View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

ANNUAL REPORT
OF THE

FEDERAL

TRADE COMMISSION
FOR THE

FISCAL YEAR ENDED JUNE 30, 1923

WASHINGTON
GOVERNMENT PRINTING OFFICE
1923

FEDERAL TRADE COMMISSION
VICTOR MURDOCK, Chairman.
JOHN F. NUGENT.
HUSTON THOMPSON.
VERNON W. VAN FLEET.
NELSON B. GASKILL.
OTIS B. JOHNSON, Secretary.
II

CONTENTS.
Page.
Summary
Administrative division
Appropriations and expenditures
Personnel
Applications for complaints and formal complaints
Publications issued
Legal division
Chief counsel
Cases involving section 7 of the Clayton Act
“Pittsburgh plus” case
Steel-merger cases
Motion-picture cases
The biscuit cases
Resale price maintenance cases
The tobacco cases
The Douglas-fir case
Blue-sky cases
Hosiery misbranding cases
Court cases
Petition to review orders of the commission
Southern Hardware Jobbers’ Association
Juvenile Shoe Co
Guarantee Veterinary Co
The L. B. Silver Co
Mishawaka Woolen Manufacturing Co
Curtis Publishing Co
The Mennen Co
Sinclair Refining Co
Maloney Oil & Manufacturing Co
Gulf Refining Co
Standard Oil Co. of New Jersey
Petitions by the commission for writs of mandamus
Suits to enjoin the commission from procuring information
Summary of proceedings under section 5 of the commission act
Summary of proceedings under the Clayton Act
Proceedings pending and disposed of
Chief examiner
Trade practice submittals
Economic division
Methods and operations of the grain exporters
Foreign ownership in the petroleum industry
Coal
Investment and profit in soft-coal mining
Aid to the United States Coal Commission

1
19
21
26
26
27
28
28
28
29
30
31
31
32
33
34
34
35
35
37
37
38
39
39
40
41
42
43
43
43
43
44
46
47
47
48
48
52
61
62
65
67
67
69
III

IV

CONTENTS.

Economic division--Continued
House furnishings
Household furniture
Kitchen furnishings and domestic appliances
Wyoming petroleum monopoly
War-time costs and profits’ of southern pine lumber companies
Cotton trade
Preliminary report
Subsequent inquiry
Wheat-flour milling
Grain trade
National wealth, national income, and taxation
Paper statistics
Cooperation with the legal division
Steel basing point case
Bethlehem-Lackawanna-Midvale merger
Western creamery case
Calcium arsenate inquiry
Aid to other branches of the Government
Senate Inquiry into the petroleum industry
Department of Commerce
Department of Justice
United States Coal Commission
Export trade division
Provisions of the export trade act
Operation under the export trade act
Concerns filing papers in connection with the export trade act
Inquiries under section 6 (h) of the Federal Trade Commission act
Foreign trade complaints investigated
Representation on the liaison committee
Enemy trade division

Page.
71
71
73
73
74
75
75
75
76
76
77
77
78
78
78
78
78
78
79
79
79
79
80
80
81
81
83
84
87
88

EXHIBITS.
l.
2.

Federal Trade Commission act
Provisions of the Clayton Act which concern the Federal Trade
Commission
3. Rules of practice before the Federal Trade Commission
4. Extracts from the trading with the enemy act
5. Export trade act
6. Curtis case
7. Mishawaka case
8. Guarantee Veterinary Co. et al
9. The Mennen Co. case
10. L. B. Silver Co. case
11. Sinclair Refining Co. et al
12. Southern Hardware Jobbers’ Association et al

93
99
103
107
117
119
125
126
132
138
143
148

13.
14.
15.
16.
17.

Juvenile Shoe Co. (Inc.)
P. Lorillard Co. case
Baltimore Grain Co. et al
Proceedings pending June 30, 1923
Proceedings disposed of during year ended June 30, 1923

154
156
161
165
200

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, FISCAL YEAR ENDED JUNE 30, 1923.
SUMMARY.
To the Senate and House Of Representatives:
The Federal Trade Commission herewith submits to the Congress its annual report
for the fiscal year July 1, 1922, to June 30, 1923. The commission, which was created
by act of Congress approved September 26, 1914, was organized March 16, 1915, and
at the close of the fiscal year reported upon concluded the eighth year of its existence.
On June 30, 1923, the personnel of the commission consisted of Victor Murdock, of
Kansas (chairman); John F. Nugent, of Idaho; Huston Thompson, of Colorado; Vernon
W. Van Fleet, of Indiana; and Nelson B. Gaskill, of New Jersey.
Pursuant to the statutes the commission has been engaged during the year in the
prevention of unfair methods of competition in domestic and foreign commerce, the
elimination of practices which substantially lessen competition or tend to create
monopoly, and in gathering and publishing facts for the information of the President,
the Congress, and the public with respect to the economic phases of domestic industry
and foreign trade. In addition the activities of associations engaged solely in export
trade were supervised. Differently stated, the commission’s work is to sustain those
practices which support the competitive system, as opposed to monopoly, in
furtherance of the fundamental object of Congress in the enactment of the Federal
Trade Commission act, the Clayton Act, and the export trade act. The commission has
sought to protect the public against those methods described by the Supreme Court in
the Grata case as (1) methods opposed to good morals because characterized by
deception, bad faith, fraud, or oppression, and/or (2) methods regarded as against
public policy because of dangerous tendency unduly to hinder competition or create
monopoly.
The work of the commission for the year covered the entire scope of the trust
problem and related subjects. It reached from the simplest form of unfair methods of
competition on through all phases to the more complex question of trust dissolution.
These activities touched the whole range of commerce--raw materials, manufacturing,
wholesaling, retailing, exporting, manipulation of
1

2

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

markets, and as representing the public interest, consumption. The whole trust problem
can be approached satisfactorily only by approaching it on the economic as well as the
legal side. Activities in both these fields as disclosed in the report here given register
an advance in an understanding of the matter.
The year was marked also in the commission’s work by the increasing variety of the
subjects handled and the growing intricacy of the legal and economic questions
presented in many of the cases arising under the law. In this connection especial
interest attaches to that division of the commission’s work which is directed to
carrying out the law against competition-lessening combinations arising from the
acquisition of the share capital of one corporation by a competing corporation, which
is prohibited specifically by the Clayton Act. The particular question presented to the
commission is whether under existing law severance of competing corporations, united
contrary to law, may be accomplished in fact rather than merely in form. Through
proceedings in several cases before the commission this question reached the courts
during the year. Among the cases in which the commission issued orders directing
segregation and from which orders appeals to the courts were taken are those directed
to (1) Armour & Co., meat packers, to divest itself of the share capital of E. H.
Stanton Co.; (2) Swift & Co., meat packers, to divest itself of the share capital of
Andalusia Packing Co. and the Moultrie Packing Co.; (3) the Aluminum Co. of
America, to divest itself of the share capital of the Aluminum Rolling Mill Co. In
another case, which has not reached the courts, the Thatcher Manufacturing Co. (milk
bottles) was ordered to divest itself of the share capital of Essex Glass Co., Travis
Glass Co., Lockport Glass Co., and Woodbury Glass Co.
While in all its divisions the commission, in those activities having to do with the
preservation of competition and the prohibition of unfair methods of competition, dealt
primarily with questions arising in trade in manufactured products, the year was
marked by the increasing frequency with which these questions affected agriculture.
The Department of Justice during the year petitioned the court for a revision of the
decree in the dissolution suit against the International Harvester Co., substantially in
accordance with the recommendations made in a report by the Federal Trade
Commission. This proceeding is pending. The commission prosecuted in the courts
motions to enforce its right of access to the records of exporters of grain and to records
of manufacturers of tobacco needed in the preparation of reports directed by Congress.
The right of such access was, in the circumstances appearing in these cases, denied,
and appeals have been taken to the Supreme Court of the United States. Orders for the
divestment of absorbed share capital of a corporation

SUMMARY.

3

by a competing corporation were made in several cases in the meat-packing industry.
Appeals have been taken from these orders by the respondents. An order for
divestment of share capital was directed by the commission to a large manufacturer of
milk bottles. In connection with agricultural interests among the numerous formal
complaints considered during the year were those against the Chamber of Commerce
of Minneapolis, a grain market, and the Utah-Idaho Sugar Co. and Amalgamated Sugar
Co., manufacturers of refined beet sugar. By direction of the Congress the commission
made also reports of interest to the farmer on grain marketing, cotton marketing, the
fertilizer industry, and calcium arsenate.
LEGAL WORK OF COMMISSION.
Under the laws which it administers the commission was called upon during the year
to handle 2,273 separate legal matters in domestic and foreign trade, involving unfair
competition, price discriminations, tying contracts, acquisitions of corporate stock, and
interlocking directorates. It disposed of 1,352 such matters. This left on hand
undisposed of at the close of the year 921 such matters. To a marked degree the 921
matters represent delay by reason of inadequacy of funds.
Details of the procedure of the commission in legal matters are given below under
topic headings which carry the unfair competition and Clayton law cases from their
inception through their several steps to decision in the Supreme Court of the United
States, the end of the process in the final determination of existing law. These topics
are (1) the applications for complaint, (2) the complaints, (3) the orders to cease and
desist, and (4) the court decisions.
Applications for complaint.-This is the initial approach to the commission in an
unfair competition or Clayton law case and is usually in the form of a letter from the
general public through an individual or corporation calling the attention of the
commission to some alleged illegal or harmful practice in foreign or domestic commerce. In bringing these matters to the commission no formalities or blank forms are
required. A letter suffices to bring a matter to the Commission’s attention if it is signed
by the complaining party, contains the name and address of the party complained
against, and a statement of the nature of the relief sought. It should also transmit all the
evidence in the possession of the complainant, documentary or otherwise, to aid in the
inquiry, which is always made preliminary to the issuance of complaint.
During the year there were before the commission 1,169 separate requests from the
public in which the activity of the commission was asked. Of these, 646 were handled
in an informal way by correspondence at small expense to the Government. In 416
instances the

4

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

papers were docketed as applications for complaint and 107 of these matters were
undisposed of at the close of the fiscal year. To the number of 416 applications for
complaints docketed during the year must be added 458, the number pending at the
beginning of the year, making a total of 874 applications for complaint before the
commission during the year. The commission disposed of 302 such applications during
the year, 181 of which were dismissed after preliminary inquiry and 121 advanced to
formal complaints. This left 572 applications for complaints undisposed of and on
hand at the start of the fiscal year beginning July 1, 1923.
The applications for complaint which give some prima facie indication of violation
of law are first examined for necessary jurisdictional elements--the public interest,
unfair methods, and the interstate commerce feature; if these are present, and without
them the commission can not proceed, jurisdiction is assumed and a thorough
preliminary investigation, which usually requires field work, is undertaken. After the
facts are gathered they are presented to a board of review, which prepares a report
summarizing the evidence, reciting the law applicable, and containing a
recommendation for commission action. The file is then assigned to a commissioner
who reviews the entire record and presents the case to the full commission with
recommendation either that a complaint issue or that the application be dismissed. A
majority vote controls.
Complaints.--It is only after most careful scrutiny of a record that the commission
issues its complaint. The commission must have, in the language of the statute, a
reason to believe that the law has been violated before complaint issues. The
complaint is by way of a citation and is the only statutory means to bring a party
charged with violation of law properly before the commission. It requires an answer
in 30 days and provides for a date and place of hearing.
Complaints to the number of 144 were issued during the year. In addition, 214 were
on hand and undisposed of at the beginning of the year, making a total of 358 separate
complaints demanding the attention of the commission in the fiscal year. The
commission disposed of 126 of these complaints, 78 by orders to cease and desist and
48 by dismissal, leaving 232 on hand with which to start the year beginning July 1,
1923. The record indicates a variety of reasons for dismissing complaints. It is noted
that seven were dismissed because the parties to whom complaints were directed had
died or were out of business when the case came on for trial, nine were dismissed for
the reason that the charges of the complaint were covered by controlling court
decisions rendered after institution of proceedings by the commission, and the
remainder were, dismissed for other reasons, including failure of proof to sustain

SUMMARY.

5

the charges of the complaint, want of interstate commerce, and in one case, the
Midvale-Republic-Inland Steel merger case, because the challenged merger was
abandoned. Since its organization 1,043 complaints of unfair competition and/or
violations of the Clayton Act have been issued by the commission.
That unfair methods of competition were used is the averment in a great majority of
the 144 complaints issued this year; 137 complaints contained this averment alone.
In 3 complaints the citation was for both unfair competition and violation of the
Clayton Act. In 3 complaints price discrimination was averred in violation of section
2 of the Clayton Act. In 1 complaint tying contracts contrary to section 3 of the
Clayton Act were averred, and 4 complaints averred the acquisition of stock of a
competing concern in violation of section 7 of the Clayton Act.
Without enumerating all the various forms of unfair competition set out in the
complaints it may be of interest to note that there were 58 cases of false and
misleading advertising, 8 of misbranding, 3 for conspiracy to injure competitors, 3 of
disparagement of a competitor’s name or goods, 11 of passing off of a competitor’s
name or goods, 10 of price fixing, 31 of resale price maintenance, 2 of bribery of
customers’ employees, and 67 other cases involving misrepresentation, coercion,
combination to effect monopoly price discrimination, and many other questioned
practices.
The complaints issued this year were directed to 2,384 separate respondents, and
involved a wide range of products and industries.
After complaint, answer by respondent, testimony or stipulation of facts in lieu
thereof, briefs and oral argument before the full commission, the commission either
dismisses the complainant or issues an order to cease and desist.
Orders to cease and desist.--The final expression of the commission in a legal case
under the Federal Trade Commission act and Clayton Act is an order upon a
respondent to cease and desist a particular practice or practices. During the year 78
such orders were issued against 211 respondents, the practices condemned including
26 cases of misbranding, 61 cases of false advertising, 8 cases of passing off of name
and goods, 2 cases of conspiracies in restraint of trade, 1 case of commercial bribery,
2 cases of disparagement of competitor’s goods, 2 cases of resale price maintenance,
and 11 cases of misrepresentation of various kinds.
Of the orders issued this year 75 were grounded upon the Federal Trade Commission
act alone, 2 were under both the Federal Trade Commission act and the Clayton Act,
and 1 under section 7 of the Clayton Act alone. The parties to whom the orders were
directed have in a great majority of cases accepted the orders and have filed

6

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

reports with the commission signifying their compliance with its terms. Of the 78
orders issued during the year appeals were taken to the circuit court in but two
instances. These cases were (1) the Swift & Co. case, involving the acquisition of
corporate stock of a competing concern in violation of section 7 of the Clayton Act,
and (2) the Chicago Portrait Co. case, involving misrepresentation in the sale of
portraits, held by the commission to be an unfair method of competition.
Orders were issued in nine cases directed to firms and individuals who were found
to have followed the practice of falsely advertising in connection with the sale of stock
in various oil companies. These were all cases of the character commonly known as
blue-sky cases and in which the commission protected the public against promoters
falsely advertising to induce the sale of stock. The record of the year discloses that
misleading brands or labels is a frequent form of representation coming to the
commission’s attention. In the 27 cases of misbranding in which orders were issued,
20 orders involved the hosiery business alone and were directed to such branding as
would convey the impression that the hosiery composed of a mixture of cotton and
wool, or of cotton and silk, was pure wool or pure silk.
Appeal lies to the United States circuit courts either by the respondent to set aside
the order of the commission or on behalf of the commission to enforce it. Since its
organization the commission has issued 548 orders to cease and desist directed to
1,583 respondents. Appeal has been taken in 40 cases.
Court cases.--While the law administered by the commission has been subject to
review by the courts in relatively few cases, a number of important decisions have
been rendered which have materially affected the commission’s work.
Among the helpful decisions may be mentioned the Sears-Roebuck Co. case, the first
case of unfair competition to be taken to court for review of the commission’s order,
and in which the court sustained the commission’s condemnation of false advertising,
and in answer to the company’s plea of discontinuance prior to the order the court
confirmed the necessity for the order and said, “No assurance is in sight that petitioner
(Sears-Roebuck Co.), if it could shake the respondent’s (Federal Trade Commission)
hand from its shoulder, would not continue its former course.” The power of the
commission to deal with misbranding of products in general and with similar deceptive
practices was affirmed by the Supreme Court of the United States in the Winsted
Hosiery Co. case. The same court in the Beechnut Co. case affirmed the commission’s
view with some qualification that cooperative schemes directed to the maintenance of
resale prices were unlawful where the effect was to inter-

SUMMARY.

7

fere with the free and natural flow of commerce. In the case against the Aluminum Co.
of America, the circuit court of appeals upheld the commission’s order directing this
company to divest itself of the stock of a competing company. On appeal the Supreme
Court,. refused to review this decision. In several cases, namely, the National Harness
Manufacturers’ Association, the Western Sugar Refining Co. case, the Wholesale
Grocers’ Association, and Southern Hardware Jobbers’ Association cases, the courts
have affirmed the power of the commission over unfair practices by combined or concerted effort on the part of associations or other groups.
In another group of cases the courts have denied the power and authority of the
commission to enforce the cessation of practices which had been found by the
commission to be unfair methods of competition or to violate the provisions of the
Clayton Act. The first denial of the power of the commission was in the Grata case,
wherein the Supreme Court of the United States, in defining the term “unfair methods
of competition,” stated that it was clearly inapplicable to practices never heretofore
regarded as opposed to good morals or against public policy, and thereby tended to
restrict the jurisdiction of the commission to precedents established under common law
and judicial decisions. This would seem adversely to effect the ready development of
the law of business practices under the commission’s rulings as reviewed by the courts.
In the same case a second denial is found when the court attached to the commission
5 procedure a rule of pleading comparable in its strictness to that governing a criminal
indictment.
In a review of an order which the commission had issued, directing the Curtis
Publishing Co. to discontinue certain contracts which the commission found after
testimony to be tying contracts, contrary to the Clayton Act and the Federal Trade
Commission act, the Supreme Court held that notwithstanding the findings of facts
made by the commission were not disturbed by the circuit court of appeals, the circuit
court or the Supreme Court could find additional facts upon their own motion and
reverse the commission’s order on such new findings. The law creating the
commission states that the findings of the commission as to the facts, if supported by
testimony, shall be conclusive. In the Mennen case, the commission issued its order
prohibiting discrimination in net selling prices between purchasers of the Mennen
products of the same grade, quality, and quantity, upon the basis of a classification of
customers by the Mennen Co. as “jobbers,” “wholesalers,” or “retailers,” or any
classification which relates to the purchaser’s form of organization. The circuit court
set the order aside, saying that the Mennen Co. had a right to give one class of
customers a preferential rate as against another class notwithstanding that both classes
purchased in the

8

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

same amount and upon the same terms, and that discrimination in price by a
manufacturer which only lessens competition between his customers and not between
such manufacturer and his immediate competitors is not such price discrimination as
is condemned by the Clayton Act. The Supreme Court refused to review the case.
On the economic side of the commission’s work, which consists largely in the
gathering of industrial facts and recording economic tendencies at the direction of the
President and Congress, a serious interference has arisen by reason of injunctions in
the Claire Furnace Co. case and the Maynard Coal Co. cases. The work which the
commission undertook related to the gathering of reports respecting the production,
prices, and costs of necessaries of life and of commerce, in these two instances reports
from the coal industry and the steel industry. This work was specifically appropriated
for by Congress in the deficiency appropriation act of November 4, 1919. The right of
the commission to require corporations to make reports in this regard will probably be
passed upon by the Supreme Court of the United States during the coming fiscal year.
In two groups of cases, (1) American Tobacco Co. and P. Lorillard Co. (Inc.),
involving tobacco products, and (2) Baltimore Grain Co., H. C. Jones Co. (Inc.), and
Hammond-Snyder Co. (Inc.), involving grain, the commission petitioned the United
States district courts at New York City and Baltimore, respectively, for writs of
mandamus to compel these companies to permit access to records in connection with
investigations being conducted by the commission at the direction of Congress or upon
the commission’s own motion. The petitions were denied. The commission has carried
the cases on appeal to the Supreme Court of the United States.
During the fiscal year ending June 30, 1923, the commission had cases in the courts
as follows:
In the Supreme Court of the United States--Curtis Publishing Co., Mishawaka
Woolen Manufacturing Co., Aluminum Co. of America, Mahoney Oil &
Manufacturing Co., Gulf Refining Co., Sinclair Refining Co., Standard Oil Co. of New
Jersey, Raymond Bros., Clark Co., Mennen Co., Fruit Growers’ Express, American
Tobacco Co., P. Lorillard Co. (Inc.), Hammond-Snyder Co. (Inc.), H. C. Jones Co.
(Inc.), Baltimore Grain Co., Claire Furnace Co., et al.
In the United States Circuit Courts of Appeals--Mishawaka Woolen Manufacturing
Co., Mahoney Oil & Manufacturing Co., Gulf Refining Co., Standard Oil Co. of New
Jersey, Guarantee Veterinary Co. et ah., Armour & Co., S. E. J. Cox et ah., Swift &
Co., B. S. Pearsall Butter Co., L. B. Silver Co., Southern Hardware Jobbers
Association, Mennen Co., Juvenile Shoe Co., Chicago Portrait Co.
In the United States district court--American Tobacco Co., P. Lorillard Co. (Inc.),
Baltimore Grain Co., H. C. Jones Co. (Inc.), and Hammond-Snyder Co. (Inc.).

SUMMARY.

9

In the courts of the District of Columbia--Claire Furnace Co. et al. and Mannered
Coal Co. et ah. in the Court of Appeals. The Mannered Coal case was also in the
Supreme Court of the District.
Summary of court cases to which the commission has been a party.--The cases to
which the commission has been a party since its organization until June 30, 1923, may
be grouped under three headings: (I) Those in which the commission’s orders to cease
and desist were sought to be set aside by the respondents, or in which the commission
has sought to enforce them, and which involve section 5 of the Federal Trade
Commission act, or section 2, 3, 7, or S of the Clayton Act; (II) those in which the
commission’s powers under section 6 of the organic act were called into question; (III)
those in which it was sought by respondents to restrain the commission from issuing
or proceeding with its complaints prior to the issuance of orders by the commission,
etc. The results of these three classes of cases are summarized below.
I. Cases in which the commission’s orders under section 5 of the Federal Trade
Commission act or section, 2, 3, 7, or 8 of the Clayton Act were (A) sought to be set
aside by the respondents, or (B) enforced by the commission.--The great bulk of the
cases fall within this group; are instituted in the Federal Circuit Courts of Appeals, and
are as follows:
(A) CASES IN WHICH THE COMMISSION’S ORDERS WERE SOUGHT TO
BE SET ASIDE BY RESPONDENTS.
(1) Cases in which the commission was sustained (13):
Sears, Roebuck & Co. v. Federal Trade Commission.
National Harness Mfgrs. Assn. v. Federal Trade Commission.
Federal Trade Commission v. Winsted Hosiery Co.1
Western Sugar Refining Co. et ah. v. Federal Trade Commission .
Federal Trade Commission v. Beech-Nut Packing Co.1
Wholesale Grocers Assn. of El Paso v. Federal Trade Commission.
Royal Baking Powder Co. v. Federal Trade Commission.
Aluminum Co. o f America v. Federal Trade Commission.2
Mishawaka Woolen Mfg. Co. v. Federal Trade Commission.2
Guarantee Veterinary Co. v. Federal Trade Commission.
L. B. Silver Co. v. Federal Trade Commission.
Juvenile Shoe Co. v. Federal Trade Commission.2
Southern Hardware Jobbers Assn. v. Federal Trade Commission.

1 Decisions by the Supreme Court of the United States reversing decisions by the United States Circuit
Court of Appeals for the Second Circuit.
2 Petition for writ of certiorari denied by Supreme Court.

10

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

(2) Cases in which the commission was not sustained (10):
New Jersey Asbestos Co. v. Federal Trade Commission.
Federal Trade Commission v. Warren Jones & Gratz. 3
Ward Baking Co. v. Federal Trade Commission.
Federal Trade Commission v. Curtis Publishing Co. 3
Kinney Rome Co. v. Federal Trade Commission.
Raymond Bros.-Clark Co. v. Federal Trade Commission.
Mennen Co. v. Federal Trade Commission. 4
Texas Co. v. Federal Trade Commission.
Standard Oil Co. of N. Y. v. Federal Trade Commission.
Canfield Oil Co. v. Federal Trade Commission.
Thos. K. Brushart v. Federal Trade Commission.
White Star Oil Co. v. Federal Trade Commission.
Paragon Refining Co. v. Federal Trade Commission.
Columbus Oil Co. v. Federal Trade Commission.
Standard Oil Co. of Ohio v. Federal Trade Commission.
Federal Trade Commission v. Sinclair Refining Co. 3
Federal Trade Commission v. Standard Oil Co. of N. J. 3
Federal Trade Commission v. Gulf Refining Co. 3
Federal Trade Commission v. Maloney Oil & Mfg. Co. 3
D. A. Winslow & Co. v. Federal Trade Commission. 4
Norden Ship Supply Co. v. Federal Trade Commission. 4
Fruit Growers Express Co. v. Federal Trade Commission.

5

(B) CASES IN WHICH THE COMMISSION HAS SOUGHT TO ENFORCE ITS
ORDERS.
Thus far the commission has filed but one petition to enforce an order to cease and
desist. This was against S. E. J. Cox et al. in the United States Circuit Court of Appeals
for the Fifth Circuit. That court, on June 18, 1923, granted the commission’s motion
for a preliminary restraining order enjoining the respondents from a violation of the
order until hearing on the merits.
In each of the above groups, where a case has been decided by both the Circuit Court
of Appeals and the Supreme Court of the United States, the decision of the latter
tribunal only has been taken into account.
In the list of cases in which the commission was not sustained it will be noted that
12 oil pump and tank cases have been grouped together. While these cases were
brought in four circuits, there was only one question involved in the entire group, the
complaints, orders, and findings being practically identical. They were consolidated
for briefing and argument in the circuit courts, and those

3 Decisions by the Supreme Court of the United States affirming the judgments of the Circuit Courts
of Appeals.
4 Petition for writ of certiorari denied by the Supreme Court of the United States.
5 The commission’s petition for writ of certiorari was granted in this case, but the writ was afterwards

dismissed upon motion of the commission, the question involved having become moot.

SUMMARY.

11

which reached the Supreme Court were decided in one opinion and should be regarded
as one case. Two other cases, D. A. Winslow & Co. v. Federal Trade Commission and
Norden Ship Supply Co. v. Federal Trade Commission, involved but one question,
were argued together in the fourth circuit, and decided in one opinion.
On this basis, the commission has been sustained in 13 and not sustained in 10 cases
involving violation of section 5 of the commission act or the named sections of the
Clayton Act.
Three appeals from the commission’s orders to cease and desist are now pending in
the United States Circuit Court of Appeals, viz, Armour & Co. v. Federal Trade
Commission (Commission’s Docket 351), Swift & Co. v. Federal Trade Commission
(Commission’s Docket 453), and Chicago Portrait Co. v. Federal Trade Commission
(Commission’s Docket 840). They are all in the Seventh Circuit.
II. Cases in which the commission’s powers under section 6 of the Federal Trade
Commission act were called into question.--Eight cases have involved the
commission’s power to require reports or to compel access to corporate records for
purposes of inspection, six cases being instituted by the commission by petitions for
writs of mandamus and two being instituted by corporations for injunctions to restrain
the commission from requiring reports. The issues in three of these are identical and
in addition two others involve the same question. These five cases were decided in two
opinions.
All of these cases were decided against the commission 5 contention in the lower
courts, and all but one are now pending on appeal.
The cases in this group are as follows :
Federal Trade Commission v. Basic Products Co.
Mannered Coal Co. v. Federal Trade Commission.
Claire Furnace Co. et al. v. Federal Trade Commission.
Federal Trade Commission v. The American Tobacco Co.
Federal Trade Commission v. Lorillard Co.
Federal Trade Commission v. Baltimore Grain Co.
Federal Trade Commission v. H. C. Jones Co. (Inc.).
Federal Trade Commission v. Hammond, Snyder Co. (Inc.).
III. Cases where respondents have sought to restrain the commission from issuing
or proceeding with its complaints, etc.--In this class of cases, four proceedings have
been instituted, the titles of which are as follows :
Douglas Fir Exploitation & Export Co. et al. v. Federal Trade Commission.
Butterick Co. et al. v. Federal Trade Commission.
T. C. Hurst & Son v. Federal Trade Commission.
The Chamber of Commerce of Minneapolis et al. v. Federal Trade Commission.
All of these cases have been decided in favor of the commission.

12

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

ECONOMIC WORK OF COMMISSION.
The general economic work of the commission during the past fiscal year, as in
previous years, has formed a vital part of its activities and one that is fundamental for
the proper presentation of facts relating to the economical and statistical phases of
industry to the President, the Congress, and the public. Such facts are fundamental not
only with respect to the general problem of maintaining healthful competition in
industry and restraining the encroachments of monopoly but are also useful in the
fields of industrial organization and marketing methods and for constructive legislative
effort. This branch of the work is carried forward under section 6 of the Federal Trade
Commission act, which grants the commission power to gather information concerning
any corporation engaged in commerce, except banks and common carriers, and also
authorizes the commission, upon the direction of the President or either House of
Congress, to investigate and report the facts relating to any alleged violation of the
antitrust acts by any corporation. The power of the commission to require report under
this section is now before the Supreme Court of the United States. Other duties of the
commission in this field are to investigate and report to the Attorney General the
manner in which final decrees of the United States courts to prevent violations of the
antitrust acts are being carried out; upon 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; to classify corporations; and to
investigate trade conditions in foreign countries.
Inquiries.--A total of 11 economic inquiries were carried forward during the year.
These related to the bituminous-coal industry; export grain; foreign control in the
petroleum industry; the cotton trade; house-furnishings industries; wheat-flour milling;
pulp and paper industry; national wealth, debt, and income; a general study of the grain
trade; petroleum industry of Wyoming and Montana; and costs and profits of southern
pine-lumber manufacturers.
Six of these inquiries-grain exporting, foreign petroleum, house furnishings, cotton,
wheat-flour milling, and national wealth--were initiated by resolutions of the United
States Senate.
Reports were issued during the year covering a preliminary survey of the cotton
trade, foreign ownership in the petroleum industry, household furniture, bituminouscoal mining, methods and operations of grain exporters, petroleum industry of
Wyoming and Montana, and costs and profits of southern pine-lumber manufacturers.
Statistics relative to newsprint supply were issued during the year but at the close of
the year were discontinued.

SUMMARY.

13

Grain and cotton.--The reports regarding both the grain trade and the cotton trade,
as well as the current work in the inquiries on these subjects, show the need not only
of remedial reforms in the methods of marketing and handling agricultural products
and of restraining injurious speculation therein but also the practicability of developing
cooperative enterprise to the advantage of both the producer and the consumer.
Petroleum.--The report on foreign ownership in the petroleum industry was
occasioned by the activity of the Royal Dutch-Shell group, a combination of British
and Dutch industries in acquiring petroleum producing, transporting, refining, and
marketing properties and equipment in the United States. The report describes the
Royal Dutch-Shell group with special reference to its holdings in the United States,
and particularly the absorption of the Union Oil Co. (Delaware); it relates the facts
regarding the present ownership and control of the Union Oil Co. of California, and
outlines the situation with respect to discrimination of foreign governments against
citizens of the United States in the acquisition and development of petroleumproducing properties in foreign lands.
In a brief report on the petroleum trade in Wyoming and Montana, supplementing
a previous extensive investigation into conditions in that region, the commission found
the whole trade dominated by the Standard Oil interests, which, after perfecting their
monopoly by absorbing the Midwest Refining Co., formed an alliance with the Sinclair
interests, lessees of the Teapot Dome naval reserve, for the purchase of crude oil and
the construction of a pipe line from Wyoming to Kansas City.
Coal.--In connection with the great public concern in the coal industry which marked
the past year, the commission completed its preliminary report on investment and
profit in soft-coal mining, an important report but not entirely complete because of the
handicap of an injunction which prevented the requirement of the additional information needed. The principal conclusions of the report were (1) the need of more
accurate and complete information regarding the ownership of bituminous coal
deposits and coal mines, the true investment therein, and the true profits arising
therefrom; (2) the need of ascertaining the profits of selling companies owned by or
affiliated with mining companies, and also with other wholesalers or retailers in coal;
(3) the need of establishing the coal industry in public confidence and protecting it by
devising lines of Federal supervision and publicity so as to avoid periods of excessively high prices and of severe depressions.
While owing to the injunction in the Mannered Coal case the commission itself
undertook no new coal work during the year, it did
67501--23----2

14

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

give material aid to the United States Coal Commission, which was created by
Congress to make a special study and report on the coal problem.
At the request of the Coal Commission and pursuant to law the Federal Trade
Commission turned over to it the greater part of its force which had formerly been
engaged on its coal inquiries. These employees were coal experts, economists,
accountants, and statistical clerks, and formed a supervising force and nucleus for
those sections of the Coal Commission’s staff dealing with the costs and profits of
coal-mining companies and coal dealers.
House furnishing.--The first report on house furnishings covered ordinary wooden
household furniture. The report was in two sections, the first pertaining to investment,
costs, prices, and profits, and the second to the organization and concentration of
ownership of corporations and firms and to unfair practices and restraints of
competition. This was the first report of the commission to trace a manufactured
product from the producer to the consumer through the crest of the “peace boom “ in
1920, and through the “buyers’ strike” and business depression which followed. It
showed that in 1920, of the consumers’ dollar, about 13.3 cents went for retailers’
profit, 8.3 cents for manufacturers’ profit, 2.1 cents for freight, and the balance for
manufacturers’ and retailers’ costs and expenses. Th 1921, 6.9 cents went for retailers’
profit, 4.2 cents for manufacturers’ profits, 3.3 cents for freight, and the balance for
manufacturing and retailing costs and expenses. The second part of the report on
kitchen furnishings and domestic appliances is under way.
In various recent economic inquiries and in particular some on which reports have
been issued during the fiscal year the commission has brought to public view the subtle
restraints of trade through open price associations for which justification has been
attempted on the ground of necessary information for a rational conduct of competitive
trade.
In addition to the economic work as described above the commission, through its
chief examiner, conducted three general investigations and issued reports of conditions
in industry where questions as to violations of the antitrust laws are involved. These
are:
Fertilizer.--Under a resolution of the Senate an inquiry was made as to whether the
production or sale of fertilizer is controlled by an unlawful combination and whether
dealers or manufacturers of the product had conspired to fix prices. The report to the
Senate showed, among other interesting facts, that in 1921 the seven largest companies
in the industry, i.e., American Agricultural Chemical Co., the Virginia-Carolina
Chemical Co., the International Agricultural Corporation, F. S. Royster Guano Co.,
Armour Fertilizer Works, Swift & Co., and the Baugh Co., produced 65 per cent of the
total

SUMMARY.

15

fertilizer used in the United States. The report also disclosed an increasing activity
among farmers’ cooperative agencies.
Calcium arsenate.--A resolution of the Senate directed an inquiry as to the alleged
violation of the antitrust acts by the manufacturers and dealers in calcium arsenate.
Report was submitted from which it was concluded that the main reasons for the
marked increase in price were the increased demand for the product for use in combating the cotton-boll weevil and the inadequacy of the available supply of white arsenic,
the chief ingredient of calcium arsenate.
Lumber.--At the request of the Attorney General a report was made summarizing the
activities of trade associations composed of manufacturers of posts and poles. These
associations have their headquarters at Spokane, Wash., and are as follows : Western
Red Cedar Association, Lifetime Post Association, and the Western Red Cedar Men’s
Information Bureau. A similar report on the activities of the Northern Hemlock and
Hardwood Manufacturers’ Association was also submitted.
A complete investigation is being made by the chief examiner of the radio industry
by virtue of House Resolution 548, adopted February 21, 1923. The data being
collected is for the use of Congress in determining what further legislation, if any, is
needed for the regulation of this industry. Some phases of the inquiry are quite
technical since a large number of patents and contracts relating thereto are involved.
Considerable work has already been done and will be completed in time for the
commission to make its report to the next Congress when it convenes.
EXPORT TRADE ACTIVITIES.
Under the export trade act (Webb-Pomerene law) of April 10, 1918, the commission
is given jurisdiction over combinations or “associations” organized for the purpose of,
and solely engaged in, export trade from the United States to foreign nations. The
sections of this act provide exemptions from the antitrust laws, provided such
associations shall not restrain trade in the United States nor conspire to enhance prices
or lessen competition within the United States.
Associations to the number of 123, with members approximating 1,500 throughout
the United States, have filed papers with the commission under this act. The
associations are engaged in the exports of raw materials and manufactured products
of many kinds.
A substantial increase is noted in exports by associations during the past fiscal year.
The revival of foreign trade is reflected in a renewed interest in the export trade act
and operations under its provisions.

16

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

Eight new associations were organized during the year and a number of others are
in process of formation. The new associations are : American Surface Abrasive Export
Corporation, New York City; American Tire Manufacturers’ Export Association, New
York City; Delta Export Lumber Corporation, Memphis, Tenn.; Grain Products Export
Association, New York City; Naval Stores Export Corporation, New Orleans, La.;
Rubber Export Association, New York City; Sulphur Export Corporation, New York
City ; United States Maize Products Export Association (Inc.), Chicago, Ill.
In the interest of the foreign trade of the United States the commission has made
inquiries in the matter of complaints filed by foreign concerns against. American
exporters and importers. During the year 114 such complaints were handled, 35 were
finally disposed of, and 79 were pending at the close of the fiscal year. Various
Government officers and trade organizations avail themselves of the investigatory
powers granted the commission and refer complaints for inquiry. Cases were received
during the year from the State, Commerce, and Treasury Departments, the Department
of Agriculture, the Department of Justice, the chambers of commerce, and from
foreign complainants direct. Ordinarily, however, complaint is made by the foreign
concern to the office of the American consul and is referred back to the United States
for investigation.
These complaints involve charges of nondelivery of goods ordered, nonpayment for
goods received, shipments of defective or damaged goods or articles below sample,
short-weight delivery, and various other matters concerning orders and shipments of
goods to and from foreign countries.
The commission’s inquiries serve to establish the facts of the complaint through
which the parties may be able to adjust their differences. In many cases the facts
developed serve to clear the American firms of responsibility. A number of complaints
were handled as unfair methods of competition cases.
The commission feels that its report of facts in these disputes is in the interest of
American business abroad. Litigation for small claims is too expensive to be
practicable, yet the smallest claim may result in widest publicity to the discredit of
American concerns in foreign countries. As stated in its last report, the commission is
assured that the adjustment of even a small complaint goes far toward the
establishment of confidence and good will in foreign markets.
At the request of the State Department the commission made a special inquiry
concerning alleged tampering with Canadian grain passing in bond through the United
States for shipment via United States ports to foreign countries. No evidence was
found of deliberate tampering or mixing within the United States, but recom-

SUMMARY.

17

mendations were made for closer Federal supervision of Canadian grain shipped in
bond through this country.
TRADE PRACTICE SUBMITTAL.
From time to time the commission is approached by groups of business men
representing an entire industry and Seeking the assistance of the commission in the
elimination from their industry of practices found to be unfair and harmful but which
the industry is unable by itself to eliminate. The commission has lent its assistance in
these situations and has called the industry together in gatherings which have been
termed “trade-practice submittals.” These submittals have been held in the following
industries: Ink, celluloid, knit goods, paper, oil, used typewriters, creamery, hosiery,
guarantee against decline, macaroni, silverware, gold knives, watch cases.
At these submittals the objectionable practices are frankly discussed and resolutions
usually adopted by the industry looking to their elimination. These resolution are
considered by the industry as binding upon it and are received by the commission as
informative as to conditions in the particular industry and the views of the trade
thereon.
During the past year, at the request of manufacturers of gold-mounted knives,
representing a major portion of those engaged in the industry, a trade-practice
submittal was held before Chairman Murdock in New York City and was attended by
24 members of the trade. The gathering was called to discuss practices having to do
with the marking of knives mounted in gold.
The industry adopted a resolution which was intended, first, to define gold mounting
and, second, to condemn any method in the construction of a gold-mounted knife by
which it may be made to appear that more gold of an indicated karat fineness has been
used than has been employed in fact.
The second trade-practice submittal held during the year was held before Chairman
Murdock at Washington, D. C., and was at the instance of a number of manufacturers
of gold-filled and gold-plated watch cases representing approximately 75 per cent of
the industry. The submittal was held for the purpose of giving those engaged in the
industry an opportunity to express their views in relation to the alleged unfairness of
prevailing methods of branding their product with long-time guaranties, and otherwise,
and the practicable methods of correcting any evils found to exist. The gathering was
attended by all the principal manufacturers.
The principal office of the commission at Washington, D. C., is open each business
day from 9 a. m. to 4.30 p. m. To expedite the

18

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

investigation and trial of cases and also in the interest of economy, the commission
maintains branch offices at New York, Chicago, and San Francisco. At the close of the
year the commission had 308 employees, of which number there were 31 lawyers
employed in the trial of cases, 54 lawyers employed in the investigation of complaints,
30 economists, 25 accountants, and the remainder, 168, statistical, clerical, and
administrative employees. Appropriation to the amount of $974,480.32 was available
to the commission during the year. The commission issued 14 publications during the
year; these are listed on page 27 of the report.

ADMINISTRATIVE DIVISION.
The sections in this division are those generally adopted in all Government
departments and establishments and are arranged to care for the management of the
commission’s activities. Changes in arrangements and functions are less liable to occur
in this than in the other divisions of the commission where the character of the work
is continually varying according to the demands made upon them through the several
sources of direction that govern their scope and activities.
For these reasons there has not been any material change in the management,
organization, and procedure of this division. All of its functions are largely governed
by general statutes and orders applicable to all work of this character wheresoever
situate in the Government service. Units in this division are :
Office of the secretary.--The secretary is the custodian of the minutes, of all
confidential papers, and of the seal of the commission; he signs all orders of the
commission in formal docket cases and intraoffice orders to all chiefs of divisions and
employees. The clerks in this office attend to the writing up of minutes, preparation
of answers to all inquiries from the general public and interested parties with reference
to the status of formal and informal proceedings. They are also responsible for the
service of all formal complaints and orders and for notices of assignments of trial to
interested parties in formal proceedings. It is the duty of this office also to arrange for
reporting of all formal proceedings before the commission. The secretary’s office is
also responsible for certification of copies of formal records to the different circuit
courts of appeal, to the United States Supreme Court, and of such documents as are
requested by the public or other departments of the Government.
Office of assistant secretary.--Administrative assistant to the secretary. Assumes
duties and responsibilities of secretary during absence of said officer.
Disbursing office, having charge of the fiscal affairs.
Supplies and equipment section, in charge of building and quarters, purchase of
supplies and equipment, supervision of the messenger, mechanical, and laboring
forces.
Personnel section, in charge of all matters relating to appointments, promotions,
demotions, transfers, changes in designation, and the relationship between this
commission and the Civil Service Commission.
Mail and files section, where the receipt and distribution of the mail takes place and
where all the papers and records of the commission except those of the docket section
are finally receivable and cared for.
19

20

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

Publications section, in charge of all matters having connection with the Public
Printer and the Superintendent of Documents. In this section are handled the
distribution of publications, maintenance of mailing lists, multigraph, mimeograph,
and photostat duplication work, and all of the clerical work necessary in keeping the
records of this branch of the commission’s activities.
During the fiscal year ended June 30, 1922, 4,735 copies of the commission’s reports
were sold by the Superintendent of Documents for $1,108. The figures for the instant
fiscal year are not available, but it is anticipated that they will far exceed the previous
year.
Docket section is a section somewhat comparable to the office of a clerk of a court.
All applications for the issuance of complaints pass through this section; it records and
files all correspondence, exhibits, notices of assignments to attorneys, field and office
reports, and all other material in connection with such applications. In its custody also
are pleadings, exhibits, correspondence, and other material relating to formal
complaints which have been served, and it maintains the current docket record for the
inspection of the public, together with a proper supply of mimeographed copies of
pleadings in the various cases before it for distribution to interested parties, upon
application. This section also indexes and files a large quantity of legal material of a
general nature not directly connected with specific applications for complaints or
formal complaints, and performs various miscellaneous services for the legal staff of
the commission. In addition to the above, this section handles all the work involved in
the direction of the official reporters for the commission (said work being done under
contract) the receipt, care, and custody of the transcript of hearings, and the auditing
of vouchers covering payment for reportorial services.
Stenographic section, from which is supplied to all of the force needed stenographic
and typewriting assistance.
Library section.--The functions carried on in the library are under the direction of
the administrative division.
The library has a collection of over 20,000 books, pamphlets, and bound periodicals,
devoted largely to the subjects of law, economics, and industries. In addition are
extensive files of clippings, leaflets’ etc. The distinctive features of the economic
collection are the files relating to corporation and trade association data and files of
representative trade periodicals for the more important industries. There is a function
peculiar to the commission’s library in the character of the work that it performs, and
that is in the material it gathers in the form of pamphlets, corporation reports,
association records, current financial and statistical services, catalogues, trade lists,
etc., which are not ordinarily found in libraries of even a technical character. The
greater amount is furnished gratuitously and much of

21

ADMINISTRATIVE DIVISION.

it is of a confidential character. This material furnishes a valuable adjunct to the
investigatory work and is adapted to furnish leads to examinations rather than
complete and substantive information on the subject matter.
The bulk of the law collection consists of the various national and regional reporter
systems and the more important reference encyclopedias and reference books that are
commonly found in law libraries. The distinctive feature, however, is a file of records
and briefs of a antitrust cases, which were acquired without expenditure.
Care is exercised to limit the selection of books to supply only those needed
constantly and immediately in the commission’s work. The commission is far removed
from other governmental law libraries and the library of the Supreme Court of the
United States and must have available sufficient volumes to answer the ordinary
requirements of the legal force. In all other instances use is made of the other libraries
in Washington.
APPROPRIATIONS AND EXPENDITURES.
The appropriations of the commission for the fiscal year ended June 30, 1923, under
the executive and sundry independent executive act approved February 13, 1922,
amounted to $955,600. In addition to this amount the commission had available the
sum of $18,880.32, 1 making a total amount available of $974,480.32.
The expenditures of the commission for the fiscal year ended June 30, 1923, plus the
outstanding liabilities as of that date, amounted to $970,753.28, which left an
unexpended appropriation balance of $3,727.04. Of this amount, $1,750.93,
represented the unexpended balance of the appropriation provided for the payment of
increase of compensation (bonus), and was available for no other purpose. The
remainder, $1,976.11, represents the unexpended balance of the commission’s lumpsum appropriation.
The appropriations, including unexpended balances of appropriations for previous
years and expenditures, are tabulated below:
Amount
available.
Federal Trade commission, 1923:
Salaries, commissioners, secretary
Increase of compensation (bonus)
All other authorized expenses
Total fiscal year, 1923
Unexpended balances:
Federal Trade Commission1922
1921
1913-14

Amount
expended.

$55,000.00
50,600.00
850.000.00
955,000.00

$55,000.00
48,849.07
827,485.91
931,334.98

88, 509.71
72,056.00
18,880.32
1,135,046.12

45,608.33
Cr. 977.71
18,880.32
994,845.92

1 This amount represents the unexpended balance of the amount made available by the ruling of the
Comptroller of the Treasury under the second paragraph of section 3 of the act creating the commission,
said amount representing the unexpended balance of the appropriations for the Bureau of Corporations

for the fiscal year 1913-14.

22

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

It is estimated that the outstanding liabilities of the commission as of June 30, 1923,
amount to $20,537.98, payment of which will be made from the unexpended balance
of the appropriations “Federal Trade Commission, 1923.”
A detailed analysis of the expenditures of the commission is given in the following
statement:
Detailed statement of the expenditures of the Federal Trade Commission for
the fiscal year ended June 80, 1928.
ADMINISTRATIVE DIVISION.
Item.
Annual leave
Sick leave
General administration
Mail and files
Disbursement and accounts
Purchases and supplies
Docket division
Library
Messengers
Time excused by Executive or commission’s order
Economic supervision
Legal supervision
Medical attendant
Printing and publications
Stenographic
Appointment division
Labor
Board of review
Preliminary work on informal complaints
Informal Complaints
Formal complaints
Court leave
Export Grain Inquiry, Part 5, Statistical Investigation of Market Manipulations
Foreign oil control
Supplies
Communications
Transportation of things
Printing etc
Heat and light
Rent
Repairs
Miscellaneous
Equipment
Total

Office.
Field.
$14,038.26
4,735.72
74,924.57
$579.93
10,869.20
9,885.62
5,466.87
14,721.59
6,437.63
7,693.24
415.11
52.67
14.99
1,151.77
10,997.76
23,676.46
532.50
8,090.12
2,652.84
1.00
23.53
97.45
66.26
65.25
160.57
7.77
179.09
2.99
88.98
3.29
7,478.16
3,823.88
425.57
22,460.21
129.28
8,662.09
730.31
352.30
8,552.45
248,727.84

1,221.48

ECONOMIC DIVISION.
Annual leave
Sick leave
General administration
Time excused by Executive or commission’s order
Economic supervision
Legal supervision
Services rendered to Department of Justice
Services rendered to Senate Committee on Manufactures--Crude oil and
Petroleum products
Services rendered to Department of Commerce
Services rendered to Coal Commission
Military leave
Printing and publications
Informal complaints
Formal complaints

$25,461.75
6,919.49
302.51
562.16
17,192.18
641.96
264.34
100.32
305.16
984.77
291.31
308.22
5,702.44
9,049.93

$966.96
2,313.90

2,740.83

Miscellaneous computing machine work
Lumber
Trading with the enemy
Coal
Steel
Lumber
Livestock and its products
Grain and produce exchanges
Paper schedule

549.72
118.97
5.95
701.93
1,057.56
590.76
71.25
14,827.59
6,042.39

23

ADMINISTRATIVE DIVISION.
Detailed statement of the expenditures, etc.--Continued.
ECONOMIC DIVISION-Continued.
Item.
Office.
$134.33

Milk products
Tobacco situation
Export Grain Inquiry, Part 1, Prices, Costs, and Profits
Export Grain Inquiry, Part 2, Market Manipulations
Export Grain Inquiry, Part 3, Control and Interrelations
Export Grain Inquiry, Part 4, Methods of Foreign Buyers
Export Grain Inquiry, Part 5, Statistical Investigation of Market Manipulations
House Furnishings Goods Industry and Trade, Part 1, Competitive Conditions
House Furnishings Goods Industry and Trade Part 2, Costs, Prices, and Profits
Second Section of the House Furnishing Goods Industry and Trade, “Kitchen
Equipment,” Part 1, Competitive Conditions
Second section of the House Furnishings Goods Industry and Trade, “Kitchen
Equipment,” Part 2, Costs, Prices, and Profits
Cotton Trade Inquiry. Part 1, Cotton Exchanges
Cotton Trade Inquiry. Part 2, Cotton Statistics
Cotton Trade Inquiry, Part 3, Cotton Manipulations
Foreign oil control
Fertilizers
Flour milling
National Wealth Inquiry, National Wealth, Part I
National Wealth Inquiry, Part 2, National Income
National Wealth Inquiry, Part 3. National Taxation
Total

5,105.28
520.33
4,160.26
4.53
8, 159.93
6,652.37
7,537.35
18,940.26
24,557.01
24,739.73
13,112.11
3,523.75
5,222.42
14.68
2,254.47
1,067.44
289.78
51.01
238,379.70

Field.
Cr. $2.00
227.61
288.16
2,509.85
16.28
4,047.38
1,004.32
104.16
4,223.57
1,401.49
7,407.29
70.99
1,805.10
472.12
3,466.26

30,323.44

LEGAL DIVISION.
CHIEF COUNSEL
Annual leave
$12,005.17
Sick leave
3,541.34
General administration
9.90
Time excused by Executive or commission’s order
272.18
Special briefs
139.21
Legal supervision
17,503.96
$122.56
Study of procedure
49.03
Stenographic
2.49
Special for commissioners
67.17
Board of review
43.46
Preliminary work on informal complaints
19.80
Informal complaints
4,638.68
379.60
Formal complaints
89,099.14
54,276.85
Petitions of mandamus
1,846.70
321.39
Preliminary work on formal complaints
132.53
Injunction proceedings against the commission
27.23
Court leave
4.71
Grain products
21.13
Export trade
35.48
Export Grain Inquiry, Part 5, Statistical Investigation of Market Manipulations.
76.87
Second Section of the House Furnishings Goods Industry and Trade,
“Kitchen Equipment,” Part 1, Competitive Conditions
29.43
Second Section of the House Furnishings Goods Industry and Trade,
“Kitchen Equipment,” Part 2 Costs Prices, and Profits
7.07
Cotton Trade Industry, Part 1, cotton Exchanges
11.49
Total
130,036.17
55,100.40
CHIEF EXAMINER.
WASHINGTON (D.C.) OFFICE.
Annual leave
6,759.04
Sick leave
1,093.92
Library
565.68
Time excused by the Executive or commission’s order
189.11
Legal supervision
15,355.50
353.93
Services rendered to Federal Real Estate Board
37.94
Services rendered to Departmental Contract Board
22.66
Services rendered to Senate Committee on Manufactures-Crude oil and petroleum products
Cr. 1.63
Corporation reports
9.31

Study of procedure
Labor
Special for the commissioners
Board of review
Preliminary work on informal complaints
Informal complaints
Formal complaints

24

61.91
3.00
5.66
2,112.62
8,006.99
15,659.09
32,177.72

2,515.07
11,484.08
17,398.84

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.
Detailed statement of the expenditures, etc.--Continued.
LEGAL DIVISION.--Continued.
Item.
CHIEF EXAMINER-Continued.

Office.

Field.

WASHINGTON (D.C.) OFFICE--continued.
Lumber
Stock securities (blue sky )
Trade practice submittal guaranteed against price decline
Export Grain Inquiry, Part 1, Prices, Costs, and Profits
Cotton Trade Inquiry, Part 3, Cotton Manipulations
Fertilizers
Radio industry
Total

$14.86
2,328.98

$141.34
1.85

29.47
1,764.52
7.92
86,202.08

40.29
1,081.29
33,019.60

NEW YORK BRANCH OFFICE.
Annual leave
Sick leave
Legal supervision
Study of procedure
Stenographic
Preliminary work on informal complaints
Informal complaints
Formal complaints
Radio industry
Total
CHICAGO BRANCH OFFICE.

2,783.84
638.80
4,554.41
42.43
4,016.54
3,366.98
10,063.92
3,404.59
331.09
29,202.60

Annual leave
Sick leave
Time excused by the Executive or commission’s order
Legal supervision
Study of procedure
Stenographic
Preliminary work on informal complaints
Informal complaints
Formal complaints
Lumber
Export trade
Radio Industry
Total

2,277.38
369.81
8.26
3,299.74
209.13
3,170.21
2,614.73
8,570.13
5,360.15
399.30
19.82
28.88
26,327.54

603.20
4.76
572.88
3,483.09
1,131.87
65.60
5,861.40

393.56
92.85
177.00
342.91
3,334.45
2,124.07
140.86

6,605.70

SAN FRANCISCO BRANCH OFFICE.
Annual leave
Sick leave
Legal supervision
Stenographic
Preliminary work on informal complaints
Informal complaints
Formal com plaints
Lumber
Stock securities (blue sky)
House Furnishing Goods Industry and Trade, part 1, Competitive Conditions
Total
SUMMARY, CHIEF EXAMINER.

560.16
7.15
388.70
1,215.19
1,692.01
1,972.81
835.62
244.47
15.59
6,931.70

126.71
255.25
512.96
1,539.60
609.39
71.97
171.67
3,287.55

Washington office
New York branch office
Chicago branch office
San Francisco branch office
Total

80,202.08
29,202.60
26,327.54
6,931.70
148,663.92

33,019.60
5,861.40
6,005.70
3,287.55
48,774.25

BOARD OF REVIEW.
Annual leave
Sick leave
Stenographic
Board of Review
Informal complaints
Formal complaints
Total

1,834.23
912.15
55.06
15,444.01
44.62
622.05
18,912.12

190.26
190.26

25

ADMINISTRATIVE DIVISION.
Detailed statement of the expenditures, etc.--Continued.
LEGAL DIVISION.--Continued.
Item.
CHIEF EXAMINER--Continued.
EXPORT TRADE BRANCH.

Office.

Annual leave
$882.41
Sick leave
187.93
Time excused by Executive or commission’s order
11.50
Board of review
13.21
Formal complaint
1,189.16
Trading with the enemy
8.26
Export trade
8,469.80
Total
19,762.27
TRADING WITH THE ENEMY.
Annual leave
451.88
Sick leave
289.49
Time excused by Executive or commission’s order
13.53
Formal com plaint
24.57
Court leave
45.98
Trading with the enemy
3,202.71
Total
4,028.16
SUMMARY OF EXPENDITURES.
Item.
Office.
Field.
Administrative
$248,727.84 $2,740.83
Economic
238,379.70 30,323.44
Legal:
Chief counsel
130,036.17 55,100.40
Chief examiner
148,663. 92 18,774.25
Board of review
18,912.12
190.26
Export trade branch
10,762.27
2,903.27
Trading with the enemy
4,328.16
270.48
Grand total
799,510.18 140,3312.93

Field.

$1,886.66
1,016.61
2,903.27

270.48
270.48
Total.
$251,468.67
268,703.14
185,136.57
197,438.17
19,102.38
13,665.54
4,298.64
939,813.11

Adjustments.--The following adjustments are made to account for the difference
between the cost and disbursements :
Total cost for the year ended June 30, 1923
Less transportation issued
New total
Plus transportation paid
New total

$939,813.11
48,226.95
891,586.16
45,404.81
936,990.97

Allotted to the retirement fund
Increase of compensation (bonus)
Disbursements for the year ended June 30, 1923

9,005.88
48,849.07
994,845.92

The appropriations for the Federal Trade Commission for the fiscal year ended June
30, 1923, were as follows :
For five commissioners. at $10,000 each ; secretary, $5,000 ; in all, $55,000.
For all other authorized expenditures of the Federal Trade Commission in performing the
duties imposed by law or in pursuance of law, including personal and other services, supplies
and equipment, law books, books of reference, periodicals, Printing and binding garage rental,
traveling expenses in-

26

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

cluding actual expenses at not to exceed $5 per day, or per diem in lieu of subsistence not to
exceed $4, newspapers, foreign postage, and witness fees and mileage in accordance with
section 9 of the Federal Trade Commission act, $850,000.

PERSONNEL.
On December 1, 1922, Vice Chairman Victor Murdock was elected chairman of the
commission for the ensuing year, succeeding Chairman Nelson B. Gaskill. On the
same date, Commissioner John F. Nugent was elected Vice chairman for the ensuing
year.
During the fiscal year ended June 30, 1923, 29 employees entered the Service of the
commission, making a total of 2,112 original appointments in the service of the
commission since its creation. During the year, 39 employees left the commission’s
service, leaving the total number of employees at the close of June 30, 1923, 308, with
a total basic salary of $762,040. Of this number, 179 were under civil-service
appointment and designation, and 129 held positions excepted from civil service rules
and regulations.
At the close of the fiscal year the commission had 58 employees who have had
United States military or naval service. The number of female employees at the close
of June 30, 1923, was 100. For the same date the number of employees in the service
coming under the provisions and benefits of the civil service retirement law was 178.
APPLICATIONS FOR COMPLAINTS AND FORMAL COMPLAINTS.
The following table shows in detail the receipt and disposition of applications for
complaints, by months for the fiscal year ended June 30, 1923, and by fiscal years
from the organization of the commission to June 30, 1923:
Table showing receipt and disposition of applications for complaints and formal complaints, by fiscal
year s, from organization of the Commission to June 30,1923.

Fiscal Year.

Organization (Mar. 16,
1915) and prior thereto
to June 30, 1915
Ended June 30:
1916
1917
1918
1919
1920

Applications for complaints.
Disposed of.
Dock- Dis
For- Total
eted. missed mal
served.

112

8

134
153
332
535
724

105
79
160
301
339

Formal complaints.
Disposed of.
Served. Dis- Orders
Cases
missed. to cease Total. apand
pealed
desist.

8
3
16
80
125
220

108
95
240
426
559

5
9
154
135
308

1
7
13
43

3
71
71
112

4
78
84
155

4
9

1921
1922
1923
Total

426 357
382 287
410 181
3,214 1,817

157 514
103 390
121 302
825 2,642

177
111
144
1,043

37
75
87
263

118
91
82
548

155
166
169
811

17
5
5
49

ADMINISTRATIVE DIVISION.

27

PUBLICATIONS ISSUED.
The following publications were issued by the Federal Trade Commission during the
fiscal year ended June 30, 1923:
Annual Report of the Federal Trade Commission for the fiscal year ended June 30, 1922;
November 22, 1922. 169 pp.
Calcium Arsenate Industry, June 23, 1923. 21 pp.
Preliminary Report on the Cotton Trade, February 26, 1923. 28 pp.
Decisions, Findings, and Orders of the Federal Trade Commission. Volume IV (July 1, 1921,
to June 30, 1922), April 19, 1923. 651 pp.
Fertilizer Industry, March 15, 1923. 87 pp.
Foreign Ownership in the Petroleum Industry, March 26, 1923. 152 pp. House Furnishings
Industry, Volume I (Household Furniture), May 26, 1923. 484 pp.
Index-Digest of Federal Trade Commission Decisions, volumes 1, 2, 3, November 28, 1922.
233 pp.
Preliminary Report on Investment and Profits in Soft Coal Mining, July 6, 1922. 222 pp.
Methods and Operations of Grain Exporters, Volume I (Interrelations and Profits), October
21, 1922. 123 pp.
Petroleum Industry of Wyoming and Montana, August 25, 1922. 3 pp. War Time Costs and
Profits of Southern Pine Lumber Manufacturers, November 29, 1922. 94 pp.
Western Red Cedar Association, February 26, 1923. 22 pp.
Northern Hemlock and Hardwood Manufacturers’ Association, May 7, 1923. 52 pp.

LEGAL DIVISION.
The legal division of the commission includes two branches, viz, the trial division,
at the head of which is the chief counsel, who is also the legal advisor to the
commission, and the examining and investigating division, at the head of which is the
chief examiner. The latter division makes preliminary investigations of all practices
complained of to the commission as being in violation of the acts which it is charged
with enforcing. If as a result of such inquiry formal complaints are issued, the
respondents are directed to make answer and show cause why an order to cease and
desist from the use of the practices charged should not issue. After joinder of issue,
testimony is taken before a trial examiner who hears the testimony and makes a
preliminary report on the facts to the commission.
CHIEF COUNSEL.
The chief counsel directs the trial of all cases. When there is a review of the orders
of the commission by the circuit courts of appeals, as provided by statute, the conduct
of the cases is also in the hands of the chief counsel and his staff. If recourse be had
to the Supreme Court of the United States, the chief counsel cooperates with the
Solicitor General in the preparation of the cases.
During the year the commission disposed of 126 formal complaints. In all of these
cases, in the absence of an admission of the facts and stipulation in lieu of testimony,
trials were had at different places throughout the country and witnesses were examined
and documentary evidence received in support of the charges stated in the complaint
and on behalf of the parties against whom the complaint had been issued. The cases
then came for final determination before the commission on brief and oral argument.
Upon such determination orders to cease and desist were issued by the commission in
78 formal cases during the fiscal year ending June 30, 1923.
Complete lists of the cases disposed of during the year under formal complaints and
those still pending before the commission appear further on in this report under
appropriate captions; but it is desired to make brief mention at this point of some of
the more important or unusual cases or classes of cases contained in those lists.
CASES INVOLVING SECTION 7 OF THE CLAYTON ACT.
Proceedings under section 7 of the Clayton Act have increased in number during the
year and have emphasized the importance of that section. In proceedings against Swift
& Co., Western Meat Co., and
28

LEGAL DIVISION.

29

Thatcher Manufacturing Co. the formal complaints charged the acquisition of stock
in other corporations in violation of section 7 of the Clayton Act, and final orders were
issued in these cases during the year. Two of these complaints also charged unfair
methods of competition under section 5 of the Federal Trade Commission act. The
orders of the commission required each respondent to divest itself of the stock
acquired and held contrary to section 7 and to cease and desist from the ownership,
management, operation, and control of the assets, rights, property, and privileges
resulting from such acquisition. A proceeding charging the Owens Bottle Co. with
acquiring the stock of three corporations in violation of section 7 was partly tried and
is nearing completion, and formal complaints have been issued against Standard Oil
Co. of New Jersey, Illinois Glass Co., Hygrade Lamp Co., and International Shoe Co.
charging each of them with acquiring stock in other corporations in violation of section
7 of the Clayton Act.
“PITTSBURGH PLUS” CASE.
A complaint was issued against the United States Steel Corporation, American
Bridge Co., American Sheet & Tin Plate Co., Carnegie Steel Co., National Tube Co.,
American Steel & Wire Co., Illinois Steel Co., Minnesota Steel Co., Clairton Steel
Co., Union Steel Co., the Lorain Steel Co., and the Tennessee Coal, Iron & Rail-road
Co., alleging that the respondents are discriminating in price between customers,
contrary to both the Federal Trade Commission act and section 2 of the Clayton Act.
The discrimination, it is averred in the complaint consists in the fact that customers
everywhere are charged the Pittsburgh base price for steel products plus an amount
equivalent to the rate of freight from Pittsburgh to destination, irrespective of the place
of the actual manufacture of the steel. By way of illustration, it is alleged that for Steel
manufactured at Duluth the discrimination against a Duluth customer, as contrasted
with sales to a Pittsburgh customer buying Pittsburgh steel, is $13.20 per ton ; that the
discrimination against a La Porte, Ind., customer buying at Chicago, as contrasted with
a Pittsburgh customer buying Pittsburgh steel, is $3.30 ; and that the discrimination,
in varying degrees, exists against steel buyers at all points outside Pittsburgh.1 The
practice is averred to have the following effects :
First. The substantial lessening of the competition of western and southern
manufacturing buyers of steel in meeting eastern manufacturing buyers, and their
elimination from important markets.
1 There is a local variation in Birmingham, Ala., section which is not described herein for the sake of
brevity.

67501--23----3

30

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

Second. The substantial lessening of competition with respondents and a tendency
toward monopoly for respondents in lines wherein they are competitors of their
customers, on the ground that respondents do not pay the discriminatory price.
Third. The substantial lessening of competition among all producers of steel in the
United States, on the ground that they charge the Pittsburgh base price plus any
amount equivalent to the rates of freight to the point of delivery, irrespective of the
location of the steel mill, and that without the maintenance of the said basing practice
by respondents the other steel producers of the country would be unable to maintain
the said prices.
Testimony in support of the complaint and for the defense has involved a most
searching inquiry, not merely into competitive conditions surrounding steel makers but
also into many lines of industry wherein steel is an important cost factor, in order to
ascertain the effect of the practice upon the markets and the competitive powers of
competing purchasers of steel throughout the country. Hearings have been held at
Chicago, Pittsburgh, Milwaukee, Detroit, New York, Minneapolis, Duluth,
Chattanooga, Birmingham, and Washington. The defense is to close shortly after the
end of the fiscal year.
STEEL MERGER CASES.
During the latter part of the last year the commission issued a complaint against the
Bethlehem Steel Corporation and the Lackawanna Steel Co., charging that the
acquisition of the properties and assets of the latter by the former was in violation of
section 5 of the Federal Trade Commission act; and a complaint against the Midvale
Steel & Ordnance Co., Cambria Steel Co., Republic Iron & Steel Co., and Inland Steel
Co., charging that the consolidation of these companies was also in violation of said
section 5. This latter consolidation was abandoned shortly after issuance of the
complaint, which was dismissed. A short time thereafter Bethlehem Steel Corporation
and Bethlehem Steel Co. purchased the properties, assets, and businesses of Midvale
Steel & Ordnance Co. and Cambria Steel Co. The commission thereupon, under date
of January 26, 1923, issued a complaint against Bethlehem Steel Corporation,
Bethlehem Steel Co., Bethlehem Steel Bridge Co., Lackawanna Steel Co., Lackawanna
Bridge Works Corporation, Midvale Steel & Ordnance Co., and Cambria Steel Co.
The complaint charges that the consolidation of these companies, the only large and
thoroughly integrated steel companies east of Pittsburgh, will substantially lessen competition among the respondents, has a dangerous tendency unduly to hinder
competition in the iron and steel industry, and is an unreasonable restraint upon
competition amounting to a restraint of

LEGAL DIVISION.

31

trade in the iron and steel industry, particularly in the northeastern section of the
United States. The commission after issuing this complaint dismissed the complaint
first above mentioned. The case was pending at the close of the fiscal year.
MOTION-PICTURE CASES.
During the year the commission considered several questions of alleged unfair
methods of competition in the motion-picture industry. These cases involved for the
most part the distribution for exhibition of old or reissued motion-picture films under
new names, without revealing to the exhibitors or to the public in any adequate
manner, if at all, that such films had previously been given more or less wide-spread
distribution under a different name. In three of such cases which were completed
during the year the commission was of the opinion that the companies concerned were
violating section 5 of the Federal Trade Commission act and issued orders to cease and
desist. These companies were the American Film Co., Signet Films (Inc.), and the
Eskay Harris Film Co.
By far the most important case dealing with the motion-picture industry remained
uncompleted at the close of the year, notwithstanding the taking of testimony had
consumed several weeks up to that time. The respondents are Famous Players-Lasky
Corporation, Realart Pictures Corporation, the Stanley Co. of America, the Stanley
Booking Corporation, Black New England Theaters (Inc.), Southern Enterprises,
Saenger Amusement Co., and certain individual defendants, officers of said
companies. These respondents include some of the largest and most powerful factors
in the three branches of motion-picture industry, namely, the production, the
distribution, and the exhibition of pictures. They are charged with a conspiracy to
dominate and monopolize the industry in the United States, and with various specific
acts looking toward the carrying into effect of the object of the conspiracy. Due to the
importance of the industry and its diversified character, not only as to physical field
of operations but also as to the necessarily different personnel and methods employed
in the three separate branches above named, a vast amount of work has devolved upon
the commission and its employees in the case. The chief counsel assumed personal
charge of the conduct of the hearings, and it is anticipated that the completed record
will be ready for disposition by the commission on or before the first of the calendar
year.
THE BISCUIT CASES.
Following the usual preliminary investigations, the commission issued formal
complaints against the two largest biscuit and cracker

32

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

manufacturers in the United States, the National Biscuit Co. and the Loose-Wiles
Biscuit Co., charging them with Violations of section 2 of the Clayton Act and, section
5 of the Federal Trade Commission act. Such charges were based on the alleged
practices of these companies in giving certain discounts based on total purchases over
a given period of time, which discounts it is claimed operated unfairly to the advantage
chain-store systems as compared with individual grocers whose purchases are equal
to those of the chain-store units similarly located. Testimony was taken during the last
few weeks of the year, but final disposition of the case has not been made by the
commission.
RESALE PRICE MAINTENANCE CASES.
The prosecution of the class of proceedings coming under the head of resale price
maintenance, which had been suspended pending the action of the Supreme Court and
resumed after the decision by that court in January, 1922, sustaining the order of the
commission against the Beech Nut Packing Co., has been continued. This decision
made further investigation appear necessary in many of the suspended cases and the
issuance of new complaints where the fresh investigations warranted them. Many new
applications based on allegations of resale price maintenance as constituting a
violation of section 5 of the Federal Trade Commission act have been received and
complaints have been issued in a number of cases during the present year. One of the
most important of these cases previously suspended is in course of trial, namely, that
against the Cream of Wheat Co. Other cases, in which complaints have been issued,
are the following : National Lead Co., Twinplex Sales Co., McCord Manufacturing
Co., Seth Thomas Clock Co., Goodall Worsted Co., Bowers Bros. et ai., Hills Bros.,
Toledo Pipe Threading Machine Co., Amour & Co. In the case of the Standard Electric
Manufacturing Co., an order to cease and desist was issued by the commission January
17, 1923. It is hoped to obtain a further definition of the law as to resale price
maintenance as soon as cases where the order of the commission may be taken to the
courts for review can be advanced.
In the case of the Music Publishers’ Association of the United States, and its
members, and the National Association of Sheet Music Dealers, and its members, the
commission found that the respondents and each and all of them conspired together for
the purpose of fixing and maintaining specific standard resale prices of musical
publications in the Various States of the United States by the members of the National
Association of Sheet Music Dealers

LEGAL DIVISION.

33

and other dealers and publishers selling musical publications to the public, and that as
a result of the conspiracy and the acts of the respondents done in pursuance thereof,
the prices of musical publications to the public and to the music profession were
enhanced generally throughout the United States. The respondents were ordered,
among other things, to cease and desist from combining and conspiring, among
themselves or with others, to fix or increase the prices of musical publications
published or sold by them or any of them, and from combining and conspiring among
themselves or with others to maintain standard or fixed resale prices for musical
publications.
THE TOBACCO CASES.
The commission issued a number of complaints attacking price-fixing agreements
made by tobacco jobbers in different localities in combination with tobaccomanufacturing companies. These complaints charge that groups of tobacco
wholesalers, in most cases organized into associations, fixed through the means of
agreements of their respective associations, uniform prices on tobacco products, and
that the tobacco-manufacturing companies assisted the various groups of jobbers in
carrying out their agreements by offering to discontinue selling to such members of
associations who sold for prices less than the associations had agreed upon. The
complaints allege also that in compliance with their promises of cooperation the
tobacco-manufacturing companies did discontinue selling certain of their customers,
because they had not observed the prices fixed by the associations of which they were
members.
The tobacco-manufacturing companies proceeded against , in combination with such
wholesalers, are the American Tobacco Co., Liggett & Myers Tobacco Co., P.
Lorillard Co. (Inc.), Tobacco Products Corporation, Falk Tobacco Co., Scotten-Dillon
Co., and Larus Bros. Co. The associations proceeded against are located in many of
the principal cities of the country, notably Philadelphia, Cincinnati, Milwaukee,
Chattanooga, Chicago, and Kansas City. Other associations embraced extensive
territories in their membership, as, for instance, the Tri-State Association, whose
members are located in New York, Ohio, and Pennsylvania; the Western Pennsylvania
Association, whose membership is scattered throughout the western part of
Pennsylvania; the Central Tobacco Jobbers’ Association , whose members are
scattered throughout central Pennsylvania; the Keystone Tobacco Jobbers’
Association, whose membership is distributed throughout eastern Pennsylvania; the
Ohio Wholesale Grocers Association, whose members do business throughout Ohio,
while in one complaint the wholesalers who are named as respond-

34

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

ents, comprise practically all of the wholesale tobacco dealers along the Pacific coast,
as well as in Utah, Idaho, and Nevada.
Hearings were held during the year in 10 of these cases.
THE DOUGLAS FIR CASE.
This case has been pending during the entire fiscal year on formal complaint
charging the Douglas Fir Exploitation & Export Co., whose principal places of
business are Seattle, Wash.; Portland, Oreg.; and San Francisco, Calif., and 107 other
corporations, partnerships, and individuals with a conspiracy to hinder and obstruct
competition in the sale and distribution of certain classes of lumber in the United
States. The charge also includes specific acts for the purpose of carrying the objects
of the conspiracy into effect, such acts including among others price agreements,
improper pressure upon competitors to compel them to join the conspiracy, and to
comply with its plans. The respondents are alleged to control 85 per cent of the
productive capacity of the class of lumber handled by them which is variously known
as Pseudotsuga taxifolia, Oregon pine, red pine, yellow pine, Columbian pine, Puget
Sound pine, and British Columbia pine, and articles and things manufactured
therefrom.
A considerable volume of testimony was taken, but the trial of the case remained
uncompleted at the close of the year. It will probably be reached for consideration by
the commission on the completed record by the first of the calendar year.
BLUE SKY CASES.
Nine companies which were engaged, or pretended to be engaged, in the sinking of
oil wells and the production of oil, together with certain individuals promoting them,
were found by the commission to have been violating section 5 of the Federal Trade
Commission act. These were all cases of the character commonly known as “blue sky”
cases; and the objectionable practices consisted in the publication, advertisement, and
circulation of false and misleading statements as to the character of the company
organization, its assets, location of alleged lands or oil wells, past and present oil
production of wells alleged to be owned by it, the amount of dividends previously
paid, and other representations of a similar character, made for the purpose of inducing
sales of the company stock.
The following concerns and also in every case individual defendants were found
using these practices or some of them: Big Diamond Oil & Refining Co., the Lone Star
Oil Co., the Guaranty Fund Oil Co., First National Oil Co., Imperial Production Co.,
the Non-

LEGAL DIVISION.

35

Derrick Drilling Machine Co. (Inc.), Royal Duke Oil Co., Old Dominion Oil Co. et al.,
and Melhuish & Co. The oil holdings and alleged holdings of these companies were
in the Texas and Oklahoma oil fields, although two of the companies had their
principal offices in Denver, Colo.
Orders to cease and desist were issued against all of said companies and such
individual defendants as were found using practices charged in the complaints.
HOSIERY MISBRANDING CASES.
The misrepresentation of product in the form of false or misleading brands or labels
is a frequent subject of consideration by the commission. It is interesting to note,
however, that in the hosiery business alone 20 orders to cease and desist were issued
during the past fiscal year against companies which were misbranding in such manner
as to convey the impression that hosiery composed of a mixture of cotton and wool,
or of cotton and silk, was pure wool or pure silk hosiery. Eight of said cases were
against manufacturers of cotton and wool mixtures which were so branded or labeled
as to create the impression that the product was pure wool; nine were against
manufacturers of cotton and silk mixtures which were so branded as to give the
impression of a pure silk product; and three were against distributors of such products
manufactured by others. Said orders were directed against the following concerns :
Sulloway Mills, Rockford Mitten & Hosiery Co., Nolde & Horst Co., George E.
Boyden & Son, Hub Hosiery Mills, King’s Palace, Kahn & Frank, Hancock Knitting
Mills, Fidelity Knitting Mills, Alamance Hosiery Mills, Esco Hosiery Co. (Inc.),
Pilling & Madeley, Rex Hosiery Co., Oscar Schmied, Thompson Bros., Moore &
Fisher, Daum-Rogers-Spitzer Co., Simmons, Hatch & Whitten Co., Brown-Durrell
CO., and Aristo Hosiery Co.
COURT CASES.
Application to the appropriate United States circuit court of appeals may be made
on behalf of the commission to secure enforcement of its orders, or on behalf of any
party against whom an order has been issued to secure a review of the order.
The following cases, in which petitions had been filed in the various circuit courts
of appeal to review orders of the commission, were decided during the fiscal year :
L. B. Silver Co. v. Federal Trade Commission, 289 Fed. 985.
Guarantee Veterinary Co. v. Federal Trade Commission, 285 Fed. 853.
The Mennen Co. v. Federal Trade Commission, 288 Fed. 774.
Southern Hardware Jobbers Assn. v. Federal Trade Commission, 290 Fed. 773.

36

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

Mishawaka Woolen Manufacturing Co. v. Federal Trade Commission, 283 Fed.
1022.
Maloney Oil & Mfg. Co. v. Federal Trade Commission, 282 Feb. 81.
Gulf Refining Co. v. Federal Trade Commission, 282 Fed. 81.
Standard Oil Co. of New Jersey v. Federal Trade Commission, 282 Fed. 81.
Juvenile Shoe Co. v. Federal Trade Commission, 289 Fed. 57.
In the following cases petitions have been filed in the Circuit court of appeals to
review orders of the commission. These petitions were pending and undecided at the
end of the fiscal year :
Armour & Co. v. Federal Trade Commission.
Swift & Co. v. Federal Trade Commission.
B. S. Pearsall Butter Co. v. Federal Trade Commission.
Chicago Portrait Co. v. Federal Trade Commission.
Applications within die year to the Supreme Court of the United States for writs of
certiorari to review the decrees of the circuit courts of appeals in cases wherein orders
of the commission had been reviewed were denied in two cases, those of the
Mishawaka Woolen Manufacturing Co. and the Aluminum Co. of America, on the
application of the parties proceeded against, and in one case, that of the Mennen Co.,
upon the application of die commission; and writs were granted in four other cases,
those of the Maloney Oil & Manufacturing Co., Gulf Refining Co., Standard Oil Co.
of New Jersey, and the Raymond Bros.-Clark Co. upon application of the commission.
In the following cases decisions were rendered by die Supreme Court of the United
States during the year: Curtis Publishing Co., 260 U. S. 568 ; Maloney Oil &
Manufacturing Co., 261 U. S. 463 ; the Gulf Refining Co., 261 U. S. 463 ; Sinclair
Refining Co., 261 U. S. 463 ; and Standard Oil Co. of New Jersey, 261 U. S. 463. The
Fruit Growers’ Express case was dismissed by stipulation (261 U.S. 629.)
The commission within the year disposed of 126 complaints issued by it and in 78
of these matters orders were issued directing the parties proceeded against to cease and
desist from the practices upon which the charges stated in the several complaints were
based, and in 48 of such matters the complaints were dismissed upon various grounds.
In only 2 of the cases disposed of by the commission within the year were petitions
filed by the parties proceeded against to have the circuit court of appeals review the
orders of the commission. There were 232 complaints pending and undetermined at
the end of the year, some having been submitted to the commission on final hearing
and others were in various stages of preparation for submission.
The opinion of the courts in the following cases decided within the year dealt with
questions of the jurisdiction of the commission

LEGAL DIVISION.

37

and there are interpreted therein various provisions of the acts of Congress which
describe the power and authority of the commission :
PETITION TO REVIEW ORDERS OF THE COMMISSION.
Southern Hardware Jobber’s Association et al. v. The Federal Trade Commission,
290 fed. 773 (C. C. A., Fifth Circuit), decided June 13, 1923.
The respondents in this case were the Southern Hardware Jobbers’ Association, its
officers and members. The association is composed of persons, partnerships, and
corporations engaged in the business of buying and selling of hardware in wholesale
quantities in certain Southern States. Membership in the association was restricted to
dealers whose sales to merchants were not less than 75 per cent of the gross sales or
not less than $250,000 per year and who employed not less than three traveling
salesmen, and had capital and surplus of not less than $75,000. The membership was
further restricted to dealers whose policy is to distribute goods through what they
termed “regular channels of trade”--that is, from manufacturer to jobber or wholesaler,
from jobber or wholesaler to retailer, and from retailer to consumer. It was deemed
contrary to the policy of the association for a manufacturer of hardware to sell direct
to the retailer on the same terms and conditions that it sells like goods in like quantity
to what they termed “legitimate jobber’s and wholesalers.” To compel or induce
manufactures of hardware to conform to its policy the association, through its officers
and members, announced that members of the association would not buy the products
of any manufacturer who sold goods to buying agencies organized by retail dealers in
hardware, upon the terms and at the prices made to so-called regular jobbers or
wholesalers, and as a result of such threats to boycott, the manufacturers were deterred
from selling to such agencies or to dealers who were not eligible to membership in the
association by the fear that they would lose the patronage of the members of the
association. An order to cease and desist from the practices charged in the complaint
was issued by the commission, whereupon respondents petitioned the court to vacate
and set aside the order of the commission. The petition was denied and the order of
the commission in all respects affirmed. The following is quoted from the opinion of
the court :
That evidence warranted the conclusion that what the petitioners did to thwart the success of
the cooperative association and the American Purchasing Co. went beyond each of the
petitioners asserting and seeking to enforce its or his individual views as to business policies or
methods, and amounted to cooperation between them in furtherance of a common purpose to
prevent hardware manufactures selling without price discrimination, to exclusively

38

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

retail dealers or organizations buying for such retailers on terms which effect a saving
to retailers of all or part of the profit which regular wholesalers or jobbers retain, with
the result of requiring such retailers to get hardware only through the self-styled
legitimate wholesalers or jobbers. The existence of a combination in restraint of trade
may be inferred from evidence of circumstances indicating concert of action to that
end. (American Column Co. v. United States, 257 U. S. 377.) The success of the
concerted action in which the petitioners participated meant the monopolizing of the
wholesale hardware trade in an extensive territory by members of the jobbers’
association and dealers conforming to the above mentioned policy, and also meant the
exclusion of hardware retailers in that territory from sources of supply available to
wholesalers unless they combined wholesaling and retailing in the particular way
which was approved by the jobbers’ association. We are of opinion that such concerted
action involved restraint of interstate trade, and is a proper subject of a Federal Trade
Commission order to cease and desist.
Juvenile Shoe Company (Inc.) v. Federal Trade Commission, 289 Fed. 57
( C. C. A., Ninth Circuit).
The Juvenile Shoe Co. (Inc.), a corporation organized under the laws of the State of
California, is engaged at Los Angeles, Calif., in the business of selling children’s shoes
at wholesale; it was organized and began business in May, 1919. Prior to that date
another corporation was organized under the laws of the State of Missouri with the
name of Juvenile Shoe Corporation of America, which senior corporation was engaged
in the business of manufacturing and selling children’s shoes, and at the time of the
organization of the Juvenile Shoe Co. (Inc.) had built up an extensive business in the
State of California and States adjacent thereto. The junior corporation made shoes
sold by it packed in cartons upon which were printed labels which resemble in size and
general appearance the registered trade-mark of the senior corporation. The
commission found that the corporate name of the junior corporation so closely
resembled that of the senior corporation and the labels of the junior corporation so
closely resembled the registered trade-mark of the senior corporation that the use of
such name and labels by the junior corporation had the capacity and tendency to cause
confusion in the trade and enabled dealers to sell the shoes of the junior corporation
as and for those of the senior corporation. An order was issued requiring the junior
corporation to cease and desist from the use of the word “Juvenile” as a part of its corporate name and to cease and desist from the use of tags and labels containing the
word “Juvenile” upon the cartons of shoes sold by it. Upon application to the court
to vacate the order of the commission, the order was in all respects affirmed. The
following is quoted from the opinion of the court:
Injunction will lie against a corporation that by any artifice deceives the public into believing
that its goods are those of another corporation having a

LEGAL DIVISION.

39

similar name, and this is true irrespective of any intent to mislead the public, and especially is
it true where the corporations are engaged in the same business (citing cases).

Guarantee Veterinary Co. et al. v. Federal Trade Commission, 285 Fed. 853
(C. C. A., Second Circuit).
The Guarantee Veterinary Co. is engaged in the business of selling, under the brand
name of “Sal-Tonik,” salt in the form of blocks for the use of livestock. In its
advertisements and advertising matter it claimed that the block salt sold by it contained
16 specified medicinal ingredients and had been adopted by the Quartermaster’s
Department of the United States. Analyses of samples of “Sal-Tonik” showed no
trace of 10 of the 16 ingredients claimed for it in the advertisements, and the evidence
disclosed, and the commission found, that the product had never been adopted for use
by the Quartermaster’s Department. An order to cease and desist from the use of
advertisements containing the claims as stated, was issued, whereupon application was
made to the court to vacate and set aside the order of the commission. One of the
grounds relied upon to support the application to vacate the order of the commission
was that for several months prior to the issuance of the complaint the company had
voluntarily ceased to make the claim in its advertisements that its product had been
adopted for use by the Quartermaster’s Department. The order of the commission was
in all respects sustained. The following is quoted from the opinion of the court :
In Sears, Roebuck & Co. v. Federal Trade Commission, 258 Fed. 307, 310, it was insisted as
here that the injunctional order was improvidently issued because before the complaint was filed
and hearing had, the petitioner had discontinued certain methods complained of. In that case,
unlike this, the petitioner had stated in its answer that it had no intention of resuming them. The
Circuit Court of Appeals for the Seventh Circuit, notwithstanding these facts, sustained the right
of the commission to make the injunctional order, and said: “No assurance is in sight that
petitioner, if it could shake respondent’s hand from its shoulder, would not continue its former
course.”
The testimony shows conclusively that the petitioners had been publishing advertising matter
containing false and misleading statements and had used an unfair method of commerce, and we
think the commission was quite within its right in issuing the order in the form it did. In such
cases the commission must exercise its discretion in view of all the circumstances.

The L. B. Silver Co. v. Federal Trade Commission., 289 Fed. 985 (C. C. A.,
Sixth Circuit), decided February 16, 1923.
The complaint in this case charged that the respondent, a corporation, made use of
false and misleading advertising. The respondent is a breeder of hogs which it
designates as “Ohio Improved Chester White Hogs” or “O. I. C.” The advertisement

40

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

upon which the charges stated in the complaint were based contained, among other
things, the claim that the O. I. C: hogs were a separate and distinct breed from the
Chester white hogs and were superior thereto; that the O. I. C. hogs were not
susceptible to cholera, pneumonia and other diseases and possessed a power to repel
disease in a degree not possessed by other breeds, and that it had secured greatly
reduced express rates on livestock shipped by it. An order directing respondent to
cease and desist from the use of advertisements containing the claims set out in the
complaint, was issued, whereupon respondent applied to the court to vacate and set
aside the commission’s order. The court affirmed that part of the order which required
respondent to cease and desist from the use of advertising matter in which the claims
were made that the hogs designated by respondent as O. I. C. hogs are not susceptible
to cholera and other diseases but possess a power to resist diseases to a degree not
possessed by hogs of other breeds, and that in the shipment of livestock respondent
had secured from express companies rates of transportation lower than the rates
granted to other shippers of livestock. That part of the order which required respondent
to cease and desist from the use of the advertisements representing that the O. I. C.
hogs are a breed separate and distinct from the Chester white was modified as shown
by the following quotations from the opinion of the court :
The claim that the O. I. C. hog is a separate and distinct breed from the Chester white is
neither palpably nor literally false, as were the brands and labels used by the Winsted Hosiery
Co. On the contrary, the truth of this claim finds equal support in the testimony of expert and
experienced breeders, as does the claim that it is false and unwarranted by the facts. Nor does
the claim tend to lessen competition or create monopoly in violation of the antitrust act. On the
contrary, it places the O. I. C. hog in direct competition with the Chester white, while if the O.
I. C. are required to be advertised and marketed as Chester whites the tendency of such
requirement would be to destroy competition and create a monopoly in the breeding and
marketing of Chester whites.
For the reasons above stated a majority of this court is of the opinion that the petitioner is not
guilty of unfair methods of competition by advertising the O. I. C. hogs as a separate and distinct
breed of hogs from the Chester white so long as it does not include in its advertisements the
claim found to be untrue by the Federal Trade Commission that the foundation stock of the O.
I. C. was crossed by a mammoth or large white English hog.

Mishawaka Woolen Manufacturing Co. v. Federal Trade Commission, 283 Fed.
1022 (C. C. A., Seventh Circuit) and 43 Sup. Ct. Rep. 247.
This case had been argued and submitted to the court prior to the decision of the
United States Supreme Court in the case of the Federal Trade Commission v. Beech
Nut Packing Co., 257 U. S. 441. The court concluded that the condemned practices
in this

LEGAL DIVISION.

41

case were substantially identical with those in the Beech Nut Packing Co. case and the
findings and order of the commission were approved upon the authority of that case.
Application was then made by the Mishawaka Co. to the Supreme Court of the United
States for a writ of certiorari. In the brief for the Federal Trade Commission it was
conceded that the order of the commission in the Mishawaka Co. case was broader
than was warranted by the opinion of the court in the Beech Nut Packing Co. case.
The writ was denied, the court assuming that the commission would modify its order
to conform to the opinion of the court in the Beech Nut Packing Co. case and without
prejudice to an application for that purpose by the Mishawaka Co. The commission
thereupon modified its order.
Federal Trade Commission v. Curtis Publishing Co., 43 Sup. Ct. Rep. 881.
The complaint issued by the commission in this case contained two courts, one
charging a violation of section 5 of the commission act and the other charging a
violation of section 3 of the Clayton Act. The respondent is engaged in publishing and
distributing to the public, throughout the several States of the United States, weekly
and monthly periodicals. The charges stated in the complaint were based upon the
practice of respondent of refusing to sell its publications to dealers who would not
agree to refrain from selling and distributing the publications of competitors of respondent, and the making of contracts with numerous wholesale dealers to distribute
its periodicals as agents and not to distribute the publications of competitors of
respondent without permission of respondent, although in many instances such dealers,
for a number of years, had beer distributing the periodicals of other publishers, which
periodicals competed with those of respondent, and upon entering into the contracts
in question with respondent such dealers were compelled to and did discontinue the
distribution of periodicals previously distributed by them, but which competed with
those of respondent. The order issued by the commission directed the respondent to
cease and desist from entering into and enforcing agreements with wholesale dealers,
which agreements prohibited the wholesale dealer from distributing the magazines and
newspapers of other publishers.
Upon petition for review to the circuit court of appeals the order of the commission
was vacated and set aside and the case was taken to the Supreme Court or the petition
of the commission for certiorari. It was held by the Supreme Court that the contracts
in question, whereby wholesale dealers were prohibited from selling or distributing the
publications of competitors of respondent, were

42

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

contracts of agency and not of sale on condition, so that they did not violate section
3 of the Clayton Act. It was further held that the employment of competent agents to
devote their entire time to the development of their principal’s business to the
exclusion of all others where nothing else appears is not unfair competition within the
provisions of section 5 of the commission act.
The Mennen Co., v. Federal Trade Commission, 288 Fed. 774 ( C. C. A., Second
Circuit) , decided March 13, 1923.
The complaint in this case contains two counts, one charging a violation of section
2 of the Clayton Act and the other charging violation of section 5 of the Federal Trade
Commission act, the charge in each count being based upon the same state of facts.
The Mennen Co. is engaged in the business of manufacturing and marketing toilet
products. In the course of selling its products it markets same according to a
classification adopted by it as “whole-salers” and “retailers.” It places in the class
whom it calls “wholesalers” certain distributors designated in the trade as “old line
wholesalers,” and in the class whom it calls “retailers” it places, among ordinary retail
dealer purchasers, certain distributors designated in the trade as “cooperative
wholesalers.” These “cooperative wholesalers” are corporations cooperative or mutual
in form of organization, whose capital stock is held by retailers engaged in selling to
the consuming public. Both the “old line wholesalers” and the “cooperative
wholesalers” purchase exclusively from manufacturers and importers and sell
exclusively to retail dealers, never selling to ultimate consumers. The Mennen Co.
charges “old line wholesalers” less than it charges “cooperative wholesalers” who
purchase like products in the same quantities. The commission found that there was
no difference in the service rendered as between “old line wholesalers” and
“cooperative wholesalers” and it also found that the discrimination in price eliminated
competition between the “old line wholesalers” and the “cooperative wholesalers.”
The commission concluded upon its findings of fact in the case that the discrimination
in price between the “old line wholesalers” and the “cooperative wholesalers” was in
violation of section 2 of the Clayton Act and section 5 of the Federal Trade
Commission act. ( The commission’s findings as to the facts, conclusion, and order to
cease and desist were issued on March 3, 1922.)
The circuit court of appeals, on a review of the case, reversed the order of the
commission, holding the discrimination in price not to be in violation of either statute.
The court based its decision under the Clayton Act on the interpretation of section 2
of said act, holding the section applicable only to the elimination of competition

LEGAL DIVISION.

43

between the seller and his immediate competitors and not between purchasers. The
court, in holding that the selling policy of the Mennen Co. did not constitute an unfair
method of competition, determined that the “cooperative wholesalers” were not
wholesalers but retailers, and applied the custom of manufactures of discriminating in
price between wholesalers and ordinary retailers selling to consumers. The Supreme
Court denied a writ of certiorari to review the case. (43 Sup. Ct. R. 705, June 11,
1923.)
It is now the law of the case that-(1) The Clayton Act does not render discrimination in price by a manufacturer
unlawful although its effect is to lessen competition between purchasers but only if the
effect be to lessen competition between a seller and his competitors, and
(2) Discrimination in price between purchasers ( in the absence of ability or
tendency to create a monopoly) is not in violation of section 5 of the Federal Trade
Commission act, if the discrimination be between wholesalers and retailers, retailers
including “cooperative” distributors engaged in functioning the same as “old line”
distributors and performing identical services.
Federal Trade Commission v. Sinclair Refining Co., Federal Trade Commission v.
Maloney Oil & Manufacturing Co., Federal Trade Commission v. Gulf Refining Co.,
Federal Trade Commission v. Standard Oil Co. of New Jersey (all reported in 261
U. S. 463).
The charges stated in the complaints issued by the commission in the above-entitled
cases, which were, argued and submitted together, were based upon the practice of
respondents of leasing to retail dealers for a nominal rental underground tanks and
pumps for use in distributing gasoline to the consuming public upon the condition that
the equipment so leased would be used by lessees only in the distribution of the
products of the respective lessors. In each of the complaints, in separate counts, the
practice was made the basis of charges of unfair methods of competition in commerce
in violation of section 5 of the commission act and a violation of section 3 of the
Clayton Act. The commission had issued an order to cease and desist from the
practice charged in the complaint in each of the cases, and upon petition for review to
the circuit court of appeals the orders of the commission were vacated and set aside,
and the cases having been brought to the Supreme Court by certiorari, the judgments
of the lower court were affirmed. The Supreme Court held that the practices did not
violate section 3 of the Clayton Act, where neither the leasing contract nor the
circumstances of the business restricted the lessees’ freedom to buy or deal in gasoline
sold by other manufacturers, although the parties had no need of and never used more

44

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

than one pump and tank. It was further held that the practice was not an unfair method
of competition within the provisions of section 5 of the commission act.
PETITIONS BY THE COMMISSION FOR WRITS OF MANDAMUS TO COMPEL
ACCESS TO RECORDS OF CORPORATIONS IN CONNECTION WITH
INVESTIGATIONS DIRECTED BY CONGRESS, DENIED.
During the fiscal year the commission applied, through the Attorney General of the
United States, to the courts in several instances for writs of mandamus to compel
access to books and records of corporations in connection with investigations directed
by Congress, and in each instance the petition was denied.
In the first of these cases, those against the American Tobacco Co. and the P.
Lorillard Co., the Senate had, by resolution, directed the commission to investigate
conditions in the domestic and export tobacco trade, with particular reference to the
market prices to producers of tobacco, the market prices for manufactured tobacco, and
the export prices of leaf. Subsequently complaint was made to the commission that
certain of the great tobacco manufacturing corporations were conspiring with
associations of tobacco jobbers to fix the prices at Which products of the
manufacturers should be sold by the jobbers. Inquiry proceeded in both matters to the
point where the facts gathered convinced the commission that an examination of the
correspondence files of the large tobacco manufacturers would disclose evidence
pertaining to both phases of the investigation; and an informal request for access to the
records having been denied by the companies, a formal demand was served upon them
for access to the correspondence files for a period of approximately one year and for
the privilege of examining the contracts existing between the companies and the
jobbers handling their products. The demand was denied, and the commission applied
to the District Court for the Southern District of New York, through the Attorney
General of the United States, for a writ of mandamus to compel compliance with the
commission, 5 demand. Subsequent to the service of the demand, but prior to the
filing of the petition with the district court, the commission issued a formal complaint
against the companies charging a conspiracy with jobbers to fix resale prices on
products manufactured by the companies. The issuance of the complaint was recited
in the petition for mandamus, and an examination of the files for the purpose of
securing evidence in support thereof was in part made the basis of the petition. The
petition was denied, the court holding: (a) That as the Senate resolution did not, in
terms, direct an inquiry into alleged violation of the antitrust laws it did not confer any
authority upon the commission; (b) that the power to conduct inqui-

LEGAL DIVISION.

45

ries conferred by section 6 (a) and (b) of the Trade Commission act authorizes the
gathering of such information only as may be voluntarily supplied; (c) that the right
to inspect documents to the extent demanded by the commission could be exercised
only where there was some specific complaint of a violation of law, together with a
showing of probable cause to believe that information would be found in the files, and
where the materiality to the charge of an alleged violation of law of the particular
correspondence and files demanded was made to appear; and (d) that to grant the
inspection prayed for would amount to an unreasonable search and seizure within the
prohibition of the fourth amendment to the Federal Constitution. (Federal Trade
Commission v. American Tobacco Co.; Federal Trade Commission v. P. Lorillard Co.,
283 Fed. 999.)
The second group of cases arose out of an investigation by the commission pursuant
to a Senate resolution (S. Res. 133, 67th Cong., 2d sess.) directing the commission to
investigate the grain business, with particular reference to export business, with a view
to ascertaining the causes of the decline in domestic prices of grain, whether the
decline in export prices was due to conditions in the export market, and the reason for
the spread of from 15 to 20 cents between the prices of cash wheat and of futures.
In connection with this investigation the commission, after informal requests had
been denied, made formal demand for access to the books and records of three
companies engaged in the export grain business in Baltimore, Md. The demand was
refused and a petition for mandamus to compel the inspection was filed. The court
denied the petition for the writ, holding (a) that the Senate resolution did not direct the
commission to inquire respecting any alleged violation of the antitrust act, and
therefore did not confer any authority upon the commission under section G (d) of the
Trade Commission act ; (b) that section G (a) and (b) of the Trade Commission act do
not confer any authority to inspect the books and documents of corporations generally
where there is no alleged violation of law but where a general investigation only is
being made into conditions existing in the industry; (c) that any attempts by the courts
to confer the authority to make such inspection in a general inquiry would be
unconstitutional. (Federal Trade Commission v. Baltimore Grain Co. ; Federal Trade
Commission v. H. C. Jones Co.; Federal Trade Commission v. Hammond, Snyder &
Co., 284 Fed. 886.)
The cases against both the tobacco and grain companies have been taken to the
Supreme Court by writ of error and are there pending. They will doubtless be reached
for argument during the October term, 1923, of that court.
67501--23----4

46

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

SUITS TO ENJOIN THE COMMISSION FROM PROCURING INFORMATION IN
CONNECTION WITH INQUIRIES DIRECTED BY CONGRESS OR
INSTITUTED UPON THE
COMMISSION’S OWN MOTION.
Two suits instituted during the last fiscal year to enjoin the commission from in any
manner requiring corporations to make reports respecting the production, prices, and
cost of producing necessaries of life and of commerce, or from proceeding, by
mandamus or otherwise, as directed by the Trade Commission act, to compel the
making of such reports, still remain undecided by the Supreme Court. These suits grew
out of an investigation which was instituted by the commission on its own motion, but
after suggestions and conference with a committee of Congress, the work being
specially appropriated for by Congress in the deficiency appropriation act of
November 4, 1919. Pursuant to resolution duly adopted, the commission sent
questionnaires to practically all corporations engaged in the manufacture and in the
sale in interstate commerce of finished and semifinished steel products, requiring them
to make monthly reports showing the quantities of products manufactured, plant
capacity; orders booked during the month, the cost of manufacturing, the prices at
which sold in domestic and foreign commerce, and general income statement and
balance sheet. The declared purpose of the inquiry was to publish the information
acquired in totals so as to show existing conditions in the production and sale of steel
products. Certain of the corporations declined to make the reports and joined in a suit
in equity to restrain the commission from proceeding in any manner to compel its
production or to impose any penalties for failure to produce the information. The
Supreme Court of the District of Columbia, in which the suit was instituted, issued a
permanent injunction enjoining the commission as prayed the ground of the decision
being that the information sought was not information respecting interstate commerce,
nor information with respect to matters so directly affecting such commerce that it
could be required under the commerce clause of the Constitution. The case was
appealed by the commission to the Court of Appeals of the District of Columbia,
which affirmed the decree of the lower court. (Claire Furnace Co. et al. v. Federal
Trade Commission, 285 Fed. 936.) This proceeding was sent to the Supreme Court
of the United States March 21, 1923, where it is still pending.
At about the date when the steel companies were requested to file monthly reports,
substantially similar questionnaires Were sent to practically all corporations engaged
in the production and sale in interstate commerce of bituminous coal. One of these
companies declined to make the reports and applied to the Supreme Court of the

LEGAL DIVISION.

47

District of Columbia for an injunction. A permanent injunction practically identical
with that issued in the steel cases was awarded. The case was taken by the
commission by appeal to the Court of Appeals of the District of Columbia, and is there
pending.
SUMMARY OF PROCEEDINGS UNDER SECTION 5 OF THE COMMISSION
ACT.
The first formal complaint was issued by the commission on February 18, 1913; it
charged unfair methods of corn petition in violation of section 5 of the Federal Trade
Commission act; since that date violations of this act have been charged in 1,017
complaints; of these proceedings 548 have resulted in the issuance of orders to cease
and desist from the use of the various methods of competition charged in the
complaints. Some of these complaints also included an additional count charging the
violation of some section of the Clayton Act; usually each count was based on the
same state of facts.
SUMMARY OF PROCEEDINGS UNDER THE CLAYTON ACT.
Forty-two complaints issued by the commission have charged violations of section
2 of the Clayton Act and in seven of these proceedings orders to cease and desist from
the violation of jaw charged in the respective complaints have been entered. Ninetysix complaints have been issued by the Commission charging violation of Section 3
of the Clayton Act, and in 38 of these proceedings orders were issued to cease and
desist from the violation of law charged in these respective complaints Twenty-nine
complaints have charged violations of section 7 of the Clayton Act and three
complaints have charged violation of section 8 of said act. In six proceedings under
section 7 of the Clayton Act orders have been issued requiring respondent to divest
itself of the stock held as charged in the complaint.
As hereinbefore noted, some of the complaints which charged Violation of the
Clayton Act also included a count charging the use of unfair methods of competition
in interstate commerce in violation of section 5 of the commission act. In all there have
been issued by the commission up to the end of the fiscal year 1,043 complaints; of
these, 1,017 have been grounded on section 5 of the commission act, and 140 of such
complaints contained a count based on section 5 of the commission act, together with
a count under one of the sections of the Clayton Act.
At the close of the fiscal year there were pending in the various circuit courts of
appeals four petitions to review the orders made by the commission, which orders
directed the party proceeded against to cease and desist from the use of certain alleged
unfair methods of

48

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

competition in violation of section 5 of the commission act or violation of sections 2
and 3 of the Clayton Act. In one of these cases the complaint contained a count based
upon the said section 5, and also a count based on section 7 of the Clayton Act; in two
of these cases the complaints were based upon section 7 of the Clayton Act, in one
case upon section 3 of the Clayton Act, and in one case upon section 5 of the Federal
Trade Commission act. One of these cases had been argued and submitted to the court
prior to the close of the year, and the other three cases were awaiting argument.
PROCEEDINGS PENDING AND DISPOSED OF.
A review of the proceedings disposed of by the commission within the fiscal year
and the proceedings pending before the commission at the close of the year will be
found in Exhibits 16 and 17.
CHIEF EXAMINER.
All the former proceedings begun by the commission and all of the reports made to
the Congress involving legal questions have as their basis investigations made by the
investigators of the legal investigating division. Broadly stated, it is the function of
this division to ascertain the facts and to make reports to the commission upon the
facts and the law applicable thereto in all matters involving alleged violations of law;
in other words, the investigations made by this division are the foundation of all the
commission’s corrective work.
The force consists of a chief examiner, 2 assistants, 3 attorneys in charge of branch
offices, and about 40 investigators, most of whom have a legal education. There are
besides 7 trial examiners attached to the division and 11 clerks and stenographers.
Besides directing the work generally, the chief examiner confers personally with
parties to proceedings and conducts correspondence with applicants and others. He
also directs the assignments of formal cases to the trial examiners. The attorneys in
charge of branch offices direct the work in the territory attached to their offices.
It is of interest to set down here the charges on which applications for complaints
received in the past fiscal year were based :
Adulteration.
Appropriation of competitor’s advertising values.
Blacklisting.
Bogus Independents.
Commercial bribery.
Combination or conspiracy in restraint
of trade.

Cumulative deferred rebates.
Destruction of mail-order catalogs.
Disparagement of competitor’s business.
Enticement of employees.
Export trade, unfair practices in.
False and misleading advertising.
Fraudulent use of trade-mark.

49

LEGAL DIVISION.
Full line forcing.
Interference with competitor’s source
of supply.
Manipulation of market.
Misbranding.
Misrepresentation.
Passing off of name and goods.
Price cutting.
Price fixing.
Sale of stock by misrepresentation
(“blue sky” cases).
Resale price maintenance.

Section 2, Clayton Act.
Section 3, Clayton Act.
Section 7, Clayton Act.
Selling below cost to put applicant out
of business.
Selling old for new.
Slack-filled packages.
Subsidizing salesmen.
Threats and intimidations.
Use of false testimonials.
Violation of commission’s order.
Wrongful use of corporate name.

The largest number of applications had reference to false and misleading advertising
and there was an increase of 23 per cent over the previous year; the next largest item
was resale price maintenance, with an increase of 32 per cent; then misbranding, which
increased 140 per cent; misrepresentation, with a small increase; interference with
competitor’s source of supply, and disparagement of competitor’s business were about
the same. In connection with applications. involving the following alleged unfair
practices, received in 1921-22, none were docketed in 1922-23:
Fraudulently securing patent.
Causing breach of competitor’s contracts.
Dumping.
Falsely marking watch cases.
Giving free goods.
Guarantee against decline in prices.

Interference with competitor’s customers.
Obtaining audit of competitor’s books
under false pretenses.
Unfairly obtaining list of competitor’s
customers.

These facts will illustrate some of the tendencies in connection with applications
received by the commission.
The following table gives a comprehensive view of the work received and completed
by the division in the past four years :
1919-20
Preliminary inquiries at
headquarters
1 34 1 600 1 600
Investigations:
Docketed applications
203 724 527
Undocketed applications
39 155 167
Supplementary
applications
15 127 130
Formal cases
(2) (2)
(2)
Trial assignments
(2) (2)
(2)
Trial examiner’s
cases
(2) (2)
(2)
Total
291 1,606 1,424

1920-21

1921-22

1922-23

34 832 838

28 877 881

24 871 867

400 401 603

258 361 388

231 436 456 211

27 233 220

48 412 275

185 451 499 137

12
86 77
7 105 98
(2) (2) (2)

21 190 176
14 115 110
(2) (2) (2)

(2) (2) (2)
480 1,717 1,836

35 206 213
19 72 83
10 48 32

28

28
8
28

34 61 60
35 117 89 63
403 2,016 1,890 539 2,201 2,239 501

1 Estimated.

2

No record.

50

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

From the foregoing it appears that there has been a steady increase in the matters
taken up for investigation: In 1920-21, 7 per cent; in 1921-22, 17 per cent; and in
1922-23, 9 per cent over each preceding year. The matters disposed of show a similar
increase, being in 1920-21, 28 per cent; in 1921-22, 3 per cent; and in 1922-23, 18 per
cent. The average annual increases have been: Matters received, 12 1/3 per cent, and
those disposed of 19 per cent. This small gain in work completed as compared with the
increase in investigations undertaken is reflected in a moderate reduction in 1922-23
of the annual “hang over,” or total of cases left uncompleted at the close of each fiscal
year. Prior to that year this item, as the table shows, had been increasing at a marked
rate. On July 1, 1922, the commission had at headquarters 231 cases which had been
on hand an average of 6 months and 13 days, and at branches 123 cases having an
average age of 4 months and 8 days. These were the older matters, and the remaining
185 assignments were being taken care of promptly. A reduction was made during the
year not only in the number of matters left on hand but also, to some extent, in their
average age.
It is important that all investigations undertaken should be begun promptly and
prosecuted with speed. To delay is oftentimes to deny justice in the class of cases with
which the commission deals. Many complaints about delays in this investigating work
have been received. The chief reasons for this situation are, first, the normal growth
in the work already outlined, and, second, the inadequacy of the force of investigators
which the commission has been able to employ. A force of between 40 and 50
examiners, however well trained and equipped, to make prompt and thorough
investigation of all the cases of alleged unfair competition in the United States, besides
considerable work under the Clayton Act and on special investigations by direction of
the Congress, has proved inadequate.
The commission has used various means to meet this situation. It has increased the
legal investigating force as far as its funds would permit, and urged the examiners to
use all possible speed compatible with thoroughness; it has made important changes
in its procedure, with a view to expediting the disposition of the cases; and by increased care in the examination of preliminary inquiries the proportion of these taken
up for investigation has been decreased. This has been made possible by the fact that,
as the established precedents grow in number and the field which they cover widens,
it becomes possible to dispose of more applications with less investigation and
consideration. Several court decisions have also been helpful in this respect.

51

LEGAL DIVISION.

The steady growth in the number of preliminary inquiries disposed of in this way is
shown by the following table:
1920-21

Preliminary inquiries docketed
Filed without docketing

1921-22

1922-23

Per cent.
54
46

Per cent.
39
61

Per cent.
30
70

In the report for last year attention was directed to the general investigation made by
this division of conditions in various indus tries, where questions as to violations of
law are involved. Consider able the during the past year was spent on work of this
character and although not appreciably increasing the total number of assignments, is
of importance. The investigations of this nature on which reports have been made are
as follows :
Lumber.--As a result of the investigation of conditions in the lumber industry, which
was begun in 1919 at the request of the Attorney General, a report was made to
Congress and to the Attorney General on January 24, 1923, summarizing the activities
of the trade associations composed of the manufacturers of posts and poles. These
associations have their headquarters in Spokane, Wash., and are as follows : Western
Red Cedar Association, Lifetime Post Association, and the Western Red Cedarmen’s
Information Bureau. A similar report, on the activities of the Northern Hemlock and
Hardwood Manufacturers Association was also made to Congress and the Attorney
General on May 7, 1923.
Fertilizer.--Under a resolution of the Senate, an inquiry was made as to whether the
production or sale of fertilizer is controlled by an unlawful combination and whether
dealers or manufacturers of the product had conspired to fix prices. An extensive
investigation was made which showed that in 1921, the seven largest companies in the
industry produced 65 per cent of the total fertilizer used in the United States.
Competition in the sale of fertilizers appeared keen in both 1921 and 1922, and the
large manufacturers were unable to maintain their hist prices. Report was made to the
Senate on March 3,1923.
Calcium arsenate.--Pursuant to a resolution adopted by the Senate on January 23,
1923, an inquiry was made as to the alleged violation of the antitrust acts by the
manufacturers and dealers in calcium arsenate. A report in which was incorporated the
facts disclosed by the investigation as made on March 3, 1923. The report shows that
in October, 1922, prices ranged from 10 to 12 cents per pound and in February, 1923,
had increased to a range of 18 to 19 cents per pound. It was concluded that the main
reasons for the marked increase in

52

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

price were the increased demand for the product for use in combating the cotton boll
weevil and the inadequacy of the available supply of white arsenic, the chief ingredient
of calcium arsenate.
In the work of the legal investigating division not only has the lapse of the since the
commission was organized given scope for the improvement of the relations between
those engaged in investigative work and the parties to such proceedings, but it has also
brought a larger measure of understanding of the problems involved. The decisions of
the courts as well have construed the laws relating to unfair competitions, so that
greater directness and certainty are possible.
TRADE PRACTICE SUBMITTALS.
Gold-mounted knives.--A trade practice submittal on the branding of gold-mounted
knives was held before Commissioner Victor Murdock, in New York City, May 2,
1922. Those participating in the meeting were:
L. A. Moreau, Federal Trade Commission attorney.
Fred G. Backus, secretary National Jewelers’ Board of Trade, New York City.
Charles B. Byron, president Chas. B. Byron Co., New York City.
Edward T. Todd, factory manager Edward Todd & Co., New York City.
Fred A. Pooley, manager export department J. R Wood & Sons, New York City.
Irving W. Broder, secretary Tomchin & Levinson (Inc.), New York City.
Melville Miller, head of knife department Goldsmith, Stern & Co., New York City.
Mortimer G. Foster, partner Goldsmith, Stern & Co., New York City.
A. L. Woodland, treasurer Kent & Woodland Co., New York City.
Harry C. Larter, partner Larter & Sons, New York City.
J. F. Umpleby, bookkeeper Carter, Gough & Co., New York City.
Abraham Shiman, president Shiman, Miller Manufacturing Co., New York City.
Thomas F. Morgan, supervising inspector mayor’s bureau of weights and measures, New
York City.
Julius C. Rauch, president Kollmar Rauch & Co., Irvington, N. J.
F. J. Krementz, president Frank Krementz Co., Newark, N. J.
John D. Battin, president Battin & Co., Newark, N. J.
J. Koch, president Long & Koch Co. (Inc.), Newark, N. J.
Henry C. Ward, vice president Durand & Co., Newark, N. J.
A. G. Van Houten, representing C. Sydney Smith Co., Providence, R I.
C. J. Roche, vice president-treasurer the Bassett Jewelry Co., Providence, R. I.
R E. Walsh, sales manager Ostby & Barton Co., Providence, R. I.
W. N. Dutemple, representative Jewelry & Cutlery Novelty Co., Attleboro, Mass.
Edward I. McConnell, New York representative L. E. Freeman Co., Attleboro, Mass.
George J. Bessinger, owner Geo. J. Bessinger & Co.
Frisch Brothers (sold to Bessinger & Co.).
Edward Todd, president Edward Todd & Co. (Inc.), New York City.
G. H. Niemeyer, president National Jewelers’ Board of Trade, New York City.

LEGAL DIVISION.

53

Morris L. Ernst, counsel to National Jewelers’ Board of Trade, New York City.
W. A. Biglin, Investigator National Jewelers’ Board of Trade, New York City.
T. Edgar Wilson, editor the Jewelers’ Circular, New York City.

As a result of the meeting the Trade Commission has issued the following statement:
At the instance of manufacturers of gold-mounted knives, representing a major
proportion of those engaged in the industry, an invitation was issued to all
manufacturers in this industry to attend a meeting in New York City, May 9, 1922, at
which it was proposed to submit to the Federal Trade Commission certain trade
practices with respect to the marking of knives mounted in gold. The meeting was
attended by 24 representatives of the industry. Commissioner Murdock was present,
explained the functions of the Federal Trade Commission, and received for transmittal
to the commission the following resolution as a submittal of trade practices regarded
as desirable by the industry:
l. In our opinion a gold-mounted knife consists of the following : (a) A gold sheet or shell;
(b) The knife movement or skeleton consisting of scales, rivets, spring, and blades.
2. All parts, including the bale and the rivets, other than the gold shell or sheet, appearing or
purporting to be gold, must be of the karat fineness marked on the gold.
3. A knife stamped with a mark indicating the karat fineness, such as 10K, 14K, or 18K, is
improperly marked if, between the skeleton and the gold sheet, any metal composition is
inserted by any method whatsoever, unless that inserted part is of the same karat fineness, to wit,
10K, 14K, or 18K.
4. We agree that all parts which appear to be gold must be of the karat fineness indicated.
Furthermore we believe that the consumer has the right to assume that a base metal sheet or
other composition inserted under a gold sheet is gold of the karat mark on the gold if the gold
sheet covers the edges of the inserted part.
5. Our decision is to the same effect even if the base metal sheet is affixed to the skeleton or
movement instead of to the gold. A knife made of a gold sheet and a stiffening of base metal
may well be a legitimate article of trade, but the mark indicating the karat fineness is improper
unless the fineness of the gold and the stifling or inserted part is up to the karat indicated.

The resolution is intended, first, to define a gold-mounted knife, and, second, to
condemn any method in the construction of a gold-mounted knife by which it may be
made to appear that more gold of an indicated karat fineness has been used than has
been employed in fact.
In the first instance--that is, in the matter of definition--the commission has
jurisdiction over brands or marks which may prove, after challenge, to be deceptive
and unlawful. In the second instance--that is, in the matter of construction--if there is
to be read into the resolutions an endeavor by the industry to standardize the product
by methods of manufacture it should be said the commis-

54

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

sion is without jurisdiction to apply its law against departure from such
standardization, in the absence of deceptive, misleading, and unlawful markings:
Each of the five paragraphs of which this resolution is comprised was considered
separately, was subject to amendment, was debated and, after amendment in some
instances, was adopted by a viva voce vote, confirmed by telling, the voting showing
little division among those participating.
The pertinent facts developed in debate, which resulted in the adoption of the
resolution, may be summarized as follows :
Paragraph 1 : The definition in this paragraph may be taken as excluding, in the view
of the industry, the use of the designation “gold knife” to describe knives that have a
gold sheet or shell over the knife scales and as excluding, in view of the industry, the
use of the designation “gold-mounted knife” to describe knives made with a shell of
gold-filled stock or with an electroplated shell.
Paragraph 2. It is proposed by this expression to convey the opinion of the industry
that the use of a solder in attaching a sheet or shell to the knife scales, unless of the
karat fineness marked on the gold, is a means of deception, for the reason that a
manufacturer by this practice can make it appear that a greater amount of gold of the
quality indicated in the karat mark has been employed than has been used in fact.
Paragraph 3 : The purpose of this expression of the industry is to condemn as
deceptive the reenforcement of the sheet of gold of indicated fineness by attaching a
metal sheet or composition not of the same karat fineness inside the gold sheet. The
reason given by the industry for this condemnation is that the amount of gold of indicated fineness is thus made to appear to be greater than the amount that has actually
been used.
Paragraph 4 : This expression is directed against the practice of inserting between
the sheet or shell of gold of indicated fineness and the scales of the knife any base
metal or other composition, the edge of which is concealed. This practice is considered
deceptive by the industry, for the reason that the quality of gold indicated is made to
appear to be present in greater quantity than it is in fact.
Paragraph 5 : By this expression the industry condemns as unfair, because of
deception, the use of a stiffening base metal attached to the skeleton of the knife, if the
base metal is covered with a sheet of gold definitely indicated to be of a certain karat
fineness.
It will be seen that the principal affirmations of the industry are based on the belief
that certain methods of construction in gold-mounted knives deceive the public into
believing that a greater amount of gold of the fineness indicated has been used by
manufacturers employing those methods than is present in the article. It

LEGAL DIVISION.

55

appears that some 90 per cent of the output of gold-mounted knives carry either on the
bale or on the side of the knife a mark indicating the quality of gold used, as 10K, 14K,
18K.
While the views of the industry, as submitted, are valuable and informative, and as
such will no doubt prove useful in event of consideration of a concrete case by the
commission, the commission does not believe them conclusive of the questions raised
in all particulars.
Considering the first paragraph of the resolution, it appears that the definition of the
industry is comprehensive. Obviously a knife and its skeleton covered with a sheet of
gold is a gold-mounted, not a gold, knife. It should also be remembered that a knife
covered with rolled gold or electroplate gold can not, under the statute, carry the mark
of karat fineness without the brand which identifies it as rolled gold or electroplate
gold.
The question raised in the second paragraph of the resolution which has to do with
the use of a solder presents a matter of some difficulty. The national stamping act
limits the manufacturer in the use of solder in articles bearing the karat-fineness mark.
The tolerance granted in the act is given at one-half of one karat of the indicated gold
fineness, with an exception. This exception is in the case of watch cases and flat ware
where the tolerance granted is three one-thousandths parts of the fineness indicated.
Provision is made that in case of test for fineness a portion which does not contain any
solder or alloy of inferior fineness shall be used and, further, that the actual fineness
of the entire quantity of gold in any article, including all solder and alloy of inferior
fineness, shall not be less by more than one karat of the fineness indicated. The second
paragraph of the resolution as it reads disapproves the use of solder of a different karat
fineness from that marked on the gold. The resolution stands as it was adopted.
However, it appeared by vote that many in the industry are adverse to the use of any
solder in a gold-mounted knife. It also appeared that a portion of the industry approves
of the use of solder in attaching a sheet or shell to the knife skeleton if the gold
fineness of the shell and solder together is not less than the mark indicated. The
commission may well wait for further light upon this particular matter in connection
with the terms and tolerances of the national stamping act, applicable herein. A further
difficulty bearing upon alleged deception in this connection is the construction of a
knife skeleton by a manufacturer who, by varying the thickness of the flat scales or by
the use of convex scales, may make it possible for the completed knife, after the gold
shell or sheet has been superimposed, to appear to carry more gold of the karat
fineness indicated than has been used in fact. In view of the difficulties cited,
judgment, so far as an expression on the second paragraph of the resolution is
concerned, may well be reserved until the questions arise in an appli-

56

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

cation for the issuance of a complaint under the regular procedure of the commission.
In examining the third paragraph of the resolution which condemns as deceptive the
insertion of inferior composition between the shell and the knife skeleton, it is well to
consider whether or not a manufacturer who reenforces the gold shell by soldering a
strip of base metal inside the shell is not violating the national stamping act if he
indicates the karat fineness of the shell and does not otherwise mark the article, as the
act provides that certain forms of gold and a base metal combined shall be specially
marked if karat fineness is indicated. If such a practice should prove to be unlawful,
it would be, of course, unfair. Under this paragraph, as under paragraph 2, the question
again arises as to the accomplishment of the same appearance, alleged here to be
deceptive, by the use of a knife skeleton with convex scales or scales of a thickness
which may make it appear that more gold of the karat fineness indicated has been used
than has been used in fact. As in that instance, so in these, judgment should be
reserved on the matter until further testimony is adduced in a proceeding in a concrete
case before the commission.
Paragraph 4, which is an expression against the use as deceptive of a concealed
inferior material under a gold sheet of indicated fineness, such inferior material not
being attached to the gold sheet, should be considered in the light of the possibility of
inserting a perforated or meshed strip of gold fineness equal to that indicated for the
shell but reduced in weight. The element of alleged deception, as to the thickness of
the gold, would still be present. Here also the question of accomplishing the same
appearance by the shape and thickness of the knife scales arises, and judgment should
be reserved on the expression in the paragraph.
Paragraph 5, advancing an expression of the industry that deception where the karat
fineness is indicated follows where a base metal sheet is affixed to the skeleton, is
subject to the same reservations as were applied to the previous paragraphs. As
before, the knife scales, convex or of a thickness, would seem to accomplish the same
deceptive appearance as to the amount of indicated gold which the industry condemns.
The questions which have been here advanced may best be resolved when they arise
in connection with concrete cases before the commission, each case to be judged on
the law and the facts as they are adduced in the particular case. The trade practice
submittal herewith submitted is informative. It is not conclusive.
That is to say, the commission does not accept this declaration as conclusive upon
it, and may, in the event that complaints are made to it by members of the industry and
a concrete case comes before it, receive the declarations of the industry as herein set
forth in weigh-

LEGAL DIVISION.

57

ing the question of whether an unfair method of competition has been practiced or
upon new evidence or further information add to or take away from the definitions
herein set forth by the industry.
Completeness of disclosure in representation labels, and markings in any
commodity, so far as it is practicable, seems desirable to the industry and the public.
Unless the nature of the article clearly forbids, complete disclosure in articles made
in part or in whole of gold would appear to involve not only a revelation of the karat
fineness of the gold employed but the pennyweight as well, quantity as well as quality
being designated, while gold-filled and gold-rolled stock to meet the requirements of
complete disclosure would be marked as such with the karat fineness added and the
proportion of gold to base metal indicated, due tolerance for mechanical and
decorative purposes being granted. In the same way, when base metal upon which gold
has been deposited by electrolysis or by fire gilding is used, the fact could be
indicated.
January 22, 1923.
Gold-filled and gold-plated watch cases.--At the request of a number of
manufacturers of gold-filled and gold-plated watch cases, representing approximately
75 per cent of the industry, a trade-practice submittal was held with the Federal Trade
Commission on January 18, 1923, for the purpose of giving those engaged in the
industry an opportunity to express their views in relation to the alleged unfairness of
prevailing methods of branding their products, with long-time guaranties and
otherwise, and to practicable methods of correcting any evils found to exist. The
gathering was attended by all the principal manufacturers and was fairly representative
of the industry. Commissioner Murdock conducted the submittal on behalf of the
commission.
The purpose of the meeting and the powers of the commission were duly explained,
and the representatives of the industry then organized by electing a chairman and
secretary and the discussion proceeded. The facts which were developed are
summarized in the following preamble and resolutions, which were unanimously
adopted and subscribed to by all present :
Whereas, There now exists, and for years past has existed, among manufacturers and dealers
in gold-filled and gold-plated watch cases throughout the United States the practice of
guaranteeing such gold-filled and gold-plated watch cases to last or wear for a specified length
of time, in most cases such guaranteeing being for a period of 20 and 25 years; and
Whereas, This practice has become so widespread that any manufacturer or maker desiring
to compete in the markets of the United States has been and is compelled as a matter of selfprotection to adopt and continue the practice; and
Whereas, The public has been defrauded and deceived because unscrupulous manufacturers
and dealers have placed upon watch cases of an inferior quality

58

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

or watch cases made of brass with a thin plating of gold, long-time guaranties, and it being
impossible for anyone to tell without destroying the ease the amount of gold contained in the
case, and it clearly appearing that said practice is not only detrimental to the purchasing public
but has resulted in unfair methods of competition in interstate commerce among manufacturers
and dealers;
Now, therefore, We, the undersigned manufacturers of not less than 75 per cent of all of the
gold-filled or gold-plated watch cases manufactured in the United States, in open meeting
condemn the practice of guaranteeing gold-filled or gold-plated watch cases to last or wear for
specified lengths of time, and we hereby petition the Federal Trade Commission to bring its
action against any person, firm, corporation, or association, being a manufacturer of or
wholesaler or retail dealer in watch cases, made in whole or in part of an inferior metal, having
deposited or plated thereon or brazed or otherwise affixed thereto, platings, coverings, or sheets
composed of gold or of an alloy thereof, and which watch cases are known in the market as
gold-filled, rolled gold plate, gold-plate, gold electro plate, or by ally similar designation, or
against any officer, manager, director, or agent of such firm, corporation, or association who
imports into or causes to be imported into the United States for the purpose of selling or
disposing of the same or deposits or causes to be deposited in the United States mails for
transportation thereby or to deliver or cause to be delivered to any common carrier for
transportation from one State, Territory, or possession of the United States or the District of
Columbia in any other State, Territory, or possession of the United States or to said District, In
interstate commerce or to transport or cause to be transported from one State, Territory, or
possession or the United States or to said District in interstate commerce except any such cases
wherein the destination marked upon the package containing same is some foreign country not
a possession of or a dependency of the United States, outside of the United States any watch
case manufactured after the date when the order takes effect and have stamped, printed,
engraved, or imprinted thereon or therein, or upon any tag, card, or label attached or applied
thereto, or inclosed therewith or upon any box, package, cover, or wrapper to which such watch
case is incased or inclosed, the word “guaranteed” or the word “warranted,” with or without
other words or marks indicating the time or duration of wear, or any mark or marks designed or
intended to indicate the length of time that such watch-cases or the plate, covering, or sheet of
gold or of its alloy in or on such watch case will last or wear, or any word or words, mark or
marks, indicating or importing or designed or intended to import time or duration; that every
manufacturer and dealer as hereinbefore described shall mark conspicuously and indelibly on
the inner surface of one of the lids or cap of any such watch-case the registered name or properly
registered trade-mark of the maker or manufacturer thereof, and that when any such watch cases
are stamped branded, engraved, or imprinted with the words “gold filled,” or words indicating
that such watch cases are gold filled, such words shall be accompanied, in chose proximity
thereto, by some words or marks usually employed to indicate the fineness of gold, which words
or marks shall be legibly stamped, branded, engraved, or imprinted upon such watch case, in
characters of the same size as those employed in said words “gold filled”; and the actual fineness
of each arid every portion of the sheets of gold or of its alloy which are soldered, brazed, or
otherwise affixed to the inferior metal in such watch cases shall not be less by more than three
one-thousandths part than the fineness indicated by the words or marks of fineness so stamped,
branded, engraved, or imprinted upon such watch cases; provided further, that when any such
watch cases are

LEGAL DIVISION.

59

stamped, branded, engraved, or imprinted with the words “gold-lined,” or words indicating that
such watch cases are gold-filed, they shall be constructed in accordance with the following
specifications : the backs and caps of such cases shall be made of two sheets of gold or of any
alloy thereof, soldered, brazed, or otherwise affixed respectively to the inner and outer surfaces
of the sheet of inferior metal; the center, bezel, pendant crown, and bow shall be made of one
sheet of gold or of an alloy thereof, soldered, brazed, or otherwise affixed to the outer surface
of the sheet of inferior metal; the sheet of gold or of its alloy affixed to the outer surface of the
backs, center, open-face, bezel pendant, crown, and bow shall not be less than three onethousandths of one inch In thickness: the sheets of gold or of its alloy affixed to the inner
surfaces of the backs, to the inner and outer surfaces of the caps, and to the outer surface of the
hunting bezel, shall not be less than one one-thousandth of an inch in thickness. Whenever the
thickness of the sheets of gold or of its alloy is stamped, branded, engraved, or imprinted in such
watch cases, such mark shall only refer to the thickness of the sheets of gold or of its alloy so
affixed to the outer surfaces of the backs, centers, open-face, bezel, pendant, crown, and bow,
and in no instance shall the thickness of the gold or of its alloy in any of the parts so mentioned
be less than the thickness indicated by the mark stamped, branded, engraved, or imprinted in
such case. The mark indicating such thickness shall be expressed in decimals indicating
thousandths of an inch. Provided, that in any test for the ascertainment of the thickness of such
sheets of gold or of an alloy thereof, the part or parts to be measured shall be those where no
gold has been added to or deducted from the thickness by any process designed or intended for
the purpose of decoration or ornamentation.
DUEBER-HAMPDEN WATCH Co.,
A. M DUEBER, President.
EMERSON WATCH CASE Co. (INC.),
By SAUL SMIGROD, President.
JOSEPH FAHYS Co.,
GEORGE E. FAHYS, President.
THE KEYSTONE WATCH CASE Co.,
By JOHN G. MUELLER, Secretary.
JOHN W. SHERWOOD,
President Solidarity Watch Case Co.
WADSWORTH WATCH CASE Co.,
H. M. STEGEMAN, Treasurer.

After consideration of the whole matter, it is concluded :
I. That the Federal Trade Commission has reason to believe from the facts submitted
to it by the manufacturers, subject to further inquiry in proceedings, as provided by
section 5 of the Federal Trade Commission act :
(a) That the practice of placing the guaranties on gold-filled and gold-plated
watches, for distribution and sale in interstate commerce, has led and leads to
deception of the purchasing public.
(b) That the marking and/or calling of watch cases for distribution and sale in
interstate commerce, as gold-filled, leads to deception of the purchasing public, in the
absence of the following elements as a minimum :

60

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

(l) That they are marked in close proximity to the words “gold-filled” and as plainly
as the words “gold-filled,” with words or marks indicating the fineness of the gold
which shall not be less by more than three one-thousandths part than the fineness
indicated.
(2) That the backs and caps are made of two sheets of gold or an alloy thereof,
affixed to the surfaces of a sheet of other metal.
(3) The center, bezel, pendant, crown, and bow are made of one sheet of gold or an
alloy thereof, applied to the outer surface of a sheet of other metal.
II. That the commission received the following as the opinion of the trade on the
subjects covered, and will take due notice thereof when proper to do so in any
proceeding pending before it :
(a) That manufacturers and dealers should be required to place the maker’s trademark “conspicuously and indelibly” on the inner surface of the lid or cap.
(b) The sheet of gold or of its alloy affixed to the outer surface of the backs, center,
open-faced bezel, pendant, crown, and bow shall not be less than three onethousandths of 1 inch in thickness; the sheets of gold or its alloy affixed to the inner
surfaces of the backs, to the inner and outer surfaces of the caps, and to the outer
surface of the hunting bezel, shall not be less than one one-thousandth of an inch in
thickness.
(c) That whenever the thickness of the sheets of gold or its alloy in gold-filled watch
cases is indicated, the mark indicating such thick ness shall only refer to the thickness
of the sheets of gold or its alloy so affixed to the outer surfaces of the backs, center,
open face, bezel, pendant, crown, and bow, the mark accurately indicating such thickness which shall be expressed in decimals indicating thousandths of an inch, in tests
to ascertain the thickness, measurements being taken at a point where no gold has been
added or taken away for decoration or ornament.
By the commission : Commissioner Nugent dissenting.
OTIS B. JOHNSON, Secretary.
The following dissenting memorandum was filed by Commissioner Nugent :
I am in favor of requiring the manufacturers to place on each watch the number of
pennyweights of gold used, in addition to the carat fineness, which does not indicate
and is not intended to indicate to the mind of the consumer anything relative to the
value of the gold used.
The long-time guaranty is a fake, and as it is used for the purpose of deceiving the
general public, I am in accord with the proposal that manufacturers who resort to it
should be proceeded against.
JOHN E. NUGENT, Commissioner.

ECONOMIC DIVISION.
The work of the Economic Division for the fiscal year ended June 30, 1923,
comprised inquiries into various subjects, among which may be especially mentioned
the profits of the bituminous coal industry, speculation and competitive conditions in
the grain export business, foreign control in the petroleum industry, the methods and
practices of the cotton trade, profits, prices, and price combinations in the housefurnishing industries, and the costs and profits of wheat-flour milling. These inquiries
were made in response to demands for information regarding conditions complained
of, and with a view generally to constructive remedial action.
Six of the inquiries, namely, those into grain exporting, the petroleum industry, the
house-furnishings business, the cotton trade, wheat-flour milling, and an inquiry into
the amount and distribution of national wealth and income, were initiated at the
request of the United States Senate. A comprehensive inquiry into the grain trade, on
which four volumes have already been published, had its origin in a request of the
President. The coal work mentioned above, was undertaken by the commission on its
own initiative.
In regard to the inquiry into the coal-mining industry, a wore particular description
is given below, but it may be noted briefly here that a report was compiled from data,
previously acquired by the commission in the regular course of its work, showing the
extent of investment in bituminous coal mining operations, the average amount of
investment per ton of output, and how such data may be used to determine what the
more or less familiar margins of profit in the prices of coal mean in terms of profit on
investment. These data may be used not only for testing the results of margins obtained
in past years, concerning which much has been published, but also give a useful
practical basis of ascertaining what rate of profit current prices probably afford to the
mine operators. There is also given below a statement of the extensive assistance
rendered by this commission with respect to recent inquiries into the coal mining
industry by the Senate and by the United States Coal Commission.
The assistance of the commission has been regularly called upon because its
economic staff includes a unique group of expert economists and accountants familiar
with the business problems of the coal industry. The constant contact of this
commission with the varying but persistently recurring economic disorders in the coal
67501--23----5

61

62

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

industry justifies its past activities in endeavoring to throw more light on the real
conditions and their causes.
The inquiry into the methods and operations of grain exporter’s developed some
very remarkable data on the operations of certain large speculators and grain
merchants especially in the wheat-futures market. This information was sought with
a view to ascertaining what effect such speculative operations had upon grain prices
generally and whether there was any general combination among such speculators in
these operations in the grain-futures market. The analysis of these statistical data
indicated that, while these large speculators were apparently working quite
independently in their operations and oftentimes on opposite sides of the market, the
changes in prices corresponded quite generally to the preponderance of their
transactions. In its examination of competitive conditions in the grain export trade, the
commission discovered two regional agreements regarding the purchase price of grain
in the country markets, one affecting chiefly the Gulf export trade in wheat and the
other wheat purchases in the Pacific Northwest.
The inquiry into the extent of foreign ownership of the domestic petroleum industry,
together with the extent to which reciprocity was accorded to American petroleum
companies in foreign countries, originated in consequence of a rather marked
development of the holdings of the so-called Royal Dutch-Shell petroleum group in
this country, and brought out the fact that in a number of foreign countries American
companies are, directly or indirectly, prevented from engaging in the petroleum
industry.
In the household furniture inquiry the commission made a careful study, for this
industry, of the remarkable economic experience of this country in the boom of 191920 and the period of price deflation and depression that immediately followed. The
effects of price changes on profits and other operating results were carefully analyzed.
The extent also to which artificial price agreements contributed, directly or indirectly,
to the various price advances and later retarded the fall of prices when the general
depression set in during the latter part of 1920 and during 1921, were also examined
in considerable detail.
These and other matters covered by the work of the Economic Division during the
fiscal year, and the constructive recommendations made by the commission, are
discussed in more detail below.
METHODS AND OPERATIONS OF THE GRAIN EXPORTERS.
The commission was directed by Senate Resolution 133, Sixty-seventh Congress,
second session, passed December 22, 1921, to make an inquiry into the various phases
of the export grain business. The

ECONOMIC DIVISION.

63

demand for this inquiry was the result of an unprecedented decline in the price of the
principal grains at a time when the quantities of certain cereals exported, particularly
wheat and rye, were unusually large.
The first volume of this report, dealing chiefly with the interrelations and profits of
grain exporters in 1920 and 1921, was transmitted to the United States Senate in
manuscript on May 16, 1922, and was printed and ready for distribution early in this
fiscal year. The second volume, which deals mainly with speculation, competition, and
prices, was completed during the fiscal year. The inquiry concerning the effect of
speculation upon grain prices was delayed by the refusal of 18 Chicago commission
houses to permit an examination of their customers’ futures trading accounts. Most
of the concerns having large speculative costumers were among those who did not
grant access to those accounts. Fourteen of the 18 commission houses refusing to grant
access were partnerships, to whose records the commission could lawfully obtain
access only with their consent. Regarding the four corporations refusing access to the
records of their customers’ future trading accounts, it would have been futile to
attempt to enforce an examination by legal procedure in time to be of service to the
inquiry.
After many members of the Chicago Board of Trade had refused the commission’s
request for access to their customer’s futures trading accounts the commission sought
the cooperation of the officers of the Chicago Board of Trade, but they refused such
cooperation, stating that the board had no power to compel its members to reveal their
customers’ business to the commission and that a mere recommendation of the board
of directors would be disregarded by many members. In this connection it should be
noted that 6 of the 15 directors of the Chicago Board of Trade were officials or
partners of concerns refusing the commission’s request for access to the records of
their customers’ future trading accounts.
Later, the commission secured, directly from the speculators themselves,
considerable data concerning futures trading on the Chicago Board of Trade. None of
the speculators whose futures trades were requested refused to furnish them.
Some of the outstanding facts developed in the second volume of the commission’s
report on methods and operations of grain exporters are summarized in the report as
follows :
In order to ascertain what effect the operations of large speculators and cash grain dealers who
hedged their mercantile transactions had on the prices of wheat, the commission secured the
daily trades in wheat futures on the Chicago Board of Trade of 12 such speculators and 9 such
hedgers for the period July 15, 1920, to May 31, 1922. A number of these traders, moreover,
gave detailed testimony concerning their operations.

64

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

From the information thus obtained and from other pertinent data the commission concludes
that while speculation frequently caused injurious aberrations in wheat prices, the extensive
decline in prices of the contract grade of wheat at Chicago from an average of about $2.85 per
bushel on July 17, 1920, to a fraction over $1 per bushel on September 14, 1922, was due
mainly to other factors, including supply and demand, rather than to speculation or
manipulation. Speculators and hedgers are especially able to run up prices during the delivery
month, and, when this occurs, after their future interests are closed out, prices inevitably fall.
In general, however, it appears that, although the frequent and temporary fluctuations in grain
prices may be attributed largely to speculation, the relatively infrequent, but long-time fluctuations, may be attributed almost entirely to other causes including actual supply and demand
conditions.
*
*
*
*
*
*
*
While the evidence is clear that speculation during this period resulted, in various instances,
in producing artificial price changes in the wheat futures market, the speculators, whose trades
were obtained, pursued quite diverse buying and selling policies, although their net position
taken as a group indicates that they were usually on the profitable side in different turns of the
market.
*

*

*

*

*

*

*

In view of the fact that futures prices have a substantial influence on cash prices (and this is
insisted on by most of the proponents of futures trading) and the fact that artificial price
conditions so often prevail in the futures market, it seems clear that, if this trading is permitted
to continue, the Federal Government should regulate it, in order to prevent abuses.
*

*

*

*

*

*

*

The car-delivery rule, which permits delivery of grain on futures contracts in cars on track,
instead of in regular elevators, is used only in emergencies on a vote of the board of directors
of the Chicago Board of Trade, and it has been invoked only twice since its adoption in 1918.
Its operation is intended to effect and naturally results in, an increase in the deliverable supply,
and consequently in a decline in price. Moreover, demurrage charges and the difficulty of
insuring or borrowing money on grain delivered on track are additional price-weakening
influences which force prices to a lower level than would he the case if delivery were made in
regular elevators. In May, 1922, especially, the invoking of the emergency car-delivery rule
helped to break prices lower than would have otherwise been the case. Most of the wheat
delivered on track in May, 1922, was delivered by the Armour Grain Co. and the J. Rosenbaum
Grain Co.
*

*

*

*

*

*

*

An examination of the correspondence files of the more important grain exporters, fobbers
(i.e., merchants who sell free on board vessel at seaports), and elevator operators showed that
in the sale of grain for export there was keen competition, but that in the purchase of wheat from
the farmer and country elevator by exporters and fobbers there were two distinct price
agreements in existence in 1921, one covering the purchase of wheat for export through the Gulf

of Mexico ports and the other that for export from the Pacific Northwest.
*

*

*

*

*

*

*

The expenses of marketing grain were much higher in 1920 than for pre-war years,
particularly for transportation and country marketing facilities. When grain prices declined these
expenses necessarily became much more burdensome.

ECONOMIC DIVISION.

65

A large proportion of the grain elevator capacity used in the export trade is controlled by large
grain merchants. Four of these merchants controlled about 22 per cent of the total capacity and
21 merchants controlled 43 per cent thereof.
The evidence in this inquiry supports that previously obtained with regard to the inadequacy
of public elevator capacity and the necessity of lower storage rates to afford the grain producer
and merchant necessary marketing facilities and to prevent price manipulations.

The recommendations of the commission based upon this study of the grain business
were as follows :
l. That the Chicago Board of Trade be required to make public each day the total volume of
futures operations in each option of each grain for the preceding day, and also the total volume
if open trades in each option of each grain in existence at the close of the preceding day, so that
the general public may have information as to the basis for the widely quoted prices of Chicago
futures.
2. That all brokers and all commission men, or officers, or large stockholders of companies
doing a brokerage or commission business in futures for customers, be prohibited from
speculating in grain futures for their own account, in order to prevent abuses and risks arising
from the same party acting at the same time as agent and as principal in trading on the exchange.
3. That the car-delivery rule and the settlement rule for defaulted futures contracts on the
Chicago Board of Trade should be interpreted and applied by an impartial person or tribunal,
because these rules involve complex questions of fact, requiring unprejudiced judgment, and
because the present practice involves the discretion of the board of directors and the president,
who may be called upon to decide questions affecting their respective interests or those of their
customers.
4. That the Chicago Board of Trade be required to permit the delivery of grain on futures
contracts at other important markets than Chicago, under proper safeguards and equitable terms,
whenever necessary in order to prevent a squeeze or corner in the Chicago market.
5. Finally, the commission reiterates, in substance, a recommendation made in a previous
report, namely, that the railroads might be encouraged to furnish, or the States or Federal
Government might assume the duty of furnishing, adequate storage elevator capacity at
convenient market points, especially at Chicago, free from control or operation by any grain
dealer, broker, or commission house, in order to remove the artificial conditions frequently
occurring there and with such storage charges and other conditions that the grain farmer or
merchant would be able to store grain in competition with elevator merchandisers, while, by
means of negotiable warehouse receipts obtained for such grain, the farmer would be aided in
borrowing money to finance his crop until he was willing to sell.

FOREIGN OWNERSHIP IN THE PETROLEUM INDUSTRY.
On February 12, 1923, the commission submitted a report to the United States
Senate on foreign ownership in the petroleum industry, made pursuant to Senate
Resolution 311, Sixty-Seventh Congress, second session, adopted June 29, 1922. The
demand for such an inquiry was occasioned by the activity of the Royal Dutch-Shell
group, a combination of British and Dutch interests, in acquiring petroleum producing,
transporting, refining, and marketing properties and equipment in this county.

66

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

This report describes the organization, development, and present status of the Royal
Dutch-Shell group, with special reference to its holdings in the United States, and
particularly the absorption of the Union Oil Co. (Delaware); it relates the facts
regarding the present ownership and control of the Union Oil Co. of California and
outlines the situation with respect to discrimination of foreign governments against
citizens of this country in the acquisition and development of petroleum-producing
properties in foreign lands.
The more important facts developed in this report were as follows :
The Royal Dutch-Shell group, a combination of the Royal Dutch Co. and the Shell
Transport & Trading Co., of London, has worldwide oil investments, including
numerous refineries, an immense fleet of tank ships, and petroleum production in
many lands, which in 1921 was no less than 11 per cent of the world output. This
group in February, 1922, consummated a merger of the principal properties and
investments of the Union Oil Co. (Delaware) with its chief American subsidiaries in
a new company, the Shell Union Oil Corporation, which now controls over 240,950
acres of oil lands in the United States; has about 3.5 per cent of the total output of
crude petroleum; owns extensive properties in refineries, pipe lines, tank cars, and
marketing equipment; and is one of the largest companies in the domestic petroleum
industry. The Union Oil Co. (Delaware) owned about 26 per cent of the stock of the
Union Oil Co. of California, but, to prevent the Royal Dutch-Shell group from gaining
control, certain stockholders of the Union of California organized an Americancontrolled holding company, which now owns more than half of its issued stock.
The most important instances of discrimination by foreign governments against
citizens of this country are the exclusive, policies of the Governments of Great Britain
and the Netherlands in respect to the oil fields of India and the Dutch East Indies, and
the 1920 San Remo agreement of Great Britain and France covering the undeveloped
oil fields of Mesopotamia and of the British and French colonies. Denial of
reciprocity of treatment to citizens of this country appears to exist with respect to the
petroleum industry of Australia, British Borneo, certain African colonies, British Honduras, British Guiana, and Trinidad, France and French possessions, Italy, and the
Netherlands and its dependencies.
Thus forced to modify its historic policy, Congress in 1920 enacted a mineral leasing
law for public lands which forbids the acquisition of properties by the nationals of any
foreign country that denies reciprocity to Americans, in consequence of which certain
applications for petroleum leaseholds have been denied to the Royal Dutch-Shell
group.

ECONOMIC DIVISION.

67

The commission drew the following conclusions :
What further efforts may be made by this combination to acquire privately owned petroleum
lands or competing oil companies, it is, of course, impossible to predict, or how far antitrust
laws may be effective to prevent them.
The supply of crude petroleum in this country is being rapidly depleted to meet the
requirements of a growing domestic consumption and foreign trade. The sources of supply of
the domestic industry are concentrated within Its own borders and in Mexico, while those of its
principal competitor are widely distributed throughout the whole world. It appears obvious that
a nation having widely distributed supply and storage facilities and owning the means of
distribution will have certain advantages in world trade against one having concentrated supply.

COAL.
Investment and pro fit in soft-coal mining.--The past year was one marked by great
public concern in the coal industry. Early in the year the Federal Trade Commission
completed its preliminary report on investment and profit in soft-coal mining, an
import ant report, but not entirely satisfactory because completed under the handicap
of an injunction which prevented the requirement of the additional information needed.
While owing to this injunction in the Mannered Coal Co. case the commission itself
undertook no new work during the year, it did give material aid to the United States
Coal Commission, which was created by act of Congress of September 22, 1922, to
make a special study and to report on the coal problem .
The Federal Trade Commission’s examination of investment in soft-coal mining
was its first study on any extended scale of the amount of funds invested in
bituminous-mining enterprises. During the war and in the commission’s coal bulletins
issued in 1920 the cost of production per ton and the net margins of profit per ton were
ascertained currently but the profits on investment were not determined. Hence it was
not known, except in a very general way, whether a profit of a given number of cents
per ton meant a high or low rate of return on the funds invested. While the results of
this inquiry were discussed in the last annual report, the report was issued during this
fiscal year and certain fundamental facts may be noted here.
Net margins of profit per ton had been determined and made public by the Trade
Commission for a substantial proportion of the industry’s production in 1916 and 1917
and for practically all of it in 1918. The National Coal Association’s unrevised figures
of net profit per ton for a substantial proportion of the tonnage had been made public
for 1919, 1920 (nine months), and 1921. The value of the new report was that it
arrived at the approximate average amount of funds invested per ton of coal produced
for each of the important bituminous coal districts and thus for the first time fur-

68

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

nished a base for judging what these various net margins per ton signified in terms of
rate of profit on the investment.
This approximate investment for 1,126 bituminous mining companies scattered
throughout nearly all the districts of the country as a whole was found to average $3.12
per ton of annual production, This investment includes borrowed funds.
The estimated average rate of return on the net investment, including borrowed
funds, for all of the districts for the six-year period 1916-1921 was about 15 per cent
and for 1918-1921 about 13 per cent. By years, the approximate rates were :
Year.
1916
1917
1918
1919
1920 (9 months)
1921
Average, 1916-1921

Per cent
profit.
8
29
18
6
23
3
15

These profits represent the net income before payment of Federal taxes thereon.
Briefly, the year 1916 showed pre-war conditions; the year 1917 was a panic-price
period uncontrolled by war regulation until August, 1917; 1918 was a year of price
control by the Fuel Administration; 1919, a year of subnormal demand; 1920, when
there was a seller’s market, had the highest bituminous coal prices in history, and
1921, a year of general business depression affecting this industry severely. For these
six years the average return of approximately 15 per cent on the investment
represented, therefore, the results both of fat years and lean.
In the third quarter of 1920 (July to September), when the coal panic of 1920 was
at its height, the average unrevised net margin of the 466 operators reporting to the
National Coal Association was $1.15 per ton, or approximately 37 per cent on the
investment. On the other hand, in December, 1921, 511 operators reporting to the
association showed on the basis of unrevised figures a loss of 35 cents per ton or a loss
of approximately 11 per cent on the investment.
The three chief coal producing States of the country are Pennsylvania, West
Virginia, and Illinois. There were marked differences between them in investment per
ton. In Pennsylvania the investment in soft coal averaged $3.68 per ton of the annual
production, in West Virginia $4.12, and in Illinois $1.67, less than half as high as in
the two first-named States. The average investment in West Virginia was $1 a ton
higher than the general average of $3.12 in 70 of the 74 mining districts of the country,
while in Illinois the figure was nearly $1.50 a ton less than the average for the country.

ECONOMIC DIVISION.

69

The information on which the report was based was that obtained before the
injunction against the commission was secured, or that collected by the National Coal
Association itself and made public without opportunity for governmental revision.
Thus, while in-complete and only partially verified the results may be taken as
probably an understatement of the profits in the soft coal mining industry for this
period.
The principal conclusions of the report were :
(l) The need of more accurate and more complete information regarding the ownership of
bituminous coal deposits and coal mines, the true investment therein, and the true profits arising
therefrom.
(2) The need of ascertaining the profits of selling companies owned by or affiliated with
mining companies and also of other wholesalers or dealers in coal.
(3) The need of establishing the coal industry in public confidence and protecting it by
devising means of Federal supervision and publicity so as to avoid periods of excessively high
prices and of severe depression.

Aid to the United States Coal Commission.--At the urgent request of the United
States Coal Commission the Federal Trade Commission turned over to it the greater
part of its force which had formerly be engaged on its coal inquiries. This was done
by granting extended leave without pay to a number of its coal experts, economists,
accountants and clerks, who were thereupon employed by the Coal Commission and
formed a directing force and nucleus for those sections of the Coal Commission’s staff
dealing with the costs and profits of coal mining companies and coal dealers.
While this release of a considerable number of its employees handicapped the work
of the Economic Division in its other investigations, the Coal Commission ‘s work was
so urgent that the Federal Trade Commission felt obliged not to withhold the aid of the
only body of experts in the Government service who are trained in the analysis and
compilation of coal costs and profits. Some of them were transferred to this work in
the fall of 1922 and the others in January 1923, the understanding being that they
would return to the Federal Trade Commission ‘s work in September, 1923, on the
termination of the Coal Commission’s existence.
All coal cost and financial records in the files of the Federal Trade Commission,
which cover a period of several years prior to January 1, 1919, were also made
available to the Coal Commission, in accordance with the provisions of the law
creating it. The Coal Commission was thus enabled to confine to the period from 1919
on its work of gathering new cost data from operators, and for the earlier period used
in its report the costs and margins which had been determined and published in
substantially the same form in the reports of the Federal Trade Commission.

70

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

It is worthy of comment that the National Coal Association, which in 1920 secured
an injunction against the Federal Trade Commission prohibiting it from requiring
information on costs of production of coal, in 1923 publicly recommended to the
United States Coal Commission that the bituminous coal operators should be called
upon to submit to a governmental agency the facts as to their costs of production. This
they proposed should be on a basis of voluntary cooperation their preference being to
report to the Department of Commerce or the Department of the Interior. If there was
any force in the contention of the operators in enjoining the Federal Trade Commission
that neither Congress nor any agency created by Congress could constitutionally
require information On the cost of production of coal that force was still unchanged.
Yet in less than two years this national association of coal operators had come to see
that they could not safely flout public opinion by refusing to governmental agencies
and to the public the basic facts about this industry. So it has come about also that the
operators have furnished to the United States Coal Commission the very information
which they refused to give to the Federal Trade Commission, and which they caused
it to be enjoined from securing.
In connection with the services of the Federal Trade Commission experts in the work
of the United States Coal Commission on the costs and profits of mining and dealing
in coal, it is proper to point out further that while the Federal Trade Commission has
been under the injunction referred to since the spring of 1920, it has been called upon
to make its information and the services of its experts available to public agencies in
two great crises in the coal trade which have developed since the time when the
injunction was laid upon it. The coal troubles of 1922 and 1923 have not caused the
public to forget the coal panic of the summer and fall of 1920 when prices of soft coal
reached theretofore unheard of heights. At that time the “Calder Committee,” the
Select Committee of the United States Senate on Reconstruction and Production, under
the chairmanship of Senator Calder, and the Senate Committee on Manufactures,
under the chairmanship of Senator LaFollette, held extensive hearings and made
vigorous efforts to probe the causes of the coal panic of that time, to determine the
profits of operators, and to secure the passage of constructive legislation to prevent the
recurrence of such price excesses in the coal trad. Both of these Senate committees
called upon the Federal Trade Commission to make available to them the information
obtained by it, which was done, and the services of a number of its experts and clerks
familiar with the coal industry were utilized by the committees. Similar service
rendered the United States Coal Commission, at its request, during the past year is
therefore the Federal Trade Commission’s second

ECONOMIC DIVISION.

71

response in the past two years to a Call for aid in a matter on which it, itself, is still
enjoined, in a large measure, from acting directly.
HOUSE FURNISHINGS.
During the fiscal year the commission continued its inquiry into the housefurnishings industry, which was undertaken pursuant to Senate Resolution 127,
adopted January 4, 1922, directing the commission to inquire into factory, wholesale
and retail price conditions in the principal branches of the house-furnishings goods
industry since January 1920, and particularly to ascertain the organization and
interrelations of corporations and firms’ engaged therein and whether there were unfair
practices or methods of competition or restraints of trade, and to report as the various
phases of the inquiry should be completed.
Household furniture.--The first report was published January 17, 1923, and covered
ordinary wooden household furniture. The report was divided into two parts, the first
pertaining to investment, costs, prices, and profits, and the second part to the
organization and concentration of ownership of corporations and firms and to unfair
practices and restraints of competition.
Financial returns were received from 299 manufacturing companies, 22 jobbers, and
560 retailers of furniture. The manufacturers made profits amounting to 28.2 per cent
of their aggregate investment of over $80,000,000 in 1920 and 8.4 per cent on an
investment of over $91,000,000 in 1921. The wholesalers profits were 32.7 per cent
on an investment of approximately $4,000,000 in 1920 and 4.2 per cent on over
$4,800,000 in 1921. The average profits of 424 specialized retail furniture stores were
22 per cent on an aggregate investment of nearly $84,000,000 in 1920 and 8.4 per cent
on an investment of nearly $95,000,000 in 1921.
This was the first report of the commission to trace a manufactured product from the
producer to the consumer through the crest of the “peace boom” in 1920 and through
the “buyers strike” and business depression which followed. It is shown that in 1920,
of the consumer’s dollar about 13.3 cents went for retailer’s profit, 8.3 cents for
manufacturer’s profit, 2.1 cents for freight and the balance for manufacturers’ and
retailers’ costs and expenses. In 1921, 6.9 cents went for retailer’s profit, 4.2 for
manufacturer’s profit, 3.3 cents for freight and the balance for manufacturing and
retailing costs and expenses.
Further findings as to prices and profits were as follows :
Wholesale prices of household furniture in 1920 reached a higher peak than most
commodities and subsequently declined more gradually and without approaching so near the
pre-war level.

72

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

Furniture manufacturers, however, reduced their prices more in absolute amount than the
decline In the prices of raw materials, relatively more than wages, and both absolutely and
relatively more than they reduced their total cost.
Retailers also reduced prices, and by the early part of 1922 probably in as great proportion
as the manufacturers, but reluctant to cut prices on large stocks of high priced furniture, their
price reductions lagged about a half year behind.
*
*
*
*
*
*
*
Most retailing of furniture in 1920 and 1921 was on the installment plan and Installment
prices averaged probably at least 16 per cent above cash prices. Installment stores generally had
higher operating expenses but made considerably higher profits on the investment than those
doing primarily a cash business.

For the study of competitive conditions, schedule returns were obtained showing the
organization and ownership of 378 manufacturing companies, 97 wholesalers, and 835
retail dealers, together with a considerable mass of letters, minutes of meetings,
bulletins, and other documents obtained by agents of the commission through
interviews and examination of die records and files of trade associations, examination
of files of various large manufacturers, and from the trade press. In the conduct of the
inquiry, the offices of 7 national and 9 smaller territorial manufacturers’ associations,
a national wholesalers’ association, a national and 34 local and state retailers’
associations were visited by agents of the commission.
The report shows that there was no significant concentration of control through
intercorporate stock ownership of the furniture indus try as a whole. There were,
however, a few cases in each branch of the industry where small groups of companies
were controlled by the same stockholders.
The report shows, on the other hand, that all branches of the industry were strongly
organized into local and national trade associations and that manufactures’
associations by adopting and using, among other devices, minimum “selling value” (i.
e. price) bulletins prepared by an expert and based on theoretical replacement costs
plus 25 per cent for contingencies and profit, acted in concert to advance prices during
the early part of 1920; to maintain prices, in conjunction with retail organizations, in
the face of the general slump during the latter part of 1920; and to retard declines of
prices in 1921.
In regard to association activities it was further found that:
Leading furniture manufacturers’ associations have jointly employed an expert to price
articles of furniture for their members on a theoretical cost basis which tended to uniformity of
prices.
Various retail organizations have frequently interfered with the sale of furniture by
manufacturers to consumers and to so-called “illegitimate” dealers by means of concerted
complaints of members to offending manufacturers and by the publication of the Buyers Guide
and Tattle Tales.

ECONOMIC DIVISION.

73

In the autumn of 1920 the heading manufacturers’ associations, following a conference with
the organized retailers who insisted that they should have time to dispose of their high-priced
stocks, advised their members to defer making reductions in factory prices.
Although a movement for “truth in furniture” has recently been started, which includes many
manufacturers and dealers’ furniture, both as to materials and workmanship, is often
misrepresented in a manner to deceive the public.

Kitchen furnishings and domestic appliances.--The commission selected kitchen
furnishings and domestic appliances as the second division of the house-furnishings
goods inquiry.
Field work on this subject was nearly completed during the fiscal year and included
inquiry into the manufacture and distribution of stoves, sewing machines, vacuum
cleaners, washing machines, refrigerators, brooms, and cooking utensils. Schedules
requesting information on investment, prices, costs, and profits and on organization
and ownership were sent to 1,286 manufacturers and over 2,500 wholesalers and
retailers of these commodities. It was found difficult to secure sufficient usable replies
to show representative results and representatives of the commission visited a number
of concerns which had returned incomplete data. The commission’s agents also visited
the offices and examined the records of the principal associations, numbering about
35, in the various industries involved in the inquiry.
A large proportion of the mass of material secured was reviewed and digested, and
drafts of reports were prepared for several important parts of the inquiry.
WYOMING PETROLEUM MONOPOLY.
Supplementing a previous elaborate report on the petroleum industry of Wyoming
there was issued at the beginning of the fiscal year a very brief report on the petroleum
trade in Wyoming and Montana, which discussed the selling prices of gasoline. The
most important conclusion of the report was that the petroleum industry and trade in
that region was dominated by Standard Oil interests, a local monopoly having been
perfected in 1920 and 1921 through the acquisition of the formerly independent
Midwest Refining Co. The even more recent acquisition from the Federal Government
of the lease of the Teapot Dome Naval Reserve by the Sinclair interests, together with
the alliance between these interests and the Standard of Indiana for the purpose of
purchasing crude petroleum and the construction of a pipe line to Kansas City for
marketing the oil constituted another effort to reintegrate monopoly in the petroleum
industry. The commission found the existing law inadequate to meet the situation and
suggested specific additional legislation of a form which would effect the abolition of
the extensive community of interest among the Standard Oil companies, which
resulted from

74

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

the defective requirements of the original decree dissolving the Standard Oil
monopoly.
WAR-TIME COSTS AND PROFITS OF SOUTHERN PINE LUMBER
COMPANIES.
During the war much valuable information regarding costs was Secured from the
lumber industry and compiled by the commission for the War Industries Board. In the
Spring of 1919 the commission secured reports containing balance sheets, sales
realization, and profits for 1917 and 1918 from many manufacturers of southern pine
lumber. Owing to extensive reductions in the office force this data could only be
tabulated intermittently and it was not until the autumn of 1922 that the report on wartime costs an d profits of southern pine lumber companies was printed and ready for
distribution. Some of the outstanding facts developed in this report are summarized as
follows :
The average rate of earnings on the entire business, as reported by 143 identical
companies, was 9 per cent in 1917 and almost ½ per cent in 1918. There was a wide
variation in the reported rates of earnings for individual companies. In 1917 the
reported rates of earnings ranged from a, loss of almost 3 per cent to a profit of a little
over 52 per cent, while in 1918 the range was from a loss of 13 per cent to a gain of
nearly 52 per cent.
The revision of the returns of these 143 companies by the elimination of stumpage
appreciation from investments and costs increased their average rate of earnings on
total investment from about 9 per cent to about 12 per cent in 1917 and from almost
8 ½ per cent to about 11 per cent in 1918.
The total investment in the lumber business compared with the annual output varied
greatly for different companies on account of differences in the supply of standing
timber owned. Consequently companies owning a timber supply sufficient to last for
short periods only generally received larger rates of return on their investment than
those owning timber supplies sufficient to last a long time. In 1917, for example, the
average revised rate of return on investment for 146 companies was a little less than
12 per cent, while the rates of return for companies grouped according to the period
of timber supply were as follows : Five years or less, not quite 15 per cent; 6 to 10
years, a little over 12 per cent; 11 to 15 years, nearly 8 per cent; and over 15 years, 9½
per cent. In other words, the companies not burdened with a relatively large timber
supply were more profitable.
There was a wide range in the reported costs, sales realization, and earnings per
thousand feet for both years. In 1918, for example, individual costs, as reported by the
205 companies, ranged from

ECONOMIC DIVISION.

75

$15.63 to $37.12 per thousand feet; the average sales realization for different
companies ranged from $18.81 to $36.28 per thousand feet; while the net earnings for
individual manufacturers ranged from a loss of $4.85 to a profit of $13.79 per thousand
feet.
The southern pine lumber industry was under increasingly strict governmental
control of prices from July, 1917, to the end of 1918, and throughout this period the
increase in prices practically paralleled increasing costs. Following the termination of
governmental price control the prices of southern pine lumber advanced rapidly to
unprecedented levels during the latter part of 1919 and early 1920. These high prices
gave rise to a “buyers’ strike” and a rapid decline in prices, which began in the spring
of 1920 and continued through the middle of 1921, when the prices of many grades
reached the price levels prevailing in the early months of 1917.
COTTON TRADE.
Preliminary report.--A Senate resolution of March 16, 1922 (No. 262), directed the
commission to make inquiry into the causes of the depressed prices of cotton in the
United States, giving particular attention to the operation of the cotton exchanges,
whether trading on these was being carried on in a fair, just, and legal way, and
whether present laws were operating equitably to the grower of cotton. The resolution
requested that in the event that the commission found remedial legislation necessary
that it inform the Senate thereof and submit such recommendation as it believed
feasible.
In February, 1923, a preliminary report dealing chiefly with the causes of the decline
in cotton prices was submitted to the Senate. It was found that “the most important
factors in the sharp decline in prices in 1920-21 were the marked increase in supply
and decrease in demand.”
Pursuant to the resolution inquiry was also made into existing laws affecting the
cotton trade, and the preliminary report discussed the operation of the cotton futures
act of 1914, together with its subsequent amendments, and their influence upon future
trading. Some consideration was given also to the character of the future contract in
its relation to future prices and the bearing that such prices have on spot prices for
cotton.
Other aspects of the cotton trade, particularly those relating to operations of
exchanges, were reserved for a subsequent report.
Subsequent inquiry.--In January, 1923, the Senate adopted another resolution
(No.429) which makes special reference to alleged corporate violations of antitrust
laws with respect to operations in cotton, the conduct of cotton exchanges, operations
upon such exchanges by corporations, partnerships, and individuals.

76

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

The inquiry under this resolution was combined with the portions of the inquiry
under the earlier resolution not covered in the preliminary report.
Much additional field work has been done in all the most important cotton markets
since the second resolution was passed, and special consideration is being given to the
study of the future exchanges, the contract which is sold thereon, the making of
quotations, and their influence on prices in both spot and future markets.
WHEAT FLOUR MILLING.
Senate Resolution 212, Sixty-seventh Congress, second session, adopted January 18,
1922, directed this commission “to extend its investigation of commercial wheat flour
milling from the date of the conclusion of its investigation of said industry included
in its report to Congress on September 15, 1920, up to the close of the fiscal year
ending June 30, 1921.”
Owing to the lack of funds for economic inquiries and the pressure of other work
already begun this inquiry could not be started until late in 1922. Although the funds
available for field work were inadequate the milling industry generally cooperated
with the commission, and data covering costs, investment, and profits were secured
from a large number of flour mills in most of the important milling centers for the
period 1919-1922. Reports were obtained from most of the mills included in the 1920
report, thus making it possible to present costs and profits for the period 1913-1922
for a representative group of companies. At the close of the fiscal year the compilation
of the data covering costs, investments, prices, and profits was nearly completed,
together with much other data pertinent to this inquiry.
GRAIN TRADE.
The work on Volumes IV and VI of the commission’s report on the grain trade was
substantially completed during the fiscal year.
Volume IV deals with the costs and profits of country and terminal elevator
operations, concerning which certain data have already been published in a preliminary
report.
Volume VI deals with the movement, variability, and relationships of cash and
future grain prices, and subjects to statistical tests certain long current economic
theories with reference to such prices.
A large amount of the work was also done during the year on Volume VII, which
deals with the results of future trading. In this volume it is planned to formulate
general conclusions on the subject of future trading in grain.

ECONOMIC DIVISION.

77

NATIONAL WEALTH, NATIONAL INCOME, AND TAXATION.
Senate Resolution 451, adopted February 28,1923, directed the commission to make
an inquiry into and to compile data concerning the total amount of the chief kinds of
wealth in the United States, to ascertain the ownership thereof and the encumbrances
thereon, including both public and private indebtedness, and to secure statistics for
recent years covering the amount of the annual increase in the national wealth in
different lines of economic activity and by different classes of the population; and also
to obtain information regarding the amount of the income exempt from Federal
taxation and to report on the various phases of the inquiry as soon as practicable. An
amendment to this resolution instructed the commission to ascertain the aggregate
taxes levied by States, counties, municipalities, and other local taxing bodies for the
last completed fiscal year and for the corresponding fiscal year five years previous.
On account of the comprehensiveness of the subject matter of this Senate resolution
and in order to expedite the work and enable the commission to report on certain
phases at an early date the subject was divided into three parts, viz, national wealth,
national income, and taxation. The work on all three parts is being carried on as
rapidly as the limited personnel and funds available for such inquiries will permit.
PAPER STATISTICS.
The collection and compilation of statistics concerning the paper industry for
monthly publication begun in 1917 was continued through the first 11 months of the
fiscal year and then was brought to a close.
The statistics obtained from the paper industry itself related chiefly to the
production, shipment, and stocks of paper and pulp by grades. The statistics obtained
from publishers related chiefly to consumption, stocks, and prices of newsprint paper.
The information so collected was compiled and published in monthly bulletins and in
a yearly summary for the benefit of those engaged in the industry, the consumers, and
the public. In addition to the . data collected by the commission, there were also
included in its current bulletins data on the imports and exports of paper compiled
from the records of the Bureau of Foreign and Domestic Commerce, Department of
Commerce.
While wide interest was manifested in these statistics, there was considerable
difficulty in getting complete and prompt returns, as the reports were made entirely on
a voluntary basis. Moreover, the heavy increase in the expense of the commission for
its legal work made it seem necessary to reduce the amount of its allotment to
67501--23----6

78

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

economic and statistical work. In view of this condition, the paper manufacturers,
jobbers, and publishers furnishing statistical data, as well as all persons receiving the
reports, were notified on June 22, 1923; that in accordance with the commission’s
resolution of June 11 the further collection, compilation, and publication of paper
statistics would be discontinued as of July 1, 1923. When this decision was announced
an effort was made by important representatives of the paper industry to induce some
other branch of the Government to undertake this work. It was finally continued by a
trade association.
COOPERATION WITH THE LEGAL DIVISION.
The legal work of the commission often involves fact-finding inquiries in which the
assistance of the economists and accountants of the economic division is often
required on a more or less extensive scale. Some of the more important instances are
noted below:
Steel basing point case.--The proceeding against the United States Steel Corporation
and its subsidiaries with regard to the practice of selling certain steel products on the
basis of Pittsburgh prices plus freight to point of delivery, without regard to the actual
place of manufacture or cost of transportation, continued to require throughout the
fiscal year the services of several members of the economic division in compiling data
and digesting testimony.
Bethlehem-Lackawanna-Midvale merger.--The merger of three of the largest
independent steel companies, namely, the Bethlehem, Lackawanna, and Midvale steel
companies, resulted in legal proceedings in the course of which the detail of an
accountant was sought from the economic division in order to ascertain various facts
regarding the business operations of these companies and the extent to which
competition had been eliminated as a result of the merger.
Western creamery case.--In connection with a charge of unfair competition on the
part of a large creamery company in the purchase of milk it became necessary to
examine in detail the accounts of the company, which was done by a detail of
accountants from the economic division.
Calcium arsenate inquiry.--An inquiry into alleged restraint of trade in the sale of
calcium arsenate was assigned to the legal staff of the commission, but certain
members of the economic division were also detailed to assist in this inquiry.
AID TO OTHER BRANCHES OF THE GOVERNMENT.
Several branches of the executive Government as well as a Senate committee have
called on the commission for aid which has been Sup-

ECONOMIC DIVISION.

79

plied by the economic division. Certain instances may be briefly mentioned.
Senate inquiry into the petroleum industry.--The Senate Committee on Manufactures
made an extensive inquiry into the petroleum industry and called upon the commission
for expert aid in connection with certain aspects of the inquiry. From the economic
division one of the Commission s expert petroleum accountants was selected to aid in
preparing report forms for the petroleum refining and marketing companies regarding
their investments and profits, and in super-vising the tabulations and analyses
tabulating and analyzing the information obtained,
Department of Commerce.--Owing to abnormal conditions in the coal trade in the
summer of 1922 the Secretary of Commerce made certain investigations of the
situation and suggestions to the mine operators in various mining districts as to what
might be considered fair prices for coal. In this connection he requested and obtained
the detail of several accountants of the economic division familiar with the industry
to ascertain costs of production in certain districts and other data pertinent to this
problem.
Department of Justice.--In proceedings in the Court of Claims certain big meat
packers sought to recover from the Government on war contracts large sums over and
above what the purchasing authorities regarded as legally and equitably due.
Assistance was sought by the Department of Justice for the purpose of examining into
these purchase transactions, which involved going into the accounts of the packers. An
accountant of the economic division expert in the records of the meat-packing industry
was selected for this work, which was represented to be indispensable for the
successful conduct of the case.
United States Coal Commission.--The extensive assistance rendered by the
commission to the United States Coal Commission has been described in some detail
above. (See p. 69.)

EXPORT TRADE DIVISION.
Under the export trade act (Webb-Pomerene law) of April 10, 1918, the commission
is given jurisdiction over combinations or “associations” organized for the purpose of
and solely engaged in export trade from the United States to foreign nations. 1
Under the provisions of section 6 (h) of the Federal Trade Commission act of
September 26, 1914, the commission is empowered-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. 2
PROVISIONS OF THE EXPORT TRADE ACT.
Section 1 of the act defines the terms “export trade,” “trade within the United
States,” and “association,” wherever used within the law. Export trade means “solely
trade or commerce in goods, wares, or merchandise exported, or in the course of being
exported from the United States or any Territory thereof to any foreign nation.” The
word “association” means “any corporation or combination, by contract or otherwise,
of two or more persons, partnerships, or corporations.”
Sections 2 and 3 of the act provide exemption from the antitrust laws, to “an
association entered into for the sole purpose of engaging in export trade and actually
engaged solely in such export trade, or an agreement made or act done in the course
of export trade by such association,” with the provision that such an association, agreement, or act shall not be in restraint of trade within the United States, or in restraint of
the export trade of any domestic competitor, and the further prohibition of any
agreement, understanding, conspiracy, or act which shall enhance or depress prices or
substantially lessen competition within the United States, or otherwise restrain trade
therein.
Section 4 extends the jurisdiction of the commission under the Federal Trade
Commission act to include unfair methods of competition used in export trade against
competitors engaged in export trade, even though the acts constituting such unfair
methods are done without the territorial jurisdiction of the United States.
Section 5 provides for the filing of papers with the Federal Trade Commission and
covers procedure in case of violation of the export trade act.
1

80

see Exhibit No.5.

2

See Exhibit No. l.

EXPORT TRADE DIVISION.

81

The commission has taken the position that the receipt and filing of such papers does
not serve as a guaranty of approval, nor as a permit or license to operate under the law.
During the debates in Congress before the passage of the act, an amendment was
proposed Providing that “before any association shall engage in business under this act
it shall secure from the Federal Trade Commission a permit to engage in such
business, and said commission is authorized to issue such permits and may, in its
discretion, refuse a permit to any association, and may, after hearing, cancel any
permit issued.” Strong objection to such a clause was voiced at that time, on the
ground that such autocratic power should not be vested in any commission of the
Government; and the proposed amendment was not made a part of the law. 3
OPERATION UNDER THE EXPORT TRADE ACT.
Associations which have filed papers with the commission are engaged in the
exportation of raw materials and manufactured products of many sorts and kinds,
including steel, copper, cement, phosphate, sulphur, rubber, lumber and wood
products, locomotives, textile machinery, steel tires and wheels, naval stores, soda
pulp, alkali, pipe fittings and valves, paper, paint, alcohol, tanning materials, webbing,
abrasives, buttons, clothespins, and foodstuffs such as milk, meat, sugar, canned foods,
and grain products.
Members of these associations number approximately 600 and are scattered
throughout all parts of the United States.
A substantial increase is noted in exports by associations during the past fiscal year.
The revival of foreign trade is reflected in a renewed interest in the act and operation
under its provisions. Eight new associations were organized during the year, and a
number of others are in the process of formation.
CONCERNS FILING PAPERS IN CONNECTION WITH THE EXPORT TRADE
ACT.
During the fiscal year, July 1, 1922, to June 30, 1923, the following concerns filed
papers with the commission:
American Corn Products Export Association, 135 William Street, New York City.
American Locomotive Sales Corporation, 30 Church Street, New York City.
American Milk Products Corporation, 71 Hudson Street, New York City.
American Paper Exports, (Inc.), 136 Liberty Street, New York City.
American Pitch Pine Export Co., 522 Maison Blanche Annex, New Orleans, La.
American Provisions Export Co., 223 West Adams Street, Chicago, Ill.
American Soda Pulp Export Association, 200 Fifth Avenue, New York City.
3

Congressional Record, June 13, 1017, vol. 55, pt. 4, p. 3578 fol.

82

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

American Surface Abrasives Export Corporation room 1309, 82 Beaver Street, New York
City.
American Tanning Materials Corporation, post-office box 857, Knoxville, Tenn.
American Textile Machinery Corporation, 24 Federal Street, Boston Mass.
American Tire Manufacturers’ Export Association, 7 Dey Street, New York City.
American Webbing Manufacturers Export Corporation, 395 Broadway, New York City.
Associated Button Exporters of America, (Inc.), 1182 Broadway. New York City.
Automatic Pearl Button Export Co. (Inc.), 301 Mulberry Avenue, Muscatine, Iowa.
Canned Foods Export Corporation, 1739 H. Street NW., Washington, D. C.
Cement Export Company, (Inc.), care of Charles F. Conn, Pennsylvania Building,
Philadelphia, Pa.
Chalmers (Harvey) & Son Export Corporation, rear 31 East Main Street, Amsterdam, N. Y.
Clandere Export Corporation, 300 East Twenty-second Street, New York City.
Copper Export Association (Inc.), 25 Broadway, New York City.
Davenport Pearl Button Export Co., 1231 West Fifth Street, Davenport, Iowa.
Delta Export Lumber Corporation, 1339 Bank of Commerce Building, Memphis, Tenn.
Douglas Fir Exploitation & Export Co., 1 260 California Street, San Francisco, Calif.
Export Clothes Pin Association of America (Inc.), 90 West Broadway, New York City.
Export Trade Association (Inc.), 99 John Street, New York City.
Florida Hard Rock Phosphate Export Association, Savannah Bank & Trust Building,
Savannah, Ga.
Florida Pebble Phosphate Export Association, 2 Rector Street, New York City.
General Alcohol Export Corporation, 60 Wall Street, New York City.
Goodyear Tire & Rubber Export Co., 1144 East Market Street, Akron, Ohio.
Grain Products Export Association, 17 Battery Place, New York City.
Grand Rapids Furniture Export Association, 213 Lyon Street NW., Grand Rapids, Mich.
Gulf Pitch Pine Export Association, 1212 Whitney Bank Building, New Orleans, La.
Hawkeye Pearl Button Export Co., 601 East Second Street, Muscatine, Iowa.
Locomotive Export Association, 30 Church Street, New York City.
McKee Button Export Co., 1000 Hershey Avenue, Muscatine, Iowa.
Mississippi Valley Trading & Navigation Co., 920 Rialto Building, St. Louis, Mo.
Naval Stores Export Corporation, 1425 Whitney Central Annex Building, New Orleans, La.
Pan American Trading Co., 59 Pearl Street, New York City.
Phosphate Export Association, 2 Rector Street, New York City.
Phosphate Export Association & Florida Hard Rock Phosphate Export Association, 2 Rector
Street, New York City.
1 On May 3, 1922, the commission issued complaint, Docket 880, against the Douglas Fir Exploitation
& Export Co.

EXPORT TRADE DIVISION.

83

Pioneer Pearl Button Export Corporation, 257 Mansion Street, Poughkeepsie, N. Y.
Pipe Fittings & Valve Export Association, Branford, Conn.
Redwood Export Co., 260 California Street, San Francisco, Calif.
Rubber Export Association, 1790 Broadway, New York City.
Sugar Export Corporation, 113 Wall Street, New York City.
Sulphur Export Corporation, 19-21 Dover Green, Dover, Del.
United Paint & Varnish Export Co., 601 Canal Road, Cleveland, Ohio.
United States Alkali Export Association (Inc.), 25 Pine Street, New York City.
United States Button Export Co., 701 East Third Street, Muscatine, Iowa.
United States Handle Export Co., Piqua, Ohio.
United States Maize Products Export Association (Inc.), 332 South La Salle Street, Chicago,
Ill.
United States Office Equipment Export Association, 134 Grand Street, New York City.
Walnut Export Sales Co. (Inc.) , 616 South Michigan Avenue, Chicago, Ill.
Walworth International Co., 44 Whitehall Street, New York City.
Wisconsin Canners’ Export Association, Manitowoc, Wis.
Wood Pipe Export Co., White Building, Seattle, Wash.

INQUIRIES UNDER SECTION 6 (H) OF THE FEDERAL TRADE
COMMISSION
ACT.
Work of the office has continued along the line of investigation of 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.
Antitrust laws have recently been enacted or are under consideration in the following
countries : Canada, the Union of South Africa, Argentina, Norway, France, and
Germany. Some of this legislation has closely followed The Federal Trade
Commission act and the Clayton Act of this country.
The Senate and House of Commons of Canada on June 13, 1923, enacted the
combines investigation act, 1923 (13-14 George V). That act provides for the
investigation of mergers, trusts, and monopolies; the relation resulting from the
purchase, lease, or other acquisition by any person of any control over or interest in
the whole or part of the business of any other person; any actual or tacit contract,
agreement, arrangement, or combination which has or is designed to have the effect
of (1) limiting facilities for transporting, producing, manufacturing, supplying, storing,
or dealing; or (2) preventing, limiting, or lessening manufacture or production; or (3)
fixing a common price or a resale price, or a common rental, or a common cost of
storage or transportation; or (4) enhancing the price, rental, or cost of article, rental
storage or transportation; or (5) preventing or lessening competition in, or substantially
con-

84

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

trolling within any particular area or district or generally, production, manufacture,
purchase, barter, sale, storage, transportation, insurance or supply; or (6) otherwise
restraining or injuring trade or commerce.
If as a result of investigation under the Canadian act, the governor in council is
satisfied that with regard to any article of commerce a combine exists at the expense
of the public, he may admit such article free of duty or reduce the duty thereon so as
to give the public the benefit of reasonable competition. If the owner or holder of a
patent makes use of exclusive rights to unduly limit production or restrict or injure
trade, such patent shall be liable to revocation. Violation of the act is made an
indictable criminal offense. Every one who is a party or privy to or knowingly assists
in the formation or operation of a combine as defined in the act is liable to a penalty
not exceeding $10,000 or to two years’ imprisonment, or if a corporation to a penalty
not exceeding $25,000.
The Parliament of the Union of South Africa enacted the board of trade and
industries act, 1923, on June 30, 1923. Under this act the board of trade and industries,
created in 1921, is given, among others, the following powers :
To inquire and report to the Minister (of Mines and Industries) upon the nature,
extent, and effect of agreements, arrangements, combinations, associations, and trusts
connected with or affecting commerce, finance, manufacture, mining, trade, or
transport in so far as they tend to the creation of monopolies or to the restraint of trade,
and to submit to the minister recommendations as to any action necessary or advisable
for preventing such creation of monopolies or restraint of trade.
The board may take evidence for the purpose of inquiring into any matter falling
within Its functions and duties and for this purpose may subpoena witnesses and
require the production of any book, record, or document for examination of same.
Recommendations or reports by the board shall be laid upon the tables of both
houses of Parliament after its receipt by the minister.
Numerous inquiries have been made by the division during the past year in response
to requests from Government departments, Congressional committees, trade
associations, and individuals.
FOREIGN TRADE COMPLAINTS INVESTIGATED.
In the interest of foreign trade of the United States, this office has made inquiries in
the matter of complaints filed by foreign concerns against American exporters and
importers. Such inquiries fall generally within the jurisdiction of the commission under section 6 (h) of the Federal Trade Commission act. In certain cases, however,
features of unfair competition have developed and prosecution under section 5 of the
Federal Trade Commission act has been necessary.

EXPORT TRADE DIVISION.

85

During the past fiscal year 114 complaints have been handled by the division, some
of which are still pending.
Various Government offices and trade organizations avail themselves of the
commission’s investigatory power, and refer such complaints to the commission for
inquiry. Cases have been received from the State, Commerce, and Treasury
Departments, the Department of Agriculture, the Department of Justice, chambers of
commerce, and occasionally from a complainant direct. Ordinarily, however,
complaint is made by the foreign concern to the office of the American consul or trade
commissioner in that country and is referred back to the United States for
investigation.
Such cases involve charges of nondelivery of goods ordered, nonpayment for goods
received, shipment of defective or damaged goods or articles below sample, shortweight delivery, and various other complaints concerning orders and shipment of
goods to and from foreign countries.
As example thereof, the following are cited :
A complainant in Cape Town, South Africa, purchased 5 barrels of linseed oil which
upon receipt was found to be impure. Complaint was filed with the American
consulate at Cape Town, and a test was made of the condition of the oil, which had
evidently been shipped in a barrel that was not clean. The commission was asked to
make inquiry in the matter, and found the respondent willing to accept the inspector’s
report as filed with the consulate. He offered an allowance of 15 per cent of the
invoice value, which was accepted by the complainant and the dispute was therefore
amicably settled by the parties thereto on the basis of the facts brought out by the
commission’s inquiry.
A complainant in the Philippine Islands ordered a motor for use in a boat, for which
he sent the American company $200 as first payment on the quoted price of $745. The
motor was never shipped and no refund made. Letters to the respondent were not
answered. Complaint was filed with the American commercial attache at Manila, and
the commission was requested to make inquiry into the matter. It was found that the
respondent had become bankrupt, his business was placed in the hands of a receiver,
and he had then disappeared. Efforts to locate him were not successful.
A Mexican complainant purchased enamel ware to the amount of $1,300, which
upon delivery was found to be of poor grade, inferior to samples upon which the sale
was made. Utensils were scarred, cracked, and on some pieces handles were missing.
Complaint was made to the American Chamber of Commerce in Mexico, reported to
the American trade commissioner in that country, and was referred to this office with
a request for investigation. Upon the reports and samples furnished, the respondent
exporter admitted

86

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

the inferiority of the goods and offered to pay half of the loss entailed if the
manufacturer would assume the other half. This was acceptable to the manufacturer,
and these payments were made through the Commerce Department.
A complainant in Australia purchased 106 cases of third-quality glass. When
received the goods were found to be marked “fourth quality,” very inferior, full of
pockets and flaws, and utterly useless for window panes, for which they were intended.
Forty-nine cases were received undamaged, but in 57 cases the glass was badly broken
due to insufficient padding and packing. Complaint was filed with the American trade
commissioner and was referred to this office with a request for an inquiry. The
respondent accepted reports of inspection submitted by the trade commissioner, and
made an allowance of nearly a thousand dollars in settlement of the claim.
In some instances the respondent company is found to be bankrupt or out of
business; in others poor management or careless business methods are responsible.
But in most cases the difficulty is due largely to the lack of good and sufficient proof
as to the validity of the claim. The commission ‘s inquiry serves to establish the facts
of the complaint, through which the parties may be able to adjust their differences.
In a number of cases, the facts brought out by the commission serve to clear the
American concern from the allegations of the complaint. For example, an Australian
importer purchased from an American concern a consignment of salt salmon packed
in barrels and shipped without refrigeration. The fish spoiled en route and a loss of
several thousand dollars was claimed. It was found, however, that the Australian was
well aware of the risk involved in shipping such goods without refrigeration and had
expressed himself as willing to run the risk. Also, there was r substantial sum still
unpaid on the consignment. In fact, both complainant and respondent had accepted
risk and suffered loss in approximately equal proportions. Further claim was therefore
not justified.
The commission’s position and that of representatives of the State and Commerce
Departments is that of an investigator of the facts involved by these disputes in the
interest of American business abroad. Litigation for small claims is too expensive to
be practicable. Yet the smallest claim may result in wide publicity toward the discredit
of American concerns in foreign countries. As expressed in a recent report from an
American consulate in South Africa, such complaints are “detrimental to the good will
enjoyed by American manufacturers in South Africa” and elsewhere. Their adjustment
is but one of the steps of the American Consular Service and other

EXPORT TRADE DIVISION.

87

Government offices in an effort to promote and encourage American trade.
In this connection it may be stated that in 1923 this division made a special inquiry
at the request of the State Department concerning alleged tampering with Canadian
grain passing in bond through the United States for shipment via United States ports
to foreign countries. This inquiry grew out of complaints filed through State Department representatives in Canada and England, and involved investigation at ports
of entry and exit, and inspection of grain elevators and railroad terminals. No
evidence was found of deliberate tampering or mixing within the United States, but
recommendations were made for closer Federal supervision of Canadian grain shipped
in bond through this country, in order to forestall further complaint and the possible
withdrawal of some of this business from United States ports. The matter is now
under inquiry by the Canadian Board of Grain Commissioners and the London Corn
Trade Association
REPRESENTATION ON THE LIAISON COMMITTEE.
A representative of the commission attends the weekly conference of the liaison
committee. Members of this committee represent all offices and departments of the
Government that are concerned with foreign trade. Weekly discussion amid reports
serve to keep each office informed, to promote cooperation, and to prevent duplication
of effort in the Government’s foreign trade activities.

ENEMY TRADE DIVISION.
The authority vested in the commission by the act of October 6, 1917, together with
the Executive order of October 12, 1917, to grant licenses to citizens of the United
States or to corporations organized within the United States, to make, use, and vend
any machine, manufacture, composition of matter, or design, or to use any process,
trade-mark, print, label, or copyright, owned or controlled by an enemy or ally of
enemy, was by the terms of the act specifically limited to tire duration of the war,
which, by the proclamation of peace, was declared to have officially ended on July 2,
1921. Therefore, in its administration of section 10 of the said act this commission
issued no such licenses during the fiscal year ending June 30, 1923.
Subsection (f), section 10, of the said act of October’ 6, 1917, provides as follows:
(f) The owner of any patent, trade-mark, print, label, or copyright under which a license is
granted hereunder may, after the end of the war and until the expiration of one year thereafter,
file a bill In equity against the licensee in the district court of the United States for the district
in which the said licensee resides, or, if a corporation, in which it has its principal place of business (to which suit the Treasurer of the United States shall be made a party), for recovery from
the said licensee for all use and enjoyment of the said patented invention, trade-mark, print,
label, or copyrighted matter: Provided, however, That whenever suit is brought, as above, notice
shall be filed with the alien property custodian within thirty days after date of entry of suit : Provided further, That the licensee may make any and all defenses which would be available were
no license granted. The court on due proceedings had may adjudge and decree to the said owner
payment of a reasonable royalty. The amount of said judgment and decree, when final, shall be
paid on order of the court to the owner of the patent from the fund deposited by the licensee, so
far as such deposit will satisfy said judgment and decree; and the said payment shall be in full
or partial satisfaction of said judgment and decree, as the facts may appear; and if, after payment
of all such judgments and decrees, there shall remain any balance of said deposit, such balance
shall be repaid to the licensee on order of the alien property custodian. If no suit is brought
within one year after the end of the war, or no notice is filed as above required, then the licensee
shall not be liable to make any further deposits, and all funds deposited by him shall be repaid
to him on order of the alien property custodian. Upon entry of suit and notice filed as above
required, or upon repayment of funds as above provided, the liability of the licensee to make
further reports to the President shall cease.
If suit is brought as above provided, the court may, at any time, terminate the license, and
may, in such event, issue an injunction to restrain the licensee from infringement thereafter, or
the court, in case the licensee, prior to suit,

88

ENEMY TRADE DIVISION.

89

shall have made investment of capital based on possession of the license, may continue the
license for such period and upon such terms and with such royalties as it shall find to be just and
reasonable.

The time limit within which suits in equity might be instituted under the foregoing
provision therefore terminated on July 2, 1922, and at the beginning of the fiscal year
covered by this report there were pending in the courts a total of 131 suits, instituted
as follows :
By enemy owners
By Chemical Foundation (Inc.)
By other American corporations taking title through the custodian
By Alien Property Custodian

47
64
4
16

These suits involved, with few exceptions, every license issued by the commission.
The few licenses not the subject of suit represent cases in which commercial
production had never been reached, or in which the amount of royalty deposited was
so insignificant as not to justify institution of suit thereagainst. The suit instituted by
the Government against the Chemical Foundation (Inc.), for the return of the 4,500
patents assigned thereto by the Alien Property Custodian also involves some 60 of the
licenses issued by the commission, being 58 covering patents, 1 trade-mark, and 1
copyright. This suit against the Chemical Foundation (Inc.) will be further referred to
hereinafter.
During the fiscal year just ended, of an aggregate of 93 licenses issued by the
commission 72 were outstanding and of full force and effect, being 57 covering
patents, 2 trade-marks, and 13 copyrights; a total of 21 having been previously
canceled and terminated, representing 19 under patents and 2 under trade-marks.
Since the licenses were granted in each instance for the life of the patent, trade-mark,
or copyright under which issued, the 57 outstanding licenses obviously still remain of
full force and effect under the supervision of the commission, and will continue so to
remain pending judicial determination of the suits in equity instituted there-against,
or in such instances as no suit in equity was instituted against the license, until the
expiration of the respective patent, trade-mark, or copyright covered thereby.
The activities of the enemy trade division during the fiscal year just ended have been
directed chiefly toward the furnishing of data for use in connection with the
prosecution of the suits in equity hereinfore referred to. It may be stated in thus
connection that upwards of five hundred copies (in many instances certified) of the
licenses issued by the commission have been furnished to the various litigants,
together with copies of such other information as was contained in the commission’s
files, and which was pertinent to the prosecution of such suits. The records of the
enemy trade division touching tire matter of royalties accrued under the various
licenses have

90

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

beer of great importance not only to the “owners” suing under subsection (f), section
10, but to the Alien Property Custodian and the Department of Justice, and, in
addition, in connection with the Governments suit instituted against the Chemical
Foundation (Inc.); the commission s figures being relied upon by all parties concerned
and being in each instance accepted as the basis for stipulations to be entered into
between the respective parties to the suits.
In connection with the suit against the Chemical Foundation (Inc.) for the return to
the Government of the 4,500 patents assigned thereto by the Alien Property Custodian,
some twelve hundred photostat copies were made at the Department of Justice, under
the immediate and personal supervision of the chief of the enemy trade division; such
copies embracing all the licenses issued by the commission, the patents covering which
are involved in said suit, together with all royalty records appertaining thereto.
The original documents being introduced and proved in the district court at
Wilmington, Del., by the chief of the enemy trade division as the representative of the
commission, substitution was then made of tire photostat copies the same now forming
a part of the record of said case. In addition to the various tabulations furnished tire
Government by tire enemy trade division covering royalties earned by the patents
assigned to the Chemical Foundation (Inc.) , the enemy trade division in its
cooperation with the Department of Justice has prepared and furnished an abstract
from the file record of each license under which suit has been instituted, the data thus
furnished being unused by the Department of Justice in connection with the
prosecution of the suit instituted thereagainst in the various district courts not only by
the enemy owners of the licensed subject matter, but also by the American owners
acquiring title through purchase from the Alien Property Custodian. Considerable data
have also been furnished various committees of Congress in connection with certain
patent investigations made during the course of the year.
While by the stipulations of subsection (f) , section 10, licensee’s liability to render
further reports of royalty accruing under tire license ended on July 2, 1922, or such
earlier date as marked the institution of suit pursuant to the privilege conferred by said
subsection, in many instances the licensee has Voluntarily continued to transmit the
usual report, proper attention being given thereto and the information contained therein
duly transmitted to the Alien Property Custodian for the completion of his file and for
what purpose it might subserve in connection with the equity suits now pending.
The royalty accrued under the commission’s licenses, and the disposition of which
is one of the important questions for judicial

ENEMY TRADE DIVISION.

91

determination in connection with the equity suits hereinbefore referred to , aggregates
$1,000,15360 accrued as follows: Under patents, $626,411.06; trade-marks,
$372,696.05; and copyrights, $1,046.49. These figures do not include any amount
accruing subsequent to July 2, 1922. When it is recalled that the amount paid in as
royalty represents only from 2 to 5 per cent of gross sales, the vast volume of business
done under the commission’s licenses can be appreciated.
Subsection (c), section 10, clothed the commission with authority to determine the
license fee to be charged in each case, which fee by the terms of the act might not
exceed $100 nor 1 per cent of the fund deposited as royalty under the license, the act
containing no specific provisions, however, as to the time or manner of making any
proper refund in such instances as the amount of royalty deposited did not justify the
retention of the fee originally charged. The disposition of the fund thus created,
aggregating some $18,000 was the subject of recent conferences between this
commission and the office of the Comptroller General of the United States, with the
result that in view of the failure of the act to prescribe the time or manner of making
refund as above referred to, and pending the determination of the suits in equity
hereinbefore referred to, it was deemed advisable to allow this fund to remain intact
pending future developments.
The bulk of correspondence handled by the enemy trade division during the fiscal
year has been considerable. Numerous questions arose, various of which were
submitted for the commission’s decision as to rights and equities involved under the
peculiar and unforeseen circumstances attending the particular case, the most recent
being a copyright license issued to Joseph W. Herbert, covering a certain dramaticmusical production entitled “Der Seerauber.” The death of this licensee occurring
before actual production was had under the license, and with no equities having been
created apparently thereunder, the commission was of the opinion that the death of the
licensee under the circumstances recited automatically terminated the license and that
no rights thereunder accrued to his widow or legal representative.
In connection with the copyright license issued to San Carlo Grand Opera Co.
covering the production of the dramatic-musical composition entitled “Salome,” and
in which the registrant and owner of the copyright failed to avail himself of the
privilege of under subsection (f), section 10 registrant has recently sought to enjoin
the San Carlo Grand Opera Co. from the continued exercise of the rights conferred by
the license and in thus connection addressed to the commission, through the
Department of State, a communication from the charge d’affaires ad interim of
Austria, to which communication the commission responded that

92

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

since the license in question was apparently properly issued under the authority of the
act of October 6, 1917, such license being for the life of the copyright involved, and
since the registrant had failed to enter suit thereagainst within the statutory period
prescribed by law, and the license had not been canceled or otherwise terminated as
provided in the act, it was the opinion of the commission that the said license was still
of full force and effect and no reason was apparent which would preclude the licensee
from continuing to exercise the rights and enjoy the benefits conferred thereby.
The activities of the enemy trade division in its administration of section 10 of the
said act of October 6, 1917, have practically reached a conclusion. The commission
maintains its supervision over the outstanding licenses as hereinbefore stated, and it
is anticipated that there will be more or less frequent demands for data during the
prosecution of the numerous suits now pending in the various courts, and that the
desultory correspondence from licensees and other interested parties will continue to
reach this division for a more or less indefinite period of time, but the amount of active
work remaining to be done is but negligible.
All of which is respectfully submitted.
VICTOR MURDOCK, Chairman.
JOHN F. NUGENT.
HUSTON THOMPSON.
VERNON W. VAN FLEET.
NELSON B GASKILL.

EXHIBITS.
EXHIBIT l.
FEDERAL TRADE COMMISSION ACT.
AN ACT To create a Federal Trade Commission, to define its powers and duties, and
for other purposes.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress
assembled, That a commission is hereby created and established, to be known as the Federal Trade
Commission (hereinafter referred to as the commission), which shall be composed of five commissioners,
who shall be appointed by the President, by and with the advice and consent of the Senate. Not more than
three of the commissioners shall be members of the same political party. The first commissioners
appointed shall continue in office for terms of three, four, five, six, and seven years, respectively, from the
late 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. 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 a secretary,
who shall receive a salary of $5,000 a year, payable in like manner, and it shall have authority to employ
and fix the compensation of such attorneys, special experts, examiners, clerks, and other employees as it
may from time to time find necessary for the proper performance of its duties and as may be from time to
time appropriated for by Congress.
With the exception of the secretary, a clerk to each commissioner, the attorneys, and such special
experts and examiners as the commission may from time to time find necessary for the conduct of its work,
all employees of the commission shall be a part of the classified civil service, and shall enter the service
under such rules and regulations as may be prescribed by the commission and by the Civil Service
Commission.
All of the expenses of the commission, including, all necessary expenses for transportation incurred by
the commissioners or by their employees under their orders, in making any investigation, or upon official
business in any other places than in the city of Washington, shall be allowed and paid on the presentation
of itemized vouchers therefor approved by the commission.
Until otherwise provided by law, the commission may rent suitable offices for its use.
The Auditor for the State and Other Departments shall receive and examine all accounts of expenditures
of the commission.
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
6701--23----7

93

94

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

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. That the words defined in this section shall have the following meaning when found in this act,
to wit:
“Commerce” means commerce among the several States or with foreign nations, or in any Territory of
the United States or in the District of Columbia, or between any such Territory and another, or between
any such Territories and any State or foreign nation, or between the District of Columbia and any State
or Territory or foreign nation.
“Corporation” means any company or association incorporated or unincorporated, which is organized
to carry on business for profit and has shares of capital or capital stock, and any company or association,
incorporated or unincorporated, without shares of capital or capital stock, except partnerships, which is
organized to carry on business for its own profit or that of its members.
“Documentary evidence” means all documents, papers, and correspondence in existence at and after
the passage of this act.
“Acts to regulate commerce” means the act entitled “An act to regulate commerce,” approved February
fourteenth, eighteen hundred and eighty-seven, and all acts amendatory thereof and supplementary thereto.
“Antitrust acts” means the act entitled “An act to protect trade and commerce against unlawful restraints
and monopolies,” approved July second, eighteen hundred and ninety; also the sections seventy-three to
seventy-seven, inclusive, of an act entitled “An act to reduce taxation, to provide revenue for the
Government, and for other purposes,” approved August twenty-seventh, eighteen hundred and ninety-four;
and also the act entitled “An act to amend sections seventy-three and seventy-six of the act of August
twenty-seventh, eighteen hundred and ninety-four, entitled ‘An act to reduce taxation, to provide revenue
for the Government, and for other purposes,’” approved February twelfth, nineteen hundred and thirteen.
SEC. 5. That unfair methods of competition in commerce are hereby declared unlawful.
The commission is hereby empowered and directed to prevent persons, partnerships, or corporations,
except banks, and common carriers subject to the acts to regulate commerce, from using unfair methods
of competition in commerce.
Whenever the commission shall have reason to believe that any such person, partnership, or corporation
has been or is using any unfair method of competition in commerce, and if it shall appear to the
commission that a proceeding by it in respect thereof would be to the interest of the public, it shall issue
and serve upon such person, partnerships or corporation a complaint starting its charges in their 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 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

FEDERAL TRADE COMMISSION ACT.

95

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

96

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.
any corporation engaged in commerce, excepting, banks and common carriers and it subject to the act to
regulate commerce, relation to other corporations and to Individuals, associations, and in 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 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 recommendation 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, mid 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.
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 naive power to require by subpena 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

FEDERAL TRADE COMMISSION ACT.

97

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 subpena the commission may invoke the aid of any court of the United States in requiring the attendance
and testimony of witnesses and the protection 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 is a contempt thereof.
Upon the application of the Attorney General of the United States, at the request of the commission,
the district courts of the United States shall have jurisdiction to issue writs of mandamus commanding any
person or corporation to comply with the provisions of this act or any order of the commission made in
pursuance thereof.
The commission may order testimony to be taken by deposition in any proceeding or investigation
pending under this act at any stage of such proceeding or investigation. Such 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 to cause to be made, full, true, and correct entries in such accounts, records, or
memoranda of all facts and transactions appertaining to the business of such corporation, or who shall
willfully remove out of the jurisdiction of the United States, or willfully mutilate, alter, or by ally 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.

98

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

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 future 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.
Approved, September 26, 1914.

EXHIBIT 2.
PROVISIONS OF THE CLAYTON ACT WHICH CONCERN THE
FEDERAL TRADE COMMISSION.
“Commerce,” as used herein, means trade or commerce among the Several States and with foreign
nations, or between the District of Columbia or any Territory of the United States and any State, Territory,
or foreign nation, or between any insular possessions or other places under the jurisdiction of the United
States, or between any such possession or place and any State or Territory of the United States or the
District of Columbia or any foreign nation, or within the District of Columbia or any Territory or any
insular possession or other place under the jurisdiction of the United States: Provided, That nothing in this
act contained shall apply to the Philippine Islands.
The word “person” or “persons” wherever used in this act shall be deemed to include corporations and
associations existing under or authorized by the laws of either the United States, the laws of any of the
Territories, the laws of any State, or the laws of any foreign country.
SEC. 2. That it shall he unlawful for any person engaged In commerce, in the course of such commerce,
either directly or indirectly to discriminate in price between different purchasers of commodities, which
commodities are sold for use, consumption, or resale within the United States or any Territory thereof or
the District of Columbia or any insular possession or other place under the jurisdiction of the United
States, where the effect of such discrimination may be to substantially lessen competition or tend to create
a monopoly in any line of commerce: Provided, That nothing herein contained shall prevent discrimination
in price between purchasers, of commodities, on account of differences in the grade, quality, or quantity
of the commodity sold, or that makes only due allowance for difference in the cost of Selling or
transportation, or discrimination in price in the same or different communities made in good faith to meet
competition: And provided further, That nothing herein contained shall prevent persons engaged in selling
goods, wares, or merchandise in commerce from .selecting their own customers in bona fide transactions
and not in restraint of trade.
SEC. 3. That it shall be unlawful for any person engaged in commerce, in the course of such commerce,
to lease or make a sale. or contract for sale of goods, wares, merchandise, machinery, supplies or other
commodities, whether patented or unpatented, for use, consumption, or resale within the United States or
any Territory thereof or the District of Columbia or any insular possession or other place under the
jurisdiction of the United States, or fix a price charged therefore or discount front, or rebate upon, such
price, on the condition, agreement or understanding that the lessee or purchaser thereof shall not use or
deal in the goods, wares, merchandise, machinery, supplies, or other commodities of a competitor or
competitors of the lessor or seller, where the effect of such lease, sale, or contract for sale or such
condition, agreement or understanding may be to substantially lesson competition or tend to, create a
monopoly in any line of commerce.
SEC. 7. That no corporation engaged in commerce shall acquire, directly or indirectly, the whole or any
part of the stock or other share capital of another corporation engaged also in commerce, where the effect
of such acquisition maybe to substantially lessen competition between the corporation whose stock is so
acquired and the corporation making the acquisition, or to restrain such commerce in any section or
community, or tend to create a monopoly of any line of commerce.
No corporation shall acquire, directly or indirectly the whole or any part of the stock or other share
capital of two or more corporations engaged in commerce where the effect of such acquisition, or the use
of such stock by the voting or granting of proxies or otherwise, may be to substantially lessen competition
between such corporations, or any of them, whose stock or other share capital is
99

100

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

so acquired, or to restrain such commerce in any section or community, or tend to create a monopoly of
any line of commerce.
This section shall not apply to corporations purchasing such stock solely for investment and not using
the same by voting or otherwise to bring about, or in attempting to bring about, the substantial lessening
of competition. Nor shall anything contained in this section prevent a corporation engaged in commerce
from causing the formation of subsidiary corporations for the actual carrying on of their immediate lawful
business, or the natural and legitimate branches or extensions thereof, or from owning and holding all or
a part of the stock of such subsidiary corporations, when the effect of such formation is not to substantially
lessen competition.
Nor shall anything herein contained be construed to prohibit any common carrier subject to the laws
to regulate commerce from aiding in the construction of branches or short lines so located as to become
feeders to the main line of the company so aiding in such construction or from acquiring or owning all
or any part of the stock of such branch lines, nor to prevent any such common carrier from acquiring and
owning all or any part of the stock of a branch or short line constructed by an independent company where
there is no substantial competition between the company owning the branch line so constructed land the
company owning the main line acquiring the property or an interest therein, nor to prevent such common
carrier from extending any of its lines through the medium of the acquisition of stock or otherwise of any
other such common carrier where there is no substantial competition between the company extending its
lines and the company whose stock, property, or an interest therein is so acquired.
Nothing contained. in this section shall be held to affect or impair any right heretofore legally acquired:
Provided, That nothing in this section shall be held or construed to authorize or make lawful anything
heretofore prohibited or made illegal by the antitrust laws, nor to exempt any person from the penal provisions thereof or the civil remedies therein provided.
SEC. 8. That from and after two years from the date of the approval of this act no person at the same
time shall be a director in any two or more corporations, any one of which has capital, surplus, and
undivided profits aggregating more than $1,000,000, engaged in whole or in part in commerce, other than
banks, banking associations, trust companies and common carriers subject to the act to regulate commerce,
approved February fourth, eighteen hundred and eighty-seven, if such corporations are or shall have been
theretofore, by virtue of their business and location of operation, competitors, so that the elimination of
competition by agreement between them would constitute a violation of any of the provisions of any of
the antitrust laws. The eligibility of a director under the foregoing provision shall be determined by the
aggregate amount of the capital, surplus, and undivided profits, exclusive of dividends declared but not
paid to stockholders, at the end of the fiscal year of said corporation next preceding the election of
directors, and when a director has been elected in accordance with the provisions of this act it shall be
lawful for him to continue as such for one year thereafter.
When any person elected or chosen as a director or officer or selected as an employee of any bank or
other corporation subject to the provisions of this act is eligible at the time of his election or selection to
act for such bank or other corporation in such capacity his eligibility to act in such capacity shall not be
affected and lie shall not become or be deemed amenable to ally of the provisions hereof by reason of any
crime in the affairs of such bank or other corporation from whatsoever cause, whether specifically
excepted by any of the provisions hereof or not, until the expiration of one year from the date of his
election or employment.
SEC. 11. That authority to enforce compliance with sections two, three, seven and eight of this act by
the persons respectively subject thereto is hereby vested in the Interstate Commerce Commission where
applicable to common carriers, in the Federal Reserve Board where applicable to banks, banking
associates and trust companies, and in the Federal trade Commission where applicable to all other
character of commerce, to be exercised as follows:
Whenever the Commission or Board vested with jurisdiction thereof shall have reason to believe that
any person is violating or has violated any of the provisions of sections two, three, seven and eight of this
act, it shall issue and serve upon such person a complaint stating its charges in that respect, and containing
a notice of a hearing upon a day and at a place therein fixed at least thirty days after the service of said
complaint. The person so complained

CLAYTON ACT.

101

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 or board requiring such person to cease and desist from the violation of the
law so charged in said complaint. Any person may make application, and upon good cause spoken may
be allowed by the commission or board, to intervene and appear in said proceeding by counsel or in
person. The testimony in any such proceeding shall be reduced to writing and filed in the office of the
commission or board. If upon such hearing the commission or board, as the case may be, shall be of the
option that any of the provisions of said sections have been or ire being violated, it shall make a report in
writing in which it shall state its findings as to the facts, and shall issue and cause to be served on such
person an order requiring such person to cease and desist from such violations, and divest itself of the
stock held or rid itself of the directors chosen contrary to the provisions of sections seven and eight of this
act, if any there be, in the manner and within the time fixed by said order. Until a transcript of the record
in such notice shall have been filed in a circuit court of appeals of the United States, as hereinafter
provided, the commission or board may at any time, upon such notice and in such manner as it shall deem
proper, modify or set aside, in whole or in part, any report or any order made or issued by it under this
section.
If such person fails or neglects to obey such order of the commission or board while the same is in
effect, the commission or board may apply to the circuit Court of appeals of the United States, within any
circuit where the violation complained or was or is being committed or where such person resides or
carries on business, for the enforcement of its order, and shall certify and file with its application a
transcript of the entire record in the proceeding including all the testimony taken and the report and order
of the commission or board. Upon such filling of the application and transcript the court shall cause
notice thereof to be served upon such person and thereupon shall have jurisdiction of the proceeding and
of the question determined therein, and shall have power to make and enter upon the pleading’s,
testimony, and proceedings set forth in such transcript a decree affirming, modifying, or setting aside the
order of the commission or board. The findings of the commission or board as to the facts, if supported
by testimony, shall be conclusive. If either party shall apply to the court for leave to adduce additional
evidence, and shall show to the satisfaction of the court that such additional evidence is material and
thwart there were reasonable grounds for the failure to adduce such evidence In the proceeding before the
commission or board, the court may order such additional evidence. to be taken before the commission
or board and to be adduced upon the hearing In such manner and upon such terms and conditions as to
the court may seem proper. The commission or board may modify its findings as to the facts, or make new
findings, by reason of the additional evidence so taken, and it shall file such modified or new findings,
which, if supported by testimony, shall be conclusive, and its recommendation, if any, for the modification
or setting aside of its original order, with the return of such additional evidence. The judgment and decree
of the court shall be final, except that the same shall be subject to review by the Supreme Court upon
certiorari as provided in section two hundred laid forty of the Judicial Code.
Any party required by such order of the commission or board to cease and desist from a violation
charged may obtain a review of such order in said circuit court of appears by finite in the court a written
petition praying that the order of the commission or board be set aside. A copy of such petition shall be
forthwith served upon the commission or board, and thereupon the commission or board forthwith shall
certify and file in the court a transcript of the record as hereinbefore provided. Upon the filing of the
transcript the court shall have the same jurisdiction to affirm, set aside, or modify the order of the
commission or board as in the case of an application by the commission or board for the enforcement of
its order, and the finding of the commission or board as to the facts, if supported by testimony, shall in
like manner be conclusive.
The jurisdiction of the circuit court of appeals of the United States to enforce, set aside, or modify
orders of the commission or board shall be exclusive.
Such proceedings in the circuit court of appeals shall be given precedence. over other cases pending
therein, and shall be in every way expedited. No order of the commission or board or the judgment of the
court to enforce the same shall in any wise relieve or absolve any person from any liability under the
antitrust acts.
Complaints, orders, and other processes of the commission or board under this section may be served
by anyone duly authorized by the commission or

102

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

board, either (a) by delivering a copy thereof to the person to be served. or to a member of the partnership
to be served, or to the president, secretary, or other executive officer or a director of the corporation to be
served; or (b) by leaving a copy thereof at the principal office or place of business of such person; or (c)
by registering and mailing a copy thereof addressed to such person at his principal office or place of
business. The verified return by the person so serving said complaint, order, or other process setting forth
the manner of said service shall be proof of the same, and the return post-office receipt for said complaint,
order, or other process registered and mailed as aforesaid shall be proof of the service of the same.
Approved, October 15, 1914.

EXHIBIT 3.
RULES OF PRACTICE BEFORE THE FEDERAL TRADE COMMISSION.
I. SESSIONS.
The principal office of the commission at Washington, D. C., is open each business day from 9 a.m. to
4:30 p.m. The commission may meet and exercise all its powers at any other place, and may, by one or
more of 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 hearing contested proceedings will be held as ordered by the
commission.
Sessions of the commission for the purpose of making orders and for the transaction of other business,
unless otherwise ordered, will be held at the office of the commission at Washington, D. C., on each
business day at 10.30 a. m. Three members of the commission shall constitute a quorum for the
transaction of business.
All orders of the commission shall be signed by the Secretary.
II. COMPLAINTS.
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 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.
The commission shall investigate the matters complained of in such application, and if upon
investigation the commission shall have reason to believe that there is a violation of law over which the
commission has jurisdiction, the commission shall issue and serve upon the party complained of a
complaint, stating its charges and containing a notice of a hearing -upon a day and at a place therein fixed
at least 40 days after the service of said complaint.
III. ANSWERS.
Within 30 days from the service of the complaint, unless such time be extended by order of the
commission, the defendant shall file with the commission an answer to the complaint. Such answer shall
contain a short and simple statement of the facts Which constitute the ground of defense. It shall
specifically admit or deny or explain each of the facts alleged in the complaint, unless the defendant is
without knowledge, in which case lie shall so state, such statement operating as a denial. Answers in
typewriting must be on one side of the paper only, on paper not more then 8 ½ inches wide and not more
than 11 inches long, and weighing not less then 16 pounds to the ream, folio base, 17 by 22 inches, with
left-hand margins not less than 1 ½ inches wide, or they may be printed in 10 or 12 point type on good
unglazed paper 8 inches wide by 10 ½ inches long, with inside margins not less than 1 inch wide.
IV. SERVICE.
Complaints, orders, and other processes of the commission may be served by anyone duly authorized
by the commission, either (a) by delivering a copy thereof to the person to be served, or to a member of
the partnership to be served, or to the president, secretary, or other executive officer, or a director of the
corporation or association to be served; or (b) by leaving a copy thereof at
103

104

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

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

RULES OF PRACTICE.

105

XI. HEARINGS ON INVESTIGATIONS.
When a matter for investigation is referred to a single commissioner for examination or report, such
commissioner may conduct or hold conferences or bearings thereon, either alone or with other
commissioners who may sit with him, and reasonable notice of the time and place of such hearings shall
be given to parties in interest and posted.
The general counsel or one of his assistants, or such other attorney as shall be designated by the
commission, shall attend and conduct such hearings, and such hearings may, in the discretion of the
commissioner holding same, be public.
XII. HEARINGS BEFORE EXAMINERS.
When issue in the case is set for trial it shall be referred to an examiner for the taking of testimony. It
shall be the duty of the examiner to complete the taking of testimony with all due dispatch, and he shall
set the day and hour to which the taking of testimony may from time to time be adjourned. The taking of
the testimony both for the commission and the respondent shall be completed within 30 days after the
beginning of the same unless, for good cause shown. the commission shall extend the time. The examiner
shall, within 10 days after the receipt of the stenographic report of the testimony, make his proposed
finding as to the facts and his proposed order thereon, and shall forthwith serve copy of the same on the
parties or their attorneys, who, within 10 days after the receipt of same, shall file in writing their
exceptions, if any, to such proposed findings and order, and said exceptions shall specify the particular
part or parts of the proposed findings of fact or proposed order to which exception is made, and said
exceptions shall include any additional findings and any change In or addition to the proposed order which
either party may think proper. Citations to the record shall be made in support of such exceptions. Where
briefs are filed the same shall contain a copy of such exceptions. Argument on the exceptions to the
proposed findings and order, if exceptions be filed, shall be had at the final argument on the merits.
XIII. DEPOSITIONS IN CONTESTED PROCEEDINGS.
The commission may order testimony to be taken by deposition in a contest proceeding.
Depositions may be taken before any person designated by the commission and having power to.
administer oaths.
Any party desiring to take the deposition of a witness shall make application in writing, setting out the
reasons why such depositions should be taken, and stating the time when, the place where, and the name
and post-office address of the person before whom it is desired the deposition be taken, the name and postoffice address of the witness, and the subject matter or matters concerning which the witness is expected
to testify. If good cause be shown, the commission will make and serve upon the parties or their attorneys
an order wherein the commission shall name the witness whose deposition is to be taken, and specify the
time when, the place where, and the person before whom the witness is to testify, but such time and place,
and the person before whom the deposition is to be taken, so specified in the commission’s order, may or
may not be the same as those named in said application to the commission.
The testimony of the witness shall be reduced to writing by the officer before whom the deposition is
taken, or under his direction, after which the deposition shall be subscribed by the witness and certified
in usual form by the officer. After the deposition has been so certified it shall, together with a copy thereof
made by such officer or under his direction, be forwarded by such officer under seal in an envelope
addressed to the commission at its office in Washington, D. C. Upon receipt of the deposition and copy
the commission shall file in the record in said proceeding such deposition and forward the copy to the
defendant or the defendant’s attorney.
Such depositions shall be typewritten on one side only of the paper, which shall be not more than 8 ½
inches wide and not more than 11 inches long and weighing not less than 16 pounds to the ream, folio
base, 17 by 22 inches, with left-hand margin not less than 11/2 inches wide.
No deposition shall be taken except after at least 6 days’ notice to the parties. and where the deposition
is taken in a foreign country such notice shall be at least 15 days.

106

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

No deposition shall be taken either before the proceeding is at issue or, unless under special
circumstances and for good cause shown, within 10 days prior to the date of the hearing thereof assigned
by the commission, and where the deposition is taken in a foreign country it shall not be taken after 30
days prior to such date of hearing.
XIV. DOCUMENTARY EVIDENCE.
Where relevant and material matter offered in evidence is embraced in a document containing other
matter not material or relevant and not intended to be put in evidence, such document will not be filed,
but a copy only of such relevant and material matter shall be filed.
XV. BRIEFS.
Unless otherwise ordered, briefs may be filed at the close of the testimony in each contested proceeding.
The presiding commissioner or examiner shall fix the time within which brief shall be flied and service
thereof shall be made upon the adverse parties.
All briefs must be filed with the secretary and be accompanied by proof of service upon the adverse
parties. Twenty copies of each brief shall be furnished for the use of the commission, unless otherwise
ordered.
Application for extension of time In which to file any brief shall be by petition in writing, stating the
facts upon which the application rests, which must be filed with the commission at least 5 days before the
time for filing the brief.
Every brief shall contain, in the order here stated(1) A concise abstract or statement of the case.
(2) A brief of the argument, exhibiting a clear statement of the points of fact or law to be discussed, with
the reference to the pages of the record and the authorities relied upon in support of each point.
Every brief of more than 10 pages shall contain on its top flyleaves a subject index with page references.
the subject index to be supplemented by a list of all cases referred to, alphabetically arranged, together
with references to pages where the cases are cited.
Briefs must be printed in 10 or 12 point type on good unglazed paper 8 inches by 101/2 inches, with
inside margins not less than 1 inch wide and with double-leaded text and single-leaded citations.
Oral arguments will be had only as ordered by the commission.
XVI. ADDRESS OF THE COMMISSION.
All communications to the commission must be addressed to Federal Trade Commission, Washington
D. C., unless otherwise specially directed.

EXHIBIT 4.

EXTRACTS FROM THE TRADING WITH THE ENEMY ACT AND EXECUTIVE
ORDER OCTOBER 12, 1917

The act of Congress approved October 6, 1917, known as the trading with the enemy
act, contains the following provisions:
SEC. 10.

********
(b) Any citizen of the United States, or any corporation organized within the United States, may, when
duly authorized by the President, pay to an enemy or ally of enemy any tax, annuity, or fee which may be
required by the laws of much enemy or ally of enemy nation in relation to patents and trademarks, prints,
labels, and copyrights; and any such citizen or corporation may file and prosecute an application for letters
patent or for registration of trademark, print, label, or copyrights in the country of an enemy, or of an ally
of enemy, after first submitting such application to the President and receiving license so to file and
prosecute, and to pay the fees required by law and customary agents’ fees, the maximum amount of which
in each case shall be subject to the control of the President.
(c) Any citizen of the United States or any corporation organized within the United States desiring to
manufacture, or cause to be manufactured, a machine, manufacture, composition of matters or design, or
to carry on, or to use any trademark, print, label, or cause to be carried on a process under any patent or
copyrighted matter owned or controlled by an enemy or ally of enemy at any time during the existence of
a state of war may apply to the President for a license; and the President is hereby authorized to grant such
a license, nonexclusive or exclusive as he shall deem best, provided he shall be of the opinion that such
grant is for the public welfare, and that the applicant is able and intends in good faith to manufacture, or
cause to be manufactured, the machine, manufacture, composition of matter, or design, or to carry on, or
cause to be carried on, the process or to use the trademark, print, label, or copyrighted matter. The
President may prescribe the conditions of this license, including the fixing of prices of articles and
products necessary to the health of the military and naval forces of the United States or the successful
prosecution of the war, and the rules and regulations under which such license may be granted and the fee
which shall be charged therefore not exceeding $100, and not exceeding one per centum of the fund
deposited as hereinafter provided. Such license shall be a complete defense to any suit at law or in equity
instituted by the enemy or ally of enemy owners of the letters patent, trade-mark, print, label, or copyright,
or otherwise, against the licensee for infringement or for damages, royalty, or other money award on
account of anything done by the licensee under such license, except as provided in subsection (f ) hereof.
(d) The licensee shall file with the President a full statement of the extent of the use and enjoyment
of the license, and of the prices received in such form and at such stated periods (at least annually) as the
President may prescribe; and the licensee shall pay at such times as many be required to the alien property
custodian not to exceed five per centum of the gross sums received by the licensee from the sale of said
inventions or use of the trademark, print, label, or copyrighted matter or, if the President shall so order,
five per centum of the value of the use of such inventions, trademarks, prints, labels, or copyrighted matter
to the licensee as established by the President; and sums so paid shall be deposited by said alien property
custodian forthwith in the Treasury of the United States as a trust fund for the said licensee and for the
owner of the said patent, trade-mark, print, label, or copyright registration as hereinafter provided, to be
paid from the Treasury upon order

107

108

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

of the court, as provided in sub-division (f) of this section, or upon the direction of the alien property
custodian.
(e) Unless surrendered or terminated is provided in this act, any license, granted hereunder shall
continue during the term fixed in the license or in the absence of any such limitation during the term of
the patent, trademark, print, label, or copyright registration under which it is granted. Upon violation by
the licensee of any of the provisions of this act, or of the conditions of the license, the President may, after
due notice and hearing, cancel any license granted by him.
(f) The owner of any patent, trade-mark, print, label, or copyright under which a license is granted
hereunder may, after the end of the war and until the expiration of one year thereafter, file a bill in equity
against the licensee in the, district court of the United States for the district in which the said licensee
resides, or, if a corporation, in which it has its principal place of business (to which suit the Treasurer of
the United States shall be made a party), for recovery from the said licensee for all use and enjoyment of
the said patented Invention, trade-mark, print, label, or copyrighted matter: Provided, however, That
whenever suit is brought, as above, notice shall be filed with the alien property custodian within thirty
days after date of entry of suit: Provided further, That the licensee may make any and all defenses which
would be available were no license granted. The court on due proceedings had may adjudge and decree
to the said owner payment-of a reasonable royalty. The amount of said judgment and decree, when final,
shall be paid on order of the court to the owner of the patent from the fund deposited by the licensee, so
far as such deposit will satisfy said judgment and decree; and the said payment shall be in full or partial
satisfaction of said judgment and decree, as the all such judgments and decrees, facts may appear; and if,
after payment of, there shall remain any balance of said deposit, such balance shall be repaid to the
licensee on order of the alien property custodian. If no suit is brought within one year after the end of the
war, or no notice is filed as above required, then the licensee shall not be liable to make any further
deposits, and all funds deposited by him shall be repaid to him on order of the alien property custodian.
Upon entry of suit and notice filed as above required, or upon repayment of funds as above provided, the
liability of the licensee to make further reports to the President shall cease.
If suit is brought, as above provided, the court may, at any time, terminate the license, and may, in such
event, issue an injunction to restrain the licensee from infringement thereafter, or the court, in case the
licensee, prior to suit, shall have made investment of capital based on possession of the license, may
continue the license for such period and upon such terms and with much royalties as it shall find to be just
and reasonable.
(g) Any enemy, or ally of enemy, may institute and prosecute suits in equity against any person other
than a licensee under this act to enjoin infringement of letter patent, trade-mark, print. label, and
copyrights in the United States, owned or controlled by said enemy or ally of enemy in the same manner
and to the extent that he would be entitled so to do if the United States was not at war: Provided, That no
final judgment or decree shall be entered in favor of such enemy or ally of enemy by any court except after
thirty days’ notice to the alien property custodian. Such notice shall be in writing and shall be served in
the same manner as civil process of Federal Court.
(h) All powers of attorney heretofore or hereafter granted by an enemy or ally of enemy to any person
within the United States, in so far as they may be requisite to the performance of acts authorized in
subsections (a) and (g) of this section, shall be valid.
(i) Whenever the publication of an invention by the granting of a patent may, in the opinion of the
President, be detrimental to the public safety or defense, or may assist the enemy or endanger the
successful prosecution of the war, lie may order that the invention be kept secret and withhold the grant
of a patent until the end of the war: Provided, That the invention disclosed in the application for said
patent may be held abandoned upon it being established before or by the Commissioner of Patents that,
in violation of said order, said invention has been published or that, in application for a patent therefor
has been filed in any other country, by the inventor or his assigns or legal representatives without the
consent or approval of the commissioner or under a license of the President.
When an applicant whose patent is withheld as herein provided, and who faithfully obeys the order of
the President above referred to shall tender his

TRADING WITH THE ENEMY ACT.

109

invention to the Government of the United States for its use, the shall, if the ultimately receives a patent,
have the right to sue for compensation in the Court of claims, such right to compensation to begin from
the date of the use of the, invention by the Government.

By the Executive order of October 12, 1917, the power and authority to administer
the above section was vested in the Federal trade Commission, as follows:
XVII. I further hereby vest in the Federal Trade Commission the power and authority to issue licenses
under such terms and conditions as are not inconsistent with law or to withhold or refuse the same, to any
citizen of the United States or any corporation organized within the United States to file and prosecute
applications in the country of an enemy or ally of enemy for letters patent or for registration of trademark,
print, label, or copyright, and to pay the fees required by law and the customary agents’ fees, the maximum
amount of which in each case shall be subject to the control of such commission ; or to pay to any enemy
or ally of enemy any tax, annuity, or fee which may be required by the laws of such enemy or ally of
enemy nation In relation to patents, trademarks, prints, labels, and copyrights.
XVIII. I hereby vest in the Federal Trade Commission the power and authority to issue, pursuant to
the provisions of section 10 (c) of the trading-with-the-enemy act, upon such terms and conditions as are
not inconsistent with law, or to withhold or refuse a license to any citizen of the United States or any
corporation organized within the United States, to manufacture or cause to be manufactured a machine,
manufacture, composition of matter, or design, or to carry on or cause to be carried on a process under any
patent, or to use any trade-mark, print, label, or copyrighted matter owned or controlled by all enemy or
ally of enemy, at any time during the present war; and also to fix the prices of articles and products
manufactured under such licenses necessary to the health of the military and the naval forces of the United
States, or the successful prosecution of the war; and to prescribe the fee which may be charged for such
license, not exceeding $100 and not exceeding 1 percent of the fund deposited by the licensee with the
alien property custodian as provided by law.
XIX. I hereby further vest in the said Federal Trade Commission the executive administration of the
provisions of section 10 (d) of the trading-with-the-enemy act, the power and authority to prescribe the
form of, and time and manner of filing statements of the extent of the use and enjoyment of the license and
of the prices received and the times at which the licensee shall make payments to the alien property
custodian, and the amounts of said payments, in accordance with the trading-with-the-enemy act.
XX. I further hereby vest in the Federal Trade Commission the power and authority, whenever in its
opinion the publication of an invention or the granting of a patent may be detrimental to the public safety
or defense or may assist the enemy, or endanger the successful prosecuting of the war, to order that the
invention be kept secret and the grant letters patent withheld until the end of the war.
XXI. The said Federal Trade Commission is hereby authorized to take all such measures as may be
necessary or expedient to administer the powers hereby conferred.

By the Executive order of April 11, 1918, the power an authority vested in the
Federal Trade Commission under section 10 (b) of the Trading with the Enemy Act
ans Section XVII of the Executive order of October 12, 1917, was revoked as follows:
I hereby revoke the power and authority vested in the Federal Trade Commission by section XVII of
the Executive order of October 12, 1917, to issue license to any citizen of the United States or any
corporation organized within the United States, to file or prosecute application in the country of an enemy
or ally of enemy for letters patent or for registration of trade-mark, print, label, or copyright, and to pay
any fees or agent’s fees in connection therewith or to pay to any enemy or ally of enemy any tax, annuity,
or fee in relation to patents, trade-marks, prints, labels, and copyrights, and no such license shall be
granted until further order.

110

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

By the Executive order of November 25, 1919, there was revested in designated
officers certain powers under the trading with the enemy act as follows:
By virtue of the power and authority vested in me by “An act to define, regulate, and punish trading
with the enemy, and for other purposes,” approved October 6, 1917, I hereby rescind, as of the 14th day
of July, 1919, the Executive order of April 11, 1918, which revoked (1) the power and authority vested
in the Secretary of the Treasury by Section XI of the Executive order of October 12, 1917, to issue licenses
to send, take, or transmit out of the United States any letter or other writing, book, map, plan or other
paper, picture, or any telegram, cablegram, or wireless message, or other form of communication intended
for or to be delivered, directly or directly, to an “enemy” or “ally of enemy,” in any way relating to letters
patent, or registration of trade-mark, print, label, or copyright, or to any application therefore, and (2) the
power and authority vested In the Federal Trade Commission by Section XVII of the Executive order of
October 12, 1917, to issue licenses to any citizens of the United States or any corporation organized within
the United States, to file or prosecute applications In the country of an “enemy” or “ally of enemy” for
letters patent or for registration of trade-mark, print, label, or copyright, and to pay any fees or agents’ fees
in connection therewith; or to pay to any “enemy” or “ally of enemy” any tax, annuity, or fee in relation
to patents, trade-marks, prints, labels, and copyrights; and I do hereby order that on and after July 14,
1919, licenses to perform the acts hereinabove described may be issued under Sections XI and XVII of
the Executive order of October 12, 1917, by the officials In whom the authority to issue such licenses was
by said order vested; and I do hereby further order that any and all licenses issued on or after July 14,
1919, which, except for the above-mentioned order of April 11, 1918, would by their terms authorize any
of the acts hereinabove described, are hereby confirmed and approved, and all such licenses shall be
deemed to have full force and effect according to the terms thereof, in like manner as though said order
of April 11, 1918, had been rescinded prior to July 14, 1919.
By virtue of the power and authority revested in the Commission by the Executive order of November
25, 1919, above quoted, license is hereby granted to all citizens of the United States and all corporations
organized within the United States, to file or prosecute applications in the country of an enemy or ally of
enemy for letters patent or for registration of trade-mark, print, label, or copyright, and to pay any fees or
agents’ fees in connection therewith; or to pay to any enemy or ally of enemy any tax, annuity, or fee in
relation to patents, trade-marks, prints, labels, and copyrights.
Dated November 29, 1919.
FEDERAL TRADE COMMISSION,
[SEAL]
(Signed)
J. P. YODER, Secretary.

FORM OF LICENSE UNDER PATENT.
Patent licenses issued by the Federal Trade Commission under the provisions of the
“Trading with the enemy act” will be in substantially the following form:
Patent No ------------------, dated ------------------------------- to --------------------------- for ------------------------------.
The Federal Trade Commission, under the authority of and in conformity with the “Trading with the
enemy act,” and of the Executive order of October 12, 1917, hereby licenses ------------------------------------------ to make, use, and vend within the United States the invention described and claimed in United
States letters patent to ------------------------------------- No - ------------- dated -----------------------------(copy annexed hereto) for the period of -------------------------------- unless sooner terminated.
The licensee during the continuance of this license shall pay to the alien property custodian,
semiannually, within 30 days after the 1st day of January and the 1st day of July, respectively, of each
year, a royalty at the rate of -------------- per cent of the gross sums received by the licensee from the sale
of the invention so herein licensed (or ---------- per cent of the value

TRADING WITH THE ENEMY ACT.

111

of the use thereof to the licensee as established by the Federal Trade Commission).
The licensee shall, during the continuance of this license, keep proper accounts and separate books
containing full particulars of:
(a) All articles made or caused to be made by the licensee under the said letters patent and of the price
or prices charged therefore;
(b) All items of cost incurred in the use of such invention and the manufacture and sale of articles
inside thereunder; and
(c) All other matters and things which in the opinion of the Federal Trade Commission may be material
for the purpose of showing the amounts from time to time payable by the licensee concerning such royalty
and what is a fair and reasonable price to the public for such article.
The licensee shall, within 10 days after each of the semiannual days aforesaid, deliver a sworn statement
to the Federal Trade Commission in writing showing the aforesaid particulars.
The licensee shall, during the continuance of this license, give al such information as the Federal Trade
Commission may consider to be material for the purpose of ascertaining the amount of royalty payable
by the licensee under this license, the cost of the use of such invention, the cost of producing and the price
or prices charged by the licensee for the said article, and for that purpose shall, if requested by the Federal
Trade Commission, permit such person or persons as shall be authorized in that behalf by the Federal
Trade Commission at any time or times to enter upon and inspect any factory or place of bus in which the
use of the said invention or the manufacture shall be carried on and all books, papers, and documents of
such licensee relating to such use, manufacture, and sale.
If any payment under this license shall not be made, within one month after the same shall have become
due under the provisions herein contained (whether demand therefor shall have been inside or not), or if
the licensee shall or shall attempt to assign or part with the benefit of or grant any sublicense under this
license, or shall make default in the performance or observance of any obligations on his part herein
contained, or shall have violated any of the conditions of this license or any of the provisions of the statute
under which it is granted, and if, after 10 days’ notice in writing, shall have failed to comply with the
aforesaid, then the Federal Trade Commission may, by notice in writing, and after a hearing, cancel and
terminate this license as from the date of such notice, but without prejudice to and so as not in any annular
to affect any liability hereunder on the part of the licensee which may then be subsisting of have accrued.
If in the opinion of the Federal Trade Commission the licensee has failed to use this license so as to
satisfy the reasonable requirement of the public with regard to the subject matter thereof; or
If in the opinion of the Federal Trade Commission the licensee has failed to supply to thin public tire
articles made under this license at reasonable prices; or
If in the opinion of the Federal Trade Commission the licensee has charged unreasonable or excessive
prices for articles made under this license; or
If in the opinion of the Federal Trade Commission the articles made under this license are of
unsatisfactory quality (and the licensee shall furnish to the Federal Trade Commission in the manner
prescribed by it and when and as often as required, samples and specimens for inspection, analysis, and
test); or
Circumstances have arisen which, in the opinion of the Federal Trade Commission, make it just and
equitable that this license be canceled in whole or in part ;
The Federal Trade Commission may, in its discretion, give notice in writing to the licensee to terminate
and cancer this license in whole or in part, and, if canceled and terminated, the same shall be without
prejudice to and so as not in any manner to affect any liability hereunder on the part of the licensee which
may then be subsisting or have accrued.
Any sums which may at any time be payable by the licensee under the provisions of this license shall
be a debt due from the licensee to the people of the United States and shall be recovered in an appropriate
action in the name of the people of the United States against the licensee.
Dated ____________ 191__
Accepted and agreed to.
______________________________________,
Licensee.

A copy of the patent is to be attached.

112

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

If the licensee is not to be the actual manufacturer, the licensee will be held
accountable to the Federal Trade Commission for the observance of the terms of his
license by the actual manufacturer of the article, and the license will contain the
following addendum, naming the actual manufacturer who shall sign:
__________________, manufacturer for __________________________________, the licensee
_____________________ of the article herein licensed, separately agrees to keep separate books containing full particulars of all articles manufactured, and the cost thereof, sold to _______________________
the licensee, and the price or prices charged therefore and his books and plant shall be open to inspection
in the same manner as provided for the licensee. The licensee and the undersigned, during the continuance
of the license, shall furnish or procure to be furnished all such information as the Federal Trade
Commission may consider to be material for the purpose of ascertaining the amount of royalty payable
by the licensee, the cost of producing or procuring the patented article, the price or prices charged for said
article, and shall permit or procure permission to be given to such person or persons as shall be authorized
in that behalf by the Federal Trade Commission at any time or times to enter upon and inspect any factory
or place of business in which the manufacture of the patented article shall be carried on by the undersigned
for the licensee, and all books, papers, and documents relating to such manufacture and sale.
The undersigned, manufacturer, is not authorized to make, use, or vend the Invention of the patent
except for ______________________, the licensee, and not further or otherwise, and the undersigned
undertakes to observe and perform the terms and conditions of the license to ____________________ to
which this is attached.
Dated ____________, 191__.
Accepted and agreed to.
___________________________________,
Manufacturer.

FORM OF LICENSE UNDER COPYRIGHT.
Copyright licenses issued by the Federal Trade Commission under the provisions of
the “Trading with the enemy act” will be in substantially the following form:
Copyright No. ______, dated _____ to _____ for the (book, etc., as the case may be; see copyright act
of March 4, 1909, sec. 5, for classification) entitled (insert title of work).
The Federal Trade Commission, under the authority of and in conformity with the “Trading with the
enemy act” and of the Executive order of October 12, 1917, hereby licenses _____ to exercise within the
United States all the rights created by the copyright laws of the United States of America, being the act
of March 4, 1909, as amended with respect to the subject matter of copyright to ______, No. _____, dated
_____ for the (book, etc., as the case may be; see copyright act of March 4, 1909, see. 5, for classification)
entitled (insert title of work), a copy of which is annexed hereto, for the period of ________, unless sooner
terminated.
The licensee, during the continuance of this license, shall pay to the alien property custodian,
semiannually, within 30 days after the 1st day of January, and the 1st day of July, respectively, of each
year, a royalty at the rate of ___ per cent of the gross sums received by the licensee front the sale of the
copyright work so herein licensed (or ___ per cent of the value of the use thereof to the licensee as
established by the Federal Trade Commission).
The licensee shall, during the continuance of this license, keep proper accounts and separate books
containing full particulars of(a) All copies of said copyright work made or caused to be inside by the licensee under the said
copyright and of the price or prices charged therefor;
(b) All items of cost incurred in the use of said copyright work and in the manufacture and sale of such
copyright work; and

(c) All other matters and things which, in the opinion of the Federal Trade Commission, may be
material for the purpose of showing the amounts from

TRADING WITH THE ENEMY ACT.

113

time to time payable by the licensee concerning such royalty and what is a fair and reasonable price to the
public for such copyright work.
The licensee shall, within 10 days after each of the semiannual days aforesaid, deliver a sworn statement
to the Federal Trade Commission in writing showing the aforesaid particulars.
The licensee shall the continuance of this license give all such information as the Federal Trade
Commission may consider to be material for the purpose of ascertaining the amount of royalty payable
by the licensee under this license, the cost of producing, and the price or prices charged by the licensee
for the said copyright work, and for that purpose shall, if requested by the Federal Trade Commission,
permit such person or persons as shall be authorized in that behalf by the Federal Trade Commission at
any time or times to enter upon and inspect any factory or place of business of the licensee in which the
use or manufacture of the said copyright work shall be carried on, and all books, papers, and documents
of such licensee relating to such use, manufacture, and sale.
If any payment under this license shall not be made within one month after the same shall have become
due under the provisions herein contained (whether demand therefor shall have been made or not), or if
the licensee shall or shall attempt to assign or part with the benefit of or grant any sublicense under this
license, or shall make default in the performance or observance of any obligation on his part herein
continued, or shall have violated any of the conditions of this license or any of the provisions of the statute
under which it is granted, and if after 10 days’ notice, in writing, shall have failed to comply with the
aforesaid, then the Federal Trade Commission may, by notice in writing, and after a hearing, cancel, and
terminate this license as from the date of such notice, but without prejudice to and so as not in any manner
to affect any liability hereunder on part of the licensee which may be subsisting of have accrued.
If in the opinion of the Federal Trade Commission the licensee has failed to use this license so as to
satisfy the reasonable requirement of the public with regard to the copyright work; or
If in the opinion of the Federal Trade Commission the licensee has failed to supply to the public the
copyright work at reasonable prices; or if in the opinion of the Federal Trade Commission the licensee has
charged unreasonable or excessive prices for said copyright work; or
Circumstances have arisen which in the opinion of the Federal Trade Commission make it just and
equitable that this license be canceled in whole or in part;
The Federal Trade Commission may, in its discretion, give notice in writing o the licensee to terminate
this licensee in whole or in part, and if canceled and terminated the same shall be without prejudice to and
so as not in any manner to affect any liability hereunder on the part of the licensee which may then be
subsisting or have accrued.
Any sums which may at any time be payable by the licensee under the provisions of this license shall
be a debt due from the licensee to the people of the United States and shall be recovered in an appropriate
action In the name of the people of the United States against the licensee.
Dated____________, 191___
Accepted and agreed to.
___________________,
Licensee.

If the licensee is not to be the actual manufacturer or producer of the copyright work,
the licensee will be held accountable to the Federal Trade Commission for the
observance of the terms of his license by the actual manufacturer or producer of the
article, and the license will contain the, following addendum, naming the actual
manufacturer or producer of the article, who shall sign:
_____________________ , the manufacturer for _____________ the licensee of the copyright work
herein licensed, separately agrees to keep separate books containing full particulars of
___________________________, the licensee, and the price or prices charged thereof, and his books and
plant shall be open to inspection in the same manner

114

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

as provided for the licensee. The licensee and the undersigned, during the continuance of the license,
shall furnish or procure to be furnished all such information as the Federal Trade Commission may
consider to be material for the purpose of ascertaining the amount of royalty payable by the licensee, the
cost of producing or procuring the copyright work, the price or prices charged thereof, and shall permit
or procure permission to be given to such person or persons as shall be authorized in that behalf by the
Federal Trade Commission at any time or times to enter upon and inspect any factory or place of business
in which the manufacture of the copyright work shall be carried oil by the undersigned for the licensee,
and all books, papers, and documents relating to such manufacture and sale.
The undersigned, manufacturer, is not authorized to exercise any right conferred by the. copyright
statutes with respect to the copyright work here involved except for __________ _________________,
the licensee, and not further or otherwise, and the undersigned undertakes to observe and perform the
terms and conditions of the license to ____________________ to which this is attached.
Dated _______, 191__.
Accepted and agreed to.
________________________________,
Manufacturer.

A surety company bond may be required of the licensee, if, in the opinion of the
Federal Trade Commission, it is necessary to safeguard the public interest.
FORM OF APPLICATION FOR LICENSE.
TRADING WITH THE ENEMY ACT.
To the FEDERAL TRADE COMMISSION:
Application of _____ for a license under patent to ____, date _______No.______.
(If under copyright, state title of work, name of copyright proprietor, and date of copyright registration.)
The undersigned. for the purpose of securing a license, represents to the Federal Trade Commission as
follows:
(a) The undersigned is a citizen of the United States, residing at street, in the city of ____, State of
_____, United States of America. (If a corporation, state under the laws of what State it is organized;
the location of its corporate offices, its business offices, and plants or factories.)
(b) The undersigned is desirous of being licensed hinder the patent (or copyright) above United, which
is owned or controlled by a citizen or subject of _____. (State the enemy country or the ally of the enemy
of which the patentee or copyright proprietor is a citizen or subject, or if a corporation where it is
incorporated. and if the patent or copyright is not owned but is claimed to be controlled state fully the facts
which establish the nature and origin of the enemy or ally of enemy control, wether it is means of an
agency, by contract, by stock ownership in corporations, or otherwise.)
(c) Attached here is a Patent copy of the letters patent and a certified abstract of its title, from the Patent
Office and a certified copy of the petition and all powers of attorney in the file of the application (or, in
the ease of a copyright, a specimen of the copyrighted work, and a certified copy of the copyright entries
from the office of the Register of Copyrights).
(d) It is for the public welfare that the license applied for be granted because--(Here state briefly but
completely and in nontechnical language the reason why it is for the public benefit that the license be
granted and specifically the demand for the article prior to the war, the demand for the article at the present
time whether or not this demand is being met or can be met, prices obtained prior to the war and prices
at the present time.)
(e) Applicant is able to make or cause to be made the patented or copyrighted article because (Here
state specifically the applicant’s experience in the production of articles of the kind covered by the patent
or copyright, his

TRADING WITH THE ENEMY ACT.

115

technical equipment for manufacturing and selling such articles and his ability to do so, the estimated cost
of manufacture and price proposed to be charged if the license is granted.)
(If the applicant does not intend to manufacture but to procure the manufacture of the article, state
specifically what arrangements have been made or proposed to this end and their terms and conditional.
State the name and address of the manufacturer proposed to be employed and his technical equipment,.
etc., and article copies of any contracts or proposals.)
(f) The license desired is exclusive or nonexclusive for the following reasons:(Here state reasons why,
in the opinion of the applicants the license be exclusive or nonexclusive.)
(g) The license is desired(1) For the term of the patent or copyright, (2) the duration of the war, or (3) any other period, stating
reasons in each case.
(h) The application is also to contain the following: “The undersigned intends in good faith to
manufacture or cause to be manufactured the article licensed and understands that the license, if granted,
may not be assigned and may be canceled by the Federal Trade Commission, after due notice of hearing
upon violation by the undermined of any of the provisions of the “Trading with the enemy act ‘ or of any
of the conditions of the license.”
(Signed)
______ __________,
Applicant.
OATH FOR AN INDIVIDUAL.
STATE OF __________________
County of ________________, ss:
__________________________, being duly sworn, deposes and states that the is the same person
whose name is signed to the foregoing statement; that lie has read this statement and’ knows and
understands its contents; and that it is true.
_____________________
Subscribed and sworn to before me this ___________ day of _______ , 191__.
_________________________,
Notary Public.
OATH FOR A CORPORATION.
STATE OF _______________
County of ________________, ss:
___________________________, being duly sworn, deposes and states that he is the
_________________________ of __________________________, the corporation whose name is signed
to the foregoing statement; that the is duly ,authorized to swear to such statement on behalf of such
corporation; that the has read this statement and knows and understands its contents; and that it is true.
____________________________
Subscribed and sworn to before me this ____________ day of __________, 19__.
________ _________
Notary Public.
To:
(Date)
In re application for United States
patent of __________________
____________________________. Ser. No. _________________________________________
____________________________ Filed _____________________________________________
For
______________________________________________________________________________
GENTLEMEN: Inclosed is a duly certified copy of an order of the Federal Trade Commission with
reference to the matter identified in the caption of this letter. Violation of this order entails a fine of
not more than ten thousand dollars ($10,000) or imprisonment of not more than ten (10) years, or
both. You are directed to govern yourselves accordingly.
Very truly yours,

(Signed)

FEDERAL TRADE COMMISSION,
L. L. BRACKEN, Secretary.

116

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.
UNITED STATES OF AMERICA,
FEDERAL TRADE COMMISSION,
(Date.)

IN THE MATTER OF ENJOINING PUBLICATION OF CERTAIN PATENTS AND SECRECY
OF INVENTIONS.
It appearing to the Federal Trade Commission that the publication of certain alleged inventions, for
which applications for patents have been made in the United States Patent Office, and which are fully
identified in a schedule filed with the Federal Trade Commission ___________, said schedule being dated
________________, and now in the files of the Federal Trade Commission, may be detrimental to the
public safety or defense and may assist the enemy and endanger the successful prosecution of the war, and
that said alleged inventions are in whole or in part known to the alleged inventors, assigns, if any, and their
solicitors.
Therefore, in conformity with the provisions of the trading with the enemy act and of the Executive
order of October 12.1917-It is ordered that, without the consent or approval of the Commissioner of
Patents or license from the Federal Trade Commission, the said inventors, assigns, if any, and solicitors,
and each thereof, and all others having knowledge of the said inventions or any thereof, keep the said
inventions and each of them secret and refrain from publication or any disclosure thereof.
It is further ordered that a copy of this order be served upon the said inventors, assigns, if any, and
solicitors by registered mall forthwith.
A true copy of the order this day entered.
FEDERAL TRADE COMMISSION.
Attest:
[SEAL.]
(Signed)
L. L. BRACKEN, Secretary.

EXHIBIT 5.
EXPORT TRADE ACT.
An Act To promote export trade, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United States Of America in Congress
assembled, That the words “export trade” wherever used in this act mean solely trade or commerce in
goods, wares, or merchandise exported, or in the course of being exported from the United States or any
Territory thereof to any foreign nation; but the words “export trade” shall not be deemed to include the
production, manufacture, or selling for consumption or for resale, within the United States or any Territory
thereof, of such goods, wares, or merchandise, or any act in the course of such production, manufacture,
or selling for consumption or for resale.
That the words “trade within the United States” wherever used in this act mean trade or commerce
among the several States or in any Territory of the United States, or in the District of Columbia, or
between any such Territory and another, or between any such Territory or Territories and any State or
States or the District of Columbia, or between the District of Columbia and any State or States.
That the word “association” wherever used in this act means any corporation or combination, by
contract or otherwise, of two or more persons, partnerships, or corporations.
SEC. 2. That nothing contained in the act entitled “An act to protect trade and commerce against
unlawful restraints and monopolies,” approved July second, eighteen hundred and ninety, shall be
construed as declaring to be illegal an association entered into for the sole purpose of engaging in export
trade and actually engaged solely in such export trade, or an agreement made or act done in the course of
export trade by such association, provided such association, agreement, or act is not in restraint of trade
within the United States, and is not in restraint of the export trade of any domestic competitor of such
association: And provided further, That such association does not, either in the United States or elsewhere,
enter into any agreement, understanding, or conspiracy, or do any act which artificially or intentionally
enhances or depresses prices within the United States of commodities of the class exported by such
association, or which substantially lessens competition within the United States or otherwise restrains
trade therein.
SEC. 3. That nothing contained in section seven of the act entitled “An act to supplement existing laws
against unlawful restraints and monopolies, and for other purposes,” approved October fifteenth, nineteen
hundred and fourteen, shall be construed to forbid the acquisition or ownership by any corporation of the
whole or any part of the stock or other capital of any corporation organized solely for the purpose of
engaging in export trade, and actually engaged solely in such export trade, unless the effect of such
acquisition or ownership may be to restrain trade or substantially lessen competition within the United
States.
SEC. 4. That the prohibition against “unfair methods of competition” and the remedies provided for
enforcing said prohibition contained in the act entitled “An act to create a Federal trade commission, to
define its powers and duties, and for other purposes,” approved September twenty-sixth, nineteen hundred
and fourteen, shall be construed as extending to unfair methods of competition used in export trade against
competitors engaged in export trade, even though the acts constituting such unfair methods are done
without the territorial jurisdiction of the United States.
SEC 5. That every association now engaged solely in export trade, within sixty days after the passage
of this act, and every association entered into hereafter which engages solely in export trade, within thirty
days after its creation, shall file with the Federal Trade Commission a verified written state117

118

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

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

EXHIBIT 6.
CURTIS CASE.
FEDERAL TRADE COMMISSION v. CURTIS PUBLISHING Co.
(Argued Nov 17.1922. Decided Jan. 8, 1923.)
No.86.
1. TRADE-MARKS AND TRADE-NAMES AND UNFAIR COMPETITION KEY No.80½, NEW VOL.,
8A KEY-NO. SERIES--WHETHER METHOD IS UNFAIR COMPETITION, OR AGREEMENT
TENDS TO CREATE MONOPOLY, IS FOR THE COURT.
The ultimate determination of what constitutes unfair competition in interstate commerce, and whether
the leases, sales agreements, or understandings substantially lessen competition or tend to create a
monopoly, is for the court, and not for the Trade Commission.
2. TRADE-MARKS AND TRADE-NAMES AND UNFAIR COMPETITION KEY No.80½, NEW VOL.
8A KEY-NO. SERIES-COURT NEED NOT REMAND TO COMMISSION FOR FURTHER
FINDINGS, IF CIRCUMSTANCES SHOW JUSTICE REQUIRES DECISION.
Under the Federal Trade Commission act (Comp. St., par. 8836a--8836k), making the findings of fact
supported by evidence conclusive, but granting jurisdiction to the Circuit Court of Appeals to make and
enter, on the pleadings, testimony, and proceedings, a decree affirming, modifying, or setting aside an
order of the commission, the court can examine the whole record, and ascertain whether there are material
facts not reported by the commission, and if there is substantial evidence relating to such facts, from which
different conclusion reasonably might be drawn, the matter should be remanded to the commission to
make additional findings; but, if, from all the circumstances, it clearly appears that In the interest of justice
the controversy should be decided without further delay, the court has full power to do so.
3. MONOPOLIES KEY No. 17(2)-CONTRACTS WITH DISTRIBUTORS HELD AGENCY AND
NOT SALES AGREEMENTS.
Contracts between a publisher and a large number of distributors, some of whom had been wholesale
dealers in magazines and others not, whereby the distributors agreed to requisition from the publisher the
number of magazines required for their territory, title to remain in the publisher until sold, and to train and
supervise boys who were to sell the magazines, are contracts of agency and not of sale on condition, so
that they do not violate Clayton Act, paragraph 3 (Comp. St., par. 8835c), prohibiting lease or sale
contracts which prohibit the lessee or buyer from handling the product of competitors, even though the
contracts contained clauses prohibiting the distributors from handling other magazines, unless with the
consent of the publisher.
4. TRADE-MARKS AND TRADE--NAMES AND UNFAIR COMPETITION KEY No. 80½, NEW
VOL. 8A KEY-No. SERIES--EMPLOYMENT OF EXCLUSIVE AGENTS IS NOT “UNFAIR
COMPETITION.”
The employment of competent agents obligated to devote their entire time and attention to developing
the principal’s business, to the exclusion of all others, where nothing else appears, is not unfair
competition, within Federal Trade Commission act, par. 5 (Comp. St., par. 8836e).
(The syllabus Is taken from 43 Sup. Ct. 210.)
On writ of certiorari to the United States Circuit Court of Appeals for the Third Circuit.
Complaint by the Federal Trade Commission against the Curtis Publishing Company. An order of the
Commission requiring the company to desist from
119

120

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

entering into certain contracts or enforcing certain provisions of outstanding-contracts was set aside by
the Circuit Court of Appeals (270 Fed. 88,1), and the commission brings certiorari. Affirmed.
Mr. Chief Justice Taft and Mr. Justice Brandeis, doubting.
Mr. Solicitor General Beck and Adrien F. Busick, both of Washington, D. C., for petitioner.
Mr. John G. Milburn, of New York City, for respondent.
Mr. Justice McReynolds delivered the opinion of the court :
The court below entered a decree setting aside an order of the Trade Commission, dated July 21, 1919,
which directed respondent publishing company to cease and desist from entering into or enforcing
agreements prohibiting wholesalers from selling or distributing the magazines or newspapers of other
publishers. 270 Fed. 881. And the cause is here by certiorari.
The commission issued an original complaint July 5, 1917, based mainly on a restrictive clause in
existing contracts with so-called district agents. Thereafter respondent changed its agreement. An
amended complaint followed, which amplified the original allegations and attacked the second contract
and consequent conditions.
The first section of the amended complaint declares there is reason to believe that respondent has been
and is using unfair methods of competition contrary to section 5, act of Congress approved September
26, 1914, c. 311, 38 Stat. 717,1 and specifically charges: That respondent, a Pennsylvania corporation with
principal place of business at Philadelphia, has long engaged in publishing, selling, and circulating weekly
and monthly periodicals in interstate commerce. That with intent, purpose, and effect of suppressing
competition in the publication, sale, and circulation of periodicals it now refuses and for some months past
has refused to sell its publications to any dealer who will not agree to refrain from selling or distributing
those of certain competitors to other dealers or distributors. That with the same intent, purpose, and effect
it is making and for several months last past has made contracts with numerous wholesalers to distribute
its periodicals as agents, and not to distribute those of other publishers without permission. That
wholesalers so restricted are the principal and often the only medium for proper distribution of weekly and
monthly periodicals in various localities throughout the United States, and many of the so-called agent’s
formerly operated under contracts with respondent which abridged their liberty of resale.
Whenever the commission shall have reason to believe that any such person, partner ship, or corporation has been
or is using any unfair method of competition in commerce, and if it shall appear to the commission that a proceeding
by it in respect thereof would be to the interest of the public, it shall issue and serve upon such person, partnership,
or corporation a complaint stating its charge in that respect, and containing a notice of a hearing upon a day and at a
place therein mixed 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 mixed 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. * * * If upon such hearing the commission shall be of the opinion that the
method of competition in question is prohibited by this act, it shall make a report in writing in which it shall state its
findings as to the facts, and shall issue and cause to be served on such person, partnership, or corporation an order
requiring such person, partnership, or corporation to cease and desist from using such method of competition. * *
*
If such person, partnership, or corporation fails or neglects to obey such order of the commission while the same
Is in effect, the commission may apply to the circuit court of appeals of the United States, within. any circuit where
the method of competition in question was used or where such person, partnership, or corporation. resides or carries
on business, for the enforcement of its order, and shall certify and file with its application a transcript of the entire
record in the proceeding, including all the testimony taken and the report and order of the commission.. Upon such
filing of the application. and transcript the court shall cause notice thereof to be served upon. such person, partnership,
or corporation an thereupon shall have Jurisdiction of the proceeding and of the question determined therein, and shall
have power to make and enter upon the pleadings, testimony, and proceedings set forth in such transcript a decree
affirming, modifying, or-setting aside the order of the commission. The findings of the commission as to the facts,
if supported by testimony, shall be conclusive. If either party shall apply to the court for heave to adduce additional
evidence, and shall show to the satisfaction of the court that such additional evidence is material and that there were
reasonable grounds for the failure to adduce such evidence in the proceeding before the commission, the court may
order such additional evidence to be taken before the commission and to be adduced upon the hearing in such manner
and upon such terms and conditions as to the court may seem proper.
Any party required by such order of the commission to cease and desist from using such method of competition may
obtain a review of such order in said circuit court of

1 SEC. 5. That unfair methods of competition in commerce are hereby declared unlawful.

The commission is hereby empowered and directed to prevent persons, partnerships, or corporations, except banks,
and common carriers subject to the acts to regulate commerce, from using unfair methods of competition in commerce.

CURTIS CASE.

121

appeals by filing in the court a written petition praying that the order of the commission be set aside. A copy of such
petition shall be forthwith served upon the commission, and thereupon the commission forthwith shall certify and file
in the court a transcript of the record as hereinbefore provided. Upon the filing of the transcript the court shall have
the same jurisdiction to affirm, set aside, or modify the order of the commission as in the case of all application by the
commission fortune enforcement of its order and the findings of the commission as to the facts if supported by
testimony, shall in like, manner be conclusive.

The second section declares there is reason to believe respondent is violating Section 3, act of Congress
approved October 15, 1914--Clayton Act--c. 323, 38 Stat 730, 2 and specifically charges: That respondent
publishes, sells, and circulates weekly and monthly periodicals in interstate commerce. That for some
months past in such commerce, it has sold and is now selling and making contracts for the sale of its
publications and periodicals for use and resale and is fixing the price charged on condition, agreement,
or understanding that the purchaser shall not sell other publications or periodicals, thereby substantially
lessening competition and tending to create a monopoly.
Respondent replied to the notice to show cause why it should not be required to desist “from the
violations of law charged in this complaint.” It denied unlawful conduct and claimed that the parties
contracted with as agents were such in fact their services were necessary for the maintenance of the plan
originated by it of distributing publications through schoolboys, who require special superintendence; and
further, that such agents had lawfully agreed to abstain from other connections and devote their time and
attention to superintending the boys and to the general upbuilding of sales. Copies of respondents first
and second agreements with distributors accompanied the answer. The first had then been superseded and
largely discontinued.
The second contract provides that upon requisition respondent will consign its publications to the agent
as he may require, retaining title until they are sold; that the agents will supply the demand of boys and
dealers at specified prices, will use reasonable efforts and devote all necessary time to promoting sales of
such publications; “that without the written consent of the publisher he will not display, deliver, or sell
any copies of any one of said publications before the authorized publication date, as specified in the
printed requisition blanks, or disposed of any periodicals other than those published by the publisher, or
directly ir indirectly furnish to any other publisher or agent the names and addresses of the persons to
whom the publisher’s publications are sold or delivered; that subject to the principal’s direction and
control the agent shall train, instruct, and supervise an adequate force of boys for distributing the
publications; and that he will return unsold copies, their cover pages, or headings.
After taking such testimony--2,500 pages--the commission made a brief and rather vague report of two
pages, containing findings and conclusions based on the second contract with dealers and without direct
reference to the earlier one. The substance of the report follows.
“PARAGRAPH 1. Respondent, a Pennsylvania corporation with principal place of business at
Philadelphia, is engaged in publishing, selling, and distributing weekly and monthly periodicals among
the States.
“PAR. 2. That in the course of such commerce, the respondent has entered into contracts with certain
person’s partnerships, or corporations to sell or distribute its magazines, by the terms of which contracts,
such persons, partnerships, or corporations have agreed among other things, not to act as agent for or
supply at wholesale rates any periodicals other than those published by the publisher 3--the respondent
herein--without the written consent of such publisher;

2 SEC. 3. That it shall he unlawful for any person engaged in commerce, in the course of such commerce, to lease
or make a sale or contract for sale of goods, wares. merchandise, machinery, supplies, or other commodities, whether
patented or unpatented, for use, consumption, or resale within the United States or any Territory thereof or the District
of Columbia or any insular possession or other place, under the jurisdiction of the United States, or fix a price charged
therefor, or discount from, or rebate upon, such price, on the condition, agreement, or understanding that the lessee
or purchaser thereof shall not use or deal in the goods, wares, merchandise, machinery, supplies, or other commodities
of a competitor or competitors of the lessor or seller, where the effect of such lease, sale, or contract for sale or such
condition, agreement, or understanding may be to substantially lessen competition or tend to create a monopoly in any
line of commerce.
Section 11 authorizes the Trade Commission to enforce, section 3, with certain exceptions, and directs that this shall
be done, as prescribed by the act establishing the commission, supra, with like power of review in the courts.
3 These words are quoted from the second contract.

122

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

that of such persons, partnerships, or corporations approximately four hundred forty-seven (447),
hereinafter referred to as ‘dealers,’ are and previous to entering into such contracts with respondent were
regularly engaged in the business of wholesale dealers in newspapers or magazines, or both, and as such
are as aforesaid engaged in the sale or distribution of magazines or newspapers, or both, and as such are
as aforesaid engaged in the sale or distribution of magazines or newspapers, or both, of other publishers;
that many of said four hundred forty-seven (447) dealers, and many others who have become such
wholesale dealers since entering into such contracts, bound by said contract provisions as aforesaid, have
requested respondent’s permission to engage also in the sale or distribution of certain publications
competing in the course of said commerce, with those of respondent, which permission as to said
competing publications has been uniformly denied by respondent; that in enforcing said contract provision
as to said dealers, and in denying them said permission, respondent has prevented and now prevents
certain of its competitors from utilizing established channels for the general distribution or sale of
magazines or newspapers, or both, of different and sundry publishers; that such established channels are
in most instances the principal and most efficient, and in numerous cases, the only medium for the
distribution of such publications in the various localities of the United States; that such method of
competition so employed by respondent in the course of such commerce, as aforesaid, has proved and is
unfair.
“PAR. 3. That in the course of such commerce, the respondent has made sales of its magazines to or
entered into contracts for the sale of the same with certain persons, partnerships, or corporations, by the
terms of which sales or contracts for such sales, such persons, partnerships, or corporations have agreed,
among other things” (here follow, without material change, the words of paragraph 2 printed, supra. in
italics; “that the effect of said contract provision has been, and is, to substantially lessen competition with
respondent’s magazines and tends to create for the respondent a monopoly in the business of publishing
magazines of the character of those published by respondent.”
The commission concluded that the method of competition described in para graph 2 of the report
violates section 5, act of September 26, 1914, and that the acts and conduct specified in the third
paragraph violate section 3; act of October 15, 1914. And it thereupon ordered: That the respondent cease
and desist, while engaged in interstate commerce, from entering into any contracts, agreements, or
understandings which forbid persons, partnerships, or corporations’ already engaged in the sale or
distribution of magazines or newspapers, or both, of other publishers from acting as agents for, selling,
or supplying to others at wholesale rates periodicals other than respondent’s without its consent from
contracting with those already engaged in the sale or distribution of magazines or newspapers, or both,
of other publishers, forbidding them from selling or distributing or continuing to sell or distribute the
same; and from enforcing any provision of an outstanding contract whereby one now engaged in the sale
or distribution of magazines or newspapers, or both of other publishers is for bidden to sell or distribute
the same without respondent’s permission.
The statute provides (sec. 5) that when the commission’s order is duly challenged it shall file a transcript
of the record, and thereupon the court shall have jurisdiction of the proceedings and the question
determined therein and shall have power to make and enter, upon the pleadings, testimony, and
proceedings, a decree affirming, modifying, or setting aside the order; but the commission’s findings as
to the facts, if supported by evidence, shall be conclusive. The court is also empowered to order the taking
of additional evidence for its consideration.
We have heretofore pointed out that the ultimate determination of what constitutes unfair competition
is for the court, not the commission; and the same rule must apply when the charge is that leases, sales,
agreements, or understandings substantially lessen competition or tend to create monopoly. Federal Trade
Commission v. Gratz, 253 U. S. 421, 427.
Manifestly, the court must inquire whether the commission’s findings of fact are supported by evidence.
If so supported, they are conclusive. But as the statute grants jurisdiction to make and enter, upon the
pleadings; testimony, and proceedings, a decree affirming, modifying or setting aside an order, the court
must also have power to examine the whole record and ascertain for itself the issues presented and whether
there are material facts not reported by the commission. If there be substantial evidence relating to such
facts

CURTIS CASE.

123

from which different conclusions reasonably may be drawn, the matter may be and ordinarily, we think,
should be remanded to the commission--the primary fact-finding body--with direction to make additional
findings, but if from all the circumstances it clearly appears that in the Interest of justice the controversy
should be decided without further delay the court has full power under the statute so to do. The language
of the statute is broad and confers power of review not found in the interstate commerce act. Louisville
and Nashville Railroad Company v. Behlmer, 175 U. S. 648, 675, 676; Inter state Commerce Commission
v. Clyde Steamship Company, 181 U. S 29, 32; and Interstate Commerce Commission v. Chicago,
Burlington and Quincy Railroad Company, 186 U. S. 320, 340, while helpful as to proper practice, do~
not determine the present problem.
Here we find a vague general complaint charging unfair methods of competition and also sales and
contracts for sales on condition that the purchaser shall not deal in other publications. This is followed
by an answer setting out the original agreement with dealers and also the substituted form. The findings
of fact make no reference whatever to the first agreement, but do show that respondent had entered into
the second (quoting its language) with “certain” ( no number is given but there were 1,535) persons,
partnerships, and corporations, approximately 447 of whom before making such contracts were wholesale
dealers in newspapers and magazines. Further, that many of’ this 447, as well as other parties to such
contracts, have been denied permission to distribute the periodicals of other publishers. And that in these
ways the most efficient established channels of distribution have been closed to competitors, competition
lessened, and a tendency to monopoly established.
The present record clearly discloses the development of respondent’s business, how it originated, the
plan of selling through school boys, the necessity for exclusive agents to train and superintend these boys
and to devote their time and attention to promoting sales, and also contracts with 1,535 such agents. The
commission’s report suggests no objection as to 1,088 of these representatives who, prior to their
contracts, had not been charged in selling and distributing newspapers or periodicals for other publishers.
There is no sufficient evidence to show that respondent intended to practice unfair methods or unduly to
suppress competition or to acquire monopoly, unless this reasonably may be inferred from making and
enforcing the second or substituted agreement with many important wholesale dealers throughout the
country.
Judged by its terms, we think this contract is one of agency, not of sale upon condition, and the record
reveals no surrounding circumstances sufficient to give it a different character. This, of course, disposes
of the charges under the Clayton Act.
The engagement of competent agents obligated to devote their time and attention to developing the
principal’s business, to the exclusion of all others where nothing else appears, has long been recognized
as proper and unobjectionable practice. The evidence clearly shows that respondent’s agency contracts
were made without unlawful motives and in the orderly course of an expanding business. It does not
necessarily follow because many agents had been general distributors, that their appointment and
limitation amounted to unfair trade practice. And such practice can not reasonably be inferred from the
other disclosed circumstances. Having regard to the undisputed facts, the reasons advanced to vindicate
the general plan are sufficient.
Effective competition requires that traders have large freedom of action when conducing their own
affairs. Success alone does not show reprehensible methods, although it may increase or render
insuperable the difficulties which rivals must face. The mere selection of competent, successful, and
exclusive representatives in the orderly course of development can give no just cause for complaint, and,
when standing alone, certainly affords no ground for condemnation under the statute.
In the present cause the commission has not found all the material facts, but considering those which
it has found and the necessary effect of the evidence, the order to desist is clearly wrong and should be
set aside without further delay.
Affirmed.
Mr. Chief Justice Taft, doubting :
The sentence in the majority opinion, which makes me express doubt, is that discussing the duty of the
court in reviewing the action of the Federal Trade

124

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

Commission when it finds that there are material facts not reported by the commission. The opinion says:
If there be substantial evidence relating to such facts from which different conclusions reasonably may
be drawn the matter may be and ordinarily, we think should be remanded to the commission--the primary
fact-finding body--with directions to make additional findings, but if from all the circumstances, it clearly
appears that in the interest of justice the controversy should be decided without delay, the court has full
power under the statute so to do.”
If this means that where it clearly appears that there is no substantial evidence to support additional
findings necessary to justify the order of the commission complained of, the court need not remand the
case for further findings, I concur in it. It is because it may bear the construction that the court has
discretion to sum up the evidence pro and con on issues undecided by the com mission and make itself
the fact-finding body, that I venture with deference to question its wisdom and correctness. I agree that
in the further discussion of the evidence, the reasoning of the opinion of the court would seem to justify
the view that it does not find in the evidence sufficient to support additional findings by the commission
justifying its order. I only register this doubt because I think it of high importance that we should
scrupulously comply with the evident intention of Congress that the Federal Trade Commission be made
the fact-finding body and that the court should in its rulings preserve the board’s character as such and
not interject Its views of the facts where there is any conflict in the evidence.
I am authorized to say that Mr. Justice Brandeis concurs with me in this.

EXHIBIT 7.
MISHAWAKA CASE.
MISHAWAKA WOOLEN MANUFACTURING Co. v. FEDERAL TRADE COMMISSION.
Commission’s order in 1 F. T. C. 506 requiring petitioner to cease and desist from using systems of price
maintenance therein set forth, affirmed, upon the authority of Federal Trade Commission v. Beech-Nut
Packing Co., 257 U. S. 441, and petition for writ of certiorari denied by the Supreme Court with the
understanding that the Commission with modify its order so that the same may be no broader than said
decision.
(Circuit Court of Appeals, Seventh Circuit. September 13, 1922.)1
No.2773.
Before Baker, Evans. and Page, Circuit Judges.
Per Curiam :
This is a proceeding to revise an order of the Federal Trade Commission. In its order the Commission
found that the petitioner’s methods of controlling prices in the retail trade were unfair.
Inasmuch as the record shows that the condemned practices were substantially identical with those
involved in Federal Trade Commission v. Beech-Nut Packing Company, 257 U. 5. 441, w approve the
finding of the Commission upon the authority of that decision.
The petition is accordingly dismissed.
(Supreme Court of the United States. January 8, 1923.)2
No. 720.
Per Curiam :
The petition for a writ of certiorari to the United States Circuit Court of Appeals for the Seventh Circuit
is denied. The Solicitor General, in his brief for the Federal Trade Commission, concedes that the order
affirmed by the Circuit Court of Appeals is broader than the decision in Federal Trade Commission v.
Beech-Nut Packing Co., 257 U. S. 441, 42 Sup. Ct. 150, 50 L. Ed. 314, 19 A. L. R 882, which the Circuit
Court of Appeals followed in dismissing the petition for the Woolen Manufacturing Co. The court denies
the application for writ of certiorari herein, assuming that the Federal Trade Commission will modify its
order accordingly, and without prejudice to an application for that purpose by the petitioner.

1 Reported in 283 Fed. 1022. Appearances : Alexis C. Angell and Henry E. Bodman, of Detroit, Mich., for petitioner.

Adrien F. Busick, of Washington, D. C., for respondent.
Appearances: Henry E. Bodman, of Detroit, Mich., for petitioner.

2 Reported in ----- U. S. -------, 43 Sup. Ct. 247.

67501--23----9

125

EXHIBIT 8.
GUARANTEE VETERINARY CO. ET AL.
United States Circuit Court of Appeals for the Second Circuit.
Guarantee Veterinary Company and George L. Owens, Petitioners, Against Federal Trade Commission,
Respondent.
Before Rogers and Manton, Circuit Judges, and Augustus N. Hand, District Judge.
Will H. Krause, counsel for petitioners.
W. H. Fuller, I. E. Lambert, for respondent.
Petition to revise an order of the Federal Trade Commission.
Petition of Guarantee Veterinary Co., a comm law trust, and George L. Owens individually for the
review of the findings and order of the Federal Trade Commission commanding them to cease and desist
from certain advertising alleged to be an unfair method of competition in commerce.
Rogers, Circuit Judge : This proceeding brings before us for review an order entered by the Federal
Trade Commission directing the petitioners to desist from certain unfair methods of competition.
The Guarantee Veterinary Co. is an association in the form of a common law trust, and has its principal
office and place of business in the city of Chicago in the State of Illinois. George L. Owens is the
controlling and managing trustee. They are engaged in the sale of salt in the form of blocks for the use
of live stock under the brand name “Sal-Tonik” in the several States of the United States.
It appears that the Federal Trade Commission, proceeding under the act of September 26, 1914,
commonly known as the Federal Trade Commission act (38 Stat. 717, C. 311), on September 2, 1919,
issued a complaint against the petitioners in which it averred that they are engaged in interstate commerce
in the sale of salt in the form of blocks for the use of live stock under the brand of “Sal-Tonik” in direct
competition with other persons, copartnership, and corporations also engaged in the sale of block salt for
the use of live stock ; that in connection with the sale of said “Sal-Tonik” blocks they had been publishing
and distributing advertising matter containing false and misleading statements Concerning the said “SalTonik” blocks. And the complaint alleged that among the false and misleading statements which the
petitioners put forth in their advertising matter were representations and implications to the effect that the
“Sal-Tonik” blocks contained certain medicinal ingredients that they operated a number of factories in
various part of the United States, the total product of one of which was purchased and thereby endorsed
by the Quartermaster’s Department of the United States Army, and that the petitioners owned and operated
certain large and expensive machinery necessary for the manufacture of the said “Sal-Tonik” blocks; and
that all of thus was designed to and did mislead the purchasing public into the belief that the petitioners’
product possessed certain unique and beneficial characteristics and tended to secure for the product an
undue preference over the product of competitors.
The complaint was duly served upon the petitioners, who filed their answer thereto on October 11 1919.
Notice of the taking of testimony was given, and testimony was taken on September 9, 1920, and on
December 15,1920. On June 8, 1921, the commission filed its finding as to facts and conclusion and on
the same day entered the order to cease and desist.
On July 18. 1921, the petitioners filed their exceptions and on December 13, 1921, the commission
filed modified findings and a modified order.
126

GUARANTEE VETERINARY CO.

127

The commission has made the following findings of fact:
“One. That the respondent, the Guarantee Veterinary Co., is an association in the form of a trust,
having its principal office and place of business in the city of Chicago, State of Illinois, of which the
respondent, George L. Owens, is the controlling and managing trustee, and that the respondents are now
and for more than two years last past have been engaged in the sale of salt In the form of blocks, for the
use of livestock, under the brand name ‘Sal-Tonik’ in and among the several States of the United States
and the District of Columbia, in direct competition with other persons, copartnership, and corporations
also engaged in the sale of block salt for the use of livestock.
“Two. That during the years 1918 and 1919 the respondents printed and caused to be circulated, in and
throughout the various States of the United States, circulars in which it stated that its product, Sal-Tonik,
contained the following ingredients : Sulphate of iron (redried), carbonized peat, charcoal, tobacco,
quassia, sulphur, gentian pure salt, chloride of magnesia, Epson salts, Glauber’s salts bicarbonate of soda,
oxide of iron, mineralized humoides, American wormseed, Levant wormseed, capsicum (red pepper);
when in truth and in fact respondent’s product, Sal-Tonik, did not contain all of said ingredients, and did
not contain carbonized peat, charcoal, tobacco, quassia, sulphur, gentian, mineralized humoides, American
wormseed, Levant wormseed, or capsicum (red pepper).
“Three. That prior to the organization of the respondent, Guarantee Veterinary Co., in the year 1918,
the respondent, George L. Owens, caused to be organized the Guarantee Swine Veterinary Co., a
corporation organized under the laws of South Dakota, and the Guarantee Serum Co., a corporation
organized under the laws of Iowa, in both of which corporations the respondent, George L. Owens, was
the largest stockholder, and of which he was the controlling manager and president.
“Four. That said Guarantee Serum Co. was owned and operated by said Guarantee Swine Veterinary
Co.; that later the word ‘Swine’ was dropped from the corporate name and the owning and operating
company became the Guarantee Veterinary Co. (Inc.); that said Guarantee Veterinary Co. (Inc.) succeeded
to all property, assets, and rights of both the said Guarantee Serum Co. and the said Guarantee Swine
Veterinary Co., and that later the assets and rights of the said Guarantee Veterinary Co. (Inc.) were
assigned or surrendered to the Guarantee Veterinary Co)., a common-law trust ; that George L. Owens was
the principal stockholder and president of the Guarantee Serum Co., the Guarantee Swine Veterinary Co.,
and the Guarantee Veterinary Co. (Inc.), and is the controlling and managing trustee of the Guarantee
Veterinary Co., a common-law trust; and that all of these corporations and the trust and George L. Owens,
first as president and later as trustee, caused to be manufactured and sold, and are now causing to be
manufactured and sold, in interstate commerce the article known and designated Sal-Tonik.
“Five. That during all the time of the existence of the said Guarantee Serum Co., the said Guarantee
Swine Veterinary Co., the said Guarantee Veterinary Co. (Inc.), the said Guarantee Veterinary Co., a
common-law trust, George L. Owens, as the principal stockholder and president of the first three named
corporations and as trustee for the last named, a common law trust, was advertising and representing or
causing to be advertised and represented to customers and dealers in said Sal-Tonik that their product,
Sal-Tonik, contained substantially the following ingredients : Sulphate of iron (redried) , carbonized peat,
charcoal, tobacco, quassia, sulphur, gentian, pure salt, chloride of magnesia, Epson salts, Glauber’s salts,
bicarbonate of soda, oxide of iron, mineralized humoides, American wormseed, Levant wormseed,
capsicum ( red pepper ); when in truth and in fact, respondent’s product, Sal-Tonik, did not contain all
of said ingredients, and did not contain carbonized peat, charcoal, tobacco, quassia, sulphur, gentian,
mineralized humoides, American wormseed, Levant wormseed, or capsicum (red pepper).
“Six. That during the years 1918 and 1910, respondents advertised in the Cooperative Manager and
Farmer (commission’s Exhibit No. 10), a magazine published at Minneapolis, Minn., which had a general
circulation through the medium of the mails and other distributing agencies in and throughout various
States and Territories of the United States and the District of Columbia, and also by circulars prepared and
printed by respondents which they caused to be circulated throughout various States and Territories of the
United States and District of Columbia, the following:

128

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

“‘U. S. Government adopts San-Tonic.--The Quartermaster’s Department of the U. S. Army has
adopted Sal-Tonik and purchased our entire southern output for use in the U.S. Cavalry. * * *
“‘The U. S. Army used Sal-Tonik, as is shown by a letter which appears below, written by the assistant
veterinarian of the U. 5. Army at Camp Johnston. * * *
“‘CAMP JOSEPH E. JOHNSTON, FLA.,
“‘January 25, 1919.
“‘GUARANTEE VETERINARY COMPANY,
“‘Chicago, Illinois
“‘To whom it may concern:
“‘While acting as 2d Lt., Vet. U. S. A., Auxiliary Remount Depot No. 333 Camp Joseph E. Johnston,
Florida, I had the opportunity of recognizing the value of Sal-Tonik. Large numbers of animals were kept
in corrals in this camp and naturally much sickness would be expected; however, I noticed that where the
animals had access to Sal-Tonik they improved in flesh and vitality. There was a very small percentage
of digestive disturbances, such as indigestion, colic, impaction, and diseases of systemic origin.
“‘Having recognized the value of Sal-Tonik I highly recommend it as an efficient medicinal salt of
superior quality.
“‘( Signed)
J. F. SWAIN,
“‘2d Lt., Vet. U. S. A., Auxiliary Remount
“‘Depot 333, Camp Joseph E. Johnston.’
“That the Palestine Salt & Coal Co., of Palestine, Tex., made salt blocks for respondents, the
respondents furnishing the medical ingredients and the Palestine Salt & Coal Co. furnishing the labor and
salt. That the Quartermaster Department of the U.S. Army purchased in the month of December, 11917,
1,200 blocks of Sal-Tonik at Palestine, Tex., from the Palestine Salt & Coal Co., who were agents for the
respondents, and that this one purchase was the only purchase of the respondent’s product made by the
United States Government.
“That the U.S. Government did not adopt Sal-Tonik.
“That Mr. J. F. Swain was not assistant veterinarian of the U. S. Army at Camp Johnston, and at the
time the above letter was written he was not 2d lieutenant in the U. 5. Army, nor was he located at Camp
Joseph E. Johnston, Fla.”
After making the above findings as to the facts the commission made the following conclusion:
“That the methods of competition set forth in the foregoing findings as to the facts are, under the
circumstances set forth, unfair methods of competition in violation of the provisions of section 5 of an act
of Congress, approved September 26, 1914, entitled ‘An act to create a Federal Trade Commission, to
define its powers and duties, and for other purposes.’”
Thereupon it issued the following order :
“It is ordered, that the respondents, Guarantee Veterinary Co., and George L. Owens, trustee, their
officers, agents, servants, and representatives, do cease and desist, directly or indirectly-“From publishing or causing to be published on circulated throughout the various States of the United
States, the Territories thereof, the District of Columbia, and foreign countries, advertisements, circular
letters, or other printed matter whatsoever wherein it is falsely stated, set forth, or held out to the general
public that the respondents’ product, Sal-Tonik, contains carbonized peat, charcoal, tobacco, quassia,
sulphur, gentian, mineralized humoides American wormseed, Levant wormseed, or capsicum (red pepper),
on any other ingredients, medical or otherwise, if said Sal-Tonik does not then, in fact Contain each and
all of the ingredients which are stated in the advertisement to enter into its composition.
“From publishing and circulating or causing to be published and circulation throughout the various
States of the United States, the Territories thereof the District of Columbia, and foreign countries,
advertisements, circular folders, letters, on any other printed or written matter whatsoever, wherein it is
falsely stated, set forth, or held out to the public :
‘(1) That the United States Government, or any department, branch. agency thereof, has adopted
respondents’ product, Sal-Tonik.
“(2) That respondents have sold their entire southern output to the United States Government or to any
department, branch, on agency thereof.

GUARANTEE VETERINARY CO.

129

“From using as an advertisement of their product, Sal-Tonik, a certain letter, dated January 25, 1919,
and signed by J. F. Swain, purported to be at the time of signature a second lieutenant in the United States
Army, at Camp Joseph E. Johnston, Fla.
“It is further ordered, that the respondents, the Guarantee Veterinary Co. and George L. Owens, trustee,
shall within 60 days after the service upon them of a copy of this order, file within the commission a report
in writing setting forth in detail the manner and form in which it has complied with the order to cease and
desist hereinbefore set forth.”
The Federal Trade Commission act, in section 5, provides that “The findings of the commission as to
the facts, if supported by testimony, shall be conclusive.” (38 Stat. 720.) We have, therefore, examined
the transcript of record, which has been filed in this court, for the purpose of determining whether the
testimony before the commission supports the findings.
It appears that the Guarantee Veterinary Co. admitted in its answer that it was engaged in interstate
commerce. It, however, asserts that no proof was ever made that any Sal-Tonik claimed to have been
analyzed, ever moved in interstate commerce, or that said blocks were made either for or by the Guarantee
Veterinary Co., or George L. Owens, nor was it shown or proven that any competitors ever made or sold
any medicated salt block, nor was it shown that George L. Owens individually was ever engaged in
interstate commerce not any time.
The transcript of record shows that the petitioners prepared and sent out no prospective customers in
various States in the latter part of the year 1918, and the earlier part of the year 1919, an advertising
circular which stated that Sal-Tonik contains the following ingredients :
“Sulphate of iron (redried) , carbonized peat, charcoal, tobacco, quassia, sulphur, gentian, pure salt,
chloride of magnesia, Epsom salts, Glauber’s salts, carbonate of soda, oxide of iron, mineralized
humoides, American wormseed, Levant wormseed, capsicum (red pepper).”
The statement contained in the circular sustains that part of Finding No. 1 as to the advertising circulars
which the petitioners circulated setting forth the ingredients of the product Sal-Tonik.
It also appears from the transcript that three different analyses were made of the petitioners’ product.
The first in June, 1916, from a sample furnished by the petitioners; the second in February, 1919, from
a sample purchased on the open market and was the product of petitioners; and the third in December,
1919, from a sample purchased on the open market which also was the product of petitioners. This is last
analysis was made by the acting chief chemist of the United States Department of Agriculture--an expert
chemist in the Department of Agriculture who had studied and compared all three of these analyses
testified that they did not show any of the following ingredients : Carbonized meat charcoal, tobacco,
quassia, sulphur, gentian, mineral humoides, American wormseed, Levant wormseed, capsicum (red
pepper). He further testified that “Sal-Tonik” was just salt with its impurities and coloring matter.
The petitioners advertised in their circulars that sixteen ingredients entered into the unmanufactured of
their blocks of “Sal-Tonik,” and the chemical analyses proved show no trace often of them. This is an
excerpt from the testimony:
“Question. Mr. Murray, is it not a fact that this product is merely salt with a little coloring matter?
“Answer. Essentially that; nearly all salt contains more or less impurities and this is colored distinctly
red by the iron oxide.
“Question. And that is about all this product is, just salt with its impurities and coloring matter?
“Answer. Essentially that ; yes.
“Question. That is what the different analyses show?
“Answer. The impurities would be a little greater than you would get in first-class table salt. The
Bureau of Chemistry’s analysis shows two per cent of sodium sulphate. That is much more than you would
get in good table salt.
The petitioners contend, however, that the “Sal-Tonik” blocks might contain all the ingredients as
advertised, and yet all the ingredients might not appear in any of the different analyses which were
introduced in evidence by the commission. This might be possible but is not probable. The three analyses
which were introduced in evidence stand undisputed and uncontradicted. The petitioners might have
submitted samples of their product for analysis and offered evidence to rebut that produced before the
commission, but they did not choose to do so. The presumption is that the testimony

130

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

presented is true, no proof having been introduced to overcome it. There is no evidence to show that the
specimens taken for analysis were not fair or typical ones, and the question whether the ingredients which
were not detected upon the chemical analysis were in some other part of the block from which the
specimens was not taken and failed to be detected on account of improper mixing is one of fact on which
the decision of the commission should be followed.
The petitioners object to finding of fact No. 6. An examination of the transcript, however, satisfies us
that the finding is supported by the testimony. It appears conclusively that Swain, the writer of the letter
set forth in the finding, never was assistant veterinarian at Camp Joseph E. Johnston and that he had not
been at the camp since December 11, 1918. That he had been discharged from the Army long before the
letter of January 25, 1919, was written, and that he was not at that the connected with the Army in any way
also is beyond question.
The circumstances connected with the purchase of “Sal-Tonik” by the Government are disclosed in a
letter written to the Guarantee Veterinary Co. by the Palestine Salt & Coal Co. dated January 23, 1917,
and which is in the transcript. The letter shows that the Palestine Salt & Coal Co. were themselves the
manufacturers of a medicated block and had arranged to sell their own product to the United States
Government at $13.40 per ton; that on December 23, 1917, a Government inspector came to the Palestine
plant to inspect their blocks. At that time 1,200 blocks which the Palestine Co. had manufactured for the
Guarantee Veterinary Co. were on hand and the Palestine Co. wanted “to have them out of the way,” and
it was suggested by the latter that they could turn these blocks belonging to the Guarantee Veterinary Co.
in on the contract which it, the Palestine Co., had with the Government, the blocks having been held so
long in the Palestine’s warehouse that they were being damaged. This was assented to and the 1,200
blocks were turned in by the Palestine Company oil its contract. There is no evidence whatever that the
United States Government ever bought any “Sal-Tonik” blocks other than those mentioned above. This
was all the basis there was for the advertisement that “Sal-Tonik” had been adopted by the Quartermaster’s
Department of the United States Army, and that it had purchased the entire southern output for use in the
United States Cavalry. The advertisement was unquestionably false and misleading. The United States
Government never adopted the respondent’s product, never bought any Sal-Tonik blocks other than those
mentioned above and which were taken over by the Government to accommodate the Palestine Co. and
to get them out of its warehouse and out of its way. And it does not appear that the respondent at any time
ever had a contract of any kind with the Government of the United States. Our conclusion is that finding
No. 6, like finding No.2, is amply sustained by the evidence.
It is not necessary for us to comment upon the other findings of fact. It is enough to say that we have
read all the testimony the commission had before it, and it amply sustains all the findings the commission
made.
The commission’s order among other things requires the petitioners to cease and desist from publishing
and circulating any printed matter wherein it is falsely stated that the United States Government or any
department, branch or agency thereof has adopted respondent’s product, Sal-Tonik. It appears that for
several months before the complaint herein was filed against them the petitioners had voluntarily ceased
to use the word “adopted” in their advertisements and circulars and inserted in lieu thereof the word
“purchased” because of thus voluntary discontinuance of the word “adopted” prior to the filing of the
complaint it is urged that thus part of the order to cease and desist is unjustifiable and erroneous.
Mr. Kerr lays it down as a rule in regard to bills to restrain the violation of trade-marks that the owner
of a trade-mark, where the mark has been illegally taken by another, is not bound to rely upon mis
assurance or promises not to repeat the illegal appropriation of the mark, but is entitled to the protection
of the court by injunction. Kerr on Injunctions, 4th ed., 350.
Mr. Nims, in his work on Unfair Competition, sec. 372, states that the fact that defendant has ceased
to commit infringing acts is no reason winy an injunction should not issue.
In Saxlehner v. Elsner, 147 Fed. 189, 191, which was brought for an infringement of a trade-mark, it
appeared that all use of the infringing bottles had ceased three weeks before the suit was brought. This
court, speaking through Judge Lacombe, said : “In view of the past conduct of defendants, complain-

GUARANTEE VETERINARY CO.

131

ant might fairly aver an apprehension that they would inn some way continue the old infringement or
concoct some new one, even though the company itself were enjoined. The circumstance that since that
time they have not, in fact, infringed is not “controlling.” The injunction granted below was sustained.
It is to be observed, however, that this is not a suit to restrain the infringement of a patent or a trademark or copyright, but that it is a proceeding under the Federal Trade Commission act. The language of
the act therefore must be considered. Section 5 of the act declares that “whenever the commission shall
have reason to believe that any such person, partnership [or corporation] has been or is using any unfair
method of competition in commerce and if it shall appear to the commission that a proceeding by it in
respect thereof would be to the interest of the public it shall issue and serve upon such person, partnership,
or [corporation a] complaint * * *.” In view of this language of the statute we are unable to say that the
language of the order was used improvidently and was beyond the commission’s authority.
In Sears, Roebuck & Co. v. Federal Trade Commission, 258 Fed. 307, 310, it was insisted, as here, that
the injunctional order was improvidently issued because before the complaint was filed and hearing and,
the petitioner had discontinued certain methods complained of. In that case, unlike this, the petitioner had
stated in its answer that it had no intention of resuming them. The Circuit Court of Appeals for the
Seventh Circuit, notwithstanding these facts, sustained the right of the commission to make the
injunctional order, and said: “No assurance is in sight that petitioner, if it could shake respondent’s hand
from its shoulder, would not continue its former course.
The testimony shows conclusively that the petitioners had been publishing advertising matter containing
false and misleading statements and had used an unfair method of commerce, and we think the commission
was quite within its right in issuing the order in the form it did. In such cases the commission must
exercise its discretion inn view of all the circumstances.
Before bringing this opinion to its conclusion we perhaps should refer to the fact that one of the
petitioners, George L. Owens, moved the commission to strike his name from the proceeding on the
ground that lie individually is not now and never was engaged in interstate commerce and mover did any
advertising of any kind individually. It is undoubtedly true that George L. Owens was not a necessary
party to this proceeding. But the evidence shows that he is and has been since its organization the
president or trustee and absolute manager of the Guarantee Veterinary Company. He has no right,
therefore, to complain because he was made a party to the proceeding.
The order of the commission is affirmed.

EXHIBIT 9.
THE MENNEN CO. CASE.
United States Circuit Court of Appeals for the Second Circuit.
The Mennen Company, petitioner, against Federal Trade Commission,
respondent.
Before Rogers, Manton, and Mayer, circuit judges.
Gilbert H. Montague, for petitioner ; Gilbert H. Montague, Joseph W. Goodwin, Charles Furnald Smith.
W. H. Fuller, chief counsel, Federal Trade Commission.
W. T. Kelley, attorney for respondent.
Felix H. Levy, for wholesale Dry Goods Association, National Hardware Association, National Supply
& Machinery Dealers’ Association, National Wholesale Jewelers’ Association, National Floor Covering
Association, and American Brush Manufacturers’ Association, as amici curiae.
Thus cause comes here on petition to review an order made on March 3, 1922, by the Federal Trade
Commission.
The petitioner is a corporation organized under the laws of the State of New York, with its principal
office and place of business in the city of Newark, in the State of New Jersey. It is engaged in the business
of manufacturing and selling talcum powder, tooth paste, shaving soap, and various other toilet articles,
causing the same to be transported to purchasers thereof from the State of New Jersey into various other
States of the United States and foreign countries in direct competition with other persons and corporations
similarly engaged. It is hereinafter referred to as the respondent.
The Federal Trade Commission on April 15, 1920, filed a complaint against the respondent and
subsequently an amended complaint on January 27, 1921. It alleged that respondent had adopted a plan
for the allowance of trade discounts in the marketing of its products ; that in pursuance of such plan
respondent has and continues to classify its customers into two groups according to a basis of selection
adopted by it and has allowed and does allow to purchasers of the same quantity and quality of its
products, different discount rates according to the classification of such purchasers by respondent. It is
further alleged that thus practice of varying discounts, irrespective of quantity and quality, tends unduly
to hinder competition between distributors of respondent’s products to retailers or directly to the
consuming public. It is also alleged that by reason of the facts recited, the respondent is using an unfair
method of competition in commerce, within the intent and meaning of section 5 of an act of Congress
entitled “An act to create a Federal Trade Commission, to define its powers and duties, and for other
purposes,” approved September 26, 1914.
It is further alleged that the varying discount rates allowed by the respond-cut are a discrimination in
price between purchasers of respondent’s commodities for use, consumption, or resale within the United
States and the District of Columbia, the effect of which may be to substantially lessen competition in the
distribution of respondent’s products or between distributors thereof.
It is further alleged that such discrimination is not founded in differences in the grade, quality, or
quantity of the commodity sold and does not make only due allowance for difference in the cost of selling
or transportation and is not made in good faith to meet competition ; that the plan for classification of
customers and the allowance of varying discount rates is not a selection of customers in bona fide
transactions not in restraint of trade.
It is also alleged that the actions and doings of the said respondent referred to and recited are contrary
to the intent and meaning of section 2 of an act of Congress entitled “An act to supplement existing laws
against unlawful restraints and monopolies, and for other purposes,” approved October 15, 1914.
132

THE MENNEN CASE.

133

The respondent filed an answer denying the jurisdiction of the commission. It also denied the material
allegations of the amended complaint and asked that it be dismissed. The motion to dismiss was overruled
and denied.
Hearings were had and evidence was introduced, before an examiner of the commission, in support of
the allegations of the amended complaint and on behalf of the respondent. Then the proceeding came on
for final hearing and the commission having heard argument and considered the record made its findings
as to the facts and its conclusions. Its conclusion was that the practices of respondent amounted to unfair
methods of competition in interstate commerce and a violation of the acts of Congress hereinbefore
mentioned. And an order to cease and desist was entered.
Rogers, Circuit Judge : The transactions complained of are transactions in interstate commerce and the
acts with which the respondent is charged are done in the course of such commerce. The practices in
which the respondent is engaged as charged in the complaint are admitted by it in its answer, but it denies
that those practices tend unduly to hinder competition, or that they constitute an unfair method of
competition in commerce, or amount to a restraint of trade.
Two acts of Congress are herein involved. The Federal Trade Commission act, being the act of
September 26, 1914, 38 Stat. 717,724, which provides in section 5. That unfair methods of competition
in commerce (i. e., interstate commerce) are hereby declared unlawful, and the Clayton Act, being the act
of October 15, 1914, which was passed to supplement existing laws against unlawful restraints and
monopolies, 38 Stat. 730, provides in section 2 as follows :
That it shall be unlawful for any person engaged in commerce, in the course of such commerce, either
directly or indirectly to discriminate in price between different purchasers of commodities, which
commodities are sold for use consumption, or resale within the United States or any Territory thereof or
the District of Columbia or any insular possession or other place under the jurisdiction of the United
States, where the effect of such discrimination may be to substantially lessen competition or tend to create
a monopoly in any line of commerce : Provided, That nothing herein contained shall prevent
discrimination in price between purchasers of commodities on account of differences in the grade, quality,
or quantity of the commodity sold, or that makes only due allowance for difference in the cost of selling
or transportation, or discrimination in price in the same or different communities made In good faith to
meet competition : And provided further, That nothing herein contained shall prevent persons engaged
in selling goods, wares, or merchandise in commerce from selecting their own customers in bona fide
transactions and not In restraint of trade”
The section of the Clayton Act provides in substance that it shall be unlawful for any person engaged
in Interstate or foreign commerce to discriminate In price between different purchasers of commodities
in transactions within the United States or under its jurisdiction where the effect of such discrimination
may be to substantially lessen competition or tend to create a monopoly in any line of commerce.”
Before considering the provision of section 2 of the Clayton Act we find it necessary to consider the
Federal Trade Commission act which lies at the basis of this entire proceeding.
The Federal Trade Commission act having declared that unfair methods of competition in commerce”
unlawful, amid created a Federal Trade Commission empowered and directed it to prevent persons,
partnerships, or corporations except banks, and common carries subject to the acts to regulate commerce,
“from using unfair methods of competition in commerce.” And unless a person, partnership, or
corporation is engaged in using “unfair methods of competition the commission has no authority whatever
to proceed under the act.
We are therefore confronted with the question as to what is meant by the words “ unfair methods of
competition in commerce” as used in the act. That question was before the Supreme Court in 1919 in
Federal Trade Commission v. Grata, 253 U. S. 421. That case went up from this court, 258 Fed. 314. and
affirmed the conclusion at which we arrived. The defendants were partners and were engaged in selling
ties and bagging for cotton bales. They sold principally to jobbers and dealers who resold the same to
retailers, cotton ginners, and farmers. For more than a year they had refused to sell any such ties unless
the prospective purchasers would also buy from them the bagging to be used with the number of ties
proposed to be bought. This was held plainly

134

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

Insufficient to show an unfair method of competition. In the opinion, which was written by
Mr. Justice McReynolds, the court said :
“The words ‘unfair method of competition’ are not defined by the statute and their exact
meaning is in dispute. It is for the courts, not the commission, ultimately to determine as matter
of law what they include. They are clearly inapplicable to practices never heretofore regarded
as opposed to good morals because characterized by deception, bad faith, fraud, or oppressing,
or as against public policy because of their dangerous tendency unduly to hinder competition
or create monopoly. The act was certainly not intended to fetter free and fair competition as
commonly understood and practiced by honorable opponents in trade. * * *
The complaint contains no intimation that Warren, Jones & Grata did not properly obtain their
ties and bagging as merchants usually do; the amount controlled by them is not stated; nor is it
alleged that they held a monopoly of either ties or bagging or had ability, purpose or intent to
acquire one. So far as appears, acting independently, they undertook to sell their lawfully
acquired property in the ordinary course, without deception, misrepresentation, or oppression,
and at fair prices, to purchasers willing to take it upon terms openly announced.”
In this case, as in the Grata case, the complaint contains no intimation that the Mennen Co.
has any monopoly of the business of manufacturing and selling toilet articles, or that it has the
ability or intent to acquire one. So far as appears the Mennen Co., acting independently, has
undertaken to sell its own products In the ordinary course, without deception, misrepresentation,
or oppression, and at fair prices, to purchasers willing to take them upon terms openly
announced.
In this case, as in the Grata case, nothing is alleged which would justify the conclusion that
the public suffered injury or that competitors had reasonable ground for complaint. The
allegation that its practice of varying discounts tended unduly to hinder competition between
distributors of respondent’s products to retailers or directly to the consuming public is a
pleader’s conclusion. The acts complained of in this case are not those which have heretofore
been regarded as “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.” And as said in the Grata case, “If real competition is to continue the right of the individual to exercise reasonable discretion in respect of his own business
methods must be preserved.”
The Clayton bill, as originally introduced, did not contain the words “where the effect of such
discrimination may be to substantially lessen competition or tend to create a monopoly in any
line of commerce,” now found in section 2, but contained the words “with the purpose or intent
thereby to destroy or wrongfully injure the business of a competitor of either such purchaser or
seller.”
The record filed in this court shows no contention by the commission that the practices
complained of have lessened competition as between the Mennen Co and its competitors, but
it shows at the most that the practices have decreased competition among the Mennen Co.’s
customers, or those desiring to become such. And it is said that if the phraseology above quoted
as originally contained in the bill had been retained therein upon final passage instead of the
phraseology, likewise above quoted, which was substituted therefor, there might be just ground
for the claim that the Clayton Act prescribed practices which injure competition among the
customers of the manufacturer, and not merely competition between such manufacturer and his
competitors. But the elimination of the phraseology contained in the bill as originally reported
and the substitution therefor of the phraseology in the form in which the bill was finally enacted
strongly indicates that Congress did not have in contemplation the former character of

competition but only the latter.
In the phraseology of the bill as originally reported the intention was unmistakably expressed
that It was intended to protect by its prohibitions both kinds of competition, competition
between the manufacturer and his competitors, as well as competition between the customers
of the manufacturer. The act as reported prohibited acts “with the purpose or intent to thereby
destroy or wrongfully injure the business of a competitor, of either such purchaser or seller.”
We have recently had occasion to point out that in the case of an ambiguous or obscure statute
the intent of Congress may be gathered from statements in

THE MENNEN CASE.

135

reports of committees having the legislation in charge in either House of Congress. U. 5. ex rel.
Fazio v. Tod, decided Nov.13, 1922. And statements made on the floor of either House by the
committee in charge of the bill in the course of its passage may in like manner be considered.
See Duplex Printing Press Co. v. Dearing, 254 U. S. 443, 475.
It is a matter of common knowledge that prior to the enactment of the Clayton Act a practice
had prevailed among large corporations of lowering the prices asked for their products in a
particular locality in which their competitors were operating, for the purpose of driving a rival
out of business. Such lowering of prices was maintained within the particular locality while the
normal or higher prices were maintained in the rest of the country; and this practice was
continued until the smaller rival was driven out of business, whereupon the prices in that locality
would be put back to the normal level maintained in the rest of the country. The Clayton Act
was aimed at that evil. Thus appears from the report of the Judiciary Committee of the House
of Representatives from which we quote as follows :
Section 2 of the bill is intended to prevent unfair discriminations. It is expressly designed
with the view of correcting and forbidding a common and widespread unfair trade practice
whereby certain great corporations and also certain smaller concerns which seek to secure a
monopoly in trade and commerce by aping the methods of the great corporations, have
heretofore endeavored to destroy competition and render unprofitable the business of competitors by selling their goods, wares, and merchandise at a less price in the particular
communities where their rivals are engaged in business than at other places throughout the
country. * * *
The necessity for legislation to prevent unfair discriminations in prices with a view of
destroying competition needs little argument to sustain the wisdom of it. In the past it has been
a most common practice of great and powerful combinations engaged in commerce--notably the
Standard Oil Co., the American Tobacco Co., and others of less notoriety, but of great
influence--to lower prices of their commodities, oftentimes below the cost of production in
certain communities and sections where they had competition, with the intent to destroy and
make unprofitable the business of their competitors, and with the ultimate purpose in view of
thereby acquiring a monopoly in the particular locality or section in which the discriminating
price is made. * * *
“In seeking to enact section 2 into law we are not dealing with an imaginary evil or against
ancient practices long since abandoned, but are attempting to deal with a real, existing,
widespread, unfair and unjust trade practice that ought at once to be prohibited in so far as it is
within the power of Congress to deal with the subject.”
There is nothing in the report of the committee which shows that in reporting the bill the
committee had in mind anything more than the suppression of the evil above referred to.
This substitution in the final stages of the Clayton bill of the clause to which we have referred
plainly indicates the intent of Congress to exclude from the operation of the section mere
competition among “purchasers” from the “seller” or “person” who allowed or withheld the
discount and to include therein only competition between such “seller” or “person” and the
latter’s own competitors. It was the latter class of competition and not the former which had
been “the common practice of great and powerful combinations engaged in commerce” to which
the committee in its report referred. And there is nothing in the report of the Judiciary
Committee of either House, or in anything said on the floor of either House by those in charge
of the bill, which indicates or suggests any such interpretation which the commission in this case
has placed upon the act.
What the Mennen Co. has done was to allow to “wholesalers” who purchased a fixed quantity

of their products a certain rate of discounts while to the “retailers” who purchased the same
quantities it denied the discount rates allowed to the “wholesalers.” This does not indicate any
purpose on the part of the Mennen Co. to create or maintain a monopoly. The company is
engaged in an entirely private business and it has a right freely to exercise its own independent
discretion as to whether it will sell to “wholesalers” only or whether it will sell to both
“wholesalers” and “retailers,” and if it decides to sell to both it has a right to determine whether
or not it will sell to the “retailers” on the same terms it sells to the “wholesalers.” It may
announce in advance the circumstances--that is, the terms--under which it will sell or refuse to
sell. In United States v. Colgate & Co., 250 U. 5. 300, 307, the Supreme Court declared that-

136

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

“In the absence of any purpose to create or maintain a monopoly, the act does not restrict the
long-recognized right of trader or manufacturer engaged in an entirely private business freely
to exercise his own independent discretion as to parties with whom he will deal. And, of course,
he may announce in advance the circumstances under which he will refuse to sell. ‘The trader
or manufacturer, on the other hand, carries on an entirely private business, and may sell to whom
he pleases.’ United States v. Trans. Miss. Freight Association, 166 U. S. 290, 320. ‘A retail
dealer has the unquestioned right to stop dealing with a wholesaler for reasons sufficient to
himself and may do so because be thinks such dealer is acting unfairly in trying to undermine
his trade.’”
In the Colgate case the court sustained the right of a manufacturer engaged in a private
business to announce in advance the prices at which his goods may be resold and his right to
refuse to deal with wholesalers or retailers who do not conform to such prices. As subsequently
explained by the court, that case was decided upon the ground that the manufacturer had an
undoubted right to specify resale prices and to refuse to deal with anyone who failed to maintain
the same. It did not appear that the Colgate Co. had undertaken to enter into any agreements,
express or implied, which undertook to obligate vendees to observe specified resale prices. And
in the case now before the court It does not appear and is not alleged that the Mennen Co. ever
undertook to fix the prices at which its products were to be resold by those who purchased from
it.
In Federal Trade Commission v. Beech-Nut Packing Co., 257 U. S. 441, the subject was gone
into very fully and the Colgate case was explained and the reason for that decision was clearly
stated and it was made evident that if the Colgate Co. had undertaken by agreements express or
implied to obligate those to whom it sold its products to observe specified resale prices a
different decision would have been rendered. In the Beech-Nut case the right to fix the prices
at which the manufacturer will sell is again fully recognized. But the course which the BeechNut Co. had adopted was condemned because of the method it pursued to control the resale
prices. The difficulty was that the manufacturer had adopted and was enforcing a system of
fixing and maintaining certain specified standard prices at which its products should be resold
by purchasers thereof with the purpose of eliminating competition in prices among all jobbers
engaged in handling the products manufactured by the company. And the court after reviewing
its previous decisions (250 U. S. 300, 252 U.S. 85, 256 U.S. 208) said:
“By these decisions it is settled that in prosecutions under the Sherman Act a trader is not
guilty of violating its terms who simply refuses to sell to others, and lie may withhold his goods
from those who will not sell them at the prices which lie fixes for their resale. He may not,
consistently with the act, go beyond the exercise of this right, and by contracts or combinations,
express or implied, unduly hinder or obstruct the free and natural flow of commerce in the
channels of interstate trade.”
In Sears, Roebuck & Co. v. Federal Trade Commission, 258 Fed. 307, 312, the Circuit Court
of Appeals in the Seventh Circuit declared in speaking of the Federal Trade Commission act of
September 26, 1914, 38 St. 719, c. 311:
“We find in the statute no intent on the part of Congress even if it has the power, to restrain
an owner of property from selling it at any price that is acceptable to him or from giving it
away.”
And in Great Atlantic & Pacific Tea Co. v. Cream of Wheat Co. 227 Fed. 46, 49, we declared
in our opinion written by Judge Lacombe :
Before the Sherman Act it was the law that a trader might reject the offer of a proposing buyer
for any reason that appealed to him. It might be because he did not like the other’s business

methods, or because lie had some personal difference with him, political, racial, or social. That
was purely his own affair, with which nobody else had any concern. Neither the Sherman Act,
nor any decision of the Supreme Court construing the same, nor the Clayton Act has changed
the law in this particular. We have not yet reached the stage where the selection of a trader’s
customers is made for him by the Government.”
In accordance with these opinions we have no doubt that the Mennen Co. had the right to
refuse to sell to retailers at all, and if it chose to sell to them that it had the right to fix the price
at which it would sell to them, and that it was under no obligation to sell to them at the same
price it sold to the wholesalers. It did not discriminate as between retailers but sold to all
retailers on one and the same scale of prices. And it did not discriminate as

THE MENNEN CASE.

137

between wholesalers but sold to all wholesalers on one and the same scale of prices. There is
nothing unfair in declining to sell to retailers on the same scale of prices that it sold to
wholesalers, even though the retailers bought or sought to buy the same quantity the wholesalers
bought.
In conclusion it ought perhaps to be said that we have not been unmindful of the fact that the
Mennen Co. in classifying purchasers into two groups, those of wholesalers and retailers, placed
in the group of retailers a class of mutual or cooperative corporations which purchased in large
quantities the Mennen products. These mutual or cooperative corporations, it is admitted,
consist solely of the retailers in the same line of trade, the stock being held exclusively by
retailers. The fact that these individuals, admitted by the counsel for the Federal Trade
Commission to be retailers, see fit for their own convenience to organize themselves into a
corporation which they constitute their agent for purchasing purposes does not change their
character, or the character of their purchases, and convert them into wholesalers.
Whether a buyer is a wholesaler or not does not depend upon the quantity he buys. It is not
the character of his buying but the character of his selling which marks him as a wholesaler as
thus court pointed out in Great Atlantic & Pacific Tea Co. v. Cream of Wheat Co., supra. A
wholesaler does not sell to the ultimate consumer but to a “jobber” or to a “retailer.” The
persons who constitute these mutual or cooperative concerns are buying for themselves to sell
to the ultimate consumers, and not to other “jobbers” or to other “retailers.” The nature of the
transaction herein involved Is not altered h)y the fact that they make their purchases thorough
the agency of their corporation. For some purposes a corporation is distinct from the members
who compose it. But that distinction is a fiction of the law and the courts disregard the fiction
whenever the fiction is urged to an intent and purpose which is not within its reason and policy.
And in such a case as this the fiction can not be invoked. The important fact is that members
of the corporation are all retailers who buy for themselves to sell to the ultimate consumer. The
Mennen Co. is within its rights in classifying them as retailers.
The facts established by the testimony are not sufficient to constitute a violation either of the
Federal Trade Commission act or of the Clayton Act, and they do not support the commission’s
conclusions of law. The Mennen Co. is not shown to have practiced “unfair methods of
competition in commerce.”
The order to cease and desist is reversed.

EXHIBIT 10.
L. B. SILVER CO. CASE.
No.3648. United States Circuit Court of Appeals, Sixth Circuit.
The L. B. Silver Company, petitioner, v. The Federal Trade Commission of America, respondent. Petition
to revise. Submitted December 5, 1922. Decided February 16, 1923.
Before Knappen, Denison, and Donahue, circuit judges.
In March, 1920, the Federal Trade Commission issued a complaint against The L. B. Silver Co., a
corporation, charging the respondent with using unfair methods of competition in interstate commerce in
violation of the provisions of section 5 of the act of Congress approved September 26, 1914, creating the
Federal Trade Commission. (Compiled Statutes, 8836a et seq.)
The complaint alleged in substance that the respondent had made and was continuing to make false
representations to the public that it is a breeder and shipper of thoroughbred hogs; that the Ohio Improved
Cheaters or famous O. I. C. hogs is a breed of hogs separate and distinct from the Chester White hogs and
superior thereto ; that it advertised Chester White hogs for sale at a price less than that for which it would
sell O. I. C. hogs and would either fill orders for Chester White with Inferior animals of the hogs bred by
it, or notify its customers that it had no Chester White hogs; that the O. I. C. Hog is not susceptible to
cholera, pneumonia, and other diseases and possesses a power to repel disease in a degree unknown to
other breeds ; that it had secured greatly reduced express rates on livestock and had advertised that two
of the O. I. C. breed of hogs weighed 2,806 pounds, in such a way as to mislead prospective purchasers
into believing that two O. I. C. hogs weighing that amount were then or recently had been in existence.
The amended answer alleged in substance that the petitioner is a breeder of Ohio Improved Chester
White hogs, familiarly known to the trade as O. I. C. hogs. that the O. I. C. hogs are a separate and
distinct breed from the Chester Whites and superior thereto; that since December 1, 1918, it has
voluntarily and permanently discontinued all advertising to the effect that it would sell Chester White hogs
at a price less than that for which it would sell O. I. C. or at any other price and denied that it had
represented the O. I. C. breed was not susceptible to cholera and other diseases, but that it had in good
faith represented that it is less susceptible to disease than other breeds, but that it would not guarantee its
hogs to be immune therefrom; that it had never represented that its hogs are not subject to pneumonia, but
that it did represent that there had been no cholera, foot and mouth or other contagious disease in
petitioner’s locality for over 50 years and that during that period of time had never lost a pig from cholera
or any other contagious disease, and that these representations are true.
The amended answer further avers that since the first day of January, 1918, the petitioner voluntarily
and permanently discontinued all representations as to reduced or special express rates and admits that it
advertised that two of petitioner’s breed of hogs weighed 2,806 pounds, but denies that such
representations were so made is to mislead a prospective purchaser and that if they were ever so used as
to he in the present tense such advertising had been voluntarily discontinued many years ago.
Upon the issue so joined The Federal Trade Commission made separate findings of fact and made and
entered a modified order that the respondent, its officers, directors, agents, and employees cease and desist
from representing, in Interstate commerce, to the public, by circulars, pamphlets, catalogues, trade
journals, periodicals, newspapers, or otherwise :
l. That the so-called Ohio Improved Cheaters, or O. I. C.s, or Famous O. I. C.s, are a breed of hogs
separate and distinct from the Chester White breed of hogs.
138

L. B. SILVER CO. CASE.

139

2. That it has no Chester White pigs when in fact it has Chester White pigs, though called by it O. I. C.
pigs ; or that it has Chester White pigs and O. I. C. pigs, as if the latter were a different and more valuable
breed, when in fact they are one and the same breed; or that it has no Chester White pigs with which to
fill orders for Chester White pigs, at its quoted prices or otherwise, when in fact it has Chester White pigs,
though called by it O. I. C. pigs; or that it has discontinued to breed Chester White pigs, when in fact it
is continuing to breed them, though designated by it O. I. C. pigs.
3. That the so-called O. I. C. pigs, as a breed, or otherwise, are not liable to cholera, foot-and-mouth
disease, tuberculosis, and other contagious diseases; that there has been no cholera, foot-and-mouth
disease, tuberculosis, nor other contagious diseases in respondent’s locality; that the O. I. C. pigs possess
a power to resist disease in a degree unknown to other breeds; that in localities where contagious diseases
have swept off the dark and black hogs the O. I. C.s were unaffected; from in any way representing to the
public that the O. I. C. pigs are more resistant to disease than are other breeds of hogs.
4. That in the shipment of livestock the respondent enjoys or has enjoyed, either or other, from express
companies rates of transportation lower than the rates granted to other shippers of livestock by the said
express companies.
5. That two of its hogs weigh 2,806 pounds; that such hogs are in existence; that their progeny is for
sale by the respondent.
Donahue, Circuit Judge: The petitioner is a corporation and the successor in business of the partnership
of L. B. Silver & Son, which partnership was the immediate successor in business of L. B. Silver, who
for many years was a successful breeder of cattle, horses, and hogs. In 1863, in Ohio, L. B. Silver under
took to improve the Chester White hog that had originated in Pennsylvania.
It is claimed by the petitioner that L. B. Silver, in his initial efforts to improve the Chester White hogs,
crossed that stock with a mammoth or large white English hog. This however is disputed. Silver is dead.
There was at that time no hardback for either the O. I. C. of the Chester White hogs, and for that reason
this disputed question is not susceptible of direct proof, but must rest on tradition only. But this tradition
finds some support not only in the testimony of witnesses to whom L. B. Silver made this statement but
also in a pamphlet written and distributed by him in 1870, in which appears the following
“In-and-in breeding is recommended by some, but our observation goes to show that it should not be
practiced to any great extent, as its tendency is to weaken the constitution of the future animal.”
The claim that he crosses the Chester White stock with a mammoth or large white English hog is
entirely consistent with this advice to other breeders contained in this pamphlet, “Hints to Stock
Breeders.” However that may be, the commission found that from the very beginning of L. S. Silver’s
business and down to the present time the respondent and its predecessor in business never used boars of
any breed other than the pure Chester White, and for the purpose of this case that finding of fact by the
commission will be accepted as final and conclusive.
Regardless, however, of whether L. B. Silver originally crossed this stock with at mammoth or large
white English hog, there is no conflict in the evidence that by careful selection and systematic mating he
did accomplish a substantial improvement in the original stock, and that the result of his efforts was a
valuable contribution to progress in swine breeding.
In 1870 L. B. Silver issued the pamphlet, Hints to Stock Breeders, to which reference has heretofore
been made. In this pamphlets he made public and definite claim that the hogs bred by him were a distinct
breed from the Chester White, which he had named Ohio Improved Chester White breed, now known as
the Ohio Improved Chester, or O. I. C. It further appears from the evidence that L. B. Silver, his
successors in business including this petitioner and many other O. I. C. breeders for half century prior
to the filing of this complaint, have openly, notoriously, and persistently made the claim that the Ohio
Improved Cheaters are a separate and distinct breed of hogs from the Chester White, and no action was
taken by anyone interested therein to challenge the truth of this claim until 1916, and again in 1918, when
complaints were made to the postal authorities. Each of these complaints failed in the accomplishment
of its purpose.
While these claims, no matter how long made, can not change the facts, nevertheless they are of
importance in determining the question of unfair methods of competition in this respect.

140

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

It further appear’s from the evidence that other breeders, either inspired by Silver’s success or acting
upon their own initiative, have developed what is known as the Modern Chester White, which is also a
decided improvement over the foundation stock. While it is conceded that the present O. I. C. hog is
superior to and has many marked characteristics, with power to transmit the same, that distinguishes it
from the Chester White as it existed in Pennsylvania and New York in 1863, nevertheless it is insisted that
the comparison should now be made between the Modern Chester White instead of with the original stock.
The further claim is made that the O. I. C. hog has no characteristics that distinguishes it from the Modern
Chester White. Upon this question there is a serious conflict in the evidence.
There is also a sharp and irreconcilable conflict in the expert opinion evidence touching the question
as to what constitutes a distinct and separate breed, but disregarding the claim of the petitioner that L. B.
Silver crossed Chester Whites with a mammoth or large white English hog, there is practically no
substantial conflict in the evidence tending to establish the facts from which these breeders and experts
reach different conclusions. One group of experts and breeders are of the opinion that there can not be
a distinct breed originated where the blood line goes back to the old foundation stock; that while different
strains or types may be developed in thus way, it is nevertheless the same breed. Another group of
breeders and experts are of the opinion that a distinct breed may be originated through selection and inand-in breeding. Each of the individual members of these groups that have testified in thus case or whose
books on livestock breeding have been admitted in evidence, though differing in opinion based on the
same state of facts, appears to be entirely honest, sincere, and equally firm in the belief that its conclusion
is the right one.
The situation presented by this conflict of opinion among experts and breeders is fully discussed and
its effect determined by the Supreme Court In the case of American School of Magnetic Healing v.
McAnnullty, 187 U. S. 94. In Bruce v. U. S., 202 Fed. 98, the Court of Appeals held that it was error
for the trial court to refuse to charge that “ * * * if the jury found that whether the substance was remedial
in character when exhibited as part of the treatment of morphinism was nearly a matter of opinion among
medical men, defendants insist be acquitted of the charge of using the mails for fraudulent purposes.” It
was also held by this court in the case of Harrison v. U. S., 200 Fed 662, 665, that a scheme to defraud
“Can not be found in ally mere expression of honest opinion.”
As heretofore stated, in the early years of Mr. Silver’s activities as a breeder of swine there was no
hardback for either the Chester White or the Ohio Improved Chester White. When a hardback known as
the “National Chester White Swine Record” was established Mr. Silver recorded his hogs in its book, but
at the same time insisted that his doing so should not be regarded as a surrender of his claim to a distinct
breed. Later, when the International Ohio Improved Chester Breeders’ Association was organized, Mr.
Silver recorded his hogs in its book. In 1897, after this organization ceased to function, an organization
known as the O. I. C. Swine Breeders was formed and established a hardback, in which was eligible to
registry only swine that could trace its origin to the L. B. Silver herd. At the time this complaint was filed
there were registered in this hardback about 950,000 hogs, tracing their ancestry to the Silver herd, and
but 90,000 hogs registered in the hardback of the three Chester White associations. There is also evidence
tending to prove that there are about 20.000 O. I. C. breeders, all of which claim and advertise that it is
a separate and distinct breed.
It further appears from the evidence that the O. I. C. hogs were classed as a separate breed of hogs by
many stock journals and publications of like nature, including scientific books on stock breeding. While
it is true that some of these editors and authors relied upon the claims amid representations made by Silver
and his successors, yet others made independent investigation of the facts upon which they based their
conclusions.
There is also substantial evidence in this record tending to prove that there is no sharp distinction
between the term “breed” and “strain” as used by geneticists, and that these terms are used
indiscriminately by a great malty breeders, so that, in so far as concerns the disposition of this case, it is
not of controlling importance whether the one group of experts are correct in their opinion that the O. I.
C.s are but a strain of the Chester or the other group are correct in the opinion that it is a distinct and
separate breed.

L. B. SILVER CO. CASE.

141

Aside from these considerations, it is apparent from the evidence in this case that this controversy does
not vitally concern the general purchasing public. On the contrary, its a controversy largely between rival
breeders of hogs, or more particularly between rival hog breeders’ associations having and maintaining
hardback If the O. I. C. hogs were inferior to the Chester Whites and not of their breed, and the petitioner
advertised them as Chester Whites, such practice would, no doubt, constitute unfair competition as against
Chester White breeders ; but it is admitted that not only are the O. I. C. hogs superior to the Chester White
hogs of 1863, but that they are the equal of the modern Chester Whites That being true, it necessarily
follows that neither the general public as consumers nor the small part of the public engaged in the
breeding of swine, and particularly in the breeding of O. I. C. amid Chester White swine, can be misled
to their prejudice by thus claim of the petitioner nor induced thereby to purchase a hog inferior to the
modern Chester White Whether the O. I. C. should or should not be classed or designated as a difficult
and distinct breed and whether they are or are not superior to the modern Chester Whites is a question that
each breeder will decide for himself, and lie will not change his individual opinion upon this subject no
matter what thus court or scientific experts on breeding may determine to be technically essential to the
origination of a new and distinct breed. There is evidence in thus record tending to prove that breeders
pay little or no attention to scholastic experts, who are designated by them as “book men,” dependent upon
breeders having actual experience for the data upon which they base their conclusions.
For the purpose of this case it may be conceded that the conclusion readied by the Federal Trade
Commission from the facts found by it that the O. I. C. and Chester White hogs are one and the same breed
is a finding of fact with the meaning of section 5 of the Federal Trade Commission act, and as such equally
conclusive as other findings of fact made by that commission. But in view of the fact that there is a
substantial conflict of opinion upon thus subject, as evidenced by the testimony not only of scientific men
but also by the testimony of practical and experienced breeders of swine, it does not necessarily follow
from this finding that the assertion of an honest opinion upon this subject, either by way of advertisement
or otherwise, by any one breeder or any number of breeders constitutes unfair methods of competition
where the facts upon which such opinion is based are generally known to that part of the public concerned
in the controversy, even if it should appear from scientific standpoint that such opinion is not technically
correct.
The statute does not define the term “unfair methods of competition.” There-ore the question is one
for the ultimate determination of the courts, as are the phrases “unsound mind,” “undue influence,” “unfair
use,” “due process of law,” found in many other statutes. Federal Trade Commission v. Grata, 253 U. S.
421, 427; Sears, Roebuck & Co. v. Federal Trade Commission, 258 Fed. 307, 311. In determining the
meaning of “unfair methods of competition” within the meaning of the Federal Trade Commission act a
court must give due consideration to the public policy declared in the Sherman Act. Federal Trade
Commission v. Beechnut Packing Co., 257 U. S. 441, 453, and cases there cited.
In the case of the Federal Trade Commission v. Winsted Hosiery Co., decided by the Supreme Court
April 24, 1922, the Winsted Hosiery Co. placed upon the cartons in which its underwear was sold the
brands or labels, “Natural merino,” “Gray wool,” “Natural wool,” “Natural worsted,” or “Australian
wool,” but none of this underwear was all wool, and much of it contained as little as 10 per cent.
The Supreme Court held that these brands and labels are literally false, and all except the label
“Merino” palpably so ; that all are calculated to deceive and do in fact deceive a substantial portion of the
purchasing public, and therefore the proceeding to stop the practice was in the interest of the public. The
court further found that the practice of using these brands and labels also constituted an unfair method of
competition as against manufacturers of all-wool and knit underwear and as against those manufacturers
of mixed wool and cotton underwear who brand their products truthfully.
*
*
*
*
*
*
*
Section 5 of the Federal Trade Commission act authorizes the filing of a complaint when such
proceedings would be to the interest of the public. Whether the Federal Trade Commission has jurisdiction
to determine complaints as to unfair methods of competition where the general public, the
67501--23----10

142

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

ultimate consumer, is not misled, deceived, or prejudiced thereby, but involves only a controversy between
dealers and breeders, is a question unnecessary to decide in this case.
The claim that the O. I. C. hog is a separate and distinct breed from the Chester White is neither
palpably nor literally false, as were the brands and labels used by the Winsted Hosiery Co. On the
contrary, the truth of this claim finds equal support in the testimony of expert and experienced breeders,
as does the claim that it is false and unwarranted by the facts. Nor does the claim tend to lessen
competition or create monopoly in violation of the antitrust act. On the contrary, it places the O. I. C. hog
in direct competition with the Chester White. On the other hand, if the O. I. C. are required to be
advertised and marketed as Chester Whites the tendency of such requirement would be to destroy
competition and create a monopoly in the breeding and marketing of Chester Whites.
For the reasons above stated a majority of this court is of the opinion that the petitioner is not guilty of
unfair methods of competition by advertising the O. I. C. hog as a separate and distinct breed of hogs from
the Chester White so long as it does not include in its advertisements the claim found to be untrue by the
Federal Trade Commission that the foundation stock of the O. I. C. was crossed by a mammoth or large
white English hog.
Paragraph 2 of the order to cease and desist as it now reads is inconsistent with paragraph 1 as above
modified. In the opinion of a majority of this court paragraph 2 should be changed to read as follows :
“That it has Chester White pigs for sale at a less price than O. I. C. pigs, or at any other price, if it in fact
has no Chester White pigs, as distinguished by it from O. I. O. pigs, for sale at quoted prices or otherwise.”
There is substantial evidence in this record to sustain the findings of facts upon which paragraphs 3 and
4 of the modified order to cease and desist are predicated, and these paragraphs are approved.
Paragraph 5 is based solely upon paragraph 7 of the complaint. That paragraph charges in substance
that respondent advertised that two O. I. C. hogs weighed 2,806 pounds, in such a way as to mislead a
prospective purchaser to believe these hogs were then, or recently had been, in existence, whereas said
representations refer to hogs which are alleged to have existed in the year 1868. There is no charge in the
complaint that respondent advertised that it had for sale the progeny of these hogs. It follows that the
allegations of this complaint do not support this paragraph. In view of the undisputed evidence that this
claim was made in the advertising as early as 1883 ; that its truth is not challenged by complaint or
evidence ; that excessive-weight hogs are not desirable or used for breeding purposes ; that some years
before the filing of this complaint, when respondent’s attention was called to the fact that its advertisement
read, “Two hogs weigh 2,806 pounds,” it at once changed this to read, “Two hogs weighed 2,806 pounds,”
and it has continued so to read ever since, it would not appear that this would involve public interest or
constitute unfair methods of competition. In any event, the evidence tending to prove that the respondent
had in good faith abandoned this form of advertising long prior to the filing of this complaint is not
disputed by oral evidence or by circumstances. In the opinion of a majority of the court the fifth paragraph
of the modified order to cease and desist should be vacated.
It is unnecessary to discuss in detail the other questions presented by the petition to review in reference
to hearsay evidence ; leading questions, the admission of opinion testimony as to the ultimate fact to be
decided by the commission, and other similar questions of a more or less technical nature. It is sufficient
to say that from the whole record it does not appear that the substantial rights of the petitioner have been
prejudiced in any way by these alleged errors.
The first and second paragraphs of the order to cease and desist, made and entered by the Federal Trade
Commission, will be modified to the extent hereinbefore stated, and as so modified, approved. Paragraphs
3 and 4 are approved as written without change or modification thereof. Paragraph 5 is vacated.
Denison, circuit judge: I concur in both the reasoning and the result of the opinion, though, for
additional reasons, I would go further and vacate entirely the first paragraph of the order to desist. Those
additional reasons will be stated in a further memorandum to be filed.

EXHIBIT 11.
SINCLAIR REFINING CO. ET AL.
Supreme Court of the United States. Nos. 213, 637, 638, 639. October term, 1922.
213. Federal Trade Commission, petitioner, v. Sinclair Refining Co. On writ of certiorari to the United
States Circuit Court of Appeals for the Seventh Circuit.
637. Federal Trade Commission, petitioner, v. Standard Oil Co. (New Jersey). 638. Federal Trade
Commission, petitioner, v. Gulf Refining Co. 639. Federal Trade Commission, p e t i t i o n e r , v .
Maloney Oil & Manufacturing Co. On writs of certiorari to the
United States Circuit Court of Appeals for the Third Circuit.
(April 9, 1923.)

Mr. Justice McReynolds delivered the opinion of the court.
In separate proceedings against 30 or more refiners and wholesalers the Federal Trade
Commission condemned and ordered them to abandon the practice of leasing underground tanks
with pumps to retail dealers at nominal prices and upon condition that the equipment should be
used only with gasoline supplied by the lessor. Four of these orders were held invalid by the
Circuit Courts of Appeals for the Third and Seventh Circuits in the above--entitled causes--276
Fed 686, 282 Fed. 81; and like ones have been set aside by the circuit courts of appeals for the
second and sixth circuits--Standard Oil Co. v. federal Trade Commission 273 Fed. 478 ;
Canfield Oil Co. v. Federal Trade Commission, 274 Fed. 571. The proceedings, essential facts,
and points of law disclosed by the four records now before us are so similar that it will suffice
to consider No.213 as typical of all.
July 18, 1919, the commission issued a complaint charging that respondent, Sinclair Refining
Co., was purchasing and selling refined oil and gasoline and leasing and loaning storage tanks
and pumps as part of interstate commerce in competition with numerous other concerns similarly
engaged ; and that it was violating both the Federal Trade Commission act, 38 Stat. 717, and the
Clayton Act, 38 Stat. 730.
The particular facts relied on to show violation of the Federal Trade Commission act are thus
alleged-“PAR. 3, That respondent in the conduct of its business, as aforesaid, with the effect of
stifling and suppressing competition in the sale of the aforesaid products and in the sale, leasing,
or loaning of the aforementioned devices and other equipments for storing and handling the
same, and with the effect of injuring competitors who sell such products and devices, has within
the four years last: past sold, leased, or loaned, and now sells, leases, or loans the said devices
and their equipment for prices or considerations which do not represent reasonable returns on
the investments in such devices and their equipments ; that many such sales, leases, or loans of
the aforesaid devices are made at prices below the cost of producing and vending the same ; that
many of such contracts for the lease or loan of such devices and their equipments provide or are
entered into with the understanding that the lessee or borrower shall not place In such devices,
or use in connection with such devices and their equipments, any refined oil or gasoline of a
competitor; that only a small proportion of the dealers in gasoline and refined oil under such
agreements and understandings deal also in similar products of respondent’s competitors and
that only a small proportion of such dealers require or use more that a single pump outfit in the

conduct of their said business ; that there are numerous competitors in the sale of such products
who are unable to enter into such lease agreements or understandings because of the large
amount of investment required to carry out such lease agreements as a competitive method of
selling refined oil and gasoline ; that there are numerous other competitors of respond
143

144

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

ent engaged in the manufacture and sale of said devices and their equipments who do not deal
in refined oil and gasoline, and therefore do not sell or lease said devices and their equipments
for a nominal consideration on a condition or understanding that their products only are to be
used therein; that the said numerous competitors who were unable to enter into such lease
agreements or understandings, as aforesaid, have lost numerous customers in the sale of refined
oil and gasoline to respondent because of the business practices of respondent hereinbefore set
forth. That the said numerous other competitors of respondent who manufacture and sell said
devices and their equipments, but do not sell refined oil and gasoline, as aforesaid, have lost
numerous customers and prospective customers for the purchase of their devices and equipments
because of the said business practices of respondent, as hereinbefore set forth.”
To show violation of the Clayton Act the complaint alleged-“PAR. 3. That the respondent, for four years last past, in the conduct of its business as
aforesaid, has leased and made contracts for the lease and is now leasing and making contracts
for the lease of said devices and their equipments to be used within the United States, and has
fixed and is now fixing the price charged therefor on the condition, agreement, or understanding
that the lessees thereof shall not purchase or deal in the products of a competitor or competitors
of respondent; and that the effect of such leases or contracts for lease, and conditions,
agreements, or understandings, may be and is to substantially lessen competition and tend to
create a monopoly in the territories and localities where such contracts are operative.”
Respondent answered and evidence was taken. In October, 1919, the com-mission announced
its report, findings, and conclusions, the substance of which follows :
“1. That the respondent is a corporation organized, existing, and doing business under and by
virtue of the laws of the State of Maine, with its principal business office located at the city of
Chicago, in the State of Illinois, and is now and has been engaged in the business of purchasing
and selling refined oil and gasoline, hereinafter referred to as products, and is largely engaged
in refining crude petroleum, and that it is now and has been since January 25, 1917, in
connection with the aforementioned business, engaged in the leasing and loaning, but not in the
manufacture, of oil pumps, storage tanks, and containers and their equipment, hereinafter
referred to as devices, in various States of the United States, but not in the District of Columbia,
in competition with numerous other persons, firms, corporations, and copartner-ships similarly
engaged; that prior to the 25th day of January, 1917, the corporate name of respondent was the
Cudahy Refining Co.
“2. That the respondent, in the conduct of its business, as aforesaid and as hereinafter more
particularly described, extensively refines petroleum and its products and purchases refined oil
and gasoline, all hereinafter referred to as ‘products,’ and also purchases all pumps, storage
tanks, or containers, hereinafter referred to as ‘devices,’ the said devices being used to contain
said products, the said products and devices then being handled and stored in the various States
of the United States and transported in interstate commerce; that the aforesaid products are sold
and flue aforesaid devices are leased or loaned by respondent to various persons, firms,
corporations, and copartnership ; that in the conduct of its business of purchasing and selling
such products and selling, leasing, or loaning such devices the same are constantly moved from
one State to another by respondent, and there is conducted by respondent a constant current of
trade in such products and devices between various States of the United States; that there are
numerous competitors of respondent who in the conduct of their business in competition with
respondent purchase similar products and purchase and manufacture similar devices, the said
devices being used to contain said products, the said products and devices then being handled
and stored In the various States of the United States and transported In interstate commerce; that

the aforesaid products are sold and the aforesaid devices sold, leased, or loaned by such
competitor of respondent to various persons, firms, corporations, and copartnership; that In the
conduct of their business as aforesaid, competitors of respondent constantly move such products
and devices from one State to another, and there is conducted by said competitors a constant
current of trade in such products and devices between the various States of the United States;
that respondent has conducted its said business in a similar manner to that above described since
January 25, 1917.

SINCLAIR REFINING CO.

145

“3. That respondent now leases and loans and has for the period of its business existence
leased and loaned devices and equipment for storing and handling its products, and that the
monetary considerations received by respondent do not represent reasonable returns upon the
investment in such devices and equipment; and also that such leases and loans of said devices
and equipment are made for monetary considerations below the cost of purchasing and vending
the same when the business of leasing or loaning said devices and equipment and the returns
received thereon are considered separate and apart from the general business and sales policy
of the respondent; that respondent’s form of contract with the users of such devices and equipment provides in substance that the devices and equipment shall be used for the sole purpose of
storing and handling gasoline supplied by respondent; and that the uniform contract used by
respondent for leasing such devices and equipment is in form, tenor, and substance as follows.”
(The ordinary form of contract (printed in the margin 1) is here set out. It recites the customer’s
desire to install certain equipment and, among other things, provides that this shall be used only
for storing and handling gasoline supplied by the lessor; that if put to any other use the lessee’s
right therein shall terminate; and that upon termination of the lease, by whatever means effected,
the lessee may purchase the equipment for a specific sum.)
“4. That the contracts mentioned in the preceding paragraph also provide that such
equipments shall be used by the lessee only for the purpose of holding and storing the
respondent’s petroleum products; that a small proportion of such lessees handle similar
products of respondent’s competitors; and that only a small proportion of such lessees as handle
similar products of respondent’s competitors require or use more than a single pump outfit in
the conduct of their said business; that the practice of leasing such devices requires a large
capital investment; that many competitors of respondent do not possess sufficient capital and
are not able to purchase and lease devices as respondent does as aforesaid, partly by reason of
which such competitors hi ave lost numerous customers to respondent; that the effect of the

1

EQUIPMENT CONTRACT.

This agreement, made and entered into this ---- of --, 19--, between Sinclair Refining Co., of -----, party
of the first part, and ------, of the city of -------State of ------, party of the second part, witnesseth:
Whereas party of the second part is now being supplied with gasoline by the party of the first part and
desires to install on his premises situated at ------ the following equipment for the better storing and
handling of such gasoline:--------.
Now, therefore, in consideration of the premises and of the sum of $1 by the party of the second part
to the party of the first part (the receipt of which is hereby acknowledged), the above-named parties do
hereby agree as follows :
1. The above-described equipment shall be used by the party of the second part for the sole purpose
of storing and handling the gasoline supplied by the party of the first part.
2. The party of the second part agrees at his own cost, to maintain said equipment in good condition
and repair so long as he shall continue to use the same.
3. The party of the second part agrees that he will not encumber or remove said equipment or do or
suffer to be done anything whereby said equipment or any part thereof may be seized, taken on execution,
attached, destroyed, or injured, or by which the title of the party of the first part thereto may in any way
be altered, destroyed, or prejudiced.
4. In the event party of the second part should at any the use said equipment for any other purpose than
the storing and handling of gasoline supplied by the party of the first part, or should cease for ------ days
to handle gasoline secured from the party of the first part, the right or license of the party of f the second
part to said equipment shall it once terminate, and thereupon party of the first part shall have the right to
enter upon said premises and remove said equipment mind every part thereof.
5. The party of the second part shall identify and save harmless the party of the first part of and from
any liability for loss, damage, injury, or other casualty to persons or property caused or occasioned by any

leakage, fire, or explosion of gasoline stored in said tank or drawn through said pump.
6. This agreement small terminate forthwith upon the sale or other disposition of said premises by party
of the second part and in any event upon the expiration ------- months from the date hereof; and in the
event that by mutual consent said equipment remains in the possession of the party of the second part at
the expiration of said period it is agreed that the same shall be used by party of the second part subject to
all of the terms and conditions of this agreement, and such may be terminated at any the after the
expiration of months from the date hereof by the party of the first part giving 10 day’s notice to that effect.
Upon the termination of this license, by whatever means effected the party of the first part shall have the
right to enter upon said premises and remove the said equipment and each and every part thereof;
provided, however, that the party of the second part shall have the right and option at such time to
purchase said equipment by paying therefor the sum of -----.
This contract is executed in triplicate, and at lines agreed that the contract held by the party of the first
part is to be considered the original and to be the binding agreement in case the duplicate varies from it
in any particular.
In witness whereof the parties hereto have caused thus agreement to be executed the day and year first
above written.

146

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

practice of leasing by contract such equipments, where such contracts contain the said provision
restricting the use of the same to the storage and handling of respondent’s products as aforesaid,
may be to substantially lessen competition and tend to create for the respondent a monopoly in
the business of selling petroleum products.
“Conclusions.--That the methods of competition and the business practices set forth in the
foregoing findings as to the facts are, under the circumstances set forth therein, unfair methods
of competition, in interstate commerce, in violation of the provisions of section 5 of an act of
Congress approved September 26, 1914, entitled ‘An act to create a Federal Trade Commission,
to define its powers and duties, and for other purposes’ and are in violation of section 3 of an
act of Congress approved October 15, 1914, entitled ‘An act to supplement existing laws against
unlawful restraints and monopolies, and for other purposes.’”
Thereupon the commission ordered that respondent cease and desist from-“1. Directly or indirectly leasing pumps or tanks or both and their equipments for storing and
handling petroleum products in the furtherance of its petroleum business, at a rental which will
not yield to it a reasonable profit on the cost of the same after making due allowance for
depreciation and other items usually considered when leasing property for the purpose of
obtaining a reasonable profit therefrom, and from doing any matter or thing which would have
the same unlawful effect as that resulting from the practice herein prohibited and by reason of
which this order is made.
“2. Entering into contracts or agreements with dealers of its petroleum products or from
continuing to operate under any contract or agreement already entered into whereby such dealers
agree or have an understanding that as a consideration for the leasing to them of such pumps and
tanks and their equipments the same shall be used only for storing or handling the products of
respondent, and from doing anything having the same unlawful effect as that resulting from the
practice herein prohibited and by reason of which this order is made.”
The Clayton Act provides :
“SEC. 3: That it shall be unlawful for any person engaged in commerce, in the course of such
commerce, to lease or make a sale or contract for sale of goods, wares, merchandise, machinery,
supplies or other commodities, whether patented or unpatented, for use, consumption, or resale
within the United States or any territory thereof or the District of Columbia or any insular
possession or other place under the jurisdiction of the United States, or fix a price charged
therefore’ or discount from, or rebate upon, such price, on the condition, agreement, or
understanding that the lessee or purchaser thereof shall not use or deal in the goods, wares,
merchandise, machinery, supplies, or other commodities of a competitor or competitors of the
lessor or seller, where the effect of such lease, sale, or contract for sale or such condition,
agreement or understanding may be to substantially lessen competition or tend to create a
monopoly in any line of commerce.”
Respondent’s written contract does not undertake to limit the lessee’s right to use or deal in
the goods of a competitor of the lessor, but leaves him free to follow his own judgment. It is not
properly described by the com-plaint and is not within the letter of the Clayton Act. But counsel
for the commission insist that inasmuch as lessees generally--except garage men in the larger
places--will not encumber themselves with more than one equipment, the practical effect of the
restrictive covenant is to confine most dealers to the products of their lessors; and we are asked
to hold that, read in the light of these facts, the contract falls within the condemnation of the
statute. Standard Fashion Co. v. Magrane-Houston Co., 258 U. S. 340, and United Shoe
Machinery Corporation v. United States, 258 U. S. 451, are relied upon.
In the Standard Fashion Co. case the purchaser expressly agreed not to sell or permit sale of

any other make of patterns on its premises. It had a retail store in Boston and sales elsewhere
were not within contemplation of the parties. This court construed the contract as embodying
an undertaking not to sell other patterns. In United Shoe Machinery Corporation v. United
States, when speaking of certain “tying” restrictions, this court said :
“While the clauses enjoined do not contain specific agreements not to us the machinery of a
competitor of the lessor, the practical effect of these drastic provisions is to prevent such use.
We can entertain no doubt that such provisions as were enjoined are embraced in the broad
terms of the Clayton Act which cover all conditions, agreements, or misunderstandings of this

SINCLAIR REFINING CO.

147

nature. That such restrictive and tying agreements must necessarily lessen competition and tend
to monopoly is, we believe, equally apparent. When it is considered that the United Co.
occupies a dominating position in supplying shoe machinery of the classes involved, these
covenants signed by the lessee and binding upon him effectually prevent him from acquiring the
machinery of a competitor of the lessor except at the risk of forfeiting the right to use the
machines furnished by the United Co., which may be absolutely essential to the prosecution and
success of his business. This system of ‘trying’ restrictions is quite as effective as express
covenants could be and practically compels the use of the machinery of the lessor except upon
risks which manufacturers will not willingly incur.”
There is no covenant in the present contract which obligates the lessee not to sell the goods
of another, and its language can not be so construed. Neither the findings nor the evidence show
circumstances similar to those surrounding the “tying” covenants of the Shoe Machinery Co.
Many competitors seek to sell excellent brands of gasoline and no one of them is essential to the
retail business. The lessee is free to buy wherever he chooses; he may freely accept and use as
many pumps as he wishes and may discontinue any or all of them. He may carry on business
as his judgment dictates and his means permit, save only that he can not use the lessor’s
equipment for dispensing another’s brand. By investing a comparatively small sum, he can buy
an outfit and use it without hindrance. He can have respondent’s gasoline with the pump or
without the pump, and many competitors seek to supply his needs.
The cases relied upon are not controlling.
Is the challenged practice an unfair method of competition within the meaning of section 5
of the Federal Trade Commission act? 2 Reviewing the circumstances, four circuit courts of
appeals have answered no. And we can find no sufficient reason for a contrary conclusion.
Certainly the practice is not opposed to good morals because characterized by deception, bad
faith, fraud, or oppression. (Federal Trade Commission v. Grata, 253 U. S. 421, 427.) It has
been openly adopted by many competing concerns. Some dealers regard it as the best practical
method of preserving the integrity of their brands and securing wide distribution. Some think
it is undesirable. The devices are not expensive--$300 to $500--can be purchased readily of
makers and, while convenient, they are not essential. The contract, open and fair upon its face,
provides an unconstrained recipient with free receptacle and pump for storing, dispensing,
advertising, and protecting the lessor’s brand. The stuff is highly inflammable and the method
of handling it is important to the refiner. He is also vitally interested in putting his brand within
easy reach of consumers with ample assurance of its genuineness. No purpose or power to
acquire unlawful monopoly has been disclosed, and the record does not show that the probable
effect of the practice will be unduly to lessen competition. Upon the contrary, it appears to have
promoted the public convenience by inducing many small dealers to enter the business and put
gasoline on sale at the crossroads.
The powers of the commission are limited by the statutes. It has no general authority to
compel competitors to a common level, to interfere with ordinary business methods, or to
prescribe arbitrary standards for those en-gaged in the conflict for advantage called competition.
The great purpose of both statutes was to advance the public interest by securing fair
opportunity for the play of the contending forces ordinarily engendered by an honest desire for
gain. And to this end it is essential that those who adventure their the, skill, and capital should
have large freedom of action in the conduct of their own affairs.
The suggestion that the assailed practice is unfair because of its effect upon the sale of pumps
by their makers is sterile and requires no serious discussion.
The judgements below must be affirmed.

A true copy.
Test:
______ ______,
Clerk, Supreme Court, United
States.

SEC. 5: That unfair methods of competition in commerce are hereby declared unlawful.
The commission is hereby empowered and directed to prevent persons, partnerships, or
corporations, except banks and common carriers subject to the acts to regulate commerce, from
using unfair methods of competition in commerce.
2

EXHIBIT 12.
SOUTHERN HARDWARE JOBBERS’ ASSOCIATION ET AL.
In the United States Circuit Court of Appeals for the Fifth Circuit.
No. 3887: Southern Hardware Jobbers’ Association et al., petitioners, v. Federal Trade
Commission, respondent.
Petition to review order of Federal Trade Commission, sitting at Washington, D. C.
Peter O. Knight (Peter O. Knight, C. Fred Thompson, and A. G. Turner on the brief for petitioners.
W. H. Fuller, chief counsel, Adrien F. Busick, and Charles Melvin Neff (W. H. Fuller, chief counsel,
and Charles Melvin Neff, trial counsel, on the brief) for respondent.
Before Walker, Bryan, and King, circuit judges.
Walker, circuit judge: The Southern Hardware Jobbers’ Association, a voluntary, unincorporated
association (herein called the jobbers’ association), four business corporations, and two individuals,
George E. King and John Donnan, flied their petition in this court praying the review and setting aside
of an order to cease and desist made against them by the respondent, the Federal Trade Commission. The
proceeding which resulted in that order was commenced by a complaint made against the petitioners by
the respondent. That complaint contained allegations to the following effect: The members of the jobbers
association, about 350 in number, are persons, partnerships, and corporations engaged in the business of
buying and selling hardware in wholesale quantities throughout certain Southern States of the United
States, said King being its president, said Donnan its secretary, and said business corporations being
members thereof and engaged in the business of buying and selling hardware in wholesale quantities in
Atlanta, Ga.; they buy hardware in various States of the United States and cause same to be transported
in interstate commerce and are fairly representative of the entire membership. Within a year prior to the
filing of the complaint certain retail dealers in hardware in Georgia and adjacent States organized under
the laws of Delaware a corporation called the Merchants’ Cooperative Association (herein referred to as
the cooperative association), for the purpose of purchasing in wholesale quantities through the
instrumentality of that corporation all hardware and supplies dealt in by such retail dealers. The profits
arising from the business of that corporation were to be distributed between its stockholders and other
retailers for whom it purchased, a retailer to get the whole or a part of the profit made on each sale to it
by that corporation. At the outset that corporation undertook to purchase supplies for the retailers for
whom it was to purchase through W. A. Ray Hardware Co., of Pensacola, Fla., a member of the jobber’s
association, under all arrangement which provided for that company receiving as compensation 5 per cent
of the cost price of supplies so purchased.
Another corporation, the American Purchasing Co., was organized under the laws of Delaware for the
purpose of acting as purchasing agent for the cooperative association and other domestic and foreign
purchasers. The parties named as defendants in the complaint mentioned have conspired and confederated
together with themselves and with other persons, and particularly with other members of the jobbers’
association, to prevent the cooperative association and American Purchasing Co. from obtaining from
manufacturers and other usual sources from which purchasers of hardware in wholesale quantities must
obtain supplies, either directly or through the assistance of said W. A. Ray Hardware Co., and have, by
boycott and threats of boycott and other unlawful means, induced manufacturers and others to refuse to
sell their products to the cooperative association and the American Purchasing
148

SOUTHERN HARDWARE JOBBERS’ ASSOCIATION.

149

Co., and such manufacturers and their brokers were informed by petitioners herein that if they
sold their products to the Cooperative association and the American Purchasing Co. the
members of the jobbers’ association would not thereafter buy the products of such
manufacturers, by means whereof manufacturers of hardware generally were intimidated to the
extent that they thereafter refused to sell their products to the cooperative association and the
American Purchasing Co. The machinery of the jobbers’ association was employed by its
officers and members in bringing about and making effective said boycott. After petitioners
herein had answered that complaint and after the introduction of evidence and a hearing by the
commission, it made its findings as to the facts and stated its conclusion. It made findings in
accord with the allegations of the complaint as to the nature and composition of the jobbers’
association, as to the relations to it of the defendant individuals and corporations, as to the
nature of the business engaged in by the hatter, as to the organization and purpose of the
cooperative association and the American Purchasing Co., and as to purchases made through
the W. A. Ray Hardware Co. The commission found, among other things, to the following
effect : When the complaint was filed and when the findings were made the jobbers’ association
comprised about 90 per cent of all those doing a jobbing or a wholesale business in hardware
in that portion of the United States bounded by the Potomac River on the north, the Rio Grande
on the south, the Atlantic Ocean on the east, and the western boundary of Oklahoma on the west;
about 90 per cent of its members were and are engaged in selling hardware at retail as well as
at wholesale, and are competitors of exclusively retail dealers in hardware in the territory
mentioned, including their own customers who are retailers. For a firm or corporation to be
eligible to membership in the jobbers’ association a by-law provides that its sales to merchants
shall be not less than 75 per cent of its gross sales of not less than $250,000 a year, that it has
not less than three salesmen consistently on the road, and that it has capital, or capital and
surplus, of not less than $75,000. The membership of the jobbers’ association is further
restricted to those wholesalers whose policy it is to distribute goods through so-called regular
channels of trade; that is, from manufacturer to jobber or wholesaler, from jobber or wholesaler
to retailer, and from retailer to consumer; It being contrary to that policy for a hardware
manufacturer to sell direct to a retailer on the same terms and conditions that it sells like goods
and quantities to so-call legitimate jobbers and wholesalers; such policy requiring that, in the
case of a sale by a manufacturer to a retailer price differentials be charged to protect the socalled legitimate jobber or wholesaler in his method of distribution. The purpose of the jobbers’
association and its members is to dominate the wholesale and jobbing trade in hardware in the
territory mentioned and to hinder competition in such trade arising from the operation of jobbers
or wholesalers who do not conform to the plan of distribution approved by the jobbers’
association. It is the policy of members of the jobbers’ association to refuse to buy from
hardware manufacturers who sell to customers who do not conform to the distribution policy
approved by the jobbers’ association. To promote that policy said association conducts a system
of espionage upon the business of the wholesale and jobbing trade in said territory.
In many instances the members and officers of the jobbers’ association, including petitioners,
have notified hardware manufacturers that named jobbers or wholesalers, including the
cooperative association and the American Purchasing Co., do not conform to the method of
distribution approved by the jobbers’ association whereby the manufacturers so notified are
made to understand that they have the choice between getting the custom of the members of the
jobbers’ association or selling to jobbers or wholesalers who do not conform to the practice
approved by the jobbers’ association. Close relations have been and are maintained between
the officers and members of the jobbers’ association and the officers and members of the

American Hardware Manufacturers’ Association, which includes the principal manufacturers
of hardware in the United States. The officers and members of the jobbers association made
known to the officers and members of the Hardware Manufacturers’ Association that the former
disapproved of sales of hardware to jobbers or wholesalers who do not conform to the policy
approved by the jobbers’ association on the same terms and conditions as are accorded to
jobbers and wholesalers who conform to that policy. The jobbers’ association furnished to the
Hardware Manufacturers

150

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

Association and its members lists of so-called regular jobbers and wholesalers in the territory
mentioned and notified them that named jobbers or wholesalers In that territory, including the
cooperative association and the American Purchasing Co., did not conform to the policy
approved by the jobbers’ association. By such means manufacturers of hardware were warned
by petitioners not to trade or deal with objectionable wholesalers or jobbers on the same terms
accorded to so-called regular jobbers or wholesalers on pain of losing the trade or patronage of
members of the jobbers’ association. In the territory mentioned there are many retailers whose
requirements of hardware were and are sufficiently large to make it practicable and profitable
for manufacturers to sell direct to them and on the same terms and conditions as they accord to
members of the jobber’s association. Hardware manufacturers are deterred from selling to such
dealers on the same terms that are accorded to members of the jobbers’ association by the fear
of losing the patronage of members of that association. By means of recited action participated
in by petitioners, manufacturers of hardware, by threats of loss of the patronage of so-called
regular jobbers or wholesalers if they sold to the cooperative association or the American Purchasing Co. oil the same terms accorded to members of the jobbers’ association, were induced
to refuse to deal with or to sell to the cooperative association and the American Purchasing Co.,
in interstate commerce, on the same terms which are accorded to members of the jobbers’
association and to wholesalers and jobbers who conform to the policy of distribution approved
by the jobbers’ association. The stated conclusion of the commission was that the acts,
agreements, understanding, policies, and practices of the petitioners, and each and all of them,
are unfair methods of competition in interstate commerce and constitute a violation of the
Federal Trade Commission act (38 Stat 719). By the order complained of the petitioners were
to forever cease and desist from-1. Combining and conspiring among themselves or with others, directly or indirectly, to
induce, persuade, or compel, and from inducing, persuading, or compelling, manufacturers,
importers, or producers, their agents or brokers, to refuse to sell to the American Purchasing Co.
or the Merchants’ Cooperative Association because of any plan of organization or method of
transacting business adopted by said company.
2. Combining and conspiring among themselves and with others to give and from giving,
directly or indirectly, verbal, written, or other notices or communications to manufacturers,
importers, and producers, their agents or brokers, that business concerns not members of the
Southern Hardware Jobbers’ Association and not in harmony with the plans and policies of the
said association and not conforming to the tests and standards set up by the said association for
membership therein are not entitled to purchase and obtain goods, wares, and merchandise upon
the same terms and conditions usually accorded by said manufacturers, importers, and producers
to the members of the Southern Hardware Jobbers’ Association.
3. Combining or conspiring together among themselves or with others, and from using any
scheme or device or means whatsoever to accomplish that result, directly or indirectly, to hinder,
obstruct, or prevent manufacturers, producers, or importers, their brokers or agents, from dealing
with the American Purchasing Co. or the Merchants’ Cooperative Association or others engaged
in similar business, upon as favorable terms and conditions usually accorded by the said
manufacturers, producers, or importers to the members of the said Southern Hardware Jobbers’
Association.
4. Hindering, obstructing, or preventing, directly or indirectly, any manufacturer, promoter
or importer, or broker or agent thereof, from selling and ship ping, either or both, in interstate
commerce, to the American Purchasing Co. or to others engaged in similar business.
5. Combining and conspiring together among themselves or with others, and from using any

scheme or device or means whatsoever to accomplish that result, directly or indirectly, to hinder,
obstruct, or prevent the American Purchasing Co. or the Merchants’ Cooperative Association,
or others engaged in similar business, from freely purchasing and obtaining, in interstate
commerce, the goods, wares, and merchandise usually handled by the said company or
association in the course of their business, or from freely competing in interstate commerce with
the members of the Southern Hardware Jobbers’ Association, Beck & Gregg Hardware Co., the
Dinkins-Davidson Hardware Co., King Hardware Co., George E. King, or others engaged in
similar business.
6. Combining and conspiring, directly or indirectly, among themselves or with others, to
establish and to continue maintaining any tests or standards for de-

SOUTHERN HARDWARE JOBBERS’ ASSOCIATION.

151

termining whether said American Purchasing Co. or Merchants’ Cooperative Association, or
others engaged in similar business, shall be permitted to purchase goods, wares, and
merchandise in interstate commerce upon the same terms and conditions as the members of the
said Southern Hardware Jobbers’ Association.
7. Combining and conspiring, directly or indirectly, among themselves or with others, to
publish’ or to distribute, and from publishing or distributing to manufacturers, importers, and
producers, their agents or their brokers, engaged in selling goods, wares, and merchandise,
especially hardware, among the various States, lists of the members of the Southern Hardware
Jobbers’ Association for the purpose and with the intent of influencing said manufacturers,
importers, producers, their agents and their brokers, to refrain from making sales of such
commodities to others than those named in such lists in the territory covered by the said
association.
8. Combining and conspiring among themselves, or with others, to induce, coerce, and
compel manufacturers, importers, and producers, or their agents or their brokers, directly or
indirectly, to refuse to sell goods, wares, and merchandise to the American Purchasing Co., or
to the Merchants’ Cooperative Association, either or both, or to others engaged in the same
business, upon the same terms and conditions usually offered and given by the said
manufacturers, importers, and producers, their agents or their brokers, to the members of the
Southern Hardware Jobbers’ Association.
9. Carrying on between and among themselves, or with others, communications written or
verbal, having the purpose, tendency, or the effect of inducing, coercing, or compelling
manufacturers, importers, or producers of goods, wares, and merchandise, especially hardware,
their agents or their brokers, directly or indirectly, to refuse to deal with or sell to the American
Purchasing Co., or to the Merchants’ Cooperative Association, or others engaged in similar
business upon the same terms and conditions usually accorded by said manufacturers, importers,
and producers to the members of the Southern Hardware Jobbers’ Association.
10. Combining or conspiring among themselves, or with others, to compel, or to attempt to
compel, the American Purchasing Co., or the Merchants’ Cooperative Association, or others
engaged in a similar business, to purchase the goods, wares, and merchandise required for their
business from or through any competitor of said purchasing company or said cooperative
association, or from others similarly engaged.
11. Combining or conspiring among themselves or with others to boycott or to threaten to
boycott, or to threaten with loss of patronage or custom, any manufacturer, importer, or
producer, or his agent or broker, engaged in interstate commerce, for selling or agreeing to sell
to the American Purchasing Co., or the Merchants’ Cooperative Association, or others engaged
in similar business. on the same terms and conditions accorded by such manufacturer, importer,
or producer, or his agent or broker, to members of the Southern Hardware Jobbers’ Association.
Evidence adduced warranted the conclusion that a main purpose of the jobbers’ association,
its officers and members, was to promote the policy of distributing hardware from manufacturer
to wholesaler or jobber, from wholesaler or jobber to retailer, and from retailer to customer, only
in the way they approved. It is consistent with that policy for a wholesaler or jobber to be also
a retailer if he has in his business a specified amount of capital, if a specified per cent of his
gross sales of not less than a specified amount a year is to dealers, and if the keeps constantly
on the road not less than a specified number of salesmen. It is contrary to that policy for a
retailer, unless he is also a wholesaler or jobber who complies with the just mentioned
requirements, to have such relations with a wholesaler or jobber or interest in the business of
a wholesaler or jobber as results in the retailer receiving the whole or a part of the profits

realized by the wholesaler or jobber on sales made by him to the retailer. The plan of doing
business adopted and attempted to be put into effect by those who promoted and organized the
cooperative association and the American Purchasing Co. was not in harmony with the policy
of the jobbers’ association, as it was a feature of that plan of business that a retailer who gets
hardware through the concerns mentioned shares in the profits realized by such concerns on
sales made by them to the retailer, though such retailer does no wholesale business. It was part
of the plan of the promoters and organizers of the cooperative association and the American
Purchasing Co. to supply hardware to only such retailers as were willing and able to pay

152

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

cash for the hardware they bought. A result of a hardware manufacturer conforming to the policy
approved by the jobbers’ association Is that one who is solely a retailer can not buy hardware
directly or indirectly, or in cooperation with other such retailers from such manufacturer on the
same terms as are accorded to retailers who are members of the jobbers’ association, though
such retailer buys in what, as between the manufacturers and jobbers or wholesalers, are
recognized as wholesale quantities. A consequence of the success Of the policy approved by
the jobbers’ association is to impair the ability of jobbers or wholesalers who share with dealers
who are exclusively retailers, to whom they sell, the profits realized on such sales, to compete
with jobbers or wholesalers who retain the profits realized on sales made by them to such
retailers, as jobbers or wholesalers so sharing their profits with buyers who sell only at retail can
not buy hardware from the manufacturer at jobbers’ prices and terms. Another consequence of
the success of the policy mentioned is to give to retailers who are also such jobbers or
wholesalers as are eligible to membership in the jobbers’ association a substantial advantage
over dealers who sell only at detail thereby restraining or hindering competition by the last
mentioned dealers. Whatever influences manufacturers of hardware to refuse to sell their
products to dealers who are obnoxious to the jobbers’ association on the same terms as are
allowed to members of that association and those who conform to its policy tends to restrain
trade by obstructing or pre-venting it with such obnoxious dealers. There was evidence of
conduct by each of the petitioners which was intended to induce, and was effective in inducing,
manufacturers not to sell to the cooperative association or of buying for it on the same terms
which were accorded to members of the jobbers’ association. If that conduct was in pursuance
of an agreement or understanding, express or implied, to which petitioners were parties, thereby
to hinder or obstruct the free and natural flow of commerce in interstate trade it constituted an
“unfair method of competition” within the Federal Trade Commission act. Federal Trade
Commission v. Beech Nut Co., 257 U. S. 441, 453; Wholesale Grocers Association v. Federal
Trade Commission, 277 Fed. 657.
It was permissible to consider the conduct of the petitioners in the light of the fact that it was
disclosed that they had in common the purpose to put into effect the above-mentioned policy of
the jobbers’ association. The doing by them of like acts to induce manufacturers to conform to
that policy was, under the circumstances, indicative of the existence of an agreement or
understanding between them to cooperate In furtherance of that policy. From the evidence as
to the relations between the jobbers’ association, its officers and members, and hardware
manufacturers and their organization, it well might be inferred that manufacturers, in conforming
to the jobbers’ association policy, were influenced by the desire to retain the custom and good
will of the large body of wholesale buyers banded together in the jobbers’ association, and that
such manufacturers or many of them were induced or coerced by the united opposition of the
members of the jobbers’ association not to sell hardware in wholesale quantities and at jobbers’
prices and terms to dealers such as the cooperative association, which was prepared to buy in
large quantities and sought no credit for goods bought. The circumstances attending the
furnishing to hardware manufacturers or their association of lists of members of the jobbers’
association and the giving of notice to such manufacturers that named dealers were irregular or
not entitled to hue treated as legitimate wholesalers were such that it could properly be inferred
that those acts were intended to have, and had, the effect of warnings to the manufacturers
against selling on usual wholesale terms to dealers who were not members of the jobbers’
association or who were so charged with noncompliance with the policy of that association.
There was evidence tending to prove that the petitioners combined and cooperated to keep
manufacturers, will I to do so. from selling their products at wholesale prices and terms to the

cooperative association and the American Purchasing Co., and to obstruct and prevent those
concerns from competing as jobbers or wholesalers in territory sought to be appropriated by the
jobbers’ association and dealers conforming to the method of doing business which was
approved by that association. The evidence warranted the conclusion that what the petitioners
did to thwart the success of the cooperative association and the American Purchasing Co. went
beyond each of the petitioners asserting and seeking to enforce its or his Individual views as to
business policies or methods, and amounted to cooperation between them in furtherance of a
common purpose to prevent bard-ware manufacturers selling without price discrimination to
exclusively retail

SOUTHERN HARDWARE JOBBERS’ ASSOCIATION.

153

dealers or organizations buying for such retailers on terms which effect a saving to retailers of
all or part of the profit which regular wholesalers or jobbers retain, with the result of requiring
such retailers to get hardware only through the self-styled legitimate wholesalers or jobbers.
The existence of a combination in restraint of trade may be inferred from evidence of circumstances indicating concert of action to that end. American Column Co. v. United States, 257 U.
S. 377. The success of the concerted action in which the petitioners participated meant the
monopolizing of the wholesale hardware trade in an extensive territory by members of the
jobbers’ association and dealers conforming to the above-mentioned policy, and also meant the
exclusion of hardware retailers in that territory from sources of supply available to wholesalers
unless they combined wholesaling and retailing in the particular way which was approved by
the jobbers’ association. We are of opinion that such concerted action involved restraint of
interstate trade, and is a proper subject of a Federal Trade Commission order to cease and desist.
As affecting the kind of interstate trade undertaken to be carried on by the cooperative
association and the American Purchasing Co., none of the things enumerated in the order
complained of includes conduct which the petitioners are entitled to persist in. The doing or
continuing to do by the petitioners of the things enumerated in the order to cease and desist is
incompatible with the discontinuance of the practices condemned by the commission. Under
the circumstances, the doing of the forbidden things would be concerted action tending to
restrain competition In interstate trade. That being so, we do not think that order is too broad.
We conclude that the petition should be denied, and it is so ordered.
(Original filed June 13, 1923.)

EXHIBIT 13.
JUVENILE SHOE CO. (INC.).
In the United States Circuit Court of Appeals for the Ninth Circuit.
Juvenile Shoe Company, Incorporated, petitioner, v. Federal Trade Commission,
respondent. No.3927.
Before Gilbert and Rudkin, circuit judges, and Dietrich, district judge.
The petitioner seeks to review the order entered against it by the respondent commanding it to desist
from certain methods of competition in commerce. The respondent’s complaint alleged that the petitioner
was organized on May 26, 1919, at Los Angeles, Calif., to sell children’s shoes exclusively at wholesale
in California and in adjacent States; that the Juvenile Shoe Corporation of America was organized in
Missouri on June 8, 1918, to manufacture and sell children’s shoes exclusively throughout the United
States in interstate commerce in competition with others similarly engaged; that it has built up an extensive
business in the sale of its product in California and adjacent States; and that its shoes are of greater value
and of superior quality and sell for higher prices than the petitioner’s shoes; that the petitioner’s Corporate
name so nearly resembles the Corporate name of said Juvenile Shoe Corporation and its trade name or
design so nearly resembles the registered trade-mark of the Juvenile Shoe Corporation that it causes
confusion in the trade and thereby induces purchasers of children’s shoes to believe that the shoes offered
for sale by the petitioner are the shoes manufactured by the Juvenile Shoe Corporation; that the trade-mark
of the latter corporation is “Juvenile Shoe System,” used by it since January 1, 1919, and registered
November 30, 1920; that since January 1, 1919, the Juvenile Shoe Corporation used its trade-mark
displayed as a wax seal, and this seal was employed by it by means of a label placed on the cartons in
which the shoes were sold and by tags attached directly to the shoes and by means of a design on the soles
of the shoes; that the petitioner put upon the boxes in which its shoes are packed a circular label
containing the face of a child surrounded by the words “Juvenile Shoe Company, Inc.” which so resembled
the trade-mark of the Missouri corporation as to be likely to cause confusion in the trade and deceive
purchasers.
The answer of the petitioner admitted that the shoes sold by the Missouri corporation were of superior
quality to those sold by itself. Upon the pleadings and the proof the respondent made findings and held
that the petitioner had violated the provisions of section 5 of the act of Congress approved September 26,
1914, creating the Federal Trade Commission and defining its powers and duties, and It ordered that the
petitioner, its officers, directors, agents, and employees cease and desist (l) from using as a part of its
corporate name the word “Juvenile” or any word or combination of words likely to be confused with the
name of the Juvenile Shoe Corporation of America; (2) from using or permitting to be used in its behalf
the word “ Juvenile” on its marks, labels, tags, or other devices upon or in connection with the sale of
shoes for infants, children, and misses; and (3) from directly or indirectly suggesting by the use of a word,
mark, or label or otherwise that the goods of the petitioner are the goods of the Juvenile Shoe Corporation
of America.
Gilbert, circuit judge, after stating the case :
The record fully justifies the order of the Federal Trade Commission enjoining the use of the petitioner’s
Corporate name. The petitioner went into the business of manufacturing and selling children’s shoes and
took a name so similar to a senior corporation that was engaged in precisely the same business and in the
same field that confusion of the two corporations in the public mind was inevitable. The names “ Juvenile
Shoe Corporation” and “Juvenile Shoe Company, Inc.” are practically identical. The reported cases in
which injunction has been sustained against the use of a corporate name afford few in
154

JUVENILE SHOE CO. (INC.).

155

stances of names so similar and so likely to create confusion as those which these two
corporations used. In assuming its name, a corporation acts at its peril, American Order Scottish
Clans v. Merrill, 151 Mass. 558; Metropolitan Tel. Co. v. Metropolitan Tel. Co., 141 N. Y. S
598. Injunction will lie against a corporation that by any artifice deceives the public into
believing that its goods are those of another corporation having a similar name, and this is true
Irrespective of any intent to mislead the public, and especially is it true where the corporations
are engaged in the same business. General Film Co. of Mo. v. General Film Co. of Me., 237
Fed. 64; Nat. Circle Daughters of Isabella v. Nat. Order D. I., 270 Fed 723.
Nor are we convinced that this court should modify that portion of the order here under review
which forbids the petitioner to use the word “Juvenile” on its marks, labels, and tags in
connection with the sale of children’s shoes and from suggesting by word, mark, label, or
otherwise that its goods are the goods of the Juvenile Shoe Corporation. The Federal Trade
Commission found as a fact that the use of the word “Juvenile” as it was employed by the
petitioner caused confusion and led purchasers to believe that the petitioner’s goods were those
of the Juvenile Shoe Corporation. It is not asserted that the Juvenile Shoe Corporation has the
exclusive right to the word “Juvenile” as applied to shoes, but we think it has a proprietary and
exclusive right to the good will which it has created by Ifs dealing and its advertising with the
purchasing public as well as by the superior quality of its shoes, and that the use of the word
“Juvenile” by the petitioner on its shoes, has, as the Trade Commission finds, tended to create
the false impression that the goods sold by the petitioner were the goods of the Juvenile Shoe
Corporation, and while it may be that the word “Juvenile” is not susceptible of appropriation as
a trade mark, the right to its use as a trade name may still be protected against the unfair
competition which might result from the use of the same trade name by another corporation,
where both are engaged in the same trade, dealing in the same class of goods and in actual
competition with one another. Pillsbury-Washburn Flour Mills Co. v. Eagle, 86 Fed. 608;
Strauss v. Notaseme Co., 240 U. 5.179; G. W. Cole Co. v. American Cement and Oil Co., 130
Fed. 703; N. K. Fairbank Co. v. Luckel King and Cake Soap Co., 102 Fed. 327; Stark v. Stark
Bros. Nurseries and Orchards Co., 257 Fed. 9.
It is contended that since the petitioner has ceased the use of a label on the cartons in which
Its shoes are packed and sold, an order to cease placing such labels on the cartons is not
warranted. But it does not follow that the order should be dissolved. The Juvenile Shoe
Corporation is not hound to accept the fact of the disuse of the labels as proof that the use will
not be resumed in the future, and the mere fact that the petitioner has ceased such use is no
reason why injunction should not issue. Sears, Roebuck & Co. v. Federal Trade Commission,
258 Fed. 307; Saxlehner v. Eisner, 147 Fed 189.
The order of the Federal Trade Commissioner is affirmed.
(Indorsed : Opinion filed May 14, 1923. F. D. Monckton, clerk. By Paul P. O’Brein, deputy
clerk.

EXHIBIT 14.
P. LORILLARD CO. CASE.
United States District Court, Southern District of New York.
The Federal Trade Commission, petitioner, against P. Lorillard Co., respondent; Federal Trade
Commission, petitioner, against American Tobacco Co. (Inc.), respondent.
William Hayward, Esq., United States attorney, attorney for petitioner; W. H. Fuller, Esq.. chief counsel
for Federal Trade Commission ; William D. Guthrie, Esq., William B. Bell, Esq., Bernard Hershkopf,
Esq., of counsel for respondent, P. Lorillard Co.; John Walsh, Esq., Junius Parker, Esq., Jonathan H.
Holmes, Esq., of counsel for respondent, American Tobacco Co. (Inc.).
These cases were argued together and will be considered in one opinion. The petitioner in each of the
above-named proceedings was granted an alternative writ of mandamus commanding the respondent to
show cause why a peremptory writ should not issue directing that immediately it forthwith deliver into the
possession of the Federal Trade Commission the accounts, books. records, documents, memoranda,
papers, and correspondence of the respondent for inspection and examination and for the purpose of
making copies thereof. The petition upon which the alternative was granted sets forth that on the 16th of
September, 1921, a complaint was filed with the Federal Trade Commission against the respondent. The
complaint alleged that the respondent in the conduct of its interstate commerce was indulging in practices
which were in violation of the provisions of the act of Congress of September 26. 1914 (38 Stat. 717), in
that the respondent was using certain methods of business practices resulting in unfair competition, and
that it was regulating and fixing, or attempting to regulate and fix, the prices at which the commodities
sold by it should be resold h)y those to whom it had sold them, and was cooperating, aiding, and abetting
others to successfully formulate and carry out a scheme or combination pursuant to which the resale prices
of respondent’s commodities should be fixed and maintained by those to whom respondent had previously
sold its products or commodities. Further, that the Senate of the Congress of the United States by a
resolution directed the Federal Trade Commission to investigate the tobacco situation in the United States
as to the domestic and export trade, with particular reference as to the market price to producers of tobacco
and the market price for manufacturing tobacco and the price of leaf tobacco exported, and to report to
the Senate as soon as possible the result of such investigation. Petitioner then sets forth that at various
times between September 29, 1921, and November 5, 1921. authorized agents of the petitioner in its belief
demanded of the respondent to produce and furnish to them at respondent’s offices certain specified documentary evidence or written data, correspondence, and other paper writings which were then and there in
the possession, custody, and control of the respondent, so that copies thereof or parts thereof might be
made. And the respondent, complying with the demands and pursuant to its duty, under the provisions
of the Federal trade act, did produce for inspection and examination of petitioner’s agents certain of the
data commanded, but in violation of provisions of the Federal trade act it refused to produce for inspection
and examination “certain documentary evidence, records, correspondence, and writings herein specified
which were then and there in respondent’s possession, custody, and control, and it refused to permit copies
thereof to be made by petitioner.” And it set forth that it is necessary in the prosecution of its duty that
such inspection and examination be granted to the petitioner’s agents and that it is hindered in the
performance of its duty and in the exercise of its power by the refusal of the respondent to grant such
examination and inspection. Its prayer for relief is that “all papers and telegrams received by the American
Tobacco Co. (P. Lorillard Co.) from all of its jobber customers located in different points throughout the
United States and also copies
156

P. LORILLARD CO. CASE.

157

of all letters and telegrams sent by the American Tobacco Co. (P. Lorillard Co.) to such jobbers
during the period of January 1, 1921, to December 31, 1921, inclusive,” be turned over for
examination and inspection. Each respondent resists the application for a peremptory writ,
contending that the Federal Trade Commission is asserting authority which it does not possess
in seeking to make in unlimited and unrestricted inspection, with the right to copy all of the
correspondence with its jobber customers. That the Senate resolution directing the Federal
Trade Commission to make the investigation referred to grants no authority for unlimited and
unrestricted search, with the right to copy the correspondence. It further contends that sections
5, 6, and 9 of the Federal Trade Commission act give no such authority of unlimited and
unrestricted search and examination, and it is said that any such construction or interpretation
of the Federal Trade Commission act would be in contravention of the fourth amendment of the
Constitution, guaranteeing the right of the people to be secure in their papers and effects against
unreasonable searches and seizures and that no warrant shall issue but upon prob-able cause
supported by oath or affirmation. Thus the question is presented whether Congress can delegate
visitorial powers under the commerce clause of the Constitution over private corporations
engaged in interstate commerce to the extent of granting unlimited and unrestricted examination
and inspection, with the right to copy.
By the act of Congress of September 26, 1914, the Federal Trade Commission was created
a body corporate. Its purposes were defined by the statute creating It and its duties and powers
and administration are referred to in sect ions 5, 6, and 9. It is provided by section 9 of the act
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 section
6 of the act provides “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.”
The Constitution provides (Art. 1, sec. 8, d. 3) that Congress shall have power to regulate
commerce with foreign nations and among the several States.
Each respondent is conceded to be a private corporation engaged in selling tobacco and its
products and is engaged in interstate and intrastate commerce. This investigation was
commenced “for the purpose of ascertaining the facts relating to respondent’s business.” The
business of each of the respondents is very extensive, its letters, papers, and other documents
making it a business of thousands of letters per month. The affidavits submitted by the
respondents set forth a mass of correspondence and other documentary evidence which, if the
petitioner prevails in its alleged right to “full and complete access to any and all documentary
evidence in the possession and control of the respondent” would, it is alleged, handicap the
respondent in its business and entail transactions expense and difficulties. Much of the
correspondence relates to transactions bearing upon intrastate commerce only. As to such of
the correspondence as bears upon intrastate commerce, the petitioner is not entitled to
examination, inspection, or copying any part thereof. The commerce clause of the Constitution
granting power to the Congress to legislate as to the commerce permits only of legislation which
has to do with interstate commerce. The Federal trade act forbids unfair practices in reference
to the commerce of an interstate character only. (Ward Packing Co. v. Federal Trade Comm.,
264 Fed. 330.) The commerce clause of the Constitution vested in the Congress a full and
complete power to regulate commerce among the several States for the strong arm of the

National Government may be put forth to brush away all obstacles to interstate commerce.” (In
re Deb, 158 U. S. 564.) And Constitutional privileges do not change, but their operation extends
to new matters as modes of business and the habits of life of the peoples vary with each
succeeding generation. The power is the same, but it operates to-day upon modes of interstate
commerce unknown to the fathers and will operate with equal force upon any new modes of
such commerce which the future may develop.” (Gibbons v. Ogden, 22 U. S. 1.) The power
of Congress to legislate embraces not only to regulate and control that which is wholly interstate,
but also that which even though intrastate affects the free flow of interstate
67501--23----11

158

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

commerce. (Minn. Rate Oases, 230 U. S 352.) To regulate is the power to enact legislation
directly affecting interstate commerce. (United States v. Adair, 152 Fed. 737.) The Constitution
having granted to the Congress plenary power to regulate or control commerce among the
States, Congress may dele gate such duties to investigate and learn conditions to a permanent
administrative body.
The validity of the Interstate Commerce Commission act granting to that Commission the
power to investigate facts relating to interstate transportation was considered in Interstate
Commerce Commission v. Brimson (154 U. S. 447). It has been held that the visitorial power
of the Federal Government provided for in the act over private corporations must be restricted
to activities of an Interstate-commerce character. (Hale v. Henkel, 201 U. S.43; Interstate
Commerce Comm. v. Goodrich Co., 224 U.S. 194; United States v. Basic Products Co., 260
Fed. 472.) We must presume that the Congress did not intend by this legislation to invade the
field reserved under the Constitution to the several States by interfering with transactions in
intrastate commerce. “The statute must be construed, if fairly possible, so as to avoid not only
the conclusion that it is unconstitutional but also grave doubts upon that score.” (United States
v. Jim Fuey Moy, 241 U. 5. 394; see also United States v. D. & H. Co., 213 U. S. 366.)
The resolution of the Senate provided that “the Federal Trade Commission be, and Is hereby,
directed to investigate the tobacco situation in the United States as to the domestic and export
trade, with particular reference to the market price to producers for tobacco and the market price
for manufactured tobacco and the price of leaf tobacco exported, and report to the Senate as
soon as possible the result of such investigation.” This resolution has not the mandatory effect
of statutory enactment with reference to the commerce clause of the Constitution, and the
present application for the writ must rest by reason of the command of section 9 of the Federal
Trade Commission act, wherein jurisdiction is granted to the district courts of the United States
“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
resolution of the Senate does not come within the terms of the authority conferred by the statute
in question. Under section 6 power is conferred upon the Commission upon the direction of
the President or either House of Congress to investigate and report the facts relating to any
alleged violations of the antitrust acts by any corporation, “but the language of this statute makes
it necessary for one of the Houses of Congress to adopt a resolution for a direction to
investigate, and reporting such investigation must be for alleged violation of the antitrust acts.
The quotation from the resolution of the Senate falls to Indicate that it is founded upon any
violation or alleged violation of the antitrust law. It does not indicate that the Senate intended
that any antitrust law violation should be investigated by the Commission. If so, an apt
expression to that effect could have been used. It can not, therefore, be concluded that it was
intended in the language used to investigate any violations of the antitrust acts by any
corporation. In any case the power of the Federal Trade Commission can not be broader than
what Congress did or could delegate. The analogy of the cases arising under the powers of the
Interstate Commerce Commission with that of the Federal Trade Commission’s powers is
pertinent. This was referred to in Beechnut Packing Co. v. Federal Trade Comm. (264 Fed.
885). A comparison of the statutes particularly setting forth the procedure under the two acts
shows the similarity. In each any person may be compelled to appear and depose and produce
documentary evidence in the same manner as witnesses may be compelled to appear and testify
and produce documentary evidence before the Commission. Both commissions are required to
make findings and proceedings before them and the findings must be based upon the testimony
given.

In the Harriman case (211 U. S. 417), Justice Holmes said :
“The Commission * * * is given power to require the testimony of witnesses ‘for the
purpose of this act.’ The argument for the Commission is that the purposes of the act embraces
all the duties that the act imposes and the powers that it gives the Commission; that one of the
purposes is that the commission shall keep itself informed as to the manner and method in which
the business of carriers is conducted, as required by section 12; that another Is that it shall
recommend additional legislation * * * and that for either of these general objects it may call
on Congress to require anyone whom it may point out to attend and testify if he would avoid the
penalties for contempt.

P. LORILLARD CO. CASE.

159

“We are or the opinion, on the contrary, that the purposes of the act for which the commission
may exact evidence embraces only complaints for violation of the act, and investigations by the
Commission upon matters that might have been made the object of the complaint. As we have
already implied, the main purpose of the act was to regulate the interstate commerce business
of carriers, and the secondary purpose, that for which the commission was established, was to
enforce the regulations enacted. These, in our opinion, are the purposes referred to; in other
words, the power to require testimony is limited, as it usually is in English-speaking countries,
at least, to the only cases where the sacrifice of privacy is necessary-those where the
investigations concern a specific breach of the law.
“If we felt more hesitation than we do, we still feel bound to construe the statute not merely
so as to sustain its constitutionality, but so as to avoid a succession of constitutional doubts, so
far as candor permits.”
The Interstate Commerce Commission deals with quasi public corporations. But the phrase
of the Federal Trade Commission act considered, in view of the language in the Harriman case,
would indicate that the right to procure information in its investigations under the provisions of
section 6 would not grant the unlimited search and inspection of correspondence with the right
to copy the same in the absence of some specific complaint which would point out the
materiality to that complaint of the particular correspondence and papers sought to be obtained.
Reading sections 5, 6, and 9, I do not think that Congress intended at the time of the
enactment of this law to go beyond the well-recognized principles of limitations with reference
to searches and seizures guarded against by the fourth amendment of the Constitution. It is
better to deduce the intention that information should only be extracted by the procedure long
established in the courts in conformity with the constitutional guaranty against unlawful and
unreasonable searches and seizures and the right of people to be secure in their papers and
effects therefrom. The fourth amendment provides :
The right of the people to be secure in their * * * papers and effects, against unreasonable
searches and seizures, shall not be violated and no war-rants shall issue but upon probable cause,
supported by oath or affirmation, and particularly describing the place to be searched, and the
persons or things to be sized.”
This command of the Constitution, properly interpreted, is a prohibition against Congress
granting powers to the commission for unlimited searches and seizures of letters and documents.
The act makes plain the duty of the commission to gather, compile, and publish for use in its
proceedings what may be voluntarily offered or submitted in response to request or demand.
It may also make investigation independently, but the exercise of visitorial power over private
corporations must keep within the restrictions of the fourth amendment. “Neither branch of the
legislative department, still less any merely administrative body established by the Congress,
possesses or can be vested with a general power of making inquiry into the private affairs of a
citizen.” (Interstate Commerce Comm. v. Brimson, 154 U. S. 478.)
As was said by Mr. Justice Brewer In re Pacific Ry. Comm. (32 Fed. 241):
“There is no doubt that Congress may authorize a commission to obtain information upon any
subject which in its judgment it may be important to possess * * *. But in its inquiries it is
controlled by the same guards against the invasion of private rights which limit the
investigations of private parties into similar matters.”
It is the duty of the court to so construe the act as to save the statute from constitutional
infirmity. (Knights Templar Indemnity Co. v. Jarman, 187 U. S. 197; U. S. v. D. & H. Co., 213
U. S.407; Harriman v. Interstate Commerce Comm., 211 U.S. 401.)
Section 6 (b) grants to the commission the right to require corporations coming within its

jurisdiction to make reports concerning their affairs and thus to furnish to the Commission such
information as It may require. And subdivision (a) of section 6 calls upon the corporations in
question to report upon specific matters as provided in subdivision (l). If the corporations fail
in reporting or are false, the commission is entitled, upon properly showing the probable cause,
to demand due disclosures and access to the inspection of any specific, necessary, and relevant
papers, excluding such papers as may be privileged. In other words, there must appear to be
some reasonable cause for a search, such as a definite complaint charging a specific wrong, and
this presenting an inquiry which would have reasonable and readily ascertainable limits.

160

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

Such a construction of subdivisions (a) and (b) of section 5 would effectuate the Intent of
Congress and the procedure Can be kept within constitutional limit (United States v. L. & N.
R. R., 236 U. S. 318 ; Veeder v. United States, 252 Fed 414.) Such a construction would seem
to be In accord with the discussions In the Senate when this legislation was enacted. (See 51
Congressional Record, part 13, 63d Cong., 2d sess., pp.12747, 128(X), 1280-12811, 12918,
12927.) It was not intended to grant an unlimited power of inquisition or an unlimited right of
access to books and papers of private parties not engaged in any public service or a search
without basis of some facts tending to establish a charge of wrongdoing.
It is now well established that a corporation is entitled to invoke the guaranties of the fourth
amendment against unreasonable searches and seizures in as full a measure as would a person
or partnership. (Silverthorne Lumber Co. v. United States, 251 U. S. 385; Coastwise Lumber
Co. v. United States, 259 Fed 847.)
In the papers submitted on this application there is no show of the existence of probable cause.
The relief prayed for is in general terms and includes all papers and telegrams received by each
respondent from its jobber customers located in different points throughout the United States
and copies of all letters and telegrams sent by each respondent to such jobbers during the period
from January 1, 1921, to December 31, 1921, inclusive. Such general demands made in other
warrants of law, such as a subpoena duces tecum, have been condemned as not giving a
reasonably accurate description of the papers wanted, either by date, title, substance, or subject
to which they relate. (Ex Parte Brown, 72 Mo. 83; Carson v. Hawley, 82 Minn. 204.)
In Boyd v. United States (116 U. S. 616), the court quoted with approval Judge Camden’s
language in Entick v. Carrington and Three Other King’s Messengers (19 Howell’s State Trials,
1029), wherein he said:
“Papers are the owner’s goods and chattels; they are his dearest property; and are so far from
enduring a seizure that they will hardly bear an inspection; and though the eye can not by the
laws of England be guilty of a trespass, yet where private papers are removed and carried away,
the secret nature of those goods will be an aggravation of the trespass, and demand more
considerable damages in that respect. Where is the written law that gives any magistrate such
a power? I can safely answer, there is none; and, therefore, It Is too much for us, without such
authority, to pronounce a practice legal which would be subversive of all the comforts of
society.”
To grant the relief prayed for by the petitioner would be to permit of an unreasonable search
and seizure of papers in violation of the fourth amendment. It was not the intention of Congress
to grant such unlimited examination and inspection by the legislature in question, nor, indeed,
did Congress have authority to do so under the commerce clause of the Constitution. It would
be unreasonable and unjust to accede to the demands of the petitioner and the application for
the peremptory writ of mandamus against the respondents, American Tobacco Co. and P.
Lorillard Co., is denied.
Manton, United States judge.
Dated October 3, 1922.

EXHIBIT 15.
BALTIMORE GRAIN CO. ET AL.
In the District Court of the United States for the District of Maryland.
Federal Trade Commission v. The Baltimore Grain Co.; Federal Trade Commission v. H. C. Jones Co.
(Inc.); Federal Trade Commission v. Hammond, Snyder Co. (Inc.).
Rose, District judge :
In these cases the Federal Trade Commission seeks a mandamus to compel the respondents, each a
corporation, the first two of Maryland and the last of Delaware, and each of them engaged in foreign and
interstate as well as intrastate trade in grain, to permit the petitioners’ agents to examine, inspect, and copy
respondents’ books of account, records, documents, correspondence, and paper writings relating to or
bearing upon their business in interstate commerce, and all letters and telegrams passing between the
respondents and the latter’s jobber customers throughout the United States during the calendar year 1921.
The petitions say that the Commission, on its own motion, deter-mined to gather and compile information
concerning, and to investigate from time to time the organization, business, conduct, practice, and
management of the respondents and to investigate and determine the facts of the relation of each of them
to other corporations, individuals, associations, and partnerships. The petition further represents that the
Commission is also acting in compliance with resolution No. 133 of the Senate of the United States,
passed December 22, 1921, directing it to investigate the margins between farm and export prices; the
freight and other costs of handling; the profits or losses of the principal exporting firms and corporations
and their subsidiary or allied companies and firms; all the facts concerning market manipulations, if any,
in connection with large export transactions or otherwise; the organization, ownership, control,
interrelationship, foreign subsidiaries, agents, or connections of the concerns engaged in the export of
grain, including the extent of their control of the facilities used by them, the organization, methods of
operation, and agents used by farm buyers of grain in this country, and other data affecting the demand
for a foreign disposition movement and use of American exported grain and report its findings and
recommendations thereon as promptly as the various phases of the work are concluded.
In the case of the Federal Trade Commission v. P. Lorillard Co., Judge Manton, sitting in the District
Court for the Southern District of New York, has recently elaborately reviewed the statutes and authorities
defining or limiting the power of the Federal Trade Commission to compel private corporations to submit
their papers to its examination. In that case the petition of the com-mission, which was denied, set forth
facts legally Indistinguishable from those alleged in the one at bar.
Here, as there, the resolution of the Senate conferred upon the Commission no authority not already
given by law.
United States v. Louisville & Nashville R. R., 236 U. S.329: The Federal Trade Commission act does
empower the Commission, upon the direction of the president or either House of Congress, “to Investigate
and report the facts relating to any alleged violation of the antitrust acts by any corporation.” The
resolution cited in the instant case does not suggest any breach of these acts. The question here is whether
the statute creating the Commission entitles it to the inspection for which it asks, and if so, whether the
act in that respect is valid.
Paragraph A of section 6 of the statute authorizes the Commission “to gather and compile information
concerning, and to investigate from the to the, the organization, business, conduct, practices, and
management of any corporation engaged in commerce * * * and its relation to other corporations and
to individuals, associations, and partnerships.”
161

162

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

Paragraph H provides that the commission may upon its own motion “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 * * *.”
Section 9 declares “that for the purpose of this act the commission, or its duly authorized
agent or agents,. shall at all reasonable times have access to, for the purposes of examination and
the right to copy, any documentary evidence of any corporation being investigated or proceeded
against * * *.”
The measure originated in the House of Representatives, and the committee which reported
it was familiar with what the Supreme Court had said in Harriman v. Interstate Commerce
Commission, 211 U. S. 243, and it said that in order that the proposed trade commission “may
have powers of subpoena and production of books and papers, the language” of the bill “has
been expressly made broad enough to permit a full exercise of that power in connection with any
kind of investigation which may be undertaken.” (Report of Committee on Interstate and
Foreign Commerce, No.533, 63d Cong., 2d sess.)
The Senate Committee on Interstate Commerce, while recognizing that In “the conduct of
such special investigations as the commission may deem necessary, it is indispensable that it
should have extensive powers of inquiry with the right to subpoena witnesses and require the
production of books and papers,” concluded that those conferred upon it were practically the
same as were then possessed by the Interstate Commerce Commission and by The Bureau of
Corporations. (Report Senate Committee on Interstate Commerce, No.5971 63d Cong., 2d sess.)
The legislative history of the act may suggest that Congress did not intend that the powers of
the commission to investigate should be confined to cases In which a complaint had been made,
or might have been, but there is no reason to suppose that Congress thought that in other
respects it was giving any authority which the Interstate Commerce Commission did not possess.
The precise question here to be decided is whether the statute confers upon the commission
the right to inspect and copy the papers of any private corporation engaged in interstate or
foreign commerce whenever, in the judgment of the commission, such inspection may furnish
information of value to an inquiry it Is making as to some economic or commercial problem and
when it has no reason to believe that any violation of law has been committed. There can be no
question of the timeliness of an investigation into the causes of the marked difference between
the prices received by the grain grower and those paid by the ultimate consumer. Many of the
farmers have long been convinced that in some way they were victimized by the railroads and
the middlemen. The feeling of resentment has become so strong among them that in some of
the wheat-growing States it has forced a realignment of political parties and has resulted in the
demand for many laws and the enactment of a number of them as to the wisdom of which there
is still grave difference of opinion.
The problems involved are of unusual perplexity. The causes of the evil most complained of
are still obscure to many. Congress and the people need all the light they can get. The more
thorough the inquiry the more valuable its results should be, provided the investigators do not
gather so much material that they will be unable to see the woods for the trees.
That is one side of the question. There is another. The respondents In these cases are private
corporations, by which various individuals more conveniently carry on that trade of corn
merchants which antedates the beginning of recorded History. They have and exercise no
franchises other than that of being corporations. They are not engaged in rendering public
service, except in the sense that such service is rendered by everyone who follows any useful
calling. To them the demand that they shall be compelled to let strangers, officials though they

be, go through not only their books of account but their correspondence flies as well seems
outrageous. In their belief the gain to the public from anything which such an inquiry can
probably or possibly reveal seems slight as compared with the annoyance and sense of wrong
it will cause them. If they are right the search and seizure asked for would be unreasonable, and
therefore forbidden. The prohibition of unreasonable and the sanction of reasonable search and
seizure is simply a practical compromise between two conflicting rights.
For upward of a century and a half there has been no doubt that general warrants are
forbidden. No official can be given authority to rummage through the papers of an individual
without the latter’s consent in the hope that something or other may be discovered useful for
some public purpose. A corpora-

BALTIMORE GRAIN CO.

163

tion’s rights as against the sovereign which created it or permits It to do business within its
borders are not, It is true, the same as those of a natural person. It is the creature of the State.
He is not. The State may exclude it, while lie may freely come in. As a condition of obtaining
a charter, or under some circumstances of retaining it or doing business under it, it is probable
the State might reserve a right to an unlimited inspection of all corporations’ books and papers.
But that question is not here presented. As was said In Silverthorne Lumber Co. v. United States
(251 U.S. at 392), “The rights of a corporation against unlawful search and seizure are to be
protected even if the same result might have been achieved In a lawful way.” It is not necessary
for the purposes of the instant case to inquire whether the United States may exercise over a
corporation engaged in interstate or foreign commerce all the powers which are possessed by
the State which chartered it. Even if it may, the wording of the statute, broad and general as in
some respect it is, does not suggest that Congress Intended to strike down as respects private
corporations engaged in inter-state commerce all the limitations which for 150 years or more
had protected private papers from searches under general warrants. Nor is there anything in the
legislative history of the act to suggest that the legislators supposed that they were taking so
radical a step, or that they were raising a constitutional question of serious and far-reaching
character. Unquestionably some of them wanted to authorize the compulsory examination of the
papers of a corporation, although no complaint of a specific violation of law was pending
against it or was in contemplation. Very possibly that much could be done, some of the things
which were said In Harriman v. Interstate Commerce Commission, supra, to the contrary
notwithstanding; Smith v. Interstate Commerce Commission (245 U. S. 44). But so far as
concerns nonpublic service corporations, at least, the inquiry in which the commission is
engaged, whatever it is, must be more or less definite and restricted in its character, so that the
activities of its minor agents, to whom in practice the actual searching must necessarily be
confided, can be kept within some bounds. Very possibly, to sustain any right of inspection and
searching, It must also appear that there la some reasonable proportion between the public value
of the information likely to be obtained and the private annoyance and irritation It will occasion.
With these general principles In mind, it will be noted that the act gives the commission power
“to investigate the organization, business, conduct, practices, and management of any
corporation engaged in” (interstate or foreign) “commerce and its relation to other corporations,
and to individuals, associations, and partnerships,” and that the right of access to papers and
books is limited to those of a corporation being investigated or proceeded against. That much
of a restriction the statute itself imposes. Whether it may, to that extent, authorize the
examination of a private corporation’s papers need not be here considered. These corporations
are not being proceeded against. Are they, in the sense of the statute, being “investigated”? The
investigation which the commission has In hand, and for which it is here seeking information,
is, strictly speaking, not of them or of the scores or, perhaps, hundreds of other corporations
whose papers it wishes to inspect, but of the conditions affecting one of the most important
branches of our national trade. To make such an investigation scientifically complete, it may
well be desirable to find out precisely how not only the corporations engaged in it conduct their
business, but to obtain the same fullness of information concerning the individuals or firms
concerned in it, but the portions of the statute with which we are now dealing give no authority
to inspect papers of any natural person. Is there not a fair presumption that the investigation
mentioned in the statute was one of another character than the one now being carried on, and
that it was to be an inquiry into the way the particular corporation itself conducted its business,
having as its substantial object the ascertainment of facts concerning that corporation, and as its
ultimate end the possibility that in some way such corporate body might be required to mend Its

ways? If that be not the true construction of the act, and if it really means that whenever the
commission thinks best to make an inquiry into the way in which some great department of
commerce is carried on, it may send its employees into the office of every private corporation
which does an interstate business in that line and empower them to go through the company’s
books, correspondence, and other papers. I am satisfied it goes beyond any power which
Congress can confer, in this way at least.
It follows that the petitions for writs of mandamus must be denied.

164

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

United States of America, District of Maryland, to wit :
I, Arthur L. Spamer, clerk of the District Court of the United States for the District of
Maryland, do hereby certify that the foregoing is a true copy of the opinion of the court, which
was filed on the 20th day of November, 1922, In the therein entitled cases of Federal Trade
Commission v. the Baltimore Grain Co.; Federal Trade Commission v. H. C. Jones Co. (Inc.);
Federal Trade Commission v. Hammond, Snyder Co. (Inc.) , No.301 equity, In said district
court.
In testimony whereof I hereunto set my hand and affix the seal of the said district court this
21st day of November, 1922.
[SEAL]
ARTHUR L. SPAMER, Clerk.

EXHIBIT 16.

PROCEEDINGS PENDING JUNE 30, 1923.
Complaint No. 82.--Federal Trade Commission v. Photo-Engravers’ Club or Chicago. Charge:
Adopting a standard scale of uniform prices at which the members sell their products, with the intent of
stifling and suppressing coin-petition In the manufacture and sale of photoengraving, the respondent having entered into an agreement with the Chicago Photo-Engravers’ Union No. 5, I. P. E. U., by the terms
of which the respondent’s members employ only union labor In their manufacturing plants and the
members of the union do not accept employment from any manufacturing photoengraver not a member
of the respondent club. In furtherance of such agreement the union has adopted a rule whereby union
labor is to cease working In photoengraving plants which do not maintain such standard scale of prices,
and has initiated a Series of fines and threats to withdraw labor, thereby compelling members to maintain
such prices against their will, all In alleged violation of section 5 of the Federal Trade Commission act.
Status : In course of trial. (Consolidated with Doc. 928.)
Complaint No. 123.--Federal Trade Commission v. American Can Co. Charge : Price discrimination
and price fixing on condition that the purchasers shall not use or deal In the products of competitors, the
effect of which is to substantially lessen competition and to tend to create a monopoly In the tin-can
business In alleged violation of sections 2 and 3 of the Clayton Act; stifling and suppressing competition
In the manufacture and sale of tin cans by at-tempting to induce customers to enter into long-term
contracts by giving certain customers more favorable terms than others In reference to allowances for leaky
cans and storage privileges, by rebating If prices are lowered, and by other discriminations, In alleged
violation of section 5 of the Federal Trade Commission act. Status : Awaiting examiner’s findings.
Complaint No. 157.--Federal Trade Commission v. Saenger Amusement Co. Charge : Stifling and
suppressing competition In the purchase and sale, lease, and exhibition of moving-picture films by forcing
exchanges to accept its terms on threat to cause exhibitors to refuse to handle otherwise; causing contracts
between exhibitors and exchanges to be broken by divers means and methods, including prior exhibition
of films In neighboring theaters after “first exhibition” had been advertised by the other; threatening
withdrawal of patronage if exchanges continued to supply exchanges; threatening curtailing supply unless
exhibitors dealt with respondent; inducing employees of competitors to leave their employment, all In
alleged violation of section 5 of the Federal Trade Commission act. Status : On suspense pending close
of docket 835.
Complaint No. 163.--Federal Trade Commission v. Armour & Co. Charge : Stifling and suppressing
competition In the manufacture and sale of dairy products by concealing its control of and affiliation with
Beer Bros. Co., a creamery company, while directing the efforts and business of said company;
discriminating In prices paid for butterfat or cream; and by purchasing and offering to purchase butterfat
or cream In certain localities at prices unwarranted by trade conditions and so high as to be prohibitive
to small competitors, In alleged violation of section 5 of the Federal Trade Commission act. Status : At
issue.
Complaint No. 168.--Federal Trade Commission v. The National Wholesale Druggists’ Association et
al. Charge : Engaging In a combination or conspiracy among themselves with the intent, purpose, and
effect of discouraging, stifling, and suppressing competition In the wholesale drug trade and of unfairly
hampering and obstructing certain of their competitors by inducing or compelling manufacturers to refuse
to recognize competitors as jobbers, and as entitled to the benefits such competitors as jobbers would
receive by means of oral and written notices to manufacturers to the effect that certain competitors not
eligible to membership In the association were not entitled to recognition as
165

166

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

jobbers; the appointment of committees to confer with manufacturers to the end that they adopt sales
methods In harmony with the policies of the association, written and oral notices by the secretary of the
association to manufacturers to the effect that competitors are selling below the manufacturers’ established
resale price, or that such competitors are persistent price cutters; the compilation and distribution among
manufacturers and wholesalers of lists of so-called legitimate jobbers, and by bringing influence to bear
on various local associations of drug jobbers and wholesalers to adopt policies In harmony with the
policies of the association, In alleged violation of section 5 of the Federal Trade Commission act. Status:
At issue.
Complaint No. 266.-Federal Trade Commission v. Pictorial Review Co. Charge : Using unfair methods
of competition In the sale of paper dress patterns, consisting of selling patterns to dealers under a contract
permitting the dealer to return all unsold patterns on the termination of contract at three-fourths of the cost
thereof, upon the condition that during the continuance of such contracts they have sold no patterns except
those manufactured by respondent, or shall have sold such patterns at the prices fixed by respondent, In
alleged violation of section 5 of the Federal Trade Commission act; selling and making contracts for sale
of Its paper dress patterns on the condition, agreement, or understanding that the purchasers thereof shall
not use or deal In the patterns of competitors, the effect of which is to substantially lessen competition or
tend to create a monopoly In violation of section 3 of the Clayton Act. Status : On suspense, awaiting the
outcome of the Butterick Co.- case. (Dec. 594.)
Complaint No. 303.--Federal Trade Commission v. Utah-Idaho Sugar Co., Amalgamated Sugar Co.-,
E. R Wooley, A. P. Cooper, and E. F. Cullen. Charge : Using unfair methods of competition In
connection with the manufacture and sale of beet sugar, consisting In the circulation of false and
misleading reports concerning the business, methods, and financial standing of competitors and the
Inability of competitors to produce sugar, due to the alleged fact that all the producing territory is
controlled by respondent; making long-term contracts with growers In territories where competitors were
intending to erect factories; causing railroads to delay building tracks and ether facilities for competitors,
and causing banks to withhold credit; spying upon the private and business affairs of competitors;
establishing factories and buying imp supplies In territories about to be occupied by competitors;
preventing manufacturers of machinery from supplying competitors; secretly paying others to institute
litigation against competitors and furnishing money to secret agents for the purpose of acquiring the
controlling interest In the business of competitors, In alleged violation of section 5 of the Federal Trade
Commission act. Status : This proceeding is now before the Commission for final determination.
Complaint No. 424.--Federal Trade Commission v. Lautz Bros. & Co. Charge : Using unfair methods
of competition In the sale of soap and washing powders by guaranteeing its jobbers In the wholesale
grocery trade against the decline In price of goods purchased and not resold by such customers at the time
of any subsequent decline In the respondent’s list price thereof; and In the event of decline In price of
goods giving to such jobbers rebates equal to the difference between the purchase price of such products
as were undisposed of and respondent’s lower list price therefor subsequently made, with the effect of
obtaining for respondent an unfair and undue advantage ever competitors who do not follow this practice;
relieving respondent’s jobbers from risk of loss and encouraging such jobbers to held In stock excessively
large quantities of respondent’s product for the purpose of realizing a speculative profit thereby and
deterring respondent from reducing list prices of its product In accordance with reductions In cost of
manufacturing, In alleged violation of section 5 of the Federal Trade Commission act. Status : Pending
before Commission.
Complaint No. 425.--Federal Trade Commission v. Fels & Co. Charge : Using unfair methods of
competition In the sale of soap and soap powders. (Ante, complaint No.424.) Status : (Ante, complaint
No.424.)
Complaint No 426.--Federal Trade Commission v. The Globe Soap Co. Charge : Using unfair methods
of competition In the sale of soap, soap powders, and other cleansing compounds. (Ante, complaint
No.424.-) Status : (Ante, complaint No.424.)
Complaint No. 427.--Federal Trade Commission v. B T Babbitt (Inc.). Charge : Using unfair methods
of competition In the sale of soap, soap powders, and other cleansing compounds. (Ante, complaint
No.424.) Status : (Ante, complaint No.424.)

PROCEEDINGS PENDING.

167

Complaint No. 428.--Federal Trade Commission v. Curtice Bros. Co. Charge: Using unfair methods
of competition In the sale of canned food products. (Ante, complaint No.424.) Status: At issue.
Complaint No. 429.--Federal Trade Commission v. Joseph Campbell Co. Charge : Using unfair methods
of competition In the sale of canned soups. (Ante, complaint No.424.) Status : At issue.
Complaint No. 446.--Federal Trade Commission v. Van Camp Packing Co. and Van Camp Products
Co. Charge : Using unfair methods of competition In the ho sale of canned food products. (Ante,
complaint No. 424.) Status : At issue.
Complaint No. 449.--Federal Trade Commission v. Wilson & Co. (Inc.-). Charge : That the respondent
purchased all the property of the Morton Gregson Co., a Nebraska corporation, theretofore engaged In the
same line of business as respondent and In active competition with it, and thereafter organized under the
laws of the State of Delaware a subsidiary corporation called the “Morton Gregson Co.,” which proceeded
to take over the property thus purchased and to operate the business of the salol Nebraska corporation,
with the effect of eliminating competition previously existing between Morton Gregson Co., the Nebraska
corporation, and the respondent, In alleged violation of section 5 of the Federal Trade Commission act
and section 7 of the Clayton Act. Status: Awaiting answer to third amended complaint.
Complaint No 450.--Federal Trade Commission v. Wilson & Co. (Inc.). Charge : That the respondent
acquired the whole of the common or voting stock of the Paul 0. Reyman Co., a corporation, the effect
of such acquisition being to enable respondent to completely dominate the business and policy of said Paul
0. Reyman Co., to restrain competition between said respondent and said Paul 0. Reyman Co., and to tend
to create a monopoly In the sale of meats and like products, In alleged violation of section 5 of the Federal
Trade Commission act and section 7 of the Clayton Act. Status : Awaiting examiner’s findings.
Complaint No. 451.--Federal Trade Commission v. The Cudahy Packing Co.-Charge : That respondent
acquired 55 per cent of the shares of capital stock of the Nagle Packing Co., a competitor; 95 per cent of
the capital stock of the D. E. Wood Butter Co., a competitor; and that a subsidiary corporation, the Dow
Cheese Co., purchased the business and good will of a competitor, the A C. Dow Co., with the effect that
respondent has dominated the business of the Nagle Packing Co. and the D. E. Wood Butter Co., and has
eliminated competition theretofore existing between the three above-mentioned companies and the
respondent, In alleged violation of section 5 of the Federal Trade Commission act and section 7 of the
Clayton Act. Status : Dismissed iii part and In course of trial as to remainder.
Complaint No. 452.--Federal Trade Commission v. Morris & Co. Charge : That the respondent
acquired approximately 75 per cent of the capital stock of the Crescent City Stock Yard & Slaughter
House Co., a competitor; that It acquired stock In the Bluefield Produce & Provision Co.; that It acquired
the whole of the capital stock of the Holland Butterine Co., and held the same out to the public as wholly
Independent and without connection with respondent; that it acquired 66 per cent of the common stock
of the Providence Churning Co., a competitor, and organized a corporation to take over and succeed to
the business and property of said Providence Churning Co.; that it acquired one-half of the entire capital
stock of the Eskerson Co., a competitor; that it acquired one-half of the capital stock of the Jacob Marty
Co., a competitor; that It acquired one-half of the capital stock of the C. A. Straubel Co., a competitor; and
acquired $64,300 of the capital stock of the Sherman, White Co., whose entire stock was $123,700; and
that the result of such acquisition is the domination by respondent of some of the above-mentioned
companies, the elimination of competition theretofore existing between the above-mentioned companies
and the respondent, and the creation of conditions which tend to create a monopoly, In alleged violation
of section 5 of the Federal Trade Commission act and section 7 of the Clayton Act. Status : In course of
trial.
Complaint No. 454.--Federal Trade Commission v. Swift & Co., and United Dressed Beef Co. Charge:
That the respondent caused its subsidiary, United Dressed Beef Co., to acquire all of the capital stock of
J. J. Harrington & Co. (Inc.), which acquisition resulted In the control by Swift & Co. of the business
theretofore conducted and controlled by said J. J. Harrington & Co. (Inc.), elimination of competition
between respondents, Swift & Co. and United Dressed Beef Co. and J. J. Harrington & Co. (Inc.), and a
tendency to create for respondent, Swift & Co., a monopoly In alleged violation of section 5 of the

168

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

Federal Trade Commission act and section 7 of the Clayton Act. Status : Awaiting examiner’s findings.
Complaint No. 455.--Federal Trade Commission v. Armour & Co. Charge : That respondent acquired
three-fifths of the capital stock of Harold L. Brown Co. (Inc.), a competitor, which company had
previously acquired the capital stock and business of Beer Bros. Commission Co., and also the capital
stock and business of Beer Bros. Co.; that It acquired as vendee and pledgee a controlling amount of the
capital stock of the Eau Claire Creamery Co.; that It acquired through its agents 503 of the 1,000 shares
of the capital stock of the Louden Packing Co., an Ohio corporation, which corporation transferred all its
business and property to the Louden Packing Co., a Delaware corporation, In consideration of all of the
stock of the Delaware corporation, consisting of 1,000 shares, 503 of which are held by agents of
respondent In trust for respondent; that it acquired one-half of the capital stock of the A. S. Kinimmoth
Produce Co.; that It acquired the entire capital stock of the Pacific Creamery, which company the
respondent held out and advertised as wholly independent without connection with respondent; and
acquired 501 shares of the capital stock of Smith, Richardson & Conroy, a Florida corporation, and that
the result of such acquisitions by respondent is the domination by respondent of the business of some of
the above-mentioned companies the elimination of competition between the above-mentioned companies,
and the creation of conditions which tend to create a monopoly, In alleged violation of section 5 of the
Federal Trade Commission act and section 7 of the Clayton Act. Status : Commission’s testimony In chief
completed.
Complaint No. 457.--Federal Trade Commission v. Western Meat Co. and Nevada Packing Co.
Charge: That respondents have violated section 5 of the Federal Trade Commission act and section 8 of
the Clayton Act by having F. L. Washburn, a director of both the Western Meat Co. and the Nevada
Packing Co. (between which companies competition existed) , and illegally acquiring, by the Western
Meat Co., the capital stock of the Nevada Packing Co., which acquisition suspended between respondents
competition which theretofore existed between them and tended to create a monopoly. Status : Held
pending action of respondent In docket 456, In which case the Commission entered its order to divest
stock on February 2, 1923.
Complaint No. 459.--Federal Trade Commission v. United Typothetae of America, Benjamin P.
Moulton, Arthur E. Southworth, Charles L. Kingsley, George H. Gardner, E. H. James, Fred W. Gage, and
Joseph A.- Borden. Charge : Using unfair methods of competition by inaugurating a campaign known as
the “three-year plan” for the purpose of collecting assessments from manufacturers and merchants who
sell paper, Printing presses, type. ink, and other supplies to employing printers and other associations
allied to the Printing industry, the money to be used mainly for the purpose of inducing employing printers
to use a uniform system of cost accounting and a standard price list compiled by the respondent; using
coercive methods to obtain subscriptions to the “three-year-plan” fund; adopting through its “trade-matter
committee” a practice of attempting to control the matter of terms on which manufacturers of Printing
presses, etc., sell their output to Printing establishments, and attempting to have such manufacturers
refuse to place any of their presses, etc., In any Printing establishment until a cash payment equal to 25
per cent of the amount of the total purchase price be paid urging printers to adopt a “standard cost system”
and “standard price list,” for the purpose of establishing a uniform scale of prices throughout the Printing
Industry, In alleged violation of section 5 of the Federal Trade Commission act. Status : Before
Commission for final determination.
Complaint No. 472.--Federal Trade Commission v. Pioneer Paper Co. Charge : Using unfair methods
of competition by falsely advertising its products as rubber, and using the terms “one ply,” “two ply,” and
“three ply,” to designate and describe the different degrees of thickness of its product, when the different
degrees of thickness consist of but one layer or ply, with the effect of misleading and deceiving the public,
and giving the respondent’s product an undue preference over products of competitors who do not use
such methods, In alleged violation of section 5 of the Federal Trade Commission act. Status of dockets
472 to 490, inclusive: Stipulations have been signed in 12 of these cases. Docket 485 is in course of trial.
Stipulations in the six remaining cases will be executed after docket 485 is tried. All were formerly on
suspense awaiting decision in the Winsted case.
Complaint No. 473.--Federal Trade Commission v. Western Elaterite Roofing Co. Charge: (Ante,
complaint No.472.) Status: (Ante, complaint No.472.)

PROCEEDINGS PENDING.

169

Complaint No 474.--Federal Trade Commission v. Sifo Products Co. Charge: (Ante, complaint No
472.) Status : (Ante, complaint No. 472.)
Complaint No. 475.--Federal Trade Commission v. Oertell Roofing Manufacturing Co. Charge: (Ante,
complaint No. 472.) Status: (Ante, complaint No. 472.)
Complaint No. 476.--Federal Trade Commission v. Stowell Manufacturing Co. Charge : (Ante,
complaint No. 472.) Status : (Ante, complaint No.472.)
Complaint No. 477.--Federal Trade Commission v. Beckman-Dawson Co. Charge : (Ante, complaint
No.472.) Status : (Ante, complaint No.472.)
Complaint No. 478.--Federal Trade Commission V. Durable Roofing Manufacturing Co. Charge :
(Ante, complaint No.472.) Status : (Ante, complaint No.472.)
Complaint No. 479.--Federal Trade Commission v. McHenry-Millhouse Manufacturing Co. Charge:
(Ante, complaint No. 472.) Status : (Ante, complaint No.472.)
Complaint No. 480.--Federal Trade Commission v. International Roofing Manufacturing Co. Charge:
(Ante, complaint No.472.) Status : (Ante, com-plaint No. 472.)
Complaint No 481.--Federal Trade Commission v. Amalgamated Roofing Co. Charge : (Ante, complaint
No.472.) Status : (Ante, complaint No.472.)
Complaint No. 482.--Federal Trade Commission v. The Chatfield Manufacturing Co. Charge : (Ante,
complaint No.472.) Status: (Ante, complaint No. 472.)
Complaint No. 483.--Federal Trade Commission v. H. W. Jolins-Manville Co. Charge : (Ante,
complaint No.472.) Status : (Ante, complaint No.472.)
Complaint No. 484.--Federal Trade Commission v. Keystone Roofing Manufacturing Co. Charge :
(Ante, complaint No.472.) Status : (Ante, complaint No.472.)
Complaint No. 485.--Federal Trade Commission v. The Barrett Co. Charge : (Ante, complaint No.472.)
Status : (Ante, complaint No.472.)
Complaint No. 486.--Federal Trade Commission v. Patent Vulcanite Roofing Co. Charge : (Ante,
complaint No.472.) Status : (Ante, complaint No.472.)
Complaint No. 487.--Federal Trade Commission v. Philip Carey Manufacturing Co. Charge: (Ante,
complaint No. 472.) Status: (Ante, complaint No. 472.)
Complaint No. 488.--Federal Trade Commission v. H. F. Watson Co. Charge : (Ante, complaint
No.472.) Status : (Ante, complaint No.472.)
Complaint No. 489.-Federal Trade Commission v. The Paraffine Companies. Charge : (Ante, complain
No.472.) Status : (Ante, complaint No.472.)
Complaint No. 490.--Federal Trade Commission v. Sylvester L. Weaver, trading as the Weaver Roof
Co. Charge : (Ante, complaint No. 472.) Status : (Ante, complaint No. 472.)
Complaint No . 522.--Federal Trade Commission v. Rub-No-More Co. Charge : Using unfair
competition iii the sale of soaps. Status : (Ante. complaint No. 424.)
Complaint No 531.--Federal Trade Commission v. Armour & Co. Charge. Organizing apparently
independent companies for the purpose of taking over the business and property of the Lookout Refining
Co. and the Chattanooga Oxygen Gas Co., and the Harris Tannery Co., competitors of respondent, the
capital stock of thee independent companies being held by officers and employees or agents of respondents
with the purpose or effect of restraining and eliminating competition and tending to create a monopoly,
In alleged violation of section 5 of the Federal Trade Commission act acid section 7 of the Clayton Act.
Status : At issue.
Complaint No. 540.--Federal Trade Commission v Roy al Baking Powder Co. Charge : Using unfair
methods of competition h)y unfairly representing and charging that its competitors’ products contain alum
to wit sodium aluminum sulphate (SaS), and are harmful, unhealthful, deleterious and dangerous to users
and consumers of such baking powders, In alleged violation of section 5 of the Federal Trade Commission
act. Status : Preparing for trial.
Complaint No. 549.--Federal Trade Commission v. Cement Securities Co. Charge : Using unfair
methods of competition by purchasing the whole of the stock and share capital of the Oklahoma Portland
Cement Co., a competitor; purchasing and acquiring $392,300 of preferred stock of a total of $400,000,
and $195,750 of the common stock of a total of $199,750 of the United States Portland Cement Co.; and
purchasing and acquiring all of the preferred stock of the Nebraska Cement Co., In alleged violation of
section 5 of the Federal Trade

170

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

Commission act and section 7 of the Clayton Act. Status : Suspended, pending action by the Department
of Justice.
Complaint No. 551.--Federal Trade Commission v. Armour & Co. Charge :Using unfair methods of
competition by adopting and maintaining a practice of offering, giving, and allowing certain benefits and
advantages to purchasers In the way of free advertising, services of specialty salesmen, and payment of
dealers’ license fee, on the condition that such purchasers agree to purchase all or a large percentage of
their supplies of Butterine and oleomargarine from the respondent, In alleged violation of section 5 of the
Federal Trade Commission act; and entering into contracts with a large number of purchasers of its said
products at prices, In quantities, and for periods therein specified upon the condition, agreement, or
understanding In the case of each contract that the purchaser named therein shall purchase all or a large
percentage of the oleomargarine and Butterine needed by said purchaser of the respondent, In alleged
violation of section 3 of the Clayton act. Status : On suspense pending final decision of courts In docket
550. (Federal Trade Commission v. B. 5. Pearsall Butter Co. now awaiting decision by the Circuit Court
of Appeals for the Seventh Circuit.)
Complaint No. 552.--Federal Trade Commission v. Swift & Co. Charge: (Ante, complaint No.551.)
Status : (Ante, complaint No.551.)
Complaint No. 553.--Federal Trade Commission v. Downey-Farrel Co. Charge :(Ante, complaint
No.551.) Status : (Ante, complaint No.551.)
Complaint No. 554.--Federal Trade Commission v. Wm. J. Moxley (Inc.). Charge : (Ante, complaint
No. 551.) Status : (Ante, complaint No.551.)
Complaint No. 555.--Federal Trade Commission v. The Ed. S. Vail Butterine Co. Charge : (Ante,
complaint No.551.) Status : (Ante, complaint No.551.)
Complaint No. 559.--Federal Trade Commission v. Troco Nut Butter Co.-Charge : (Ante, complaint
No.551.) Status : (Ante, complaint No. 551.)
Complaint No. 560.--Federal Trade Commission v. Friedman Manufacturing Co. Charge : (Ante,
complaint No.551.) Status : (Ante, complaint No.551.)
Complaint No. 573.--Federal Trade Commission v. Owens Bottle Co. Charge : That respondents have
violated section 3 of the Clayton Act by entering into licensing agreements for the use of its glass-blowing
machines with the principal manufacturers In the United States of glass bottles, jars, and other glass
products, upon the express condition, agreement, and understanding In each licensing agreement that the
licensee named therein shall not use respondent’s machine In connection with the machine or devices of
competitors, with the effect of excluding and debarring competitors of respondent from securing sales of
their machines or devices In commerce and lessening competition therein; that respondent has violated
section 7 of the Clayton Act by acquiring 4,836 shares of the capital stock of the Whitney Glass Works,
a competitor; the whole of the capital stock of the American Bottle Co., a competitor; and the whole of
the capital stock of the Graham Glass Co., with the effect of eliminating competition In sections and
communities theretofore served by said com-panics; and that respondents have violated section 8 of said
Clayton Act by having L. 5. Stoehr a director of both the American Bottle Co. and the Graham Glass Co.
since respondent acquired the capital stock of said companies. Status : Additional testimony to be taken
about July 23, 1923.
Complaint No. 578.-Federal Trade Commission v. Swift & Co., Libby, McNeill & Libby (of Illinois)
and Libby, McNeill & Libby (Ltd.) (of Honolulu) . Charge : That the respondent, Libby, McNeill &
Libby, In effect a subsidiary of the respondent, Swift & Co., acquired all of the share capital of the Thomas
Pineapple Co.; the share, capital. property, and business of the Honolulu Pineapple Co.; Kahaluu
Pineapple & Range Co. (Ltd.); and Koolau Fruit Co. (Ltd.) , with the effect of substantially lessening
competition In the sale of pineapples In the Territory of Hawaii and creating a condition which tended to
create for respondents a monopoly In the growing and sale of pineapples, In alleged violation of section
7 of the Clayton Act and section 5 of the Federal Trade Commission act. Status : On suspense pending
court decisions In dockets Nos. 351 and 453, being the Commission’s proceedings against Armour & Co.
and Swift & Co., respectively, both of which are on appeal In the United States Circuit Court of Appeals
for the seventh circuit.
Complaint No. 591.--Federal Trade Commission v. One-piece Bifocal Lens Co., a corporation. Charge:
Using unfair methods of competition by adopting an elaborate system of licensing and price fixing by
which respondent’s product is manufactured In part by certain licensee manufacturers to a specified degree
of utility, and thereupon sold by such manufacturing licensee to other finishing

PROCEEDINGS PENDING.

171

or retailing licensees who complete the product and sell and distribute the same, the price or prices thereof
being at all stages In the progress of the article prescribed and rigidly maintained by the express terms and
conditions of its licensing agreements and by the refusing of respondent to sell to those who do not
maintain such resale prices, In alleged violation of section 5 of the Federal Trade Commission act; and
by agreements with certain of its so-called licensees, and on the agreement or understanding that such
licensee shall not use or deal In the product of a competitor or competitors of respondent with the effect
of substantially lessening competition or tending to create a monopoly, In alleged violation of section 3
of the Clayton Act. Status : Awaiting examiner’s findings.
Complaint No 594.--Federal Trade Commission v. Butterick Co., Federal Publishing Co., Standard
Fashion Co., Butterick Publishing Co., New Idea Pattern Co., and Designer Publishing Co. Charges :
Using unfair methods of competition by entering into contracts with approximately 20,000 retail dry goods
dealers whereby its paper dress patterns are to be resold at certain prices fixed and established by
respondents, and refusing to sell to those who do not maintain such resale prices, iii alleged violation of
section 5 of the Federal Trade Commission act ; and entering into contracts whereby its dealers are
prohibited from dealing In patterns manufactured by competitors of respondents, and enforcing such
contracts by refusal to sell to such dealers who do not maintain such agreements and by threats of suits
and institution of suits for damages, In alleged violation of section 3 of the Clayton Act. Status: Thu is
proceeding is now before the commission for final determination.
Complaint No. 626.--Federal Trade Commission v. Gulf Ship Chandlery Co. Charge : Unfair methods
of competition In that the respondent, engaged In the sale of ship chandlery, etc. has given valuable gifts,
cash commissions, and gratuities to captains and other officers of ships to induce them to purchase ship
chandlery and supplies from the respondent, In alleged violation of section 5 of the Federal Trade
Commission act. Status : Suspended because of the action of the Supreme Court of the United States In
denying petitions for writs of certiorari In the Winslow and Norden cases. (Dockets 458 and 614.)
Complaint No. 648.--Federal Trade Commission v. Alabama Dry Dock & Ship Building Co. (Inc).
Charge : Unfair methods of competition In that the respondent, engaged In the business of repairing ships
and furnishing repair parts, has given to captains and other officers and employees of vessels valuable
gifts, cash commissions, and gratuities as an inducement to have the ships operated by them for the owners
thereof repaired by the respondent In alleged violation of section 5 of the Federal Trade Commission act.
Status : (Ante, complaint No.626.)
Complaint No. 694.--Federal Trade Commission v. The Chamber of Commerce of Minneapolis; the
officers, board of directors, and members of the Chamber of Commerce of Minneapolis; Manager
Publishing Co.; John H. Adams ; and John F. Fleming. Charges : Using unfair methods of competition
by engaging In a confederation and conspiracy to annoy and embarrass and destroy the business of the
Equity Cooperative Exchange, a competitor of the respondent chamber of commerce and its members In
the selling, buying, and distribution of grain, by (a) the publication of false and misleading statements
concerning the said cooperative exchange, particularly In the publications of the respondent publishing
company; (b) the instigation and preparation for trial of certain litigation; (c) refusal to make available to
said cooperative exchange and its members the telegraphic market quotation service supplied by the
respondents; (d) the boycott of and persistent refusal to buy grain from the said cooperative exchange; (e)
the suppression of competition among members of the respondent chamber of commerce and
discrimination against nonmembers; and (f) by the means of contracts binding country shippers to slump
all or a greater part of their grain to the respondent chamber of commerce members, In alleged violation
of section 5 of the Federal Trade Commission act. Status : Before commission for final determination.
Complaint No. 705.--Federal Trade Commission v. S. Davidson Co.-, D. R Davidson, S. Davidson, and
M. A. Davidson. Charge: Using unfair methods of competition In the sale of ship chandlery by giving
expensive gifts and large sums of money In the form of cash commissions to officers and employees of
ships to induce them to purchase ship-chandlery supplies from the respondent, In alleged violation of
section 5 of the Federal Trade Commission act. Status : (Ante, complaint No.626.)

172

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

Complaint No. 726.--Federal Trade Commission v. Constantine Calevas, Joseph Garcia, and E. A.
Piller, partners, styling themselves Garcin, Piller & Co., and Calevas Bros. Charge : Using unfair methods
of competition In the sale of ship chandlery, including stewards’ supplies, deck, engine, and cabin
supplies, by giving to captains and other officers of vessels valuable gifts, cash commissions, and gratuities
to induce them to purchase supplies from the respondents, In alleged violation of section 5 of the Federal
Trade Commission act. Status : (Ante, complaint No.626.)
Complaint No. 728.--Federal Trade Commission v. American Safety Razor Corporation.- Charge :
Using unfair methods of competition by the use of advertising matter containing false and misleading
statements concerning the quality of material and workmanship entering into shaving l)rushes sold l)y it
and by placing deceptive labels on the containers of such brushes with the effect of misleading and
deceiving the purchasing public, In alleged violation of section 5 of the Federal Trade Commission act.
Status : Ready for oral argument.
Complaint No 740.--Federal Trade Commission v. Prichard & Constance (Inc.). Charge : Using unfair
methods of competition In the manufacture of cosmetics and toilet articles by adopting and maintaining
a system of fixing the resale price of its products and refusing to sell until prospective customers have
given written assurance that the resale prices fixed by respondent will be maintained, In alleged violation
of section 5 of the Federal Trade Commission act. Status : Before commission for final determination.
Complaint No. 742.--Federal Trade Commission v. F. B. Dunn, R T Harris, L. G. Wright, T E. Lester,
5. 11 Miles, George F. Burton, F. L. McCoy, and J. H. Darby. Charge : Using unfair methods of
competition In the sale hoof the capital stock of the Congressional Oil Co. by the use of said company as
a device for the disposition of certain oil leases at exclusive and fictitious prices; by published false and
misleading statements relative to the company’s property, earnings, and prospects, and by deceiving the
purchasing public by numerous fraudulent schemes of promotion, In alleged violation of section 5 of the
Federal Trade Commission act. Status : Awaiting briefs.
Complaint No 745.--Federal Trade Commission v. Austin, Nichols & Co. (Inc.) (Virginia). Charge:
That Austin, Nichols & Co. (Inc.) entered into an agreement with Wilson & Co. (Inc.) for the acquisition
of the Wilson & Co. (Whiteland, Ind.) vegetable-canning plant and control of the Fame Canning Co. and
Wilson Fisheries Co. In anticipation of a consent decree resulting from the prosecution of a suit In equity
brought by the Attorney General of the United States, by which decree Wilson & Co. (Inc.) were
perpetually enjoined from engaging In business unrelated to the meat-packing industry. The respondent,
incorporated to effect the consolidation of all the properties, now holds control thereof, and is charged
with the suppressing of competition, tending to create a monopoly In the grocery and food-product
business, In alleged violation of section 7 of the Clayton Act. Status : Further testimony to be taken.
Complaint No. 746.--Federal Trade Commission v. W. J. Chapman. Charge : Using unfair methods of
competition by offering and giving to captains of vessels cash gratuities to induce them to purchase ship
chandlery, steward’s supplies, deck, engine, and cabin supplies from the respondent, In alleged violation
of section 5 of the Federal Trade Commission act. Status : (Ante, complaint No.626).
Complaint No 760.--Federal Trade Commission v. United States Steel Corporation, American Bridge
Co., American Sheet & Tin Plate Co., Carnegie Steel Co., National Tube Co., American Steel & Wire Co.,
Illinois Steel Co., Minnesota Steel Co., Clairton Steel Co., Union Steel Co., the Lorain Steel Co., and the
Tennessee Coal, Iron & Railroad Co. Charge : Using unfair methods of competition and discrimination
In prices, In that the United States Steel Corporation and its subsidiaries In fixing the price of steel which
is made and used In such centers as Chicago, Duluth, and Birmingham upon the price f. o. b. mill at
Pittsburgh, plus the freight rates from Pittsburgh to such centers. operates as a discrimination In price In
favor of Pittsburgh fabricators as against fabricators In Chicago, Duluth, and Birmingham districts, In
violation of section 2 of the Clayton Act and section 5 of the Federal Trade Commission act. Status :
Testimony being taken.
Complaint No. 767.--Federal Trade Commission v. Wichita-Engle Oil Co., E. U. Engle, C. T Engle, and
W. S. Pratt. Charge : Using unfair methods of

PROCEEDINGS PENDING.

173

competition in the sale of the capital stock of the respondent company by the use of false and misleading
statements respecting the location, owners, productivity, and value of respondent’s oil interests, with the
effect of misleading and deceiving the purchasing public, in alleged violation of section 5 of the Federal
Trade Commission act. Status : Before commission for final determination.
Complaint No. 775.--Federal Trade Commission v. Swift & Co., National Leather Co. Charge: That
the respondent Swift & Co. by reason of Its acquisition of a controlling Interest In England, Walton & Co.
(Inc.) and its subsidiaries and the subsequent organization by Swift & Co. of respondent . National Leather
Co. and the transfer thereto of the Swift & Co. interest In England, Walton & Co., and In numerous other
corporations engaged In tanning and the manufacture and sale of leather and by-products, the corporate
stock of which had been acquired by Swift & Co., has been for the purpose and effect of substantially
lessening competition and of creating a combination In restraint of trade In the manufacture and sale of
leather, In alleged violation of section 5 of the Federal Trade Commission act and section 7 of the Clayton
Act. Status : At issue.
Complaint No 776.-Federal Trade Commission v. Armstrong Paint & Varnish Works, United States
Roofing Paper & Paint Factories (Inc.) , and Abe Hochman and Harry Goldfish, partners doing business
under the trade name of Army & Navy Stores. Charge : Using unfair methods of competition by offering
for sale paints, varnishes, and roofing paper, labeled “U. S.” with a reproduction of a picture of Uncle
Sam, with the purpose and effect of misleading the purchasing public into the belief that the goods were
made for the Army or Navy, or according to Government specifications, and by labeling its product In
such manner as to indicate they were manufactured by the respondent United States Roofing Paper &
Paint Factories (Inc.) and by the use of numerous false and misleading statements by the respondent,
Hochiman and Goldfish, as to the value and quality of the paints, varnishes, and roofing paper offered for
sale, with the effect of misleading and deceiving the purchasing public, In alleged violation of section 5
of the Federal Trade Commission act. Status : Awaiting respondent’s brief.
Complaint No. 778.--Federal Trade Commission v. Tide Water Oil Co., and Tide Water Oil Sales
Corporation. Charge : That the respondents, by maintaining a system of rebates and discounts based and
graduated on the separate purchases of their petroleum products by dealers during a definite period and
on purchases of carload lots thereof, thereby causing the purchasers to confine their purchases to the
respondents, have indulged Iii the practice which tends to substantially lessen competition and create a
monopoly In alleged violation of section 5 of the Federal Trade Commission act and section 2 of the
Clayton Act. Status : At issue.
Complaint No. 785.--Federal Trade Commission v. J. H. Crites, John G. Dee, W. J. Ross, M. W.
McQuaid, and M. L. Chandler. Charge : Using unfair methods of competition In the sale of share stock
of the O-tex Production Co., by the use of numerous false and misleading statements as to the said company s drilling operations and the productivity of its properties, to the effect of misleading and deceiving
the purchasing public, In alleged violation of section 5 of the Federal Trade Commission act. Status :
Awaiting examiner’s findings.
Complaint No. 786.--Federal Trade Commission v. Kelly Dry Dock & Ship Building Co. (Inc.).
Charge: Using unfair methods of competition by offering and giving to officers and other employees of
vessels, without the knowledge and consent of their employers, cash commissions and gratuities as an
inducement to have their vessels repaired and repair parts furnished by the respondent, In alleged violation
of section 5 of the Federal Trade Commission act. Status : (Ante, complaint No.626.)
Complaint No 793.--Federal Trade Commission v. the Q. R. S. Music Co. Charge : Unfair competition
In the manufacture and sale of rolls for player pianos, In establishing and announcing fixed resale prices
and stating that it will refuse to resell, and In fact has refused to sell, to those who fail to maintain such
prices, In alleged violation of section 5 of the Federal Trade Commission act; further, because of contracts
entered into with dealers under the terms of which such dealers to the extent of their trade In player rolls
are to handle respondent’s products only, the effect is to substantially lessen competi-

67501--23----12

174

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

tion and tend to create a monopoly, In alleged violation of section 3 of the Clayton Act. Status: Awaiting
examiner’s findings.
Complaint No. 798.--Federal Trade Commission v. Osa J. Smythe and S. W. Levy, partners, styling
themselves Smythe & Levy. Charge : Unfair methods of competition In that the respondent, engaged In
the sale of ship chandlery, has given cash commissions and gratuities of various kinds to captains, officers,
and employees of ships to induce them to purchase ship chandlery supplies from the respondents, all In
alleged violation of section 5 of the Federal Trade Commission act. Status : This proceeding is now before
the commission for final determination.
Complaint No. 801.--Federal Trade Commission v. Adolphe Schwobe (Inc.) . Charge : Unfair methods
of competition In taking advantage of the American practice of grading watches by the number of jewels
In the movement, by Importing Swiss lever watch movements of a low grade but containing 15 to 23
jewels, and after casing said movements, selling the watches to retailers with the number of jewels
conspicuously marked on the works or dial or both, thereby enabling said retailers to deceive the
purchasing public as to the value and quality of said watches and injuring the manufacturers of and dealers
In Swiss and American-made watches, In alleged violation of section 5 of the Federal Trade Commission
act. Status : Negotiations for stipulation proceeding.
Complaint No. 804.--Federal Trade Commission v. Maritime Co. (Inc.) . Charge : Unfair methods of
competition In offering and giving to captains, engineers, and other officers of vessels, without the
knowledge of their employers, as an Inducement to have their vessels cleaned, painted, and repaired by
the respondent, lavish entertainment, including automobile, dinner, and theater parties, lodging
accommodations, and for other forms of entertainment, are In alleged violation of section 5 of the Federal
Trade Commission act. Status : (Ante, complaint 626.)
Complaint No. 807.--Federal Trade Commission v. Athol Manufacturing Co. Charge : The respondent,
which is engaged In the manufacture of “Atholeather,” a cotton fabric product finished so as to resemble
genuine leather, indicates by the use of the name of “Atholeather” that its product consists of or contains
leather, thereby tending to confuse the purchasing public, In alleged violation of section 5 of the Federal
Trade Commission act. Status : At issue
Complaint No. 821.--Federal Trade Commission v. Liberty Iron & Wire Company (Inc.). Charge :
Unfair methods of competition In offering and giving to captains, engineers, and other officers of vessels,
without the knowledge of their employers, as an inducement to have their vessels repaired and repair parts
furnished by the respondent, money and lavish entertainment including automobile parties, dinner and
theater parties, lodging accommodations, and forms of amusement, In alleged violation of section 5 of the
Federal Trade Com-mission act. Status : (Ante, complaint No.626.)
Complaint No. 825.--Federal Trade Commission v. J. Berman and B. Brenner, partners, styling
themselves Berman & Brenner. Charge : Unfair methods of competition In that the respondents, engaged
In New York, N. Y., In the manufacture and sale of clothing for men and boys, label their clothes to
Indicate Rochester, N. Y., manufacture, thereby misleading the purchasing public into the belief that the
respondents’ clothing is of the quality produced In Rochester and under Rochester manufacturing
conditions, as extensively advertised by the chamber of commerce and other business associations of that
city, In alleged violation of section 5 of the Federal Trade Commission act. Status : Suspended pending
disposition of other similar cases.
Complaint No. 826.--Federal Trade Commission v. Phillip Moskowitz, trading under the name and style
of Rochester Clothing Co. Charge : Unfair methods of competition In that the respondent, engaged In New
York, N.Y., In the manufacture and sale of clothing for men and boys, labels his clothes “Trade-Mark,
Rochester Clothing Co., for particular men,” with the abbreviation “Co.” inconspicuously placed, thereby
misleading the purchasing public into the belief that the respondent’s clothing is of the quality produced
In Rochester and under Rochester manufacturing conditions as extensively advertised by the chamber of
commerce and other business associations of that city, In alleged violation of section 5 of the Federal
Trade Commission act Status : This proceeding is now before the commission for final determination.
Complaint No. 827.--Federal Trade Commission v. Samuel Blum. Charge : Unfair methods of
competition In that the respondent, engaged In New York, N. Y., In the manufacture and sale of clothing
for men and boys, labels his

PROCEEDINGS PENDING.

175

clothes to indicate Rochester, N. Y., manufacture, thereby misleading the purchasing public into the belief
that the respondent’s clothing is of the quality produced In Rochester and under Rochester manufacturing
conditions, as extensively advertised by the chamber of commerce and other business associations of that
city, In alleged violation of section 5 of the Federal Trade Commission act. Status: This proceeding is now
before the commission for final determination
Complaint No 828.--Federal Trade Commission v. A D. Davis Packing Co. Charge : Unfair methods
of competition In offering and giving to officers and employees of vessels without the knowledge of their
employers, as an inducement to have their vessels provisioned by respondent, lavish entertainment, In
alleged violation of section 5 of the Federal Trade Commission act. Status : (Ante, complaint No.626.)
Complaint No. 833.--Federal Trade Commission v. John J. Morrill and Louis Halvarson, partners
styling themselves A. H. McLeod and Co. Charge : The respondents have offered and given cash
commissions and gratuities to captains, engineers, and other officers or employees of vessels without the
knowledge of their employers to induce the purchase of sails, rigging, and canvas equipment from
respondent, In alleged violation of section 5 of the Federal Trade Commission act. Status : This
proceeding is now before the commission for final determination.
Complaint No. 835.-Federal Trade Commission v. Famous Players-Lasky Corporation, the Stanley Co.
of America, Stanley Booking Corporation, Black New England Theaters (Inc.) , Southern Enterprises
(Inc)., Saenger Amusement Co., Adolphe Zukor, Jesse L. Lasky, Jules Mastbaum, Alfred 5. Blank,
Stephen A. Lynch, Ernest V. Richards, jr. Charge : Unfair methods of competition In that the respondents
Famous Players-Lasky Corporation, Adolphe Zukor, and Jesse L. Lasky have combined and conspired
to secure control of and monopolize the motion-picture industry, and to restrain, restrict, and sup-press
competition In the distribution of motion-picture films by (a) acquisition of all the corporate stock of
Bosworth (Inc.) , Jesse L. Lasky Feature Play Co. (Inc.) , Famous Players Film Co., and by coercion,
Paramount Pictures Corporation; (b) affiliation with certain independent producers; (c) the creation and
exploitation of the Realart Pictures Corporation which the respondents held out to the general public as
wholly Independent and not affiliated with or controlled by said respondents; (d) acquiring, with the aid
of the other respondents, the control of numerous theater corporation operating motion-picture theaters
throughout the United States; and (e) building or acquiring numerous theaters for the exhibition of
respondents’ motion pictures, exclusively, all In alleged violation of section 5 of the Federal Trade
Commission act, and, as to respondents Famous Players-Lasky Corporation. Adolphe Zukor, and Jesse
L. Lasky, In alleged violation of section 7 of the Clayton Act. Status : In course of trial.
Complaint No. 836.--Federal Trade Commission v. National Biscuit Co. Charge : Unfair methods of
competition In that the respondent, engaged In the manufacture and sale of biscuits, crackers, and other
bakery products, In allowing discounts based on aggregate monthly orders, refuses to grant as high a rate
of discount on the pooled orders of two or more retail store owners as on the orders of owners of so-called
chain stores, thereby giving the owners of chains of retail stores an undue advantage In competing with
owners operating but one retail store, the said discrimination In price tending to lessen competition and
create a monopoly, In alleged violation of section 5 of the Federal Trade Commission act and section 2
of the Clayton Act. Status : Awaiting examiner’s findings.
Complaint No. 831.-Federal Trade Commission v. Loose-Wiles Biscuit Co. Charge : Unfair methods
of competition In that the respondent, engaged In the manufacture and sale of biscuits, crackers, and other
bakery products, In allowing discounts based on aggregate monthly orders, refuses to grant as high a rate
of discount on the pooled orders of two or more retail store owners as on the orders of owners of so-called
chain stores, thereby giving the owners of chains of retail stores and undue advantage In competing with
owners operating but one retail store, the said discrimination In price leading to lessen competition and
create a monopoly, In alleged violation of section 5 of the Federal Trade Commission act and section 2
of the Clayton Act. Status : At issue on amended complaint and answer.
Complaint No 842.--Federal Trade Commission v. Berkeley Machine Works (Inc.). Charge : Unfair
methods of competition In that cash commissions, gratuities, and lavish entertainment, including
automobile parties, dinner and theater parties, lodging accommodations, and other forms of entertainment
and

176

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

amusement are offered and given to officers, agents, and employees of vessels, without the knowledge or
consent of their employers, to induce them to have their vessels repaired by the respondent, In alleged
violation of section 5 of the Federal Trade Commission act. Status : (Ante, complaint No. 626)
Complaint No. 852.--Federal Trade Commission v. the Proctor & Gamble Co. and the Proctor &
Gamble Distributing Co. Charge: Unfair methods of competition In that the respondents, certain of whose
soaps and washing powders contain no naphtha, falsely designate said products as naphtha soap and
naphtha washing powders, and further advertise their soap as of the highest grade because it Is white and
because it contains naphtha, which loosens the dirt, whereas said soap contains no naphtha, and the fact
that it is white adds nothing to its cleansing value, thereby misleading and deceiving the purchasing public,
In alleged violation of section 5 of the Federal Trade Commission act. Status : In course of trial.
Complaint No. 856.--Federal Trade Commission v. George F. Barton, Rock-wood Brown, Charles N.
Edwards, Claude A. Hargis, and R W. Watts. Charge : The respondents are the officers and promoters
of the Consolidated Royalty & Leasing Syndicate, an unincorporated association. They are charged with
making and publishing numerous false and misleading statements relative to the organization, business,
and prospects of the association, as a means of deceiving the purchasing public and furthering the sale of
the share stock of the said Consolidated Royalty & Leasing Syndicate, all In alleged violation of section
5 of the Federal Trade Commission act. Status : Awaiting respondent’s brief.
Complaint No. 857.--Federal Trade Commission v. S. F. Shepard, Rockwood . Brown, A. L. Todd, R
Allyn Lewis, R J. Wiswell, D. M. Leopold, H. P. Hanson, E. H. Eshleman, F. L. Moorman, and E. H.
McArthur Charge : The respondents are trustees for or associated In the promotion of the Burkley Oil Co.,
Burk Crest Oil Co., Burk Bethel Oil Co., Gypsy Burk Oil Co., Burk Imperial Oil Co., and Burk
Consolidated Oil Co. Unfair methods of competition are charged In that the respondents, to further the
sale of the share stock of said unincorporated associations, issued and published numerous false and
misleading statements and concealed or withheld other material information relative to the organization,
business, and properties of the said companies, thereby deceiving and misleading the purchasing public,
In alleged violation of section 5 if the Federal Trade Commission act. Status : Awaiting respondent’s
brief.
Complaint No. 862.--Federal Trade Commission v. Crofts & Reed Co., Polonia Soap Co. Charge :
Unfair methods of competition In that the respondent Crofts & Reed Co., controlled by the respondent
Polonia Soap Co.. brands and mislabels its products to promote the belief that olive oil, poroxido, palm
oil, witch-hazel, buttermilk, medicines, or drugs are contained In the soaps so designated, when In fact
its soaps contain no such ingredients, In alleged violation of section 5 of the Federal Trade Commission
act. Status : Awaiting respondent’s brief.
Complaint No 863.--Federal Trade Commission v. Central Railway Signal Co. Charge : Unfair methods
of competition In that the respondent’s which is a manufacturer of certain compounds, features, and parts
for railway signal fusees, brought suit In equity against the Unexcelled Manufacturing Co. (Inc.) for
alleged infringement of patents and notified a number of railway companies who were the principal
purchasers of said fusees of the pendency of said suit, stating that other fusees on the market were
infringements also, and making mention of a right to recover damages from the users of any such alleged
infringing fusees, all of which was calculated to bring and had the tendency of bringing all railway signal
fusees other than those manufactured by the respondent into suspicion among the railway companies, In
alleged violation of section 5 of the Federal Trade Commission act. Status : Negotiations for stipulation
proceeding.
Complaint No 865.--Federal Trade Commission v. Henry H. Hoffman, R C. Russell, J. H. Cain, R V.
Wilson, B. Baernstein, the Ranger - Burkburnett Oil Co., the Ranger-Comanche Oil Co., and the Union
National Oil Co. Charge : The respondent individuals are promoters of the respondent corporation. Unfair
methods of competition are charged In that they, In order to further the sale of the share stock of the said
corporations, issued and published numerous false and misleading statements and concealed or withheld
other material information relative to the organization, business, and properties of the said corporations,
thereby deceiving and misleading the purchasing public, In alleged

PROCEEDINGS PENDING.

177

violation of section 5 of the Federal Trade Commission act. Status : Awaiting respondent’s brief.
Complaint No. 868.--Federal Trade Commission v. Calumet Baking Powder Co. Charge : Unfair
methods of competition In that the respondent, for the purpose of furthering the sale of its baking powders,
adopted the practice of publishing anonymously adverse, disparaging, and derogatory pinions, statements,
and comments as to the wholesomeness of self-rising flours, the use of which does not involve the addition
of baking powder, such statements being not founded In fact, all for the purpose of deceiving the
purchasing public, in alleged violation of section 5 of the Federal Trade Commission act. Status :
Negotiations for stipulation proceeding.
Complaint No. 871.--Federal Trade Commission v. A W. Perryman, doing business under the name and
style Perryman Investment Co.; A. W. Perryman, F. P. Penfield, C. S. Thomas, individually and as trustees
and officers of the Houston Oil & Refining Co., a trust; W. L. Diehl, individually and as second vice
president of the Houston Oil & Refining Co., a trust; and William M. Huff, individually and as third vice
president of the Houston Oil & Refining Co., a trust. Charge : The respondents are the promoters of the
Houston Oil & Refining Co., a Texas trust. Unfair methods of competition are charged In that the
respondents, for the purpose of furthering the sale of the same stock of the said oil company, issued and
published numerous false and misleading statements and concealed or withheld other material information
relative e to the organization, business, property, and prospects of said corporation, thereby deceiving the
purchasing public, In alleged violation of section 5 of the Federal Trade Commission act. Status :
Awaiting briefs.
Complaint No. 873.--Federal Trade Commission v. Hewitt Brothers Soap Co. Charge: Unfair methods
of competition In that the respondent advertises, brands, and labels its soap as “white naphtha,” stating
that it is made by a new process and of a combination of naphtha, coconut oil, and other cleansing
ingredients, when, In fact, the said soap contains no naphtha, but contains instead a petroleum distillate
other than naphtha, originally only to the extent of 1 per cent or less of the whole constituent ingredients,
and substantially all lost by volatilization or evaporation before such soap reaches, the ultimate consumer,
thereby misleading and deceiving the purchasing public, In alleged violation of section 5 of the Federal
Trade Commission act. Status : At issue.
Complaint No. 875.--Federal Trade Commission v. Lexington Manufacturing Co., Middlesburg Mills,
Millwood Corporation. Charge : The respondents, Lexington Manufacturing Co. and Middlesburg Mills,
are engaged In the manufacture of cotton bedticking and other cotton products, and are controlled by the
respondent Millwood Corporation, a holding company. Unfair methods of com petition are charged In that
some of the respondent’s bedtickings of various grades and qualities are labeled “A. C. A.” In simulating
of a symbol used for many years by the Amoskeag Manufacturing Co. as a designation for its best quality
special-process bedticking, which because of its quality and adaptability to purpose is popular and In great
demand In the trade, the said practice by the respondents tending to mislead and deceive the purchasing
public Into the belief that tickings manufactured by respondent manufacturers are Identical with those of
the Amoskeag Manufacturing Co., In alleged violation or section 5 of the Federal Trade Commission act.
Status : Before Commission for final determination.
Complaint No. 876.--Federal Trade Commission v. Lawrence S. Mayers and Chauncey H. Mayers,
partners, doing business under the firm name and style of Geneva Watch Co. Charge : The respondents,
wholesale dealers In watches, the movements of which they Import from places In Switzerland other than
Geneva, have adopted the trade name “Geneva Watch Co.” for their watch business, have procured the
United States registration of the trade-mark “Geneva,” and stamp it on the dials, of their watches with the
addition of the word “Swiss,” to simulate the standard method of designating High-grade Geneva watches,
and advertise the said watches as “Geneva” watches manufactured by the “Geneva Watch Co.” and offered
at the lowest manufacturer’s, prices, all for the purpose of creating the mistaken belief that they are
engaged In the manufacture of watches, In the Swiss city of Geneva, well known as the place of origin of
the highest grade of Swiss watches, that their watches are manufactured In said city, and that they are sold
direct to the trade at manufacturer’s prices, and thereby induce the trade and consuming public to purchase
respondents’ watches In preference to competitors’ watches of like quality, which are not falsely
designated “Geneva,” and In many instances In

178

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

preference to competitors’ watches actually made In the city of Geneva, In alleged violation of section 5
of the Federal Trade Commission act. Status : Ready for oral argument.
Complaint No. 880.--Federal Trade Commission v. Douglas, Fir Exploitation & Export Co. (Inc.) and
107 others. Charge : The complaint sets, forth that, although the respondent Douglas Fir Exploitation &
Export Co., a domestic corporation of the State of Washington, engaged In the manufacture and sale of
lumber In interstate and foreign commerce, has filed papers with the Federal Trade Commission under the
Webb Export Trade Associations Act, by reason of its policy find plan of business it Is not such an
association within the meaning of said act. The 107 other respondents are stockholders and officers of the
respondent company and are themselves engaged In the lumber business, representing about 85 per cent
of the productive capacity of all American manufacturers, vendors, shippers, and dealers In Oregon pine,
red fir, yellow fir, Columbian pine, Puget Sound pine, and British Columbia pine and the product, thereof.
Respondents are charged with having fixed the prices and terms at which they have agreed to sell their
lumber and by various and divers, means conspiring to hinder and obstruct competition In the sale and
distribution of said lumber and lumber products, all In alleged violation of section 5 of the Federal Trade
Commission act. Status : Commission’s case closed.
Complaint No. 881.--Federal Trade Commission v. Citrus Soap Co. Charge : ‘The respondent, engaged
In the manufacture and sale of washing powders, soaps, and similar products, has adopted and employs
a system for the maintenance and enforcement of uniform prices fixed by it for the resale of its products
to retail dealers, refusing to sell to wholesale dealers who fail to observe and maintain said resale pi.-ices
and requiring its vendees not to sell to other wholesalers except at resale prices fixed by respondent, In
alleged violation of section 5 of the Federal Trade Commission act. Status : Ready for trial.
Complaint No. 883.--Federal Trade Commission v. Alfred Peats Co. Charge : The respondent, engaged
In the sale of paints and painters’ supplies, advertises and asserts that its “Clover Leaf Paint” consists of
the purest grades of white lead, zinc, linseed oil, Japan drier, and Is of an exceptional high grade, which
has never failed to give the best satisfaction, when In fact the said paint consists largely of adulterants and
fillers, mineral spirits, and substitutes for pure linseed oil, In alleged violation of section 5 of the Federal
Trade Commission act. Status : At issue
Complaint No. 884.--Federal Trade Commission v. Henry Bosch Co. Charge :Unfair methods of
competition In that the respondent, engaged In the sale of paints and painters’ supplies, falsely advertises
and asserts that as to its “Henry Bosch Co.’s Prepared Paint” every ounce of lead, zinc, oil, and Japan drier
is of the highest grade and that it Is impossible to produce any better paint, when In fact adulterants and
fillers are substituted for white lead and zinc oxide and the volatile ingredient consists of mineral spirit,
In alleged violation of section 5 of the Federal Trade Commission act. Status : At issue.
Complaint No. 886.--Wholesale Tobacco Cigar Dealers’ Association of Philadelphia, its officers,
directors, and members, the American Tobacco Co. and P. Lorillard Co. respondents. Charge : That the
association and its members agreed upon a schedule of fixed prices for tobacco products at which the
members should resell to their dealer customers, and that they adopted a system for the maintenance and
enforcement of such prices by the members of the association and by all other wholesale dealers selling
In the association’s territory, the respondent manufacturers cooperating and conspiring with the
association and its members and participating in said price-maintenance system by agreeing to refuse to
sell and by refusing to sell offending dealers further supplies of their products, all in alleged violation of
section 5 of the Federal Trade Commission act. Status : Hearings were held In Philadelphia, New York,
and Washington, beginning October 16, 1922, and concluding December 19, 1922. The examiner’s report
was filed on April 12, 1923, to which exceptions have been filed by certain other respondents; final
arguments will be heard October 10, 1923.
Complaint No. 887.--Federal Trade Commission v. Oppenheim, Oberndorf & Co. (Inc.), doing business
under the trade name and style Sealpax Co. Charge : The respondent, In the sale of its “Sealpax”
underwear, maintains a schedule of uniform resale prices and refuses to sell said underwear to wholesale
dealers who fall to observe and maintain said resale prices and otherwise endeavors to enforce its fixed
prices for the resale of its product, In alleged violation of section 5 of the Federal Trade Commission act.
Status : Ready for briefs.

PROCEEDINGS PENDING.

179

Complaint No. 890.--Federal Trade Commission v. Cream of Wheat Co. Charge : Unfair methods of
competition In that the respondent, engaged in the manufacture and sale of a cereal-food product known
as “Cream of Wheat,” has maintained and enforced a schedule of uniform prices for the resale of said
product, refusing to sell to price cutters and otherwise enforcing said system of price maintenance, in
alleged violation of section 5 of the Federal Trade Commission act. Status : In course of trial.
Complaint No 892.--Federal Trade Commission v. V. Vivaudou (Inc.). Charge : The respondent,
engaged In the manufacture and sale of toilet articles, adopted and maintains a schedule of uniform prices
for the resale of its products, threatening to refuse to sell and refusing to sell said products to those dealers
who persist In selling below the resale prices fixed by the respondent and otherwise enforcing said system
of price maintenance, In alleged violation of section 5 of the Federal Trade Commission act. Status :
Negotiations for stipulation proceeding.
Complaint No 893.--Federal Trade Commission v. St. Louis Wholesale Grocers’ Association, its
officers and members. Charge: The respondent association is, an unincorporated trade association
composed of wholesale grocers, and jobbers of groceries and food products. Unfair methods of
competition are charged In that said association, acting on behalf of its members and In cooperation with
them, has adopted and carried out a plan of coercing and attempting to coerce manufactures to guarantee
against decline In price, publishing classified lists of manufacturers that the said members may give
preference when making purchases to those manufacturers who have agreed to guarantee against decline
in price and thereby tend to restrict, diminish, and obstruct the business of manufactures of food products
who do not so guarantee in alleged violation of section 5 of the Federal Trade Commission act. Status :
Ready for submittal to the commission.
Complaint No. 894.--Federal Trade Commission v. Wisconsin Wholesale Grocers’ Association, its
officers, directors, and members. Charge : The respondent association is an unincorporated trade
association composed of whole sale grocers and jobbers of groceries and food products. Unfair methods
of competition are charged in that the said association, acting on behalf of its members and In cooperation
with them, has adopted and carried out a plan of coercing and attempting to coerce manufacturers to
guarantee against decline In price, publishing classified lists, of manufacturers that the said members may
give preference when making purchases to those manufacturers who have agreed to guarantee against
decline In price and thereby tend to restrict, diminish, and obstruct the business of manufacturers of food
products who do not so guarantee, In alleged violation of section 5 of the Federal Trade Commission act
Status : Ready for briefs
Complaint No. 898.--Federal Trade Commission v. United States Products Co. Charge . Unfair
methods of competition In that respondent, engaged In the manufacture and sale of an abrasive bearingfitting compound named by it “Kwik-Ak-Shun,” having done no more than to file with the commission
a petition paving that the commission institute such proceedings In the premises as might seem proper
against the M K 11 Products Co., a competitor, nevertheless notified the trade, through advertisements,
that it had commenced proceedings for unfair competition against the M. K. T Products Co. before the
commission to) enjoin the same, which notification had the capacity and tendency of misleading and
deceiving the ti and into the belief that respondent had instituted competent legal proceedings before the
Federal Trade Commission wherein the rights and liabilities of respondent and the M. K. T Products Co.
In the premises would be legally adjudicated and determined and the legality or illegality of the things
done by the M. T. K. Products Co. complained against be fixed and determined In alleged violation of
section 5 of the Federal Trade Commission act. Status : In course of trial.
Complaint No. 899.--Federal Trade Commission v. Joyce-Pruit Co. The respondent, engaged In the
sale of dry goods, clothing, hardware, and groceries at wholesale and retail, offered a prize of $10 worth
of merchandise to the person producing the largest number of current mail-order catalogues. thereby
procuring many catalogues of the National Cloak & Suit Co. and other mail-order house competitors,
which catalogues it rationed for the purpose of unduly hindering the business of its mail-order house
competitors which sell merchandise principally by means of catalogues In the hands of customers and
prospective customers In alleged violation of section 5 of the Federal Trade Commission act. Status : At
issue.

180

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

Complaint No. 900.--Commission v. National Lead Co. Charge : Unfair methods of competition are
charged In that the respondent, engaged In the manufacture of white lead, red lead, litharge, and other
products used ].il the painting trade, has adopted and enforced a system of fixing and maintaining standard
prices for the resale of its products by dealers, In alleged violation of section 5 of the Federal Trade
Commission act. Status : Ready for argument.
Complaint No 902.--The Chicago Tobacco Jobbers’ Association, its officers and members. and the
American Tobacco Co., respondents. Charge : The charge is unfair competition In that the association
and its members agreed upon a schedule of fixed prices at which the members should resell tobacco
products to their customers and that the American Tobacco Co. entered into an agreement with the
association and its members to assist them In maintaining the prices fixed and agreed upon, all In alleged
violation of section 5 of the Federal Trade Commission act. Status : Hearings were held In Chicago on
May 9, 10, 11, and 12, 1923. After the report of the trial examiner has been made, the case will be set
down for final argument.
Complaint No. 904.--Commission v. Lease Motor Co. (Inc.) and Acoma Motors Co. (Inc.) Charge :
The respondent Lease Motor Co. is engaged In the business of repairing Ford motor cars and trucks and
In assembling, producing, and rebuilding “Mohawk” trucks, and its subsidiary, respondent Acoma Motors
Co., (Inc.), acts as its sales agent. Unfair methods of competition In commerce are charged In that the
respondents falsely advertise and represent their assembled trucks as new “Mohawk” trucks made In New
York and describe the chassis thereof as the Mohawk chassis when In truth and In fact such trucks are not
made In New York, the chassis thereof is a Ford chassis, and old, used; worn, and second-hand parts enter
into said product, In alleged violation of section 5 of the Federal Trade Commission act. Status: Awaiting
answer.
Complaint No. 906--Cincinnati Tobacco Jobbers’ Association, its officers and members, and the
American Tobacco Co., respondents. Charge : The charge is unfair competition In that the association and
its members agreed with the American Tobacco Co. upon a schedule of prices at which they should thereafter resell the tobacco products of that company, and that the American Tobacco Co. cooperated with the
respondent association and its members In enforcing the maintenance of such fixed schedule of prices, all
in alleged violation of section 5 of the Federal Trade Commission act. Status : Hearings were held In
Cincinnati on November 8, 9, and 10, 1922, and In Washington on November 28 and 29, 1922. The
examiner’s report not yet completed nor final arguments made.
Complaint No. 907.--Cincinnati Tobacco Jobbers’ Association, its officers and members, and the
Liggett & Myers Tobacco Co., respondents. Charge : The charge is unfair competition In that the
association and its members agreed with the Liggett & Myers Tobacco Co. upon a schedule of prices at
which they should thereafter resell the tobacco products of that company, and that the Liggett & Myers
Tobacco Co. cooperated with the respondent association and its members In enforcing the maintenance
of such fixed schedule of prices, all In alleged violation of section 5 of the Federal Trade Commission act.
Status : Hearings were held November 15, 1922, at Cincinnati, and November 27, 1922, at Washington.
After the report of the trial examiner has been made the case will be set down for final argument.
Complaint No. 908.--Cincinnati Tobacco Jobbers’ Association. Its officers and members, and the
Tobacco Products Corporation and Falk Tobacco Co., respondents. Charge : The charge is unfair
competition In that the association and Its members agreed with the Tobacco Products Corporation and
Falk Tobacco Co. upon a schedule of prices at which they should thereafter resell the tobacco products
of these companies, and that the Tobacco Products Corporation and Falk Tobacco Co. cooperated with
the respondent association and Its members In enforcing the maintenance of such fixed schedule of prices,
all In alleged violation of section 5 of the Federal Trade Commission act. Status : Hearings were held In
Cincinnati on November 8, 9, and 10, and In Washington on November 27, 1922. Examiner , s report,
exceptions thereto, and briefs filed.
Complaint No. 909.--Cincinnati Tobacco Jobbers’ Association. its officers and members, and the P.
Lorillard Co., respondents. Charge : The charge is unfair competition In that the association and its
members agreed with the P. Lorillard Co. upon a schedule of prices at which they should thereafter resell
the tobacco products of that company, and that the P. Lorillard Co. co-

PROCEEDINGS PENDING.

181

operated with the respondent association and its members In enforcing the maintenance of such fixed
schedule of prices, all In alleged violation of section 5 of the Federal Trade Commission act. Status :
Testimony was taken In Cincinnati November 13 and 14, 1922, and In Washington, D. C., December 14
and 15, 1922. The trial examiner’ report was filed May 28, 1923. Briefs have been filed and final
argument is fixed for October 11, 1923.
Complaint No. 911.--Milwaukee Tobacco Jobbers’‘Association and P. Lorillard C o. (Inc.),
respondents. Charge : The charge is unfair competition In that the association and its members agreed
upon a schedule of fixed prices at which the members should resell tobacco products to their dealer
customers and that the P. Lorillard Co. (Inc.) entered into an agreement with the association and Its
members to assist them In maintaining the prices fixed and agreed upon, all In alleged violation of section
5 of the Federal Trade Commission act. Status : Hearings were held In Milwaukee on January 30 and 31,
1923, and In Washington on April 10, 1923. After the report of the trial examiner has been made, the case
will be set down for final argument.
Complaint No 912 --Milwaukee Tobacco Jobbers’ Association and the American Tobacco Co
respondents. Charge : The charge is unfair competition In that the association and its members agreed
upon a schedule of fixed prices at which the members should resell tobacco products to their dealer
customers and that the American Tobacco Co. entered into an agreement with the association and its
members to assist them In maintaining the prices fixed and agreed upon all In alleged violation of section
5 of the Federal Trade Commission act. Status . Hearings were held In Milwaukee January 24 to January
29, 1923. After the report of the trial examiner has been made, the case will be set down for final
argument.
Complaint No. 913.--Commission v. Films Distributors League (Inc.), Eastern Feature Film Co.,
Favorite Players Film Corporation, Lande Film Distributing Corporation (of Ohio), Lande Film
Distributing Corporation (of Delaware), Supreme Photo Play Corporation, Favorite Film Co., Friedman
Film Corporation, Alexander Film Corporation, Supreme Film Co., Quality Film Corporation, Leo G.
Garner, doing business under the trade name and style Reliance Film Exchange, M. Brown, doing business
under the trade name and style Capital Film Exchange, William Alexander, Maurice Fleckles, Herman
Rifkin. Charge : The respondents, distributors of motion-picture films are members of the respondent
Films Distributors League (Inc.). Unfair methods of corn-petition In commerce are charged In that the
respondents at the of the production of the photo play entitled “The Three Musketeers” by the Douglas
Fairbanks Interests, with the purpose of trading on the popularity of said Douglas Fairbanks and on the
demand created by advance advertising of his production, reissued the photo play “D’Artagnan,” produced
by the Tri angle Film Corporation In 1915, after changing the name to “The Three Musketeers,” advertised
said reissue under its new title without designating it as a reissue and In some instances by displaying In
inconspicuous type a statement to the effect that the respondent’s photo play was formerly entitled
“D’Artagnan,” or was an adaptation or recreation of D’Artagnan, and In that the respondents to further
the deception that the said reissue was the Fairbanks production supplied for exhibition with the reissue
other photo plays In which said Douglas Fairbanks did enact the leading role, all for the purpose of
misleading and deceiving the public, iii alleged violation of section 5 of the Federal Trade Com mission
act. Status: At issue.
Complaint No 914.--Commission v. Twinplex Sales Co., a corporation, and Mrs. H. S. Gardner, H. S.
Gardner, jr., and Charles H. Gardner, individually and as copartners doing business under.- the trade name
and style of Twinplex Sales Co., H. 5. Gardner, individually and as trustee of said business for said
copartners, and J. Bryant Reinhart and Thomas L. Fouke, individually and as employees and agents of said
partnership. Charge : Unfair methods of competition in commerce are charged in that the respondents
have fixed standard prices for the resale of their razor-stropping devices known as “Twinplex” stroppers,
and employ cooperative means in the maintenance of said resale prices, listing dealers who fail to maintain
the same, and refusing to further supply such offending dealers, thus tending to suppress competition, In
alleged violation of section 5 of the Federal Trade Commission act. Status: Preparing for trial.
Complaint No 915.--Commission v. Cutler-Hammer Manufacturing Co. Charge : Unfair methods of
competition in commerce are charged in that the respondent practices discrimination in prices in the sale
of its electric con-

182

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

troilers by granting a greater rate of discount from the list price to those of Its vendees who accept the
respondent’s “sole use contract” whereby the vendee agrees to purchase the respondent’s controllers only,
the effect of said practice being to substantially lessen competition and to create a monopoly, In alleged
violation of section 2 and section 3 of the Clayton Act. Status : Negotiations for stipulation proceeding.
Complaint No 916.--Trigg, Dobbs & Co. and others. Charge : The respondents, Chattanooga Wholesale
Tobacco Dealers, are charged with unfair competition In that they entered into an agreement,
understanding, and conspiracy by which they flied a schedule of prices at which they would thereafter
resell to their dealer customers, all In alleged violation of section 5 of the Federal Trade Commission act.
Status : Hearings were held In Chattanooga April 25, 26, 27, and 28, 1923. After the report of the trial
examiner has been made the case will be set down for final argument.
Complaint No. 917.--The American Tobacco Co., Trigg, Dobbs & Co., and others, respondents. Charge
: That the American Tobacco Co. and the other respondents, Chattanooga Wholesale Grocers and
Wholesale Tobacco Dealers, entered into a combination, conspiracy, and understanding by which they
fixed resale prices on American Tobacco Co.’s products, and that the American Tobacco Co. agreed with
the other respondents to refuse to continue selling to such of the respondents as would resell its products
at prices lower than those agreed upon, all In alleged violation of section 5 of the Federal Trade Commission act. Status : Hearings were held In Chattanooga April 25, 26, 27, and 28, 1923, and In New York
May 4, 1923. After the report of the trial examiner has been made the case will be set down for final
argument.
Complaint No. 918.--Commission v. Superior Woolen Mills. Charge : Unfair methods of competition
In commerce are charged In that the respondent, engaged in retail business, falsely advertises that clothing
is sold by it directly from the weaver to the wearer, and indicated by the display of its corporate name that
It operates woolen mills and manufactures In its mills the materials used by it In the manufacture of the
suits and garments sold by it, all for the purpose of misleading and deceiving the purchasing public, In
alleged violation of section 5 of the Federal Trade Commission act. Status : In course of trial.
Complaint No 920.--Commission v. Atlantic Comb Works. Charge : Unfair methods of competition In
commerce are charged In that the respondent In the sale of its toilet articles, composed of nitrated cellulose
or pryoxyn plastic, known commercially as “celluloid,” “pyroxylin,” “fibreloid,” “viscoloid,” etc.,
advertises said products as “white ivory,” thereby misleading and deceiving the purchasing public as to
the quality and value of said articles, In alleged violation of section 5 of the Federal Trade Commission
act. Status : In course of trial.
Complaint No. 922.--Commission v. Michigan Wholesale Grocers’ Association, its officers, executive
committee, and members. Charge : Unfair methods of competition In commerce are charged In that
respondents have adopted and carried out a policy and plan of coercing manufacturers to guarantee the
respondent members against decline In price of commodities dealt In and to make their purchases from
manufacturers so guaranteeing, thereby tending to restrict, diminish, and obstruct the sales and business
of manufacturers of food products who do not guarantee against price decline, In alleged violation of
section 5 of the Federal Trade Commission act. Status : At issue.
Complaint No 924.--Federal Trade Commission v. The Don-O-Lac Co. (Inc.). Charge : Using unfair
methods of competition by falsely advertising and misrepresenting as “American Shellac” a product which
is not shellac as commercially known and which contains no shellac gum. Status : This proceeding is now
before the Commission for final determination.
Complaint No. 925.--Commission v. Mid-American Oil & Refining Co. and B. H. Crites. Charge : The
respondent individual Is the promoter of respondent Mid-American Oil & Refining Co., a Texas trust.
Unfair methods of com-petition In commerce are charged In that respondents, with the aid of certain
subsidiaries known as Mid-American Syndicate, Mid-American Mexia Syndicate, and Mid-American
Stevens County Syndicate, published numerous false and misleading statements and representations
relative to the organization, business, property, and prospects of respondent company and said syndicates,
to further the sale of the share stock of the respondent, and thereby deceived the purchasing public, In
alleged violation of section 5 of the Federal Trade Commission act. Status : Awaiting briefs.

Complaint No. 927.--Commission v. Corn Products Refining Co. Charge : Unfair methods
of competition In commerce are charged In that the respond-

PROCEEDINGS PENDING.

183

ent’s practice of guaranteeing against decline In price, aided and abetted by its great financial resources,
its domination of the markets for glucose and table sirups, and Its control of market price of said
commodities is a potential weapon for the ruin and elimination of respondent’s competitors and has a
dangerous tendency unduly to hinder competition In the table-sirup industry, and to create a monopoly
thereof In the hands of the respondent, In alleged violation of section 5 of the Federal Trade Commission
act. Status: Preparing for trial.
Complaint No.928 (In consolidation with 82).--Commission v. the American Photo-Engravers’
Association and others, and the International Photo-Engravers’ Union of North America, and others.
Charge : Unfair methods of competition In commerce are charged In that the respondents conspired and
agreed to adopt and maintain a scale of uniform prices for the sale of all photoengraving products. The
respondent, International Photo-Engravers’ Union of North America and its local organizations threatened
to call strikes or with-draw union employees from photo-engraving establishments that would not maintain
said uniform scale of prices, it being understood between the respondents that the members of the
respondent association would employ none but members of respondent union’s local organization, thereby
and with the aid of other methods of enforcement of said agreement, regulating, controlling, and
suppressing competition between manufacturers of photo-engraving products, making possible the
establishment and maintenance of enhanced prices of such products, and hindering free competition, In
alleged violation of section 5 of the Federal Trade Commission act. Status : Jn the course of trial.
Complaint No. 930.--Commission v. Right-Way Royalty Syndicate, E. L. Chapman, H. F. Mitchell, and
A. J. Chapman. Charge: Respondent syndicate is an unincorporated Texas trust. The respondent
individuals are trustees, officers, organizers, and promoters, and constitute the board of trustees of said
respondent syndicate. Unfair methods of competition are charged In that the respondents, to further the
sale of syndicate securities have made and are still making numerous false, misleading, and deceptive
statements concerning the business, management, operations, property, prospects, etc. of said syndicate,
In violation of section 5 of the Federal Trade Commission act. Status : Awaiting briefs.
Complaint No. 931--Commission v. Occidental Oil Corporation and T F. Smith, president; W. R.
Charles, vice president; and L. J. Robling, secretary-treasurer. Charge : Unfair methods of competition In
commerce are charged In that the individual respondents In their efforts to sell the shares of stock In the
respondent corporation make use of statements concerning the properties, assets, oil production, and
prospects thereof, In letters, circulars, maps, and other literature that are false and misleading, In alleged
violation of section 5 of the Federal Trade Commission act. Status : Awaiting briefs.
Complaint No. 932.--Commission v. Dispatch Petroleum Co., Porter Oakes, and James T. Chiles.
Charge : Respondent company is a Texas joint-stock association and respondent individuals are promoters
thereof. Unfair methods of competition In commerce are charged In that respondent. to further the sales
of the share stock of said company, made numerous false and misleading statements and concealed
essential facts as to the properties, prospects, and earnings of said company, In alleged violation of section
5 of the Federal Trade Commission act. Status : Awaiting examiner’s findings.
Complaint No 933.--Commission v. Texas-Atlantic Oil Co., G. P. Edgell, J. B. Sikes, V. C. Nelson, R
J. Leavitt, and W. Lincoln Wilson. Charge : The respondent company is a Texas trust and the respondent
individuals are the promoters, officers, and agents thereof. Unfair methods of competition are charged
In that the respondents, to further the sale of the share stock of said company, made numerous false and
misleading statements and concealed essential facts as to the properties, prospects, and earnings of said
company, In alleged violation of section 5 of the Federal Trade Commission act. Status : Awaiting
examiner s findings.
Complaint No. 934.--Commission v. Pacific States Paper Trade Association, its officers and members;
Seattle-Tacoma Paper Trade Conference, its officers and members; Spokane Paper Dealers, its officers
and members; Portland Paper Trade Association, its officers and members; Paper Trade Conference of San
Francisco, Its officers and members; Los Angeles Wholesale Paper Jobbers’ Association, Its officers and
members; J. Y. C. Kellogg, individually and as secretary of the Seattle-Tacoma Paper Trade Conference;
Chriss A. Bell, Individually and as secretary of the Portland Paper Trade Association; B. N. Coff-

184

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

man, individually and as secretary of the Pacific States Paper Trade Association; J. R Coffman,
individually and as secretary of the Los Angeles Wholesale Paper Jobbers’ Association; W. B. Gilbert,
individually and as secretary of the Spokane Paper Dealers; Zellerhach Paper Co.; Blake, Moffitt &
Towne; American Paper Co.; J. W. Fales Paper Co.; Mutual Paper Co.; Washington Pulp & Paper
Corporation; Paper Warehouse Co. (Inc.); the Seattle Paper Co.; Standard Paper Co.; Tacoma Paper &
Stationery Co.; John W. Graham & Co.; B. G. Ewing Paper Co.; American Type Founders Co.; BlakeMcFall Paper Co.; J. W. P. McFall, an individual doing business under the trade name J. W. P. McFall
Paper Co.; Endicott Paper Co.; R L. Brackett and Charles L. Frazier, partners doing business under the
name and style Crescent Paper Co.; Bonestell & Co.; Pacific Coast Paper Co.; Union Paper Co.; Richardson Case Paper Co.; Eastman Gibbons Paper Co.; Delmas Paper Co.; San Jose Paper Co.; Pioneer Paper
Co.; R L. Craig Co.; Spokane Paper & Stationery Co.; Rogers Paper Co.; Sierra Paper Co.; Standard
Woodenware Co. Charge : Arbitrary designation as to “legitimate” or “illegitimate” dealers and the same
adjective applied to the channels through which their trade flows are among the factors involved In this
complaint. The association, through its members comprising a number of “local associations,” the
complaint states, embraces practically all the wholesale dealers In paper and paper products throughout
the States of Oregon, Washington, and California. Other States affected In great part by the activities of
the association are Idaho, Nevada, Arizona, Montana, New Mexico, and the Territory of Alaska.
Averments by the commission are to the effect that by concerted agreement adherence of members of local
associations to the maintenance of enforced schedule prices is consummated. It is further alleged that to
the end that such schedule prices may be maintained and price competition eliminated throughout the
Pacific States, the members notify their local associations and the Pacific States Paper Trade Association
of infractions of the agreement to maintain standard prices, and these various associations bring pressure
to bear upon the offending member to cease such practice. It is charged that the alleged acts and things
done by respondents and by each of them have a dangerous tendency unduly to hinder competition and
to create a monopoly, and constitute unfair competition within the meaning of section 5 of the Federal
Trade Commission act. Status : Set for final argument November 14, 1923.
Complaint No. 937.--Commission v. McCord Manufacturing Co. (Inc.). Charge : It is charged that
unfair methods of competition In commerce In the manufacture and sale of automotive equipment,
including motor gaskets for use on cylinder heads, manifolds, etc., have been engaged In by respondent
by endeavoring to accomplish In the maintenance of standard resale prices h)y divers cooperative means
and by favoring distributors who do maintain such prices and discriminating against distributors who fail
to maintain such prices, In alleged violation of section 5 of the Federal Trade Commission act. Status :
Ready for trial.
Complaint No. 940.--Commission v. Scotch Woolen Mills. Charge : Respondents are engaged In the
manufacture of men’s clothing and the sale thereof In interstate commerce to retail dealers doing business
under the name of Scotch Woolen Mills, In many of which respondent or its stockholders have a
beneficial interest. The respondent does not own nor is it interested In any woolen mills. Unfair methods
of competition In commerce are alleged In that the use of the name Scotch Woolen Mills, when In fact
the respondent has no such mills, tends to mislead and deceive the purchasing public to believe that
purchases from the respondent are from the manufacturer of the cloth, In alleged violation of section 5 of
the Federal Trade Commission act. Status : In course of trial.
Complaint No. 941.--Commission v. Keeler Bros. & Co., a corporation; the Columbia Securities Co.,
a corporation; the National Finance Co., a corporation; George Keeler and Frank Keeler. Charges : Unfair
methods of competition are charged In that the respondents, engaged In the purchase and sale of
municipal, county, and school bonds, procured bonds, apparently valid, but In which had been
fraudulently embodied provisions and terms which indicated increased commercial value, using In
connection with the sale thereof false and misleading histories of the bonds, failing to disclose to
purchasers and prospective purchasers the real facts of the issues, and thereby misleading the purchasing
public to believe that the bonds sold by the respondents were valid obligations of the municipalities by
which they had been executed, issued as by law provided In conformity with elections duly called and
held, and that

PROCEEDINGS PENDING.

185

said purchasers would involve no risk of repudiation or expense of litigation to confirm validity or to
enforce collection, In alleged violation of section 5 of the Federal Trade Commission act. Status :
Awaiting examiner’s findings.
Complaint No 943.--Commission v. Abbott E. Kay and R T Nelson, as individuals and as copartners,
doing business under the name of Aaban Radium Co. Charge : Unfair methods of competition In
commerce are charged In that respondent, while engaged In the manufacture and sale of a product
purporting to contain radium, but which In fact contains no radium, advertise radium content and thereby
tend to mislead and deceive the purchasing public In alleged violation of section 5 of the Federal Trade
Commission act. Status : Awaiting examiner’s findings:
Complaint No 945.--Commission v. Ajax Rope Co. (Inc.). Charge : Unfair methods of competition In
commerce are charged In that the respondent, engaged In the purchase and sale of rope, cable, and twine,
advertises as the “maker” of said products and states that it operates “mammoth rope factories” when In
fact the respondent does not own, operate, or control any factory engaged In the manufacture of rope,
cable, or twine, and by its advertising tends to mislead the trade and purchasing public, In alleged
violation of section 5 of the Federal Trade Commission act. Status : Negotiation for stipulation proceeding.
Complaint No. 947.--Commission v. Waldes & Co. (Inc.). Charge : The complaint relates that Waldes
& Co., of Prague, Czechoslovakia, sold about 80 per cent of the snap fasteners that were marketed In the
United States at the time of the outbreak of the World War, at which time the importation of products from
Austria was discontinued by the American trade. During the World War many American corporations
were organized for and began the manufacture and sale of snap fasteners In the United States. Unfair
methods of competition are charged In that the respondent, organized under the laws of the State of New
York In 1919, and engaged In the manufacture and sale of snap fasteners, under the brands “Kohinoor,”
“Revol,” etc., established by its predecessor, Waldes & Co., of Prague, adopted and put into effect the
practices of (a) exchanging its products for competitors’ snap fasteners found on the shelves of jobbers
and department stores, (b) subsequently selling at extremely how prices the snap fasteners so acquired,
thereby demoralizing the market and causing many customers of its competitors to discontinue purchasing
snap fasteners from said competitors, and (c) underselling its competitors by the sale of its products at less
then the cost of production, all for purpose and with the intent of driving the American manufacturer of
snap fasteners from the competitive field and to create a monopoly In the manufacture and sale of dress
snap fasteners such as was formerly enjoyed by Waldes & Co., of Prague, In alleged violation of section
5 of the Federal Trade Commission act. Status : At issue.
Complaint No. 949.--Commission v. Seth Thomas Clock Co. Charge : Unfair methods of competition
are charged In that respondent, engaged In the manufacture and sale In interstate commerce of clocks,
employs a system of fixing and maintaining standard prices for the resale of its products, refuses to sell
to jobbers, wholesalers, and retailers who fail to maintain said prices, and employs other cooperative
means of insuring the observance of its retail price system, thus tending to obstruct commerce and freedom
of competition, In alleged violation of section 5 of the Federal Trade Commission act. Status : In course
of trial.
Complaint No. 950.--Commission v. Dr. Herman Heuser. Charge: Unfair methods of competition In
commerce are charged In that the respondent, licensor of patent rights for a process of manufacture of
nonalcoholic beverages, caused a letter of warning to be sent to licensee of the Baltimore Process Co.,
holder of a similar patent of prior date, advising them that the process they were using was an infringement
of certain patents owned by the respondent, and, for purposes of intimidation and without intention of
bringing suit, threatening legal action unless said licensees discontinued the use of the process owned by
the Baltimore Process Co., thereby tending to intimidate and coerce said licensees to discontinue the use
of the Baltimore process In favor of respondent’s process, In alleged violation of section 5 of the Federal
Trade Commission act. Status : Awaiting examiner’s findings.
Complaint No. 951.--Commission v. Pennsylvania, New Jersey, and Delaware Wholesale Grocers’
Association, its officers, members of executive committee, and members. Charge : Unfair methods of
competition are charged In that the respondents adopted a plan of hampering, obstructing, and preventing
the Proc-

186

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

ter & Gamble Distributing Co., engaged In sale direct to the retail trade, from selling soap, soap products,
and cooking fats to the members of the respondent association and wholesale grocers, and sought to coerce
wholesalers to refrain from dealing In the products of said Proctor & Gamble Distributing Co., In alleged
violation of section 5 of the Federal Trade Commission act. Status: In course of trial.
Complaint No. 952.--Commission v. Pennsylvania, New Jersey, and Delaware Wholesale Grocers’
Association, its officers, members of executive committee, and members. Charge : Unfair methods of
competition In commerce are charged In that the respondents have adopted and carried out a policy and
plan of coercing manufacturers to guarantee the respondent members against decline in price of
commodities dealt In and to make their purchases from manufacturers so guaranteeing, thereby tending
to restrict, diminish, and obstruct the sales and business of manufacturers who do not guarantee against
decline In price, In alleged violation of section 5 of the Federal Trade Commission act. Status : In course
of trial.
Complaint No. 954.--Commission v. Jacob Hochman and Samuel Levine, as Individuals and trading
under the name and style of Hochman & Levine. Charge : Unfair methods of competition are charged In
that the respondents label, brand, and sell shirts manufactured by them as “English broadcloth,” when In
fact said shirts are manufactured from cotton cloth manufactured In the United States of a quality Inferior
to that of the widely advertised English broadcloth imported from England, In alleged violation of section
5 of the Federal Trade Commission act. Status : In course of trial.
Complaint No. 956.--Commission v. Oakleed Oil Co., Mark Kleeden, and Julia K. Threlkeld. Charge:
Unfair methods of competition In commerce are charged In the sale of the share stock of respondent
company In that the respondents have misrepresented the business, management, properties, and prospects
of the said respondent oil company for the purpose of misleading and deceiving the purchasing public,
In alleged violation of section 5 of the Federal Trade Commission act. Status : Suspended pending
Investigation by the Post Office Department.
Complaint No. 957.--Commission v. the Ohio Wholesale Grocers’ Association Co., a corporation, and
its stock-holding members. Charge : Unfair methods of competition In commerce are charged In that
respondents have adopted and carried out the policy and plan of coercing manufacturers to guarantee the
respondent members against decline In price of commodities dealt In and to make their purchases from
manufacturers so guaranteeing, In alleged violation of section 5 of the Federal Trade Commission act.
Status: At issue.
Complaint No. 958.--Commission v. Ohio Dairy Co. Charge : Unfair methods of competition In
commerce are charged In that respondent’s practice of paying, temporarily, unduly high prices at selected
competitive points, while at the same the paying lower prices at other points for the same grade, quality,
and quantity of cream and butterfat for the purpose of controlling or suppressing competition, tends to
compel its competitors to cease buying at such points and artificially restrains competition In alleged
violation of section 5 of the Federal Trade Commission act. Status : At issue.
Complaint No. 959.--Commission v. Hygienic Laboratories. Charge : Unfair methods of competition
In commerce are charged In that the respondent’s “free trial” offer for its hair color restorer “Kolor-Bak”
does In fact involve the payment of the regular price for the said restorer, and In that the respondent avoids
fulfillment of its money-back guarantee by claiming that the preparation has not been used according to
instructions, In alleged violation of section 5 of the Federal Trade Commission act. Status : At issue.
Complaint No. 960.--Commission v. Texas-Mexia Drilling Syndicate, B. M. Hatfield, Sterling
Syndicate, J. D. Johnson, Old Timers Oil Pool, Albert S. Leach, Co-operative Oil Interests, and C. R
Farmer. Charge : Unfair methods of competition In the sale of the share stock of the respondent syndicates
and Interests, are charged, In that the respondents have misrepresented the business, management,
properties, and prospects of said respondent syndicates and interests for the purpose of misleading and
deceiving the purchasing public, In alleged violation of section 5 of the Federal Trade Commission act.
Status : Suspended pending criminal prosecution by the United States.
Complaint No. 961.--Federal Trade Commission v. M. F. Skidmore and Elmer L. Skidmore, partners,
doing business under the names and styles of “Skidmore Pen Co.,” “William Bolles Dollar Pen Co.,” and
“Toledo Gold Filler Fountain Pen Co.” Charge : Unfair methods of competition In commerce are

PROCEEDINGS PENDING.

187

charged In that the respondents manufacture fountain pens to resemble the product of the Conklin Pen Co.
and by simulating the brands and trade names of said Conklin pens tend to deceive and mislead the
purchasing public into the belief that pens manufactured by respondents are Conklin pens, In alleged
violation of section 5 of the Federal Trade Commission act. Status : Awaiting findings of trial examiner.
Complaint No. 962.-Federal Trade Commission v. Bethlehem Steel Corporation, Bethlehem Steel Co.,
Bethlehem Steel Bridge Corporation, Lackawanna Steel Co., Lackawanna Bridge Works Corporation,
Midvale Steel & Ordnance Co., Cambria Steel Co. Charge : The respondent, the Bethlehem Steel Corporation, on or about October 25, 1922, acquired the properties, assets, and businesses of the Lackawanna
Steel Co. and its subsidiaries and is now acquiring and has acquired the properties, assets, and businesses
of the respondents, Midvale Steel & Ordnance Co. and Cambria Steel Co. Unfair methods of competition
In commerce are charged In that the respondents by uniting under a common ownership and management
and thereby effecting control of the iron and steel products originating In their respective territories tend
to substantially lessen potential and actual competition, contrary to the public policy expressed In section
7 of the Clayton Act and In alleged violation of section 5 of the Federal Trade Commission act, to unduly
hinder competition In the iron and steel industries In said territory and unreasonably restrict competition
so as to restrain trade contrary to the public policy expressed In sections 1 and 3 of the Sherman Act and
In alleged violation of section 5 of the Federal Trade Commission act. Status : Preparing for trial.
Complaint No 963.-Federal Trade Commission v. Roller Oil & Refining Co. (Inc.), H. C. Roller, C. F.
Gibbons, Percie C. Wilie, E. H. Doud. Charge : Unfair methods of competition are charged In the sale
of share stock of the respondent corporation In that the respondents have misrepresented the business,
management, properties, and prospects of said corporation for the purpose of misleading and deceiving
the purchasing public, In alleged violation of section 5 of the Federal Trade Commission act. Status :
Awaiting examiner’s report.
Complaint No. 964.-Federal Trade Commission v. Standard Oil Co. of New Jersey. Charge : Unfair
methods of competition are charged In that the respondent acquired one-half or more of the stock or share
capital of the Humble Oil & Refining Co., the effect of such acquisition being to substantially lessen
competition between the said Humble Oil & Refining Co. and the respondent and its subsidiary, the
Standard Oil Co. of Louisiana, to restrain commerce In those sections In which said companies are
engaged In commerce and to create a monopoly In alleged violation of section 7 of the Clayton Act.
Status: Preparing for trial.
Complaint No. 965.-Federal Trade Commission v. Turner & Porter (Inc.). Charge : Unfair methods of
competition In commerce are charged In that the respondent, engaged In the manufacture and sale of
stationery, designates and advertises as “Relief-Engraving” its process of Printing which resembles, In
appearance, to some extent, an impression made from engraved plates but is not “engraving” as commonly
understood by the purchasing public, and In that respondent falsely represents that the words “ReliefEngraving” have been registered In the United States Patent Office as the trade-mark, all for the purpose
of misleading and deceiving the purchasing public In alleged violation of section 5 of the Federal Trade
Commission act. Status : Testimony to be taken July 17.
Complaint No. 966.-Federal Trade Commission v. J. B. Harris-Mexia Trust, J. B. Harris-Mexia Trust
No.2, and J. B. Harris. Charge : Unfair methods of competition In commerce are charged In the sale of
stock of respondent trusts In that the respondents have misrepresented the business, management, properties, and prospects of the said respondent trusts for the purpose of misleading and deceiving the
purchasing public In alleged violation of section 5 of the Federal Trade Commission act. Status :
Awaiting briefs.
Complaint No 967.--Tobacco Products Corporation and Midwest Tobacco Jobbers’ Association,
respondents. Charge : That the respondent association and the Tobacco Products Corporation entered into
an agreement, understanding, and conspiracy by which they fixed the price at which the members of the
respondent association should resell the products of the Tobacco Products Corporation, and that the
Tobacco Products Corporation agreed to assist In the carrying Out of the conspiracy by discontinuing the
sale of Its products to such members of the association as would sell such products at prices less than those
fixed by the conspiracy, all In alleged violation of section 5 of the Federal Trade Commission act. Status:
Complaint issued February 24, 1923.

188

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

Complaint No. 968.--Scotten-Dillon Co. and Midwest Tobacco Jobbers’ Association, respondents.
Charge : That the respondent Association and Scotten-Dillon Co. entered into an agreement,
understanding, and conspiracy l)y which they fixed the price at which the members of the respondent
association should resell the products of Scotten-Dillon Co., and that Scotten-Dillon Co. agreed to assist
In the carrying out of the conspiracy by discontinuing the sale of its products to such members of the
association as would sell such products at prices less than those fixed by the conspiracy, all In alleged
violation of section 5 of the Federal Trade Commission act. Status : Complaint issued February 24,1923.
Complaint No. 969.--The American Tobacco Co. and Midwest Tobacco Jobbers’ Association,
respondents. Charge : That: the respondent association and the American Tobacco Co. entered into an
agreement, understanding, and conspiracy by which they fixed the price at which the members of the
respondent association should resell the products of the American Tobacco Co., and that the American
Tobacco Co. agreed to assist In the carrying out of the conspiracy by discontinuing the sale of its products
to such members of the association as would sell such products at prices less than those fixed by the
conspiracy, all In alleged violation of section 5 of the Federal Trade Commission act. Status : Complaint
issued February 24, 1923.
Complaint No. 970.--Federal Trade Commission v. Wasatch Woolen Mills, a corporation. Charge :
Unfair methods of competition In commerce are charged In that the respondent, engaged In the purchase
and sale of “woolen goods made to order” and having no mills or factories of its own, indicates by the use
of Its corporate name that it is a manufacturer owning or operating woolen mills and that its customers
thereby save the profits of the middleman, thus misleading and deceiving the purchasing public, In alleged
violation of section 5 of the Federal Trade Commission act. Status : Awaiting examiner’s findings.
Complaint No. 971.--Federal Trade Commission v. Salt Lake Cooperative Woolen Mills, a corporation.
Charge : Unfair methods of competition In commerce are charged In that the respondent, engaged In the
purchase and sale of “woolen goods made to order,” and having no mills or factories of its own, indicates
by the use of its corporate name that it is a manufacturer owning or operating woolen mills and that its
customers thereby save the profits of the middleman, thus misleading and deceiving the purchasing public,
In alleged violation of section 5 of the Federal Trade Commission act. Status : Awaiting examiner’s
findings.
Complaint No. 972.--Federal Trade Commission v. Jenkins Knitting Co., a corporation. Charge : Unfair
methods of competition In commerce are charged In that the respondent, having no mills or factories of
its own but engaged In the purchase and sale of knit goods, indicate by the use of its corporate name that
it is a manufacturer owning and operating woolen mills and that its customers therefore save the profits
of the middleman, thins mis leading and deceiving the purchasing public, In alleged violation of section
5 of the Federal Trade Commission act. Status : Awaiting examiner’s findings.
Complaint No. 973.--Federal Trade Commission v. B. Raff & Sons. Charge : Unfair methods of
competition are charged In that the respondent In jobbing pyroxyliny or celluloid combs, toilet sets, etc.,
advertises said articles as “Parisian Ivory,” “White Ivory,” or “Reed Ivory,” thereby misleading and
deceiving the purchasing public, In alleged violation of section 5 of the Federal Trade Commission act.
Status : Awaiting answer.
Complaint No. 974.--Federal Trade Commission v. Brooks Oil Co. and E. A. Benedict. Charge : Unfair
methods of competition In commerce are charged In that the respondents, cooperating In the sale of house
paint, have falsely rep-resented, advertised, and labeled said product as “U. S. Quality Paint,” the said
paint In fact being a how-grade product not made for nor used by the United States Government and not
made according to any Government specification or requirements, In alleged violation of section 5 of the
Federal Trade Commission act. Status : To be tried July 16.
Complaint No. 975.--Edward Frohlich, trading under the name and style of Frohlich Glass Co., and E.
A. Benedict. Charge : Unfair methods of competition In commerce are charged In that the respondents,
cooperating In the sale of house paint, have falsely represented, advertised, and labeled said product as
“U. S. Quality Paint,” the said paint In fact being a low grade product not made for nor used by the United
States Government and not made according to

PROCEEDINGS PENDING.

189

any Government specification or requirements In alleged violation of section 5 of the Federal Trade
Commission act. Status : To be tried July 16.
Complaint No. 976.--Federal Trade Commission v. Goodall Worsted Co. and Albert Rohaut. Charge:
Unfair methods of competition In commerce are charge In that the respondent corporation a manufacturer
of Palm Beach cloth, and its sales agent, the respondent Rohaut, fixed uniform and minimum prices below
which clothing manufactured from Palm Beach cloth should not be sold to jobbers and dealers and enforce
said standard prices by the use of a license agreement with the manufacturers of Palm Beach clothing by
refusing to sell such cloth to manufacturers who fail to observe and maintain said resale prices, thereby
tending to unduly restrain the natural flow of commerce and freedom of competition In alleged violation
of section 5 of the Federal Trade Commission act. Status : At issue.
Complaint No. 977.--Federal Trade Commission v. Eastman Kodak Co., Allied Laboratories
Association (Inc.), the Burton Holmes Lectures (Inc.), the Craftsmen -Film Laboratory (Inc.) , Kinoto Co.
of America (Inc.) , Erbograph Co., Cromlow Film Laboratories (Inc.) , Palisades Film Laboratories (Inc.),
Claremont -Film Laboratory (Inc.), Film Developing Corporation, Evans Film Manufacturing Co. (Inc.),
Republic Laboratories (Inc.) , Lyman H. Howe Film Co., Rex Laboratory (Inc.), Tremont Film
Laboratories (Inc.) , Mark Dintenfass, George Eastman, Jules E. Brulatour. Charge : The complaint
alleges that the Eastman interests, In an endeavor to monopolize the manufacture and sale of
cinematographic film In the United States, caused the respondent Brulatour to establish and operate
laboratories for the production of positive print motion-picture films (without disclosing the true
ownership) for the purpose of coercing competing laboratories to refrain from purchasing foreign
cinematography film, such coercion being effected by underselling, discrimination In price and terms of
credit or delay In or refusal to make delivery; and that subsequently the Eastman interests assumed title
to said laboratories and by threat of operation thereof induced the respondent association and its members
to join In a conspiracy by which the association members agreed to confine their purchases to film
manufactured In the United States, the Eastman Co. agreeing to close its manufacturing laboratories and
to refrain from further competition with members of the association, but threatening to reopen and operate
its laboratories if the association members again purchased or used imported film, and the respondent
members thereupon confined their purchase to Eastman film, falsely announcing that film produced by
manufacturers other than Eastman can not be used to good advantage. Unfair methods of competition are
charged In that the practices above described have resulted In the monopoly of the cinematography-film
business In the United States by the Eastman Co. and restricted competition and fixed prices In the sale
of positive prints to the producers of motion-picture film In alleged violation of section 5 of the Federal
Trade Commission act. Status : Awaiting some answers.
Complaint No. 978.--Federal Trade Commission v. Western Woolen Mills Co., a corporation. Charge:
Unfair methods of competition are charged In that the respondent, engaged In the purchase and sale of
woolen goods and having no mills of its own, indicates by the use of Its corporate name that it is a
manufacturer owning or operating woolen mills and that its customers therefore save the profits of the
middleman, thus misleading and deceiving the purchasing public, In alleged violation of section 5 of the
Federal Trade Commission act. Status : Awaiting examiner’s findings.
Complaint No. 979.--Federal Trade Commission v. Abraham Cohen, trading under the name and style
of Puritan Products Co. (Inc.). Charge : Unfair methods of competition In commerce are charged In that
the respondent, en-gaged In the manufacture and sale of “Magnolia” salad and cooking oil simulate the
trade name, containers, and labels used by the Corn Products Refining Co. In the sale of its favorably
known Mazola salad and cooking oil made of corn oil, thereby misleading and deceiving the purchasing
public In alleged violation of section 5 of the Federal Trade Commission act. Status : Awaiting answer.
Complaint No. 980.--Federal Trade Commission v. Victor K. Kissal and Paul Kokalis, copartners doing
business under the name of Kissal & Kokalis. Charge : Unfair methods of competition are charged In that
the respondents, operating a beverage stock In the District of Columbia, have simulated the white store
front and distinctive sign well known to the people of the District of Columbia as originally adopted by
and associated with a chain of retail
67501--23----13

190

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

stores known as Dikeman’s Orange Beverage Stores, thereby tending to mislead and deceive the
consuming public In alleged violation of section 5 of the Federal Trade Commission act. Status : At issue.
Complaint No. 982.--Federal Trade Commission v. E. O. Wakefield, Mrs. E. O. Wakefield, A. J. Plume,
and William Plume, copartners, doing business under the firm name of Murray Knitting Co. Charge :
Unfair methods of competition In commerce are charged In that the respondents, engaged In the purchase
and sale of knit goods and having no mills or factories of their own, indicate by the general use and
prominent display of the firm name under which they do business that they are manufacturers and that
their customers therefore save the profits of the middleman, thereby misleading and deceiving the
purchasing public In alleged violation of section 5 of the Federal Trade Commission act. Status :
Awaiting examiner’s findings.
Complaint No. 983.--Federal Trade Commission v. Morris Errera. Charge : Unfair methods of
competition In commerce are charged In that respondent, operating a beverage store In the District of
Columbia, has simulated the white store front and distinctive signs well known to the people of the District
of Columbia as originally adopted by and associated with a chain of retail stores known as Dikeman’s
Orange Beverage Stores and thereby tends to mislead and deceive the consuming public In alleged
violation of section 5 of the Federal Trade Commission act. Status : At issue.
Complaint No. 984.--The American Tobacco Co. and the Tobacco Jobbers’ Association of Western
Pennsylvania, its officers and members, respondents. Charge: That the respondent association and the
American Tobacco Co. entered into a conspiracy, agreement, and understanding, by which they fixed
resale prices of tobacco products of the American Tobacco Co. handled by the members of the respondent
association, and that the American Tobacco Co. agreed to assist In the accomplishment of the conspiracy
by agreeing to discontinue selling to such members of the association: as would sell the products or the
American Tobacco Co. at prices less than those fixed by the conspiracy, all In alleged violation of section
5 of the Federal Trade Commission act. Status : Complaint was issued March 8, 1923, and answers were
filed on April 27, 1923.
Complaint No. 985.--P. Lorillard Co. (Inc.) , and the Tobacco Jobbers’ Association of Western
Pennsylvania, its officers and members, respondents. Charge : That the respondent association and the P.
Lorillard Co. (Inc.) entered into a conspiracy, agreement, and understanding, by which they fixed resale
prices of tobacco products of the P. Lorillard Co. handled by the members of the respondent association,
and that the P. Lorillard Co. (Inc.), agreed to assist In the accomplishment of the conspiracy by agreeing
to dis continue selling to such members of the association as would sell the products of the P. Lorillard
Co. (Inc.) at prices less than those fixed by the conspiracy, all In alleged violation of section 5 of the Federal Trade Commission act. Status : Complaint was issued March 8, 1923, and answers were filed on
April 27, 1923.
Complaint No. 986.--Federal Trade Commission v. Broadway Knitting Co., a corporation. Charge :
Unfair methods of competition In commerce are charged In that the respondent, engaged In the purchase
and sale of knit goods and “woolen goods made to order” and having no mills or factories of its own
indicates by the use of its corporate name that it is a manufacturer and that its customers therefore save
the profits of the middleman, thereby misleading and deceiving the purchasing public, In alleged violation
of section 5 of the Federal Trade Commission act. Status : Awaiting examiner’s findings.
Complaint No. 987.--Federal Trade Commission v. The American Tobacco Co., a corporation; Tri-State
Tobacco Jobbers’ Conference, an unincorporated organization, Its officers, T W. Mahany, president,
William J. Stern, secretary and manager, S. D. Ostrow, treasurer, their successors, and its members.
Charge : Unfair methods of competition In commerce are charged In that respondents conspired and
agreed to fix uniform prices for the sale and resale of cigars, cigarettes, and other tobacco products,
thereby tending to restrict competition and restrain the natural flow of commerce In alleged violation of
section 5 of the Federal Trade Commission act. Status : At issue.
Complaint No. 988.-Federal Trade Commission v. Paramount Royalty Syndicate and Lea R Ellis.
Charge : Unfair methods of competition In commerce are charged In the sale of securities of respondent
syndicate In that the respondents have misrepresented the organization, business, management, properties,
and prospects of said respondent syndicate for the purpose of misleading

PROCEEDINGS PENDING.

191

and receiving the purchasing public, In alleged violation of section 5 of the Federal Trade Commission
act. Status : At issue.
Complaint No. 990.--Federal Trade Commission v. Missouri-Kansas Wholesale Grocers’ Association,
Peet Bros. Manufacturing Co., the Rub-No-More Co. Charge : The complaint charges unfair methods of
competition In that the respondents adopted a plan of hampering, obstructing, and preventing the Proctor
& Gamble Distributing Co., which quotes equal prices to wholesalers and retailers, from selling soaps,
soap products, and cooking fats to the members of the respondent association and wholesale grocers, and
sought to coerce wholesalers into refraining from dealing In the said products of the Proctor & Gamble
Distributing Co., In alleged violation of section 5 of the Federal Trade Commission act. Status : Testimony
ready to begin July 17.
Complaint No. 991.--Federal Trade Commission v. Iowa-Nebraska-Minnesota Wholesale Grocers’
Association, its officers, members of executive committee, and all of its members; Slocum-Bergren Co.;
Gowan-Lenning-Brown Co.; Peet Bros. Manufacturing Co.; Jas. S. Kirk & Co.; and Cudahy Packing Co.
Charge : The complaint charges unfair methods of competition In that the respondents adopted a plan of
hampering, obstructing, and preventing the Proctor & Gamble Distributing Co., which quotes equal prices
to wholesalers and retailers, from selling soaps, soap products, and cooking fats to the members of the
respondent association and wholesale grocers, and sought to coerce whole sales into refraining from
dealing In the sale products of the Proctor & Gamble Distributing Co., In alleged violation of section 5
of the Federal Trade Commission act. Status : Awaiting some answers.
Complaint No. 992.--Federal Trade Commission v. The Ohio Wholesale Grocers’ Association Co., a
corporation, and its stockholding members, and Peet Bros. Manufacturing Co., a corporation. Charge :
Unfair methods of competition are charged In that the respondents adopted a plan of hampering,
obstructing, and preventing the Proctor & Gamble Distributing Co., which quotes equal prices to
wholesalers and retailers, from selling soap, soap products, and cooking fats to the members of the
respondent association and wholesale grocers, and sought to coerce wholesalers to refrain from dealing
In the products of said Proctor & Gamble Distributing Co., In alleged violation of section 5 of the Federal
Trade Commission act. Status : Awaiting some answers.
Complaint No. 993.--Federal Trade Commission v. Bowers Bros. (Inc.), Lipscomb-Russell Co., W. K.
Livingston, and J. K. Livingston, a partnership trading under the name of Livingston & Co.; J. E.
Talmadge, jr., C. J. Talmadge, J. Y. Talmadge, and the executors of J. E. Talmadge, sr., a partnership
trading under the name of Talmadge Bros. & Co. Charge : Unfair methods of competition are charge In
that the respondents cooperate to maintain and enforce standard resale prices established for the resale of
coffees roasted by respondent, Bowers Bros. (Inc.); refuse to sell to price cutters and prevent certain
wholesalers and jobbers from obtaining said products, thereby suppressing and preventing all price
competition, In alleged violation of section 5 of the -Federal Trade Coin-mission act. Status: At issue.
Complaint No. 994.--Federal Trade Commission v. Standard Education Society. Charge : The complaint
relates that the respondent offers its “Standard Reference Work” free of charge In conjunction with a 10
years’ subscription for its “Standard Loose-Leaf Extension Service” at $49, payable within one year In
monthly installments. Unfair methods of competition are charged In that the respondent’s representation
that the sum of $49 is for the so-called extension service is false and misleading, as such sum Is greatly
In excess of the cost of the service and is sufficient to compensate the respondent for the set of books
delivered “free,” and In that the respondent misrepresents the value of the said hooks and extension service
and Induces individuals to accept said books on approval but prevents the purchasers from exercising their
option of returning the books to the respondent at its expense; misrepresents the quality of Its book
bindings; makes false and misleading representation as to honorary membership In the “ Standard
Education Society” offered as an inducement to purchase respondent’s books; claims that other books
offered In connection with its “Standard Reference Work” are given free and without charge, whereas the
price obtained Is so far In excess of the usual selling price of the Standard Reference Work as to constitute
a fair price for all of the books delivered to the customers; falsely advertises that the Standard Reference
Work has been “officially adopted by 24 States,” and circulates commendations of its publications
subsequent to their withdrawal and abrogation by the persons signing them, all In alleged violation of
section 5 of the Federal Trade Commission act. Status : Awaiting answer to amended complaint.

192

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

Complaint No. 995.--Federal Trade Commission v. King-Ferree Co. (Inc.) Charge: Unfair methods of
competition are charged In that the respondent, a manufacturer of cigars at Greensboro, N. C., by labeling
and advertising Its said product as “Vantampa” cigars, tends to mislead and deceive the purchasing public
to believe said cigars are Tampa cigars manufactured from the Havana tobacco used In the Tampa district,
In alleged violation of section 5 of the Federal Trade Commission act. Status : Before commission for final
decision.
Complaint No. 997.--Federal Trade Commission v. Prosperity & Co. (Inc.). Charge : Complaint herein
charges unfair methods of competition In that the respondent, for the purpose of inducing its competitors’
customers to wrong-fully and unlawfully breach their contracts with said competitors and thereupon install
and use respondent’s garment-pressing machines In substitution for those of its competitors, allows as part
payment of the purchase price for its own machines such sums as have been paid on contracts for the
purchase of competing machines and furnishes the services of attorneys to defend suits brought by
competitors for the purchase price for competing machines originally installed In alleged violation of
section 5 of the Federal Trade Commission act. Status: Before commission for final determination.
Complaint No. 998.--Federal Trade Commission v. Mrs. E. M. Henning, Joseph M. Henning, C. Wesley
Henning, and William E. Henning, individuals, trading under the name and style of Phillips Genuine
Sausage Co. Charge : Unfair methods of competition are charged In that the respondents, engaged In the
sale of pork sausage, simulate the trade name and label of the Joseph Phillips Co., a long-established and
favorably known manufacturer of “Phillips Original All-Pork Sausage,’ In alleged violation of section 5
of the Federal Trade Commission act. Status : Awaiting examiner’s findings.
Complaint No. 999.--Federal Trade Commission v. Royal Dutch Co. of Texas. Charge: Unfair methods
of competition are charged In that respondent, originally organized as the “Pennsylvania Dutch Oil Co.,”
changed its name In simulation of that of the internationally known Royal Dutch Co., thereby tending to
mislead prospective purchasers of Its corporate stock to believe that the said respondent is affiliated with
the Royal Dutch Shell group of corporations, In alleged violation of section 5 of the Federal Trade
Commission act. Status : At issue.
Complaint No. 1000.--Federal Trade Commission v. The Charles H. Elliott Co. Charge : Unfair methods
of competition are charged In that the respondent, engaged In the manufacture of jewelry, stationery,
Printing and engraving products suitable for use by schools, colleges, universities, and the student
organizations thereof, offers and gives, without the knowledge and consent of the student organization,
valuable gratuities to the students authorized to purchase said products as an inducement to buy
respondent’s products; offers and gives substantial and unwarranted reductions In price and valuable
gratuities to induce said students to cancel contracts entered into with competitors of said respondent, and
circulates false, misleading, and disparaging statements concerning its competitors, In alleged violation
of section 5 of the Federal Trade Commission act. Status : Testimony to be taken July 9, 1923.
Complaint No. 1002.--Federal Trade Commission v. A Morrison and L. Morrison, partners, trading as
Morrison Fountain Pen Co. Charge : Unfair methods of competition are charged In that the respondents,
engaged In the sale and manufacture of fountain pens and pencils, label their products with false and
fictitious resale prices far In excess of the usual retail prices for the purpose of misleading and deceiving
the purchasing public as to the true value and usual selling price of said articles, In alleged violation of
section 5 of the Federal Trade Commission act. Status : Testimony to be taken In July.
Complaint No. 1005.--Federal Trade Commission v. Consolidated Woolen Mills Co. Charge: Unfair
methods of competition are charged In that the respondent, engaged In knitting garments from yarns
purchased from woolen mills and In purchasing from the manufacturers thereof blankets, robes and
mackinaws for sale by It, Indicates by the use of its corporate name that it Is a manufacturer of woolens,
thereby causing the public to believe that purchases from the respondent are direct from the manufacturers
of such yarn, cloth, and garments and that the profits of the middleman are thus saved to the purchaser,
In alleged violation of section 5 of the Federal Trade Commission act. Status : Awaiting examiners
findings.
Complaint No 1004.-Federal Trade Commission v. Harry Lederer & Bros. (Inc.). Charge : Unfair
methods of competition are charged In that pens and

PROCEEDINGS PENDING.

193

pen points manufactured by the respondent from metals other than gold are Inscribed or stamped In small
and indistinct letters and figures : “Premo 141 Warranted,” the said figures being used with the intent and
purpose of deceiving the purchasing public by reason of their resemblance to the “14K” mark on articles
made of gold, In alleged violation of section 5 of the Federal Trade Commission act. Status: Testimony
to be taken In July.
Complaint No 1005.--Federal Trade Commission v. Greenhalgh Mills, a corporation, J. Braumhall, J.
W. Byrd, W. C. Baylies, Robert Amory, Charles Crehore, and B. F. Meffert, copartners, trading under the
name and style of Amory, Brown & Co. Charge: Unfair methods of competition are charged In that the
respondents, manufacturers and sales agents of cotton fabrics, caused certain of said cottons to be labeled
“De Luxe Pongee,” the said name having the capacity and tendency to mislead the trade and purchasing
public to believe that the fabric so labeled is a silk fabric such as that commonly known and designated
“Pongee,” In alleged violation of section 5 of the Federal Trade Commission act. Status : Awaiting
examiner’s findings.
Complaint No. 1006.--Federal Trade Commission v. Hill Bros. Charge : Unfair methods of competition
are charged In that the respondents adopted and maintained a system of standard prices for the resale of
certain brands of their roasted coffee, refusing to sell to dealers failing to observe the mini mum resale
prices and employing various cooperative means for the enforcement of the price list, thereby hindering
and suppressing all price competition and tending to obstruct the natural flow of commerce, In alleged
violation of section 5 of the Federal Trade Commission act. Status : At issue.
Complaint No. 1007.--Federal Trade Commission v. Canada Dry Ginger Ale (Inc.) and Canada Dry
Sales Corporation. Charge: Unfair methods of competition are charged In that the respondents, engaged
In the manufacture of ginger ale In the United States and the sale thereof, have adopted and used labels
simulating In color, design, wording, and general arrangement the well-known labels of the J. J.
McLaughlin (Ltd.), manufacturers of Canadian ginger ale formerly sold In the United States by the
respondent Canada Dry Sales Corporation, thereby misleading and deceiving the purchasing public In
alleged violation of section 5 of the Federal Trade Commission act. Status : In course of trial.
Complaint No 1008.--Federal Trade Commission v. S. A Samuels, L. E. Samuels, L. H. Samuels, Harry
H. Samuels, doing business under the name and style of Cocoa Products Co. Charge : Unfair methods
of competition are charged In that the respondents, engaged iii the manufacture and sale of cocoa and
chocolate preparations, changed, altered, and falsified orders obtained by respondents’ salesmen for
presentation to and to be filled by jobbers from Stock to be purchased from respondents so that said
orders represented larger purchases than the actual orders obtained from the retailers, thereby causing
retail dealers to refuse to accept the respondents’ products from the jobbers, to the detriment and loss of
said jobbers, In alleged violation of section 5 of the Federal Trade Commission act. Status : Testimony
taken June 20, 1923.
Complaint No 1009.--Federal Trade Commission v. Illinois Glass Co. Charge : Unfair methods of
competition are charged In that the respondent, engaged In the manufacture and sale of glass bottles,
entered into and carried out an agreement by the effect of which the respondent acquired the entire assets
and capital stock of the Cumberland Glass Manufacturing Co., the More Jonas Glass Co., and the
Minotola Glass Co., thereby tending to substantially lessen competition, restrain commerce, and create
a monopoly, In alleged violation of section 5 of the Federal Trade Commission act and section 7 of the
Clayton Act. Status : At issue.
Complaint No. 1010.--Federal Trade Commission v. Pittsburgh Coal Co. of Wisconsin, Northwestern
Fuel Co., Reiss Coal Co., Clarkson Coal & Dock Co., M. A. Hanna Coal & Dock Co., Carnegie Dock &
Fuel Co Berwind Fuel Co., Northern Coal & Dock Co., Great Lakes Coal & Dock Co Pittsburgh & Ashland Coal & Dock Co., Northwestern Coal Dock Operators Association, its officers, directors, and
members. Charge : Unfair methods of competition are charged In that the respondent companies, the
largest distributors of anthracite and bituminous coal inn the northwest territory which comprises the
States of Minnesota, Wisconsin, North Dakota, South Dakota, and parts of Iowa and Nebraska, entered
into an agreement and conspiracy among themselves, through the respondent association and with others,
to restrict, restrain, and suppress competition In the sale of coal by (a) abolishing com-

194

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

missions to Jobbers; (b) refraining from soliciting certain municipal business, recognizing such business
as the prospect of the local retail dealer; (c) restricting certain contracts with retail dealers to cover publicutility business; (d) adopting uniform grading and cost-accounting methods for the standardization of coal
sizes and costs; (e) refusing to sell to certain dealers not equipped with sheds and scales; (f) agreeing to
uniform methods of accounting with retail dealers; (g) adopting uniform contracts with retail dealers and
large consumers, prohibiting the diversion of coal except as authorized by the contract; (h) circulating lists
of retailers to whom the respondents refuse to sell; (i) providing for the standardization and maintenance
of uniform selling prices; (j) discriminating in price between the city of Duluth and the cities of St. Paul
and Minneapolis; (k) selling at less than cost ; (l) discriminating In price between wagon dealers and retail
dealers equipped with yards and sheds; (m) arbitrarily reducing the price of coal to compel competitors
to join the respondent association, all In alleged violation of section 5 of the Federal Trade Commission
act and section 2 of the Clayton Act. Status : In the course of trial.
Complaint No 1011.--Federal Trade Commission v. J. Mailender, trading under the unincorporated
names and styles of “M. Rider & Co.,” “Queen City Salvage Co.,” “Army Goods Headquarters,” “ArmyNavy Store.” and “Army Goods Store.” Charge : Unfair methods of competition are charged In that the
respondent, engaged In the purchase and sale of men’s work and dress clothing, surplus Army and Navy
property, paints, and other goods, falsely represents certain of his wares as purchased from the United
States Army or Navy, or made In accordance with specifications of the United States Government and of
high quality, thereby tending to mislead and deceive the purchasing public, In alleged violation of section
5 of the Federal Trade Com-mission act. Status : At issue.
Complaint No. 1012.--Ohio Wholesale Grocers’ Association, Cleveland Tobacco Jobbers, and P.
Lorillard Co. (Inc.), respondents. Charge : The charge is unfair competition In that the Ohio Wholesale
Grocers’ Association and a group of Cleveland, Ohio, tobacco jobbers, and P. Lorillard Co. (Inc.), entered
into a conspiracy, agreement, and understanding, l)y which they fixed the prices at which the products of
P. Lorillard Co. (Inc.) should be resold by the jobber respondents, and that P. Lorillard Co. (Inc.) agreed
with the other respondents to assist In the carrying out of the conspiracy alleged, by refusing to sell to such
of the respondents as would resell its products at prices less than those fixed by the conspiracy. All In
alleged violation of section 5 of the Federal Trade Commission act. Status : The complaint issued April
26, 1923, and answers were filed In June, 1923.
Complaint No. 1013.--Ohio Wholesale Grocers’ Association, Cleveland Tobacco Jobbers, and
American Tobacco Co., respondents. Charge : The charge is unfair competition In that the Ohio
Wholesale Grocers’ Association and a group of Cleveland, Ohio, tobacco jobbers and the American
Tobacco Co. entered into a conspiracy, agreement, and understanding, by what they fixed the prices at
which the products of the American Tobacco Co. should be resold by the jobber respondents, and that the
American Tobacco Co. agreed with the other respondents to assist In the carrying out of the conspiracy
alleged, by refusing to sell to such of the respondents as would resell its products at prices less than those
fixed by the conspiracy. All In alleged violation of section 5 of the Federal Trade Commission act. Status
: The complaint issued April 26, 1923, and answers were filed In June, 1923.
Complaint No. 1014.--Federal Trade Commission v. Ralph E. Dings and Lyon S. Schuster, a partnership
doing business under the name and style of Dings & Schuster. Charge : Unfair methods of competition
are charged In that the respondents, engaged In the manufacture and sale of paints, varnishes, shellac, and
shellac substitutes, label as “white shellac” a product composed of shellac gum and a large quantity of
shellac gum substitutes, such as rosin and similar ingredients, without distinguishing it from their similarly
labeled product which Is composed solely of shellac gum dissolved In alcohol, thereby tending to mislead
and deceive the purchasing public, In alleged violation of section 5 of the Federal Trade Commission act.
Status : At issue.
Complaint No. 1015.--Federal Trade Commission v. William R Warner & Co. (Inc.). Charge: Unfair
methods of competition are charged In that the respondent, having established two scales of prices for its
patent medicines, pharmaceuticals, and drug specialties designated, respectively, as jobbers’ prices and
retailers’ prices, makes a regular practice of selling its products at said

PROCEEDINGS PENDING.

195

jobbers’ prices to certain selected wholesalers and retailers ; at the same time and irrespective of quantity
purchased charges the higher retailers’ prices to other wholesalers and retailers, thereby discriminating
between its two classes of customers and giving preferred wholesalers and retailers an unfair advantage
over competitors, who are compelled to purchase the respondent’s goods of the same quality and quantity
at higher prices and on less advantageous terms, tending to hinder and lessen competition, In alleged
violation of section 5 of the Federal Trade Commission act and section 2 of the Clayton Act. Status :
Awaiting answer.
Complaint No. 1016.--Federal Trade Commission v. Edwin E. Ellis Co. (Inc.). Charge : Unfair methods
of competition are charged In that the respondent, engaged In the Printing and selling of stationery,
designates and advertises as “Process engraving” its method of Printing In simulation of impressions made
from engraved plates, thereby tending to mislead and deceive the purchasing public into the erroneous
belief that the respondent’s products are In fact “engraved” In alleged violation of section 5 of the Federal
Trade Commission.
Complaint No. 1017.--Federal Trade Commission v. Process Engraving Co. Charge : Unfair methods
of competition are charged In that the respondent, engaged In the Printing and selling of stationery,
designates and advertises as Process “engraving” is method of Printing In simulation of impressions made
from engraved plates. thereby tending to mislead and deceive the purchasing public into the erroneous
belief that the respondent’s products are In fact “engraved,” In alleged violation of section 5 of the Federal
Trade Commission act. Status : At issue.
Complaint No. 1018--Federal Trade Commission v. Toledo Pipe Threading Machine Co. Charge :
Unfair methods of competition are charged In that the respondent, engaged In the manufacture of pipethreading, boring and cutting tools. and similar products, employs a system or policy whereby it has established and maintained standard prices for the resale of its products by jobbers and other distributors,
refusing to sell its products to price cutters and employing other cooperative means for the enforcement
of said resale prices, thereby tending to obstruct the free and natural flow of commerce and freedom of
coin-petition, In alleged violation of section 5 of the Federal Trade Commission act. Status : A waiting
answer.
Complaint No. 1019.--Federal Trade Commission v. The Standard Register Co. Charge: Unfair
methods of competition are charged In that the respondent, engaged In the manufacture and sale of
manifolding or autographic registers and supplies therefor, publishes numerous false, misleading,
disparaging, and unfair representations concerning its completion., the Eery Register Co., falsely asserting
that a court decision In favor of the respondent has lead the effect of canceling all orders place with said
Eery Co.; threatening to bring and instituting suit for alleged infringement of patents, said suit and threat
of litigation being not In good faith but for the purpose of intimidating the said Eery Co. and its customers;
falsely representing its register as superior In quality and circulating statements to the effect that the Eery
Co. is more than six mouths In arrears with is orders. all for the purpose of injuring its competitor and
In alleged violation of section 5 of the Federal Trade Commission act. Status : At issue.
Complaint No. 1020.--Federal Trade Commission v. The Armand Co. Charge : Unfair methods of
Competition are charged In that the respondent, engaged In the manufacture and sale of toilet
preparations, employs a system of fixing and establishing certain specified standard prices for the resale
of its products by jobbers, wholesalers, and retailers, refusing to sell to price cutters and employing other
cooperative means for the enforcement of said system of resale prices, thereby tending to obstruct the
natural flow of commerce and freedom of competition, In alleged violation of section 5 of the Federal
Trade Commission act. Status : Awaiting answer.
Complaint No. 1021.--Federal Trade Commission v. Hygrade Lamp Co. Charge : Unfair methods of
competition are charged In that the respondent, engaged In the manufacture and sale of tungsten lamps,
adopted and enforces a policy of requiring its jobbers to enter into an exclusive agreement whereby said
jobbers agree to restrict their purchases to the respondent and to limit their Hygrade Lamp business to said
jobber’s exclusive territory, which is clearly defined In the agreement, all In consideration of respondent’s
agreement to sell exclusively to said jobber In said exclusive territory, thereby hindering and suppressing
competition In the jobbing of electric lamps, In alleged violation of section 5 of the Federal Trade
Commission act. Status : Awaiting answer.

196

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

Complaint No. 1022.--Federal Trade Commission v. Hygrade Lamp Co. Charge : Unfair methods of
competition are charged In that the respondent, by the acquisition of the capital stock of the Lux
Manufacturing Co., a competitor, tends to lessen competition and restrain commerce In the territory served
by the Lux Co., In alleged violation of section 7 of the Clayton Act. Status : At issue
Complaint No 1023.--Federal Trade Commission v. International Shoe Co. Charge : It is charged that
the respondent, by acquiring substantially all of the capital stock of the W. H. McElwain Co., theretofore
engaged In the manufacture and sale of shoes In competition with the respondent, tends to lessen
competition, restrain commerce, and create a monopoly, In alleged violation of section 7 of the Clayton
Act. Status : Awaiting answer.
Complaint No. 1024.--Federal Trade Commission v. Charles E. Cormier Rice Milling Co. (Inc.).
Charge: Unfair methods of competition are charged In that the respondent, engaged In buying and selling
rice and having no rice mills of its own, indicates by the use of the word “milling” as a part of Its corporate
name that it is a miller of rice and that its customers therefore save the profits of all Intermediate dealers,
thereby tending to mislead and deceive the purchasing public, In alleged violation of section 5 of the
Federal Trade Commission act. Status : At issue.
Complaint No 1025.--Federal Trade Commission v. Charles Tager, an individual trading under the name
of Regat Sales Co. Charge : Unfair methods of competition are charged In that the respondent, by
resorting to false, mis-leading, and deceptive representations as to the Markwell Manufacturing Co. and
the Botts Marking Ink Co., distributors of Acme tacking machines and staples, persuades and induces
customers and prospective customers who were using Acme tacking machines and staples to discontinue
the use of said Acme machines In exchange for the respondent’s Regat tacking machines, and to purchase
large supplies of Regat staples, thus preventing said competitors from selling staples to their customers,
In alleged violation of section 5 of the Federal Trade Commission act. Status : Taking of testimony to
begin July 17, 1923.
Complaint No. 1026.--Federal Trade Commission v. M. Kaplin, trading as Butterfly Shop. Charge :
Unfair methods of competition are charged In that the respondent, engaged In the sale of wearing apparel
at retail, falsely represents as “silk” certain hosiery and other articles manufactured from materials or
fabrics other than silk but resembling silk In appearance and texture, thereby misleading and deceiving
the purchasing public, In alleged violation of section 5 of the Federal Trade Commission act. Status :
Taking of testimony to begin July 6, 1923.
Complaint No 1027.--Federal Trade Commission v. Panama Rice Milling Co. Charge : Unfair methods
of competition are charged In that the respondent, engaged In the buying and selling of rice and having
no rice mills of its own, Indicates by the use of the word “milling” as a part of its corporate name that it
is a miller of rice and that its customers therefore save the profits of fill intermediate dealers, thereby
tending to mislead and deceive the purchasing public, In alleged violation of section 5 of the Federal Trade
Commission act. Status : Awaiting answer.
Complaint No. 1028.--Federal Trade Commission v. Guaranty Royalties Co., W. F. Rogers, W. L.
Hughes, and A. C. Loughrey. Charge : Unfair methods of competition are charged In the sale of the stock
of the respondent joint-stock association In that the respondents have made numerous false, misleading,
and deceptive statements concerning the organization, management, properties, production, earnings, and
prospects of the respondent company for the purpose of inducing the public to purchase said stock, In
alleged violation of section 5 of the Federal Trade Commission act. Status : Awaiting answer.
Complaint No. 1029.--American Tobacco Co., Bauswitz Cigar Co., of Phoenix, Ariz., and others, all
of whom are Phoenix, Ariz., tobacco jobbers, respondents. Charge : The charge is unfair competition In
that the American Tobacco Co. and the other respondents entered Into an understanding by which they
fixed the prices at which respondent jobbers should resell the products of the American Tobacco Co., and
that the American Tobacco Co. promised the other respondents its cooperation In the enforcement of the
alleged conspiracy by agreeing to discontinue selling such of the jobber respondents as would resell its
products at prices less than those fixed by the conspiracy. All In alleged violation of section 5 of the
Federal Trade Commission act. Status : The complaint issued May 28, 1923, and the hearing day named
In the complaint is July 17, 1923.

PROCEEDINGS PENDING.

197

Complaint No 1030.--Liggett & Myers Tobacco Co., Bauswitz Cigar Co., of Phoenix, Ariz., and others,
all of whom are Phoenix, Ariz., tobacco jobbers, respondents. Charge : The charge is unfair competition
In that the Liggett & Myers Tobacco Co. and the other respondents entered into an understanding by
which they fixed the prices at which respondent jobbers should resell the products of the Liggett & Myers
Tobacco Co., and that the Liggett & Myers Tobacco Co. promised the other respondents its cooperation
In the enforcement of the alleged conspiracy by agreeing to discontinue selling such of the jobber respondents as would resell its products at prices less than those fixed by the conspiracy. All In alleged
violation of section 5 of the Federal Trade Commission act. Status: The complaint issued May 28, 1923,
and the hearing day named In the complaint is July 17, 1923.
Complaint No. 1031.--P. Lorillard Co. (Inc.), Bauswitz Cigar Co., of Phoenix, Ariz., and others, all of
whom are Phoenix, Ariz., tobacco jobbers, respondents. Charge : The charge is unfair competition In that
the P. Lorillard Co. (Inc.) and the other respondents entered into an understanding by which they fixed
the prices at which respondent jobbers should resell the products of the P. Lorillard Co. (Inc.) and that the
P. Lorillard Co. (Inc.) promised the other respondents its cooperation In the enforcement of the alleged
conspiracy by agreeing to discontinue selling such of the jobber respondents as would resell its products
at prices less than those fixed by the conspiracy. All In alleged violation of section 5 of the Federal Trade
Commission act. Status : The complaint issued May 28, 1923, and the hearing day named In the complaint
is July 17, 1923.
Complaint No. 1032.--The American Tobacco Co., Conference of Wholesale Tobacco Dealers of
Oregon, and others, respondents. Charge : The respondents joined In its complaint with the American
Tobacco Co., groups of tobacco jobbers, and wholesale grocers located In numerous localities along the
Pacific coast. The charge is that each group and the American Tobacco Co. conspired to fix resale prices
on American Tobacco Co.’s products sold by the members of such groups, and that each of the groups
agreed with each and every one of the other groups and with the American Tobacco Co. to adhere to the
prices fixed by the American Tobacco Co., and each of such of the other groups, and that the American
Tobacco Co. offered each of the groups to assist In the conspiracies by refusing to continue selling to such
jobber as would resell its products at prices less than those fixed by the conspiracies aforesaid, all In
alleged violation of the Federal Trade Commission act. Status : The complaint issued May 31, 1923, and
the hearing day named In it Is July 20, 1923.
Complaint No. 1033.--Liggett & Myers Tobacco Co., Conference of Wholesale Tobacco Dealers of
Oregon, and others, respondents. Charge : The respondents joined In its complaint with the Liggett &
Myers Tobacco Co. and groups of tobacco jobbers and wholesale grocers located In numerous localities
along the Pacific coast. The charge is that each group and the Liggett & Myers Tobacco Co. conspired
to fix resale prices on Liggett & Myers Tobacco Co.’s products sold by the members of such groups and
that each of the groups agreed with each and every one of the other groups and with the Liggett & Myers
Tobacco Co. to adhere to the prices fixed by the Liggett & Myers Tobacco Co. and each of such of the
other groups, and that the Liggett & Myers Tobacco Co. offered each of the groups to assist in the
conspiracies by refusing to continue selling to such jobber as would resell its products at prices less than
those fixed by the conspiracies aforesaid, all in alleged violation of the Federal Trade Commission act.
Status : The complaint issued May 31, 1923, and the hearing day named in it is July 20, 1923.
Complaint No. 1034.--Liggett & Myers, Keystone Tobacco Jobbers’ Association, its officers and
members, and the Central Pennsylvania Tobacco Jobbers’ Association, its officers and members,
respondents. Charge : The charge is unfair competition In that Liggett & Myers Tobacco Co. and the
Keystone Tobacco Jobbers’ Association by conspiracy fixed prices at which the members of that
association should resell the products of the Liggett & Myers Tobacco Co.; that the Central Pennsylvania
Tobacco Jobbers Association entered into a similar conspiracy with the Liggett & Myers Tobacco Co.;
that each association agreed to abide by the prices of the other association when its members sold into
territory of the members of such other associations and that the Liggett & Myers Tobacco Co. agreed with
both of the associations to assist In the carrying out of the several conspiracies by discontinuing to sell
such members of the associations as would sell its products at prices less than those fixed by the
conspiracies aforesaid. Status: The complaint issued June 6, 1923, and the hearing day named In the
complaint is July 26, 1923.

198

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

Complaint No. 1035.--Larus Bros. Co., Keystone Tobacco Jobbers’ Association, its officers and
members, and the Central Pennsylvania Tobacco Jobbers’ Association, its officers and members,
respondents. Charge : The charge is unfair competition In that Larus Bros. Co. and the Keystone Tobacco
Jobbers’ Association, by conspiracy, fixed prices at which the members of that association should resell
the products of Larus Bros. Co.; that the Central Pennsylvania Tobacco Jobbers’ Association entered into
a similar conspiracy with Larus Bros. Co.; that each association agreed to abide by the prices of the other
association when its members sold into territory of the members of such other association, and that Larus
Bros. Co. agreed with both of the associations to assist In the carrying out of the several conspiracies by
discontinuing to sell such members of the associations as would sell its products at prices less than those
fixed by the conspiracies aforesaid. Status : The complaint issued June 6, 1923, and the hearing day
named In the complaint is July 26, 1923.
Complaint No 1036.--Federal Trade Commission v. The American Tobacco Co., a corporation;
Keystone Tobacco Merchants’ Association, an unincorporated organization, its officers, J. C. Lindner,
president; E. A. Stroud, vice president; I. Finkelstein, treasurer; W. F. Smulyan, secretary; their successors,
and its members; Central Tobacco Jobbers’ Association of Pennsylvania, an unincorporated organization,
its officers, G. H. Stallman, president; Jacob L. Hauer, vice president; W. Clyde Shissler, secretary and
treasurer; their successors, and its members. Charge : Unfair methods of competition are charged In that
the respondents conspired and agreed to fix uniform prices for the sale and resale of cigars, cigarettes, and
other tobacco products, the respondent, the American Tobacco Co., refusing to sell its products to those
who did not maintain said standard resale prices or resold said products to price-cutting sub-jobbers and
retailers, all for the purpose and with the effect of restricting competition and restraining the natural flow
of commerce In alleged violation of section 5 of the Federal Trade Commission act. Status : Awaiting
some answers.
Complaint No 1037.--Federal Trade Commission v. P. Lorillard Co. (Inc.), a corporation; Keystone
Tobacco Merchants’ Association, an unincorporated organization; its officers, J. C. Lindner, president;
E. A. Stroud, vice president; l. Finkelstein, treasurer; W. F. Smulyan, secretary; their successors and its
members; Central Tobacco Jobbers’ Association of Pennsylvania, an unincorporated organization, its
officers, G. H. Stallman, president; Jacob L. Hauer, vice president; W. Clyde Shissler, secretary and
treasurer; their successors and its members. Charge : Unfair methods of competition are charged In that
the respondents conspired and agreed to fix uniform prices for the sale and resale of cigars, cigarettes, and
other tobacco products, the respondent, P. Lorillard Co. (Inc.), refusing to sell its products to those who
did not maintain said standard resale prices or resold products to price-cutting subjobbers and retailers,
all for the purpose and with the effect of restricting competition and restraining the natural flow of
commerce In violation of section 5 of the Federal Trade Commission act. Status: Awaiting some answers.
Complaint No 1038.--Federal Trade Commission v. Standard Oil Co. of Kentucky, a corporation, F.
T. Hurner, Gulf Refining Co., a corporation, F. D. Jones, the Texas Co., a corporation, H. G. Thompson,
Tampa Automobile Dealers’ Association, its officers, directors, and members, Tampa Retail Gasoline
Dealers’ Association, its officers, directors, and members. Charge : Unfair methods of competition are
charged In that the respondent associations and their members conspired and agreed to fix prices and
margins of profit for the sale of gasoline and for the enforcement of said prices solicited and obtained the
cooperation of the respondent oil companies and their local agents, the individual respondents, the lastnamed group of respondents refusing to sell and deliver gasoline on usual and customary terms and
conditions to those gasoline dealers who would not enter into and abide by the agreement fixing prices
and margins of profit, all of which tends to reduce and divert the natural flow of commerce and to suppress
and restrict the freedom of competition, In alleged violation of section 5 of the Federal Trade Commission
act. Status : Awaiting some answers.
Complaint No. 1039.--Federal Trade Commission v. American Electric Heater Co. Charge : Unfair
methods of competition are charged In that the respondent, engaged In the manufacture and sale of
electrical appliances, established certain specified wholesale and retail prices at which its “American
Beauty” iron should be sold by dealers, refusing to sell to price cutters and employing other cooperative
means for the enforcement of its standard resale prices, thereby

PROCEEDINGS PENDING.

199

hindering and suppressing competition and obstructing the free and natural flow of commerce, In alleged
violation of section 5 of the Federal Trade Commission act. Status : Awaiting answer.
Complaint No. 1040.--Federal Trade Commission v. F. M. Stamper Co. Charge : Unfair methods of
competition are charged In that the respondent, engaged In the purchase and sale of poultry, eggs, and
cream, has adopted and maintains the practice of paying higher prices for poultry and eggs at one of its
buying stations than it pays for such produce at other buying stations, thereby compelling competing
buyers to discontinue purchasing produce In the territory In which higher prices are paid by the respondent
and tending to substantially lessen competition and create a monopoly In said territory In alleged violation
of section 5 of the Federal Trade Commission act. Status Awaiting answer.
Complaint No. 1041.--Federal Trade Commission v. Mountain Grove Creamery, Ice & Electric Co.
Charge : Unfair methods of competition are charged In that the respondent has caused its butter to be put
up In packages or cartons containing from 1 to 2 ounces less than the recognized standard weight of 16
ounces or 1 pound, the true weight being marked on the container however, each carton containing
separately wrapped, unmarked units of slightly less than the standard and customary size and weight, and
In imitation thereof, the tendency being to enable and encourage retailers to commit a fraud on the ultimate
purchasers of the separately wrapped unmarked units In alleged violation of section 5 of the Federal Trade
Commission act. Status Awaiting answer.
Complaint No. 1042.--Federal Trade Commission v. The Wichita Creamery Co. Charge : Unfair
methods of competition are charged In that the respondent has caused its butter to be put rip In packages
or cartons containing 1 ounce less than the recognized standard weight of 16 ounces or 1 pound, the true
weight being marked on the container, however, each carton containing separately wrapped unmarked
units of slightly less than the standard and customary size and weight, and In imitation thereof, the
tendency being to enable and encourage retailers to commit a fraud on the ultimate purchasers of the
separately wrapped unmarked units, In alleged violation of section 5 of the Federal Trade Commission
act. Status : Awaiting answer.
Complaint No. 1043.--Federal Trade Commission v. The Meriden Creamery Co. Charge : Unfair
methods of competition are charged In that the respondent has caused its butter to be put up In packages
or cartons containing 1 ounce less than the recognized standard weight of 16 ounces or 1 pound, the true
weight being marked on the container however, each carton containing separately wrapped, unmarked
units of slightly less than the standard and customary size and weight and In imitation thereof, the
tendency being to enable and encourage retailers to commit a fraud on the ultimate purchasers of the
separately wrapped, unmarked units, In alleged violation of section 5 of the Federal Trade Commission
act. Status: Awaiting answer.

EXHIBIT 17.
PROCEEDINGS DISPOSED OF DURING YEAR ENDED JUNE 30, 1923.
l. ORDERS TO CEASE AND DESIST.
Complaint No. 293.--Federal Trade Commission v. Non-Derrick Drilling Machine Co. (Inc.). Charge:
Unfair methods of competition In connection with the sale of its corporate stock, consisting of publishing,
advertising, and circulating extravagant, false and misleading statements, promises, and predictions
concerning the business, organization, assets, capital stock, financial standing, and prospective profits of
respondent, and concealing from the public material facts relating to and affecting the plans, organization,
business, and capital stock of the respondent, and making, publishing, and circulating false statements
regarding the existence, character, strength, efficiency, and operation of a drilling device or apparatus for
the manufacture of which the respondent was ostensibly organized, and also falsely stating, representing,
and advertising that it is engaged In business as a drilling contractor, whereas its activities have been
confined solely to the sale of its capital stock, In alleged violation of section 5 of the Federal Trade
Commission act. Disposition : After Hearing the commission entered its order directing the respondent
to cease and desist from the practices alleged In the complaint.
Complaint No. 400.--Federal Trade Commission v. The Music Publishers’ Association of the United
States, National Association of Sheet Music Dealers, Thomas F. Delaney, individually and as president;
E. Grant Ege, individually and as vice president; J. M. Priaulx, individually and as secretary and treasurer
of the National Association of Sheet Music Dealers; Walter Fischer, J. Elmer Harvey, Charles W.
Homeyer, William J. Kearney, Edward P. Little, Holmes T. Maddox, L. W. Miller, Harold Orth, Gustav
Schirmer, S. Ernest Phillpit, Paul A. Schmitt, Clayton F. Summy, Charles H. Willis, W. H. Witt, Harvey
J. Wood, individually and as directors of the National Association of Sheet Music Dealers, and all
members of said association. Charge: Using unfair methods of competition by conspiring with the intent
and effect of stifling competition In the business of selling musical publications, and fixing and
maintaining standard resale prices; and by agreeing upon policies of increase In price, and upon uniform
rates and schedules of prices of certain classes of musical publications, with the result that the prices of
such publications were increased and enhanced, In alleged violation of section 5 of the Federal Trade
Commission act. Disposition : After hearing the commission entered its order directing the respondents
to cease and desist from the practices alleged In the complaint.
Complaint No. 453.--Federal Trade Commission v. Swift & Co. Charge : That respondent purchased
956 shares of the capital stock of the Moultrie Packing Co., a competitor, causing the same to be
transferred on the books of the company to officers and employees of the respondent. who, at a
stockholders’ meeting of said company, were elected as directors and stockholders for the transfer of
property of the said company to respondent ; that it purchased all the capital stock of the Andalusia
Packing Co., a competitor, and acquired the business of the company by a procedure similar to that
employed In acquiring the Moultrie Packing Co.; and acquired one-half of the capital stock of the
England, Walton Co. (Inc.), a competitor, securing control of the remaining stock of said company by
receiving said stock as security for money loaned to Mulford & Bryan to purchase it ; and that the result
of such acquisitions is the elimination of competition theretofore existing between the above-mentioned
companies and the respondent and the creation of conditions which tend to create a monopoly, In alleged
violation of section 5 of the Federal Trade Commission act and section 7 of the Clayton Act. Disposition:
After hearing the commission entered its order directing the respondent to cease and desist from the
practices alleged In the complaint.
200

PROCEEDINGS DISPOSED OF.

201

Complaint No. 456.--Federal Trade Commission v. Western Meat Co. Charge : That respondent
acquired all of the capital stock of the Nevada Packing Co., which acquisition resulted In the elimination
of competition theretofore existing between respondent and said Nevada Packing Co. and the creation of
a monopoly In meat and its by-products In communities adjacent to Reno, Nev., In violation of section
5 of the Federal Trade Commission act and section 7 of the Clayton Act. Disposition : After hearing the
commission entered its order directing the respondent to cease and desist from the charges alleged In the
complaint.
Complaint No. 584.--Federal Trade Commission v. John Bene & Sons (Inc.).-Charge : Using unfair
methods of competition by circulating false and mis-leading statements regarding an analysis made by it
of samples of one of its competitor’s goods to the effect that such products were harmful, dangerous, and
of no benefit. In alleged violation of section 5 of the Federal Trade Com-mission act. Disposition : After
hearing the commission entered its order directing the respondent to cease and desist from the practices
alleged In the complaint.
Complaint No. 588--Federal Trade Commission v. Esco Hosiery Co. (Inc.). Charge : Using unfair
methods of competition by labeling, advertising, stamping, and branding on packages containing hosiery
bought and sold by it representations that the hose contained In said packages are silk, when In truth and
In fact the material In said hose is not all silk, but only a portion of such material is silk, the remaining
portion being composed for the most part of cotton and wool, with the effect of misleading and deceiving
the trade and general public, In alleged violation of section 5 of the Federal Trade Commission act.
Disposition : After hearing the commission entered its order directing the respondent to cease and desist
from the practices alleged In the complaint.
Complaint No. 676.--Federal Trade Commission v. Harry Friedman, trading under the name and style
of Rex Hosiery Co. Charge: Using unfair methods of competition In the wholesale sale of hosiery by
labeling hosiery with the words “American silk.” when such hosiery In fact contains no genuine silk, In
alleged violation of section 5 of the Federal Trade Commission act. Disposition : After hearing the
commission entered its order directing the respondent to cease and desist from the practices alleged In the
complaint.
Complaint No. 677.--Federal Trade Commission v. W. A Shoffner and L. I. Young, partners, styling
themselves the Alamance Hosiery Mills. Charge : Using unfair methods of competition In the
manufacture and sale of hosiery labeled as “American silk,” when such hosiery contains no genuine silk,
In alleged violation of section 5 of the Federal Trade Commission act. Disposition : After hearing the
Commission entered its order directing the respondent to cease and desist from the practices alleged In
the complaint.
Complaint No. 678.--Federal Trade Commission v. Brown Durrell Co. Charge Using unfair methods
of competition In the wholesale distribution of hosiery and underwear by falsely labeling it “Worsted,”
“ Fine’ wool,” “Merino,” “All wool,” “ Natural wool,” or “ Cashmere,” when such hosiery and underwear
is made of mixed cotton and wool, with the effect of deceiving the purchasing public, In alleged violation
of section 5 of the Federal Trade Commission act. Disposition : After hearing the Commission entered its
order directing the respondent to cease and desist from the practices alleged In the complaint.
Complaint No. 679.--Federal Trade Commission v. Nolde & Horst Co. Charge : Using unfair methods
of competition In the manufacture and sale of hosiery by labeling hosiery made of mixed cotton and wool
In approximately equal parts as “Worsted,” “Fine wool,” “Merino,” “All wool,” “Natural wool,” or
“Cashmere,” with the effect of misleading and deceiving the purchasing public, In alleged violation of
section 5 of the Federal Trade Commission act. Disposition : After hearing the Commission entered its
order directing the respondent to cease and desist from the practices alleged In the complaint.
Complaint No 680.--Federal Trade Commission v. Hancock Knitting Mills. Charge : Using unfair
methods of competition In the manufacture and sale or hosiery by labeling hosiery made wholly of cotton
or of cotton and wool In approximately equal parts, as “ Silk lisle,” “Best silk lisle,” or “Oriental sylk,”
or “Men’s cashmere half hose,” with the effect of misleading and deceiving the purchasing public, In
alleged violation of section 5 of the Federal Trade Commission act. Disposition : After hearing the
Commission entered its order

202

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

directing the respondent to cease and desist from the practices alleged in the complaint.
Complaint No. 681.--Federal Trade Commission v. Fidelity Knitting Mills. Charge : Using unfair
methods of competition In the manufacture and sale of hosiery by labeling hosiery made wholly of cotton
or of cotton and wool In approximately equal parts, as “Silk lisle,” or “Cashmere,” with the effect of
misleading and deceiving the purchasing public, In alleged violation of section 5 of the Federal Trade
Commission act. Disposition : After hearing the commission entered its order directing the respondent to
cease and desist from the practices alleged In the complaint.
Complaint No. 682.--Federal Trade Commission v. Joseph Kahn, Jacob Frank, and Jerome Frank,
partners, styling themselves Kahn & Frank. Charge : Using unfair methods of competition In the
wholesale distribution of hosiery by labeling hosiery containing no genuine silk as “Ladies’ silk boot
hose,” “Ladles’ art silk hose,” etc., with the effect of misleading and deceiving the purchasing public, In
alleged violation of section 5 of the Federal Trade Commission act. Disposition : After hearing the
commission entered its order directing the respondent to cease and desist from the practices alleged In the
complaint.
Complaint No. 683.--Federal Trade Commission v. J. Reed Thompson, Andrew N.- Thompson, George
L. Thompson, and A Walter Thompson, partners, styling themselves Thompson Bros. Charge : Using
unfair methods of competition In the manufacture and sale of hosiery by labeling hosiery containing no
genuine silk as “Ladies’ silk boot hose,” “Ladies’ art silk hose,” etc., with the effect of misleading and
deceiving the purchasing public, In alleged violation of section 5 of the Federal Trade Commission act.
Disposition : After hearing the commission entered its order directing the respondent to cease and desist
from the practices alleged In the complaint.
Complaint No. 684.--Federal Trade Commission v. Charles Daum, Thomas J. Rogers, and Harry
Spritzer, partners, styling themselves the Daum, Rogers, Spritzer Co. Charge : Using unfair methods of
competition In the wholesale distribution of hosiery made of cotton and silk, cotton and wool, or silk fiber
and wool, as “Men’s silk half hose,” “Cashmere hose,” or “Silk and wool,” with the effect of misleading
and deceiving the purchasing public, In alleged violation of section 5 of the Federal Trade Commission
act. Disposition : After hearing the commission entered its order directing the respondent to cease and
desist from the practices alleged In the complaint.
Complaint No. 685.--Federal Trade Commission v. Aristo Hosiery Co.-Charge : Using un fair methods
of competition In the manufacture and sale of hosiery by labeling hosiery made of mixed cotton and wool
as “Worsted ribbed hose,” “Worsted fashioned hose,” “Wool fashioned hose,” “Women’s black cashmere
hose,” “Black cashmere,” “Fashioned cashmere hose,” “Women’s black wool hose, fashioned,” “Ladies’
high-grade cashmere,” with the effect of misleading and deceiving the purchasing public, In alleged
violation of section 5 of the Federal Trade Commission act. Disposition : After hearing the commission
entered its order directing the respondent to cease and desist from the practices alleged In the complaint.
Complaint No. 686.--Federal Trade Commission v. Rockford Mitten & Hosiery Co.- Charge : Using
unfair methods of competition In the manufacture and sale of hosiery made of mixed cotton and wool by
labeling It “Worsted ribbed hose,” “Worsted fashioned hose,” “Wool fashioned hose,” “Women’s black
cashmere hose,” “Black cashmere,” “Fashioned cashmere hose,” “Women’s black wool hose, fashioned,”
“Ladies’ high-grade cashmere,” with the effect of misleading and deceiving the purchasing public, In
alleged violation of section 5 of the Federal Trade Commission act. Disposition : After hearing the
commission entered Its order directing the respondent to cease and desist from the practices alleged In the
complaint.
Complaint No. 687.-Federal Trade Commission v. John T. Moore, Clarence G. Fisher, Edward J.
Murphy, and W. H. Mathews, partners, styling themselves Moore & Fishier. Charge : Using unfair
methods of competition In the wholesale distribution of hosiery made of mixed cotton and silk by labeling
it as “World’s best pure thread silk” or “Silk plated,” and by placing on hosiery containing no genuine silk
the label “Silk lisle,” and by labeling hosiery made of mixed cotton and wool as “Cashmere,” with the
effect of misleading and deceiving the purchasing public, In alleged violation of section 5 of the Federal
Trade Commission act. Disposition: After hearing the commission entered its

PROCEEDINGS DISPOSED OF.

203

order directing the respondent to cease and desist from the practices alleged In the complaint.
Complaint No. 689.--Federal Trade Commission v. Everett F. Boyden, trading under the name and style
of George E. Boyden & Son. Charge : Using unfair methods of competition by selling hosiery made of
cotton and wool In approximately equal parts as “Cashmere,” with the effect of misleading and deceiving
the purchasing public, In alleged violation of section 5 of the Federal Trade Commission act. Disposition:
After bearing the commission entered its order directing the respondent to cease and desist from the
practices alleged In the complaint.
Complaint No. 698.--Federal Trade Commission v. Pilling & Madeley. Charge : Using unfair methods
of competition In the wholesale distribution of hosiery by labeling hosiery containing 110 genuine silk
as “Gordon silk hose,” “Women’s two-tone silk hose,” or “Pure thread silk hose,” with the effect of
misleading and deceiving the purchasing public, In alleged violation of section 5 of the Federal Trade
Commission act. Disposition : After hearing the com-mission entered its order directing the respondent
to cease and desist from the practices alleged In the complaint.
Complaint No. 699.--Federal Trade Commission v. Oscar Schmied. Charge : Using unfair methods of
competition In the wholesale distribution of hosiery by labeling hosiery made of cotton and silk as
“Ladies’ silk hose,” “Men’s silk half hose,” “Silk hose,” or “ Silk half hose,” with the effect of misleading
and deceiving the purchasing public, In alleged violation of section 5 of the Federal Trade Commission
act. Disposition : After hearing the commission entered its order directing the respondent to cease and
desist from the practices alleged In the complaint.
Complaint No. 716.--Federal Trade Commission v. Simon Adelson, trading under the name and style
of United States Refining Co. Charge : Using unfair methods of competition In the manufacture and sale
of paints and other products by using false advertising matter and deceptive labels to lead the purchasing
public into the erroneous belief that his product is ground In pure linseed oil or is pure white lead and is
procured from or manufactured by the United States Government, In alleged violation of section 5 of the
Federal Trade Commission act. Disposition : After hearing the commission entered its order directing the
respondent to cease and desist from the practices alleged In the complaint.
Complaint No 734.--Federal Trade Commission v. International Paint & Oil Co. Charge : Using unfair
methods of competition by labeling as “Tar-pen-tine” its coal-tar distillate, which is capable of being used
for some of the purposes for which turpentine can be used, which labeling so closely simulates the word
“turpentine “ that the purchasing public is deceived and misled to believe that the respondent’s product
is turpentine or similar thereto, In alleged violation of section 5 of the Federal Trade Commission act.
Disposition : After hearing the commission entered its order directing the respondent to cease and desist
from the practices alleged In the complaint.
Complaint No.- 736.-Federal Trade Commission v. Sulloway Mills. Charge : Using unfair methods of
competition by the use of false and deceptive labels on hosiery made of wool and other material In
approximately equal proportions, which create the belief that Its hosiery so manufactured is composed
entirely of wool In alleged violation of section 5 of the Federal Trade Commission act. Disposition : After
hearing the commission entered its order directing the respondent to cease and desist from the practices
alleged in the complaint.
Complaint No. 738.--Federal Trade Commission v. Thatcher Manufacturing Co. Charge : Using unfair
methods of competition by acquiring from the Owens Bottling Machine Co. the exclusive right to
manufacture and sell milk bottles produced by the first automatic bottle-making machine. Subsequently
another bottle-making machine was invented and licensed by the Hartford Fairmont Co.; and that the
respondent, by taking over the control of the Hartford Fairmont Co. and its licensees, tends to eliminate
competition and create a monopoly In the manufacture and sale of milk bottles, In alleged violation of
section 5 of the Federal Trade Commission act and section 7 of the Clayton Act. Disposition : After
hearing the Commission entered its order directing the respondent to cease and desist from the practices
alleged in the complaint.
Complaint No. 741.-Federal Trade Commission v. Eskay Harris Feature Film Co. Charge : Using unfair
methods of competition by the adoption of

204

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

the title “Black Beauty” for a film reconstructed by it from an old film en-tithed “ Your Obedient Servant,”
with the purpose and effect of appropriating the value created by the advertising campaign of the
Vitagraph Co. for its bona fide production “Black Beauty,” and by falsely claiming the control of the
motion-picture rights and title of “Black Beauty” and threatening to prosecute any infringement, In alleged
violation of section 5 of the Federal Trade Commission act. Disposition : After bearing the Commission
entered its order directing the respondent to cease and desist from the practices alleged In the complaint.
Complaint No. 747.--Federal Trade Commission v. The Standard Electric Manufacturing Co. Charge
: That the respondent, with the purpose and effect of lessening competition and creating a monopoly In
the manufacture and sale of electrical appliances, enters into tying contracts with dealers whereby they,
In consideration of a 10 per cent rebate, agreed to refrain from dealing In the products of competitors of
the respondent, and that the respondent refuses to sell its appliances to dealers who fail to maintain its
standard resale prices, all In alleged violation of section 5 of the Federal Trade Commission act.
Disposition : After hearing the Commission entered its order directing the respondent to cease and desist
from the practices alleged In the complaint.
Complaint No. 770.--Federal Trade Commission v. Simons, Hatch & Whitten Co. Charge: Using unfair
methods of competition In the wholesale distribution of hosiery by labeling and advertising hosiery made
of animal or vegetable fiber product containing no silk as “Pure silk,” by labeling a cotton product as “Silk
lisle,” and by labeling a cotton and wool product as “Cashmere” or “Wool,” with the effect of misleading
and deceiving the purchasing public, In alleged violation of section 5 of the Federal Trade Commission
act. Disposition : After hearing, the Commission entered its order directing the respondent to cease and
desist from the practices alleged In the complaint.
Complaint No. 771.--Federal Trade Commission v. Louis Philippe (Inc.-), and Park & Tilford. Charge
: Using unfair methods of competition In the manufacture and sale of a face cream, known as “Creme
angelus,” containing no lemon juice, by falsely labeling and advertising it as a French product made with
and compounded from real lemons, with the effect of misleading and deceiving the purchasing public and
hindering competitors from marketing similar toilet preparations which do contain the juice of lemons,
In alleged violation of section 5 of the Federal Trade Commission act. Disposition : After hearing, the
Commission entered its order directing the respondent to cease and desist from the practices alleged In
the complaint.
Complaint No. 774.-Federal Trade Commission v. Pinene Manufacturing Co.(Inc.). Charge : Using
unfair methods of competition by falsely advertising its product “Pinene” as equal to turpentine and a
chemically correct substitute therefor, whereas said product is In fact the petroleum distillate with a small
portion of turpentine, with the effect of misleading and deceiving the purchasing public, and by further
misleading the purchasing public by the use of the name “Pinene,” the respondent’s product containing
little, if any, pinene, In alleged violation of section 5 of the Federal Trade Commission act. Disposition:
After hearing, the Commission entered its order directing the respondent to cease and desist from the
practices alleged In the complaint.
Complaint No 789.--Federal Trade Commission v. Royal Duke Oil Co. Charge : Unfair methods of
competition In connection with the sale of stock, In that false and deceptive statements were made In
advertisements, such as claiming ownership In land where a contingent leasehold interest only existed,
and describing certain tracts, covered by leases as being proven acreage although no oil had been
produced, and drilling had been abandoned by respondent, In alleged violation of section 5 of the Federal
Trade Commission act. Disposition : After hearing, the Commission entered its order directing the
respondent to cease and desist from the practices alleged In the complaint.
Complaint No. 790.--Federal Trade Commission v. Charles Goodman, trading under the name and style
of Eagle Safety Razor Co. Charge : Unfair competition In the marketing of safety razors and shaving
outfits In Printing false, fictitious, and misleading prices on the containers, knowing that those to whom
he sells will retail the merchandise at much lower prices, thus tending to deceive the consumer into
believing that his purchase is at a greatly reduced price, In alleged violation of section 5 of the Federal
Trade Commission act. Disposition : After hearing the Commission entered its order directing the
respondent to cease and desist from the practices alleged in the complaint.

PROCEEDINGS DISPOSED OF.

205

Complaint No. 792.--Federal Trade Commission v. Caravel Co. (Inc.) Charge : Unfair competition,
tending to discredit American apple growers and other American exporters, In selling abroad as and at the
price of “Oregon Newtown Pippins” a superior apple for export purposes, the admittedly inferior
“California Newtown Pippins,” In alleged violation of section 5 of the Federal Trade Commission act and
section 4 of the Webb Act. Disposition : An order was entered requiring the respondent to cease and desist
from the practices complained of.
Complaint No. 795.--Federal Trade Commission v. Big Diamond Oil & Refining Co., P. M. Faver, J.
F. Dofflemyer, B. F. King, and O. E. Houston. Charge : Unfair methods of competition In the sale of the
capital stock of the respondent oil company In publishing false and mishandling statements, thereby
deceiving the purchasing public with respect to the location, ownership, productivity, and value of
respondents’ oil interests, In alleged violation of section 5 of the Federal Trade Commission act.
Disposition : After hearing the Commission entered its order directing the respondent to cease and desist
from the practices alleged In the complaint.
Complaint No. 796.--Federal Trade Commission v. Lone Star Oil Co., Joe L. Stetman, Mrs. H. S
Lawson, C H. Langdon, C A. Bradley, J. D. Hawk, George F. Barton, J. B. Braidwood, and George B
Komp. Charge : Unfair methods of competition In the sale of the corporate stock of the respondent, Lone
Star Oil Co., In circulating false and mishandling statements with respect to the extent of its operations
and the value of Its stock, and, further, the said stock was treasury stock of the Lone Star Oil Co., and the
proceeds of sale were to be used for the development of its properties, whereas said stock was the property
of the respondent, C. A. Bradley, and no part of salt proceeds was turned into the treasury of the Lone Star
Oil Co., all In alleged violation of section 5 of the Federal Trade Commission act. Disposition : After
hearing the Commission entered its order directing the respondent to cease and desist from the practices
alleged In the complaint.
Complaint No. 799.--Federal Trade Commission v. Phillip King, Harry King, and Joseph King, partners,
doing business under the name and style of King’s Palace. Charge : Unfair method of competition In
advertising cotton blankets as “wool-finished blankets,” mercerized cotton tablecloths as ,’ mercerized
satin damask tablecloths,” and hosiery composed partly of wool and partly of cotton as “men’s wool sport
socks,” thereby deceiving and misleading the purchasing public as to the quality and value of the
commodities thus offered for sale, In alleged violation of section 5 of the Federal Trade Commission act.
Disposition : After hearing the Commission entered its order directing the respondent to cease arid desist
from the practices alleged In the complaint.
Complaint No 834.--Federal Trade Commission v. Meyer J. Loeb, doing business under the name and
style of Loeb & Co., and P. Hutner, doing business under the name and style U. Hutner & Co. Charge
: A material known as “Salt’s Peco plush” and used In the manufacture of coats is well known to the trade
and purchasing public as of high quality.- The respondent Hutner is charged with having furnished the
respondent Loeb with certain coats of inferior material and “ Salt’s Peco plush” labels therefor, the said
respondents thereupon advertising these coats as made of “ Salt’s Peco plush,” and so misrepresenting
them to the purchasing public, In alleged violation of section 5 of the Federal Trade Commission act.
Disposition : After hearing the Commission entered its order directing the respondent to cease and desist
from the practices alleged In the complaint.
Complaint No. 840.-Federal Trade Commission v. Chicago Portrait Co. Charge : Unfair methods of
competition In that the respondent, engaged In making portraits from photographs, obtains orders for such
portraits by means of drawings for so-called “lucky envelopes,” or by giving trade checks for one-half the
pretended purchase price, by which the prospective purchaser is misled to believe that he is obtaining said
portraits at prices substantially below their usual selling prices, and In that the respondent misrepresents
its portraits to be hand paintings and induces the purchasing public to sign a contract for the reproduction)
of photographs, falsely representing said contract as a receipt for the photographs obtained from the
customer, whereas said Con tract contains numerous provisions of a binding nature on the customer,
which are not explained to or understood by said customer, and which serve to nullify verbal agreements
made and false impressions created by respondent’s salesmen as to the value of the portraits, the furnishing
of frame and glass, etc. In
67501--23----14

206

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

alleged violation of section 5 of the Federal Trade Commission act. Disposition : After hearing the
commission entered Its order directing the respondent to cease and desist from the practices alleged In the
complaint.
Complaint No. 841.--Federal Trade Commission v. The Chamber of Commerce of Missoula, its officers,
directors, and members, and the Northwest Theaters Co. Charge : Unfair methods of competition In that
the respondents conspired to hinder or prevent the sale of goods by mail-order houses situated without the
State of Montana by providing for the acceptance of catalogues of mail-order houses in lieu of the usual
price of admission to the respondent theater company’s playhouse, and offering prizes for certain of such
catalogues, all such catalogues being destroyed subsequent to the receipt and pursuant to said conspiracy,
In alleged violation of section 5 of the Federal Trade Commission act. Disposition : After hearing the
commission entered its order directing the respondent to cease and desist from the practices alleged In the
complaint.
Complaint No. 845.--Federal Trade Commission v. Melvin Behrend and Leopold Behrend, copartners,
doing business under the firm name and style of Behrend’s. Charge : Unfair methods of competition In
advertising their comfortable to the public as “Silkoline covered comforts” and their blankets as “Superior
wool finish,” thereby misleading the purchasing public to believe that their comfortable are covered with
material made of silk, when In fact they are made of highly mercerized cotton, and that their blankets are
made of wool, when In fact they contain no wool whatsoever, In alleged violation of section 5 of the
Federal Trade Commission act. Disposition : After hearing the commission entered its order directing the
respondent to cease and desist from the practices alleged In the complaint.
Complaint No. 849.--Federal Trade Commission v. Morrison & Co. Charge : Unfair methods of
competition In labeling certain razors of inferior quality with fictitious and excessive resale prices to
mislead and deceive the purchasing public with regard to the grade or quality of said razors In alleged
violation of section 5 of the Federal Trade Commission act. Disposition : After hearing the commission
entered its order directing the respondent to cease and desist from the practice alleged In the complaint.
Complaint No. 851.--Federal Trade Commission v. C. H. Parker Co. Charge : Unfair methods of
competition In that the respondent falsely advertises as “Navy architectural spar and Interior varnish,” a
varnish which was In fact rejected by the Navy Department because the product had not been made In
conformity with the Government specifications, In alleged violation of section 5 of the Federal Trade
Commission act. Disposition : After hearing the commission entered its order directing the respondent to
cease and desist from the practices alleged In the complaint.
Complaint No. 853.--Federal Trade Commission v. Budd Tailoring Co. Charge : The respondent has
adopted a plan of selling $30 suits of clothing or overcoats to be paid for by the customer In 60 weekly
payments of 50 cents, each payable In advance, with the understanding that such customers will be
grouped into clubs of 60 customers each and that the name of 1 customer will be drawn from each club
every week, either by lot or for services rendered In securing additional customers, the customers so
selected to be given the clothing ordered without payment other than the weekly installments previously
paid. Unfair methods of competition are charged In that the said sales methods constitute a lottery and
nu that customers are deceived and misled as to the value and quality of the clothing to be furnished
thereunder. In alleged violation of section 5 of the Federal Trade Commission act. Disposition : After
hearing the commission entered its order directing the respondent to cease and desist from the practices
alleged In the complaint.
Complaint No. 858.--Federal Trade Commission v. B. H. Stinemetz & Son Co. Charge : The
respondent, an old and established mercantile house, advertised a special sale or series of sales In terms,
inducing the belief on the part of the purchasing public that high-grade goods In regular stocks would be
sold at unusual reductions from market value, whereas inferior goods were purchased and mingled with
the regular stock goods, all subjected to a fictitious mark up before establishing mark-down or sale prices,
to the deception of the public and the Injury of competitors, In alleged violation of section 5 of the Federal
Trade Commission act. Disposition: After hearing the commission entered Its order directing the
respondent to cease and desist from the practices alleged in the complaint.
Complaint No. 859.--Federal Trade Commission v. P. E. Ennis, doing business under the name and style
of Pure Silk Hosiery Mills. Charge : Unfair methods of competition In that the respondent, a former agent
of the “Reel Silk

PROCEEDINGS DISPOSED OF.

207

Hosiery Mills” and now engaged In the sale of hosiery, simulates the trade name of his former employers
and their method of doing business and falsely represents that he, as the “Pure Silk Hosiery Mills,”
actually manufactures his hosiery In his own mills, when, In fact, such mills exist In trade name only,
thereby misleading and deceiving the purchasing public, In alleged violation of section 5 of the Federal
Trade Commission act. Disposition : After hearing the commission entered its order directing the
respondent to cease and desist from the practices alleged In the complaint.
Complaint No. 861.--Federal Trade Commission v. Old Dominion Oil Co., Great Western Oil Co.,
Bethlehem Oil Co., Metropolitan Oil Co., O. L. Pardue, A. B. Pardue, J. H. West, J. L. Stout, H. J.
Gingles, W. B. Young, and J. D. Towner. Charge: The respondent individuals are the promoters of the
respondent corporations. Unfair methods of competition are charged In that they, to further the sale of
the corporate stock of the said corporations, issued and published numerous false statements and
concealed or withheld other material information relative to the organization, business, and properties of
said corporations, thereby deceiving and misleading the purchasing public, In alleged violation of section
5 of the Federal Trade Commission act. Disposition : After hearing the commission entered its order
directing the respondents to cease and desist from the practices alleged In the complaint.
Complaint No. 864.--Federal Trade Commission v. The Guaranty Fuel Oil Co., E. M. Thomasson, N.
V. S. Mallory, John G. Menke, individually and as trustees and officers of the Guaranty Fund Oil Co.
Charge : Unfair methods of competition In that the respondents, to further the sale of the shares of
beneficial interest In the properties of the respondent company, an unincorporated voluntary association,
issued and published numerous false and mis-leading statements relative to the organization, business, and
properties of said association, thereby deceiving and misleading the purchasing public, In alleged violation
of section 5 of the Federal Trade Commission act. Disposition : After hearing the commission entered its
order directing the respondents to cease and desist from the practices alleged In the complaint.
Complaint No. 866.--Federal Trade Commission v. R C. Russell, L. C. Hamblet, R D. Hamblet, Mrs.
M. H. Merrill, and First National Oil Co. Charge : The respondent individuals are the promoters of the
respondent oil company, a Texas corporation. Unfair methods of competition are charged In that they, In
order to further the sale of the share stock of the corporation, issued and published numerous false and
misleading statements and concealed or with held other information relative to the organization, business,
property, and prospects of said corporation, thereby deceiving the purchasing public, In alleged violation
of section 5 of the Federal Trade Commission act. Disposition : After hearing the commission entered its
order directing the respondents to cease and desist from the practices alleged In the complaint.
Complaint No. 867.--Federal Trade Commission v. Imperial Production Co., J. T. Craig, S. F. Tubbs,
and J. B. Bright. Charge: The respondent individuals are the promoters of the respondent Imperial
Production Co., a Texas trust. Unfair methods of competition are charged In that they, In order to further
the sale of the share stock of the company, issued and published numerous false and misleading statements
and concealed or withheld other material information relative to the organizations, business, property, and
products of said company, thereby deceiving the purchasing public, In alleged violation of section 5 of
the Federal Trade Commission act. Disposition : After hearing the consumers entered its order directing
the respondents to cease and desist from the practices alleged In the complaint.
Complaint No. 872.--Federal Trade Commission v. William F. Melhuish, jr., and Henry Clay Silver,
doing business under the firm name and style of Melhuish & Co., T. A Edmonds, Y. E. Hildreth, W. E.
Weathers, J. W. Mastin, and the Edmonds Oil & Refining Corporation. Charge: The respondent
individuals are promoters of the respondent Edmonds Oil & Refining Corporation, incorporated under the
laws of the State of Louisiana. In order to further the sale of the share stock of said corporation they
issued and published numerous false and misleading statements relative to the organization business,
properties, and products of said corporation to deceive and mislead the purchasing public, In alleged
violation of section 5 of the Federal Trade Commission act. Disposition : After hearing, the commission
entered its order directing the respondent to cease and desist from the practices alleged In the complaint.
Complaint No. 874.--Federal Trade Commission v. Morris Klein, doing business under the name and
style of Racine Tire Sales Co. Charge : Unfair methods of competition, In that the respondent, engaged
In the business of

208

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

rebuilding and repairing second hand and used automobile tires, solicits, by means of advertising and
circulars, mail orders for said tires without disclosing, unless In small type, the fact that the said tires are
second hand or us ed tires rebuilt and repaired by the respondent, and In that the respondent simulates the
name of the Racine Rubber Co., a well-established and favorably known manufacturer of tires, and
simulates its trade name “Multi-Mile Cord “ by advertising his tires as “Multi-Cord,” thereby tending to
deceive and mislead the purchasing public, all In alleged violation of section 5 of the Federal Trade
Commission act. Disposition: After hearing an order was entered requiring the respondent to cease and
desist from the practices complained of.
Complaint No. 877.--Federal Trade Commission v. Sam Silverman, Jacob Silverman, and Henry
Greenblatt, partners, doing business under the name and style of Warewell Co. Charge : Unfair methods
of competition In that the respondents engaged In the publication and sale of books (at times as the
Famous Authors Association or Classics Publishing Co.), under the pretense of securing advice from an
advertising agency connected with the Little Leather Library Corporation, a favorably known publisher
of a collection of thirty pocket editions known as the “Little Leather Library,” generally advertised at a
price of $2.98 per set, obtained confidential information and data concerning the publication and sale of
the said Little Leather Library and thereupon caused to be published a set of 30 similar volumes containing
the same selections published In the said Little Leather Library, closely simulating the latter In materials,
form, and advertising copy, all to mislead and deceive the purchasing public to believe that the
respondents’ set of books is the well-advertised “Little Leather Library,” In alleged violation of section
5 of the Federal Trade Commission act. Disposition: After hearing, the commission entered its order
directing the respondent to cease and desist from the practices alleged In the complaint.
Complaint No. 878.--Federal Trade Commission v. Dudley D. Gessler. Charge : The respondent,
engaged In the sale of dyes, dyestuffs, and chemicals used In connection with said dyes, trading under his
own name and at times under the trade name and style of the Keystone Chemical Co.-. offers and gives
cash commissions and gratuities to superintendents, foremen, and other employees of textile mills and like
industries without the knowledge of their employers to Induce said employees to purchase the
respondent’s commodities In preference to those of its competitors, In alleged violation of section 5 of the
Federal Trade Commission act. Disposition : After hearing, the commission entered its order directing the
respondent to cease and desist from the practices alleged In the complaint.
Complaint No. 879.--Federal Trade Commission v. Bellas Hess & Co. Charge: The respondent, a mailorder house, purchased and advertised In its catalogues the coats manufactured by the Salts Textile
Manufacturing Co. under the trade name “Salts Peco Seal Plush” and also purchased and advertised on
the same pages In said catalogues, at lower prices and as “Iceland Seal Plush,” similar coats manufactured
from a plush having a cotton pile which is much inferior In value to the fur fabric with silk pile generally
known as “seal plush,” and by false and misleading statements concerning the origin, nature, quality, and
values of these cotton plush coats tended to mislead and deceive the purchasing public to believe that its
“Iceland Seal Plush” coats are of the quality of genuine “seal plush” and so induced the public to purchase
cotton plush coats In preference to seal plush coats and In preference to cotton plush coats sold by its
competitors without the use of misleading names and statements, In alleged violation of section 5 of the
Federal Trade Commission act. Disposition : After hearing, the commission entered its order directing
the respondent to cease and desist from the practices alleged In the complaint.
Complaint No. 882.--Federal Trade Commission v. Keaton Tire & Rubber Co. Charge : The respondent
is the general distributing agent for the products of a number of manufacturers of demountable rims and
demountable rim parts for automobile wheels, which it designates as “standard” parts, and is engaged In
the sale thereof In competition with the like products of the Thompson-Neaylon Manufacturing Co. Unfair
methods of competition are charged In that the respondent has inaugurated and carried on a campaign of
disparagement against said Thompson-Neaylon Manufacturing Co.- and its parts, characterizing it and
similar competitors as pirates arid their parts as counterfeit parts, and physically removing the said
company’s parts and display boards from the trade, substituting therefor the respondent’s display boards
on which are published “warnings” which suggest that parts such as those made by the Thomp-

PROCEEDING DISPOSED OF.

209

son-Neaylon Co. are illegal duplications of standard parts and that the use of such rim parts is dangerous
and destroys the rim factory’s guarantee on the entire rim equipment, and, with the cooperation of its
branch houses and dealers, otherwise aims to discredit the Thompson-Neaylon parts with the trade and
public, all In alleged violation of section 5 of the Federal Trade Commission act. Disposition : After
hearing the commission entered Its order directing the respondent to cease and desist from the practices
alleged In the complaint.
Complaint No. 885.--Federal Trade Commission v. L. C. Orrell & Co. Charge : Unfair methods of
competition In that the respondent, engaged In the sale of paints and painters’ supplies, falsely advertises
and asserts that its “Painter’s pure paint” contains pure lead, pure zinc oxide, pure raw linseed oil, pure
turpentine, and Japan drier; that its paint is the best and cheapest for the painter In use, is equaled by few
other paints but surpassed by none; and that the user is guaranteed 100 per cent quality, service, and value,
when In fact the said paint contains no turpentine whatsoever In alleged violation of section 5 of the
Federal Trade Commission act. Disposition : After hearing the commission entered its order directing the
respondent to cease and desist from the practices alleged In the complaint.
Complaint No. 888--Federal Trade Commission v. Amalgamated Tire Stores Corporation. Charge:
Unfair methods of competition In that the respondent, dealing In tires secured by it largely from distressed
stocks, the stocks of bankrupt or of financially embarrassed concerns, and from the surplus tire stocks of
the United States Army, falsely advertised its tires as “firsts” and “fresh “ when In fact many of the tires
so advertised and offered for sale were “seconds,’ and were not “fresh,” but were more than one year old
and deteriorated through age or other causes, thereby tending to mislead and deceive the purchasing public
In alleged violation of section 5 of the Federal Trade Commission act. Disposition : After hearing the
commission entered its order directing the respondent to cease and desist from the practices alleged In the
complaint.
Complaint No. 889.--Federal Trade Commission v. Hub Hosiery Mills. Charge : The respondent, by
labeling or branding its Infants’ hose as “Infants’ Australian ribbed merino hose,” misleads the purchasing
public into the belief that its hosiery is made of wool of the merino sheep or of other fine Australian
quality, when In fact said hosiery is composed partly of wool aud partly of cotton In alleged violation of
section 5 of the Federal Trade Commission act. Disposition : After hearing the commission entered its
order directing the respondent to cease and desist from the practices alleged In the complaint.
Complaint No. 896.--Federal Trade Commission v. Williams Soap Co. (Indianapolis). Charge: The
respondent makes numerous false and misleading statements In its catalogues, advertising matter, and
labels concerning the origin, nature, quality, and value of its soaps, falsely asserting or implying that
certain of its soaps are medicated or contain antiseptics or are especially prepared for the treatment of skin
diseases, using fictitious names to indicate manufacture and indorsement by a national association of
physicians, and In that It labels certain of its soaps with fictitious resale prices greater than the actual
selling price to mislead the public to believe that purchases of its soaps are at prices substantially less than
the fair retail value, all In alleged violation of section 5 of the Federal Trade Commission act.
Disposition: After hearing, an order was entered requiring the respondent to cease and desist from the
practices complained of.
Complaint No. 901.--Federal Trade Commission v. Fox Film Corporation Charge : Unfair methods of
competition In that respondent selected several photoplays which it had produced previously and which
had been exhibited throughout the United States, gave such photoplays new names different from those
under which said plays had been theretofore exhibited to the public, correspondingly changed the films,
and supplied said films with new advertising matter to exhibitors without disclosing the fact that said films
were reissues. thereby tending to mislead exhibitors and, through them, the public Into the belief that said
reissues were new releases, In violation of section 5 of the Federal Trade Commission act. Disposition:
After hearing the commission entered its order directing the respondent to cease and desist from the
practices. alleged In the complaint.
Complaint No. 903.--Federal Trade Commission v. American Film Corporation. Charge : Unfair
methods of competition In that respondent selected photoplays which it had previously produced and
which had been exhibited throughout the United States, gave said photoplays new names different from

210

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

those under when the said photoplays had heretofore been exhibited to the public, correspondingly
changed the film, adding thereto an inconsequential amount of new or additional matter, and supplied said
finish with new advertising matter to exhibitors without disclosing the fact that said films were reissues,
thereby tending to mislead exhibitors and through them, the public, and to discredit the stars who acted
the leading roles In such issues and the current productions In which said stars were appearing before the
public at the time respondent’s reissues were being exhibited, In alleged violation of section 5 of the
Federal Trade Commission act. Disposition : After hearing the commission entered its order directing the
respondent to cease and desist from the practices alleged In the complaint.
Complaint No. 910.--Federal Trade Commission v. Penn Lubric Oil Co. Charges : Unfair methods of
competition are charged In that respondent has used various forms of advertising which have been and
are calculated to deceive the purchasing public into the belief that the respondent’s lubricating oils are
pure Pennsylvania oils of the highest grade found In the State of Pennsylvania when In fact its lubricants
consist of a compound of Pennsylvania oil and of inferior and cheaper oil, In alleged violation of section
5 of the Federal Trade Commission act. Disposition: After hearing the commission entered its order
directing the respondent to cease and desist from the practices alleged In the complaint.
Complaint No. 919.--Federal Trade Commission v. Clifford Smith, doing business under the name and
style of Clifford Smith Co. Charges : That respondent used unfair methods of competition while engaged
In the sale of paints, oils, varnishes, turpentine, and allied products by advertising and selling as
“Argentine turpentine,” a commodity which was and is not turpentine, and was and is, In fact, a mixture
of mineral oil and destructively distilled wood turpentine, and the use of said trade name tends and tended
to mislead and deceive the trade and consuming public as to the quality and value of its product, In alleged
violation of section 5 of the Federal Trade Commission act. Disposition : After hearing the commission
entered its order directing the respondent to cease and desist from the practices alleged In the complaint.
Complaint No. 921.--Federal Trade Commission v. Premier Electric Co. Charges : Using unfair methods
of competition In commerce is charged In that respondent, In advertising its telephone instruments, fails
to disclose that said instruments contain old, used, or second-hand parts, the use of which permits it to sell
its products at prices substantially below those fixed by competitors for similar articles made of new parts,
thereby deceiving the purchasing public, In violation of section 5 of the Federal Trade Commission act.
Disposition : After hearing the commission entered its order directing the respondent to cease and desist
from the practices alleged In the complaint.
Complaint No. 923.--Federal Trade Commission v. Hoffman Machinery Corporation and its officers.
Charge : Unfair methods of competition are charged In that the respondents engaged In the manufacture
and sale of machines for pressing garments, In which business they have a substantial monopoly, causing
their salesmen and other employees to spy upon the salesmen and other employees of their competitors
for the purpose of securing the names of such competition’s’ customers and attempting to induce such
customers to breach their contracts with competitive manufacturers and install the respondents’ garmentpressing machines In place of like machines purchased from said competitors by (a) allowing as part
payment of its purchase price an amount equal to that paid on the contract for the purchase of such
competing machines; (b) furnishing the services of attorneys to defend suits brought by competitors
against such customers; (c) furnishing legal advice as to the way In which customers may rescind or evade
contracts with competitors; and (d) framing letters to be addressed to competitors for the purpose of
rescinding contracts, all In alleged violation of section 5 of the Federal Trade Commission act. Disposition
: After hearing the commission entered its order directing respondents to cease and desist from the
practices alleged In the complaint.
Complaint No. 926.--Federal Trade Commission v. Jack Bernstein, doing business as United Woolen
Mills of Washington. Charge: Unfair methods of competition are charged In that respondent, engaged In
the manufacture and sale of men’s clothing, had adopted the trade name “United Woolen Mills of
Washington,” thereby indicating to the purchasing public that he owns and operates mills which
manufacture woolens from which his clothing is made, when In fact respondent neither owns, operates,
nor has any interest in any mill manufacturing woolen cloth, and in that respondent’s trade name simu-

PROCEEDINGS DISPOSED OF.

211

lated the corporate name of the nationally known United Woolen Mills, a West Virginia corporation,
thereby misleading and deceiving the general purchasing public, In alleged violation of section 5 of the
Federal Trade Commission act. Disposition : After hearing the Commission entered its order directing the
respondent to cease and desist from the practices alleged In the complaint.
Complaint No. 929.--Federal Trade Commission v. John McQuade & Co. (Inc.). Charges: Unfair
methods of competition are charged, In that the respondent engaged In the manufacture and sale of paints,
zincs, lead compositions, and similar products, misrepresenting the quality of its products by using false,
deceptive, and misleading labels calculated and designed to deceive the trade and general public, In
alleged violation of section 5 of the Federal Trade Commission act. Disposition : After hearing, the
Commission entered its order directing the respondent to cease and desist from the practices alleged In
the complaint.
Complaint No. 935.--Federal Trade Commission v. T. S. Southgate, trading under the name and style
of T. S. Southgate & Co. and Lexington Grocery Co. and Taylor Bros & Co. (Inc.), trading under the name
and style of Southern Salt Co. Charges : Respondents are charged with unfair methods of competition,
In that they advertise and sell their ground rock salt as “common fine” and as the highest grade of salt
obtainable, without disclosing the fact that said salt was imported from Germany and is rock salt, there
being numerous manufacturers of salt In the United States who manufacture salt by an evaporation process
and advertise their product as “common fine salt”; also there being numerous salt manufacturers who
manufacture salt from rock salt which is especially imported and is indicated to be an inferior grade aud
quality, and advertise their product as rock salt. Disposition : After hearing the Commission entered its
order directing the respondent to cease and desist from the practices alleged In the complaint.
Complaint No. 936.--Federal Trade Commission v. Signet Films (Inc.) Charge: respondent is charged
with unfair methods of competition, for the reason that it supplies motion-picture films by reissuing old
photoplays under new tithes without properly informing the public of such changes, In alleged violation
of section 5 of the Federal Trade Commission act. Disposition : After hearing, the Commission entered
its order directing the respondent to cease and desist from the practices alleged In the complaint.
Complaint No. 938.--Federal Trade Commission v. American Turpentine Co., trading under the name
and style of North American Fibre Products Co. Charge : Respondent is engaged In unfair methods of
competition In commerce In that it purchases and sells paints, varnishes, and roofing material which it
labels and advertises to indicate as being manufactured by the North American Fibre Co. and having
factories located throughout the United States, when In fact it does not own nor operate any factory,
thereby misleading and deceiving the purchasing public In alleged violation of section 5 of the Federal
Trade Commission act. Disposition: After hearing the Commission entered its order directing the
respondent to cease and desist from the practices alleged In the complaint.
Complaint No. 942.--Federal Trade Commission v. Sizz Chemical Co., W. C.-Milks, president and
trustee; E. M. Hall, vice president and trustee; F. G. Schlueter, secretary-treasurer and trustee; Edwin
Gotsch, trustee; C. C. Cummings, trustee. Charge: Unfair methods of competition In commerce are
charged In that respondents, engaged In the manufacture and sale In commerce of a cleansing compound
known as “Sizz,” represent their product as free from alkali and as possessing remarkable cleansing power,
and give certain demonstrations of this cleansing power which representations and demonstrations are
false and misleading and tend to deceive the prospective purchasers of said product In alleged violation
of section 5 of the Federal Trade Commission act. Disposition : After hearing the Commission entered its
order directing the respondent to cease and desist from the practices alleged In the complaint.
Complaint No. 944.--Federal Trade Commission v. Fred A. Maltby and Clarence W. Maltby, as
individuals and as partners. Charge : Unfair methods of competition are charged In that the respondents,
engaged In the operation of taxicabs for hire, adopted and advertised under the names of Yellow Bell
Taxicab, Yellow Ford Taxi Co., and Black and White Taxi Co., In simulation of the trade name of their
competitors and to secure listing In the telephone directory immediately preceding or following the listing
of said competitors, thereby diverting from said competitors a portion of the good will and patronage
which would have accrued to them, and In that the said respondents list and adver-

212

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

tise under some 50 additional names used by taxicab companies throughout the United States to prevent
such other taxicab companies from operating tinder or using any of said names In the city of Washington
aud the District of Columbia, In alleged violation of section 5 of the Federal Trade Commission act.
Disposition : After hearing the commission entered its order directing the respondents to cease and desist
from the practices alleged In the complaint.
Complaint No. 946.--Federal Trade Commission v. Henry Lederer & Bros. (Inc.). Charge : respondent
is charged with unfair methods of competition In that while engaged In the manufacture and sale of
fountain pens and pencils it labels its product with false and fictitious resale price marks which are far In
excess of the actual value of selling price, and thereby misleads the purchasing public as to the quality of
said product, In alleged violation of section 5 of the Federal Trade Commission act. Disposition : After
hearing the commission entered its order directing the respondents to cease and desist from the practices
alleged In the complaint.
Complaint No. 948.--Federal Trade Commission v. Eli Hyman and Louis Zaslav, partners, doing
business under the name and style of Hyman and Zaslav. Charge : Unfair methods of competition are
charged In that the respondents, jobbers of toilet articles, silverware, and novelties, purchase such toilet
articles composed of nitrated cellulose grained to imitate ivory and label and brand said articles as French
ivory, thereby tending to mislead and deceive the purchasing public as to the quality of said articles, In
alleged violation of section 5 of the Federal Trade Commission act. Disposition : After hearing the commission entered its order directing the respondents to cease and desist from the practices alleged In the
complaint.
Complaint No. 955.--Federal Trade Commission v. John T. Bailey, trading under the name and style
of United Fibre Works. Charge : Respondent is charged with unfair methods of competition In that while
lie engaged In the purchase and sale of manila rope and acted as sales agent and manufacturer of oakum,
cotton, hemp, and jute twine he falsely represented himself to be a manufacturer with mills In various
cities, and to be the successor of the John T. Bailey Cordage Co., which company was until recently a
large and long-established cordage and In that he advertises and represents “certain Government rope”
manufactured during the World War, shipped to Europe, and later reshipped to the United States as being
first grade and best quality, when In fact it has deteriorated by reason of Its age and for other causes, all
for the purpose of misleading and deceiving the public, In alleged violation of section 5 of the Federal
Trade Commission act. Disposition: After hearing the Commission entered its order directing the
respondents to cease and desist from the practices alleged In the complaint.
Complaint No. 981.--Federal Trade Commission v. the Holsman Co. Charge : Unfair methods of
competition are charged In that the respondent falsely advertises as “French ivory “ Its toilet articles
composed In whole or In part of nitrated cellulose or pyroxyhin plastic, commonly known as “celluloid,”
“pyralin,” “fibreloid,” etc., for the purpose of misleading and deceiving the purchasing public, In alleged
violation of section 5 of the Federal Trade Commission act. Disposition : After hearing the Commission
entered its order directing the respondent to cease and desist from the practices alleged In the complaint.
Complaint No. 996.--Federal Trade Commission v. Kraus & Co. (Inc.) and Herman T. Weeks. Charge
: Complaint herein charges unfair methods of competition In commerce In that the respondent Kraus &
Co. engaged In the manufacture of cigars In Baltimore, Md., and its selling agent, respondent Weeks,
caused said product to be labeled “Tampa,” and thereby tending to mislead and deceive the purchasing
public into the belief that said cigars are Tampa cigars manufactured from Havana tobacco used In the
Tampa district, In alleged violation of section 5 of the Federal Trade Commission act. Disposition : After
hearing the commission issued its order directing the respondent to cease and desist from the practices
alleged In the complaint.
Compliant No. 1001.--Federal Trade Commission v. G. F. Hemler. Charge : Unfair methods of
competition are charged In that the respondent, a manufacturer of cigars at McSherrystown, Pa., by
labeling and advertising the said product as “Tampa, Florida” and “All Havana Hand Made,” tends to
mislead and deceive the purchasing public Into the belief that said cigars are Tampa cigars manufactured
from the Havana tobacco used In the Tampa district, In alleged violation of section 5 of the Federal Trade
Commission act. Disposition : After hearing the commission issued its order directing the respondent to
cease and desist from the practices alleged In the complaint.

PROCEEDINGS DISPOSED OF.

213

2. CASES DISMISSED.
Complaint No. 40.--Federal Trade Commission v. The Colorado Milling & Elevator Co. Charge:
Attempting to eliminate competition by fixing resale prices and by refusing to sell to those who will not
agree to maintain such prices, In alleged violation of section 5 of the Federal Trade Commission act.
Disposition : Dismissed July 20, 1922.
Complaint No. 131.--Commission v. Atlantic Refining Co. Charge : Falsely representing the product
of certain of their competitors to be unsatisfactory, defective, and further representing that such would not
operate and was being sold at such exorbitant prices, thereby inducing competitors’ customers to cancel
orders, selling and lending pumps, etc.-, without adequate consideration and threatening to sell oil direct
by retail unless dealers used the Gilbert & Baker product, and holding itself out to be the agent of its
competitors as well as of the Gilbert & Barker Manufacturing Co. Disposition : Dismissed by reason of
decision of the Supreme Court of the United States, October term, 1922, Federal Trade Commission v.
Sinclair Refining Co., etc.
Complaint No. 207.--Commission v. the Cleveland Macaroni Co. Charge : Respondent sought to obtain
preference for the sale of Its products, to wit, macaroni, noodles, and kindred products, by the adoption
and use of a plan of rewards to salesmen of wholesalers, graduated In value according to quantities sold
by such salesmen to the retail dealers. Disposition : Dismissed, respondent having been adjudicated a
bankrupt and being now out of business.
Complaint No. 215.--Commission v. Minerals Separation ltd., Mineral Separation American Syndicate
ltd., Minerals Separation American Syndicate (1913), ltd., Beer, Sondheimer & Co., Beer, Sondheimer
& Co. (Inc.), Minerals Separation North American Corporation, Benno Elkan, Otto Frohnknecht, and
Harry Falck. Charge : The selling, leasing, and licensing of apparatus, processes, paraphernalia, supplies,
accessories, data, etc., used In the separation and concentration of ores by flotation, by entering into and
enforcing and attempting to enter into and enforce agreements by which respondents attempt, and
undertake to prevent inventors, manufacturers, vendors, lessors, licensors, and users (independent
concerns) of apparatus, etc., not covered by patent or patent rights controlled by respondents, from selling,
leasing, licensing, or using the independent commodities without permission, to permit no independent
concern to manufacture and sell independent commodities except on payment of exorbitant commission,
to compel mine operators, metallurgists, etc., not In respondent’s employ, to withhold all Information
relating to apparatus, etc., from defendant In the event of patent litigation instigated by respondent, and
to exact exorbitant royalties and to discriminate In such royalties, and to compel acceptance of
respondents’ patent claims without dispute or objection, and by falsely and maliciously disparaging
Independent commodities and concerns, asserting exclusive rights, etc. Disposition : Dismissed because
of lack of appearance of Interstate commerce.
Complaint No. 227.--Commission v. Helvetia Milk Condensing Co. Charge : Injuring and harassing
competitors, destroying the trade of competitors and Suppressing and stifling competition In the sale of
evaporated milk by guaranteeing Its customers against a decline In price of goods purchased and not resold
at the time of such subsequent decline, and agreeing to refund the difference and by actually making such
refund. Disposition : Dismissed without prejudice, Commissioners Nugent and Thompson dissenting.
Complaint No. 308.--Commission v. the Ohio Cities Gas Co., Columbus, Ohio. Charge : Unfair
methods of competition In the business of purchasing and selling refined oil and gasoline, and the leasing
and loaning of oil pumps, storage tanks, and containers, and their equipment, is charged by virtue of
selling and loaning such pumps, tanks, etc., below cost, with the understanding that dealers shall not retail
gasoline of competitors from such tanks thus furnished. Disposition : Dismissed by reason of Supreme
Court decision In the gasoline pump cases. (See ante, 131.)
Complaint No. 324.--Commission v. the Factory Oil Co., Akron, Ohio. Charge : (Ibid above, 309.)
Disposition : Dismissed, Supreme Court decision. (See ante, 131.)
Complaint No. 339.--Commission v. The Pictorial Review Co. and Oklahoma Publishing Co. Charge:
Hampering and embarrassing competitors and obtaining an unfair and undue advantage by compilation
of a list of news dealers throughout Oklahoma handling magazines of competitor without disclosing to
the dealers the purpose for which it was sought. Disposition : Dismissed without prejudice.

214

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

Complaint No. 372.--Commission v. Standard Oil Co. of Kentucky. Charge : Unfair methods of
competition In the business of purchasing and selling refined oil and gasoline by virtue of selling, leasing,
and loaning oil pumps, storage tanks or containers, and their equipments, below cost, with the
understanding that dealers shall not place In such devices the refined oil or gasoline of competitors.
Disposition : Dismissed by decision of the Supreme Court. (See ante, 131.)
Complaint No. 395.--Commission v. Ida Davis, doing business under the trade name of David Davis
Sons.- Charge : That respondent Is knowingly and deceptively engaged In loading, doping, and saturating
sponges with foreign matter, thereby falsifying the weight of said sponges, creating a fictitious price,
defrauding and misleading customers, and causing prejudice and injury to competitors. Disposition :
Dismissed without prejudice.
Complaint No. 468.--Commission v. H. A. Metz & Co. (Inc.). Charge : That respondent has been
offering, loaning, and giving sums of money to employees of customers and prospective customers of
dyestuffs and chemicals sold and offered for sale by him as an inducement to influence such employees
to purchase from respondent and refrain from dealing with respondent’s competitors. Disposition :
Dismissed without prejudice.
Complaint No. 499.--Commission v. the Bayer Co. (Inc.). Charge : Respondent has been publishing
false and misleading advertisements to the effect that the word “aspirin “ is only properly applied to
designate the product of respondent; that respondent’s product is the only genuine, unadulterated, and safe
drug product manufactured and sold as aspirin; and that the products manufactured and sold by
competitors as and for aspirin are spurious and adulterated and composed of other materials, such as
talcum powder and the like. Disposition : Dismissed.
Complaint No 504.--Commission v. F. Hecht, Louis Friedheim, and T. I. Glynn, partners, styling
themselves F. Hecht & Co., and T. I. Glynn Leather Co. (Inc.). Charge : Respondent sold to foreign
countries an inferior grade of leather known as “kips,” and an inferior grade of sheepskin, said leathers
being billed as “calf “ and “cabretta,” respectively, and not conforming In value, quality, or grade to the
samples by which same were sold. Disposition : Dismissed for failure of proof.
Complaint No. 515.--Federal Trade Commission v. The Haller & Merz Co. Charge : (Ante, complaint
No. 468.) Disposition : Dismissed October 21, 1922.
Complaint No. 517.--Commission v. the Franklin Import & Export Co. (Inc.). Charge : Respondent has
offered and given to employees of customers and prospective customers and competitors’ customers of
respondent’s dyestuffs and chemicals, sums of money as an inducement to influence their said employers
to purchase from respondent and refrain from dealing with competitors of respondent. Disposition :
Dismissed.
Complaint No. 520.--Commission v. Proctor & Gamble Distributing Co. Charge : Respondents make
a practice of giving guaranties and assurances against price decline In the list price of its soap and of
giving rebates to compensate its customers for such decline, thereby obtaining an Unfair advantage over
competitors, encouraging jobbers to hold excessive stocks for the purpose of realizing a speculative profit
to the injury of the public and deterring respondent from reducing list prices In accordance with the
reduction in cost. Disposition: Dismissed.
Complaint No. 525.--Commission v. New York Color & Chemical Co. Charge : Respondent has been
offering and giving to employees of customers and prospective customers sums of money and other
gratuities as an inducement to influence their employers to deal with respondent and purchase the
dyestuffs and chemicals sold and offered for sale by him and to refrain from dealing with competitors of
respondent. Disposition : Dismissed.
Complaint No. 526.--Commission v. Louis Rosenthal, doing business under the name and style of
United Chemical & Color Co. Charge : (Ibid above.) Disposition : Dismissed.
Complaint No. 528.--Commission v. Arkansas Distributing Co. Charge : (Ibid above.) Disposition :
Dismissed.
Complaint No. 529.--Commission v. Max B. Kaesche, doing business under the name and style of F.
Bredt & Co. Charge : (Ibid above.) Disposition : Dismissed.
Complaint No. 544.--Commission v. Valvoline Oil Co. Charge : (See ante 131.) Disposition :
Dismissed. (See ante 131.)
Complaint No. 545.--Commission v. Irving Abraham, doing business under the name and style of

Abraham Bros. Charge : Offering to give employees of cus-

PROCEEDINGS DISPOSED OF.

215

tomers, without the knowledge and consent of their employers, sums of money as an inducement to
influence such employers to purchase paints, varnishes, and kindred products from respondents and refrain
from dealing with respondent’s competitors. Disposition : Dismissed.
Complaint No. 556.--Commission v. The G. H. Hammond Co. Charge : Respondent allows its
customers advantages, such as free advertising services of specialty salesmen and payment of dealers’
license fees, only on condition they agree to purchase all or a large percentage of their Butterine and
oleomargarine from respondent, and enters into contracts to that effect, tending to lessen competition and
create a monopoly, In violation of section 5 of the Federal Trade Commission act and section 3 of the
Clayton Act. Disposition : Dismissed.
Complaint No. 557.--Commission v. Morris & Co. Charge : (Same as 556.) Disposition : Dismissed.
Complaint No. 558.--Federal Trade Commission v. Wilson & Co. Charge : Using unfair methods of
competition by adopting and maintaining a practice of offering, giving, and allowing certain benefits and
advantages to purchasers In the way of free advertising, services of specialty salesmen, and payment of
dealers’ license fee, on the condition that such purchasers agree to purchase all or a large percentage of
their supplies of Butterine and oleomargarine from the respondent, In alleged violation of section 5 of the
Federal Trade Commission act; and entering into contracts with a large number of purchasers of its said
products at prices, In quantities, and for periods therein specified upon the condition, agreement, or
understanding In the case of each contract that the purchaser named therein shall purchase all or a large
percentage of the oleomargarine and Butterine needed by said purchaser of the respondent, In alleged
violation of section 3 of the Clayton Act. Disposition : Dismissed November 4, 1922.
Complaint No. 587.--Commission v. Tide Water Oil Co., Tide Water Oil Sales Corporation, Tide Water
Oil Co. of Massachusetts. Charge : (See ante 131.) Disposition : Dismissed. (See ante 131.)
Complaint No. 624--Commission v. Autographic Register Co. Charge: Respondent enters into written
contracts with users and lessees of its autographic registers, such contracts containing the express
provision that such lessees will use on such registers only the supplies furnished by respondent, which
provision prevents such lessees from purchasing from competitors of respondent any supplies to be used
upon or In connection with the registers leased by respondent. Disposition : Dismissed.
Complaint No. 662.--Commission v. Deep Wells Oil Co., George B. Mechem & Co., and George B.
Mechem. Charge : That the stock of respondent oil company, issued In exchange for oil and gas leases,
which same were In part nonexistent, and for an agreement to drill certain test wells, which agreement was
not carried out by respondent Mechem, the principal stockholder, was sold by respondent George B.
Mechem & Co. by means of false and misleading statements concerning its business and property.
Disposition : Dismissed for failure of proof.
Complaint No. 688.--Commission v. Reber Manufacturing Co. Charge : Respondent falsely labels so
as to deceive the purchasing public, the hose manufactured and sold by it, such labels bearing the words
“World’s best pure thread silk” or “Silk plated” being placed on the hosiery which is made of mixed
cotton and silk, while hosiery which contains no genuine silk is labeled “Silk lisle” and that made of mixed
cotton and wool is branded “Cashmere.” Disposition : Dismissed for the reason that respondent is not
now engaged in business.
Complaint No. 695.--Commission v. Associated Oil Co. (Inc.), Adey-Johnston Co. (Inc.), E. A- Adey,
jr., 5. B. Coleman, and B. V. Johnston. Charge : Respondents are charged In the sale of the corporate
stock of respondent Associated Oil Co. (Inc.) by the respondent, Adey-Johnston Co. (Inc.), and the
respondent individual stockholders, officers, and directors of each of said corporations, with numerous
false and misleading statements concerning the business and property of the respondent oil company
which were issued and published to deceive the purchasing public and that the sale of the corporate stock
was continued after the properties of the company were proven of no value. Disposition : Dismissed.
Complaint No. 697.--Commission v. New York Hosiery Works. Charge : Respondent, engaged In the
sale of hosiery at wholesale, places his labels bearing the words “Ladies’ silk hose,” “Men’s silk half
hose,” “ Silk hose,” “ Silk half hose,” or “Pure silk,” on hosiery made of cotton and silk, thereby
misleading

216

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

and deceiving the public. Disposition : Dismissed for the reason that respondent is not now engaged In
business.
Complaint No. 710.--Commission v. Tide Water Oil Co. and Tide Water Oil Sales Corporation.
Charge: That In the advertising of their lubricating oils respondents published a facsimile copy of a letter
from the Bethman Motor Co. to the Tide Water Oil Co. containing a statement to the effect that Henry
Ford & Son (Inc.) recommended for exclusive use In Fords on tractors the respondents’ heavy special
Veedol oil. which statement was known to the respondents to be false and was calculated to mislead the
purchasing public and owners of Fords on tractors. Disposition : Dismissed.
Complaint No. 727.--Commission v. Austin Bond doing business under the trade name and style of
Bond Bros. & Co., New York. Charge : Respondent, engaged In the business of buying, packing, and
selling overissued or unused newspapers, has simulated and appropriated the trade name, trade-mark, and
code address of the long-established and favorably known Bond Bros. & Co., engaged In export and
import of overissued and unused newspapers. Disposition : Dismissed.
Complaint No. 761.--Commission v. The Prest-O-Lite Co. (Inc.). Charge : Respondent sells its
acetylene gas In metal containers on which is etched a notice to the effect that the device is sold and
licensed for sale and use only while filled by the respondent and when sold for not less than the fixed
price, the cylinder being exchangeable In the Prest-O-Lite system only when filled and issued by the
respondent. Unfair methods of competition and a tendency to create a monopoly In the sale of acetylene
gas are charged In that, as the respondent sells its metal cylinders containing acetylene gas and passes title
to the purchasers thereof, said notices are false and misleading; that respondent refuses to refill cylinders
not of its issue or which have been issued by it but were filled by a competitor of respondent; that
respondent maintains for its products a fixed resale price and eliminates all competition as to price
between dealers In its products by refusing to supply dealers who resell its products at less than the price
indicated. Disposition : Dismissed.
Complaint No. 794.--Commission v. Big Bear Oil Co. Charge : Respondents are charged with unfair
methods of competition In the sale of capital stock of the respondent oil company, In that numerous false
and misleading statements have been published to deceive the purchasing public with respect to the location, productivity, and value of respondent’s oil interests. Disposition : Dismissed for failure of proof.
Complaint No. 800.--Commission v. Herbert W. Brand, Harry C. Oppenheimer, and Edwin W. Brand,
partners, doing business under the name and style of Brand & Oppenheimer. Charge : Respondents
engaged In the manufacture and sale of cotton lining material, advertise and label their products as
“Silkette,” thereby deceiving and misleading the public into the belief that their linings are partly or
wholly composed of silk. Disposition : Dismissed without prejudice.
Complaint No. 820.--Commission v. The Carnick Bros. Co. Charge : Respondents purchasing steel and
iron specialties which are unmerchantable or of Inferior grade, quality, and size, and mixed with old and
rusty wares bought “as is,” sells these goods for export and misrepresents them to be of certain specified
grades, qualities, and sizes, underbidding competitors who sell similar goods but of a character and quality
as represented, with the tendency of bringing the character of certain exports of the United States into
disrepute. Disposition : Dismissed, respondent having gone out of business.
Complaint No. 831.--Commission v. The Excelsior Shoe Co. Charge : Respondents, through the
unauthorized use of the names, designations, and emblems of the well-known Boy Scouts of America,
advertises, pictures, and labels Its shoes as “Boy Scout” shoes, and indicates the approval of the Boy
Scouts of America as part of the regulation Boy Scout uniform, thereby misleading the purchasing public
to believe that the respondent’s shoes are of superior quality, that the respondent enjoys the exclusive right
to sell shoes under the said name, and that the boys buying respondent’s shoes, having acquired medallions furnished by the respondent, are eligible to membership In the Boy Scout troops. Disposition :
Dismissed.
Complaint 838.--Commission v. Gypsum Industries’ Association, its officers, committees, and
members. Charge : Respondent conspired to binder competition In the sale and distribution of gypsum
products manufactured by members of the association by limiting the territory In which such products may
be sold by customers of its members and by prohibiting sales to dealers who deal with

PROCEEDINGS DISPOSED OF.

217

customers without their territory, thereby restricting the sale of such products by mail order, or otherwise,
for delivery at points other than those at which the authorized dealer maintains a retail establishment.
Disposition : Dismissed, “it appearing that on January 3, 1923 the District Court of the United States for
the Southern District of New York entered a decree In an action then pending therein In which the United
States of America was complainant and Gypsum Industries’ Association et ah were defendants, by which
decree the issues In the above-entitled proceeding were adjudicated and disposed of.
Complaint No. 850.--Commission v. Goheen Manufacturing Co. Charge : Respondent, In selling its
especially prepared paint for galvanized iron and labeled “Galvanum,” has circulated letters which contain
false and misleading statement that : “It is the standard of the United States Government,” when In fact
the Government of the United States has never adopted said Galvanum as a standard for any purpose.
Disposition : Dismissed, respondent having been a Steamboat Co.
Complaint No. 869.--Commission v. Baltimore & Philadelphia Steamboat Co. Charge : Respondent,
engaged In the transportation by water of freight and passengers between Baltimore and Philadelphia, has
made it a practice to cut the price of transportation below cost to compel a competitor, the Marine
Transport Corporation, to withdraw and discontinue its business that the previously existing monopoly
held by the respondent may be restored to it. Disposition : Dismissed.
Complaint No. 891.--Commission v. Bethlehem Steel Corporation and Lackawanna Steel Co. Charge
: Respondents, by entering into an agreement to combine or consolidate their respective properties,
businesses, and interests into a common enterprise whereby the properties, assets, and business of
respondent Lackawanna Steel Co. as well as those of its subsidiary Lackawanna Bridge Works
Corporation and Lackawanna Steel Co., another subsidiary, are to be acquired by said Bethlehem Steel
Corporation, itself In control of a number of subsidiary corporations, will thereby effect a combination
which will control a substantial percentage of the production of certain steel and iron products In the
United States, and especially In the State of Ohio and ail territory north of the Potomac River and east of
said State, which said merger or consolidation will have a dangerous tendency to hinder and lessen
competition and restrain trade and commerce, the agreement constituting an attempt to monopolize certain
interstate trade and commerce. Disposition : Dismissed without prejudice.
Complaint No. 895.--Commission v. Otto Eisenlohr & Bros. (Inc.). Charge : Respondent engaged In
the manufacture and sale of cigars and other tobacco products, has adopted and maintained a schedule of
uniform resale prices for Its products, threatening to refuse to sell to price cutters and otherwise enforcing
said system of resale price maintenance. Disposition : Dismissed, Commissioner Nugent dissenting.
Complaint No. 897.--Commission v. M. T. K. Products Co. and Trust (J. A. Menard, John E.
Burkheimer, B. G. Raymond, H. P. Vogt. R. G. Townsend, and their successors, trustees under said trust);
M. T. K. Sales Corporation; Beckley-Ralston Co. Charge: The company and trust is engaged In the
manufacture and sale of an abrasive bearing-fitting compound named “Timesaver” the Sales Corporation
and the Beckley-Ralston Co. are distributors of “Timesaver.” It is charged that respondents have caused
notices and advertising matter to be sent to the trade generally to the effect that “Timesaver” was a
patented article, that similar articles (not specified however) infringing the patent were on the market, that
the policy would be to protect their patent against all infringements and that legal proceedings would be
vigorously pressed against dealers In and users of such infringing compounds, all of which has the
capacity and tendency to bring all other similar products into suspicion to the harm of the manufacturers
thereof and the dealers therein, none of whom has been especially charged and placed on notice.
Disposition : Dismissed for the reason that the charges of the complaint were not supported by the proof.
Complaint No. 905.--Commission v. Midvale Steel & Ordinance Co., Republic Iron & Steel Co., and
Inland Steel Co. Charge: Respondents, Midvale Steel & Ordnance Co. and Inland Steel Co., have agreed
to consolidate their respective properties, businesses, and interests into a common enterprise and to
acquire the properties, assets, and business of the Republic Iron & Steel Co., thereby tending to suppress
and eliminate all competition which has theretofore existed between then and to effect control of a large
proportion of the iron and steel

218

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

commodities business In the United States and particularly the States of Pennsylvania, Ohio, West
Virginia, Kentucky, Indiana, Michigan, and Illinois; that said consolidation and merger has a dangerous
tendency to unduly restrain trade and commerce and to create a monopoly. Disposition : Dismissed
without prejudice, the merger having been abandoned.
Complaint No. 939.--Commission v. Braden’s California Products (Inc.) and A. Claude Braden. Charge
: Respondent Braden, a former stockholder of the Braden Preserving Co., in organizing the said
respondent, Braden’s California Products (Inc.) simulated the name of said Braden Preserving Co., well
known to the purchasing public by reason of its advertising, and that the respondent corporation in the sale
of its products, packed by various packers and labeled by it, features its name to enable it to pass off said
products as and for the jams, preserves, and marmalades packed by the Braden Preserving Co. (Inc.),
which misled and deceived the general purchasing public. Disposition : Dismissed.
Complaint No. 953.--Commission v. C. C. Cannan. Charge : That to further the sale of stock, shares,
and units of beneficial interest of oil companies and syndicates promoted by him respondent made
numerous false and misleading statements concerning the value of the securities offered and the business,
prospects, management, and earnings of the various companies. Disposition : Dismissed.
Complaint No. 989.--Commission v. Paul E. Peck and Richard K. Peck, copartners, doing business
under the name of P. E. Peck & Son. Charge: Respondents, engaged In the sale of steamship supplies,
offer and give sums of money and other things of value to employees and representatives of steamship
owners, without the knowledge or consent of such owners, as an inducement to said employees and
representatives to purchase their supplies from respondent. Disposition : Dismissed for the reason that the
respondent had been adjudicated bankrupt and said respondent Paul E. Peck is now deceased and said
partnership is itself no longer doing business.

ADDITIONAL COPIES
OF THIS PUBLICATION MAY BE PROCURED FROM
THE SUPERINTENDENT OF DOCUMENTS
GOVERNMENT PRINTING OFFICE
WASHINGTON, D. C .

AT
15 CENTS PER COPY
PURCHASER AGREES NOT TO RESELL OR DISTRIBUTE THIS
COPY FOR PROFIT.--PUB. RES. 57, APPROVED MAY 11, 1922