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ANNUAL REPORT
OF THE

FEDERAL

TRADE COMMISSION
FOR THE

FISCAL YEAR ENDED JUNE 30

1947

UNITED STATES
GOVERNMENT PRINTING OFFICE
WASHINGTON : 1947

FEDERAL TRADE COMMISSION
GARLAND S. FERGUSON, Chairman 1
EWIN B. DAVIS
WILLIAM A. AYRES
ROBERT E. FREER
LOWELL B. MASON
OTIS B. JOHNSON, Secretary
FEDERAL TRADE COMMISSIONERS 1915-47
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. Van Fleet
Charles W. Hunt
William E. Humphrey
Abram F. Myers
Edgar A. McCulloch
Garland 5. Fergus on
Charles H. March
Ewin L. Davis
Raymond B. Stevens
James M. Landis
George C. Mathews
William A. Ayres
'Robert E. Freer
Lowell B. Mason

State from which appointed

Period of service

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
Illinois

Mar.16, 1915-Mar. 18, 1918.
Mar.16, 1915-Jan. 31, 1017.
Mar.16, 1915-May 31, 1918.
Mar.16, 1915-Apr. 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, 1912.
Feb.25, 1925-Oct. 7, 1933.
Aug. 2, 1926-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. 27,1915.
Oct.15, 1945.

EXECUTIVE OFFICES OF THE COMMISSION
Pennsylvania Avenue at Sixth Street, Washington 25, D. C.
BRANCH OFFICES
Room 501, 45 Broadway, New
133 Federal Office Building, Civic
York 6.
Center, San Francisco 2.
1118 New Post office Building
447 Federal Office Building,
433 West Van Buren Street,
Seattle 4.
Chicago 7.
1031 Federal Office Building, 600 South Street, New Orleans 12.

' The Chairmanship rotates annually. Commissioner Freer will become Chairman in January 1948.
II

LETTER OF SUBMITTAL
To the Congress of the United States:
I have the honor to submit herewith the Thirty-third Annual Report of the Federal
Trade Commission for the fiscal year ended June 30, 1947. A limited number of copies
of the report is being printed by the Federal Trade Commission.
By direction of the Commission :
GARLAND S. FERGUSON, Chairman.
III

CONTENTS
INTRODUCTION
Page
1
2
5
6
7
7
8
9
10
12
13

Acts administered by Commission
Industry-wide elimination of unlawful practices
Organizational designations revised
Lunham Trade-Mark Act
Office of Compliance established
Summary of legal activities
General investigations
The Commissioners and their duties
Publications of the Commission
Recommendations to Congress
Minority recommendations to Congress
PART I. GENERAL INVESTIGATIONS
The present trend of corporate mergers and acquisitions
The copper industry, parts I and II
The sulphur industry and international cartels
The wholesale baking industry, part II
Economic effects of grain exchange actions
Growth and concentration in flour-milling industry
Reports on industrial operations

14
18
21
25
26
27
29

PART II. GENERAL LEGAL WORK
Description of procedure
Procedure upon applications for complaint
Procedure upon formal complaints
Provisions of Wheeler-Lea amendment
Legal investigations
Survey of radio and periodical advertising
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

35
35
36
37
38
44
47
47
48
52
59
62

PART III. SETTLEMENT OF CASES BY STIPULATION
Agreements on corrective action result from informal conferences with businessmen 65
PART IV. TRADE PRACTICE CONFERENCES
Establishment and administration of trade practice rules for industnes
Group I and Group II rules explained
Conference and r e making activities during year
Pending trade practice proceedings
Administration of rules
Types of practices covered in promulgated rules
Informative labeling

67
67
68
70
71
72
74
V

VI

CONTENTS
PART V. WOOL PRODUCTS LABELING ACT
Page

Informative labeling for protection of industry and the public

76

PART VI. MEDICAL AND SCIENTIFIC OPINIONS
Data utilized by Commission in cases relating to food, drugs, devices, and cosmetics 79
PART VII. FOREIGN TRADE WORK
Export Trade Act
Associations operating under the act
New associations
Exports in 1946
Inquiries and recommendations
Trust laws and trade regulation abroad

80
80
82
82
82
84

PART VIII. FISCAL APPAIRS
Appropriation acts providing funds for Commission work
Appropriations and expenditures for fiscal year
Detailed statement of costs for fiscal year
Appropriations and expenditures, 1915-47

87
87
88
89

APPENDIXES
Federal Trade Commission Act
Titles of other acts administered by the Commission
Rules of practice
Statement of policy
Investigations, 1915-47
Index

91
99
101
119
123
141

ANNUAL REPORT
OF THE

FEDERAL TRADE COMMISSION
FOR THE

FISCAL YEAR ENDED JUNE 30, 1947
INTRODUCTION
ACTS ADMINISTERED BY THE COMMISSION
The Federal Trade Commission herewith submits its report for the fiscal year July
1, 1940, to June 30, 1947.
The Commission, an administrative agency, was organized March 16, 1915, under
the Federal Trade Commission Act which was approved September 26, 1914. It was
the intent of the Congress in the passage of the Federal Trade Commission Act to
create an independent agency which would assist in the successful operation and
perpetuation of free enterprise and the competitive system of economy.
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.
The legal activities of the Commission have largely to do with the prevention and
correction of “unfair methods of competition” in accordance with section 5 of the
Commission’s organic act, and’ with the prevention of “unfair and deceptive acts and
practices” in accordance with the Wheeler-Lea amendment of March 21, 1938, to the
organic act. The phrase “unfair methods of competition” is not defined in the act. In
the first case in which the Supreme Court had occasion to consider this language,
namely, F. T. C. v. Gratz, 253 U. S. 421, the Court associated with the phrase those
practices “opposed to good morals because characterized by deception, bad faith fraud,
or oppression, or as against public policy because of their dangerous tendency unduly
to hinder competition or create monopoly.”
The Wheeler-Lea amendment broadens the organic act by charging the Commission
with the duty of preventing unfair and deceptive acts’ so as to extend the same
protection to the consuming public that the original act extended to competitors. The
Commission does not concern itself with purely private competitive controversies.
Under the organic act it is empowered to proceed only as it appears to the Commission
that the particular proceeding would be “to the interest of the public.”
1

2

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

Other legal activities of the Commission embrace administration of (l) 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; (2) the Export Trade Act also known as the Webb-Pomerene Law, which
permits the organization of associations to engage exclusively in export under stated
restrictions; (3) 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; and (4) those sections of the Lanham TradeMark Act which delegate to the Commission certain duties with respect to the
cancellation of trade-marks registered with the Patent Office. (This act became
effective July 5, 1947.)
The general investigations arise chiefly under section 6 (a), (b), (d), and (h) 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.
(b) To require, by general or special orders, corporations engaged in commerce, excepting
banks, and common carriers * * * to file with the Com mission 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.
(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,
and with such recommendations as it deems advisable.

INDUSTRY-WIDE ELIMINATION OF UNLAWFUL PRACTICES
On August 12, 1946, the Commission put into effect a reorganization plan designed
to expedite observance of the laws under its jurisdiction by emphasis upon industrywide simultaneous action and by expanding the cooperative phases of its work.
Under the program greater emphasis will be placed on the elimination of unfair trade
practices through cooperative means. In those instances where circumstances permit,
industry members will be given an opportunity to eliminate unfair methods of
competition or unfair or deceptive practices though stipulation agreements to cease and
desist or through the establishment of trade practice rules. Heretofore trade practice
conferences have been held only when the Commis1
The Independent Offices Appropriation Act of 1934 provided that future investigations by the
Commission for Congress must be authorized by concurrent resolution of the two Houses. Under the
Appropriation Act of 1948, 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 of such resolution to finance the cost of such investigation.”

ELIMINATION OF UNLAWFUL PRACTICES

3

sion received a request for rules from an industry. The Commission now plans to
initiate these conferences on its own motion where this means of eliminating unfair
trade practices appears appropriate. This action by the Commission should permit
more prompt, equitable, and economical settlement of the issues involved than is
otherwise possible.
However, no matter is disposed of by voluntary agreement through trade practice
conference or stipulation which involves violation of the Clayton Act, combination or
collective action in restraint of trade, or practices which are fraudulent or inherently
dangerous to health.
In accordance with this program the Commission directed its Office of Legal
Investigations to conduct industry-wide investigations in the following industries :
masonry waterproofing materials, household fabric dye, cosmetic and toilet
preparations, mothproofing products, simulated and Cultured pearls, manufacturers of
machine knives for paper-cutting machines, textile looms, automobile dealers (District
of Columbia), automobile dealers (New York City), manufacturers of cotton textiles,
and liquid emulsion floor wax products.
The investigations covering the masonry waterproofing products, household fabric
dye, cosmetic and toilet preparations, and moth-proofing products industries were
completed. They involved surveys of the business practices of 182 companies. The
other industry-wide investigations were in progress at the close of the fiscal year.
Trade practice rules were promulgated by the Commission for the masonry
waterproofing products industry and the household fabric dye industry. A trade
practice conference was held for the cosmetic and toilet preparations industry with a
view to establishing trade practice rules. Trade practice rules also were promulgated
during the year for seven other industries (see p. 68) in which the conference
proceedings had been initiated before the Commission’s reorganization plan was
operating.
Under the program emphasis also is placed on the settlement of cases through the
Commission’s stipulation procedure which permits the elimination of certain unfair
trade practices through cooperative means. Since the Commission established the
Division of Stipulations in August 1946, it has approved during the fiscal year 120
voluntary agreements to cease and desist from unlawful practices. (See p.65.)
The Commission’s organization at the close of the fiscal year consisted of the
following offices and divisions :
Office of the General Counsel.--The function of handling the Commission’s cases
which are previewed by the courts after decision by the Commission is performed by
the General Counsel, an Associate General Counsel and an Assistant General Counsel,
with the necessary assisting attorneys.
Coordination and handling of all matters relating to compliance with and
enforcement of orders to cease and desist are handled in the Office of the General
Counsel under the Supervision of an Assistant General Counsel, with the necessary
assisting attorneys.
The function of handling cases arising under the Lanham TradeMark Act (see p.6)
is performed by the General Counsel and an Assistant General Counsel, with the
necessary assisting attorneys.
The General Counsel also acts as the principal legal adviser to the Commission on
the applicable law, precedent, or policy in a wide variety of matters.

4

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

Effective July 1, 1947, the Commission separated the Office of the Chief Trial
Counsel from the Office of the General Counsel. This action was a continuance of the
policy of separating the Commission’s advisory and prosecution functions.
Office of the Chief Trial Counsel.--The function of preparing, trying, briefing and
arguing complaints in litigated cases is a prosecuting function which is performed by
a staff of attorneys who work under the supervision of the Chief Trial Counsel and two
Assistant Chief Trial Counsel. Neither they nor any of the attorneys performing such
function in a particular case or in a factually related one participate or advise in the
decision of such case except under the same conditions that are applicable to attorneys
representing the respondent therein and which conditions are set forth in the
Commission’s published Rules of Practice. (See p.101.) Administration of the Export
Trade Act is conducted by the Export Trade Office under a third Assistant Chief Trial
Counsel.
Office of Legal Investigations.--The legal investigational activities of the
Commission are conducted through its Office of Legal Investigations, the active
operating units being the Legal Investigations Division and the Radio and Periodical
Division. The Director of the Office of Legal Investigations is responsible for the
coordination of the legal investigational activities so there will be no conflict of jurisdiction or duplication of work between the divisions attached to his office. He also is
responsible for the initiation, through the Commission, of industry-wide investigations
whenever it appears that simultaneous action against all members of an industry is
warranted in the public interest and this type of treatment appears practicable.
Division of Stipulations.--All matters considered appropriate for settlement by the
Commission’s stipulation procedure are referred to the Division of Stipulations for the
negotiation of agreements to cease and desist from unlawful practices. The division
takes no part in the investigation or prosecution of an y matter. It consists of a Director, an Assistant Director and a staff of attorney-conferees. (See p. 119 for the
Commission’s policy on disposing of cases by stipulation.)
Office of Trade Practice Conferences and Wool At Administration.--Rules for the
elimination and prevention of unfair trade practices on an industry-wide basis are
established by the Commission under its trade practice conference procedure, the
requirements for which are set forth in the Commission’s published Rules of Practice
and Statement of Policy. (See pp.114 and 119.) This work is conducted by the
Commission through the staff of the Office of Trade Practice Conferences and Wool
Act Administration, which also ad-ministers the Wool Products Labeling Act of 1939
and the rules and regulations issued thereunder. These activities are under the
supervision of a Director who is principal adviser to the Commission in such matters;
an Associate Director; and three Assistant Directors in charge, respectively, of the
Rule Making Division, the Rule Administration Division, and the Wool
Administration and Inspection Division.
Duties of the office include the holding of trade practice conferences for industries
and hearings on proposed trade practice rules, administration and enforcement of
approved rules, and other work incident to the trade practice conference procedure.

ORGANIZATIONAL DESIGNATIONS REVISED

5

In the work of carrying out the provisions of the Wool Products Labeling Act, the
office closely integrates the administration of such statute with related trade practice
rules in order that unified action and more adequate coverage of the textile field may
be accomplished.
Trial Examiners Division.--The Trial Examiners Division consists of a Chief Trial
Examiner, an Assistant Chief Trial Examiner and a staff of attorneys designated trial
examiners who are charged with the trial of issues under the various acts administered
by the Commission.
The Administrative Procedure Act, a p proved by the President June 11, 1946, in
some particulars involves a departure from the former trial procedure. It segregates
authority and vests in the trial examiner certain powers heretofore administered by the
Commission and provides for a recommended decision by the trial examiner that
becomes a part of the record. The powers and duties of trial examiners are set forth in
the Commission’s Rules of Practice. (See p.106.)
Office of Industrial Economics, formerly called Office of Accounts, Statistics and
Economic Reports.--This Office conducts the general economic investigations of the
Commission as distinguished from those primarily legal in nature. The work of the
Office and its three divisions is in charge of a Director, who also is Chief Economist;
a Chief Accountant, a Chief Statistician and an Assistant Chief Economist, who are
Assistant Directors of the Division.
The purposes of the general surveys conducted by this Office are to ascertain and
report the facts to the President or to the Congress concerning general economic
conditions, the state of competition and the degree of concentration in a given industry,
together with suggestions for remedial legislation. The surveys are made in response
to the request of the President, at the direction of the Congress, or upon the initiative
of the Commission, as provided in section 6 of the Federal Trade Commission Act.
(See p.2.)
As a regular part of its work the Office is called upon to advise and consult with the
Commission’s attorneys and to prepare accounting, economic and statistical analyses
in connection with legal cases.
Medical Advisory Division.--The Medical Advisory Division furnishes the
Commission or any of its offices or 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. Through the Director of
the Division the Commission maintains contact with the Government agencies
concerned with such products.
Administrative Services.--The Administrative services of the Commission are
rendered by the following divisions : Planning and Budget; Personnel; Research,
Compiling and Publication; Legal Records; Economic and Administrative Records;
Library; and Services and Supplies.
ORGANIZATIONAL DESIGNATIONS REVISED
On October 24, 1947, the Commission revised its organizational designations in
accordance with recommendations of the United States Senate Committee on
Expenditures in the Executive Departments and

6

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

to conform to the Committee’s proposals made in Senate Report No.243 with
respect to the standardization of organizational nomenclature for Government
departments. The new organizational designations are listed below, but elsewhere
throughout this Annual Report the designations employed are those which were in
use during the 1947 fiscal year and up to October 24, 1947:
General Counsel (formerly Office of General Counsel).
Division of Appellate Proceedings.
Division of Compliance.
Division of Trade-Marks
Bureau of Litigation (formerly Office of Chief Trial Counsel).
Division of Anti-Monopoly Trials.
Division of Deceptive Practices Trials.
Division of Export Trade.
Bureau of Legal Investigation (formerly Office of Legal Investigations).
Division of Field Investigation.
Division of Radio and Periodical Advertising.
Bureau of Trial Examiners (formerly Trail Examiners Division).
Bureau of Stipulations (formerly Division of Stipulations).
Bureau of Medical Opinions (formerly Medical Advisory Division).
Bureau of Trade Practice Conferences and Wool Act Administration (formerly
Office of Trade Practice Conferences and Wool Act Administration).
Division of Rule Making.
Division of Rule Administration.
Division of Wool Administration and Inspection.
Bureau of Industrial Economics (formerly Office of Industrial Economics).
Division of Economics.
Division of Accounting.
Division of Statistics and Financial Reports.
Bureau of Administration (formerly Administrative Services).
Division of Budget and Planning.
Division of Personnel.
Division of Research, Compiling and Publications.
Division of Legal Records.
Division of Economic and Administrative Records.
Library.
Division of Services and Supplies.
The Commission assigned the title of “Director” to the heads of Bureaus and the
title of “Chief” to the heads of Divisions.
LANHAM TRADE-MARK ACT
The Lanham Trade-Mark Act of 1946, which became effective July 5, 1947,
authorizes the Federal Trade Commission to apply to the Commissioner of Patents for
cancellation of the registration of trade-marks on the principal register which are
deceptive, immoral or scandalous, or which have been obtained fraudulently or are in
violation of the other stated provisions of the act.

SUMMARY OF LEGAL ACTIVITIES DURING FISCAL YEAR

7

On July 1, 1947, a Trade-Mark Division was established in the Office of the General
Counsel to perform the duties assigned to the Commission by the new legislation. The
division is under the supervision of an Assistant General Counsel.
OFFICE OF COMPLIANCE ESTABLISHED
On March 18, 1947, the Commission established the Office of Compliance to advise
it with respect to the manner and form of compliance with orders to cease and desist
and to coordinate, supervise and report to the Commission on all matters involving
compliance and enforcement of such orders. This office has the responsibility for
securing initial reports of compliance with orders and of such supplemental reports of
compliance as may be required; planning and requesting investigations of the manner
and form in which respondents are complying with orders, and supervising and
preparing civil penalty proceedings certified to the Attorney General.
The Office of Compliance is under the supervision of an Assistant General Counsel
in the Office of the General Counsel.
SUMMARY OF LEGAL ACTIVITIES DURING FISCAL YEAR
The Commission issued 53 formal complaints alleging violations of the laws it
administers; entered 56 orders directing respondents to cease and desist from such
violations; and accepted 145 stipulations to discontinue unlawful practices.
There were 28 cases in the United States Supreme Court and Circuit Courts of
Appeals in which the Commission was a party. Rulings favorable to the Commission
were obtained in 16 cases, 5 in the Supreme Court and 11 in United States Circuit
Courts of Appeals. Decisions of circuit courts of appeals affirmed 6 Commission
cease and desist orders (1 with modification and 1 with a dismissal as to 1 respondent);
dismissed 3 petitions to review, leaving the Commission’s orders to cease and desist
in effect; denied a petition to enjoin a Commission proceeding; and remanded 1
proceeding at the request of the Commission to enable it to reinstate an order to cease
and desist. The Supreme Court denied respondents’ petitions for certiorari in 4 cases
and granted the Commission’s petition for certiorari in 1 case. Three Commission
orders to cease and desist were set aside by circuit courts of appeals. Of these, 1 was
appealed to the Supreme Court and petition for rehearing is pending as to another. One
civil penalty action brought in a district court by the Attorney General for violation of
a Commission order to cease and desist resulted in a judgment of $38,000 against the
respondents. (A detailed report of Commission cases m the Federal courts begins at
p.59.)
Trade practice rules were promulgated for the following nine industries : household
fabric dye, masonry waterproofing, vertical turbine pump, saw and blade service, doll
and stuffed toy, piston ring, construction equipment distributing, wholesale
confectionery (Philadelphia trade area), and watch (respecting the terms “waterproof,”
“shockproof,” “nonmagnet” and related designations, as applied to watches, watch
cases, and watch movements).
In the administration of the Wool Products Labeling Act, field inspections were
made of several million articles subject to the labeling

8

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

provisions of the act, covering the labeling practices of over 7,500 manufacturers,
distributors, and other marketers.
The Commission conducted several investigations into the operation of export
associations organized under the Export Trade Act. Investigations of the Sulphur
Export Corporation and the Export Screw Association of the United States were
completed, and recommendations for the readjustment of the business of the
associations were issued. At the close of the fiscal year, 49 export associations were
registered with the Commission.
GENERAL INVESTIGATIONS
The Commission completed six general investigations during the fiscal year and
transmitted reports thereon to Congress under the following titles:
(1) The Present Trend of Corporate mergers and Acquisitions.
(2) The Copper Industry, Part I--The Copper Industry of the United States and
lnternational Copper Cartels; and Part Il-Degree of Concentration in Domestic
Copper Industry at End of 1945.
(3) The Sulphur Industry and International Cartels.
(4) The Wholesale Baking Industry, Part Il--Costs, Prices and Profits.
(5) Economic Effects of Grain Exchange Actions Affecting Futures Trading During
the First Six Months of 1946.
(6) Growth and Concentration in the Flour-Milling Industry.
Investigations nearing completion at the close of the fiscal year dealt with such
subjects as the recent trend of manufacturer-controlled retail prices; costs and profits
in the fertilizer industry; mergers in the dairy industry; and the effect of production and
distribution policies of large concerns on small business in the farm implement and
steel industries.
The Commission also resumed its peacetime function of collecting summarizing and
analyzing the financial operating statements of American manufacturing corporations.
Information to be made public on the basis of the financial operating data collected
will be combined in the form of industry totals and averages and will not disclose the
identity of any individual corporations. The first of these industrial financial reports,
covering the first three months of 1947, was near completion at the close of the fiscal
year. The Securities and Exchange Commission collaborated with the Federal Trade
Commission in assembling and publishing the industry summaries.
During its existence the Commission has conducted more than 140 general
investigations and 370 cost studies.2 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

2 An alphabetical list and brief of description of the investigations conducted by the Commission appear
in the appendix, beginning at p. 123.

THE COMMISSIONERS AND THEIR DUTIES

9

Trade Act the Packers and Stockyards Act, the Securities Act of 1933, the Stock
Exchange Act of 1934, the revised Federal Power Commission Act of 1934, the Public
Utilities Holding Company Act of 1935, the Natural Gas Act of 1938, and the
Robinson-Patman Antidiscrimination 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 8 last preceding his
appointment, except when he 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, 1947, the Commission was composed of the following members :
Garland S Fergus on, Democrat, of North Carolina, Chairman; Ewin L. Davis,
Democrat, of Tennessee; William A. Ayres, Democrat, of Kansas; Robert E. Freer,
Republican, of Ohio; and Lowell B. Mason, Republican, of Illinois.
The Chairmanship of the Commission rotates annually among its members.
Commissioner Fergus on is serving as Chairman during the calendar year 1947, having
succeeded Commissioner Ayres. Commissioner Freer will become Chairman in
January 1948. Through this method of rotation, each Commissioner serves as
Chairman at least once during his 7-year 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 is assigned to supervisory charge
of the work of one or more of the several offices, divisions and internal organizations
into which the Commission is divided. Supervision over the individual groups is
rotated annually. The following assignments of Commissioners were effective during
part of the fiscal year and continued through December 31, 1947:
Chairman Fergus on: Executive Office of the Commission (Office of the Secretary
and Administrative Divisions), and Special Legal Assistants to the Commission.
Commissioner Davis: Office of Legal Investigations and Medical Advisory Division.
Commissioner Ayres: Office of Trade Practice Conferences and Wool Act
Administration and Division of Stipulations.
Commissioner Freer: Office of General Counsel and Office of Chief Trial Counsel.
Commissioner Mason : Office of Industrial Economics and Trial Examiners
Division.

3

September 26 marks the anniversary of the approval of the Federal Trade Commission Act in 1914.

10

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

The Secretary is the Executive Officer of the Commission and is responsible for its
administrative management.
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 all
hearings 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, 1947 numbered 603 officials and employees, including attorneys,
economists, accountants, and administrative personnel stationed in Washington and
in 5 branch offices.
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 to 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.

Publications issued during the fiscal year were :
Annual Report of the Federal Trade Commission for the Fiscal Year Ended June 30,
1946. House Document No.8, Eightieth Congress first session, January 3, 1947; 125
pages. Available from the superintendent of Documents, Government Printing Office,
at 25 cents a copy while the supply lasts.
Trade Practice Rules for the following industries : Piston Ring Industry, July 12,
1946, 10 pages; Construction Equipment Distributing Industry, July 20, 1946, 7 pages;
Wholesale Confectionery Industry (Philadelphia Trade Area), July 30, 1946, 9 pages;
Masonry Waterproofing Industry, August 31, 1946, 15 pages; Saw and Blade Service
Industry, December 27, 1946, 9 pages; Respecting the Terms “Water-proof,”
“Shockproof,” “Nonmagnetic,” and Related Designations, as Applied to Watches,
Watch Cases, and Watch Movements, April 24, 1947, 7 pages; Household Fabric Dye
Industry, May 29, 1947, 12 pages; Vertical Turbine Pump Industry, June 17, 1947 9
pages; and Doll and Stuffed Toy Industry, June 28,1947,8 pages. All rules available
from Federal Trade Commission without charge while the supply lasts.
Trade Practice Rules, September 1, 1935, to June 30, 1945; a 488 compilation.
Available from the Superintendent of Documents, government Printing Office, at 75
cents a copy while the supply lasts.
Wholesale Baking Industry, Part II, Costs, Prices and Profits, August 7,1946; 137
pages. Available from the Superintendent of Documents, Government Printing Office,
at 35 cents a copy while the supply lasts. A processed summary is available from
Federal Trade Commission without charge while the supply lasts.
Economic Effects of Grain Exchange Actions Affecting Futures Trading During the
First Six Months of 1946, February 4, 1947, 85 pages. Available from Federal Trade
Commission without charge while the supply lasts.

PUBLICATIONS OF THE COMMISSION

11

The Present Trend of Corporate Mergers and Acquisitions, March 7,1947; 23 pages.
Available from the Superintendent of Documents, Government Printing Office, at 10
cents a copy while the supply lasts.
The Copper Industry, Part I, The Copper Industry of the United States and
International Copper Cartels, and Part II, Degree of Concentration in Domestic
Copper Industry at End of 1945, March 11, 1947; 420 pages Available from the
Superintendent of Documents, Government Printing Office, at $1.25 a copy while the
supply lasts. A processed summary is available from Federal Trade Commission
without charge while the supply lasts.
Growth and Concentration in the Flour-Milling Industry, June 2, 1947; 36 pages.
Available from the Superintendent of Documents, Government Printing Office, at 25
a copy while the supply lasts. A processed summary is available from Federal Trade
Commission without charge while the supply lasts.
The Sulphur Industry and International Cartels, June 16,1947; 105 pages. Available
from the Superintendent of Documents, Government Printing Office, at 25 a copy
while the supply lasts. A processed
summary is available from the 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 back-ground 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 39 volumes of Federal Trade Commission Decisions contain (1) the findings
of fact and orders to cease and desist issued by the Commission throughout the
years; (2) the stipulations accepted by the Commission wherein respondents 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 are published
from time to time in separate volumes and may be purchased from the
Superintendent of Documents, Government Printing Office.
767228--48----2

12

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

The trade practice rules, the Wool Products Labeling Act and the regulations
thereunder, and the Rules of Practice be ore the Com mission are published in
pamphlet form and may be obtained from the Commission without charge.
RECOMMENDATIONS TO CONGRESS
On March 4, 1947, the Commission addressed to the Congress a special report
pursuant to the statutory direction contained in section 6 (f) of the Federal Trade
Commission Act that it recommend to Congress additional legislation. This report
pointed out the recent increase in the trend toward corporate acquisitions and mergers
and recommended to the Congress that section 7 of the Clayton Act be amended to
prevent acquisition of physical assets as well as corporate stock where the effect may
be substantially to lessen competition in interstate commerce. Similar
recommendations have been made to the Congress in the Commission’s Annual
Reports for many years.
A Bill embodying the substance of the Commission’s recommendations for
amendment of section 7 of the Clayton Act was introduced in the present Congress (H.
R. 3736, 80th Congress) and favorably reported to the House of Representatives by the
Committee on the Judiciary (House Report No.596). The Commission renews its recommendation that legislation be enacted which will enable the Commission to deal
effectively with this problem of curbing corporate mergers and acquisitions which
restrict commerce.
The following chart demonstrates the sharp increase in the corporate merger
movement over the period from 1919 to date :

[GRAPHIC]

MINORITY RECOMMENDATIONS

13

The Commission also submits for consideration of the Congress the recommendation
that the Clayton Act be amended to provide that orders to cease and desist entered
thereunder shall become final in the same manner as do similar orders to cease and
desist under the Federal Trade Commission Act.
As enacted in 1914, the Federal Trade Commission Act provided that orders to cease
and desist should become final only after affirmance in one of the Circuit Courts of
Appeals and following a decree of the court embodying the Commission’s order. There
were no penalties provided for violation of orders to cease and desist and they could
only be enforced finally by way of criminal contempt proceedings in the circuit courts
for violation of court orders.
In the Wheeler-Lea Act of 1938, section 5 of the Federal Trade Commission Act was
amended to provide that orders to cease and desist under that act should become final
at the expiration of 60 days from service of the order unless appeal is taken to the
courts. Thereafter violations of final orders to cease and desist are subject to civil
penalty proceeding brought by the Attorney General in the United States District
Courts.
There appears to be no substantial reason why orders under the Clayton Act should
not have the same status as to finality and as to penalties for violation as similar orders
under the Federal Trade Commission Act.
MINORITY RECOMMENDATIONS
Commissioner Mason submits individually two minority proposals as follows :
“1. That the Commission recommend to Congress legislation which will promote the
cooperative elimination upon an industry-wide basis of acts and practices prohibited
by the statutes administered by the Commission by giving trade practice conference
procedure and rules a clear statutory basis, by facilitating the acquisition of the
information necessary to the initiation and conduct of such conferences, by affording
an opportunity for cooperation by the Department of Justice and the Department of
Commerce in the initiation of trade practice conferences and in the formulation of the
rules to be promulgated, by providing means whereby the Attorney General may stay
the initiation of a conference for a particular industry when he is of the opinion that
the public interest does not at that time warrant the holding of such conference and
whereby he may test the legality of things done in actual compliance with any rule as
finally promulgated if the Commission denies his request to modify or repeal such
rule, and by encouraging compliance with rules as finally promulgated by protecting
signatories thereto from suits under the antitrust laws for actual compliance with the
rules during the time they are in effect, except as to a proceeding in equity by the
Attorney General for things done in compliance with a rule after due notice.
“2. That the Federal Trade Commission Act be amended so that the Act provides for
an executive director or administrator responsible to Commission for administrative
leadership, that the Chairman be designated by the President, and that the
Commissioners’ compensation be increased.”

PART I. GENERAL INVESTIGATIONS
During the fiscal year 1947 the Commission completed and transmitted to Congress
the following reports 1 which presented the results of general investigations :
The Present Trend of Corporate Mergers and Acquisitions.
The Copper Industry, Parts I and II.
The Sulphur Industry and International Cartels.
The Wholesale Baking Industry, Part II.
Economic Effects of Grain Exchange Actions Affecting Futures Trading During the
First Six Months of 1946.
Growth and Concentration in the Flour-Milling Industry.
In addition, the Commission, with the cooperation of the Securities and Exchange
Commission, completed a combined compilation, by industry groups, of the financial
operating statements of approximately 5,500 manufacturing corporations for the first
three months of 1947. The reports, which were not ready for publication until after the
close of the fiscal year, disclose the relationship between investments, sales, costs and
profits for the period covered.
Other reports in course of preparation at the close of the fiscal year dealt with studies
of the trend of manufacturer-controlled retail prices; costs, profits and practices in the
fertilizer industry; the effect of production and distribution policies of large concerns
on small business in the farm implement industry and the steel industry; and mergers
in the dairy industry.
The Commission also presented extensive data on mergers and acquisitions before
subcommittees of the Senate and House Judiciary Committees which were considering
proposed amendments of section 7 of the Clayton Act, to give the Commission power
to prevent acquisitions of assets generally similar to its present power over acquisitions
of stock. Detailed information was submitted on the extent of mergers in steel drums,
in liquor, and in manufacturing generally. The Commission also presented evidence
to the Senate Small Business Committee on the effect of integration by the large steel
producers upon the supply of steel available for small business.
THE PRESENT TREND OF CORPORATE MERGERS AND
ACQUISITIONS
The Commission’s major interest in its general investigation work during the year
centered around the problem of the increase in the concentration of economic power.
Most of the individual industry studies, as listed above, have been focused on this
central problem of monopoly. The Commission’s attitude was summarized in a special
report submitted on July 1, 1946, to the Monopoly Subcommittee of the House Select
Committee on Small Business, in which it stated :

Summaries of the complete reports listed may be obtained from the Commission while the supply
lasts.
1

14

CORPORATE MERGERS AND ACQUISITIONS

15

In the opinion of the Commission, the present, and still growing, concentration of economic
power in the United States constitutes today’s greatest domestic challenge to the American
theory of competitive enterprise, and, along with it, all that is embodied in the meaning of the
somewhat intangible, but nonetheless real, meaning of the “American way of life” and “freedom
of economic enterprise.”

Concentration has made its most notable advances in the United States through
mergers and acquisitions. Unless the resulting consolidations possess nearly complete
control of an industry and, in addition, follow unlawful practices, they have been held
by the courts to be legal. This immunity from the antitrust laws stems partly from the
loophole which exists in section 7 of the Clayton Act. In passing that law in 1914,
Congress intended “to arrest the creation of trusts, conspiracies, and monopolies in
their incipiency.” 2
As passed by Congress, the law granted the Commission power to prevent
acquisitions of competing companies which would substantially lessen competition or
tend to create a monopoly, if the acquisitions took the form of the purchase of stock.
However, the act was silent on the acquisition of assets. Consequently, the intent of
the law has easily been evaded for over three decades by the simple process of
purchasing assets rather than stock. Moreover, the Commission’s powers to prevent
acquisitions of stock have been rendered practically null and void by decisions of the
Supreme Court, which permitted such acquisitions of stock to take place if they are
followed by acquisitions of assets before the Commission is able to enter an order of
divestiture. As a result, when the Commission tries to prevent acquisitions which take
the form of purchases of stock, it usually finds that the acquiring company purchases
the assets, thereby removing the case from the field of possible action by the
Commission.
In order to determine the impact of mergers and acquisitions which took place during
and after World War II, the Commission made a study of the merger movement
covering the period January 1940 through December 1946. The report, entitled The
Present Trend of Corporate Mergers and Acquisitions, was transmitted to Congress,
March 7, 1947.
In this study it was found that between 1940 and 1946 over 1,800 formerly
independent competitive firms in the manufacturing and mining industries alone
disappeared as a result of mergers and acquisitions. That these recent acquisitions have
already had a significant effect upon the structure of the economy is indicated by the
fact that the asset value of the concerns acquired amounted to $4.1 billion, or nearly
5 percent of the total asset value of all manufacturing corporations in 1943--the latest
year for which such data are available. The merger movement was particularly
pronounced following VJ-day. In the fourth quarter of 1945 it reached the highest level
in the last 15 years.
The increase in the merger movement following VP-day parallels very closely the
sharp upward movement that took place at the end of World War I. The wave of
mergers and acquisitions at the end of the First World War extended through 1919,
1920 and the early part of 1921, until it was interrupted by the postwar depression. The
movement was greatly accelerated in the middle 1920’s and carried to all-time heights
in 1928 and 1929.

2

Report of the senate committee on the Judiciary, January 22, 1914.

16

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

During wartime there is little incentive for large corporations to acquire small
businesses. New facilities which are needed to produce war products are supplied in
large part by the Government. However, as victory looms in sight, and the elements
of competition and control over markets again become important, there occurs a
revival of interest in mergers and acquisitions. Furthermore, big corporations generally
emerge from war periods with large amounts of liquid funds which can be used to
support intensive merger activity. At the end of 1945, the 62 largest listed
manufacturing corporations held $8.4 billion of net working capital, which was largely
in highly liquid form. This amount was sufficient to purchase the assets of nearly 90
percent of the total number of all other manufacturing corporations in the United
States. Thus the large corporations have sufficient funds to support a high level of
merger activity for years to come, particularly in those industries in which small
business still continues to occupy an important position.
The greatest number of acquisitions took place in the food, textile and apparel,
chemicals, nonelectrical machinery, and transportation equipment industries. The
acquisitions in the last field represented largely the absorption of firms in the warexpanded aircraft industry. A considerable number of acquisitions also took place in
petroleum and coal products, primary metals, and beverage industries.
A particularly striking feature of the current merger movement is the importance of
acquisitions in several of the traditionally “small business” industries. More than onethird of the total number of acquisitions were accounted for by only three industries,
namely, food nonelectrical machinery, and textiles and apparel-all predominant; “small
business” fields.
This importance of the merger movement in “small business” industries is strikingly
illustrated by recent developments in the steel drum, tight cooperage, and wine
industries, each of which customarily has been regarded as a stronghold of small
business. By means of acquisitions, the giant steel corporations have increased their
owner-ship of steel drum fabricating capacity from less than 10 percent before the war
to 87 percent at the time the study was made. Similarly, the big distillers moved into
the “small business” fields of tight cooperage and wines. Ten independent tight
cooperage fir ms, representing virtually the country’s entire capacity, were absorbed
by large distillers during 1945-46. Likewise, as a result of the purchase of many
leading California wineries and several wine distributing houses, the distillers gained
possession of nearly one-fourth of the country’s wine storage capacity and about 50
percent of all the aging wines.
The logical counterpart of this characteristic of the current merger movement is the
relatively small number of acquisitions which have taken place in the more highly
concentrated industries, such as automobiles, tobacco, and rubber products. This, of
course, reflects the small number of small businesses still available for purchase in
such industries.
One of the outstanding characteristics of the current merger movement lies in the
fact that most of the actions have consisted of the acquisition of small companies by
large corporations.
Nearly one-third (32 percent) of the companies merged since 1940 were absorbed
by the very largest corporation those with assets

CORPORATE MERGERS AND ACQUISITIONS

17

exceeding $50 million. Another 41 percent of the total were taken over by
corporations with assets ranging from $5 million to $49 million. Hence, nearly
three-fourths of the total number of firms acquired during this period were absorbed
by larger corporations with assets of over $5 million At the other end of the scale,
the distinctly small firms, those with less than $1 million of assets, have made only
11 percent of the acquisitions.
The largest firms, those with assets of $50 million and over, acquired an average
of some four firms each, while the smallest acquiring firms, those with assets of
under $1 million, acquired an average of less than one and a half firms each.
The predominant role of the giant corporations in this current merger movement
is strikingly illustrated by the fact that since 1940, 71 out of the 100 largest
manufacturing corporations bought up 278 concerns, or 17 percent of all companies
acquired; and in addition 49 of the second 100 purchased 175 firms, or 10 percent
of all the companies acquired. In other words, 120 out of the top 200 corporations
bought up 453 companies, or 27 percent of the total.
Only 4 of the 18 most active acquiring concerns were too small to rank among the
nation’s 200 largest manufacturing corporations. These 18 corporations acquired an
average of more than 13 firms each, most of which were purchased during 1944-46.
The impact of the merger movement on small business is clearly shown by the
fact that fully 90 percent of all the firms bought out since 1940 held assets of less
than $5 million, and 70 percent had less than $1 million of assets. On the other
hand, only 4 percent of the total number of acquired firms had assets of over $10
million.
In short, the figures indicate conclusively that the major impetus behind the
current merger movement has been the desire of giant corporations to consolidate
their wartime gains and to expand the scope of their domination through
acquisitions of smaller, independent enterprise.
How has the recent merger movement affected the competitive structure of the
American economy? The majority of the actions (60 percent) were horizontal
acquisitions; that is, the purchase of firms engaged in roughly similar lines of
production. Vertical acquisitions, which involve either the “backward” purchase of
suppliers or the “forward” purchase of further fabricating facilities, have accounted
for 17 percent of the total number. And conglomerate acquisitions, in which there is
no discernible relationship in the nature of business between the purchasing and the
acquired firms, represented 22 percent of the total number.
Each of these three types of acquisitions contributes to the increase of economic
concentration and to the decline of competition. A major result of horizontal
acquisitions is to bring together firms producing (l) identical products for similar
markets or (2) products which might be substituted for one another.
Vertical integrations have a particularly severe effect upon small business during
periods such as the present which are plagued by shortages of raw materials
components, etc. During such periods, large firms frequently reached backward to
acquire important suppliers, and in so doing reduce the amount of supplies
available for small independent business.
The third avenue of expansion, the conglomerate acquisition, con-

18

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

tributes greatly to the concentration of economic power, since it results in the
absorption of many small firms in different and often completely unrelated lines of
activity. Perhaps the most important danger inherent in these conglomerate
organizations is the economic power they can wield over a large number of
different industries. Threatened with competition in any one of its fields of
enterprise, the conglomerate corporation may sell below cost or use other unfair
methods in that field, absorbing its losses through excessive profits made in its
other lines of activity, all rationalized in the name of “meeting competition.” The
conglomerate corporation is thus in a position to strike out with great force against
small business in a variety of different industries.
The majority of recent acquisitions in manufacturing as a whole and in most of
the individual industries have been of the horizontal type. Horizontal acquisitions
have been particularly important in mining, petroleum and coal products, d rugs and
medicines, paper, beverages food and chemicals (other than drugs).
As might be expected, forward vertical acquisitions were most pronounced in the
basic materials industries, such as primary metals and chemicals (other than drugs),
while the backward integrations were outstanding in electrical machinery, textiles
and apparel, and paper and allied products. By far the greatest number of vertical
acquisitions were of this latter type and were most noticeable in the textiles
industry as a result of the efforts of converters, selling agents, and apparel
manufacturers to secure supplies of gray goods.
Conglomerate acquisitions were made in substantial numbers by beverage, metal
fabricating, machinery, transportation equipment, and drug corporations. In
addition, many acquisitions of this type were made by nonmanufacturing concerns,
notably reflecting the absorption of manufacturing firms by financial and banking
interests.
THE COPPER INDUSTRY, PARTS I AND II
The Commission’s Report on the Copper Industry, summarized below, was
transmitted to Congress March 11, 1947.
The copper industry presents an outstanding example of a primary materials field
in which concentration has reached an extraordinarily high level partly as a result
of acquisitions and mergers. This concentration exists not only in the United States
but in the world market.
In fact, the interconnecting relationships between international interests through
direct financial relations, interlocking directors, or less directly, through large
commercial banks, investment houses and industrial consumers in the United States
and in foreign countries, are such as to indicate that 5 groups dominate the
production and price policies of more than 60 percent of the world’s production of
primary copper. The individuals who head these dominant groups are (1) Cornelius
F. Kelley, chairman of the board of Anaconda Copper Co.; (2) E. T. Stannard,
president of Kennecott Copper Corp., the world’s largest single copper producing
company; (3) Louis C. Cates, president of Phelps Dodge Corp.; (4) A. Chester
Beatty, chairman of the board of Rhodesian Selection Trust, Roan Antelope Copper
Mines, Ltd., Mufulira Copper Mines, Ltd., director of Rokana Corporation, Ltd.,
and the controlling figure in British-controlled Rhodesian mines; and (5) Robert C.
Stanley, chairman of International Nickel Co.

COPPER INDUSTRY, PARTS I AND II

19

Ownership of a large part of the nearly 50 percent of known world reserves
controlled by American nationals is concentrated in three American mining companies
as follows:
Anaconda-United States, Mexico, and Chile
Kennecott-United States and Chile
Phelps-Dodge--United States
Total, 3 American companies
All other American companies
Total, all American companies

Tons
25,590,000
13,100,000
7,000,000
45,690,000
9,478,000
55,168,000

Percent
23.10
11.83
6.82
41.25
8.54
49.79

An adequate supply of copper is an essential element in the economy of an industrial
nation. This natural resource is one of great international importance because presently
developed producing capacity and known future reserves, except in the United States,
are located in only slightly industrialized nations and colonies far from the principal
consuming areas.
Even the United States no longer has within its borders enough new copper and
scrap copper to supply all industrial needs for high level industrial activity. It,
therefore, in common with Great Britain, France and other highly industrialized
countries, faces growing dependence on copper imported mainly from areas such as
Chile and the colonial regions of Africa. The tariff on raw copper imported into the
United States, which since 1932 was 4 cents per pound, or the equivalent of over 22
percent at the open market price of 17.5 cents in November 1946, was suspended by
Act of Congress in March 1947 until March 31, 1949.
The Commission’s Report on the Copper Industry was among the sources of
information used by Congress in deciding to suspend the tariff. The opening up of the
world supply of copper on a duty-free basis to American users brought an end to the
crisis in copper supply in this country and stopped the precipitate rise in price which
had reached 24 cents p er pound, New York electrolytic, and threatened to go even
higher. The price dropped to 21.5 cents per pound and futures contracts on the New
York Commodity Exchange indicated further price recessions,
Known commercial copper reserves of the world as of January 1, 1945, have been
estimated at iii million short tons of recoverable copper of which about half is in South
America and Africa, some 29 million tons in the United States, and the balance widely
scattered.
Three nationalities control nearly 83 percent of the world copper reserves as follows:
American-United States, Mexico, Bolivia, Peru, Chile
British-Canada, Australia, and Africa
Belgian-Africa
Total
All other nationalities
Total world reserves

Short tons
55,168,000
29,340,000
7,400,000
91,908,000
18,892,000
110,800,000

Percent
49.79
26.48
6.68
82.95
17.05
100.00

The above tabulation showing control of 26.48 percent of world reserves by British
nationals indicates a sharper separation of interest between American and British
producers than actually

20

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

exists because Americans hold substantial minority interests in both Canadian and
South African companies whose reserves are here listed as British.
The production of primary copper by the four leading producing countries, for the
3 years 1943-45, averaged 2,174,000 tons annually At this rate it would appear that the
world’s present total estimated commercially workable reserves of 111 million tons
may become exhausted in about 51 years.
At the wartime rate of production, which may or may not be needed in peacetime,
though likely to be approximated at least for a time, the United States, still the world’s
largest producing country, may exhaust its present workable reserves in less than 30
years. Some estimates place the period of exhaustion of the highest grade ores as low
as 10 years. Canada may exhaust its reserves in a little more than 30 years; Chile in
something like 50 years, and Rhodesia, the newest producing area, in about 86 years.
These estimates are all based on maintained world production of something over 2
million tons annually and also on known reserves workable at world prices of 15 cents
or less per pound. Of course, new reserves may be discovered even in the older
producing countries, while a price advance might result in some increase in production
from the lower grade ores. Even so, the outlook is not encouraging for long continued
world production of 2 million or more tons of copper annually from presently known
workable reserves.
During the 16 years from 1930 through 1945, the 3 large consolidate companies that
control the production of the bulk of copper mined in the United States made some
profit on their total investments in most of the years, and substantial profits after
payment of income taxes in some of the years. Of the 3 leaders, Kennecott showed a
profit in every year except 1932, in which it lost 2.5 percent on its total investment, the
range in rate of return in other years being from 0.83 percent in 1933 to is 22 percent
in 1937. Phelps Dodge lost 0.6 and 1.98 percent in 1931 and 1932, respectively, and
realized profits in the remaining years ranging from 0.05 percent in 1933 to 8.95
percent in 1942. Anaconda showed losses of 1.91 percent and 0.23 percent
respectively in 1932 and 1933, and profits ranging from only 0.21 percent in 1931 to
8.57 percent in 1941. All rates are after payment of income taxes.
The general, these larger integrated companies have been able to earn profits and
strengthen their financial positions through accumulation of surpluses when raw
copper sold at from 12 to 15 cents per pound, and have experienced large profits when
the price was 17 or more cents per pound.
Throughout most of its history, the copper industry has been characterized by the
existence of cartel arrangements of one type or another. In fact, for about 60 years
prior to 1933, copper producers attempted control of domestic and export prices and
of production through copper price pools or cartel agreements.
The failure in 1890 of Baring Brothers of London, which was the forerunner of the
world depression of the 1890’s was precipitated by the collapse of the Secretan Copper
Corner in Europe. This corner, backed by international bankers, was based upon largescale purchases of copper covering 75 percent of the world’s output of copper. Prices

SULPHUR INDUSTRY AND INTERNATIONAL CARTELS

21

were increased to 18 cents per pound; then consumption decreased while a flood of
new copper appeared in the form of scrap and from new mines, and the price broke
to 7.6 cents per pound.
Other cartel arrangements were participated in by a series of domestic copper
export associations which fixed export prices. The last such association was Copper
Exporters Inc. (1926-33) whose “foreign associates” in the international sphere
adhered to and cooperated in all association acts in accordance with contracts
which were identical, except as to minor wording, with those of the American full
members.
At one time this international cartel controlled 85.8 percent of the world copper
production. With the inception of the 1929 depression, its control decreased to 77.7
percent in 1931 and thereafter continued to decrease in 1932 and 1933 as a result of
withdrawal of “foreign associates.” Prices were advanced from between 12 and 13
cents per pound in June 1927 to a maximum of 23.775 cents domestic and 24.375
cents export c. i. f. European base, March 15, 1929. Thereafter prices leveled off at
18.3 cents per pound for export and 18 cents Connecticut Valley delivery for
domestic copper for more than 12 months to April 14, 1930, when as stocks
accumulated the price broke 4 cents per pound on April 15, 1930.
For the period of 5 months in late 1930 and earl y 1931, export prices were
stabilized at around 10.3 cents per pound. In April 1931 a new price decline set in
that carried cop per prices to an unprecedented low of less than 5 cents per pound
in the depth of the depression. The cartel failed to stem the downward trend of
prices and it was disbanded in 1933.
With the improvement in business a new international cartel was formed in 1935.
American companies were not members, although foreign subsidiaries of Anaconda
and Kennecott became members.
Rigid production controls were imposed on all foreign producers with the result
that rapidly increasing demand outran supply and there was a sharp price increase
to 17 cents per pound in 1937. As the supply situation im p roved, prices sagged as
usual to more normal competitive levels of 9 to 12 cents per pound. The cartel
ceased to function with the beginning of the war in 1939 and the domestic price
was fixed at 12 cents per. pound when the United States entered the war.
An important result of the varied influences which have been at work in the
industry, especially during the past 25 years, has been the high degree of
concentration of ownership and control referred to above. The importance of
copper as a basic material in all industries renders it necessary to maintain such a
free and open market in the world supply of copper that the power of concentrated
control cannot be used contrary to the public interest.
THE SULPHUR INDUSTRY AND INTERNATIONAL CARTELS
The sulphur industry is even more concentrated than the copper industry, and,
like the latter, has been characterized by cartel agreements, rigid prices, and
comparatively high profit ratios for the leading companies, according to the

Commission’s Report on the Sulphur Industry and International Cartels,
transmitted to Congress June 16, 1947.

22

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

Native or natural sulphur is mined in the United States, Italy and Japan, but as of
1946 the United States was by far the largest producer.
Texas Gulf Sulphur Co. ranks as the world’s largest producer of native sulphur.
During the 25-year period, 1919-43, this company produced 28,124,372 long tons of
sulphur, an annual average of 1,124,975 tons. Its production was equivalent to
approximately 56 percent of the total United States production during that time and,
together with that of Freeport Sulphur Co., accounted for approximately 86 percent of
the total United States production during the past 25 years.
Freeport Sulphur Co. is the world’s second largest producer of native sulphur.
During the 25 years ending in 1943, the company produced 15,030,374 long tons of
sulphur, an average of 601,215 tons a year. The annual production of 1,027,837 tons
in 1943 represented approximately 40 percent of the total United States production.
For the 25-year period, the company’s production was approximately 30 percent of the
total United States production.
As in the case of most highly concentrated products, prices of sulphur have remained
unchanged over long periods of time. The greatest variations in the price of crude
sulphur occurred during and immediately after World War I, when the sales realization
of marketed production, f. o. b. mines, ranged from a maximum of $22 per long ton in
1918, to a minimum of $15.12 per long ton in 1919. By 1926 the sales realization of
marketed production f. o. b. mines became stabilized at $18 per ton and remained at
approximately that amount for the next 11 years.
The cost-price relationships in the industry have been such that the operations of
domestic sulphur producers from the beginning of their operations have been highly
profitable. Texas Gulf Sulphur Co. earnings during the 28-year period of its operations
were equivalent to 21.97 percent of its invested capital after providing for the payment
of Federal income and excess profits taxes, and 26.10 per-cent of the investment
before providing for such taxes. Profits, after taxes, were large in all years, ranging
from maximums of 62.9 percent of investment in 1926, 67.9 percent in 1927, 66.5
percent in 1928, and 58.7 percent in 1929, to a minimum of 11.7 percent in 1938.
Freeport Sulphur Co. earned an average profit on its total invested and borrowed
capital during the 28-year period, 1919-1946, of 13.64 percent, after providing for the
payment of Federal income and excess profits taxes, and 16.35 percent before
providing for such taxes. The company earned profits in all years but three, when
losses were sustained equivalent to 5.82 percent on the investment in 1921,2.53
percent in 1922, and 2.65 percent in 1924. Substantial profits were earned in most of
the other years and were largest during the years 1927-1933 when an average of 24.76
percent on the investment was earned, after providing for Federal taxes. Profits were
lower thereafter, averaging 13.09 percent on the investment during the years 19341946. During this period the range in profits was from a minimum of 10.60 percent to
a maximum of 17.30 percent.
Almost the entire history of the sulphur industry has been marked by cartel
agreements among the world’s leading producers--particularly among the two chief
sources of supply, the American and the Italian companies. The factor limiting the
ability of the cartel par-

SULPHUR INDUSTRY AND INTERNATIONAL CARTELS

23

ticipants to enhance and maintain prices in foreign markets was always the
uncontrolled production of non-member companies. Since the early 1920’s this
competition has consisted of uncontrolled producers of natural sulphur, mainly by
American, Japanese and South American producers, and producers of by-product
sulphur in the smelting of pyrites for their metal contents, mainly in Scandinavia,
Spain and Portugal under patents controlled by Orkla Grube Aktebolaget
Industrimetoder of Stockholm, and in Italy by the Montecatini interests.
When competition arose from these three sources in the early 1930’s, each became
the object of cartel control to maintain cartel price structures and distribution
arrangements. Orkla competition was controlled by a secondary agreement between
it and Sulphur Export Corp.3 dividing the foreign market, fixing foreign prices,
limiting further issuance by Orkla of licenses to third parties in Europe, and providing
for joint acquisition of basic patents under which other by-product competition might
arise.
Montecatini (Italian) competition was disposed of by the Italian Government,
compelling Montecatini to become part of the Italian national cartel, and a measure of
control was set up for a time over the American independent sulphur movement in
export trade by Sulphur Export Corp. finding a market for independent tonnage in its
quota, in consideration of which American independents were to observe cartel prices.
There were no such definite arrangements with American independents after 1935, but
the latter appear to have found it advantageous to follow the price leadership of the
cartel in sales they made in Europe.
When Rio Tinto Co. of Spain and Mason and Barry of Portugal, licensees under
Orkla patents, competed for the Spanish market and Rio Tinto threatened to export to
France, Sulphur Export Corp. exerted its influence to prevent such invasion of other
markets.
In support of a cartel of French sulphur grinders who purchased their requirements
from the cartel or from other sources that followed the cartel’s price leadership, the
main cartel participants undertook to bolster the French cartel’s weak control over the
grinding industry by refusing to sell to particular French grinders at destinations where
new grinding capacity was being built.
The obvious international effects of activities of these types were to eliminate
competition in the foreign markets, enhance and maintain prices, retard the
development of low-cost recovery of by-product sulphur through Norwegian
processes, accelerate the exhaustion of the world’s richest natural sulphur, and compel
foreign market consumers to pay high prices in order to enhance and maintain the
profits of natural sulphur producers.
The domestic and export segments of the American Sulphur industry are inseparable
in interest. From an economic standpoint, the distribution and pricing activities of
Sulphur Export Corp. have a natural relationship to the production, distribution, and
pricing activities of its individual producing members. Sulphur Export Corp.’s
international agreements have distinctly eliminated and restrained competition abroad.
Its policy of tolerance toward the two

3 See p.82 for Commission’s recommendations for readjustment of the business of Sulphur Export
Corp.

24

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

smaller nonmember producers who have been permitted ,and upon occasion even
assisted, to find foreign outlets far tonnages, which additional tonnages, if sold in the
domestic market, might have had a depressing effect thereon, has tended to forestall
and ameliorate competition at home. The independents, while not always strictly
observing Sulphur Export Corp.’s prices abroad, or its members’ domestic prices at
home have nevertheless followed quite closely the price and distribution leadership of
their larger competitors in both markets because it was to their advantage to do so. To
do otherwise would not have been good business. The report of the Canadian
Commissioner of its Combines Act reports similar economic effects of the cartel
agreements on sulphur distribution in Canada, one of the markets not included under
the cartel agreements.
From 1926 through 1931, during the first three years of which there were only two
American producers it appears that the domestic price level yielded substantial profits.
Price protection afforded the Italians maintained export prices substantially higher than
domestic prices, and still further enhanced the profits of the American producers.
Quota restrictions under the carte agreement, however, restricted the quantity of
sulphur that could be sold at the higher export prices. The fact that domestic prices
were lower than export prices would seem to indicate that, especially prior to 1933,
the two dominant companies, after selling abroad their permitted quantities under the
cartel agreement at the higher cartel price, so priced their product at home as to retain
the maximum share of the domestic market in competition with pyrites and by-product
sulphur. Such pricing would be especially effective in retaining the tonnage consumed
by the growing sulphuric acid industry.
The continued prevalence of this price difference in favor of sales for export during
the late 1920’s produced a situation in which it became profitable for American
consumer-purchasers to buy in the United States and divert tonnage for export.
Manufacturers of ground sulphur likewise found it advantageous to export to foreign
markets where ground sulphur p rices were based on cartel maintained crude sulphur
prices. Since Sulphur Export Corp. was obligated under its cartel agreements to absorb
such exports in its quota, a definite policy of direct selling only to domestic users, or
to those intermediate handlers who would cooperate to preserve foreign cartel controls,
was adopted both at home and abroad. A formal agreement between the two company
members of Sulphur Export Corp., in 1929, to limit domestic sales to the needs of
domestic users was abandoned when the Federal Trade Commission pointed out the
objectionable effects of such an agreement on domestic trade. Restraints abroad
necessitated restraints at home in order to determine not only who might engage in
export trade in sulphur, but the conditions of trading.
The operations of all four producers constituting the American sulphur industry have
been highly profitable, and the indications are that Sulphur Export Corp.’s foreign
cartel agreements have added to the profitability of the United States industry even
with respect to the non-member companies.

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

25

THE WHOLESALE BAKING INDUSTRY, PART II
A third concentrated industry studied by the Commission was the wholesale baking
industry. The results of the study were presented to Congress August 7, 1946, in a
report entitled Wholesale Baking Industry, Part II--Costs, Prices and Profits.
The commercial baking of bread and other bakery products increased considerably
during the war period. A recent survey indicated that 85 percent of the bread and 35
percent of the cake consumed in this country were produced by commercial bakers. It
is estimated that the baking industry in 1945 had annual sales in excess of $2 billion
compared with total sales of $1.4 billion for 1939. The estimated quality of
commercial bread produced in 1945 amounted to 15 billion pounds, compared with
10.5 billion pounds for 1939.
Perhaps the most interesting finding in the study was the absence of any close
relationship between size of corporations and efficiency. In fact, the report shows that
the 4 largest baking companies--Continental Baking Co., General Baking Co., Purity
Bakeries Corp., and Ward Baking Co.--had an average cost to produce and sell bread
and rolls of 7.58 cents per pound in September 1945, compared with an average cost
of 7.41 cents for 10 medium-large multiple plant baking companies. The lower costs
of these 10 resulted principally from lower plant overhead expenses. Thus, based on
average costs, the medium-large plants were definitely more efficiently operated than
the plants of the industry’s 4 giant corporations.
However, in terms of plants rather than corporations, the large plants had lower
average costs than the medium and smaller sized plants. For September 1945,
wholesale baking plants producing in excess of 1 million pounds of bread and rolls per
month had total costs of 7.47 cents a pound, compared with average costs of 7.60 cents
per pound for those plants baking from 500,000 to 1,000,000 pounds per month; 7.78
cents per pound for those plants baking from 250,000 to 500,000 pounds per month
and 9.12 cents per pound for those plants baking under 250,000 pounds monthly. But,
inasmuch as efficiency was highest in the medium-large corporations, it is obvious that
many of the most efficient large plants were not operated by the giant corporations, but
rather were owned by the medium-large concerns.
Although they were not the most efficient concerns, the 4 leaders nonetheless made
the highest rates of profits on sales in the industry, ranging from 4.54 cents per dollar
of sales in 1941 to 8.47 cents in 1943. Bakeries with annual sales of less than $500,000
reported minimum profits on sales ranging from a low of 2.68 cents per dollar of sales
in 1941 to a high of 5.04 cents in 1943. Similarly, the 4 largest baking companies
reported the highest rates of return on net worth before income taxes, ranging from a
maximum of 28.86 percent for 1943 to a minimum of 10.09 percent for 1941. These
rates compare with those reported by wholesale baking companies with annual sales
under $500,000, ranging from a high of 23.7 percent for 1943 to a low of 11.06 percent
for 1941. Out of the 192 companies in this smallest sized group reporting for 1941, a
total of 43 reported losses while none of the 4 largest companies in the industry
reported a net loss for any year from 1936 to 1945, inclusive.

26

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

It was found that the giant baking companies go to extreme lengths in order to get
local retail stores to handle their bread . Consignment sales by large chain bakers w as
the principal method used to force smaller concerns out of the market. Other methods
used by the giant firms were those of furnishing retailers with bread rack s free, giving
premiums, allowing special discounts, distributing free bread, and selling below cost
in individual markets. The big companies with multiple-plants scattered over large
areas have an advantage in that they can subsidize the costs of operation for one plant
with the profits from the group as a whole. That is, while charging higher prices in an
established market, they take heavy losses from returned products in a new territory
and furnish retailers with free goods and free equipment in an effort to build up sales
at the expense of local bakeries. Moreover, it was found that many of the large
interstate baking companies truck bread long distances from their plants and sell it in
competition with small local bakeries at lower prices than prevail in other places where
there is no price competition.
(For summary of the report on the Wholesale Baking Industry, Part I--Waste in the
Distribution of Bread, see p.15 of the Annual Report of the Federal Trade Commission
for the 1946 fiscal year.)
ECONOMIC EFFECTS OF GRAIN EXCHANGE ACTIONS AFFECTING
FUTURES TRADING DURING THE FIRST 6 MONTHS OF 1946
On February 4, 1947, the Commission reported the results of a special study made
at the request of the then Chairman of the Senate Committee on Agriculture and
Forestry. The report reviews the conditions during the first 6 months of 1946 which
made for futures trading to be conducted in the usual manner on the Chicago, Kansas
City and Minneapolis grain exchanges under existing conditions of Government price
control and severe restrictions on the movement of short supplies of free grain in the
cash market. It also reviews the economic effects of emergency actions taken by the
exchanges, sometimes at the suggestion of Government agencies, on the interests
trading in futures.
As principal grains, one after another, reached ceiling prices, the only field for
speculation in futures became selling short in the hope of possible decrease in prices
below ceilings. This produced the a normal condition that speculative interest shifted
predominantly to selling short at ceiling prices. Confidence among speculators that this
could be done safely was created by the fact that defaults were settled at ceiling prices
in 1945, which meant no penalty to defaulting shorts. This resulted in speculative short
traders assuming open positions opposite long interests desiring grain who froze the
shorts in their open positions by refusal to sell.
When ceiling prices were advanced by Government action in March and May, 1946,
shorts stood to lose the full amount of the increases as prices promptly moved up to
the new ceilings. In March when the ceiling price for wheat was advanced, all three
exchanges took action prematurely closing out May wheat contracts, thus protecting
short interests on that future. In May, when a general advance was author-

GROWTH AND CONCENTRATION IN FLOUR-MILLING INDUSTRY

27

ized affecting wheat, corn, oats, and barley, two of the exchanges, at the joint
request of three Government agencies, followed the same emergency policy of
closing out open contracts at the old ceiling prices, again protecting shorts at the
expense of longs.
The inequity of this action from the viewpoint of injured long interests was
promptly followed by suits against the Chicago Board of Trade, which thereupon
reversed itself by reopening trading on contracts on July and specified later months
which had been ordered closed out. This permitted these later-month contracts to
advance to the new ceilings, whereupon they were again closed out prematurely on
June 13, 1946, at the new ceilings. This placed on shorts the financial burden of the
ceiling price advance on all old contracts closed out by the Chicago Board of Trade
in anticipation of the expiration of price controls on July 1, 1946. A total o
28,648,000 bushels of July and later-month contracts for wheat, corn, rye, and
barley was so closed out on May 13, 1946, at a total cost to shorts and a profit to
longs of $4,747,290. While this action burdened shorts with definite financial loss
to this amount, it likewise protected them from further possible loss in case p rice
controls expired as then expected on July 1, and prices advanced to levels higher
than the ceilings prevailing up to July 1.
GROWTH AND CONCENTRATION IN THE FLOUR-MILLING
INDUSTRY
On June 2, 1947, the Commission transmitted a report to Congress on Growth and
Concentration in the Flour-Milling Industry. The flour-milling industry of the United
States is old, and, because of the relatively small capital required to build a flour mill
in the early days and as a result of early lack of facilities for rapid and cheap transportation of wheat and flour, the industry was carried on by numerous small enterprises.
With progressive improvement in design and efficiency of flour-milling equipment and
the increased capital investment per fully equipped flour mill occasioned thereby,
production in larger mills became increasingly important. The development of more
rapid and less expensive means of transportation also favored the growth in size of
flour-milling establishments. The result has been a progressive increase in the size of
flour mill operations and a progressive decrease in the number of flour-milling
establishments. For example, the United States Bureau of the Census reports a decline
from 11,691 establishments in 1909 to 2,571 in 1945, a decrease of 78 percent.
Meanwhile, the population of the United States increased from about 92 to 140
million, again of 52 per cent. On a per capita basis, there was 1 mill for every 7,869
inhabitants in 1909 and 1 for every 54,454 in 1945.
Through the combined processes of increasing the size of individual establishments,
construction of multiple establishments and consolidation of previously independent
enterprises, there has developed a certain degree of concentration in the flour-milling
industry. The industry has also expanded its animal feed business. With all of this
development, however, the flour-milling industry has not evolved as high a degree of
concentration as that existing in many other industries.
767228--48---3

28

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

In 1945 the aggregate capacity of the largest 6 companies, with individual capacities
ranging from 130,300 down to 31,690 hundredweight per day, was 366,150
hundredweight, or 27.13 percent of the total of 1,349,749 hundredweight for the
United States. The next 30 companies, in order of size, with capacities ranging from
26,000 down to 5,000 hundredweight per day, had an aggregate daily capacity of
314,526 hundredweight, or 23.30 percent of the total capacity of the industry. Thus,
the largest 36 companies operated 50.43 percent of the industry’s total capacity. The
remaining 49.57 percent was distributed among an unknown number of enter p rises
ranging in size from something less than 5,000 down to 49 hundredweight per day.
In 1945 the largest corporation in the industry, General Mills, Inc., controlled 9.65
percent of the total capacity of the industry; Pillsbury Mills, Inc., the second largest
flour mill organization, operated 6.13 percent of the industry’s capacity; the third in
size was Commander Larabee Milling Co., with 3.32 percent; the fourth, International
Milling Co., with 2.89 percent; Russell-Miller occupied fifth place with 2.79 percent;
and sixth place was held by Colorado Milling and Elevator Co., with 2.35 percent.
General Mills, Inc., was incorporated June 20, 1928, for the purpose of consolidating
five flour-milling and grain storage enterprises, all of which were already controlled
by a group of stockholders common to the five enterprises. In January and February,
1929, it acquired Sperry Flour Co. and Creston Harrington and Lind, and in April 1929
purchased Larrowe Milling Co. No later acquisitions by General Mills were reported
to the end of 1945.
The capital of General Mills increased by 250.3 percent, of which the growth
resulting from mergers was no less than 178.5 percent, leaving 71.8 percent by internal
growth. In 1945 General Mills had 14 subsidiaries operating in 24 localities from
Buffalo, N. Y., to the Pacific Coast, with numerous grain storage elevators in the
wheat-producing areas as well as at its flour mills.
The second largest domestic flour-milling company in the United States, Pillsbury
Mills, Inc., was incorporated September 25, 1923, to consolidate 2 previously related
companies, the original enterprise having been founded in 1872. Seven important
acquisitions were made during the period 1915-1945. In 1945, Pillsbury Mills, Inc.,
operated flour mills in 9 cities from Buffalo to the Pacific Coast, commercial feed
mills in 9 localities, packaged food plants in 4 cities and facilities in 14 cities.
The Russell-Miller Milling Co. made 3 acquisitions from 1915-1945--1 malting plant
that had been closed by prohibition and 2 providing flour-milling and grain storage.
The Colorado Milling and Elevator Co. purchased 5 flour-milling properties during
the period 1924-1945, and also acquired 5 country elevator stations. In 1945, it owned
flour mills in 19 localities concentrated in Colorado, Idaho, Utah, Kansas, and
Missouri, and in addition operated 6 feed mills and 155 grain elevators in localities
other than at its flour mills.

REPORTS ON INDUSTRIAL OPERATIONS

29

Noticeable features of the development of these enterprises are : (l) the acquisition
of flour mills in widely dispersed localities, (2) acquisition of grain storage well
distributed throughout the principal wheat-producing regions, and (3) entry into and
development of the feed-manufacturing business.
REPORTS ON INDUSTRIAL OPERATIONS
The purpose of these reports is to provide accurate and current information as to the
financial characteristics and operating results of American manufacturing industries
without disclosing the individual features of any particular corporation. The reports
represent a combined industry compilation of the financial statements of manufacturing corporations so as to disclose the simple facts of the true relationship between
investments, sales, costs, and profits.
Prior to the war the Commission, in accordance with the powers granted by Congress
in 1914, collected, summarized, and analyzed the financial operating statements of
corporations in a number of industries and published summaries of the results. During
the war period, this work was discontinued because the Price Control Act conferred
upon the Office of Price Administration similar powers. On December 12, 1946, the
President, by Executive Order, transferred this function back to the Federal Trade
Commission and it thereupon resumed its peacetime work in this field.
On April 15, 1947, the Commission directed a representative cross-section of
manufacturing corporations to file with it a brief financial statement of operations for
the first three months of 1947. The significant facts developed from a combined
tabulation of these reports are presented in the tables beginning on page 31.
The plan for resumption of this work was carefully developed after intensive work
by an interagency committee on financial statistics representing nine Government
agencies. This committee operated under the direction of the Bureau of the Budget as
provided for by the Federal Reports Act of 1942. During the development of the work
outline, advice was sought from the Industry Advisory Council on Government
Reports and the Advisory Council representing labor organizations.
The interagency committee on financial statistics recommended a program of
quarterly and annual financial reports. This work was assigned jointly to the Federal
Trade Commission and the Securities and Exchange Commission. The Securities and
Exchange Commission is responsible for the collection and compilation of information
from corporations with securities listed on a national stock exchange and the Federal
Trade Commission is responsible for the collection of information from a sufficient
number of non-listed corporations so as to effectively round out a representative
sample for determining current national estimates for all industrial manufacturing
groups. The two agencies collaborated on the assembly and publication of the industry
summaries.
The industrial financial summaries should be of increasing value to business and the
Government in showing the financial trends of indus-

30

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

trial activity. Since the reports are to be issued on a quarterly basis they will provide
a current barometer of the economic conditions of the economy and of its various
industry segments. From these reports it will be possible to determine (l) the general
financial situation of business; (2) the trend in economic activity; and (3) deficiencies
which may appear in the economic position and operating results of the various
industries. In short, these reports provide the Government and the general public with
a current bird’s eye view of the direction in which our economy is moving.
The summaries can also be used to determine not only the economic condition of
industry as a whole, but also the differences which may exist among different sizes of
operations. Comparisons can be made between large, medium size and small business.
Those concerned with the problems of small business will undoubtedly use the reports
as a primary source of information.
The Commission found after issuing similar reports m 1939 and 1940 that there
existed a great demand for them among business concerns. The Commission has
received hundreds of letters from private firms requesting the reports and commenting
favorably upon them. An analysis of these requests and the comments reveal that
business concerns used the reports for a variety of purposes. For example, they used
the data in comparing their own financial position and operating results with that of
their industry as a whole. Every businessman has a natural and legitimate interest in
knowing how his operations compare with the industry as a whole and, more
particularly, wants to compare with the industry’s average his ratio of profits and sales
to his investment, his net working capital, his capital turnover, and the ratio of his
costs and expenses to net sales, such as labor costs, material costs, selling and
distribution, general and administrative expenses, etc.
These financial reports are an important source of information for the internal
operations of the Federal Trade Commission. The Commission, for example, is
interested in the whole subject of economic concentration and particularly in the
current changes which take place at the level of concentration among the Nation’s
various industries. The financial summaries will provide the data needed to construct
an “Index of Concentration” for each of the Nation’s major manufacturing industries.
In this connection, it should be noted that the development of such an index was the
second recommendation contained in the staff report of the Monopoly Subcommittee
of the House Small Business Committee.
A number of other Government agencies have indicated their desire to obtain the
reports for the purpose of assisting them in their own analysis of economic and
industrial operations. The nine agencies which comprised the committee that
developed the current program have all indicated a desire to obtain and use the reports.
In summarizing, the reports project provides for achieving these results with a
minimum of burden on the responding corporations and without duplication in the
collection of information and at a minimum cost to the taxpayers.

REPORTS ON INDUSTRIAL OPERATIONS

31

Table 1.--Federal Trade Commission and Securities and Exchange Commission quarterly industrial
financial reports series, first quarter 1947, aggregate for all manufacturing industries combined
SELECTED INCOME AND EXPENSE ITEMS
Assets range (thousands of dollars)
1 to 249 250 to 999 1,000 to 5,000 to 100,000
Total
4,999
99,999
and over
1 Net sales

$1,620,181 $3,299,698 $ 6 , 1 2 7 , 6 5 7 $ 1 2 , 3 2 5 , 8 2 6 $ 1 1 , 2 0 1 , 0 9 1

$34,574,452

2 Costs and expenses
1,497,968 2,960,325 5,341,047 10,639,154 9,762,505 30,200,999
3 Net operating profit
122,213
339,372 786,610
1,686,672 1,438,586 4,373,453
4 Other income or deductions-net
1,699
7,354
14,510
8,480
3,694
28,348
5 Net income before Federal income
taxes
123,912
346,726 801,120
1,695,152 1,434,892 4,401,801
6 Provision for Federal income taxes
48,090
143,840 317,921
670,963
547,765 1,728,577
7 Net income after taxes
75,822
202,880 483,199
1,024,189
887,127 2,673,224
8 Dividends paid (cash or in kind)
14,560
32,938
72,257
272,685
276,248 668,688
CONDENSED BALANCE SHEET
ASSETS
9 Cash

$413,219

$784,105 $1,432,029

$3,580,763

$ 3 , 9 9 3 , 9 8 0

$10,204,097

10 United States Government securities
113,538
11 Other marketable securities
37,383
12 Accounts and notes receivable
net
538,152
13 Inventories
656,032

367,229
77,690

749,216
174,144

2,267,994
319,616

3,106,732 6,604,709
70,134 678,966

1,018,678
1,593,570

2,076,665
3,598,326

4,476,942
9,291,480

3,441,221 11,551,659
9,152,079

24,291,487

14 Other current assets
15 Total current assets

54,239
1,812,563

112,038
155,271
407.194
200,817
929,559
3,953,311 8,185,651
20,343,990 19,964,963

54,260,477

16 Property, plant and equipmentnet
773,901
17 Other assets including deferred
charges
171,203
18 Total
2,757,667

1,555,605 3,263,229

8,666,004 14,109,903 28,368,644

298,714 755,857 2,113,043 2,736,004 6,074,826
5,807,630 12,264,732 31,123,037 36,810,869 88,703,941

LIABILITIES
19 Bank loans payable within one
year
$107,701
20 Other notes and accounts
payable
398,634
21 Federal income taxes accrued
120,600
22 Other current liabilities
121,616
23 Total current liabilities
748,551
24 Long-term debt and other liabilities
149,123
25 Stockholders’ equity
1,859,992
26 Total
2,757,667

$258,468
673,954
436,595
234,627
1,603,643

$658,503 $1,219,476
1,106,168 2,122,243
989,178 2,286,965
639,401 1,524,176
3,293,249 7,152,860

$430,878 $2,675,025
2,468,956
6,769,954
1,862,848
5,696,185
1,635,354
3,955,174
6,298,036 19,096,338

259,050
606,332 2,316,902
4,337,664 7,069,072
3,944,937
8,305,157 21,653,273 26, 175,171 61,938,531
5,807,630 12,204,732 31,123,037 36,810,869 88,703,941

Number of sample corporations

725

1,206

2,368

1,112

57

5,468

TABLE 2.-Federal Trade Commission and Securities and Exchange Commission quarterly industrial financial reports series, first quarter 1947, aggregates for industries [Thousands of
dollars]
Printing
Lumber Furniture Paper and and pub- Chemicals
Income and expense
Ordnance Food
and wood and
allied
lishing
and allied
products fixtures products except
products
newspapers
Netsales
$53,038 $7,133,598$580,338 $2,267,548 $961,811 $549,194 $442,230 $1,343,807 $811,952 $2,555,934
Costs and expenses
40,538
6,558,574 530,202 1,874,630 874,711 444,401 358,010 1,080,093 713,666 2,112,390
Net operating profit
12,500
575,019 44,136
392,918 87,100
104,793 44,220
263,714 98,346
443,544
Other income or deductions-net 852 4,421
4,941
4,963
1,530
2,172
656
4,055
3,588
6,329
Net income before
Federal income taxes
11,648
570,598 39,195
897,881 88,630
106,965 44,876
259,659 101,934 449,873
Provision for Federal
income taxes
4,376
239,071 15,644
158,785 35,579
40,962
17,591
103,972 38,688
175,155
Net income after taxes 7,272
331,532 23,551
239,096 53,051
66,003
27,285
155,687 63,246
274,718
Dividends paid (cash or in kind)
115,271 13,863
51,895
7,460
9,326
3,882
25,535
12,608
105,632
Tobacco
manufactures

Textile
mill
products

ASSETS AND LIABILITIES
ASSETS
Cash
75,758
1,307,773 97,491
688,803
United States Government
securities
14,685
765,361 6,259
456,819
Other marketable securities264
115,092 8,572
80,425
Accounts and notes receivable19,407 1,437,435 108,110 835,896
Inventories
47,457
3,620,479 1,564,436 1,510,639
Other current assets
1,289
88,955
10,908
53,143
Total current assets 158,859 7,335,096 1,795,778 3,625,724
Property, plant and
equipment-net
36,701
3,121,829 88,612
1,247,117
Other assets including
deferred charges
14,103
774,991 39,512
245,777
Total
209,663
11,231,916 1,923,904 5,118,620
LIABILITIES
Bank loans payable
within one year
867
Other notes and

646,619

177,095

166,066

Apparel
and
textiles

Products
of petroleum and
coal

$2,876,080
2,518,288
35,792
2,273
360,065
13,882
256,183
54,972

208,617

169,039

65,259

361,932

242,206

882,619

988,389

80,286
5,899
354,110
584,311
20,656
1,253,879

108,262
18,749
195,049
259,998
23,847
774,943

56,902
5,485
140,448
264,685
16,624
549,404

324,766
31,892
403,096
587,864
25,841
1,735,393

147,320
43,819
348,289
329,213
17,298
1,128,145

651,516
83,054
856,690
1,767,966
55,198
4,297,044

674,468
28,347
929,521
1,540,033
19,449
4,180,207

174,742

602,411

208,942

1,337,142 362,732

2,165,512

6,765,592

81,541
196,051 28,049
1,510,160 1,573,405 786,394

280,195 248,462 934,391
3,352,729 1,739,338 7,396,946

676,040
11,621,839

125,081

42,354

85,834

36,327

41,714

43,219

156,749

accounts payable
9,662
737,794 51,083
Federal income taxes accrued14,572 1,003,398 74,771
Other current liabilities 9,866
355,451 25,013
Total current liabilities 34,967
2,743,262 327,961
Long-term debt and
other liabilities
4,414
999,519 559,448
Stockholders’ equity
170,281 7,489,135 1,036,496
Total
209,663
11,231,916 1,923,904
Number of sample
corporations
11
738
31

411,972
536,560
182,051
1,296,650

206,927
125,247
57,941
515,196

108,382
101,698
40,462
286,869

62,855
55,601
31,805
191,975

175,186
280,125
106,354
604,020

192,161
129,484
85,046
449,909

411,716
628,328
247,865
1,444,657

851,702
299,495
401,394
1,638,425

213,045 39,182
78,780
43,513
3,608,925 955,783 1,207,756 550,907
5,118,620 1,510,160 1,573,405 786,394

300,933 126,083 488,687
2,447,775 1,163,347 5,463,608
3,352,729 1,749,338 7,396,946

1,574,163
8,409,251
11,621,839

487

269

89

238

207

126

254

379

Leather

Stone

Primary

Fabri-

Rubber

and

clay, and metal

products

leather
products

glass industries metal
ery
products
products

Electrical Motor

Transpor- Instru
tation
ments,
equipphoto

machin-

ment

Miscellaneous

Income and expenses
Total

Net sales
$525,528
$35,553,577
Costs and exspenses
467,354
31,184,068
Net operating profit
58,174
4,369,509
Other income or deductions-net
15,259
Net income before Federal income
taxes
58,867
4,384,768
Provision for Federal income taxes
25,220
1,720,881
Net income after taxes
33,647
2,663,892
Dividends paid (cash or in kind)
662,743

Machinery

vehicles

and

and parts except
optical
manufact
motor
goods;
vehicles watches
and parts and
clocks

$784,049 $611,805 $766,894 $3,343,363$1,594,346 $2,943,287 $1,637,058 $2,369,973 $1,067,740 $374,004
698,321

548,999

661,754

2,900,855 1,371,108 2,552,140 1,460,935 2,029,540 1,050,240 331,382

85,728

62,806

105,140

442,508

223,238

391,147

176,123

340,433

17,590

42,622

-125

1,592

1,647

-3,970

1,840

-1,106

-3,968

-1,443

8,037

4,819

85,603

64,398

106,787

438,538

225,078

390,041

172,155

338,990

25,537

47,441

36,332

26,710

43,468

170,932

86,879

157,748

62,580

144,344

14,256

18,708

49,271

37,688

63,319

267,606

138,199

232,293

109,575

194,646

11,281

28,733

23,791

8,772

20,377

47,629

31,124

53,307

28,298

23,038

6,893

11,399

270,454

1,288,935 438,850

860,597

370,808

981,956

286,745

117,859

178,089

1,342,158 259,155

489,807

159,811

229,233

271,270

99,452

29,313

36,565

67,316

13,844

11,468

32,328

2,696

267,187

1,042,077 563,679

744,500

375,979

175,653

409,296

1,952,463 1,129,579 2,864,633 1,325,940 1,806,835 871,951

446,159

21,620

65,328

16,931

ASSETS AND LIABILITIES
ASSETS
Cash
208,325 140,679
150,999
10,204,097
United States Government securities149,939 61,185
77,966
6,604,709
Other marketable securities
2,499
6,408
25,844
678,966
Accounts and notes receivable
335,813 236,042
215,461
11,551,659
Inventories
646,397 345,261
415,891
24,291,487
Other current assets
4,051
13,762
30,433
929,559
Total current assets
1,374,024 803,338
916,595
54,260,477
Property, plant and equipment-net 498,616 135,749
286,507
28,368,644
Other assets including deferred charges 42,357 53,174
81,682
6,074,820
Total
1,887,998 992,261
1,284,785
88,703,941
LIABILITIES
Bank loans payable within 1 year
54,177
2,675,025
Other notes and accounts payable
145,739
6,769,954
Federal income taxes accrued
86,095
5,696,185
Other current liabilities

cated

29,087

35,318

1,278,863 688,354

123,586

114,571

62,269

108,481

1,175,959 5,727,526 2,455,668 5,684,802 2,673,327 3,836,261 1,946,755 858,750
976,030

4,044,204 1,142,806 1,991,929 721,668

1,741,723 405,840

312,238

187,222

468,081

486,788

63,339

227,411

477,674

321,456

146,524

2,339,211 10,239,811 3,825,884 8,154,406 3,716,451 6,064,772 2,499,118 1,234,326

34,167

34,170

35,596

69,734

110,993

353,325

154,133

154,599

106,399

45,810

170,814

98,513

142,510

751,297

314,342

634,853

304,276

665,355

247,529

75,286

170,303

84,045

136,541

616,850

238,274

492,812

174,208

256,809

96,833

94,137

110,365

35,614

58,682

397,456

166,145

539,378

345,986

323,165

324,565

48,912

6

7,

61,658
3,955,174
Total current liabilities
485,650
347,668
19,096,338
Long-term debt and other liabilities166,756
46,914
7,669,072
Stockholders’ equity
1,241,592
890,202
61,938,531
Total
1,887,998
1,284,785
88,703,941
Number of sample corporations
62
5,468

252,342

373,329

1,835,337 829,754

2,020,368 978,603

1,399,928 775,325

264,145

18,079

163,505

908,399

569,244

468,007

50,867

721,840

1,802,376 7,496,076 2,799,193 5,564,794 2,255,665 4,196,837 1,547,381 919,315

992,261

2,339,211 10,239,811 3,825,884 8,154,406 3,716,451 6,064,772 2,499,118 1,234,326

122

238

306

196,938

466

756

482,184

207

124

176,412

87

83

1

34

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

TABLE 3.--Federal Trade Commission and Securities and Exchange Commission quarterly financial
reports series, first quarter 1947, profit ratios by size classes

Assets class (thousands of dollars)

Ratio of net Ratio of net
income
income
before taxes
after taxes
to stockhold- to stockholders’ equity
ers’ equity
Percent

1 to 249
250 to 999
1,000 to 4,999
5,000 to 99,999
190,000 end over
All sizes

6.66
8.79
9.65
7.83
5.48
7.11

Percent
4.08
5.14
5.82
4.73
3.39
4.32

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 forth the facts in detail is sufficient, but it should be accompanied by all
evidence in possession of the complaining party in support of the charges made.
PROCEDURE UPON APPLICATIONS FOR COMPLAINT
Upon receipt of an a p plication for complaint, the Commission through its Office
of Legal Investigations considers the essential jurisdictional elements before deciding
whether it shall be docketed for investigation. When docketed, it is assigned to the
Chief Examiner or the Chief of the Radio and Periodical Division depending upon the
type of investigation to be made. Cases requiring field investigations are assigned to
the Chief Examiner; other matters, as more fully set out on pages 44 to 47, are
assigned to the Radio and Periodical Division. The matter is thereafter assigned to an
attorney for the purpose of developing all the essential facts.
The general procedure in matters requiring field investigations 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 com edition or unfair or deceptive act or practice, and also to of
comp 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 recommends the action he believes the
Commission should take. The record is reviewed by the Chief Examiner or the Chief
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 Chief of the Radio and Periodical Division may
recommend to the Commission (1) 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;
1

A brief statement of the provisions of these laws appears on pp.1 and 2.

35

36

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

(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 Trial Counsel for preparation of the complaint and trial of the case.
Should the Commission permit disposition by stipulation in lieu of formal complaint,
the case is referred to the Director of the Division of Stipulations 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, within 20 days from service of the complaint, shall file answer
admitting or denying each allegation.
Upon request made within 15 days from service of the complaint any respondent
shall be afforded an opportunity to submit offers of settlement or proposals of
adjustment where time, the nature of the proceeding and the public interest permit, and
due consideration shall be given to them.
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’s complaint being supported 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 and files a recommended decision which
includes a statement of (1) findings and conclusions, as well as the reasons or basis
therefor, upon all the record; material issues of fact, law, or discretion presented on
and (2) an appropriate order. Exceptions to the trial examiner’s recommended decision

may be taken by either counsel.
Briefs may be filed within a stated time after the trial examiner’s

DESCRIPTION OF PROCEDURE

37

recommended decision is made and, in the discretion of the Commission, upon the
written application of the attorney for the respondent or the attorney sup porting the
complaint, 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.
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 p arty may apply to the Supreme
Court for review, by certiorari, of the action of the circuit court of appeals.
PROVISIONS OF WHEELER-LEA AMENDMENT 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, cosmetics,
and devices (meaning devices for use in the diagnosis, prevention, or treatment of
disease) 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

38

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

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.
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 of 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 INVESTIGATIONS
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 an d 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 periodical advertising (see pp.44 to 47), there were
pending for investigation2 132 preliminary or undocketed cases, and 176 additional
applications of this character were received during the year, making a total of 308 on
band, of which 168 were investigated. Of the investigated matters 163 were docketed
for action and 5 were closed without docketing because of lack of jurisdiction or other
reasons. There remained 140 preliminary cases of this type pending for investigation
at the end of the fiscal year.
Two hundred and ninety-one applications for complaint which had been docketed
without preliminary investigation were pending for regular investigation at the
beginning of the year. Subsequently 282 additional cases of this type were received,
making a total of 573 such cases docketed for investigation. Of these 209 were investigated and transmitted to the Commission for action, leaving 364 cases of this character

pending for investigation at the close of the year.
During the year, 282 further investigations were made, including

2 Statistics reported on pp. 38 to 47 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. 62-64.

LEGAL INVESTIGATIONS

39

inquiries into alleged violations of cease and desist orders and stipulations,
investigations for the Chief Trial Counsel and others of a supplemental and special
nature. At the end of the year 250 such matters awaited completion of investigation.
Aside from matters handled as the result of the continuing survey of radio and
periodical advertising and others of the same type not requiring field investigations,
the Legal Investigations Division completed 752 investigations under the laws
administered by the Commission, including those made in connection with industrywide inquiries in the household fabric dye and the cosmetic and toilets preparations
industries. There were also disposed of in connection with the legal investigational
work of the Commission 15,299 pieces of incoming and outgoing mail relating to
matters of complaints and inquiries involving varying degrees of research and study.
Price fixing and other trade restraints.--In the Congressional debates leading to the
passage of the Federal Trade Commission Act in 1914, there was stressed the necessity
for the establishment of an agency in Government to eliminate trade practices which,
if carried to fruition, would result in monopoly or have a tendency toward that end. At
the beginning of this fiscal year, 57 cases of this type were either awaiting
investigation or being investigated. During the year, 135 additional cases were
instituted, making a total of 192 restraint-of-trade matters on the calendar. Seventy
investigations of this type were completed for consideration and disposition by the
Commission, leaving 122 cases pending on the active investigational calendar as of
June 30, 1947.
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 comprise
such practices as price fixing, conspiracy to boycott or threats of boycott coercion,
collusive bidding, control and limitation of supply, interference with sources of supply
of competitors, intimidation, full-line forcing and tying contracts, various forms of
basing-point, delivered-price and zoning systems designed to eliminate price
competition, misuse of patents and licensing agreements for monopolistic purposes,
resale price maintenance, and selling below cost with the intent and effect of injuring
competitors. Of these, price fixing continues to be the most frequently recurring
charge.
The following general classifications of commodities involved convey an idea of the
widespread nature of the restraint-of-trade investigations : cellulose, lenses for traffic
lights, magazines, drugs, bottled gas, toys, petroleum and petroleum products, sheet
music, women’s wearing apparel, display cases, quartz crystals, paper, cottonseed,
watches, milk, hearing aids, household furniture and rugs, sheet steel, book matches,
chemicals, motion picture films, beer, dental equipment and supplies, batteries, sewer
pipe, natural gas, building materials, furnaces and furnace fittings, and many others.
Included in the above figures are 18 completed matters involving formal docketed
cases. These consisted of a variety of matters, some to bring up to date investigations
of complaints which had not yet been tried, but for the most part they consisted of
complete investigations to determine whether the terms of Commission cease and
desist orders had been violated. Where violations of orders were found, evidence was

obtained in appropriate form to support civil

40

ANNUAL RE PORT OF THE FEDERAL TRADE COMMISSION, 1947

penalty actions. Such investigations are equally extensive with those conducted in
original cases. Fourteen cases of this character were pending at the close of the
fiscal year.
Of the 192 restraint-of-trade investigations in progress during the fiscal year, 6
resulted from applications for complaint filed by Federal, State, or municipal
agencies; 7 were submitted by trade associations; l by a labor union; and 35 were
initiated by the Commission on its own motion. Most. of the other cases originated
as a result of complaints made by individuals and concerns whose business was
being jeopardized by alleged unfair and illegal practices.
Clayton Act, section 2, as amended by Robinson-Patman Act.--The RobinsonPatman Act, approved June 19, 1936, amended section 2 of the Clayton Act and
restated in more inclusive form the basic principles 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.
An effort is made by the Commission in preliminary stages of an investigation
under the Robinson-Patman Act to determine not only whether the practice in
question involves prima facie violation of the act but whether the defenses available
thereunder 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, 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.
At the beginning of the year there were on hand for investigation 88 matters
involving the Robinson-Patman Act, which included l for investigation as to
compliance with an order to cease and desist, and 3 were formal matters for
additional investigation. Aside from investigations made in industry-wide studies
involving this act, the Commission instituted field investigations of alleged
violations of the Robinson-Patman Act in 56 matters. Additional investigations
were made in connection with 13 formal cases. At the close of the year 106 matters
were pending, including 6 formal cases and 15 cases being investigated in
connection with an industry-wide inquiry involving the manufacturers of papercutting machine knives.
During the year, 139 investigations were completed. This number included the
investigation of 73 companies in an industry-wide survey of the cosmetic and toilet
preparations industry and 11 investigations made in connection with formal cases.

As in previous years the administration of the statute touched widely varied fields
of industry and commerce and involved many classes of commodities.

LEGAL INVESTIGATIONS

41

The proceedings of the Commission and the decisions of the courts in RobinsonPatman Act cases have served as useful guides for mem-hers 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.
Clayton Act, section 3.--This section of the act has reference to exclusive dealing
contracts made upon condition that the buyer or lessee will not deal in the goods,
wares or merchandise of a competitor. There were 17 such cases pending at the
beginning of the fiscal year awaiting investigation. During the fiscal year, is
additional cases were instituted making a total of 35 such cases on the calendar.
Fourteen investigations of this type were complete during the fiscal year for
consideration and disposition by the Commission, leaving 21 pending on the active
investigational calendar as of June 30 , l 947.
The following commodities were involved in these investigations : motion picture
films, beauty culture service, farm machinery and implements , fish , shrimp,
gasoline, auto accessories and general merchandise, hearing aids, advertising space,
soft drinks, fuel oil, baking soda, tobacco products, metallic packing, fire
extinguishers and refills, towel cabinets, wire-tying machines and tying wire, rivets
and rivet machines, and vending machines.
Included in the above figures are three completed matters which involved formal
docketed cases. Twenty-one of such cases were p ending at the close of the fiscal
year.
Of the 35 exclusive-dealing contract investigations in progress during the fiscal
year, some of the applications for complaint were filed by trade associations, some
by newspaper companies and others by the Commission on its own motion. The
greatest number, however, resulted from complaints made by individuals,
companies and corporations alleging unfair practices which jeopardized their
respective businesses.
Stock acquisitions, mergers and consolidations.--The Commission and the
Department of Justice are invested with concurrent jurisdiction to prevent and
restrain violation of the Clayton Act. Section 7 of the act prohibits the direct or
indirect acquisition by one corporation engaged in commerce of the stock or other
share capital of another corporation engaged also in commerce, or the acquisition
by a holding company of the stock or share capital of two or more corporations
engaged in commerce, where the effect of such acquisition or acquisitions, or the
use of such stock by the voting or granting of proxies or otherwise, may be to
substantially lessen competition between the acquiring and the acquired
corporations or any of them, restrain such commerce in any section or community,
or tend to create a monopoly of any line of commerce. The formation of subsidiary
corporations for the actual carrying on of the immediate lawful business of the
acquiring corporation and the acquisition of the capital stock thereof is excepted
from the prohibition. The purchase of capital stock solely for investment purposes,

where the stock is not voted or otherwise used to bring about the substantial
lessening of competition, is also excepted under the provisions of the section. The
acquisition of the property and assets of

42

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

a competing corporation or corporations, or the merger of the assets and businesses of
competing corporations is not prohibited by the statute and the courts have held that
the Commission is without authority to prevent such acquisitions or mergers
notwithstanding the effect thereof on competition and commerce or tendency to create
a monopoly.
The Commission’s work under section 7 of the Clayton Act during the year included
the consideration of two matters in which complaints were issued prior to the
beginning of the year. One of these matters, involving groceries and food products,
was dismissed and the other matter, involving building materials and fuel, was
awaiting disposition at the close of the year. This complaint also involved alleged
violation of section 5 of the Federal Trade Commission Act. No formal complaints
were issued during the year.
Applications for complaint were docketed in five matters, two of which were closed
after preliminary investigation. Six applications for complaint were pending at the
close of the year, the commodities involved being asbestos products, evaporated milk,
biscuits and crackers, and distillery products. During the year the Commission also
gave consideration to two undocketed matters which were closed after preliminary
investigation.
Investigations involving food drugs, devices, and cosmetics.--In the administration
of the Wheeler-Lea amendment to the Federal Trade Commission Act, 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 amendment, the Commission has completed 2,466 field
investigations of alleged violations of section 12 of the act, which relates to false
advertising of food drugs, devices, and cosmetics. Of these , 135 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, 143 applications for complaint respecting alleged false
advertising of food, drugs, devices, and cosmetics were under investigation.
Wool Products Labeling Act.--Investigation of applications for complaint alleging
violations of the Wool Products Labeling Act and of the regulations promulgated
thereunder present many complex problems, particularly to identify accurately 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 identify
accurately the various constituent fibers, and their

LEGAL INVESTIGATIONS

43

weights, which actually make up the products under investigation, and frequently
laboratory tests are required.
Violations of the Wool Act generally are coupled with false advertising,
misrepresentation, and other unfair or deceptive acts or practices or unfair methods of
competition, necessitating investigation and proceedings under both the Wool Products
Labeling Act and the Federal Trade Commission Act.
Since the effective date of the act, July 14, 1941, there have been completed 234
field investigation s of applications for complaint involving alleged false and improper
labeling, 15 during the fiscal year. At the close of the fiscal year, 15 such applications
were in process of investigation.3
Investigations under Export Trade Act.--In its administration of the Export Trade
(Webb-Pomerene) Act, the Commission directed the Legal Investigations 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 they (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 five
export trade associations whose members are important producers and distributors of
lumber, plywood, and books. Investigations of four other associations were pending
at the close of the year. These involved producers and distributors of alkali, rubber,
and lumber. (For further details of the administration of the Export Trade Act, see
p.80.)
Industry investigations.--During the Year the Commission directed that
investigations be conducted on an industry-wide scale when practicable. Such
investigations are authorized by the Commission when it appears that there exists in
an industry a practice or method of doing business that may call for corrective action
under any of the laws administered by the Commission. The purpose of the procedure
is to avoid placing a member or members of an industry in an unfair or
disadvantageous position by widely separated actions. This procedure may terminate
in a trade practice conference, the simultaneous negotiation of stipulations, or in a
separate proceeding brought simultaneously against each member of an industry found
to be guilty of the practice or method alleged.
Investigations of this type were directed in the following industries : household
fabric dye, cosmetic and toilet products, mothproofing products, machine knives for
pa p er cutting machines, imitation J)earl, manufacturers of cotton textiles, automobile
dealers in the District of Columbia, automobile dealers in New York City area, liquid
emulsion floor wax products, waterproofing products (cement and masonry), and
textile looms.

3

For additional work under the wool Act and the regulations, see p.76.

767228--48----4

44

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

Investigations of 4 of these industries were completed during the year. These
investigations covered the individual activities of 182 different concerns, as follows:
Industry
Household fabric dye
Cosmetic products
Waterproofing products (cement and masonry)
Mothproofing products
Total

Number of
companies
investigated
22
73
14
73
182

SURVEY OF RADIO AND PERIODICAL ADVERTISING
The Commission maintains its Radio and Periodical Division to conduct expeditious
investigations of certain cases involving false and misleading advertising violative of
the Federal Trade Commission Act, as well as other types of cases not requiring field
investigations and including certain industry-wide investigations.
The survey of advertising was inaugurated by the Commission in 1929 and limited
to magazines and newspapers. Expanded in 1934 to cover radio commercial
continuities, it also has included, since 1939, 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 are complying with orders an& stipulations to
discontinue false and misleading representations.
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 65, 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. Effective
August 12, 1946, the duty of negotiating stipulations based on investigations
conducted by the Radio and Periodical Division was transferred to the Division of
Stipulations, established the same date.
In matters involving advertising, the investigations cover the practices of all
advertising agencies who participated in the preparation of the advertisements to
determine whether they should be joined as parties in any corrective action by the
Commission.
The only objective of the Commission’s continuous survey of advertising is to
prevent false and misleading advertisements. It does not undertake to dictate what an
advertiser shall say, but merely indicates what he may not say under the law.
Newspaper and magazine advertising.--It has been found advisable in examining
advertisements in current publications 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 more than 20,000,
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 require that advertising copy be
censored before acceptance.
Copies of current magazines and newspapers generally are procure d on a staggered
monthly basis, at an average rate of three times

SURVEY OF RADIO AND PERIODICAL ADVERTISING

45

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, the Commission procured l,733
editions of representative newspapers of established general circulation and 1,309
editions of magazines and farm and trade journals of interstate distribution. These
periodicals included 236 issues of farm 179 issues of trade journals and specialty
publications, and 10 issues of domestic foreign-language publications.
In these newspapers, magazines, and farm and trade journals, 398,711
advertisements were examined, of which 18,256 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 14,239 pages, examination of which resulted in
238 advertisements being marked as containing possibly false and misleading
representations. Of the 102 mail-order houses included in the survey, 5 had combined
annual sales in excess of $2,782,021,573.
Radio advertising.--The Commission issued calls for commercial continuities four
times yearly up to July 1943, twice yearly up to January 1, 1947, and thereafter three
times yearly, from each individual radio station. National and regional networks
respond on a continuous weekly basis, submitting copies of the commercial advertising
parts of all programs wherein linked hook-up s 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 is supplemented by periodic reports from individual stations
listing the identities of recorded commercial transcriptions and related data.
The Commission received copies of 679,232 commercial radio broadcast
continuities and examined 641,402. The continuities received amounted to 1,487,437
typewritten pages and those examined totaled 1,430,692 pages, consisting of 568,340
pages of network script, 833,352 pages of individual station script, and some 29,000
pages of script representing the built-in advertising portions of transcription recording
productions destined for radio broadcast through distribution of multiple pressings of
such recordings to individual stations. An average of 5,654 pages of radio script was
read each working day. From this material 9,573 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, 16 regional network
groups, and transcription producers engaged in preparing commercial radio recordings;
and of 898 commercial radio stations, 493 newspaper publishers, and 404 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.
Analysis of questioned advertising.--Analysis of the questioned advertisements,
which were assembled into 1,299 cases and given legal

46

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

review, discloses that they pertained to 1,336 commodities in the proportions indicated
below :

CLASSIFICATION OF PRODUCTS
Commodity
Food, drugs, devices, cosmetics :
Food (human)
Food (animal)
Drugs
Cosmetics
Devices

Percent
4.7
1.2
55.8
16.9
2.2
80.8

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

1.4
2.0
1.1
2.2
12. 5
19.2
100.0

Number of cases handled.--At the close of the year, 680 cases were pending as
compared with 640 at the close of the previous fiscal year. During the fiscal year, 345
investigations were completed and 335 new investigations were initiated, 212 of which
were originated through the division’s general survey of advertising, 107 through
letters of complaint and 16 through reference by the Commission. Settlement by
stipulation was recommended in 99 cases; issuance of complaint in 5 cases.
Correspondence handled by the division totaled 2,505 incoming pieces of mail and
8,275 outgoing pieces.
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. Then a list of the claims that appear to be false or misleading is sent to
the advertiser, together with a statement based upon the scientific opinion theretofore
obtained. The advertiser is invited to submit informally by letter, or in person, or by
counsel any evidence he chooses in support of his claims.
If, after a consideration of all available evidence, 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 in the investigational files that the
advertising is false and misleading, the matter is referred to the Commission with
recommendation either that complaint issue or that 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.
Industry-wide investigations.--Pursuant to the reorganization plan effective August
12, 1946, the Commission, through its Radio and Periodical Division, completed an
industry-wide investigation of the

I. COMPLAINTS UNDER FEDERAL TRADE COMMISSION ACT

47

mothproofing products industry which dealt with the advertising and promotional
practices of 73 separate companies.
At the close of the year the division was conducting industry -wide investigations
with respect to the advertising and promotional practices of the simulated and cultured
pearls industry, involving 122 separate companies, and the floor wax products
industry, involving 107 manufacturers and distributors of all types of such products.
DISPOSITION OF CASES BY STIPULATION
Instead of disposing of cases by the formal complaint and trial method, the
Commission under certain circumstances affords respondents the opportunity of
signing a statement of facts and an agreement to cease and desist from most types of
unfair methods of competition and unfair or deceptive acts or practices in commerce.
The policy of the Commission with respect to stipulations of this type is set forth in
its Statement of Policy. (See p.119.)
During the fiscal year the Commission approved 145 stipulations, of which 120 were
negotiated through the Division of Stipulations after it was established on August 12,
1946. (See p.65 for report of the Division of Stipulations.)
FORMAL COMPLAINTS
During the fiscal year the Commission issued 53 formal complaints alleging
violations of the laws it administers. Of this total, 39 charged violation of the Federal
Trade Commission Act; 9, violation of the Clayton Act; 3, violation of the Federal
Trade Commission and Clayton Acts; and 2, violation of the Wool Products Labeling
and Federal Trade Commission Acts.
I. COMPLAINTS UNDER FEDERAL TRADE COMMISSION ACT
A. PRICE-FIXING COMBINATIONS AND RESTRAINT-OF-TRADE PRACTICES
[Complaints referred to are identified by accompanying docket numbers]

In each of five complaints issued by the Commission competing manufacturers and
sales organizations were charged with combining, through their trade associations and
otherwise, to fix prices and restrain trade in the sale of their products. The products
involved in these complaints were glazed facing the (5467); brick (5468); vitrified
sewer pipe (5483 and 5484) and corn products (5502). Complaints 5483, 5484, and
5502 also alleged price discrimination in violation of the Robinson-Patman Act.
The Commission also issued four complaints (5495, 5496, 5497 and 5498)
separately charging four producers of motion picture advertising films with unfair
competitive practices through the use of exclusive dealing contracts with various
motion picture exhibitors.
B. FALSE ADVERTISING AND MISREPRESENTATION

A total of 26 corn plaints charged false and misleading advertising. They may be
classified broadly as follows, although some involved more than one classification :
Five complaints alleged false and misleading representations with respect to the
therapeutic properties of medicinal preparations and devices, and in some cases a

vertisements also were alleged to be false and misleading because they failed to reveal
the potential danger

48

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

from the use of the products advertised; four charged misrepresentations concerning
the properties of cosmetics; five, misrepresentations as to the origin, composition,
condition, quality, ingredients, or price of the products advertised; five,
misrepresentation as to results to be obtained through the use of products; two,
misrepresentation as to business status; two, misrepresentation in connection with the
sale of correspondence school courses; and three, misrepresentation in connection with
making so-called special offers.
C. MISCELLANEOUS COMPLAINTS

Complaints issued under this heading alleged such practices as sup-plying and using
lottery devices to promote the sale of merchandise; misrepresenting that the profits
from the sale of merchandise go to charitable organizations; misrepresenting, in
connection with the sale of advertising, that it will be published in a local telephone
directory or other well established publications; and misuse of the names “Army” and
“Navy” in connection with the sale of products.
II. COMPLAINTS UNDER WOOL PRODUCTS LABELING ACT

Two 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 were not labeled so as to disclose 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. (5457 and 5489)
III. COMPLAINTS UNDER CLAYTON ACT
A. VIOLATION OF SECTION 2 (a) OF CLAYTON ACT, AS AMENDED BY
ROBINSON-PATMAN ACT

Three complaints alleged violation of section 2 (a) which prohibits discrimination
in price when it may have adverse effects on competition. The complaints involved
vitrified sewer pipe and other clay products (5483 and 5484) and corn products (5502).
B. VIOLATION OF SECTION 2 (c) OF CLAYTON ACT, AS AMENDED BY
ROBINSON-PATMAN ACT

Nine 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. Seven of the complaints (5456, 5460, 5462,
5469, 5471, 5482, and 5494) involved food products; one (5470), women’s apparel
and accessories; and one (5501),men’s clothing.
C. VIOLATION OF SECTION 2 (d) OF CLAYTON ACT, AS AMENDED BY
ROBINSON-PATMAN ACT

A company and its officers were charged with paying one of their customers for
advertising and other services furnished by the customer while not making such
payments available on proportionally equal terms to all of their customers who were
competing in the sale of the respondents’ products with the favored customer (5482).

ORDERS TO CEASE AND DESIST
The Commission during the fiscal year issued 56 orders to cease and desist from the
use of unfair methods of competition and other viola-

I. ORDERS UNDER FEDERAL TRADE COMMISSION ACT

49

tions 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

National Retail Liquor Package Stores Association, Inc., New York, and others.-This Nation-wide association, whose membership is composed of various State,
county, municipal, and local retail liquor associations, was ordered by the Commission
to cease and desist from entering into or continuing any agreement or conspiracy with
any of its members to fix uniform retail prices; to compel manufacturers by threat of
boycott to sell at prices fixed by the association; to compel manufacturers by threat of
boycott not to sell to retailers who sell at prices less than those set by the association;
or to compel manufacturers by threat of boycott to grant uniform discounts and
allowances to all retail liquor dealers who are members directly or indirectly of the
association (4168).
Tag Manufacturers Institute, New York, and others.--This association of
manufacturers and its members, who produce and sell 95 percent of the tags and like
marking and pricing devices used in the United States, were ordered by the
Commission to cease and desist from entering into or carrying out any conspiracy or
planned common course of action to fix prices; to exchange information on present or
future prices or conditions of sale; to take any action to secure compliance with any
pricing policies; or to participate in any open price reporting plan which has the effect
of injuring competition (4496).
B. FALSE ADVERTISING OF FOOD, DRUGS, DEVICES, AND COSMETICS

Langendorf United Bakeries, Inc., San Francisco.--The respondent, in connection
with the manufacture and sale of Hollywood, Holsom and other brands of bread, was
found to have deceived the falsely advertising the qualities and properties of its public
by example, the baker made statements which misled the public into believing that by
eating Hollywood brand bread as part of an effective reducing diet hunger would be
prevented, and that the bread has greater reducing properties than ordinary bread. The
Commission ordered the respondent to cease and desist from these and similar
misrepresentations. The order also prohibits the respondent from representing it has
been appointed official baker for the Dionne quintuplets (5250).
Frontier Asthma Co., Buffalo, and others,--In the order in this case the Commission
banned advertisements which represented that the res p ondents’ medicinal
preparations constitute cures or remedies for asthma or possess any therapeutic value
in the treatment of asthma except that they may afford temporary relief from the
paroxysms of the ailinent (3935).
Modern Home Diathermy, Los Anyeles.--The inhibitions in this order were directed
against representations that the respondent’s device sold under the name of Vitatherm
Short Wave Diathermy when used by unskilled laymen in the treatment of selfdiagnosed conditions, is a scientific, effective or competent treatment of, or remedy
for, arthritis, neuralgia, asthma, bronchitis, rheumatism,

50

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

lumbago or Similar disorders; or that the device constitutes a competent or effective
treatment for the alleviation of pain resulting from diseases and ailments, unless such
claim is specifically limited to conditions which do not involve acute inflammatory
processes, glandular structures or the special senses. The Commission found that the
device instead of being beneficial might result in serious and irreparable injury to
health under certain conditions. It ordered the respondent to discontinue disseminating
advertisements which fail to reveal that the device is not safe for use for any condition
unless a competent medical authority has determined, as a result of diagnosis, that the
use of diathermy is indicated and has prescribed the frequency and rate of application
of the treatments, and the user has been adequately instructed by a trained technician
in the use of the device (5032.)
The Myndall Cain House of Beauty, Minneapolis.--The Commission in this case
prohibited numerous representations concerning the results to be accomplished by use
of cosmetics known as the Myndall Cain line. The Commission ordered the
respondents to discontinue representing that their cosmetics keep the complexion
young, nourish and revitalize the skin and correct any complexion fault; or that the oils
in the preparations have any beneficial effect on the skin in excess of their ability to
facilitate the removal by mechanical means of foreign matter and to temporarily soften
dry skin when caused by external conditions. Other provisions of the order were
directed against the use of trade names of certain of the products which the
Commission found to be deceptive and misleading (5466).
Oxford Products, Inc., trading as Vitamin Guild of America, Cleveland, Ohio.-Ruling that gray hair is not known to be the result of vitamin deficiency, the
Commission ordered this respondent to cease and desist from making such a
representation and from advertising that its product, Calcium Pantothenate Vitamin Tablets (Cal-Pan), is a gray hair or antigray hair vitamin, the use of which will prevent
gray hair or restore the original color to gray hair (5388).
C. UNFAIR PRACTICES OTHER THAN MISREPRESENTATION OF DRUGS,
DEVICES, AND COSMETICS

William A. Herman, New York.--The respondent was ordered to cease and desist
from misrepresenting his private detective and investigating agency to be a business
devoted to genealogical research and the locating of missing heirs in order to obtain
information “by deceit and subterfuge.” The Commission found that the respondent’s
principal business was the investigation of persons making claims against insurance
companies or employers in connection with industrial insurance and workmen’s
compensation laws, but that he sought to obtain information for this purpose, as well
as for other investigations, by disguising the true nature of his business through use of
the trade name “National Estates Research” and by other means (5225).
E. H. Roberts Portrait Co., Kansas City, Mo., and others.-Practices tending to
mislead and deceive the purchasing public with respect to the nature of the
respondents’ business and the quality and value of tinted or colored enlargements and
miniatures of photographs, as well as frames for such reproductions, are p rohibi ted
by the order in this case. Among the numerous practices found to be deceptive were

III. ORDERS UNDER THE CLAYTON ACT

51

representations that the reproductions sold by the respondents were “paintings” which
were being sold at special or reduced prices; the display of attractive “samples” when
the final products delivered were inferior to such specimens; and failure to disclose
that the portraits were of such an unusual shape and design that they required a frame
which could be procured only from the corporate respondent (4692).
Central University, Indianapolis.--In this case the Commission ordered a
correspondence school operated solely by its secretary from her residence to stop
describing itself as a university and otherwise misrepresenting its status. The order
prohibits the respondent from representing that the school is a larger institution than
it actually is or that it has more complete educational facilities or a larger student
enrollment than is the fact. Commission findings were to the effect that there was
neither a resident faculty nor a resident study body and that neither the credits earned
by students of the school nor the degrees conferred are recognized by reputable ‘
accredited colleges or universities (5326).
II. ORDERS UNDER WOOL PRODUCTS LABELING ACT
This act and the rules and regulations promulgated 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 non-process
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 following cases are illustrative of the orders issued
:
David D. Doniger & Co., New York.--The Commission ordered this respondent,
which manufactures and sells “McGregor” sportswear and sweaters, to discontinue the
practice of placing the information required by the Wool Products Labeling Act on
labels bearing the statement “Detach for Stock Control.” The order requires that the
information called for by the act be shown clearly and conspicuously by means of a
stamp, tag, label or other mark attached securely to the respondent’s products. The
order also prohibits the use of conflicting labels on the same garment, and provides
that when the name of a specialty fiber from the hair of the camel, alpaca, llama or
vicuna is used, such fiber shall not be described by any other name on any other label
or tag attached to the product (5157).
Bolger Brothers, Philadelphia.--The respondent, a corporation engaged in
garnetting or reclaiming wool waste material, was ordered to cease an desist from
selling it without labeling it to show the percentage of wool and other information
required by the Wool Products Labeling Act (5378).
III. ORDERS UNDER THE CLAYTON ACT
A. VIOLATION OF SECTION 2 (a) OF CLAYTON ACT. AS AMENDED BY
ROBINSON-PATMAN ACT

Draper Corp., Hopedale, Mass.-This corporation, the sole manufacturer in the

United States of single shuttle cotton and synthetic fiber

52

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

automatic looms, was ordered to cease and desist from discriminating in price between
its various costumers in connection with the sale of bobbins, shuttles and repair and
re placement parts for automatic looms. The Commission found that the respondent
granted a special discount to textile mill owners operating looms of Draper
manufacture and that this discrimination had an adverse effect on competition (5436).
(For part of the order dealing with section 3 of the Clayton Act, see below.)
B. VIOLATION OF SECTION 2 (e) OF CLAYTON ACT, As AMENDED BY
ROBINSON-PATMAN ACT.

Seven orders were directed against violations of the brokerage section of the
Robinson-Patman Act, which prohibits, in connection with transactions in interstate
commerce, the payment by a seller or acceptance by a buyer of brokerage fees or other
compensation in lieu thereof on purchases made by such a buyer in his own behalf f
or by an agent or other intermediary acting for him or subject to his control.
Food dealers paying unlawful brokerage to buyers.--The respondents in five orders
were directed, in connection with the interstate sale of seafood products, 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 the orders are :
Custom House Packing Corp., Monterey, Calif., and others (5404); High Seas Tuna
Packing Co., Inc, San Diego, Calif. (5428); West Coast Packing Corp., Long Beach,
Calif., and others (5432); French Sardine Company of California, Terminal Island,
Calif. (5456); and California Marine Curing & Packing Co., Terminal Island, Calif.,
and others (5462).
Dealers accepting unlawful brokerage from seller.--The following two respondents,
in connection with their interstate 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 :
C. H. Robinson Co., and others, Minneapolis, fruits and Vegetables (4589); and
Robert Rosoff, Trenton, N. J., furs and fur garments (5370).
C. VIOLATION OF SECTION 3 OF CLAYTON ACT

Draper Corp., Hopedale, Mass.--The Commission ordered the respondent to cease
and desist from entering into or continuing in effect any contract for the sale of
bobbins, shuttles and repair and replacement parts for automatic looms, which contract
contains any agreement or understanding that the purchaser shall not use or deal in
competitive equipment or parts. These exclusive-dealing contracts, providing for the
sale of loom equipment and parts at special low prices in consideration of the
purchaser’s agreement to buy such products exclusively from the respondent, were
found by the Commission to lessen competition and to tend to create a monopoly
(5436). (For part of the order dealing with section 2 (a) of the Clayton Act, see p.51.)
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

TYPES OF UNFAIR METHODS AND PRACTICES

53

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, at-tributes, or properties, or nature of manufacture, and
selling them under 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 be 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 employer’s knowledge or consent, to obtain or hold patronage.
5. Procuring 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.

54

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

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 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.
18. Aiding, assisting, or abetting unfair practice, misrepresentation, and deception,
and furnishing means or instrumentalities there-for; 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 with-out 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

TYPES OF UNFAIR METHODS AND PRACTICES

55

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 of carrying
charge on deferred payments.
20. Using containers ostensibly of the capacity customarily associated by the
purchasing public with standard weights or quantities 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
failing to disclose the termination of such relationship, in soliciting customers of such
concern, 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 nurseryman, 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

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

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.
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 false making promises or holding out guaranties,
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 o 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 therefor 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

TYPES OF UNFAIR METHODS AND PRACTICES

57

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
offers.
(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.
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 in 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 making 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 products 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

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

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 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
widespread 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 repre-

CASES IN FEDERAL COURTS

59

senting rising market conditions and demand, and leading seller to ship under t e belief
that he would receive prices higher than the buyer intended to or did pay.
CASES IN FEDERAL COURTS
COMMISSION ACTIONS IN THE UNITED STATES SUPREME, CIRCUIT, AND
DISTRICT COURTS

During the fiscal year there were 28 cases in the United States Supreme Court and
circuit courts of appeals in which the Commission was a party.
Rulings favorable to the Commission were obtained in 16 cases. In this group were
four cases before the Supreme Court and eight before circuit courts of appeals which
finally were concluded in favor of the Commission.
Rulings were unfavorable to the Commission in five cases, three of these before
circuit courts of appeals being concluded finally.
At the end of the fiscal year 12 cases, 1 in the Supreme Court and 11 in circuit courts
of appeals, were pending.
The United States Supreme Court granted certiorari requested by the Commission
in one case wherein a circuit court of appeals had set aside the Commission’s order to
cease and desist, and denied certiorari requested by others in four cases wherein circuit
courts of appeals had affirmed the Commission ands orders to cease and desist.
Circuit courts of appeals affirmed six Commission orders to cease and desist, one
with modification and one with a dismissal as to one respondent; dismissed three
petitions to review, thus leaving Commission orders to cease and desist in effect;
remanded one proceeding at the request of the Commission to enable it to reinstate its
order to cease and desist; denied a petition for injunction which attempted to enjoin
a Commission proceeding; remanded one proceeding at the request of the Commission
to enable it to set aside the order to cease and desist; remanded one proceeding for
modification of an order to cease and desist; and set aside three Commission orders to
cease and desist. A petition for rehearing was filed by the Commission in one of the
latter cases and was denied. Seven petitions to review Commission orders to cease and
desist were filed in circuit courts of appeals.
Six civil penalty proceedings were pending at the beginning of the fiscal year and
one additional Civil penalty proceeding was instituted during the year. These
proceedings were certified by the Commission to the Attorney General of the United
States under section 16 of the Federal Trade Commission Act. Of these seven
proceedings one was dismissed, one resulted in a judgment for $38,000 in a district
court, one was rejected by the Attorney General, and four were pending at the end of
the fiscal y ear.
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 section 2 of the
Clayton Act, as amended by the Robinson-Patman Act, are summarized below.
(Except where otherwise indicated, cases involve violation of the Federal Trade Com

mission Act. United States circuit courts of appeals are designated First Circuit
(Boston), etc.).
767228--48----5

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

CASES DECIDED BY THE COURTS
Acme Asbestos Covering & Flooring Co., and others, Chicago.--The Sixth Circuit
(Cincinnati) affirmed the Commission order to cease and desist except as to one
respondent in a case involving a price-fixing combination and restraint of trade in the
sale of pipe insulation, through use of license agreements and zone-delivered prices.
American Drug Corp., St. Louis, Mo.--The Eighth Circuit (St. Louis) remanded this
case to the Commission on motion of the Commission. The Commission then
reinstated its order to cease and desist which had been vacated previously. The order
is directed against misrepresentation of a medicinal preparation.
A. P. W. Paper Co., Albany, N. Y.--The Second Circuit (New York) remanded this
case and directed the Commission to consider the desirability of modifying the order
to cease and desist to accord with the mandate of the Supreme Court. The Commission
modified the order in accordance with the court’s direction.
Elizabeth Arden, Inc., and others, New York.--The Supreme Court of the United
States denied a petition for writ of certiorari to review a decision of the Second Circuit
(New York) affirming the Commission’s order to cease and desist from violation of
section 2 (e) of the Robinson-Patman Act by discrimination in the furnishing of
cosmetic demonstrator services to retailers.
Nelson C. Brewer, and others, Chicago.--The Sixth Circuit (Cincinnati) affirmed the
Commission’s order prohibiting the sale of lottery devices in interstate commerce.
S. Buchsbaum & Co., Chicago.--The Seventh Circuit (Chicago) set aside the
Commission’s order forbidding use of the term “Elasti-Glass” to designate or describe
merchandise made of vinylite or any other similar synthetic resinous compound.
The Cement Institute, and others Chicago.--The Seventh Circuit (Chicago) set aside
the Commission s order to cease and desist issued under the Federal Trade
Commission Act and the Robinson-Patman Act and involving alleged Nation-wide
restraint of competition in the price of Portland cement through the agreed use of a
multiple basing-point delivered-price system. The Supreme Court granted a writ of
certiorari to review the circuit court decision.
Eastman Kodak Co., Rochester, N. Y.--The Second Circuit (New York) affirmed the
Commission’s order forbidding suppression of competition by use of a resale-pricemaintenance policy in connection with the sale of photographic film. The Supreme
Court denied a writ of certiorari. (Subsequently, the Commission modified its order
so as to permit Eastman to use such a sales policy in selling Kodachrome film because
the product is now “sold in free and open competition” with Ansco color film
manufactured by a competitor of Eastman.)
General Seafoods Corp., and others, Boston.--The First Circuit (Boston) remanded
this case to the Commission in accordance with stipulation of counsel to vacate the
order and dismiss the complaint which had alleged misrepresentation in the sale of
seafood.
Harvest House, New York.--The Second Circuit (New York) dismissed the petition
to review in accordance with the stipulation of counsel. The Commission’s order
prohibits misrepresentation of a book dealing with methods for developing the body.

CASES IN FEDERAL COURTS

61

Koret, Inc., New York.--The Second Circuit (New York) dismissed the petition to
review in accordance with stipulation of counsel. The modified order in this case is
directed against certain representations concerning the composition of women’s
handbags.
Langendorf United Bakeries, San Francisco.--The Ninth Circuit (San Francisco)
dismissed the petition to review in accordance with stipulation of counsel. The order
was directed against misrepresentation of bread.
Morton Salt Co., Chicago.--The Seventh Circuit (Chicago) set aside the Commission
ands order to cease and desist involving alleged violation of section 2 (a) of the
Clayton Act by discriminating in prices of salt.
National Crepe Paper Association of America, and others, Philadelphia.--The
Seventh Circuit (Chicago) affirmed the Commission’s order forbidding price fixing
in the sale of paper through use of a system of zone-delivered prices. The Supreme
Court denied a petition for writ of certiorari.
The Parker Pen Co., Janesville, Wis.--The Seventh Circuit (Chicago) modified and
affirmed the Commission’s order forbidding misleading advertising of guaranties in
connection with the sale of fountain pens.
Vacu-Matic Carburetor Co., Wauwatosa, Wis.--The Seventh Circuit (Chicago)
affirmed the Commission ands order prohibiting misrepresentation concerning the
economy in gasoline consumption to be derived from use of a mechanical device for
attachment to automobile engines. The Supreme Court denied a petition for writ of
certiorari.
CASES PENDING IN THE COURTS
Allied Paper Mills, Kalamazoo, Mich., and others.--Seventh Circuit (Chicago),
combination in restraint of trade in book print and coated paper.
Amasia Importing Corp., New York.--Second Circuit (New York) , misbranding and
mislabeling of women’s girdles.
American Association of Law Book Publishers, Rochester, N. Y., and others.-Second Circuit (New York) and price-fixing combination in law books and legal
publications.
Canute Co., Milwaukee.--Seventh Circuit (Chicago) , false and misleading
advertising of Canute Water, a hair dye.
The Cement Institute, and others, Chicago.--Supreme Court of the United States ,
alleged Nation-wide combination to restrain competition in the price of Portland
cement and to discriminate in price through the agreed use of a multiple basing-point
delivered-price system.
Consumers Home Equipment Co., and others, Detroit.--Sixth Circuit (Cincinnati)
, false and misleading representations as to silverware, mattresses and other household
goods.
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 o f automobile engines and mileage.
Morton Salt Co., Chicago.--Seventh Circuit (Chicago) , alleged price discrimination

in the sale of salt, in violation of section 2 (a) of the Robinson-Patman Act. The case
is pending on petition for rehearing.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

Edward P. Paul & Co New York.--United States Court of Appeals for the District
of Columbia, false and misleading advertising of lamps, dishes and other articles.
Rigid Steel Conduit Association, and others, New York.--Seventh Circuit (Chicago),
price-fixing combination through use of basing-point system.
Scotch Woolen Mills, Chicago.--Seventh Circuit (Chicago), mis-leading use of the
words “Scotch” and “Mills” in trade name.
Standard Oil Company, an Indiana corporation, Chicago --Seventh Circuit
(Chicago), price discrimination in the sale of gasoline in violation of section 2 (a) of
the Robinson-Patman Act.
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”
basing point system of fixing prices for rolled-steel products in alleged violation of the
Clayton and Federal Trade Commission Acts.
CIVIL PENALTY JUDGMENTS
American Steel & Wire Co. Of New Jersey, Worcester, Mass.; Anaconda Wire &
Cable Co., Phelps-Dodge Copper Products Corp., and General Cable Corp., all of
New York; General Electric Co., Schenectady, N.Y.; and The Okonite Co., Passaic, N.
J.--Consent judgments totaling $38,000 were entered in the United States District
Court for the Southern District of New York against these six manufacturers of electric
wire and cable for alleged violation of a Federal Trade Com-mission cease and desist
order directed against a price-fixing conspiracy. General Cable Corp. paid a judgment
of $500 and the other five corporations paid judgments of $7,500 each. The suit for
recovery of civil penalties was filed at the direction of the Attorney General, acting on
the request of the Commission.
TABLES SUMMARIZING LEGAL WORK OF THE COMMISSION AND
COURT PROCEEDINGS, 1915-47
TABLE I.--Applications for complaints
FISCAL YEAR ENDED JUNE 30, 1941
Pending beginning of year
996
Applications aocketed
699
Previous action reconsidered :
To complaints
0
Settled by stipulation to cease
and desist
1
Settled by acceptance of TPC
rules
0
Consolidated with other proceed
ings
0
Dismissed
0
Closed without further proceed
Total for disposition
1,696
To cornplaints
41
Settled by stipulation to cease and

CUMULATIVE SUMMARY, 1915 TO JUNE 30, 1947
Applications docketed
Previous action reconsidered :
To complaints
Settled by stipulation to cease
and desist
Settled by acceptance of TPC
rules
Consolidated with other proceedings
Dismissed
Closed without further proceedings 1
Total for disposition
To complaints
Settled by stipulation to cease and

20,809
10
225
6
1
81
45
21,267
4,993

desist
128
Settled by acceptance of TPC rules
0
Consolidated with other proceedings 14
Dismissed
0
Closed without further proceedings 1 373
Total disposition during year
556
Pending end of year
1,140

desist
Settled by acceptance of TPC rules
Consolidated with other proceedings 172
Dismissed
Closed without further proceedings 1
Total disposition
Pending June 30, 1947

6,674
97
3,863
4,828
20,127
1,140

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

63

TABLES SUMMARIZING LEGAL WORK, 1915-47

TABLE 2.--Complaints
FISCAL YEAR ENDED JUNE 30, 1947

CUMULATIVE SUMMARY, 1915 TO JUNE 30, 1947

Pending beginning of year
423
Complaints docketed
53
Previous action reconsidered :
Orders to cease and desist
2
Settled by stipulation to cease and
desist
6
Dismissed
1
Closed without further proceeding 1
6
Total for disposition
479

Complaints
Previous action reconsidered :
Orders to cease and desist
Settled by stipulation to cease
and desist
Dismissed
Closed without further proceedings 1
Total for disposition

5,563

Complaints rescinded
Orders to cease and desist
Settled by stipulation to cease and
desist
Settled by acceptance of TPC rules
Dismissed
Closed without further proceedings 1
Total disposition
Pending June 30, 1947

12
3, 891

Complaints rescinded
0
Orders to cease and desist
50
Settled by stipulation to ccase and desist
2
Settled by acceptance of TPC rules
2
Dismissed
18
Closed without further proceedings 1
9
Total disposition during year
87
Pending end of year
392

69
1
12
2
5,587

66
38
975
213
5,195
392

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 courts of appeals
FISCAL YEAR ENDED JUNE 30, 1947
CUMULATIVE SUMMARY, 1915 TO JUNE 30, 1947
Pending beginning of year
Appealed
Total for disposition

18
7
25

Decisions for Commission
Decisions for others
Petitions withdrawn
Cases remanded to Commission
Total disposition during year
Pending end of year

6
3
3
2
14
11

Appealed
Decisions for Commission
Decisions for others1
Petitions withdrawn
Cases remanded to Commission
Petitions withdrawn
Total disposition
Pending June 30, 1947

375
194
103
65
2
65
364
11

1
This table lists a cumulative total of 103 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 52.
NOTE.--During the fiscal years 1919-47, inclusive, 60 petitions by the Commission for enforcement of orders to
cease and desist were passed upon by courts. Of these proceedings 56 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.

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, 1947
CUMULATIVE SUMMARY, 1915 TO JUNE 30, 1947
Pending beginning of year
Appealed by Commission

6
1

Appealed by Commission
Appealed by others

49
55

Appealed by others
Total for disposition

4
5

Decisions for Commission
Decisions for others
Petitions withdrawn by Commission
Certiorari denied Commission
Certiorari denied others
Total disposition during year
4
Pending end of year

0
6
6
6
4

64

Total for disposition
Decisions for Commission
Decisions for others
Petitions withdrawn by Commission
Certiorari denied Commission
Certiorari denied others
Total disposition
Pending June 30, 1947

104
29
15
2
9
48
103
1

1

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

TABLE 5.--Court proceedings--mandamus, injunction, etc.--district courts and
circuit courts of appeals
FISCAL YEAR ENDED JUNE 30, 1947
Pending beginning of year
Instituted by Commission
Instituted by others
Total for disposition

CUMULATIVE SUMMARY, 1915 TO JUNE 30, 1947
1
0

1

Decisions for Commission
Decisions for others
Petitions withdrawn by Commission
Petitions withdrawn by others
Cases remanded to Commission
Total disposition during year
Pending end of year

Instituted by Commission
Instituted by others
Total for disposition

72
42
114

2
1
0
0
0
1
2
0

Decisions for Commission
Decisions for others
Petitions withdrawn by Commission
Petitions withdrawn by others
Cases remanded to Commission
Total disposition
Pending June 30, 1947

83
18
5
7
1
114
0

TABLE 6.--Court proceedings--mandamus, injunction, etc.--Supreme Court of the
United States
FISCAL YEAR ENDED JUNE 30, 1947

CUMULATIVE SUMMARY, 1915 TO JUNE 30, 1947

Pending beginning of year
Appealed by Commission
Appealed by others
Total for disposition

0
0
0
0

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

0
0
0
0
0
0

Appealed by Commission
Appealed by others
Total for disposition

9
4
18

Decisions for Commission
Decisions for others
Certiorari denied Commission
Certiorari denied others
Total disposition
Pending June 80, 1947

3
5
1
4
18
0

PART III. SETTLEMENT OF CASES BY STIPULATION
AGREEMENTS ON CORRECTIVE ACTION RESULT FROM INFORMAL
CONFERENCES WITH BUSINESSMEN
The Commission on August 12, 1946, created the Division of Stipulations,
consisting of a Director and Assistant Director, a staff of attorney-conferees and a
small clerical force. All matters considered appropriate for settlement by stipulation
1 are referred by the Commission to this division, which serves upon the proposed
respondent a statement of the allegedly illegal practices the Office of Legal Investigations recommends should be stopped. The Division of Stipulations takes no part in
the investigation or prosecution of any matter.
When served with such statement, the proposed respondent may reply by
correspondence or confer with the Director of the Division of Stipulations, or with a
designated attorney-conferee, either in person or through his authorized representative.
Usually such conferences are presided over by an attorney-conferee and are
participated in by one or more representatives of the Office of Legal Investigations and
any other interested divisions, the proposed respondent and his representatives.
Thus all business is afforded an opportunity for an informal hearing. After a frank,
informal and thorough discussion of the issues involved, amicable settlements are
reached whereby any previous errors are corrected matters of no public interest
eliminated, and stipulations in disposition of the cases, covering such charges as are
deemed to have been substantially p roved, are forthwith drafted, signed and presented
to the Commission for its consideration in settlement of any remaining law violations.
Or a recommendation for closing the case in whole or in part, or for such other action
as appears to be in accordance with law and the public interest, is then submitted by
the division for consideration and final action by the Commission.
Since its inception in August 1946, the division has reported 198 cases to the
Commission with recommendation for their disposition as follows :
For acceptance of executed stipulation
For closing without prejudice
For further investigation
For issuance of complaint
Total

120
37
25
16
198

The Commission, through this division, encourages informal conferences with
businessmen and whenever in the course of negotiations for a stipulation, facts and
conditions are ascertained to exist in the industry involved which show a rather
uniform indulgence by the proposed respondents’ numerous competitors in the same
or similar.

1 The policy of the Commission with respect to disposition of cases by stipulation
is set forth in its Statement of Policy on p. 119
65

66

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

acts, the division recommends, for the Commission’s consideration, the institution of
investigations on an industry-wide basis. Such recommendations have been made in
the floor wax industry, the mothproofing industry and the shoe industry.
The objective is to provide uniform and concurrent voluntary corrective action, if
any action is indicated, applicable to all the members of the various industries, so that
all may be placed on an equal competitive basis for the betterment of the public
interest.
The Division of Stipulations is also charged with the duty of obtaining reports from
parties who have entered into voluntary agreements to cease and desist, showing in
detail the manner and form of their compliance with such agreements.

PART IV. TRADE PRACTICE CONFERENCES
ESTABLISHMENT AND ADMINISTRATION OF TRADE PRACTICE
RULES
FOR INDUSTRIES
Trade practice conferences provide a cooperative procedure for preventing unfair
competitive methods and other business practices contrary to laws administered by the
Commission. Under this procedure rules defining and cataloging unfair trade practices
are established after industry conferences and hearing of interested and affected
parties, including representatives of the purchasing public. Such conference
proceedings being industry-wide in scope, industry members are thereby placed on a
fair and equal competitive basis. The accomplishment of law observance by this
industry-wide cooperative action is aimed to effectuate substantial economies in the
cost of law enforcement, both to Government and industry.
The work of administering promulgated rules is directed to the maintenance of active
cooperation between the industry and the Commission in promoting voluntary
observance of the rules and in ascertaining new industry situations requiring
amendment of the rules or other appropriate action. Through this work industry
members are afforded guidance and assistance to the end that the conduct of their
business may be in accordance with the law.
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 (see p.114). Trade practice conference
proceedings may be instituted by the Commission upon its own motion or upon
application therefor whenever such proceedings appear to the Commission to be in the
interest of the public. Any interested party or group in an industry, large or small, may
apply to the Commission for the institution of such proceedings. Prior to the beginning
of proceedings and during the course thereof, members of the Commission’s staff are
available to afford guidance and assistance to industry in working out constructive
solutions of the various competitive problems. As a part of such proceedings, industrywide conferences are held and, before the Commission finally approves 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.
GROUP I AND GROUP II RULES EXPLAINED
Trade practice rules appropriate for approval or acceptance by the Commission may
include not only provisions for the elimination of practices which are illegal per se or
are conducive to unfair competitive conditions in industry, but also provisions for
fostering and promoting fair competition in the public interest. The rules as finally
promulgated are classified by the Commission as Group I and Group II rules,

respectively.
67

68

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

Group I rules.--The unfair trade 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.
CONFERENCE AND RULE MAKING ACTIVITIES DURING YEAR
During the fiscal year the conference and rule making work was considerably
expanded. Conference proceedings for several industries were initiated by the
Commission upon its own motion in addition to those instituted pursuant to
applications received from interested industry groups. Comprehensive sets of rules
clarifying legal requirements applicable to their trade practices were promulgated for
nine important industries under the trade practice conference procedure; formal
conferences and hearings for several other large and important industries were held;
and pending and newly instituted proceedings were advanced. In addition, the
practices of some other industries were surveyed and studied, and informal meetings
held with various industry groups with a view to determining whether conference
proceedings should be initiated.
The rules promulgated during the year are specifically applicable to the problems of
the respective industries to which they apply and cover a wide diversity of practices.
New rules promulgated during fiscal year.--Trade practice rules for the following
industries were promulgated during the fiscal year : (l) h o u s e h o l d f a b r i c d y e
industry; (2) masonry waterproofing products industry; (3) vertical turbine pump
industry; (4) watch industry (respecting the terms “waterproof”, “shockproof” “non
magnetic”, and related designations); (5) saw and blade service industry; (6) doll and
stuffed toy industry; (7) construction equipment distributing industry; (8) piston ring
industry; and (9) wholesale confectionery industry (Philadelphia trade area) 1 These
nine industries have an estimated annual volume of business of over one billion dollars
in the aggregate.
Rules for the household fabric dye industry.--Proceedings for the establishment of
rules for this industry were initiated by the Commission after an industry-wide survey
of the practices prevalent in the industry. In the course of the proceedings a general
industry conference and public hearing were held on the proposed rules. The industry
to which such rules apply is composed of persons, firms, and corporations engaged in
the business of placing on the market fabric dyes,

With respect to the last three industries named, the conference proceedings were
completed during the fiscal year ended June 30, 1948, but rules for the industries were
promulgated during the fiscal year 1947.
1

CONFERENCE AND RULE MAKING ACTIVITIES DURING WAR

69

tints, and color removers which are prepared and packaged for use in the home in
dyeing, redyeing, coloring, tinting, or retinting wearing apparel and fabric home
furnishings or decorations or removing color therefrom preparatory to redyeing or
retinting. Subjects covered by the rules include misuse of the terms “all fabric”, “all
purpose”, and similar representations as applied to industry dyes or tints; misuse of the
words “fast”, “fadeless”, “fadeproof”, “unfadable”, “sunfast”, “wash-fast”, and
representations of similar import; deception respecting efficacy of color removers;
deceptive guarantees; confusion as to “tint” and “dye”; and deception by failure to
disclose essential information. Improper use of demonstrators and payment of “spiffs”,
push money, etc., also are defined and proscribed.
Rules for the masonry water proofing products industry.--Proceedings for the
establishment of rules for this industry were instituted by the Commission upon a
showing of widespread use of certain unfair practices in the industry. Rules covering
these practices were promulgated after a general industry conference and public
hearing for consideration of the proposed rules. Products of the industry are
admixtures or coatings for concrete, brick, stone, stucco, concrete blocks, mortar, and
other masonry, which are designed to render structures made thereof impermeable or
resistant to water or moisture. In addition to the manufacturers and primary producers
of such products, numbering about 150 concerns, there are many hundreds of
marketers, including building supply houses, distributors, contractors, dealers,
applicators, and other concerns through which the various industry products reach the
purchasing public. Practices which are unfair are defined and proscribed in the rules,
and members of the industry are thereby afforded a definite guide for keeping the
conduct of their business in constant adjustment with the law. The rules prescribe the
requirements for proper use of such significantly descriptive terms as “waterproof”,
“dampproof”, “water-resistant”, “damp-resistant”, “weatherproof”, “watertight”,
“moistureproof”, “vaporproof” etc as descriptive of industry products or the results to
be obtained by their use. The industry’s products are of vital importance and the promulgation of rules is especially timely by reason of the expected extensive
construction of masonry buildings, basements, foundations, floors, piers, docks, dams,
reservoirs, swimming pools, etc.
Rules for vertical turbine pump industry.--The rules promulgated for this industry
are of considerable public interest. The industry’s products are used extensively in
water works, mining, agriculture, smelting, milling, construction work, marine
operations, and in many other activities or pumping water, sewage, gasoline, fuel oil,
chemicals, and other liquids.- The rules proscribe various unfair methods of
competition. and unfair or deceptive acts or practices, such as commercial bribery, use
of false or deceptive guarantees or warranties , deception as to rebuilt or used products,
combinations to fix prices or suppress competition or restrain trade, and unfair selling
methods. The industry is most essential to postwar construction and the rules are
designed to keep the business practices of industry members in consonance with the
requirements of law.
Rules respecting the terms “waterproof”, “shockproof”, “nonmagnetic”, and

related designations, as applied to watches, watch cases and watch movements.-These rules clarify requirements for proper use of the terms named and have for their
purpose the elimination

70

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

and prevention of deception in the marketing of watches, watch cases or watch
movements, whether of domestic or foreign manufacture, and maintenance of fair
competition among persons, firms, and corporations engaged in the sale, offering for
sale, or distribution of these articles. Provisions of the rules respecting the use of such
terms are applicable to all types of advertising, whether in newspapers, periodicals,
sales catalogs, sales promotional literature, on the radio, or otherwise; and also to the
use of the terms as a mark, or part of the marking, on any watch, watch case, or
movement, or on any label, tag, container, or literature used in connection with the
sale, offering for sale, or distribution of such articles. The rules prescribe definite and
specific requirements as to conditions to use of the terms and are designed to
adequately protect the buying public. The definition of such terms as applied to
watches, watch cases, and watch movements has been an urgent need of the industry.
Rules for the saw and blade service industry.--Members of this industry engage in
the business of supplying and servicing, under lease or rental contract, saws, saw
frames, knives, chopper machines, knife or slicer machines (and plates or blades for
such machines), and similar articles for use in meat markets, packing houses, restaurants, and other food processing or food dispensing establishments. The
promulgated draft for this industry consists of 18 Group I rules prohibiting a variety
of unfair competitive practices, together with 5 Group 11 rules constituting voluntary
expressions recommending against the use of practices which the industry considers
harmful or unethical, or recommending use of ethical practices which the industry
considers beneficial to itself or the public, such provisions having been considered by
the Commission as in harmony with the law and the public interest.
Rules for doll and stuffed toy industry.--Another industry for which rules were
promulgated during the fiscal year is the doll and stuffed toy industry. The rules are
designed to eliminate and prevent unfair trade practices in the manufacture and
marketing of all kinds of dolls and stuffed toys and they prohibit a variety of forms of
misrepresentation of products. Use of unsanitary material is specially proscribed and
disclosure of used or second-hand material is required. Lottery schemes used in the
marketing of industry products, tie-in sales and price discrimination violative of the
provisions of the Robinson-Patman Antidiscrimination Act also are prohibited.
(Explanatory statements respecting the rules promulgated during the fiscal year for
the construction equipment, piston ring and whole-sale confectionery industries were
included in the Annual Report for the fiscal year ended June 30, 1946.)
PENDING TRADE PRACTICE PROCEEDINGS
Trade practice proceedings were undertaken for other industries and were pending
in various stages of progress at the close of the fiscal year. In some instances proposed
rules had been released by the Commission and public hearings held. In other cases,
where the proceedings were less advanced, the necessary preliminary study and
consideration had been undertaken preparatory to further action. Among the new
conference proceedings instituted during the fiscal period was that for the cosmetic

and toilet preparations industry.

ADMINISTRATION OF RULES

71

After an industry-wide survey of practices in this industry a general industry
conference was called by the Commission to consider proposed rules for the
elimination of unfair practices and abuses in the industry. At the close of the fiscal
year the results of this conference were being studied prior to release of proposed rules
for hearing.
ADMINISTRATION OF RULES
Rules for over 150 industries, comprising more than 2,000 separate provisions, have
been promulgated and are now under administration. During the fiscal year rule
administration activities were undertaken to the extent possible with the personnel
available for this work. Existing rules for several industries received special attention
over and above the general rule administration activities.
Artificial limb industry.--The rules for this industry have as their principal objective
the aiding of some 600,000 physically handicapped persons in the United States who
use artificial limbs or devices by protecting them from the harmful effects of deceptive
trade methods and monopolistic practices in the sale of prosthetic devices. Various
practices which are deceptive and otherwise unfair or harmful are defined in the rules
and provision made therein for their elimination and prevention. The administration
of these rules was conducted with due regard to the substantial public interest involved
and to the requirements of the probationary order of a Federal Court to which certain
members of the industry were subject.
Masonry waterproofing products industry.--The rules for the masonry waterproofing
products industry likewise received special attention. The advertising of industry
members was examined and informal conferences and correspondence conducted with
the members for the purpose of assisting them in bringing their advertising into
conformity with the approved rules. Through these administrative efforts, unwarranted
and deceptive claims as to the efficacy of industry products and other unfair
competitive practices have been reduced substantially.
Radio receiving set manufacturing industry.--Another rule administration problem
receiving special consideration concerned the rules for the radio receiving set
manufacturing industry. Having found that a considerable number of advertisers of
radio sets were including rectifiers in the tube count of sets advertised, the
Commission issued an interpretation of applicable trade practice rule provisions in the
light of a recent court decision on the subject. All industry members were afforded
opportunity to bring their advertising into conformity with such provisions as
interpreted. Thereafter, a survey was made of radio set advertising with the view to
taking appropriate corrective action against industry members who fail to comply with
legal requirements.
Other industry rules receiving special attention.----Other rules receiving special
attention during the fiscal period include those for the following industries: household
fabric dye, watch (respecting use of designations “waterproof”, “shockproof”,

“nonmagnetic”, etc.), linen, rayon, and fur.
Cooperative liaison working-During the year contacts were renewed with several
industries having trade practice rules for the purpose of creating cooperative liaison
by means of which the rules might

72

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

be more effectively administered and enforced in the best interest of both the
industries and the public. The cooperative liaison established with these industries
proved helpful in determining whether present rules are adequate in fulfilling industry
needs; whether new practices have developed which indicate a need for rule revision;
and whether the rules have accomplished the results toward which they are directed.
TYPES OF PRACTICES COVERED IN PROMULGATED RULES
The following are illustrative of the variety of subjects covered by trade practice
rules now in effect :
Misrepresentation in various forms, including false or misleading advertising;
misbranding; defamation of competitors or disparagement of their products;
commercial bribery in purchasing or selling supplies; inducing breach of competitor’s
contract; false invoicing; imitation of competitor’s trade-marks, trade names, etc.;
substituting inferior products for those ordered; lottery schemes; use of consignment
distribution to close competitor’s trade outlets; enticing away employees of a
competitor; giving “push money”, gratuities, etc., under circumstances involving
commercial bribery, deception or restraint of trade; full-line forcing as a monopolistic
weapon; combination or conspiracy to fix prices, suppress competition or restrain
trade; unfair bidding methods. discriminations in price, service or facilities, such as
discrimination effected through rebates, refunds, discounts credits, returns, or other
means; prohibited brokerage or commissions; the making of advertising or promotional
allowances or the furnishing of services or facilities on terms not accorded to all
customers on proportionally equal terms; and aiding or abetting another in the use of
unfair trade practices.
Other subjects covered in the rules are : Use of slack-filled or short-weight
containers, or those of odd size simulating standard and generally recognized types;
use of deceptive depictions (photographs, engravings, cuts, etc.) in describing industry
products, use of false or misleading guarantees, warranties, price quotations, price
lists, or terms of sale; misrepresentation as to possible earnings or opportunities
afforded on completion of correspondence school courses, or as to Government
connection with, or indorsement of, any school, or respecting an training or services
offered by such school; falsely representing offers as “special” or “limited”;
misrepresenting regular lines of merchandise as “close-outs” to induce belief that
bargains are available; representing products as conforming to recognized industry
standards when such is not the fact; misrepresenting kind, quality, thickness or backing
of mirrors; use of fictitious animal designations in descriptions of furs;
misrepresenting character, extent or type of business engaged in; representing retail
prices as wholesale, or deception through failure to differentiate between wholesale
and retail transactions; use of false or misleading testimonials; use of “blind”
advertisements in such manner as to mislead or deceive; 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; and false representations respecting tube
capacity of radio sets and their range or receptivity.

TYPES OF PRACTICES COVERED IN PROMULGATED RULES

73

The rules also cover the following: Misuse of terms “perfect”, “perfect cut”,
“commercially perfect”, “real” ‘ “genuine”, “natural”, etc., in describing precious
stones or their imitations; deceptive use of word as applied to sun glasses; improper
use of terms “pullorum tested” “blood tested” etc, as applied to baby chicks; misuse
of words “all fabric”, “all purpose” “fast”, “fadeless” “fadeproof” “unfadable”,
“sunfast”, or “wash-fast” as descriptive of products of the household fabric dye
industry; deceptive use of such terms as “all-wave”, “world-wave”, “world-wide
wave”, etc., with reference to radio receiving sets; improper use of words “bristle”,
“puce bristle”, etc., in the sale of toilet brushes; misuse of terms “extra fancy”, “extra
select”, “extra quality”, “deluxe”, “choice” , etc., to describe tuna fish products;
improper use of words “lisle cotton”, “cotton lisle”, etc., as app lied to hosiery
products; deceptive use of terms “hand woven”, “hand loomed”, “hand printed”, and
“hand embroidered” in describing linen products; misuse of term “waterproof” as
applied to watches, watch cases or watch movements, or to luggage or related
products, or to masonry waterproofing products, or of the expression “water resistant”
to describe watches, watch cases or watch movements or masonry waterproofing
products, or of the words “water repellent” as descriptive of such watches watch cases
or watch movements, or of luggage or related products; improper use of terms “water
tight”, “moistureproof”, or “water sealed” as applied to watches, watch cases or watch
movements, or to masonry waterproofing products; misuse of terms “vaporproof”,
“dampproof”, “dampproofin”,”damp-resistant”, “weatherproof”, “weatherproofing”,
“perpetual”, “eternal”, “permanent”, or “permanently” to describe “everlasting”,
products of the masonry waterproofing industry; deceptive use of words “water protected”, “shockproof”, “shock protected”, “shock absorbing”, “shock resistant”,
“unconditionally shock resistant”, “jarproof”, “nonmagnetic”, or “antimagnetic” in
referring to watches, watch cases or watch movements; and misuse of words
“dustproof” or “warp-proof” as applied to luggage and related products.
Subjects embraced in other rules include : Exclusive or preemptive deals to eliminate
or suppress competition; improper use of demonstrators and payment of “spiffs,”
“push money,” etc., in the sale of industry products; deceptive concealment of name
of sponsor and other pertinent information respecting product offered for sale;
persuading distributors to refrain from submitting independent bids and price
quotations to buyers; coercing adherence to published rental rates or trade-in values;
furnishing property on condition of exclusive right to service the same; deception of
customers of competitors as to identity; and prejudicing competitors’ relationships
with their agents.
In addition, there are rules providing for disclosure of fiber content of textile
merchandise made of rayon, 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 secondhand, used,
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 standard or genuine, and the

specification of

74

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

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, as to quality, quantity, and size of ripe olives packed in cans and other
opaque containers, as to latent defects in artificial limbs or devices, as to price charged
for so-called premiums in sale of piston rings, and as to use and application of masonry
waterproofing products.
INFORMATIVE LABELING
Informative labeling enters extensively into the work of the Commission under the
trade practice conference rules. 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 purporting to contain wool are subject to Wool Act
labeling, similar fiber identification of other textiles under certain circumstances, and
informative labeling of various lines of merchandise outside the field of textiles, are
covered by trade practice rules.
The object of informative labeling is twofold: (l) 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 bet ter 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.
The value of such labeling is widely recognized as a necessary and effective
preventive of confusion or deception of the public and of unfair competitive
conditions.
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 infants’ and
children’s knitted outerwear industry, June 28, 1939; uniform industry, May 18, 1940;
and ribbon industry, June 30, 1942.
Provisions on the subject of informative labeling are also contained in the different
sets of rules promulgated for the following industries 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;

INFORMATIVE LABELING

75

curled hair, January 12, 1940 ; luggage and related products, September 17, 1941 ; sun
glass, December 23, 1941 ; razor and razor blade, June 19,1945 ; wood-cased lead
pencil, June 29,1945 ; artificial limb, April 16, 1946 ; masonry waterproofing, August
31, 1946 ; and household fabric dye, May 29, 1947.
Rules providing for informative disclosure in advertising and selling 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 ; and tuna
(revised and extended rules) , June 23, 1945.

767228--48----6

PART V. WOOL PRODUCTS LABELING ACT
INFORMATIVE LABELING FOR PROTECTION OF INDUSTRY AND
THE PUBLIC
The Wool Products Labeling Act of 1939 provides, in substance, that purchasers
shall be informed as to the true content of articles, subject to the provisions of the Act,
which are made or appear to be made in whole or in part of woolen fiber, and that
producers, manufacturers, merchants, and the public generally shall be safeguarded
against the deception and unscrupulous competition arising from misbranding and
nondisclosure of content. The act, approved by the President October 14, 1940, and
effective July 14, 1941, is enforced and administered by the Federal Trade
Commission.
The fiber content of articles containing, purporting to contain, or represented as
containing “wool,” “reprocessed wool,” or “reused wool” is required by the act to be
disclosed by appropriate stamp, tag, label, or other means of identification. The act
applies to such articles when manufactured for, or marketed in, “commerce” as defined
by section 2, excepting carpets, rugs, mats, and upholsteries exempted by section 14.
The act requires that the label or other identification mark disclose the kind and
percentage of each different fiber contained in the pro duct including the respective
percentages of “wool,” “reprocessed wool,” and “reused wool.” Disclosure of the
maximum percentage of loading and adulterating material, if any, and the name of the
manufacturer of the wool product or the name of a qualified distributor or reseller,
must also appear on the label. The label, or a proper substitute specified by the statute,
is to remain on the merchandise when it is delivered to the consumer.
Products covered by the act include 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. 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 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
may be obtained upon application to the Commission. 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 requirements of the law
in its application
76

INFORMATIVE LABELING

77

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. Hearings
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
consonant with law, and also would 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, 6,239 registered identification numbers had
been assigned to manufacturers pursuant to their applications filed under this rule, an
increase of 459 over the preceding fiscal year. 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 1,593 manufacturers’ registered
identification numbers had been canceled.
Continuing guaranties.--For the purpose 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 (l) a separate guaranty specifically designating the wool product guaranteed, or
(2) a continuing guaranty filed with the Commission applicable to all products handled
by 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, 7,552 continuing guaranties had been properly filed with the as against 6,770 at
the end of the 1946 fiscal year. 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 prescribed in the Federal
Trade Commission Act, which is also authorized by the Wool Act has been utilized
and proven adequate and effective without resorting to the supporting peremptory
remedies specifically provided by the Wool Act. Such peremptory remedies are
available when needed, and, in cases of deliberate or willful violation, misdemeanor
proceedings may be applied.
Administrative compliance work includes inspections, examinations, and correction
of labeling practices of specific concerns in

1 The Commission has issued a publication (W-3) setting forth illustrations, with
explanatory text, 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.

78

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

spections of labeling and related matters during the year concerned over 7,500
manufacturers, distributors, and other marketers in 549 cities. Field inspections
covered in excess of 18 million articles. During the preceding fiscal year the field
inspections totaled approximately 5,500 in 172 cities and covered more than 10 million
articles.
Compliance in cases of improper labeling under the act was effected for the most
part 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 cases have arisen in which voluntary
cooperative action has not been sufficient to effect correction and where it has been
necessary to invoke mandatory processes.2 The administrative compliance work
proved. both effective and economical in the large volume of instances arising.

2 For complaints alleging violations of the Wool Products Labeling Act, see p. 48 ;
for Commission orders directed against such violations, see p.51.

PART VI. MEDICAL AND SCIENTIFIC OPINIONS
DATA ARE UTILIZED BY COMMISSION IN CASES RELATING TO
FOOD, DRUGS, DEVICES, AND COSMETICS
The Medical Advisory Division furnishes the Commission with scientific facts and
opinions concerning the composition of and the advertising claims made for food;
drugs, curative devices, cosmetics, and other commodities in cases where questions
of science arise. It arranges for analyses of samples of such products under
investigation and gathers information with respect to their nature.
The division provides medical opinions and scientific information needed in the
preparation of formal complaints issued and stipulations accepted by the Commission.
During the fiscal year it prepared 187 written opinions and in addition rendered many
verbal opinions. A substantial amount of time was devoted to assisting the
Commission’s legal staff in its preparation for hearings involving questions of science,
and to securing the services of expert scientific witnesses whose testimony was
essential to a determination of the scientific facts. Forty-two such experts served as
witnesses during the year.
The Director of the Medical Advisory Division is the Commission’s liaison officer
with the Food and Drug Administration. In instances where it is necessary or desirable
for contacts to be made by other members of the staff, they are cleared through the
liaison officer.
Through the Director of the Medical Advisory Division the Commission maintains
cooperative contact with many other Government agencies concerned with food , drugs
curative devices, cosmetics, insecticides, etc. Included among these are the Food and
Drug Administration, the National Bureau of Standards, the United States Public
Health Service, the Bureau of Animal Industry, and the Agricultural Marketing
Service. Similar contacts also are maintained with many nongovernmental clinics,
hospitals, laboratories, and scientists.
79

PART VII. FOREIGN TRADE WORK
EXPORT TRADE ACT
The Commission administers the Export Trade Act, commonly called the WebbPomerene Law, which grants exemption from the antitrust laws to associations or
cooperatives solely engaged in export trade under certain conditions set out in the law.
Export associations are required to file with the Commission copies of their
organization papers and periodic reports and if the Commission has reason to believe
that an association is not operating in accordance with law, an investigation may be
made and recommendations issued for readjustment of the association’s business.
The law prohibits restraint of the trade of a domestic competitor of the association,
artificial enhancement or depression of prices within the United States, and substantial
lessening of competition or other restraint of trade in this country.
FORTY-NINE ASSOCIATIONS OPERATING UNDER THE ACT
At the close of the fiscal year the following 49 export associations were on file with
the Federal Trade Commission :
American Hardwood Exporters, Inc.,
901 Carondelet Building,
New Orleans.

California Alkali Export Association,
608 Lathain Square Building,
Oakland, Calif.

AMTEA Corp.
(American Machine Tool Export Association),
Empire State Building,
New York.

California Dried Fruit Export Association,
1 Drumm Street,
San Francisco.

American Phonograph Cooperative,
Ltd.,
134 North LaSalle Street,
Chicago.
American Provisions Export Co.,
c/o Armour & Co.,
Foreign Sales Department,
Union Stock Yards,
Chicago.
American Soda Pulp Export Association,
280 Park Avenue,
New York.
American Spring Manufacturers Export
Association,
30 Church Street,
New York.
American Tire Manufacturers Export
Association,

California Prune Export Association,
1 Drumm Street,
San Francisco.
Carbon Black Export, Inc.,
500 Fifth Avenue,
New York.
Citrus CorporatIon of America,
424 Madison 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, Wash.

30 Church Street,
New York.
80

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

FORTY-NINE ASSOCIATIONS OPERATING UNDER THE ACT

81

Easco Lumber Association,
821 Market Street,
San Francisco.

Railway Car Export Corp. of America,
1025 Connecticut Avenue,
Washington, D. C.

Electrical Export Corp.,
122 East Fifty-first Street,
New York.

Redwood Export Co.,
405 Montgomery Street,
San Francisco.

Export Screw Association of the United
States,
21 Stevens Street,
Providence, R I.

Rubber Export Association, The
1185 East Market Street,
Akron, Ohio.

Flints Export Agency,
50 Broad Street,
New York.

Steam locomotive Export Association,
Inc.,
Room 1622,
30 Church Street,
New York.

Florida Hard Rock Phosphate Export
Association,
318 East Main Street,
Lakeland, Fla.

Sulphur Export Corp.,
420 Lexington Avenue,
New York.

Flour Millers Export Association,
859 National Press Building,
Washington, D. C.

Texas Rice Export Association,
407 Jensen Drive,
Houston, Tex.

Friction Materials Export Association,
Inc.,
22 East Fortieth Street,
New York.
General Milk Co., Inc.,
19 Rector Street,
New York.
Goodyear Tire & Rubber Export Co.,
The,
1144 East Market Street,
Akron, Ohio.
Maine Sardine Packers’ Export Association,
Eastport, Maine.
Metal Lath Export Association, The,
Room 1504,
205 East Forty-second Street,
New York.
Motion.Picture Export Association, Inc.,
546 Fifth Avenue,
New York.
Pacific Forest Industries,
1219 Washington Building,
Tacoma, Wash.
Pacific Fresh Fruit Export Association,
333 Pine Street,
San Francisco.
Pine Street, Pencil Industry Export Association,
167 Wayne Street,
Jersey City, N. J.
Pipe Fittings & Valve Export Associa

Textile Export Association of the
United States,
320 Broadway,
New York.
Typewriter Manufacturers Export Association,
1611 Forty-fourth Street,
Washington, D. C.
United States Alkali Export Association,
11 Broadway,
New York.
United States Scientific
Export Association, Inc.,
50 Broadway,
New York.
Universal Dairy Products Co.,
80 East Jackson Boulevard,
Chicago.
Walnut Export Sales Co., Inc.,
540 Postal Station Building,
Indianapolis.
Washington Evaporated Apple Export
Association,
709 First Avenue, North,
Yakima, Wash.
Wescosa Lumber Association,
Room 500
San Francisco.
Wine & Brandy Export Association of
California,
717 Market Street,
San Francisco.

tion, The,
347 Madison Avenue,
New York.
Potash Export Association, Inc.,
420 Lexington Avenue,
New York.

Wire Rope Export Trade Association,
The
Room 2006,
19 Rector Street,
New York.

82

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

NEW ASSOCIATIONS
The Maine Sardine Packers’ Export Association was formed in July 1946, and now
represents 11 sardine packing companies located on the coast of Maine. Association
offices were established in Eastport, Maine, and New York.
The American Phonograph Cooperative, Ltd., was formed in September 1946 by 23
companies to export used coin-operated phonographs, with offices in Chicago.
The United States Scientific Export Association, organized in November 1946, will
ship scientific, chemical, technical and laboratory apparatus, instruments, equipment
and supplies to foreign countries for its five member companies in Illinois,
Pennsylvania and New York. The association office is in New York.
The Citrus Corporation of America filed its organization papers with the
Commission in February 1947 and established offices in New York and Delaware.
Members are producers of citrus fruits in Florida and include one growers ,
association, a packing company and four individuals.
EXPORTS IN 1946 TOTAL $322,597,224
Exports during 1946 showed a substantial increase over 1945, especially in metal
products and foodstuffs :
1945
1946
Metals and metal products
$16,303,330
$93,435,947
Products of mines and wells
20,003,356
29,320,916
Lumber and wood products
8,207,702
9,636,851
Foodstuffs
9,450,482
1 3 1 ,
623,782
Miscellaneous
40,007,613
58,579,728
Totals
94,172,483
322,597,224
INQUIRIES AND RECOMMENDATIONS
Several inquires as to operation of certain export associations were in progress
during the fiscal year.
Summons and bill of particulars were issued in August 1946 to the Pacific Forest
Industries, an association exporting plywood from the West Coast. This was a
reopened case, continuing an inquiry made in 1939 and 1940 (Docket 202-1). Hearings
were held on the West Coast in the Fall of 1946 and the matter is still pending.
Inquiries involving Carbon Black Export, Inc., Electrical Apparatus Export
Association, General Milk Co., Inc., and The Pipe Fittings & Valve Export
Association also are pending (Dockets 202-5, 202-4, 202-6 and 202-9).
After formal hearings, the Commission issued recommendations for the readjustment
of the business of Sulphur Export Corp. (Docket 202-6) on February 7, 1947, as
follows:

1. That Sulphur Export Corp. refrain in the future from formulating, promoting or
participating in any plan, program or agreement whereby either or any of the following
described provisions, or provisions of similar purport or effect, are continued, entered
into or effectuated, to wit :
(a), Provisions such as those in the agreement between Sulphur Export Corp. and the
Ufficio per la Vendita Dello Zolfo Italiano, whereby said Sulphur Export Corporation
bound itself to deduct from its tonnage quota of shipments of American Sulphur for
export, certain shipments of sulphur from the United States made by or through
American producers not stockholders or members of said Corporation;

INQUIRIES AND RECOMMENDATIONS

83

(b) Provisions such as those in the agreement between Sulphur Export Corporation
and the Ufficio per la Vendita Dello Zolfo Italiano, whereby the latter was guaranteed
the right to sell a specified minimum tonnage of sulphur in a certain designated period,
on a priority basis over and above the tonnage of sulphur to be sold by Sulphur Export
Corporation in said territory during the same period ;
(c) Provisions such as those in the agreement between Sulphur Export Corp. and the
Ufficio per la Vendita Dello Zolfo Italiano, requiring that shipments of manufactured
sulphur from the United States made by or through American exporters be deducted
from the tonnage quota of export shipments of crude sulphur made by Sulphur Export
Corporation ;
(d) Provisions such as those in the agreement between Sulphur Export Corp. and the
Ufficio per la Vendita Dello Zolfo Italiano, requiring that the parties to such agreement
were to maintain the status quo in the manufactured sulphur industry in the trade
territories to which said agreement applied and to do nothing which would encourage
any alteration in the competitive trade situation in said industry in said trade areas.
2. That Sulphur Export Corp. refrain in the future from formulating, promoting or
participating in any plan, program or agreement such as that provided in the agreement
with Orkla-Grube Aktlebolag, that Sulphur Export Corp. shall acquire or control or
participate in the acquisition or control of any share in patents or processes useful for
or capable of being used in connection with the production of sulphur for commercial
purposes, and that said Corporation in the future refrain from so obligating itself,
financially or otherwise, in any such understanding or agreement.
3. That Sulphur Export Corp. in the future refrain from entering into any
understanding or agreement with American producers of sulphur who are not regularly
admitted and recognized members of said Corporation, whereby said producers or
Sulexco agree not to sell sulphur in certain foreign markets, or to sell only at agreed
or noncompetitive prices and terms, or to refrain from competing with each other in
export trade in sulphur.
4. That Sulphur Export Corp. in the future cease and desist from selling, banding,
marketing or disposing of sulphur for the account of or belonging to any American
producer who is not a regularly admitted and recognized member of the Sulphur
Export Corp.
5. That Sulphur Export Corp. in the future seasonably file with the Commission all
information required by the Export Trade Act to be flied annually, and furnish all
information and documentary evidence requested or required by the Commission,
pursuant to said Act, whether called for any report forms, by questionnaires or
communications, by personal visitation or otherwise.
It is ordered by the Commission that Sulphur Export Corp. file with the Commission
within 30 days hereof a report stating whether it has elected to comply with the above
recommendations, and if so, the manner in which it has so complied.
The sulphur association reported compliance and has continued to operate.
The Commission, after formal hearings, made the following recommendations for
the readjustment of the business of Export Screw Association of the United States on
February 19, 1947 (Docket 202-8):
1. That Export Screw Association of the United States refrain in the future from
formulating, promoting or participating in any plan, program or agreement whereby

either or any of the following-described undertakings, or undertakings of similar
purport or effect, are abetted, continued, entered into or effectuated, to wit:
(a) Undertaking or practice, such as the participation In the purchase of the Faiu
Works of Sweden, by means of which foreign competitors who have or may ship their
products into the United States are eliminated or their production terminated or
abandoned.
(b) Undertaking or agreement, such as the agreement with the International Union
of Wood Screw Manufacturers by means of which the United States was agreed upon
as the home market for the members of the Association and the importation of wood
screws into this country by members of the Union was prevented.
(c) Undertaking or practice, such as the Association’s cooperation with the
International Union of Wood Screw Manufacturers, whereby machinery for the

84

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

making of wood screws was purchased or sequestered and made unavailable to
manufacturers or potential manufacturers of wood screws.
(d) Undertaking or agreement, such as the agreement between the Association and
Guest, Keen and Nettlefolds, Ltd., of Birmingham, England, a foreign competitor,
whereby the export of wood screws from foreign countries into the United States and
its territories and possessions was limited, restrained and prevented.
2. That Export Screw Association of the United States in the future refrain from
entering into any understanding or agreement with American manufacturers of wood
screws who are not regularly admitted and recognized members of said Association,
whereby said manufacturers agree to sell only at agreed and noncompetitive prices and
terms, or to refrain from competing in export trade in wood screws.
3. That Export Screw Association of the United States refrain In the future from
fixing prices, terms or discounts upon or trading in any manner in wood screws
marketed in Puerto Rico or any other territory or possession of the United States.
4. That Export Screw Association of the United States 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.
It is ordered by the Commission that Export Screw Association of the United States
file with the Commission within 30 days hereof a report stating whether it has elected
to comply with the above recommendations, and if so, the manner in which it has so
complied.
The Screw Association reported compliance.
TRUST LAWS AND TRADE REGULATION ABROAD
Under section 6 (h) of the Federal Trade Commission Act, the Commission compiles
information as to trust laws, unfair competition and regulation of trade and industry
in foreign countries. A few of the more important measures are noted :
Argentina.--A number of decrees in May and June 1946 effected reorganization of
the economic and financial structure of the country. In October 1946 the President
presented to Congress a Five-Year Plan including 27 basic laws for expansion of
industry, agriculture, communications and trade; reforms in public health, education
and the electoral system; reorganization of government offices; and regulation of fuel
and power. As a step toward nationalization of public services, the Government
purchased 3 French-owned railways in December 1946, and the British-owned roads
in February 1947.
Australia.--The Commonwealth Wheat Stabilization Acts passed in August 1946
provided for a guaranteed price, control of acreage, continuation of the Wheat Board
as a central marketing organization, and subsidy through a stabilization fund.
Austria.--A Nationalization Act passed July 26, 1946, was made effective September
17, 1946, for certain industries.
Brazil.--A decree on April 4, 1946, prescribed a rigid system of price control. The
new Constitution of September 18, 1946, set out principles for regulation of natural
resources, business and banking.

Canada.--The Combines Investigation Act was amended August 31, 1946.
China.--Emergency measures were taken by the National Government in February
1947 in an effort to balance the budget. Wartime

TRUST LAWS AND TRADE REGULATION ABROAD

85

price control, outlawing of strikes and factory closing, and prohibition of hoarding and
speculation were reimposed.
Colombia.--Price and rent control were reimposed in March 1946 to prevent
speculation, scarcity and increased prices.
Costa Rica.--A Legislative Decree on July 23, 1946, increased the capital of the
Agricultural Development Section of the National Bank to make loans to organized
industrial and agricultural cooperatives. Price-fixing measures were reestablished in
August 1946.
Czechoslovakia.--The nationalization program begun in 1945 now covers about 65
percent of the industrial capacity of the country.
Ecuador.--A decree effective February 8, 1947, provided a new system of foreign
trade control. Only essential articles may be imported, and prices of imported goods
are under control of the Director of Foreign Trade who may determine a maximum
profit and confiscate goods sold contrary to the regulations.
France.--The French Four-Year Plan contemplates revitalizing six basic industries
of the country, coal, electricity, transport, steel, cement, and farm machinery, through
price control, rationing, allocation of materials, control of credit and foreign exchange,
and a system of building licenses, as well as control of employment. The gas and
electricity industries, certain insurance companies and the coal industry were
nationalized in 1946.
Germany.--A Decartelization Act, made effective by the American and British
military Governments, prohibits combines in restraint of trade and concentration
through employment of more than 10,000 employees by one company.
Great Britain.--The Bank of England was nationalized by law February 14, 1946,
and the coal industry by act of July 12, 1940, effective January 1, 1947. Other
industries which it is proposed to nationalize are iron and steel, Cable & Wireless,
Ltd., civil aviation, inland transportation, and electricity. In December 1946 the Government announced a program to modernize the textile industry, the Government to
reimburse the spinners to the extent of 25 percent of the cost of replacing obsolete
machinery. An Agriculture Bill was introduced in December 1946, a Town and
Country Planning Bill and an Industrial Organization Bill in January 1947.
Hungary.--State ownership of coal mines was provided in a decree on January 1,
1946. Under a land reform program, about 4,000,000 acres have been taken over by
the Government and divided among about 700,000 families.
International.--In the fall of 1946 the Combined Tin Committee effected a world
allocation of tin supplies. An International Shipping Conference met in London in
February 1947 with representatives of shipowners from 12 maritime countries. An
International Wool Study Group met in London in April 1947 with delegates and
observers from 25 countries. A draft convention has been prepared by the International
Wheat Council to assure adequate supplies, promote stability in price, establish
reserves, provide security for efficient producers, and promote wheat consumption.
Italy.--Decrees in March and June 1946 established a Central Industrial Commission
with consultative functions with respect to control of industry and trade, and power to
allocate industrial development and determine prices and distribution of products.

86

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION , 1947

Mexico.--A National Securities Commission was created by decree on April 16,
1946. A Soil and Water Conservation Act was passed July 19, 1946. A decree on
October 15, 1946, declared all radioactive mineral resources a part of the national
reserves.
Netherlands.--The National Welfare Plan for 1946 provided for coordination of the
economic, social and financial policy of the Government by forecasting production,
prices, national income and expenditures.
New Zealand.--The Government has a seven-point plan for encouraging secondary
industries , including import control , trade agreements, decentralized of industry, and
financial assistance.
Panama.--Laws on July 3, 1946, and August 30, 1946, respectively, created a
National Price Bureau and a Tariff Commission.
Peru.--A National Food Supply Corporation has been created to regulate prices and
distribution of food products. An Office of Industries and a National Food and
Agriculture Council, created in 1946, will prepare plans for an industrialization
program to utilize National raw materials. A National Foreign Trade Council was
created by decree January 21, 1947, to promote and control foreign trade.
Poland.--Under the Nationalization Law of January 3, 1946, key industries have
been taken over by the Government. Economic development is in the hands of a
Cabinet Committee, served by a Central Planning Board. Agriculture holdings of over
125 acres have been confiscated for distribution among small holders.
Rumania.--The National Bank was declared a state enterprise under a law dated
December 23, 1946, effective January 1, 1947.
Salvador.--A decree on July 13, 1946, authorized the President to control and
supervise the price and supply of articles affecting the standard of living.
Union of Soviet Socialist Republics.--A decree was issued in September 1946 to
correct violations and further implement the 1935 basic Law of Collective Agriculture.
The Law on the Fourth Five-Year Plan was adopted by the Supreme Soviet March 18,
1946.
Uruguay,--A proposed law for the regulation of monopolies was introduced in May
1947. A message to Congress by the Executive Branch of the Government stated that
the purpose was not a prohibition of concentration per se, but elimination of
unfavorable effects of private business monopolies. State monopolies are not affected.
A residential decree on August 30, 1946, prescribed rules for marking and sale of
pharmaceutical preparations and for analytical control of their contents through
chemical analysis.
Venezuela.--Decrees on March 8, 1946, and May 19, 1946, respectively, created a
National Economic Council to make studies and advise the Government, and a
Development Corporation to evolve a plan for projects to utilize the agricultural,
livestock and industrial resources of the country.
Yugoslavia.--The Nationalization Act of December 5, 1946, provided for
nationalization of 42 branches of trade and industry, covering practically every field
of economic activity except the retail trade and agriculture.

PART VIII. FISCAL AFFAIRS
APPROPRIATION ACTS PROVIDING FUNDS FOR COMMISSION
WORK
The Independent Offices Appropriation Act, 1947 (Public Law 334, 79th Congress),
approved March 28, 1946, provided funds for the fiscal year 1947 for the Federal
Trade Commission as follows :
FEDERAL TRADE COMMISSION
Salaries and expenses : For salaries and expenses of the Federal Trade COM
tnission, including personal services in the District of Columbia ; contract steno
graphic reporting services ; supplies and equipment, lawbooks, books of reference,
periodicals, garage rentals ; traveling expenses ; newspapers not to exceed $500,
foreign postage ; not to exceed $5,000 for deposit in the general fund of the Treasury
for cost of penalty mail as required by section 2 of the Act of June 28, 1944 (Public
Law 364); and witness fees and mileage in accordance with section 9 of the Federal
Trade Commission Act ; $2,194,120, of which not less than $228,695 shall be
avai]nble 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.
Printing and binding : For all printing and binding for the Federal Trade
Commission, $45,000.
In addition to this sum, there was appropriated in the Third Deficiency
Appropriation Act, 1946, (Public Law 521, 79th Congress), approved July 23, 1946,
a supplemental amount for the fiscal year 1947 as follows:
FEDERAL TRADE COMMISSION
Salaries and expenses : For an additional amount, fiscal year 1947, for “Sal-aries and
expenses,” $325,000: Provided, That the limitation under this head in the Independent
Offices Appropriation Act, 1947, on the amount which may be expended for penalty
mail costs is hereby increased from $5,000 to $6,000.
Printing and binding : For an additional amount, fiscal year 1947, for “Printing and
binding”, $5,000.
Also, in accordance with the provisions of Executive Order No.9809, dated
December 12, 1946, the sum of $125,000 was transferred to the Commission from the
Office of Price Administration to permit the resumption of the financial reports
program, duties which had been performed by that office during the emergency period,
but by the Commission prior to that time.
Finally, House Joint Resolution 159, making appropriations to supply deficiencies

in certain appropriations for the fiscal year ending June 30, 1947, and for other
purposes (Public Law 25, 80th Congress), approved March 29, 1947, provided funds
in the amount of $281,000 to meet increased pay costs authorized by the Act of May
24, 1946 (Public Law 390).
APPROPRIATIONS FOR FISCAL YEAR
Funds available to the Commission for the fiscal year 1947 as cited above amounted
to $2,975,120. This sum was made up of two items : (l) $2,925,120 for the general
work of the Commission, and (2) $50,000 for printing and binding.
87

88

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

Appropriations, allotments, expenditures, liabilities, anf balances for the fiscal year
ended June 30, 1947
Amount
available

Amount
expended

Federal Trade Commission, 1947Salaries, Commissioners, and all
other authorized expenses
$2,800,120.00
Printing and binding, Federal Trade
Commission, 1947
50,000.00
Transfer from Office of Prioe Administration, 1947
125,000.00
Total, fiscal year 1947
2,975,120.00
Unexpended balances:
Federal Trade Commission, 1946 53,015.13
Printing and binding, Federal
Trade Commission, 1946
36,605.23
Federal Trade Commission, 1945 59,493.77
Printing and binding, Federal
Trade Commission, 1945
27,590.45
Total
3,152,424.58

Expenditures
and
liabilities

Liabilities

Balances

$2,564,163.94 $161,347.65 $2,725,511.59 $74,608.41
9,546.63

29,116.44

38,663.07

11,336.93

85,709.93
2,059,420.50

11,779.49
202,243.58

97,489.42
2,801,004.08

27,510.58
113,455.92

42,165.63

2,855.01

45,020.64

8,594.49

12,220.48
1,885.30

16,010.00

28,230.48
1,885.30

8,374.75
57,608.47

22,098.57
2,958,899.07

5,491.88
193,525.51

22,098.57
2,737, 790.48

221,108.59

Detailed statement or costs for the fiscal year ending June 30, 1947
Salary
Travel
Other
Commissioners
$48,076.25
$1,269.31
$3.41
Office of Commissioners
69,433.71
Office of the Secretary
44,200.92
Total
161,710.88
1,269.31
3.41

Total
$49,348.97
69,433.71
44,200.92
162,983.60

Administration:
Budget and planning
Library
Personnel
Stenographic
Information servioe
Legal research and publications
Legal records
Economic and administrative records
Services and supplies
Communications
Contract services
Equipment
Rents
Supplies
Transportation of things
Travel expense
Total

29,094.80
19,239.83
28,627.21
110,164.16
18,164.15
32,114.06
60,594.64
10,472.94
84,292.71
16,820.07
2,491.86
13,827.32
7,218.56
13,916.40
2,050.13
141.50
449,230.34

Legal:
Preliminary inquiries
Application for complaints
Complaints
Export trade associations
Trade practice conferences
Wool products labeling act
Stipulations
Legal aids to Commisslon
Industry wide investigations
Total
General investigations:
Accounting work, unlawful practices
Export trade study
Office of coordinator of fisheries
Wholesale bread baking
Senate Committee on Agriculture
Farm machinery

29,094.80
19,239.83
28,627.21
110,164.16
18,164.15
32,114.00
60,594.64
10,472.94
84,292.71
16,820.07
2,491.86
13,827.32
7,218.56
13,916.40
2,050.13
392,704.50

140,218.95
399,666.92
747,780.26
19,978.37
69,283.39
183,664.02
67,835.39
32,385.32
19,906.75
1,680,719.37

102,174.51
472.24
2,724.31
842.32
3,122.10
48,250.75

141.50
141.50

56,324.34

5,662.23
26,449.54
50,081.45
1,057.34
1,843.55
21,785.88

465.65
146,346.83
676.22
426,792.68
19,606.41
817,468.12
10.66
21,048.37
203.11
71,330.05
86.24
205,536.14
67,835.39
32,385.32
5,644.61
46.78
25,598.14
112, 524.60 21,095.07
1,814,339.04

182.89
15.00
132.14
99.17
552.64
1,473.66

1.09

102,358.49
487.24
2,856.45
941.49
2.20
3,676.34
9.13
49,733.54

Fertilizer industry
Financial reporting program
Study of the efficiency of large, small and
medium-sized companies
Production and distribution policies
Study of the steel situation for Senate
Committee on Small Business
Total

15,448.60
84,222.44
2,432.26
197.62
1,830.01
281,717.16

1,027.96
952.67

4.50
1,171.63

30.58

4,468.11

18,481.08
86,346.74
2,462.84
197.62

1,188.55

1,830.01
267,371.82

APPROPRIATIONS AND EXPENDITURES. 1915-47

89

Detailed statement of costs for the fiscal year ending June 30, 1941--Continued
Salary

Travel

Other
$43,865.68

Total
$43,865.68

$161,710.88
392,764.50
1,080,719.37
261,717.16

$1,269.31
141.50
112,524.60
4,460.11

2,496,911.91

118,401.52

3.41
56,324.34
21,095.07
1,188.55
43,865.68
122,477.05

162,983.60
449,230.34
1,814,339.04
267,371.82
43,865.68
2,737,790.48

Printing and binding
Summary:
Commissioners and Secretary
Administration
Legal
General investigations
Printing and binding
Total

RECAPITULATION OF COSTS BY DIVISIONS
Commissioners and Secretary
General Counsel
Accounts, statistics, and economic reports
Legal investigations
Trial examiner
Medical advisory
Trade practice conferences and Wool Act
administration
Stipulations Division
Legal aids to Commission
Administrative
Printing and binding
Total

$158,865.16
463,798.51
208,074.73
700,599.44
136,093.00
24,104.47

$1,269.31
27,713.92
5, 285.94
46,418.63
13,538.05
404.74

252, 947.41 23,629.43
64,433.65
32,385.32
395,610.22 141.50
2,496,911.91 118,401.52

$3.41
15,434.57
1,193.10
975.68
12.22
4,377.70

$160,137.88
506,947.00
274,553.77
747,994.75
149,643.27
28,886.91

289.35

276,866.19
64,433.65
32,385.32
452,076.06
43,865.68
2,737,790.48

56,324.34
43,865.68
122,477.05

APPROPRIATIONS AND EXPENDITURES, 1915-47
Appropriations available to the Commission since its organization and expenditures
for the same period, together with the unexpended balances, are :
Year

Nature of appropriations

1915

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

1916
1917
1918
1919
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
1930

Appropriations
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

Expenditures
$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

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

1931
1932
1933

90
Year

1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
1944
1945
1946
1947

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

35,363.58
1,932,857.81
39,858.73
1,808,097.19
30,000.00
1,421,714.70
30,000.00

35,363.58
1,808,463.35
39, 858.73
1,749,484.00
30,000.00
1,378,973.14
20,000.00

0
124,454.46
0
58,612.59
42,741.56
10,000.00

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
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

Appropriations

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
43,000.00
2,016,070.00
43,000.00
2,129,833.00
44,000.00
2,925,120.00
50,000.00

Expenditures
and liabilities

Balance

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
39,848.47
1,957,818.31
39,728.72
2,119,462.47
43,557.97
2,823,001.01
38,663.07

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
3,151.55
58,251.69
3,271.28
10,370.53
9,442.03
102,118.99
11,336.93

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

1 The salary of the secretary is controlled by the provisions of the Classification Act
of 1923, approved March 4, 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.
767228--48---7
91

92

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

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, prosecute 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.
(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
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 "and persons" (and following the words “to regulate commerce”), the
following: “air carriers and foreign air carriers subject to the Civil Aeronautics Act of
1938.”
3

FEDERAL TRADE COMMISSION ACT

81

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 reasonable grounds for the failure to adduce such evidence in the
proceeding before the Commission, the court may order such additional evidence to
be taken before the Commission and to be adduced upon the hearing in such manner
and upon such terms and
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.
4

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

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 anywise 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 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.

FEDERAL TRADE COMMISSION ACT

95

(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 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.
5

See footnote on p. 2.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

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.
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

FEDERAL TRADE COMMISSION ACT

97

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.
(b) Whenever it appears to the satisfaction of the court in the case of a newspaper,
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

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

(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 prescribed 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, 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
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

OTHER ACTS ADMINISTERED BY THE COMMISSION 87

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 (U. S. C., title 15, sec. 13), as amended by theRobinsonPatman Antidiscrimination Act, and sections 3, 7, and 8 of the Clayton Act (U. S. C.,
title 15, secs. 61); the Wool Products Labeling Act (U. S. C., title 15, sec. 68); and
certain sections of the Lanham Trade-Mark Act (Public Law 489, 79th Congress).

RULES OF PRACTICE
RULE I. THE COMMISSION

Offices.--The principal office of the Commission is at Washington, D. C.
All communications to the Commission must be addressed to Federal Trade
Commission, Washington 25, D. C., unless otherwise specifically directed.
Branch Offices are maintained at New York, Chicago, San Francisco, Seattle, and
New Orleans.
Their addresses are : Federal Trade Commission, Room 501, 45 Broadway, New York,
N. Y.; Federal Trade Commission, 1118 New Post Office Building, 433 West Van
Buren Street, Chicago 7, Ill.; Federal Trade Commission, Federal Office Building,
Room 133, Civic Center, San Francisco 2, Calif.; Federal Trade Commission, 447
Federal Office Building, Seattle 4, Wash.; Federal Trade Commission, Room 652,
Federal Office Building, 600 South Street, New Orleans 12, La.
Hours.--Offices are open on each business day from 8: 30 a. m. to 5 p. m.
Sessions.--The Commission may meet and exercise all its powers at any place, and
may, by one or more of its members, or by such examiners as it may designate,
prosecute any inquiry necessary to its duties in any part of the United States.
Sessions of the Commission for hearings will be held as ordered by the Commission.
Sessions of the Commission for the purpose of making orders and for transaction of
other business unless otherwise ordered will be held at the principal office of the
Commission at Pennsylvania Avenue at Sixth Street, Washington, D. C., on each
business day at 10 a. m.
Quorum.--A majority of the members of the Commission shall constitute a quorum
for the transaction of business.
Public information.--All requests, whether for information or otherwise, and
submittals shall be addressed to the principal office of the Commission.
RULE II. THE SECRETARY
The Secretary is the executive officer of the Commission and shall have the legal
custody of its seal, papers, records, and property; and all orders of the Commission
shall be signed by the Secretary or such other person as may be authorized by the
Commission.
RULE III. INVESTIGATIONAL HEARINGS
Investigational hearings, as distinguished from formal hearings in adversary
proceedings, shall be held only as ordered by the Commission and shall be held before
the Commission, one or more of its members, or a duly designated representative for
the purpose of hearing the testimony of witnesses and receiving documents and other
data
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relating to subjects within the investigational jurisdiction of the Commission. Unless
otherwise ordered by the Commission, such hearings shall be public. Hearings shall
be stenographically reported and a transcript thereof shall be made which shall be a
part of the record of the investigation.
Every person required to attend and testify or submit documents or other data shall
be entitled to retain or, on payment of lawfully prescribed costs, procure a copy or
transcript of such person’s testimony or documents produced.
RULE IV. APPLICATIONS FOR COMPLAINT
Any person, partnership, corporation, or association may apply to the Commission
to institute a proceeding in respect to any violation of law over which the Commission
has jurisdiction.
Such application for complaint shall be in writing, signed by or in behalf of the
applicant, and shall contain a short and simple statement of the facts constituting the
alleged violation of law and the name and address of the applicant and of the party
complained of.
RULE V. COMPLAINTS
Whenever the Commission shall have reason to believe that there is a violation of
law over which the Commission has jurisdiction, and in case of violation of the
Federal Trade Commission Act, if it shall appear to the Commission that a proceeding
by it in respect thereof would be to the interest of the public, the Commission shall
issue and serve upon the proper parties a complaint stating its charges and containing
a notice of a hearing upon a day and at the place therein fixed, at least thirty (30) days
after the service of said complaint.
Upon request made within 15 days after service of the complaint, any party shall be
afforded opportunity for the submission of facts, arguments, offers of settlement, or
proposals of adjustment where time, the nature of the proceeding, and the public
interest permit, and due consideration shall be given to the same. Such submission
shall be in writing. The filing of such request shall not operate to delay the filing of the
answer.
RULE VI. SERVICE
Complaints, orders, and other processes of the Commission, and briefs in support of
the Complaint, will be served by the secretary of the Commission by registered mail,
except when service by other method shall be specifically ordered by the Commission,
by registering and mailing a copy thereof addressed to the person, partnership, or
corporation to be served at his or its principal office or place of business. When
proceeding under the Federal Trade Commission Act service may also be made at the
residence of the person, partnership, or corporation to be served.
When service is not accomplished by registered mail complaints, orders, or other
processes of the Commission, and briefs in support of the complaint may be served by
anyone duly authorized by the Commission, or by any examiner of the Commission,
(a) By delivering a copy of the document to the person to be served, or to a member
of the partnership to be served, or to the presi-

RULE VIII. ANWERS

103

dent, secretary, or other executive officer or a director of the corporation to be served;
or
(b) By leaving a copy thereof at the principal office or place of business of such
person, partnership, or corporation. When proceeding under the Federal Trade
Commission Act service may also be made at the residence of the person, partnership,
or corporation to be served.
The return post-office receipt for said complaint, order, or other process or brief
registered and mailed as aforesaid, or the verified return by the person serving such
complaint, order, or other process or brief, setting forth the manner of said service,
shall be proof of the service of the document.
RULE VII. APPEARANCE
Any individual or member of a partnership which is a party to any proceeding before
the Commission may appear for himself, or such partnership upon adequate
identification, and a corporation or association may be represented by a bona fide
officer of such corporation or association upon a showing of adequate authorization
therefor.
A party may also appear by an attorney at law possessing the requisite qualifications,
as hereinafter set forth, to practice before the Commission.
Attorneys at law who are admitted to practice before the Supreme Court of the
United States, or the highest court of any State or Territory of the United States, or the
United States Court of Appeals for the District of Columbia, or the District Court of
the United States for the District of Columbia, may practice before the Commission.
No register of attorneys who may practice before the Commission is maintained. No
application for admission to practice before the Commission is required. A written
notice of appearance on behalf of a specific party or parties in the particular
proceeding should be submitted by attorneys desiring to appear for such specific party
or parties, which notice shall contain a statement that the attorney is eligible under the
provisions of this rule. Any attorney practicing before the Commission or desiring so
to practice may, for good cause shown, be disbarred or suspended from practicing
before the Commission, but only after he has been afforded an opportunity to be heard
in the matter.
No former officer, examiner, attorney, clerk, or other former employee of this
Commission shall appear as attorney or counsel for or represent any party in any
proceeding resulting from any investigation, the files of which came to the personal
attention of such former officer, examiner, attorney, clerk, or other former employee
during the term of his service or employment with the Commission.
RULE VIII. ANSWERS
In case of desire to contest the proceeding the respondent shall, within twenty (20)
days from the service of the complaint, file with the Commission an answer to the
complaint. Such answer shall contain a concise statement of the facts which constitute
the ground of defense. Respondent shall specifically admit or deny or explain each of
the facts alleged in the complaint, unless respondent is without knowledge, in which
case respondent shall so state.

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Ten (10) copies of answers shall be furnished. The original of all answers shall be
signed in ink, by the respondent or by his attorney at law. Corporations or associations
shall file answers through a bona fide officer or by an attorney at law. Answers shall
show the office and post-office address of the signer.
Failure of the respondent to file answer within the time above provided and failure
to appear at the time and place fixed for hearing shall be deemed to authorize the
Commission, without further notice to respondent, to proceed in regular course on the
charges set forth in the complaint.
If respondent desires to waive hearing on the allegations of fact set forth in the
complaint and not to contest the facts, the answer may consist of a statement that
respondent admits all the material allegations of fact charged in the complaint to be
true. Such answer will constitute a waiver of any hearing as to the facts alleged in the
complaint and the Commission may proceed to make its findings as to the facts and
conclusions based upon such answer and enter its order disposing of the matter without
any intervening procedure. The respondent may, however, reserve in such answer the
right to other intervening procedure, including a hearing upon proposed conclusions
of fact or law, in which event he may, in accordance with Rule XXIV, file his brief
directed solely to the questions reserved.
Requests for leave to withdraw an answer and file a substitute or amended answer
made prior to the appointment of a trial examiner shall be addressed to the
Commission, and if made subsequent to such appointment shall be addressed to and
ruled upon by the trial examiner subject to the provisions of Rule XX.
RULE IX. INTERVENTION
So far as the responsible conduct of public business shall permit, any interested
person, after leave granted, may appear before the Commission, or its delegated
responsible officer, for the presentation, adjustment, or determination of any issue,
request, or controversy in any proceeding or in connection with any function of the
Commission.
Any person, partnership, corporation, or association desiring to intervene in a
contested proceeding shall make application in writing, setting out the grounds on
which lie or it claims to be interested
The Commission may, by order, permit intervention by counsel or in person to such
extent and upon such terms as it shall deem proper.
RULE X. MOTIONS
Motions before the Commission or the trial examiner shall state briefly the purpose
thereof and all supporting affidavits, records, and other papers, except such as have
been previously filed, shall be filed with such motions and clearly referred to therein.
Motions in any proceeding before a trial examiner which relate to the introduction
or striking of evidence, to matters of procedure, or to any other matters coming within
the scope of the trial examiner’s authority shall be made to the trial examiner and shall
be ruled on by him. All other motions in any proceeding, except as otherwise provided
in these rules, shall be addressed to and shall be ruled on by the Commission, but in
the case of motions to dismiss for alleged failure of

XII. DOCUMENTS

105

proof based upon testimony taken before a trial examiner, the motion will be referred
to the trial examiner for report and recommendation before a ruling is made by the
Commission.
Ten (10) copies of all written motions shall be filed with the Commission.
Prompt notice shall be given of the granting or denial, in whole or in part, of any
written application, petition, or other request of any interested person made in
connection with any formal proceeding. Except in affirming a prior denial or where
the denial is self-explanatory, such notice shall be accompanied by a simple statement
of grounds.
RULE XI. CONTINUENCE AND EXTENSION OF TIME
Except as otherwise expressly provided by law, the Commission, for cause shown,
may extend any time limits prescribed in these rules. A hearing before a trial examiner
shall begin at the course of the hearing shall be regulated by the trail examiner sybject
to the proisions of Rule XX.
Applications for continuances and extensions of time should be made prior to the
expiration of time prescribed by these rules.
RULE XII. DOCUMENTS
Filing.--All documents required to be filed with the Commission in any proceeding
shall be filed with the Secretary of the Commission.
Title.--Documents shall clearly show the docket number and title of the proceeding.
Copies.--Documents, other than correspondence, shall be filed in triplicate, except
as otherwise specifically required by these rules.
Form.--Documents not printed shall be typewritten, on one side of paper only; letter
size, eight (8) inches by ten and one-half (10 1/2) inches; left margin, one and one-half
(11/2) inches; right margin, one (l) inch.
Documents may be printed, in ten (10) or twelve (12) point type, on good, unglazed
paper, of the dimensions and with the margins above specified.
Documents shall be bound at left side only.
The originals of all answers, briefs, motions, and other documents shall be signed
in ink, by the respondent or his duly authorized attorney. Where the respondent is an
individual or a partnership, the originals of said documents shall be signed by said
individual or by one of the partners, or by his or its attorney. Where the respondent is
a corporation, the originals of said documents shall be signed under the corporate
name by a duly authorized official of such corporation, or by its attorney. Where the
respondent is an association, the originals of said documents shall be signed under the
association name for said association by a duly authorized official of such association,
or by its attorney.
One copy of a brief or other document required to be printed shall be signed as the
original.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

RULE XIII. ADMISSION AS TO FACTS AND DOCUMENTS
At any time after answer has been filed counsel or parties in any controversy may
serve upon the opposing side a written request for the admission of the genuineness
and authenticity of any relevant documents described in and exhibited with the request
or the admission of the truth of any relevant matters of fact set forth in such
documents.
Copies of the documents shall be delivered with the request unless copies have
already been furnished. Each of the matters on which an admission is so requested
shall be deemed admitted unless, within a period designated within the request, not
less than ten days after service thereof or within such further time as the Commission
or the trial examiner may allow on motion and notice, the party so served serves upon
the party making the request, a sworn statement either denying specifically the matters
of which an admission is requested, or setting forth in detail the reasons why he can
neither truthfully admit nor deny those, matters. Service required hereunder may be
made upon a respondent either by registering and mailing or by delivering a copy of
the documents to be served to the respondent or his attorney, or by leaving a copy at
the principal office or place of business of either. Service upon the attorney supporting
the complaint may be either by registering and mailing or by delivering a copy of the
documents to be served to such attorney.
RULE XIV. TRIAL EXAMINERS
All hearings pursuant to formal complaints shall be presided over by the Commission, a member of the Commission, or by a trial examiner appointed by the
Commission and duly qualified as an examiner or hearing officer within the meaning
of the Administrative Procedure Act. So far as practicable trial examiners shall be
assigned to cases in rotation.
Subject to the published rules of the Commission and within its authority, officers
presiding at hearings shall have the following powers and duties in all cases to which
they are assigned by the Commission, to wit:
(1) To administer oaths and affirmations.
(2) To issue subpoenas authorized by law.
(3) To rule upon offers of proof and receive relevant evidence.
(4) To take or cause depositions to be taken whenever the ends of justice would be
served thereby.
(5) To regulate the course of the hearings.
(6) To hold conferences for the settlement or simplification of the Issues by consent
of the parties.
(7) To dispose of procedural requests or similar matters.
(8) To make and submit to the Commission a recommended decision as provided
by Rule XXII.
(9) To certify questions to the Commission for its determination.
(10) To take any other action authorized by Commission rule consistent with
theAdministrative Procedure Act.
Trial examiners shall perform no duties inconsistent with their duties and
responsibilities as such. Save to the extent required for the disposition of ex parte
matters as authorized by law, no trial

XV. HEARINGS IN ADVERSARY PROCEEDINGS

107

examiner shall consult any person or party as to any fact in issue unless upon notice
and opportunity for all parties to participate.
Trial examiners shall not be responsible to, or subject to the supervision or direction
of, any officer, employee, or agent engaged in the performance of investigative or
prosecuting functions for the Commission.
The trial examiner is charged with the duty of conducting a fair and impartial
hearing and of maintaining order in form and manner consistent with the dignity of the
Commission. He will note on the record any disregard by counsel of his rulings on
matters of order and procedure and where he deems it necessary shall make special
written report thereof to the Commission. In the event that counsel supporting the
complaint or counsel for any respondent shall be guilty of disrespectful, disorderly, or
contumacious language or conduct In connection with any hearing, the trial examiner
may suspend the proceeding and submit to the Commission his report thereon, together
with his recommendations as to whether any rule should be issued to show cause why
such counsel should not be suspended or disbarred pursuant to Rule VII or subjected
to other appropriate action in respect thereto. A copy of such trial examiner’s report
shall be furnished to any counsel upon whose language or conduct such report is made,
and the Commission will take disciplinary action only after an opportunity for hearing
has been accorded such counsel.
RULE XV. HEARINGS IN ADVERSARY PROCEEDINGS
All hearings pursuant to formal complaint shall be public unless otherwise ordered
by the Commission, and such hearings shall be subject to the following conditions and
requirements
(a) Every party respondent shall have the right of due notice, cross-examination,
presentation of evidence, objection, exception, motion, argument, appeal and all other
fundamental rights.
(b) The taking of evidence and subsequent proceedings shall proceed with all
reasonable diligence and with the least practicable delay.
(c) Not less than five (5) days notice of the time and place of any indefinitely
postponed hearing shall be given to counsel of record or to parties, but in appointing
such hearing due regard shall be had for the convenience and necessity of all parties
or their representatives.
(d) The trial examiner may withdraw from a case when he deems himself
disqualified, or he may be withdrawn by the Commission after timely affidavits
alleging personal bias or other disqualification have been filed and the matter has been
heard by the Commission or by a trial examiner whom It has delegated to Investigate
and report.
(e) Hearings shall be stenographically reported by the official reporter of the
Commission under supervision of the presiding trial examiner. A transcript of said
report shall be a part of the record and the sole official transcript of the proceeding.
Transcripts will be supplied to respondents and to the public by the official reporter
at rates not to exceed the maximum rates fixed by contract between the Commission
and the reporter.
(f) Changes in the official transcript may be made only when they involve errors
affecting substance and then only in the manner herein provided. No physical changes
shall be made in or upon the official record or copies thereof in the custody of the

Commission. Lists of

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

changes agreed to in writing by opposing counsel may be incorporated into the record,
if and when approved by the trial examiner, at the close of evidence in support of the
complaint, or at the final hearing before the trial examiner, or at any time thereafter
before he files his report, and at no other times. If any changes are ordered by the trial
examiner without such written agreement between opposing counsel they shall be
subject to objection and exception.
RULE XVI. SUBPOENAS
Subpoenas requiring the attendance of witnesses or the production of documentary
evidence from any place in the United States, at any designated place of hearing, may
be issued by the presiding trial examiner or a member of the Commission. Application
therefor may be made either to the presiding trial examiner or to the Commission.
Application for subpoenas for the production of documentary evidence shall be made
in writing to the presiding trial examiner or to the Commission. The application must
have reasonable scope and specify as exactly as possible the documents desired, and
show their general relevancy. The application shall be verified by oath or affirmation.
An appeal may be taken to the Commission by the parties from the presiding trial
examiner’s denial of a motion to quash or refusal to issue a subpoena for the
production of documentary evidence.
RULE XVII. WITNESSES AND FEES
Witnesses at formal hearings shall be examined orally. Witnesses summoned in
support of the complaint shall be paid the same fees and mileage as are paid witnesses
in the courts of the United States.
Witnesses whose depositions are taken, and the persons taking such depositions,
shall severally be entitled to the same fees as are paid for like services In the courts of
the United States.
Witness fees and mileage, and fees for depositions, shall be paid by the party at
whose instance witnesses appear.
RULE XVIII. EVIDENCE
In general.--Counsel supporting the complaint shall have the general burden of proof
and the proponent of any factual proposition shall be required to sustain the burden of
proof with reference thereto. The trial examiner, subject to appeal to the Commission
as provided in Rule XX, shall admit relevant, material and competent evidence, but
shall exclude irrelevant, immaterial and unduly repetitious evidence.
Documentary.--Where relevant and material matter offered in evidence is embraced
in a document containing other matter not material or relevant and not intended to be
put in evidence, such immaterial or irrelevant parts shall be excluded, and shall be
segregated insofar as practicable.
Official notices of facts.--Where any recommended decision of the trial examiner or
any decision of the Commission, or part thereof, rests upon the taking of official notice
of a material fact not appearing in the evidence in the record, any party shall, upon
timely motion, be afforded an opportunity to show the contrary.

RULE XX. APPEALS TO THE COMMISSION

109

Objections.--Objections to evidence shall be in short form, stating the grounds relied
upon, and the transcript shall not include argument or debate thereon except as ordered
by the presiding officer. Rulings on such objections shall appear in the record.
RULE XIX. DEPOSITIONS
For good and exceptional cause the testimony of any witness may be taken In any
case whether at issue or not, by deposition de bene esse or, prior to the pendency of
a case, according to the common usage in Chancery. Depositions may be taken orally
or upon interrogatories before any person having power to administer oaths and who
has been duly designated by the Commission or the presiding trial examiner.
Unless notice be waived, no deposition shall be taken except after at least five (5)
days written notice to the parties within the United States, and fifteen (15) days notice
when deposition is to be taken elsewhere.
Any party desiring to take the deposition of a wit ness shall make application in
writing to the Commission or the presiding trial examiner setting out the reasons why
such deposition should be taken, the character of the deposition. the time when, the
place where, and the name and post office address of the person before whom such
deposition is to be taken, the name and post office address of each witness, and the
subject matter concerning which the witness is expected to testify. If good and
exceptional cause be shown, an order containing such instruction will be made and
served upon the parties.
Upon application granted, such deposition may be taken before a person having
power to administer oaths other than the person designated in the notice, provided
reasonable written notice of such change is given the opposing party. Each witness so
testifying shall be duly sworn and the adverse party shall have the right to cross
examine such witnesses. The questions propounded to the witnesses and the answers
thereto shall be reduced to writing, and, in the presence of the officer taking the
deposition, read to the witness and subscribed by the witness and certified in usual
form by said officer. Thereafter the said officer shall forward said deposition with
three copies thereof, in an envelope under seal, endorsed with the title of the case, and
addressed to the Commission at its office in Washington, D. C. If in a pending case,
such sealed deposition shall immediately be forwarded to the presiding trial examiner
and at a time of hearing read in evidence subject to such objections to the questions
and answers as were noted at the time of taking the deposition or as would be valid
were the witness personally present at such hearing.
RULE XX. APPEALS TO THE COMMISSION FROM RULINGS
OF TRIAL EXAMINERS
Except as provided for in rule XVI, parties shall not have the right to prose cute
interlocutory appeals from rulings of a trial examiner during the time the proceeding
is pending before him unless it be shown to the Commission that the prompt decision
of such appeal is necessary to prevent unusual delay and expense.
Motions for reconsideration and reversal of previous rulings may be made before the
trial examiner at the termination of the reception of evidence. In such motions each
exception shall be separately set

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

out, with exact citations to each portion of the record involved and references to the
principal authorities relied upon. The trial examiner shall rule upon each exception.
An appeal may be taken to the Commission from any adverse ruling on any such
motion and the record relating thereto shall be certified to the Commission. Notice of
such appeal shall be made on the record when the rulings are made and thereupon the
trial examiner shall fix a time, not exceeding fifteen (15) days unless the necessity for
further time shall clearly appear, for filing the appeal and a like time for filing the
answer. Pending Commission decision and action upon such appeal the case shall
remain open. Any such matters not thus laid before the Commission shall be deemed
waived.
RULE XXI. PROPOSED FINDINGS AND CONCLUSIONS BEFORE
TRIAL EXAMINER
At the close of the reception of evidence before the trial examiner in all formal
proceedings, or within a reasonable time thereafter to be fixed by the trial examiner,
parties may file for consideration by the trial examiner their pro-posed findings and
conclusions, together with their reasons therefor. Such proposals shall be in writing
and shall contain exact references to the record and authorities relied on. Copies
thereof shall be furnished all parties, and three copies, including the signed original,
shall be filed with the Commission.
Oral argument may be allowed at the discretion of the trial examiner. The record
shall show the ruling on each such proposal. Exceptions to such rulings shall be
subject to appeal under Rule XXIII only.
RULE XXII. TRIAL EXAMINER’S RECOMMENDED DECISION
IN ADVERSARY PROCEEDINGS
The trial examiner, as soon as practicable and within thirty (30) days after receipt
of the complete transcript and all exhibits in adversary proceedings, shall make and
file a recommended decision which shall become a part of the record and include a
statement of (l) findings and conclusions, as well as the reasons or basis therefor, upon
all the material issues of fact, law, or discretion presented on the record; and (2) an
appropriate order.
In cases in which the issues of fact are to be determined upon complaint and
admission answer or stipulation of facts, no recommended decision will be made if
waived by respondent, but in any case where evidence has been taken and must be
considered in the decision thereof, a recommended decision will be made regardless
of any waiver by the parties.
Except where he shall have become unavailable to the Commission, the
recommended decision shall be made by the trial examiner who presided at the
hearing.
No officer, employee or agent, engaged in the performance of investigative or
prosecuting functions for the Commission, and no party respondent or his agent or
counsel in any case shall, in that or a factually related case, participate or advise in the
recommended decision of the trial examiner, except as a witness or as counsel in
public proceedings.
All findings, conclusions and orders recommended by the trial examiner shall be
based upon the whole record and supported by reliable,

RULE XXIV. BREIFS AND ORAL ARGUMANTS

111

probative and substantial evidence (including facts of which he may take official
notice). No findings shall be recommended except such as he deems supported by the
greater weight of the evidence
At any time prior to the filing of his recommended decision the trial examiner may,
for good cause shown, reopen the case for the reception of further evidence.
A copy of the trial examiner’ s recommended decision shall be served upon each
party, counsel or other representative, who has appeared pursuant to Rule VII.
RULE XXIII. EXCEPTIONS
Any party may, within ten (10) days after receipt of a copy of the trial examiner’s
recommended decision, file with the Commission exceptions to any part thereof and
to the trial examiner’s failure to include proposed findings and conclusions requested
under Rule XXI. Each exception shall specify the portions of the record and the
authorities relied on to sustain each point.
Ten (10) copies of the exceptions shall be filed. All exceptions and rulings thereon
shall become part of the record.
A copy of such exceptions shall forthwith be furnished the trial examiner and a copy
served upon each of the parties and counsel who were served with a copy of the trial
examiner’s recommended decision.
If exceptions are to be argued, they shall be argued at the time of final argument
upon the merits, except as otherwise provided in Rule XX.
RULE XXIV. BRIEFS AND ORAL ARGUMENTS BEFORE
THE COMMISSION
A. QUESTIONS FOR PRESENTATION

Questions which may be presented for consideration and decision by the Commission on final hearing include the following :
(l) Whether the findings and conclusions recommended by the trial examiner are
relevant and material to the issues and are supported by reliable, probative, and
substantial evidence and by the greater weight of the evidence;
(2) Whether additional findings and conclusions, not recommended by the trial
examiner, should be made either with or without sending the case hack to the trial
examiner for the reception of further evidence;
(3) Whether the trial examiner was justified in having taken official notice of any
fact and whether the Commission should take official notice of any other fact;
(4) Whether due process was observed and whether there was any prejudicial
irregularity in procedure or prejudicial error in the rulings of the trial examiner;
(5) Whether the facts show a violation of law amenable to redress by the
Commission and what conclusions of law are justified and requisite in the premises;
and
(6) Whether an order to cease and desist, an order of dismissal, or other order,
should be entered and issued, and the substance and form thereof.
B. BRIEFS

Filing.--Any party to a proceeding may file a brief in support of his contentions
within the time limits fixed by these rules.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

Briefs not filed on or before the time fixed in the rules will be received only by
special permission of the Commission.
Time.--Opening brief shall be filed by the attorney supporting the complaint within
twenty (20) days after service upon him of a copy of the recommended decision of the
trial examiner.
Brief on behalf of respondent shall be filed within twenty (20) days after service
upon respondent or respondent’s attorney of copy of brief in support of the complaint.
Where respondent shall have filed an answer admitting all material allegations of
fact, the time so limited shall begin to run at the time of filing such answer.
In the event permission is granted for filing reply brief in support of the complaint,
it shall be filed within ten (10) days after filing of brief on behalf of respondent. No
further brief on behalf of respondent shall be filed.
Number.--Twenty (20) copies of each brief shall be filed.
Contents.--Briefs, except the reply brief in support of the complaint, shall contain,
in the following order:
(a) A concise abstract or statement of the case.
(b) A brief of the argument, exhibiting a clear statement of the points of fact or law
to be discussed, with references to the pages of the record and the authorities relied
upon in support of each point.
The exceptions, if any, to the recommended decision of the trial examiner may also
be included in the brief.
Index--Briefs comprising more than ten (10) pages shall contain on their top
flyleaves a subject index with page references. The subject index shall be
supplemented by an alphabetical list of all cases referred to, with references to pages
where references are cited.
Form.--Briefs shall be printed, multigraphed, or otherwise neatly processed on -good
unglazed white paper in type not smaller than ten (10) point double leaded, citations
and quotations single leaded; footnotes not less than eight (8) point single leaded. Type
page shall not be more than twenty-nine (29) picas wide by approximately forty-eight
(48) picas deep and trimmed page shall be seven (7) Inches by ten (10) inches, with
an inside margin of not less than one (l) inch.
Length.--Unless leave be granted, briefs shall not exceed seventy-five (75) printed
pages.
Signing.--At least one copy of each brief shall be signed in ink, by the respondent or
his duly authorized attorney, as prescribed in Rule XII.
C. ORAL ARGUMENTS

Oral arguments before the Commission shall be had as ordered, on written
application of the Chief Trial Counsel of the Commission, or of the respondent, or of
attorney for respondent, filed within fifteen (15) days after filing of brief on behalf of
respondent.
Oral arguments before the Commission shall be reported stenographically
unless~otherwise ordered by the Commission.
RULE XXV. COMMISSION’S ADJUDICATION
Upon submittal of a case to the Commission for final decision on the merits the
Commission will consider the whole record, including the recommended decision of

the trial examiner and the exceptions

RULE XXVII.REOPENING OF PROCEEDINGS

113

thereto, will resolve all questions of fact by what it deems to be the greater weight of
the evidence thereon, will make its decision stating the reasons or basis therefor and
enter an appropriate order, and wherever it decides that an order to cease and desist
should be entered will also make, as provided by law, a report in writing stating its
findings as to the facts. As authorized under the various statutes defining its powers
and duties the Commission adjudicates all formal proceedings brought before it and
as authorized under the Administrative Procedure Act reserves such adjudications
exclusively to itself.
No officer, employee or agent, engaged in the performance of investigative or
prosecuting functions for the Commission, and no party respondent or his agent or
counsel in any case shall, in that or a factually related case, participate or advise in the
decision of the Commission, except as a witness or as counsel in public proceedings.
RULE XXVI. REPORTS SHOWING COMPLIANCE WITH ORDERS
AND WITH STIPULATIONS
In every case where an order to cease and desist is issued by the Commission for the
purpose of preventing violations of law and in every instance where the Commission
approves and accepts a stipulation in which a party agrees to cease and desist from the
unlawful methods, acts, or practices involved, the respondents named in such orders
and the parties so stipulating shall file with the Commission, within sixty days of the
service of such order and within sixty days of the approval of such stipulation, a report,
in writing, setting forth in detail the manner and form in which they have complied
with said order or with said stipulation; provided, however, that if within the said sixty
(60) day period respondent shall file petition for review in a circuit court of appeals,
the time for filing report of compliance will begin to run de novo from the final
judicial determination; and provided further that where the order prevents the use of
a false advertisement of a food, drug, device, or cosmetic, which may be injurious to
health because of results from such use under the conditions prescribed in the
advertisement, or under such conditions as are customary or usual, or if the use of such
advertisement is with intent to defraud or mislead, an Interim report stating whether
and how respondents intend to comply shall be filed within ten days.
Within its sound discretion, the Commission may require any respondent upon
whom such order has been served and any party entering into such stipulation, to file
with the Commission, from time to time thereafter, further reports in writing, setting
forth in detail the manner and form in which they are complying with said order or
with said stipulation.
Reports of compliance shall be signed In ink by respondents or by the parties
stipulating.
RULE XXVII. REOPENING OF PROCEEDINGS
In any case where an order to cease and desist has been issued by the Commission
it may, upon notice to the parties, modify or set aside, in whole or in part, its report of
findings as to the facts or order in such manner as it may deem proper at any time prior
to expiration of the time allowed for filing a petition for review or prior to the filing
of the transcript of record in the proceeding in a Circuit Court of Appeals

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

of the United States pursuant to a petition for review or for enforcement of such order.
In any case where an order to cease and desist issued by the Commission has become
final by reason of court affirmance or expiration of the statutory period for court
review without a petition for such review having been filed, the Commission may at
any time after reasonable notice and opportunity for hearing as to whether changed
conditions of fact or of law or the public interest so require, reopen and alter, modify
or set aside in whole or in part its report of findings as to the facts or order therein
whenever in the opinion of the Commission, after such hearing, such action is required
by said changed conditions or by the public interest.
In any case where an order dismissing a formal complaint of the Commission has
been entered the Commission may, upon reasonable notice to the parties and
opportunity for a hearing as to whether said proceeding should be reopened, issue an
order reopening the same whenever, in the opinion of the Commission, changed
conditions of fact or of law or the public interest so require.
RULE XXVIII. TRADE PRACTICE CONFERENCE PROCEDURE
(a) Purpose.--The trade practice conference procedure has for its purpose the
establishment, by the Commission, of trade practice rules in the interest of industry
and the purchasing public. This procedure affords opportunity for voluntary
participation by industry groups or other interested parties in the formulation of rules
to provide for elimination or prevention of unfair methods of competition, unfair or
deceptive acts or practices, and other illegal trade practices. They may also include
provisions to foster and promote fair competitive conditions and to establish standards
of ethical business practices in harmony with public policy. No provision or rule,
however, may be approved by the Commission which sanctions a practice contrary to
law or which may aid or abet a practice contrary to law.
(b) When authorized.--Trade practice conference proceedings may be authorized by
the Commission upon its own motion or upon application therefor whenever such
proceedings appear to the Commission to be in the interest of the public. In authorizing
proceedings, the Commission may consider whether such proceedings appear to have
possibilities (l) of constructively advancing the best interests of industry on sound
competitive principles in consonance with public policy, or (2) of bringing about more
adequate or equitable observance of laws under which the Commission has
jurisdiction, or (3) of otherwise protecting or advancing the public interest.
(c) Application.--Application for a trade practice conference may be filed with the
Commission by any Interested person, party, or group. Such application shall be in
writing and be signed by the applicant or the duly authorized. representative of the
applicant or group desiring such conference. The following information, to the extent
known to the applicant, shall be furnished with such application or In a supplement
thereto :
(l) A brief description of the industry, trade, or subject to be treated.
(2) The kind and character of the products involved.

RULE XXVIII. TRADE PRACTICE CONFERENCE PROCEDURE

115

(3) The size or extent and the divisions of the industry or trade groups concerned.
(4) The estimated total annual volume of production or sales of the commodities
involved.
(5) List of membership of the industry or trade groups concerned in the matter.
(6) A brief statement of the acts, practices, methods of competition or other trade
practices desired to be considered, or drafts of suggested trade practice rules.
(d) Informal discussions with members of the Commission’s staff.--Any interested
person or group may, upon request, be granted opportunity to confer in respect to any
proposed trade practice conference with the Commission’s trade practice conference
office, either prior or subsequent to the filing of any such application. They may also
submit any pertinent data or information which they desire to have considered. Such
submission shall be made during such period of time as the Commission or its duly
authorized official may designate.
(e) Industry conferences.--Public notice of the time and place of any such authorized
conference shall be issued by the Commission. A member of the Commission or of its
staff shall have charge of the conference and shall conduct the conference pursuant to
direction of the Commission and in such manner as will facilitate the proceeding and
afford appropriate consideration of matters properly coming before the conference. A
transcript of the conference proceedings shall be made, which, together with all rules,
resolutions, modifications, amendments or other matters offered, shall be filed in the
office of the Commission and submitted for its consideration.
(f) Public hearing on proposed rules.--Before final approval by the Commission of
rules for an industry, and upon public notice, further opportunity shall be afforded by
the Commission to all interested persons, corporations or other organizations,
including consumers, to submit in writing relevant suggestions or objections and to
appear and be heard at a designated time and place.
(g) Promulgation of rules.--When trade practice rules shall have been finally
approved and received by the Commission, they shall be promulgated by official order
of the Commission and published, pursuant to law, in the Federal Register. Said rules
shall become operative thirty (30) days from date of promulgation or at such other time
as may be specified by the Commission. Copies of the final rules shall be made
available at the office of the Commission. Under the procedure of the Commission a
copy of the trade practice rules as promulgated by the Commission is sent to each
member of the industry whose name and address is available, together with an
acceptance form providing opportunity to such member to signify his intention to
observe the rules in the conduct of his business.
(h) Violations.--Complaints as to the use, by any person, corporation or other
organization, of any act, practice or method inhibited by the rules may be made to the
Commission by any person having information thereof. Such complaints, If warranted
by the facts and the law, will receive the attention of the Commission in accordance
with the law. In addition, the Commission may act upon its

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

own motion in proceeding against the use of any act, practice or method contrary to
law.
(i) Amendment of rules.--Trade Practice rules may be amended or rescinded by the
Commission upon its own motion or upon application filed with it by any interested
person, party or group. Such application shall be in writing, signed by the applicant or
his duly authorized representative, and shall set forth the reasons for the requested
action.
RULE XXIX. PUBLIC INFORMATION
The Rules of Practice of the Commission, and such amendments as may be made
thereto, shall be published in the Federal Register and may be obtained from the
Commission upon application.
The findings, conclusions of law, and final orders of the Commission in respective
formal proceedings and a digest of accepted stipulations to desist from unlawful
practices shall be published in the official reports of the Commission.
Trade Practice Conference Rules for respective industries, issued under Rule
XXVIII hereto, may be obtained upon application to the Commission and shall be
published in the Federal Register.
Information concerning the activities of the Commission will be released from time
to time under the direction or pursuant to the authority of the Commission.
In proceedings instituted by the issuance of formal complaint, the pleadings,
transcript of testimony, exhibits, and all documents received in evidence or made a
part of the record therein shall be available for inspection and copying by the public
at the convenience of the Commission.
Documents, records, and reports made public by the Commission, including
stipulations to cease and desist, certain trade practice conference records, and certain
papers filed under the Wool Products Labeling Act, shall be available for inspection
and copying at the convenience of the Commission.
The records and files of the Commission, and all documents, memoranda,
correspondence, exhibits, and information of whatever nature, other than the
documentary matters above described, coming into the possession or within the
knowledge of the Commission or any of Its officers or employees in the discharge of
their official duties, are confidential, and none of such material or information may be
disclosed, divulged, or produced for inspection or copying except under the following
circumstances :
Upon good cause shown, the Commission may by order direct that certain records,
files, papers, or information be disclosed to a particular applicant.
(a) Application by a member of the public for such disclosure shall be in writing,
under oath, setting forth (1) the interest of the applicant in the subject matter; (2) a
description of the specific information, files, documents, or other material inspection
of which is requested; (3) whether copies are desired; and (4) the purpose for which
the information or material, or copies, will be used if the application is granted. Upon
receipt of such an application the Commission will take action thereon, having due

regard to statutory restrictions, its rules of practice, and the public interest.

RULE XXIX. PUBLIC INFORMATION

117

(b) In the event that confidential material is desired for inspection, copying, or use
by some agency of the Federal or a State Government, a request therefor may be made
by the administrative head of such agency. Such request shall be in writing, and shall
describe the information or material desired, its relevancy to the work and function
of such agency and, if the production of documents or records or the taking of copies
thereof is asked, the use which, is intended to be made of them. The Commission will
consider and act upon such requests, having due regard to statutory restrictions, its
rules of practice, and the public interest.
In cases in which an officer or employee of the Commission has been lawfully
served with a subpoena duces tecum, material designated herein as confidential shall
be produced only when and as authorized by the Commission. Service of such
subpoena shall immediately be reported to the Commission with a statement of all
relevant facts. The Commission will thereupon enter such order or give such
instructions as it shall deem advisable in the premises. If the officer or employee so
served has not received instructions from the Commission prior to the return date of
the subpoena, he shall appear in response thereto and respectfully decline to produce
the documents or records subpoenaed (pointing out that he is not permitted to do so
under this rule, and request a continuance pending action by or instructions from the
Commission. If, notwithstanding, the court or other body orders the production of any
of the material subpoenaed, the officer or employee shall immediately report the facts
to the Commission.

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.
SETTLEMENT OF CASES BY TRADE PRACTICE CONFERENCE
AND STIPULATION AGREEMENTS
Upon the promulgation of trade practice conference rules for an industry, an
examination will be made of all charges of law violations by members of that industry
then pending before the Commission which have not reached the formal stage through
the issuance of complaint. In those instances in which the pending charges are
adequately covered by the trade practice conference rules, and which are not excluded
by the exceptions hereinafter stated, the Commission will consider the advisability of
closing the matters without prejudice to reopening whenever that action appears to be
warranted. In such instances consideration will be given to whether or not a proposed
respondent has subscribed to the trade practice conference rules for his industry, to
whether or not there is adequate reason to believe that he is in fact complying with
such rules and will continue to do so, and to whether or not the public interest or the
applicable statute requires any further proceedings.
Upon the promulgation of trade practice conference rules for an industry, formal
complaints which have not then been adjudicated and in which the charges are
adequately covered by such rules, and which are not excluded by the exceptions
hereinafter stated, may be brought directly before the Commission on motion to
suspend without prejudice to the Commission’s right to resume the proceeding. In
considering such motions the Commission will be guided by factors similar to those
outlined above with respect to informal matters.
119

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

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, in
instances which are not excluded by the exceptions hereinafter stated, 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 the policy of the Commission to utilize the trade practice conference and
stipulation procedures to encourage widespread observance of the law by enlisting the
cooperation of members of industries and informing them more fully of the
requirements of the law, so that wherever consistently possible the Commission may
avoid the need for adversary proceedings against persons who, through
misunderstanding or carelessness, may violate the law unintentionally. But it is not the
policy of the Commission to grant the privilege of settling cases through trade practice
conference or stipulation agreements to persons who have violated the law where such
violations involve intent to defraud or mislead; false advertisement of foods, drugs,
devices or cosmetics which are inherently dangerous or where injury is probable;
suppression or restraint of competition through conspiracy or monopolistic practices;
or violations of the Clayton Act; nor will the privilege be granted where the
Commission is of the opinion that such procedure will not be effective in preventing
continued use of the unlawful methods, acts or practices. The Commission reserves the
right in all cases to withhold the privilege of settlement by trade practice conference
or stipulation agreements. When in connection with an industry-wide investigation
informal matters of whatever nature are docketed against individual members of that
industry, from which the promulgation of trade practice conference rules ensues
covering the questioned practices, and which are subscribed to and accepted by the
affected members of the industry, the Com-mission will give careful consideration to
whether or not the public interest requires further investigation of such informal
matters.
Explanatory statement.--The Commission has long had a public statement of policy
governing the settlement of informal cases by stipulation agreements. There has been
no comparable generally published statement of policy with respect to trade practice
conference agreements. Under its present program, the Commission may institute trade
practice conferences on its own initiative. When it appears that questionable practices
are so prevalent in an industry that they may be more effectively and expeditiously
reached by trade practice conference than by individual proceedings, the Commission
may utilize that procedure in dealing with the over-all problem. In those situations it
is necessary, after the promulgation of trade practice conference rules, to determine
what further action should be taken in pending informal cases relating to the same
parties and practices, as

SETTLEMENT OF CASES

121

well as to determine the extent to which pending formal matters may have been
affected.
It is the desire of the Commission to inform the public on these matters, but to avoid
commitments which may abrogate its statutory procedures or frustrate the
effectiveness of its corrective processes. To this end the Commission has formulated
a statement of policy concerning the scope and effect of its trade practice conference
procedure insofar as it may affect the settlement of pending matters before it, and it
has reappraised its policy with respect to the settlement of cases by stipulation
agreements.
For many years the Commission has sought to encourage voluntary compliance with
the laws which it administers. It has utilized individual stipulation agreements and
conferences with whole industries and has otherwise cooperated with businessmen to
inform and guide them with respect to the scope and meaning of the laws within its
jurisdiction. A cooperative procedure similar to trade practice conferences was first
used by the Commission in about 1919; the Trade Practice Conference Division was
established in 1926; and the present active list of trade practice conference rules covers
about 160 industries.
It has long been the Commission’s practice in certain instances where proper
circumstances are present to dispose of pending matters upon acceptance by the
affected parties of trade practice rules for their industry covering the charges in such
matters. This practice was specifically limited In 1936 when the Commission
determined that whenever an application for trade practice conference is received from
an industry, some or all of whose members are respondents in proceedings before the
Commission involving alleged violations of the Clayton Act or combinations or
conspiracies in restraint of trade in violation of the Federal Trade Commission Act,
such proceedings will have to go forward without regard to the trade practice
conference procedure.
The cooperative procedures, however, require a constant vigilance to avoid the
dangers inherent in them. Their use should never be permitted as an easy escape for
wilful violators of the laws administered by the Commission or as a means for
avoiding or delaying the effectiveness of the Commission’s corrective action. These
considerations have governed the Commission’s policy with respect to the settlement
of pending matters by trade practice conference or stipulation agreements.
Trade practice conference rules have no force of law in themselves. Violations of
those rules are not proceeded against directly. The Commission can proceed only on
a charge of violation of the law upon which the rules are based. Their purpose is to
express the requirements of the statutes and decisions in terms which may be
understood by the members of particular industries and in language addressed to their
problems and practices. An agreement by a member of an industry to abide by the rules
is an expression of intention to abide by the basic law.
It is manifestly difficult to draft a statement of policy on a broad basis which does
not afford an evasive device to the wilful violator while seeking to avoid unduly harsh
treatment of the unintentional or casual violator. Any statement of policy must,
therefore, depend for

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

its effectiveness upon the consistent and sound judgment of the Commission in
applying it in individual instances. But no statement of policy should be so broad as
to constitute an invitation to reluctant or recalcitrant respondents to avail themselves
of informal settlements for the purpose of delaying or defeating effective action. It
should invite only those who desire in good faith to correct unlawful practices on a
cooperative and voluntary basis. The object of the Commission is to correct--not to
punish. But there must be a reasonable assurance that any cooperative procedure will
be effective and provide full freedom to institute such further proceedings as are or
may become necessary in the public interest.
Conspiracies and monopolistic practices are, with few exceptions, deliberately
engaged in for the purpose of restraining competition and ordinarily with knowledge
of their illegality. Since good faith is ordinarily lacking in such violations, it cannot
be expected to be present in agreements by the conspirators to discontinue and not
resume the violations. Violations of this type are frequently also criminal violations
of the Sherman Act, and the settlement of such violations by informal agreement may
impair the rights of private litigants or compromise the enforcement of that act by the
Department of Justice. When conspirators are discovered, or when they are on the
verge of being discovered, they would doubtless be glad to make use of the
Commission’s trade practice conference or stipulation procedure as a protection
against the more rigorous procedure provided by the antitrust laws.
Trade practice conference rules may include rules against restraints of trade and
against violations of the Clayton Act. Insofar as such rules may be informative to and
followed by members of the affected industries, they have a substantial value. They
should not be accepted, however, as a basis for the settlement of cases in which the
Commission has reason to believe that such violations have occurred.
COOPERATION WITH OTHER AGENCIES
In the exercise of its jurisdiction with respect to practices and commodities
concerning which other Federal agencies also have functions, it is the established
policy of the Commission to cooperate with such agencies to avoid unnecessary
overlapping or possible conflict of effort.
It is the policy of the Commission not to institute proceedings in matters such as the
labeling or branding of commodities where the subject matter of the questioned
portion of the labeling or branding used is, by specific legislation, made a direct
responsibility of another Federal agency.
In proceedings involving false advertisements of food, drugs, cosmetics, and devices
as defined in section 15 of the Federal Trade Commission Act, account is taken of the
labeling requirements of the Food and Drug Administration in any corrective action
applied to the advertising. In the case of advertisements of food, drugs, cosmetics, or
devices which are false because of failure to reveal facts material with respect to the
consequences which may result from the use of the commodity, it is the policy of the
Commission to proceed only when the resulting dangers may be serious or the public
health may be impaired, and in such cases to require that appropriate disclosure of the
facts be made in the advertising.

INVESTIGATIONS BY THE COMMISSION, 1915-47
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.1 They were made at the request of the President, the Congress, the
Attorney General, 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 inquires, 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 G Cost System for
Manufacturers (H. Doe. 1356, 64th, 31 p., o. 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.
Advertising as a Factor in Distribution.--See Distribution Methods and Costs.
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: coporate consolidations
and mergers:5 unbalanced agricultural-industrial relations; cooperative associations;
production financing; transporta-

1 The wartime cost-finding inquiries, 1917-1918 (p. 139), include approximately 870 aeparate
investigations.
2 Documents out of print (designated “o. p.”) are availab le in depository libraries.
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 Distribu tion 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.28 Agricultural
Implement and Machinery Induatry (H Doc. 702, 75th, 6/8/3 9), 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; 1948, p.12; 1947, p.12.
5 See footnote 4.

767228---48-----9

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

tion; 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 In-come Inquiry, Part I,
Principal Farm Products, 1,134 p., 3/2/37 (summary, conclusions, and
recommendations, 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 (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 petroleumbase 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), appeared to be due to
sudden increased demand rather than trade restraints (Calcium Arsenate Industry, 5.
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 been improperly
related to secure capital equipment or whether orders that had been related bad been
extended for the purpose of obtaining capital equipment in violation of priorities
regulations.
Cartels.--See paragraphs headed Copper Industry, International Phosphate Cartels,
and Sulphur Industry.
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 systems 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, 5. 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 discounts 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 (1936) 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 (W. P. B.), Wartime, 1942-43.--For the War Production
Board, the Commission investigated the transactions of the major chro6 Basing-point Systems are also discussed in the published reports listed herein under “Price
Bases,” “Steel Code,” and “Steel Sheet Piling.”
7 Bee footnote 4, p.123.

INVESTIGATIONS BY THE COMMISSION, 1945-47

125

mium processors to determine the extent to which they were complying with
Amendment No. 2 to W. P. B General Preference Order No. m-18a, 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.)
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 5. Res. 217, 64th 6/22/16; H Res. 352, 64th, 8/18/16, and 5. 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., o. p., 5. Doc. 207, 65th)-pursuant to F. T. C.
motion; and Report of the F. T. C. on Premium Prices of Anthracite (97 p., o. 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: (l) Pennsylvania, bituminous, 103 1).,
o. p.; (2) Pennsylvania, anthracite, 145 p., o. p.; (8) 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, 1941143.--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.

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Cooperation in American Export Trade.--See Foreign Trade.
Cooperation in Foreign Countries (F. T. C.).--Inquires 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, 5. 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 Industry (F. T. C.)--The Commission’s report on The Copper Industry,
transmitted to Congress (3/11/47), was In two parts : Part I--The Copper Industry of
the United States and International Copper Cartel-s, and Part Il-Concentration and
Control By the Three Dominant Companies. The Commission reported that “The
copper situation is particularly serious, not only because of the concentration of
control of the ore reserves and of the productive capacity, but also because the
domestic supply is inadequate to meet the demands of high level national production
and employment. furthermore, the production of foreign copper, on which the United
States will become increasingly dependent, is likewise dominated by a few corporate
groups which in the past have operated cooperatively in cartels to regulate production
and prices.” A summary of the report appears at p.18.
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 Financial Reports.
Corporate Mergers and Acquisitions (F. T. C.).--To determine the impact on the
Nation’ s economy of corporate mergers and acquisitions, the Commission made a
study of the merger movement for the years 1940-46, inclusive. The results of the
study were transmitted to Congress In a report entitled The Present Trend of Corporate
Mergers and Acquisitions (23 p., 3/7/47), which showed, among other things, that
during the period covered, more than 1,800 formerly independent competitive firms
in manufacturing and mining industries alone had disappeared as a result of mergers
or acquisitions, and that more than one-third of the total number of acquisitions
occurred in only three industries, food, nonelectrical machinery, and textiles and
apparel-all predominantly “small business” fields. A summary of the report appears
at p.14.
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.
Costume Jewelry, Manufacturers of (W. P. B.), Wartime, 1942-44.--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.

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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 Millinery Distribution.
Distribution Methods and Costs (F. T. C.).--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. Eight 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., o. p.); Part
III, Building Materials-Lumber, Paints and Varnishes and Portland Cement (2/19/44, 50 p., o.
p.); Part IV. Petroleum Products, Automobiles, Rubber Tires and Tubes, Electrical Household
Appliances, and Agricultural Implements (3/2/44, 189 p., o. p.); Part V. Advertising as a Factor
in Distribution (10/30/44, 50 p., o. 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.); Part VIII. Cost of Production and Distribution of Fish in New England
(6/30/45, 118 p.); and Part IX. Cost of Production and Distribution of Fish on the Pacific Coast
(7/25/46, 82 p.). The inquiries relating to fish were conducted in cooperation with the
Coordinator of Fisheries, Interior Dept. During World War II special reports on the distribution
of some 20 commodity groups were made for confidential use of the Office of Price
Administration and other war agencies.
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 Lamp Manufacturers (W. P. B.), Wartime, 1942-43.--At the direction 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 were no substantial antitrust law violations
(Report of the F. T. C. on Commercial Feeds, 206 p., 3/29/21).
Fertilizer (Senate).--Begun by the Commissioner of Corporations (S. Res. 487, 62d, 3/1/13),
this inquiry disclosed extensive use of bogus independent fertilizer

8 The Commission was created September 26 1914, upon passage of the Federal Trade Commission
Act, sec. 3 of which provided that “all pending g investigations and proceedings of the Bureau of
Corporations [of the Department of Commerce] shall be continued by the Commission.”

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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 popularselling 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 Live-stock
(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 the Big Five Packers, resulting in a
consent decree (Supreme Court of the D. C., 2/27/20, 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 Limitation, p. 130).
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, 215 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., o.p.); and
VII. Effects of Future Trading (6/25/26, 419 p., o. 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, 1921) was an important factor in

enactment of the Grain Futures Act (1921). (Further reference to the grain trade is made under
Grain Elevators, Grain Exporters, and Grain Wheat Prices, p.130.
Food (President) Continued--Bakeries and Flour Milling.--One F. T. C. report was
published by the Food Administration (U.S. Food Administration, Report

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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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 were tabulated
for O. P. A.
Food--Bread Baking (O.P. A.), Wartime, 194142.--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., o. p., 1/11/28); and Conditions in the Flour Milling Business,
supplementary (S. Doc. 96, 72d, 26 p., 5/28/32).
Food--Wholesale Baking Industry (F. T. C.).--This inquiry (F. T. C. Res., 8/31/45) resulted
in two reports to Congress : Wholesale Baking Industry, Part I-Waste in the Distribution of
Bread (4/22/46, processed, 29 p.) and Wholesale Baking Industry, Part II--Costs, Prices and
Profits (8/7/46, 137 p.). Part I developed facts concerning wasteful and uneconomic practices
in the distribution of bread, including consignment selling which involves the taking back of
unsold bread ; furnishing, by gift or loan, bread racks, stands, fixtures, etc., to induce
distributors to handle a given company’s products.- It was found that, although War Food Order
No. 1 which prohibited these practices was only partially observed, in 1945 as compared with
1942, the quantity of bread saved was sufficient to supply the population of England, Scotland,
and Wales with a daily ration of one-third of a loaf for 30 days, the population of France for 36
days, or the population of Finland for nearly 1 year. The Commission suggested that “a careful
examination of present laws be made by the legislative and executive branches of the
Government to determine what legislation, if any, is needed to permanently eliminate wasteful

trade practices and predatory competition which threaten the existence of many small bakers,
foredoom new ventures to failure and promote regional monopolistic control of the wholesale
bread baking industry.”
Part II presents information concerning prices and pricing practices in the industry, profits
earned, and unit costs of production and distribution. It compares the details of production and
distribution costs for bread and rolls, other bakery products, and for all bakery products for two
operating periods in 1945,

10 In connection with its wartime cost finding inquiries, 1917-18, p. 139 herein, the Com-mission
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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March and September. Comparisons of costs are also made for these two periods for plants
arranged by geographical areas. Comparisons of the costs of production and distribution are
made by size groups of wholesale bakeries. A summary of Part II appears at p. 25.
Food--Fish.--See Distribution Methods and Cost.
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--Flour-Milling Industry, Growth and Concentration in (F. T. C.).--The
Commission’s study showed that there has been a progressive increase in the size of flour mill
operations and a progressive decrease in the number of flour-milling establishments.Nevertheless, the Commission reported, there is a lesser degree of concentration in the flourmilling industry than in many other important industries. The results of the study were presented
to Congress in a report on the Growth and Concentration in the Flour-Milling Industry (6/2/47).
A summary of the report appears at p. 27.
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.
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., o. 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., o.p.,
12/13/20).
Food--Important Food Products.--See Distribution Methods and Costs.
Food--Meat Packing Profit Limitations (Senate), Wartime, 1917-18.--Following an
inquiry (S. Res. 177, 66th, 9/3/19) involving 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, 8/3/19) 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). Results 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 Milksheds (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
milk-sheds, interim report, H. Doc. 887, 74th, 125 p., 12/81/85); 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., 6/4/36); 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.,

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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 Price. (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 industrywide 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 Ra sin 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 Prices, S. Doc. 209, 66th, 11 p., o. p., 2/2/20).
Food--Sugar (House).--An extraordinary advance in the price of sugar in 1919 (H. R e s .
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).
Food--Sugar, Beet (F. T. C.).--Initiated by the Commissioner of Corporations,11 but
completed by the F. T. C., this inquiry dealt with the cost of growing beets and the cost of beetsugar manufacture (Report on the Beet Sugar Industry in the U. S., H. Doc. 158, 65th, 164 p.,
o. 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 heating plants were In violation of Orders L-79 and
P-84, and other applicable regulations and orders of W. P. B.
Fuse Manufacturer. (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 L-158 and L-161, as amended.
Gasoline.--See Petroleum.
11

See footnote 8, p.127.

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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, paraformaldehyde, or hexamehtylenetramine, to which they were not otherwise
entitled.
Grain.--See Food.
Grain Exchange Actions (F. T. C. and Chairman of Senate Committee on Agriculture
and Forestry).--The Commission’s report on Economic Effects of Grain Exchange Actions
Affecting Futures Trading During the First Six Months of 1946 (85 p., 2/4/47) presents results
of a special study made at the request of the then Chairman of the Senate Committee on
Agriculture and Forestry. The report reviews the factors which made it impossible, during the
first half of 1940, for futures trading to be conducted in the usual manner on the Chicago,
Kansas City and Minneapolis grain exchanges under existing conditions of Government price
control and severe restrictions on the movement of short supplies of free grain In the cash
market. The report also discusses the economic effects of emergency actions taken by the
exchanges on the interests trading in futures, and suggests, among other things, that both the
Commodity Exchange Act and the U.S. Warehouse Act “should be so amplified and
coordinated, or even combined, as to make effective the type and scope of regulation over
futures trading contemplated by the Congress in enacting the Commodity Exchange Act.” A
summary of the report appears at p.26.
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).
Housefurnishings (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 Ho use 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 determine 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.
Industrial Financial Reports (F. T. C. and S. E. C.).--This new series of reports (1947) Is
intended to meet the general needs of the Government and the public for current reliable
corporation financial data. The reports show the aggregate estimates for American
manufacturing corporations as derived from reports collected by the Federal Trade Commission
and the Securities and Exchange Commission. This work Is based upon resumption by F. T. C.
of its prewar financial reporting function and continuation by S. E. C. of its current
responsibilities for collection of financial information from corporations with securities
registered on a national exchange. F. T. C. obtains comparable information from a carefully
selected sample of small, medium size and large non-registered corporations. The sample has
been designed so that the two sets of data can be combined to provide estimates for 21 major

industry groups as well as the aggregate for all manufacturing corporations. For the first
quarterly period of 1947, total assets of all manufacturing corporations were estimated at $89
billion. The aggregate sales for all manufacturing corporations were estimated at $35.6 billion,
profits before taxes at $4.4 billion and the net profit after pro-vision for federal income taxes
at $2.7 billion. The aggregate stockholders’ equity was estimated at $61.9 billion and the
resulting quarterly rate of return was 4.3 percent. The Industrial Financial Reports formerly
were known as Industrial Corporation Reports. A summary of the report appears at p.29.
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

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133

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.
International Phosphate Cartels (F. T. C.).--The F. T. C. Report on International
Phosphate Cartels (F. T. C. Res., 9/19/44) developed facts with respect to the practices,
arrangements and agreements between domestic phosphate companies and foreign competitors
through International cartels, through which minimum export prices were fixed. These prices
varied from market to market, depending upon competition, ocean freight rates, and other
factors. The agreements established fixed quotas in each grade, and sales were allocated among
members of the Phosphate Export Association according to their quotas and the grade involved.
The report (processed, 60 p.) was transmitted to Congress 5/1/46.
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 jewel-bearing 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 Lumber 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 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).
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 ch ips 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 leased 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).
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 restrict competition ; that inequities existed in dealer agreements and in certain
manufacturers’ treatment of some dealers ; and that some companies’ car finance

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

plans developed serious abuses (Motor Vehicle Industry, H. Doe.- 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 (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 (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 M-327 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 (O.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 news-print 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 Paper
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., o.p., 6/13/17); and Newsprint Paper
Investigation (in response to S. Res. 95, 65th, 6/27/17 ; 5. 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 (News-print 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 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, 6/18/1312 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

12 See footnote 8, p.127.

INVESTIGATIONS BY THE COMMISSION, 1915-47

135

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. 81, 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. 5. 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 5. 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., 2/3/28)--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 electricpower 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 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,

13 See footnote 8, p.127. Conditions in one of the midcontinent fields were discussed by the
Bureau of Corporations in Conditions in the Healdton Oil Field (Oklahoma) (116 p., 8/15/15).

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were among the influences which brought about enactment of such remedial legislation as the
Securities Act (1933) , the Public Utility Holding Company Act (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) comprised 95 volumes.
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 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 delivered-price
system, the Commission examined price schedules of the more important manufacturers of range
boilers, 1932-36, dis-closing 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 (8/21/21) 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 sup ply 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.
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 determine whether
requirements of its Conservation Order No. m-131-a, relating to quinine and other drugs
extracted from cinchona bark, were being complied with.
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 Com 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.

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, 1985, 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.

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137

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, 8 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). The Report of the F.T.C. on Resale Price Maintenance (F. T. C. Res., 4/25/39)
was submitted to Congress 12/13/45. The inquiry developed facts concerning the programs of
trade organizations interested in the extension and enforcement of minimum resale price
maintenance contracts, and the effects of the operation of such contracts upon consumer prices
and upon sales volumes of commodities In both the price-maintained and non-price-maintained
categories.
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 (W. P. B.), Wartime, 1942-43.--Silverware manufacturers were
investigated at the request of the War Production Board to deter-mine 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, 5. Doc. 159, 73d, 79 p., 3/19/34) and the Commission and
N. R A. studied the effect of the multiple basing-point 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., Republic 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 Findings, 1917-18.
Steel Costs and Profits (O.P. A.), Wartime, 194243.--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.

Steel Industry (O. PM.), Wartime, 194142.--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
16

The salary lists do not appear in the report but are available for inspection has 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 basing- point system is also discussed
in published reports listed (175 p., processed). The basing-point under “Cement” and herein.

138

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

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 11 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 had issued stock dividends, and the amounts thereof,
since the Supreme Court decision (3/8/20) holding 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.
Sulphur Industry (F. T. C.) --In its report to Congress on The Sulphur Industry and
International Cartels (6/16/47), the Commission stated that the operations of all four producers
constituting the American sulphur industry generally have been highly profitable, and that the
indications are that foreign cartel agreements entered Into by Sulphur Export Corp., an export
association organized under the Webb-Pomerene Law, have added to the profitability of the U.
S. industry. On 2/7/47, after hearings, the Commission recommended that Sulphur Export
readjust its business to conform to law (see pp.21 and 82).
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., o. 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 Halt of 1935, Parts I to III, 5/22/36 to 8/22/36, 119 p., processed, o.p. ; Textile
Industries in the Last Half of 1935, Parts I to III, 11/20/36 to 1/6/37, 155 p., processed, o. p. ;
and Textile Industries in the First Half of 1936, Parts I to III, 1/21/37 to 2/11/37, 163 p.,
processed, o.p.
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., o.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

18 See footnote 15, p.136.

INVESTIGATIONS BY THE COMMISSION, 1915-47

139

cotton on New York futures contracts (The Cotton Trade, incl. testimony, S. Doc. 100, 88th, 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 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 (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
illustration, and use of the tin supply in the U.S.
Tobacco (Senate).--Inquiry (S. Res. 329, 68th, 2/9/25) into activities of two well-known
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 Flue-Cured Districts of the States of
North Carolina and Georgia, 54 p., processed, 5/3/31).
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 Pan-American
Financial Conference held In Washington, May 24-29, 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's 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-Cooper (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

See footnote 10, p.129.
Approximately 260 of the wartime cost inquires are listed In the F. T. C. Annual Reports, 1018,
pp.29-30, and 1919, pp. 38-42 and in's World War Activities of the F. T. C., 1917-18 (69 p., processed,
7/15/40).
19
20

767228--48--10

140

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1947

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 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 19415 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 Financial Reports; Metal-Working
Machines; Paperboard; Priorities; 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.80; for appropriation items, see p.87; and for titles and summaries of
investigations, 1915-47, see p.123.]
Page
Acme Asbestos Covering & Flooring Co
60
Administrative Procedure Act
5
Advertising, false and misleading :
Analysis of
45
Complaints alleging
47
Food, drugs, devices, cosmetics
37, 42
Injunctive proceedings involving
38
Mail-order
45
Newspaper and periodical
44
Orders directed against
49
Radio commercial
45
Stipulations relating to
46
Survey of
44
Agricultural Marketing Service, the
79
Allied Paper Mills, and others
61
Amasia Importing Corp
61
American Association of Law Book Publishers, and others
61
American Bridge Co
62
American Drug Corp
60
American Phonograph Cooperative, Ltd., The
82
American Steel & Wire Co. of New Jersey
62
Anaconda Wire & Cable Co
62
A P. W. Paper Co
60
Arden, Elizabeth, Inc., and others
60
Artificial limb industry, trade practice rules for
71
Attorney General of the United States, the
7, 13, 59, 62
Automobile dealers, District of Columbia and New York City, industry-wide
investigation of
3, 43
Ayres, William A., Commissioner
9
Bolger Brothers
51
Brewer, Nelson C., and others
60
Buchsbaum & Co., S
60
Bureau of Animal Industry, the
79
Bureau of the Budget, the
29
California Marine Curing & Packing Co., and others
52
Canute Co
61
Carbon Black Export, Inc
82
Carnegie-Illinois Steel Corp
62
Cement Institute, The, and others
60, 61
Central University
51
Citrus Corporation of America, The
82
Clayton Act :
Amendments proposed
12
Complaints issued under
48
Contempt proceedings under
37
Orders issued under
51
Procedure under
36
Section 2 (see also Robinson-Patman Act)
2, 9, 40, 48, 52, 60, 61, 62
Section 3
2, 41, 52
Section 7
2, 12, 14, 15, 41, 42
Section 8
2

141

142

INDEX

Page
Commissioner of Patents, the
6
Committee on the Judiciary, Rouse of Representatives
12, 14
Committee on the Judiciary Senate
14
Complaints, formal
7, 47
Congress of the United States, The
2, 5, 8, 11, 12, 13, 15, 18, 19, 21, 25, 27, 29
Construction equipment distributing industry, trade practice rules for
7, 68, 70
Consumers Home Equipment Co., and others
61
Copper industry, investigation of
8, 14, 18
Corporate mergers and acquisitions, investigation of
8, 14
Cosmetic and toilet preparation industry, industry-wide investigation of
3, 39, 43
Cosmetic and toilet preparation industry, trade practice conference for
70
Cotton textile manufacturing industry, industry-wide investigation of
3, 43
Court eases :
Civil penalty suits
7, 59, 62
Decided
7, 60
Pending
61
Petitions to review
59
Custom House Packing Corp., and others
52
Davis, Ewin L., Commissioner
9
Department of Commerce, the
13
Department of Justice, the
11, 13, 41
Doll and stuffed toy industry, trade practice rules for
7, 68, 70
Doniger & Co., David D.
51
Draper Corp
51, 52
Eastman Kodak Co
60
Electrical Apparatus Export Association
82
Export Screw Association of the United States
8, 83
Export Trade Act (Webb-Pomerene Law) :
Export associations operating under
8, 80
Export associations organized during fiscal year
82
Inquiries and recommendations under
8, 43, 82
Provisions of
80
Federal Power Commission Act of 1934
9
Federal Reports Act of 1942
29
Federal Trade Commission :
Acts administered by
1, 2, 36
Administrative divisions
5, 9
Appropriations, expenditures and fiscal affairs
87
Cases in Federal courts
7, 59
Chairman
9
Chief Economist
5
Chief Examiner
35
Chief, Radio and Periodical Division
35
Chief Trial Counsel
4, 36, 39
Chief Trial Examiner
5
Commissioners
9
Director, Division of Stipulations
4, 36, 65
Director, Medical Advisory Division
5, 79
Director, Office of Industrial Economics
5
Director, Office of Legal Investigations
4
Director, Office of Trade Practice Conferences and Wool Act Administration
4
Division of Stipulations
3, 4, 9, 44, 65
Duties of
1, 2, 9
Executive Office
9
Export Trade Office
4
Foreign trade work
80
General Counsel
3

Investigations, general
Investigations, industry-wide
Legal activities
Legal investigations
Legal Investigations Division

1, 2, 8, 14
2, 3, 39, 43, 47
1, 2, 7
35, 38
4, 39, 43

INDEX
Federal Trade Commission--Continued
Medical Advisory Division
Office of Chief Trial Counsel
Office of Compliance
Office of General Counsel
Office of Industrial Economics
Office of Legal Investigations
Office of Trade Practice Conferences and Wool Act Administration
Offices and divisions assigned to Commissioners
Organizational designations revised
Organized
Personnel
Procedure upon applications for complaint
Procedure upon formal complaints
Publications
Radio and Periodical Division
Recommendations to Congress (with minority recommendations)
Reorganization plan adopted
Rules of practice
Secretary
Statement of policy
Stipulations accepted by
Trade-Mark Division
Trial Examiners Division
Federal Trade Commission Act :
Amended
Approved
Civil penalties under
Complaints issued under
Orders to cease and desist issued under
Procedure under
Section 5
Section 6
Section 9
Section 12
Section 15
Section 10
Text of
Types of unfair practices in violation of
Wheeler-Lea amendment to
Ferguson, Garland S., Chairman, Federal Trade Commission
Flour-milling industry, investigation of
Food and Drug Administration, the
Freer, Robert E., Commissioner
French Sardine Co. of California
Frontier Asthma Co
General Cable Corp
General Electric Co
General Milk Co., Inc
General Seafoods Corp., and others
Grain exchanges, investigation of
Harvest House
Herman, William A
High Seas Tuna Packing Co
Household fabric dye industry, industry-wide investigation of

143
Page
5, 9, 79
4, 9
7
3, 4, 7, 9
5, 9
4, 35, 65
4, 9
9
5
1
10
35
36
10
4, 35, 44
12
2
101
10
119
3, 7, 47, 65
7
5, 9
1
1
7, 37, 59, 62
47
49
36, 37
1, 13, 42, 59
2, 5, 10, 12, 84
87
37, 42
37
60
91
52
1, 13, 37, 42
9
8, 14, 27
79
9
52
49
62
62
82
60
8, 14, 26
60
50
52
3, 39, 43

Household fabric dye industry, trade practice rules for
Independent Offices Appropriations Acts
Industrial financial reports, first quarter 1947
Investigations, general :
Copper industry
Corporate mergers and acquisitions, present trend of
Flour-milling industry
Grain exchanges
Sulphur Industry and international cartels
Wholesale baking industry

7, 68
2, 87
8, 14, 29
8, 14,18
8, 14
8, 14, 27
8, 14, 26
8, 14, 21
8, 14, 25

144

INDEX

Investigations, industry-wide :
Page
Automobile dealers, New York City and District of Columbia
3, 43
Cosmetic and toilet preparation industry
3, 39, 43
Cotton textile manufacturing industry
3, 43
Household fabric dye industry
3, 39, 43
Liquid emulsion floor wax industry
3, 43, 47
Manufacturers of machine knives for paper-cutting machines
3, 43
Masonry waterproofing product industry
3, 43
Mothproofing product industry
3, 43, 47
Simulated and cultured pearl industry
3, 43, 47
Textile loom manufacturing industry
3, 43
Koret, Inc
61
Langendorf United Bakeries Inc
49, 61
Lanham Trade-Mark Act
2, 3, 6
Liquid emulsion floor wax industry, industry-wide investigation of
3, 43, 47
Maine Sardine Packers’ Export Association, The
82
Manufacturers of machine knives for paper-cutting machines, i ndustry
wide investigation of
3, 43
Mason, Lowell B.-, Commissioner
9, 13
Masonry waterproofing product industry, industry-wide investigation of
3, 43
Masonry waterproofing product industry, trade practice rules for
7, 68, 69, 71
Modern Home Diathermy
49
Morton Salt Co
61, 62
Mothproofing products industry, industry-wide investigation of
3, 43, 47
Myndall Cain House of Beauty, The
50
National Bureau of Standards, the
79
National Crepe Paper Association of America, and others
61
National Retail Liquor Package Stores Association, Inc., and others
49
Natural Gas Act of 1938
9
Office of Price Administration, the
29
Okonite Co., The
62
Orders to cease and desist
7, 48
Oxford Products, Inc
50
Ox’O-Gas Co
61
Pacific Forest Industries
82
Packers and Stockyards Act
9
Parker Pen Co., The
61
Patent Office, the
2
Paul & Co., Edward P
62
Phelps-Dodge Copper Products Corp
62
Pipe Fittings & Valve Export Association
82
Piston ring industry, trade practice rules for
7, 68
President of the United States, The
2, 5, 9, 13, 29
Price-fixing and restraint-of-trade cases
39, 47, 49
Public Utilities Holding Company Act of 1935
9
Radio receiving set manufacturing industry, trade practice rules for
71
Rigid Steel Conduit Association, and others
62
Roberts Portrait Co., E. H
50
Robinson Co., C. H., and others
52
Robinson-Patman Act (see also Clayton Act, sec. 2)
2, 9, 40, 41, 48, 52, 60, 62
Rosoff, Robert
52
Saw and blade service Industry, trade practice rules for
7, 68, 70
Scotch Woolen Mills
62
Securities Act of 1933
9
Securities and Exchange Commission
8, 14, 29
Senate, United States
9
Senate Committee on Expenditures in the Executive Departments
5
Simulated and cultured pearl industry, industry-wide investigation of
3, 43, 47
Small Business Committee, House of Representatives
14, 30
Small BusIness Committee, Senate
14
Standard Oil Co. (Indiana)
62

Stipulations to cease and desist
Stock Exchange Act of 1934
Sulphur Export Corp
Sulphur industry and international cartels, investigation of
Tag Manufacturers Institute, and others

3, 7, 47, 65
9
8, 23, 24, 82
8, 14, 21
49

INDEX
Tennessee Coal, Iron & Railroad Co
Textile loom manufacturing industry, industry-wide Investigation of
Trade practice rules :
Administration of
Group I and Group II rules explained
Informative labeling provisions of
Procedure for establishing
Promulgated during fiscal year
Purposes of
Trade practice conferences
Types of practices covered by
United States Public Health Service, the
United States Scientific Export Association, The
United States Steel Corp
Vacu-Matic Carburetor Co
Vertical turbi ne pump industry, trade practice rules for
Watch industry, trade practice rules for
Webb-Pomerene Law (see under Export Trade Act)
West Coast Packing Corp., and others
Wheeler-Lea amendment :
Approved
Injunctive procedure and penalties under
Investigations under
Provisions of
Wholesale baking industry, investigation of
Wholesale confectionery industry (Philadelphia trade area), , trade practice
rules for
Wool Products Labeling Act :
Administration of
Approved
Civil penalties under
Complaints issued under
Effective date of
Enforcement of
Investigations under
Orders Issued under
Procedure under
Provisions of
Rules and regulations under
Section 2
Section 9
Section 14

145
Page
62
3, 43
71
67
74
67
3, 7, 68
67
3, 67, 70
72
79
82
62
61
7, 68, 69
7, 68, 69
52
1
38
42
37
8, 14, 25
7, 68
7, 76
76
37
48
76
77
42
51
36
76
76
76
77
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