (180 p., 8/21/19). A further study (H. Res. 217,
66th, 8/19/19) resulted in the Report of the F. T. C. on Shoe and Leather Costs and
Prices (212 p., 6/10/21).
Lumber--Costs.--See Wartime Cost Finding, 1917-18.
Lumber Trade Associations (Attorney General).--The Commission’s extensive
survey of lumber manufacturers’ associations (referred to F. T. C. 9/4/19) resulted in
Department of Justice proceedings against certain associations for alleged antitrust law
violations. Documents published were: Report of the F. T. C. on umber
Manufacturers’ Trade Associations, incorporating regional reports of 1/10/21, 2/18/21,
6/9/21, and 2/15/22 (150 p., o. p.); Report of the F. T. C. on Western Red Cedar
Association, Lifetime Post Association, and Western Red Cedarmen’s Information
Bureau (22 p., 1/24/23), also known as Activities of Trade Associations and
Manufacturers of Posts and Poles in the Rocky Mountain and Mississippi Valley
Territory (S. Doc. 293, 67th, o. p.); and Report of the F. T. C. on Northern Hemlock
and Hardwood Manufacturers Association (52 p., 5/7/23).
Lumber Trade Associations (F. T. C.).--Activities of five large associations were
investigated in connection with the Open-Price Associations inquiry (p.104) to bring
down to date the 1919 lumber association inquiry (Chap. VIII of Open-Price Trade

Associations, S. Doc. 226, 70th, 516 p., 2/13/29).
Mass Foods Distributors.--See Food.
Meat--Packing Profit Limitations.--See Food.
Metal-Working -Machines, Invoicing and Distribution of (W. P. B.), Wartime,
1942-43.--For the War Production Board an inquiry was made to obtain complete data
from the builders of metal-working machines (including those manufactured by their
subcontractors) such as all nonportable power-driven machines that shape metal by
progressively removing chips or by grinding, boning, or lopping; all nonportable
power-driven shears, presses, hammers, bending machines, and other machines for
cutting, trimming, bending, forging, pressing, and forming metal; and all power-driven
measuring and testing machines. Each type and kind of machine was reported on
separately.
Milk.--See Food.
Millinery Distribution (President).--This inquiry, requested by President
Roosevelt, embraced growth and development of syndicates operating units for retail
millinery distribution, the units consisting of lease departments in department or
specialty stores (Report to the President of the United States on Distribution Methods
in the Millinery Industry, 65 p., processed, 11/21/39).

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

Motor Vehicles (Congress).--Investigating (Public Res. 87, 75th, 4/13/38)
distribution and retail sales policies of motor vehicle manufacturers and dealers, the
Commission found, among other things, a high degree of concentration and strong
competition; that many local dealers’ associations fixed prices and operated used-car
valuation or appraisal bureaus essentially as combinations to re strict competition; that
inequities existed in dealer agreements and in certain manufacturers’ treatment of
some dealers; and that some companies’ car finance plans developed serious abuses
(Motor Vehicle Industry, H. Doc. 468, 76th, 1077 p., 6/5/39). The leading companies
voluntarily adopted a number of the Commission’s recommendations as company
policies.
National Wealth and Income (Senate).--In 1922 the national wealth was estimated
(inquiry pursuant to S. Res. 451, 67th, 2/28/23) at $353,000,000,000 and the national
income in 1923 at $70,000,000,000 [National Wealth and Income (S. Doc. 126, 69th,
381 p., o. p., 5/25/26) and Taxation and Tax-Exempt Income (S. Doc. 148, 68th, 144
p., o. p., 6/6/24).
Nickel, Processors of (W. P. B.), Wartime, 1942-43.--The Commission was
designated by the War Production Board to investigate the transactions of some 600
nickel processors for the purpose of determining the extent to which they were
complying with W.P. B. Preference Order No. M-6-a, issued 9/30/41, and Conservation Order M-6-b, issued 1/20/42. The investigation was conducted concurrently
with a survey of chromium processors.
Open-Price Associations (Senate).--An investigation (S. Res. 28, 69th, 3/17/25) to
ascertain the number and names of so-called open-price associations their importance
in industry and the extent to which members maintained uniform prices, was reported
in Open-Price Trade Associations (S. Doc. 226, 70th, 516 p., 2/13/29).
Packer Consent Decree.--See Food (President) Continued-Meat Packing.
Paint, Varnish, and Lacquer, Manufacturers of (W. P. B.), Wartime, 1943-44.-The purpose of this survey was to determine whether the manufacturers covered were
in violation of War Production Board Orders M-139, M-150, M-159, M-246, and M327 in their acquisition and use of certain chemicals, all subject to W. P. B. allocation,
used in the manufacture of paint, varnish, and lacquer. Sales of such products to
determine their end uses also were investigated.
Paperboard (O. P. A.), Wartime, 1941-42.--Costs, profits, and other financial data
regarding operations of 68 paperboard mills (0.- P. A. request, 11/12/41) for use in
connection with price stabilization work, were transmitted to O. P. A. in a confidential
report (May 1942).
Paper--Book (Senate), Wartime, 1917-18.--This inquiry (S. Res. 269, 64th, 9/7/16)
resulted in proceedings by the Commission against certain manufacturers to prevent
price enhancement and the Commission recommended legislation to repress trade
restraints [Book Paper Industry-A Preliminary Report (S. Doc. 45, 65th, 11 p., o. p.,
6/13/17), and Book Paper Industry--Final Report (S. Doc. 79, 65th, 125 p., o.p.,
8/21/17)].
Paper--Newsprint (Senate), Wartime, 1917-18.--High prices of newsprint (S. Res.
177, 64th, 4/24/16) were shown to have been partly a result of certain newsprint
association activities in restraint of trade. Department of Justice proceedings resulted
in abolishment of the association and indictment of certain manufacturers. The
Commission for several years conducted monthly reporting of production and sales
statistics, and helped provide some substantial relief for smaller publishers in various

parts of the country. [Newsprint Pa per Industry, preliminary (S. Doc. 3, 65th, 12 p.,
o. p. 3/3/17); Report of the F. T. C. on the Newsprint Paper Industry- (S. Doc. 49,
65th, 162 p., 6/13/17); and Newsprint Paper Investigation (in response to S. Res. 95,
65th, 6/27/17; S. Doc. 61, 65th, 8 p., o.p., 7/10/17)].
Paper-Newsprint (Senate).--The question investigated (S. Res. 337, 70th, 2/27/29)
was whether a monopoly existed among newsprint manufacturers and distributors in
supplying paper to publishers of small dailies and weeklies (Newsprint Paper
Industry, S. Doc. 214, 71st, 116 p. 6/30/30).
Paper--Newsprint (Attorney General).--The Commission investigated (inquiry
referred to F. T. C. 1/24/38) the manner in which certain newsprint manufacturers
complied with a consent decree entered against them (11/26/17) by the U. S. District
Court, Southern District of New York.
Peanut Prices.--See Food.
Petroleum Products.--See Distribution Methods and Costs.
Petroleum and Petroleum Products, Prices (President and Congress).--At
different times the Commission has studied prices of petroleum and petroleum
products and issued reports thereon as follows: Investigation of the Price of

INVESTIGATIONS BY THE COMMISSION, 1915-45

105

Gasoline, preliminary (S. Doc. 403, 64th, 15 p., o. p., 4/10/16) and Report on the Price
of Gasoline in 1915 (H. Doc. 74, 65th, 224 p., o. p., 4/11/17)--both pursuant to S. Res.
109, 63d, 6/18/13 12 and S. Res. 457, 63d, 9/28/14, which reports discussed high prices
and the Standard Oil companies’ division of marketing territory among themselves, the
Commission suggesting several plans for restoring effective competition; Advance in
the Prices of Petroleum Products (H. Doc. 801, 66th, 57 p., 6/1/20)--pursuant to H.
Res. 501, 66th, 4/5/20, in which report the Commission made constructive proposals
to conserve the oil supply; Letter of Submittal and Summary of Report on Gasoline
Prices in 1924 (24 p. processed, 6/4/24, and Cong. Record, 2/28/25, p. 5158)--pursuant
to request of President Coolidge, 2/7/24; Petroleum Industry--Prices, Profits and
Competition (S. Doc. 61, 70th, 360 p., 12/12/27)-pursuant to S. Res. 31, 69th, 6/3/36;
Importation of Foreign Gasoline at Detroit, Mich. (S. Doc. 206, 72d, 3 p., o. p.,
2/27/33)--pursuant to S. Res. 274 72d, 7/16/32; and Gasoline Prices (S. Doc. 178, 73d,
22 p., 5/10/34)-pursuant to S. Res. 166, 73d, 2/2/34.
Petroleum Decree (Attorney General).--The Commission investigated (inquiry
referred to F. T. C. 4/16/36) the manner in which a consent decree entered (9/15/30)
against Standard Oil Co. of California, Inc., and others, restraining them from
monopolistic practices, was being observed, and reported (4/2/37) to the Attorney
General.
Petroleum--Foreign Ownership (Senate) .--Inquiry was made (S. Res. 311, 67th,
6/29/22) into acquisition of extensive oil interests in the U. S. by the Dutch-Shell
organization, and into discrimination allegedly practiced in foreign countries against
American interests (Report of the F. T. C. on Foreign Ownership in the Petroleum
Industry 152 p., o. p., 2/12/23).
Petroleum Pipe Lines (Senate).--Begun by the Bureau of Corporations, 13 this
inquiry (S. Res. 109, 63d, 6/18/13) showed the dominating importance of the pipe lines
of the great midcontinent oil fields and reported practices of the pipe-line companies
which were unfair to small producers (Report on Pipe-Line Transportation of
Petroleum, 467 p., o. p., 2/28/16), some of which practices were later remedied by the
Interstate Commerce Commission.
Petroleum--Regional Studies (Senate and F. T. C.).--Reports published were:
Pacific Coast Petroleum Industry- (two parts, 4/7/21 and 11/28/21, 538 p.)-pursuant
to S. Res. 138, 66th, 7/31/19; Reports of the F. T. C. on the Petroleum Industry of
Wyoming (54 p., o. p., 1/3/21)--pursuant to F. T. C. motion; Petroleum Trade in
Wyoming and Montana (S. Doc. 233, 67th, 4 p., 7/13/22)--pursuant to F. T. C. motion,
in which report legislation to remedy existing conditions was recommended; and
Report of the F. T. C. on Panhandle Crude Petroleum (Texas) (19 p. 2/8/28)--pursuant
to F. T. C. motion, 10/6/26 (in response to requests of producers of crude petroleum).
Potomac Electric Power Co. (Procurement Director, United States Treasury.)-A study (2/29/44) of the financial history and operations of this corporation for the
years 1896-1943 was made at the request of the Director of Procurement, United States
Treasury, and the report thereon was introduced into the record in the corporation’s
electric rate case before the District of Columbia Public Utilities Commission.
Power--Electric (Senate).--This inquiry (S. Res. 329, 68th, 2/9/25) resulted in two
reports, the first of which, Electric Power Industry--Control of Power Companies (S.
Doc. 213, 69th, 272 p., 2/21/27), dealt with the organization, control, and ownership
of commercial electric-power companies. It called attention to the dangerous degree
to which pyramiding had been practiced in superposing a series of holding companies

over the underlying operating companies, and was influential in bringing about the
more comprehensive inquiry described under Power--Utility Corps., below. Supply
of Electrical Equipment and Competitive Conditions (S. Doc. 46, 70th, 282 p.,
1/12/28) showed, among other things, the dominating position of General Electric Co.
in the equipment field.
Power--Interstate Transmission (Senate).--Investigation (S. Res. 151, 71st,
11/8/29) was made of the quantity of electric energy transmitted across State lines and
used for development of power or light, or both (Interstate Movement of Electric
Energy, S. Doc. 238, 71st, 134 p., 12/20/30).
Power--Utility Corporations (Electric and Gas Utilities) (Senate).--This extensive inquiry (S. Res. 83, 70th, 2/15/28; Public Res. 46, 73d, 6/1/34; and
See footnote 8, p. 99.
See footnote 8, p. 99. Conditions in one of the midcontinent fields were discussed
by the Bureau of Corporations in Conditions in the Healdton Oil Field (Oklahoma)
(116 p., 3/15/15).
12
13

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

F. T. C. Act, Sec. 6) embraced the financial set-up of electric and gas utility companies
operating in interstate commerce and of their holding companies and other companies
controlled by the holding companies. The inquiry also dealt with the utilities’ efforts
to influence public opinion with respect to municipal ownership of electric utilities.
The Commission’s reports and recommendations, focusing Congressional attention
upon certain unfair financial practices in connection with the organization of holding
companies and the sale of securities, were among the influences which brought about
enactment of such remedial legislation as the Securities Act of 1933, the Public Utility
Holding Company Act of 1935, the Federal Power Act (1935), and the Natural Gas
Act (1938).
Public hearings were held on all phases of the inquiry and monthly interim reports
presented hundreds of detailed studies by the commission’s economists, attorneys,
accountants and other experts, based on examination of 29 holding companies having
$6,108,128,713 total assets; 70 subholding companies with $5,685,463,201 total
assets; and 278 operating companies with $7,245,106,464 total assets. The testimony,
exhibits and final reports (Utility Corporations, S. Doc. 92, 70th) included 95 volumes.
14

Price Bases (F. T. C.).--More than 3,500 manufacturers representing practically
every industrial segment furnished data for this study (F. T. C.- motion, 7/27/27) of
methods used for computing delivered prices on industrial products and of the actual
and potential influence of such methods on competitive markets and price levels. In
the cement industry the basing-point method 15 was found to have a tendency to
establish unhealthy uniformity of delivered prices and cross-haul or cross-freighting
to be an economic evil (Report of the F. T. C. on Price Bases Inquiry, Basing-Point
Formula and Cement Prices, 218 p., 3/26/32). Illustrating the use in a heavy
commodity industry of both a modified zone-price system and a uniform deliveredprice system, the Commission examined price schedules of the more important
manufacturers of range boilers, 1932-36, disclosing that the industry operated under
a zone-price formula, both before and after adoption of its N. R. A. code (Study of
Zone-Price Formula in Range Boiler Industry, 5 p., processed, 3/30/36, a summary
based on the complete report which was submitted to Congress but not printed).
Price Deflation (President).--To an inquiry (3/21/21) of President Harding, the
Commission made prompt reply (undated) presenting its views of the causes of a
disproportional decline of agricultural prices compared with consumers’ prices (Letter
of the F. T. C. to the President of the U. S., 8 p., o. p.).
Priorities (W. P. B.), Wartime, 1941-45.--Pursuant to Executive orders (January
1942), W P. B. designated the Federal Trade Commission as an agency to conduct
investigations of basic industries to determine the extent and degree to which they
were complying with W P. B. orders relative to the allocation of supply and priority
of delivery of war materials. F. T. C. priorities investigations are listed herein under
the headings, Aluminum, Foundries Using; Antifreeze Solutions, Manufacturers of;
Capital Equipment; Chromium, Processors of; Commercial Cooking and Food and
Plate Warming Equipment, Manufacturers of; Contractors, Prime, Forward Buying
Practices of; Copper Base Alloy Ingot Makers; Copper, Primary Fabricators of;
Costume Jewelry, Manufacturers of; Electric Lamps, Manufacturers of; Fruit Growers
and Shippers; Furnaces, Hot Air, Household; Fuse Manufacturers; Glycerin, Users of;
Insignia Manufacturers; Jewel Bearings, Consumers of; Metal-working Machines,
Invoicing and Distribution of; Nickel, Processors of; Paint, Varnish and Lacquer,
Manufacturers of; Quinine, Manufacturers and Wholesalers of; Silverware,

Manufacturers of; Silverware Manufacturers and Silver Suppliers; Steel Industry;
Textile Mills, Cotton; and Tin, Consumers of. The report on each of these
investigations was made directly to W P. B.
Production Cost Accounting (F. T. C.), Wartime, 1941-42.--This investigation
covered production cost accounting methods and systems used in the bread baking,
paperboard, steel and other industries during wartime.
Profiteering (Senate), Wartime, 1917-18.--Current conditions of profiteering (S.
Res. 255, 65th, 6/10/18) as disclosed by various Commission investigations were
reported in Profiteering (S. Doc. 248, 65th, 20 p., 6/29/18).
Quinine, Manufacturers and Wholesalers of (W. P. B.), Wartime, 1942-43.--At
the instance of the War Production Board, investigation was made to deter-mine
whether requirements of its Conservation Order No. m-131-a, relating to quinine and
other drugs extracted from cinchona bark, were being complied with.
14 Final reports were published in 1935; a general index in 1937. Some of the volumes are out of print.
For report titles, see F. T. C. Annual Report, 1941, p.221; and for lists of companies investigated, see F.
T. C. Annual Reports, 1935, p. 21, and 1936, p.36.
15 Basing-point systems are also discussed in the published reports listed under “Cement,” “Steel
Code.” and “Steel Sheet Piling” herein.

INVESTIGATIONS BY THE COMMISSION, 1915-45

107

Radio (House).--A comprehensive investigation of the radio industry (H. Res. 548,
67th, 3/4/23; Report of the F. T. C. on the Radio Industry, 347 p., 12/1/23) contributed
materially to enactment of the Radio Act of 1927 and the succeeding Federal
Communications Act of 1934. The investigation was followed by Corn-mission and
Department of Justice proceedings on monopoly charges which culminated in a
consent decree (11/2/32; amended 11/2/35).
Rags, Woolen.--See Textiles.
Raisin Combination.--See Food.
Range Boilers.--See Price Bases.
Resale Price Maintenance (F. T. C.).--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 purchasers should resell. them led to the first inquiry,
resulting in a report, Resale Price Maintenance (H. Doc. 1480, 65th, 3 p., o. p.,
12/2/18). Other reports were: A Report on Resale Price Maintenance (H. Doc. 145,
66th, 3 p 6/30/19, and Resale Price Maintenance (F.- T. C. motion 7/25/27.- reports,
Part I, H. Doc. 546, 70th, 141 p., o. p., 1/30/29, and Part II, 215 p., 6/22/31).
Rubber Tires and Tubes.--See Distribution Methods and Costs.
Salaries (Senate).--The Commission investigated (S. Res. 75, 73d, 5/29/33) salaries
of executives and directors of corporations (other than public utilities) engaged in
interstate commerce, such corporations having more than $1,000,000 capital and assets
and having their securities listed on the New York stock or curb exchanges. The
Report of the F. T. C. on Compensation of Officers and Directors of Certain
Corporations (15 p., processed, 2/26/34) explained the results of the inquiry. 16 The
facts developed focused the attention of Congress on the necessity of requiring listed
corporations to report their salaries.
Silverware, Manufacturers of (W. P. B.), Wartime, 1942-43.--Silverware manufacturers were investigated at the request of the War Production Board to determine
the extent to which they had complied with the copper orders, that is, W P.- B. General
Preference Order No. m-9-a, Supplemental Order No. m-9-b, and Conservation Order
m-9-c, all as amended.
Silverware Manufacturers and Silver Suppliers (W. P. B.), Wartime, 1942-43.-The activities of silverware manufacturers and silver suppliers under W P. B.
Conservation and Limitation Orders m-9-a, b, and c, m-100 and L-140 were
investigated and reported on at the request of the War Production Board.
Sisal Hemp (Senate).--The Commission assisted the Senate Committee on
Agriculture and Forestry in an inquiry (S. Res. 170, 64th, 4/17/16) and advised how
certain quantities of hemp, promised by the Mexican sisal trust, might be fairly
distributed among American distributors of binder twine (Mexican Sisal Hemp, S. Doc.
440, 64th, 8 p., o. p., 5/9/16). The Commission’s distribution plan was adopted.
Southern Livestock Prices.--See Food.
Steel Code and Steel Code as Amended (Senate and President).--The Commission investigated (S. Res. 166, 73d, 2/2/34) price fixing, price increases, and other
matters (Practices of the Steel Industry Under the Code, S. Doc. 159, 73d, 79 p.,
3/19/34) and the Commission and N. R. A. studied the effect of the multiple basingpoint system under the amended code (Report of the F. T. C. to the President in
Response to Executive Order of May 30, 1934, With Respect to the Basing-Point
System in the Steel Industry, 125 p., 11/30/34). 17 The Commission recommended
important code revisions.

Steel Companies, Proposed Merger (Senate).--An inquiry (S. Res. 286, 67th,
5/12/22) into a proposed merger of Bethlehem Steel Corp.- and Lackawanna Steel Co.,
and of Midvale Steel & Ordnance Co., Re public Iron & Steel Co., and Inland Steel
Co., resulted in a two-volume report, Merger of Steel and Iron Companies (S. Doc.
208, 67th, 11 p., o. p., 6/5/22 and 9/7/22).
Steel Costs and Profits.--See Wartime Cost Finding, 1917-18.
Steel Costs and Profits (O. P. A.), Wartime, 1942-43.--A report on the Commission’s survey of costs, prices and profits in the steel industry, begun in April 1942 at
the request of O. P. A., was made to that agency. The inquiry covered 29 important
steel producing companies.
The salary lists do not appear in the report but are available for inspection,
As of the same date the N. R. A. published its Report of the National Recovery
Administration on the Operation of the Basing-Point System in the Iron and Steel
Industry (175 p., processed). The basing-point system is also discussed in published
reports listed under “Cement” and “Price Bases” herein.
16
17

108

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

Steel Industry (O. P.M.), Wartime, 1941-42.--This investigation covered practically every steel mill in the country and was conducted for the purpose of
determining the manner in which the priorities and orders promulgated by the Office
of Production Management were being observed, I. e., the technique used in the steel
industry in meeting the requirements of O. P. M. (later the War Production Board)
orders and forms. controlling the distribution of pig iron, iron and steel, iron and steel
alloys, and iron and steel scrap.
Steel Sheet Piling--Collusive Bidding (President).--Steel sheet piling prices on
certain Government contracts in New York, North Carolina, and Florida were
investigated (inquiry referred to F. T. C. 11/20/35). The F. T. C. Report to the
President on Steel Sheet Piling (42 p., processed, 6/10/36) demonstrated the existence
of collusive bidding because of a continued adherence to the basing-point system 18
and provisions of the steel industry’s code.
Stock Dividends (Senate).--The Senate requested (S. Res. 304, 69th, 12/22/26) the
names and capitalizations of corporations which bad issued stock dividends, and the
amounts thereof, since the Supreme Court decision (3/8/20) bolding that such
dividends were not taxable. The same information for an equal period prior to the
decision was also requested. The Commission submitted a list of 10,245 corporations,
pointing out that declaration of stock dividends at the rate prevailing did not appear
to be a result of controlling necessity and seemed questionable as a business policy
(Stock Dividends, S. Doc. 26, 70th, 273 p., 12/5/27).
Sugar.--See Food.
Taxation and Tax-Exempt Income.--See National Wealth and Income.
Temporary National Economic Committee, Studies of the F. T. C.--See F. T. C.
Annual Report, 1941, p.218, for titles.
Textile Mills, Cotton (W. P. B.), Wartime, 1943-44.--For the War Production
Board the Commission conducted a compliance investigation of manufacturers of
cotton yarns, cordage and twine to ascertain whether they were in violation of
Priorities Regulation 1, as amended, by their failure to fill higher rated orders at the
time they filled lower rated orders.
Textiles (President).--President Roosevelt (Executive order of 9/26/34) directed an
inquiry into the textile industry’s labor costs, profits, and investment structure to
determine whether increased wages and reduced working hours could be sustained
under prevailing economic conditions. Reports covering the cotton, woolen and
worsted, silk and rayon, and thread, cordage and twine industries, were: Report of the
F. T. C. on Textile Industries, Parts I to VI, 12/31/34 to 6/20/35, 174 p. (Part VI,
financial tabulations, processed, 42 p., o. p.); Report of the F. T. C. on the Textile
Industries in 1933 and 1934, Parts I to IV, 8/1/35 to 12/5/35,129 p.; Parts II and III, o.
p. (Part IV, processed, 21 p.; accompanying tables, processed, 72 p., o. p.); Cotton
Spinning Companies Grouped by Types of Yarn Manufactured During 1933 and 1934,
1/31/36, 20 p., processed, o.p.; Cotton Weaving Companies Grouped by Types of
Woven Goods Manufactured During 1933 and 1934, 3/24/36, 48 p., processed, o. p.;
Textile Industries in the First Half of 1935, Parts I to III, 5/22/36 to 8/22/36, 119 p.,
processed; Textile Industries in the Last Half of 1935, Parts I to III, 11/20/36 to
1/6/37,155 p., processed; and Textile Industries in the First Half of 1936, Parts I to III,
1/21/37 to 2/11/37, 163 p., processed.
Textiles--Combed Cotton Yarns.--High prices of combed cotton yarns led to this
inquiry (H.- Res. 451, 66th, 4/5/20) which disclosed that while for several years profits
and prices had advanced, they declined sharply late in 1920 (Report of the F. T. C. on
Combed Cotton Yarns, 94 p., o. p., 4/14/21).

Textiles--Cotton Growing Corporation.--See Foreign Trade.
Textiles--Cotton Merchandising (Senate)--Investigating abuses in handling
consigned cotton (S. Res. 252, 68th, 6/7/24), the Commission made recommendations
designed to correct or alleviate existing conditions (Cotton Merchandising Practices,
S. Doc. 194, 68th, 38 p., 1/20/25).
Textiles--Cotton Trade (Senate).--Investigation (S. Res. 262, 67th, 3/29/22)
involved a decline in cotton prices, 1920-22, as reported in Preliminary Report of the
F. T. C. on the Cotton Trade (S. Doc. 311, 67th, 28 p., o. p., 2/26/23). After a second
inquiry (S. Res. 429, 67th, 1/31/23), the Commission recommended certain reforms
in trading practices and particularly in permitting Southern delivery of cotton on New
York futures contracts (The Cotton Trade, incl. testimony, S. Doc. 100, 68th, 2 vols.,
510 p., o. p., 4/28/24) A subsequent Senate bill (S. 4411, 70th, 5/18/28) provided for
Southern warehouse delivery, but, before any law was enacted, the New York Cotton
Exchange adopted Southern delivery on New York
18

See footnote 15, p.106.

INVESTIGATIONS BY THE COMMISSION, 1915-45

109

futures contracts (11/16/28 and 2/26/30) in accordance with the Commission’s
recommendations.
Textile--Woolen Rag Trade (F. T. C.), Wartime, 1917-18.--The Report on the
Woolen Rag Trade (90 p., o. p., 6/30/19) contains information gathered during the
World War, 1917-18, at the request of the War Industries Board, for its use in
regulating the prices of woolen rags employed in the manufacture of clothing.
Tin, Consumers of (W. P. B.), Wartime, 1942-43.--The principal consumers of tin
were investigated at the instance of the War Production Board to determine the degree
of their compliance with Conservation Order m-43-a, as amended, and other orders and
regulations issued by the Director of the Division of Industry Operation, controlling
the inventories, distribution, and use of the tin supply in the U.S.
Tobacco (Senate).--Inquiry (S. Res. 329, 68th, 2/9/25) into activities of two wellknown companies disclosed that alleged illegal agreements or conspiracies did not
appear to exist (The American Tobacco Co. and the Imperial. Tobacco Co., S. Doc.
34, 69th, 129 p., o. p., 12/23/25).
Tobacco Marketing--Leaf (F. T. C.).--Although representative tobacco farmers in
1929 alleged existence of territorial and price agreements among larger manufacturers
to control cured leaf tobacco prices, the Commission found no evidence of price
agreements and recommended production. curtailment and improvement of marketing
processes and cooperative relations (Report on Marketing of Leaf Tobacco in the FlueCured Districts of the States of North Carolina and Georgia. 54 p., processed,
5/23/31).
Tobacco Prices (Congress).--Inquiries with respect to a decline of loose-leaf
tobacco prices following the 1919 harvest (H. Res. 533, 66th, 6/3/20) and low tobacco
prices as compared with high prices of manufactured tobacco products (S. Res. 129,
67th, 8/9/21) resulted in the Commission recommending modification of the 1911
decree (dissolving the old tobacco trust) to prohibit permanently the use of common
purchasing agencies by certain companies and to bar their purchasing tobacco under
any but their own names (Report of the F. T. C. on the Tobacco Industry, 162 p., o. p.,
12/11/20, and Prices of Tobacco Products, S. Doc. 121, 67th, 109 p., o. p., 1/17/22).
Trade and Tariffs in South America (President).--Growing out of the First PanAmerican Financial Conference held in Washington, May 29, 1915, this inquiry
(referred to F. T. C. 7/22/15) was for the purpose of furnishing necessary information
to the American branch of the International high Commission appointed as a result of
the conference. Customs administration and tariff policy were among subjects
discussed in the Report on Trade and Tariffs in Brazil, Uruguay-Argentina, Chile,
Bolivia, and Peru (246 p., o. p., 6/30/16).
Twine.--See Sisal Hemp and Textiles.
Utilities.-See Power.
War Material Contracts (House), Wartime, 1941-42.--At the request of the House
Committee on Naval Affairs, the Commission assigned economic and legal examiners
to assist in the Committee’s inquiry into progress of the national defense program (H.
Res. 162, 77th, 4/2/41). The Commission’s examiners were active in field
investigations covering aircraft manufacturers’ cost records and operation, naval air
station construction, materials purchased for use on Government contracts, and
industry expansion financing programs.
Wartime Cost Finding (President) 1917-18.--President Wilson directed the
Commission (7/25/17) to find the costs of production of numerous raw materials and
manufactured products. The inquiry resulted in approximately 370 wartime cost
investigations. At later dates reports on a few of them were published,19 including:

Cost Reports of the F. T. C--Copper (26 p., o. p., 6/30/19);Report of the F. T. C. on
Wartime Costs and Profits of Southern Pine Lumber Companies (94 p., o. p., 5/1/22);
and Report of the F. T. C. on Wartime Profits and Costs of the Steel Industry (138 p.,
2/18/25). The unpublished reports 20 cover a wide variety of subjects. On the basis of
the costs as found, prices were fixed, or controlled in various degrees, by Government
agencies such as the War and Navy Departments, War Industries Board, Price Fixing
Committee, Fuel Administration, Food Administration, and Department of
Agriculture. The Commission also conducted cost inquiries for the Interior
Department, Tariff Commission, Post Office Department, Railroad Administration,
and other Government
See footnote 10, p.100.
20 Approximately 260 of the wartime cost inquiries are listed in the F. T. C. Annual Reports, 1918,
pp.29-30, and 1919, pp. 38-42, and in World War Activities of the F. T. C., 1917-18 (69 p., processed,
7/15/40).
19

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945

departments or agencies. It is estimated that the inquiries helped to save the Country
many billions of dollars by checking unjustifiable price advances.
Wartime Inquiries, 1917-18, Continued.--Further wartime inquiries of this period
are described herein under the headings: Coal, Coal Reports-Cost of Production, Cost
of Living, Flags, Food, Farm Implements, Independent Harvester Co., Leather and
Shoes, Paper--Book, Paper--Newsprint, Profiteering, and Textiles--Woolen Rag Trade,
Wartime Inquiries, 1941-45.--To aid in the 1941-45 war program, F. T. C. was
called upon by other Government departments, particularly the war agencies, to use
its investigative legal, accounting, statistical and other services in conducting
investigations. It made cost, price and profit studies; compiled industrial corporation
financial data; investigated compliance by basic industries with W, P. B. priority
orders; and studied methods and costs of distributing important commodities. The
1941-45 wartime investigations are herein listed under the, headings: Advertising as
a Factor in Distribution; Cigarette Shortage; Distribution Methods and Costs; Fertilizer
and Related Products; Food--Biscuits and Crackers; Food--Bread Baking; Food--Fish;
Food--Flour Milling; Household Furniture; Industrial Corporation Reports; MetalWorking Machines; Paperboard; Priorities; Production Cost Accounting; Steel Costs
and Profits; and War Material Contracts.

INDEX
[Index does not include names or items in alphabetical lists, tables, or appendixes. For names
of export trade associations, see p.78; for appropriation items, see p.82; and for titles and
summaries of investigations, 1915-45, see p.94.]
Page
Acme Asbestos Covering & Flooring Co., Chicago
57
Advertising as a factor in distribution, investigation of
3,10
Advertising, false and misleading:
Analysis of
74
Complaints alleging
35
Food, drugs, devices, cosmetics
29, 33, 39, 76
Injunctive proceedings involving
29
Mail-order
73
Newspaper and magazine
73
Orders directed against
39
Radio commercial
73
Stipulations relating to
2, 6, 34, 74
Survey of
72
Advertising, survey of war-related
4, 25
Agriculture, Department of
23, 76
Agriculture, House Committee on
26
American Association of Law Book Publishers, Rochester, N. Y
57
American Bridge Co
56, 59
American Drug Corp., St. Louis
52, 57
American Steel & Wire Co. of New Jersey
37, 56, 59
A. P. W. Paper Co., Inc., Albany, N. Y
52
Arden, Elizabeth Inc., New York
44
Arnold Co.; Ed. W., Logansport, Ind
41
Associated Laboratories, Minneapolis
53
Associated Merchandising Corp., New York
45
Atlantic Packing Co., Philadelphia
53
Attorney General of the United States, The
56, 57
Auburn Die Co., Inc., Auburn, Maine
38
Austelle-Flintom Co., Orangeburg, S. C
44
Ayers, William A., Commissioner
4, 5
Brach & Sons, E. J., Chicago
45
Brewer & Sons, Charles A., Chicago
58
Britt-Mc Kinney Co., Greenville, S. C
44
Buchsbaum&Co., S., Chicago
57
Bureau of Corporations
25
Button jobbing industry, trade practice. rules for
2, 65
California Akali Export Association, Oakland, Calif
56, 80
Caradine Hat Co., St. Louis
43
Carbon Black Export, Inc
79
Carlay Co., The, Chicago
39
Carnegie-Illinois Steel Corp
56, 59
Cartel Committee, Interdepartmental
26
Ceil Malk, Inc., Brooklyn
43
Cement Institute, The, Chicago
53, 57
Chaitt, Benjamin, Elmira, N.Y., and others
42
Charles of the Ritz Distributors Corp., New York
53
Cheramy, Inc., New York
54
Childers Co., H. D., Mobile, Ala
44

Cigarette shortage, investigation of

3, 23
111

112

INDEX

Clayton Act:
Page
Complaints issued under
34, 36
Contempt proceedings under
29
Orders issued under
43
Procedure under
29
References to
1,4,
2 8, 28, 29, 31, 32, 34, 36, 37, 43, 44, 45, 52, 53, 55, 56, 57, 58, 59
Section (see also Robinson-Patman Act)
1,4,
31, 30, 43, 44, 45, 52, 53, 55, 56, 58, 59
Section 3
1, 37, 52, 53, 59
Section 7
1, 8, 32, 37
Section 8
1
Coast Fishing Co., Wilmington, Calif
43
Complaints, formal
2, 34
Congress of the United States, The
2, 6, 8, 9
Coordinator of Fisheries, Office of
3, 14
Corn Products Refining Co., New York
52, 53
Corn Products Sales Co., New York
53
Court cases:
Decided
2, 52
Judgments for civil penalties
2, 52, 57
Pending
57
Petitions for review
52
Davis, Ewin L., Chairman, Federal Trade Commission
4, 5
Dearborn supply Co., Chicago
53, 57
Decker Products Co., Pelham, N. Y
53
Delta Equipment Co., Philadelphia
38
Dietzgen Co., Eugene, New York
56
Duffy Manufacturing Co., J. R., Philadelphia
37
Eastman Kodak Co., Rochester, N. Y
38, 58
Efird, Jasper W., New York, and others
44
Electrical Apparatus Export Association
79
Eversharp, Inc., Chicago
41
Export Trade Act (Webb-Pomerene law):
Congressional inquiries relating to operation of
80
Export associations organized under
3, 34, 77, 78
Investigations under
3, 34, 79
Provisions of
77
References to
1, 3, 4, 5, 28, 34, 56, 77, 79, 80
Federal Trade Commission:
Acts administered by
1, 28
Administrative divisions
5, 6
Appropriations, expenditures and fiscal affairs
82
Cases in Federal courts
2, 52
Chairman
4, 5, 26
Chief counsel
5, 27, 30, 75
Chief economist
26
Chief examiner
5, 27
Chief trial examiner
28
Commissioners
4, 5
Decisions (printed volumes)
6
Director, Division of Trade Practice Conferences
71
Director, Medical Advisory Division
26
Director, Radio and Periodical Division
27, 28
Division of Accounts, Statistics, and Economic Investigations
5
Duties
1, 4
Foreign trade work
5, 77
Hearings for taking testimony
2
Interdepartmental service
25
Investigations, for war agencies
1, 3, 4, 25
Investigations, general
1, 3, 10
Legal activities
1, 2, 27
Legal investigation
27, 30

Legal Investigation Division
Legal Research and Compiling Division
Library Division
Medical Advisory Division

5, 24, 27, 30, 34
6
6
5, 6, 26, 33, 76

INDEX

113

Federal Trade Commission--Continued
Page
Membership on wartime committees
26
Organized
1
Personnel
5
Proceedings suspended because of war
3
Procedure upon formal complaints
28
Procedure, informal
27
Publications
6
Radio and Periodical Division
5, 6, 27, 34, 72
Recommendation to Congress
8
Rules of practice
28, 64, 93
Secretary
5
Statement of policy
34, 93
Stipulations accepted by
2, 34, 74
Trade Practice Conference Division
5, 6, 64, 71
Trial and Appellate Division
5
Trial Examiners Division
5, 6, 34
Federal Trade Commission Act:
Amended
1, 29
Approved
1
Civil penalties under
2, 52, 57
Complaints issued under
34
Orders issued under
34, 37
Procedure under
29
Provisions covering false advertising of food, drugs, devices, and cosmetics
29
References to
1, 4, 6, 28, 29, 30, 33, 34, 36, 52, 57, 59, 72
Section 5
52
Section 6
1, 6
Section 9
82
Section 12
29, 33
Section 15
29
Section 16
57
Text of
85
Types of unfair practices in violation of
45
Wheeler-Lea Amendment to
29, 33
Ferguson, Garland S., Commissioner
4, 5
Firth, Lemuel, Gloucester, Mass., and others
39, 58
Fish, cost of production and distribution in Great Lakes area, investigation of
3, 10, 14
Fish, cost of production and distribution in New England, investigation of
3, 10, 17
Florida Hard Rock Export Association, investigation of
3, 79
Florman & Bro., A. M., New York
44
Food and Drug Administration
76
Foreign Economic Administration
26
Fraering Brokerage Co., New Orleans
44
“Free goods” cases
42
Freer, Robert E., Commissioner
4, 5, 26
Funsten Co., San Francisco
43
Gelb, Joan Clair, New York, and others
54
General Milk Co., Inc
79
General Seafoods Corp., Boston
58
Giljan Medicine Co., Inc., Cincinnati
40
Glover & Wilson, Little Rock, Ark
44
Graphic Arts Club of Charlotte, Inc., Charlotte, N. C
38
Grater-Bodey Co., Norristown, Pa
38
Gulf Oil Corp., Pittsburgh
54
Halfhill Co., L. A., The, Los Angeles
43
Hastings Manufacturing Co., Hastings, Mich
41, 58
Healthaids, Inc., Jersey City, N. J
39
Hearing aid industry trade practice rules for
2, 65
Herzog & Co., Jack, New York
58
Holzbeierlein & Sons, Inc., Washington, D. C
44
Houbigant, Inc., New York
54
Houbigant Sales Corp., New York
54
Howe & Co., Seattle
54

Hutchings Brokerage Co., Mobile, Ala

44

114

INDEX

Independent Offices Appropriation Act
Interior, Department of the
Internal Revenue, Bureau of
Investigations:
Advertising as a factor in distribution
Cigarette shortage
Cost of production and distribution of fish in Great Lakes area
Cost of production and distribution of fish in New England
Milk distribution, prices, spread and profit
War Production Board priority orders, compliance with
Jacobson, Irving Ray, Madison, Wis
Journal of Living Publishing Corp., The, New York
Justice, Department of, the
Kallamann & Co., L. R., Chicago
Key Advertising Co., Inc., the, Cincinnati
Kongo., Chemical Co., New York
Lanteen Laboratories, Inc., Chicago
Leach & Co., G., Reading, Pa
Lekas & Drivas, Inc., New York
Lesch Fine Arts, Rudolf, Inc., New York
Lindlahr, Victor H., New York
Liquid Tight Paper Container Association, Philadelphia
Lottery cases
Low pressure refrigerants industry, trade practice rules for
Maggioni & Go., L. P.,. Savannah, Ga
Manhattan Brewing Co., Chicago
March, Charles H., Commissioner
Marine Products Co., San Diego, Calif
Marquette Cement Manufacturing Co., Chicago
Mason, Lowell B., Commissioner
Mayo Brothers Vitamins, Inc., Los Angeles
Meador & Co., W. M., Inc., Mobile, Ala
Methods and costs of distribution, investigation of
Milk & Ice Cream Can Institute, Cleveland
Milk distribution, prices, spreads and profits, investigation of
Modern Marketing Service, Inc., Chicago
Modernistic Candies, Inc., Chicago
Morton Salt Co., Chicago
Moss, Samuel H., Inc., New York
National Bureau of Standards
National Crepe Paper Association of America, Philadelphia
National Retail Tea & Coffee Merchants Association, Inc., Chicago
Natural Gas Act of 1938
Navy Department, The
O’Brien Machinery Co., The, Philadelphia
O’Mahoney, Joseph C., Senator
Orders to cease and desist
Ox’O-Gas Co., New York
Packers and Stockyards Act
Parke, Austin & Lipscomb, Inc., New York
Parker Pen Co., The, Janesville, Wis
Petroleum Coordinator for War
Phosphate Export Association
Post Institute Sales Corp., New York
Post Office Department, the
Preparatory Training Institute, Trenton, N.J.
President of the United States, the
Price Administration, Office of
Price-fixing and restraint-of-trade cases
Progress Tailoring Co., Chicago
Public Utilities Holding Company Act of 1935
Rainey & Co., J. P., Philadelphia
Rango Tablet Co., Los Angeles

Page
2, 82
3, 14
23
3, 10
3, 23
3, 10, 14
3, 10, 17
3, 10, 11
3, 24
57
39
7
41
40
57
57
57
54
38
39
38
54, 58
2, 65
43
58
4, 5
43
53
4
40
44
3, 10
58
3, 10, 11
55
54
43, 58
55
76
58
39
4
3, 37
38
9
2, 37
58
4
55
41, 58
26
79
55
75
55
2, 4, 69
14, 23, 26
30, 34, 37
58
4
38
57

Razor and razor blade industry, trade practice rules for
Rigid Steel Conduit Association, New York
Robinson-Patman Act (see also Clayton Act, sec. 2)

2, 65
58
1, 4, 28, 31, 36, 43, 56

INDEX

115

Page
Rogers Redemption Bureau, Minneapolis
57
Rohleder, Charles F., Philadelphia
38
Roosevelt, President
9
Rudd Manufacturing Co., New York
42
Savoy Manufacturing Co., New York
58
Scientific Apparatus Makers of America, Surveying-Drafting-Coaters Section of,
Philadelphia
56
Scotch Woolen Mills, Chicago
58
Securities Act of 1933
4
Segal Lock & Hardware Co., Inc., New York
55
Senate Interstate Commerce Committee, chairman of
3, 23
Sheaffer Pen Co., W. A., Fort Madison, Iowa
41
Sherman Antitrust Law
54, 80
Shriver Co., B. F., Westminster, Md
43
Siegel Co., Jacob, Philadelphia
55
Silverman & Associates, J., San Francisco
54, 55
Southgate Brokerage Co., Inc., Norfolk, Va
44, 59
Spicer, William Edgar, Washington, D. C
54
Staley Manufacturing Co., A. E., Decatur, Ill
52, 55
Staley Sales Corp., Decatur, Ill
55
Standard Education Society, Chicago
56
Stetson Felt Mills, St. Paul
56
Stipulations to cease and desist
2, 34, 74
Sulphur Export Corp
79
Supreme Court of the United States
2, 7, 29, 52, 53, 54, 50, 80
Temporary National Economic Committee
8, 9
Tennessee Coal, Iron & Railroad Co
56, 59
Thomson Manufacturing Co., Judson L., Waltham, Mass
59
Todd, J. E., Inc., Kenmore, N.Y.
56
Trade practice rules:
Administration of
65
Group land Group II rules defined
64
Informative labeling provisions of
67
Procedure for establishing
64
Promulgated during fiscal year
2, 65
Purposes of
63
References to
2, 6, 63, 64, 65, 66, 67, 68
Trade practice conferences
63
Types of practices covered in
66
Wartime operation of
25
Treasury Department Committee on Incentive Taxation
26
Tuna industry, revised and extended trade practice rules for
2, 65
Ultra-Violet Products, Inc., Los Angeles
56
United States Alkali Export Association, Inc., New York
56, 80
United States circuit courts of appeals
2, 29, 52
United States district courts
2, 29, 52, 57
United States Maltsters Association, Chicago
59
United States Public Health Service
76
United States Steel Corp
56, 59
Utah Wholesale Grocery, Salt Lake City
39
Vacu-Matic Carburetor Co., Wauwatosa, Wis
59
Vitamin Products Co., Milwaukee
40
Vocational Placement Bureau, Akron, Ohio
54
Von Senden Co., Arthur, Inc., Pittsburgh
42
War Department, the
3
War Food Administration, the
23
War Manpower Commission, the
14, 23
War Production Board, the
1, 3, 4, 6, 23, 24, 25, 26
War Production Board priority orders, investigation of compliance with
3, 24
Water heater industry, trade practice rules for
2, 65
Waterman Co., L. E., New York
41
Webb-Pomerene law (see under Export Trade Act).
Weiss, David M., New York
59

Westinghouse Electric Supply Co., New York

38

116

INDEX

Wheeler-Lea Act:
Page
Approved
29
Injunctive procedure and penalties under
29, 30
Investigations under
33
Provisions contained in
29
References to
29, 33
Wood-cased lead pencil industry, trade practice rules for
2, 65
Wool Products Labeling Act:
Administration of
70, 71
Approved
69
Civil penalties under
29
Complaints issued under
34, 36
Effective date of
69
Enforcement of
70
Exemptions provided in
69
Orders issued under
42
Procedure under
29
Provisions of
69
References to
1, 3, 6, 26, 28, 29, 33, 34, 36, 42, 64, 69, 70, 71
Rules and regulations promulgated under
69
Section 2
69
Section 9
70, 71
Section 14
69
Wartime administration of
26
Zenith Radio Corp., Chicago
57


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102