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ANNUAL REPORT
OF THE

FEDERAL

TRADE COMMISSION
FOR THE

FISCAL YEAR ENDED JUNE 30, 1928

UNITED STATES
GOVERNMENT PRINTING OFFICE
WASHINGTON
1928

FEDERAL TRADE COMMISSION
WILLIAM E HUMPHREY, Chairman
ABRAM F. MYERS.
EDGAR A. McCULLOCH.
GARLAND S. FERGUSON, JR.
C. W. HUNT.
OTIS B. JOHNSON, Secretary.

CONTENTS
Page
VII
1
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5
6
8
10
10
11
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12
12
13
13
14
15
15
15
17
18
19
21
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21
21
23
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28
32
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35
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87
38
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39
39
40
41
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43
43

Introduction
The report
Public-utilities investigation
Trade practice conference division
Motion-picture industry
Shirting-fabrics industry
Golf-ball industry
Edible-oil industry
Fur industry
Heavy sheet glass
Hickory-handle branch-wood-turning industry
Millwork industry
Waxed-paper industry
Flat glass industry
Cottonseed oil mills Industry
Paint, varnish, and lacquer and allied industries
Rebuilt-typewriter industry
Publishers of periodicals
Chief examiner
The Clayton Act
Special investigations
Trial examiner’s division
Outline of procedure
Complaint
Stipulation
Economic division
Work on hand
Electric-power industry
Petroleum prices, profits, and competition
Stock dividends
Bread, flour, and grain
Panhandle crude petroleum
Electric power and gas utilities
Resale price maintenance
Open-price associations
Lumber trade associations
Geographic bases of price making
Du Pont investments inquiry
Chain stores
Blue-sky securities
Chief counsel
Outline of procedure
Summary of work, 1928
Character of complaints
Conspiracy to fix prices Restraint of trade-Violation of section 5 of the
Federal Trade Commission act

43
III

IV

CONTENTS

Chief counsel--Continued.
Character of complaints-Continued.
Page
Resale price maintenance-Violation of section 5 of the Federal Trade
Commission act
44
Misrepresentation of furniture--Violation of section 5 of the Federal Trade
Commission act
45
Difficulties of procedure In enforcement of orders of commission
46
Export trade-Violation of section 5 of the Federal Trade Commission act, as
extended by section 4 of the export trade act;
46
Misrepresentation of correspondence school courses--Violation of Federal Trade
Commission act
47
Tying contracts-Violation of section 3 of the Clayton Act and section 5 of the
Federal Trade Commission act
48
Acquisition of capital stock of competitors--Violation of section
7 of the Clayton Act
49
Orders to cease and desist
50
“Philippine Mahogany” cases--Violation of section 5 of the Federal Trade
Commission act
52
Blue-Sky cases--Violation of section 5 of the Federal Trade Commission act
52
Pacific coast milling Industry--Price-fixing combination--Violation of section 5
of the Federal Trade Commission act
53
Conspiracy in restraint of trade-Violation of Federal Trade Commission act
54
Misrepresentations--Violation of section 5 of the Federal Trade Commission act
55
Photo-Engraving case--Conspiracy to fix and enhance prices--Violation of section 5
of the Federal Trade Commission act
56
Motion-Picture case--Restraint of trade--Violation of section 5 of the Federal
Trade Commission act
57
Export trade--Violation of section 5 of the Federal Trade Commission act, as
extended by the export trade act
58
Methods of competition condemned
58
Court cases
62
Cases in the United States Circuit Court of Appeals arising under section 5 of the
Federal Trade Commission act and section 7 of the Clayton Act
63
Indiana Quartered Oak Co.--Misrepresentation in the sale of wood in violation of
section 5
63
The Western Meat Co. case--Stock acquisition in violation of section 7 of the
Clayton Act
68
The Proctor & Gamble Co. case--False advertising and misbranding soap
64
Arkansas Wholesale Grocers’ Association--Combination and conspiracy to
lessen competition in groceries--Violation of section 5 of the Federal Trade
Commission act
65
J. W. Kobi Co.--Resale price maintenance
67
The B. Paul (Paul Balme) case-Simulation of trade name and dress of goods
68
The American Snuff Co. case
69
International Shoe Co.--Violation of section 7 of the Clayton Act
70
Paramount Famous Lasky Corporation
70
Bayuk Cigars (Inc.)--Misbranding--False and misleading advertising
70

CONTENTS

V

Chief counsel-Continued.
Court cases--Continued.
Page
Cases in the United States Circuit Court of Appeals, etc.--Continued.
Philip Carey Manufacturing Co.--Disparagement of competitors
71
The Utah-Idaho Sugar Co. case--Suppression of competition in the manufacture
and sale of beet sugar
72
Grand Rapids Varnish Co.--Commercial bribery
73
Standard Education Society case--Misrepresentation Books
74
Sea Island Thread Co.--Misbranding of cotton thread
75
F. W. Dobe--Sundry misrepresentations in connection with correspondence
school
75
Pure Silk Hosiery Mills case--False advertising--False representations in sale of
hosiery
75
The Shade Shop case--Appropriation and simulation of trade name
76
Cases arising under sections 6 and 9 of the Federal Trade Commission act
79
The Maynard Coal Co. case--A proceeding in which an economic investigation
of the commission was halted by injunction
80
Millers’ National Federation case--Investigation by commission in response
to resolution of the United States Senate
82
Royal Baking Powder case--Violation of section 5 of the Federal Trade
Commission act
84
Royal Baking Powder Co.--Mandamus to compel commission to pass upon
affidavits of prejudice against member of commission
80
Tables summarizing work of legal division
87
1. Preliminary inquiries
87
2. Export trade Investigations
87
8. Applications for complaints
88
4. Complaints
88
5. Petitions for review--lower courts
89
6. Petitions for review--Supreme Court of the United States
90
7. Petitions for enforcement--Lower courts
90
8. Petitions for enforcement--Supreme Court of the United States
91
9. Petitions for rehearing, modification, etc.--Lower courts
91
10. Petitions for rehearing, modification, etc.--Supreme Court of the United States
91
11. Interlocutory, mandamus, etc.--Lower courts
92
12. Interlocutory, mandamus, etc.--Supreme Court of the United States
92
13. Interlocutory, mandamus, etc.--Rehearing, modification, etc.--Lower courts
92
14. Interlocutory, mandamus, etc.--Rehearing, modification, etc.--Supreme Court of
the United States
93
Export trade section
94
Operation of the export trade act
94
Success of the Webb law
95
Exports during 1927 totaled $371,500,000
95
New Webb law associations
96

VI

CONTENTS

Export trade section--Continued.
Operation of the export trade act--Continued.
Page
Fifty-six export associations filed papers in 1928
96
Proposed law to permit import combines
98
Trust laws and unfair competition in foreign countries
98
International trade conferences
98
Canadian combines investigation act
100
British companies act of 1928, the merchandise marks act, and Government export
credit insurance
101
Swedish monopoly law--The Swedish Match Trust
102
The German cartel court
103
Unfair competition law of Czechoslovakia
103
French bill for the suppression of fraud
103
Spanish Government monopoly--Nationalization of the automobile industry
proposed
104
Italian decree to encourage industrial combination
104
Cuban sugar defense law-International sugar conventions
104
Dominican sugar defense commission
105
Valorization of sugar and coffee In Brazil
105
Chilean nitrate subsidy
106
Salvador company law
106
Antitrust law proposed In Uruguay
107
Foreign trade complaints
107
Administrative division
109
Personnel
109
Publications
110
Fiscal affairs
110
Appropriations, expenditures, liabilities, and balances
111
Statement of costs for the fiscal year ended June 30, 1928
111
Detailed statement of costs for the fiscal year ended June 30, 1928
111
Adjustments
112
Library
113
EXHIBITS
1. Procedure and policy
2. Federal Trade Commission act
3. Provisions of the Clayton Act which concern the Federal Trade Commission
4. Export trade act
5. Rules of practice before the commission
6. Proceedings disposed of July 1, 1927, to June 30, 1928
Orders to cease and desist
Orders of dismissal
7. Complaints pending July 1, 1928, and status
8. Stipulation approved and accepted
9. Trade practice conferences
10. Inquiries made by the Federal Trade Commission since its organization in 1915,
at the request of the Senate, the House of Representatives, the President, the
Attorney General, and on motion of the commission
11. Senate, House, and commission resolutions under which the commission made

117
120
126
130
132
137
137
148
155
182
186

187

investigation during the fiscal year ending June 30, 1928

194

INTRODUCTION
To the Senate and House of Representatives:
Investigation of public utilities, particularly their publicity methods, became an
outstanding feature of the work of the Federal Trade Commission in the last fiscal
year.
Although the regular activities, such as the prevention and correction of unfair
competition in commerce as well as violations of the antitrust laws were carried on as
usual, the investigation of electric-power and gas companies as called for in Senate
Resolution No.83 became the most comprehensive economic inquiry ever undertaken
by the commission.
The commission’s estimates made provision for additional skilled employees, mostly
accountants, to carry on the utilities inquiry and other congressional work, and
allowance therefor is included in the Budget figures which have been approved for
transmission to Congress.
The procedure outlined in Senate Resolution No.83 was unique in that it called for
public hearings. Heretofore the commission had not conducted public hearings in
connection with economic investigations; in fact, had not made public its reports of
such surveys until all work had been completed and approved. The resolution also
directed the commission to furnish a report of progress to the Senate once each month.
The resolution called for information concerning the history an growth of the
financial structure of all public-utility corporations doing an interstate or international
business, and holding, service, and management companies, as well as data regarding
methods used by the utilities in obtaining publicity and distributing propaganda.
Commissioner Edgar A. McCulloch was designated as presiding officer at all public
hearings.
The work of the inquiry was then divided into two classes financial and propaganda.
The financial phase was placed in charge of the chief economist, Mr. Francis Walker,
while the propaganda investigation was turned over to Mr. Robert E. Healy, chief
counsel, who was also to examine witnesses in all public hearings.
In accepting this solution from the Senate the commission adopted a resolution
undertaking an investigation in strict and full
VII

VIII

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

compliance with the terms of the Senate resolution, and that in the prosecution of the
inquiry the commission would “rely on and employ the powers conferred on it to make
investigations at the direction of either House of Congress.” It would rely also on “any
and all powers conferred upon it by law to conduct inquiries on its own initiative, or
otherwise, and any other powers legally available to it, whether contained in its
organic act or elsewhere, which may conduce to a diligent and complete performance
of the ends and purposes set forth in said resolution.”
It was evident at the outset that the financial part of the investigation would be
complicated, and that preparations of exhibits to be introduced at hearings would
require much detailed work, so public hearings were begun first in connection with the
propaganda phase of the inquiry, while examiners were sent out to begin bringing in
the data for the financial survey.
The commission held its first public hearing March 8. When the summer recess was
taken a few days after the close of the fiscal year, 71 witnesses had been examined, 38
volumes of testimony comprising 4,877 type-written pages had been taken, and 3,670
exhibits had been introduced. These records covered the propaganda activities of
utilities in 40 States. When the summer recess. began the commission had not called
witnesses representing the States of Arizona, California, Idaho, Montana, Nevada,
Oregon, Utah, and Washington.
Among the witnesses who testified at these hearings were several national officers
of the National Electric Light Association, American Gas Association, and the Joint
Committee of National Utility Association. There were also officials of State public
utility information committees and regional. subdivisions of the National Electric
Light Association.
While no evidence was introduced du ring the fiscal year regarding the financial
structure of the industry and the relation between holding, operating, and service
companies, a broad foundation was and is now being laid for conducting that phase of
the hearings. Comprehensive questionnaires have been sent to large holding
companies, and examiners of the commission have inspected the records of these
organizations and affiliated corporations.
During the fiscal year the commission conducted a larger number of trade-practice
conferences than ever before in its history. The trade-practice conference idea is being
developed in connection with the modern policy of self-regulation of industry. The
conferences are helping to eliminate on a large scale unfair practices in commercial
competition.
The Senate, May 3, directed the commission to investigate chain store systems of
marketing and distribution, reporting on the extent, if any, to which consolidations of
chain stores had been effected in

INTRODUCTION

IX

violation of the antitrust laws and the extent to which such consolidations were
susceptible to regulations under the present laws. Information was also asked
concerning the control of commodities by chain stores; the existence, if any, of unfair
competitive methods, agreements, conspiracies, or combinations in restraint of trade;
and other features of chain-store merchandising. The investigation is being conducted
by the economic division.
Complete reports may be seen in the following pages of the chief counsel’s division,
the chief examiner’s division, economic division, trade-practice conference division,
trial examiner’s division, export-trade section, court cases, administrative division, and
the public-utilities investigation.

ANNUAL REPORT OF THE FEDERAL TRADE
COMMISSION
PUBLIC UTILITIES INVESTIGATION
Senate Resolution 83, adopted February 15, directed the commission to investigate
the financial structure of public utilities doing an interstate, and in some cases an
international, business, as well as their methods of obtaining publicity.
Evidence put into the record up to the close of the fiscal year deals with that part of
the Senate resolution relating to publicity methods. This phase of the investigation
is not yet completed.
A complete stenographic transcript of testimony taken to date is now in the hands
of the Senate and monthly reports of progress have been made to the Senate since the
investigation began in March.
The inquiry into the financial phase was promptly started and accountants and
examiners began the examination of the records and books of account of certain
important holding and service companies in Boston, New York, Philadelphia, and
Chicago, and a preliminary questionnaire was sent to operating gas and electric
companies. By the end of June more than 5,000 replies had been received.
This questionnaire called for information concerning production, purchases, sales,
interstate business, intercompany relationships, earnings, investment, plant capacity;
etc., which will give bases for measuring the importance of interstate and power-group
business in the electric-power and gas industries.
On June 20 the commission sent its comprehensive report form entitled “General
Report of Electric and Gas Utilities, Holding and Service Companies for Such Utilities
and Affiliated Companies” to the Government Printing Office. The data called for in
this report form include the facts in so far as they can be secured through. schedule
upon the following (1) The growth of capital assets and capital liabilities of holding
companies and management groups, including their public-utility and nonpublic-utility
subsidiaries, and of independent operating companies doing an interstate business; (2)
the methods of issuing, the price realized, and the commissions, bonuses, and fees
received or paid by such companies with respect to the various issues of securities
made by them; (3) the inter company relationships among holding companies,
managing or serv1

2

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

ice companies, and financial, engineering, construction and electric, and gas operating
companies; (4) the services furnished to electric and gas public-utility companies by
holding, management, and serv ice companies, the expenses and earnings of such
companies, together with the fees, commissions, or bonuses charged by them or their
subsidiary or affiliated companies; and (5) political campaign contributions and the
expenditure of funds to be used to influence or control public opinion with respect to
municipal or public ownership of electric-power enterprises.
The financial matters referred to under this resolution comprise, in brief, the
following general subjects: (1) The growth of the capital assets and capital liabilities
of public utility corporations doing an interstate or international business supplying
either electrical energy in the form of power or light or both, however produced, or
gas, natural or artificial, of corporations holding the stocks of two or more public
utility corporations operating in different States, and of nonpublic utility corporations
owned or controlled by such holding companies; (2) the method of issuing, the price
realized, or value received, the commissions or bonuses paid or received, and other
pertinent facts with respect to the various security issues of all classes of corporations
herein named, including the bonds and other evidences of indebtedness thereof, as well
as the stocks of the same; (3) the extent to which such holding companies or their
stockholders control or are financially interested in financial, engineering, construction, and/or management corporations, and the relation, one to the other, of the
classes of corporations last named, the holding companies, and the public utility
corporations; (4) the services furnished to such public utility corporations by such
holding companies and/or their associated, affiliated, and/or subsidiary companies, the
fees, commissions, bonuses, or other charges made there-for, and the earnings and
expenses of such holding companies and their associated, affiliated, and/or subsidiary
companies; and (5) the value or detriment to the public of such holding companies
owning the stock or otherwise controlling such public utility corporations immediately
or remotely, with the extent of such ownership or control, and particularly what
legislation, if any, should be enacted by Congress to correct any abuse that may exist
in the organization or operation of such holding companies.
Congress made available to the commission for the fiscal year 1928-29 a special
appropriation of $85,000 to be used in prosecution of the investigation of public
utilities. It was necessary to employ a number of accountants and clerical workers to
carry on the investigation. A large item of expense was traveling allowances for
witnesses.

PUBLIC UTILITIES INVESTIGATION

3
Senate Resolution 83 is as follows:
Resolved, That the Federal Trade Commission is hereby directed to inquire into and report
to the Senate, by filing with the Secretary thereof, within each thirty days after the passage of
this resolution and finally on the completion of the investigation (any such inquiry before the
commission to be open to the public and due notice of the time and place of all hearings to be
given by the commission, and the stenographic report of the evidence taken by the commission
to accompany the partial and final reports) upon (1) the growth of the capital assets and capital
liabilities of public-utility corporations doing an interstate or international business, supplying
either electrical energy in the form of power or light, or both, however produced, or gas, natural
or artificial, of corporations holding the stock of two or more public-utility corporations
operating in different States, and of nonpublic utility corporations owned or controlled by such
holding companies; (2) the method of issuing, the price realized or value received, the
commissions or bonuses paid or received, and other pertinent facts with respect to the various
security issues of all classes of corporations herein named, including the bonds and other
evidences of indebtedness thereof, as well as the stocks of the same; (3) the extent to which such
holding companies or their stock-holders control or are financially interested in financial
engineering, construction, and/or management corporations, and the relation, one to the other,
of the classes of corporations last named, the holding companies, and the public-utility
corporations; (4) the services furnished to such public-utility corporations by such holding
companies and/or their associated, affiliated, and/or subsidiary companies, the fees,
commissions, bonuses, or other charges made therefor, and the earnings and expenses of such
holding companies and their associated, affiliated, and/or subsidiary companies; and (5) the
value or detriment to the public of such holding companies owning the stock or otherwise
controlling such public-utility corporations immediately or remotely, with the extent of such
ownership or control, and particularly what legislation, if any, should be enacted by Congress
to correct any abuses that may exist in the organization or operation of such holding companies.
The commission is further empowered to inquire and report whether, and to what extent, such
corporations or any of the officers thereof, or anyone in their behalf or in behalf of any
organization of which any such corporation may be a member, through the expenditure of
money or through the control of the avenues of publicity, have made any and what effort to
influence or control public opinion on account of municipal or public ownership of the means
by which power is developed and electrical energy is generated and distributed, or since 1923
to influence or control elections: Provided, That the elections herein referred to shall be limited
to the elections of President, Vice President, and Members of the United States Senate.
The commission is hereby further directed to report particularly whether any of the practices
heretofore in this resolution stated tend to create a monopoly or constitute violation of the
Federal antitrust laws.

The resolution of the commission accepting the tasks assigned to it under Senate
Resolution 83, is as follows:
Whereas the Senate of the United States has by a resolution agreed to on February 15, 1928
(S. R. 83, 70th Cong., 1st sess.), directed the Federal Trade Commission to make an inquiry into
certain practices and conditions relating to specified classes of public utility corporations and
corporations connected therewith: Now, therefore, be it

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Resolved, That an inquiry shall be undertaken immediately by the commission in strict and
full compliance with the terms of the said resolution and that In the prosecution of said inquiry
the commission shall rely on and employ the powers conferred on it to make investigations at
the direction of either house of Congress, and any and all powers conferred upon it by law to
conduct inquiries on its own initiative or otherwise and any other powers legally available to it,
whether contained in its organic act or elsewhere, which may conduce to a diligent and complete
performance of the ends and purposes set forth in said resolution.

TRADE PRACTICE CONFERENCE DIVISION
The division of trade practice conferences is charged with the duty of coordinating
and facilitating the work incident to the holding of trade practice conferences, of
providing for specialized direction thereof, of extending the scope of such work within
its proper sphere, of providing for immediate action in cases of violation of trade-practice rules, of observing and studying the working of such, and of encouraging closer
cooperation between business as a whole and the commission in serving the public.
The work of this division has increased enormously during the past fiscal year. Since
the last annual report, trade practice conferences were held for the following
industries: Motion picture, golf ball, edible oil, shirting fabrics, fur, heavy sheet glass,
hickory handle, millwork, wax paper, flat glass, cottonseed oil mills, paint, varnish and
lacquer, rebuilt typewriters, and publishers of periodicals. Preparatory work upon
applications for trade practice conferences for numerous other industries had, at the
end of the fiscal year, reached various stages of completion.
Never in the history of American business has there been a time when self-regulation
has received more intensive consideration. By “self-regulation,” as used here, is meant
the adoption and adherence to workable rules prescribed by an industry for the
regulation of its own business conduct with due regard for the public interest.
If an industry is capable of self-regulation, the trade practice conference procedure
of the Federal Trade Commission affords the most effective method yet devised to
accomplish this end.
In dealing with self-regulation we are not dealing with a new subject. For many
years industry has attempted this with varying degrees of success, the degree of
success attained in any industry being readily measured by existing competitive
conditions therein. If these conditions are all that can be reasonably desired, the
success attained is complete. If, however, practices still exist which result in unfairness
or are otherwise bad, previous attempts at self-regulation in that particular industry
have failed.
Trade associations, “institutes,” the United States Chamber of Commerce, and
business organizations in other forms have done, and are doing, excellent work in this
respect. Competitive conditions in many industries are being studied and intelligently
analyzed, codes are being adopted, much money is being expended in educating
industries for the work of self-regulation, but when faults are discovered and rules
adopted for their correction, it remains for the trade practice
5

6

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

conference procedure to supply, in a measure at least, an element which heretofore has
been completely lacking--namely, enforcement.
Self-regulation without rules would be impossible and rules without some power of
enforcement make self-regulation often a mere expensive gesture. The fact that some
power rests, as it does, in an impartial, disinterested governmental body obviates the
necessity of frequent use of such power. This is demonstrated in that of more than 300
rules adopted by industries in trade practice conferences the power of the Federal
Trade Commission has not been invoked with reference to a dozen of these. The
complete study of the effect of past conferences now being made by the division of
trade practice conferences may change these figures or disclose some additional
reasons, but irrespective of the showing on final analysis the fact remains that the mere
probability that any rule may be enforced adds materially to its general observance.
The following is a brief summary of trade practice conferences for the industries
named. Complete reports of each conference, and the resolutions passed, may be had
upon request to the commission.
MOTION-PICTURE INDUSTRY

During the week of October 10, 1927 a trade practice conference was held for the
motion-picture industry in the assembly room of the Bar Association of the city of
New York. The conference was conducted by Abram F. Myers, commissioner,
assisted by M. Markham Flannery, director of trade practice conferences.
The industry, consisting of producers, distributors, and exhibitors, was represented
in practically its entirety.
The resolutions adopted by the industry were divided into four groups. The rules
appearing in Group I have been approved by the commission. The rules in Group II
have been received and accepted by the commission as expressions of the trade. The
resolution appearing in Group III is disapproved by the commission The resolutions
under Group IV are held in abeyance without further action of the commission, as the
sharp division of the vote cast indicates a total lack of agreement as between the
opposing branches of the industry.
The rules classified as Group I rules provide for the rewriting of the then existing
standard uniform contract between distributors and exhibitors, and for such
modifications and changes in the system of arbitration as a committee of six, named:
by the conferees, deem necessary; for the elimination of paid commercial advertising
from motion-picture exhibitions when films are leased for entertainment purpose; and
for the elimination of substitution in the matter of stars, directors, and other features
influencing selection, which have been specified in orders taken before the particular
picture is pro-

TRADE PRACTICE CONFERENCE DIVISION

7

duced. These resolutions also condemn the use of misleading or salacious advertising;
the “bicycling” of films or the surreptitious use of films in theaters other than those
contracted for; delaying the return of films for the purpose of securing additional
exhibition time without compensation, or by reason of such delay making impossible
the shipment of such film to the next customer who has booked it; commercial bribery;
the use of films at a theater other than the theaters specified in the contract; failure to
report promptly and accurately percentage bookings; agreements among distributors
to boycott the exhibitor or to exact higher rental than can be obtained in open
competition; and the use of buying power by an exhibitor to buy more films than he
can use, for the purpose of attempting a corner, or to force a competing exhibitor out
of business, or to force him to sell his theater.
Rules classified as Group II rules condemn fake motion picture production schemes,
fake motion picture acting schools, fake motion picture scenario schools, or other
dishonest enterprises which trade on the public’s ambition to be come a part of the
motion-picture industry; the practice of transferring titles to theaters without making,
at the same time, provisions for transferring existing contracts and violation of film
exchange fire regulations. Other resolutions of this group are intended to raise the
moral tone of production to the highest standards; to eliminate deceptive titles; to
provide a formula with reference to the selection and rejection of certain story material
for picturization; to provide for the establishment and functioning of a nonprofit
casting bureau for the purpose of bringing about betterments in working and other
conditions with reference to persons known as “extras” employed in the motionpicture studios to provide a formula for the prevention, of exploiting children
employed in motion picture productions; to regulate the lending of employees under
contract by one producer to another; and to establish a system of registering titles for
the purpose of avoiding duplication and conflict.
The resolution classified as Group III, which was rejected by the commission as
being in restraint of trade if carried into effect, sought to prevent competition between
regularly established exhibitors of moving pictures with schools, churches, and like
institutions bye prohibiting producers from contracting for the exhibition of pictures
at any place where motion pictures are shown to the public, if such exhibition is found
to be in competition with a regularly operated motion-picture theater.
Resolutions classified as Group IV resolutions were intended to provide for: An
equal opportunity to all exhibitors to bid for all pictures; relief of exhibitors from what
is known as “protection,”
16588---28-----2

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

which consists in requiring an unreasonable length of time to elapse after the first
showing of a film before subsequent showings are permitted ; relief for exhibitors from
producers acquiring, or threatening to acquire, theaters in order to coerce exhibitors
to lease pictures or to surrender theater holdings.
On these subjects the conference resulted in no agreement, as the independent
exhibitors and the affiliated producer-distributor exhibitor groups seemed hopelessly
divided.
In addition to the rules and resolutions referred to an agreed statement, of policy
proposed by the producer-distributor groups, and accepted by exhibitors, was held in
abeyance by the commission until results could be determined from its actual effect
upon the motion-picture industry. The provisions of this policy. were: The sales
method known as block booking shall not be used for the accomplishment. of any
illegal purpose; no distributor will require as a condition of permitting an exhibitor,
to lease its pictures that such exhibitor shall also lease pictures of another distributor;
if an exhibitor shall claim within a reasonable time prior to the date fixed for the
exhibition of any picture included in any block leased by him that such picture will be
offensive, to the clientele of his theater because of racial or religious subject matter,
such, claim shall be arbitrated by the board of arbitration of the proper zone, and, if
sustained, such exhibitor shall be relieved, of obligation to take and any exhibitor who
has purchased an entire pay for such picture; if block of pictures offered by any
distributor so elects within a reasonable time prior to the date fixed for exhibition, of
any picture included ,in such block, such exhibitor may refuse to take such picture by
paying one-half of the allocated price thereof, provided that the pictures so rejected out
of any block shall not exceed 10 per cent of, the number included in such block, and
if a rejected picture is resold by the distributor, one-half of the net price received on
such resale shall be credited. against the exhibitor’s obligation in respect of such
picture up to the amount of such obligation; reissues will not be included in any block
with new pictures; news reels and short subjects will not be included in any block with
features, and the lease of news reels ore short-subject blocks shall not be required as
a condition of being permitted to lease feature blocks or vice versa; the matters dealt
with by paragraphs 3 and 4 shall be covered by appropriate provisions to be included
in the new standard form of contract.
SHIRTING FABRICS INDUSTRY

William E Humphrey, chairman of the commission, conducted a trade practice
conference for the shirting fabrics industry at the New York office of the commission
on December 10, 1927, assisted by

TRADE PRACTICE CONFERENCE DIVISION

9
M. Markham Flannery, director of trade practice conferences. Approximately 95 per
cent, by volume, of the shirting fabrics industry was represented.
The rules were arranged into two groups and became effective two weeks from the
date of approval.
At this conference the industry condemned by a rule classified as a Group I rule the
misbranding of merchandise on the part of convertors, shirting manufacturers, and
others, and pledged themselves to make every effort within their power to discourage
and stamp out this serious evil existing in that industry.
By a second Group I rule a discriminatory practice, resulting from using New York
as a basing point for the shipping of shirting fabric, was also completely abandoned.
Prior to this conference shirting fabric shipped from New England or from the South
was delivered in New York City without charge for either freight or drayage. Shirting
fabric shipped to any other city in the United States was subject to an arbitrary freight
charge and drayage charge. This practice was regarded as discriminatory because
charges were made for freight that exceeded the amount of freight actually paid. To
correct this evil the rule adopted by the industry provided for the shipment of all
shirting fabric f. o. b. point of origin. This rule follows the doctrine in the Pittsburgh
Plus case (D. 760) and others involving the same principle.
This conference was held for that branch of the industry known as “converters,” or
those who buy the plain fabric from the mill and by finishing, dyeing, printing, etc.,
convert it into shirting Prior to this conference great quantities of such material were
used in furnishing large samples free of cost to dealers which, with each order
received, were shipped throughout the United States. The gratuitous furnishing of
these samples was in the nature of a service. Being “free” it developed to an
alarmingly extensive and ever increasing growth, superinduced by intensive
competition. Its entire burden rested solely on the converters who paid the mill for the
enormous yardage annually used for this purpose. A rule was adopted by the industry
and classified by the commission as a Group II rule which limits the quantity of such
samples that may be given free and compels individual requirements in excess thereof
to be supplied by the “converter” at the sales price of the fabric. The burden, huge in
the aggregate, becomes insignificant when thus divided among thousands of
distributors and obviates any tendency on this ground toward a demand for higher
prices, which, naturally, would be passed on to the public.
By another Group II rule concerns which spend time and money perfecting a
desirable pattern, which they use on a superior quality of fabric only, are protected
against the unscrupulous who made a

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

practice of imitating the design, using inferior dyes of the same color, and printing it
on lower-grade fabric. This practice, prevalent on the New York market prior to the
conference, is reported as having disappeared entirely therefrom after a single informal
action taken through the division of trade practice conferences relating to the violation
of this rule.
GOLF BALL INDUSTRY

A trade practice conference for the golf-hall industry was called by the Federal
Trade Commission, which met at Cleveland, Ohio, on October 26, 1927. Edgar A.
McCulloch, commissioner, presided, assisted by Stephen C. Van Fleet, assistant
director of trade-practice conferences.
The commission announced its approval of the rules adopted in resolution form by
the conference, which prohibit the use of the following practices:
I. The paying secretly of yearly salaries to professional golf players In order to have them play
the golf ball of a particular manufacturer or marketing company.
II. The paying secretly of special prize money to professional golfers who win matches or
tournaments by the company whose ball has been played by the winning player.
EDIBLE OIL INDUSTRY

William F. Humphrey, chairman of the commission, conducted a trade practice
conference for the edible oil industry at the New York office of the commission on
December 9, 1927, assisted by M. Markham Flannery, director of trade practice
conferences.
The resolutions adopted by the industry have been arranged in two groups.
As regards those included in Group I, the commission has affirmatively approved the
same as fair methods of competition. for the industry and has undertaken to enforce
the same by proceeding against infractions thereof under the Federal Trade
Commission act.
As regards those included in Group II, the commission concluded that it could not
affirmatively approve and undertake to enforce them, for the reason that it could not
predict in every case what the results of such procedure would be.
The resolutions contained in Group I condemned the use of slack filled containers;
established standard size containers; fixed a standard net weight per gallon for
vegetable and olive oil; condemned misleading labels and misbranding; and the
simulation of standard size containers tending to mislead the public.
The two rules embraced in Group II provide for the affixing to the container of the
name and address of the packer or distributor, and the labeling of salad or vegetable
oil containers with the true name of the oil.

TRADE PRACTICE CONFERENCE DIVISION

11
FUR INDUSTRY

A trade-practice conference for the fur industry was held at the Hotel Pennsylvania,
New York City, on February 3, 1928, at which William E Humphrey, chairman of the
commission, presided, assisted by M. Markham Flannery, director of trade-practice
conferences. Approximately 90 per cent of the volume of the industry was present.
The four resolutions passed by this conference were approved by the commission on
February 27, 1928, and establish rules for the naming of furs dyed to simulate other
and more expensive furs. These rules provide that all furs shall be stamped with their
true name; that if the name of the country is used to indicate color it shall be an
accurate statement; and prohibits the use of a trade-mark which deceives the public.
HEAVY SHEET GLASS

A trade-practice conference for the heavy sheet-glass industry was held at the branch
office of the commission at New York City on March 22, 1928, at which William E.
Humphrey, chairman of the commission, presided, assisted by M. Markham Flannery,
director of trade-practice conferences.
One hundred per cent of the volume of the plate glass manufactured in the United
States was rep resented, and by far the greater volume of the sheet glass, although the
exact percentage of the latter could not be ascertained.
This conference resulted in the elimination of the deceptive use of the phrase “Demiplate,” which consists of ordinary drawn window glass, and has resulted in misleading
the public into the belief that the glass thus described was a form of plate glass.
Numerous efforts had been made by the industry to itself eliminate from the trade this
term which from time to time reappeared. In numerous instances purchasers of glass
for doors, windows, store fronts, show cases, desk tops, automobile wind shields,
replacements, etc., have been supplied with a heavy window glass under the term
“demi-plate,” when they ordered and believed they were receiving polished plate glass.
The industry adopted a resolution denouncing the use of the term, and by a second
resolution defined the term “plate glass” and required that the words “plate glass,” or
any words, prefixes, or suffixes in connection with the words “plate glass” shall not
be used in the advertising, sale, or distribution of any glass which has not been ground
and polished in accordance with requirements as set forth by the United States
Government Specification Board, dated April 1, 1924.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
HICKORY HANDLE BRANCH-WOOD-TURNING INDUSTRY

A trade practice conference for the hickory handle branch of the wood-turning
industry was held at St. Louis, Mo., on May 22, 1928, at which Edgar A. McCulloch,
commissioner, presided, assisted by M. Matkham Flannery; director of trade practice
conferences.
It was stated that about 80 per cent of the volume of hickory handles for striking
tools produced in the United States was represented at the conference.
The hickory-handle industry is a branch of wood turnery. During the course of the
200 years or more of the industry’s existence certain abuses grew up, such as
misleading marking up or highjacking of grades; misleading names for grades; false
invoicing of handles properly graded; and price discriminations haying inevitably,
through competitive pressure, become imbedded in the industry. The purpose of this
trade practice conference was to eliminate these abuses, which were practically as old
as the industry itself. It was called primarily for the manufacturers of hickory handles,
but invitations were also sent to the distributors of handles, to certain manufacturers
of tools, and other large users of handles, including departments of the Government,
railroads, and certain public utility concerns.
One Group I rule, predicated on the fact that the manufacture and distribution of
handles for striking tools, the grade and quality of which are not indelibly and plainly
marked thereon have caused confusion in the trade, deception of the public, and, in any
crafts, danger to life and limb, provided that striking-tool handles shall be impressed
with the proper grade mark or symbol identifying and establishing the correct grade
and quality of such handle, in accordance with certain specific provisions. Other
resolutions of this group provided for the manner Of impressing such symbols on each
handle and condemned false invoicing as to grades and to the modification,
concealment, or removal of grade or plant identification symbols and condemned other
false descriptions of handles.
Group II resolutions provide for a variation in “liners” not to exceed 5 per cent, and
for the amicable settlement of disputes.
MILLWORK INDUSTRY

A trade-practice conference was held for the millwork industry at the Stevens Hotel,
Chicago, Ill., on May 15, 1928, at which G. S. Ferguson; jr., commissioner, presided,
assisted by M. Markham Flannery, director of trade-practice conferences. Based On
volume, more than 85 per cent of the industry was represented.
The rules adopted by the industry have been arranged in two groups: Those under
Group I were affirmatively approved by the

TRADE PRACTICE CONFERENCE DIVISION

13
commission; those under Group II were accepted by the commission as expressions
of the trade.
The resolutions embraced in Group I relate to the following practices:
Inducing breach of contract, misbranding, fraud and misrepresentation, secret
rebates, and price discrimination.
The resolutions embraced in Group II relate to guarantee against decline, antidumping, defining qualified distributor, terms of sale, distribution of price lists,
arbitration, selling without specifications, defining qualified manufacturer, enunciating
principle of reasonable differential, and uniform contracts.
WAXED PAPER INDUSTRY

A trade-practice conference for the waxed-paper industry was held at Washington,
D.C., in the hearing room of the commission, on June 7, 1928, at which C. W. Hunt,
commissioner, presided, assisted by M. Markham Flannery, director of trade-practice
conferences.
The resolutions adopted at the conference of this industry were arranged in groups:
Group I embraces resolutions affirmatively approved by the commission, and Group
II resolutions accepted by the commission as expressions of the trade. These rules
became effective November 15, 1928. The resolutions embraced in Group I refer to
the following practices:
Inducing breach of contract, imitating trade-marks or trade names, enticement of
employees, defamation of a competitor or disparagement of his goods, threatening suit
for patent or trade-mark infringements, use of inferior material, discrimination in price
by means of split shipments, repudiation of contracts, and deviation from standards.
The resolutions embraced in Group II refer to the following practices:
Ambiguous or incomplete contracts, discrimination in price by means of charging
for etchings. or plates, discrimination in price by means of ink coverage, selling goods
below cost, and delivery point charges.
FLAT-GLASS INDUSTRY

A trade practice conference for distributors and manufacturers of the flat-glass
industry and those engaged in lines kindred to the distribution of glass was held at the
La. Salle Hotel, Chicago, Ill., on June 14, 1928. The conference was in charge of
Abram F. Myers, commissioner, assisted by M. Markham Flannery, director of trade
practice conferences.
From 90 to 95 per cent of the flat-glass jobbing and manufacturing interests were
represented.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

The resolutions adopted by the industry at the conference were placed in two groups.
Group I resolutions were affirmatively approved by the commission and Group II
resolutions were accepted by the commission as expressions of the trade. The
resolutions embraced in Group I refer to the following practices:
Inducing breach of contract, misbranding, fraud and misrepresentation, the labeling
of products, substitution of quality, secret rebates, and price discrimination.
The resolutions embraced in Group II include the following practices:
Selling at cost to induce purchase of other products, arbitration, selling without
specifications, differentials between carload and less than carload shipments, and antidumping.
COTTONSEED OIL MILLS INDUSTRY

A trade practice conference for the cottonseed oil mills industry was held at
Memphis, Tenn., July 24, 1928, Edgar A. McCulloch, commissioner, presiding,
assisted by M. Markham Flannery, director of trade practice conferences.
It was estimated that, based on volume, approximately 95 per cent of the industry,
covering 14 Southern States, was represented.
Resolutions adopted by the conference were arranged in groups. Group I included
resolutions affirmatively approved by the commission and Group II, resolutions
accepted by the commission as an expression of the trade.
The resolutions embraced in Group I prohibit:
Price discrimination, commercial bribery, and misbranding, and provide for
publication of price statistics.
The following resolution, which was something of an innovation, in that no similar
rule has been included in any previous trade practice conference, was adopted:
Resolved, That the clandestine violation of any of said resolutions, those accepted by the
Federal Trade Commission merely as expressions of the Industry as well as those approved by
said commission, shall be deemed to be unfair methods of competition.

Commissioners Humphrey and Ferguson did not concur in the approval of this rule,
being of the opinion it was beyond the power of the commission.
Resolutions included in Group II condemn unwarranted cancellation of contract, or
post or predating of contracts under certain circircumstances, define character and
quality of commodities, regulating time of delivery, condition of purchases, brokerage,
and commissions.

TRADE PRACTICE CONFERENCE DIVISION

15
PAINT, VARNISH, AND LACQUER AND ALLIED INDUSTRIES

A trade practice conference was held for the paint, varnish, and lacquer and allied
industries, at the Ambassador Hotel, Atlantic City, N. J., on August 1, 1928, at which
G. S. Ferguson, jr., commissioner, presided, assisted by M. Markham Flannery,
director of trade practice conferences.
Approximately 60 per cent of the paint, varnish, and lacquer industry, based on
volume, was present.
Resolutions which were divided into two classes were adopted by the conference.
Those relating to business conduct are designated as rules 1, 2, and 3, and were
affirmatively approved by the commission. Those relating to committee work and
requests to the commission are designated A, B, and C, and were accepted by the
commission as expressions of the trade;
The resolutions embraced in the first group relate to commercial bribery, false
advertising, and misbranding. The resolutions contained in the second group relate to
the establishment of a committee to cooperate with the commission.
REBUILT TYPEWRITER INDUSTRY

A second trade practice conference was held for the rebuilt typewriter industry, at
Cleveland, Ohio, August 22, 1928, at which Edgar A. McCulloch, commissioner,
presided, assisted by M. Markham Flannery, director of trade practice conferences.
The conference was attended by members of the industry, who conduct about 50 per
cent of the volume of business in this fie ld and comprise about 5 per cent of the
industry in numbers.
The conference previously held for this industry on February 27, 1920, defined the
term “rebuilt” as applied to typewriters.
Two resolutions were passed by the conference which were affirmatively approved
by the commission. These resolutions define and prescribe the use and application of
the words “rebuilt” and “overhauled.”
PUBLISHERS OF PERIODICALS

A trade-practice conference for publisher of periodicals was held at the WaldorfAstoria Hotel, at New York City, on October 9, 1928, at which William E Humphrey,
chairman of the commission, presided, assisted by Attorney Martin A. Morrison and
by M. Markham Flannery, director of trade-practice conferences.
Practically the entire periodicals publishing field was represented, in person or
through associations.
The following resolution was unanimously adopted:
Whereas, at this conference or trade practice for periodicals, held in response to the call of
Hon. William E Humphrey, chairman of the Federal Trade

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Commission, Chairman Humphrey has said in part: “The majority of the periodical publishers
not only obey the law but often go far beyond what the law requires in selecting the
advertisements they will publish. I do not believe. there is an Industry in America conducted
by more honest, high-minded, public-spirited men and women than the publication industry. I
do not believe that any industry In America has greater power for good. I believe that the future
greatness and security of the Nation rests to a greater extent upon the publishing Industry than
probably any other”: Be it
Resolved, That we express our sincere appreciation of such commendation, from so high an
official and personal source, of the principles and conduct of the publishing industry; and
Whereas, The record of the publishing industry for many years past shows that the very great
majority of such publishers have, of their own initiative, taken measures to eliminate fraudulent
advertising from their columns, and have welcomed every practicable suggestion to increase the
efficiency of such measures; be it
Resolved, That we recognize the fact that the National Better Business Bureau, an
organization composed of and supported by the business of advertising, is the most competent
agency of assistance to the business of advertising in preventing fraud in advertising and selling
and that said bureau has expressed its willingness to cooperate in every way with publishers, In
eliminating fraudulent advertising; be it further
Resolved, That we desire and will welcome every cooperation and assistance of the National
Better Business Bureau and, said bureau having expressed Its willingness and ability to do so,
we request said bureau to advise periodical publishers generally, and, wherever deemed
advisable, any governmental agency, whenever advertising, which is being published or is likely
to be offered for publication, is established by said National Better Business Bureau to be
fraudulent upon reasonable investigation and notice to the person complained of.

The National Better Business Bureau, by the above resolution, was selected by the
publishers as the machinery through which the industry would do its own policing of
the periodical field. In other words, the National Better Business Bureau, operating
wholly in behalf of the publishers and advertising industry, will report to the
commission, through the division of trade practice conferences, violations of the trade
practice conference rule. This, however, does not preclude a anyone from reporting
such violations directly to the commission, nor does it in any way affect the exercise
of the commission s prerogative to cause applications for complaints to be filed on the
commission’s own initiative.

CHIEF EXAMINER
The chief examiner supervises all of the legal investigating work of the commission.
Most of this work is the, investigation of applications for complaints preliminary to the
correction of unfair methods of competition under the various laws administered by
the commission. To this division are also referred special inquiries, primarily of a legal
nature, which the commission may be directed to do by the President, either House of
Congress, or the Attorney General.
Investigations preliminary to the possible issuance of complaints originate in several
ways, i.e., by the direction of the commission, by information obtained in other
investigations, and in the great majority of cases by direct application to the
commission from competitors or the public, which may be affected by alleged unfair
practices. No formality is required in making an application for a complaint, a letter
setting forth the facts in detail being sufficient, which should, however, be
accompanied by all evidence in the possession of the com plaining party in support of
the charges being made.
When an application is received by the chief examiner the jurisdictional elements,
such as interstate commerce, methods of competition involved, and public interest are
considered. In many cases it is necessary to supplement the data submitted by
correspondence or by a preliminary investigation before deciding whether to docket
an “application for the issuance of complaint.” A smaller percentage of the total
inquiries received are now docketed than formerly. By referring to Table 1 (p.87) it
will be noted that during the year only about 20 per cent of the inquiries were docketed
as applications for complaints. In 1923 about 30 per cent of the total inquiries received
were docketed and in 1921 about 50 per cent. This decrease is accounted for by the
fact that as precedents are established by the commission and the courts, it is possible
to dispose of more inquiries without an extensive investigation.
After an application is docketed it is assigned by the chief examiner to an examining
attorney or a branch office for investigation. It is their duty to secure all the facts
regarding the matter from both the applicant and the respondent. Without disclosing
the name of the applicant, the party complained against is approached, advised of the
charges, and requested to submit such evidence as it: desires in defense or explanation
of its position. The examining attorney, after developing the facts from all available
sources, summarizes the
17

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

evidence in a final report, reviewing the law applicable thereto, and making a
recommendation as to action. The entire re cord is them reviewable by the chief
examiner, and, if it appears to be complete, is submitted with recommendation to the
board of review or the commission for their consideration.
The chief examiner also conducts, by direction of the commission or upon requests
of other units, supplemental investigation of applications for complaints, of formal
complaints where additional information is desired by the chief counsel, or suspected
violations of the commission ‘s orders to cease and desist. This includes the alleged
violation of stipulations to cease from unfair practices entered into between
respondents and the commission and the violation of resolutions subscribed to at tradepractice conferences.
The investigating work of the commission is carried on from its main office at
Washington, D. C., and through its three branch offices located at 45 Broadway, New
York City; 608 South Dearborn Street, Chicago, Ill.; and 544 Market Street, San
Francisco, Calif. An attorney from the San Francisco office is also located at Seattle,
Wash., with an office at 431 Lyon Building. Business men can confer at these places
with qualified representatives of the commission regarding cases and in light of the
rulings made by the commission.
THE CLAYTON ACT
The commission has concurrent jurisdiction with the Department of Justice in the
enforcement of sections 2, 3, 7, and 8 of the Clayton Act. Effective enforcement of
section 7 has been most difficult and in its annual report for the year ending June 30,
1927, the commission directed attention to the decisions of the United States Supreme
Court in the cases against the Western Meat Co., Swift & Co., and the Thatcher
Manufacturing Co., construing this act (272 U. S. 554). In this decision the order of
the commission against the Western Meat Co., including the prohibition of the
acquisition of the physical assets of the Nevada Packing Co., through ownership of the
illegally acquired stock, was affirmed. In the case of Swift & Co. and the Thatcher
Manufacturing Co., however, by a 5 to 4 vote, the court set aside the commission’s
orders on the ground that the statute conferred no authority upon the commission to
order a disposition of physical assets although obtained as a result of an illegal
acquisition of stock. In these two cases the acquisition of the physical properties was
consummated before the commission filed its complaints, while in the case against the
Western Meat Co., the physical property had not be en acquired at the time final order
was issued. The result is that a corporation may purchase the stock of a competitor in
violation of section 7, and if it can use the stock thus acquired to com-

CHIEF EXAMINER

19

plete the acquisition of the physical assets of the corporation. before the commission
files complaint, then the situation is beyond the corrective power of the commission.
The rules of the commission were amended so that in such cases complaint would
issue immediately upon completion of the preliminary inquiry and before a hearing by
the board of review. However, considerable time is necessary in making the
preliminary inquiry and so far as the commission is concerned, the effectiveness of the
act has been materially lessened by the decisions referred to above.
Since these decisions there have been noted a number of cases where the jurisdiction
of the commission has been defeated by the corporation having acquired the capital
stock of another company, and then converting the assets of the acquired company
either before the preliminary inquiry was completed or before the question as to
whether the facts warranted action under section 7 had been considered.
SPECIAL INVESTIGATIONS

Cottonseed.--During the year the inquiry of certain phases of the cottonseed industry
authorized by House Resolution 439, approved March 2, 1927, was completed. This
inquiry was directed to the question as to whether there was a combination, agreement,
or association among the purchasers of cottonseed to fix prices in violation of the
antitrust laws. Considerable evidence of cooperation among, the State associations
composed of the concerns operating crushing mills was secured, but on the whole did
not indicate that the price paid for cottonseed was fixed by agreement. Prices received
for cottonseed in 1927 were materially higher than those received in 1926. It was also
concluded from the inquiry that one of the main causes of dissatisfaction to both the
producer of cottonseed and those engaged in its purchase and manufacture is the lack
of a uniform system of grading, which subject is being given consideration by the
United States Department of Agriculture. The results of the inquiry are incorporated
in a report made by the commission to the House of Representatives on March 5, 1928.
Cooperative marketing.--The extensive inquiry of cooperative marketing
organizations authorized under Senate Resolution 34 (69th Cong., special session),
approved March 17, 1925, was also concluded during the year. A report in two parts
covering the results of the inquiry was submitted to the Senate April 30, 1928. Part I
deals with the growth and importance of cooperative marketing organizations and
includes a discussion of the evidence obtained relative to interferences with the
formation and operation of organizations of producers. It also includes a brief
summary covering the development of State and Federal cooperative law, while Part
II

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

deals with a comparison of data on costs, prices, and practices of cooperatives and
their competitors. The investigation shows that in some sections, particularly
California, cooperative marketing has been quite successful, while in other parts of the
country this form of marketing has met only with varying degrees of success. From the
data secured it was concluded that the soundness of cooperative marketing should not
be measured by the number of failures or successes of individual organizations,
because the system has not been in use long enough to determine whether or not, as
against other methods of marketing, it will result finally in bettering the financial and
social condition of the producer and also prove a benefit to the general public. The
proportion of failures among cooperative marketing associations does not appear to be
any greater than among the concerns operating along old-established lines of
distribution. When failures occurred they were found to be due primarily in some cases
to inefficient management and in others to lack of capital, lack of support of the
producers, and other economic conditions. On the other hand, where the association
had been in operation over a period of years it was found that the problems of
operation, management, financing, and selling had been solved and that as, good and
in some instances better returns were made to its were realized from other methods
of marketing. Some evidence was disclosed indicating that private interests in the past
had used questionable methods in opposing cooperatives, and that no doubt there
would be continued opposition from the interests controlling the better established
methods of marketing. It was concluded, how ever, that the antitrust laws and the
Federal Trade Commission act afford a remedy for any unfair practices which may be
directed against cooperative marketing organizations.

TRIAL EXAMINERS’ DIVISION
OUTLINE OF PROCEDURE

The trial examiners’ division, established by the commission on December 1, 1925,
functions under the direct supervision of the com mission. The duties of this division
are subdivided as follows: (1) Presiding at the trial of formal complaints issued by the
commission and (2) the settlement of application for complaint by stipulation; the
above duties will be considered under the caption “Complaint” and “Stipulation.”
COMPLAINT

Under the procedure adopted by the commission; a trial examiner presides at the trial
of all formal cases, and in the conduct of such proceedings rules on all motions of
counsel and the admissibility of evidence and continues the hearing as necessity may
require; and at the close of the proceedings the trial examiner makes up the record and
prepares the report upon the facts, which said report is served by the presiding trial
examiner upon the counsel for the commission and attorney for respondent. The report
upon the facts, with exceptions thereto taken by counsel for the commission and
attorney for respondent, is the basis for argument at the final hearing before the
commission.
STIPULATION

In addition to presiding at hearings in formal cases, the division is also charged by
the commission with the settlement of applications for complaint by stipulation, except
in those cases where the practice is so fraudulent or so vicious that the protection of
the public demands the regular procedure of complaint. This division of the
commission affords an agency to administer the commission’s present policy providing
for the settlement by stipulation of informal cases. This procedure provides an
opportunity for the respondent to enter into a stipulation of the facts and voluntarily
agree to cease and desist forever from the alleged unfair methods set forth therein,
which said stipulation is subject to the final review and approval of the commission.
During the short period since the stipulation rule has been in effect 278 separate
respondents entered into stipulations of the facts
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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

with an agreement to abandon the unfair methods of competition and cease and desist
forever from the said practices in interstate commerce.
Stipulation release for publication, after deleting names of parties, up to June 25,
1928, are reproduced on page 182.
The policy of the commission affording respondents an opportunity of disposing of
certain cases by stipulation has resulted in a substantial saving in time and money to
the Government, as well as to the prospective respondent, and at the same time has
immediately eliminated unfair methods and practices from the channels of interstate
trade.
From an estimate made by the commission it was determined that the average cost
of procedure by complaint, involving the taking of testimony, reporting, and trial, costs
about $2,500, while the cost of settling application for complaint by stipulation--thus
avoiding a complaint--costs less than $500 per case. The immediate cessation of the
unfair practice, however, is of greater importance than the monetary saving involved.
The procedure by stipulation, in the opinion of the commission, has resulted in
gradually establishing and perfecting precedents that in the future will greatly facilitate
procedure and at the same time eliminate from the. channels of trade many unfair
business methods that to a large extent have become prevalent, although recognized
as unethical but tolerated through usage.

ECONOMIC DIVISION
The work of the economic division represents substantially the functions taken over
from the Bureau of Corporations. It consists in ascertaining and interpreting facts
relating to the organization, conduct, and results of commercial enterprises, and in
recommending Constructive or remedial legislative action. Under the Federal Trade
Commission act the President or either House of Congress is authorized to direct the
commission to make inquiries of this general character and the commission may also
initiate them on its own motion. While questions of monopoly or restraint of trade are
presumably involved in the former, they are not necessarily involved in the inquiries
undertaken on the initiative of the commission.
The results of these inquiries are embodied in printed reports and du ring the period
of its existence the commission has in this manner surveyed a large portion of the
industries of the country, and a number of important legislative results are attributable
in part at least to the findings of the commission.
During the fiscal year the following inquiries were prosecuted by the economic
division:
Electric power.--Inquiry directed by Senate Resolution 329 (68th Cong., 2(1 sess.), February
3 (calendar day, February 9), 1925.
Petroleum prices.--Inquiry directed by Senate Resolution 31 (69th Cong. 1st sess.), June 3,
1926.
Stock dividends.--Inquiry directed by a Senate Resolution 304 (69th Cong., 2d sess.);
December 22, 1926.
Bread and flour.--Inquiry directed bay Senate Resolution 163 (68th Cong., 1st sess.),
February 16, 1924.
Panhandle petroleum.--Inquiry directed by the commission October 0, 1926.
Power and gas utilities.--Inquiry directed by Senate Resolution 88 (70th Cong., 1st sess.),
February 13 (calendar day, February 15), 1928.
Resale price maintenance.--Inquiry directed by the commission July 25, 1927.
Open-price associations.--Inquiry directed by Senate Resolution 28 (69th Cong., special
sess.), March 17, 1925.
Lumber trade associations.--Inquiry directed by the commission January 4, 1926.
Price bases.--Inquiry directed by the commission July 27, 1927.
Du Pont investments.--Inquiry directed by the commission July 29, 1927.
Chain stores.--Inquiry directed by Senate Resolution 224 (70th Cong., 1st sess.), May 8
(calendar day, May 12), 1928.
Blue-sky securities.--Inquiry directed by the commission July 27, 1927.
1688---28-----3

23

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
WORK ON HAND

At the close of the fiscal year 1927, as stated in the last annual report, the
commission had on hand and uncompleted seven inquiries. Of this number, five were
brought to completion during the fiscal year 1928, that is, bread and flour, petroleum
prices, panhandle petroleum, stock dividends, and the original inquiry into electric
power, leaving uncompleted only the inquiry into Open-price associations and lumbertrade associations.
Early in the fiscal year the commission on its own motion ordered four new
inquiries, which were assigned to the economic division, i.e., resale price maintenance,
geographic bases of prices, blue-sky securities, and Du Pont investments. In addition,
the Senate in the course of the fiscal year directed an inquiry into chain stores (S. Res.
224), which was assigned to the economic division, and also a new investigation of
power and gas utilities, a large portion of which inquiry was assigned to this division.
At the close of the fiscal year, therefore, the economic division had on hand and
uncompleted seven inquiries and, in addition, the very extensive accounting and
financial investigation of the power and gas utility companies called for by Senate
Resolution 83 and assigned to the economic division by the commission. Of these
inquiries, however, that into Du Pont investments was virtually completed. at the close
of the fiscal year and those into blue-sky securities and open-price associations were
well along toward completion.
ELECTRIC-POWER INDUSTRY

On January 12, 1928, the commission transmitted its second and concluding report
on the electric-power industry to the Senate, made in response to Senate Resolution
329, Sixty-eighth Congress, second session. The first volume, Control of Power
Companies, submitted to the Senate February 21, 1927, dealt primarily with the
organization, control, and ownership of commercial power companies, with special
reference to the extent of the control exercised by the General Electric Co.
During the debate in the Senate on the above-mentioned resolution it was stated that
the General Electric Co. had acquired a monopoly control over the manufacture, sale,
and distribution of electrical equipment and apparatus. Part I of the second volume
shows the results of the commission’s inquiries on this subject, including a general
survey of competitive conditions in the manufacturing field. Part II of this volume
deals with competitive conditions in the electric-power industry and considers, also,
how such conditions are affected by the industry’s status as a public utility subject to
Govern-

ECONOMIC DIVISION

25
ment regulation. Among the important findings and conclusions of the commission;
as stated in this report, are the following:
The General Electric Co. has been for many years the largest manufacturer of power-plant
machinery and equipment in the United States. Its value of sales billed increased from
$16,000,000 In 1893 (the first complete year after its formation) to nearly $327,000,000 in
1926; its total Investment Increased from about $51,000,000 In 1893 to nearly $382,000,000
In 1920; and its net earnings were a little less than $3,000,000 in 1893 and (before deducting
Federal income taxes) over $59,000,000 in 1926.
As compared with the census classification of “electrical machinery, apparatus, and supplies,”
which includes Important products that are not used by the electric-power industry, ‘the value
of the General Electric Co.’s output has rep resented from 16 to slightly more than 20 per cent
of the total value for the country in recent census years. For the more important units of electricpower equipment the General Electric Co.’s proportion is larger, representing for the census
years 1919, 1921, and 1923 from 46.9 to 51.0 per cent of the value of all generators; from 52.2
to 58.3 per cent of the transformers; from 34.2 to 42 per cent of the motors; and from 32 to 45.1
per cent of the control apparatus. These percentages measure roughly the importance of the
General Electric Co. as a producer of the heavier lines of power equipment. Prior to 1925 the
three largest companies were the General Electric Co., the Westinghouse Electric &
Manufacturing Co., and the Allis-Chalmers Manufacturing Co. In 1925 the American Brown
Boveri Electric Corporation, a domestic company manufacturing under American and foreign
patents and technical information, was organized, thereby adding a fourth company to the group.
The Brown Boveri company acquired several Important manufacturers of transformers,
switches, and electric-railway equipment.
During the five-year period 1922-1926 the rate of profit of the General Electric Co. before
deducting Federal income taxes ranged from 11.2 per cent to 10.2 per cent. Considering only
the earnings on its investment in the electric manufacturing business (i. e., excluding outside
investments) the rates of return during the same period ranged from 14.3 per cent to 22.8 per
cent. The profits of other electrical companies were not obtained for this period, but for 1924
financial reports were received from 79 companies engaged to a greater or, less extent in the
manufacture of goods used by the electric-power industry. The average rate of return for these
companies (which had an aggregate total investment of about $490,000,000) was 9.6 per cent
In 1924, as compared with 15.1 per cent for the General Electric Co., though some of these
companies individually had higher rates of return than the General Electric Co.
The inquiry respecting competitive conditions in the manufacture and distribution of electricpower equipment was limited to those lines such as generators, transformers, motors, switches
and switch gear, station equipment, and line materials that are essential to the production and
distribution of electric energy. Prior to 1925 the manufacture of much equipment was carried
on partly by the three large companies mentioned above, generally known as “full-line”
companies, manufacturing practically all kinds of power equipment, and partly by a large
number of smaller “short-line” companies confining their production in some cases to a single
kind of equipment. The prices of these large companies are regarded in the trade as maximum
levels, above which the other comparatively small manufacturers generally can not hope to sell.
It is also the general belief among these comparatively small

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

manufacturers that the large companies compete actively in price quality, and service. Some
small manufacturers stated that although the, large companies undoubtedly have the power to
crush them by price competition, this power has not been used in recent years. It was stated,
however; by certain small manufacturers of fractional horsepower motors that in recent years
prices have been reduced to levels at which they have been unable to compete. Many small
manufacturers, on the other hand, stated that the small companies rather than the very large e
ones are their sharpest price competitors. The general opinion among the many small
manufacturers called upon was that the General Electric and Westinghouse Cos. dominate the
trade chiefly because of their financial resources, country-wide distribution, and service
organizations and control of many of the largest wholesalers. The elements in the competition
of the large companies that are most difficult for the small manufacturers to meet are the lumpsum bid, the quantity discount, and the consignment of motors. There was some complaint of
oppressive patent litigation, but no substantial evidence has been obtained on this point.
Preference for the equipment of one manufacturer over that of another because of previous
installations, plays an important part in the purchasing of some power interests; but, in general,
power companies secure competitive bids and appear to purchase their equipment from the
lowest, bidder, other conditions as to guaranteed efficiencies, times of delivery, etc., being satisfactory. Some large power groups distribute their purchases among different manufacturers for
the specific purpose of maintaining competition.
Several manufacturers stated that prior to 1925 they were unable to sell to companies
affiliated with the Electric Bond & Share Co., which was then controlled by the General Electric
Co. Executives of the Electric Bond & Share Co. stated that the company’s policy had always
been to purchase from the General Electric Co. only In case the latter’s prices and terms were
at least as favorable as those of other companies. A study of the generators in use during 1925
in the plants of companies affiliated with the Electric Bond & Share Co.; however, showed that
for specified 5-year periods within which such generators were Installed from 1905 to 1925, 91
to 97 per cent were of General Electric make as compared with from 60 per cent to 75 per cent
for their privately owned companies not so affiliated, and from 36 to 44 per cent for municipal
plants.
The General Electric and Westinghouse Cos., through their research organizations, have been
leaders in developing patents, technical information, and manufacturing experience in the nature
of trade secrets that are of value to companies in foreign countries. Foreign companies likewise
have patents and information valuable to companies in America. The result is that these two
large American companies have severally entered into contracts with numerous large electrical
manufacturing interests in the principal foreign industrial countries. By these contracts each
party, among other things, makes the other its exclusive licensee under its patents in a specified
territory. Thus these two large American companies have obtained the American rights under
the foreign patents of many of the most important foreign companies. These rights may be used
or withheld from use as the big companies see fit, as no other American manufacturer can obtain
the rights without the consent of their American holders. Thus potential competition, both of the
foreign companies and of other American manufacturers who might otherwise obtain rights
under the foreign patents, is eliminated.
In the beginning of the electric-power industry two or more independent plaints frequently
competed in supplying electric energy in a given locality. This,

ECONOMIC DIVISION

27
however, resulted in comparatively small plants and In duplication of distribution lines, with
resulting high costs for the energy sold by each oaf the competing companies. Consolidations
of local companies followed, until at the present time each city or district usually is supplied by
a single operating company. In most States these local monopolies are recognized by laws
declaring them to be public utilities subject to a governmental regulation. State regulation of the
sale of power is confined to intrastate commerce. The growing movement of power across State
lines, with the development of large operating units and their connection to form larger so-called
superpower Systems, is steadily increasing the importance of interstate commerce in power
which is beyond the field of State regulation and for which there is at present no adequate
provision for Federal regulation.
Particularly during the last 20 years numerous so-called holding companies have grown up
which control, finance, and manage local operating companies, sometimes situated in as many
as 20 or more States. These holding companies normally own only voting stocks amounting in
many cases to not more than 25 per cent of the total outstanding capitalization of operating
companies. In many States the issuance of securities by operating companies and the
expenditure of funds raised thereby is subjected to State regulation. The financial transactions
of a mere holding company, however, controlling operating companies in a given State but
chartered in another State, escape direct regulation, because the holding company is not engaged
in intrastate commerce in that State, nor even doing business there. Consequently the
opportunity for unchecked speculative pyramiding of holding-company structures exists, and
It has been exploited by the sale to the public of a large volume of holding-company securities
that are based upon their equities, merely in what has been aptly described as the "control of
control” of operating properties. Not only do the financial operations of holding companies
escape State regulation, but the fees charged for their services to operating companies likewise
occasion difficulty to State regulatory agencies. Fees for financing and construction services are
allowed to be capitalized as a basis for rates, while fees for operating management are
chargeable to operating expenses. State commissions must pass upon the allowance of these
items without adequate authority to obtain information regarding their reasonableness, if the
holding companies are incorporated in other States. Some complaint on this score has been
noted in particular instances.
Rate regulation was one of the earliest and still is the most important function of State
regulatory bodies. The determination of the amount of investment to be used as a basis for
measuring the fairness of rates is an important feature of rate regulation. The view of the
Massachusetts and other State utility commissions as well as of the Interstate Commerce
Commission that capital honestly and prudently invested should be taken as the controlling
factor in the determination of fair and reasonable rates appears to be gaining ground. It is the
frequent practice of holding companies, however; at group a number of local operating
companies and merge them to form a single large operating company, with the possibility of
profit to the holding interests in the turnover of the properties. Applications to State
commissions for increased valuations following such mergers sometimes have been made and
allowed.
The characteristic feature of the power industry under governmental regulation is the absence
of competition in the usual sense of the word. Electric power, however, is in constant
competition with other forms of power, particularly in the manufacturing industries. Electric
power companies, therefore, frequently offer exceptionally low rates to Induce industrial
concerns to

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

buy power rather than to produce it, and they also make sales to distributing companies at low
rates. Such low rates, often made by special contract and with little aor no effective supervision
by regulatory agencies, may be for sales of power in interstate commerce, in which case State
commissions do not have jurisdiction. Consumers of electric energy for lighting, however,
whose aggregate consumption represents not more than 25 to 30 per cent of the total demand,
but who pay 60 to 70 per cent of the gross amount derived from sales of energy, are dependent
upon effective public regulation to insure that their rates are fair.
A notable feature of the power industry is the competition among holding company interests
to acquire desirable operating properties in various States. The frequent result of this
competitive bidding, it is alleged, is speculative fluctuations in the prices of voting stocks of
operating companies, for which prices paid often do not coincide with book equities nor bear
any reasonable relationship to past or probable future earning capacities.
The power industry has a large and very active trade organization, the National Electric Light
Association, which in 1926 included in its nine classes of membership 15,820 of the leading
power operating and holding companies, manufacturers of electric power equipment, engineers,
scientists, and others interested in the development of the power industry. The object of the
association, as set forth In its constitution, is to advance the art and science of the production,
distribution, and use of electric energy, largely through educational methods. The association’s
activities may be classed under three general heads: (1) Compilation and dissemination of
technical and other information; (2) cooperation with other organized groups of manufacturers,
dealers, engineers, scientists, financial interests, underwriters, and with State and Federal
governmental agencies in the consideration of matters affecting the power industry, either
directly or indirectly; and (3) educational activities intended to create public good will for the
industry as at present conducted under private ownership subject to public regulation. Through
its extensive divisional and committee organization, cooperation with technical, trade, financial,
governmental, and other organizations, and through its contacts with the press and other
agencies for the molding of public opinion, the association undertakes many lines of activity that
care unusual in trade association programs, and until quite recently, at least, it has sometimes
been lacking in frankness toward the public.
There were formerly two manufacturers’ trade associations and one manufacturers’ social
organization federated under what was known as the Electrical Manufacturers’ Council, which
in 1927 were consolidated under the name of the National Electrical Manufacturers’
Association. The council exercised an unusual amount of control over the activities of Its
constituent associations in applying the rule that all acts or proposed activities should be subject
to review by the council’s legal committee and its employed counsel. In this way the council was
apparently alert in keeping the manufacturers’ association activities in line with the requirements
of the antitrust laws.
PETROLEUM PRICES, PROFITS, AND COMPETITION

On December 12, 1927, the commission transmitted to the United States Senate a
report on Prices, Profits, and Competition in the Petroleum Industry. This report was
made pursuant to Senate Resolution 31 of the Sixty-ninth Congress, first session,
agreed to June 3,

ECONOMIC DIVISION

29
1926. Although the Senate resolution was addressed primarily to the question whether
there was arbitrary control of prices of petroleum and its products through agreements
among companies engaged in the industry or through conditions of ownership or
control of oil properties, its broad scope and the complicated character of the
petroleum industry made it necessary to cover all phases of the industry, which
embraces crude-petroleum production, pipe-line transportation, petroleum refining,
and the distribution of petroleum products to the consumer. The important facts set
forth in the report are as follows:
Less than 20 years ago one company, which was absolutely controlled by a very small group
of men, completely dominated the petroleum industry and determined the prices of both crude
petroleum a and the refined products. Since then great changes have taken place in the
organization and importance of many companies and in their relations to one another and to the
industry as a whole. This has been due partly to the separation of most of the subsidiaries of the
Standard Oil Co. of New Jersey from this holding company in 1911, as a result of a Judicial
decree under the antitrust acts, and partly to the great expansion of the industry through new and
extremely productive fields of crude supply and through new and well-nigh insatiable demands
for gasoline for motor cars.
In 1906 the Appalachian, the Lima-Indiana, and the mid-continent fields each had a crude
production of about 22,000,000 barrels, and the California field bad about 33,000,000 barrels
of heavy crude, though it was then of little value except for fuel. By 1926 about 425,000,000
barrels were produced in the mid-continent field, 225,000,000 in California, and 85,000,000 in
other fields west of the Mississippi, the total production being over five times as large as in
1906. With respect to refined products, the census for 1905 shows a production of 27,000,000
barrels of illuminating oils, with a production of gasoline of only 5,800,000 barrels. In 1926 the
production of kerosene was 62,000,000 barrels and of gasoline 300,000,000 barrels. Gasoline
production had increased more than fiftyfold. With this great expansion numerous large and
efficient independent companies have developed and the potentiality of competition has been
restored.
All of the separated Standard companies in the aggregate now have about 25 per cent of the
crude production and about 45 per cent of the output of refined products. They had about 80 per
cent of refined products 20 years ago. Considering all the large companies, both Standard and
independent, each of 11 refining companies now uses more than 2 per cent of the total crude
refined in the United States. Five of these companies have evolved from the dissolution of the
old Standard combination, and their combined consumption is nearly 42 per cent of the total;
the consumption of the six independent companies is roughly 25 per cent. In the marketing. of
their refined products the independent companies sustain roughly the same relation to one
another and to the whole as in the refining business. About half of the crude is still produced by
a very large number of individuals or small companies, but more than two-thirds of the “proven
acreage” of oil-bearing lands of the country is in the hands of nine Standard companies and the
six independent companies to which reference is made above. Interstate pipe-line mileage for
the transportation of crude oil has increased from 49,000 miles in 1920 to nearly 75,000 at the
present time. Formerly nearly all these pipe lines were controlled by Standard refining interests,
and even

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

after the law declaring them common carriers had been upheld by the Supreme Court (1914)
they had minimum requirements as to the quantity accepted for shipment, which generally
prevented their use by any companies but those affiliated with them. This commission, in a
report published in 1916, recommended that these minimum quantities should be greatly
reduced. The Interstate Commerce Commission in 1922 directed a reduction in this minimum
quantity for shipments to certain points from 100,000 to 10,000 barrels, and voluntary
reductions since then have resulted in the extensive use of such pipe lines by independents. A
still greater equality of opportunity in the use of pipe lines appears desirable.
The inquiry disclosed with respect to company management that 179 directors hold 458
directorships in companies covering 70 per cent of the industry aside from the production of
crude, but only four instances were reported of inter-locking of directorates such as would have
an appreciable tendency to unify the control of any considerable part of the industry.
The controlling ownership of the several Standard Oil companies which, after the dissolution
decree was put into effect in 1911 rested in the hands of three or four individuals, has been
widely dispersed. So far as this factor is concerned there is no longer unity of control of these
companies through community of interest. Among different companies this community of
interest varies widely, and is largest among the pipe-line companies.
Of nearly 10,000 reported large stockholders in all reporting companies only 163 were found
to have as much as 1 per cent or more of the voting stock of each of two or more companies, and
only 22 of these were holders of stock in potentially competing large groups. With respect to
5 individuals and 11 other holders, each of them had more than 1 per cent of the voting stock
of the controlling companies in two or more of the Standard groups, and each of six brokerage
houses held more than 1 per cent of the voting stock of both Standard and independent
companies. None of these holdings, however, appears to have any especial significance with
respect to control No individual reported as the holder of 1 per cent or more of the stock of two
Standard companies is reported as an officer or director of any company in the petroleum
industry.
The Standard marketing companies continue in general to confine their tank-wagon sales to
retailers and their filling station business to the separate territories assigned to them before the
combination was dissolved, but there are now numerous exceptions to this rule. Thus the
Standard of New York and the Standard of California compete for such business on the Pacific
coast. In Texas and Arkansas the Standard of New York likewise competes with the Standard
of New Jersey. The Standard of Indiana through a recently acquired subsidiary is now In
competition with the Standard of New Jersey, the Standard of New York, the Standard of
Kentucky, and other instances might be cited.
Moreover, some of the largest Standard companies hold themselves ready to sell gasoline in
tank ears to jobbers without restriction as to the territory of resale, thus making it possible for
the independent jobber to resell in com petition with them. Some of them also sell In tank cars
outside of their regular marketing territories. The number of independent jobbers is very large
and is rapidly increasing.
The resolution directing this inquiry, which was agreed to June 3, 1926, was grounded on the
fact that in the early part of each of the years 1924 to 1926 gasoline prices had been materially
advanced in the face of rapidly accumulating stocks and had been reduced later in the year when
stocks were decreasing. Since the first four months of the year also constituted the

ECONOMIC DIVISION

31

period of lowest consumption, this paradoxical showing seemed to indic ate an interference
with the free working of the law of supply and demand. The change in price was downward in
the early part of 1927, in strong contrast to what had happened in the years immediately
preceding.
In general, as to the prices of crude petroleum, this inquiry tends to establish the conclusion
that the price movements for the longer periods are substantially controlled by supply and
demand conditions, but that these conditions are reflected quite imperfectly in shorter periods,
partly because crude prices are determined by the decisions of a few large purchasing companies
among which there is generally little real competition. With respect to refined products, at least
in local sale and distribution, the price conditions reflect even less closely the actual changes in
supply and demand, so far as they can be measured by concrete statistical facts. In part this
corresponds to the normal conditions of local marketing over wide areas, but in part also to the
fact that the varying prices at which the different Standard companies offer their products at the
same time In their respective marketing territories are generally followed by their competitors.
No recent evidence was found of any understanding, agreement, or manipulation among large
oil companies to raise or depress prices of refined products. General changes in tank-wagon
market prices of gasoline are decided upon and announced to competitors, generally a day in
advance, through “Platt’s Oilgram” service, ticker service, by telephone, or otherwise by each
company of the Standard Oil group for its particular territory, independently of the other
Standard companies. These changes in prices, which are not simultaneous for the different
Standard companies, are generally followed immediately by most of the independent marketers
in the respective regions in which such price changes are made. The independent companies
seldom take the initiative in c hanging pr ices. Discounts and concessions from the regular prices
are often give to various customers at different times by all the companies in the trade While
there is keen competition for volume of business between the various independent and the
Standard Oil companies in the several territories, price competition is generally only sporadic,
local, or temporary.
There is a w id e difference in the retail prices of gasoline in various sections of the country
At the end of June, 1927, gasoline sold at retail in San Antonio, Tex., at 15 cents per gallon,
while the price at Boise, Idaho, was 25.5 cents per gallon. The Boise price was 10.5 cents, or
70 per cent, over the San Antonio price. These wide prices differences are due to a number of
factors, such as differences in railway freight, differences in wholesaler’s margins, differences
in State gasoline sales taxes, and differences in retail dealers’ margins. In certain cases there are
considerable differences at adjacent points within a State which are due to local competition.
Complaint s as to unfair competition were not frequently encountered, the Independent
jobbers being more concerned, about price cutters in their own ranks. It is admittedly one of the
chief functions of jobbers’ associations to keep members from cutting the tank-wagon and
filling-station prices announced by the Standard companies. The Standard companies and the
other large companies, when once established, are not complained of much as price cutters.
Particular cases of alleged unfair competitive methods are described in the report.
Through a system of licenses under certain pa tents to produce gasoline by the “cracking
process” a so-called patent pool was recently established among a number of large refiners, but,
as the legality of this arrangement is now before the courts, this commission refrains from
expressing an opinion upon that score.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Restrictions of production of crude oil In particular fields have occurred from time to time as
a result of concerted action of producers. Information obtained in this investigation indicates that
agreements made in 1926 and 1927 by officials of the largest oil companies in the country to
restrict production of crude petroleum in the Seminole fields had for their object the protection
of the profits of the companies by preventing further declines in crude prices and consequently
in the prices of refined products as well as the preventing of the physical waste of petroleum,
which, while threatened, has not occur red apparently to any considerable extent. In this policy
they have been aided, more-over, by the public authorities of Oklahoma, who ultimately
imposed restrictions on production.
Recently several important mergers have been made in the oil industry of companies engaged
in interstate trade; and in each case except one a Standard company has been one of the elements
of the new organization. Among them may be mentioned the combination of the Standard of
Indiana with the Pan American Petroleum & Transport Co., the Standard of California with the
Pacific Oil Co., the Standard of New York with the General Petroleum Corporation, and the
Tidewater Oil Co. with the Associated Oil Co. Only the economic results of these mergers are
considered here, and a study of them discloses in each case the development through this means
of a rather completely integrated organization, with marketing outlets for refined products and
with sufficient crude production and proven acreage to supply the refineries included. In two
instances especially, not mentioned above, the companies merged had been marketing petroleum
products within the same areas, so that some suppression of competition was incidentally
involved in merging them.
It is apparent that increased competitive activity has developed in the industry in the most
recent years, but this has not prevented an increasing rate of profit in all of its branches. Returns
were received by the commission from most of the important producing, refining, and marketing
companies. For the years 1923, 1924, 1925, and the first half of 1926, the rate of profit on
investment, based on the companies’ own figures, ranged from an average of 2.5 per cent in
1923, a year of depression in the industry, to 14.7 per cent in the first half of 1928 for all crudeoil-producing companies reporting, and from 5.1 per cent to 11.3 per cent for the refining
companies. The profits of interstate pipe-line companies were much higher, exceeding 17 per
cent in every year of the period 1921-1926, and averaging no less than 20.3 per cent. The profits
of the petroleum industry, however, were much higher before and during the war than in recent
years.
The peculiar conditions connected with the occurrence and production of petroleum,
especially the fact that an operator may be able to drain the petroleum from adjacent owners’
land, together with the tendencies of the present leasing system, have led to a movement for
devising some method of regulating production in order to conserve the petroleum and to protect
the financial interests of landowners and operating companies. This commission is not now
prepared to make any recommendation as to the methods to be used, as this problem is being
considered by the Federal Oil Conservation Board.
STOCK DIVIDENDS

On December 5, 1927, the commission sent to the Senate its report on stock
dividends in response to Senate Resolution 304, Sixty-ninth Congress, second session,
approved December 22, 1926, directing the commission to “ascertain and report to the
Senate the names and the

ECONOMIC DIVISION

33
capitalization of corporations that have issued stock dividends, together with the
amount of such stock dividends, since the decision of the Supreme Court holding that
stock dividends were not taxable, and to ascertain and report the same information as
to the same corporations ford the same period of time prior to such decision.”
This report presented the names, capitalization, and amounts of stock dividends of
10,245 corporations paying such dividends since the decision of the Supreme Court
of the United States that such dividends were not taxable to shareholders. (Eisner V.
Macomber, 252 U. S. 189.) This was the total number of corporations paying stock
dividends subsequent to the decision from which the commission was able to procure
reports which could be thus tabulated. As the names of many of the corporations in
question were obtained from the Treasury Department records relating to stock
dividends in recent years only, a very large proportion of the returns were not suitable
for statistical comparison to show the trend of business policy prior and subsequent to
the stock dividend decision referred to. Taking 2,971 corporations which were strictly
comparable not only for dividends but also for capitalization and surplus for 14 years
(7 years prior and 7 years subsequent to the decision), the absolute increase in stock
dividends in the later period as compared with the former may be computed at about
476 per cent for those corporations paying a stock dividend at any time during the
entire 14 years.
In the later seven years these corporations distributed in stock alone the equivalent
of about 28 per cent of their total surplus available for distribution and of about 42 per
cent of the total surplus attributable to the seven years in question. In the earlier seven
years the equivalent of only a little over 8 per cent of the total surplus available for
distribution and of less than 11 per cent of the total surplus attributable to the period
was distributed in stock. The probable reasons for the difference between the two
periods, as explained in detail in the report, are the heavy reinvestment of earnings in
property in both periods which were not capitalized until after the decision in Eisner
v. Macomber. In the earlier period it was uncertain whether such dividends were
taxable or not, and the rear of such taxation, which would have especially affected
large stockholders subject to high surtaxes, was probably a potent reason for not
issuing them. The stock-dividend decision early in 1919 removed this objection.
From 1920 to 1926 the large dividend declarations in stock and cash, more
particularly the former, reduced the average surplus per dollar of capitalization from
$1.07 to $0.53. Surplus per dollar of capitalization at the close of 1926 was below that
at the beginning of 1913, when it amounted to $0.60.

34

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
GRAIN, BREAD, AND GRAIN

This inquiry was begun under Senate Resolution 163, which directed the
commission to investigate the production, distribution, transportation, and sale of
flour and bread, showing costs, prices, and profits at each stage of the precess of
production and distribution from the time the wheat leaves the farm until the bread is
delivered to the consumer; the extent and methods of price fixing, price maintenance,
and price discrimination; the developments in the direction of monopoly and
concentration of control in the milling and baking industries; and all evidence
indicating the existence of agreements, conspiracies, or combinations in restraint of
trade.
On May 7, 1926, a preliminary report on the profits of flour millers and conditions
of competition in the flour-milling industry was sent to the Senate, and on February
11, 1927, a preliminary report on bakery combines and profits was submitted. These
were referred to in detail in the 1926 and 1927 annual reports of the commission,
respectively.
On January 11, 1928, there was transmitted to the Senate a report covering all phases
of the inquiry called for by the resolution, though in respect to competitive conditions
in flour milling the report was not as full as it was desired, owing to the refusal of the
Millers’ National Federation to furnish the commission certain information requested.
It is expected that the commission will issue a supplementary report when decision has
been reached on certain legal proceedings now under way to determine its right to this
information.
The report issued January 11, 1928, includes a study of the mar-gins of wheat
handlers, the marketing of flour and bread, competitive conditions in both flour and
bread baking, bread prices, and profits and costs for both bread and flour. In addition,
there is shown the distribution of the consumer’s price of bread among the successive
agencies of production, manufacture, and distribution.
Detailed returns covering the marketing of bread were obtained by the commission
from 147 large baking companies operating 355 plants. Probably one-half or more of
the total commercial bread is produced and sold by a comparatively small number of
companies. In 1925, 57 companies, including 3 chain-store systems operating 278
plants, produced and sold more than 30 per cent of the estimated total commercial
production of that year.
The study of wholesale baking plants by size groups indicates that, in general, the
costs of the larger plants are appreciably lower than for the smaller plants taken as a
whole. On the other hand, very low-cost plants are found in practically every size
group, and a number of the small plants show as low cost as the largest.

ECONOMIC DIVISION

35
From 1922 to 1924 consumers paid retail grocers an average price of 8.549 cents for
a pound of bread. Of this final sales realization the farmer received 1.145 cents, the
miller 0.4060 cent, the baker 5.110 cents, and the retail grocer 1.279 cents, excluding
the cost of the wheat, flour, and bread to the miller, baker, and retail grocer,
respectively, these latter items being omitted to avoid duplication. Transportation of
wheat and flour and country and terminal handling charges absorbed the remainder of
this total sales realization, amounting to about 0.6 cent.
The inquiry has shown, among other things, that wholesale baking has in recent
years been generally profitable. In several places price-cutting wars have occurred,
sometimes initiated by the big bakery combines and followed by price-fixing
agreements.
PANHANDLE CRUDE PETROLEUM

In October, 1926, in response to a request by producers in the Panhandle oil field in
northwest Texas, a special inquiry was made to ascertain the reasons for a recent
reduction in the price of petroleum which was instituted by the major purchasing
companies.
As a result of investigation among large and small operating companies, whose
combined production comprised more than 70 per cent of the current output of the
Panhandle field, it was found that prior to August 1, 1926, the oil was purchased upon
a gravity basis. Crude oil testing 28°-28.9° A. P. I. gravity brought $1.35 per barrel,
with an addition of 5 cents for each full degree in gravity up to 390 gravity and above,
for which the maximum price was $1.90 per barrel. This schedule of prices applied
particularly to Hutchinson and Carson Counties.
On August 1, 1926, one of the small purchasing companies abolished the gravity
basis and announced a flat price of $1.25 per barrel for oil produced in Hutchinson and
Carson counties. On September 22 and 24 similar action was taken by two of the major
purchasing companies. On October 4 the remaining purchasing company adopted the
same course. This brought the matter of price reduction to an issue. At that time the
daily production in Hutchinson and Carson Counties was around 120,000 barrels,
which was equivalent to 96 per cent of the total output for the Panhandle field.
On one hand, particularly among the smaller producers, there was a strong belief that
they were being imposed upon, and allegations of discrimination as compared with
prices paid for Oklahoma and North and Central Texas crude petroleum were made.
On the other hand, the purchasing companies declared that the Panhandle crude was
abnormally high in paraffin and sulphur content, thus making it more difficult to
handle in pipe lines and in refinery operations, and be-

36

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

cause of these unusual characteristics there was no demand for the oil among refiners.
Furthermore, what was deemed highly objectionable was the fact that the producers
were pushing drilling operations and increasing the production at a time when pipe line
and storage facilities were inadequate to handle the output.
After a thorough investigation of the situation it was found that only a few of the
smaller producers had taken the precaution to erect storage tanks to care for the new
production, and drilling operations had increased the output to a point far in excess of
the pipe line and storage facilities of the few purchasing companies that were attempting to handle the oil. Prorating the quantity of oil taken from each producer was
resorted to, and this afforded some relief to the smaller producers.
There were adequate railroad facilities for shipping the oil to distant points, but there
was an obvious shortage in field storage tanks and in gathering pipe lines to move the
oil. from the wells to railroad loading racks. The larger and more experienced
producing companies erected tanks and installed gathering lines to handle their own
production, and they also gave liberal assistance to neighboring smaller producers. The
greatest difficulty was in providing adequate facilities to accommodate all those that
desired an immediate market and constant service in moving the oil from the wells.
As regards the reasons for reducing the price of the product , inquiry among the few
refineries that had experience in refining Hutchinson County oil developed the opinion
that because of its peculiar character it was more difficult to handle and more
expensive to refine than c rude produced in some adjacent fields. With respect to the
properties of the Panhandle crude petroleum, a report of recent analyses by the United
States Bureau of Mines states that “the crude oil now being produced in the recently
discovered Panhandle field of Texas has gained the reputation of being a difficult
crude to refine. This is largely due to the fact that the oil contains sulphur compounds
which are difficult to remove from the gasoline and other products. The crude as
produced, according to a report of the Bureau of Mines (No.6014, December, 1926),
usually contains a small amount of emulsified water, which should be completely
removed in the field as it is corrosive to refinery equipment, and the high wax content
of the oil causes it to congeal in storage tanks and pipe lines and makes it difficult to
transport during cold weather.
ELECTRIC POWER AND GAS UTILITIES

Senate Resolution 83, Seventieth Congress, first session; directed the commission
to inquire into , and report to the Senate upon certain aspects of the policies and
practices of electric po we r and gas utility companies and associated interests. The
subjects of inquiry are,

ECONOMIC DIVISION

37

broadly speaking, their financial management and their methods of publicity. In
undertaking this work the commission directed that the financial aspects should be
investigated by the chief economist, while the methods of publicity should be inquired
into by the chief counsel, both, however, working in cooperation. The information
collected in accordance with the direction of the Senate resolution is being put in
evidence by the chief counsel through public hearings, over which a member of the
commission has been designated to preside. Further details of this investigation will
be found under Public Utilities Investigation, page 1.
RESALE PRICE MAINTENANCE

Pursuant to a resolution of the commission adopted July 25, 1927, a comprehensive
study of the question of resale-price maintenance was undertaken during the year. The
resolution directed the chief economist to make inquiry regarding the maintenance of
manufacturers resale prices, both at wholesale and retail, and to report to the
commission on the advantages and disadvantages of resale-price maintenance to
manufacturers, wholesalers, and retailers, and to the consumers who ultimately buy the
goods. The resolution further directs that the study shall cover the costs, prices,
margins, and profits of manufacturers and distributors on price-maintained and nonprice-maintained goods, the relationship of advertising expenses to such costs, price
se, margins, and profits, the ca uses or motives for price cutting by distributors, the
effects of such price cutting upon the volume of goods handled, and its effects either
in eliminating manufacturers and distributors from business, or in multiplying the
number of distributors if such effects are found, together with any other facts pertinent
for the consideration of the Congress, and the character of legislation, if any, on the
subject that should be recommended to the Congress by the commission.
This inquiry was initiated late in 1927, and has been carried on as rapidly as limited
personnel permitted. Schedules and questionnaires have been sent to thousands of
manufacturers, wholesalers and retailers of price-maintained and nonprice-maintained
goods. In this connection a large amount of field work was done by the agents of the
commission in studying the policies and practices of different classes of traders and
in assisting in securing the returns. Questionnaires calling for general information one
the subject have also been sent to thousands of professional men and consumers.
Responses to the commission’s requests for financial and other information have
resulted in a mass of valuable material, which is being summarized for the preparation
of a report, which will also include in its scope; considerable study of published
material on price maintenance in the United States and in certain foreign countries.

38

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
OPEN PRICE ASSOCIATIONS

At the end of the fiscal year the report On open price associations was organized and
substantially written, the important being further work needed to round out the analyze
is Basic field work and statistical compilations had been completed.
Although, this inquiry relates directly only to open price associations, it was deemed
important to make a general canvass of practically all trade associations whose
members do an interstate business. It was necessary to obtain some information from
each association in order to determine whether it should be classed as open price or
not, in the Sensed of the McKellar resolution (S. Res. 28, 69th Cong., special session
of the Senate), under which this inquiry was undertaken. It was also felt that the
significance of open price activities could be determined only by comparison, and
especially by comparison between open price associations and other trade associations
that compile and distribute trade statistics but do not include price information as an
activity.
The inquiry has therefore been rather broad, and some information has been obtained
from a large number of trade associations. In the number covered exceeds 1,000.
The term “open price” association was defined for the purposes of the commission’s
report in the words of the McKellar resolution as one “distributing or exchanging price
information.” The price information in question may relate merely to the general
market trend and contain nothing in the nature of actual prices obtained in specific
transactions. In this group are included any that are known to have functioned as open
price associations, even if with reference to only a part of the membership or for only
a short time, since the date of the McKellar resolution.
LUMBER TRADE ASSOCIATIONS

Closely connected with the open price associations inquiry is that into lumber trade
associations, which was initiated by the commission. This latter inquiry was intended
to bring down to date previous surveys of the activities of five specific lumber
associations operating in the South and West. While the work as planned was
practically completed before the close of the year under review , the draft of the report
was not in shape for submission to the commission.
GEOGRAPHIC BASES OF PRICE MAKING

On July 27, 1927, the commission directed the chief economist “to inquire into and
report upon (1) the factory base method, the basing point method, and the delivered
price method of quoting and charging prices (including their respective variations),
together with any

ECONOMIC DIVISION

39
other method of differentiating prices with respect to location; (2) the causes for the
adoption of the several methods employed and the purposes intended to be served by
them; (3) their actual and potential effects upon prices and competitive conditions; and
(4) any constructive measures which might be employed to promote greater efficiency,
economy, or fairness in the methods of quoting or charging prices.”
Information on price making is being gathered through interview and questionnaire
and from invoices of manufacturers. In the case of the latter the offices of dealers and
manufacturers are visited and the price data transcribed directly from original or
duplicate documents.
Progress in the work of this inquiry has been retarded by the prior claims of other
inquiries as well as by the negotiations with firms and associations frequently
necessary before access to their records would be secured or information requested
was furnished. Nevertheless, questionnaires have been received from a considerable
proportion of the trade associations covering manufacturing lines and from individual
manufacturers in all the more important industries, while invoice records have
generally been made available to the commission’s agents. This information variously
secured is being assembled for further study.
DU PONT INVESTMENTS INQUIRY

On July 29, 1927, the chief economist was directed to institute an inquiry into the
acquisition of stock of the United States Steel Corporation and of General Motors by
the E I. du Pont de Nemours Co. This inquiry was completed and the report submitted
to the commission just after the close of the fiscal year ended June 30, 1928.
Some time after this work was started the Du Pont Co. disposed of its interests in the
United States Steel Corporation, which was the principal condition provoking the
inquiry. The effects of such intercompany stockholdings were also covered by this
study.
Certain phases of the inquiry have been referred to the legal division for further
investigation.
CHAIN STORES

On May 3, 1928, the Senate, by Resolution 224, directed the commission to make
an investigation of the chain-store system of marketing and distribution. Under the
resolution, which is broad in scope. the commission is to ascertain and report on,
among other things, the extent, if any, to which consolidations of chain stores have
been effected in violation of the antitrust laws and the extent to which such
consolidations are susceptible to regulation under the present
16588---28-----4

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

laws; the extent, if any, of control of commodities by chain stores; the existence, if
any, of unfair competitive methods, agreements, conspiracies, or combinations in
restraint of trade; the advantages or disadvantages of chain-store distribution in
comparison with those of other types of distribution as shown by prices, costs, profits,
and margins, quality of goods and services rendered by chain stores and other
distributors or resulting from integration, managerial efficiency, low overhead, or other
similar causes; the parts played in the growth of chains by actual savings in costs of
management and operation and quantity prices available only to chain stores, and
whether or not such quantity prices constitute a violation of either the Federal Trade
Commission act, the Clayton Act, or any other statute. The commission is also to
recommend legislation, if deemed needful, in respect to regulation of chain-store
distribution and quantity prices.
Work on this inquiry was undertaken shortly after the passage of the resolution. The
comprehensiveness of the resolution and the intricacies of the problem, due to the wide
ramifications of the chain-store system of distribution, necessitated a thorough canvass
of the task to be undertaken. At the close of the fiscal year plans for conducting the
active work on the inquiry were being developed.
BLUE-SKY SECURITIES

On July 27, 1927, the commission adopted a resolution, which, after setting forth
that, in cases that had come before it, the commission had found inadequate present
legislative remedies in respect to so-called blue-sky securities, that the commission had
formerly made a general inquiry into the subject, but no report had been published, and
the practice of selling worthless securities is an economic evil which should be
promptly remedied, if practicable, directed that the chief economist to inquire further
into the practice of selling such securities; the legislative, administrative and other
methods employed to abate the evil and the results thereof; together with other matters
covered by the previous inquiry in order to bring the same up to date; and to report
thereupon to the commission.
Work on the foregoing resolution was got well under way in the latter months of
1927, and work in the field was completed early in 1928. Considerable progress has
been made in the preparation of text for the report, the completion of which has been
delayed owing to the necessity for using as large a number of the commission’s force
as possible on more urgent work in connection with the power and gas utility
investigation ordered by the Senate.

CHIEF COUNSEL
OUTLINE OF PROCEDURE

The chief counsel is the legal adviser to the commission and, among other things, is
charged with the duty of supervising the preparation of complaints and other legal
process directed by the commission, the prosecution or defense of all cases before the
commission and in the courts, and of the work of the export-trade section. He is also
specifically charged with the duty of conducting the public hearings and certain other
phases of the public-utilities investigation under Senate Resolution No.83.
It is only after the most careful scrutiny of the record that the commission issues a
complaint. The commission must have, in the language of the statute, a reason to
believe that the law has been violated and that the public interest is involved before
complaint issues. The complaint is the specified statutory means provided to bring
before the commission a party charged with violation of laws within its jurisdiction.
Unlike the preliminary inquiries and applications for complaint, which are held strictly
confidential, the complaint and answer is a public record, and with the issuance of a
complaint there is set up the formal docket; which, unless otherwise specifically
directed by the commission, is open for public inspection after the complaint has been
served upon the respondent.
A complaint is issued in the name of the commission in the public interest. It names
a respondent and charges a violation of law, with a statement of the charges. The party
first complaining to the commission is not a party to the complaint when issued by the
commission; nor does the complaint seek to adjust matters between parties. It is to
prevent unfair methods of competition for the protection of the public.
The commission s rules of practice and procedure provide:
(1) In case of desire to contest the proceeding the respondent shall, within 30 days from the
service of the complaint, unless such time be extended by order of the commission, 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. Respondent shall specifically admit or deny
or explain each of the facts alleged in the complaint, unless respondent Is, without knowledge,
In which case respondent shall so state, such statement operating as a denial. Any allegation of
the complaint not specifically denied in the answer, unless respondent shall state in the answer
that respondent is without knowledge, shall be deemed to be admitted to be true and may be so
found by the commission.

41

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

(2) In case respondent desires to waive hearing on the charges set forth in the complaint and
not to contest the proceeding, the answer may consist of a statement that respondent refrains
from contesting the proceeding or that respondent consents that the commission may make,
enter, and serve upon respondent an order to cease and desist from the violations of the law
alleged in the complaint, or that respondent admits all the allegations of the complaint to be true.
Any such answer shall be deemed to be aim admission of all the allegations of the complaint and
to authorize the commission to find such allegations to be true.
(3) Failure of the respondent to file answer within the time as above provided for shall be
deemed to be an admission of all allegations of the complaint to authorize the commission to
find them to be true and to waive hearing on the charges set forth in the complaint.

After complaints are issued the chief counsel is charged with the trial or other proper
disposition of all cases. In a contested case the matter is set down for the taking of
testimony before a trial examiner upon due notice to all parties respondent. After the
taking of testimony and the submission of evidence on behalf of the commission.. in
support of the complaint, and on behalf of the respondent, the trial examiner prepares
a report of the facts for the information of the commission, counsel for the
commission, and counsel for the respondent. Exceptions to the trial examiner’s report
may be made by either counsel for the commission or counsel for the respondent.
Within a stated time after receipt of the trial examiner’s report briefs are filed and then
the case comes on for final argument before the full commission. Thereafter the
commission reaches a decision either sustaining the charges of the complaint or
dismissing the complaint. If the complaint is sustained, the commission makes a report
in which it states its findings as to the facts and conclusion that the law has been
violated, and thereupon an order is issued requiring the respondent to cease and desist
from such practices. If the complaint is dismissed, an order of dismissal is entered.
Respondents against whom orders to cease and desist have been directed are
required within a specified time, usually 60 days, to report in writing the manner in
which they are complying with the provisions of the commission’s order. If a
respondent fails or neglects to obey the order while the same is in effect the
commission may apply to a United States circuit court of appeals for enforcement
thereof. Respondents may likewise apply to a United States circuit court of appeals for
review of the commission’s orders, and these proceedings may be carried by either
party on certiorari to the Supreme Court of the United States for final determination.
All court proceedings are supervised by the chief counsel through the assistant chief
counsel in charge of appellate work.

CHIEF COUNSEL

43

SUMMARY OF WORK, 1928

The work. of the export-trade section is reported, at page 94. That of the public
utilities investigation is described at page 1. The volume of other work of the chief.
counsels office is concisely expressed in the statistical tables to be found on pages 87
to 93 of this report. Complete synopses of complaints disposed of by orders of
dismissal or orders to cease and desist entered during the year and all cases pending.
at its close will be found in Exhibits 6 and 7, pages 137 and 155.
CHARACTER OF COMPLAINTS

In the course of the performance of its duties the commission is called upon to
protect the public from unfair and monopolistic business practices.
All but 5 of the 66 complaints issued during the year charged unfair methods of
competition violative of section 5 of the Federal Trade Commission act. Violations of
section 7 of the Clayton Act by of capital stock of competing concerns were charged
in five complaints. There was one complaint issued charging violation of section. 3 of
the Clayton Act (tying contracts). This complaint also includes a charge of violation
of section 5 of the Federal Trade Commission act. Violation of section 8 Of the
Clayton Act (interlocking directorates) was charged in one complaint, which complaint
is among those containing charges of violation, of section 7 of the same act. In one
complaint charges were made of violation of section 5 of the Federal Trade
Commission act as extended by section 4 of the export trade act. No complaints under
section 2 of the Clayton Act (price discrimination) were issued during the past fiscal
year.
Herewith are presented brief summaries of the charges contained in a few of the
complaints issued by the commission during the past fiscal year. These complaints are
fairly representative.1
Conspiracy to fix prices--Restraint of trade--Violation of section 5 of the Federal
Trade Commission act.--A complaint on this subject was issued by the commission on
May 22, 1928, against 55 manufacturers of fire brick and 4 individuals connected with
such business. The complaint charges them with entering into an agreement,
combination, and conspiracy, and using concerted action among themselves and with
others to restrict, restrain, and suppress competition in the sale of fire brick for the
purpose and with the intent and effect of unduly enhancing the prices of fire brick and
to bring

1 Attention is especially invited to the fact that most of these complaints are pending, and
consequently the commission has reached no determination as to whether the law has been
violated as charged therein.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

about a substantial uniformity of such prices; that in such concerted action, or pursuant
to the alleged combination, agreement, or piracy, respondents (a) established the size
of base bricks and fixed the price at which base bricks are to be sold; (b) brought about
uniform methods of computing the size of various refractories and the base brick
equivalent of such refractories, also uniform terms and methods of sale; (c) hold
meetings for the discussion of prices; (d) exchange information as to what prices for
base brick from each of the respondents are to be in the future; (e) notify each other
of any changes to be made in the prices of base brick and when such prices are to
become effective; (f) cooperatively place each of the sizes, kinds, and grades of
refractories in definite classes and fix and agree upon the differential or extra in price
above the price of the base brick for each of the classes fixed and agreed upon; and (g)
adopt and follow these classifications in the sale of their refractories.
The complaint also charges that the effect of said concerted action and/or agreement,
combination, and conspiracy is to suppress competition and to restrain trade in the sale
and distribution of fire brick and to deny to the public those advantages in price and
otherwise which would obtain under conditions of natural and normal competition
between and among the respondents.
Answers on behalf of most of the respondents have been filed at the case of the
fiscal year, which, in general, deny any violation of law as charged.
Resale price maintenance--Violation of section 5 of the Federal Trade Commission
act.--There were three complaints issued during the year charging resale price
maintenance as an unfair method of competition. Typical of this character of complaint
is the one issued on July 20, 1927, against a manufacturer of a certain widely sold
proprietary medicine in which it is alleged that the respondent manufacturer has
adopted and is enforcing a system of fixing and maintaining certain specified uniform
prices at which the dealers shall sell the product; that in order to prevent dealers from
cutting prices or reselling the product at less than the prices established by the
respondent manufacturer it employs means substantially as follows: (a) Issues price
lists to dealers in which the uniform minimum resale prices established by it are set
forth; (b) makes it generally known to the trade that it expects and requires all dealers
to maintain and enforce said resale prices; (o) enters into contracts, agreements,
understandings, and arrangements with dealers for maintenance by them of such resale
prices as a condition to Opening accounts with such dealers or continuing to supply
them with the medicine; (d) procures groups of dealers in given localities to agree
among themselves and with it to observe and maintain such resale

CHIEF COUNSEL

45

prices; (e) secures from dealers information and evidence of the failure of other dealers
to observe and maintain the fixed resale prices and as to the wholesalers who supply
such price-cutting dealers; (f) employs its salesmen and other agents to ascertain and
investigate the activities of price-cutting dealers and to procure their adherence to the
fixed-price schedule; (g) uses the information procured to coerce price-cutting dealers
into observing the fixed prices and the wholesalers to refrain from supplying the
medicine to price-cutting dealers; (h) exacts promises and assurances from pricecutting dealers that they will in the future maintain the fixed resale prices and from
wholesalers that they will not in the future supply price-cutting dealers; (I) refuses to
supply price-cutting dealers unless and until the offending dealer gives satisfactory
assurances that they will in the future maintain and observe the fixed prices; (j) refuses
to sell to wholesalers who sell to price-cutting dealers unless and until such
wholesalers agree to discontinue supplying such price-cutting dealers; (k) in order to
check up on the wholesale prices, offers to retailers a special refund on condition that
they submit the wholesalers’ invoices; and also requests copies of wholesalers’
catalogues, circulars, and advertising matter relating to the product.
It is further alleged in the complaint that the direct effect and result of respondent’s
resale price-maintenance system is to suppress competition in the sale and distribution
of its medicine, to constrain dealers to sell its medicine at the fixed prices, and to
prevent them from selling it at less prices as they may desire, and to deprive the
ultimate purchasers of those advantages in price and otherwise which they would
obtain from the natural and unobstructed flow of commerce in said medicine under
conditions of free competition, all to the prejudice of the public and in violation of the
above-mentioned act.
Respondent filed its answer to the complaint denying the charges of violation of
law.2
Misrepresentation of furniture--Violation of section 5 of the Federal Trade
Commission act.--During the year 12 complaints were issued by the commission
against certain manufacturers of furniture charging them with unfair methods of
competition in causing their furniture to be represented to dealers and through them
to the consuming public, as “walnut,” “genuine walnut,” “combination walnut,”
“American walnut,” “mahogany and American walnut,” “mahogany and gumwood
combination,” “combination mahogany 5-ply walnut tops, fronts, and ends,” “walnut
and gumwood,” and “genuine mahogany” without disclosing that their furniture is
manufac-

2 The commission on July 26,1928, after trial of the case, Issued findings as to the facts and
order to cease and desist.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

tured from so-called plywood and that the only walnut or mahogany used in its
construction is to be found in the legs, posts, stretchers, rails, and in the exterior ply
of the broad or flat parts exposed to view when place in the generally accepted position
f or use. It is charged that such description of their furniture or designation of the wood
or woods used in its construction in catalogues, price lists, and invoices are adopted
by retail dealers in furniture and used by them in selling it to the purchasing public. It
appears from the complaints that the broad or flat parts of such furniture consist
chiefly of gum-wood, poplar, chestnut, or wood of similar grade, and that the exposed
exterior ply of walnut or mahogany is no more than one twenty-eighth of an inch in
thickness. The complaints charge that such description of furniture so constructed is
an unfair method of competition, because it has the capacity and tendency to mislead
and deceive into the purchase of said furniture in the erroneous belief that its broad or
flat parts consist entirely of walnut or mahogany.
At the close of the fiscal year answers to most of the complaints had been filed
admitting certain allegations but denying in general that the practices of respondent are
misleading, deceptive, or unlawful.
At a conference held between representatives of the commission and retail furniture
dealers in New York City in November and December, 1925, certain rules regarding
the description of furniture were adopted, and on January 7, 1926, approval of these
rules was announced by the commission. One of them provides that if wood is
veneered on the same wood it may be designated as wood of that particular kind, but
if veneered on a different wood it shall be “described as veneered. As the fiscal year
closed, approximately 1,000 manufacturers of furniture throughout the United States,
not including those against whom these complaints have been issue d, had subscribed
their approval of the rules so adopted at the trade-practice conference, and signified
their purpose to mark and describe their products accordingly.
DIFFICULTIES OF PROCEDURE IN ENFORCEMENT OF ORDERS OF
COMMISSION

Export trade--Violation of section 5 of the Federal Trade Com mission act, as
extended by section 4 of the export trade act.--On October 10, 1927, the commission
issued a complaint against a firm engaged in the business of exporting apples from the
United States to the Argentine. It is alleged in the complaint that the concern,
knowingly and contrary to the provisions of the trade-mark law of the Republic of
Argentina, registered as its trade-marks in Argentinean the names of a variety of
American apples and pears such as “Ben Davis,” “Gravenstein,” “Spitzenberg,”
“Jonathan,” “Winter Banana,” “Rome Beauty,” “Winesap,” “Flemish Beauty,” and

CHIEF COUNSEL

47
“Beurre d’ Anjou”; that apples and pears have for years been exported to and marketed
in the Argentine under such varietal names; that in the year 1925 respondents, well
knowing the facts, notified many of their competitors engaged in the export trade in
apples and pears to Argentina that all of said varietal names of apples and pears were
the property of the respondents and had been registered by them as trade-marks in
Argentina, and that they had the right to prevent any barrel or box containing such
apples or pears: and bearing any of said names from entering Argentina; that the
threatened to hold such competitors responsible for damages for all shipments made
by them of such apples and pears to Argentina under any such varietal names. It is also
charged in the complaint that these notices and threats have and had the capacity and
tendency to and did and do hamper and hinder the lawful business of said competitors
in the exportation of apples and pears and their sale in the Republic of Argentina for
the reason that said notices and threats cause many competitors to believe that if they
so export and sell such apples and pears they will be subjected by respondents to
lawsuits and other litigation which respondents threaten. This the complaint charges
is to the prejudice and injury of competitors and constitutes unfair methods of
competition in export trade prohibited by section 5 of the Federal Trade Commission
act as extended by section 4 of the export trade act.
Respondents have not as, yet filed answer to the complaint, but negotiations are
pending looking toward a solution of the problem in the interest of all exporters. The
commissions rules of practice provide that failure of the respondent to file an answer
within the time provided for shall be deemed to be an admission of all allegations of
the complaint and to authorize the commission to find them to be true and to waive
hearing on the charges set forth in the complaint. In this case the commission has
extended the time for filing answer.
ERRATUM
The heading on page 46 of this Annual Report reading “Difficulties of Procedure in
Enforcement of Orders of Commission” Should appear on page 77 above Paragraph reading “A
vexatious problem of procedure in the enforcement of orders . . .”

Misrepresentation of correspondence-school courses--Violation of section 5 of the
Federal Trade Commission act.--Ten complaints have been issued during the year
against correspondence schools claiming to give courses of instructions in subjects of
various designations, such as "Applied Art," "Fingerprint Work and Secret Service
Intelligence," "Physical Voice Culture," "Beauty Culture," "Automotive Engineering,"
"Music," "Poultry Culture," and "Physical Culture." The complaints in substance
charge that the several respondents sell their courses of instructions and induce pupils
to enroll and contract for such courses through divers false and misleading
representations as to the value of the course, the standing, equipment, faculty, and

accomplishments of the school, etc. Among

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

the various unfair and unlawful practices charged in the complaints are, in substance,
the following: (a) Purporting to grant extra discount or reduction from the regular
prices which are. fictitious; (b) falsely claiming that instruction books, instruments,
appliances, materials, or equipment furnished with the course are free; (c) falsely
representing that the school is a nonprofit organization; (d) falsely purporting to
guarantee to pupils positions at high and lucrative compensation or refund tuition fees,
etc.; (e) using intimidation and threats of legal proceedings to compel pupils to
continue courses be yond their intellectual capacity and to pay tuition charges in full;
(f) falsely representing that completion of course of instruction will make pupil an
expert qualified for employment as such; (g) falsely claiming that school’s “highschool” course qualifies pupils for en-trance to all colleges and universities; (h)
publishing fictitious employer advertisements in “help-wanted” columns in order to
develop prospective students; (I) falsely claiming to be a university; (j) falsely
promising to give pupils life membership in a purported existing organization which
in fact is fictitious; (k) making false, extravagant, and fictitious claims as to the
principle, its discoverer, value, and accomplishment of a course in voice culture; (l)
falsely representing that the course of instruction meets requirements of State laws;
and (m) falsely claiming as its graduate famous or successful member of profession.
In their answers to the complaints the respondents admit certain allegations’ and
deny others, particularly that their representations are false or misleading. Three of the
complaints have been disposed of, one by a dismissal because respondent has agreed
to abide by certain rules adopted in a trade-practice conference, and the other two by
orders directing respondents to cease and desist from making untruthful or misleading
representations.
Tying contracts--Violation of section 3 of the Clayton Act and section 5 of the
Federal Trade Commission act.--This complaint was issued on May 23, 1928, against
the respondent corporation. It alleges that this corporation is the exclusive distributor
for radio receiving sets and radio vacuum tubes manufactured by two other dominant
corporations and deals in no other; that since about January, 1927, the respondent
corporation, together with said two manufacturers, granted, under so-called “License
agreements,” to approximately 25 manufacturers in the United States of radio
receiving sets, the right to manufacture and sell receiving sets under certain of their
patents upon certain conditions, one of which is that such licensed manufacturers shall
purchase from respondent sufficient vacuum tubes to make the sets so manufactured
initially operative; that the patents covering the manufacture of said vacuum tubes had
thereto-

CHIEF COUNSEL

49

fore expired; that the respondent corporation and the licensed manufacturers sell
approximately 95 per cent of all radio receiving sets produced in the United States;
that the effect of the above-mentioned condition imposed upon such a large number
of manufacturers is that, whereas formerly the purchasers of radio receiving sets were
supplied with vacuum tubes by dealers, wholesalers, and retailers, from the products
of various manufacturers of such tubes sold by them in free competition and kept in
stock by said dealers, under said condition of the license agreements said licensed
manufacturers must purchase from the respondent corporation all tubes required for
the initial operation of the sets and install them in the sets, when sold, as part thereof,
so that the manufacturers of other vacuum tubes have no opportunity to compete in the
sale of tubes for the equipment of such sets when sold by the manufacturers, as they
formerly had; that by force of said provision the sale of vacuum tubes for initial
equipment is monopolized by the respondent, and all other producers and sellers of
vacuum tubes for radio reception are excluded entirely from the competition for
supplying said equipment; that further, such condition tends to and does exclude all
other producers and sellers of vacuum tubes from selling their tubes for renewals or
replacements in said receiving sets, the purchasers and owners of said sets naturally
seeking for replacement the same make of tubes as those installed in the sets as
originally purchased, so that dealers in the sets made under said license agreements
find it necessary to keep in stock the tubes sold by the respondent to the virtual
exclusion of the tubes of other manufacturers. The complaint charges that for the
reasons above indicated said license agreements constitute contracts for the sale by
respondent of radio vacuum tubes for use, consumption, or resale on the condition,
agreement, or understanding that the purchasers of the vacuum tubes shall not use or
deal in the vacuum tubes of competitors of the respondent corporation, the effect of
which is to substantially lessen and eventually extinguish competition or tend to create
a monopoly in respondent in the interstate sale of vacuum tubes, all in violation of
both the Clayton Act and the Federal Trade Commission act.
The case is pending upon the complaint and the respondent’s answer in which it
denies that its practices are in violation of law as charged.
Acquisition of capital stock of competitors--Violation of section 7 of the Clayton
Act.--A typical complaint on this subject is the one issued by the commission on
March 3, 1928, against a recently organized corporation which acquired the capital
stock of two corporations engaged for many years in the manufacture and sale in
competition with each other of electrical wiring devices of various types, kinds, and
classes. The volume of sales of each of these corporations prior

50

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

to the acquisition by respondent is alleged to have been more than $4,000,000
annually. Each of the acquired corporations owned subsidiary manufacturing
corporations and operated plants or factories in Philadelphia, PL, Trenton and
Washington, N.J., and Hartford, Conn. It is charged in the complaint that the effect of
respondent’s acquisition and control of the voting power of the capital stock of the two
competing corporations may be and is (a) to substantially lessen competition in
electrical wiring devices between the corporations whose stock respondent acquired;
or (b) to restrain commerce in electrical wiring devices of various types, kinds, and
classes in the sections or communities in which such corporations were severally
engaged at the time of such acquisition; or (c) to tend to create a monopoly of
commerce in such electrical wiring devices, all in violation of the Clayton Act.
At the close of the fiscal year respondent had not yet filed its answer, the usual time
therefor having been extended by the commission.
ORDERS TO CEASE AND DESIST

The final expression of the commission, in a case where respondent is found to have
violated the law, as alleged, is an order upon such respondent to cease and desist from
the particular practices alleged in the complaint. The commission during the year here
reported upon issued orders to cease and desist in 47 cases. All of these orders coveted
violations of section 5 of the Federal Trade Commission act relating to unfair methods
of competition. One was for violation of section 5 of the Federal Trade Commission
act as extended by Section 4 of the export trade act. No orders for infraction of the
Clayton Act were issued during the fiscal year. As in past years, respondents upon
whom the commission served orders to cease and desist have in a great many cases
accepted their terms and filed reports with the commission signifying compliance
therewith.
The orders to cease and desist issued during the year are as follows:
Orders to Cease and Desist During Year
[For details see Exhibits]
Respondent
Always Ready Products Co
American Snuff Co
disparagement of

Location
Williamsport Pa
Memphis, Tenn

Method of competition involved
False and misleading advertising,
Resale price maintenance;
competitors’ goods; inducing

breach of contracts.
Bayak Cigars (Inc.)
Philadelphia, Pa
misbranding.
Bradley & Co., James 3
New York, N.Y.
be importer.
Bradstreet Inc,.) et al, Hobart
Chicago, Ill
misuse of
Carey Manufacturing Co. et al Cincinnati, Ohio

False and misleading advertising;
Misbranding; falsely claiming to
False and misleading advertising;
photographs.
Inducing breach of contracts;

espionage; threats
Philip.
competitors’

of litigation; disparagement, of
goods;

contracts.

exclusive

dealing

CHIEF COUNSEL

51
Respondent

Orders to Cease and Desist During Year--Continued
Location
Method of competition involved

Carlton Soap Co. (Inc.)
Chipman Knitting Mills at al
Columbia Novelty Co

New Rochelle, N.Y.
Easton, Pa
East Boston, Mass

Commonwealth Manufacturing
et al.

Chicago, Ill

Crites, J. H. et al

Fort Worth, Tex

Dispatch Petroleum Co. et al.

Wichita Falls, Tex

Dollar Co Robert
Dwinell-Wright Co
Eagan Manufactory, Dr. et al.
Eastern Seed Co.

San Francisco, Calif
Boston, Mass
Chicago, Ill
Lancaster, Pa

Famous Players-Lasky Corporation et al
nopoly;

New York, N.Y.

Misbranding; false and misleading advertising.
False and misleading advertising; misbranding.
False and misleading advertising; misrepresenting
value of premium
False and misleading advertising falsely claiming Co.
to be manufacturer; misbranding; falsely
claiming Government approval.
False and misleading advertising; misrepresentation
in sale of stock.
False and misleading advertising; misrepresentation
in sale of stock.
False and misleading advertising; passing off.
Resale price maintenance.
False and misleading advertising.
False and misleading advertising; misrepresenting
value of premiums.
Conspiracy to injure competitors; purchase of stock
stock to lessen competition or create a moinducing breach of contract; block

booking.
Orear College of Automotive
Engineering et al
Karnmond Lumber Co
Herb Juice Medicine Co
Hewitt Brothers Soap Co
Hoffman, Henry H., et al
Household Supply Co. et al

Chicago, Ill
Los Angeles, Calif
Jackson, Tenn
Dayton, Ohio
Houston, Tex
Chicago, Ill

False and misleading advertising; falsely claiming
reduced price.
False and misleading advertising; passing off.
Resale price maintenance; coercion; refusal to sell.
False and misleading advertising; misbranding.
False and misleading advertising;
misrepresentation in sale of stock.
False and misleading advertising; falsely claiming
to be manufacturer; falsely claiming to

sell at
Kirschmann Hardwood Co
San Francisco, Calif
Kurlan Charles
New York, N.Y.
Lease Co. (Inc.), Robert M.,
Long Island City,
et al.
Long Island, N. Y
Leitch Manufacturing Co., C.A. New York, N.Y.
Marie Antoinette Perle Co.
do
Marvel Dress Co
Philadelphia, Pa
McCafferty Sons ManufacBrooklyn, N.Y.
turing Co. (Inc.), James A.
Meteor Coal Co
St. Louis, Mo
Michigan Sample Furniture Co. Philadelphia, Pa
Mid-American Oil & Refining
Fort Worth, Tex
Co. et al
Mills Silver Works et al
New York, N. Y
Morrissey & Co., Charles T.,et.al Chicago, Ill
National Fruit Flavor Co.(Inc.).
New Orleans, La
New York Pharmaceutical
New York, N. Y
Conference (Inc.)
Nustile Hosiery Mills et al.
Philadelphia, Pa
Perryman Investment Co. et al

Houston, Tex

Photo-Engravers Board of
New York, N. Y
Trade of New York (Inc.)et al
Photo-Engravers Club of Chicago Chicago, Ill.
Public Service Cup Co
Brooklyn, N. Y
Right Way Royalty Syndicate et al Fort Worth, Tex
Roberts & Co., Norman

Chicago Ill

wholesale prices.
False and misleading advertising; passing off.
Misbranding.
False and misleading advertising; fraud in export
trade.
Misbranding.
False and misleading advertising; misrepresentation
False and misleading advertising.
Misbranding; misrepresentation.
Misrepresentation; passing off.
False and misleading advertising; misrepresentation
False and misleading advertising; misrepresentation
in sale of stock.
False and misleading advertising; falsely claiming
to be manufacturer.
Misbranding; false and misleading advertising.
False and misleading advertising.
Resale price maintenance; coercion; intimidation.
False and misleading advertising; misrepresentation
falsely claiming to be manufacturer.
False and misleading advertising; misrepresentation
in sale of stock.
Combination to effect price enhancement and
price maintenance.
Do.
Resale price maintenance; coercion; refusal to sell.
False and misleading advertising; misrepresentation
in sale of stock.
False and misleading advertising.

Roller Oil & Refining Co.
(Inc.) et al.
School of Applied Art
giving of free
Shepard, S.F., et al
Shure Co., N
claiming
Smith, Hanford F

Maxia, Tex
Battle Creak, Mich.

Chicago, Ill
do

Elkhart, Ind

False and misleading advertising; misrepresentation
in sale of stock.
False and misleading advertising falsely claiming
reduction in price; falsely claiming
goods
False and misleading advertising; misrepresentation
in sale of stock
False and misleading advertising; misbranding;
fictitious price markings; falsely
Government approval.
False and misleading advertising; falsely
representing equipment, etc.

52

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Orders to Cease and Desist During Year--Continued
Location
Method of competition involved
Red Lion, Pa
False and misleading advertising; misbranding,
passing off.
Union Woolen Mills Co. et al
Racine, Wis
False and misleading advertising; falsely claiming
to be manufacturer.
Washington Cereal Association et al Seattle, Wash
Combination to suppress competition.
Waterbury Clock Co. et al
Waterbury, Conn
Resale price maintenance; coercion; refusal to sell.
Wholesale Grocers Association
New Orleans, La
Restriction to regular dealers; inducing refusal to
of New Orleans et al.
sell certain dealers as wholesalers.
Respondent
Tampa Cigar Co,

A number of representative cases resulting in orders to Cease and desist issued
during the fiscal year are described below:
“Philippine Mahogany” cases--Violation of section 5 of the Federal Trade
Commission act.--Orders to cease and desist were issued against three hardwood
lumber companies in proceedings in which they were charged with the use of unfair
methods of competition in that they sold as “Philippine mahogany “ lumber from certain trees not mahogany grown in the Philippine Islands but having some of the general
characteristics and appearance of mahogany. Upon a stipulation that the evidence
taken in certain analogous cases theretofore tried before the commission should be
taken as the evidence in these proceedings, the commission found that the Woods sold
by respondents as “Philippine mahogany,” which are set out by name in the orders to
cease and desist, Were not in fact mahogany and the selling of said woods as
“Philippine mahogany” was misleading and deceptive to the purchasing public. The
orders, entered by the commission on August 16, 197, directed respondents to cease
and desist from advertising, describing, or otherwise designating or selling under the
terms “mahogany,” “Philippine mahogany,” or any other term of similar import, woods
known under the common or, trade names, “red lauan,” “white lauan,” “tanguile,”
“narra,” “apitong,” “bataan, “lamao,” “almon,” “orion,” “batang,” “bagaac,” “batak,”
and “balachacan,” or any other wood, lumber, or wood product, unless such Wood or
lumber or the wood from which such products are made, is derived from the trees of
the mahogany or Meliaceae family.
These are part of a group of similar cases, one of which was by agreement selected
as a test case and the commission’s order to cease and desist, similar to the foregoing
orders, was affirmed upon respondent’s petition for review by the United States Circuit
Court of Appeals for the Second Circuit. Shortly after the close of the fiscal year the
company applied to the Supreme Court for certiorari to review the decision of the
lower court.
Blue Sky cases--Violation of section 5 of the Federal Trade Com mission act.--There
were eight orders to cease and desist issued during

CHIEF COUNSEL

53

the year in this class of cases where respondents Were charged in complaints issued
by the commission with selling stocks or securities in certain oil development or
promotion schemes through and by means of false and misleading representations
concerning the property, resources, assets, production, management, or financial
condition, etc., of the companies whose stocks or Securities respondents were offering
for sale.
These cases had been placed on the commission’s suspense calendar pending the
determination of certain criminal matters being prosecuted by the Department of
Justice and having to do with the misuse of the mails in the sale and distribution of oil
stocks and securities. During the past fiscal year the commission’s cases were removed
from the suspense calendar and brought to conclusion by the issuance, on August 19,
1927, of orders against a number of the respondent companies and individuals
directing them to cease and desist from publishing, circulating, or distributing any
newspaper, pamphlet, circular, advertisement, or any other written or printed matter
in connection with the sale or offering for sale in interstate commerce of stocks or
other securities wherein is printed or set forth any false or misleading statement or
misrepresentation concerning the promotion, organization character, history, resources,
assets, production, earnings, income, dividends, progress, or prospect of any
corporation, association, or partnership.
Pacific coast milling industry--Price fixing combination--Violation of section 5 of
the Federal Trade Commission act.--A complaint had been issued by the commission
against the Washington Cereal Association and the Oregon Cereal and Feed
Association, their officers and members, including some 32 individuals and
corporations engaged in the flour and feed milling business. Among others, allegations
were made of the following acts and practices which the commission found to be true
upon respondents’ having elected to refrain from contesting the charges: (1) That the
respondents manufacture over 75 per cent of the entire amount of flour produced
annually in the State of Washington and over 60 per cent of the aggregate amount
produced annually in the three States of Washington, Oregon, and Idaho; (2) that
respondent associations, their officers, members, and various committees, both among
themselves, within their respective organizations and all cooperating together, have
been and still are engaged in an unlawful combination and conspiracy affecting the
distribution of milled grain between and among the States of Washington, Oregon,
Idaho, and other States, and which was entered into with the purpose, intention, and
effect of suppressing competition throughout said States and the fixing of uniform
prices, price levels, discounts, terms and conditions of sale,

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

distribution and delivery of milled grain; (3) that, in Carrying out and enforcing their
agreements and conspiracy by which they fixed prices and suppressed competition in
flour and other grain. products, they engaged in a large number of overt acts and
practices as set forth in the commission’s findings of fact.
With the exception of the Globe Grain & Milling Co., found to have discontinued
its milling business, the order to cease and desist entered October 27, 1927, was issued
against all respondents, and they were therein directed by the commission to cease and
desist from (1) combining, agreeing, or cooperating among themselves or with others,
either through correspondence, association meetings, the secretaries of the said
associations, meetings of one or more of them, or otherwise, to fix, maintain, or
control uniform prices, discounts, terms and conditions of sale, distribution, and
delivery; (2) exchanging in formation among themselves or with others regarding
contemplated changes in prices, discounts, terms and conditions of sale, distribution,
and delivery; (3) preparing and distributing among themselves or others lists
containing uniform prices, discounts, terms and conditions of sale , distribution, and
deliver y which have been agreed upon; and (4) agreeing to abide and be governed by
the uniform prices, discounts, terms and conditions of sale, distribution , and delivery
agreed upon by either association when selling in the territory of that association.
Conspiracy in restraint of trade--Violation of Federal Trade Commission act.--On
November 17, 1927, the commission issued an Order to cease and desist. against the
Wholesale Grocers’ Association of New Orleans, its officers and members, consisting
of certain individuals and companies engaged in the wholesale grocery business in the
New Orleans territory. The respondents waived bearing and did not contest the charges
which the commission thereupon found to be true.
The order directed them to cease and desist from the practices com plained of as
follows: (1) From following a common course of action pursuant to any agreement,
understanding, combination, or conspiracy among themselves or with others for the
purpose or with the effect of lessening competition in the sale of groceries by or
through any of the following means or methods, viz: (a) By holding meetings for the
interchange of information concerning and the adoption and discussion of plans and
measures for carrying out the above-described undertakings or similar undertakings;
(b) by notifying manufacturers and producers of groceries or allied, products of; such
undertakings and their purpose and effect and by seeking to procure or procuring any
manufacturers or producers to abide by such agreements or undertakings or similar
agreements or undertakings on the part

CHIEF COUNSEL

55
of respondents or any of them; (c) seeking by boycotts and by other means of
intimidation and coercion to compel manufacturer’s and producers of groceries and
allied products to Sell the groceries and products in which they respectively deal only
to wholesale dealers who are classified by respondents or any of them as so-called
regular and legitimate dealers in groceries and allied products, and seeking to confine
sales to the members of the respondent association, and also seeking to restrain such
manufacturers and producers from selling their respective products to so-called
irregular and illegitimate dealers; (d) seeking or Securing the names of so-called
irregular or illegitimate dealers in groceries and allied products and reporting the
names of such dealers to manufacturers and producers of groceries and allied products
and inducing or compelling such manufacturers and producers to cease dealing with
or to refuse to deal with such dealers; (e) by espionage at wharves, docks, freight
stations and warehouses, and at other places at which merchandise is unloaded,
discharged, stored, and delivered , for the purpose of ascertaining sales of groceries
and allied products by manufacturers and producers thereof to so-called irregular and
illegitimate dealers; and by threats of boycott or by boycotting, seeking to induce
manufacturers to refrain from selling or supplying such products to such dealers; and
(f) by using any other cooperative, mutual, or individual means to carry out any of said
methods or undertakings with the intent or effect of lessening competition in interstate
trade or commerce in groceries and allied products.
Misrepresentations--Violation of section 5 of the Federal Trade Commission act.--In
connection with the sale of cosmetics, creams, lotions, and other toilet articles, the
commission on December 16, 1927, issued an order against the Kling-Gibson Co., of
Chicago, and four individuals connected therewith, directing them to cease and desist
from certain false, fraudulent, and deceptive practices in which the commission found
they were indulging with the intent and purpose of deceiving and defrauding the
public; and concerning the charges of which respondents waived hearing. The
following are among the practices respondents were directed to discontinue: (1)
Making any representations for the purpose, intent, or effect of thereby deceiving,
defrauding, or misleading the public; (2) using the name “Dr. Egan,” or name or title
of any doctor, physician, or medical practitioner, real or fictitious, as having an y
connection with their products; (3) falsely representing that any doctor, physician; or
medical practitioner is in any way connected with the origin, preparation, or use or sale
of any of their products; (4) falsely representing that their products are medicated or
have any therapeutical value or effect; (5) falsely representing the curative, restorative,
or beautifying effects of such products upon the human
16588---28----5

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

body; (6) falsely representing the existence of a drug or a biological product; (7)
falsely representing that respondents are manufacturers or compounders of the
products in which they deal or that they own control, or operate a factory or
laboratory; and (8) falsely representing the absence of an objectionable ingredient in
their products.
Photo-Engraving case--Conspiracy to fix and enhance prices--Violation of section
5 of the Federal Trade Commission act.--This case is of national scope in which were
named as respondents (1) the American Photo-Engravers’ Association, a trade
association of the manufacturing and commercial photo-engravers and the national
organization for some 31 local photo-engravers’ associations or clubs the members of
which produced from 75 per cent to 90 per cent of the total output of photo-engravings
in the United States; and (2) the International Photo-Engravers’ Union of North
America, with which over 90 per cent of the workmen in the industry in the United
States are affiliated and organized into some 75 local unions, also named parties
respondent.
In the complaint of the commission the employers operating through their local and
national associations and the employees operating through their unions were charged
with combining, conspiring, confederating, and agreeing together to adopt, maintain,
and enforce a scale of uniform and enhanced prices for the sale of photo-engraving
products and to limit, lessen, hinder, and suppress competition in such products. After
full trial, in which some 3,500 pages of oral testimony and 339 documentary exhibits
were received in evidence, the commission issued its findings of fact and thereupon
dismissed the complaint as to the unions but entered an order against the American
Photo-Engravers’ Association and the local or sectional organizations thereof directing
them to cease and desist from combining, conspiring, confederating, cooperating, or
agreeing together or with others for the purpose or with the result of limiting, lessening, hindering, regulating, or suppressing competition as to price In the sale of photoengraving products, or as to any process, operation, or time element in such products,
or of enhancing the prices of photo-engraving products sold in interstate commerce;
and for such purpose, from coercing, intimidating, or preventing any manufacturers of
such products from individually and freely making such prices for their products as the
free exercise of their individual judgment shall direct, and from preventing such
manufacturers from competing in price among themselves or with others engaged in
the same business. It is also provided in the order that for the purpose of carrying it
into effect these respondents shall cease and desist from certain practices, some of
which are as follows: (a) Agreeing upon or using the so-called standard price scale or
similar device as a means for hindering, lessening, or curtailing price com-

CHIEF COUNSEL

57

petition; (b) from seeking, advocating, or making any agreement or understanding that
members of a club or association or individual photo-engravers of one locality or
section shall not sell their products at prices lower than the customary agreed or
understood price in any territory where sales are to be made; also from advocating and
declaring that it is unethical or unbusinesslike or remiss or negligent for a photoengraver located in one locality or section to compete in price or otherwise with one
or more photo-engravers in any other section or locality; (c) using any device, contract,
provision, mutual understanding, or other means with unions or otherwise as a means
for inducing or compelling any photo-engraving concern to adhere to certain prices or
minimum prices for photo-engraving products; (d) from reprimanding, fining,
suspending, or expelling from any employer organization any member for competing
in price or failing to live up to any uniform price understanding; (e) from asserting or
using the privilege to inspect books of accounts of any photo-engraver for the purpose
of obtaining evidence of price cutting or failure to abide by uniform price
understandings; and (f) from holding estimating classes for the purpose of securing
uniform price understandings.
Motion-Picture case--Restraint of trade--Violation of section 5 of the Federal Trade
Commission act.--In this case respondents were charged in the complaint of the
commission with having entered into a combination and conspiracy to secure control
of and monopolize the motion-picture industry and to restrain, restrict, and suppress
competition in the distribution of motion-picture films. Hearings were held at
numerous points throughout the United States at which over 17,000 pages of testimony
and 728 documentary exhibits were received in evidence. After reviewing briefs and
hearing oral argument the commission on July 9, 1927, made its findings as to the facts
. and issued an order against certain of the respondents, namely, the Famous PlayersLasky Corporation, Adolph Zukor, and Jesse L Lasky, their agents and representatives,
directing them to cease and desist substantially as follows: (1) From continuing in
force or attempting to carry into effect the conspiracy (which the commission found
they had entered into) for the purpose of lessening and restricting competition in
foreign or domestic commerce; (2) in the business of producing, distributing, and
exhibiting motion-picture films, from leasing and distributing such films by so-called
block-booking, a system by which motion-picture films are supplied or offered to
theaters or exhibitors in a group or “block,” the exhibitor or theater to book all the
films in the group or “block” or be permitted to book none; and (3) from building or
acquiring, or threatening so to do, any theaters for the purpose or with the intent or
effect of intimidating or coercing exhibitors of motion-picture films to lease

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

or book and exhibit motion-picture films of the Famous Players-Lasky Corporation.
Shortly after the close of the fiscal year the commission filed in the United States
Circuit of Appeals for the Second Circuit its petition: to enforce the order to cease and
desist, in which petition it alleged that the above-named respondents have failed and
neglected to obey the order, and have continued and are continuing to violate the terms
thereof. This petition is now pending in court.
Export trade--Violation of section 5 of the Federal Trade Com mission act as
extended by the export trade act.--Complaint had been issued by the commission
against a number of individuals and corporations of New York, engaged in the
business of exporting auto mobiles, trucks, and auto parts, in which they were charged
with using certain unfair methods of competition in export trade. Upon hearing of the
charges the commission found that seven of the respondents had been indulging in the
unfair practices as alleged, and on March 3, 1927, directed them and their agents and
representatives to cease and desist from pursuing or continuing the unfair methods of
competition in export trade for the purpose or with the effect of injuring the public and
competitors and bringing into disrepute the export trade of the United States by any
of the following methods: (1) Representing themselves as willing and able or
promising to furnish for export trade automobiles, motor trucks, or chassis as and for
new, complete, and fully equipped machines with standard parts, when they are not
properly equipped or do not intend to furnish such machines or parts in accordance
with their representations and undertakings; (2) promising or representing themselves
as willing and able to furnish in export trade automobiles, motor trucks or chassis as
and for new, complete, and fully equipped machines with standard parts, when they
are not properly equipped or do not intend to furnish such machines or parts in
accordance with their representations and undertakings; (3) demanding or exacting
payments in advance of receipt or opportunity for full inspection by purchasers of the
merchandise furnished or conducting their export trade in any manner as to cause such
demands to be made without opportunity for inspection when and if such merchandise
so furnished in export trade is not in exact accordance with their representations and
undertakings; and (4) conducting their export trade by any similar means or methods
as to tend to prejudice the public and competitors and others engaged in American
export trade.
METHODS OF COMPETITION CONDEMNED

The following list shows unfair methods of competition and Clayton Act violations
which have from time to time been con-

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59
demned by the commission and prohibited by orders to cease and desist:
Misbranding of fabrics and other commodities respecting the materials or ingredients of which
they are composed, their quality, origin, or source.
Adulteration of commodities, misrepresenting them as pure, or selling them under such names
and circumstances that the purchaser would be misled Into believing them to be pure.
Bribery of buyers or other employees of customers and prospective customers to secure new
customers or induce continuation of patronage.
Making unduly large contributions of money to associations of customers.
Procuring the business or trade secrets of competitors by espionage, by bribing their
employees, or by similar means.
Procuring breach of competitor’s contracts for the sale of products by misrepresentation or
by other means.
Inducing employees of competitors to violate their contracts or enticing away employees of
competitors in such numbers or under such circumstances as to hamper or embarrass them in
business.
Making false or disparaging statements respecting competitors’ products, their business,
financial credit, etc.
The use of false or misleading advertisements.
Making vague and indefinite threats of patent-infringement suits against the trade generally,
the threats being couched in such general language as not to convey a clear idea of the rights
alleged to be infringed, but, nevertheless, causing uneasiness and fear in the trade.
Widespread threats to the trade of suits for patent infringement arising from the sale of alleged
infringing products of competitors, such threats not being made in good faith but for the purpose
of intimidating the trade.
False claims to patent, trade-mark, or other rights or misrepresenting the scope thereof;
appropriating and using trade-marks wrongfully.
Intimidation for the purpose of accomplishing enforced dealing by falsely charging disloyalty
to the Government
Tampering with and misadjusting the machines sold by competitors for the purpose of
discrediting them with purchaser.
Trade boycotts or combinations of traders to prevent certain wholesale or retail dealers or
certain classes of such dealers from procuring goods or goods at the same terms accorded to the
boycotters or conspirators, or to coerce the trade policy of their competitors or of manufacturers
from whom they buy.
Passing off of products, facilities, or business of one manufacturer or dealer for those of
another by imitation of product, dress of goods, or by simulation or appropriation of advertising
or of corporate or trade names, or of places of business, and passing off by a manufacturer of
an inferior product for a superior product theretofore made, advertised, and sold by him
Unauthorized appropriation of the results of a competitor’s ingenuity, labor, and expense,
thereby avoiding costs otherwise necessarily involved in production.
Preventing competitors from procuring ‘advertising space in newspapers or periodicals by
misrepresenting their standing or other misrepresentation calculated to prejudice advertising
mediums against them.
Misrepresentation in the sale of stock of corporations.
Selling rebuilt machines of various descriptions, rebuilt automobile tires, and old motion-

picture films slightly changed and renamed as and for new products.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Harassing competitors by requests, not In good faith, for estimates on bills of goods, for
catalogues, etc.
Giving away of goods In large quantities to hamper and embarrass small competitors and
selling goods at cost to accomplish the same purpose.
Sales of goods at cost, coupled with statements misleading the public into the belief that they
are sold at a profit.
Bidding up the prices of raw materials to a point where the business is unprofitable for the
purpose of driving out financially weaker competitors.
The use by monopolistic concerns of concealed subsidiaries for carrying on their business,
such concerns being held out as not connected with the controlling company.
Intentional appropriation or converting to one’s own use of raw materials of competitors by
diverting shipments.
Giving and offering to give premiums of unequal value, the particular premiums received to
be determined by lot or chance, thus in effect setting up a lottery.
Schemes and devices for compelling wholesalers and retailers to maintain resale prices on
products fixed by the manufacturer.
Combinations of competitors to enhance prices, maintain prices, bring about substantial
uniformity in prices, or to divide territory or business, or to put a competitor out of business, or
to close a market to competitors.
Acquiring stock of another corporation or corporations where the effect may be to
substantially lessen competition, restrain commerce, or tend to create a monopoly.
Various schemes to create the impression in the mind of the prospective customer that he is
being offered an opportunity to make a purchase under unusually favorable conditions when
such is not the case, such as-(1) Sales plans in which the seller’s usual price is falsely represented as a special reduced
price made available on some pretext for a limited time or to a limited class only.
(2) The use of the “free” goods or service device to create the false impression that
something is actually being thrown in without charge, when, as a matter of fact, fully covered
by the amount exacted in the transaction taken as a whole.
(3) Sales of goods in combination lots of with abnormally low figures assigned to staples the
prices of which are well known and correspondingly highly compensating prices assigned to
staples the cost of which is not well known.
(4) Sale of ordinary commercial merchandise at usual prices and profits as pretended
Government war surplus offered at a bargain.
(5) Use of misleading trade names calculated to create the impression that a dealer is a
manufacturer selling directly to the consumer with corresponding savings.
(6) Plans ostensibly based on chance or services to be rendered by the prospective customer
whereby he may be able to secure goods contracted for at particularly low prices or without
completing all the payments undertaken by him, when, as a matter of fact, such plans are not
carried out as represented and are a mere lure to secure his business.
(7) Use of pretended exaggerated retail prices in connection with or upon the containers of
commodities intended to be sold as bargains at lower figures.
(8) Falsely claiming forced sale of stock, . with resulting forced price concessions, when, as
a matter of fact, there is mingled the customary stock inferior goods, and other methods are
employed so that no such concessions are in fact accorded.

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61

Seeking to cut off and hamper competitors in marketing their products through destroying or
removing their sales display and advertising mediums.
Discriminating in price, with the effect of substantially lessening competition.
Subsidizing public officials or employees through employing them or their relatives under
such circumstances as to enlist their interests in situations In which they will be called upon by
virtue of their official position to act officially, making unauthorized changes in proposed
municipal bond issues, corrupting public officials or employees and forging their signatures, and
using numerous other grossly fraudulent, coercive, and oppressive practices in dealing with
small municipalities.
Suggesting to prospective customers the use of specific, unfair, and dishonorable practices
directed at competitors of the seller.
Imitating or using standard containers customarily associated in the mind of the general
purchasing public with standard weights of the product therein contained, to sell to said public
such commodity in weights less than the afore-mentioned standard weights.
Concealing business identity in connection with the marketing of one’s product, or
misrepresenting the seller’s relation to others--e. g., claiming falsely to be the agent or employee
of some other concern, or failing to disclose the termination of such a relationship in soliciting
customers of such concern, etc.
Misrepresenting in various ways the advantages to the prospective customer of dealing with
the seller, such as:
(1) Seller’s alleged advantages of location or size.
(2) False claims of being the authorized distributor of some concern.
(3) Alleged indorsement of the concern or product by the Government or by nationally known
businesses.
(4) False claim by a dealer in domestic products of being an importer, or by a dealer of being
a manufacturer, or by a manufacturer of some product of being also the manufacturer of the raw
material entering into said product.
(5) False claim of “no extra charge for credit.”
(6) Being manufacturer’s representative and outlet for surplus stock sold at a sacrifice, etc.
Tying or exclusive contracts, leases, or dealings in which, In consideration of the granting of
certain rebates or refunds to the customer, or the right to use certain patented equipment, etc.,
the customer binds himself to deal only In the products of the seller or lessor.
Showing and selling prospective customers articles not conforming to those advertised, in
response to inquiries, without so stating.
Direct misrepresentation of the composition, nature, or qualities of the product offered and
sold.
Use by business concerns associated as trade organizations or otherwise of methods which
result or are calculated to result in the observance of uniform prices or practices for the products
dealt in by them with consequent restraint or elimination of competition, such as use of various
kinds of so-called standard cost systems, price lists or guides, exchange of trade information,
etc.
Securing business through undertakings not carried out and through dishonest and oppressive
devices calculated to entrap and coerce the customer or prospective customer, such as:
(1) Securing prospective customer’s signature by deceit to a contract and promissory note
represented as simply an order on approval, securing agents to distribute the seller’s products
through promising to refund the money paid

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

by them should the product prove unsatisfactory, and through other undertakings not carried out.
(2) Securing business by advertising a “free trial" offer proposition, when, as a matter of fact,
only a "money back "opportunity is offered the prospective customer, etc
Giving products misleading names so as to give them a value to the purchasing public or to
a part thereof which they would not otherwise possess, such as:
(1) Names Implying falsely that the particular products so named were made for the
Government or in accordance with its specifications and of corresponding quality, or are
connected with it in some way, or in some way have been passed upon, inspected, underwritten,
or indorsed by it.
(2) That they are composed in whole or in part of ingredients or materials respectively
contained only to a limited extent or not at all.
(3) That they were made in or came from some locality famous for the quality of such
products.
(4) That they were made by some well and favorably known process, when. as a matter of fact,
only made in imitation of and by a substitute for such process.
(5) That they have been inspected, passed, or approved after meeting the tests of some official
organization charged with the duty of making such tests expertly and disinterestedly or giving
such approval.
(6) That they were made under conditions or circumstances considered of Importance by a
substantial fraction of the general purchasing public, etc.
Interfering with established methods of securing supplies in different businesses in order to
hamper or obstruct competitors in securing their supplies.
COURT CASES

Application may be made by the commission to the United States circuit courts of
appeals to enforce its order to cease and desist, or the respondent may petition the
Court to have the order set aside The number of court proceedings in which the
commission has been involved during the year, as well as a cumulative showing of this
work throughout the commission’s life, will be found in the statistical tables on pages
87 to 93 of this report., From these it will be noted that the commission has issued 851
(net) orders to cease and desist, and petitions to review these orders have been filed
in only 75 cases. The United States Circuit Court of Appeals decided 30 of these cases
in favor of the commission and 35 against. In 5 of these cases the commission was
sustained by the Supreme Court, of the United States.
Since its creation the commission has applied to the United States circuit courts of
appeals for enforcement of its order to cease and desist in a total of 11 cases; of these
3 have been decided in favor of and none against the commission; 2 petitions by the
commission were denied; 3 are still pending; and in three cases the applications for
enforcement have been withdrawn.
The pages immediately following contain brief descriptions of cases in the courts
during the year.

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CASES IN THE UNITED STATES. CIRCUIT COURTS OF APPEALS ARISING
UNDER SECTION 5 OF THE FEDERAL TRADE COMMISSION ACT AND
SECTION
7 OF THE CLAYTON ACT

Indiana Quartered Oak Co--Misrepresentation in the sale of wood in violation of
section 5.--The commission’s order in this, a test case, directed the respondent; and its
officers, directors, agents, employees, and successors to cease and desist from
advertising, describing, or otherwise designating or selling or offering for sale under
the term “mahogany,” Philippine mahogany,” or any other term of similar import,
woods known under the common or trade names, “red lauan, “white lauan,” “tanguile,”
“narra,” “apitong,” “bataan,” “lamao,” “ Orion,” “almon,” “batang,” “bagaac,”
“batak,” and “balachacan,” or any other wood, lumber, or wood products, unless such
wood or lumber, or the wood from which such products are made, is derived from the
trees of the mahogany or Meliaceae family.
By agreement, the company filed with the second circuit its petition to review and
set aside the order on October 14, 1927. Briefs were filed, not only on behalf of the
immediate parties but by the Philippine government, the National Better Business
Bureau, the National Hardwood Lumber Association, and the National Association of
Engine and Boat Manufacturers. The case was argued on the merits on April 19 and
20, 1928, and decided in favor of the commission on May 14, 1928, the court using the
following language (26 F. (2d) 840):
It was the petitioner’s advertising of lauan and tanguile woods as “Philippine mahogany” that
has worked deception upon the public. Purchasers from petitioner have relied upon its
representations and have sold the products made from these Philippine woods as mahogany.
Mahogany wood has had a long-established reputation; deception on the public in the sale of
inferior woods which are not true mahogany (which deception reaches the ultimate purchaser,
even though the intermediate customers knew that the woods were not mahogany) is an unfair
method of competition in commerce under section 5 of the Trade Commission act.
*
*
*
*
*
*
*
It was not necessary for the commission to establish intent to deceive the purchasing public.
For the test of unfair competition was whether the natural and probable result of the use by the
petitioner of such woods was deceptive to the ordinary purchaser and made him purchase that
which he did not intend to buy.

On July 26 the company filed with the Supreme Court of the United States its
petition for certiorari. This was denied October 15, 1928.
The Western Meat Co. case-Stock acquisition in violation of section 7 of the Clayton
Act.--This case has been discussed at length in previous reports. Briefly, the
commission’s order directed the company to so divest itself of all capital stock of the
Nevada Packing

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Co., a competing concern, as to include in such divestment the latter company’s plant
and all property necessary to the conduct and operation thereof as a complete, going
packing plant and organization, and so as to neither directly nor indirectly retain any
of the fruits of the acquisition of the capital stock of said Nevada Packing Co. The
Court of Appeals for the Ninth Circuit held that this order went beyond the
commission’s authority and directed that it be modified by eliminating the injunction
against the acquisition by the Western Meat Co. of the plant and property of the
Nevada Packing Co. (4 Fed. (2d) 223). The Supreme Court of the United States,
however, took the position that the commission’s order must be construed with regard
to the existing circumstances; that divestment of stock must be actual and complete
and could not be effected, as counsel for respondent admitted was intended, by using
the control resulting there-from to secure title to the possessions of the Nevada
Packing Co., and then to dissolve it; that, properly understood, the order was within
the commission’s authority and that the court below erred in directing the elimination
therefrom of the injunction referred to (272 U.S. 554). The final decree of the Court
of Appeals, based on the mandate of the Supreme Court, allowed the Western Meat
Co. six months, or until November 2, 1927, to submit to the commission a report
showing how its order had been carried out. The company petitioned for an
amendment of the decree which would allow it 60 days’ additional time for filing the
report, and the court on November 14 granted this extension. Two additional
extensions have been allowed by the court, the last one running until September 15,
1928, and with the provision that there will be no further extensions.
The Procter & Gamble Co. case--False advertising and misbranding soap.--The
Procter & Gamble Co. manufactures soap, some of which it advertises and sells as “P.
& G. White Naphtha Soap.” It also manufactures and sells a washing powder under the
name of “Star Naphtha Washing Powder.” The commission alleged that at the time
such soap and powder are sold to the consuming public they contain no naphtha nor
any petroleum distillate in any amount sufficient to be effective as a cleansing
ingredient.
After hearing, the commission ordered the company to cease using the word
“Naphtha” as a brand name for any soap or soap products when such commodities at
the time of their sale to the consuming public contain kerosene and no other petroleum
distillate , or no naphtha, or naphtha in an amount of 1 per cent or less by weight.
The company, on August 28, 1924, petitioned the Circuit Court of Appeals for the
Sixth Circuit to review the commission’s order. On January 5, 1926, the court rendered
its decision, sustaining the first section of the order, prohibiting the use of the word
“Naphtha" as

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65

a designation for a kerosene ingredient of soap. It, however, vacated the remaining part
of the order, which prohibited the use of the word “Naphtha” on soap containing not
more than 1 per cent of naphtha (a volatile ingredient) at the time of sale to the
consumer, indicating that the order Should have been directed to the naphtha content
to be placed in the soap at the time of manufacture. The decision left the commission
free to enter such further order with respect to the amount of naphtha which should be
placed in the soap at the time of manufacture as investigation should determine to be
necessary. (11 F. (2d) 47.) Thereafter both parties filed petitions for rehearsing, which
were denied on April 7, 1920. The Procter & Gamble Co. then filed a petition in the
Supreme Court of the United States for certiorari, to which the commission filed a
cross petition likewise praying for certiorari because, among other things, it was its
contention that the regulation of the amount of naphtha to be placed in the product at
the time of manufacture, as the circuit court of appeals indicated, was not for the
Federal Government to determine.
The Supreme Court denied these petitions on October 25, 1926. (273 U. S. 717,
718.) Subsequently extensive investigation has been conducted by the commission to
determine the amount of naphtha necessary to put in the soap at the time of
manufacture so that there will be more than 1 per cent in the product when it is
marketed in the usual time as shown by experience. The results of this investigation
will be considered by the commission in determining whether a further order shall be
issued fixing the amount of naphtha to be put in at time of manufacture.
Arkansas Wholesale Grocers’ Association--Combination and conspiracy to lessen
competition in groceries--Violation of section 5 of the Federal Trade Commission act.-On July 13, 1926, this association filed, in the United States Circuit Court of Appeals
for the Eighth Circuit, a petition for review of an order entered by the commission May
15 of that year, by which the association, and its officers and members, and their
agents, representatives, and employees, were directed to cease and desist from
following a common course of action pursuant to mutual understanding, combination,
agreement, or conspiracy, for the purpose, or with the effect, directly or indirectly, of
lessening competition in the course of trade in groceries or allied products, or any of
them, entering the State of Arkansas from other States: (1) By ceasing to deal, or to
deal less extensively than otherwise, with one or more manufacturers, producers,
brokers, or other agents representing any manufacturer or producer, on the ground or
for the reason that such manufacturers, producers, brokers, or agents sell their goods
direct to chain stores, so-called cooperatives , or retailers in the grocery trade, at prices

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lower than those at which retailers can purchase said goods in the same territory from
wholesale grocers in the ordinary course of trade; (2) by advocating the said common
course of action outlined in paragraph (1) foregoing, in bulletins, news-letters or
correspondence, or at meetings; (3) by threats, oral or in writing, express or implied,
directed to any manufacturer, producer , broker, or manufacturers’ agent for the
purpose or with the effect of inducing, persuading, or constraining such manufacturer,
producer, broker, or agent to cease to sell or diminish his sales to chain stores, socalled cooperatives or retailers, at prices lower than those at which retailers can
purchase said goods in the same territory from wholesale grocers in the ordinary
course of business; (4) by urging a common course of action by manufacturers,
respondents, independent wholesale grocers, and retailers to defeat the sales policy of
manufacturers selling indiscriminately to jobbers and retailers as an encouragement
to trading exclusively through jobbers and as a discouragement to trading with
manufacturers who do not distribute exclusively through jobbers; (5) by cooperatively
soliciting assurances from manufacturers that they will remain loyal to the
association’s contention that it is improper and illegitimate for manufacturers to sell
both jobbers and retailers, and by giving assurances on the part of the association to
such manufacturers of special selling effort in re-turn for or on account of said loyalty;
(6) by circulating among the members, nonmembers, wholesale grocers, and retailers
, statements from members advocating the practice of selling exclusively or chiefly
through wholesale grocers, or circulating, as aforesaid, communications from other
sources urging united action in favor of following the channels of trade from the
manufacturer to the wholesaler, thence to the retailer and thence to the consumer , to
the exclusion of any other channel of distribution in the grocery trade; (7) by
recommending or procuring the circulation of scurrilous or defamatory attacks on
manufacturers or producers or their representatives who sell direct to chain stores,
cooperatives, or retailers; (8) by obtaining the cooperation of the Little Rock or any
other retail grocers’ organization or its members to the end that retail grocers cease to
sell to the public, either wholly or in so far as practicable, the merchandise of
manufacturers, producers, or their brokers who sell direct to chain stores, so-called
cooperatives, or other retailers at prices described in paragraph (1) set out above; or
by concertedly advocating in bulletins, news-letters or correspondence, or at meetings
that the retailers carry out the said common course of action, with the purpose or effect
of destroying or lessening the movement of the grocery products affected into
Arkansas through respondents to retail customers.

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67

Briefs were filed and the ease was argued before the court on January 14, 1927. The
association’s principal contention was that the Federal Trade Commission act under
which “the findings of the commission as to the facts, if supported by testimony, shall
be conclusive” was contrary to sections 1 and 2 of article 3 of the Constitution as an
invasion of the judicial powers exclusively vested in the courts. It also contended that
the facts as found by the cornmission were not representative of the preponderance of
the evidence; that there was no evidence of the collusion of the members of the
association in procuring manufacturers, producers, or their representatives to refuse
to sell to chain stores, cooperatives, and retailers.
The court, however, on April 5, 1927, unanimously affirmed the commission’s order
in every respect. In upholding the constitutionality of the Federal Trade Commission
act, it used the following language: “We think the question can not now be regarded
an open one.” (18 F. (2d) 866.)
The association petitioned the Supreme Court for a writ of certiorari; this was
opposed by the commission and was, on October 17, 1927, denied. (48 Sup. Ct. 30-2.)
J. W. Kobi Co.--Resale price maintenance.--On April 6, 1927, this company filed in
the United States Circuit Court of Appeals, Second Circuit, its petition to review an
order entered by the commission June 18, 1926, by which it was directed to cease and
desist from carrying into effect its policy of securing the maintenance of resale prices
for its hair dressing known as “Golden Glint Shampoo” and “Golden Glint Powder”
through cooperative methods, (1) by seeking or securing or entering into contracts,
agreements, or understandings with customers or prospective customers that they will
maintain the resale prices designated by it; (2) by soliciting customers to report the
names of other customers who fail to observe such resale prices; (3) by utilizing any
other equivalent cooperative means of accomplishing the maintenance of such resale
prices. The company also filed a motion asking the court to direct the commission to
certify as part of the proceedings the trial examiner s report and exceptions of
petitioner. This motion was denied by the court in order entered June 13, 1927.
The case was argued on the merits on November 21-22, 1927, and decided in favor
of the commission on December 12 of that year. The court said:
What was proven here established offenses of agreements or understanding either in
obtaining, directly or indirectly, from its customers promises or assurances that the prices fixed
by the petitioner would be observed by such dealers and entering into contracts with the
understanding that the petitioners’ products would be resold by the dealers at prices specified
or fixed by the

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petitioner. There was also a method employed in reporting on price cutters and a continuous
request of dealers and Jobbers to report the competitors who did not observe the resale prices
suggested by the petitioner and a threat to refuse sales to dealers so reported on. These practices
were offensive to the act and warrant the order entered below. (23 F. (2d) 41.)

The B. Paul (Paul Balme) case--Simulation of trade name and dress of goods.--The
commission, on June 17, 1927, filed with the Circuit Court of Appeals for the Second
Circuit (New York City) an application for the enforcement of its order entered April
14, 1922, against Paul Balme, trading under the name and style of B. Paul, by which
the respondent was directed to cease and desist from (1) certain practices which tended
to confuse and mislead the ‘public into believing that the henna hair dye manufactured
by it was the one and the same as that of a competitor, viz, the use of the trade name,”
Henna D’Oreal,” in imitation of a competitor’s “L’Oreal Henne”; the packing of its
product in containers similar in size, shape, and color to those used by a competitor;
by the simulation of labels on said containers; and (2) certain false and misleading
advertising.
After briefs and argument, the court, on January 9, 1928, unanimously affirmed the
validity of the commission’s order (23 F. (2d) 615), saying:
The order of the Federal Trade Commission adjudging the respondent guilty of unfair
competition is affirmed; the question of the present violation of section 5, for which enforcement
is asked by the petition to this court, is referred to the Federal Trade Commission, with
opportunity for the respondent to answer and submit proof, and with directions to the
commission to report its conclusions to this court.

The decision, rendered as it was in connection with the commission’s first
application for enforcement coming on for hearing before the second circuit, is
important from the standpoint of practice. The court took a position directly contrary
to that of the seventh circuit in the Standard Education Society case (infra p.--), saying:
Manifestly, it is very apparent that the question of violation of the commission’s order would
not be involved until a valid order was recognized by this court after having acquired
Jurisdiction. Therefore, we must first examine the proceeding before the commission and
determine whether there has been a violation of the law. Until then, no good purpose can be
served by determining disputed questions of fact as to a violation of the order.

After the respondent Balme had answered, he applied to the Supreme Court of the
United States for a writ of certiorari. This, however, was denied on May 21, 1928 (48
Sup. Ct. 560). During July and August, testimony was taken before an examiner of the
commission at New York City and Philadelphia with reference to violations of the
order.

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69
The American Snuff Co. case.--On June 30, 1927, the commission entered its order
directing this company to cease and desist from a number of practices found to be
unfair methods of competition. The order contained the usual requirement that the
corporation report within 60 days the manner and form of compliance therewith. In
compliance with the latter requirement, the Corporation made a report in which, while
it denied the validity of the findings and order, it nevertheless assured the commission
that it would not do any of the things prohibited, with one exception, namely, it
declined to comply with paragraph 3 (a) of the order. This paragraph is set forth below,
together with the closely related paragraph (b):
(3) It is further ordered, That the respondent, its officers, agents, representatives,
servants, and employees, cease and desist from-(a) Using the word “dental” and the depiction of a tooth, or either of them, alone or
in connection with any other word or words, in the brand name or on the labels on the
containers of any of its snuff products, to represent, describe, or define such product,
when its said product contains no ingredient other than tobacco.
(b) Making, publishing, or circulating written or oral statements or representations
in connection with the sale or distribution of any of its snuff products that such product
will cure toothache, pyorrhea, bleeding gums, neuralgia, or other like maladies, when
such product contains no ingredient other than tobacco.
The commission, accordingly, on March 17, 1928, filed with the Circuit Court of
Appeals for the Third Circuit (at Philadelphia) its application for enforcement. On
May 16 the printed transcript of the record was filed with the court, and on the 23rd
of that month a stipulation was entered into fixing dates for the filing of briefs. Before
briefs had been filed, however, the commission (on August 18 last) filed with the court
a supplemental application for the enforcement of paragraphs 2-a, b, and c, and 3-b of
its order, alleging that the American Snuff Co. was making, publishing, and circulating
written and oral statements or representations that the snuff products of its competitors
are made of trash, inferior tobacco, cigar stubs, old tobacco chews , and tobacco stems;
that they contain opium, copperas, glass, hair, dirt, or similar substances; that they will
cause blindness and tuberculosis; that they will destroy the teeth, cause pyorrhea,
bleeding gums, or other maladies; and other statements or representations of like
import; and by making, publishing, and circulating written or oral statements or
representations in connection with the sale and distribution of certain of its snuff
products that such product will cure toothache, pyorrhea, bleeding gums, neuralgia,
and other like maladies, when such product contains no ingredient other than tobacco.

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International Shoe Co.--Violation of section 7 of the Clayton Act.--On March 3,
1928, the corporation of this name filed in the Circuit Court of Appeals for the First
Circuit (Boston) its petition to review and set aside the commission’s order entered on
November 25, 1925, which, in brief, required the company to divest itself of all assets,
property, etc., acquired by it from the W. H. McElwain Co. (a Massachusetts
corporation, with principal office and place of business located at Boston), subsequent
to the acquisition by the International Shoe Co. of the stock or share capital of the
McElwain Co., and after the commission’s complaint. in this proceeding had been,
issued and served. The proceeding was under section 7 of the Clayton Act.
The commission’s order required the company to submit, within 60 days, for
consideration and approval-a plan for the performance of this order In a manner which shall restore in harmony with the law
the competitive conditions which existed with respect to the respondent and such assets,
properties, rights, and privileges prior to the acquisition by International Shoe Co. of the stock
or share capital of W. H. McElwain Co.

Numerous conferences. between counsel for the company and the commission failed
to produce a plan as required by the order; and the action referred to above was the
result.
On May 31, 1928, the company filed with the court its motion to have the
commission’s complaint adjudged insufficient in law, and to have the order made
pursuant thereto set aside. Both sides filed briefs, and the court , after argument on
June 28, on the same day denied the motion. The matter now awaits briefing and
argument on the merits. It will probably be reached the early part of the October term.
Paramount Famous Lasky Corporation.--As noted more fully elsewhere in this
report (pp.37, 38), the commission, on July 9, 1927, entered its order to cease and
desist in this proceeding, which, briefly, was directed against a conspiracy in restraint
of trade in the business of producing, distributing, and exhibiting motion-picture films,
against the practice of “block booking” of motion-picture films, and the acquisition of
theater buildings for the purpose of intimidating or coercing exhibitors of motionpicture films to lease and exhibit films produced by respondents.
The respondents having failed and neglected to obey the order, the commission, on
August 1, 1928, filed with the Circuit Court of Appeals for the Second Circuit (New
York City) its application for enforcement.
Bayuk Cigars (Inc.)--Misbranding--False and misleading advertising.--This case
was instituted by the corporation of this name,

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71
on February 15, 1928, by the filing of a petition to review and set aside the order
issued by the commission on February 8, 1928, direct mg it to cease and desist, in
connection with the sale and distribution of cigars in interstate commerce, (1) from
using the word “Havana,” or other word or words of similar import, alone or in
conjunction with the word “ribbon,” or other word or words, as or in a brand name for
or as descriptive of any such cigars which are not corn-posed entirely of tobacco
grown on the island of Cuba; (2) from using the word “Mapacuba,” or other word or
words of similar import, as or in a brand name for or as descriptive of any such cigars
which are not composed in whole or in part of tobacco grown on the island of Cuba;
(3) from using the word “Mapacuba,” or other word or words of similar import, as or
in a brand name for or as descriptive of any such cigars which are composed in part
only of tobacco grown on the island of Cuba, unless said word be immediately
followed and accompanied by a word or words in letters equal or greater in size,
visibility, and conspicuousness, clearly and unequivocally indicating or stating that
such cigars are not composed wholly, but in part only, of tobacco grown on the is] and
of Cuba; (4) from using a depiction simulating the flag; emblem, insignia, or coat of
arms of the Republic of Cuba, map of Cuba, Cuban tobacco fields, city or harbor of
Habana, Cuba, or depiction of similar im port, in the advertising, branding, or labeling
of any such cigars which are not composed in whole or in part of tobacco grown on the
island of Cuba; (5) from using a depiction Simulating the flag, emblem, insignia, or
coat of arms of the Republic of Cuba, map of Cuba, Cuban tobacco fields, city or
harbor of Habana, Cuba, or depiction of similar import, in the advertising, branding,
or labeling of any such cigars which are composed in part only of tobacco grown on
the island of Cuba, unless such depiction be accompanied by a word or words of equal
or greater visibility and conspicuousness, clearly and unequivocally indicating or
stating that such cigars are not composed wholly, but in part only, of tobacco grown
on the island of Cuba; (6) from representing in any other manner what soever that any
of said cigars contain or are composed in whole or in part of tobacco grown on the
island of Cuba, when such is not true in fact.
After briefs had been filed, the case was argued before the third circuit
(Philadelphia) on May 31, 1928. A decision is expected at the October, 1928, term of
court.
Philip Carey Manufacturing Co.--Disparagement of competitors.--A petition for
review was filed by the corporation of this name, with the Circuit Court of Appeals for
the Sixth Circuit (Cincinnati) on September 13, 1927. It asked that the order entered
by the commission on August 4 of that year be reviewed and set aside.
16588---28-----6

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The order in question directed the company, in connection with its business of
manufacturing and selling asphalt paving blocks in interstate commerce, to cease and
desist from, directly or indirectly-1. Employing or using any system of espionage whereby officers, agents, or employees of
respondent corporations, or either of them, obtain or seek to obtain information as to the
facilities, capacities, operations, or customers of any competitor;
2. Circulating, representing, or publishing, or causing to be circulated, represented, or
published among purchasers or prospective purchasers of preformed bituminous-expansion
Joint, any false, deceptive, or misleading statement concerning the ability of any competitor to
fill orders or make deliveries;
3. Circulating, representing, or publishing, or causing to be circulated, represented, or
published among purchasers or prospective purchasers of preformed bituminous expansion Joint
any false, deceptive, or misleading statement of or concerning the acceptableness or adaptability
for the use intended of the product of any competitor;
4. Circulating, representing, or publishing, or causing to be circulated, rep resented, or
published, among purchasers or prospective purchasers of pre formed bituminous expansion
Joint any false, deceptive, or misleading statement concerning the financial standing, the
business, or business methods of any competitor.

Briefs were filed, and the case was argued on the merits on May 18, 1928.- The
commission’s order was reversed November 12, 1928.
The Utah-Idaho Sugar Co. case--Suppression of competition in the manufacture and
gale of beet sugar.--The respondents in this ease, namely, the Utah-Idaho Co., the
Amalgamated Sugar Co., E R. Wooley, A. P. Cooper, and E F. Cullen, were charged
by the commission with stifling and suppressing competition in the purchase of sugar
beets in the manufacture and sale of refined beet. sugar by means of a combination or
conspiracy, involving, among others, the following unfair trade practices:
(1) The circulation of false, misleading, and unfair reports as to competitors and
prospective competitors; (a) concerning financial standing and responsibility; (b) that
they would be unable to secure sugar-beet seed or the beets or to pay for those they did
purchase; (c) that their contemplated factories would not be built, etc.
(2) The circulation of false reports to the elect that respondents (a) occupied all the
producing territory in which their competitors. contemplated operating; (b) had
contracts for all the beets to be grown, etc.
The commission after very extensive hearings dismissed the complaint as to the
respondent E F. Cullen and entered its order to cease and desist against the other
respondents. The respondents filed petitions for review in the Circuit Court of Appeals
for the Eighth Circuit.

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73
After briefs and argument, this court, on October 21, 1927, reversed the
commission’s order, holding that the facts found by the commission presented a
situation over which it had no jurisdiction, and that it was without authority to make
the restraining order. (22 F. (2d) 122.) The following extracts from the opinion are
pertinent:
In this ease the respondents are engaged in the manufacture and sale of beet sugar. The sugar
is sold In interstate commerce. The manufacture is intrastate. This proceeding is based on
section 5 of the Federal Trade Commission act, which declares unlawful unfair methods of
competition in commerce. The fact that respondents are engaged in commerce in selling sugar
produced has no bearing on the case, for the reason that the proof does not show any acts of
unfair competition in such product. The fact that a respondent is engaged in commerce is not
material unless the acts charged have to do with such commerce or that of its competitors in such
commerce. The acts to which the proof is directed are concerning only the manufacture. The
manufacture of sugar from beets is somewhat peculiar in that it is necessary to have the factory
located where beets may readily he obtained by short haul. It is not profitable to ship the beets
a great distance to the factory. The acts to which the proof is directed consisted in the effort of
respondents to prevent competing factories being located in contiguous territory where they
might absorb a part of the supply of beets to respondents’ factories. It was at most a prevention
of competition in the purchase of the raw material for manufacture within the State, and in no
case does the proof show an interference with the transport of beets from one State to another
or an interference with the purchase thereof.
*
*
*
*
*
*
*
In the present case there is no commerce to obstruct until the beets are manufactured into
sugar and such sugar has been placed in transport. The argument is, however, as stated above,
that the acts here cut off at the source such commerce. It Is only such acts as directly Interfere
with commerce which come under the Federal jurisdiction. The line must be drawn somewhere,
else all jurisdiction in trade or production would become Federal. Hence Congress has not
jurisdiction of such acts as only indirectly or remotely affect commerce. In the instant case if
interference with the production and manufacture into sugar of beets is an obstruction to a later
or unborn commerce in sugar to be made from the beets, one who intrastate sold defective beet
seed, thus preventing the production of beets to be manufactured into sugar, would be In
commerce. Or one who sold fertilizer to raise the seed to plant the beets to make the sugar to
be shipped in commerce would be in commerce.

The commission decided not to apply to the Supreme Court for a writ of certiorari.
Grand Rapids Varnish Co.--Commercial bribery.--The commission, on June 18,
1928, filed with the Circuit Court of Appeals for the Sixth Circuit (Cincinnati) an
application for the enforcement of its order in this case. This is one of the earlier
proceedings instituted by the commission, and the order, originally entered on April
15, 1918, and subsequently modified, was directed against what is known as
commercial bribery. By it the company, a Michigan

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

corporation, and its agents, representatives, servants, and employees were directed to-cease and desist from directly or indirectly secretly giving, or offering to give, employees of Its
customers or prospective customers, or those of its competitors customers or prospective
customers, without the knowledge or consent of their employers, as an inducement to cause their
employers to purchase or contract to purchase, from the respondent, varnish and kindred
products, or to Influence such employers to refrain from dealing, or contracting to deal, with
competitors of respondent, without other consideration therefor, money or anything of value.

On June 30, 1928, the court entered an order directing the company to file its answer
to the commission’s petition on or before October 2, 1928.
Standard Education Society case--Misrepresentations--Books.--This is a Minnesota
corporation, with headquarters at Chicago and engaged in the production and sale of
sets of books known as “The Standard Reference Work,” and also a loose-leaf service
called “The Standard Loose-Leaf Extension Service.” This concern was directed by
an order entered’ by the commission on November 10, 1923, to cease and desist from
(1) falsely representing and exaggerating the regular prices of said books, from which
it purported to give reductions; (2) falsely representing that its products are bound in
“ rich maroon Levant” or other leather; (3) representing that its Standard Reference
Work has been officially adopted by 24 States; (4) offering prospective customers
fictitious “honorary membership” in the”Standard Education Society.”
It appearing that respondent persisted in its course of action prohibited by the order,
the commission, on May 27, 1926, filed in the. United States Circuit Court of Appeals,
Seventh Circuit, its ap plication for affirmance and enforcement of the order to cease
and; desist. The commission alleged in its application, supported by affidavit, that
respondent failed and neglected to obey the order to cease and desist. This was denied
by respondent’s answer; whereupon the commission moved the court to strike out such
denial, it being the commission’s contention that the Federal Trade Commission act,
under which the proceedings. were brought, does not provide for or contemplate the
trying out of an issue as to the failure or neglect to obey the order before determining
upon the record whether the order is valid The court, however, in an opinion handed
down October 22, 1926, overruled the commission’s motion to strike, and ordered that
unless an agreement be reached upon the facts as to the failure or neglect to obey the
order, either party might apply to the court for appointment of a referee or
commissioner to hear the testimony and report his findings upon this issue. (14 F. (2d)
947.) Such a referee was, at the request of the commission, duly appointed. Prior to
the taking of testimony, however, the company having

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75
evinced a purpose to comply with the commission’s order, and to secure the full
cooperation of its agents and employees in attaining this end, the court, on October 11,
1927, on motion of the commission, dismissed the commission’s application for
enforcement, without prejudice, however, to the institution of further proceedings
should they prove necessary.
Sea Island Thread Co.--Misbranding of cotton thread.--The commission’s order in
this case directed the respondent, a New York corporation, to cease and desist from
“using the word ‘Satinsilk’ or the words ‘Satin Silk,’ either alone or with other word
or words, as a brand or label upon spools of thread composed wholly of cotton, or
upon the containers of such thread.”
The company took exception to this order and, on May 24, 1927, filed with the
Circuit Court of Appeals for the Second Circuit its petition to review and set it aside.
Briefs were filed on behalf of both parties, and also by the Silk Association of America
as amicus curiae. The case was argued November 23, 1927, and the commission’s
order affirmed from the bench without opinion. (22 F. (2d) 1019.)
F. W. Dobe--Sundry misrepresentations in connection with correspondence school.-The commission’s order in this case prohibited the respondent engaged in conducting
a correspondence school for drafting in Chicago from making misrepresentations as
to his qualifications for teaching, terms of instruction, opportunities for employment
at liberal remuneration after completing his courses, etc. It was entered on February
6, 1925. It appearing that the respondent was ignoring the order, the commission, on
December 21, 1926, applied to the Circuit Court of Appeals for the Seventh Circuit for
enforcement. Further proceedings were held in abeyance, pending negotiations, at the
instance of the respondent, for the withdrawal of the commission’s application for
enforcement, in view of respondent’s expressed willingness to abide by the terms of
the order and subscribe to a code of ethics adopted by correspondence schools in
conference with and approved by the commission; and on January 31, 1928, at the
instance of the commission, the court dismissed the application for enforcement,
without prejudice to a renewal of proceedings by the commission, should the
respondent at any time violate the provisions of the order.
Pure Silk Hosiery Mills. case--False advertising--False representations in sale of
hosiery.--The Pure Silk Hosiery Mills sold hosiery to the consuming public generally
throughout the United States. Although it neither owned nor operated any factory, it
represented by a variety of means that the hosiery it offered for sale and sold was
manufactured in mills owned and operated by it; that customers in purchasing from it
obtained hosiery at wholesale or mill prices;

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that in buying from it purchasers eliminated middlemen’s profit and derived
advantages (in price and otherwise) which they could not obtain if they purchased
hosiery in the regular channels. The commission’s complaint alleged that the use by
respondent company of the word “Mills” in its name, when it neither owned nor
operated any hosiery mill, was in violation of section 5 of the Federal Trade
Commission act. On October 24, 1922, the commission directed the Pure Silk Hosiery
Mills to cease selling hosiery in interstate commerce “ under a trade or corporate name
which includes the word ‘Mills’ in combination with the words ‘Pure Silk Hosiery,’
or words of like import,” unless and until respondent actually owns or operates a
factory or mills in which it manufactures the hosiery sold by it.
Subsequent investigation by the commission disclosed that its order was being
ignored, and so, on July 1, 1924, it petitioned the Circuit Court of Appeals for the
Seventh Circuit for enforcement Briefs were filed, argument had, and the court, on
December 8, 1924, granted the petition of the commission and by decree adopted its
order and commanded the Pure Silk Hosiery Mills to obey it. (3) F. (2d) 105.) Petition
for rehearing was filed by the company and denied by the court.
Subsequently the commission deemed the Pure Silk Hosiery Mills to be acting in
violation of the decree of the circuit court of appeals mentioned above, and on June
26, 1925, filed its petition with the same court to enforce the decree. Hearing on the
petition was had before the court on January 7, 1926. On July 8, 1926, the court, at its
request, was supplied by the company with a statement concerning its operations, and
subsequently kept in touch with new developments, involving the organization of a
new corporation to succeed to the business of the former concern, all with the view to
seeing that the business was conducted in accordance with its decree and the order of
the commission. On December 8, 1927, the application for enforcement of the decree
was dismissed, with leave to the commission to reinstate for good cause shown.
The Shade Shop case--Appropriation and simulation of trade name.--This is a
District of Columbia case. Alfred Klesner, doing business under the name and style
of “ Shade Shop, Hooper & Klesner,” was charged by the commission with a violation
of section 5 of the Federal Trade Commission act, in that he had appropriated and
simulated the trade name “The Shade Shop” adopted by one W. Stokes Sammons in
connection with his business of manufacturing and selling window shades. Sammons
had been engaged exclusively in the business since 1901
The commission’s order prohibited Klesner, his servants, agents, and employees
from using the words “Shade Shop” standing alone

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77
or in conjunction with other words as an identification of the business conducted by
him, in any manner of advertisement, signs, stationery, telephone or business
directories, trade lists, or otherwise.
The respondent having refused to comply with the order, the commission, on May
13, 1924, filed in the Court of Appeals for the District of Columbia its petition for
enforcement.
After briefs and argument, the court, without considering the merits of the case, held
that it was without jurisdiction and dismissed the petition. (6 F. (2d) 701.) This was
on June 1, 1925. The commission applied to the Supreme Court of the United States
for a writ of certiorari, which was granted, and the Supreme Court, after bearing,
reversed the judgment of the Court of Appeals and remanded the cause for further
proceedings-concluding that the words “circuit court of appeals of the United States”
in the Trade Commission act included the Court of Appeals of the District of Columbia as the appellate tribunal to be charged with the duty in the District. (274 U. S. 145.)
After the decision of the Supreme Court (April 18, 1927) the case was twice reargued
in the lower court and on April 2, 1928, that tribunal dismissed the commission’s petition for enforcement on the ground that the name “Shade Shop,” as used by the
respondent, was a generic term and merely descriptive of the business carried on by
him, and that therefore the prior and exclusive use of this term by another concern
engaged in the window-shade business was not such as to be entitled to legal
protection. (25 F. (2d) 524.) The commission petitioned for a writ of certiorari on
August 15, 1928, and this was granted October 22, 1928.
A vexatious problem of procedure in the enforcement of orders directed against
unfair methods of competition warrants special mention.
The statute provides that if the person against whom the commission issues an order
to cease and desist from the use of unfair methods of competition fails or neglects to
obey such order the commission may appeal to the proper circuit court of appeals for
the enforcement of its order, and shall certify and file with its application a transcript
of the. record made before the commission. Thereupon the court shall have jurisdiction
of the proceeding and shall have power to make and enter upon the pleadings,
testimony, and proceedings set forth in such transcript an order affirming, modifying,
or setting aside the commission s order.
It has been the commission’s contention from its organization that the statute
contemplated that upon such application and review of the proceeding before the
commission the court should, if it found the order valid, enter a decree requiring the
person against whom it is issued to obey it.

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ANNUAL REPORT OF THE FEDERAL TRADE

The two circuit courts of appeals that have thus far construed this provision have not
adopted the commission’s views, nor are they in accord with each other.
The Circuit Court of Appeals for the Seventh Circuit (Chicago) hold (Federal Trade
Commission v. Standard Education Society, 14 Fed. (2d) 947) that the commission
must prove in that court that its order has been violated before the court will even
consider the validity of the commission’s findings and order based upon the evidence
taken before the commission and certified by it to the court in conformity with the
statute. If the evidence taken before the court fails to prove a violation of the order,
it does not appear whether the court will consider the validity of the order at all. If the
evidence of a violation is satisfactory, presumably the court will enter a decree in the
words of the order. Then, if the commission can thereafter prove that the decree has
been violated, the court will presumably punish the offender as for contempt. It will
thus be seen that punishment for a violation of the law can not be secured until the
commission has proven in its own proceeding that the statute has been violated, and
has proven that the offender is in contempt for a violation of the decree of the court.
The requirement to thrice prove a violation of a prohibitive statute before punishment
can be inflicted, and to prove it twice before an injunction can be secured, probably
does not have a parallel in our statutes.
A decision of the second circuit (New York) (Federal Trade Commission v. Balme,
23 Fed. (2d) 615) holds that on application of the commission for the enforcement of
its order the court will first determine whether it is valid. In the case mentioned it held
the order valid but did not enter a decree of enforcement. Instead it directed that the
commission take evidence to determine whether the order had been violated and return
the evidence with its findings to the court. Presumably, if the evidence so taken shows
a violation of the order, the court will enjoin its further violation. If thereafter it be
proven that the decree has been violated, punishment as for contempt will follow. The
advantage of the procedure adopted by the second circuit over that required by the
seventh circuit is that the commission may secure a decision with respect to the
validity of its order before being called upon to prove that it has been violated. If the
order is held invalid, time will not have been wasted in taking testimony with respect
to its violation. However, even under the ruling of the second circuit, if we interpret
it correctly, after an order of the commission is found valid, a decree of enforcement
will evidently not issue without proof of the violation of the

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79

commission’s order. After such a decree is obtained, a violation of the decree is
undoubtedly punishable as contempt. Here again it seems necessary to prove twice a
violation of law to get an order of enforcement and to prove still a third violation to
inflict punishment.
It will be seen that the effect of these decisions has been to make the procedure for
securing obedience to the statute very cumbersome, tedious, and expensive. It is
difficult to conceive that Congress intended to prescribe such a procedure. The statute
shows on its face an attempt to make its enforcement speedy and direct. The procedure
before the commission is as informal and direct as is . consistent with due process of
law. The act provides for a review of the proceedings by the circuit courts of appeals
instead of by the district courts, as is the case with the Interstate Commerce Commission act and other acts, shortening the process through the courts by one step. The
section also provides that the decision of the circuit court of appeals shall be final,
except that the Supreme Court may review the judgment of the circuit court of appeals
on certiorari. An appeal as a matter of right from the judgment of the circuit court of
appeals is not provided for. Finally, the section provides that the circuit court of
appeals shall expedite cases arising under it in every way. These provisions manifest
the legislative intent to secure a speedy and inexpensive compliance with the
commission’s valid orders.
The commission has not as yet been able to present this question to the Supreme
Court, but will do so when the occasion offers.
If an order of the commission is found valid by a circuit court of appeals, an order
of enforcement should issue at once.
An order of the commission which has been found valid should be enforced by the
court not because it has been disobeyed but because it has been found valid.
CASES ARISING UNDER SECTIONS 6 AND 9 OF THE FEDERAL TRADE
COMMISSION ACT

In addition. to the review by the United States circuit courts of appeals of the
commission’s orders directed against “unfair methods of competition,” issued under
authority of section 5 of its organic act, and price discrimination, exclusive-dealing
contracts, stock acquisitions in competitive concerns, and interlocking directorates,
authorized by section 11 of the Clayton Act, the former statute invests the commission
with power, among other things, to gather and compile information concerning and.
to investigate from time to time the organization, business, conduct, practices, and
management of corporations engaged in interstate commerce (excepting banks and
common carriers) and their relation to other corporations, individuals, asso-

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

ciations, and partnerships; to require such corporations to file annual or special reports
concerning their organization, business, etc.; and, 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. To facilitate the exercise of these
powers the commission is authorized to apply to the Attorney General for the
institution of mandamus proceedings.
A number of cases have arisen as a result of efforts to test the powers of the
commission to compel the production of testimony or of documents in investigations
or to compel the filing of reports. The cases relating to the Claire Furnace Co., the
American Tobacco and Lorillard Cos., the Baltimore Grain Co. et al., and the Basic
Products Co., which arose in this manner, were concluded prior to the beginning of the
fiscal year, and have been discussed at length in previous annual reports. The Maynard
Coal Co. case (concluded during the year) and that relating to the Millers’ National
Federation (still pending) are discussed below, as are also certain proceedings in unfair
competition cases, where respondents, through the medium of various extraordinary
legal remedies, have sought to halt or influence the conduct of proceedings by the
commission.
The Maynard Coal Co. case--A proceeding in which an economic investigation of
the commission was halted by injunction.--In 1919 the press, the public, and various
branches of State and National Governments were giving great attention to the
enormous increase in the cost of the great majority of the necessities of life. In August
of that year the Federal Trade Commission was asked by Congress what it could do
as touching the then high cost of living, and in response to the inquiry members of the
commission appeared before the Committee on Appropriations of the House of
Representatives and suggested that a thorough inquiry into and publication of the facts
respecting the production, prices, and costs of certain basic commodities would, in
their opinion, be of the greatest value to the country at large, to Congress, to the courts,
to the prosecuting arm of the Government, and to business itself, in ascertaining the
causes of the conditions existing. Asked what articles or industry should be
investigated, the then chairman of the commission suggested fuel, steel, and several
other basic commodities. As a result of this suggestion, money was appropriated and
the commission sent questionnaires to practically all corporations engaged in the
production and sale in interstate commerce of bituminous coal, asking for reports on
cost, income, and tonnage.
One of these corporations, the Maynard Coal Co., organized under the laws of Ohio,
declined to make the report in question, and applied to the Supreme Court of the
District of Columbia for an injunction, which was granted. (48 W. L. R. 278.)

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The case was taken by the commission to the Court of Appeals of the District of
Columbia, where it was argued in January, 1924. On May 10 of that year a reargument
was directed. The case was reached on the calendar on October 10, 1924, and at that
time continued generally pending a decision of the Supreme Court of the United States
in the Claire Furnace Co. case. The latter case having been decided April 18, 1927, the
Maynard case was reargued October 3, 1927; and on November 7 of that year the
Court of Appeals rendered its opinion, reversing the decree of the lower court, and
remanding the cause, with directions to dismiss the bill. (22 F. (2d) 873.) The court
followed the action of the Supreme Court in the Claire Furnace Co. case, quoting from
the opinion in that case as indicated below (274 U. S. 160):
With this statement we are forced to the consideration of a controlling question of
Jurisdiction. In the case of Federal Trade Commission et al. v. Claire Furnace Co. et al. (274 U.
S. 160) the Supreme Court, considering a proceeding identical with that presented in this case,
where an injunction bad been granted to restrain the threatened enforcement of the penalty for
refusal to comply with a similar order of the commission. The court there held that injunction
did not lie, since the statute furnished complainants a complete and adequate remedy at law.
*
*
*
*
*
*
*
Considering the discretionary power reposed in the Attorney General to control the bringing
of actions under the act, the court in its opinion in the Claire case said: There was nothing
which the commission could have done to secure enforcement of the’ challenged orders except
to request the Attorney General to institute proceedings for a mandamus or supply him with the
necessary facts for an action to enforce the incurred forfeitures. If, exercising his discretion, he
had instituted either proceeding, the defendant therein would have been fully heard and could
have adequately and effectively presented every ground of objection sought to be presented
now. Consequently, the trial court should have refused to entertain the bill in equity for an
injunction. * * * It was intended by Congress in providing this method of enforcing the orders
of the Trade Commission to impose upon the Attorney General the duty of examining the scope
and propriety of the orders and of sifting out of the mass of inquiries issued what in his
Judgment was pertinent and lawful before asking the court to adjudge forfeitures for failure to
give the great amount of information required or to issue a mandamus against those whom the
orders affected and who refused to comply. The wide scope and variety of the questions,
answers to which are asked in these orders, show the wisdom of requiring the chief law officer
of the Government to exercise a sound discretion In designating the inquiries to enforce which
he shall feel justified in invoking the action of the court. In a case like this the exercise of this
discretion will greatly relieve the court and may save it much unnecessary labor and discussion.
The purpose of Congress in this requirement is plain, and we do not think that the court below
should have dispensed with such assistance. Until the Attorney General acts the defendants can
not suffer, and when he does act they can promptly answer and have full opportunity to contest
the legality of any prejudicial proceeding against

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

them. That right being adequate, they were not in a position to ask relief by injunction. The bill
should have been dismissed for want of equity.”

Final decree, in accordance with the mandate of the court of appeals, was entered in
the Supreme Court of the District of Columbia on December 14, 1927.
Millers’ National Federation case--Investigation by commission response to
resolution of the United States Senate.--On February 16, 1924, the United States
Senate, by resolution, directed the commission to investigate and report to the Senate,
among other things, the extent and methods of price fixing, price maintenance, and
price discrimination, in the flour and bread industries; developments in the direction
of monopoly and concentration of control, and all evidence indicating the existence
of agreements, conspiracies, or combinations in these industries. In the course of the
investigation the commission made inquiry with respect to the activities of the Millers’
National Federation, a voluntary, unincorporated association, whose members produce
approximately 65 per cent of the flour milled in the United States, as well as the
activities of other milling associations and corporations engaged in the milling
industry. Permission was requested of the Millers’ National Federation to inspect
certain papers, document; and correspondence files, which permission was in part
granted. As a result of the inspection of certain correspondence, the commission
requested the federation to supply it with copies of certain designated letters, and
further requested access, for the purpose of inspection, to minutes of meetings among
members of the federation and other millers in various parts of the country and to
letters passing between the federation and its members leading up to the adoption of
a so-called code of ethics by the federation. The request was denied. The commission
thereafter called a hearing in the investigation at Chicago, Ill., and served subpoena
upon the secretary of the federation requiring him to produce at the hearing certain
letters specified by dates, names of the parties correspondent, and subject matter,
which its representative had been permitted to inspect in the federation’s offices.
Subpoenas were also served upon the secretary requiring the production of minutes of
the meetings among members of the federation and other millers above mentioned
(inspection of which had been denied) and of the letters relating to the adoption of the
code of ethics. The Washburn-Crosby Co., a member of the federation and the largest
milling corporation in the United States, having also refused to permit the commission
to inspect certain letters specified by dates, names of parties correspondent, and
subject matter, as well as having declined to permit a statement of its business, made
up from its books by representatives of the commission, to be taken from its

CHIEF COUNSEL

83
offices, subpoenas duces tecum were served upon officers of the corporation, requiring
the production of the letters and of the statement, at a hearing to be held at
Minneapolis, Minn.
On the day prior to the hearing set for Chicago, Ill., the Millers National Federation
on behalf of its members filed a petition in the Supreme Court of the District of
Columbia praying for a temporary restraining order and a temporary injunction
restraining the commission from taking any steps or instituting any proceedings to
enforce the subpoenas or requiring the plaintiffs, or any of them, to produce the
documents or letters required thereby. On the day of bearing set at Chicago the
secretary of the federation, the officers of the Washburn-Crosby Co., and certain
individuals connected with the federation through membership therein of corporations
in which they were officers, did not appear as required by subpoenas ad testificandum,
and on the morning of the same day a temporary restraining order was issued by the
Supreme Court of the District of Columbia as prayed for in the petition. A motion for
temporary injunction was subsequently made. The commission answered the motion
on the merits and moved to dismiss the petition on various grounds, among others, that
the court was without jurisdiction to restrain the commission from proceeding with the
hearing. Both motions were argued, and on September 22, 1926, the court rendered its
decision granting the temporary injunction (decision not reported). From this an appeal
was taken on December 10, 1926, to the Court of Appeals of the District of Columbia.
Before hearing on this appeal was had, the commission, on March 30, 1927, petitioned
the Supreme Court of the United States for certiorari, which was denied on April 25,
1927 (274 U. S. 743) , thus leaving the case to be heard on the appeal in the Court of
Appeals of the District of Columbia.
After briefs and arguments, the Court of Appeals, on December 5, 1927, affirmed
the decree of the Supreme Court of the District (23 F. 2d) 968, and remanded the case
for further proceedings. The court held that the opinion of the Supreme Court of the
United States in the Claire Furnace Co. case was not controlling, that the present case
must be determined upon principles not obtaining in that ease, and that injunction
would lie to restrain the commission, should the court find, on a final determination
of the case on its merits, that the commission had exceeded its jurisdiction. In short,
its holding was that the Supreme Court of the District had jurisdiction to determine the
matter. The commission, on December 12, 1927, filed a petition for rehearing, on the
ground that the court had failed to decide the point of law which was the principal
basis for the judgment below, and practically the sole ground assigned in the petition

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

for special appeal on which the case was heard in the court of appeals--the court below
holding that sections 6 and 9 of the Federal Trade Commission act did not confer any
jurisdiction upon the commission to employ subpoenas in any investigation made
under section 6 of the act, but that the statute conferred power upon the commission
to employ subpoenas only in adversary proceedings conducted under authority of
section 5. The petition for rehearing was denied on January 21, 1928. The commission
filed answer to the amended bill of complaint on February 14. On March 23 the court
granted the motion of the federation for leave to file supplemental bill of complaint,
in which it was claimed that final decree should issue against the commission, on the
ground that its investigation had been completed, final report made to the Senate, and
its authority thereby exhausted. The commission’s answer to this supplemental bill
was filed on April 4. At the close of the fiscal year negotiations were being conducted
looking to a stipulation of the facts, in lieu of taking testimony in the suit for
permanent injunction, in the Supreme Court of the District of Columbia.
Royal Baking Powder case-Violation of section 5 of the Federal Trade Commission
act.--This company was charged, on complaint of the commission, with publishing
false statements about the products of competitors, among which were (1) that
competitors’ baking powders contained alum and were therefore unfit for use in food;
(2) that the alum contained in such powders is the astringent commonly sold in drug
stores under the name of alum and chemically known as potassium aluminum sulphate;
(3) that competitors’ baking powders are poisonous, that they are made of ground-up
cooking utensils, that they do not come within the pure food laws, that they pucker up
the stomach in the same manner that lump alum puckers up the mouth, and that they
are made of the same substance used as a styptic after shaving. It was further charged
that respondent had advertised anonymously to the same effect. Answer was filed,
testimony taken, and briefs and oral argument presented to the commission. Thereafter,
on March 23, 1926, the commission issued its order dismissing the proceeding. On the
same day counsel for the commission filed a petition for reargument of the case before
the commission, which petition was on said day granted. Notices of such dismissal and
the granting of the petition for reargument were served upon the baking powder
company simultaneously. Thereafter the case was reargued before the commission,
upon which it vacated its order of dismissal entered March 23, 1926, and directed the
reopening of the case solely for the taking of further testimony with respect to
misleading advertising, anonymous advertising, and the circulation of erroneous
extracts from the book A Collation of Cakes. The order expressly

CHIEF COUNSEL

85

provided that no evidence be taken with respect to statements by the respondent
relative to the deleteriousness of alum baking powder, and also confirmed the previous
dismissal with respect to the use by respondent of the slogan “ No alum--no bitter
taste,” since the corn-mission was of opinion that its use as before them in this case
was not an unfair method of competition. Thereupon, on October 22, 1926, the Royal
Baking Powder Co. filed in the Supreme Court of the District of Columbia a petition
for a writ of certiorari which the court caused to be issued and served upon the
commission, command mg it to certify and transmit to that court the record and papers
im the case before the commission, it being the contention of the company that the
commission lost jurisdiction of the proceedings before it upon its entering the order
of dismissal of March 23, 1926. On October 30, 1926, the commission moved the court
to dismiss the petition and to quash the writ of certiorari, and on November 13, 1926,
in addition to its motion to quash the writ of certiorari, the commission also filed a
demurrer to the petition. Thereafter the matter was argued, briefs were filed, and on
June 21, 1927, the court rendered its decision sustaining the commission s motion to
quash the writ of certiorari on the ground of lack of jurisdiction in the court. (Not
reported) . The court declined to pass upon the demurrer to the petition, offering at the
election of the petitioner to transfer the matter to the equity side of the court. This was
done, and the equity court, on November 7, 1927, granted the commission’s motion
to dismiss the bill, saying (decision not reported): “From an examination of the
decided cases bearing upon the questions presented herein the court is of opinion that,
by the entry of the order of dismissal, on March 23, 1926, the commission did not
exhaust its jurisdiction over the case pending before it; that its order reopening the
case, as well its subsequent orders in relation thereto, were administrative and
procedural in character; and that the same are not subject to review by this court.”
Final decree was signed November 15, 1927, the court at the time taking occasion to
discuss allowance of writ of supersedeas, applied for by the company. It said: “It is not
here necessary to decide whether this court, because of the limitations of the equity
rule, supra, is or is not vested with discretion to grant a supersedeas which shall
operate as an injunction against the Federal Trade Commission pending the appeal; but
in view of the fact that this court reached the conclusion herein that the several orders
com plained of were administrative and procedural, and, as such not here properly
subject to review, it is of opinion that it should not thus do indirectly that which it has
directly held it had no right or jurisdiction to do.” The company noted an appeal to the
Court of Appeals of the District of Columbia, and on March 22, 1928, filed the tran-

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

script of record with this court. The commission, on April 7, 1928, filed a motion to
dismiss the appeal, on the ground that the transcript had not been filed within the time
provided by the new rules of the court of appeals, effective December 1, 1927. The
motion, how ever, was denied. The printed transcript of record was filed on June 28
last; the next steps are the filing of briefs and argument. The case will not be reached
before the fall term.
Royal Baking Powder Co.--Mandamus to compel commission pass upon affidavits
of prejudice against member of commission.--In connection with a proceeding then
pending before the commission against the company referred to, and before decision
by the commission on a motion to dismiss the said complaint filed by the respondent
company, the latter, on May 31 and June 4, 1928,; filed in said cause certain petitions
in the form of affidavits, in which it was charged that one of the members of the
commission was so biased and prejudiced against the company as to be unable to give
fair and impartial consideration to matters affecting said company, and in which
suggestion was made that this commissioner would, on consideration of the facts,
admit the impropriety of his continuing to sit in judgement in matters concerning the
Royal Baking Powder Co. The petition prayed that The commission take action to
prevent further participation by this commissioner in deliberations or decisions in
matters and proceedings coming before the commission in which the company a party
or had an interest. On June 11, 1928, the commission entered an order overruling the
motion to dismiss, and on June 28, 1928, a further order was entered postponing
consideration of the petitions (in the form of affidavits of prejudice) until the final
hearing of the case. The company thereupon, on June 30, 1928 filed with the Supreme
Court of the District of Columbia its petition praying that a rule issue requiring the
commission to show cause why a writ of mandamus should not issue against it,
requiring it, before any other or further action is taken in connection with the pending
proceeding (Doc. 1499) or in any other matter in which the company is a party or haste
an interest, to pass upon and announce decision on in the prayers in the petition in the
form of affidavits of prejudice referred to. On July 16 the court granted the company’s
motion to strike the commission’s answer, with leave to the commission to file an
amended answer. This was done on July 25. The next development will be a hearing
on the motion of the company to strike the amended answer.

87

CHIEF COUNSEL

TABLES SUMMARIZING WORK OF LEGAL DIVISION AND COURT
PROCEEDINGS, 1915-1928
TABLE 1.--Preliminary inquiries
Pending beginning of year
Instituted during year
Total for disposition
Dismissed after investigation
Docketed as applications for complaints
Total disposition during year
Pending end of year

1915 1916 1917 1918 1919 1920 1921
0
4
12
32
19
29
61
119
265
462
611
843 1,107 1,070
119 269 474 643
862 1,136 1,131
3
123
289
292
298
351
500
112
134
153
332
535
724
563
115
257
442
624
833 1,075 1,063
4
12
32
19
29
61
68

Pending beginning of year
Instituted during year
Total for disposition
Dismissed after investigation
Docketed as applications for complaints
Total disposition during year
Pending end of year

1922 1923 1924 1925 1926 1927 1928
68
147
102
191
176
298
328
1,223 1,234 1,568 1,612 1,483 1,265 1,331
1,291 1,381 1,670 1,803 1,659 1,563 1,659
731
897 1,157 1,270 1,075
942 1,153
413
382
322
357
286
293
282
1,144 1,279 1,479 1,627 1,361 1,235 1,435
147
102
191
176
298
328
224

CUMULATIVE SUMMARY TO JUNE 30, 1928
Inquiries instituted
Dismissed after investigation
Docketed es applications for complaints
Total disposition
Pending June 30, 1928

14,193
9,037
4,932
13,969
224

TABLE 2.--Export trade investigations

Pending beginning year
Instituted during year
Total for disposition
Disposition during year
Pending end of year

1922 1923 1924 1925 1920 1927 1928
53
35
79
43
10
10
29
10
79
16
11
52
54
68
63 114
95
54
62
70
97
28
35
52
44
40
41
55
35
79
43
10
10
29
42
CUMULATIVE SUMMARY TO JUNE 30, 1928

Investigations instituted
Total disposition
Pending June 30, 1928
166588---28-----7

343
301
42

88

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
TABLE 3.--Applications for complaints

1915 1916 1917 1918 1919
Pending beginning of year
0 104
Applications docketed
112 134
Rescinded dismissals:
Stipulated
0
0
Trade practice acceptance
0
0
Other
0
0
Total for disposition
112 238
To complaints during year
0
3
Dismissals
Stipulated
0
0
Trade practice acceptance
0
0
Others
8 105
Total disposition during year
8 108
Pending end of year
104 130

1920 1921 1922 1923 1924 1925 1926 1927 1928
130 188 280 389 554 467 458 572 565 488 422 457
153 332 535 724 426 382 416 377 340 273 292 334
0
0
0
0
0
0
0
1
1
1
1
2
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
5
6
4
3
4
0
0
283 520 815 1,113 980 855 880 954 909 766 714 793
16 80 125 220 156 104 121 143 118 57 45 58
0
0
0
0
0
0
0
3
5 102
0
0
0
0
0
0
0
0
0
2
79 160 301 339 357 292 187 243 298 185
95 240 426 559 513 397 308 389 421 344
188 280 389 554 467 458 572 565 488 422

80
3
127
255
459

68
19
118
253
530

CUMULATIVE SUMMARY, TO JUNE 30, 1928
Applications docketed
Rescinded dismissals:
Stipulated
Trade practice acceptance
Others
Total rescinded dismissals
Total for disposition
To complaints
Dismissals:
Stipulated
Trade practice acceptance
Others
Total dismissals
Total disposition
Pending June 30,1923

4,830
5
0
22
27
4,857
1,246
258
24
2,799
3,081
4,327
530

TABLE 4.--Complaints
1915 1916 1917 1918
28
Pending at beginning of year
Docketed during year
Rescinded orders to cease and
desist
Contest
Consent
Default
Rescinded dismissals
Stipulated
Trade practice acceptance
Others
Total for disposition
Orders to cease and desist
Contest
Consent
Default
Dismissals
Stipulated
Trade practice acceptance
Others
Total disposition during year
Pending at end of year

1919

1920

1921

1922

1923

1924

1925

1926

1927

19

0
0

0
5

5 10 86 133 287 312 257 232 264 220 152 147
9 154 135 308 177 111 144 154 132 62 76 64

0
0
0

0
0
0

0
0
0

0

0
0

0
0
0

0
0

0
0

0
0

0
5

0
0
0

0
0
0

3
0
0

0
0
0
0
0

0
0
0
0
5

0
0
1
4
10

0
0
0

0
0
0

0
0

0
0
0

0
0

0
0
0

0
0

0
0
0

0
0

4
1
0

0
0

0
0
0

0
0

0
0
0

0
0

0
0
0

0
0

1
0
0

0
0

0
0

0
0
0
0
1
0
1
1
0
0
1
0
14 164 221 441 455 423 402 392 390 282 229 212
71
0
0

75 110 116 74 28 45 30 28 34 38
0
0
0 17 54 47 43 16 18
8
0
0
0
0
0
0
0
0
0
2

0
0
0
0
0
0
0
6
3
1
3
0
0
0
0
0
0
0
0
0
5
5
7 13 44 37 75 88 36 97 83 24 20
78 88 154 153 166 170 128 176 130 82 76
86 133 217 312 257 232 264 220 152 147 136

0

89

CHIEF COUNSEL
CUMULATIVE SUMMARY, TO JUNE 30, 1928
Complaints docketed
Rescinded orders to cease and desist:
Contest
Consent
Default
Total rescinded orders to cease and desist
Rescinded dismissals:
Stipulated
Trade practice acceptance
Others
Total rescinded dismissals
Total for disposition
Orders to cease end desist:
Contest
Consent
Default
Total orders to cease and desist
Dismissals:
Stipulated
Trade practice acceptance
Others
Total dismissals
Total disposition
Pending June 30, 1928

1,531
5
1
0
6
0
0
4
4
1,541
652
203
2
857
13
10
528
548
1,405
186

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

1919 1920
0
2
4
9
4
11
1
0
1
3
0
0
2
3
2
8

1921 1922 1923 1924 1925 1926 1927
8
13
9
4
14
9
8
18
5
5
15
6
5
4
26
18
14
19
20
14
12
1
4
5
1
6
5
4
11
5
4
4
3
1
2
1
0
1
0
2
0
3
13
9
10
5
11
6
9
13
9
4
14
9
8
3

CUMULATIVE SUMMARY, TO JUNE 30, 1928
Appealed to June 30, 1928
Decisions for commission
Decisions against commission
Petitions withdrawn
Total disposition to June 30, 1928
Pending June 30, 1928

75
30
35
7
72
3

1928
3
4
7
3
1
0
4
3

90

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

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

1919
0
0
0
0
0
0

1920
0
2
0
2
0
1

0
0
0
0
0

1921
1
2
0
3
0
0

0
0
0
1
1

1922 1923
3
3
4
5
0
2
7
10
2
0
0
5

0
0
0
0
3

0

1

2
0
4
3

1924
1
0
1
2
0
1
0

1
2
9
1

1925
0
5
1
6
0
0
0

0
1
2
0

1926
4
2
3
9
0
0
0

1
1
2
4

1927
6
1
1
8
3
2
0

2
1
3
6

1928
1
0
0
1
0
0
0

1
1
7

0
1
1

1

0

CUMULATIVE SUMMARY, TO JUNE 30, 1928
Appealed by commission to June 30, 1928
Appealed by others to June 30, 1928
Total appealed to June 30, 1928
Decisions for commission
Decisions against commission
Petitions withdrawn by commission
Writ denied commission
Writ denied others
Total disposition to June 30,1928
Pending June 30, 1928

21
8
29
5
9
1
7
7
29
0

TABLE 7.--Petitions for enforcement--Lower courts
1919
Pending beginning of year
0
Appealed
0
Total for disposition
0
Decisions for Commission
0
Decisions for others
0
Petitions by commission denied 0
Petitions withdrawn
0
Total disposition during year 0
Pending end of year
0

1920
0
0
0
0
0
0
0
0
0

1921
0
0
0
0
0
0
0
0
0

1922
0
0
0
0
0
0
0
0
0

1923
0
1
1
1
0
0
0
1
0

1924
0
1
1
0
0
0
0
0
1

1925
1
1
2
2
0
1
0
2
0

1926
0
3
3
0
1
1
0
1
2

1927
2
2
4
0
0
0
1
1
3

1928
3
3
6
1
1
0
2
4
2

CUMULATIVE SUMMARY, TO JUNE 30, 1928
Appealed to June 30, 1928
Decisions for commission
Decisions against commission
Petitions by commission denied
Petitions withdrawn
Total disposition to June 30, 1928
Pending June 30, 1928

11
3
0
2
3
8
3

91

CHIEF COUNSEL

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

1919
0
0
0
0
0
0
0
0
0

1920
0
0
0
0
0
0
0
0
0
0

1921
0
0
0
0
0
0
0
0

1922
0
0
0
0
0
0
0
0
0
0

1923
0
0
0
0
0
0
0
0
0

1924
0
0
0
0
0
0
0
0
0

1925
0
0
0
1
0
0
0
0
0

CUMULATIVE SUMMARY, TO JUNE 30, 1928
Appealed to June 30,1928
Decisions for commission
Decisions against commission
Petitions by others denied
Total disposition to June 30, 1928
Pending June 30,1928

1926
0
0
1
1
0
0
0
0
1

1927
1
0
0
1
0
1
0
1
0

1928
0
0
1
0
0
1
1
0

3
1
1
1
3
0

TABLE 9.--Petitions for rehearing, modification, etc.--Lower courts
1919
Pending beginning of year
0
Appealed
0
Total for disposition
0
Decisions for commission
0
Decisions against commission 0
Petitions by commission denied 0
Petitions by others denied
0
Total disposition during year
0
Pending end of year
0

1920
0
1
1
0
0
0
0
0
1

1921
1
0
1
0
0
1
0
1
0

1922
0
2
2
1
0
0
0
1
1

1923
1
0
1
0
0
0
1
1
0

1924
0
2
2
0
0
2
0
2
0

1926
0
8
8
1
1
1
3
6
2

CUMULATIVE SUMMARY, TO JUNE 30, 1928
Appealed to June 30, 1928
Decisions for commission
Decisions against commission
Petitions by commission denied
Petitions by others denied
Total disposition to June 30, 1928
Pending June 30, 1928

1926
2
3
5
0
0
2
2
4
1

1927
1
0
1
0
0
0
0
0
1

1928
1
1
2
0
1
1
0
2
0

17
2
2
7
6
17
0

TABLE 10.--Petitions for rehearing, modification, etc.--Supreme Court of the
United States
1919
Pending beginning of year
0
Appealed
0
Total for disposition
0
Petitions by commission denied 0
Petitions by others denied
0
Total disposition during year
0
Pending end of year
0

1920
0
0
0
0
0
0
0

1921
0
0
0
0
0
0
0

1922
0
1
1
0
1
1
0

1923
0
0
0
0
0
0
0

1924
0
0
0
0
0
0
0

CUMULATIVE SUMMARY, TO JUNE 30, 1928
Appealed to June 30, 1928
Petitions by commission denied
Petitions by others denied
Total disposition to June 30, 1928
Pending June 30,1928

1925
0
0
0
0
0
0
0

1926
0
1
1
0
1
1
0

1927
0
4
4
2
2
4
0

6
2
4
6
0

1928
0
0
0
0
0
0
0

92

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
COURT PROCEEDINGS--MISCELLANEOUS

TABLE 11.--Interlocutory, mandamus, etc.--Lower courts
Pending beginning of year
Appealed
Total for disposition
Decisions for Commission
Decisions against commission
Petitions withdrawn by Commission
Petitions withdrawn by others 0
Total disposition during year
Pending end of year

1919
0
2
2
5
1
0

1920
1
4
6
0
1

0

1921
4
2
11
1
0

0
0

1
1

1922
5
6
11
3
1

0
0

1
4

1923
6
5
4
0
7

0
1

1
5

1924
4
0
5
5
0
0

0
0

5
6

1925
4
1

7
4

1928
5
2
1
1

7
0
0

1
0

0
4

1927
4
2
1
0

6
0
0

0
0

1926
4
1

1

0

0
1
4

0
1
4

CUMULATIVE SUMMARY, TO JUNE 30, 1928
Appealed to June 30, 1928
Decisions for commission
Decisions against commission
Petitions withdrawn by commission
Petitions withdrawn by others
Total disposition to June 30, 1928
Pending June 30, 1928

2
0

1
5

4
3

25
7
10
4
1
22
3

TABLE 12.--Interlocutory, mandamus, etc.--Supreme Court of the United States
Pending beginning of year
Appealed
Total for disposition
Decisions for Commission
Decisions against commission
Certiorari denied Commission
Certiorari denied others
Total disposition during
Pending end of year

1919
0
0
0
0
0
0
0
0
0

1920
0
0
0
0
0
0
0
0
0

1921
0
0
0
0
0
0
0
0
0

1922
0
0
0
0
0
0
0
0
0

1923
0
6
6
0
0
0
0
0
6

1924
6
0
6
0
2
0
0
2
4

1925
4
0
4
0
3
0
0
3
1

1926
1
0
1
0
0
0
0
0
1

CUMULATIVE SUMMARY, TO JUNE 30, 1928
Appealed to June 30, 1928
Decisions for commission
Decisions against commission
Petitions by commission denied
Total disposition to June 30,1928
Pending June 30,1928

1927
1
1
2
1
0
1
0
2
0

1928
0
0
0
0
0
0
0
0
0

7
1
5
1
7
0

TABLE 13.--Interlocutory, mandamus, etc.--Rehearing, modification, etc.-Lower courts
1919
Pending beginning of year
0
0
Appealed
0
0
Total for disposition
0
Decisions for commission
0
Petitions by commission denied 0
Total disposition during year
0
Pending end of year
0

1920

1921
0
0

0
0
0
0
0

1922
0
0

0
0
0
0
0

1923
0
0

0
0
0
0
0

1924
0
0

0
0
0
0
0

1925
0
0

0
0
0
0
0

1926
0
0

0
0
0
0
0

1927
0
0

0
0
0
0
0

0
1
0
2
0

CUMULATIVE SUMMARY--TO JUNE 30, 1928
Appealed
Decisions for commission
Petitions by commission denied
Total disposition
Pending June 30, 1928

1928
0
2

2
1
1
2
0

2
0
1
0
0

93

CHIEF COUNSEL

TABLE 14.--Interlocutory, mandamus, etc.--Rehearing, modification, etc.-Supreme Court of the United States
1919
Pending beginning of year
0
Appealed
0
Total for disposition
0
Petitions by commission denied 0
Petitions by others denied
0
Total disposition during year 0
Pending end of year
0

1920
0
0
0
0
0
0
0

1921
0
0
0
0
0
0
0

1922
0
0
0
0
0
2
0
0

1923
0
0
0
0
0
0

1924
0
2
2
0
2
0
0
0
0

1925
0
0
0
0
0

1926
0
0
0
0
0
0
0
0
0

CUMULATIVE SUMMARY--TO JUNE 30, 1928
Appealed
Petitions by commission denied
Total disposition to June 30, 1928
Pending June 30, 1928

2
2
2
0

1927
0
0
0
0
0
0

1928
0
0
0
0
0
0

EXPORT TRADE SECTION
Foreign-trade work of the commission includes administration of the export trade
act (Webb-Pomerene law) and inquiries under section 6(h) of the Federal Trade
Commission act which directs the commission 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.”
This work is handled by the export trade section of the legal division.
OPERATION OF THE EXPORT TRADE ACT

The export trade act has completed 10 years of service to American exporters.
Enacted in April, 1918, “to promote export trade,” the law offers exemption from
antitrust laws to an association “entered into for the sole purpose of engaging in export
trade and actually engaged solely in such export trade” with the qualifying provisions
that such an association may not (1) restrain the export trade of any domestic
competitor of the association, (2) artificially or intentionally enhance or depress prices
within the United States of commodities of the class exported by the association, or
(3) substantially lessen competition within the United States or otherwise restrain trade
therein.
Export associations organized under the law, file with the Federal Trade
Commission copies of their organization papers and amendments thereto, and furnish
such information as the commission may require as to their organization, business,
conduct, practices, management, and relation to other associations, corporations,
partnerships, and individuals. In case of violation of the law the commission may
investigate and make recommendations for the readjustment of the association’s
business. In case of failure to comply with such recommendations the commission’s
findings may be referred to the Attorney General of the United States for further
action.
One of the primary purposes of the law was to enable American exporters to operate
in foreign markets on an equal footing with foreign combines. This has been
accomplished through cooperative agreements stabilizing export prices, reducing
selling costs, standardizing grades, contract terms and sales conditions, improving the
quality of the products exported, and assuring buyers of prompt and efficient service
in the filling of orders. The Webb law association
94

EXPORT TRADE SECTION

95

is also in a position to present a solid front to the buying combines which might
otherwise play one exporter against another and beat the price down to an unprofitable
basis. Many economies have been effected through operation under the law and many
advantages reported by associations filing papers with the commission.
The organization and operation of a Webb law association are varied to meet the
needs of the particular industry to be served. The two outstanding types are that of a
company incorporated under State laws with stock issued to the combining members,
and that of a more loosely drawn unincorporated association predicated upon agreements or articles of association. Various plans are adopted for the development of
export trade and its apportionment among the members. In case of seasonal products,
arrangements are made for warehousing abroad and distribution at regular intervals in
order to prevent an oversupply at any one time and consequent low prices in foreign
markets. In case of heavy cargo, consignments are consolidated and steamers
chartered. Small orders are also combined and lower freight rates obtained thereby; for
this reason the association office is usually located at an export center--New York,
New Orleans, San Francisco, Portland, or Seattle. Member companies are scattered
throughout the States. Offices and agencies of Webb law associations have been
established in all parts of the world.
SUCCESS OF THE WEBB LAW

The commission is sometimes asked whether the export trade act has been a success.
It is difficult to estimate the measure of success achieved, but producers and
manufacturers throughout the country have reported that exportation of their products
would be impossible without their organization under the provisions of the act. Webb
law associations have shared with other exporters the handicaps presented by postwar
conditions in Europe and internal revolutions and catastrophes in Latin America and
the Orient, but they appear to have weathered the storm; comparatively few of them
have gone out of business, and new associations are formed each year. The volume and
value of their exports have increased annually, totaling in 1924, $140,000,000; in
1925, $165,000,000; in 1926, $200,000,000; and in 1927, $371,500,000.
EXPORTS DURING 1927 TOTALED $371,5000,000

A variety of commodities was exported by Webb law associations during 1927,
including lumber and wood products to the amount of $35,400,000 (pine, fir, redwood,
walnut, hardwoods, doors, plywood, wooden tools, barrel and box shooks, clothespins,
and naval stores); metal and metal products to the amount of $180,000,000 (copper,
zinc,

96

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

iron and steel products, machinery, railway equipment, pipes, valves, and screws);
chemical products valued at $3,100,000 (caustic soda, Soda ash, liquid chlorine, soda
pulp, paints and varnish); raw materials such as phosphate rock, crude sulphur, etc.,
to the amount of $15,200,000; manufactured products such as paper, abrasives, rubber,
cotton goods and linters, buttons, and miscellaneous goods, to the amount of
$84,800,000; and foodstuffs valued at $53,000,000 (milk, meat, sugar, corn products,
flour, rice, canned salmon, and dried fruit).
NEW WEBB LAW ASSOCIATIONS

New associations formed during the fiscal year ending June 30, 1928, included:
American Soft Wheat Millers Export Corporation, comprising 33 flour millers in
Pennsylvania, Maryland, Virginia, West Virginia, and Washington, D. C., with headquarters
office at Washington.
Northwest Dried Fruit Export Association, comprising 24 packers and merchants of dried fruit
in Washington, Oregon, and California, with headquarters at Portland, Ore.
South American Fruit Exporters (Inc.), comprising 7 exporters of fruit and fruits products in
New York City.
American Rice Export Corporation, comprising 15 rice growers and millers in Louisiana and
Texas, with headquarters at the “rice city,” Crowley, La.
California Sardine Export Association, comprising 19 sardine packers in California, with
offices at San Francisco and Los Angeles, Calif.
Steel Export Association of America, formed by the United States Steel Products Co. and the
Bethlehem Steel Export Corporation, with headquarters office In New York City.
FIFTY-SIX EXPORT ASSOCIATIONS FILED PAPERS IN 1928

Fifty-Six export associations filed reports with the Federal Trade Commission during
the first six months of 1928:
American Brake Beam Manufacturers Export Association, West Nyack, N. Y.
American Export Door Corporation, Washington Building, Tacoma, Wash.
American Locomotive Sales Corporation, 30 Church Street, New York City.
American Milk Products Corporation, 71 Hudson Street, New York City.
American Paper Exports (Inc.), 75 West Street, New York City.,
American Pitch Pine Export Co., 1605 Pere Marquette Building, New Orleans, La.
American Provisions Export Co., 140 West Van Buren Street, Chicago, Ill.
American Rice Export Corporation, Crowley, La.
American Soda Pulp Export Association, 200 Fifth Avenue, New York City.
American Soft Wheat Millers Export Corporation, 8261 K Street, NW., Washington, D.C.
American Spring Manufacturers Export Association, 921 Farmers’ Bank Building, Pittsburgh,
Pa.
American Surface Abrasives Export Corporation, 82 Beaver Street, New York City.

EXPORT TRADE SECTION

97

American Tire Manufacturers Export Association, 30 Church Street, New York City.
American Webbing Manufacturers Export Association, 395 Broadway, New York City.
Associated Button Exporters of America (Inc.), 320 Broadway, New York City.
Automatic Pearl Button Export Co. (Inc.), 301 Mulberry Avenue, Muscatine, Iowa.
California Dried Fruit Export Association, 1 Drumm Street, San Francisco, Calif.
California Sardine Export Association, 604 Postal Telegraph Building, San Francisco, Calif.
Cement Export Co., The, Pennsylvania Building, Philadelphia, Pa.
Chalmers (Harvey) & Son Export Corporation, rear 31 East Main Street, Amsterdam, N. Y.
Copper Export Association (Inc.), 25 Broadway, New York City.
Copper Exporters (Inc.), 25 Broadway, New York City.
Davenport Pearl Button Export Co., 1231 West Fifth Street, Davenport, Iowa.
Douglas Fir Exploitation & Export Co., 1125 Henry Building, Seattle, Wash.
Export Clothes Pin Association of America (Inc.), 280 Madison Avenue, New York City.
Exporters of Wood Products (Inc.), 96 Wall Street, New York City.
Export Screw Association of the United States, 101 Park Avenue, New York City.
Florida Hard Rock Phosphate Export Association, Savannah Bank & Trust Building,
Savannah, Ga.
Florida Pebble Phosphate Export Association, 420 Lexington Avenue, New York City.
Goodyear Tire & Rubber Export Co., The, 1144 East Market Street, Akron, Ohio.
Gulf Pitch Pine Export Association, 1223 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.
Naval Stores Export Corporation, 1429 Whitney Building, New Orleans, La.
Northwest Dried Fruit Export Association, 402 Security Building, Portland, Ore.
Pacific Flour Export Co., care of Centennial Mill Co., 506 Central Building, Seattle, Wash.
Phosphate Export Association, 420 Lexington Avenue, New York City.
Pioneer Pearl Button Export Corporation, 217 Mansion Street, Poughkeepsie, N. Y.
Pipe Fittings and Valve Export Association, Branford, Conn.
Producers Linter Export Co., 822 Perdido Street, New Orleans, La.
Redwood Export Co., 310 Sansome Street, San Francisco, Calif.
Rubber Export Association, The, 1213 Akron Savings & Loan Building, Akron, Ohio.
Salmon Export Corporation, 3301 Smith Building, Seattle, Wash.
South American Fruit Exporters (Inc.), 44 Water Street, New York City.
Steel Export Association of America, The, 25 Broadway, New York City.
Sugar Export Corporation, 113 Wall Street, New York City.
Sulphur Export Corporation, 33 Rector Street, New York City.
United Paint & Varnish Export Co., 601 Canal Road, Cleveland, Ohio.

98

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

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., The, Piqua, Ohio.
Walnut Export Sales Co. (Inc.), 616 South Michigan Avenue, Chicago, In.
Walworth International Co., 44 Whitehall Street, New York City.
Western Plywood Export Co., 1549 Dock Street, Tacoma, Wash.
Wisconsin Canners Export Association, Manitowoc, Wis.
Zinc Export Association, 61 Broadway, New York City.
PROPOSED LAW TO PERMIT IMPORT COMBINES

During the past year an attempt was made to broaden the scope of the export trade
act by inserting an amendment which, without changing the existing law, would have
added thereto provision for similar antitrust exemption to be granted to import
combines for the purpose of importing into the United States crude rubber, potash,
sisal, or other raw. materials or products of nature in a crude or unfinished state
“which are certified by the Secretary of Commerce to be of a character not made,
produced, or grown in substantial quantities within the United States, or to be
controlled by any foreign government, combination, or monopoly.” This proposed
amendment was embodied in bills H. R. 8927 and 5.2312, introduced in Congress by
Representative Newton and Senator Jones, respectively H. R. 8927 was favorably
reported by the House Committee on the Judiciary, but failed of passage in the House
of Representatives. The Senate bill was not voted upon.
TRUST LAWS AND UNFAIR COMPETITION IN FOREIGN COUNTRIES

Under Section 6(h) of the Federal Trade Commission act the commission follows
unfair competition and trade restraint laws in foreign countries, and other conditions
in international trade that may affect the foreign commerce of this country. Some of
the more recent developments along this line are as follows:
INTERNATIONAL TRADE CONFERENCES

The Sixth International Conference of American States was held at Habana, Cuba,
in January and February, 1928. The conference approved and signed 11 conventions,
62 resolutions, 7 motions and 4 agreements. A plan for the reorganization of the Pan
American Union was adopted. The committee on public international law reported
progress in its study of codification of international law and consideration of this
subject was continued until the next conference. A code of private international law
was presented by the commission of jurists and was accepted by 18 affirmative votes,
with

EXPORT TRADE SECTION

99

some reservations by several countries; the United States delegation abstain from
voting on the code. A plan for a uniform law on bills of exchange and other
instruments of credit was presented and referred to the Inter-American High
Commission. The committee on economic problems presented plans for revision of the
trade-mark conventions, the organization of an inter-American chamber of commerce,
and conferences to consider problems of immigration, standardization, uniformity of
communication statistics and of consular fees. Reports were presented on treaties and
on various social problems. Other subjects considered included intellectual
cooperation, the problem of communications, economic use of international rivers,
commercial aviation, frontier police, status of aliens, maritime neutrality, asylum, the
obligation of States in the event of civil war, and the pacific settlement of international
disputes. A plan for creation of a Pan American court of conciliation and mediation
was referred to a committee for further study.
Work of the International Economic Conference at Geneva in May, 1927, has been
continued by the economic consultative committee which met at Geneva in May, 1928.
The subjects under discussion included methods by which statistics of industrial
production and international trade may be improved, equal treatment of foreigners,
interpretation and application of the most-favored-nation clause, revision of tariffs, and
the convention for the abolition of import and export prohibitions and restrictions
drafted at the diplomatic conference in the fall of 1927. In July, 1928, the last-named
convention had been signed with some reservations by 28 countries, including the
United States. No action was taken by the consultative committee with reference to the
question of industrial agreements, but it was recommended that a special study be
made by the economic organization of the League of Nations concerning-(1) The subject matter and nature of international Industrial agreements and cartels and their
Importance from the International economic standpoint.
(2) The status and juridical form of these agreements and cartels and the legislation
applicable to them.
(3) The measure of publicity given to them.

The International Chamber of Commerce was represented at the Geneva meeting of
the economic consultative committee and presented a number of resolutions on the
subjects outlined above. The inter-Rational chamber was also represented at the Third
General Conference on Communications and Transit meeting in Geneva in August and
September, 1927; the Universal Postal Union Conference on Air Mails meeting at The
Hague in September, 1927; the Inter-Rational Railway Union in Brussels in April,
1928; the Congress of the Baltic and International Maritime Conference in Hamburg

100

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

in May, 1928; the International Shipping Conference in London June, 1928; the
general meeting of the “Comite Consultatif International des Communications
Telephoniques a Grande Distance Paris in June, 1928; and the Congress of the
International Association for the Protection of Industrial Property at Rome in May,
1928. Arrangements have been made for the fifth congress of the International
Chamber of Commerce to be held in Amsterdam July, 1929.
The International Association for the Protection of Industrial Property, meeting in
Rome in May, 1928, considered among other subjects:
(1) Reservation of the rights of third parties, under article 4 of the convention;
(2) Independence of trade-marks, assignment of trade-marks, and a plan for international
classification of trademarks;
(3) International classification of patents and adoption of a system of licensing as a substitute
for provisions now in existence under the working clauses of patent laws;
(4) Application of the Madrid agreement against false indications of origin in the various
countries of the Union, with emphasis on the importance of protecting geographical
appellations; and
(5) Protection of broadcasting against unfair competition.
CANADIAN COMBINES INVESTIGATION ACT

In October, 1927, final report was made by the commissioners appointed under the
Canadian combines investigation act to investigate the operation of the Canadian
Proprietary Articles Trade Association. The association was charged with restraint of
trade and enhancement of prices through resale price agreements. The commissioner
found it to be in control of the entire Canadian trade in nationally advertised
proprietary medicines and toilet articles, and “an association which has operated and
is likely to operate to the detriment of and against the interest of the public."
Immediately after the publication of this report the association withdrew its stop list
and ceased operations.
Legislation has been enacted by the Ontario Legislature providing for regulation of
the sale of fruit and vegetables on consignment and requiring that records shall be kept
and shippers notified regarding sales of their products. This action is a result of
recommendations in a report issued in 1926, under the combines investigation act,
disclosing certain marketing conditions and practices found to be judicial to the
interests of growers and consumers of fruits and vegetables in Ontario.

EXPORT TRADE SECTION

101

BRITISH COMPANIES ACT OF 1928, THE MERCHANDISE MARKS ACT, AND
GOVERNMENT EXPORT CREDIT INSURANCE

The new British companies act, passed in 1928, includes “blue-sky “ provisions
designed to protect the interests of investors. The law applies not only to prospectuses
and offers of sale in the case of British companies, but also to those of foreign
companies, and heavy fines may be imposed upon newspaper proprietors, printers,
advertising agents, and others who are found to be parties to a violation of the act in
connection with securities and shares of foreign companies. In addition to information
required by prior legislation, each prospectus now issued to “any member of the
public” shall give
(a) The rights as regards dividend, capital, and voting of all different classes of shares.
(b) The profits for each of the three preceding years of the company or of any business which
is to be acquired.
(c) Particulars of the dividends paid on each class of shares for each of the preceding years.

Other information required includes the place and date of incorporation, the authorized
and issued share capital, the amount of debentures outstanding and rate of interest,
names and addresses of directors, and wh ether the shares or securities are quoted or
dealt in on any recognized stock exchange. When shares are offered, the company
must state the minimum amount which in the opinion of the directors must be raised
to provide the purchase price of any property to be acquired, the preliminary expenses
and underwriting commission, and the working capital. “Haw king” of shares from
house to ho use is made a criminal offense, but a business office is not to be construed
as a house. The hawking”, clause was made effective at once. Other portions of the
act will come into Operation upon issuance of an order in council, and a consolidation
act may be passed in order to enforce the law. The courts will be given power to cancel
any contract made in breach of the law.
Section 2 of the British merchandise marks act of 1926, effective on June 15, 1927,
provides that in case of complaint to the effect that the trade of the United Kingdom
would be prejudiced by the importation or sale of certain goods for use and
consumption in the Kingdom, without an indication of the origin of the goods, the
British Board of Trade may appoint a committee to make an inquiry into the matter,
and after report confirming such impending prejudice, an order in council may be
issued prohibiting the sale or exposure for sale in the United Kingdom of imported
goods of that class or description unless they bear an indication of origin. During

102

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

1927 orders in council were issued covering importation and sale of gold and silver
leaf, woven labels, wire netting and woven wire, mill bobbins, felt hats and felt-hat
hoods, iron and steel wire and wire nails and staples, brass water taps and metal
fittings, cabinet furniture of metal (not including locks), furniture castors, braces or
belt buckles, and tires or tubes. In 1928 orders in council have been recommended by
committees which would require indications of origin on the following imported
products: Apples and pears, enamel zinc sheets, cast-iron enamel baths, toothbrushes
and shaving brushes, and electric incandescent lamps. A number of inquiries are
pending before committees appointed under the provisions of the act.
A report on operation of the British Government Export Credit Insurance, since its
organization in July, 1926, was presented to the House of Commons in April, 1928,
by a committee appointed for that purpose. The report states that the credit insurance
scheme ha s proved of great practical value in the development of export trade of the
United Kingdom, Insurance to the amount of £2,923,500 was placed by the Export
Credits guaranty department up to and including March, 1928, and applications are
rapidly increasing the advantage to British exporters lies in the fact that although other
British institutions offer insurance against loss arising through actual insolvency of the
foreign importer, the Government credit, department offers a policy which guarantees
payment of the amount insured as soon as the corresponding bills are presented for
nonpayment.
SWEDISH MONOPOLY LAW--THE SWEDISH MATCH TRUST

Under the Swedish act for the investigation of monopolistic enterprises and
combines, 1925, an investigation has been made as to the influence of the Swedish
Milling Trust on the prices and marketing condition s of bread cereals and other
cereals.
During the past year the Swedish Match Trust obtained 25-year monopolies in
Latvia and Ecuador and entered into an agreement with the Estonian Government for
exclusive manufacture and sale of matches in that country for 28 years, the company
to take over government bonds and to pay stipulated sums in proportion to the out put.
It is said that the trust may float a loan for the Hungarian Government in return for
similar privileges in that country. In Germany, however, a bill was passed by the
Reichstag in 1927 under which German match factories should operate under
government license, the purpose said to be to oppose invasion of the Swedish Trust
which has obtained control of the German match production.

EXPORT TRADE SECTION

103
THE GERMAN CARTEL COURT

In a decision in 1927 by the German Cartel Court, it was held that a member of the
Drahtverband or syndicate of wire manufacturers was not justified in withdrawing
from the syndicate and abrogating its agreement to abide by the quota apportionment
allotted to it. The member comp any had insisted upon a larger quota and sold directly
to the trade in violation of regulations of the syndicate; its contention that the
syndicate was not in a position to market its products was not upheld by the court. The
syndicate contended that overproduction and insufficient domestic demand had
resulted in a slow market and it was therefore impossible to grant the member’s
demand for an increased quota.
UNFAIR COMPETITION LAW OF CZECHOSLOVAKIA

The unfair competition law of Czechoslovakia. was enacted in July, 1927, effective
on January 28, 1928. This law provides that-Whoever, in the course of economic intercourse through an act calculated to injure a
competitor gets into conflict with the moral standards of competition, may be sued to cease and
desist such act and to remove the objectionable conditions caused by it; however, if he know or
should have known that his act was likely to injure a competitor, he may be sued also for
compensation of the injury caused thereby.

In cases involving violation of the above-quoted clause, or involving unfair
advertising, false indications of origin, or commercial bribery, a competitor or any
agency authorized by statute to safeguard the economic interests of competitors, may
bring a civil suit for an order to cease and desist. In case of disparagement of a competitor’s business, false use of marks of identification, divulging of business secrets,
or unfair use of a competitor’s employees, suit must be brought by one directly
affected by the act. Certain violations are punishable as criminal acts by fine not to
exceed 50,000 crowns, or by imprisonment not to exceed six months. Provision is
made for further decrees establishing special boards for the settlement of cases involving unfair competition by arbitration proceedings.
FRENCH BILL FOR THE SUPPRESSION OF FRAUD

Early in 1928 the French Government submitted to Parliament a bill for the
suppression of fraud in the manufacture and sale of soaps. This law if enacted would
prohibit the labeling as “pure” all soap containing more than 5 per cent of rosin, and
would prevent the sale under the name of soap of any product other than that resulting
from the treatment when heated of oil fats by an alkaline lye and con16588---28-----8

104

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

taining as a result of the process a minimum of 35 per cent of hydrated acid fats.
SPANISH GOVERNMENT PETROLEUM MONOPOLY-NATIONALIZATION OF
THE AUTOMOBILE INDUSTRY PROPOSED

In A royal decree signed by the King of Spain in June, 1927, a Government
petroleum monopoly was established, with the provision that a corporation shall be
formed composed entirely of Spanish subjects, with Spanish capital only, which shall
control the importation, industrial manipulation of all kinds, warehousing, distribution,
and sale of liquid mineral fuels and by-products thereof. The monopoly corporation
shall take over all works, depots, distributing offices, street pumps, and other
installation intended for the importation, manufacture, warehousing, and distribution
of petroleum product in Spain, and shall pay therefor the industrial value of the
properties, as determined by a jury composed of three representatives of the Spanish
Government, one representative of the monopoly corporation, and one representative
of the party whose property is to be expropriated. The Spanish Government will own
30 per cent the shares of the stock in the monopoly corporation.
Nationalization of the automobile industry is also contemplated. Roy al decrees
issued in 1927 and 1928 provide for the creation of an automobile commission and the
“Caja del Motor y del Automovil des Estado,” which will be controlled by a.
permanent delegate of the president of the supreme court of the public treasury. A fund
of 5,000,000 pesetas has been appropriated by the Government, to which will be added
income derived from taxes placed upon the manufacture, importation, and sale of
automobiles within the country Manufacturers having contracts with the Government
will be allowed advances, and subsidies may be granted “to help the nationalization
of the industry.”
ITALIAN DECREE TO ENCOURAGE INDUSTRIAL COMBINATION

In order to encourage industrial combination in Italy a royal decree was issued in
June, 1927, which grants a reduction in taxes to mergers effected by companies that
are already in existence.
CUBAN SUGAR DEFENSE LAW-INTERNATIONAL SUGAR CONVENTIONS

The sugar defense law of Cuba was passed on October 4, 1927, pro viding for the
establishment of a national sugar defense commission and ado Cuban sugar export
company to dispose of surplus production. On February 14, 1928, a decree was passed
providing for calculation of an average price by a “fiscalization committee of average

EXPORT TRADE SECTION

105

prices,” to be headed by the Secretaries of Agriculture, Commerce, and Labor. In
March, 1928, another decree was issued, under which the crop for that year should be
limited to 4,000,000 tons, this amount to be apportioned between the various mills in
the form; of quotas. In the meantime, in November, 1927, representatives of the Cuban
Government met in Paris with representatives of sugar industries in Czechoslovakia,
Germany, and Poland, and entered into the “Paris convention,” under which Cuba
agreed to reduce her production in 1927-28, in exchange for which the European
parties agreed to make every possible effort to increase consumption of sugar in their
respective countries in order to reduce the amount to be exported. The conference was
held too late in the season to regulate the beet-sugar crop for 1927-28, but as to the
1928-29 crop, the European representatives agreed to reduce if necessary in order to
prevent overproduction during that year. A further conference was agreed upon, to be
held in October, 1928, at which time further agreements might be made for restriction
and disposition of surplus. The Paris convention was ratified by the German,
Czechoslovakian, and Polish representatives at Berlin on November 80, 1927, and on
December 26 the Belgian sugar manufacturers joined the convention. It is said that
Hungarian and Dutch interests may also join. Conferences have been held in
Amsterdam with representatives of the Javan industry and in Habana with sugar
producers of Peru, Brazil, Argentina, and Santo Domingo, and an attempt will be made
to bring all of these interests into further agreements between Cuban and European
interests.
DOMINICAN SUGAR DEFENSE COMMISSION

A national commission for the defense of sugar was created by decree in the
Dominican Republic in November, 1927. The first step taken by the commission was
to prohibit the production of sugar in the Republic beyond a maximum capacity of the
centrals which were established at the time of the enactment of the decree.
VALORIZATION OF SUGAR AND COFFEE IN BRAZIL

Sugar valorization in. Brazil was continued in 1927 under a plan which included
cooperative selling, a guaranteed price, and an apportionment of 15 per cent of the
production for export. The Government supported this plan by granting a reduction.
of the export tax to 2 per cent ad valorem instead of the established 8 per cent.
In December, 1927, a decree was enacted under which the Brazilian Government is
given broad powers to control interstate and foreign commerce in coffee. The
Government is authorized to fix monthly

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

the quota of coffee exportable from each State, to prescribe the exportation of any
additional amount, to make all exportation contingent upon previous authorization, to
prevent exportation of adulterated, painted, or mixed coffees; and to compel the
marking of all coffee to show the state of origin and type. This law will take the place
of the coffee defense scheme previously in effect, which included regulation by
interstate agreements, but was found to be ineffective because there were no means to
compel acceptance by refractory coffee producers without a Federal law embracing the
entire industry.
CHILEAN NITRATE SUBSIDY

In the Chilean nitrate industry restriction of production was abandoned in 1927. But
in order to meet the competition of German producers of synthetic nitrogen, the
Chilean Government announced in May, 1928, that a subsidy of £250,000 would be
paid to Chilean producers, based upon their output for the first quarter of 1928; and
in the case of a reduction in the price of synthetic nitrogen by German producers for
the year commencing July 1, 1928, the Chilean Government would pay to producers
in Chile a sum equal to the German reduction. In the case of contracts entered into
before the German price is announced the Chilean producers will be required to pass
the reduction on to their buyers, but in the case of contracts entered into after the
German announcement the bonus may be retained by the nitrate producers.
SALVADOR COMPANY LAW

Under the law for the control of commercial establishments enacted in Salvador in
June, 1927, a national commercial registration office is created to which every person
who has a commercial establishment in the country (provided the value exceeds $150)
must apply for registration. The chief of commercial registration is empowered to
examine the books or papers of any firm on the registry and to cancel the registration
“when a merchant commits a grave fault such as an unjustified failure in payments, the
rejection of orders without proper cause, etc.” In case of cancellation or suspension
from the registry the collector of customs will be instructed to prevent delivery of any
merchandise shipped to the offending merchant through the customs, such
merchandise to be held at the disposal of the shipper. The purpose of the law is said
to be the suppression of questionable methods of trading and improvement of general
commercial standards in Salvador.

EXPORT TRADE SECTION

107
ANTITRUST LAW PROPOSED IN URUGUAY

An antitrust law has been drafted in Uruguay which would prohibit, under penalty
of punishment, destruction of products for the purpose of increasing prices, closing
down works against compensation, or purchase of shares for the purpose of
establishing a monopoly in foodstuffs.
FOREIGN TRADE COMPLAINTS

Also under section 6(h) of the Federal Trade Commission act, the commission
cooperates with the United States Department of State, the Commerce Department, and
other agencies, in investigating complaints involving the practices of American
exporters and importers which may affect the foreign trade of this country.
Such a case is usually reported in the first instance to the American consul abroad.
It may involve allegations of misrepresentation of goods, quality below sample or
order, short shipment, delay or failure to ship, spoilage or breakage en route,
overcharge, failure to reply to inquiries, and other factors resulting in strained relations
between American and foreign traders. If it is found that an inquiry in the States is
necessary, the commission may be asked to interview the American parties and to
obtain such facts as are available to substantiate or refute the allegations of the foreign
complainant. The commission’s inquiries are made informally, without publicity, and
in most cases do not result in unfair competition procedure.
The consuls report that a small complaint against an American firm may make a loud
noise and cause much damage to the prestige of American goods in a foreign market,
especially in those markets where American products are not well established. The
facts brought out by the commission’s inquiry, coupled with an inspection report
submitted by the consul, frequently lead to a better understanding and an amicable
adjustment of the dispute by the parties thereto, and put an end to anti-American
sentiment abroad. The laboratories of the United States Bureau of Standards and other
scientific agencies have given valuable service in testing returned samples of products
said to be defective; and the arbitration committees of the chambers of commerce and
other commercial organizations have cooperated in those cases where the parties
agreed to submit their disputes to arbitration. A reciprocal service is extended by the
consuls in case of complaint by an American against a foreign trader.
During the past year 97 foreign trade complaints were under investigation by the
export trade section, of which 55 were completed and 42 were still pending on July
1st.
These cases involved the following imports into the United States: Flour and fish
from Canada, antiques and prints from England,

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

sesame oil from France, wood pulp and beaded bags from Germany, autographs from
Italy, stamps from Persia, skins and hides from Arabia, and curios from India; and the
following exports from the United States: Automobile parts, musical instruments,
toothpick machinery, brick-making machines, and eggs to Argentina; auto mobiles,
flour; hosiery, and novelties to Brazil; razor sharpeners and cork disks to Chile;
automobiles and cotton goods to Peru; inner tubes to Ecuador; miscellaneous
merchandise to Colombia; bicycle parts to San Salvador; lumber, enameled tanks,
motor accessories, sponges, hosiery, and cotton goods to Australia; radio equipment
and adding machines to New Zealand; fire extinguishers and mantles to the Straits
Settlements; tires, engines, bicycle part; films, oil, and cotton thread waste to Japan;
shrimps to China, pipe fittings to India; aircraft parts, barrel staves, ice machines,
velocipedes, and shoes to South Africa; wagons to Mexico; hosiery and clothing to
Cuba; fuel oil to Canada; jute bags, persimmon logs, lumber, and cotton to England;
radio equipment, leather, and tiles to Belgium; hams and canned lobster to France;
machines, lumber, and hosiery to Germany; automobile parts to Denmark;’ bearings
to Norway; typewriters and cotton to Sweden; oil to Holland; lumber to Spain; leather
and cotton goods to Greece; automobile equipment to Serbia; automobile parts and
cotton remnants to Syria; and rubber belts to Persia.

ADMINISTRATIVE DIVISION
PERSONNEL

On June 30, 1928, the commission consisted of William E Humphrey, of
Washington, chairman; Abram F. Myers, of Iowa; Edgar A; McCulloch, of Arkansas;
G. S. Ferguson, jr., of North Carolina; and C. W. Hunt, of Iowa.
The term of office of Commissioner John F. Nugent, of Idaho, expired September
25, 1927, Mr. Garland S. Ferguson, jr., of North Carolina, under date of November 12,
1927, was given a recess appointment to fill the vacancy, taking the oath of office and
entering upon duty November 14, 1927; On December 17, 1927, the President sent to
the United States Senate the nomination of Mr. Ferguson to be a Federal trade
commissioner for a term of seven years from September 26, 1927. The nomination was
confirmed January 4, 1928, and Mr. Ferguson took the oath of office and entered upon
duty under the new commission January 9, 1928.
Under date of June 11, 1928, the President appointed Abram F. Myers, of Iowa, a
Federal trade commissioner for a term of seven years from September 26, 1928, as a
recess appointment, under which Mr. Myers took the oath of office June 19, 1928,
succeeding himself.
Mr. William E. Humphrey was elected chairman of the commission for the year
December 1, 1927, to November 30, 1928, succeeding C. W. and Abram F. Myers was
elected vice chairman for the same period.
The personnel of the commission at the close of the year ended June 30, 1928,
consisted of five commissioners and 344 employees, with a total pay roll of $918,980,
which included $50,000 for the salaries of the commissioners, leaving a pay roll of
$868,980 for the 344 employees. During the year 89 employees entered the service and
33 left the service of the commission. Of the total personnel of 349, including the
commissioners, at the close of June 30, 1928, 189 were under the civil-service
appointment and 155 employees and 5 commissioners held excepted positions.
At the close of the fiscal year the commission had 57 employees who have had
United States naval or military service. The total number of women employees was
122. The total number of employees coming under the provisions and benefits of the
retirement law at the close of the fiscal year was 193. The amount of money deducted
during the fiscal year from the salaries of employees subject to the provisions of the
United States civil service retirement law amounted to $14,515.62. Of the grand total
of the personnel of 344 employees, 206 were administrative employees, 82 attorneys,
29 economists, and 27 accountants.
109

110

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
PUBLICATIONS

The following publications were issued during the year:
Annual Report for the Fiscal Year Ended June 30, 1927; issued December 5, 1927; 224 pages.
Stock Dividends (in response to S. Res. 304, 69th Cong., 2d sess.; printed as S. Doc. 26);
issued December 5, 1927; 273 pages.
Petroleum Industry--Prices, Profits, and Competition (in response to S. Res. 31, 69th Cong.,
1st sess.; printed as S. Doc. 61); issued December 12, 1927; 860 pages.
Rules of Practice and Procedure, amended; issued January 1, 1928; 16 pages.
Competition and Profits in Bread and Flour (in response to S. Res. 163, 68th Cong., 1st sess.;
printed as S. Doc. 98); issued January 11, 1928; 50 pages.
Supply of Electrical Equipment and Competitive Conditions--second and concluding volume
of report on the electric-power industry (in response to S. Res. 329, 68th Cong., 2d sess.; printed
as S. Doc. 46); issued January 12, 1928; 282 pages.
Panhandle Crude Petroleum; issued February 3, 1928 ; 19 pages.
Cotton seed Industry (in pursuance of H. Res. 439, 69th Cong., 2d sess; printed as H. Doc.
193); issued March 5, 1928; 37 pages.
Trade Practice Conferences; issued March 15, 1928; 82 pages.
Cooperative Marketing (in response to S. Res. 34, 69th Cong., special sess.; printed as S. Doc.
95); issued April 30, 1928; 721 pages.
Utility Corporations No. 1--a monthly report on the Electric Power and Gas Utilities Inquiry
(in response to S. Res. 83, 70th Cong., 1st sess.; printed as S. Doc. 92); issued March 15, 1928;
46 pages.
Utility Corporations No. 2--a monthly report on the Electric Power and Gas Utilities Inquiry
(in response to S. Res. 83, 70th Gong., 1st sess.; printed as S. Doc. 92); Issued April 16, 1928;
185 pages.
Utility Corporations No. 3--a monthly report on the Electric Power and Gas Utilities Inquiry
(in response to S. Res. 83, 70th Cong., 1st sess.; printed as S. Doc. 92); Issued May 15, 1928;
571 pages.
Utility Corporations No. 4--a monthly report on the Electric Power and Gas Utilities Inquiry
(in response to S. Res. 83, 70th Cong., 1st sess.; printed as S. Doc. 92); issued June 15, 1928;
637 pages.
Copies of these publications may be purchased from the Superintendent of Documents,
Washington, D. C., for nominal sums.
FISCAL AFFAIRS

Appropriations available to the commission for the fiscal year ended June 30, 1928,
under the executive and sundry civil act approved February 11, 1927, amounted to
$984,350. This sum was made up of three separate items: (1) $50,000 for salaries of
the commissioners, (2) $917,850 for the general work of the commission, and (3)
$16,500 for printing and binding.
Expenditures and liabilities for the year amounted to $968,465.15, which leaves a
balance of $15,884.85. This represents a balance (1) of $1,361.12 in salaries for
commissioners and (2) $14,523.73 in the lump sum appropriation.

ADMINISTRATIVE DIVISION

111
The appropriations; expenditures, liabilities, and balances are tabulated as follows:
Appropriations, expenditures, liabilities, and balances
Amount
available

Amount
expended

Liabilities

Expenditures and
Balances
liabilities

Federal Trade Commission, 1928:
Salaries, commissioners
$50,000.00 $48, 638. 88
$48,638.88
$1,361.12
Printing and binding
16,500.00
9,748.34
$6,753.66
16,500.00
All other authorized expenses 917,850.00 885,724.79
17,601.48 903,326.27
14,523.73
Total, fiscal year 1928
984,350.00 944,110.01
24,355.14 968,465.15
15,884.85
Unexpended balances:
1927
59,689.08
23,370.63
36,324.61
1926
11,385.46
131.03
11,254.43
1923
Cr. 626.62
1922
Cr. 515.51
Total
1,055,424.54 966,469.54
63,443. 89

Statement of costs for the fiscal year ended June 30, 1928
Administrative
Economic
Legal: Chief counsel
Chief examiner
Board of review
Export trade
Trial examiner
Trade practice conference
Grand total

Office
$267,745.61
223,550.58
136,249.64
164,878.93
30,695.72
216.67
41,403.33
13,052.51
877,792.99

Field
$237.94
25,573.72
21,058.39
34,371.96
.01
5,622.14
1,733.97
88,598.13

Total
$267,983.55
249,124.30
157,308.03
199,250.89
30,695.72
216.68
47,025.47
14,786.48
966,391.12

Detailed statement of costs for the fiscal year ended June 30, 1928
Item
Annual leave
Application for complaints
Bluesky securities
Board of review
Bread inquiry, S. Res. No.163
Chain-stores inquiry, S. Res. No.224
Communications
Complaints, formal
Computing machine work
Cooperative associations, S. Res. No.34
Cottonseed, H. Res. No.439
Docket section
Drafting complaints
Du Pont investments
Economic supervision
Electric power industry, S. Res. No.329
Equipment
Export trade
Fiscal affairs
General administration, commissioners, etc
Heat and light
labor
legal supervision
library
Mail and file section

Office
Field
$67,246.54
44,117.35
$11,572.12
7,294.04
2,505.47
27,711.11
3,247.41
439.18
3,572.23
96,892.37
22,074.52
71.12
31,620.45
11,825.34
1,760.74
1,328.31
17,041.24
4,025.28
3,055.28
1,020.63
24,532.81
7,079.20
58.50
10,593.65
6,355.35
909.63
11,082.86
82,495.10
237.94
140.90
3,207.68
60,135.97
512.72
5,208.06
8,335.50

Medical attendant
Messengers
Military leave
Miscellaneous
Miscellaneous economic
Miscellaneous legal

1,434.01
10,153.42
914.82
262.84
1,154.99
1,416.16

112

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
Detailed statement of costs for the fiscal year ended June 30, 1928--Continued

Item
Open-price associations, S. Res. No. 28
Personnel section
Petroleum prices, S. Res. No. 31
Power and gas inquiry, S. Res. No.83
Preliminary inquiries
Price bases
Printing and binding
Publications section
Purchases and supplies
Rents
Repairs
Resale price maintenance
Sick leave
Stenographic section
Stipulations
Stock dividends, S. Res. No.304
Study of procedure
Supplies
Time excused by the Executive or commission’s order
Trade practice conference
Transportation of thin
Virginia independent Men’s Association
Witness fees
Total office expenses

Office
$40,948.07
8,888.21
9,869.34
28,986.83
36,018.64
20,966.55
12,055.38
14,404.97
5,344.28
8,345.80
184.66
31,228.88
14,664.12
59,506.69
5,088.68
13,161.55
489.85
12,964.43
1,499.24
9,224.71
266.16
179.29
909.00
877,792.99

Total cost
1 Credit.

Field
7,867.13
1 .13
8,635.96
9,429.66
2,312.10

6,542.76

31.50

1,733.97

88,598.13
877,792.99
966,391.12

Adjustments.--The following adjustments are made to account for the difference
between costs and expenditures:
Total cost for the year ended June 80, 1928
Less transportation Issued
New total
Plus transportation paid
Expenditures for the year ended June 80, 1928

$966,391.12
27,905.82
938,485.30
27,984.24
966,469.54

Appropriations available to the commission since its organization and expenditures
for the same period, together with the unexpended balances, are Shown in the
following table:
Year
1915
1916
1917
1918
1919
1920
1921
1922
1923
1924
1925
1926
1927
1928

Appropriations
$184,016.23
430,964.08
567,025.92
1,608,865.92
1,753,530.75
1,305,708.82
1,032,005.67
1,026,150.54
974,480.32
1,010, 000.00
1,010,000.00
1,008,000.00
997,000.00
984,350.00

Expenditures
$90,442.05
379,927.41
472,501.20
1,452,187.32
1,522,331.95
1,120,301.32
938,664.69
956,116.50
970,119.66
977,018.28
1,008,998.80
996,745.58
960,675.39
968,465.15

Balance
$93,574.18
51,036.67
94,524.72
156,678.60
231,198.50
185,407.80
93,340.89
70,034.04
4,360.66
32,981.72
1,001.20
11,254.42
36,324.61
15,884.83

ADMINISTRATIVE DIVISION

113

LIBRARY

The library has a collection of more than 25,000 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 trade periodicals for the more important industries. There is a function peculiar
to the commission’s library in the character of work 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, and trade lists which are not
ordinarily found in libraries of even a technical character. The greater amount is
furnished gratuitously. This material furnishes a valuable adjunct to the investigatory
work and is adapted to furnish leads to examinations rather than to complete and
substantive information on the subject matter. The law collection consists chiefly of
the various national and regional reporter systems and the more important
encyclopedias and reference books that are commonly found in law libraries. The
distinctive feature is a file of records and briefs of antitrust cases which were acquired
without expenditure. Care is exercised to limit the purchase of books and periodicals
to supply only those needed constantly and immediately in the commission’s work.
The commission is far removed from other Government libraries and must have
available sufficient volumes to answer the ordinary requirements of the legal and
economic force. The Library of Congress and the department libraries are freely drawn
upon to supplement the commission’s limited collection.

EXHIBITS
115

EXHIBITS
EXHIBIT 1
PROCEDURE AND POLICY
POLICY IN PURELY PRIVATE CONTROVERSIES

On March 17, 1925, the commission announced changes in its rule of procedure and policies
as follows (as amended September 17, 1928):
“Hereafter it shall be the policy of the commission not to entertain proceedings of alleged
unfair practices where the alleged violation of law is a purely private controversy redressable
in the courts except where said practices substantially tend to affect the public. In cases where
the alleged injury is one to a competitor only and is redressable in the courts by an action by the
aggrieved competitor and the interest of the public is not substantially involved, the proceeding
will not be entertained.”
In accordance with the foregoing the commission amended paragraph 3, of subdivision 2, of
the Rules of Practice, headed “II. Complaints,” by inserting: After the word “jurisdiction” the
following: “and if it shall appear to the commission that a proceeding by it in respect thereof
would be to the interest of the public.”
SETTLEMENT OF CASES BY STIPULATION
The commission also adopted the following as its policy in the handling and settlement of
cases:
“The end and object of all proceedings of the Federal Trade Commission is to end all unfair
methods of competition or other violations of the law of which it is given jurisdiction. The law
provides for the issuance of a complaint and a trial as procedure for the accomplishment of this
end. But it is also provided that this procedure shall be had only when it shall be deemed to be
in the public interest, plainly giving the commission a judicial discretion to be exercised in the
particular case.
“It has been contended that the language of the statute using the word ‘shall’ is mandatory,
but in view of the public interest clause no member of the commission as now constituted holds
or has ever held that the statute is mandatory. Hence, the proposed rule for settlement of
applications for complaint [by stipulation] may be considered on its merits.
“If it were not for the public-interest clause it might appear that the statute would be
mandatory. It remains to determine what effect the public interest clause has. In the interest of
economy and of dispatch of business as well as the desirability of accomplishing the ends of the
commission with as little harm to respondents as possible [therefore], all cases should be so
settled where they can be except where the public interest demands otherwise.
“But when the very business itself of the proposed respondent is fraudulent, it may well be
considered by the commission that the protection of the public demands that the regular
procedure by complaint and order shall prevail. Indeed, there are some cases where that is the
only course which would be of any value at all. As for instance the so-called ‘blue-sky cases’
and all such where the business itself is inherently fraudulent or where a business of a legitimate
nature is conducted in such a fraudulent manner that the commission is warranted in the belief

that no agreement made with the proposed respondent will be kept by him.
“The rule shall be that all cases shall be settled by stipulation except when the public interest
demands otherwise for the reasons set forth above.”
117

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

ON AFFORDING PROSPECTIVE RESPONDENTS OPPORTUNITY TO SHOW CAUSE
COMPLAINT SHOULD NOT ISSUE WHY
The commission also adopted a rule providing for hearings by proposed respondents before
a complaint is issued, reading as follows (as amended June 18,1927):
“Except as hereinafter provided, the board of review, before it shall recommend to the
commission that a complaint issue in any case, shall afford the proposed respondent a hearing
to show cause why a complaint should not issue, such hearing shall be informal in character and
shall not involve the taking of testimony. The proposed respondent shall be permitted to make
or submit such statements of fact or law as he shall desire. The extent and control of such
hearing shall rest with a majority of the board. The respondent shall have three weeks’ notice
of the time and place of hearing, to be served on the respondent by the secretary of the
commission.
“Provided, That if in any case the majority of the board shall be of opinion that a hearing is
not required because (a) the respondent has been fully interviewed and has given to the examiner
every fact or argument that could be offered as a defense, or (b) the practice has been fully
established and is of such character that in the nature of the case nothing could be adduced in
mitigation, or (c) to delay the issuance of a complaint to afford a hearing might result in a loss
of jurisdiction, or (d) otherwise unnecessary or incompatible with the public interest, the board
may transmit the case to the commission, via the docket section, with its conclusions and
recommendations, without a hearing, as in this rule provided.”
ON PUBLICITY IN THE SETTLEMENT OF CASES
On April 80, 1925, the commission adopted a rule and issued a statement regarding publicity,
as follows:
“From and after this date, in the settlement of any matter by stipulation before complaint is
issued, no statement in reference thereto shall be made by the commission for publication. 1
After a complaint is issued, no statement in regard to the case shall be made by the commission
for publication until after the final determination of the case.
“After a complaint has been issued and served the papers in the case shall be open to the
public for inspection, under such rules and regulations as the secretary may prescribe.”
It has been the rule, which is now abolished, to issue a statement upon the filing of a
complaint, stating the charges against a respondent.
Concerning the withholding of publicity where cases are settled by stipulation without
complaint, the custom has always been not to issue any statement, The so-called applicant or
complaining party has never been regarded as a party in the strict sense. The commission is not
supposed to act for any applicant, but wholly in the public interest. It has always been and now
is the rule not to publish or divulge the name of an applicant or complaining party, and such
party has no legal status before the commission except where allowed to intervene as provided
by the statute.
ON DEALING WITH UNFAIR COMPETITION THROUGH TRADE-PRACTICE
CONFERENCES
The trade-practice conference affords, broadly stated, a means through which representatives
of an industry voluntarily assemble, either at their own instance or that of the commission, but

under the auspices of the latter, for the purpose of considering any unfair practices in their
industry, and collectively agreeing upon and providing for their abandonment in cooperation
with and with the support of the commission.
This procedure deals with an industry as a unit. It is concerned solely with practices and
methods, not with individual offenders. It regards the industry as occupying a position
comparable to that of “friend of the court” and not as that of the accused. It wipes out on a
given date all unfair methods condemned at the conference and thus places all competitors on
an equally fair

1 The commission does, however after omitting the names of the proposed respondents, make
public digest of cases in which it accepts stipulations of the facts and agreement to cease and
desist.

PROCEDURE AND POLICY

119
competitive basis. It performs the same function as a formal complaint without bringing charges,
prosecuting trials, or employing any compulsory process, but multiples results by as many times
as there are members in the Industry who formerly practiced the methods condemned and
voluntarily abandoned.
The beneficial results of this form of procedure are now well established, and the commission
is always glad to receive and consider requests for the holding of trade-practice conferences.2

2 The commission has prepared and -published for public distribution a pamphlet entitled “Trade
Practice Conferences,” In which the history, theory and working of this procedure and the
various traded-practice conferences theretofore held by the commission are described.

16588---28-----9

EXHIBIT 2.
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 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
120

FEDERAL TRADE COMMISSION ACT

121
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 twentyseventh, 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 ninetyfour, 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 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.

122

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

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 shall be proof of the service of the same.
SEC. 6. That the commission shall also have power-(a) To gather and compile information concerning, and to investigate from time to time the
organization, business, conduct, practices, and management of any corporation engaged in
commerce, excepting, banks and common carriers 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

FEDERAL TRADE COMMISSION ACT

123
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, and to report to Congress thereon,
with such recommendations as it deems advisable.
SEC. 7. That in any suit in equity brought by or under the direction of the Attorney General
as provided in the antitrust acts, the court may, upon the conclusion of the testimony therein, if
it shall be then of opinion that the complainant is entitled to relief, refer said suit to the
commission, as a master in chancery, to ascertain and report an appropriate form of decree
therein. The commission shall proceed upon such notice to the parties and under such rules of
procedure as the court may prescribe, and upon the coming in of such report such exceptions
may be filed and such proceedings had in relation thereto as upon the report of a master in other
equity causes, but the court may adopt or reject such report, in whole or in part, and enter such
decree as the nature of the case may in its judgment require.
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 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

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

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.
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

FEDERAL TRADE COMMISSION ACT

125
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 3.
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
126

PROVISION OF THE CLAYTON ACT

127
voting or granting of proxies or otherwise, may be to substantially lessen competition between
such corporations, or any of them, whose stock or other share capital is so acquired, or to
restrain such commerce in any section or community, or tend to create a monopoly of any line
of commerce.
This section shall not apply to corporations purchasing such stock solely for Investment and
not using the same by voting or otherwise to bring about, or in attempting to bring about, the
substantial lessening of competition. Nor shall anything contained in this section prevent a
corporation engaged in commerce from causing the formation of subsidiary corporations for the
actual carrying on of their immediate lawful business, or the natural and legitimate branches or
extensions thereof, or from owning and holding all or a part of the stock of such subsidiary
corporations, when the effect of such formation is not to substantially lessen competition.
Nor shall anything herein contained be construed to prohibit any common carrier subject to
the laws to regulate commerce from aiding in the construction of branches or short lines so
located as to become feeders to the main line of the company so aiding in such construction or
from acquiring or owning all or any part of the stock of such branch lines, nor to prevent any
such common carrier from acquiring and owning all or any part of the stock of a branch or short
line constructed by an independent company where there is no substantial competition between
the company owning the branch line so constructed 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 he 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

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provisions of sections two, three, seven and eight of this act, it shall issue and serve upon such
person a complaint stating its charges in that respect, and containing a notice of a hearing upon
a day and at a place therein fixed at least thirty days after the service of said complaint. The
person so complained of shall have the right to appear at the place and time so fixed and show
cause why an order should not be entered by the commission 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 and 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.

PROVISIONS OF THE CLAYTON ACT

129
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 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 postoffice 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 4
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 state130

EXPORT TRADE ACT

131
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
Therefore 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 5
RULES OF PRACTICE BEFORE THE COMMISSION 1
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, and if it shall appear to the commission that a proceeding
by it in respect thereof would be to the interest of the public, the commission shall issue and
serve upon the party complained of a complaint stating its charges and containing a notice of
a hearing upon a day and at a place therein fixed, at least 40 days after the service of said
complaint.
III. ANSWERS
(1) In case of desire to contest the proceeding the respondent shall, within 30 days from the
service of the complaint, unless such time be extended by order of the commission, 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. Respondent shall specifically admit or deny
or explain each of the facts alleged in the complaint, unless respondent is without knowledge,
In which case respondent shall so state, such statement operating as a denial. Any allegation of
the complaint not specifically denied in the answer, unless respondent shall state in the answer
that respondent is without knowledge, shall be deemed to be admitted to be true and may be so
found by the commission.

(2) In case respondent desires to waive hearing on the charges set forth in the complaint and
not to contest the proceeding, the answer may consist of a statement that respondent refrains
from contesting the proceeding or that respondent consents that the commission may make,
enter, and serve upon respondent an order to cease and desist from the violations of the law
alleged

1

As amended and revised to June 30, 1927.
132

RULES OF PRACTICE BEFORE THE COMMISSION

133
in the complaint, or that respondent admits all the allegations of the complaint to be true. Any
such answer shall be deemed to be an admission of all the allegations of the complaint and to
authorize the commission to find such allegations to be true.
(3) Failure of the respondent to file answer within the time as above provided for shall be
deemed to be an admission of all allegations of the complaint and to authorize the commission
to find them to be true and to waive hearing on the charges set forth in the complaint.
(4) Three copies of answers must be furnished. All answers must be signed in ink by the
respondent or by his duly authorized attorney and must show the office and post-office address
of the signer. All answers must be typewritten or printed. If typewritten, they must be on paper
not more than 8¼ inches wide and not more than 11 inches long. If printed, they must he on
paper 8 inches wide by 10 ½ inches long.
IV. SERVICE
Complaints, orders, and other processes of the commission may be served by anyone duly
authorized by the commission, either by delivering a cop 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 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 mailed, 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 he or it claims
to be interested. The commission may, by order, permit intervention by counsel or in person
to such extent and upon such terms as it shall deem just.
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 1/2 inches
long, with inside margins not less than 1 inch wide.
VI. CONTINUANCES AND EXTENSIONS OF TIME
Continuances and extensions of the 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. Witness fees and mileage shall be paid by the party
at whose instance the witnesses appear.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
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 five 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, stating 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 papers 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.
XI. HEARINGS ON INVESTIGATION
When a matter for investigation is referred to a single commissioner for examination or report,
such commissioner may conduct or hold conferences or hearings 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 report on the facts, and shall forthwith serve copy
of the same on the parties or their attorneys, who, within 10 days after the receipt of same, shall
file in writing their exceptions, if any, and said exceptions shall specify the particular part or
parts of the report to which exception is made, and said exceptions shall include any additional
facts which either party may think proper. Seven copies of exceptions shall be filed for the use
of the commission. Citations to the record shall be made in support of such exceptions. Where
briefs are filed the same shall contain a copy of such exceptions. Argument on the exceptions,
if exceptions be filed, shall be had at the final argument on the merits.
When, in the opinion of the trial examiner engaged in taking testimony in any formal
proceeding, the size of the transcript or complication or importance of the issues involved
warrants it, he may of his own motion or at the request of counsel at the close of the taking of

testimony announce to the attorneys for the respondent and for the commission that the examiner
will receive at any the before he has completed the drawing of the “trial examiner’s report upon
the facts” a statement in writing (one for either side) in terse outline setting forth the contentions
of each as to the facts proved in the proceeding.
These statements are not to be exchanged between counsel and are not to be argued before
the trial examiner.
Any tentative draft of finding or findings submitted by either side shall be submitted within
10 days after the closing of the taking of testimony and not later, which the shall not be
extended.

RULES OF PRACTICE BEFORE THE COMMISSION

135
XIII. DEPOSITIONS IN CONTESTED PROCEEDINGS
The commission may order testimony to be taken by deposition in a contested 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 deposition should be taken, and stating the time when, the place where,
and the name and post-office address of the person before whom it is desired the deposition be
taken, the name and post-office 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 the 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 81/2 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.
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.
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
All briefs must be filed with the secretary of the commission and briefs on behalf of the
commission must be accompanied by proof of the service of the same as hereinafter provided,
or the mailing of same by registered mail to the respondent or Its attorney at the proper address.
Twenty copies of each brief shall be furnished for the use of the commission unless otherwise
ordered. The exceptions, if any, to the trial examiner’s report must be incorporated in the brief.
Every brief, except the reply brief on behalf of the commission, hereinafter mentioned, shall

contain in the order here stated:
(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.
16588--28----10

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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 singleleaded citations.
The reply brief on the part of the commission shall be strictly in answer to respondent’s brief.
The time within which briefs shall be filed is fixed as follows: For the opening brief on behalf
of the commission, 30 days from the day of the service upon the chief counsel or trial attorney
of the commission of the trial examiner’s report; for brief on behalf of respondent, 30 days after
the date of service upon the respondent or his attorney of the brief on behalf of the commission;
for reply brief on behalf of the commission, 10 days after the filing of the respondent’s brief.
Reply brief on behalf of respondent will not be permitted to be filed. Applications for extension
of the in which to file briefs shall be by petition in writing, stating the facts on which the
application rests, which must be filed with the commission at least five days before the time
fixed for filing such briefs. Briefs not filed with the commission on or before the dates fixed
therefor will not be received except by special permission of the commission. Appearance of
additional counsel in a case shall not, of itself, constitute sufficient grounds for extension of the
for filing brief or for postponement of final hearing.
Briefs on behalf of the commission may be served by delivering a copy thereof to the
respondent’s attorney or to the respondent in Case respondent be not represented by attorney;
or by registering and mailing a copy thereof addressed to the respondent’s attorney or to the
respondent in case respondent be not represented by attorney, at the proper post-office address.
Written acknowledgment of service, or the verified return of the party making the service, shall
constitute proof of personal service as hereinbefore provided, and the return post-office receipt
aforesaid for said brief, when registered and mailed, shall constitute proof of the service of the
same.
Oral arguments may be had only as ordered by the commission on written application of the
chief counsel or of respondent filed not later than five days after expiration of the time allowed
for filing of reply brief of counsel for the commission.
XVI. ADDRESS OF THE COMMISSION
All communications to the commission must be addressed to Federal Trade Commission,
Washington, D. C., unless otherwise specifically directed.

EXHIBIT 6
PROCEEDINGS DISPOSED OF JULY 1, 1927, TO JUNE 30, 1928
1. ORDERS TO CEASE AND DESIST
NOTE.--Six orders to cease and desist included in statistics for 1927, but served during 1928,
are included herewith.
Complaint No. 82.--In the matter of Photo-Engravers’ Club of Chicago. Charge: Adopting a
standard scale of, uniform prices at which the members sell their products, with the intent of
stifling and suppressing competition in the manufacture and sale of photo-engravings, 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 photo-engraver 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.
(Consolidated with Docket 928.)
Disposition: (See Disposition, Docket 928.)
Complaint No. 785.--In the matter of 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.
Disposition: After hearing, cause was dismissed, as to M. L. Chandler and an order to cease
and desist was entered against remaining respondents August 19, 1927.
Complaint No. 835.--In the matter of 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 S. Blank, Stephen A. Lynch, Ernest V. Richards, Jr. Charge: Unfair methods of
competition in that the respondents Famous Players-Lasky Corporation, Adoiphe Zukor, and
Jesse L. Lasky have combined and conspired to secure control of and monopolize the motionpicture industry, and to restrain, restrict, and suppress competition in the distribution of motionpicture 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 corporations operating motionpicture 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.
Disposition: After hearing, cause was dismissed as to Realart Pictures Corporation, Stanley
Co. of America, Stanley Booking Corporation, Black New England Theatres (Inc.), Southern
Enterprises (Inc.), Saenger Amusement Co., Jules Mastbaum, Alfred S. Black, Stephen A.
Lynch, and Ernest V. Richards, Jr., and an order to cease and desist was entered against the
remaining respondents July 9, 1927, Commissioner Nugent dissenting in part.
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Complaint No. 857.--In the matter of 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 mis leading the purchasing public, In alleged violation of section 5 of the Federal
Trade Commission act.
Disposition: After hearing, cause was dismissed as to Rockwood Brown, A. L. Todd, R. Allyn
Lewis, R. 3. Wisweli, D. M. Leopold, H.P. Hanson, E H. Eshleman, F. L. Moorman, and E H.
McArthur, and an order to cease and desist was entered against the remaining respondents
August 19, 1927.
Complaint No. 865.--In the matter of 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 0 1 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 corporation, 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 corporation, thereby deceiving and misleading the
purchasing public in alleged violation of section 5 of the Federal Trade Commission act.
Disposition: After hearing, cause was dismissed as to R. C. Russell, J. H. Cain, R. V. Wilson,
and B. Baernstein, and an order to cease and desist was entered against the remaining
respondents August 19, 1927.
Complaint No. 871.--In the matter of A. W. Perryman, doing business under the name and
style Perryman Investment Co.; A. W. Perryman, F. P. Pen field, 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
share stock of the said oil company, issued and published numerous false and misleading
statements and concealed or withheld other material 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, cause was dismissed as to F. P. Penfield, C. S. Thomas, W. L.
Diehl, and William M. Huff, and an order to cease and desist was entered against remaining
respondents August 19, 1927.
Complaint No. 873.--In the matter of Hewitt Bros. 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.

Disposition: With the consent of respondent, an order to cease and desist was entered January
16, 1928.
Complaint No. 925.--In the matter of Mid-American Oil & Refining Co. and J. H. Crites.
Charge: The respondent individual is the promoter of respondent Mid-American Oil & Refining
Co., a Texas trust. Unfair methods of competition 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

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the purchasing public, in alleged violation of section 5 of the Federal Trade Commission act.
Disposition: After hearing, an order to cease and desist was entered August 16, 1927.
Complaint No. 928 (in consolidation with 82).--In the matter of The American PhotoEngravers’ 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 photo-engraving products. The respondent, International Photo-Engravers Union of
North America and its local organizations, threatened to call strikes or withdraw 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.
Disposition: After hearing, cause was dismissed as to International Photo-Engravers’ Union,
the local photo-engravers’ unions affiliated therewith, and the officers, executive boards, and
members of all of the said respective unions, and an order to cease and desist was entered
against the remaining respondents February 10, 1928, Commissioner Ferguson not voting, not
having been a member of the commission when the matter was argued, and Commissioner
Humphrey dissenting as to the dismissal of the union labor respondents.
Complaint No. 930.--In the matter of 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.
Disposition: After hearing, cause was dismissed as to A. J. Chapman, and an order to cease
and desist was entered against the remaining respondents August 19,1927.
Complaint No. 932.--In the matter of 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 respondents, to further the sales of the shares of 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.
Disposition: After hearing, an order to cease and desist was entered August 19, 1927.
Complaint No. 963.--In the matter of Roller Oil & Refining Co. (Inc.), H. C. Roller, C. F.
Gibbons, Percie C. Willie, E H. Doud. Charge: Unfair methods of competition are charged in
the sale of shares of stock of the respondent corporation in that the respondents have
misrepresented the business, the 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.
Disposition: After hearing, cause was dismissed as to G. F. Gibbons and E. H. Doud, and an
order to cease and desist was entered against remaining respondents August 19, 1927.

Complaint No. 1100.--In the matter of American Snuff Co. Charge: Unfair methods of
competition are charged in that the respondent adopted and enforced a system of uniform prices
for the resale of Its products, refusing to sell to price cutters and employing other cooperative
means and methods to compel the maintenance of its resale prices, thereby tending to suppress
competition and to deprive the consuming public of advantages in price which they would obtain
under conditions of free competition, in alleged violation of section 5 of the Federal Trade
Commission act.

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Disposition: After hearing, an order to cease and desist was entered June 30, 1927. (This
proceeding, disposed of during fiscal year 1927, and so recorded in the statistical tables, was
not so recorded in the text of the annual report for that year, as service upon the parties at
Interest had not been effected.)
A petition for the enforcement of this order was filed by the commission in the United States
Circuit Court of Appeals for the Third Circuit March 17, 1928.
Complaint No. 1111.--In the matter of Dwinell-Wright Co., a corporation. Charge: Unfair
methods of competition are charged In that the respondent. engaged In the importation and sale
of teas and coffees, employs a system of fixing and maintaining certain specified uniform prices
at which its products will be resold by wholesaler or Jobbers to retailers and by retailers to the
consuming public, using various cooperative methods of maintaining the said established resale
system, and thereby tending to hinder and suppress competition and to obstruct the free and
natural flow of commerce, In alleged violation of section 5 of the Federal Trade Commission
act.
Disposition: After hearing, an order to cease and desist was entered June 30, 1927. (This
proceeding, disposed of during fiscal year 1927, and so recorded In the statistical tables, was
not so recorded In the text of the annual report for that year, as service upon the parties at
interest had not been effected.)
Complaint No. 1150.--In the matter of Morton F. Baum, an individual doing business under
the trade name and style Michigan Sample Furniture Co. Charge: Unfair methods of
competition are charged in that the respondent retailer falsely advertises that his furniture is sold
at manufacturers’ prices, thereby tending to mislead the purchasing public into the belief that
middle-men’s profits are saved to the respondent’s customers, and in that the respondent
advertises and offers certain of his furniture as “walnut” when in fact said furniture is made of
woods other than walnut and in imitation of genuine walnut wood, all In alleged violation of
section 5 of the Federal Trade Commission act.
Disposition: With the consent of respondent, an order to cease and desist was entered
November 28, 1927.
Complaint No. 1165.--In the matter of James A. McCafferty Sons Manufacturing Co. (Inc.).
Charge: Unfair methods of competition are charged In that the respondent, engaged in the
manufacture and sale of paint and paint products, advertises and sells one of Its products as
“Gold seal combination white lead,” when In fact said product contains no sulphate or carbonate
of lead In amount greater than 3 per cent of the total ingredients of said product, thereby tending
to mislead and deceive the purchasing public as to the quality of said product, in alleged
violation of sections of the Federal Trade Commission act.
Disposition: With the consent of respondent, an order to cease and desist was entered June
30, 1927. (This proceeding, disposed of during fiscal year 1927, and so recorded in the
statistical tables, was not so recorded in the text of the annual report for that year, as service
upon the parties at Interest had not been effected.)
Complaint No. 1184.--In the matter of Philip Carey Manufacturing Co., Philip Carey Co.
Charge: Unfair methods of competition are charged in that the respondents’ practices of entering
Into exclusive contracts whereby competitors bind themselves not to deal in the products of any
competitors of respondents tends to substantially lessen competition in the sale of asbestos and
asphalt products, and asphalt paving Joints particularly, and to create a monopoly of such
commerce in the hands of the respondents, in alleged violation of section 5 of the Federal Trade
Commission act and section 3 of the Clayton Act and In that the respondents make disparaging
statements concerning competitors” products, business methods, and financial responsibility,

practice espionage, threaten and Intimidate customers of competitors, thereby causing them to
break existing contracts, and threaten Infringement suits without intention of bringing such suits,
said persecution and harassment against competitors being calculated and intended to prevent
sales of said competitors’ paving joints, in alleged violation of section 5 of the Federal Trade
Commission act.
Disposition: After hearing, charges under section 3 of the Clayton Act were dismissed, and
an order to cease and desist under section 5 of the Federal Trade Commission act was entered
August 4, 1927.
A petition to review the commission’s order was filed by respondent in the United States
Circuit Court of Appeals for the Sixth Circuit September 13, 1927.
Complaint No. 1276.--In the matter of Robert M. Lease Co. (Inc.), Lease Bros. Motor Co.
(Inc.), Acoma Motors Co. (Inc.), Lease Motors Co. (Inc.).

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141
Lease Motors Export Sales Corporation, Panther Motor Co. (Inc.), Exporters and Importers
Association of the World, Robert M. Lease, Irving Lease, Albert Lease, and John P. Agnew.
Charge: Unfair methods of competition are charged In that the respondents, falsely representing
themselves as manufacturers and vendors of new motor trucks and automobiles and contracting
for the sale thereof for export with standard factory equipment and right-hand drive, made a
practice of shipping motor trucks which were not new, many of the parts being old, used, rusted,
or secondhand parts, and without complete factory equipment and right-hand drive, gave buyers
no opportunity for examination or inspection of trucks prior to shipment, and refused to refund
payments In excess of agreed prices or for trucks returned or rejected for reason; and in that the
respondent Lease Bros. Motor Co. (Inc.), by falsely representing that it had entered into the
purchase of plant and equipment, obtained a contract for the sale of certain chassis and the
payment of earnest money thereon, when in fact it had not entered Into the purchase of said
properties and did not at any time intend to perform the said contract, thereby tending to bring
discredit and loss of business to American manufacturers seeking foreign trade, all In alleged
violation of section 5 of the Federal Trade Commission act.
Disposition: After hearing, an order to cease and desist was entered March 3, 1928.
Complaint No. 1295.--In the matter of Chipman Knitting Mills, a corporation, and Chas.
Chipman’s Sons Co. (Inc.), a corporation. Charge: Unfair methods of competition are charged
In that the respondents’ “seamless” hosiery is falsely represented as “form-fashioned” hosiery,
thereby tending to mislead and deceive the purchasing public and to injure competitors who do
not misrepresent their product, in alleged violation of section 5 of the Federal Trade
Commission act.
Disposition: After hearing, an order to cease and desist was entered April 16, 1928.
Complaint No. 1323.--In the matter of Kirschmann Hardwood Co. Charge: Unfair methods
of competition are charged in that respondent has sold, and continues to sell, certain hardwood
lumber and other hardwood products, at wholesale and retail, to dealers In hardwood lumber,
manufacturers of furniture, and other users of hardwood lumber, under the name and designation
of “Philippine mahogany,” and in advertisements, circular letters, and other correspondence with
purchasers and prospective purchasers, on letterheads, in voices, price lists, and other trade
literature, has represented, named, and designated, and continues to represent, name, and
designate, said hardwood lumber and other hardwood products as “Philippine mahogany,” when
in truth and in fact said hardwoods products so sold by it are not mahogany wood, in alleged
violation of section 5 of the Federal Trade Commission act.
Disposition: After hearing, an order to cease and desist was entered August 16, 1927,
Commissioner Humphrey dissenting.
Complaint No. 1324.--In the matter of Hammond Lumber Co. Charge: Un-fair methods of
competition are charged in that respondent has sold, and continues to sell, certain hardwood
lumber and other hardwood products, at wholesale and retail, to dealers in hardwood lumber,
manufacturers of furniture, and other users of hardwood lumber under the name and designation
of “Philippine mahogany,” and in advertisements, circular letters, and other correspondence with
purchasers and prospective purchasers, on letterheads, invoices, price lists, and other trade
literature, has represented, named, and designated, and continues to represent, name, and
designate, said hardwood lumber and other hardwood products as “Philippine mahogany,” when
in truth and in fact said hardwood lumber and other hardwood products so sold by it are not
mahogany wood, in alleged violation of section 5 of the Federal Trade Commission act.
Disposition: After hearing, an order to cease and desist was entered August 16, 1927,

Commissioner Humphrey dissenting.
Complaint No. 1325.--In the matter of The Robert Dollar Co. Charge: Unfair methods of
competition are charged in that respondent has sold, and continues to sell, certain hardwood
lumber and other hardwood products, at wholesale and retail, to dealers in hardwood lumber
under the name and designation of “Philippine mahogany,” and in advertisements, circular
letters, and other correspondence with purchasers and prospective purchasers, on letterheads,
invoices, price lists, and other trade literature, has represented, named, and designated, and
continues to represent, name, and designate, said hardwood lumber and other hardwood
products as “Philippine mahogany,” when in truth and in fact said hardwood lumber and other
hardwood products so sold by it are not mahogany wood, in alleged violation of section 5 of the
Federal Trade Commission act.

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Disposition: After hearing, an order to cease and desist was entered August 16, 1927,
Commissioner Humphrey dissenting.
Complaint No. 1326.--In the matter of D. A. Horn and J. M. Hyson, partners, doing business
under the trade name and style “Tampa Cigar Co.” Charge: Unfair methods of competition are
charged In that the respondents, engaged in the manufacture of cigars in Pennsylvania and the
sale thereof in interstate commerce, label their cigars and their containers with various names
and legends in Spanish, including the word “Tampa,” or the word “Havana,” thereby tending
to mislead the public into the belief that such cigars are made in the Tampa district, Florida, or
are made wholly of tobacco grown on the island of Cuba, respectively, whereas such cigars are
made in Pennsylvania and are composed wholly of tobacco grown elsewhere than in Cuba; and
in that the respondents indicate, without basis therefor, that one of their products was awarded
a “Double Grand Prize, St. Louis Exposition, 1904,” thereby tending to mislead the trade and
public, and to injure competitors who do not practice misrepresentation, in alleged violation of
section 5 of the Federal Trade Commission act.
Disposition: After hearing, an order to cease and desist was entered July 30, 1927.
Complaint No. 1343.--In the matter of Wholesale Grocers Association of New Orleans, its
officers and members. Charge: Unfair methods of competition are charged in that the
respondents have cooperated to confine the distribution of groceries and allied products in the
territories served by the respondent members to so-called regular and legitimate channels of
trade and to prevent irregular and illegitimate dealers from obtaining groceries directly from
manufacturers and producers, carrying out said purposes by threats of boycott and other methods
of intimidation and coercion against manufacturers, brokers, and agents and by espionage and
other cooperative and individual efforts, thereby tending to suppress competition and obstruct
the natural flow of commerce, in alleged violation of section 5 of the Federal Trade Commission
act.
Disposition: With the consent of respondent, an order to cease and desist was entered
November 17, 1927.
Complaint No. 1345.--In the matter of Washington Cereal Association, its officers and
members; Oregon Cereal & Feed Association, its officers and members; Preston-Shaffer Milling
Co. Charge: Unfair methods of competition are charged in that respondents, engaged In the
milling of grain and/or the wholesaling of flour, cereal products, and feed, and foodstuffs for
cattle and poultry, have been and still are engaged in an unlawful combination and conspiracy
affecting the distribution of said products in the States of Washington, Oregon, Idaho, and other
States with the purpose of suppressing competition, and to effectuate said purpose respondents
agree upon and fix uniform prices, discounts, and terms of sale and maintain said prices by
correspondence, meetings, and lists, which acts hinder and obstruct the free flow of said products in the channels of interstate trade and deny to dealers in and consumers of said products
those advantages in price and otherwise which they would obtain under conditions of normal
and unobstructed competition In the absence of said acts, in alleged violation of section 5 of the
Federal Trade Commission act.
Disposition: After hearing, cause was dismissed as to Globe Grain & Milling Co., and an
order to cease and desist was entered against remaining respondents October 27, 1927.
Complaint No. 1350.--In the matter of B. J. Sackheim and Mary Rae Sackheim, partners,
doing business under the trade name and style of Norman Roberts & Co. Charge: Unfair
methods of competition are charged in that the respondents, engaged in the sale of wearing
apparel direct to consumers by mail, advertise, and represent certain fur scarves as consisting
of Manchurian fox, lynx, or wolf, when in fact said scarves are made of other pelts inferior in

quality and value, and in that the respondents offer other garments as wool serge, or woolfinished serge, or as made of silk, when in fact cotton is the principal material used, thereby
tending to mislead the purchasing public and to injure competitors who do not practice
misrepresentation, in alleged violation of section 5 of the Federal Trade Commission act.
Disposition: After hearing, an order to cease and desist was entered May 28, 1928.
Complaint No. 1351.--In the matter of Simon B. Bluestine and Samuel L. Bluestine, partners,
doing business under the trade names and styles of Nustile

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Hosiery Mills and Nustile Hosiery Co. Charge: Unfair methods of competition are charged In
that the respondents, engaged in the sale of hosiery direct to the consuming public, represent
themselves as manufacturers when in fact they neither own nor operate any factory or mill and
purchase their hosiery for resale, and in that the respondents misrepresent the quality and
fashioning of certain of their hosiery, thereby tending to mislead the consuming public and to
injure competitors who do not practice misrepresentation, all in alleged violation of section 5
of the Federal Trade Commission act.
Disposition: After hearing, an order to cease and desist was entered June 30, 1928.
Complaint No. 1352.--In the matter of Leroy A. Kling, John E Weddell, William R. Durgin,
Cecil Widdefield, copartners, doing business under the trade names and styles Dr. Eagan
Manufactory, Dr. S. J. Eagan, Dr. Eagan Laboratory, Pharmaceutical Products (Ltd.), KlingGibson Co., a corporation. Charge: Unfair methods of competition are charged in that the
respondents, engaged in the business of selling cosmetics, creams, lotions, and other toilet
preparations, misrepresent their products and make numerous false and fraudulent statements
in behalf of such preparations, the ingredients and medicinal properties thereof, and as to the
results to be obtained therefrom, thereby tending to mislead the consuming public and to injure
competitors who do not practice misrepresentation, in alleged violation of section 5 of the
Federal Trade Commission act.
Disposition: After hearing, an order to cease and desist was entered December 16, 1927.
Complaint No. 1360.--In the matter of Carlton Soap Co. (Inc.). Charge: Unfair methods of
competition are charged in that the respondent, engaged in the sale of toilet and bath soaps,
labels certain of its soap as “British bath” soap, when in fact the said soap is manufactured in
the United States, thereby tending to mislead and deceive the purchasing public and to injure
competitors who do not practice misrepresentation, in alleged violation of section 5 of the
Federal Trade Commission act.
Disposition: After hearing, an order to cease and desist was entered November 14, 1927.
Complaint No. 1362.--In the matter of Charles Kurlan. Charge: Unfair methods of competition
are charged in that the respondent, engaged in the sale of cloth and fabrics to manufacturers of
men’s shirts, names and designates as “Tabsylk” a fabric composed wholly of cotton and
supplies labels bearing said designation to his vendees, which labels are attached to the men’s
shirts manufactured by them, thereby tending to mislead and deceive the purchasing public and
to injure competitors who do not practice misrepresentation, In alleged violation of section 5
of the Federal Trade Commission act.
Disposition: After a stipulation in lieu of testimony, an order to cease and desist was entered
February 6, 1928.
Complaint No. 1367.--In the matter of Commonwealth Manufacturing Co. and Harry Dushoff,
doing business under the trade names and styles Harry Dushoff & Co. and Chicago
Manufacturing Co. Charge: Unfair methods of competition are charged in that the respondents,
engaged in the sale of binder twine, shirts, and shoes, describe themselves as “manufacturers”
of the commodities dealt in, when in fact the respondents are not manufacturers but purchase
said commodities for resale; and, further, in that respondents sell certain of their shoes as “Army
shoes,” when in fact the said shoes are not surplus property of the United States Government,
but were obtained by the respondents from the manufacturers thereof in the ordinary course of
trade, thereby tending to mislead and deceive the purchasing public and to injure competitors
who do not practice misrepresentation, in alleged violation of section 5 of the Federal Trade
Commission act.

Disposition: After hearing, an order to cease and desist was entered June 25, 1927. (This
proceeding, disposed of during fiscal year 1927, and so recorded in the statistical tables, was
not so recorded in the text of the annual report for that year, as service upon the parties at
interest had not been effected.)
Complaint No. 1373.--In the matter of Public Service Cup Co. Charge: Unfair methods of
competition are charged in that the respondent, engaged In the manufacture and sale of paper
drinking cups, dishes, and like products, enforces a merchandising system adopted by it of
establishing and maintaining certain specified uniform prices for the resale of its products,
refusing to supply price cutters and employing cooperative means and methods for the
enforcement of said system of resale prices, in alleged violation of section 5 of the Federal
Trade Commission act.

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Disposition: After hearing, an order to cease and desist was entered February 20, 1928.
Complaint No. 1375.--In the matter of Union Woolen Mills Co., Racine, Wis., Union Woolen
Mills Co., Jackson, Mich., Max Cohen. Charge: Unfair methods of competition are charged in
that the respondents by the use and display of the names of the respondent companies,
incorporated by respondent Cohen for the purpose of jointly conducting with him an interstate
business in the manufacture and sale at retail of men’s clothing, tend to mislead and deceive the
purchasing public into the belief that the respondents manufacture the cloth used by them in the
manufacture of their clothing and that persons buying from the respondents are buying directly
from the manufacturers of both the cloth and clothing, thereby saving the profits of middlemen,
in alleged violation of section 5 of the Federal Trade Commission act.
Disposition: After hearing, an order to cease and desist was entered January 25, 1928.
Complaint No. 1386.--In the matter of C. A. Leitch Manufacturing Co. Charge: Unfair
methods of competition are charged in that the respondent, engaged in the manufacture of
roofing materials, sells its roofing paint, also called fluid cement, as and for a composition or
mixture of Natural or Trinidad Lake Asphalt and Gilsonite with other substances, when in fact
it contains neither Natural or Trinidad Asphalt nor Gilsonite, thereby tending to mislead and
deceive the purchasing public and to injure competitors who do not practice misrepresentation,
in alleged violation of section 5 of the Federal Trade Commission act.
Disposition: After hearing, an order to cease and desist was entered September 26, 1927.
Complaint No. 1391.--In the matter of Bayuk Cigars (Inc.). Charge: Unfair methods of
competition are charged in that the respondent’ engaged An the manufacture of cigars in
Philadelphia, Pa., labels certain of its products as “Havana Ribbon” and “Mapacuba,” thereby
creating the impression that the said cigars are made of Havana or Cuban tobaccos when in fact
the respondent’s “Havana Ribbon” cigars contain no Havana or Cuban tobacco and the
“Mapacuba” cigars are composed of a mixture containing but a small amount of Cuban tobacco,
the practices charged tending to mislead the public and to injure competitors who do not practice
misrepresentation, in alleged violation of section 5 of the Federal Trade Commission act.
Disposition: After hearing, an order to cease and desist was entered February 8, 1928.
A petition for review of the commission’s order was filed by respondent in the United States
Circuit Court of Appeals for the Third Circuit February 15, 1928.
Complaint No. 1392.--In the matter of New York Pharmaceutical Conference (Inc.). Charge:
Unfair methods of competition are charged in that the respondent, composed of representatives
of local associations of retail druggists of New York City, has undertaken to secure the adoption
and maintenance of resale prices by manufacturers, jobbers, and wholesalers (of drugs and druggists’ sundries) and the adherence to such retail prices by retail druggists, members of the local
associations, and to induce the retailers not to purchase from wholesalers, etc., who fail to adopt
the resale price maintenance policy soliciting through interviews with wholesalers, etc., by
informing retailers of names of wholesalers who conform, by furnishing “courtesy cards” for use
by manufacturers’, etc., salesmen introducing the holder as representing a “friendly" concern,
by publishing lists of those to whom "courtesy cards" have been issued, by threatening retailers
with investigation by the board of pharmacy and the narcotic and prohibition authorities and
with bodily harm should they not comply, and other methods to the same end--the general effect
of which is the boycotting of nonconforming wholesalers, etc., and depriving them of sales to
retailers (an unlawful restraint of trade), all in alleged violation of section 5 of the Federal Trade
Commission act.
Disposition: With consent of respondent, an order to cease and desist was entered January 9,
1928.

Complaint No. 1394.--In the matter of Hobart Bradstreet (Inc.), Kling Gibson Co., and
William R. Durgin. Charge: Unfair methods of competition are charged in that the respondent
Hobart Bradstreet (Inc.), engaged in the business of selling, marketing, and distributing courses
in gymnastics and methods of gymnastic exercises or physical exercises named by it “ Spine
Motion” and “ Somatic Motion” and advertising such courses and methods in various magazines
and publications, unlawfully conspired and agreed with

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145

respondents Kling-Gibson Co. and William R. Durgin to deceive and defraud the public,
whereupon respondent William R. Durgin prepared certain false and misleading advertisements,
statements, literature, etc., concerning said courses and methods, which advertisements,
statements, literature, etc., were placed in various publications by respondent Kling-Gibson Co.
and in the hands of the public, and were intended to and did mislead and deceive purchasers, all
in allege violation of section 5 of the Federal Trade Commission act.
Disposition: After hearing, cause was dismissed as to King-Gibson Co. and William R. Durgin
(Commissioner Nugent dissenting), and an order to cease and desist was entered against
remaining respondents June 30, 1927. (This proceeding, disposed of during fiscal year 1927,
and so recorded in the statistical tables, was not so recorded in the text of the annual report for
that year, as service upon the parties at interest had not been effected.)
Complaint No. 1431.--In the matter of N. Shure Co. Charge: Unfair methods of competition
are charged in that respondent, engaged in the business of selling merchandise of sundry sorts
and kinds at wholesale to retail dealers sets forth in its catalogues many false and misleading
statements and representations concerning the origin, nature, character, value, and prices of
sundry of respondent’s said articles of merchandise depicted and described in said catalogues
and concerning the materials whereof said articles are made, which statements and
representations hold out said merchandise to be of greater value and quality than the actual value
and quality thereof, and stamps and imprints similar false statements on certain of its
merchandise and labels certain of its merchandise with fictitious and exaggerated prices, thus
placing in the hands of its vendees the means of deceiving and defrauding the public, all to the
prejudice of the public and respondent’s competitors, In alleged violation of section 5 of the
Federal Trade Commission act.
Disposition: With consent of respondent, an order to cease and desist was entered March 27,
1928.
Complaint No. 1439.--In the matter of Samuel Dach, doing business under the trade name and
style Columbia Novelty Co. Charge: Unfair methods of com-petition are charged in that
respondent, engaged in the business of selling perfumery direct to consumers, offers in
advertisements to employ the services of the reader as agent to sell respondent’s perfumery in
consideration of certain “ premiums”; the said advertisements contain many false and misleading
assertions and representations as to the nature, quality, and value of said premiums which induce
and procure many agents who accept such employment acting in the belief that said statements
are true, all of which is to the prejudice of the public and respondent’s competitors in alleged
violation of section 5 of the Federal Trade Commission act.
Disposition: After hearing, an order to cease and desist was entered February 20, 1928.
Complaint No. 1440.--In the matter of David Jacoby and Morris Gottsegen, partners doing
business under the trade name and styles Mills Silver Works and Mills Sales Company. Charge:
Unfair methods of competition are charged in that respondents engaged in the business of selling
merchandise of sundry sorts and kinds at wholesale to retail dealers displays its two trade names,
“ Mills Silver Works” and “ Mills Sale Co.,” conspicuously in its advertisements and stationery,
said acts having the capacity and tendency to and do mislead and deceive many retail dealers
into the belief that respondents are manufacturers and that persons dealing with them save the
middlemen’s profits, when in truth and in fact respondents are not manufacturers but buy their
merchandise from others and resell same at a profit; further, respondents set forth in their advertisements many false and misleading statements concerning the origin, nature, character, and
value of many articles of merchandise, which statements hold out said merchandise to be of a
greater and higher value and quality than the actual value and quality thereof; all of which acts

have the capacity and tendency to and do mislead retail dealers, to the prejudice of the public
and respondents’ competitors in alleged violation of section 5 of the Federal Trade Commission
act.
Disposition: After hearing, an order to cease and desist was entered July 21, 1927.
Complaint No. 1444.--In the matter of Charles T. Morrissey, doing business under the trade
names and styles of Charles T. Morrissey & Co., and Charles Orangeade Co. Charge: Unfair
methods of competition are charged in that respondent engaged in the business of manufacturing
soft drink powders, labels

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the containers of its product With the names and depictions of the fruit from which said powders
are said to be made, and supplies dealers With placards and other display matter similarly
marked, to be used by said dealers in advertising the drinks made from said powders; in truth
and in fact neither said powders nor the beverages made therefrom contain any of the fruit or
juice so advertised and depicted, and said acts have the capacity and tendency to mislead and
deceive purchasers, to the prejudice of the public and respondent’s competitors in alleged
violation of section 5 of the Federal Trade Commission act.
Disposition: After hearing, an order to cease and desist was entered May 14, 1928.
Complaint No. 1447.--In the matter of Meteor Coal Co. Charge: Unfair methods of
competition are charged in that respondent, engaged in the business of selling coal to dealers,
names and designates one grade of its coal as “ Pocahontas” coal, which coal is substantially
lower in quality and value than a certain bituminous coal of high quality and value known
throughout the trade and similarly named, said coal of high quality and value, being mined only
in certain portions of Virginia and West Virginia, which act of respondent has the capacity and
tendency to and does mislead and deceive the trade and consuming public to the prejudice of
the public and respondent’s competitors in alleged violation of section 5 of the Federal Trade
Commission act.
Disposition: With the consent of respondent an order to cease and desist was entered January
21, 1928.
Complaint No. 1455.--In the matter of James J. Bradley, doing business under the trade name
and style of James J. Bradley & Co. Charge: Unfair methods of competition are charged in that
respondent engaged in the business of selling toilet and bath soaps, labels and stamps, one of
its soaps With the words “ English Tub Soap,” “ Hanson-Jenks, Limited-London-New York”
and “ James J. Bradley & Co., sole agent, U. S. and Canada” which acts have the capacity and
tendency to and do mislead and deceive retail dealers and the consuming public Into the belief
that said soap is manufactured in England and imported into the United States, when in truth and
in fact said soap is manufactured in the United States, which acts are to the prejudice of the
public and respondent’s competitors, in alleged violation of section 5 of the Federal Trade
Commission act.
Disposition: After hearing, an order to cease and desist was entered January 21, 1928.
Complaint No. 1456.--In the matter of Hanford F. Smith. Charge: Unfair methods of
competition are charged In that respondent, engaged In the business of teaching sundry arts,
sciences, trades, etc., by correspondence, sets forth In his advertising numerous false and
misleading statements as to his courses of study, e. g., that respondent’s courses are the courses
of, and offered by an educational institution designated “ Princeton University” or “ Princeton
N. I. University”; that respondent’s institution conducts sundry departments With a properly
qualified faculty; that pupils taking said courses will receive appropriate degrees and diplomas
and that said institution owns and possesses buildings and grounds in which its educational
activities are carried on, all of which statements have the capacity and tendency to and do cause
many of the public to take and purchase respondent’s courses in the belief that said statements
are true, all in alleged violation of section 5 of the Federal Trade Commission act.
Disposition: With consent of respondent, an order to cease and desist was entered June 30,
1927. (This proceeding. disposed of during fiscal year 1927, and so recorded in the statistical
tables, was not so recorded in the text of the annual report for that year, as service upon the
parties at interest had not been effected.)
Complaint No. 1460.--In the matter of Waterbury Clock Co., Ingersoll Watch Co. (Inc.),
Ingersoll Watch Co., George H. Eberhard Co. Charge: Unfair methods of competition are

charged in that respondents engaged In the manufacture and sale of certain watches named and
denominated “ Ingersoll” watches have enforced and still enforce a system of price maintenance
by which they have established uniform minimum prices at which wholesale dealers shall resell
to retail dealers and uniform minimum prices at which retail dealers shall resell said watches to
the public, and by giving a certain notice and warning to dealers upon invoices, etc., and by
trade letters, agreements with wholesalers and retailers, visits by salesmen, intimidation, tracing
systems, refusals

PROCEEDINGS DISPOSED OF DURING YEAR

147
to sell, and other methods seek to and do maintain said system of resale prices, which act
suppresses competition in the distribution and sale of said “ Ingersoll” watches and deprives the
ultimate purchasers of those advantages in prices which they would obtain from free
competition, all of which is to the prejudice of the public in alleged violation of section 5 of the
Federal Trade Commission act.
Disposition: After hearing, an order to cease and desist was entered April 3, 1928.
Complaint No. 1466.--In the matter of Morris Steinberg, trading as Marvel Dress Co. Charge:
Unfair methods of competition are charged In that respondent, engaged in conducting the sale
of women’s dress through mail orders, advertises said dresses as being made or decorated with
“silk,” “silk lustre pongee,” “wool finish,” etc., when in truth and in fact said dresses are made
of cotton and contain no silk or wool whatsoever, in alleged violation of section 5 of the Federal
Trade Commission act.
Disposition: After hearing, an order to cease and desist was entered March 17, 1928.
Complaint No. 1469.--In the matter of Herb Juice Medicine Co. Charge: Unfair methods of
competition are charged in that respondent engaged in the manufacture and sale of a certain
medicine known as “ Miller’s Herb Juice,” has enforced and now enforces a system of uniform
resale prices to which end it establishes uniform prices and issues price lists, enters into
contracts and agreements with dealers for the maintenance of said prices, procures, local groups
of dealers to agree to maintain said prices, seeks and secures information as to nonmaintaining
dealers, and exacts promises from wholesale dealers not to supply said price cutters and, further,
refuses to sell to either wholesalers or retailers unless the price is maintained, which acts
suppress competition in the distribution and sale of respondent’s medicine and deprive the
ultimate purchasers of those advantages in price and otherwise which they would obtain under
conditions of free competition, in alleged violation of section 5 of the Federal Trade
Commission act.
Disposition: After hearing, an order to cease and desist was entered April 10, 1928.
Complaint No. 1477.--In the matter of Frank P. Snyder, trading under the name and style of
Always Ready Products Co. Charge: Unfair methods of competition are charged In that
respondent engaged in the production and sale of a battery solution for use in electric storage
batteries, makes numerous statements, representations, and advertisements concerning the
effectiveness of said solutions in recharging said batteries, which statements, representations,
and advertisements are alleged to be false, deceptive, and misleading and have the capacity and
tendency to and do mislead purchasers and dealers to purchase the solution in the belief that
such statements, assertions, and representations are true, all of which Is to the prejudice of
respondent’s competitors who do not misrepresent the nature, effect, and ingredients of their
product, in alleged violation of section 5 of the Federal Trade Commission act.
Disposition: Upon default of appearance, an order to cease and desist was entered October
15, 1927.
Complaint No. 1479.--In the matter of Nathaniel L. Blauston, an Individual, doing business
under the names and styles of Marie Antoinette Perle Co. and Bristol Gift House. Charge: Unfair
methods of competition are charged in that the respondent, engaged in the sale of jewelry,
silverware, flatware, leather goods, and novelties at wholesale, sets forth false and misleading
statements and pictorial representations In his catalogues concerning the materials of which his
merchandise is composed and the nature and character thereof, thereby tending to mislead and
deceive dealers and the purchasing public, in alleged violation of section 5 of the Federal Trade
Commission act.

Disposition: With the consent of respondent, an order to cease and desist was enter ed
February 6, 1928.
Complaint No. 1482.--In the matter of the National Fruit Flavor Co. (Inc.). Charge: Unfair
methods of competition are charged in that the respondent; engaged In the manufacture of
concentrates and compounds for the production of soft drinks, advertises and provides for the
sale of its product as “ Grape Squeeze,” thereby implying that the beverages made therefrom are
derived from grape juice or grapes when, In fact, the concentrate is not made or derived from
grape juice or grapes but results in a beverage imitating grape juice in color, odor, and taste, in
alleged violation of section 5 of the Federal Trade Commission act.

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Disposition: Upon default of appearance, an order to cease and desist was entered January 30,
1928.
Complaint No. 1483.--In the matter of Samuel Booth. Charge: Unfair methods of competition
are charged in that the respondent engaged in the sale of bedspreads and knitted goods under
the trade names Household Supply Co. and Crawford Knitting Mills, describes and represents
his bedspreads as consisting of silk, when, in fact, the material contains no silk, and certain of
his knitted goods as consisting of 100 per cent pure worsted manufactured by the Crawford
Knitting Mills which are held out to be the largest knitting mills in the world, when, in fact, said
knitted goods contain no more than 35 per cent of wool and said mills exist in trade name only,
thereby tending to mislead and deceive the purchasing public and to injure competitors who do
not practice misrepresentation, in alleged violation of section 5 of the Federal Trade
Commission act.
Disposition: Respondent waiving hearing, an order to cease and desist was entered June 30,
1928.
Complaint No. 1485.--In the matter of School of Applied Art. Charge: Unfair methods of
competition are charged in that the respondent, engaged in the business of giving courses of
instruction in applied art by correspondence, advertises a 20 per cent discount for subscription
within a stated time when, in fact, there is no discount, the reduced price advertised being the
respondent’s regular price, and, further, in that the respondent advertises that he will give “free”
an artist’s outfit of tools and a set of instruction books when, in fact, the cost of such tools and
books is included in the price demanded by respondent for its course of instruction, In alleged
violation of section 5 of the Federal Trade Commission act.
Disposition: With the consent of respondent, an order to cease and desist was entered
November 28, 1927.
Complaint No. 1489.--In the matter of R. P. Kuhns, Homer Lay, Roy Deck, and E J. Sterner,
partners, doing business under the trade name and style Eastern Seed Co. Charge: Unfair
methods of competition are charged In that the respondents, engaged in the sale of seeds through
agents who are given premiums and prizes as and in lieu of compensation, make numerous false
and misleading statements as to the quality and value of said premiums, tend to mislead their
agents as to the number of packages of seed to be sold as a condition of earning said premiums
and, further, in that respondents’ claims as to the testing of seeds in gardens maintained by them
for that purpose are false, no tests being effected and no gardens maintained, all in alleged
violation of section 5 of the Federal Trade Commission act.
Disposition: After a stipulation in lieu of testimony, an order to cease and desist was entered
May 17, 1928.
Complaint No. 1505.--In the matter of Greer College of Automotive Engineering, Erwin
Greer, and Frederick Greer. Charge: Unfair methods of competition are charged in that the
respondent, engaged in the sale of courses of instruction in the sciences, trades, and professions,
advertises reduced or special tuition fees which are, in fact, the regular and full prices for the
courses of instruction, thereby tending to mislead and deceive the purchasing public and to
injure competitors who do not advertise on the basis of fictitious prices, in alleged violation of
section 5 of the Federal Trade Commission act.
Disposition: With the consent of respondent, an order to cease and desist was entered June
30, 1928.
2. ORDERS OF DISMISSAL

NOTE.--Two orders of dismissal included in statistics for 1927, but served during 1928, are
included herewith.
Complaint No. 457.--In the matter of 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 therefore existed between them. and tended
to create a monopoly.
Disposition: Dismissed after trial.
Complaint No. 902.--In the matter of 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 mem-

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149
bers 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 filed and agreed upon, all
in alleged violation of section 5 of the Federal Trade Commission act.
Disposition: Dismissed after trial by reason of decision of Supreme Court of the United States
in Federal Trade Commission v. American Tobacco Company, commission’s Docket 886.
Complaint No. 1089.--In the matter of The Three-In-One Oil Co. Charge Unfair methods of
competition are charged in that the respondent employs a system for the maintenance and
enforcement of certain specified uniform prices fixed by it at which its oil shall be resold by
wholesale and retail dealers, respectively, and uses cooperative means of accomplishing the
maintenance of said retail prices, thereby tending to restrain the natural flow of commerce and
freedom of competition, in alleged violation of section 5 of the Federal Trade Commission act.
Disposition: Dismissed after trial, Commissioner Nugent dissenting. (This proceeding,
disposed of during fiscal year 1927, and so recorded in the statistical tables, was not so recorded
in the text of the annual report for that year, as service upon the parties at interest had not been
effected.)
Complaint No. 1153.--In the matter of The National Association of Stationers &
Manufacturers of the United States, its officers and members et al. Charge: Unfair methods of
competition are charged in that the respondent associations of stationery manufacturers and
dealers entered into a combination and conspiracy with the purpose, intent, and effect of
discouraging, stifling, and suppressing competition in the wholesale and retail stationery trade
and of enhancing the prices of such goods by (a) establishing and maintaining a National
Catalogue Commission for the preparation and distribution of lists of standard minimum retail
prices; (b) establishing and maintaining local committees to further the purposes of the National
Catalogue Commission; (c) inducing manufacturers to adopt the recommendations of the
National Catalogue Commission and to increase their list prices, enlarge trade discounts, and
standardize resale prices; (d) endeavoring to compel the adoption of said minimum prices and
standard retailers’ discounts; (e) securing the adoption of standard cost-keeping methods which
have the effect of inflating costs as a basis for the gross margins to be secured and the resale
prices to be recommended; (f) encouraging refusal to sell to price cutters; (g) by inducing
dealers to boycott manufacturers not in harmony with the policies of the respondents and give
preference to cooperating manufacturers; (h) circulating false and derogatory statements
concerning the quality of goods and business methods of those who refuse to adopt the
respondents’ recommendations; (I) inducing manufacturers to refuse to sell to the so called
irregular dealers, transient dealers, and brokers; (j) endeavoring to eliminate competition
between the various branches of the trade and discriminating in favor of manufacturers who
abstain from selling direct to consumers (k) gathering and disseminating information in aid of
the enforcement of the aforesaid policies and excluding. from membership in the respondent
association all retailers not in harmony with said policies, all in alleged violation of section 5
of the Federal Trade Commission act.
Disposition: Dismissed after trial.
Complaint No. 1201.--In the matter of J. R. Speal, Hartman & Mainahan L. L. Hardesty &
Co., Charles Jacobs, Rowe V. Clark, J. A. Morgan & Sons, W. K. Morgan & Co., Paul Brown,
W. F. Allen & Co. Charge: Unfair methods of competition are charged In that the respondents
have combined and cooperated to eliminate competition in the purchase of strawberries in the
producers’ market for a large strawberry-producing. area, and thereby restrict the prices paid to

an amount substantially less than the growers would receive under conditions of free and Open
competitive purchasing, and in that the respondents thereafter cause their principals, without
their knowledge or consent to pay prices substantially in excess of the amounts paid by the
respondents to the growers of the strawberries, thereby tending to enhance prices of said
strawberries to a large number of the consuming public, in alleged violation of section 5 of the
Federal Trade Commission act.
Disposition: Dismissed after trial.
Complaint No. 1238.--In the manner of M. Rea Gano, Gano Moore Co., Gano Moore Coal
Mining Co. (Inc.). Charge: Unfair methods of competition are charged in that the respondents,
engaged in the business of exporting coal from the United States to South America, accepted
orders and received payment

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

from foreign customers for coal of a specified quality and quantity and willfully or through
negligence delivered for the coal so ordered coal of a quality inferior thereto, failed to make
deliveries at the time specified and of the quantities ordered, refused to make deliveries
contracted for except at increased prices, and endeavored to induce customers to enter into
agreements to disregard the export regulations of the United States Government, thereby tending
to bring American trade into disrepute with the South American buying public and to Injure and
damage the reputation and business of American exporters, in alleged violation of the Federal
Trade Commission act as extended by the provisions of section 4 of the Webb Act.
Disposition : Dismissed after stipulation in lieu of testimony.
Complaint No. 1241.--In the matter of Julius Klorfein. Charge: Unfair methods of
competition are charged in that the respondent, engaged in the manufacture of cigars In the
States of New York and Pennsylvania and in the sales thereof, labels his product with the words
“Havana,” “Vuelta Abajo,” and “Garcia” in connection with a design registered by him in the
United States Patent Office as a trade-mark for cigars and causes the said words to appear as a
part of said trade-mark when such is not the fact, thereby tending to mislead and deceive the
purchasing public to believe that the respondent’s cigars are made wholly from tobacco grown
in Cuba and either wholly or In part of tobacco grown in the Vuelta Abajo district by
manufacturers of the surname “Garcia” and that the respondent was the first, and is entitled to
the exclusive right in the United States, to use the word “ Garcia” in connection with the sale
of cigars, all in alleged violation of section 5 of the Federal Trade Commission act.
Disposition: Dismissed after trial, charges having been disposed of satisfactorily to
commission by stipulation.
Complaint No. 1271.--In the matter of Wadeeh Rizcallah, Selin Katin, Badie Katin, partners
doing business under the trade name and style W. Rizcallah & Co. Charge : Unfair methods of
competition are charged in that the respondents, engaged in the importation of lace from China
and the sale thereof to garment manufacturers, designate their lace as “ Irish picot,” “ Irish
beading,” and “ Real Irish edge,” thereby misleading and deceiving the purchasing public as to
the quality and value of respondent’s product, and tending to Injure competitors who are in fact
importers of Irish lace, in alleged violation of section 5 of the Federal Trade Commission act.
Disposition: Dismissed.
Complaint No. 1290--In the matter of Abrasive Paper and Cloth Manufacturers’ Exchange,
its officers and members. Charge: Unfair methods of competition are charged in that the
respondents are engaged in an unlawful combination and conspiracy entered into with the
purpose and intention of unduly enhancing the prices of abrasives and of fixing uniform prices,
terms, and discounts at and upon which the abrasives manufactured by the members should be
sold, and of stifling and suppressing competition in the sale and distribution of abrasives, in
alleged violation of section 5 of the Federal Trade Commission act.
Disposition: Dismissed without prejudice, after trial.
Complaint No. 1299.--In the matter of Heywood-Wakefield Co. Charge: Unfair methods of
competition are charged in that the respondent, engaged in the manufacture of furniture
perambulators and other like articles which consist in whole or in part of a woven fabric
resembling wicker-work, advertises and rep resents its wares as “ wicker” wares when in fact
the material used by the respondent Is wood-paper pulp processed and worked into a form
resembling withes or cordage, thereby tending to deceive the trade and purchasing public and
to injure competitors who do not misrepresent their products, in alleged violation of section 5
of the Federal Trade Commission act.
Disposition: Dismissed, respondent having agreed to comply with rules of the industry as

approved by Federal Trade Commission following trade practice conference held for the woven
furniture industry.
Complaint No. 1322.--In the matter of Pacific Southwest Import Co. Charge : Unfair methods
of competition are charged in that respondent has sold, and continues to sell, certain hardwood
lumber and other hardwood:
products, at wholesale and retail, to dealers in hardwood lumber, manufacturers of furniture, and
other users of hardwood lumber under the name and designation of “Philippine mahogany,” and
in advertisements, circular letters, and other correspondence with purchasers and prospective
purchasers, on letterheads, invoices, price lists, and other trade literature, has represented,

PROCEEDINGS DISPOSED OF DURING YEAR

151
named, and designated, and continues to represent, name, and designate, said hardwood lumber
and other hardwood products as “ Philippine mahogany,” when In truth and in fact said
hardwood lumber and other hardwood products so sold by it are not mahogany wood, in alleged
violation of section 5 of the Federal Trade Commission act.
Disposition: Dismissed, respondent having discontinued business.
Complaint No. 1340.--In the matter of Marion Tool Works (Inc.) Charge: Unfair methods
of competition are charged in that the respondent, engaged in the manufacture and sale of tools;
advertises and sells certain of Its products as “Crecoite steel tools,” when In fact the metal parts
of the respondent’s said tools are not composed of steel but are composed of a metal other than
steel, thereby tending to mislead and deceive the purchasing public and to injure competitors
who do not practice misrepresentation, in alleged violation of section 5 of the Federal Trade
Commission act.
Disposition: Dismissed after trial, without prejudice to right of commission to take further
appropriate action should respondent resume use of word “steel” in connection with manufacture
and sale of tools referred to in complaint.
Complaint No. 1346.--In the matter of Con-Ferro Paint & Varnish Co. Charge : Unfair
methods of competition are charged in that the respondent; engaged in the manufacture and sale
of paints, makes numerous false and mis-leading statements as to the quality and value of its
products, thereby tending to mislead the purchasing public and to injure competitors who do not
misrepresent their products, in alleged violation of section 5 of the Federal Trade Commission
act.
Disposition: Dismissed after trial.
Complaint No. 1368.--In the matter of Korean H. Basmadjian, doing business under the trade
name and style H. Basmadjian & Sons. Charge : Unfair methods of competition are charged in
that the respondent, engaged in the sale of pistachio nuts, makes numerous false and misleading
statements and representations to the effect that H. Basmadjian & Sons are the growers of the
pistachio nuts in which they deal and that their nuts are of better and higher quality than
pistachio nuts bought in the open market in the ordinary course of trade, when in fact the
respondent never has grown or produced pistachio nuts, thereby tending to mislead the
purchasing public and to injure competitors who do not practice misrepresentation, In alleged
violation of section 5 of the Federal Trade Commission act.
Disposition : Dismissed, respondent having discontinued business. (This proceeding,
disposed of during fiscal year 1928, and so recorded in the statistical tables, was not so recorded
in the text of the annual report for that year, as service upon the parties at interest had not been
effected.)
Complaint No. 1387.--In the matter of Reading Saddle & Manufacturing Co. Charge: Unfair
methods of competition are charged In that the respondent, engaged in the manufacture of tools,
advertises, labels, and sells certain Of its products as “steel,” “converted steel,” or “ solid steel,”
when in fact the said tools are not composed of steel and are composed of a metal other than
steel, thereby tending to mislead and deceive the purchasing public and to injure competitors
who do not practice misrepresentation in alleged violation of section 5 of the Federal Trade
Commission act.
Disposition: Dismissed without prejudice to right of commission to take further appropriate
action should respondent resume use of word “ steel” in connection with the manufacture and
sale of tools referred to in complaint.
Complaint No. 1390.--In the matter of John H. Dockman & Son. Charge: Unfair methods of

competition are charged in that the respondent engaged in the business of manufacturing and
selling candy specialties furnishes to the retail dealer ordering a specified quantity thereof a
punch-board device for use in the sale of its candy products to the purchasing public, which
board contains 300 holes, in each of which is secreted a ball, the balls being variously colored;
the purchaser of each 1-cent piece of candy is privileged to punch one of the balls from the
board, the color of the ball so produced determining the kind of option the customer may
exercise In the purchase of another of several candy specialties also manufactured and sold by
respondent, there being no option in the case of black balls, by which practice, it is charged,
dealers are placed in possession of the means whereby they can Commit a fraud on the public,
and trade is diverted to respondent from competitors who market their products through retail
dealers without the use of punch boards, in alleged violation of section 5 of the Federal Trade
Commission act.
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Disposition: Dismissed after trial.
Complaint No. 1395.--In the matter of Wrightsville Hardware Co. Charge; Unfair methods
of competition are charged in that the respondent, engaged in the manufacture of hardware,
coffee mills, house furnishing specialties and gray iron castings, makes and sells a nail hammer
designated by it as a "cast steel nail hammer” and stamps into the head of said hammer the
Words “cast steel,” such statements being false and misleading, as said hammers are not made
of steel but are made of malleable iron, and deceives the purchasing public in so doing, such acts
tending to divert business from and otherwise injure and prejudice competitors who do not
practice misrepresentation, in alleged violation of section 5 of the Federal Trade Commission
act.
Disposition : Dismissed without prejudice to the right of the commission to take further
appropriate action should respondent resume use of the word “steel” in connection with the
manufacture and sale of tools referred to in complaint.
Complaint No. 1436.--In the matter of M. W. Savage Co. Charge: Unfair methods of
competition are charged in that respondent, engaged in the business of selling direct to the
consumer by mail, articles of merchandise of sundry sorts, obtains orders for and makes sales
of its merchandise through and by means of certain catalogues in which it causes to be set forth
many false and misleading statements and representations concerning the origin, nature,
character, and value of sundry of its articles of merchandise depicted and described In said
catalogues and concerning the materials whereof said articles are made, which statements and
representations hold out said merchandise to be of a greater and higher value and quality than
the actual value and quality thereof, said acts and practices being to the prejudice of the public
and respondent’s competitors, in alleged violation of section 5 of the Federal Trade Commission
act.
Disposition: Dismissed after trial, respondent having stipulated to desist from practices
charged in complaint.
Complaint No. 1445.--In the matter of Wholesale Confectioners Club of Richmond, Va., Its
officers and members. Charge : Unfair methods of competition are charged in that respondent
engaged in selling confectionery and allied N products has with its members cooperated and
confederated to prevent competing dealers from obtaining confectionery and allied products
directly from the manufacturers thereof, to fix uniform prices of resale, to prevent others from
selling at less prices, and, through the following means, to suppress competition. The fixing of
prices, the holding of meetings for the interchange of information, etc., the notification of and
seeking to induce manufacturers to abide by and adhere to respondent’s plan, boycott and threats
of boycott, and other means, the effect and result of which acts and practices is to substantially
lessen, hinder, and suppress competition to the prejudice of the public and respondent’s
competitors in alleged violation of section 5 of the Federal Trade Commission act.
Disposition: Dismissed, court proceedings in United States of America against respondents
having resulted in a decree which enjoins respondents from fol-lowing practices charged in
complaint.
Complaint No. 1446.--In the matter of Douglass Caramel Co. Charge: Unfair methods of
competition are charged in that respondent, engaged in the manufacture and sale of candies, has
put Into effect a scheme which is intended to induce the consuming public to participate in a
lottery, its candies for sale at 1 cent each and uniform in appearance being packed in display
boxes with prizes for the purchasers who choose candies which, prove to have colored centers
instead of the white or cream colored centers, found in most of the candies, thereby tending to
induce the consuming public to purchase respondent’s candles In preference to the products of

its competitors who do not give prizes won by chances or otherwise, in alleged violation of
section 5 of the Federal Trade Commission act.
Disposition: Dismissed.
Complaint No. 1448.--In the matter of J. W. Elwood, A. E Parmalee, and A. B. Carpenter,
partners, doing business under the trade name and style Northwestern Fur Co. Charge : Unfair
methods of competition are charged in that respondents engaged in the business of teaching the
art and trade of furriery by correspondence, set forth in their advertising certain amounts which
they falsely represent to be the regular and usual prices charged by them for their course of
instruction together with false representation to the effect that for a limited time said price will
be reduced if pupils take advantage of said

PROCEEDINGS DISPOSED OF DURING YEAR

153
offer within the time stated, which acts have the capacity and tendency to and do cause many
of the public to purchase respondents’ course in the belief said statements are true, when In truth
and in fact said prices are the regular and usual prices charged by respondents, thus injuring
competitors who do not use such method, all of which is to the prejudice of the public and
respondents competitors in alleged violation of section 5 of the Federal Trade Commission act.
Disposition: Dismissed, respondent having agreed to comply with rules of the industry as
approved by the commission, following trade practice conference with correspondence school
industry.
Complaint No. 1449.--In the matter of J. W. Elwood, A. E Parmalee, and A. B. Carpenter,
partners, doing business under the trade name and style North western School of Taxidermy.
Charge : Unfair methods of competition are charged in that respondents engaged in the business
of teaching the art and trade of taxidermy by correspondence set forth in their advertising certain
amounts which they falsely represent to be the regular and usual prices charged by them for their
course of instruction together with false representations to the effect that for a limited time said
price will be reduced if pupils take advantage of said offer within the time stated, which acts
have the capacity and tendency to and do cause many of the public to purchase respondents’
course In the belief said statements are true when in truth and in fact said prices are the regular
and usual prices charged by respondents, thus injuring competitors who do not use such method,
all of which is to the prejudice of the public and respondents’ competitors in alleged violation
of section 5 of the Federal Trade Commission act.
Disposition: Dismissed, respondent having agreed to comply with rules of the industry as
approved by the commission following trade practice conference with correspondence school
industry.
Complaint No. 1454.--In the matter of Maiden Knitting Mills. Charge: Unfair methods of
competition are charged in that respondent engaged in the manufacture and sale of knitted
garments, labels certain of its garments “guaranteed all wool,” “all wool,” “100 per cent wool”
and similar phrases, when in truth and in fact said knitted garments are not composed wholly of
wool but of part wool and part cotton, and by said act places in the hands of dealers the means
of committing a fraud upon each other and the consuming public which acts are to the prejudice
of the public and respondent’s competitors who do not so represent, in alleged violation of
section 5 of the Federal Trade Commission act.
Disposition: Dismissed without prejudice, after trial.
Complaint No. 1463.-In the matter of W. R. Maxwell. Charge : Unfair methods of
competition are charged in that respondent engaged at Chicago, Ill., under the trade name “
National Business Institute,” in selling a “Business Administration Course and Service,” offers
said course to customers at a price stated by him to he an “ introductory price” or a “ special
price” of $37.50 and that the regular price is $150, when in truth and In fact $37.50 is the
regular price and the $150 price is fictitious, and further represents that the course is a course
in accountancy, when in truth and in fact it is not an accountancy course but is a course in
business administration, which false representations have the capacity and tendency to and do
cause many persons to purchase said course in the belief that said representations are true, which
acts are to the prejudice of the public and respondent’s competitors in alleged violation of
section 5 of the Federal Trade Commission act.
Disposition: Dismissed, respondent having agreed to comply with the rules of the industry as
approved by the commission, following trade practice conference with correspondence school
industry.

Complaint No. 1471.--In the matter of the Figaro Co. Charge : Unfair methods of competition
are charged in that respondent, engaged in the manufacture and sale of certain products for use
in curing meats called and labeled “Figaro Smoked Salt” and “Figaro Liquid Smoke,” advertises
its products as “Figaro Sugar-Curing Smoked Salt, made from condensed and refined (liquid)
smoke,” “Cures, Flavors, Smokes,” and “Figaro Liquid Smoke,” and that they contain “wood
smoke” and are produced by condensing wood smoke, when in truth and in fact said products
do not contain smoke, but the contents so referred to is approximately 80 per cent crude
pyroligneous acid, which acts mislead the purchasing public to its prejudice, in alleged violation
of section 5 of the Federal Trade Commission act.
Disposition: Dismissed.

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Complaint No. 1475.--In the matter of Omaha Tanning Co. and W. C. Kalash. Charge: Unfair
methods of competition are charged In that respondent engaged in the business of tanning hides
and the manufacture and sale of harness, saddles, and horse collars, makes numerous statements
in its advertisements and also in radio talks given by its president, W. C. Kalash, to the effect
that all harness manufactured by it is made of leather tanned in its own tannery, that buyers save
all middlemen’s profits through buying from respondent, and that all leather used in
respondent’s harness passes the most rigid test, all of which statements are false and misleading
and have the capacity and tendency to and do cause the public to buy respondent’s products,
which acts are to the prejudice of the public and respondents’ competitors who do not so act,
in alleged violation of section 5 of the Federal Trade Commission act.
Disposition: Dismissed, having been disposed of satisfactorily to, commission by stipulation
whereby respondent agrees to desist from practices charged.
Complaint No. 1484.--In the matter of Sandow-Lewis (Inc.). Charge: Unfair methods of
competition are charged in that the respondent, engaged in giving courses of instruction in
physical culture by mail, advertises that the regular price for its course of instruction is $50, but
that a special price of $30 is offered for those subscribing immediately, when in fact said price
never has been $50; and, further, in that the respondent’s advertisements and business literature
set forth a picture of a large building bearing the sign “ Sandow Lewis, Incorporated,” in such
a manner as to import that the entire building is owned or occupied by the respondent when, in
fact, the respondent’s place of business consists of a rented room in a building bearing no sign
similar to that pictured, in alleged violation of section 5 of the Federal Trade Commission act.
Disposition: Dismissed, respondent having agreed to abide by rules of the industry as
approved by the commission, following trade practice conference with correspondence-school
industry.
Complaint No. 1488.--In the matter of the Benjamin Brooks Co. Charge: Unfair methods of
competition are charged in that respondent engaged in the business of selling sundry articles of
merchandise, makes numerous false, mis leading, and deceptive statements and representations
concerning the articles of merchandise in which it deals and the materials whereof said
merchandise is composed, which acts are to the injury and prejudice of competitors who do not
so act, in that business is diverted from said competitors in alleged violation of section 5 of the
Federal Trade Commission act.
Disposition: Dismissed, respondent having discontinued business.
Complaint No. 1490.--In the matter of Suffolk Knitting Mills, Frank Cohen, Sam Caplan, Paul
Cohen. Charge : Unfair methods of competition are charged in that the respondent corporation
and its trustees in liquidation, engaged in the manufacture and sale of sweaters and knit goods,
label and sell said products as “ wool,” “ 100 per cent all wool,” etc., when, in fact, the articles
are manufactured from shoddy wool mixed with cotton, thereby tending to mislead and deceive
the purchasing public and to injure competitors who do not practice misrepresentation, in
alleged violation of section 5 of the Federal Trade Commission act.
Disposition Dismissed, respondent company having been dissolved by special act of General
Court of Massachusetts, approved April 15, 1927.
Complaint No. 1497.--In the matter of Continental Sugar Co. Charge: Unlawful restraint and
monopoly are charged in that the respondent, engaged in. the manufacture and sale of beet
sugar, acquired the stock or share capital of the St. Louis, Sugar Co., thereby tending to
substantially lessen competition and to restrain commerce in sugar, in alleged violation of
section 7 of the Clayton Act.
Disposition: Dismissed, after hearing before board of review.

EXHIBIT 7
COMPLAINTS PENDING JULY 1, 1928, AND STATUS
Complaint No. 288.--In the matter of the Hoover Suction Sweeper Co. Charge: Unfair
methods of competition in the manufacture and sale of vacuum sweepers to the extent that it has
been giving and offering to give cash bonuses and prizes to employees of Its competitors and
the employees of dealers handling the products of its competitors as an inducement to influence
them to favor the sale of respondent’s products over those of its competitors in alleged violation
of section 5 of the Federal Trade Commission act. Status: An order to cease and desist, entered
May 27, 1919, was vacated by commission order dated May 12, 1928, and the case is now
before the commission for consideration looking toward the issuance of a modified order to
cease and desist.
Complaint. No. 540.--In the matter Royal Baking Powder Co. Charge: Using unfair methods
of competition by 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: Awaiting trial following denial of respondent’s
appeal to Supreme Court of the District of Columbia from commission’s order rescinding its
order of dismissal entered March 23, 1926, and reopening case.
Complaint No 962.--In the matter of 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 : In course of trial.
Complaint No. 1110.--In the matter of James S. Kirk & Co. Charge: Unfair methods of
competition are charged in that the respondent has manufactured and sold in addition to its
several brands of soap which contain various percentages of olive oil, seven other separate kinds
of soap which it labeled, advertised, and sold as “Castile” soaps, though said soaps contained
no olive oil content whatsoever, thereby tending to mislead and deceive the public into the belief
that the respondent’s soaps are genuine Castile soap the oil ingredient of which is olive oil, in
alleged violation of Section 5 or the Federal Trade Commission act. Status : Awaiting final
argument.

Complaint No 1115.---In the matter of General Electric Co., American Telephone &
Telegraph Co., Western Electric Co. (Inc.), Westinghouse Electric & Manufacturing Co., The
International Radio Telegraph Co., United Fruit Co., Wireless Specialty Apparatus Co., and
Radio Corporation of America. Charge : Unfair methods of competition are charged In that the
respondents have combined and conspired for the purpose and with the effect of restraining
competition and creating an monopoly in the manufacture, purchase, and smile of radio devices
and apparatus by: (l) Acquiring patents and patent rights covering
155

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

all radio devices and apparatus and combining and pooling or allotting the rights thereunder ton
manufacture, sell, or use such devices and apparatus; (2) granting to the respondent Radio
Corporation of America the exclusive right to sell certain radio devices and restricting its
purchases to the products of certain of the respondent manufacturers; (3) restricting the
competition of certain respondents ; (4) restricting the use in radio communication or
broadcasting of articles manufactured and sold under respondent’s patents mind patent rights;
(5) acquiring equipment heretofore existing for transoceanic radio communication and
perpetuating the monopoly thereof by refusing to supply to others the apparatus and devices
necessary for the employment and operation of certain service ; (6) entering into exclusive
contracts and preferential agreements for the handling of transoceanic radio traffic and the
transmission of radio messages in this country, thereby excluding others from the necessary
facilities for the transmission of radio traffic; and (7) agreeing mind contracting earning
themselves to cooperate in the development of new inventions relating to radio and to exchange
patents covering the results of the research and experiment of their employees in the art of radio,
seeking thereby to perpetuate their control arid monopoly of the various means of radio
communication and broadcasting license the time covered by existing’ patents owned by their
or under which they are licensed, all in alleged violation of section 5 of the Federal Trade
Commission act. Status : In course of trial.
Complaint No. 1127.--In the matter of Calumet Baking Powder Co. Charge : Unfair methods
of competition are charged in that the respondent has published and circulated numerous false
and misleading statements in disparagement of “ K. C. baking powder,” a product of the Jaques
Manufacturing Co., thereby tending to mislead the trade into the belief that said K. C. baking
powder is an inferior, adulterated, and undesirable product and to injure and damage the
business and good will of said competitor, the Jaques Manufacturing Co., in alleged
violation of section 5 of the Federal Trade Commission act. Status : Awaiting examiners
report.
Complaint No. 1215.--In the matter of Motor Wheel Corporation. Charge : Unfair methods
of competition are charged in that resplendent, engaged in the manufacture and sale of wooden
wheels and steel disc wheels for automobiles and sundry parts and materials therefor, having
acquired the businesses and assets of its competitors, Prudden Wheel Co. and Auto Wheel Co.;
proceeded to and did acquire the corporate stock of Forsythe Bros. Co., the only competitor of
the respondent during the year 1922 in the manufacture of steel disc wheels, thereby tending to
lessen competition, restrain interstate commerce and to create a monopoly, in alleged violation
of section 7 of the Clayton act. Status: Awaiting examiners report.
Complaint No. 1245.--In the matter of B. Z. B. Knitting Co. Charge : Unfair methods of
competition are charged in that the respondent, engaged in the manufacture and sale of hosiery,
advertised its product as “fashioned” or “full fashioned” hosiery, when in fact said hosiery is not
“fashioned” as the term is understood by the public, 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. 1251.--In the matter of American Association of Advertising Agencies, its
officers, executive board, and members ; American Press Association, a corporation ; Southern
Newspaper Publishers’ Association, its officers, directors, and members. Charge : Unfair
methods of competition are charged in that the respondents are engaged In a combination and
conspiracy affecting national advertising throughout the United States, entered into with the
purpose of compelling national advertisers to employ respondent agencies or other advertising
agencies in the placing of national advertising in newspapers throughout the United States and

to prevent said advertisers from advertising directly in said newspapers at the minimum “net”
rates and to compel said advertisers to pay at the maximum “gross” rates, employing various
cooperative means to effectuate said combination and conspiracy the effect of which is to hinder
and obstruct national advertising throughout the United States : to restrict the distribution of
such advertising, and of the type parts essential thereto, to channels and upon terms and conditions dictated by the respondents ; to restrict the publication of national advertising to
newspapers selected and approved by the respondents ; to compel newspaper publishers to
charge for the publication of national advertising at maximum gross rates and to prevent them
from according minimum net rates to direct advertisers ; to compel the employment of the
respondents or other agencies as intermediaries

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157
in placing national advertising, or in the alternative to pay for direct advertising at the maximum
gross rates and in addition thereto to prepare and distribute their advertisements at their own
expense, and to hinder and obstruct the marketing of goods, wares, and merchandise, all in
alleged violation of section 5 of the Federal Trade Commission act. Status : In course of trial.
Complaint No. 1263.--In the matter of National Leather & Shoe Finders’ Association, Its
officers, executive committee. and members; Greater Boston and New England Leather and
Finders’ Credit Bureau; Central States Leather and Finders’ Credit Bureau; Central West
Leather and Finders’ Credit Bureau; Northwestern Leather and Finders’ Credit Bureau;
Northern New Jersey Leather and Finders’ Credit Bureau; Wisconsin Leather and Finders’
Credit Bureau; New York State Leather and Finders’ Credit Bureau; Shoe Finders’ Board of
Trade; Colorado Leather and Finders’ Credit Bureau; Pittsburgh Leather and Finders’ Credit
Bureau; Philadelphia Leather and Finders’ Credit Bureau; Baltimore Leather and Finders’ Credit
Bureau; Greater New York Leather and Finders’ Credit Bureau; Capital Leather and Finders’
Credit Bureau of Albany, N. Y.; Michigan Leather and Finders’ Credit Bureau of Detroit;
Illinois Leather and Finders’ Credit Bureau (Inc.); Cleveland Leather and Finders’ Credit
Bureau; Toledo Leather and Finders’ Credit Bureau; Cincinnati Leather and Finders’ Credit
Bureau; St. Louis Leather and Finders’ Credit Bureau; Connecticut Leather and Finders’ Credit
Bureau; Virginia Leather and Finders’ Credit Bureau; Iowa and Nebraska Leather and Finders’
Credit Bureau; Missouri, Kansas, and Arkansas Leather and Finders’ Credit Bureau; Illinois
State Leather and Finders’ Credit Bureau ; Louisville Leather and Finders’ Credit Bureau; Twin
Cities Leather and Finders’ Credit Bureau; Rubber Heel Club of America and the officers and
members thereof. Charge: Unfair methods of competition are charged In that the respondents
have combined and conspired with the intent and effect of discouraging, stifling, and
suppressing competition in price and otherwise In the sale and distribution of shoe findings and
In shoe-repair service, and of confining such commerce to “ regular.” channels of trade and
“legitimate” dealers, in alleged violation of section 5 of the Federal Trade Commission act.
Status : At issue.
Complaint No. 1269.--Federal Trade Commission v. Shanghai Lace Corporation. Charge:
Unfair methods of competition are charged in that the respondent, engaged in the importation
of lace from China and in the sale thereof to the manufacturers of garments, describes its lace
as “Irish picot,” “Irish edge,” and “Real Irish edge,” thereby misleading and deceiving the
purchasing public as to the quality and value of respondent’s product and tending to injure
competitors who are in fact Importers of Irish lace, in alleged violation of section 5 of the
Federal Trade Commission act. Status: Awaitng respondent’s brief.
Complaint No. 1273.--In the matter of. Abraham D. Sutton, David Sutton, Selim Sutton,
partners doing business under the trade name and style A. D. Sutton & Sons. Charge: Unfair
methods of competition are charged in that the respondents, engaged in the importation of lace
from China and the sale thereof to garment manufacturers, designate their lace as “Irish picot,”
“Irish beading,” and “Real Irish edge,” thereby misleading and deceiving the purchasing public
as to the quality and value of respondent’s product, and tending to injure competitors who are
in fact importers of Irish lace, in alleged violation of section 5 of the Federal Trade Commission
act. Status: Awaitng respondent’s brief.
Complaint No. 1274.--In the matter of Alfred Kohlberg (Inc.). Charge: Unfair methods of
competition are charged In that the respondent, engaged in the importation of lace from China
and the sale thereof to garment manufacturers, designates its lace as “Irish Swatow” and “Irish
Siccawei,” thereby tending to mislead and deceive the purchasing public as to the quality and

value of the respondent’s product and to injure competitors who are in fact Importers of Irish
lace, in alleged violation of section 5 of the Federal Trade Commission act. Status: Awaitng
respondent’s brief.
Complaint No. 1275.--In the matter of Abraham Lian, George Marabak, R. Lian, William
Lian, Michael Marabak, Joseph Marabak, John Marabak, Sahid Lian, partners doing business
under the trade name and style Lian & Marabak. Charge: Unfair methods of competition are
charged in that the respondents, engaged in the importation of lace from China and the sale
thereof to manufacturers of garments, designate their lace as “Irish lace,” thereby misleading and
deceiving the purchasing public as to quality and value of respondents’ product and tending to
injure competitors who are in fact Importers of Irish lace, In alleged violation of section 5 of the
Federal Trade Commission act. Status: Awaitng respondent’s brief.

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Complaint No. 1283.--In the matter of Non-Plate Engraving Co. (Inc.), a corporation. Charge:
Unfair methods of competition are charged in that the respondent. engaged in the printing of
stationery, indicates by the use of its corporate name and its advertising matter that it is engaged
in the business of engraving when in fact the process used by the respondent is not one of
engraving but involves printing to simulate the impression made from engraved plates, in
alleged violation of section 5 of the Federal Trade Commission act. Status: At issue.
Complaint No. 1292.--In the matter of Calumet Baking Powder Co. Charge: Unfair methods
of competition are charged in that the respondent, engaged in the manufacture and sale of baking
powders, has caused to be set forth statements and innuendoes untruthfully and unfairly representing that its competitor, Royal Baking Powder Co., packs its Royal Baking Powder in 6 and
12 ounce cans, instead of one-half pound and pound cans, for the purpose of cheating the public
by passing off and causing the trade to pass off said 6 and 12 ounce cans as and for one-half
pound and pound cans, respectively; and In that the respondent has adopted the practice of
disseminating statements and comments calculated to further the interests of respondent and in
disparagement and derogation of the products and businesses of its competitors, concealing its
connection with the various methods through which said practice was carried into effect; and
further in that the respondent falsely represented that the baking powder of its competitor, Royal
Baking Powder Co., forms or tends to form a hard mass In the digestive tract in persons
consuming food prepared therewith, its house-to-house canvassers and demonstrators making
misleading comparisons and tests to deceive the purchasing public, all In alleged violation of
section 5 of the Federal Trade Commission act. Status: Respondents motion to dismiss awaiting
consideration until after final disposition of docket 1127 in the mater of Calumet Baking Powder
Co.
Complaint No. 1311.--In the matter of Masland Duraleather Co., W. & J. Sloane. The
respondent Masland Duraleather Co. Is engaged in the manufacture of imitation leather and the
sale thereof through the respondent W. & J. Sloane. Charge: Unfair methods of competition are
charged in that the respondents brand and label a coated fabric, made in imitation of but
containing no leather, as “Duraleather,” thereby enabling vendees to misrepresent articles made
of respondents’ product and injuring the business of competitors who do not practice
misrepresentation; and in that the respondents’ trade name “Duraleather” simulates the trade
name “Duro,” used for many years by their competitor A. C. Lawrence Leather Co., in advertising and selling Its product as “Duro leather,” thereby tending to mislead and deceive the trade
into belief that the respondents’ product is a product of the aforesaid competitor, all in alleged
violation of section 5 of the Federal Trade Commission act. Status: Awaiting final argument.
Complaint No. 1319.--In the matter of West Coast Theatres ( Inc. ). West Coast Theatres
(Inc.) of Northern California, Venice Investment Co., Holly wood Theatres (Inc.), All Star
Feature Distributors (Inc.), Educational Film Exchange Principal Pictures Corporation H. M.
Turner Fred Dahnken, C. L. Langley, and F. W. Livingston, partners, doing business under the
name and style of Turner D. Dahnken & Langley, and Messrs. A. L. Gore, Michael Gore Sol.
Lesser, Adolph Ramish and Dave Bershon. Charge: Unfair methods of competition are charged
in that the respondents combined for the purpose of preventing producers or distributors of
motion-picture films in other States from leasing their films to competitors of the respondents
and from shipping said films into the State of California. and preventing competition in
negotiating for and leasing of said motion-picture films, employing threats. coercive measures,
and other cooperative and individual means to make effective the aforesaid undertakings, in
alleged violation of section 5 of the Federal Trade Commission act. Status :Awaitng
respondent’s brief.

Complaint No. 1320.--In the matter of West Coast Theatres (Inc.), West Coast Theatres (Inc.)
of Northern California, The T. & D. Jr. Enterprises (Inc.), and H. M. Turner, Fred Dahnken, C.
L. Langley, and F. W. Livington, partners, doing business under the trade name and style of
Turner, Dahnken & Langley. Charge: Unfair methods of competition are charged in that the
respondents combined for the purpose of restraining and preventing producers or distributors
of motion-picture films in other States from leasing their films to competitors of the respondents
and from shipping said films into the State of California for delivery to respondents’
competitors, and restraining and preventing competition in negotiation for and leasing of said
motion-picture

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159
films, in the respondents effecting joint management of their theatres, recognizing restrictive
territorial arrangements, observing agreements to refrain from competition, and employing
coercive and other cooperative and individual means to make effective their undertakings
in alleged violation of section 5 of the Federal Trade Commission act. Status: Awaiting briefs.
Complaint No. 1328.--In the matter of National Cash Register Co. Charge: Unfair methods
of competition are charged in that the respondent has inaugurated and systematically conducted
a plan and scheme to unduly hinder and restrain competition in the manufacture and sale of cash
registers and similar machines, to monopolize or attempt to monopolize said manufacture and
sale, to eliminate, stifle and force out of said business the Remington Gash Register Go. and to
harass and discourage the agents and employees of said competitor; carrying out its plan against
the Remington Gash Register Co. by (a) ascertaining the names of its customers and prospective
customers; (b) making false and misleading statements in disparagement of said company and
its products; (e) tampering with the Remington Co.’s cash registers; (d) under taking to persuade
and induce customers of the Remington Co. to breach their contracts with said company; (e)
representing the Remington Co.’s executory contracts of purchase as not binding on the
customers; (f) offering to accept Remington cash registers in the possession of customers under
executory contracts at a substantial valuation in money as part of the purchase price for cash
registers of respondent’s manufacture and offering the latter at prices greatly below the normal
retail prices; (g) circulating false statements and representations concerning the business of the
Remington Cash Register Co. and its financial stability, and by means thereof. as well as by
means of threats, intimidation, and persuasion, attempting to induce employees to violate and
terminate their contracts with said Remington Co.; and (h) practicing espionage against sale
Remington Co. and its employees, all in alleged violation of section 5 of the Federal Trade
Commission act. Status: In course of trial.
Complaint No. 1329.--In the matter of The Armand Co., its officers and agents; SpurlockNeal Go., Berry, DeMoville & Go., Robinson-Pettet Go., Lamar & Rankin Drug Go., GreinerKelly Drug Go., The J. W. Growdus Drug Go., San Antonio Drug Go., Western Wholesale Drug
Go., Fuller-Morrison Co., Ilumiston, Keeling & Go., Peter Van Schaack & Sons, The McPike
Drug Co., Faxon-Gallagher Drug Go., J. S. Merrell Drug Go., A. M. Berry, A. D. Berry, F. S.
Berry, W. D. Phillips, M. P. Williams, copartners doing business under the trade name of Berry,
DeMoville & Go., The Fair (Inc.), E H. Cone (Inc.), T. C. Marshall, doing business under the
name of Marshall’s Pharmacy, Clarence E Jeffares and Malcolm J. Long, copartners, doing
business under the trade name of Jeffares-Long Drug Go., Owl Drug Co. (Inc.). Charge: Unfair
methods of competition are charged in that the respondent The Armand Go., engaged in the
manufacture of toilet articles and cosmetics, and the respondent wholesalers and dealers,
unlawfully and knowingly conspired and agreed to monopolize and restrain interstate trade in
the products of The Armand Co. by selling the Said products at uniform, noncompetitive,
wholesale and retail prices arbitrarily suggested and fixed by The Armand Co. and largely in
excess of the prices which would have prevailed without such agreement, refusing to sell said
products to dealers other than those engaged in the drug business, ref using to sell to price
cutters and employing cooperative means for the enforcement of the said suggested or fixed
prices, in alleged violation of section 5 of the Federal Trade Commission act. Status: At issue.
Complaint No. 1330.--In the matter of Plateless Engraving Co. (Inc.). Charge: U n f a i r
methods of competition are charged in that the respondent, engaged in process printing and in
the sale of process printed stationery, uses lime word “Engraving” in its corporate Dame, and
thereby tends to mislead and deceive the purchasing public into the erroneous belief that the

respondent’s stationery is “engraved,” and tends to injure competitors who do not misrepresent
their products, in alleged violation of section 5 of the Federal Trade Commission act. Status: At
issue.
Complaint No. 1334.--In the matter of E R. Marshall, doing business under the trade name
and style of Crescent Calendar Co. Charge: Unfair methods of competition are charged in that
the respondent in soliciting orders for school commencement announcements and invitations
represents that the name of the school will be “process embossed in gold” or “embossed in
gold,” when in fact the announcements and invitations are prepared for the respondent by the
embossing of a design from steel dies or plates, leaving a blank space in which

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the name of the school is process printed by the respondent without the use of dies or plates but
in simulation of embossing, in alleged violation of section 5 of the Federal Trade Commission
act. Status: At issue.
Complaint No. 1335.--In the matter of Aluminum Co. of America, a corporation. Charge:
Unfair methods of competition are charged in that the respondent, controlling the sources of
supply of aluminum metal and, through its subsidiaries, a large manufacturer of aluminum
products. discriminates in price between purchasers of virgin sheet aluminum on the basis or
agreements that all aluminum scrap resulting from the operations of the purchasers shall be
resold to the respondent, thereby tending to substantially lessen competition and create a
monopoly, in alleged violation of section 2 of the Clayton Act; and in that the respondent fixes
prices arbitrarily, makes price concessions, sells below cost, and discriminates against
competitors in the quantity and quality of its deliveries to them, thereby unfairly harassing
competitors and tending to suppress competition and maintain a monopoly, in alleged violation
of section 5 of the Federal Trade Commission act. Status: In course of trial.
Complaint No. 1342.--In the matter of George M. Rubinow, trading under the name and style
of Rubinow Edge Tool Works. Charge: Unfair methods of competition are charged in that
respondent, engaged in the business of manufacturing tools, makes use of the term “steel,” “cast
steel,” etc., in advertising and branding tools composed of a metal other than steel. Status: At
issue.
Complaint No. 1369.--In the matter of W. U. Blessing, and M. S. Gohn, co-partners, doing
business under the trade name and style of W. U. Blessing & Co., and A. E. Wallick. Charge
: Unfair methods of competition are charged in that the respondents, engaged in the manufacture
of cigars in the State of Pennsylvania and in the sale thereof, label their “Triangulares” cigars
and containers with the word “Garcia” and the words “Tampa Style,” thereby tending to mislead
the purchasing public as to the quality of the respondents’ product and the place of manufacture
and to injure competitors who do not practice misrepresentation, in alleged violation of section
5 of the Federal Trade Commission act. Status : Awaiting briefs.
Complaint No. 1371.--In the matter of Perpetual Encyclopedia Corporation, North America
Publishing Co. (Inc.), et al. Charge : Unfair methods of competition are charged in that the
respondents republished without substantial change the “Home and School Reference Work”
(originally copyrighted in 1912 or 1915) under different names and as a new and up-to-date
(1924) edition, employing without right the names of attorneys, fictitious corporate
organizations, and collection agencies to further the sale of said publication and to assist in
coercing and blackmailing purchasers into the payment of money on orders or contracts,
substituting late copyright registration dates for the actual date of such registration, falsely
stating that well-known educators, scientists, and public officials are members of the editorial
staff and contributors, mis representing and grossly exaggerating sales prices, obtaining signed
orders by subterfuge, misrepresenting the quality of the paper and binding, offering additional
books or extension service “free,” when in fact the price thereof was included in the price of the
book bought, and making numerous false and misleading representations, all tending to deceive
the purchasing public, the said practices injuring competitors who do not practice
misrepresentation, in alleged violation of section 5 of the Federal Trade Commission act. Status
: At issue.
Complaint No. 1378.--In the matter of Ohio Leather Co. Charge : Unfair methods of
competition are charged in that the respondent, engaged in the manufacture and sale of leather,
advertises and labels one of its products as “Kaffor Kid,” thus indicating that it Is manufactured
from the skins of goats, when in fact the respondent’s said product is manufactured from the

hides of calves, thereby tending to mislead and deceive the trade and consuming public and to
injure competitors who do not practice misrepresentation, in alleged violation of section 5 of the
Federal Trade Commission act. Status : Awaiting final argument.
Complaint No. 1379.--In the matter of Great Northern Fur Dyeing & Dressing Co. Charge :
Unfair methods of competition are charged in that the respondent, engaged in the business of
dressing and dyeing Australian and New Zealand rabbit skins, causes one of its trade-marks-“Northern Seal” (black), “Northern Bevre” (brown), “Northern Nutrette” (plum color)--to be
stamped on the back of each skin prepared by It, and furnishes to manufacturers of garments
made from such skins silk labels containing the words “Genuine Northern Seal,” thus placing
in the hands of dealers who sell to the

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161
public garments made from such skins the means whereby such dealers can commit a fraud on
the public by displaying such labels and trade-marks to support their false representations that
such garments are made from genuine seal fur or the fur of animals other than rabbits; the
tendency being to deceive the purchasing public and to divert trade from competitors who
properly label their rabbit skins, and from dealers in the skins of seals, beavers, musk rats, etc.,
all in alleged violation of section 5 of the Federal Trade Commission act. Status : Awaiting trial.
Complaint No. 1380.--In the matter of Feldbaum & Spiegel (Inc.). Charge : Unfair methods
of competition are charged in that the respondent, engaged in the business of manufacturing and
selling to dealers garments made of dyed Australian and New Zealand rabbit skins, on the back
of each of which skin is stamped the dyer’s trade-mark “Northern Seal “ and to which garments
are attached silk labels bearing the words “Genuine Northern Seal,” thus placing In the hands
of dealers the means whereby a fraud on the public may be committed by displaying the labels
and trade-marks to customers to support their false representations that the garments are made
of genuine seal fur; the tendency being to deceive the purchasing public and to cause trade to
be diverted from competitors who disclose that the garments made by them are made of rabbit
fur, all in alleged violation of section 5 of the Federal Trade Commission act. Status : At issue.
Complaint No. 1381.--In the matter of Golden Fur Dyeing Co. (Inc.), and Samuel Jacobs and
Isidor Sachs, partners, doing business under the trade name and style Jacobs & Sachs. Charge
: Unfair methods of competition are charged in that the respondents, engaged in the business of
(1) dressing and dyeing Australian and New Zealand rabbit skins for the owners, and (2)
manufacturing and selling garments made therefrom, cause the trade-mark containing the words
“ Golden Seal “ to be stamped on the back of each skin prepared by the dyer respondent, many
of which skins are owned by the manufacturing respondent and made up by it into garments for
sale to the trade, thus placing in the hands of the dealers who sell the garments to the public the
means whereby such dealers can commit a fraud on the public by displaying such trade-mark
to support their false representations that such garments and made from genuine seal fur; the
tendency being to deceive the purchasing public and to divert trade from competing
manufacturers of properly marked garments made of rabbit skins, or from those who manufacture and sell garments made of genuine seal fun, and in alleged violation of section 5 of the
Federal Trade Commission act. 2 Status: At issue.
Complaint No. 1382.--In the matter of Cassileth, Schwartz & Cassileth (Inc.), Joseph Brickner
and Julius Bernfeld, partner’s, trading as Brickner & Bernfeld, Samuel Oldman and Max
Oldman, partners trading as Oldman Bros. Charges: Unfair methods of competition are charged
in that respondents, engaged in the business of (1) dressing and dyeing Australian and New
Zealand rabbit skins for the owners thereof, (2) dealing mm the skins so dressed and dyed, and
(3) manufacturing and selling garments made from the skins so dressed and dyed and dealt in
case the trademark “Iceland Seal” or “Iceland Beaver” to be stamped on the back of each skin
prepared by the dyer respondent, many of which are so prepared on contract for the dealer
respondent who sells some of the same to the manufacturing respondent, thus placing in the
hands of dealers who sell the garments made from the “Iceland Seal” skins to the public the
means whereby a fraud on the public can be committed by permitting them to display such trademark to support their false representations that such garments are made from genuine seal fur;
the tendency being to deceive the purchasing public and to divert trade from competing
manufacturers of properly marked garments made of rabbit skins, or from those who
manufacture and sell garments made of genuine seal fur, all in alleged violation of section 5 of
the Federal Trade Commission act. Status: At issue.

Complaint No. 1383.--In the matter of Adiel Vandeweghe and David Fesh back. Charge:
Unfair methods of competition are charged in that (1) the dyer respondent and (2) the
manufacturing respondent (who purchases a substantial number of skins from the former)
engaged in dressing and dyeing Australian and New Zealand rabbit skins and the manufacture
and sale to the trade of garments made therefrom cause each of such skins to be marked on the
back thereof the trade-mark “Superior Seal,” thus placing in the hands of dealers who sell such
garments to the public the means whereby such dealers can commit a fraud on the public by
displaying such trade-mark to sup-

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port their false representations that the garments are made from genuine seal fur; the tendency
being to deceive the purchasing public and to divert trade from competing manufacturers of
properly marked garments made of rabbit skins, or from those who manufacture and sell
garments made of genuine seal fur, all in alleged violation of section 5 of the Federal Trade
Commission act. Status : At issue.
Complaint No. 1384.--In the matter of Philip A. Singer & Bro. (Inc.), and Herman Gelberg
and Benjamin Schwartz, partners, doing business under the name and style Gelberg & Schwartz.
Charge : Unfair methods of competition are charged in that (1) the dyer respondent and (2) the
manufacturing respondent (for whom the former dresses and dyes many skins) engaged in the
dressing and dyeing of rabbit skins and the manufacture and sale to the trade of garments made
therefrom cause the trade-mark “Baltic Seal” or “Baltic Beaver “ to be stamped on the back of
each skin prepared by the dyer respondent, thus placing in the hands of dealers who sell the
garments made from such skins the means whereby such dealers can commit a fraud on the
public by displaying such trade-marks to support their false representations that the garments
are made from genuine seal fur or from genuine beaver fur; the tendency being to deceive the
purchasing public and to divert trade from competing manufacturers or properly marked garment
made from rabbit skins, or from those who manufacture and sell garments made of genuine seal
or beaver fur, all in alleged violation of section 5 of the Federal Trade Commission act. Status:
At issue.
Complaint No. 1385.--In the matter of A. Hollander & Son (Inc.), A. Hollander & Son-Arnold
Corporation, and Harry H. Hertz Co. Charge : Unfair competition is charged in that the
respondents engaged in the business of (1) dressing and dyeing muskrat skins on contract for
the owners, (2) dressing and dyeing Australian and New Zealand rabbits largely imported by
itself, and (3) manufacturing and selling fur garments, cause each skin prepared by the dyer
respondents to be stamped on the back thereof with the trade-marks “Hollander Seal” or “Bay
Seal,” and as many of such skins are sold to the manufacturing respondent there is placed in the
hands of dealers the means of perpetrating a fraud on the purchasing public by displaying such
trade-marks to support their false representations that the garments are made from genuine seal;
the tendency being to deceive the public and to divert trade from competing manufacturers of
properly marked garments made of muskrat or rabbit skins, or from those who manufacture and
sell garments made of genuine seal fur, all in alleged violation of section 5 of the Federal Trade
Commission act. Status: At issue.
Complaint No. 1396.--In the matter of Berkey & Gay Furniture Co. Charge: Unfair methods
of competition are charged in that the respondent engaged in the manufacture and sale of
furniture, principally of gum or chestnut wood or other woods of similar grades and quality,
causes practically all of the pieces of furniture made by It to be veneered with a thin covering
of mahogany or walnut wood of the thickness of about two twenty-eighths of an inch and describes and designates such furniture in advertisements, catalogues, invoices, etc., as “Walnut
and gumwood,” “Mahogany and gumwood,” or by other combinations, not disclosing that the
furniture is veneered, thus placing in the hands of retailers the means whereby such dealers may
commit a deception or fraud on the public, such practice causing trade to be diverted to
respondent from competitors who describe their veneered furniture as “veneered,” giving the
name of the wood composing the veneer as well as the wood from which the core of such
furniture is made, or whose furniture is made entirely of mahogany or walnut, all in alleged
violation of section 5 of the Federal Trade Commission act. Status: Before the commission for
final determination.
Complaint No. 1397.--In the matter of Stow & Davis Furniture Co. Charge: Unfair methods

of competition are charged in that the respondent engaged In the manufacture and sale of
furniture, principally of gum or chestnut wood or other woods of similar grades and quality,
causes practically all of the pieces of furniture made by it to be veneered with a thin covering
of mahogany or walnut wood of the thickness of about two twenty-eighths of an inch and describes and designates such furniture in advertisements, catalogues, invoices, etc., as
“Mahogany,” “Walnut,” “Mahogany and gumwood,” or by other combinations, not disclosing
that the furniture is veneered, thus placing in the hands of retailers the means whereby such
dealers may commit a deception or fraud on the public, such practice causing trade to be
diverted to respondent

COMPLAINTS PENDING JULY 1, 1928, AND STATUS

163
from competitors who describe their veneered furniture as “veneered,” giving the name of the
wood composing the veneer as well as the name of the wood from, which the core of such
furniture is made, or whose furniture is made entirely of mahogany or walnut, all in alleged
violation of section 5 of the Federal Trade Commission act. Status : Before the commission for
final determination.
Complaint No. 1398.--In the matter of Gunn Furniture Co. Charge : Unfair methods of
competition are charged in that the respondent engaged in the manufacture and sale of furniture,
principally of gum or chestnut wood or other woods of similar grades and quality, causes
practically all of the pieces of furniture made by it to be veneered with a thin covering of
mahogany or walnut wood of the thickness of about two twenty-eighths of an inch and describes
and designates such furniture in advertisements, catalogues, invoices, etc., as “Mahogany,”
“Walnut,” “Mahogany and gumwood,” or by other combinations, not disclosing that the
furniture is veneered, thus placing in the hands of retailers the means whereby such dealers may
commit a deception or fraud on the public, such practice causing trade to be diverted to
respondent from competitors who describe their veneered furniture as “veneered,” giving the
name of the wood composing the veneer as well as the name of the wood from which the core
of such furniture is made, or whose furniture is made entirely of mahogany or walnut, all in
alleged violation of section 5 of the Federal Trade Commission act. Status: Before the
commission for final determination.
Complaint No. 1399.--In the matter of Grand Rapids Show Case Co. Charge: Unfair methods
of competition are charged in that the respondent engaged In the manufacture and sale of
furniture, principally of gum or chestnut wood or other woods of similar grades and quality,
causes practically all of the pieces of furniture made it to be veneered with a thin covering of
mahogany or walnut wood of the thickness of about two twenty-eighths of an inch and describes
and designates such furniture in advertisements, catalogues, invoices, etc., as “ Mahogany,”
“Walnut,” or “American walnut,” not disclosing that the furniture is veneered, thus placing in
the hands of retailers the means whereby such dealers may commit a deception or fraud on the
public, such practice causing trade to be diverted to respondent from competitors who describe
their veneered furniture as “veneered,” giving the name of the wood composing the veneer as
well as the name of the wood from which the core of such furniture Is made, or whose furniture
is made entirely of mahogany or walnut, all in alleged violation of section 5 of the Federal Trade
Commission act. Status: Before the commission for final determination.
Complaint No. 1400.--In the matter of John Widdicomb Co. Charge : Unfair methods of
competition are charged in that the respondent engaged in the manufacture and sale of furniture,
principally of gum or chestnut wood or other woods of similar grades and quality, causes
practically all of the pieces of furniture made by it to be veneered with a thin covering of
mahogany or walnut wood of the thickness of about two twenty-eighths of an inch and describes
and designates such furniture in advertisements, catalogues, invoices, etc., as “Walnut,” “French
walnut,” “American walnut” or “Mahogany,” not disclosing that the furniture is veneered, thus
placing in the hands of retailers the means whereby such dealers may commit a deception or
fraud on the public, such practice causing trade to be diverted to respondent from competitors
who describe their veneered furniture as “veneered,” giving the name of the wood composing
the veneer as well as the name of the wood from which the core of such furniture is made, or
whose furniture is made entirely of mahogany or walnut, all in alleged violation of section 5 of
the Federal Trade Commission act. Status :Before the commission for final determination.
Complaint No. 1401.--In the matter of Luce Furniture Co., and the Furniture Shops (Inc.).

Charge : Unfair methods of competition are charged in that the respondent engaged in the
manufacture and sale of furniture, principally of gum or chestnut wood or other woods of similar
grades and quality, causes practically all of the pieces of furniture made by it to be veneered
with a thin covering of mahogany or walnut wood of the thickness of about two twenty-eighths
of an inch and describes and designates such furniture in advertisements, catalogues, invoices,
etc., as “Mahogany,” “Walnut,” or “Mahogany and gumwood,” not disclosing that the furniture
is veneered, thus placing in the hands of retailers the means whereby such dealers may commit
a deception or fraud on the public, such practice causing trade to be diverted to respondent from
competitors who describe their veneered furniture as “veneered,” giving the name of the wood
composing the veneer as well as the name

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

of the wood from which the core of such furniture Is made, or whose furniture is made entirely
of mahogany or walnut, all in alleged violation of section 5 of the Federal Trade Commission
act. Status : In course of trial.
Complaint No. 1402.--In the matter of Century Furniture Co. Charge : Unfair methods of
competition are charged in that the respondent engaged in the manufacture and sale of furniture,
principally of gum or chestnut wood or other woods of similar grades and quality, causes
practically all of the pieces of furniture made by it to be veneered with a thin covering of
mahogany wood of the thickness of about two twenty-eighths of an Inch and describes and
designates such furniture in advertisements, catalogues, Invoices, etc., as “ Mahogany,” not
disclosing that the furniture is veneered, thus placing in the hands of retailers the means whereby
such dealers may commit a deception or fraud on the public, such practice causing trade to be
diverted to respondent from competitors who describe their veneered furniture as “ veneered,”
giving the name of the wood composing the veneer as well as the name of the wood from which
the core of such furniture is made, or whose furniture is made entirely of mahogany or walnut,
all in alleged violation of section 5 of the Federal Trade Commission act. Status :Before the
commission for final determination.
Complaint No. 1403.--In the matter of David E. Uhl, trading under the name and style of
Grand Rapids Fancy Furniture Co. Charge : Unfair methods of competition are charged in that
the respondent engaged in the manufacture and sale of furniture, principally of gum or chestnut
wood or other woods of similar grades and quality, causes practically all of the pieces of
furniture made by it to be veneered with a thin covering of mahogany or walnut wood of the
thickness of about two twenty-eighths of an inch and describes and designates such furniture in
advertisements, catalogues, invoices, etc., as “Mahogany” or “Walnut,” not disclosing that the
furniture is veneered, thus placing in the hands of retailers the means whereby such dealers may
commit a deception or fraud on the public, such practice causing trade to be diverted to
respondent from competitors who describe their veneered furniture as “veneered,” giving the
name of the wood composing the veneer as well as the name of the wood from which the core
of such furniture is made, or whose furniture is made entirely of mahogany or walnut, all in
alleged violation of section 5 of the Federal Trade Commission act. Status :Before the
commission for final determination.
Complaint No. 1404.--In the matter of Valley City Desk Co. Charge : Unfair methods of
competition are charged in that the respondent engaged in the manufacture and sale of furniture,
principally of gum or chestnut wood or other woods of similar grades and quality causes
practically all of the pieces of furniture made by it to be veneered with a thin covering of oak,
mahogany or walnut wood of the thickness of about two twenty-eighths of an inch and describes
and designates such furniture in advertisements, catalogues, invoices, etc., as “ Oak,”, “Walnut”
or “Mahogany,” not disclosing that the furniture is veneered, thus placing in the hands of
retailers the means whereby such dealers may commit a deception or fraud on the public, such
practice causing trade to be diverted to respondent from competitors who describe their
veneered furniture as “veneered,” giving the name of the wood composing the veneer as well
as the name of the wood from which the core of such furniture is made, or whose furniture is
made entirely of mahogany or walnut, all in alleged violation of section 5 of the Federal Trade
Commission act. Status: Before the commission for final determination.
Complaint No. 1405.--In the matter of Foote-Reynolds Co. Charge : Unfair methods of
competition are charged in that the respondent engaged in the manufacture and sale of furniture,
principally of gum or chestnut wood or other woods of similar grades and quality, causes
practically all of the pieces of furniture made by It to be veneered with a thin covering of walnut

wood of the thickness of about two twenty-eighths of an inch, and describes and designates such
furniture In advertisements, catalogues, invoices, etc., as “Walnut and gumwood,” or by other
combinations, not disclosing that the furniture is veneered, thus placing In the hands of retailers
the means whereby such dealers may commit a deception or fraud on the public, such practice
causing trade to be diverted to respondent from competitors who describe their veneered
furniture as “veneered,” giving the name of the wood composing the veneer as well as the name
of the wood from which the core of such furniture is made, or whose furniture Is made entirely
of mahogany or walnut, all in

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165
alleged violation of section 5 of the Federal Trade Commission act. Status :Before the
commission for final determination.
Complaint No. 1406.--In the matter of Prichett-Powers Co. Charge : Unfair methods of
competition are charged in that the respondent engaged in the manufacture and sale of furniture,
principally of gum or chestnut wood or other woods of similar grades and quality, causes
practically all of the pieces of furniture made by it to be veneered with a thin covering of walnut
wood of the thickness of about two twenty-eighths of an inch, and describes and designates such
furniture in advertisements, catalogues, invoices, etc., as “Walnut and gumwood,” or by other
combinations, not disclosing that the furniture is veneered, thus placing in the hands of retailers
the means whereby such dealers may commit a deception or fraud on the public, such practice
causing trade to be diverted to respondent from competitors who describe their veneered
furniture as “veneered,” giving the name of the wood composing the veneer as well as the name
of the wood from which the core of such furniture is made, or whose furniture is made entirely
of mahogany or walnut, all In alleged violation of section 5 of the Federal Trade Commission
act. Status : Before the commission for final determination.
Complaint No. 1407.--In the matter of Johnson Furniture Co. and Johnson-Handley-Johanson
Co. Charge : Unfair methods of competition are charged in that the respondent engaged in the
manufacture and sale of furniture, principally of gum or chestnut wood or other woods of similar
grades and quality, causes practically all of the pieces of furniture made by it to be veneered
with a thin covering of walnut wood of the thickness of about two twenty-eighths of an inch, and
describes and designates such furniture in advertisements, catalogues, invoices, etc., as “Walnut
and gumwood,” or by other combinations, not disclosing that the furniture is veneered, thus
placing in the hands of retailers the means whereby such dealers may commit a deception or
fraud on the public, such practice causing trade to be diverted to respondent from competitors
who describe their veneered furniture as “veneered,” giving the name of the wood composing
the veneer as well as the name of the wood from which the core of such furniture is made, . or
whose furniture is made entirely of mahogany or walnut, all in alleged violation of section 5 of
the Federal Trade Commission act. Status :Before the commission for final determination.
Complaint No. 1408.--In the matter of Grand Rapids Chair Co. Charge : Unfair methods of
competition are charged in that the respondent engaged in the manufacture and sale of furniture,
principally of gum or chestnut wood or other woods of similar grades and quality, causes
practically all of the pieces of furniture made by it to be veneered with a thin covering of
mahogany or walnut wood of the thickness of about two twenty-eighths of an inch, and describes
and designates such furniture in advertisements, catalogues, invoices, etc., as “Walnut and
gumwood,” “Mahogany and gumwood,” or by other combinations, not disclosing that the
furniture is veneered, thus placing in the hands of retailers the means whereby such dealers may
commit a deception or fraud on the public, such practice causing trade to be diverted to
respondent from competitors who describe their veneered furniture as “veneered,” giving the
name of the wood composing the veneer as well as the name of the wood from which the core
of the furniture is made, or whose furniture is made entirely of mahogany or walnut, all in
alleged violation of section 5 of the Federal Trade Commission act. Status : Before the
commission for final determination.
Complaint No. 1409.--In the matter of Hekman Furniture Co. Charge : Unfair methods of
competition are charged in that the respondent, engaged in the manufacture and sale of furniture,
principally of gum or chestnut wood or other woods of similar grades and quality, causes
practically all of the pieces of furniture made by it to be veneered with a thin covering of

mahogany or walnut wood of the thickness of about two twenty-eighths of an inch and describes
and designates such furniture in advertisements, catalogues, invoices, etc., as “Walnut and
gumwood,” “Mahogany and gumwood,” or by other combinations, not disclosing that the
furniture is veneered, thus placing in the hands of retailers the means whereby such dealers may
commit a deception or fraud on the public, such practice causing trade to be diverted to
respondent from competitors who described their veneered furniture as “veneered,” giving the
name of the wood composing the veneer as well as the name of the wood from which the core
of such furniture is made, or whose furniture is made entirely of mahogany or walnut, all in
alleged violation of section 5 of the Federal Trade Commission act. Status: Before the
commission for final determination.

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Complaint No. 1410.--In the matter of William F. Drueke and Albert F. Dickinson, partners,
trading under the name and style of William F. Drueke & Co. Charge : Unfair methods of
competition are charged in that the respondent, engaged in the manufacture and sale of furniture,
principally of gum or chestnut wood or other woods of similar grades and quality, causes
practically all of the pieces of furniture made by it to be veneered with a thin covering of
mahogany or walnut wood of the thickness of about two twenty-eighths of an inch and describes
and designates such furniture in advertisements, catalogues, invoices, etc., as “Walnut and
gumwood,” “Mahogany and gumwood,” or by other combinations, not disclosing that the
furniture is veneered, thus placing in the hands of retailers the means whereby such dealers may
commit a deception or fraud on the public, such practice causing trade to bo diverted to
respondent from competitors who describe their veneered furniture as “veneered,” giving the
name of the wood composing the veneer as well as the name of the wood from which the core
of such furniture is made, or whose furniture is made entirely of mahogany or walnut, all in
alleged violation of section 5 of the Federal Trade Commission act. Status: Before the
commission for final determination.
Complaint No. 1411.--Wagemaker Co. Charge : Unfair methods of competition are charged
in that the respondent, engaged in the manufacture and sale of furniture, principally of gum or
chestnut wood or other woods of similar grades and quality, causes practically all of the pieces
of furniture made by It to be veneered with a thin covering of mahogany or walnut wood of the
thickness of about two twenty-eighths of an inch and describes and designates such furniture In
advertisements, catalogues, invoices, etc., as “Walnut and gumwood,” “Mahogany and
gumwood,” or by other combinations, not disclosing that the furniture is veneered, thus placing
in the hands of retailers the means whereby such dealers may commit a deception or fraud on
the public, such practice causing trade to be diverted to respondent from competitors who
describe their veneered furniture as “veneered,” giving the name of the wood composing the
veneer as well as the name of the wood from which the core of such furniture is made, or whose
furniture is made entirely of mahogany or walnut, all in alleged violation of section 5 of the
Federal Trade Commission act. Status :Before the commission for final determination.
Complaint No. 1412.--In the matter of Robert W. Irwin Co. Charge : Unfair methods of
competition are charged in that the respondent, engaged in the manufacture and sale of furniture,
principally of gum or chestnut wood or other woods of similar grades and quality, causes
practically all of the pieces of furniture made by it to be veneered with a thin covering of
mahogany or walnut wood of the thickness of about two twenty-eighths of an inch and describes
and designates such furniture in advertisements, catalogues, invoices, etc., as “Walnut and
gumwood,” “Mahogany and gumwood,” or by other combinations, not disclosing that the
furniture is veneered, thus placing in the hands of retailers the means whereby such dealers may
commit a deception or fraud on the public, such practice causing trade to be diverted to respondent from competitors who describe their veneered furniture as “veneered,” giving the name of
the wood composing the veneer as well as the name of the wood from which the core of such
furniture is made, or whose furniture is made entirely of mahogany or walnut, all in alleged
violation of section 5 of the Federal Trade Commission act. Status : Before the commission for
final determination.
Complaint No. 1413.--Standardized Furniture Co. Charge: Unfair methods of competition are
charged in that the respondent engaged in the manufacture and sale of furniture, principally of
gum or chestnut wood or other woods of similar grades and quality, causes practically all of the
pieces of furniture made by it to be veneered with a thin covering of mahogany or walnut wood
of the thickness of about two twenty-eighths of an Inch and describes and designates such

furniture in advertisements, catalogues, invoices, etc., as “Walnut and gumwood,” “Mahogany
and gumwood,” or by other combinations, not disclosing that the furniture is veneered, thus
placing in the hands of retailers the means whereby such dealers may commit a deception or
fraud on the public, such practice causing trade to be diverted to respondent from competitors
who describe their veneered furniture as “veneered,” giving the name of the wood composing
the veneer as well as the name of the wood from which the core of such furniture is made, or
whose furniture is made entirely of mahogany or walnut, all in alleged violation of section 5 of
the Federal Trade Commission act. Status :Before the commission for final determination.

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167
Complaint No. 1414.--In the matter of H. E Shaw Furniture Co. Charge: Unfair methods of
competition are charged In that the respondent engaged in the manufacture and sale of furniture,
principally of gum or chestnut wood or other woods of similar grades and quality, causes
practically all of the pieces of furniture made by it to be veneered with a thin covering of
mahogany or walnut wood of the thickness of about two twenty-eighths of an inch and describes
and designates such furniture in advertisements, catalogues, invoices, etc., as “Walnut,” “Walnut
and gumwood,” “Mahogany and gumwood,” or by other combinations, not disclosing that the
furniture Is veneered, thus placing in the hands of retailers the means whereby such dealers may
commit a deception or fraud on the public, such practice causing trade to be diverted to
respondent from competitors who describe their veneered furniture as “veneered” giving the
name of the wood composing the veneer as well as the name of the wood from which the core
of such furniture is made, or whose furniture Is made entirely of mahogany or walnut, all in
alleged violation of section 5 of the Federal Trade Commission act. Status : Before the
commission for final determination.
Complaint No. 1415.--In the matter of Widdicomb Furniture Co. Charge : Unfair methods of
competition are charged in that the respondent engaged in the manufacture and sale of furniture,
principally of gum or chestnut wood or other woods of similar grades and quality, causes
practically all of the pieces of furniture made by it to be veneered with a thin covering of
mahogany or walnut wood of the thickness of about two twenty-eighths of an inch and describes
and designates such furniture in advertisements, catalogues, invoices, etc., as “Walnut and
gumwood.” “Mahogany and gumwood,” or by other combinations, not disclosing that the
furniture is veneered, thus placing in the hands of retailers the means whereby such dealers may
commit a deception or fraud on the public, such practice causing trade to be diverted to
respondent from competitors who describe their veneered furniture as “veneered,” giving the
name of the wood composing the veneer as well as the name of the wood from which the core
of such furniture is made, or whose furniture is made entirely of mahogany or walnut, all in
alleged violation of section 5 of the Federal Trade Commission act. Status :Before the
commission for final determination.
Complaint No. 1416.--In the matter of Imperial Furniture Co. Charge : Unfair methods of
competition are charged in that the respondent engaged In the manufacture and sale of furniture,
principally of gum or chestnut wood or other woods of similar grades and quality, causes
practically all of the pieces of furniture made by it to be veneered with a thin covering of
mahogany or walnut wood of the thickness of about two twenty-eighths of an inch and describes
and designates such furniture in advertisements, catalogues, invoices, etc., as “Walnut and
gumwood,” “Mahogany and gumwood,” or by other combinations, not disclosing that the
furniture is veneered, thus placing in the hands of retailers the means whereby such dealers may
commit a deception or fraud on the public, such practice causing trade to be diverted to
respondent from competitors who describe their veneered furniture as “veneered,” giving the
name of the wood composing the veneer as well as the name of the wood from which the core
of such furniture is made, or whose furniture is made entirely of mahogany or walnut, all in
alleged violation of section 5 of the Federal Trade Commission act. Status : Before the
commission for final determination.
Complaint No. 1417.--In the matter of Williams-Kimp Furniture Co. Charge: Unfair methods
of competition are charged In that the respondent engaged in the manufacture and sale of
furniture, principally of gum or chestnut wood or other woods of similar grades and quality
causes practically all of the pieces of furniture made by it to he veneered with a thin covering

of mahogany or walnut wood of the thickness of about two twenty-eighths of an inch and
describes and designates such furniture in advertisements, catalogues, invoices, etc., as
“Walnut,” “Mahogany,” “Red mahogany,” “Brown mahogany,” “Walnut combination,” or by
other combinations, not disclosing that the furniture is veneered, thus placing in the hands of
retailers the means whereby such dealers may commit a deception or fraud on the public, such
practice causing trade to be diverted to respondent from competitors who describe their
veneered furniture as “veneered,” giving the name of the wood composing the veneer as well
as the name of the wood from which the core of such furniture is made, or whose furniture is
made entirely of mahogany or walnut, all in alleged violation of section 5 of the Federal Trade
Commission act. Status: Before the commission for final determination.
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Complaint No. 1418.--In the matter of Paalman Furniture Co. Charge: Unfair methods of
competition are charged in that the respondent engaged in the manufacture and sale of furniture,
principally of gum or chestnut wood or other woods of similar grades and quality causes
practically all of the pieces of furniture made by it to be veneered with a thin covering of oak,
mahogany, or walnut wood of the thickness of about two twenty-eighths of an inch and describes
and designates such furniture in advertisements, catalogues, invoices, etc., as “Mahogany,”
“Walnut,” “Oak,” “Mahogany, and gumwood,” or by other combinations, not disclosing that the
furniture is veneered, thus placing in the hands of retailers the means whereby such dealers may
commit a deception or fraud on the public, such practice causing trade to he diverted to
respondent from competitors who describe their veneered furniture as “veneered,” giving the
name of the wood composing the veneer as well as the name of the wood from which the core
of such furniture is made, or whose furniture is made entirely of mahogany or walnut, all in
alleged violation of section 5 of the Federal Trade Commission act. Status :Before the
commission for final determination.
Complaint No. 1419.--In the matter of The Cabinet Shops. Charge : Unfair methods of
competition are charged in that the respondent engaged in the manufacture and sale of furniture,
principally of gum or chestnut wood or other woods of similar grades and quality causes
practically all of the pieces of furniture made by it to be veneered with a thin covering of walnut
wood of the thickness of about two twenty-eighths of an inch and describes and designates such
furniture in advertisements, catalogues, invoices, etc., as “Walnut,” not disclosing that the
furniture is veneered, thus placing in the hands of retailers the means whereby such dealers may
commit a deception or fraud on the public, such practice causing trade to be diverted to
respondent from competitors who describe their veneered furniture as “veneered,” giving the
name of the wood composing the veneer as well as the name of the wood from which the core
of such furniture is made, or whose furniture is made entirely of mahogany or walnut, all in
alleged violation of section 5 of the Federal Trade Commission act. Status :Before the
commission for final determination.
Complaint No. 1420.--In the matter of Furniture Studios (Inc.). Charge: Unfair methods of
competition are charged in that the respondent engaged in the manufacture and sale of furniture,
principally of gum or chestnut wood or other woods of similar grades and quality causes
practically all of the pieces of furniture made by it to be veneered with a thin cove ring of maple
or walnut wood of the thickness of about two twenty-eighths of an inch and describes and
designates such furniture in advertisements, catalogues, Invoices, etc., as “Maple,” “Walnut,”
“Walnut decorated,” “Georgian Walnut decorated,” not disclosing that the furniture is veneered,
thus placing in the bands of retailers the means whereby such dealers may commit a deception
or fraud on the public, such practice causing trade to be diverted to respondent from competitors
who describe their veneered furniture as “veneered,” giving the name of the wood composing
the veneer as well as the name of the wood from which the core of such furniture is made, or
whose furniture is made entirely of mahogany or walnut, all in alleged violation of section 5 of
the Federal Trade Commission act. Status: Before the commission for final determination.
Complaint No. 1421.--In the matter of Macey Co. Charge : Unfair methods of competition
are charged in that the respondent engaged in the manufacture and sale of furniture, principally
of gum or chestnut wood or other woods of similar grades and quality, causes practically all of
the pieces of furniture made by it to be veneered with a thin covering of mahogany or walnut
wood of the thickness of about two twenty-eighths of an inch and describes and designates such
furniture in advertisements, catalogues, invoices, etc., as “Mahogany,” or “Genuine walnut,” not
disclosing that the furniture is veneered, thus placing in the hands of retailers the means whereby

such dealers may commit a deception or fraud on the public, such practice causing trade to be
diverted to respondent from competitors who describe their veneered furniture as “veneered,”
giving the name of the wood composing the veneer as well as the name of the wood from which
the core of such furniture is made, or whose furniture is made entirely of mahogany or walnut,
all in alleged violation of section 5 of the Federal Trade Commission act. Status : Before the
commission for final determination.

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169
Complaint No. 1422.--In the matter of Grand Rapids Furniture Co. Charge: Unfair methods
of competition are charged in that the respondent engaged in the manufacture and sale of
furniture, principally of gum or chestnut wood or other woods of similar grades and quality,
causes practically all of the pieces of furniture made by it to be veneered with a thin covering
of mahogany or walnut wood of the thickness of about two twenty-eights of an inch and
describes and designates such furniture in advertisements, catalogues, invoices, etc., as “Walnut
and gumwood,” “Mahogany and gumwood,” or by other combinations, not disclosing that the
furniture is veneered, thus placing in the hands of retailers the means whereby such dealers may
commit a deception or fraud on the public, such practice causing trade to be diverted to
respondent from competitors who describe their veneered furniture as “veneered,” giving the
name of the wood composing the veneer as well as the name of the wood from which the core
of such furniture is made, or whose furniture is made entirely of mahogany or walnut, all in
alleged violation of section 5 of the Federal Trade Commission act. Status : Before the
commission for final determination.
Complaint No. 1423.--In the matter of Armour & Co. and Armour & Co. of Delaware.
Charge : Unfair methods of competition are charged in tin ant respondent engaged in the
manufacture and sale of soap and soap products, labeled, advertised, and sold certain kinds of
its soap as “Donna Castile,” “ Stork Castile,” “Carrara Sapone Castighia,” and “Broadway Bath
Olive Castile,” and certain brands of soap under the designation of “Castile Styles” as “Castile”
soap, representing said soaps to be genuine Castile soap containing olive oil exclusively and that
they are imported from Spain, when in fact they were not imported and the fats from which they
are and have been made include and have included vegetable oils other than olive oils, and
animal fats such as tallow, in a substantial and varying amount, In some Instances in a
proportion preponderant to and in others practically excluding the use of olive oil as an
ingredient in their composition, all of which has the capacity and tendency to confuse, mislead,
and deceive the trade and the public and to injure respondents’ competitors who sell genuine
Castile soap, all In alleged violation of section 5 of the Federal Trade Commission act. Status
: On suspense calendar to await decision of court of last resort in Docket 1110, in the matter of
James S. Kirk & Co.
Complaint No. 1424.--In the matter of Globe Soap Co. Charge : Unfair methods of
competition are charged in that respondent engaged in the manufacture and sale of toilet soaps
and soap products, labeled, advertised, and sold several brands of soap as and for “Castile
Soap,” including the brand called “Lion Castile,” representing said soaps to be genuine Castile
soap containing olive oil exclusively, when in fact they are and have been made of fats which
include and have included vegetable oils other than olive oil, and animal fats such as tallow, in
a substantial and varying amount, in some instances In a proportion preponderant to and in
others entirely excluding the use of olive oil as an ingredient, all of which has the capacity and
tendency to confuse, mislead, deceive, and defraud the trade and public and to injure
respondent’s competitors who sell genuine Castile soap, all in alleged violation of section 5 of
the Federal Trade Commission act. Status: On suspense calendar to await decision of court of
last resort in Docket 1110, in the matter of James S. Kirk & Co.
Complaint No. 1425.--In the matter of Cincinnati Soap Co. Charge : Unfair methods of
competition are charged in that respondent engaged in the manufacture and sale of toilet soaps
and soap products, labeled, advertised, and sold certain kinds of its soap as “Purity Castile,”
“Crown Castile,” “Olive Castile,” an d “Fontaine Castile” as “Castile” soap, representing said
soaps to be genuine Castile soap containing olive oil exclusively when in fact they are and have

been made of fats which include and have included vegetable oils other than olive oil, and
animal fats such as tallow, in a substantial and varying amount, in some instances in a proportion
preponderant to and in others entirely excluding the use of olive oil as an ingredient, all of which
has the capacity and tendency to confuse, mislead, deceive, and defraud dealers in soap and the
public and to injure respondent’s competitors who sell genuine Castile soap, all in alleged
violation of section 5 of the Federal Trade Commission act. Status : At issue.
Complaint No. 1426.--In the matter of Peet Bros. Co. Charge: Unfair methods of competition
are charged in that respondent, engaged in the manu-

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

facture and sale of toilet soaps and so products, labeled, advertised, and sold certain kinds of
its soap as “Crystal Cocoa Hardwater Castile,” “Cocoa Castile,” “Defender Castile,” and
“Rainbo Castile” as “Castile soap,” representing said soaps to be genuine Castile soap
containing olive. oil exclusively, when in fact they are and have beer made of fats which include
and have included vegetable oils other than olive oil, and animal fats such as tallow, In a
substantial and varying amount, in some instances in a proportion preponderant to and in others
entirely excluding the use of olive oil as an ingredient, all of which has the capacity and
tendency to confuse, mislead, deceive, and defraud the public and to injure respondent’s
competitors who sell genuine Castile soap, all in alleged violation of section 5 of the Federal
Trade Commission act. Status: On suspense calendar to await decision of court of last resort in
Docket 1110, in the matter of James S. Kirk & Co.
Complaint No. 1430.--In the matter of Southern Alberta Lumber Co. (Ltd.), also known as
Southern Alberta Lumber & Supply Co. (Ltd.), and H. N. Serueth, individually and as manager
of said corporation. Charge: Unfair methods of competition are charged in that respondent,
engaged in the purchase, of lumber and its resale to dealers, alters the bills of lading and other
like documents listing the shipments of lumber made to it, issued by the producers, which
instruments are accepted by the owners and operators of seagoing vessels as truthfully setting
forth the amount of lumber shipped by respondent and for which the carriers in turn issue their
bills of lading, etc., covering like amounts, by reducing the listed amounts, such reduction saving
respondent freight and other costs, which savings enable it to sell its lumber greatly below the
prices at which its competitors can and do sell their lumber at a reasonable profit, all of which
is to the prejudice of the public and respondent’s competitors, in alleged violation of section 5
of the Federal Trade Commission act. Status : At issue.
Complaint No. 1432.--In the matter of Mendoza Fur Dyeing Works (Inc.). Charge : Unfair
methods are charged in that respondent engaged in the business of processing, dressing, and
dyeing rabbit pelts which It imports from Australia and New Zealand, causes the fur of said pelts
to resemble in appearance the fur of beaver pelts and marks and stamps said pelts “Mendoza
Beaver” and supplies its vendees with labels similarly marked which are attached to garments
made by the vendees who then sell said garments to retailers. which practices place In the hands
of retailers the means of committing a fraud upon the public, to the prejudice of the public and
respondent’s competitors in alleged violation of section 5 of the Federal Trade Commission act.
Status : At issue.
Complaint No. 1434.--In the matter of Gibbons Knitting Mills (Inc.). Charge : Unfair methods
of competition are charged in that respondent engaged in the business of selling knitted garments
at wholesale sets forth in Its advertisements its corporate name, “Gibbons Knitting Mills (Inc.)”
and prominently prints and sets forth said name upon its stationery, price lists, catalogues, etc.,
all of which misleads and deceives retail dealers into the belief that respondent is a manufacturer
and that persons buying respondent’s garments eliminate the profits of middlemen when in truth
and in fact respondent does not own, Operate, or control any mill, and does not manufacture said
garments sold by it, but buys them from other manufacturers and resells them at a profit, all of
which is to the prejudice of the public and respondent’s competitors, in alleged violation of
section 5 of the Federal Trade Commission act. Status : Awaiting final determination.
Complaint No. 1435.--In the matter of Independent Industries (Inc.) Charge : Unfair methods
of competition are charged in that respondent engaged in the manufacture of knitted and other
garments for women, advertises in monthly periodicals soliciting persons to become sales
representatives for respondent, supplies said representatives with trade literature, price lists, etc.,
in which it designates the material of which its garments are made, and which is not silk, a

product of the cocoon of the silkworm, to be “Mona-silk,” and thus places in the hands of its
representatives the means of committing a fraud upon the purchasing public, to the prejudice of
the public and respondent’s competitors, in alleged violation of section 5 of. the Federal Trade
Commission act. Status : At issue.
Complaint No. 1438.--In the matter of Yokum Bros., a corporation. Charge : Unfair methods
of competition are charged in that respondent engaged in the manufacture and sale of cigars in
the State of Pennsylvania causes the words “Spana-Cuba” to be placed on the boxes and
containers in which its cigars

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171
are sold and on the bands upon each cigar, said acts having the capacity and tendency to and do
mislead and deceive the trade and consuming public into the belief that said cigars are composed
of Cuban tobacco, when in truth and in fact said cigars are composed entirely of tobacco grown
elsewhere than in Cuba, all of which acts are to the prejudice or the public and respondent’s
competitors in alleged violation of section 5 of the Federal Trade Commission act. Status : At
issue.
Complaint No. 1441.--In the matter of W. H. Snyder, R. r. Snyder, and Roger N. Snyder,
partners doing business under the trade name and style W. H. Snyder & Sons. Unfair methods
of competition are charged In that respondents engaged in the manufacture and sale of cigars
In the State of Pennsylvania cause the words “Havana Fruit” and “Havana Velvet” to be placed
on the boxes and containers In which their cigars are sold and on the bands upon each cigar, said
acts having the capacity and tendency to and do mislead and deceive the trade and consuming
public Into the belief that said cigars are composed of Cuban tobacco. when in truth and in fact
said cigars are composed entirely of tobacco grown elsewhere than in Cuba, all of which acts
are to the prejudice of the public and respondents competitors in alleged violation of section 5
of the Federal Trade Commission act. Status : At issue.
Complaint No. 1442.--In the matter of T. E Brooks, doing business under the trade name and
style T. E. Brooks & Co. Charge : Unfair methods of competition are charged in that
respondent, engaged in the manufacture and sale of cigars In the State of New York, causes the
words “Havana Sweets” to be placed on the boxes and containers in which his cigars are sold
and on the bands upon each cigar, said acts having the capacity and tendency to and do mislead
and deceive the trade and consuming public into the belief that said cigars are composed of
Cuban tobacco, when In truth and In fact said cigars are composed entirely of tobacco grown
elsewhere then in Cuba, all of which acts are to the prejudice of the public and respondent’s
competitors in alleged violation of section 5 of the Federal Trade Commission act. Status: At
issue.
Complaint No. 1443.--In the matter of John C. Herman and Edwin S. Herman, partners, doing
business under the trade name and style John C. Herman & Co. Charge: Unfair methods of
competition are charged In that respondents engaged In the manufacture and sale of cigars in
the State of Pennsylvania cause the words “Havana Darts” to be placed on the boxes and
containers in which their cigars are sold and on the bands upon each cigar, said acts having the
capacity and tendency to and do mislead and deceive the trade and consuming public Into the
belief that said cigars are composed of Cuban tobacco, when in truth and in fact said cigars are
composed entirely of tobacco grown elsewhere than In Cuba, all of which acts are to the
prejudice of the public and respondents’ competitors in alleged violation of section 5 of the
Federal Trade Commission act. Status : At issue.
Complaint No. 1450.--In the matter of Showers Bros. Co. Charge: Unfair methods of
competition are charged In that respondent engaged In the manufacture and sale of furniture
describes In Its advertisements certain articles of its furniture as composed of “Walnut,”
“Mahogany,” “Combination walnut,” “Combination mahogany,” “Combination blended
walnut,” or “Combination blended mahogany,” which statements when used by dealers In selling
said furniture to customers have the capacity and tendency to mislead said customers into the
belief that said furniture is composed in whole or in part of mahogany or walnut, when in truth
and in fact said furniture is composed of other woods with a thin veneering of mahogany or
walnut on the exposed surfaces, which acts are to the prejudice of the public and respondent’s
competitors who do not use such practices, in alleged violation of section 5 of the Federal Trade

Commission act. Status: Awaiting final argument.
Complaint No. 1451.--In the matter of Consolidated Cigar Co. Charge: It is charged that
respondent acquired the stock or share capital of the “44” Cigar Co. and the G. H. P. Cigar Co.,
two of its competitors engaged in the manufacture and sale of cigars, the effect of said act being
to substantially lessen com-petition and restrain commerce between and among respondent and
said competitors and to create a monopoly, in violation of section 7 of the Clayton Act. Status:
In course of trial.
Complaint No. 1452.--In the matter of Inecto (Inc.). Charge: Unfair methods of competition
are charged in that the respondent engaged in the manufacture and sale of a hair dye designated
by it as “Inecto Rapid Notox,” sets forth in its advertising matter and stationery many false and
misleading statements concerning the nature, properties, and characteristics of said hair dye and
fur-

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

ther reproduce “unsolicited” testimonial letters, which letters are neither in fact unsolicited nor
written to respondent, all of which acts have the capacity and tendency to mislead and deceive
dealers and the public to the prejudice of the public and respondents’ competitors, in alleged
violation of section 5 of the Federal Trade Commission act. Status: At issue.
Complaint No. 1453.--In the matter of Fleck Cigar Co. Charge: Unfair methods of
competition are charged in that respondent, engaged in the manufacture and sale of cigars in the
State of Pennsylvania, causes the words “Rose-O-Cuba” and “Habana” to be placed on the
boxes and containers in which its cigars are sold and on the brand or label upon each cigar, said
acts having the capacity and tendency to mislead and deceive the trade and consuming public
into the belief that said cigars are composed of Cuban tobacco, when in truth and In fact said
cigars are composed of tobacco grown elsewhere than In Cuba, which acts are to the prejudice
of the public and respondent’s competitors, in alleged violation of section 5 of the Federal Trade
Commission act. Status: At issue.
Complaint No. 1457.--In the matter of Samuel Breakstone. Charge: Unfair methods of
competition are charged in that respondent engaged in the business of selling automobile parts,
supplies and accessories, having bought In the open market from the United States Government
certain spark-plug cores manufactured by the A C Spark Plug Co., one of respondent’s
competitors, bearing the symbol “A C,” which cores were for use in airplane motors and would
not function in automobile motors, has mounted said cores in spark-plug shells not made for or
by said A C Spark Plug Co., makes written and oral representations to the public and dealers
that said spark plugs are “A C” spark plugs manufactured by said competitor and designed and
intended for use in automobile motors, and having procured a supply of certain cartons or containers formerly owned by said A C Spark Plug Co., packed its complete spark plugs therein,
so placing in the hands of dealers a means of committing a fraud upon purchasers, said acts
tending to divert and diverting business from respondent’s said competitor and further, because
respondent’s spark plugs do not function properly, when applied to automobile motors, said acts
tend to and do otherwise injure and prejudice said competitor, all of which acts are to the
prejudice of the public and respondent’s competitors, in alleged violation of section 5 of the
Federal Trade Commission act. Status: Before the commission for final determination.
Complaint No. 1458.--In the matter of San Martin & Leon Co. (Inc.). Charge: Unfair methods
of competition are charged in that respondent engaged in the business of selling and distributing
cigars names and designates certain of Its cigars “Hoyo de Cuba,” “Flor de San Marba Y Leon,”
and “El Briche” and sets forth on the boxes in which said cigars are packed the above phrases
and in addition the words “Havana,” “Mild Havana,” “Mild Havan Cigars,” and further that
respondent labels the container of one of its cigars with the words “Guaranteed genuine Havana
cigars from tobacco from our own plantation in Cuba,” all of which acts have the capacity and
tendency to and do mislead the trade and public into the belief that said cigars are composed
wholly of Cuban or Havana tobacco when in truth and in fact said cigars are composed In part
of Cuban or Havana tobacco, most of which Is purchased by respondent in the open market, and
in part of tobacco grown elsewhere, and which acts are to the prejudice of the public and of
those of respondent’s competitors who sell cigars composed wholly of Cuban or “Havana”
tobacco, or who sell cigars composed in part of tobacco grown elsewhere and make no
representations to the contrary, in alleged violation of section 5 of the Federal Trade
Commission act. Status: At issue.
Complaint No. 1459.--In the matter of John F. Reichard doing business under the trade name
and style Manchester Cigar Co. Charge: Unfair methods of competition are charged In that
respondent engaged in the manufacture and sale of cigars labels the boxes and containers In

which its cigars are packed with the words “Havana Cadet,” which act has the capacity and
tendency to and does mislead the trade and public into the belief that said cigars are composed
of Havana tobacco when in truth and in fact said Havana Cadet” cigars are composed entirely
of tobacco grown elsewhere than in Cuba, and which act is to the prejudice of the public and of
those of respondent’s competitors who sell cigars composed either entirely of Havana tobacco
or entirely of tobacco grown elsewhere but without representing otherwise, in alleged violation
of section 5 of the Federal Trade Commission act. Status: At issue.

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173

Complaint No. 1461.--In the matter of Wheeling Steel Corporation, John Wood
Manufacturing Co., Detroit Range Boiler & Steel Barrel Co., W. A. Case & Son Manufacturing
Co., Casy-Hodges Co. (Inc.), and the Scaife Manufacturing Co. Charge: Unfair methods of
competition are charged in that respondents engaged in the manufacture and sale of range
boilers have established and maintained a certain sales policy with the alleged intent and
purpose to destroy two local producers and competitors in the Pacific coast market. These two
competitors are the National Steel Construction Co. of Seattle and the National Boiler &
Manufacturing Co. of Los Angeles, both of which, from their geographical position, are unable
to buy the raw materials used in the manufacture of range boilers at a price which compares
favorably to the price respondents pay, as said raw materials are produced In Eastern States.
As the cost and transportation of the raw materials is reflected materially in the sales price of
both respondents and their competitors the sales policy of respondents works to the disadvantage
of respondents’ competitors. The sales policy of respondents is as follows: For one fixed and
uniform lump sum each respondent sells its range boilers and pays the actual cost of
transportation thereof to all markets in all parts of the United States. This allows a larger profit
on sales near respondents’ factories, which larger profit makes up for the loss sustained on sales
to the Pacific coast market which covers the States of California, Oregon, and Washington. In
this market respondents lose money on all sales because of said sales policy, and because the
respondents’ uniform sales prices are lower than the sales prices of the two above-mentioned
competitors the sales policy has the capacity and tendency to and does create a monopoly in and
of said Pacific coast market, which acts are to the prejudice of the public and respondents’
competitors in alleged violation of section 5 of the Federal Trade Commission act, and because
of the uniform lump-sum sales policy local competition is eliminated and constitutes an unlawful
discrimination against the purchasing public in large territories of the United States by depriving
such purchasers of the advantage otherwise accruing to them from their proximity to one of the
respondents’ factories in alleged violation of section 2 of the Federal antitrust act. Status: At
issue.
Complaint No. 1462.--In the matter of Pepsodent Co., a corporation. Charge: Unfair methods
of competition are charged In that respondent, engaged in the business of manufacturing
dentifrices which it sells and distributes under the trade brand or label “Pepsodent,” has adopted
and employed and still employs a system for the maintenance of uniform resale prices by
securing the cooperation of its customers, to this end using such practices as trade letters and
interviews, reports by dealers of other dealers who fail to observe and maintain the resale prices,
refusal to sell to dealers who fail to observe said resale prices and entering in contracts,
agreements, or understandings for the observance of said resale prices as a condition of entering
into or continuing business relations with dealers, which acts have the capacity and tendency to
constrain dealers uniformly to sell respondent’s products at the resale prices designated by
respondent and so to hinder and suppress the free competition which otherwise would exist
among dealers in respondent’s products, all of which is to the prejudice of the public and
respondent’s competitors in alleged violation of section 5 of the Federal Trade Commission act.
Status: At issue.
Complaint No. 1464.--In the matter of V. Vivaudou (Inc.). Charge: Unfair methods of
competition are charged In that respondent, engaged in the business of manufacturing and
selling perfumes, cosmetics, and other toilet articles, has acquired the stock of the Alfred H.
Smith Co., a distributor of cosmetics and toilet articles, and further has had Parfumerie Melba
(Inc.), the stock of which is owned by respondent, acquire the control of the Melba
Manufacturing Co., which acts have the effect of substantially lessening competition among the

three corporations named and tend to create a monopoly, in alleged violation of section 7 of the
Clayton Act. Status: In course of trial.
Complaint No. 1465.--In the matter of Havatampa Cigar Co. Charge: Unfair methods of
competition are charged In that respondent, engaged in the manufacture and sale of cigars,
names and designates one of its cigars “Hoye de Cuba,” and sets forth on the boxes In which
said cigars are packed the above phrase and in addition the words “Havana,” “Habana,” “Mild
Havana, “ Mild Habana,” and “Mild Havana Cigar,” and further makes similar representations
in its various advertisements, which acts have capacity and

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tendency to and do mislead the trade and consuming public into the belief that said cigars are
composed wholly of tobacco grown on the island of Cuba, when In truth and in fact they are
composed in whole or in part of tobacco grown elsewhere, all of which is to the prejudice of the
public and respondent’s competitors who do not misrepresent their cigars, in alleged violation
of section 5 of the Federal Trade Commission act. Status: At issue.
Complaint No. 1467.--In the matter of Herbert L. Smith. Charge: Unfair methods of
competition are charged in that respondent, engaged in the manufacture and sale of cigars, sets
forth in advertising matter on containers and on bands used in connection therewith the words
“Havana” and “Havana Brown,” which representations have the capacity and tendency to and
do mislead the trade and the consuming public into the belief that said cigars are composed
wholly of tobacco grown on the island of Cuba, when in truth and in fact they are composed
either in whole or in a substantial part of tobacco grown elsewhere than on the island of Cuba.
Status: At issue.
Complaint No. 1468.--In the matter of the Light House Rug Co. (Inc.) . Charge : Unfair
methods of competition are charged in that respondent, engaged in the manufacture and sale of
rugs, has employed the personnel of the Chicago Lighthouse, an institution employing blind
people and engaged in the manufacture of rugs formerly bought and distributed by respondent,
and after so doing has continued the manufacture of rugs by said blind people and by power
looms operated by people who are not blind; and has labeled each rug “ Light House Rugs” and
similarly advertised said rugs, which acts have the capacity and tendency to and do deceive the
purchasing public into the belief that said rugs manufactured on power looms operated by
people who are not blind are produced by hand by the labor of blind people, all to the prejudice
of the public and respondent’s competitors who do not so act, in alleged violation of section 5
of the Federal Trade Commission act. Status : Before the commission for final determination.
Complaint No. 1470.--In the matter of Scott & Bowne. Charge : Unfair methods of
competition are charged in that respondent, engaged in the manufacture and sale of a certain
medicine known as “Scotts Emulsion,” has enforced and now enforces a system of uniform
resale prices and in order to carry out said system it establishes uniform prices and issues price
lists, enters into contracts and agreements with dealers for the maintenance of said prices,
procures local groups of dealers to agree to maintain said prices, seeks and secures information
as to nonmaintaining dealers, and exacts promises from wholesale dealers not to supply said
price cutters and further refuses to sell to either wholesalers or retailers unless the price is
maintained, which acts suppress competition in the distribution and sale of respondent’s
medicine and deprive the ultimate consumers of those advantages in price and otherwise which
they would obtain under conditions of free competition, in alleged violation of section 5 of the
Federal Trade Commission act. Status : Before the commission for final determination.
Complaint No. 1472.--In the matter of Pan-American Manufacturing Co. ( Inc.). Charge:
Unfair methods of competition are charged in that respondent engaged in the manufacture and
sale of a concentrate or sirup known as “Grapico,” advertises its product in such a way as to
impart to the purchasing public that said product is the juice of the grape when in truth and in
fact said product is not made from the juice or fruit of the grape, which act is to the prejudice
of the public and respondent’s competitors who do not so act, in alleged violation of section 5
of the Federal Trade Commission act. Status : At issue.
Complaint No. 1473.--In the matter of Bell International Tailors (Inc.). Michael Heller, S. R.
Robins, and Simon Heller. Charge : Unfair methods of competition are charged in that
respondent, individuals incorporated under the name “Bell International Tailors (Inc.),” with the
intent and purpose of rep resenting the International Tailoring Co., a competitor, and engaged

in the business of selling men’s and boy’s ready-made clothing, makes numerous false and
misleading statements, orally and in Its advertising, to the effect that it is a branch of or
connected with the International Tailoring Co., one of respondent’s competitors, that it makes
to measure of the customer the clothing sold by it, that an extra suit is given, free of charge, with
each purchase of a suit or overcoat, and that the clothes sold by it are union made, and further
respondent gives to each customer a “ Guarantee bond” guaranteeing the quality of its goods,
which is in fact not a bond, all of which statements are in truth and in fact to the contrary and
have the capacity and tendency to and do cause the

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public to purchase respondent’s clothes in the belief that said statements are true, to the
prejudice of the public and respondent’s competitors who do not so act, In alleged violation of
section 5 of the Federal Trade Commission act. Status : At issue.
Complaint No 1474.--In the matter of Morgan-Field & Co. (Inc.), Lester Stern, Michael
Heller, and Earl Weil. Charge: Unfair methods of competition are charged in that respondent
Individuals incorporated under the name “ Morgan-Field & Company, Inc.,” with the intent and
purpose of representing Marshall-Field & Co. and engaged In the business of selling men’s and
boy’s ready-made clothing, makes numerous false and misleading statements, orally and in Its
advertising, to the effect that It Is identical with Marshall-Field & Co., one of Its competitors,
that it makes to measure of the customer the clothing sold by it and that its clothes are union
made and, further, respondent gives to each customer a “ Guarantee bond” guaranteeing the
quality of its goods, which is In fact not a bond, all of which statements are In truth and in fact
to the contrary and have the capacity and tendency to and do cause the public to purchase
respondent’s clothes In the belief that said statements are true, to the prejudice of the public and
respondent’s competitors who do not so act, in alleged violation of section 5 of the Federal
Trade Commission act. Status : At issue.
Complaint No. 1476.--In the matter of H. Wenzel Tent & Duck Co. Charge : Unfair methods
of competition are charged in that respondent engaged in the business of manufacturing tents,
tarpaulins, and other canvas or duck products has advertised and labeled its products with a
fictitious weight, said weight not being the basis used by the trade to designate goods of a certain
quality, and, further, respondent’s wagon covers and wall tents advertised, represented and
referred to as being of certain dimensions in linear feet contain less than the number of linear
feet advertised, which acts have the capacity and tendency to and do mislead purchasers or
prospective purchasers into the belief that said products are made as advertised, all of which Is
to the prejudice of the public and respondent’s competitors in alleged violation of section 5 of
the Federal Trade Commission act. Status : Awaiting examiner’s report.
Complaint No.1478.--In the matter of N. Shure Co. Charge: Unfair methods of competition
are charged In that respondent, engaged in the wholesale mail order business and selling, among
other things, powders and liquid flavors designed and intended to be converted into beverages
by the addition of water, labels the containers of said soft-drink powders and liquids with the
names of various fruits, when in truth and in fact said powders and liquid flavors are not made
from, nor do they contain the fruit or juice of the fruit so represented, which act has the capacity
and tendency to and does mislead wholesale purchasers and the public into the belief that said
powders and liquid flavors are composed in whole or in part of the fruit so represented, and
further places in the hands of said wholesale dealers the means of deceiving the purchasing
public to its prejudice and to the prejudice of respondent’s competitors who do not so act, in
alleged violation of section 5 of the Federal Trade Commission act. Status : At issue.
Complaint No. 1480.--In the matter of Hoosier Manufacturing Co., Union Soap Co., Crescent
Soap Co., C. A. Wocher, Robert Wands, and Rose K. Wands. Charge : Unfair methods of
competition are charged in that respondents, engaged In a common enterprise to produce and
sell certain cheap products resembling soap and designated as soap, mislead and deceive the
public as to the origin, quality, nature, and ingredients of such products by giving them brands,
names, and labels, such as “Nature’s Lemon Cocoa,” “Marvola Vegetable Cream,” “Pure
Vegetable Oil Combined with Mineral Salts,” “Foam White Family,” and “Savetyme,” all of
which are false and deceptive and tend to mislead and deceive purchasers into believing that
said soaps contain vegetable oils and mineral salts when In truth and In fact they do not contain
said oils nor salts and, furthermore, label one of their toilet soaps “For Toilet, Bath and

Shampoo”; “Combination Price, 75c.”; “Crescent Soap Company,” which statements are
deceptive and misleading, as said soap is not suitable for the toilet, containing from 50 to 60 per
cent of ingredients other than soap ingredients, is not made to sell at 75 cents, but at a much
lower figure, and is not manufactured by the Crescent Soap Co., all in alleged violation of
section 5 of the Federal Trade Commission act. Status: In course of trial.
Complaint No. 1481.--In the matter of Edmond Waterman and Charles Waterman, doing
business under the trade name and style of E. Waterman & Co. Charge : Unfair methods of
competition are charged in that respondents,

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engaged in the business of exporting apples, pears, and other fruits to the Republic of
Argentina, have knowingly and contrary to the provisions of the trade-mark law of said
Republic caused to be registered a number of names or designations of American apples and
pears, have notified many of their competitors that all of said names were the property of
respondents and had been registered by them as trade marks in Argentina, and that they had the
right to prevent any barrel or box containing such apples or pears and bearing any of said names
from entering Argentina, and threatened to hold such competitors responsible in damages for
all shipments made by them of such apples or pears to Argentina under any of said names, which
acts had and now have the capacity and tendency to and did and do hamper and hinder the
lawful business of said competitors in the exportation of apples and pears to and the sale of said
commodities in the said Republic of Argentina by deterring said competitors and causing them
to refrain from such sale and exportation to Argentina of such products under aforesaid wellestablished and commonly used names and designations referred to herein, for the reason that
said notices and threats have caused and still cause many of said competitors to believe that if
they so export and sell said commodities they will be subjected by respondents to lawsuits and
other litigation which respondents have threatened and still threaten to institute against said
competitors, which alleged acts and practices have been and are now to the prejudice and Injury
of respondent’s competitors in alleged violation of section 5 of the Federal Trade Commission
act. Status : At issue.
Complaint No. 1486.--In the matter of American School of Correspondence. Charge: Unfair
methods of competition are charged in that respondent, engaged in the business of giving
courses of instruction by correspondence, sets forth in its advertisements statements to the effect
that it is organized and incorporated as an institution to operate without profit; that its entire
income is expended In preparing and giving its courses; that for limited periods Its courses are
sold at substantially less than the regular prices; that free textbooks, out fits of tools, etc., are
given with its courses; that all pupils completing Its courses are supplied with positions at high
and lucrative salaries; that pupils taking certain courses will thereby become experts; that pupils
taking respondent’s “high-school” course are qualified to enter all colleges, etc., and others, all
of which alleged false and misleading acts have the capacity and tendency to cause the public
to subscribe for respondent’s courses in preference to courses of competitors who do not make
such statements, in alleged violation of section 5 of the Federal Trade Commission act. Status
: At issue.
Complaint No. 1487.--In the matter of the Ion a Co. Charge : Unfair methods of competition
are charged In that respondent engaged In the manufacture and sale of an electromagnetic device
purporting to have curative and therapeutic value and action when applied to the human body,
sets forth in its advertisements statements to the effect that said device will benefit all diseases,
that It is based on the discoveries and theories of well-known scientists, that It is used, indorsed,
and recommended by well-known physicians, and others, and other statements of like effect,
which acts have the capacity and tendency to and do mislead dealers and the purchasing public
to purchase said device believing said statements to be true, all of which is to the prejudice of
respondent’s competitors who do not so act, in alleged violation of section 5 of the Federal
Trade Commission act. Status: At issue.
Complaint No 1491.--In the matter of N. Fleugelman & Co. ( Inc.) Charge: Unfair methods
of competition are charged in that the respondent, engaged in the business of converting cotton
fabrics arid selling the same at wholesale, advertises and sells certain of its fabric as “Satinmaid”
or “Satlimized,” when In fact said fabric Is not made in whole or in part from satin or silk, but
is composed wholly of cotton, thereby tending to mislead and deceive the purchasing public and

to injure competitors who do not practice misrepresentation, in alleged violation of section 5 of
the Federal Trade Commission act. Status: In course of trial.
Complaint No. 1492.--In the matter of Automatic Burner Corporation and A. B. C. Oil Burner
Sales Corporation. Charge : Unfair methods of competition are charged in that the respondents,
engaged in the manufacture and sale of oil burners, advertise that their “A. B. C. Burner” has
been given the highest heating-efficiency rating by the Department of Agriculture and the United
States Government, when in fact there is no justification for such claims, thereby tending to
mislead and deceive the purchasing public and to injure

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177

competitors who do not practice misrepresentation, in alleged violation of section 5 of the
Federal Trade Commission act. Status: At issue on amended complaint.
Complaint No. 1493.--In the matter of Joseph C. Margulias, doing business under the trade
name and style of Chester Hair Works. Charge: Unfair methods of competition are charged in
that the respondent, engaged in the sale of hair to bedding manufacturers, offers and advertises
as “curled hair” a product consisting of hair intermingled with a substantial proportion of
Tampico and sisal or other substances containing no hair whatever, thereby tending to mislead
and deceive the purchasing public and to injure competitors who do not practice
misrepresentation, in alleged violation of section 5 of the Federal Trade Commission act. Status:
In course of trial.
Complaint No.1494.--In the matter of Regent Tailors (Inc.), Dundee Woolen Mills Co.,
Dundee Tailoring Co., Max Greengard, and David Greengard. Charge: Unfair methods of
competition are charged In that the respondent Regent Tailors (Inc.), engaged in the
manufacture and sale of men’s clothing and operated by the respondent individuals, makes use
of the corporate name of Dundee Woolen Mills Co.” and of the trade name “Dundee Woolen
Mills’, to deceive and mislead the purchasing public into the belief that the purchaser of said
clothing at retail is dealing with a mill or mills in which raw materials are converted into the
fabrics from which such clothing is manufactured, and that the purchaser thereby receives the
benefit in price and quality associated with purchase from the producer, in alleged violation of
section 5 of the Federal Trade Commission act. Status: At issue.
Complaint No. 1495.--Not released.
Complaint No. 1496.--In the matter of Raladam Co. Charge: Unfair methods of competition
are charged In that the respondent, engaged in the preparation and sale of a thyroid “ obesity
cure” under the name “ Marmola Prescription Tablets,” advertises said product in a manner
tending to mislead the purchasing public to believe that it is a scientifically accurate method of
treatment resulting from protracted research and that it is safe, effective, and dependable in use,
when in fact the present knowledge of thyroid as a remedial agent is stated not to justify the
respondent’s representation of its product, in alleged violation of section 5 of the Federal Trade
Commission act. Status: In course of trial.
Complaint No. 1498.--In the matter of Arrow-Hart & Hegeman (Inc.). Charge: Unlawful
restraint and monopoly are charged in that the respondent acquired the share capital of the Hart
& Hegeman Manufacturing Co. and the Arrow Electric Co., thereby tending to substantially
lessen competition and to restrain commerce In electrical wiring devices, in alleged violation
of section 7 of the Clayton Act. Status: Awaiting answer.
Complaint No. 1499.--In the matter of Royal Baking Powder Co. Charge: Unfair methods of
competition are charged in that the respondent, engaged in the manufacture and sale of baking
powder, published and circulated a pamphlet and “foreword” which tended to mislead and
deceive the public to believe that a trial examiner’s report represented the decision of the
Federal Trade Commission in Docket No.540 and that the commission had approved the
methods of competition charged In said complaint; and, further, in that the respondent employed
Thomas R. Shipp (Inc.) as its press agent for the distribution of news Items (with which the
respondent’s connection was wholly concealed), the effect of which was derogatory and
disparaging to respondent’s competitors and to the baking powders manufactured and sold by
them, all in alleged violation of section 5 of the Federal Trade Commission act. Status: Awaiting
answer. Petition by respondent for writ of mandamus which would require commission to
announce decision on affidavits of prejudice filed by respondent in this case, is pending in the
Supreme Court of the District of Columbia.

Complaint No. 1500.--In the matter of E B. Knickerbocker, trading under the name and style
of Wayne Machine Co. Charge: Unfair methods of competition are charged In that the
respondent, engaged in the rebuilding of used machinery and tools, adopted a trade name in
simulation of that of the long-established and favorably known Wayne Machinery Co. (Inc.),
thereby tending to mislead and deceive the purchasing public and to injure the respondent’s
competitor, Wayne Machinery Co. (Inc.), an alleged violation of section 5 of the Federal Trade
Commission act. Status: Awaiting briefs.
Complaint No. 1501.--In the matter of VT. Bolin, trading under the name and style VT. Bolin
Co., Fort Worth, Tex. Charge: Unfair methods of competition are charged in that the respondent,
engaged In the sale of shares or interests in

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leased oil lands, misrepresents leases, properties, oil production, prospects, and profits, thereby
misleading and deceiving the purchasing public and injuring competitors who do not practice
misrepresentation, In alleged violation of section 5 of the Federal Trade Commission act. Status:
At issue.
Complaint No. 1502.--In the matter of T. G. Cooke, doing business under the trade name and
style of University of Applied Science. Charge: Unfair methods of competition are charged in
that respondent, engaged in the business of furnishing a course of printed instruction in fingerprint work and secret-service intelligence, tends to mislead the public by the use of the word
“University” as a part of its trade name, quotes fictitious prices for his course of instruction,
offers pupils a “free” finger-print outfit, when in fact the said outfit is paid for by reason of the
instruction fee, and represents that pupils will be given a life membership in an identification
bureau, when in fact the so-called identification bureau has no real existence, all in alleged
violation of section 5 of the Federal Trade Commission act. Status: In course of trial.
Complaint No. 1503.--In the matter of Perfect Voice Institute and T. G. Cooke. Charge:
Unfair methods of competition are charged in that the respondent, engaged in the sale of a
printed course of instruction in voice culture, quotes fictitious prices and makes numerous false
and misleading statements based on a so-called Feuchtinger discovery of the functions of the
hyoglossus muscle, which in fact has no connection with voice quality or production, in alleged
violation of section 5 of the Federal Trade Commission act. Status: In course of trial.
Complaint No. 1504.--In the matter of Marsay School of Beauty Culture, O. C. Miller, A. J.
Weber, and Ignatius Barnard. Charge: Unfair methods of competition are charged in that the
respondents, engaged in the sale of courses of instruction by correspondence in the profession
of “beauty culture,” make numerous false and misleading representations as to the employment,
remuneration, and profits to be enjoyed by its graduates, and falsely state that the respondents’
school is the only home training school which enables its graduates to meet the requirements of
the laws of the local jurisdiction, in alleged violation of section 5 of the Federal Trade
Commission act. Status: In course of trial.
Complaint No. 1506.--In the matter of Chicago Correspondence School of Music (Inc.) and
J. Peter Beringer. Charge: Unfair methods of competition are charged in that the respondent
corporation, engaged in the sale of courses of instruction by correspondence in the art of music,
advertises reduced or special tuition fees. for subscription within a pretended time limit, which
are in fact the regular and full prices for the courses of instruction, and offers “ free” musical
instruments and carrying cases, when in fact the cost thereof is included in the tuition fee, all in
alleged violation of section 5 of the Federal Trade Commission act. Status: In course of trial.
Complaint No. 1507.--In the matter of the Dr. Rodney Madison Laboratories (Inc.), Rodney
Madison, individually. and as president of the Dr. Rodney Madison Laboratories (Inc.). Charge:
Unfair methods of competition are charged in that the respondents, engaged in the sale of
electric magnetic devices, make numerous false, misleading, and deceptive statements and
representations as to the curative powers of their device “ Vitrona “and as to the qualifications
of the respondent, Rodney Madison, as a physician and inventor, thereby tending to mislead the
purchasing public and to injure competitors who do not practice misrepresentation, in alleged
violation of section 5 of the Federal Trade Commission act. Status: In course of trial.
Complaint No. 1508.--In the matter of American Poultry School and T. E. Quisenberry.
Charge: Unfair methods of competition are charged in that the respondents, engaged in
furnishing correspondence courses of instruction in poultry culture, employ sales methods
involving fictitious prices, misrepresentation as to limited subscription periods, and the giving
of “ free” baby chicks the cost of which is in fact included in the regular tuition fee, in alleged

violation of section 5 of the Federal Trade Commission act. Status: In course of trial.
Complaint No. 1509.--In the matter of Forrest Dustin and C. G. Rose, co. partners doing
business under the name of Tailor-Made Shoe System, and individually. Charge: Unfair methods
of competition are charged in that the respondents, engaged in the sale of shoes, falsely advertise
and represent that they are manufacturers of shoes saving the public the profits of middlemen,
and that their shoes are custom made, thereby tending to mislead the purchasing public and to
injure competitors who do not practice misrepresentation; and

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further, In that the respondents mislead their salesmen and prospective salesmen to believe that
they can earn indefinitely large incomes, thereby deceiving said salesmen and injuring
competitors who do not make false inducements to secure the services of high-priced salesmen,
all in alleged violation of section 5 of the Federal Trade Commission act. Status: At issue on
amended complaint.
Complaint No. 1510.--In the matter of Hoyt Bros. (Inc.). Charge Unfair methods of
competition are charged In that the respondent, engaged in the manufacture and sale of a general
line of pharmaceuticals, cosmetics, toilet preparations, soaps, etc., brands certain of its soap as
“ Castile,” thus indicating that it is an olive-oil product when in fact said soap includes vegetable
oils, other than olive oil, and animal fats in a substantial and preponderant amount, thereby
tending to mislead and deceive the purchasing public and to injure competitors who do not
practice misrepresentation, all in alleged violation of section 5 of the Federal Trade Commission
act Status: On suspense calendar awaiting decision in Docket 1110, James S. Kirk & Co.
Complaint No. 1511.--In the matter of Pennsylvania Salt Manufacturing Co. Charge:
Unlawful restraint and monopoly are charged In that the respondent. engaged in the manufacture
and sale of industrial chemicals, acquired directly all the share capital of a competitor, the
Michigan Electrochemical Co., thereby tending to substantially lessen competition and restrain
commerce in said products, in alleged violation of section 7 of the Clayton Act. Status : At
issue.
Complaint No. 1512.--In the matter of the Anderson Co. Charge : Unfair methods of
competition are charged in that the respondent, engaged in the manufacture and sale of
accessories for Ford motor cars under the trade name “Anco,” maintains and enforces specified
uniform prices at which its product shall be resold by its jobbers and dealers, employing
cooperative means and methods for the enforcement of said system of resale prices, thereby
tending to hinder and suppress competition, in alleged violation of section 5 of the Federal
Trade Commission act. Status : At issue.
Complaint No. 1513.--In the matter of Marion Butler Kirtland and Roy M. Kirtland, trading
under the name and style of Ray Laboratories. Charge: Unfair methods of competition are
charged in that the respondents, engaged in the sale of hair color restorer called “Youthray,”
make numerous false and misleading statements tending to deceive the public into the erroneous
belief that the said product is a natural color restorer, in no way injurious to the scalp and
effective in curing dandruff, in alleged violation of section 5 of the Federal Trade Commission
act. Status : Awaiting answer.
Complaint No. 1514.--Not released.
Complaint No. 1515.--In the matter of Empire Manufacturing Co. Charge: Unfair methods
of competition are charged in that the respondent, engaged in the manufacture and sale of
furniture, describes its product as “Genuine Walnut,” or “Combination Walnut,” walnut being
the wood composing the exposed ply of the broad or flat parts of the furniture without disclosure
of the veneered construction and the relatively small proportion of use of the designated wood,
thereby tending to mislead and deceive the purchasing public and to injure competitors who do
not practice misrepresentation, in alleged violation of section 5 of the Federal Trade
Commission act. Status : At issue.
Complaint No. 1516.--In the matter of Mechanics Furniture Co. Charge: Unfair methods of
competition are charged in that the respondent, engaged in the manufacture and sale of furniture,
describes its product by such designations as “Walnut,” “Mahogany,” “Mahogany and American
Walnut,” etc., walnut or mahogany being the wood composing the exposed ply of the broad or
flat parts of the furniture without disclosure of the veneered construction and the relatively small

proportion of use of the designated wood, thereby tending to mislead and deceive the purchasing
public and to injure competitors who do not practice misrepresentation, in alleged violation of
section 5 of the Federal Trade Commission act. Status: At issue.
Complaint No. 1517.--In the matter of Union Furniture Co. Charge : Unfair methods of
competition are charged in that the respondent, engaged in the manufacture and sale of furniture,
describes its product by such designations as “Walnut,” “Mahogany,” “Walnut and gumwood,”
walnut or mahogany being the wood composing the exposed ply of the broad or flat parts of the
furniture without disclosure of the veneered construction and the relatively small proportion of
use of the designated wood, thereby tending to mislead and deceive the purchasing public and
to injure competitors who do not practice misrepresentation, in alleged violation of section 5 of
the Federal Trade Commission act. Status: At issue.

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Complaint No. 1518.--In the matter of West End Furniture Co. Charge: Unfair methods of
competition are charged in that the respondent, engaged in the manufacture and sale of furniture,
describes its product by such designations as “Walnut,” “Mahogany,” “Walnut and gumwood
combination,” walnut or mahogany being the wood composing the exposed ply of the broad or
flat parts of the furniture without disclosure of the veneered construction and the relatively small
proportion of use of the designated wood, thereby tending to mislead and deceive the purchasing
public and to injure competitors who do not practice misrepresentation, in alleged violation of
section 5 of the Federal Trade Commission act. Status: At issue.
Complaint No. 1519.--In the matter of Winnebago Manufacturing Co. Charge: Unfair
methods of competition are charged in that the respondent, engaged in the manufacture and sale
of furniture, describes its products by such designations as “Mahogany,” “Walnut,”
“Combination Mahogany,” etc., the walnut or mahogany being the wood composing the exposed
ply of the broad or flat parts of the furniture without disclosure of the veneered construction and
the relatively small proportion of use of the designated wood, thereby tending to mislead and
deceive the purchasing public and to injure competitors who do not practice misrepresentation,
in alleged violation of section 5 of the Federal Trade Commission act. Status: At issue.
Complaint No. 1520.--In the matter of Rockford Cabinet Co. Charge : Unfair methods of
competition are charged in that the respondent, engaged in the manufacture and sale of furniture,
describes its product by such designations as “Walnut,” “Mahogany,” “Combination mahogany
and gum,” etc., the walnut or mahogany being the wood composing the exposed ply of the broad
or flat parts of the furniture without disclosure of the veneered construction and the relatively
small proportion of use of the designated wood, thereby tending to mislead and deceive the
purchasing public and to injure competitors who do not practice misrepresentation, in alleged
violation of section 5 of the Federal Trade Commission act. Status : Awaiting answer.
Complaint No. 1521.--In the matter of Rockford Chair & Furniture Co. Charge : Unfair
methods of competition are charged in that the respondent, engaged in the manufacture and sale
of furniture, describes its product as “ Walnut” or “ Mahogany,” which are the woods
composing the exposed ply of the broad or flat parts of the furniture without disclosure of the
veneered construction and the relatively small proportion of use of the designated wood, thereby
tending to mislead and deceive the purchasing public and to injure competitors who do not
practice misrepresentation, in alleged violation of section 5 of the Federal Trade Commission
act Status : At issue.
Complaint No. 1522.--In the matter of Rockford National Furniture Co. Charge : Unfair
methods of competition are charged in that the respondent, engaged in the manufacture and sale
of furniture, describes its product by such designations as “Mahogany,” “Walnut,”
“Combination mahogany,” etc., the mahogany or walnut being the wood composing the exposed
ply of the broad or fiat parts of the furniture without disclosure of the veneered construction and
the relatively small proportion of use of the designated wood, thereby tending to mislead and
deceive the purchasing public and to injure competitors who do not practice misrepresentation,
in alleged violation of section 5 of the Federal Trade Commission act Status : At issue.
Complaint No. 1523.--In the matter of Rockford Palace Furniture Co. Charge : Unfair
methods of competition are charged in that the respondent, engaged in the manufacture and sale
of furniture, describes its product by such designations as “Walnut,” “Mahogany,” “Walnut and
gumwood,” etc., the walnut or mahogany being the wood composing the exposed ply of the
broad or fiat parts of the furniture without disclosure of the veneered construction and the
relatively small proportion of use of the designated wood, thereby tending to mislead and
deceive the purchasing public and to injure competitors who do not practice misrepresentation,

in alleged violation of section 5 of the Federal Trade Commission act. Status: At issue.
Complaint No. 1524.--In the matter of Rockford Republic Furniture Co. Charge : Unfair
methods of competition are charged in that the respondent, engaged in the manufacture and sale
of furniture, describes its products by such designations as “ Five-ply walnut tops, fronts, and
ends,” “All exterior walnut construction,” walnut being the wood composing the exposed ply
of the broad or fiat parts of the furniture without disclosure of the veneered construction and the
relatively small proportion of use of the designated wood, thereby tending to mislead and
deceive the purchasing public and to injure com-

COMPLAINTS PENDING JULY 1, 1928, AND STATUS

181

petitors who do not practice misrepresentation, in alleged violation of section 5 of the Federal
Trade Commission act. Status : At issue.
Complaint No. 1525.--In the matter of Rockford Standard Furniture Co. Charge : Unfair
methods of competition are charged In that the respondent, engaged In the manufacture and sale
of furniture, describes its products by such designations as “Genuine mahogany,” “Genuine
walnut,” “Combination walnut,” etc., mahogany or walnut being the wood composing the
exposed ply of the broad or fiat parts of the furniture without disclosure of the veneered
construction and the relatively small proportion of use of the designated wood, thereby tending
to mislead and deceive the purchasing public and to injure competitors who do not practice
misrepresentation, in alleged violation of section 5 of the Federal Trade Commission act. Status:
At issue.
Complaint No. 1526.--In the matter of Rockford Superior Furniture Co. Charge : Unfair
methods of competition are charged in that the respondent, engaged in the manufacture and sale
of furniture, describes its products by such designations as “Mahogany,” “Walnut,” “Genuine
mahogany,” etc., walnut or mahogany being the wood composing the exposed ply of the broad
or fiat parts of the furniture without disclosure of the veneered construction and the relatively
small proportion of use of the designated wood, thereby tending to mislead and deceive the
purchasing public and to injure competitors who do not practice, misrepresentation, in alleged
violation of section 5 of the Federal Trade Commission act. Status: At issue.
Complaint No. 1527.--In the matter of Aetna Fire Brick Co. and 55 other fire-brick
manufacturing companies, J. J. Brooks, Jr., Frederick W. Donahoe, H. H. Hopwood, J. M.
McKinley. Charge: Unfair methods of competition are charged, in that the respondents engaged
or interested in the business of manufacturing and selling refractories or fire-brick shapes made
of fire clay and/or silica, entered into an agreement, combination, and conspiracy to restrict,
restrain, and suppress competition in the sale of refractories for the purpose of unduly enhancing
selling prices and to bring about a substantial uniformity in such prices, all in alleged violation
of section 5 of the Federal Trade Com mission act. Status: Awaiting answers.
Complaint No. 1528.--In the matter of Lionel Strongfort Institute. Charge: Unfair methods of
competition are charged in that the respondent, engaged in the sale of courses of instruction in
physical culture by correspondence, employs methods involving. fictitious tuition fees,
misrepresentation as to limited subscription periods, the sale of accessories at “actual cost,” and
misleading representation as to the results to be obtained from the courses of instruction, in
alleged violation of section 5 of the Federal Trade Commission act. Status: At issue.
Complaint No. 1529.--In the matter of Radio Corporation of America. Charge: Unfair
methods of competition are charged in that the respondent, engaged in the sale of radio receiving
sets, devices, tubes, and accessories and the licensing of radio receiving patents, embodies a
contract of sale in its license agreements which tends to prevent licensees from using or dealing
in radio tubes other than those sold by the licensor and to lessen competition and create a
monopoly therein, in alleged violation of section 5 of the Federal Trade Commission act and
section 3 of the Clayton Act. Status: Awaiting answer.
Complaint No. 1530.--In the matter of Albany Billiard Co., F. Grote, and Hubbell Co. (Inc.),
and Portland Billiard Ball Co. Charge : Unfair methods of competition are charged in that the
respondents; cooperating together with the common purpose of suppressing, restraining, and
restricting competition In the sale and distribution of composition pool balls, have agreed that
the respondent Portland Billiard Ball Co. cease the making of regulation size balls and that the
respondent Albany Billiard Ball Co. cease the making of balls of less than the regulation size,
agreeing also to acquire at fixed prices and sell each others products, all in alleged violation of

section 5 of the Federal Trade Commission act. Status: At issue.
Complaint No. 1531.--In the matter of Mulhens & Kropff (Inc.). Charge: Unfair methods of
competition are charged in that the respondent, engaged in the manufacture and sale of chemical
and toilet products, advertises, offers, and sells an Eau de Cologne which it labels, marks,
dresses, and packs in simulation of the Eau de Cologne “4711,” originally produced and sold
by the long-established and favorably known house of Mulhens, thereby tending to mislead,
deceive, and Induce the purchasing public to purchase respondent’s Eau de Cologne as and for
the original and genuine Eau de Cologne now manufactured and sold by Ferd. Mulhens (Inc.),
in alleged violation of section 5 of the Federal Trade Commission act. Status: At Issue.

EXHIBIT 8
STIPULATIONS APPROVED AND ACCEPTED
During the fiscal year ending June 30, 1928, the commission approved and accepted
stipulations Nos. 204 to 278, both inclusive, wherein respondents agreed to cease and desist
from certain alleged unfair methods of competition, thereby disposing of pending applications
for complaint involving unfair practices as follows :
[Copies of statements covering these stipulations may be had upon request to the
commission]
204. Lingerie and Outerwear for Women.--Misuse of words “Silk” and “Rosesilk” in
advertising. Approved and dismissed July 11, 1927.
205. Candy and Confections.--Restriction of competition. Boycott. (Inducing, coercing, or
compelling manufacturers to refuse to sell to jobber competitors.) Approved and dismissed July
11, 1927.
206. Pyroxylin-Coated Material (imitation leather) .--Combination to fix and maintain
prices, terms and discounts. Approved and dismissed July 29, 1927.
207. Cigars.--Misuse of words “Havana,” “Habana,” and “Vuelta Abajo” on brands or labels
and in advertising. Approved and dismissed September
16, 1927.
208. Correspondence Course of Instruction.--Simulation of trade name; misuse of word
“American” in trade name; use of alleged false indorsement; misuse of word “ President” to
imply corporate entity, in advertising. Approved and dismissed September 21, 1927.
209. Pumice Stone.--Misuse of word “ Mills” on brands or labels and In advertising.
Approved and dismissed September 21, 1927.
210. Shirts and Neckties.--Misuse of words “ Broadcloth” and “ Silk” in advertising; misuse
of words “ Silk tie free with every shirt” in advertising. Approved and dismissed September 21,
1927.
211. Shoes and Shirts.--Misuse of words “ Direct to wearer,” “ Save middleman’s profits,”
“ Piccadilly,” and “ Imported” in advertising. Approved and dismissed October 5, 1927.
212. Hosiery (mail order).--Misuse of Words “ Direct to wearer,” “ Silk,” and “ Chiffon” in
advertising. Approved and dismissed October 5, 1927.
213. Dresses (mail order).--Misuse of words “ Silk” and “ Canton crepe” in advertising.
Approved and dismissed October 14, 1927.
214. Shirts.--Misuse of words “ Factory to wearer” and “ Factory to you” in advertising, and
of words “English broadcloth” in advertising. Approved and dismissed October 21, 1927.
215. Encyclopedia and Reference Works.--Misrepresentations in advertising concerning
“unusual” or “limited” offers or “free” offers; fictitious price marking; representing usual prices
to be “special”; maintenance of a fictitious collection agency; misuse of testimonials, and of
word “Publishing” In trade name. Approved and dismissed October 21, 1927.
216. Shoes.--Misuse of words and letters “Army,” “Navy,” “Garrison,”
U, S.,” “ United States” in various combinations, with name or number of an inspector, on
brands or labels. Approved and dismissed, November 2, 1927.
217. Piece Goods and Remnants.--Misuse in advertising of words “Direct from mills to
you.” Approved and dismissed December 2, 1927.
218. Piece Goods and Remnants.--Misuse in advertising of words “Direct from mills to

you.” Approved and dismissed December 2.1927.
219. Toiletries (perfumes, cosmetics, etc.) --Resale price maintenance; refusal to sell.
Approved and dismissed December 2,1927.
220. Electrical Fixtures.--Misuse In advertising of “cuts” or pictorial representations
simulating products of competitors not handled by respondent Approved and dismissed
December 2, 1927.
182

STIPULATIONS APPROVED AND ACCEPTED

183

221. Lawn Mowers.--Misuse on stamps, brands, or labels of the words “ ball bearings.”
Approved and dismissed December 2, 1927.
222. Lawn Mowers.--Misuse on stamps, brands, or labels of words “ ball bearings.”
Approved and dismissed December 2, 1927.
223. Tooth Paste.--Resale price maintenance ; refusal to sell. Approved and dismissed
December 2, 1927.
224. Candles for Use in Churches.--Misuse of words “Beeswax,” “Wax,” “Church,”
“Cathedral,” “Altar” on brands or labels. Approved and dismissed December 2, 1927.
225. Leather, Harness, Saddles, Etc.--Misleading and false statements in advertising “I
make harness from the leather I tan myself.” Approved and dismissed December 5, 1927.
226. Beverages.--Misuse of fruit name (grape) as a trade brand or designation to describe
synthetic product. Approved and dismissed December 12, 1927.
227. Shoes.--Misuse in advertising of words and letters “United States,” “Army,” “U.S.”
Approved and dismissed December 14, 1927.
228. Beverage Sirups and Concentrates.--Misuse of word “ Grape” In corporate name and
as brand or label on synthetic product ; misuse of pictorial representation of bunch of grapes as
brand or label. Approved and dismissed January 11, 1928.
229. Beverage Concentrates.--Misuse of word “Grape” in trade name and on brands or
labels to designate synthetic product. Approved and dismissed January 11, 1928.
230. Shirts.--Misuse In advertising of words “Direct from manufacturer,” “English
broadcloth,” “ Silk,” and “ Rayon silk.” Approved and dismissed January 11, 1928.
231. Overalls.--Misuse of words “Shrunk” and “Shrunken” on brands or labels. Approved
and dismissed January 11, 1928.
232. Ladders.--Misuse in advertising of words “Norway pine” and “Spruce.” Approved and
dismissed January 11, 1928.
233. Shoes.--Misuse on brands or labels of words “U. S.” and “Army” with name of an
inspector. Approved and dismissed January 11, 1928.
234. Washing Bluine.--Misuse in advertising of words “Free,” “Given,” “Gold filled,” “10karat solid gold filled,” “Ivory finish,” and “Platinum finish.” Approved and dismissed January
11, 1928.
235. Manicuring specialties.--Misuse in advertising of words “Ivory,” “Amber,” “Shell,”
“Pearl,” “Satin,” “Platinum,” “Platinum finish,” “Orange.--wood,” and “Orange.” Approved and
dismissed January 11, 1928.
236. Radio Receivers and Parts.--Resale price maintenance. Approved and dismissed
January 11,1928.
237. Shoes.--Misuse in advertising of words “ U. S.” and “Army” with name of an inspector.
Approved and dismissed January 11, 1928.
238. Shirts.--Misuse in advertising of words “ Flannel,” “Pongee,” “Silk,” and “Sylk” ; also
as a brand or label. Approved and dismissed January 11, 1928.
239. Canvas Work Gloves.--Misuse in advertising of word “Manufacturers.” Approved and
dismissed January 23, 1928.
240. Stationery Printing.--Misuse in advertising of words “Engraved” and “Embossed.”
Approved and dismissed January 25, 1928.
241. Lumber.--Misuse in advertising and on brands or labels of words “White pine” (Pinue
Strobus). Approved and dismissed February 8, 1928.
242. Lingerie.--Misuse of word “Manufacturing” in trade name; of words “Direct from
manufacturers”; “Knitting” and “ Mill” in advertising. Approved and dismissed February 10,
1928.
243. Hosiery.--Misuse of words “Silk” and “Fashioned” on brands or labels. Approved and

dismissed February 15, 1928.
244. Elastic Reducing Belts.--Misuse In advertising of word “Silk.” Approved and
dismissed February 15, 1928.
245. Beverage Concentrates and Sirups.--Misuse in advertising of fruit names to describe
synthetic product, together with pictorial representation of said fruit. Approved and dismissed
February 24, 1928.
246. Candy.--Resale price maintenance; refusal to sell. Approved and dismissed February
29, 1928.
247. Beverage Concentrates and Powders.--Misuse in advertising and on brands or labels
of fruit names to describe synthetic products. Approved and dismissed March 2, 1928.

184

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

248. Candles for Use in Churches.--Misuse on brands or labels of words “ Bees-wax,”
“Wax,” and “Altar.” Approved and dismissed March 5, 1928.
249. Stationery Printing.--Misuse in advertising of words “Bossed,” “Embossed,”
“Embossing,” and “Emboss.” Approved and dismissed March 16, 1928.
250. Plated Ware and Metal Goods.--Misuse In advertising and on brands or labels of word
“ Silver.” Approved and dismissed March 23, 1928.
251. Malt Extracts and Malt Sirups.--Misuse in advertising of words “Imported,”
“Bohemian,” and “Germania” ; also as brands or labels. Approved and dismissed March 23,
1928.
252. Shirts.--Misuse In advertising of words “English,” “Imported,” “Silk,” and “Flannel.”
Approved and dismissed March 26, 1928.
253. Outerwear.--Misuse of word “Knitting” in trade name and of words “Knitting” and “
Manufacturers” in advertising. Approved and dismissed April 2, 1928.
254. Garden Tractors.--Misrepresentation In advertisements of horsepower of motors.
Approved and dismissed April 6, 1928.
255. Toilet Preparations.--Misuse of word “Oil” on brands or labels and in advertising
(Cuticle oil). Approved and dismissed April 18, 1928.
256. Bed Ticking.--Misuse in advertising and on brands or labels of word “ Bohemian.”
Approved and dismissed April 18, 1928.
257. Automobile Seat Covers.--Misuse of word “Mills” in trade name. Approved and
dismissed April 27, 1928.
258. Fountain Pens.--Misuse of word “Manufacturing” in trade name; of word “Iridium” in
advertising; fictitious price marking. Approved and dismissed April 27, 1928.
259. Novelties (knife and chain combinations).-Fictitious price marking. Approved and
dismissed April 27, 1928
260. Bed Spreads, Hosiery.--Misuse of word “Mills” in trade name ; of words “Direct from
mill” and “ Silk” In advertising. Approved and dismissed April 27, 1928.
261. Remnants.--Misuse in advertising of words “Direct from manufacturer” (or “Mills”) and
of word “Free.” Approved and dismissed April 27, 1928.
262. Shoes.--Misuse in advertising and on brands or labels of words “U.S.A.,” “Army,”
“Regulation Army,” “Regulation garrison,” and “Garrison.” Approved and dismissed May 2,
1928
263. Patent Roofing.--Misuse in advertising of words “Perfect fire protection.” Approved
and dismissed May 4, 1928
264. Beverage Concentrates and Sirups.--Misuse in advertising and on brands or labels of
fruit names to describe synthetic products. Approved and dismissed April 18, 1928
265. Soap.--Misuse on brands or labels of word “Buttermilk.” Approved and dismissed May
21, 1928.
266. Building Material.--Misuse in advertising of word “Lumber.” Approved and dismissed
May 21, 1928.
267. Plasters (alleged remedies for rheumatism)--Misuse in advertising of words “Given,”
“Free,” “Ruby,” “Opal,” “Emerald,” “Silk.” Approved and dismissed June 1, 1928.
268. Salt.--Misuse in advertising and on brands or labels of word “Kanawha.” Approved and
dismissed June 1, 1928.
269. Salt.--Misuse in advertising and on brands or labels of word “Kanawha.” e Approved
and dismissed June 1, 1928
270. General Mail Order Business.--Misuse In advertising of words : Wool, cashmere,

flannel, serge, silk, pongee, pongette, satin, tussah, linene, linine, linet, ruby, sapphire, diamond,
emerald, muskrat, mink. Approved and dismissed June 6, 1928
271. Fences.--Misuse In advertising of words “Uncle Sam,” with pictorial representation of
said character; misrepresentation as to tensile strength of product; misuse of words “Double
galvanized.” Approved and dismissed June 11, 1928.
272. Patent Roofing Materials.--Misuse in advertisements of words “Fire safe.” Approved
and dismissed June 11, 1928
273. Rice.--Passing off. Misuse on brands or labels and in advertising of word “Monaco,”
which said word is trade brand of competitor. Approved and dismissed June 25, 1928.

STIPULATIONS APPROVED AND ACCEPTED

185

274. Blankets, Bedspreads, Etc.--Misuse of word “Mills” In trade name. Approved and
dismissed June 25, 1928.
275. Beverage Concentrates and Flavors.--Misuse In advertising and on brands or labels
of fruit names to designate synthetic products. Approved and dismissed June 25, 1928.
276. Shoes.--Misuse in advertising and on brands or labels of words “Army,” “Munson last,”
and “Last.” Approved and dismissed June 25, 1928.
277. Miners’ Carbine Lamps.--Resale price maintenance. Approved and dismissed June 25,
1928.
278. Beverage Concentrates and Extracts.--Misuse in advertising of names of fruits and/or
pictorial representations of same to designate synthetic products. Approved and dismissed June
25, 1928.

EXHIBIT 9
TRADE PRACTICE CONFERENCES
During the last fiscal year statements of the commission have issued relating to conferences
held for the industries named below:

Industry
Motion pictures
Butter, egg, cheese, and poultry
Correspondence schools
Woven furniture
Edible oil
Shirting fabrics
Fur
Petroleum (Virginia)
Golf balls
Heavy sheet glass

Where held
New York
San Francisco
Pittsburgh
Chicago
New York
do
do
Richmond
Cleveland
New York

Date of statement
May 25, 1928
July 7, 1927
July 21, 1927
July 26, 1927
Jan. 31, 1928
Jan. 26, 1928
Mar. 7, 1928
Mar. 22,1928
Feb. 6, 1928
May 1, 1928

Conferences were also held for the following Industries, but statement of the commission not
Issued prior to July 1, 1928, to wit:
Industry
Millwork Industry
Woodturning--hickory handle

Where held
Chicago
St. Louis

Date
May 15, 1928
May 22, 1928

A full official report of any conference, setting forth the resolutions adopted by the Industry
and the action taken by the Federal Trade Commission, may be obtained upon application to the
commission.
186

EXHIBIT 10
INQUIRIES MADE BY THE FEDERAL TRADE COMMISSION SINCE ITS
ORGANIZATION IN 1915, AT THE REQUEST OF THE SENATE THE HOUSE OF
REPRESENTATIVES, THE PRESIDENT, THE ATTORNEY GENERAL, AND ON
MOTION OF THE COMMISSION
SENATE
Fertilizer--S. Res. 487, 62d Cong., 3d sess.--The inquiry made in response to this resolution,
which was begun by the Bureau of Corporations, disclosed the extensive use of bogus
independent fertilizer companies used for purposes of competition, but through conferences with
the principal manufacturers agreements were reached for the abolition of such unfair
competition.
Pipe lines--S. Res. 109, 63d Cong., 1st sess.--The report on this inquiry, which was begun
by the Bureau of Corporations, showed the dominating importance of the pipe lines in the great
mid-continent oil fields, and that the pipe-line companies, which were controlled by a few large
oil companies, not only charged excessively high rates for transporting petroleum but also
evaded their duties as common carriers by insisting on unreasonably large Shipments to the
detriment of the numerous small producers.
Gasoline--S. Res. 457, 63d Cong., 2d sess.--Acting under this resolution, the commission
published a report on gasoline prices in 1915, which discussed the high prices of petroleum
products and showed how the various Standard Oil companies had continued to maintain a
division of marketing territory among themselves. The commission suggested several plans for
restoring effective competition in the oil Industry.
Sisal hemp--S. Res. 170, 64th Cong., 1st sess.--In response to a resolution calling on the
commission to assist the Senate Committee on Agriculture and Forestry by advising how certain
quantities of hemp, promised by the Mexican Sisal Trust, might be fairly distributed among
American manufacturers of binder twine, the commission made an inquiry and submitted a plan
of distribution, which was followed.
Newsprint paper--S. Res. 177, 64th Cong., 1st sess.--The newsprint-paper Inquiry resulted
from an unexpected advance in prices. The report of the com mission showed that these prices
were very profitable and that they had been partly the result of certain newspaper association
activities which were in restraint pf trade. Through the good offices of the commission
distribution of a considerable quantity of paper to needy publishers was obtained at comparatively reasonable prices. The Department of Justice instituted proceedings, in consequence
of which the association was abolished and certain newsprint manufacturers indicted.
Anthracite coal--S. Res. 217, 64th Cong., 1st sess., and S. Res. 51, 65th Cong., 1st sess.-The rapid advance in the prices of anthracite at the mines, compared with costs, and the
extortionate overcharging of anthracite jobbers and dealers were disclosed in the Inquiry in
response to these resolutions and a system of current reports called for regarding selling prices
which substantially checked further exploitation of the consumer.
Book paper--S. Res. 269, 64th Cong., 1st sess.--The inquiry into book paper, which was

made shortly after the newsprint inquiry, had a similar origin and disclosed similar restraints of
trade, resulting in proceedings by the commission against the manufacturers involved therein
to prevent the enhancement of prices. The commission also recommended legislative action to
repress restraints of trade by such associations.
Flags--S. Res. 35, 65th Cong., 1st sess.--A sudden increase in the prices of American flags
led to this inquiry, which disclosed that while a trade association had been active to fix prices
shortly before the price advance had been so great on account of the war demand that further
price fixing had been superfluous.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Independent Harvester Co.--S. Res. 212 65th Cong. 2d sess.--This resolution called for a
thorough investigation of the organization and methods of operation of the company which had
been formed several years before to compete with the Harvester Trust The company passed into
receivership, and the report disclosed that mismanagement and insufficient capital brought about
Its failure.
Farm Implements--S. Res. 223, 65th Cong., 2d sess.--The high prices of farm implements
led to this inquiry, which disclosed that there were numerous trade combinations to advance
prices and that the consent decree for the dissolution of the International Harvester Co. was
absurdly inadequate. The commission recommended a revision of the decree and the Department
of Justice proceeded against the company to that end.
Milk--S. Res. 431, 65th Cong., 3d sess.--This inquiry into the fairness of milk prices to
producers and of canned milk to consumers, and whether they were affected by fraudulent or
discriminatory practices, resulted in a report showing marked concentration of control and of
questionable practices in the buying and handling of cream by butter manufacturers, many of
which have since been recognized as unfair by the trade itself.
Southern livestock prices--S. Res. 133, 66th Cong., 1st sess.--The low prices of southern
livestock, which gave rise to the belief that discrimination was being practiced, were
investigated, but the alleged discrimination did not appear to exist.
Pacific coast petroleum--S. Res. 138, 66th Cong., 1st sess.--On the Pacific coast the great
increase in the prices of gasoline, fuel oil, and other petroleum products led to this inquiry,
which disclosed that several of the companies were fixing prices.
Commercial feeds--S. Res. 140, 66th Cong., 1st sess.--The inquiry into commercial feeds,
which aimed to discover whether there were any combinations or restraints of trade in that
business, was diligently pursued, and though it disclosed some association activities in restraint
of trade, it found no important violation of the antitrust laws. Certain minor abuses in the trade
were eliminated.
Meat-packing profit limitations--S. Res. 177, 66th Cong., 1st sess.--The inquiry into meatpacking profit limitations had as its object the study of the system of war-time control
established by the Food Administration ; certain changes were recommended by the
commission, including more complete control of the business and lower maximum profits.
Tobacco prices--S. Res. 129, 67th Cong., 1st sess.--This inquiry was also directed to the low
prices of leaf tobacco and the high prices of tobacco products. It disclosed that in the sale of
tobacco several of the largest companies were engaged in numerous conspiracies with their
customers--the jobbers--to enhance the selling prices of tobacco. Proceedings against these
unlawful acts were instituted by the commission.
House furnishings--S. Res. 127, 67th Cong., 2d sess.--The alleged failure of housefurnishing goods to decline in price since 1920 as much as most other commodities, alleged to
be due to restraints of trade, was inquired into by the commission. Three reports were issued on
the subject, dealing with wooden household furniture, household stores, kitchen furnishings, and
domestic appliances. These reports showed that extensive conspiracies existed, under the form
of cost-accounting devices and meetings. to inflate the prices of such goods.
Export grain--S. Res. 133, 67th Cong., 2d sess.--The low prices of export wheat gave rise
to this inquiry, which developed extensive and harmful speculative manipulation of prices on
the grain exchanges and conspiracies among country grain buyers to agree on maximum prices
for grain purchased. Legislation for a stricter supervision of grain exchanges was recommended,
together with certain changes in their rules. The commission also recommended governmental
action looking to additional storage facilities for grain uncontrolled by grain dealers.
Flour milling--S. Res. 212, 67th Cong., 2d sess.--A report on the inquiry into the flour-

milling industry was sent to the Senate in May, 1924. It showed the costs of production of wheat
flour and the profits of the flour-milling companies in recent years. It also discussed the
disadvantages to the miller and consumer arising from an excessive and confusing variety in the
sizes of flour packages.
Cotton trade--S. Res. 262, 67th Cong., 2d sess.--The inquiry Into the cotton trade originated
by this resolution was covered in part by a preliminary report issued in February, 1923, which
discussed especially the causes of the decline in cotton prices in 1922 and left the consideration
of the other topics Indicated

INQUIRIES MADE BY FEDERAL TRADE COMMISSION

189

to be treated in connection with an additional and related inquiry called for by the Senate at that
time.
Fertilizer--S. Res. 307, 67th Cong., 2d sess.--The fertilizer inquiry developed that active
competition generally prevailed in the Industry in this country, though in foreign countries
combinations control some of the most important raw materials. The commission recommended
constructive legislation to improve agricultural credits and more extended cooperative action
in the purchase of fertilizer by farmers.
Foreign ownership in petroleum industry--S. Res. 311, 67th Cong., 2d sess.--The
acquisition of extensive oil interests in this country by the Dutch-Shelf concerns, an international
trust, and discrimination practiced against Americans in foreign countries provoked this inquiry
which developed the situation in a manner to promote greater reciprocity on the part of foreign
governments.
Calcium arsenate--S. Res. 417, 67th Cong., 4th sess.--The high prices of calcium arsenate,
a poison used to destroy the cotton boll weevil, led to this inquiry from which it appeared that
time cause was due to the sudden increase In demand rather than to any restraints of trade.
Cotton trade--S. Res. 429, 67th Cong., 4th sess.--The inquiry in response to this second.
resolution on the cotton trade was combine with the one mentioned above and resulted in a
report which was sent to the Senate in April, 1924. This report recommended that Congress
enact legislation providing for some form of southern warehouse delivery oil New York
contracts, and as a part of such a delivery system the adaption of a future contract which would
require that not more than three adjacent or contiguous grades should be delivered on any single
contract. The commission also recommended a revision of the system of making quotations and
differences at the various spot markets and the abolition of deliveries on futures at New York.
The special warehouse committee of the New York Cotton Exchange on June 28, 1924, adopted
the recommendations of the commission with reference to the southern delivery on New York
contracts, including the contiguous grade contract.
National wealth--S. Res. 451, 67th Cong., 4th sess.--This resolution called for a
comprehensive inquiry into national wealth and income and specially indicated for investigation
the problem of tax exemption and the increase in Federal and State taxes in recent years. Two
reports were issued as a result of this inquiry. The first was a discussion of taxation and tax
exemption which among other things comprised an elaborate estimate of the amount and
ownership of tax-exempt securities by different classes of corporations and persons, and
examined the significance of these facts with respect to the great increase in the burdens of
taxation. The second report was devoted to national wealth and income, estimating the former
to be $353,000,000,000 in 1922 and the national income in 1923 at $70,000,000,000. The
nature of the wealth and income and its distribution among various classes is also given.
Bread--S. Res. 163, 68th Cong., 1st sess.--This resolution directed the commission to
investigate the productions, distribution, transportation, and sale of flour and bread, showing
costs, prices, and profits at each stage of the process of production and distribution; the extent
and methods of price fixing, price maintenance, and price discrimination, concentration of
control in the milling and baking industries ; and evidence indicating the existence of
agreements, conspiracies, or combinations in restraint of trade. Two preliminary reports were
issued dealing with competitive conditions in flour milling and bakery combines and profits. The
final report covered the whole problem and showed, among other things, that wholesale baking
In recent years had been generally profitable. It disclosed also price-cutting wars by the big
bakery combines and subsequent price-fixing agreements.
Cotton merchandising practices--S. Res. 252, 68th Cong., 1st sess.--Abuses in handling

consigned cotton are discussed in the report on this inquiry and a number of recommendations
designed to correct or alleviate existing conditions are made.
Packer consent decree--S Res. 278, 68th Cong., 2d sess.--In response to this resolution a
report was made reviewing the legal history of the consent decree and the efforts made to
modify or vacate it. A. summary is given of the divergent economic interests involved the
question of packer participation In unrelated lines. The report recommended the enforcement
of the decree against the big five packing companies.
Empire Cotton Growing Corporation--S. Res. 317, 68th Cong., 2d sess.--This inquiry
concerned the development, methods, and activities of the Empire Cotton Growing Corporation,
a British company. The report discusses world cotton

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

production and consumption and conclude that there is little danger of serious competition to
the American cotton grower and that it will be many years before there is a possibility of the
United States losing its Position as the largest producer of raw cotton.
Tobacco--S. Res. 329, 68th Cong 2d sess.--The report on this investigation related to the
activities of the American Tobacco Co. and the Imperial Tobacco Co. of Great Britain. The
alleged illegal agreements, combinations, or conspiracies between these companies did not
appear to exist. The report dis closed on the other hand evidences of mismanagement in a
heading tobacco growers cooperative association.
Electric power--S. Res. 329, 68th Cong., 2d sess.--Two reports on the electric power
industry were made pursuant to this resolution. The first dealt with the organizations, control,
and ownership of commercial electric-power companies and showed the extreme degree to
which pyramiding has been carried in superposing a series of holding companies over the
underlying operating companies. The second report related to the supply of electrical equipment
and competitive conditions existing in the industry. The dominating position of the General
Electric Co. is clearly brought out.
Petroleum prices--S. Res. 31, 69th Cong., 1st sess.--A comprehensive study covering all
branches of the industry from the ownership of oil lands and the production of crude petroleum
to the conversion of petroleum into finished products and their distribution to the consumer.
The report described not only the influences affecting the movements of gasoline and other
products, but also discussed the organization and control of the various important concerns In
the industry. No recent evidence was found of any understanding, agreement, or manipulation
among the large oil companies to raise or depress prices of refined products.
Open--price associations--S. Res. 28, 69th Cong., special sess.--This resolution called for
an investigation to ascertain the number and names of so-called open-price associations, their
importance in the industry, and the nature of their activities, with particular regard to the extent
to which uniform prices are maintained among members to wholesalers or retailers.- The report
in response to this resolution has not yet been issued.
Cooperative marketing--S. Res. 34, 69th Cong., special sess.--An inquiry on the
development and importance of the cooperative movement in the United States and illegal
interferences with the formation and operation of cooperatives. The report includes also a study
of comparative costs, prices, and marketing practices as between cooperative marketing
organizations and other types of marketers and distributors handling farm products.
Stock dividends--S. Res. 304, 69th Cong., 2d sess.--This resolution called for a list of the
names and capitalization of those corporations which had issued stock dividends, together with
the amount of such stock dividends, since the decision of the Supreme Court, March 8, 1920,
holding that stock dividends were not taxable. The same Information for the equal period prior
to that decision was also called for. The report contains a list of 10,245 such corporations and
a brief discussion on the practice of declaring stock dividends, concluding it to be of
questionable advantage as a business policy.
Utility corporations--S. Res. 83, 70th Cong., 1st sess.--This resolution directed the
commission to make an investigation of electric and gas public utility companies and their
holding companies with respect to their financial development and practices, the conditions
respecting the control of the industry, propaganda in opposition to public ownership and
attempts to influence elections to certain offices. The resolution directed the holding of public
hearings In the conduct of the investigation and called for monthly progress reports to be made
to the Senate. The first of these reports was dated March 15, 1928.
Chain stores--S. Res. 224, 70th Cong. 1st sess.--Pursuant to This resolution the commission
initiated a general inquiry into merchandising through chain stores. The study will bring out the

advantages or disadvantages of This form of marketing as compared with those of other types
and an examination of the activities of chain-store systems to ascertain whether they involve any
violation of the antitrust laws.
HOUSE OF REPRESENTATIVES
Bituminous coal--H. Res. 352, 64th Cong., 1st sess.--While this resolution aimed originally
at the investigation of the alleged depressed condition of the bituminous-coal industry the
Inquiry had not long been under way before there

INQUIRIES MADE BY FEDERAL TRADE COMMISSION

191

was a great advance in prices; and the commission in its report suggested various measures for
insuring a more adequate supply at reasonable prices. War-time price control was soon after
established.
Sugar--H. Res. 150, 66th Cong., 1st sess.--The extraordinary advance in the price of sugar
in 1919 led to this inquiry, and the price advance was found to be due chiefly to speculation and
hoarding in sugar. Certain recommendations were made for legislative action to cure these
abuses.
Shoe costs and prices--H. Res. 217, 66th Cong., 1st sess.--The high prices of shoes after the
war led to this inquiry, and the investigation of the commission attributed them chiefly to supply
and demand conditions. The economic waste due to the excessive variety of styles and rapid
changes therein was emphasized.
Cotton yarn--H. Res. 451, 66th Cong., 2d sess.--The commission was called upon in 1920,
by this resolution, to investigate the very high prices of combed cotton yarn, and the inquiry
disclosed that there had been an unusual advance in prices and that the profits in the industry
had been extraordinarily large for several years.
Petroleum prices--H. Res. 501, 66th Cong., 2d sess.--Another inquiry into high prices of
petroleum products. The report of the commission pointed out that the Standard companies
practically made the prices in their several marketing territories and avoided competition among
themselves. Various constructive proposals to conserve the oil supply were made by the
commission.
Tobacco prices--H. Res. 533, 66th Cong., 2d sess.--An inquiry into the prices of leaf
tobacco and the selling prices of tobacco products. The unfavorable relationship between them
was reported to be due in part to the purchasing methods of the large tobacco companies. As
a result of this inquiry the commission recommended that the decree dissolving the old Tobacco
Trust should be amended and alleged violations of the existing decree prosecuted. Better
systems of grading tobacco were also recommended by the commission.
Radio--H. Res, 548, 67th Cong., 4th sess.--As a result of the investigation made by the
commission in response to this resolution it was found that a vast number of patents were owned
by and cross licensed among a number of large companies. At the conclusion of the
investigation the commission instituted proceedings against these companies charging a
monopoly of the radio field.
Cottonseed--H. Res. 439, 69th Cong., 2d sess.--Alleged fixing of prices paid for cottonseed
led to this investigation. The commission found considerable evidence of cooperation among
the State associations, but the evidence as a whole did not indicate that prices had been fixed
by those engaged in crushing or refining cottonseed in violation of the antitrust laws. One of
the main causes of dissatisfaction to both the producer of cottonseed and those engaged in its
purchase and manufacture was found to be the lack of a uniform system of grading.
PRESIDENT
Trade and tariffs in South America.--This report was an outgrowth of the First Pan
American Financial Conference, which met at Washington May 24-29, 1915. Its immediate
purpose was to furnish the American branch of the International High Commission, appointed
as a result of this financial conference, with concrete information to assist it in the deliberations
of the International High Commission. The tariff characteristics of Brazil, Uruguay, Argentina,
Chile, Bolivia, and Peru are discussed in the report. The investigation established the prevalence
of a decided protective tariff tendency in some of the South American countries as against the
erroneous Impression that had been created in this country that all the Latin American tariffs

were devised purely for revenue.
Food inquiry--February 7, 1917.--The general food investigation, undertaken with a special
appropriation of Congress, resulted in a very important series of reports on the meat-packing
industry, which had as their immediate result the enactment of the packers and stockyards act
for the control of this industry and the prosecution of the big packers for a conspiracy in restraint
of trade by the Department of Justice. Another branch of the food inquiry developed important
facts regarding the grain trade which were of assistance to Congress in regulating the grain
exchanges and to the courts In interpreting the law. Reports were also issued on the flour-milling
and food-canning industries.
War-time cost finding--July 25, 1917.--The numerous cost investigations made by the
Federal Trade Commission during the war into the coal, steel, lumber, petroleum, cotton-textile,
locomotive, leather, canned foods, and copper

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

industries, not to mention scores of other important industries, on the basis of which prices were
fixed by the Food Administration, the War Industries Board, and the purchasing departments
like the Army, Navy, Shipping Board, and Railroad Administration, were all done under the
President’s special direction, and it is estimated that they helped to save the country many
billions of dollars by checking unjustifiable price advances. Subsequent to the war a number
of reports dealing with costs and profits were published based on these war-time inquiries.
Among these may be mentioned reports on steel, coal, copper, lumber, and canned foods.
Wheat prices--October 12, 1920.--The extraordinary decline of wheat prices in the summer
and autumn of 1920 led to a direction of the President to inquire into the reasons for the decline.
The chief reasons were found in abnormal market conditions, including certain arbitrary
methods pursued by the grain purchasing departments of foreign governments.
Gasoline--February 7, 1924.--At the direction of the President, the commission undertook
an inquiry into a sharp advance in gasoline prices. The report on this inquiry was referred by the
President to the Attorney General and has not yet been published.
ATTORNEY GENERAL
Raisin combination--September 30, 1919.--A combination of raisin growers in California
was referred to the commission for examination by the Attorney General pursuant to the Federal
Trade Commission act, and the commission found that it was not only organized in restraint of
trade but was being conducted in a manner that was threatening financial disaster to the growers.
The commission recommended a change of organization to conform to the law, which was
adopted by the raisin growers.
Lumber trade associations--September 4, 1919.--An extensive survey of lumber
manufacturers associations throughout the United States. The information secured was presented
in a series of reports revealing the activities and attitude of lumber manufacturers toward
national legislation, amendments to the revenue laws, elimination of competition of competitive
woods, control of prices and production, restriction of reforestation, and other matters. In consequence of the commission’s findings and recommendations the Department of Justice initiated
proceedings against certain of these associations for violations of the antitrust laws.
MOTION OF THE COMMISSION
Cooperation in American Export Trade.--An extensive investigation of competitive
conditions affecting Americans in international trade. The report dis-closed the marked
advantages of other nations in foreign trade by reason of their superior facilities and more
effective organizations. The Webb-Pomerene Act authorizing the association of manufacturers
for export work was enacted as a direct result of the recommendations embodied in this report.
Commercial bribery.--The prevalence of commercial bribery of employees was brought out
in a special report to Congress. The report carried with it recommendations for legislation
striking at this vicious practice.
Resale price maintenance.--The question whether a manufacturer of standard articles,
identified by trade-mark or trade practice, should be permitted to fix by contract the price at
which the purchasers could resell them led to this report. The commission recommended to
Congress the enactment of legislation permitting resale price maintenance under certain
conditions.
Leather and shoe industries.--The general complaint about the high, prices of shoes in the
latter part of 1917 as compared with the low prices of country hides led the commission to

undertake this investigation. No justification for the high prices for shoes could be found and
recommendations were made for the relief of this condition.
Woolen rag trade.--This report contains certain information that was gathered during the war
at the request of the War Industries Board for its use in regulating the prices of woolen rags.
The compilation of the data and the preparation of the report was authorized by the commission
on June 30, 1919.
Petroleum.--Complaints of several Important producing companies in the Salt Creek oil field
led to this investigation. The report covers the production, pipe-line transportation, refining, and
wholesale marketing of crude petroleum and petroleum products in the State of Wyoming.

INQUIRIES MADE BY FEDERAL TRADE COMMISSION

193

Bituminous coal.--The report on investment and profit in soft-coal mining was prepared and
transmitted to Congress with the belief that the information would be of timely value in
consideration of pending legislation regarding the coal trade. The data cover the years 1916 to
1921. inclusive.
Petroleum.--A special report directing the attention of Congress to conditions existing in the
petroleum trade in Wyoming and Montana. Remedial legislation is recommended by the
commission.
Cooperation.--The report on cooperation in foreign countries is the result of studies of the
cooperative movement in fifteen European countries and concludes with recommendations for
further developments of cooperation in the United States.
Anthracite coal --A report dealing with premium prices of anthracite coal charged by certain
mine operators and the premium prices and gross profits of wholesalers in the latter part of 1923
and early in 1924. The report discusses also the development of the anthracite combination and
the results of the Government’s efforts to dissolve it
Panhandle petroleum.--An inquiry into conditions in the Panhandle (Texas) oil field made
in response to requests of crude-petroleum producers. The report revealed that a reduction of
prices late in 1926 was largely a result of difficulties of handling and expenses of marketing this
oil because of peculiar physical properties.
Lumber trade associations.--An investigation of the activities of five large lumber trade
associations bringing down to date the study made at the request of the Attorney General in
1919-20. This inquiry has been conducted in conjunction with the inquiry into open-price
associations. The report of the commission’s findings has not yet been published.
Resale price maintenance.--A further investigation into this subject was ordered by the
commission on July 25, 1927. The study is being conducted from the point of view of its
economic advantages or disadvantages to the manufacturer, distributor, and consumer, the
effects on costs, profits, and prices, and the purpose and results of price cutting.
Blue-sky securities.--This inquiry, bringing down to date a previous inquiry of the
commission on which no report had been published, is directed to the nature of the abuses in the
sale of worthless securities, the present methods of controlling this evil, and the comparative
advantages of State and Federal regulation.
Price bases.--An inquiry ordered by the commission into the various practices regarding price
bases, namely, factory base, basing point base, and delivered base, with a view to determining
the causes for the adoption of the several methods employed and the purposes intended to be
served by them, and their actual or potential effects on prices and competitive conditions. This
matter is still in course of investigation.
Du Pont investments.--The reported acquisitions of E. I. du Pont de Nemours & Co. of the
stock of the United States Steel Corporation, together with the previously reported holdings in
the General Motors Corporation, caused an inquiry into these relations with a view to
ascertaining the real facts and their probable economic consequences. The report of the
commission’s findings has not yet been published.

EXHIBIT 11
SENATE, HOUSE, AND COMMISSION RESOLUTIONS UNDER WHICH THE
COMMISSION MADE INVESTIGATION DURING FISCAL YEAR ENDING JUNE 30,
1928
SENATE RESOLUTION 329
(February 9, 1925)
Whereas it has been stated openly that an agreement exists between the American Tobacco
Company and the Imperial Tobacco Company of Great Britain whereby the American Tobacco
Company will sell no tobacco in Great Britain and the Imperial Tobacco Company will sell no
tobacco in the United States; and
Whereas such an agreement gives the Imperial Tobacco Company a practical monopoly on
certain types of tobacco grown in Virginia, North Carolina, and South Carolina and a special
Interest in certain types of tobacco grown In Kentucky and purchased in the United States by
the local resident agents of the Imperial Tobacco Company and processed In the United States
in Its plants, and the same agreement gives the American Tobacco Company a special interest
In other types grown in those States; and
Whereas the growers of leaf tobacco have formed great cooperative organizations, known at
the Tobacco Growers’ Cooperative Association, the Dark Tobacco Growers’ Cooperative
Association, the Burley Tobacco Growers’ Cooperative Association, comprising an aggregate
of more than two hundred and seventy thousand grower members for the cooperative marketing
of the tobacco of their members ; and
Whereas such cooperative associations have been organized along lines encouraged by this
Government and have been financed in part by the War Finance Corporation and the
Intermediate credit banks; and
Whereas the American Tobacco Company and the Imperial Tobacco Company are opposed
to the formation of cooperative marketing associations among tobacco growers and desire to
destroy them, and have attempted to discourage members by purchasing leaf tobacco from
nonmember growers at higher prices than tenders theretofore made by such cooperative
associations, and have Induced and encouraged breaches of contracts between members and the
cooperative associations contrary to the terms of the members’ agreements with the associations;
and
Whereas the said companies have practically boycotted the said cooperative associations and,
by reason of their special interests in certain types, have caused great damage and harm to the
cooperative associations; and
Whereas the aforesaid agreement stops competition between the said companies In the
purchase from the growers of the types of tobacco used by the American Tobacco Company and
the Imperial Tobacco Company and enables one company or the other to control the purchase
and marketing of these types; and
Whereas acts on the part of these two companies cause leaf tobacco to be diverted from the
cooperative associations to these companies, directly or indirectly, in spite of the contracts
between the growers and the cooperative associations; and

Whereas such conduct on the part of such companies appears to be unfair practice In
pursuance of an Illegal agreement to restrict and restrain competition and trade In leaf tobacco
in interstate commerce : Now, therefore be it
Resolved, That the Federal Trade Commission be, and it is hereby, directed to Investigate and
report to the President of the United States on or before July 1, 1925, the present degree of
concentration and interrelation in the owner194

INVESTIGATIONS MADE DURING FISCAL YEAR 1928

195

ship, control, direction, financing, and management through legal or equitable ownership of
stocks, bonds, or other securities or instrumentalities, or through interlocking directorates or
holding companies, or through agreements or through any other device or means whatsoever by
the American Tobacco Company and the Imperial Tobacco Company; and also particularly to
investigate the methods employed by these companies in their fight against cooperative
marketing associations and any boycott thereof; and also particularly to investigate any
agreements or arrangements made by said companies to embarrass or injure any such
cooperative associations or to cause discouragement or breaches of contract between growers,
members, and the said cooperative associations; and
Resolved further, That the President of the United States be, and he is hereby, requested to
direct the Secretary of the Treasury to permit the said Federal Trade Commission in making
such investigation to have access to all official reports and records in any or all of the bureaus
of said Treasury Department; and whereas it has been alleged on the floor of the Senate during
the course of a debate upon a bill relating to the disposition, operation, management, and control
of the water-power and steam-power plant, with their incidental lands, equipment, fixtures, and
properties, that a corporation known as the General Electric Company has acquired a monopoly
or exercises a control in restraint of trade or commerce in violation of law of or over the
production and distribution of electric energy and the manufacture, sale, and distribution of
electrical equipment and apparatus: Therefore be it
Resolved further, That the Federal Trade Commission be, and it is hereby, directed to
investigate and report to the Senate to what extent the said General Electric Company, or the
stockholders or other security holders thereof, either directly or through subsidiary companies,
stock ownership, or through other means or Instrumentalities, monopolize or control the
production, generation, or transmission of electric energy or power, whether produced by steam,
gas, or water power ; and to report to the Senate the manner in which the said General Electric
Company has acquired and maintained such monopoly or exercises such control in restraint of
trade or commerce and in violation of law.
The commission shall also ascertain and report what effort, if any, has been made by the said
General Electric Company or other corporations, companies, organizations, or associations, or
anyone In its behalf, or In behalf of any trade organization of which it is a member, through the
expenditure of money or through the control of the avenues of publicity; to influence or control
public opinion on the question of municipal or public ownership of the means by which power
is developed and electric energy Is generated and distributed.
Resolved further, That the President of the United States be, and he is hereby, requested to
direct the Secretary of the Treasury, under such rules and regulations as the Secretary of the
Treasury may prescribe, to permit the said Federal Trade Commission to have access to official
reports and records pertinent thereto In making such investigation.
SENATE RESOLUTION 31
(June 3, 1926)
Resolved,, That the Federal Trade Commission, be, and is hereby, directed to investigate and
report to the Senate at the next Session of Congress :
First. The very material advances recently made in the price of crude oil, gasoline, kerosene,
and other petroleum products and whether or not such price increases were arbitrarily made and
unwarranted.
Second. Whether or not there has been any understanding or agreement between various oil

companies or manipulations thereby to raise or depress prices, or any conditions of ownership
or control of oil properties or of refining and marketing facilities in the industry which prevent
effective competition.
Third. The profits of the principal companies engaged in the producing, refining, and
marketing of crude oil, gasoline kerosene, and other petroleum products during the years 1922;
1923, 1924, and 1925, and also such other matters as may have bearing upon the subjects
covered by the provisions of this resolution.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
SENATE RESOLUTION 304
(December 22, 1926)

Whereas it has become he usual practice of corporations in order to protect stockholders from
the payment of income taxes, to declare stock dividends ; and
Whereas this procedure enables corporations to acquire competing plants, and in this way
avoid the provisions of the antitrust laws and
Whereas in order to legislate upon the subject, the Senate should be fully informed as to the
extent of this practice: Therefore be it
Resolved, That the Federal Trade Commission be, and it is hereby, directed to ascertain and
report to the Senate, the names and the capitalization of corporations that have issued stock
dividends, together with the amount of such stock dividends, since the decision of the Supreme
Court holding that stock dividends were not taxable, and to ascertain and report the same
information as to the same corporation for the same period of time prior to such decision.
SENATE RESOLUTION 163
(February 16, 1924)
Resolved, That the Federal Trade Commission be, and it is hereby, directed to investigate the
production, distribution, transportation, and sale of flour and bread, including by-products, and
report its findings in full to the Senate, showing the costs, prices, and profits at each stage of the
process of production and distribution, from the time the wheat leaves the farm until the bread
is delivered to the consumer ; the extent and methods of price fixing, price maintenance, and
price discrimination ; the developments in the direction of monopoly and concentration of
control in the milling and baking industries, and all evidence indicating the existence of
agreements, conspiracies, or combinations in restraint of trade.
SENATE RESOLUTION 83
(February 15, 1928)
Resolved, That the Federal Trade Commission is hereby directed to inquire into and report
to the Senate, by filing with the Secretary thereof, within each thirty days after the passage of
this resolution and finally on the completion of the investigation (any such inquiry before the
commission to be open to the public and due notice of the time and place of all hearings to be
given by the commission and the stenographic report of the evidence taken by the commission
to accompany the partial and final reports) upon: (1) The growth of the capital assets and capital
liabilities of public utility corporations doing an interstate or international business supplying
either electrical energy in the form of power or light, or both, however produced, or gas, natural
or artificial, of corporations holding the stocks of two or more public utility corporations
operating in different States, and of nonpublic utility corporations owned or controlled by such
holding companies ; (2) the method of issuing, the price realized or value received, the
commissions or bonuses paid or received, and other pertinent facts with respect to the various
security issues of all classes of corporations herein named, including the bonds and other evidences of indebtedness thereof, as well as the stocks of the same; (3) the extent to which such
holding companies or their stockholders control or are financially interested in financial,
engineering, construction, and/or management corporations, and the relation, one to the other,
of the classes of corporations last named the holding companies, and the public utility

corporations ; (4) the services furnished to such public utility corporations by such holding companies and/or their associated, affiliated, and/or subsidiary companies, the fees, commissions,
bonuses, or other charges made therefor, and the earnings and expenses of such holding
companies and their associated, affiliated, and/or subsidiary companies ; and (5) the value or
detriment to the public of such holding companies owning the stock or otherwise controlling
such public utility corporations immediately or remotely, with the extent of such ownership or

INVESTIGATIONS MADE DURING FISCAL YEAR 1928

197

control, and particularly what legislation, if any, should be enacted by Congress to correct any
abuses that may exist in the organization or operation of such holding companies
The commission is further empowered to inquire and report whether, and to what extent, such
corporations or any of the officers thereof or any one in their behalf or In behalf of any
organization of which any such corporation may be a member, through the expenditure of
money or through the control of the avenues of publicity, have made any and what effort to
influence or control public opinion on account of municipal or public ownership of the means
by which power Is developed and electrical energy is generated and distributed, or since 1923
to influence or control elections: Provided, That the elections herein referred to shall be limited
to the elections of President Vice President, and Members of the United States Senate.
The commission is hereby further directed to report particularly whether any of the practices
heretofore in this resolution stated tend to create a monopoly or constitute violation of the
Federal antitrust laws.
SENATE RESOLUTION 28
(March 17, 1925)
Whereas the Federal Trade Commission In Its annual report for 1922 states that at the request
of the Joint Commission of Agricultural Inquiry the commission undertook a special
investigation concerning the activities of trade associations and found by response to Its
questionnaires that there were one hundred and fifty “open-price associations, or those
distributing or exchanging price information”; and
Whereas the commission reported “Most of the open-price associations also distributed or
exchanged Information on other features of business, such as orders received, purchases,
productions, stocks, cost of production and merchandising, and matters of general interest to
members”; and
Whereas such associations may exert a large influence in maintaining prices at an exorbitant’
level, particularly in the case of manufacturing concerns the products of which are protected by
a high tariff duty: Therefore be it
Resolved, That the Federal Trade Commission Is hereby directed to investigate and to report
to the Senate at the next session of Congress:
First. The present number and nature of open-price associations, the names of such
associations, the number of their members thereof, and the importance of such association in the
industry.
Second. To what extent, if any, the effect of such open-price associations has been to maintain
among members thereof uniform prices to wholesalers or retailers, or to secure uniform or
approximately uniform Increases In such prices.
Third. Whether such open-price associations engage in other activities, and if so, the nature
and effects thereof, with respect to alleged violations of the antitrust laws.
SENATE RESOLUTION 224
(May 12, 1928)
Whereas it Is estimated that from 1921 to 1927 the retail sales of all chain stores have
increased from approximately 4 per centum to 10 per centum of all retail sales: and
Whereas there are estimated to be less than four thousand chain store systems with over one
hundred thousand stores; and

Whereas many of these chains operate from one hundred to several thousand stores; and
Whereas there have been numerous consolidations of chain stores throughout the history of
the movement, and particularly in the last few years; and
Whereas these chain stores now control a substantial proportion of the distribution of certain
commodities in certain cities, are rapidly increasing this proportion of control in these and other
cities, and are beginning to extend this system of merchandising into country districts as well;
and

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Whereas the continuance of the of chain-store distribution and the consolidation of such chain
stores may result in the development of monopolistic organizations in certain lines of retail
distribution; and
Whereas many of the concerns, though engaged in interstate commerce in buying may not be
engaged In interstate commerce in selling; and
Whereas, in consequence the extent to which such consolidations are now, or should be made,
amenable to the jurisdiction of the federal antitrust laws is a matter of serious concern to the
public: Now, therefore be it
Resolved, That the Federal Trade Commission is hereby directed to undertake an inquiry into
the chain store system of marketing and distribution as conducted by manufacturing wholesale
retailing, or other types of chain stores and to ascertain and report to the Senate (1) the extent
to which such consolidations have been effected in violation of the anti trust laws, if at all; (2)
the extent to which consolidations or combinations of such organizations are susceptible to
regulation under the Federal Trade Commission act or the antitrust laws, if at all ; and (3) what
legislation, if any, should be enacted for the purpose of regulating and controlling chain-store
distribution.
And for the information of the Senate in connection with the aforesaid subdivisions (1), (2),
and (3) of this resolution the Commission Is directed to store into and report in full to the Senate
(a) the extent to which the chain-store movement has tended to create a monopoly or
concentration of control In the distribution of any commodity either locally or nationally ; (b)
evidences Indicating the existence of unfair methods of competition in commerce or of
agreements, conspiracies, or combinations in restraint of trade involving chain-store distribution
; (c) the advantages or disadvantages of chain-store distribution In comparison with those of
other types of distribution as shown by prices, costs, profits, and margins, quality of goods and
services rendered by chain stores and other distributors or resulting from integration, managerial
efficiency, low overhead, or other similar causes ; (d) how far the rapid increase in the chainstore system of distribution Is based upon actual savings in cots of management and operation
and how far upon quantity prices available only to chain-store distributors or any class of them;
(e) whether or not such quality prices constitute a violation of either the Federal Trade
Commission act, the Clayton Act, or any other statute and (f) what legislation, if any, should be
enacted with reference to such quantity prices.
HOUSE RESOLUTION 439
(March 2, 1927)
Whereas the price paid the producers of cottonseed has been practically the same and uniform
throughout the cotton-producing sections of the country during the harvesting period for several
years ; and
Whereas it appears that those Industries engaged in purchasing and processing cottonseed are
in agreement or combination on the prices to be paid the producers In restraint of trade:
Therefore be it
Resolved, (1) That the Federal Trade Commission be, and It Is hereby, directed to Investigate
the action Of those industries engaged in purchasing cottonseed for the purpose of, crushing
cottonseed, and those industries engaged in refining and otherwise processing and marketing
cottonseed, to ascertain if there be a combination, agreement, or association to fix prices of
cottonseed or to violate any of the antitrust laws.
(2) The Federal Trade Commission shall make such Investigation as is hereby directed with

reasonable dispatch and report the result of their findings to the House of Representatives as
soon as possible.
(3) Should it be determined that any persons, firms, corporations, or associations engaged Inn
purchasing and processing cottonseed, maintain a monopoly in violation of law, or use unfair
methods of competition in commerce, the Federal Trade Commission shall forthwith by
appropriate action proceed for the punishment of such practices or violations of law in
accordance with acts of Congress provided in such cases.

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199

SENATE RESOLUTION 34
(March 13, 1925)
Whereas the successful development of cooperative organizations in production, distribution,
and consumption, affords needed opportunities. for increasing the income of the producer,
especially the farmer, ad for diminishing the cost of living of the consumer, and appears to be
of great public benefit, as shown by the experiences of numerous foreign countries and
Whereas the President’s agricultural conference recommends constructive Federal assistance
in the development of producers’ marketing organizations; and
Whereas complete and conclusive information with respect to the economic advantages or
disadvantages of the cooperative movement in this country, as compared with other types of
marketing farm products, has not been made available in comprehensive form ; and
Whereas It is frequently charged that various cooperative organizations of farmers engaged
in marketing grain, tobacco, cotton, livestock, and other products, as well as consumers’
cooperative purchasing organizations, are being discriminated against and injured by various
corporations and trade associations, In alleged violation of the antitrust laws: Now, therefore,
be it
Resolved, That the Federal Trade Commission is hereby directed to make an Inquiry (1) into
the growth and importance of cooperative associations, including particularly the costs of
marketing and distribution of such cooperatives as compared with the corresponding costs of
other types of distributors; and (2) into the extent and importance of the interferences with aid
obstructions to the formation and operation of cooperative organizers of producers, distributers,
and consumers by any corporation or trade association, in alleged violation of the antitrust laws,
and to report thereon with recommendations for legislation or other remedial action, if the same
appears necessary.
RESOLUTION OF THE FEDERAL THE COMMISSION ORDERING AN INQUIRY
INTO
RESALE PRICE MAINTENANCE
On July 25, 1927, the Federal Trade Commission adopted the following resolution:
“Whereas several bills providing for resale PRICE maintenance have been introduced in
Congress since 1920, including the Merritt bill, Kelly bill, the Wyant bill, and the Williams bill
; and
“Whereas in 1916, on a referendum of the Chamber of Commerce of the United States, about
74 per cent of the votes cast were in favor of legislation permitting resale price maintenance ;
and
“Whereas in 1926, on a similar referendum, about 54 per cent of the votes were in favor ; and
“Whereas this commission many years ago recommended that Congress enact legislation
permitting resale price maintenance under certain conditions of governmental control ; and
“Whereas it seems probable that agitation for some legislation of this character will continue
; and
“Whereas there has been no thorough and comprehensive investigation of the economic
advantages and disadvantages of such legislation: Therefore be it
“Resolved, That the chief economist of the commission be directed to inquire into the question
of the maintenance of manufacturers’ resale prices, both at wholesale and retail, and to report
to the commission--

"1. The advantages and disadvantages of resale price maintenance (a) to competing
manufacturers employing it and to other competing manufacturers, (b) to competing wholesalers
and retailers employing it and to other competing wholesalers and retailers, (e) to the ultimate
purchaser.
“2. The costs, profits, and margins of manufacturers and distributors and the prices to
consumers on competing price maintained and nonprice maintained goods and particularly the
relation of advertising expenses to such costs, profits, margins, and prices.
“3. The causes and motives for price cutting by distributors (a) in general; (b) below the total
cost of the distributor; (c) below the purchase price paid by the distributor of goods; the
Justification for such price cutting, if any; the
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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

effect of price cutting on manufacturers, distributors, and consumers particularly with reference
to: (a) How far, if at all, price cutting increases volume of business for a distributor and offsets
the decreased profit per unit; (b) how far, if at all, price cutting has eliminated manufacturers
and distributors from business; (c) the effect of price cutting by distributors on the prices,
profits, and margins of manufacturers.
“4. The relation of the price maintenance, if any, to the multiplication of distributors, and, if
such effect is found the relation of this multiplication to the cost of marketing
“5. Any other facts pertinent for the consideration of Congress with reference to legislation
on this subject.
“6. The character of the legislation, if any, which should be recommended by the
commission.”

FEDERAL TRADE COMMISSION,
Washington, July 29, 1927.
Investigation of close financial T relationships alleged to exist between the United States
Steel Corporation, the General Motors Corporation, and the E I. du Pont de Nemours Co. was
authorized to-day by the Federal Trade Commission upon motion by Commissioner A. F.
Myers.
Recently published financial reports were cited by the commission to show that the du Pont
Co. has a large investment in the stock of the General Motors Corporation and the Steel
Corporation, and that it expects to have a number of directors representing its interests elected
to the board of the Steel Corporation and in other ways to develop a close corporate connection
between the three companies.
Establishment of a community interest among these three corporations, reputed to be among
the largest in the Nation, Is held by the commission to be a matter of public concern. In
authorizing the Inquiry the commission calls attention to the act creating the Federal Trade
Commission and giving it the power and authority to inquire into the organization, business
conduct, practices, and management of corporations.
The resolution of the commission directs the chief economist to unmake an inquiry into the
relationships, direct or indirect, tending to bring these three large corporations under a common
ownership and control or management, with information as to the probable economic
consequences of such community of interest.
The resolution adopted by the commission Is as follows:
“Whereas It appears from published financial reports of the E. I. du Pont de Nemours Co. that
it has a large investment in the Stock of the General Motors Corporation; and
“Whereas it is currently reported in the press that the said du Pont Co. has recently acquired
a large holding in the capital stock of the United States Steel Corporation, that it expects to have
a number of directors representing Its interests elected to the board of the latter company and
in other ways to develop a close corporate connection among them; and
“Whereas the establishment of a community of interest among these three corporations, which
are reputed to be among the largest Industrial corporations In this country, Is a matter of public
concern; and
“Whereas the act creating this commission authorizes it to Inquire Into the organization,
business, conduct, practices, and management of the said corporations: Now, therefore, be It
“Resolved, That the chief economist, of this commission be directed to cause an inquiry to
be made into the relationships. direct or indirect, among the United States Steel Corporation,

the General Motors Corporation. and the E I. du Pont de Nemours Co., tending to bring them
or any other important industrial corporations under a common ownership, control, or
management, with information as to the probable economic consequences of such community
of interest, and to report the facts to this commission.”

FEDERAL TRADE COMMISSION,
Washington, August 20, 1927.
Methods used in quoting and charging the prices the consuming public must pay for the
necessaries of life will be the subject of a comprehensive survey by the Federal Trade
Commission in the next few months, it was made known

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201

to-day in connection with the publication for the first time of a resolution adopted by the
commission and termed the “price bases resolution.”
Three definite modes of quoting and charging prices with reference to locality of the
purchaser will be studied and reported on by the economics staff of the commission. Three such
systems of price fixing are mentioned by the commission as (1) the delivered price method, (2)
the factory base methods, and (3) the basing-point method.
It is pointed out that numerous companies who distribute their. products in various States of
the Union are quoting prices in which no allowance is made for difference In transportation
costs in widely separated markets. This is called the delivered price method. Then other
distributors employ the policy of quoting uniform prices at the factory, with freight charges
added according to the locality of the consumer. This is termed "the factory base method." Still
others follow the practice of adding to the market prices at a certain basing point the freight
charges from that point to the locality of the consumer. This is the basing-point method.
STARTS FOUR INQUIRIES
It is expected that facts and data of lasting value to business and industry will be the result of
the commission’s inquiry into the various practices regarding price bases and that through this
study of competitive conditions will develop new and constructive measures for obtaining
greater efficiency and economy. The report also will from a basis for determining what are the
fair practices in this regard.
This will be the fourth recent undertaking of Its kind by the commission on its own initiative
for employing its corps of experts on problems Involving the welfare of the buying public.
The resolution is as follows:
“Whereas the economical distribution of commodities is one of the chief problems of the day;
and
“Whereas the method of determining the prices (or the total cost to the purchaser) of
commodities sold in the same or in different localities is an important factor In a sound system
of distribution; and
“Whereas there are various systems and theories on which such prices are made and marked
differences of opinion as to their expediency and fairness; and
“Whereas some distributors are employing the policy of national distribution with prices,
particularly in different consuming territories, that make no allowance for difference In
transportation costs, while others allege that there should be a delimitation of markets having
respect to transportation expense: Now, therefore, be it.
Resolved, That the chief economist of the Federal Trade Commission is hereby directed to
inquire into and report upon (1) the factory-base method, the basing-point method, and the
delivered-price method of quoting and charging prices (including their respective variations),
together with any other method of differentiating prices with respect to location; (2) the causes
for the adoption of the several methods employed and the purposes intended to be served by
them; (3) their actual and potential effects upon prices and competitive conditions; and (4) any
constructive measures which might be employed to promote greater efficiency, economy, or
fairness in the methods of quoting or charging prices.”
CITES “PITTSBURGH PLUS”
Three years ago the commission, after taking 18,000 pages of testimony, completed its famous

“Pittsburgh plus” case, which illustrate concretely certain methods in price fixing. The large
steel corporation involved was ordered to cease and desist from its “Pittsburgh plus”
arrangement in quoting prices. Its Pittsburgh mill sold its products to fabricators and
manufacturers in the Pittsburgh district at factory prices, but the same class of customers outside
that district was charged, in addition to the Pittsburgh price at the factory, the freight charges
from Pittsburgh to the outside point. But fabricators or manufacturers located in Chicago, who
bought products from the same steel corporation’s Chicago factory, had to pay just the same
price--that is, the Pittsburgh factory price plus the freight from Pittsburgh to Chicago. This
illustrates the basing-point method.

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The factory-base method may be illustrated by the practice of automobile concerns of selling
their cars f. o. b. the factory--in other words, at the factory price plus, the freight from factory
to locality of the purchaser.
The delivered-price method, in which a corporation delivers its products to customers in any
part of the country at a given price without basing the price on the cost of transportation, may
also be pictured by an example. The factory may, be in Baltimore, but a customer in
Washington, 40 miles away, will pay the same price for goods delivered as will a consumer in
Los Angeles, 3,000 miles distant. In such instances the company maintains its delivered price
by charging each customer enough to remunerate itself in the total receipts for losses sustained
through long freight shipments such as the one from Baltimore to Los Angeles. In effect,
broadly speaking, the Washington man pays the freight for the Los Angeles customer.

FEDERAL TRADE COMMISSION,
Washington, August 12, 1927.
So-called “blue-sky” securities and other “wildcat” schemes for bleeding the people of their,
money will be viewed through the investigating microscope of the Federal Trade Commission
and will be made the subject of careful research and study in the economics laboratory of the
commission, according to a resolution adopted by the commission and made public to-day.
The resolution provides that efforts be made to determine the extent to which “get-rich quick”
frauds are practiced on the gullible portion of the buying public and to suggest remedies for the
relief of the “blue-sky” menace through possible State and Federal legislation.
CITE “ BLUE-SKY” CASKS
Eight current “blue-sky” cases now before the commission are listed by the commission as
typical examples of the evil on which war has been declared. The entire eight have to do with
alleged 4 wildcat” oil propositions promoted in Texas
The Federal Trade Commissions resolution”on the so-called “blue-sky” securities is” as
follows:
“Whereas this commission has had frequent occasion to proceed against un fair methods of
competition with respect to the sale of so-called “blue-sky” securities, and has found in that
respect that present legislative, remedies are inadequate; and
“Whereas this commission formerly initiated a general inquiry into this subject with a view
to constructive remedial proposals, but no report was published; and
“Whereas the practice of fraudulently selling worthless, securities is a great economic evil
which should be remedied promptly if practicable: Now, therefore, be it
“Resolved, That the chief economist of this commission is hereby directed to inquire further
into (1) the practice of selling blue-sky securities, (2) the legislative, administrative, and other
methods employed to abate the evil and the results thereof, and (3) other matters covered by,
the previous inquiry. in order to bring the same up to date, and to report thereon, to the
commission without formulating conclusions of legislative policy but, instead, stating succinctly
the arguments both for State and for Federal regulation and the forms which such regulation
should take.”

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