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ANNUAL REPORT
OF THE

FEDERAL

TRADE COMMISSION
FOR THE

FISCAL YEAR ENDED JUNE 30

1937

UNITED STATES
GOVERNMENT PRINTING OFFICE
WASHINGTON: 1937
For sale by the Superintendent of Documents, Washington, D. C, - - - Price 25 cent. (Paper cover)

FEDERAL TRADE COMMISSION
WILLIAM A. AYRES, Chairman 1
GARLAND S. FERGUSON, Vice Chairman
CHARLES H. MARCH
EWIN L. DAVIS
ROBERT E. FREER,
OTIS B. JOHNSON, Secretary
FEDERAL TRADE COMMISSIONERS--1915-37
Name

State from which appointed

Joseph E. Davies
Edward N. Hurley
William J. Harris
Will H. Parry
George Rublee
William B. Colver
John Franklin Fort
Victor Murdock
Huston Thompson
Nelson B. Gaskill
John Garland Pollard
John F. Nugent
Vernon W. Van Fleet
Charles W. Hunt
William E. Humphrey
Abram F. Myers
Edgar A. McCulloch
Garland S. Ferguson
Charles H. March
Ewin L. Davis
Raymond B. Stevens
James M. Landis
George C. Mathews
William A. Ayres
Robert E. Freer

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

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

EXECUTIVE OFFICES OF THE COMMISSION
Constitution Avenue at 6th Street,
Washington, D. C.
BRANCH OFFICES
45 Broadway, New York
544 Federal Office Building, San Francisco
483 West Van Buren Street, Chicago
801 Federal Building, Seattle
1

Chairmanship rotates annually. Commissioner Furguson will become chairman in January 1938.

II

LETTER OF SUBMITTAL
To the Congress of the United States:
I have the honor to submit herewith the Twenty-fifth Annual Report of the Federal
Trade Commission for the fiscal year ended June 30, 1939.
By direction of the Commission.
WILLIAM A. AYRES, Chairman
III

CONTENTS
INTRODUCTION
Page
3
4
6
8
9
10
11
13
14
15

Powers and duties of the Commission
General legal activities
Robinson-Patman Anti-Price Discrimination Act
Trade-practice conferences
General investigations
Commissioners and their duties
How Commission work is handled
Publications of the Commission
President lays cornerstone of new Commission building
Recommendations
PART I. GENERAL INVESTIGATIONS
Agricultural income
Fresh fruits and vegetables
Milk and dairy products
Farm implements and machinery
Textile industries
Petroleum decree

19
23
26
29
31
33

PART II. GENERAL LEGAL WORK
Description of procedure
Chart Facing page
Legal investigation
Consolidations and mergers
Disposition of cases by stipulation
Representative complaints
Orders to cease and desist
Types of unfair competition
Cases in the Federal courts
Tabular summary of legal work

37
37
40
41
42
43
52
65
68
79

PART III. TRADE-PRACTICE CONFERENCES
Activities under trade conference procedure
Sales of industries concerned exceeds billion dollars
Benefits derived from trade practice rules
History and purpose of procedure
Outline of trade conference procedure
Group I and group II rules

93
93
94
94
95
97

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

101
V

VI

CONTENTS
PART V. FOREIGN-TRADE WORK

Administration of Export Trade Act (Webb-Pomerene law)
Association exports increase in 1936
Associations operating under the act
Advantages obtained by exporters in 1936
Trust laws and unfair competition abroad

Page
109
109
110
111
112

FISCAL AFFAIRS
Appropriation acts providing funds for Commission work
Appropriations and expenditures

123
124

APPENDIXES
Federal Trade Commission Act
Clayton Act
Robinson-Patman Anti-Price Discrimination Act
Export Trade Act
Sherman Act
Tydings-Miller Act
Rules of practice
Investigations, 1915-1937
Index

129
135
138
140
141
142
143
149
169

INTRODUCTION
POWERS AND DUTIES OF THE COMMISSION
GENERAL LEGAL ACTIVITIES
ROBINSON-PATMAN ANTI-PRICE DISCRIMINATION ACT
TRADE PRACTICE CONFERENCES
GENERAL INVESTIGATIONS
COMMISSIONERS AND THEIR DUTIES
HOW COMMISSION WORK IS HANDLED
PUBLICATIONS OF THE COMMISSION
PRESIDENT LAYS CORNERSTONE OF NEW BUILDING
RECOMMENDATIONS
1

ANNUAL REPORT
OF THE

FEDERAL TRADE COMMISSION
INTRODUCTION
POWERS AND DUTIES OF THE COMMISSION
The Federal Trade Commission herewith submits its report for the fiscal year 193637. Organized March 16, 1915, under the Federal Trade Commission Act, approved
September 26, 1914, the Commission is an administrative body exercising quasijudicial functions. These functions are chiefly: (1) to prevent unfair methods of competition in interstate commerce; (2) to make investigations at the direction of Congress,
the President, the Attorney General, or upon its own initiative; (3) to report facts in
regard to alleged violations of the anti-trust laws; (4) to prevent discriminations in
price and other forms of discrimination in violation of the Robinson-Patman Act
amending the Clayton Act; (5) to prevent exclusive dealing contracts, capital stock
acquisitions, and interlocking directorates in violation of the Clayton Act, and (6) to
administer the Webb-Pomerene or Export Trade Act, aimed at promotion of foreign
trade by permitting the organization of associations to engage exclusively in export
trade.
In performing these functions, the Commission’s duties fall into two categories,
namely, (1) legal activities in connection with prevention of unfair practices prohibited
by the acts it administers, and (2) general investigations of economic conditions in
certain industries or commercial groups.
Legal activities have to do with (1) prevention and correction of unfair methods of
competition in accordance with section 5 of the Federal Trade Commission Act, in
which it is declared that unfair methods of competition in commerce are unlawful; (2)
administration of section 2 of the Clayton Act prohibiting unlawful price discriminations, as amended by the Robinson-Patman Act, and sections 3, 7 and 8 of the Clayton
Act dealing, respectively, with unlawful “tying” contracts, unlawful stock acquisitions,
and unlawful interlocking directorates, and (3) administration of the Webb-Pomerene
Export Trade Act.
3

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

In connection with its foreign-trade work, the Commission has the power under
section 6 (h) of the Federal Trade Commission Act,
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.

The general investigational and economic work of the Commission arises chiefly
under section 6 (a), (b), and (d) of the Federal Trade Commission Act, giving the
Commission power-(a) To gather and compile information concerning, and to investigate, from time to time, the
organization, business, conduct, practices, and management of any corporation engaged in
commerce, excepting banks and common carriers, * * * and its relation to other corporations
and to individuals, associations, and partnerships.
(b) To require, by general or special orders, corporations engaged in commerce, excepting
banks, and common carriers subject to the act to regulate commerce, * * * to file with the
Commission in such form as the Commission may prescribe annual or special, or both annual
and special, reports or answers in writing to specific questions, furnishing to the Commission
such information as it may require as to the organization, business, conduct, practices,
management, and relation to other corporations, partnerships, and individuals of the respective
corporations filing such reports or answers in writing. * * *
(d) Upon the direction of the President or either House of Congress to investigate and report
the facts relating to any alleged violations of the antitrust acts by any corporation.1
GENERAL LEGAL ACTIVITIES

Upon authority of the acts which it administers, the Commission, during the last
fiscal year, has continued to direct its efforts toward the correction and elimination of
unfair methods of competition and other unlawful practices.
Cases before the Commission.--During the fiscal year, the Commission made
approximately 2,100 investigations in cases which were in a preliminary stage or had
not progressed to the status of formal complaint or stipulation. These cases were
disposed of either by progression to the status of formal complaint, by stipulation, or
by closing. The number of such informal cases investigated in the preceding fiscal year
was approximately the same.
During the year, the Commission approved a total of 624 stipulations to cease and
desist, executed by parties against whom proceedings had been instituted. Of these,
364 were cases in which false and misleading advertising in newspapers, magazines,
or by radio broadcast, was involved. The total number of stipulations to cease and
desist approved in the last preceding fiscal year was 890.
1 Public, No.78, 73d Cong., approved June 16, 1933, making appropriations for the fiscal year ending
June 30, 1934, for the “Executive Office and Sundry Independent Executive Bureaus, Boards,
Commissions” etc., made the appropriation for the Commission contingent upon the provision (48 stat.
291, 15 U. S.C. A., sec. 46a) that hereafter no new investigations shall be initiated by the Commission as
the result of a legislative resolution, except the same be a concurrent resolution of the two Houses of
Congress.”

GENERAL LEGAL ACTIVITIES

5

The stipulation procedure is usually employed in cases where the methods of
competition complained of are not so fraudulent or vicious that protection of the public
interest requires observance of the procedure of formal complaint and issuance of a
cease and desist order. The stipulation procedure in such cases provides opportunity
for a prospective respondent to enter into a written agreement to cease and desist from
the unfair methods set forth therein.
During the last fiscal year, the Commission issued 294 complaints against
companies, associations and individuals, alleging various forms of unfair competition
or other practices. These included 10 cases of alleged combination or conspiracy in
restraint of trade through price fixing and other unlawful agreements, and 23
complaints charging violation of Section 2 of the Clayton Act as amended by the
Robinson-Patman Anti-Price Discrimination Act. The number of complaints issued in
the preceding year was 386. In 296 cases, the Commission served upon respondents
its orders to cease and desist from unfair practices which had been alleged in
complaints and which were found to have been engaged in by the respondents. This
was an increase of 135 or 84 percent over the number issued during the last preceding
year. Representative cases are described at pages 43 and 52.
Cases before the courts.--During the year, the Commission was sustained in 18 cases
before various Federal Courts, and was reversed in none. Seventeen of the affirming
decisions were in the United States Circuit Courts of Appeals, and 1 was in a
mandamus proceeding before a United States District Court. Of these 18 cases, 15
embraced formal affirmances of the Commission’s orders to cease and desist; one
involved a contempt proceeding for violation of a decree affirming an order of the
Commission, in which instance the respondents were filled $10,000; one had to do
with a Court dismissal of an application by the Commission for enforcement of its
order, the dismissal having been granted on joint motion of the Commission and the
respondents, because the latter stipulated they would obey the Commission’s order;
the third case, in a district court, was a successful attempt by the Commission to
compel a corporation to supply information needed for use in the Commission’s
general investigation of agricultural income.2
In the Supreme Court of the United States there were no decisions on the merits in
Federal Trade Commission cases, However, 7 petitioners, who had failed in attempts
to nullify in the United States Circuit Courts of Appeals Commission orders to cease
and desist, were likewise unsuccessful in their petitions to the Supreme Court for writs
of certiorari. The Commission petitioned for and obtained a writ of certiorari in one
case.
Foreign Trade work.--Three American associations engaged solely in export trade
were organized during the fiscal year, under the
2

National Biscuit Co., p.75,

6

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Webb-Pomerene Export Trade Act. They filed with the Commission statements
required by the act, thereby becoming entitled to the benefits and exemptions provided
therein. The total number of associations filing papers is now 45. They are discussed
under Part V of this report, which also contains a review of trust law developments
abroad.
Misleading advertising.--For handling certain types of false and misleading
advertising cases, the Commission has set up a special board of investigation,
consisting of three attorneys. Through this special board and its staff, the Commission
examines the advertising columns of newspapers and magazines and commercial
advertising continuities broadcast by radio, noting misleading representations
appearing therein. Complaints against advertisers are also received from the public and
are given careful consideration. Misleading representations in advertising are often
corrected through the advertiser’s agreement by stipulation to cease and desist from
such mis-representations, although some of the cases before this board result in the
issuance of formal complaints and orders to cease and desist.
ROBINSON-PATMAN ANTI-PRICE DISCRIMINATION ACT

Section 2 of the Clayton Act was amended, effective June 19, 1936, by Public 692,
Seventy-fourth Congress, generally known as the Robinson-Patman Act.
The act had been in effect approximately one year at the close of the fiscal year. No
additional appropriation to cover the expense of the work occasioned by the duty of
enforcing the new act was available to the Commission until May 14, 1937. During
this interval, however, the Commission administered the act as vigorously as the funds
and personnel available permitted. In this period (the working period was actually
much less than 1 year because of delays necessarily incident to beginning work under
a new statute), the Commission instituted field investigations in 306 cases, each case
involving alleged violation of the act by from 1 to as many as several hundred
concerns. Of these field investigations, 169 were completed, although the number of
cases in process of investigation steadily increased.
Commission complaints involving alleged violation of Section 2 of the Clayton Act
as amended by the Robinson-Patman Act were issued in 23 cases during the last fiscal
year, and, shortly following the close of that year, the first order to. cease and desist
was entered under the act. (See p.48.)
New act changed law substantially.--The Robinson-Patman Act made substantial
changes in the law through a restatement of the basic principle of prohibiting sellers
from engaging in price discrimination which injuriously affects competition. It
extended the applicability of the law to recently evolving conditions in trade and
commerce and broadened its scope to include certain forms of discrimination not

ROBINSON-PATMAN ANTI-PRICE DISCRIMINATION ACT

7

directly connected with price discrimination. Administrative and enforcement
processes were also facilitated by a provision of the amending act that upon showing
of a discrimination in price or in services or facilities furnished, a prima facie case is
made out and the burden of rebutting it and of justifying the discrimination shall be
upon the alleged violator.
In cases of price discrimination where quantity differentials, although justifiable
under other provisions of the act, are found to be “unjustly discriminatory or
promotive of monopoly in any line of commerce” because the “available purchasers
in greater quantities are so few”, the Commission may, after investigation and hearing
of all interested parties “fix and establish quantity limits, and revise the same as it
finds necessary, as to particular commodities or classes of commodities.”
Section 3 of the amending act makes it a criminal offense, subject to fine or
imprisonment, to be a party to or assist in a sale or contract to sell which discriminates
to the knowledge of such party against competitors of the purchaser for the purpose
of destroying competition or eliminating a competitor, or to sell or contract to sell
goods at unreasonably low prices for the purpose of destroying competition or
eliminating a competitor.
Authority to enforce the amended act, except as to criminal proceedings and suits
for damages, is vested concurrently in the Commission and the Department of Justice,
except as to common carriers subject to the Interstate Commerce Act, as amended, to
common carriers engaged in wire or radio communication, or radio transmission of
energy, or to banks, banking associations and trust companies. As to these exceptions
authority is vested in other agencies of the Government. Jurisdiction to enforce the
criminal sections is conferred exclusively on the Department of Justice.
Investigations touch various commodities.--The commodities in connection with the
sale of which investigations have been made, have included many phases of production
and distribution, at least some of which touch the life of every citizen. The number of
investigations by general commodity classifications was: Groceries, 60; building
materials, 38; toiletries, 26; drugs, 17; petroleum products, 15; tobacco, 12; furniture
and household supplies, 11; automobile accessories, 11; dairy products, 10; leather
goods, beverages and seed inoculants, 6 each; machinery, optical goods, china and
glassware, 5 each; steel, millinery, confectionery and sporting goods, 4 each; coal,
fertilizer, stationery and office supplies, 3 each; plumbing and heating supplies,
electrical supplies, feed, textiles, sanitary supplies, book paper, merchandise and
clothing, 2 each; and a miscellaneous group including cast iron pipe, tin plate, tin cans,
metal fittings, chemicals, books, hides, serum, jewelry, film, sand for use in making
glass, shoes, school supplies, plate glass, buttons, playing cards, shoe

8

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

polish, drinking straws, wooden ware, can openers, fly paper, baby chicks, ice cream
cones, wooden crates, advertising space and services. The data obtained and the
knowledge of current practices pertinent to the prohibitions of the act acquired in study
of the many producing and distributing industries, necessarily provide the Commission
with valuable sign posts for the future administration of the act.
Business men seek advice.--In addition to the field investigations mentioned,
hundreds of business men or their attorneys have called at the Commission’s offices
and discussed the application of the new law to their business practices for the purpose
of acquainting themselves with its provisions. In some instances, entire industries
have, pursuant to such conferences, revised general practices which appeared to be in
conflict with the law. Thousands of letters respecting the new law and its application
in particular circumstances have been received and answered.
The contacts of the Commission and its staff with business indicate an interest in and
increasing approval of the amended act. The public reaction since June 19, 1936, is
indicated by enactment of legislation with respect to price discrimination by at least
eleven States. In 3 States the new statutes are, with necessary modifications,
substantially identical with the amended Section 2 of the Clayton Act, and in the
remaining 8 States the new laws include, in each instance, at least the substance of
some of the provisions of Section 2.
Economic and accounting aspects.--One feature of the Robinson-Patman Act, more
or less characteristic of several of the laws regarding competition and monopoly, is the
accounting examination and economic analysis involved in its administration. The
average cost for each investigation is higher than in cases instituted under the other
acts which the Commission administers. The Commission foresaw this situation and
from the beginning prepared its plans accordingly, as far as circumstances regarding
appropriations permitted.
Practices forbidden by the Act are defined primarily with respect to their effects on
competition, monopoly, cost of production and distribution, and sales prices. The
determination of some of these questions requires the use of technical experts.
Fortunately, the Commission had, in addition to its legal staff, a group of economists
and accountants of exceptional experience in this field of work, who were assigned to
assist the legal staff.
TRADE PRACTICE CONFERENCES

An important phase of the Commission’s activities during the last year has been its
trade practice conference work, which was instituted in 1919.

GENERAL INVESTIGATIONS

9

Under this procedure, a means is afforded whereby members of an industry may
voluntarily cooperate with the Commission in the establishment of a code of fair trade
practices, the purpose of which is the wholesale elimination of unfair methods of
competition, trade abuses, and trade evils.
This work is performed under authority of the Federal Trade Commission Act, and
other laws administered by the Commission, whereby the Commission is empowered
and directed to prevent the use of unfair methods of competition or other illegal
practices in commerce.
Since the inauguration of this work, approximately 200 industries have undertaken
the establishment of trade practice rules under the Commission’s auspices. These
industries are varied in character, with memberships ranging from several hundred to
many thousands.
GENERAL INVESTIGATIONS

Under authority of section 6 of the Federal Trade Commission Act, the Commission
may gather information concerning corporations and investigate their organization and
operations and may, at the request of the President, the Congress, the Attorney
General, or upon its own initiative, conduct general investigations of alleged violations
of the antitrust laws. It also may make reports in aid of legislation.
More than 100 general inquiries or studies have been conducted during the
Commission’s existence, most of them in pursuance of Congressional resolutions,
although many have been conducted pursuant to Presidential orders and others on the
Commission’s initiative.3 Many of these inquiries have supplied not only valuable
information bearing on conditions, developments and trends in interstate trade and
industrial development, but have thrown light on the need for and wisdom of
legislation for corrective action. The public need for such fact-finding studies in this
increasingly complex economic era grows greater, irrespective of different economic
and political philosophies.
The status of each investigation in progress during or at the close of the fiscal year
is described as follows:
Agricultural income.--This investigation was directed by resolution of Congress. The
Commission’s report to the Congress, with conclusions and recommendations, was
submitted March 2, 1937. It contained a study of the decline in income of producers
of principal farm products as compared to the increases or decreases in income of the
principal sellers, manufacturers and handlers of such products. It showed the degree
of control exercised by the principal companies in respect to various principal farm
products or manufactures thereof;
3

A list of these investigations. and brief descriptions, begin at p. 147.

10

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

the division of the consumers’ dollar among producers, manufacturers and distributors
of such commodities; and the costs, profits and rates of return of the principal
companies.
Fresh fruits and vegetables.--Final report on this inquiry was made to Congress June
10, 1937. The scope of investigation was similar to that of the agricultural income
inquiry. The report contained the Commission’s conclusions and recommendations.
Milk and dairy products.--Investigation of alleged monopolistic conditions in the
milk and dairy products industry, under a House Concurrent Resolution, was
completed and a final report, summarizing principal facts, with conclusions and
recommendations, was submitted to Congress, January 4, 1937.
Farm implements and machinery.--Undertaken pursuant to a Joint Congressional
Resolution, approved June 24, 1936, this inquiry is pending. The resolution authorized
the Commission to investigate certain financial practices of corporations “engaged in
the manufacture, sale or distribution of agricultural implements and machinery, of
whatever kind and description * * *”
Textile industries --This inquiry, undertaken pursuant to Executive Order, to
ascertain the facts regarding labor costs, rates of return and investments of companies
in the textile industry, was concluded with a report made February 11, 1937.
Petroleum decree investigation.--The Commission, on April 2,1937, transmitted to
the Attorney General a report of its investigation of the manner in which a consent
decree entered in the case of the Government against certain Pacific Coast oil
companies has been or is being executed. This investigation was requested by the
Attorney General and was conducted pursuant to duty imposed upon and power
granted to the Commission under Section 6 (c) of the Federal Trade Commission Act.
THE COMMISSIONERS AND THEIR DUTIES

The Federal Trade Commission is composed of five Commissioners appointed by
the President and confirmed by the Senate. Not more than three of the Commissioners
may belong to the same political party.
The term of office of a Commissioner is 7 years, as provided in the Federal Trade
Commission Act. The term of a Commissioner dates from the 26th of September last
preceding his appointment (September 26 marking the anniversary of the approval of
the act in 1914), except when he succeeds a Commissioner who relinquishes office
prior to expiration of his term, in which case, under the act, the new member “shall be
appointed only for the unexpired term of the Commissioner whom he shall succeed.”
At the close of the fiscal year, June 30,1937, the Commission was composed of the
following members: William A. Ayres, Democrat,

HOW THE COMMISSION’S WORK IS HANDLED

11

of Kansas, chairman; Garland S. Ferguson, Democrat, of North Carolina, vicechairman; Charles H. March, Republican, of Minnesota; Ewin L. Davis, Democrat, of
Tennessee; and Robert E. Freer, Republican, of Ohio.
Each January the Commission designates one of its members to serve as chairman
during the ensuing calendar year. Commissioner Ayres was chosen chairman for the
calendar year 1937, succeeding Commissioner March. The chairmanship rotates, so
that each Commissioner serves as chairman at least once during his term of office.
The chairman presides at meetings of the Commission, supervises its activities, and
signs the more important official papers and reports at the direction of the
Commission.
In addition to the general duties of the Commissioners, in administering the statutes,
the enforcement of which is committed to the Commission, each Commissioner has
supervisory charge of a division of the Commission’s work. Chairman Ayres has
supervisory charge of the administrative division; Commissioner Ferguson of the chief
trial examiner’s division and the trade practice conference division; Commissioner
March of the chief examiner’s division; Commissioner Davis of the chief counsel’s
division and the special board of investigation; and Commissioner Freer of the
economic division. Every case that is to come before the Commission is first examined
by a Commissioner and then reported on to the Commission, but all matters under the
jurisdiction of the Commission are acted upon by the Commission as a whole.
The Commission meets regularly for the transaction of business every business day
at its offices in Washington. The Commissioners hear final arguments in the cases
before the Commission, as well as arguments on motions of counsel for the
Commission or respondents.
The Commissioners usually preside individually at trade-practice conferences held
for industries in various parts of the country, and also have numerous administrative
duties incident to their position
The secretary of the Commission is its administrative officer.
At the close of the fiscal year the Commission had a total personnel of 577,
including the Commissioners.
HOW THE COMMISSION’S WORK IS HANDLED

The work of the Federal Trade Commission may be divided broadly into the
following general groups: Legal, economic, and administrative.
The legal work of the Commission is under the direction of the chief counsel, the
chief examiner, and the chief trial examiner.
The chief counsel acts as legal adviser to the Commission, and supervises legal
proceedings against respondents charged with violations of the acts administered by
the Commission, and has charge of the trial of cases before the Commission and in the
courts.
14070---37-----2

12

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

The chief examiner has charge of legal investigations of applications for complaint
alleging violations of the laws over which the Commission has jurisdiction. When the
Commission undertakes investigations in response to Congressional Resolutions, or
under section 6 of the Federal Trade Commission Act, the chief examiner supervises
such parts of such investigations as may be assigned to his division by the
Commission.
Members of the chief trial examiner’s division are appointed to preside at the trial
of formal complaints and at the taking of testimony in investigations conducted by
Executive direction, pursuant to Congressional Resolutions, upon the Commission’s
own initiative, or at the request of the Attorney General. They also arrange settlement
by stipulation of applications for complaint, subject to the approval of the
Commission.
There are also the division of trade practice conferences, the special board of
investigation for cases involving false and misleading advertising, and the export trade
section of the chief counsel’s division for handling foreign trade work under the
Export Trade Act and section 6 (h) of the Federal Trade Commission Act.
The economic division, under the chief economist, conducts certain of the general
inquires of the Commission, such as those covering farm implements, the textile
industry, and fresh fruits and vegetables.
The economic division and the chief examiner’s division, jointly, have conducted
the milk investigation and the agricultural income inquiry. The chief examiner’s
division had charge of the petroleum decree investigation.
Responsible directly to the assistant secretary of the Commission, the administrative
division conducts the business affairs of the Commission and is made up of units such
as are usually found in Government establishments, the functions of such units being
covered largely by general statutes. These units are as follows: Accounts and
personnel, disbursing office, docket section, publications, library, mails and files,
supplies, stenographic and hospital.
The Commission has a public relations and editorial service for the distribution of
information, for the preparation and editing of reports; and the answering of inquiries
relative to the Commission’s work. This division is under the supervision of the
assistant to the chairman.
The Commission has access to the laboratories, libraries and other facilities of
various agencies of the Federal Government, including the National Bureau of
Standards, the Public Health Service, and the Food and Drug Administration, to any
of which it may refer matters for scientific opinions or information. With these
agencies effective cooperation continued throughout the fiscal year. The Commission
also obtains, when necessary certain medical and other scientific in-

PUBLICATIONS OF THE COMMISSION

13

formation and opinions from non-government hospitals, clinics and laboratories.
PUBLICATIONS OF THE COMMISSION

Publications of the Commission, reflecting the character and scope of its work; vary
in content and treatment from year to year, especially documents relating to general
business and industrial inquiries.4 Such studies are illustrated by appropriate charts,
tables, and statistics. These fact-finding studies, reports, and recommendations deal
not only with current developments, possible abuses, and trends in an industry, but
contain scientific and historical background. Considered as a whole, they have
supplied economists and students of business and government, the Congress, and the
public with information not only of general interest but of great value as respects the
need or wisdom of new and important legislation, to which they have frequently led,
as well as corrective action by the Department of Justice and private interests affected.
The Supreme Court has at times had recourse to them, and many of them have been
designated for reading in connection with university and college courses in economics
and law.
Findings and orders of the Commission, as published, contain interesting and
important material regarding business and industry. They toll, case by case, tho story
of unfair competition, exclusive-dealing contracts, price discriminations, and capitalstock acquisitions in violation of the statutes which the Commission administers, and
of the measures taken by the Commission to prevent such violations of law.
The Commission’s decisions are printed first in the form of advance sheets with
permanent volume number and pagination, and later as bound volumes.
Regarding the Commission’s publications, the Federal Trade Commission Act;
section 6 (f), says the Commission shall have power to make public from time to time
such portions of the information obtained by it hereunder, except trade secrets and
names of customers, as it shall deem expedient in the public interest; and to make
annual and special reports to the Congress and to submit therewith recommendations
for additional legislation; and to provide for the publication of its reports and decisions
in such form and manner as may be best adapted for public information and use.
Publications issued by the Commission during the fiscal year were:
Report of the Federal Trade Commission on the Sale and Distribution of Milk and
Milk Products, New York Milk Sales Area. House Document No.95 (75/1).5
Summary Report on Conditions with Respect to Sale and Distribution of Milk and
Dairy Products. House Document No.94 (75/1).
Fruits and Vegetables-Agricultural Income Inquiry (Interim Report). Senate
Document No.17 (75/1).
4 These investigations are listed and briefly described beginning at p 147. 5 symbol for Seventy-fifth
Congress, first session.

14

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Principal Farm Products-Agricultural Income Inquiry. Volume I. Summary.
(Summary and Conclusions and Recommendations Only). Senate Document No.54
(75/1).
Data Compiled from Public Sources of Information and Reproduced by the
Commission in Connection with its Administration of the Robinson-Patman Act of
June 19, 1936, Public, 692, amending Section 2 of the Clayton Act.
Decisions; Volume 20. December 3, 1934 to June 24, 1935.
Injunctions in Cases Involving Acts of Congress. Senate Document No.33 (75/1).
Legalization of Contracts for Minimum Resale Prices. Senate Document No.58
(75/1).
Textile Industries in the First Half of 1935:
Part 2. The Woolen and Worsted Textile Industry.
Part 3 The Silk and Rayon Textile Industry.
Textile Industries in the last Half of 1935:
Part l. The Cotton Textile Industry, including Thread, Cordage and Twine.
Part 2. The Woolen and Worsted Textile Industry.
Part 3. The Silk and Rayon Textile Industry.
Textile Industries in the First Half of 1936:
Part l. The Cotton Textile Industry, including Thread, Cordage and Twine.
Part 2. The Woolen and Worsted Textile Industry.
Part 3, The Silk and Rayon Textile Industry.
PRESIDENT LAYS CORNERSTONE OF NEW COMMISSION BUILDING

Late in 1936, contract was awarded for construction of a permanent home for the
Commission, at the apex of the Government building triangle between Constitution
and Pennsylvania Avenues. Construction work was started a few weeks later, and the
cornerstone of the new building was laid by President Roosevelt on July 12 of this
year. During his memorable address on that occasion, the President said, in part:
All of the fine things achieved in the interest of fair trade practice since the approval by
President Wilson in September 1914, of the original Federal Trade Commission Act justify the
event for which we are assembled here today: The laying of the cornerstone of a new home for
the Commission. The record of accomplishments in the interest of fair competition, in
prosperous times and when evil days were upon the land, warrants that this body shall have a
habitation adequate to its needs and in keeping with the importance of the tasks which it has
accomplished and will continue to perform in the protection of American trade. * * *
The dangers to the country growing out of monopoly and use of unfair methods of
competition still exist and still call for action. They make the work of the Federal Trade
Commission of vital importance in our economic life. We must not be lulled by any sense of
false security. Eternal vigilance is the price of opportunity for honest business. It is the price we
must pay if business is to be

RECOMMENDATIONS

15

allowed to remain honest and to carry on under fair competitive conditions, protected from the
sharp or shady practices of the unscrupulous.

The Commission expects to occupy its new building early in 1938. It will be the first
time since its organization that the Commission and its staff will have been housed in
a permanent home, adequate to its needs.
RECOMMENDATIONS

Amendments to Federal Trade Commission Act. For several years the Commission
has made recommendations in its annual reports and in reports on particular
investigations, to the effect that Section 5 of its organic act be so amended as to
declare unlawful, not only “unfair methods of competition” as the present law
declares, but also “unfair or deceptive acts and practices.” The reason for the
recommended amendment is that there are some unfair or deceptive commercial
practices which primarily injure the public rather than competitors and in such cases
it is difficult to show the latter type of injury which the courts have held necessary
under the present law.
The Commission has also recommended amendments which would make its orders
final and conclusive if and when respondents do not apply for court review within 60
days, which would make it unnecessary to establish violation of an order before the
Commission can apply for court affirmance, and which would direct the courts upon
such affirmance to incorporate the affirmed order in a court decree
In renewing these recommendations, the Commission is gratified to note that in
substance, they have been incorporated in a bill, S. 1077, which passed the Senate
during the first session of the Seventy-fifth Congress and in a bill which has been
favorably reported by the Interstate and Foreign Commerce Committee of the House
of Representatives.
Amendments to Section 7 of the Clayton Act. On a number of occasions the
Commission has called attention to the fact that while this section now declares
unlawful the acquisition by one corporation of the capital stock of a competing
corporation where certain monopolistic tendencies and conditions may result, it does
not purport to declare unlawful the acquisition of physical assets where similar
tendencies and conditions may result. The Commission has also pointed out that this
unforbidden method of accomplishing these similar results has been increasingly
employed by corporations engaged in interstate commerce, thereby evading said
section 7. The Commission has therefore recommended in earlier annual reports and
upon other occasions and now renews its recommendation that the acquisition of assets
be declared unlawful under the same circumstances that the acquisition of stock is
already so declared.
In its recent report on Agricultural Income, pursuant to Joint Resolution of the
Senate and House of Representatives (Senate Document No.54, Seventy-fifth
Congress, first session) the Commission amplified the foregoing recommendation so
as to preclude the acquisition of assets where the combined assets would exceed an
amount to be specified by Congress. This would have the advantage of a positive

legislative standard, defining the limit at which corporate accretions in size and power
shall be halted in order to prevent monopoly. The Commission now renews that
recommendation.

PART I. GENERAL INVESTIGATIONS
AGRICULTURAL INCOME
FRESH FRUITS AND VEGETABLES
MILK AND DAIRY PRODUCTS
FARM IMPLEMENTS AND MACHINERY
TEXTILE INDUSTRIES
PETROLEUM DECREE
17

PART I. GENERAL INVESTIGATIONS
AGRICULTURAL INCOME
FINAL REPORT ON INQUIRY SUBMITTED TO CONGRESS

This inquiry was made by direction of Congress under Public Resolution No.61,
Seventy-fourth Congress, first session, approved August 27, 1935, and amended by
Public Resolution No.86, Seventy-fourth Congress, second session, approved May 1,
1936. The resolution, as amended, authorized and directed the Federal Trade
Commission to investigate and report the extent of decline in agricultural income in
recent years; the increase or decrease for the same years of the income of the principal
corporations or other principal sellers engaged in handling or processing certain
essential farm commodities; the distribution of the consumer’s dollar paid for those
commodities, as between farmers, processors and distributors; the growth of capitalization and assets of principal corporations and their costs, profits, investments and
rates of return; the avoidance of taxes by such corporation or their officers; the extent
of control or monopoly in the handling or processing of those commodities and the
methods and devices used for obtaining and maintaining such control or monopoly; the
extent to which any fraudulent, dishonest, unfair and indirect methods are employed
in the grading, warehousing and transportation of those commodities, and the
prevalence of producer-cooperative organizations and their effects on producer and
consumer. The Commission was also directed to report its conclusions and recommendations owing out of the inquiry.
An interim report was made on December 26, 1935, and printed as House Document
No.380, Seventy-fourth Congress, second session, and the final report, Principal Farm
Products--Agricultural Income Inquiry, was submitted to the Congress March 2,1937.
The summary and conclusions and recommendations of the final report were printed
as Senate Document No.54, Seventy-fifth Congress, First Session.
Principal farm products covered.--Principal farm products covered in the
investigation were wheat, cotton, tobacco, potatoes, livestock and milk. Wheat
reflected the greatest decline in gross income to farmers from 1929 to 1932. In 1932,
gross income from wheat amounted to only about 29 percent of the gross income of
1929. Milk showed the smallest decline, but the gross income of farmers from that
commodity in 1932 was only 54.3 percent of that in 1929.
19

20

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

The sharpest recovery in the gross income of farmers from the low year of 1932 was
in tobacco. By 1934, the income from tobacco production aggregated 78.5 percent of
that in 1929.
Generally speaking, the gross income represented by sales by the principal
manufactures, processors and distributors of these products fell off less than the gross
income of farmers from their production, and the recovery from the low point of the
period by the manufacturers, processors and distributors reached a higher percentage
of the 1929 figure than was true of the gross income of the farmer-producers of these
products.
Division of the consumer’s dollar.--The report shows how the consumer’s dollar was
divided between distributor, processor and farmer in the prices paid for butter, fluid
milk, wheat flour, wheat bread, cigarettes, beef, veal and pork during the period
covered by the inquiry. Butter, as contrasted with bread, a product involving relatively
large processing costs, showed a high percentage of the consumer’s dollar going to the
farmer. In 1934 in 51 cities the weighted average retail price of butter, graded 92 score
or better, was 31.5 cents per pound. Of this retail price, wholesale and retail distributors received a combined average gross margin of about 25 percent, manufacturers
about 16 percent, and producers about 59 percent. In 1935 in 51 cities the weighted
average retail price of white wheat flour bread was 8.3 cents per pound. Retail
distributors received about 19 percent of this price as their average gross margin,
bakeries 56 percent, flour millers 7 percent, wheat middlemen and transportation
agencies 5 percent, and gross proceeds of wheat farmers were about 13 percent.
Tobacco group’s concentration of control.--The inquiry disclosed that thirteen
tobacco manufacturers sold in one year more than 97 percent of the cigarettes, more
than 90 percent of the smoking tobacco, upward of 75 percent of the chewing tobacco
and in excess of 98 percent of the snuff produced in the United States in 1934. The
report discusses methods by which the larger companies obtained commanding
positions in their respective industries, which were shown to have been by acquisition
of competing firms, or by expansion, or by both.
Rates of return on investment.--Rates of return on investment for the period covered,
1929 to 1935, inclusive, earned by the reporting tobacco manufacturers, the biscuit and
cracker companies and the chain grocery companies, are shown in the report. The
annual averages were 15.8 percent for tobacco manufacturers, 14.6 percent for biscuit
and cracker companies, and 16.4 percent for chain groceries. Milk processors and
distributors, wholesale baking companies and wheat middlemen showed higher rates
of return during the first three years of the period than for the last three years. Average
annual returns for the entire period were 9.57 percent for the milk companies,

AGRICULTURAL INCOME

21

8.76 percent for the bakers and 10.59 percent for the wheat middle-men. Returns to
wheat processors, wholesale flour distributors and chain drug store companies (large
distributors of tobacco products) were substantial for all years except 1932 and
averaged 7.76 percent, 9.61 percent and 8.29 percent for these respective groups.
Reporting meat packers had an average rate of return of 4.28 percent; shoe
manufacturers, 4.77 percent; leaf tobacco middlemen, 7.44 percent; tobacco
wholesalers and jobbers, 4.43 percent; cotton processors, 1.52 percent, with losses in
some individual years. Tanning and leather companies sustained a loss, averaging for
the period 1.89 annually, and chain tobacco stores a loss averaging 1.37 percent
annually.
Conditions in terminal grain markets.--Inquiry made into conditions of
merchandising grain in the terminal markets showed that many of the practices which
were the subject of criticism by the Commission in earlier investigations of terminal
grain markets still existed. One of these is the control of railroad-owned terminal
elevators, leased by large merchandisers of grain at low rentals, giving the lessees an
undue competitive advantage over other grain merchandisers in the purchase and
handling of grain, with the result that such large merchandisers practically dominate
both the cash and futures markets.
RECOMMENDATIONS OF THE COMMISSION

In its conclusions and recommendations with respect to the grain trade, the report
said that correction of conditions described therein could not be left to the trade itself,
and that Federal legislation should be enacted providing, among other things:
1. That all deliveries of grain on futures contracts shall be made from public
warehouses:
a. Licensed by federal authority;
b. Subject to federal regulation;
c. Not owned, operated, or controlled, directly or indirectly by any person, firm, or
any other organization directly or indirectly dealing in grain.
2. That all deliveries of grain on any futures contracts shall be subject to:
a. Federal grading and inspection;
b. Federal regulation of the delivery of grain on such contracts.
In respect to cotton merchandising, the report, after showing that cotton merchants
and spinners generally regard the operations of the futures market under southern
deliveries with satisfaction, recommended further study of the system of southern
deliveries to ascertain whether legislation should be enacted providing for making the
contract more merchantable.
The report cited the unbalanced relations between industry and agriculture and
suggested that making available to the public of

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

reliable and adequate information concerning the large industrial corporations would
constitute an important step toward correcting this condition.
Concerning the value of cooperative associations, the report explained that although
an exact measure of their value in dollars and cents would be difficult to obtain, the
Commission desired to add to the vast body of opinion its own conclusion that true
cooperative associations have been of great value to the producers of farm products,
and that such cooperatives have significantly increased the bargaining strength of
producers and reduced the spread between producers’ and consumers’ prices.
The inquiry disclosed, in several of the industries, a high degree of monopolistic
control, frequently due to methods contrary to the letter or spirit of the law. In this
connection, the Commission, in its report, renewed its recommendation for amendment
of Section 7 of the Clayton Act, which now prohibits the acquisition by one
corporation engaged in commerce of stock in a competing corporation so engaged
where the effect may be to substantially lessen competition between such corporations.
The Commission recommended an amendment to prohibit acquisition of assets, not
only indirectly through use of stock unlawfully acquired, but also direct acquisition of
assets independently of stock acquisition. Under a decision of the Supreme Court, the
Commission cannot effect the separation of units acquired through purchase of capital
stock if, following the stock acquisition, but prior to service of the Commission’s
formal complaint, assets of the companies whose stock has been acquired are merged.
Additional recommendations were made by the Commission as a further check to
monopolistic tendencies.
LEGAL STUDIES OF TOBACCO AND POTATO MARKETING

Legal studies of the extent of possible concentration of control and of monopoly, and
of any methods and devices used to gain such control, were made with regard to
tobacco and potatoes.
Tobacco.--The investigation failed to disclose that any one company had a monopoly
in the manufacturing, processing, warehousing, distribution or marketing of leaf
tobacco or tobacco products. Considerable concentration of control was found,
however. Five buyers of leaf tobacco, two of which primarily represent English
companies, generally purchase about 75 percent of the total domestic production and
their purchases are largely concentrated in the auction belts. Three companies, and, to
a less extent, a fourth, substantially control the manufacture of cigarettes of the most
popular price class, and are also important factors in the manufacture of smoking and
chewing tobacco. Three other companies control about 97 percent of the total snuff
business.

FRESH FRUITS AND VEGETABLES

23

No substantial price fixing or price agreements in the marketing of leaf tobacco were
found except in the minimum sale prices established for dealers in Connecticut shadegrown tobacco pursuant to an Agricultural Adjustment Administration marketing
agreement.
Information obtained during the inquiry indicated that competition in the cigarette
industry might be increased by popular cigarettes selling in various price ranges and
that new or more important com petition in manufacturing would result in increased
competition in the purchase of leaf tobacco. The opinion was expressed that the
uniform internal revenue tax of $3 per thousand on small cigarettes has tended to
restrict the manufacture and sale of 10-cent cigarettes, the most active and substantial
new competition that has manifested itself in the industry in many years. The
Commission therefore recommended that Congress consider the advisability of levying
a graduated tax on cigarettes in lieu of the present uniform tax.
Potatoes.--Processing of potatoes is so limited in volume as to be of little
consequence. No close approach to monopoly was found in their warehousing,
distribution or marketing. Excessive production financing charges and local marketing
fees are exacted in certain instances, but remedies are available to the majority of
growers affected through production credit associations organized pursuant to the
Farm Credit Act of 1933, and by collective action among producers.
FRESH FRUITS AND VEGETABLES
REPORTS TO CONGRESS CONTAIN COMMISSION’S RECOMMENDATIONS

Public Resolution No.61, amended by Public Resolution No.112, Seventy-fourth
Congress, second session, approved June 20, 1936, authorized and directed the
Commission to make further investigation with respect to agricultural income from
table and juice grapes, fresh fruits and vegetables, and to make both interim and final
reports. The interim report was submitted February 1, 1937, and printed as Senate
Document No.17, Seventy-fifth Congress, first session, and the final report was
submitted June 10, 1937
Under the resolution, the scope of this investigation was generally the same as that
of agricultural income.
Decline in farmers’ gross income .--The Commission’s final report shows that the
farmers’ gross income from the production of fruits and vegetables declined in 1932
to 51.84 percent of the 1929 gross income. This was the lowest point reached during
the seven-year period, 1929 to 1935, inclusive. By 1935 it had recovered to 70.02
percent of the 1929 level. The sales of no group of the reporting processors and
distributors of fruits and vegetables, either fresh or processed, fell during the sevenyear period to as low a percentage of its 1929 sales as did the farmers’ gross income
in relation to its 1929 level, nor failed to

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

exceed the percentage of recovery reached by the gross income of the farmer.1
Monopoly and control.--In the matter of monopoly and control, the inquiry on fruits
and vegetables disclosed significant proportions of the national production of certain
kinds of fruits and vegetables handled by only a few of the large corporations and
cooperative associations, such as the California Fruit Growers’ Exchange, Florida
Citrus Exchange, Mutual Orange Distributors, and Lake Wales Citrus Growers’
Association. The most important chain store System in the distribution of fresh fruits
and vegetables is The Great Atlantic & Pacific Tea Co.
Distribution of the consumer’s dollar.--The distribution of the consumer’s dollar
paid for five fresh fruits and five fresh vegetables handled by chain grocery stores is
shown in the report. The fruits are (1) table grapes, (2) Florida and California oranges,
(3) Florida grape-fruit, (4) Pacific Northwest apples, and (5) Georgia and Carolina
peaches. The vegetables are (1) Maine, Virginia, Maryland and Idaho, potatoes, (2)
Texas onions, (3) Texas and Florida cabbage, (4) Florida and California tomatoes, and
(5) Iceberg lettuce from the Pacific coast. Of the consumer’s dollar paid for the five
fresh fruits combined, for those markets and producing areas for which the information
was obtained, the growers’ proceeds were 29.4 cents, distributors’ gross margins were
35.33 cents, and transportation and all other costs, including packing and loading,
absorbed the remainder of the dollar. The retail margin alone amounted to 31.14 cents
and transportation costs, including icing and heating, to 20.21 cents. For the five fresh
vegetables, growers’ proceeds were 34.78 cents, distributors’ margins, 32.10 cents, and
transportation and all other costs, 33.12 cents. The retail margin alone was 27.26 cents
and transportation was 22.82 cents.
Rates of return on investments.--For all groups of companies comprising the
processors and wholesale distributors, the rates of return on investment were lowest
in 1932, and for the groups comprising the chain store distributors they were lowest
in 1935. Relatively high rates of return, however, were earned by chain store
distributors.
Producer cooperative groups.--Producers’ marketing cooperative associations are
important in the distribution of some fresh fruits. In 1934, they marketed almost 62
percent of the total cranberry production of the United States, 57 percent of all citrus
fruits, 28 percent of the dried prunes, 16 percent of the grapes and 7.5 percent of the
apples. For some vegetables, the percentages are substantial and for particular
commercial producing areas for both fruits and vegetables, the proportions are large.
Processing and bargaining cooper1 Sales of industrial concerns were compared with gross cash incomes of farmers because the net
Incomes of farmers from production of fruits and vegetables are not computed by the Department of
Agriculture and therefore could not be compared with net operating profit of manufacturers, processors
and distributors.

FRESH FRUITS AND VEGETABLES

25

atives are of less importance in the fruit and vegetable industry. Marketing
cooperatives were found to be most successful for products having relatively long
marketing seasons, making possible the permanent employment of skilled marketing
personnel, and for products, the commercial production of which is largely
concentrated in, at most, a few highly specialized producing areas.
Many aspects of the marketing. of fresh fruits and vegetables are discussed in the
report, including marketing by large organizations, production financing, shipping by
truck, character and adequacy of terminal market facilities, terminal market inspection,
terminal market cartage, loss and damage claims and sale of fruits at auction.
Racketeering practices in terminal markets.--The report shows that monopolistic and
racketeering practices in the carting of fruits and vegetables exist in several of the
larger terminal markets, particularly in New York, Philadelphia and Chicago. An
analysis of the facilities and conditions existing in a limited number of the larger
terminal markets shows that although many of the facilities have been modernized,
there has been a marked lack of scientific planning. Many unfair practices have
developed in the terminal inspection service in recent years, particularly as it affects
loss and damage claims.
Large marketing organizations.--Five concerns, other than cooperative associations,
distribute fresh fruits and vegetables on a national or very wide scale. Three of these,
the Atlantic Commission Co., Wesco Foods Co. and Tri-Way Produce Co., are
subsidiaries of chain grocery stores while the other two, American Fruit Growers, Inc.,
and Nash-Finch Co., are independently owned. The subsidiaries of the chain store
companies follow substantially identical methods in the purchase of fruits and
vegetables. They buy from growers and shippers as well as from terminal market
receivers and distribute some tonnage to the independent trade in addition to that sold
to their parent’ companies. Prior to the passage of the Robinson-Patman Act in 1936,
chain buying subsidiaries customarily obtained a brokerage, or its equivalent in the
form of a price reduction, from their principal shippers. This practice has been
discontinued, but each of these companies, to a greater or lesser extent, receives
discounts or price reductions in lieu of brokerage in purchases from principal shipping
connections.
CONCLUSIONS AND RECOMMENDATIONS

In the Commission’s conclusions, it was set forth that certain practices in the carting
of agricultural products in New York, Chicago and Philadelphia amount to illegal
agreements in restraint of trade and in violation of the antitrust acts; and that the
activities of the agents of the teamsters’ union in Chicago, Cleveland and Philadelphia
in interfering with outside trucks were in violation of the Federal

26

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Anti-Racketeering Act. As to these practices, the Commission has made its evidence
available to the Department of Justice.
The report recommended that the Perishable Agricultural Commodities Act be
amended to authorize and direct the Secretary of Agriculture to make complete
condition inspections for the purpose of determining the extent of damage and insofar
as practicable the cause of such damage on all cars of the more perishable commodities
arriving in the principal terminal markets.
It also recommended that the Interstate Commerce Commission be authorized and
directed to require the claim division of the Association of American Railroads to
furnish periodically, for the information of all interested persons, certain data
concerning tonnage or number of carloads of each kind of fresh fruits and vegetables
and of melons delivered by each railroad to each of the principal terminal markets, and
the average amount of claims paid by each of these railroads per carload of each of
these perishable commodities delivered in the various terminal markets.
Amendment of the Interstate Commerce Act was also recommended to empower the
Interstate Commerce Commission to prescribe certain rules and regulations governing
the filing, investigation and payment of all loss and damage claims in the shipment of
perishable commodities.
MILK AND DAIRY PRODUCTS
INVESTIGATION COMPLETED AND SUMMARY REPORT SUBMITTED TO
CONGRESS

Investigation of conditions with respect to sale and distribution of milk and other
dairy products, made pursuant to House Concurrent Resolution No. 32, Seventy third
Congress, second session, was concluded and a final report, summarizing the principal
facts with conclusions and recommendations, was submitted to Congress on January
4, 1937.
Under the resolution, the Commission was directed to make the investigation with
a view to determining particularly whether any person or organization:
is operating within any milkshed in the United States in such a manner as to substantially lessen
competition or tend to create a monopoly in the sale or distribution of such dairy products, or
is a party to any conspiracy in restraint of trade or commerce in any such dairy products, or is
in any way monopolizing or attempting to monopolize such trade or commerce within the United
States or any part thereof, or is using any unfair methods of competition in connection with the
sale or distribution of any such dairy products, or is in any way operating to depress the price
of milk sold by producers.

The Commission was directed to report to the House of Representatives “the result
of its investigations together with its recommendations, if any, for necessary remedial
legislation.”

MILK AND DAIRY PRODUCTS

27

The Summary Report of Conditions with Respect to the Sale and Distribution of Milk
and Dairy Products, as sent to the Congress, January 4, 1937, summarized the six
reports previously sent to the Congress dealing with milk and milk products and
distribution problems, and also presented conclusions and recommendations based
upon the factual data obtained during the investigation. The six reports were entitled:
Report of the Federal Trade Commission on:
1. Sale and Distribution of Milk Products, Connecticut and Philadelphia
Milksheds, April 5,1935;
2. Sale and Distribution of Milk and Milk Products, Philadelphia and
Connecticut Milksheds, December 31,1935;
3. Sale and Distribution of Milk and Milk Products, Chicago Sales Area, April
15, 1936;
4. Distribution and Sale of Milk and Milk Products, Boston, Baltimore,
Cincinnati, and St. Louis, June 4, 1936;
5. Sale and Distribution of Milk and Milk Products, Twin Cities Sales Area, June
13, 1936;
6. Sale and Distribution of Milk and Milk Products, New York Milk Sales Area,
September 30, 1936.
REPORT ON NEW YORK MILK SALES AREA

All of these reports, except the last named covering the New York area, have been
summarized in earlier annual reports of the Commission. The last named report,
submitted in the fiscal period covered by this annual report, embraces the operations
of large dairy farmers’ cooperative organizations in the New York milkshed and the
operations of two nation-wide distributors and processors of milk and milk products
with headquarters in New York City. This report also discusses health regulations and
the development of cooperative marketing laws.
The New York metropolitan area, with a population of more than 10,000,000 people
consuming approximately 4,000,000 quarts of fluid milk daily, is supplied with fluid
milk and cream by the New York milkshed comprising all of the State of New York,
and parts of Vermont, New Jersey and Pennsylvania.
Dairymen’s League Cooperative Association, Inc., is the largest milk producers
association in the New York milkshed, representing about 37,500 active dairy farmers.
The Sheffield Producers’ Cooperative Association is the second largest dairy
cooperative Organization in the New York milkshed
Health regulations in different markets.--Local authorities in each of the markets
investigated by the Commission have endeavored to see that the consuming public was
supplied with wholesome milk produced, handled and delivered under sanitary
conditions. Health regulations
14070--37----3

28

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

in the several markets sometimes differ widely, and some are more strict in their
sanitary requirements than others. The United States Public Health Service has
prepared a standard milk ordinance and code which has been adopted by many states
and municipalities throughout the country.
The National Dairy Products Corporation, largest milk distributor in the United
States, has acquired either directly or indirectly the capital stock or assets of 358
individuals, firms, or corporations engaged in practically all branches of the dairy
industry. Throughout the period of the depression, National Dairy Products
Corporation made profits on its entire operations after paying large salaries to its
officers and employees. The Borden Co., originally organized as a condensed milk
manufacturer, is the second largest milk distributor and dairy products company in the
United States. The company has acquired directly or indirectly the capital stock or
assets of approximately 200 companies and is an important distributor in both the New
York and Chicago scales areas. Throughout the period of the depression, The Borden
Co. consistently made profits after paying large salaries to its officers and employees.
SUMMARY REPORT ON THE MILK INVESTIGATION

In its Summary Report of Conditions With Respect to the Sale and Distribution of
Milk and Milk Products, submitted January 4, 1937, the Commission recommended
that dairy farmers exercise the right and authority given them by Federal and State
laws to organize cooperative associations financed, managed and controlled
exclusively by farmers for collectively marketing and disposing of their milk and milk
products.
It was also suggested that milk producer cooperative organizations in the several
milksheds give careful consideration to the plan of organizing common sales agencies
to handle interstate and intermilkshed sales of milk and cream with a view to more
effectively controlling the sale and transfer of milk and cream from one producing area
to another and thus preventing to some extent distributors in any one market from
importing milk from other producing areas, thereby creating a surplus and depressing
prices paid local producers.
The Commission called the attention of the Congress to the fact that companies
engaged in large scale distribution of milk and milk products have been built up
through the acquisition and consolidation of established business concerns, many of
which were competitors prior to the acquisitions. These acquisitions were often
accomplished by such methods that it was doubtful if they violated the antitrust laws.
It was also pointed out to the Congress that conditions existing in the milk industry
like those in other industries investigated by the Commission emphasize the necessity
of amending Section 7 of the

FARM IMPLEMENTS AND MACHINERY

29

Clayton Act as recommended in the Commission’s Agricultural Income report,
discussed elsewhere in this volume.
The milk inquiry disclosed trade practices which may amount to unfair methods of
competition. However, such practices usually occurred in local transactions, and
although in some instances they may have affected interstate commerce, they probably
did not constitute unfair methods of competition in commerce within the meaning of
Section 5 of the Federal Trade Commission Act.
The report called attention to certain features in the milk trade where a particular
market may be supplied in part with milk produced in that State and in part with milk
produced in other States. In such markets, the efforts of the authorities in a particular
State to regulate the sale and distribution of milk within its borders may be frustrated
by the importation of milk from another State because of the inter state character of
the transaction. It was suggested that such situations may be met by negotiating
compacts and agreements between or among the States interested, with the consent of
Congress, whereby the sale and distribution of milk both in interstate and intrastate
commerce may be regulated in the public interest. To this end it was recommended
that legislation be enacted empowering an appropriate Federal authority to confer with
and advise State authorities regarding the regulation of the production, sale, and
distribution of milk products, and to assist in the negotiation of such compacts.
It was also recommended that the Federal authority be authorized and directed to
prepare and recommend for consideration by the several States, uniform laws relating
to the regulation of the milk industry, including the classification of milk as to uses,
health and sanitary regulations, inspection rules, and other matters.
It was further recommended that the Federal authority “be directed to intensely study
the problems and observe the operations of the dairy industry and to report any
violations of law to an appropriate tribunal.”
FARM IMPLEMENTS AND MACHINERY
INVESTIGATION REQUESTED IN PUBLIC RESOLUTION IS IN PROGRESS

Public Resolution No.130, approved by the President June 24, 1936, directed the
Federal Trade Commission to investigate corporations “engaged in the manufacture,
sale, or distribution of agricultural implements and machinery, of whatever kind and
description * * *.”
The resolution directed the Commission to ascertain: (1) the costs, selling prices,
profits and distribution methods of manufacturers; (2) the distributors’ costs, selling
prices, profits, and margins entering into the prices paid by farmers; (3) the facts
relative to price movements of farm implements and machines since 1914; to make (4)
a

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

comparison between the price movement of farm implements and machinery and the
price movement of implements and machinery of somewhat comparable material and
labor; to inquire into (5) the extent and basis of concentration of control of
manufacture and distribution of farm implements and machines in the hands of
particular manufacturers, and (6) any developments and tendencies in the direction of
monopoly and concentration of ownership or control of the means of manufacture,
sale, or distribution.
The resolution also called for (7) all of the facts, for the three years preceding the
adoption of the resolution, regarding violations of the antitrust laws, including the
nature, extent and effects thereof; the existence and effect of any contract, agreement,
combination or unlawful restraint of trade and the existence of any unfair methods of
trade or competition; the existence and extent of any unlawful methods of price fixing,
price maintenance, or price discrimination; the existence of any combination to restrict
or control the manufacture or supply of agricultural implements or machinery or to
raise or control the price thereof, or to restrict credit in the sale thereof; whether and
to what extent present prices are due to violation of the antitrust laws; whether and to
what extent the profits of any corporation engaged in any branch of the industry have
been affected, enhanced or maintained by unlawful combinations or understandings
and whether and to what extent the costs or profits of any corporation have been misstated or misrepresented, to conceal or promote violations of the antitrust laws.
Due to the lack of an appropriation for this investigation and the pressure of work
on other inquiries, only a limited number of the Commission’s staff could be assigned
to the farm machinery inquiry during the fiscal year ending June 30, 1937. In order to
expedite the inquiry and assure the maximum amount of information possible with the
limited funds and personnel available, five sets of comprehensive report forms were
prepared covering (1) manufacturers, two report forms, (2) wholesale dealers, (3) retail
dealers, and (4) farmers.
Report forms sent to manufacturers, dealers and farm leaders.--Report forms were
sent to approximately 250 manufacturers of farm implements calling for the necessary
detailed information. The first report forms of manufacturers called for information
concerning their officers, directors and stockholders. The second report forms required
(1) balance sheets, (2) income statements in sufficient detail to show the nature of the
operations; (3) details of sales and costs of sales, and (4) the manufacturing cost of the
principal farm implements and the average actual selling prices thereof. Information
as to the cost of manufacture was called for in sufficient detail to show the cost of raw
material, labor, taxes, depreciation and overhead expenses.

TEXTILE INDUSTRIES

31

Manufacturers of farm machinery have furnished excellent cooperation in this
inquiry. As of June 30, 1937, Commission accountants were at work in the offices of
four of the larger manufacturers, checking and studying financial statements, cost
statements and selling prices of these companies.
Retail distribution of farm machinery is accomplished primarily by independent
retail dealers, although some of the large manufacturers operate retail stores. Report
forms were sent to approximately 6,500 independent retail dealers and 250 retail
dealers affiliated with manufacturers. Wholesale distribution of farm machinery is
accomplished principally through branch houses by the major manufacturers, although
in the South and far West there are a few important independent jobbers engaged in
distributing farm machinery for the smaller manufacturers. Approximately 200 report
forms were sent to independent jobbers. Mail order houses also distribute farm
machinery, generally of their own manufacture, through their retail outlets.
Report forms were sent to almost 16,000 representative farmers and farm leaders
located in all parts of the country asking for reports of prices paid, credit terms,
indications of unfair competitive practices and general information applicable to the
farm implement and machinery business.
Examiners of the Commission were engaged in checking and studying the reports
received from retail dealers, jobbers and farmers. However, many of these reports are
lacking in information on important items and the selling prices of specific implements
are not always properly identified, and considerable checking will be necessary before
the data can be tabulated.
An engineering study is being made to cover manufacturing methods, changes in
designs, improvements in the quality of machines and other engineering problems.
TEXTILE INDUSTRIES
DATA SHOWS LABOR COSTS, BATES OF RETURN AND INVESTMENTS

This inquiry was conducted pursuant to an Executive Order of September 26, 1934,
and supplemental authorization, directing the Commission to ascertain the facts and
to prepare reports covering labor costs, rates of return and investments of companies
in the textile industries. This information was sought in order to determine what effect
increased wages or shorter hours of labor might have on the textile industries. The
inquiry was concluded with a report made February 11, 1937.
The Commission obtained data from cotton, woolen, silk and rayon textile
manufacturing, and dyeing and finishing companies, covering seven six-month periods
from January 1, 1933, through June 30,1936.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

The data for each of the first four six-month periods from January 1, 1933, to
December 31,1934, were issued in four separate parts by classes of products
manufactured. Each succeeding report included data showing rates of return, costs and
profits for each of the preceding periods.
During the fiscal year ended June 30, 1937, the following reports were issued:
Textile Industries in the Last Half of 1935: Part I, The Cotton Textile Industry,
Including Thread, Cordage and Twine, November 20, 1936; Part II, The Woolen and
Worsted Textile Industry, December 21,1936; Part III, The Silk and Rayon Textile
Industry, January 6, 1937; Textile Industries in the First Half of 1936: Part I, The
Cotton Textile Industry, Including Thread, Cordage and Twine, January 21,1937; Part
II, The Woolen and Worsted Textile Industry, January 29, 1937; Part III, The Silk and
Rayon Textile Industry, February 11, 1937. A complete list of all reports issued under
the textile industries inquiry may be found on pp.163-164.
In addition to the usual statistical data shown in the reports covering the four sixmonth periods, January 1, 1933, to December 31, 1934, the reports embracing the three
six-month periods between January 1, 1935, and June 30, 1936, contain detailed
analyses of operations per unit of goods sold, showing separately the cost of raw
material, labor, fuel and power, dyes and chemicals, property taxes, depreciation, gain
or loss on commodity exchange futures, processing tax, cost of selling and bad debts,
payments to officers and directors, and other general and administrative expenses.
These unit costs could be shown only for a limited number of companies because the
majority of textile manufacturers produce two or more types of products, in which
event the costs of particular types are not available.
The appendix tables of these reports contain extensive detailed statistics on
investments, costs, expenses, and profit or loss on sales for companies grouped by size
of textile investment, rates of return on textile investment, and profit or loss on sales.
This information is shown separately for each type of operation, i.e., spinning,
weaving, combined spinning and weaving, dyeing and finishing (divided into
companies performing these operations on a commission basis and those operating on
their own goods), and companies manufacturing thread, finishing and spooling thread,
and manufacturing cordage and twine.
The cooperation of the industry with the Commission was excellent, a large
proportion of the reporting companies having furnished their reports with exceptional
promptness.
Throughout the textile inquiry, the reports of the Commission were forwarded
promptly to the President; the Cabinet Committee on Textiles, consisting of Honorable
Cordell Hull, Secretary of State; Honorable Henry A. Wallace, Secretary of
Agriculture; Honorable Daniel C. Roper, Secretary of Commerce; Honorable Frances
Perkins,

PETROLEUM DECREE

33

Secretary of Labor; the Labor Advisory Board; other interested Government officials;
textile trade associations; labor executives and to the general public. Each report was
presented as a factual study. No recommendations or conclusions were called for in
the Executive Order.
These reports of the Commission apparently proved of much value to the industry,
to the individual manufacturer and to the general public. They made it possible for
individual manufacturers to compare their costs with those of the entire industry or
with important divisions thereof, and were of value in the adjustment of labor controversies.
PETROLEUM DECREE
REPORT ON INVESTIGATION TRANSMITTED TO THE ATTORNEY GENERAL

Pursuant to duty imposed upon and the power granted to it under Section 6 (c) of the
Federal Trade Commission Act, and at the request of the Attorney General made April
16,1936, the Commission conducted an investigation for the purpose of determining
the manner in which a consent decree entered in the case of United States against
Standard Oil Company of California, Inc., and others, has been or is being observed.
The decree in question was entered under date of September 15, 1930, perpetually
enjoining and restraining seven major oil companies, twelve independent oil
companies and one individual, operating primarily on the Pacific Coast, from
conspiring to monopolize and restrain interstate trade and commerce in the
manufacture, transportation or sale of gasoline in violation of the Sherman Antitrust
Act.
A staff of attorneys and accountants was assigned to the task of developing the facts
and gathering information with respect to the activities and practices of the concerns
involved.
The investigation was commenced June 29, 1936, and was terminated on December
31,1936. From field offices in Los Angeles the inquiry extended throughout the
principal marketing centers of the States of California, Washington, Oregon, Arizona
and Nevada.
The Commission transmitted its report to the Attorney-General on April 2,1937. It
was not made public by the Commission.

PART II. GENERAL LEGAL WORK
DESCRIPTION OF PROCEDURE
LEGAL INVESTIGATION
CONSOLIDATIONS AND MERGERS
DISPOSITION OF CASES BY STIPULATION
REPRESENTATIVE COMPLAINTS
ORDERS TO CEASE AND DESIST
TYPES OF UNFAIR COMPETITION
CASES IN THE FEDERAL COURTS
TABULAR SUMMARY OF LEGAL WORK
35

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

When an application for complaint is received, the Commission, through its chief
examiner, considers the essential jurisdictional elements. Under Section 5 of the
Federal Trade Commission Act it must be shown that a proceeding involves the use
of an unfair method of competition in commerce and that such proceeding “would be
to the interest of the public.” The provisions of Section 5 are also extended to foreign
trade of American exporters by the Export Trade Act. Section 2 of the Clayton Act,
as amended (See Robinson-Patman Anti-Price Discrimination Act) and Sections 3, 7,
and 8 of the Clayton Act make unlawful, under the circumstances therein set forth,
price discrimination (providing under specific conditions for fixing quantity limits not
to be exceeded in the allowance of price differentials) and certain other forms of
discrimination, tying and exclusive-dealing contracts, agreements, or understandings,
corporate acquisitions of stock in competing companies, and interlocking directorates.
The Federal Trade Commission, the Interstate Commerce Commission, the Federal
Communications Commission, and the Federal Reserve Board are empowered to
enforce compliance with such sections in their respective fields.
It must also appear that the practice complained of is one over which the Federal
Trade Commission has jurisdiction. Frequently it is necessary to obtain additional data
by further correspondence or by a preliminary field investigation before deciding
whether to docket an application for complaint.
When an application for complaint has been docketed, it is assigned by the chief
examiner to an attorney for investigation, in which the facts regarding the matter are
developed. The attorney to whom the
37

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

application is assigned interviews the party complained against, advising of the
charges, and requesting the submission of such evidence as may be desired in defense
or in justification. In making such investigation, it is not the policy of the Commission
to disclose the identity of the complainant. If necessary, competitors of the respondent
are interviewed to determine the effect of the practice from a competitive viewpoint.
It is often desirable to interview consumers to assist in determining whether the
practice alleged constitutes an unfair method of competition and also to establish the
requisite public interest.
After developing the facts from all available sources, the examining attorney
summarizes the evidence in a report, reviews the law applicable thereto, and makes
recommendations as to what action the Commission should take.
The record is then reviewed by the Chief Examiner, and, if found to be complete, is
submitted, with a brief statement of facts, with conclusions and recommendations, to
the Commission for its consideration. The Chief Examiner may recommend: (1) that
the case be closed without further action because of lack of evidence in support of the
charge or for the reason that the practice does not violate any law over which the
Commission has jurisdiction, (2) closing of the application upon the signing by the
respondent of a stipulation of the facts and an agreement to cease and desist from the
unlawful practice as charged, or (3) issuance of formal complaint.
If, after consideration of the Chief Examiner’s recommendation, the Commission
decides that formal complaint should issue, the case is referred to the Chief Counsel
for preparation of formal complaint and trial of the case. Or, if the Commission should
permit stipulation, the case is referred to the chief trial examiner for its negotiation.
Cases involving unfair methods of competition are, in some in-stances, referred to
the director of trade practice conferences for report in lieu of formal complaint if they
relate to an industry which has had or which contemplates having a trade practice
conference for consideration of the unfair practices involved.
All proceedings prior to issuance of formal complaint or publication of a stipulation
are confidential.
FORMAL PROCEDURE

Only after careful consideration of the facts and evidence developed by the
investigation does the Commission issue a complaint. The complaint and the answer
of respondent thereto and subsequent proceedings are a public record.
A complaint is issued in the name of the Commission acting in the public interest.
It names a respondent and charges a violation of law, with a statement of the charges.
The party complaining to the Com-

DESCRIPTION OF PROCEDURE

39

mission is not a party to the formal complaint issued by the Commission, nor does the
complaint seek to adjust matters between parties; rather, the prime purpose of the
proceedings is to prevent, for the protection of the public, those unfair methods of
competition forbidden by the Federal Trade Commission Act and those practices
prohibited by the Clayton, Robinson-Patman, and Export Trade Acts.
The Commission’s rules of practice and procedure provide that in case the
respondent desires to contest the proceedings he shall, within 20 days from service of
the complaint, file answer thereto with the Commission. The rules of practice also
specify a form of answer for use should the respondent decide to waive hearing on the
charges and not contest the proceeding.
Under the rules of practice, “failure of the respondent to file answer within the time
* * * provided or failure to appear at the time and place fixed for hearing shall be
deemed to authorize the Commission, without further hearing or notice to respondent,
to proceed in regular course on the charges set forth in the complaint, and to make,
enter, issue, and serve upon respondent findings of fact and an order to cease and
desist.”
In a contested case the matter is set down for taking of testimony before a trial
examiner. This may occupy varying lengths of time, according to the nature of the
charge or the availability and number of witnesses to be examined. Hearings are held
before a member of the Commission’s staff of trial examiners, who may sit anywhere
in the country, the Commission and the respondents being represented by their
respective attorneys.
After the taking of testimony and the submission of evidence on behalf of the
Commission in support of the complaint, and then on behalf of the respondent, the trial
examiner prepares a report of the facts for the information of the Commission, counsel
for the Commission, and counsel for the respondent. Exceptions to the trial examiners
report may be taken by counsel for either side.
Within a stated time after the trial examiner’s report is made, briefs are filed, and the
case is set for final argument before the Commission. Thereafter the Commission
reaches a decision sustaining the charges made in the complaint, or dismissing the
complaint, or closing the case.
If the complaint is sustained, the Commission states its findings as to the facts and
conclusion that the law has been violated, and thereupon an order is issued requiring
the respondent to cease and desist from such violation.
If the complaint is dismissed or closed, an appropriate order is entered.
An order to cease and desist is the Commission’s final step in its legal procedure,
except in cases which are taken to court.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

CASES MAY BE TAKEN TO FEDERAL COURTS
No penalty is attached to an order to cease and desist as such, but a respondent
against whom it is directed is required within a specified time, usually 60 days, to
report in writing the manner in which the order is being obeyed. If the respondent fails
to obey an order, the Commission may apply to a United States Circuit Court of
Appeals for enforcement of its order, and failure to obey the court’s decree affirming
the Commission’s order results in the respondent being held for contempt of court and
subjected to the consequent penalty of fine or imprisonment, or both. Also the
respondent may petition for review. The statute provides that “such proceedings in the
Circuit Court of Appeals shall be given precedence over other cases pending therein,
and shall be in every way expedited.” The Circuit Court has power to affirm, modify,
or set aside an order of the Commission, but either party may apply to the United
States Supreme Court for a writ of certiorari, through which, if granted, there may be
obtained a review of the decision and judgment of the court of appeals and final
adjudication of the matter at issue.
LEGAL INVESTIGATION
INQUIRIES PRIOR TO FORMAL COMPLAINT OR STIPULATION

The legal investigational work of the Commission includes the investigation of
applications for complaint preliminary to formal action for the correction of unfair
methods of competition or other practices violative of the laws administered by the
Commission. This work is directed and supervised by the chief examiner.
Preliminary investigations also are conducted by the special board of investigation
in cases which involve allegations of false and misleading advertising, and are handled
through a special procedure more fully described beginning at p.101.
At the beginning of the fiscal year, July 1,1936, there were pending for investigation
by the chief examiner’s staff, 324 applications for complaint in preliminary or
undocketed cases. During the fiscal year, 627 additional applications of this character
were received, making a total of 951, of which 631 were investigated during the year.
As a result, 211 of such investigated cases were docketed and transmitted to the
Commission for action and 420 were closed without docketing because of lack of
jurisdiction or other deficiencies. This left 320 preliminary cases of this type pending
for investigation at the end of the fiscal year, June 30, 1937.
Two hundred eighty-three applications for complaint which had been docketed
without preliminary investigation, were pending for regular investigation at the
beginning of the fiscal year. During the year, 827 additional cases of this type were
received for investigation, making a total of 1,110 such cases docketed for
investigation. Of

CONSOLIDATIONS AND MERGERS

41

these cases, 663 were investigated and transmitted to the Commission for action,
leaving 447 cases of this character still pending for investigation at the end of the
fiscal year.
Thus the chief examiner’s division, during the fiscal year, completed 1,294
investigations of preliminary and docketed applications for complaint.
Several attorneys ordinarily assigned to legal investigational work were engaged
during the year on the investigations of milk and dairy products, agricultural income,
and petroleum decree, all of which inquiries are described in Part II, General
Investigations.
The chief examiner conducts supplemental investigations (1) in matters originating
with the Special Board of Investigation (relating to false and misleading advertising);
(2) where additional evidence is necessary in connection with formal complaints; (3)
where it appears or is charged that cease-and-desist orders of the Commission are
being violated, and (4) where it appears or is charged that a stipulation entered into
between a respondent and the Commission, wherein the respondent agreed to cease
and desist from certain unfair competitive practices, is not being observed in good
faith.
The legal investigational work of the Commission is directed from its central office
in Washington and conducted through that office and four branch offices, located at
45 Broadway, New York City; 433 West Van Buren Street, Chicago; 544 Market
Street, San Francisco; and 801 Federal Building, Seattle.
CONSOLIDATIONS AND MERGERS
CASES ARISING UNDER SECTION 7 OF THE CLAYTON ACT

Section 7 of the Clayton Act in substance declares it to be unlawful for a
corporation, engaged in interstate commerce, to acquire directly or indirectly the
capital stock or other share capital of another corporation also engaged in commerce,
where the effect of such acquisition may be to substantially lessen competition
between the corporations involved, or to restrain such commerce in any section or
community, or tend to create a monopoly of any line of commerce. It also declares it
to be unlawful for a corporation or a holding company to acquire capital stock or other
share capital or two or more corporations engaged in commerce where the effect of
such acquisition also may be as aforementioned.
At the beginning of the fiscal year there were pending in the Commission 12
preliminary matters involving acquisitions, consolidations and mergers, while 18 new
inquiries were instituted during the year. Of these 30 cases, at the close of the year, 1
was pending, 1 had been docketed as an application for complaint, and 28 had been
closed without action, of which 2 had been referred to the Department of Justice for
consideration under the Sherman Act.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

One formal complaint alleging violation of Section 7 of the Clayton Act, was issued
against Schenley Distillers Corporation of New York City. The corporation allegedly
acquired capital stock of the Bernheim Distilling Company, Louisville, Ky., a
competing corporation. This complaint was pending at the close of the year.
A formal complaint against Sterling Products, Inc., of New York City, pending
before the Commission at the beginning of the year, was later dismissed. It had
charged unlawful acquisition of the capital stock of The R. L. Watkins Company, Inc.,
dealer in proprietary medicines and pharmaceutical preparations.
There was also pending at the close of the year an order of divestiture issued in 1934
against Vanadium-Alloys Steel Co., of Latrobe, Pa., because of its unlawful
acquisition of the capital stock of Colonial Steel Company. The time fixed for the sale
of such capital stock has been extended from time to time by the Commission because
of the respondent company’s alleged inability to satisfactorily dispose of the stock or
property of the acquired corporation.
DISPOSITION OF CASES BY STIPULATION
PROCEDURE AFFORDS OPPORTUNITY TO AVOID FORMAL COMPLAINT IN
CERTAIN INSTANCES

In addition to disposing of cases by formal complaint and trial, the Commission in
certain circumstances , affords a respondent the privilege of disposing of a case by
signing a statement of fact and agreement to discontinue the alleged unfair method of
competition.
The Commission determines the form and subject matter of all stipulations which
are prepared in accordance with the facts as disclosed by the investigation. If a
respondent alleges the facts to be other than the investigation discloses, then the matter
is not subject to stipulation and the proper and only procedure is to try the issue in
order to develop the true facts.
In those classes of cases in which the Commission affords the respondent an
opportunity to dispose of a matter by stipulation, that procedure accomplishes
economically and expeditiously the same result as a complaint and order to cease and
desist. It also simplifies the Commission’s legal procedure and saves both the
Government and the respondent the expense incident to trial of the complaint.
Often it appears that a violation occurs through ignorance, or misunderstanding, and
that the attention of the offender has only to be called to the fact to induce
discontinuance of the practice. In such an instance, the Commission, instead of issuing
a formal complaint, grants the respondent an opportunity to sign a statement of facts
disclosed by the investigation and agreement to cease and desist from the practices
charged. If such stipulation is signed, further action is

REPRESENTATIVE COMPLAINTS

43

suspended; if it is not signed, the case goes to trial. But, if the practice is fraudulent or
especially malicious and of serious injury to the public, a stipulation is not permitted.
All Stipulations are for the public record.
CASES AFFECT WIDE VARIETY OF BUSINESSES

Unfair trade practices discontinued as a result of stipulations comprise a wide variety
of misleading misrepresentations affecting a large number of businesses. These
practices are usually of a type that can be readily corrected through this procedure.
The range of commodities involved in the disposition of cases by stipulation
embraces practically all types of products sold in interstate commerce.
TOTAL NUMBER OF STIPULATIONS

Stipulations in which various individuals, firms and corporations agreed to cease and
desist from the unlawful practices as set forth therein and which were approved by the
Commission during the fiscal year ended June 30,1937, included 260 cases in addition
to 364 cases of a special class which were limited largely to false and misleading
advertisements and were disposed of through a special procedure for this purpose. A
total of 624 cases were thus approved and accepted during the year.
At the end of the fiscal year, the procedure of disposition of cases by stipulation had
been in effect about 11 ½ years. During this period a total of 3,811 stipulations had
been approved and accepted by the Commission, of which number 2,015 were of the
general class and 1,796 were of the special class limited largely to misleading advertising matter.
REPRESENTATIVE COMPLAINTS
ALLEGED VIOLATIONS OF FEDERAL TRADE COMMISSION, CLAYTON AND
ROBINSON-PATMAN ACTS

During the fiscal year ended June 30, 1937, the Commission issued 294 complaints
as compared with 386 issued during the last preceding fiscal year.
Two hundred seventy-seven of these complaints charged violation of Section 5 of
the Federal Trade Commission Act prohibiting unfair methods of competition in
commerce, while 7 of this number also charged violation of Section 2 of the Clayton
Act as amended by the Robinson-Patman Anti-Price Discrimination Act, and 2 charged
violation of Section 3, the exclusive dealing section of the Clayton Act.
Seventeen of the 294 complaints alleged practices other than violation of the Federal
Trade Commission Act. Of these, 16 charged
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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

violation of Section 2 of the Clayton Act as amended by the Robinson-Patman Act and
1 alleged violation of Section 7 of the Clayton Act prohibiting unlawful stock
acquisitions.
The total number of complaints issued charging violation of the Clayton Act was 26,
of which 23 alleged violation of Section 2 of that act as amended by the RobinsonPatman Act.
I. COMPLAINTS UNDER THE FEDERAL TRADE COMMISSION ACT
A. SUPPRESSION OF PRICE COMPETITION AND OTHER ALLIED
RESTRAINTS
ON TRADE
1. COMBINATIONS TO FIX AND MAINTAIN PRICES

Ten complaints were issued charging combination and conspiracy in restraint of
trade through price fixing and other similar agreements. The agreements were entered
into mostly among members of and within certain industries, who were alleged to have
combined to fix minimum prices at which their products were to be sold, or to fix
uniform prices and discounts among the members, all in violation of Section 5 of the
Federal Trade Commission Act. Allegedly, the agents for establishing and making
these combinations effective were usually trade associations. The following cases are
representative:
Association of rice millers.--An association of rice millers and eight association
members were charged with unlawfully restricting the sale of milled rice through
fixing and maintaining uniform prices. The alleged combination and conspiracy was
enforced, it was charged, through a marketing board and a crop board organized within
the association.
Metal window products manufacturers.--Nineteen manufacturers of metal window
products, all members of an association, were charged with using common basic price
books and formulas for determining the price for every product in the industry and
with maintaining a schedule of uniform prices and discounts. In furtherance of this
purpose, they were alleged to have submitted all estimates of bids on a project in a
given area to one of their clearing bureaus located at strategic points throughout the
United States, which bureau was designated by the association as the place to clear
bids or prices for that particular area for the purpose of obtaining identical gross or net
price estimates which they allegedly used in bidding on the project in question.
Chalk and crayon manufacturers.--Fourteen leading manufacturers of chalk, wax
crayons, water colors, tempera colors and other school supplies were charged with
maintaining and enforcing fixed prices with resultant enhancement of prices for school
supplies.
Blue print and tracing paper manufacturers.--A complaint charged eleven
manufacturers of blue print, tracing and other reproduction papers and cloths, and their
trade association, with fixing and maintaining uniform prices by combination and

conspiracy among themselves.

REPRESENTATIVE COMPLAINTS

45

Industrial rivet makers .-- A similar complaint was issued against thirteen
Companies manufacturing industrial rivets, and their trade association, alleging the
existence of a combination and conspiracy through which uniform prices were fixed
and maintained.
Automobile parts and accessories associations.--Five trade associations composed
of manufacturers and distributors of automobile parts and accessories were charged
with forming a combination to control the market in, and to fix and maintain the resale
prices of, such products throughout the United States. Under the agreements, the
complaint charged, manufacturer members fixed uniform and substantially identical
prices for their products to jobbers, as well as uniform and substantially identical
resale prices at which jobbers should resell such products. The complaint alleged that
the association and its members furthered the conspiracy and combination by
attempting to monopolize in the hands of jobbers the distribution of automobile parts,
accessories, and shop equipment.
Turbine generator and condenser manufacturers.--A complaint alleging collusive
bidding, and fixing and maintaining uniform prices, was issued against nine companies
engaged in the manufacture and sale of turbine generators and condensers and against
their trade association. The principal purchasers of turbine generators and condensers
are public utilities, and municipal, State and Federal Governments. (See General
Electric Co., and others, order to cease and desist, p.58.)
Water gate valve and hydrant manufacturers.--Thirty-four manufacturers of water
gate valves, hydrants, fittings and similar articles used for water supply systems, and
their trade association , selling their products chiefly to municipalities and to divisions
of municipal, State and Federal Governments, were charged with engaging in price
fixing practices which prevented price competition and resulted in restraining trade,
increasing prices of their respective products and creating in themselves a monopoly
in the sale of their products. (See Water Works Valve and Hydrant Group, order to
cease and desist, p.58.)
Cast iron soil pipe producers--Use of basing point system.--The Commission issued
a complaint on March 26, 1937, against an association, its officers, and 35
corporations producing cast iron soil pipe, charging that the respondents had entered
into a combination substantially lessening competition in interstate commerce and
discriminating in price among their customers in such commerce. The principal vehicle
for this combination was alleged to be the use of a single basing point system on the
part of producers in all parts of the country based upon Birmingham, Ala. It was
charged that the respondents had thus violated the Federal Trade Commission Act and
Section 2 of the Clayton Act as amended by the Robinson-Patman Act. Answers to the
complaint were filed on June 23,1937, on the part of all respondents.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Window glass manufacturers.--A complaint charging practically all manufacturers
and distributors of window glass in the country, with a conspiracy to fix prices, control
sources of supply and the channels of distribution of their products, and with putting
into practice a system of discriminatory prices, is described on p.49 under the
Robinson-Patman Act cases. Violation of both the Federal Trade Commission and
Robinson-Patman Acts was alleged.
Golf ball manufacturers.--Violation of both the Federal Trade Commission and
Robinson-Patman Acts was alleged in a complaint issued against certain members of
the golf ball industry. The complaint is described on p.49 under the Robinson-Patman
Act cases. Under the Federal Trade Commission Act, the respondents were charged
with monopolistic practices in the establishment of a uniform price-fixing policy on
the part of leading manufacturers in concert with influential retailers.
2. RESALE PRICE MAINTENANCE

Seven complaints alleging unlawful resale price maintenance through agreements
between manufacturers and various distributors, wholesalers and retail dealers, were
issued during the fiscal year. Six of these cases were against liquor distillers and
distributors and involved alleged resale price maintenance in connection with the sale
of liquors and whiskies. Associations of retail liquor dealers whose members were
alleged to have cooperated with the distillers and distributors in effecting price fixing
merchandising policies, were also named respondents.
The complaints charged that the distillers and distributors fixed and observed
uniform resale prices and discounts and obtained the active cooperation of wholesalers
and retailers in maintaining the prices and discounts through unlawful agreements and
understandings. The respondents were charged with blacklisting and boycotting all
wholesalers and retailers who did not execute the price-fixing agreements into which
they entered.
3. MISCELLANEOUS

Seven complaints alleged other combinations and conspiracies in restraint of trade
through attempts to control and restrict channels of distribution, through curtailment
of production, submission of identical bids, boycott and similar practices. The
commodities involved were candy, concrete pipe, lumber and other building materials,
women’s apparel, sponges, hot air furnaces and heating supplies.
B. FALSE ADVERTISING AND MISREPRESENTATION

A total of 178 complaints issued during the fiscal year charged false and misleading
representations in advertisements, on labels and otherwise. These may be classified as
follows:

REPRESENTATIVE COMPLAINTS

47

Forty-six complaints involved alleged false and misleading advertising and
misrepresentation as to therapeutic value of various medicinal preparations and
devices.
Forty-four complaints charged misrepresentations as to nature, quality, character,
and prices of various products or of the ingredients entering into their manufacture.
Twenty-eight complaints alleged fictitious retail price marking, false claims of
distributors as being manufacturers, or false representation as to quality, nature and
place of origin of ingredients. Some of these cases allegedly involved false claims as
to beneficial therapeutic value of various toilet preparations and cosmetics.
Sixteen complaints charged false representations in the sale of books, encyclopedias,
and home-study courses, ten of these complaints allegedly having to do with false
representations by correspondence schools as to the nature and character of the schools
and their courses of study, the availability of positions and earning capacity of
students.
Thirteen complaints alleged false representation as to place of origin of such
products as toys, candy, hams, chinaware, flavoring compounds, razor blades, and
gloves.
Thirteen complaints alleged false representation in connection with the sale of
automobiles and products for use in connection with their operation, eight of these
cases allegedly involving misrepresentation as to the rate of interest on deferred
balances on installment purchase contracts, and five allegedly embracing false
representations as to the nature and effectiveness of motor compounds, anti-freeze
solution and lubrication oil.
Eleven complaints (in addition to those otherwise listed which include a similar
charge) alleged false representations as to a company or individual being the
manufacturer or producer of such products as eye-glasses, adding machines, smoking
pipes, nursery products, hosiery, blankets, ribbons, whiskies and other spirituous
beverages.
Seven complaints alleged false representations in the sale of dog food, baby chicks,
and medicinal products for animals.
C. MISCELLANEOUS CASES

Lotteries or gift enterprises.--Forty-seven complaints charged manufacturers of and
dealers in candy, clocks , blankets and bed-spreads, ice cream cones, hosiery, luggage
and other miscellaneous products, with using schemes involving an element of chance
or lottery in the sale of such products to the ultimate consumer. Thirty-one of these
cases were against candy manufacturers and dealers.
False disparagement of competitors, and other practices.--Seven complaints alleged
false disparagement of competitors or their products and 7 charged the respective
respondents with misrepresentation as to the earning capacity of their sales agents.
Five complaints charged imitation of competitor’s products and the passing off of
certain articles as the products of competitors.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

II. COMPLAINTS UNDER THE CLAYTON ACT
A. COMPLAINTS CHARGING VIOLATION OF SECTION 2 OF THE CLAYTON
ACT
AS AMENDED BY THE ROBINSON-PATMAN ACT 1
1. ALLEGED PRICE DISCRIMINATIONS

Two complaints against large yeast distributors.--Two complaints alleged that
certain large yeast distributor corporations, maintaining similar discount schedules,
were unlawfully discriminating in price between different purchasers and that the
effect was substantially to lessen or to injure, destroy or prevent competition in the
manufacture, sale, and distribution of bread and allied products in which yeast is used.
It was also alleged that the discriminatory prices had a tendency to create a monopoly
in favored customers of the corporations.
Cheese distributors.--In two complaints, simultaneously issued, the Commission
charged the Kraft-Phoenix Cheese Corporation, Chicago (complaint dismissed July
17,1937), and a second cheese distributing corporation (complaint pending at the close
of the fiscal year), with unlawfully discriminating in price to retailers. Both
corporations were alleged to have sold at similar prices. It was charged that the general
effect of the systematic discriminations in price was to substantially lessen or to injure,
destroy or prevent competition, in the Sale and distribution of cheese, cheese products
and salad products, between the respondents and other manufacturers and distributors
of similar products engaged in interstate commerce, and also between the favored
customers and unfavored competing purchasers of cheese. It was further charged that
the effect of the discriminations had been a tendency to create a monopoly in the
respondents and also in the favored purchasers.
Millinery distributor.--Hollywood Hat Co., Inc., New York (against which the
Commission issued an order to cease and desist, July 17, 1937), was charged in the
complaint with discriminating in price in favor of certain retailers, particularly one
retailer operating stores in 3 California cities, by giving them a lower price than that
charged competing retailers. The alleged effect of such discrimination was to lessen
or to injure, destroy or prevent competition in the sale and distribution of women’s
hats between those of the respondent’s customers who received the benefit of such
discriminatory lower prices and competing customers who did not receive such benefit
and were charged higher prices.
Manufacturer of glazed tile .--The Commission charged a manufacturer and
distributor of glazed the with allowing a 15 percent discount,
1 One of the cases described hereunder was closed prior to the end of the fiscal year, while two were
dis. posed of by orders to cease and desist and two by orders of dismissal, shortly after the close of the
fiscal year. These cases, respectively, are: (1) Procon Grocery service Co., Inc.; (2) Hollywood Hat Co.,
Inc.; (3) Biddle Purchasing Co.; (4) Bird & Son, Inc., Bird Floor Covering sales Corporation, and
Montgomery Ward & Co., Inc., and (5) Krafaft Phoenix Cheese Corporation. In the remaining complaints,

pending at the close of the year, the respondents are not identified hereunder.

REPRESENTATIVE COMPLAINTS

49

regardless of quantities sold, to so-called wholesalers, which discount allegedly was
denied to the contractors. It was charged that the effect of such discrimination had
been or might have been substantially to lessen competition or to injure, destroy or
prevent competition in the distribution of tile, particularly between wholesalers and
the contractors.
Floor covering companies and a mail order house.--Bird & Son, Inc., a
manufacturer, and Bird Floor Covering Sales Corporation, a distributor of floor
covering, both of East Walpole, Mass., were charged with selling to Montgomery
Ward & Co., Chicago, at a lower price than to competing retailers. Montgomery Ward
& Co., was also made a respondent. (Complaint against these respondents dismissed
July 17, 1937.)
Dealer in bank and trust company supplies.--A corporation engaged in the sale of
pass books, account books and other paraphernalia for use by banks and trust
companies, was charged with discriminating in price between different purchasers
where the effect might have been substantially to lessen competition or tend to create
a monopoly in interstate commerce in such goods or to injure, destroy or prevent
competition with the respondent in their distribution.
Window glass manufacturers.--One complaint charged practically all manufacturers
and distributors of window glass in the country, and two trade associations, also their
officers and employees, with a conspiracy to fix prices, and control sources of supply
and the channels of distribution of their product. The respondents were also charged
with making effective a policy and system whereby the respondent manufacturers
discriminated in price between different purchasers of window glass. The effect of the
discrimination allegedly was to lessen competition, tend to create a monopoly, and to
injure, destroy and prevent competition between and among certain so-called “quantity
buyers”, who allegedly were given a 7 ½ percent differential, and certain other buyers
designated as “carload lot buyers”, who allegedly were required and compelled to
purchase window glass from the so called “quantity buyers” at 7 ½ percent more than
the price quoted to and paid by the quantity buyers. It was also charged that a similar
effect was produced upon competition between and among the customers of these
classes of buyers purchasing window glass for resale to consumers.
Golf ball manufacturers.--Violation of both the Robinson-Patman and the Federal
Trade Commission Acts was alleged in one complaint issued against certain members
of the golf ball industry. Under the Robinson-Patman Act, it was alleged that certain
manufacturers of golf balls were alleged to have sold these balls to members of a professional golfers association at a discount or a rebate on the purchase price quoted to
the retail trade on golf balls of like grade and quality

50

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

but which did not have imprinted on them the initials of the association. It was further
alleged that members of the association knowingly induced the manufacturers to
discriminate in price and the general effect of the discrimination had been substantially
to lessen competition and tend to create a monopoly in the manufacture, sale and
distribution of golf balls, and to injure, destroy and prevent competition between and
among manufacturers, wholesalers and retailers of golf balls. Under the Federal Trade
Commission Act, the complaint charged monopolistic practices through a uniform
price fixing policy on the part of leading manufacturers in concert with influential
retailers.
Cast iron soil pipe producers.--A complaint charging an association, its officers, and
35 corporations producing cast iron soil pipe, with price discrimination, is described
on p.45 under the Federal Trade Commission Act cases. The complaint alleged
violation of both the Federal Trade Commission Act, Section 5, and the Clayton Act,
Section 2, as amended by the Robinson-Patman Act.
2. ALLEGED VIOLATION OF BROKERAGE SECTION

Under subsection 2 (c) of the Clayton Act, as amended by the Robinson-Patman Act,
relating particularly to brokerage and so-called “dummy” brokerage houses, the
Commission issued five complaints which are more fully discussed hereunder.
Large grocery chain store system.--A large corporate chain of retail grocery stores,
operating more than 14,000 retail stores, was charged with purchasing in interstate
commerce goods on which it received and accepted from the sellers certain allowances
or discounts in lieu of brokerage It was further alleged that no services whatsoever
had at any time been performed by this large food chain for which allowances and
discounts were received. Testimony in this case was taken in many parts of the
country, including New York, California, Wisconsin and Texas.
A wholesale grocer, a broker, and sellers --A corporation generally referred to as
a wholesale grocery house, a brokerage company affiliated with and purchasing chiefly
for the wholesale house, and several manufacturers and sellers of food products, were
charged with the illegal receipt and payment of brokerage. It was alleged that the socalled broker was acting in fact for, in behalf of and subject to the control of the
wholesale corporation and that in connection with sales to the wholesale corporation,
no services were rendered the sellers for which the brokerage company could lawfully
be reimbursed. It was alleged that the brokerage company and the wholesale company
occupied and used one office and that the same employees served both companies.
Market information and purchasing services.--Two complaints related to the
business of corporations operating market information

REPRESENTATIVE COMPLAINTS

51

and purchasing services, and of companies engaged either in buying or selling
foodstuffs and groceries through the companies operating the market information and
purchasing services. The complaints designated certain companies as buyers and
others as sellers.
According to the complaints, the companies operating the market information and
purchasing services received orders from members of the group of buyers to purchase
commodities, and transmitted such orders to companies of the selling group for
execution. In the course of the transactions, the complaints alleged, the sellers paid the
market information and purchasing service companies so-called brokerage fees or
commissions, which the latter in turn paid over to the buyers. The complaint further
charged that the fees or commissions were not retained by the market information and
purchasing service companies as payment for any services rendered by them to the
sellers and were not paid to the buyers for any services they rendered. In one of these
complaints the respondents were Biddle Purchasing Co., New York, and others,
against which the Commission issued an order to cease and desist, July 17, 1937. The
complaint in the other case was pending at the close of the fiscal year.
Chain store purchasing agents.--Procon Grocery Service Co., Inc., and certain large
chain store buyers were also charged with violation of the brokerage section. This
complaint is more fully discussed under the heading of “Descriptions of Outstanding
Cases”, p.58.
3. MISCELLANEOUS

Cosmetics manufacturers.--Seven complaints were directed against manufacturing
distributors of cosmetics, with slight variation in that allegations of violations of all
sections were not charged against each respondent. The charges generally were that
Section 2 (a) was violated in the granting of discounts based on annual volume of purchases with the effect of injuring competitors. The paying or contracting for payment
of certain sums of money to or for the benefit of certain customers in consideration for
advertising services furnished by them in connection with the sale of the
manufacturer’s products, without making such payments or allowances available on
proportionally equal terms to all customers competing in the distribution of the
product, was alleged to be in violation of Section 2 (d). It was further alleged that
Section 2 (e) was violated in that certain customers were furnished with demonstrators,
whereas other customers were discriminated against by not being furnished similar
services on proportionally equal terms.
B. COMPLAINTS CHARGING VIOLATION OF SECTION 3 OF THE CLAYTON
ACT

Petroleum products and automobile accessories.--One complaint charging violation
of Section 3, the exclusive dealing section of the Clayton Act, was issued against a
corporation engaged in the pro-

52

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

duction of petroleum products and in the sale and distribution of such products and
automobile accessories, such as automobile tires and tubes, batteries, spark plugs,
window shield wipers, oil filters, and auto light bulbs. It was charged that the
respondent forced and coerced service station operators dealing in its petroleum
products to deal also in specific automobile accessories named by it and, in connection
with the resale of which, it received certain commissions or profits. The complaint also
alleged that service station operators were induced not to deal in any competitive
automobile accessories made by manufacturers other than those named by the
respondent.
Automobile manufacturers.--Violation of Section 3 of the Clayton Act as well as of
Section 5 of the Federal Trade Commission Act, was charged in a complaint issued
against a manufacturer of automobiles and its sales subsidiary. The respondent
manufacturer, with the cooperation of its subsidiary, was alleged to have coerced and
compelled dealers in makes of automobiles manufactured by the respondent company,
to purchase accessories and supplies for use thereon only from it or from the concerns
affiliated with it. The complaint also alleged that the manufacturer and its sales
subsidiary made sales and contracts of sale of automobile parts upon the expressed
condition, agreement and understanding that the purchasers thereof were not to deal
in automobile parts manufactured by a competitor.
C. COMPLAINT CHARGING VIOLATION OF SECTION 7 OF THE CLAYTON
ACT

Liquor distilling company.--A complaint under Section 7 of the Clayton Act charged
a distilling company with having acquired all of the capital stock of a competing
distilling company, the alleged acquisition having had the effect, it was charged, of
ending competition between the two corporations.
ORDERS TO CEASE AND DESIST
UNFAIR TRADE PRACTICES PROHIBITED IN 296 CASES

The Commission issued 295 orders to cease and desist from the use unfair methods
of competition and other violations of law during the fiscal year, which was an
increase of 135 over the number of orders issued during, the last preceding fiscal year.
However, two of the 296 orders issued have been rescinded, leaving a net total of 294
orders to cease and desist entered during the fiscal year.
LIST OF RESPONDENTS
Respondent
A. F. of L. Trade Union Committee for Unemployment
Insurance and Relief, and others
Aborn Hat Manufacturing Company
Acme Distilleries, Inc.

Location
New York, N.Y.
Chicago, Ill.
Baltimore, Md.

Afta Solvents Corporation

New York, N.Y.

ORDERS TO CEASE AND DESIST
Respondent
Allen’s Cut-Rate Shops, and others
Allura, Inc
Alvita Products Company
Ambur Distilleries, Inc
American Bank Machinery Company
American Candy Co
American, Grain Distillers, Inc
American Mint Corporation, and others
American Remedy Co
American Tap Bush Co
Ardelle, Inc., Helen
Army and Navy Supply Co., and others
Arrow Distilleries, Inc
Atlantic Coast Oil Co. of New York, Inc
Atlas Products Co
Atz’s Hatchery, and others
Avery Salt Co
Banner Distilling Co
Barage-Webster Co
Barletta Manufacturing & Packing Co., and others
Barth Laboratories, Hec., and others
Bear Mill Manufacturing Co., Inc
Becker, Inc., M. & J
Beich Co., Paul F
Beverly Products Co
Blackwell Journal Publishing Co
Bonomo Candy and Nut Corporation
Boston Sportswear Co., and others
Boyd Business University
Brecht Candy Co
Brier & Co., Samuel, and others
British American Toffee Co
Brown&Haley
Buno Co.,
Calafo Co
California Packing Corporation, and others
Campbell Distilleries, Inc.
Cap Association of the United States, Inc., and others
Carey Salt Co
Casey Co., J H
Casterline Brothers
Cataldo, Angelo, and others
Cauk Co. L. D
Champion Co.
Charles of the Ritz Distributors Corporation
Chase Candy Co.
Chesapeake Distilling and Distributing Co
Claeys, J C
Clark Distilling Corporation, James, and others
Clark Grave Vault Co
Clopay Corporation
Close Co., George
Colonial Distilling and Distributing Corporation

53
Location
New Haven, Conn.
Sacramento, Calif.
Pasadena, Calif.
Milwaukee, Wis.
Philadelphia, Pa.
Milwaukee, Wis.
Detroit, Mich.
New York, N.Y.
Philadelphia; Pa.
Detroit, Mich.
Seattle, Wash.
Richmond, Va.
Peoria, Ill.
New York, N. Y.
Newark, N.J.
Milltown, Ind.
Scranton, Pa.
Chicago, Ill.
Eau Claire, Wis.
New York, N. Y.
Chicago, Ill.
New York, N. Y.
Brooklyn, N. Y.
Bloomington, Ill.
Springfield; Mass.
Blackwell, Okla.
Brooklyn, N. Y.
Boston, Mass.
Washington, D. C.
Denver, Cob.
Philadelphia.
New Raven, Conn.
Tacoma, Wash
Philadelphia
Los Angeles
San Francisco.
Camden, N J
New York City
Hutchinson, Kans.
Portland, Ore.
Chicago.
Boston.
Milford, Del.
Springfield, Ohio
New York City
St. Joseph, Mo.
Baltimore
South Bend, Ind.
Jersey city, N.J.
Columbus, Ohio.
Cincinnati.
Cambridge, Mass.
New York City.

54

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Respondent
Columbia Distilling Co., and others
Conde Nast Publications, Inc
Consolidated Distillers Corporation
Cosner Candy Co
Crystaltone Radio Corporation, and others
Cushing Refining and Gasoline Co
Diamond Knitting Mills
Distillers Exchange, Inc
Dockman & Son, Inc., John H
Dollar Crystal Co
Dominion Distilleries, Inc
Duncombe Research Laboratory
Durant Motor Car Co
Eagle Spice Co
Eastern Art Co., and others
Edison-Bell Co., Inc., and others
Eldeen Spice Co
Elders, H. Will St.
Electro Thermal Co
Elisco, Charles, and others
Esbeco Distilling Corporation
Eucathol Co., Inc
Euclid Candy Co
Fabrikant Co., Louis
Fall River Wholesale Grocers’ Association, and others
Federal Distillers Corporation
Federal Institute of Meats and Marketing
Fine-Reding Candy Manufacturing Co., Inc
Finishing Products Co., Inc
Foley Co., M. F
Food Display Machine Corporation
Fort Clark Distilleries, Inc
Foster-Milburn Co
Frank & Co., Inc., S. M
Galion Metallic Vault Co
Garten Table Pad Co., Inc
General Distillers, Ltd
General Electric Co., and others
Germania Tea Co., and others
Gibbs & Son, Inc., W. A
Gibson, L. W
Glade Candy Co
Glenn Laboratories, Inc
Gold Seal Distillers, Inc
Granite Arts, Inc
Griffith Piano Co
Gulf Coast Oil Co. of Mississippi, Inc., and others
Gynex Corporation, and others
Haddorff Piano Co
Hauer Distilling Co
Havana Flonda Cigar Co., Inc
Heininger, Dr. S. B
Helmco, Inc

Location
San Francisco.
New York City.
Baltimore.
Denver.
New York City.
Cushing, Okla.
New York City.
Do.
Baltimore.
Omaha, Nebr.
New York City.
Highland Park, Mich.
Detroit.
Brooklyn, N. Y.
Providence, RI.
New York City.
Do.
Joseph, Mo.
Steubenville, Ohio.
Maywood, Ill.
Stamford, Conn.
Shawnee, Okla.
San Francisco.
New York City.
Fall River, Mass.
Detroit.
Marinette, Wis.
Oklahoma City, Okla.
Indianapolis.
Boston.
Chicago.
Peoria, Ill.
Buffalo, N. Y.
New York City.
Galion, Ohio.
Philadelphia.
San Francisco.
Schenectady, N. Y.
Minneapolis.
Chester, Pa.
Chicago.
Salt Lake City, Utah.
New York City.
Chicago.
Omaha, Nebr.
Newark, N.J.
New Orleans.
New York City.
Rockford, Ill.
Cincinnati.
Quincy, Fla.
Chicago.
Do.

ORDERS TO CEASE AND DESIST
Respondent
Herba Medicinal Laboratory
Hercules Products and Distilling Corporation
Heusner & Son, H. N
Hewitt Soap Co., Inc. and others
Hirsch Distilling Co
Hodgdon, Daniel R., and others
Hollywood Mask, Inc
Hollywood Shirt Co
Holmes, Inc., Robert, and others
Holst Publishing Co., and others
Hughes Co., Inc., Henry L., and others
Humania Hair & Specialty Manufacturing Co
Hynd Corporation, A. C
I.S. U. Rank and File Group, and others
I.T. S. Co., and others
Imperial Distillers Co
Imperial Distillers Corporation
International China Co., and others
International Distilling and Distributing Corporation
Interstate Distillers, Inc
Iokelp Co
Irish Hills Distilleries, Inc
Italian-American Spice Co
Jenner Manufacturing Co., and others
Johnson, Charles L., and others
Kalo Inoculant Co
Kienzler Distilling Corporation
Kimball Co., A., and others
King Trading Corporation, and others
Kleinert Rubber Co., I. B
Knight Electric Co., Inc., and others
Kolynos Co
Kroekel-Oetinger, Inc
Krueger, Inc., B. H., and others
Landon & Warner
La Salle Distillery, Inc
La Salle Extension University
Lawrence Blanket Mills
Leader Novelty Candy Co., Inc
Leeve-No-Ring Chemical Co
Lefebvre & Co., Ltd., P A., and others
Leonard, Inc., A. O
Leyden, Martin J
Liberty Distilleries, Inc
Licht’s Fur Factory
Lindholm Co., Inc., G.
Loft, Inc., and others
Luce & Co
Luden’s, Inc
Lumber Mills Co
M & M Bag and Suit Case Co
Malestic Distilling Co
Majestic Laboratories

55
Location
New York City.
Brooklyn N. Y.
Hanover, Pa.
Dayton, Ohio
Kansas City, Mo.
New York City
Chicago
New York City
Jersey City, N.J.
Boone, Iowa
New York City
Do.
Buffalo, N. Y.
New York City.
Elyria, Ohio
Detroit
Los Angeles
Salisbury, N. C.
Washington, D. C.
Baltimore
San Diego, Calif.
Detroit
New York City
Pontiac, Mich.
Evanston, Ill.
Quincy, Ill.
New York City
Do.
Do.
Do.
Do.
New Haven, Conn.
Philadelphia
New York City
Chicago
Stamford, Conn.
Chicago
Worcester, Mass.
Brooklyn, N. Y.
New York City
Malone, N. Y.
New York City
Seattle, Wash.
Baltimore
New York City
Brooklyn, N. Y.
Long Island City, N. Y.
Jersey City, N.J.
Reading, Pa.
Chicago
New York City
Baltimore
Richmond Hill, Long

Island, N. Y.

56

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Respondent
Maple City Candy Co
Marconi Radio Corporation, and others
Margarella, Pasquale
Marion Vault Manufacturing Co
Martel, Gus
McCann Co., John J
McDonald Chocolate Co., J G
McWethy, F. L
Med-Dental Systems Co
Menasha Wooden Ware Corporation, and others
Metropolitan Surgical Instrument Council, Inc., and others
Miller and Co., Inc., George C
Miller, Bain, Beyer & Co
Miller Co., Charles N
Millinery Quality Guild, Inc., and others
Mills Sales Co
Mills Sales Co. of New York, Inc., and others
Montebello Distillers, Inc
Morgen Distilling Corporation
Morici and G. Matalone Co., A
Morris Candies, Inc., Miss
Mount Rose Distilling Co
Mushroom Growers of America
Musil Distilling Co., L
Mutual Stores, Inc
National Civil Service Training Bureau
National Electrical Manufacturers Association, and others
National Grave Vault Co
National Kream Co., Inc., and others
National Salesmen’s Training Association
National Silver Co
Neet, Inc
Neway Manufacturing Co
North American Clothes Co., and others
Novelty Sweets Co
Old Colonel Distillery, Inc., and others
Old Gold Distillers, Inc
Old Rose Distilling Co
Olson Rug Co
Ostler Candy Co
Ostrucon Distilled Products Co., Inc
Paramount Distillers
Pedodyne Co., Inc., and others
Pepsotalis Co
Perfect Manufacturing Co
Perfection Burial Vault Co
Pike-Hansen, Inc
Piuma, Joseph A
Plantation Chocolate Co., Inc
Plough, Inc
Potomac Distilling Corporation

Location
La Porte, Ind.
New York City
Do.
Marion, Ohio
Danbury, Conn.
Burlington, N.J.
Salt Lake City, Utah
Marshall, Mich.
Cincinnati
Menasha, Wis.
New York City
Boston
Philadelphia
Boston
New York City
Do.
Do.
Baltimore
New York City
Chicago
Minneapolis
Trenton, N.J.
Chicago
Racine, Wis.
Washington, D. C.
Los Angeles
New York City
Galion, Ohio
Brooklyn, N. Y.
Chicago
New York City
Chicago
Do.
New York City
Philadelphia
Louisville, Ky.
Chicago.
Do.
Do.
Salt Lake City, Utah
New York City
Cleveland
Chicago
Morgantown, W. Va.
Cincinnati
Galion, Ohio
Chicago
Los Angeles
Philadelphia
Memphis, Tenn.
Baltimore

ORDERS TO CEASE AND DESIST
Respondent
Pratt Food Co
Premier Peat Moss Corporation
Provincial Distilleries, Ltd., Inc
Quaker City Chocolate and Confectionery Co
Quality Distillers, Inc
Quality Products Co., Inc
Queen Anne Candy Co
Radumac Mineral Co., and others
Raladam Co
Rango Tablet Co., and others
Raritan Distillers Corporation
Reo Distillers, Inc
Repair Parts and Replacement Co., Inc
Retail Furniture Dealers’ Association of others
Rex Distilling Co
Rieser Co., Inc
Rittenhouse Candy Co
Rosecrest Distillers
Ross Knitting Mills, Inc., and others
Rubinstein, Inc., Helena
Russek’s Fifth Avenue, Inc
Saffan, Inc., Erna, and others
Sanderson Adjustment Bureau, Inc., and others
Saretsky, Charles A
Savage Candy Co
Schainuck and Son, Inc., Jonas
Schwabacher Brothers & Co., Inc
Seld Leather Co
Sendol Co
Service Products, Inc., and others
Shupe-Williams Candy Co
Sorenson-Beales Candy Co
South Bend Distributing Co., Inc
Spanish Diamond Co., and others
Springfield Metallic Casket Co
Standard Distributors, Inc., and others
Stanley Store
Startup Candy Co
Stayton, G Fred, and others
Sterling Co., and others
Sun Radio Service and Supply Corporation
Sunlife Chlorophyllian Laboratories, Ltd
Sunrise Distilling Corporation
Sunset Distilling Co
Sutton Laboratories, Inc
Sweet Candy Co
Tarzana Mineral Water Co
Taylor Distributing Co., C. O
Trieste Importing Co
Ucanco Candy Co. Inc
Udga, Incorporated, and others
Unique Novelties; Inc

57
Location
Philadelphia
New York City
Brooklyn, N. Y.
Philadelphia
Los Angeles
Brooklyn, N. Y.
Seattle, Wash.
Los Angeles
Detroit
Los Angeles
Perth Amboy, N.J.
Newark, N. J
Chicago
St. Louis,
Providence, R. I.
New York City
Philadelphia
Paterson, N. J
New York City
Do.
Do.
Chicago
Atlanta, Ga.
New York City
Denver, Colo.
Washington, D. C.
Seattle, Wash.
Gloversville, N. Y.
Kansas City, Mo.
New York City
Ogden, Utah
Sioux City, Iowa
South Bend, Ind.
Wheeling, W. Va.
Springfield, Ohio
New York City
Collingswood, N.J.
Provo, Utah
Des Moines, Iowa
Do.
Washington, D. C.
Los Angeles
Chicago
Do.
Chapel Hill, N. C.
Salt Lake City
Hollywood, Calif.
Chicago
New York City
Davenport, Iowa
St. Paul, Minn.
Brooklyn, N. Y.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Respondent
United Distillers and Winers, Inc
United Distillers Corporation
United Silk Co
United States School of Music
Utilities Engineering Institute, Inc
Valley Springs Distillery, Inc
Van Dissen Distilling Co., James
Vivadou Co., Jean
Voneiff-Drayer Co
Water Works Valve and Hydrant Group of the Valve and
Fittings Institute, and others
Wearwell Knitting Mills
Welsh Foundation Pacific
West Coast Distilleries Co
Western American Distillers Corporation
Western Reserve Distilling Co
White & Co., Vernon, and others
Williams-Crahan Co
Wilson Chemical Co., Inc
Winthrop Novelty Co., Inc
Wolf Creek Soap Co
Wolverine Gum, Inc
Woody Candy Co
World Library Guild, Inc
York Caramel Co
Zellers Laboratories
Zion Holy Spiritual Mission, and others

Location
Detroit
Providence, R. I.
Dallas, Tex.
New York City
Chicago
Do.
Los Angeles
New York City
Baltimore
New York City
Do.
Palisades, Calif.
San Francisco
Do.
Cincinnati
Chicago
Oklahoma City, Okla.
Tyrone, Pa.
Brooklyn, N. Y.
Dayton, Ohio
Detroit
Oklahoma City, Okla.
New York City
York, Pa.
Reading, Pa.
Chicago

DESCRIPTIONS OF OUTSTANDING CASES DECIDED
Illustrative of the orders to cease and desist issued during the fiscal year are the cases
described as follows:
COMBINATIONS TO FIX PRICES AND RESTRAIN TRADE

Water Works Valve and Hydrant Group of the Valve and Fittings Institute, New
York, and others--An order to cease and desist was issued against the valve and
hydrant group, its governing committee, its officers and 33 member companies. It
restrained them from entering into and executing any agreement, combination,
understanding or conspiracy to fix and maintain uniform delivered prices for water
gate valves, hydrants, fittings and similar products. The respondents were specifically
prohibited from entering into such an agreement involving the division of the United
States into zones and the fixing and maintaining of uniform delivered prices in such
zones. The order also barred agreements under which the respondents fixed uniform
discounts and refused to continue selling to jobbers and distributors who declined to
resell at the uniform delivered prices fixed by the respondents.
General Electric Co., Schenectady, N. Y., and others.--An order to cease and desist
was issued against General Electric Co., Westinghouse

DESCRIPTIONS OF OUTSTANDING CASES DECIDED

59

Electric & Manufacturing Co., Elliott Co. and Allis-Chalmers Manufacturing Co.,
restraining them from entering into or maintaining any conspiracy to (1) fix and
maintain uniform delivered prices in the sale of turbine generators; (2) to sell turbine
generators upon uniform performance guarantees where the guarantees were not based
upon actual performance; (3) to use the pricing sheets of any of the companies as the
pricing sheets of any of the others, and (4) to submit uniform bids.
In the same proceeding, Westinghouse Electric & Manufacturing Co., AllisChalmers Manufacturing Co., Elliott Co., Worthington Pump & Machinery
Corporation, Foster-Wheeler Corporation, C. H. Wheeler Manufacturing Co.,
Ingersoll-Rand Co., and Ross Heater & Manufacturing Co., were restrained from
entering into and executing a similar conspiracy with respect to the sale of condensers,
which were sold chiefly to Federal, State and Municipal Governments and public
utilities.
National Electrical Manufacturers’ Association and others, New York.--This
association and sixteen member manufacturers of power cable and wire, were directed
to cease and desist from the maintenance of uniform selling prices held to have been
performed under an illegal agreement, combination and conspiracy. The respondents
manufacture impregnated paper cable, varnished cambric cable, parkway cable and
rubber power cable. The largest consumers of the respondents’ commodities were
found to have been public utilities, Municipal, State and Federal Governments and
large industrial plants and office buildings.
The respondent manufacturers were found to have had an under standing and
agreement that no customer should be allowed to purchase except on a delivered price
basis. As a result; these respondents habitually and systematically discriminated in
price among the various customers after making due allowance for cost of
transportation, ex-acting higher prices from customers having little or no transportation
expense and accepting lower prices from those having heavy transportation expense,
according to findings. The order specifically prohibited the fixing, maintaining, or
enhancing of prices, special charges, discounts, transportation charges, or any terms
or conditions of sale which constituted a substantial element in competition, by
agreement or understanding.
Menasha Wooden Ware Corporation, Menasha, Wis., and others.--An order to cease
and desist was issued against Menasha Wooden Ware Corporation, Menasha, Wis.,
The Creamery Package Mfg.. Co., Chicago, Elgin Butter Tub Co., Elgin, Ill.,
Wisconsin Butter Tub Co., Marshfield, Wis., Bousfield Wooden Ware Co., Minneapolis, and Storey City Butter Tub Co., Storey City, Iowa. These Middle Western
manufacturers are said to sell more than 90 percent of the total volume of new butter
tubs produced in the United States.
14070---37-----5

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Their trade association, the Butter Tub Manufacturers’ council, was also made a
respondent. The six manufacturers were directed to cease and desist from entering into
combinations, conspiracies or agreements, either directly or through their trade
association, to restrict, restrain and suppress competition by one or more of the
following specific methods:
Jointly or cooperatively (1) fixing, adopting and quoting uniform prices, terms and
discounts for the sale of butter tubs to creameries and other customers; (2) enforcing
and maintaining such fixed prices, terms and discounts by exchanging information
through the trade association; (3) exchanging with each other, directly or through the
medium of the trade association or any other medium, information as to future prices
in advance of the actual adoption, quotation, or effective date of such prices; (4)
adopting special price lists of preferred customers to whom to allow extra discounts
on butter tubs; (5) discriminating against Land O’Lakes Creameries, Inc., Minneapolis,
a large Minnesota cooperative association, or any other purchaser of butter tubs in
interstate commerce, and (6) exchanging with each other, directly, or through the trade
association or any other medium, future sales price information, including lists of
preferred customers, jobbers or brokers, and reports as to sales of butter tubs together
with prices, discounts and terms at which they are sold.
Millinery Quality Guild, Inc., and others, New York --An order to cease and desist
was issued against Millinery Quality Guild, Inc. and its members who are
manufacturers of ladies’ hats. The order restrained them from soliciting or obtaining
from retail dealers in women’s hats any agreement or understanding whereby the
retailers would undertake or agree to refrain from purchasing from manufacturers
women’s hats which were, or were claimed to be, copies of designs originated and
manufactured by the respondents. The order also restrained the respondents from
failing or refusing to sell their products to retail dealers for the reason that such dealers
purchased from manufacturers hats alleged by the respondents to be copies of hats, the
designs of which were originated by them. The respondents were also prohibited from
expelling from membership in the guild any member for the reason that it had sold
women’s hats to retailers who refused to enter into the agreement with respect to
protection against design piracy.
Conde Nast Publications, Inc., New York.--Conde Nast Publications, Inc., publisher
of Vogue magazine, was served with an order requiring it to cease and desist from
entering into contracts, agreements or understandings with retail dealers in women’s
garments, specifying that the retailers shall observe and maintain retail prices quoted,
by it with respect to certain garments pictured in the magazine The respondent was
also directed to cease entering into contracts with manufacturers of women’s garments
requiring a manufacturer

DESCRIPTIONS OF OUTSTANDING CASES DECIDED

61

to limit the number of retail dealers to whom it will sell and ship such garments in each
locality. The order also prohibited the respondent from using and carrying out a plan
whereby, pursuant to contracts with selected manufacturers of women’s garments, it
selects models of such manufacturers’ garments, pictures the same in its magazine,
selects and publishes the names of retailers who have such garments for sale and
requires the manufacturers to refrain from selling such garments pictured to any
retailers except those selected by the respondent.
California Packing Corporation, and others, San Francisco.-California Packing
Corporation and Alaska Packers Association, packers and distributors of food
products, such as dried fruits, canned fruits, canned vegetables, canned fish, canned
pineapple and canned coffee, were required to cease and desist from inducing,
coercing or compelling the routing of shipments of commodities purchased or sold by
concerns which wore, in competition with them to or through Encinal Terminals at
Alameda, Calif., or through any other terminals owned or controlled by them. Among
other practices prohibited in connection with the routing of shipments through such
terminals was the pursuance of a plan or policy of using the tonnage of freight shipped
or received by the respondent corporations, or their buying power, to induce, coerce,
or compel steamship companies or indus trial concerns to route tonnage to or through
Encinal Terminals or any subsidiary terminal or to use the facilities thereof in violation
of the order, through throats of withdrawing or diminishing, or promises of making or
increasing purchases or shipments by the respondents.
FALSE DISPARAGEMENT OF COMPETITORS’ PRODUCTS

Loft, Inc., Long island City, N. Y., manufacturer and distributor of candy and
confection products, was directed to stop representing that glucose, whether in
commercial or in any other form, as now produced and used or contained in candy
products, was impure, harmful to health, unwholesome, dangerous or unsafe. The
respondent was also prohibited from representing that candy products made with or
containing glucose were impure, harmful to health, unwholesome, dangerous and
unsafe, and inferior in quality to and less pure than the candy products of the
respondent. The order also prohibits the representation that Loft candies are made
without, or do not in fact, contain glucose.
IMITATION OF NATIONALLY KNOWN RADIO BRANDS

Marconi Radio Corporation, New York, and others, in connection with the sale of
radio sets, were directed to cease and desist from using such well-known and long
established trade-marks, names and symbols, as “Edison”, “Bell”, “EB”, “Marconi”,
“Majestic”, “Victor”,

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

“Brunswick”, “General Electric”, “GE” in a circle with scroll-like interior decorations,
“Radio Corporation of America”, and colorable imitations and simulations thereof, and
from representing that their products so branded were manufactured, endorsed,
sponsored or approved by any of the concerns whose trade-marks, names and symbols
were as above set out, contrary to the facts, and when the use thereof was without the
knowledge and consent of the lawful powers of these trade-marks, names and symbols.
FALSELY REPRESENTING CUTLERY TO BE STAINLESS STEEL

National Silver Company, New York, in connection with the inter state sale of
flatware cutlery made of carbon steel and thinly plated with nickel and chromium, was
ordered to cease and desist from representing, contrary to the facts; that the cutlery
was stainless. The respondent company was directed to cease using the word
“Stainless” as a trade name, brand, stamp, or label for knives and flatware cutlery
unless made of steel containing chromium and carbon in certain proportions which
represent and correspond to the specifications for cutlery made from stainless steel. It
was further ordered that the respondent company cease similarly using the word
“Stainpruf” or like words indicating that the chromium-plated knives and flatware
cutlery in question were in fact stain proof.
MISREPRESENTATIONS AS TO PROPRIETARY PRODUCT

Tyrell H. Duncombe, Highland Park, Mich., trading as Duncombe Research
Laboratory, sold the preparation “Germex” directly to physicians, hospitals,
laboratories and individuals.
The Commission found that the respondent had represented this product as a safe,
harmless antiseptic, suitable even for intravenous use, and as capable of destroying
disease-bearing germs, bacteria and parasites; and that it was a cure for cancer,
syphilis, arthritis, pernicious anemia, gangrene and tuberculosis; that it gave notable
results in such diseases or ailments as sinusitis, catarrh, trench mouth and stomach
ulcers; and was successfully used in the treatment of diphtheria, scarlet fever,
septicemia, fistula and rheumatics fever.
The Commission found that the respondent was not a doctor, although he had
prescribed for patients, and that “Germex” was not ste rile but contained living
microorganisms; that “Germex” was an aqueous solution, the drug extractives of
which were identical with those of the echinacea root; that it contained no therapeutic
ingredients which would be helpful in the treatment or cure of any of the dis eases
enumerated by the respondent, and that the respondent’s representations in respect to
the preparation were false and misleading in their entirety.

DESCRIPTIONS OF OUTSTANDING CASES DECIDED

63

The Commission’s order required the respondent to cease representing that
“Germex” was sterile or antiseptic in its action, would kill or drive out disease-forming
bacteria; could be taken safely, externally, internally or int ravenously; or was a cure
or remedy for, or would relieve pain in connection with, or produce any beneficial
results in the treatment of the diseases or ailments mentioned, or any other diseases or
ailments to which human beings are subject.
MISREPRESENTATION OF CORRESPONDENCE SCHOOL AS AN EXTENSION
UNIVERSITY

LaSalle Extension University, Chicago, conducting courses principally in law,
accountancy and business subjects, was ordered to cease and desist from representing,
directly or indirectly, through use of the term “Extension University” or the word
“University”, in its corporate name or m any other manner, that it was or that it
conducted a university or an extension university.
The Commission found that the word “Extension” preceding the word “University”
as used in the respondent’s advertising did not change or limit in this case the
characteristics and attributes generally understood as necessary to entitle an institution
to be designated as a university. In fact, this usage was found to indicate a broadening
and enlargement of the scope of activities of even an institution recognized as a
university. Under these circumstances, it was found that use of the word “Extension”
means bringing to the public outside the walls of a university the advantages which it
ordinarily would offer only to resident students.
From the testimony of noted and outstanding educators, it was found that while
many of the respondent’s courses of instruction were of college grade, the institution
itself was not a university and did not possess the qualities and attributes considered
by educators and the public generally as requisites necessary to be possessed by an
institution to make it a university or to entitle it to be designated as such.
CANDY LOTTERY

Queen Anne Candy Company, Seattle, Wash., was ordered to cease selling to
wholesale dealers and jobbers, for resale to dealers, candy so packed and assembled
that sales to the public were or might be made, by means of a lottery, gaming device
or gift enterprise; and to discontinue supplying wholesalers and jobbers with “punch
board” or “push card” devices, either with assortments of candy or separately, bearing
legends informing the purchasing public that the candy was being sold by lot or chance
or in accordance with a sales plan, gaming device, or gift enterprise.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
MISREPRESENTATION OF EARNING CAPACITY

Food Display Machine Corporation, Chicago, engaged in the sale of potato chip
machines, was ordered to cease and desist from representing or holding out as possible
or maximum earnings for prospective operators of its machines during a fixed period,
any amount in excess of actual earnings of its regular operators under normal business
conditions during a fixed period. The respondent was also directed to cease
representing or holding out as usual or customary earnings or profits to be derived
from operation if its machines, any sum in excess of the average amounts actually
earned under normal business conditions.
CLOSING OF CASE INVOLVING ROBINSON-PATMAN ACT

In one complaint involving alleged violation of Section 2 of the Clayton Act as
amended by the Robinson-Patman Act, the Commission closed the case without
prejudice. A discussion of the charges contained in the complaint follows:
Procon Grocery Service Co., Inc., New York, Kroger Grocery and Baking Co.,
Cincinnati; American Stores Co., Philadelphia; First National Stores, Inc., Somerville,
Mass.; National Tea Co., Chicago; Safeway Stores, Inc., Oakland, Calif.; David Pender
Grocery Co., Norfolk, Va.; Southern Grocery Stores, Inc., Atlanta; Eisner Grocery Co.,
Champaign, Ill.; Steiden Stores, Inc., Louisville; Danahy-Faxon Stores, Inc., Buffalo,
and Fisher Grocery Co., Springfield, Ill., were charged in one complaint with a
Violation of Section 2 (c) of the Robinson-Patman Act. The complaint alleged that
these large chain store buyers, through the instrumentality of Procon Grocery Service
Co., Inc., were obtaining a so-called brokerage fee or commission, the amount of
which varied between l percent and 10 percent of the quoted sale price agreed upon
by buyer and seller, and that Procon, after the receipt of such fees or commissions,
transmitted and paid them over to the respondent buyers, who were stockholders in
Procon Grocery Service Co. It was further alleged that Procon was the agent and
representative of the respondent buyers, acting for them and in their behalf and subject
to their control, and that the so-called brokerage fees or commissions were not
received or accepted by Procon as payment for any services rendered by Procon to the
sellers but, on. the contrary, were received and accepted for the use and benefit of the
buyers and for the purpose of being transmitted and paid over to them. After the
issuance of the complaint, the corporation was dissolved. Its members expressed an
intention to cease the practices alleged, surrendered their charter and certified to the
Commission a statement to the effect that they had dissolved the corporation in good
faith and did not intend as a group or individually to

TYPES OF UNFAIR COMPETITION

65

organize any similar corporation or any unincorporated association to engage in the
business practices described in the complaint. The Commission then closed the case
without prejudice to its right to reopen it and resume prosecution of the complaint in
accordance with its regular procedure, should the facts so warrant.
TYPES OF UNFAIR COMPETITION
PRACTICES CONDEMNED IN ORDERS TO CEASE AND DESIST

Following is a partial list of unfair methods of competition which have been
condemned by the Federal Trade Commission in orders to cease and desist issued
during the fiscal year. These do not include violations of the Clayton Act as amended
by the Robinson-Patman Anti-Price Discrimination Act, nor of those sections of the
Clayton Act embracing “tying” contracts, corporate stock acquisitions, and
interlocking directorates. The list follows:
1. Use of false and misleading advertising, false branding and labeling of products,
for example:
(a) Misrepresenting flavoring extracts to be imported when they are in fact
domestic-made.
(b) Misrepresenting merchandise as having been procured from sales of refused,
salvaged or surplus Army and Navy supplies.
(c) Misrepresenting the processes employed in preparing salt offered for use in
the curing of meats.
(d) Mislabeling radios with well-known and long recognized brand names of
nationally advertised radios, simulating the brand names of such nationally
advertised radios and passing off such products as and for such nationally
advertised radios.
(e) Misrepresenting the quality, character and viscosity of motor oils, and the
quality, character and octane rating of gasolines.
(f) Misrepresenting western ponderosa pine as white pine.
(g) Misrepresenting that upright pianos are grand pianos.
(h) Misrepresenting as camel’s hair certain textile fabrics which do not contain
camel’s hair or camel’s wool.
(I) Misrepresenting as whitefish a certain salt water fish known as cusk.
(j) Misrepresenting cigars made in the United States from domestic tobacco as
being made from Cuban tobacco and as being Havana cigars.
(k) Misrepresenting tombstones and monuments made from granite chips mixed
with cement as being granite.
(l) Misrepresenting photographic enlargements as being original drawings or
paintings.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

(m) Misrepresenting stock size men’s suits as being tailor-made or made-toorder.
(n) Misrepresenting the results to be obtained upon using various motor
compounds and fluids, cleaning fluids, animal traps and other products.
(o) Misrepresenting that various miscellaneous products, such as incandescent
lamps, stump socks for use on artificial limb appliances, and imitation and
simulated diamonds, have a merit far in excess of that actually possessed.
2. Combining, agreeing and cooperating for the purpose, and with the effect; of
suppressing competition among members of the combination and closing the sources
of supply and sale to non-members through such cooperative means as controlling
solicitation of business, allocation of customers and channels of distribution, fixing
and maintaining uniform prices, terms and conditions, and exchanging information
regarding contemplated price changes. The commodities involved in such agreements
were: pin tickets, women’s wear, surgical instruments, uniform caps, electric cable,
turbine generators and condensers, butter tubs, grocery products, furniture, rubber
heels and soles, and water gate valves and hydrants.
3. Misrepresenting the advantage to prospective customers in dealing with the seller
by(a) Asserting that the seller is a manufacturer of the products he offers for sale,
thereby implying to purchasers that the middlemen’s, profits are eliminated.
(b) Alleging that the seller is a wholesaler and is offering his goods at wholesale
prices.
(c) Misrepresenting the size and importance of the seller’s business by use of
illustrations of fictitious buildings, or by exaggeration of the space occupied by the
seller’s business, or of the extent and value of his equipment.
4. Misrepresenting the necessity for, or advantage in using, various devices claimed
to be beneficial in curing, treating or relieving such conditions as prostatic gland
troubles or deficiencies, foot and leg abnormalities, obesity and hair deficiencies.
5. Use of books or pamphlets claiming; (l) to reveal all of the essentials to health and
alleging that all illness is caused by neglect of one or more of such essentials; and (2)
claiming to conquer bashfulness, nervousness and other psychological abnormalities.
6. Misrepresenting the necessity for, or advantage in using, various medicinal
preparations claimed to be beneficial in curing, treating or relieving such conditions
as nutritional deficiencies; diseases and ailments of the skin, stomach, kidney, bladder
and digestive organs; glandular disturbances; asthma and hay fever; women’s diseases,
rheumatism, arthritis, neuritis and related ailments; metabolic dis-

TYPES OF UNFAIR COMPETITION

67

orders, vitamin and mineral deficiencies; weakness, irritation and diseases of the eyes
and ears.
7. Misrepresenting the advantages in using certain hair tonic, eyewash, facial cream,
depilatory, eyelash grower and dentifrice, claimed to be beneficial, respectively, in
relieving eye strain, promoting growth of hair, penetrating the skin below the
epidermis so as to reach and beneficially affect the underlying muscles, tissues and
glands, restoring gray hair permanently to its former color without dyeing, removing
tartar on teeth and destroying mouth germs and bacteria.
8. Misrepresenting in the sale of encyclopedias and reference works that purchasers
will receive all or a portion of the books free upon subscribing to additional research
or extension services; that the purchasers are on preferred lists to receive the books
free and without cost; that old and unrevised encyclopedias and reference works have
been revised, enlarged and brought down to date; and that leaders in various
professional fields are contributors to, or associate editors of, such encyclopedias and
reference works, when they are not.
9. Use of misrepresentations by correspondence schools importing that they have
some connection with, or are a branch or bureau of, the United States Government or
of the Civil Service Commission; that there are many openings for various positions
in the classified Civil Service and that examinations to fill such vacancies are held at
frequent intervals; that upon completion of the courses of instruction, successful
students will be placed in Government or other positions; that students have been
selected on account of scholastic grades, or otherwise, to receive the courses at
reduced rates; and that the respondents conduct, or are connected with, a university or
an extension division of a university.
10. Misrepresenting through use of the words “Laboratory”, “Manufacturer”,
“Mill”, “Factory”, and “Distiller” that the seller is the manufacturer of the products
which he offers for sale, implying that middlemen’s profits are eliminated and other
advantages obtained because of the purchasers’ ability to deal direct with the
manufacturer.
11. Misrepresenting the character and quality of the raw mate rials used in
manufacturing finished products, for example, misstating the amount and quality of
the wool content of fabrics and other products; misrepresenting the amount and quality
of silk in fabrics; misrepresenting split leather as being genuine cowhide, genuine
leather, or chamois; misrepresenting the proportion or quantity of pure fruit juices or
other food products in jams, preserves and other food stuffs.
12. Use of puzzle contests with the representation that the mere solution of the
puzzle entitles the successful contestant to a prize, when, in fact, other services and
performances are imposed upon the contestant before he is entitled to receive a prize.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

13. Using a method of sale involving an element of chance or lottery, or preparing
goods so that such a method of sale may be used.
14. Misrepresenting the character of the process used in producing gasoline and
misrepresenting that gasoline to which tetraethyl head has been added is narcotic in
effect, “doped up”, poisonous, unsafe and dangerous to the life and health of persons
using such gasoline for motor fuel.
15. Simulation of the containers in which merchandise of competitors is customarily
packed and displayed, simulation of well known accounting systems and imitation of
names of trade papers and well known and registered trade marks such as “Ethyl” and
“Gulf”.
16. Use of false and disparaging statements in respect to products sold by
competitors, such products being oilcloth, window shades, pianos, pipe’s, pipe filters,
beer taps and candy.
17. Misrepresenting, through use of fictitious prices, that the usual and ordinary sale
price is higher than the price at which the goods are actually sold, when such is not a
fact.
18. Misrepresenting, in advertising for house-to-house canvassers or sales agents,
the nature of their employment, the prospective profits, the usual retail prices of the
products which they are to sell and the demand therefor.
19. Use of demonstrations. and scientific tests in such a way as to misrepresent the
circumstances surrounding the tests or the results the re of.
20. Misrepresenting in the sale of dental plates that from impressions made by
customers from their own teeth and gums the seller can make artificial teeth that fit as
well and are as satisfactory as those made by members of the dental profession.
21. Misrepresenting the geographic location of the place of manufacture of a product
by specifying the name of a place famous for such products.
CASES IN THE FEDERAL COURTS
COMMISSION ACTIONS IN THE U. S. SUPREME, CIRCUIT AND DISTRICT
COURTS

Federal Trade Commission cases pending in the United States courts for final
determination during or at the close of the fiscal year are reviewed in alphabetical
order in the pages immediately following.2
During the year the Commission was sustained in 18 cases before the Federal
Courts, 17 of which were in the United States Circuit Courts of Appeals, and 1 in a
United States District Court. In none of these cases was the Commission reversed.
While there were no decisions during the year on the merits in Commission cases
pending in the Supreme Court of the United States, that
2

United states Circuit Courts of Appeals are designated First Circuit, second Circuit, etc.

CASES IN THE FEDERAL COURTS

69

Court denied petitions for writs of certiorari applied for by 7 petitioners, who were
unsuccessful in their attempts in the Circuit Courts of Appeals to nullify the
Commission’s orders. These petitioners were: Armand Co., Des Moines, Iowa; A.
McLean & Son, M. J. Holloway & Co., and Bob Hofeller Candy Co., all of Chicago;
Queen Anne Candy Co., Hammond, Ind.; Bonita Co., Fond du Lac, Wis., and F. A.
Martoccio Co. (Hollywood Candy Co.), Minneapolis.
The Supreme Court granted the Commission’s petition for writ of certiorari in the
Standard Education Society case.
Fifteen of the 18 cases in which the Federal courts sustained the Commission were
formal affimances. These cases were: (1) American Army and Navy Stores, and (2)
Army and Navy Trading Company, both of Washington, D. C.; (3) Butterick
Publishing Co. and seven other respondents, (4) James Kelley, (5) National Silver Co.,
and (6) Real Products Corporation, all of New York; (7) Chicago Silk Co., (8) A.
McLean & Son, (9) M. J. Holloway & Co., (10) Mid West Mills, Inc., and (11)
Standard Education Society and four others, all of Chicago; (12) F. A. Mortoccio Co.
(Hollywood Candy Co.), Minneapolis; (13) Queen Anne Candy Co., Hammond, Ind.;
(14) Bonita Co Fond du Lac, Wis., and (15) George Ziegler Co., Milwaukee.
Of the remaining three cases, one involved a contempt proceeding for violation of
a decree affirming an order of the Commission, in which the respondents, Pacific
States Paper Trade Association and certain of its member companies, of San Francisco
and points in California, Washington, Oregon and Utah, were fined $10,000; One
involved a Court dismissal of the Commission’s application for enforcement on joint
motion of the Commission and the respondents, Evans Fur Co. and Kent Fur Co., both
of Chicago, because d the respondents had stipulated with the Commission that they
would, in the future,, scrupulously obey all terms of the Commission’s order to cease
and desist, and the third case represented a successful attempt by the Commission,
through mandamus, to compel the National Biscuit Co., New York, to supply certain
data required in connection with the Commission’s Agricultural Income Investigation.
Commission court cases for the fiscal year are summarized as follows:
American Army and Navy Stores, Inc., and Army and Navy Trading Co., both of
Washington, D. C.--On July 22, 19 36, the Commission docketed, with the United
States Court of Appeals for the District of Columbia, applications for enforcement of
its cease and desist orders directed against these two concerns. With the applications,
the Commission filed printed transcripts of the records and briefs.
The charge was that the use by these corporations of the words “Army and Navy”
in their names, and in advertising in circulars, trade journals, newspapers and
periodicals, misled and deceived buyers

70

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

into the false belief that the goods to be purchased in such stores “were substantially:
all if not all, procured from the Army and Navy Departments of the United States
Government; that the goods were of the quality and nature used by said Departments;”
and that substantial bargains in price and quality would be obtained in such stores,
with resulting diversion of trade to the respondents from their competitors.
On August 24, 1936, the Court entered its decree affirming the Commission’s order
in the American Army and Navy Stores case, and commanding the respondent to
comply therewith.
The Army and Navy Trading Co. case was argued on its merits, November 10, 1936,
and the Court, January 4,1937, with a slight modification, affirmed the Commission’s
order (88 F. (2d) 776). In the course of its opinion, it said:
The first of the two issues of law in the case is whether the conclusion of the Commission, that
the use of the words “Army and Navy” in the Trading Company’s name is an unfair method of
competition, is justified. It is. The Supreme Court has ruled that false and misleading
representations as to the origin of a commodity constitute an unfair method of competition. *
* * The second issue of law is whether the cease and desist order of the Commission is too
broad. The Trading Company contends that the Commission cannot lawfully order suppression
of a trade name where the use of qualifying words will eliminate the deception and preserve the
rights of competitors and the public. * * * We think it not feasible to select qualifying words for
use with the name “Army and Navy Trading Company” which will be effective to eliminate
deception. The stock of goods of the Trading Company is in only an insubstantial portion, if at
all, in any sense Army and Navy goods. But the phrase “Army and Navy” in the name “Army
and Navy Trading Company” makes the single representation that at least the major portion of
the merchandise offered for sale is in some sense Army and Navy goods. This single
representation being untrue, it cannot be qualified; it can only be contradicted.

Armand Co., Des Moines, Iowa.--The Second Circuit (New York), July 2, 1936, in
an opinion entered by the entire court (84 F. (2d) 973), denied the Armand Company’s
petition for reargument. of a motion to vacate the Court’s decree (entered in 1935-see
78’ F. (2d) 707), affirming the Commission’s cease and desist order. The proceeding
involved the maintenance, by the Armand Co., through the medium of express or
implied agreements, of resale prices for its cosmetic products, fixed at arbitrary levels
imposed by the company. On October 1, 1936, the company petitioned the Supreme
Court for a writ of certiorari, to review the Second Circuit’s per curiam decision of
July 2. Brief in opposition, on behalf of the Commission, was filed October 30. The
petition was denied November 16 (299 U.S. 597). Petition for rehearing was filed
December 10, and denied December 14, 1936 (299 U.S. 623).
Butterick Publishing Co., New York, and others.--This group of New York
publishers and distributors of magazines and other period-

CASES IN THE FEDERAL COURTS

71

icals, includes the Butterick Co., MacFadden Publications, Inc., Frank A. Munsey Co.,
Street & Smith Publications, Inc., Pictorial Review Co., International Circulation Co.,
Inc., S. M. News Co., Inc., and Midwest Distributors, Inc. The group, on October 25,
1935, had filed with the Second Circuit (New York) petitions to review and set aside
the Commission’s order to cease and desist in this case. On August 13,1936, the
Second Circuit (85 F. (2d) 522), unanimously affirmed the Commission’s order.
Under the order, the petitioners were directed to cease and desist from preventing
or seeking to prevent, by agreement, combination or concert of action, any person, firm
or corporation from selling to distributors thereof or dealers therein, second-hand or
back-number magazines lawfully owned by such person, firm or corporation, or
seeking to prevent, or causing wholesalers to prevent retailers of magazines from
buying and selling second-hand or back-number magazines. A proviso was added to
the effect that nothing therein contained should prevent the petitioners from taking
such action against wholesalers and retailers of their respective magazines as might
reasonably be necessary to prevent the placing on sale of the coverless magazines or
returns for which the petitioners had reimbursed such wholesalers and retailers.
The Court, in part, said:
While it is contended that the Commission was without jurisdiction in that the unfair methods
of competition found were not shown to have been used in interstate commerce, it seems too
clear for controversy that they were. The new magazines whose source of supply was controlled
by the publishers were largely shipped across State lines and the threat to withhold them from
dealers who did not sell new magazines exclusively would, if carried out, to that extent stop
inter-state transportation of the magazines. So, too, the second-hand magazines were largely
transported from State to State and the threatened curtailment of that business would have like
effect upon interstate commerce.
Though any one publisher acting alone may sell or not sell his magazines as he may choose,
Federal Trade Commission v. Raymond Bros.-Clark Co., 263 U.S. 565, two or more may not
combine in such refusal if the result is to harm the public or any person against whom the
concerted action is taken. Binderup v. Pathe Exchange, 263 U.S. 291.
*
*
*
*
*
*
*
But in this instance the concerted attempt was to prevent the sale of second-hand magazines
where the new magazines of the petitioners were sold in competition with each other and the
second-hand ones. It was shown that the business of selling second-hand magazines had been
seriously curtailed by the agreement of’ the publishers and the action taken thereunder; and,
except for some unsupported argument that the public health was endangered by the sale of used
magazines, the action was plainly for the purpose of stifling competition. Certainly it is selfevident that an owner of second-hand magazines may of right sell them if he chooses, as may
the owner of any other property suitable for sale. One need only remember the large use made
of what are really second-hand books and magazines in the libraries throughout the country, to
put aside as inconsequential the notion that the business is injurious to public health. The
requirement that dealers must

72

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

not sell second-hand magazines where the new ones are sold, as a condition precedent to being
allowed to obtain new magazines for sale from the petitioners, has been shown unreasonable and
unnecessary to protect any legitimate rights of the publishers, and the order of the Commission
under review should be affirmed, since the facts which support it have been found on sufficient
evidence.

Candy Lottery Cases.--The Seventh Circuit (Chicago) July 1, 1936, in a unanimous,
opinion, modified slightly and affirmed the Commission’s cease and desist orders
directed against A. McLean & Son and M. J. Holloway & Co., both of Chicago; Queen
Anne Candy Co., Hammond, Ind.; and Bonita Co., Fond du Lac, Wis. The proceedings
were instituted February 29, 1936, when the Commission filed applications for
enforcement of its orders. Pertinent excerpts from the Court’s opinion (84 F. (2d) 910)
follow:
It is contended by the respondents ,that the facts as found do not support an order to cease and
desist. We hold otherwise on the authority of Federal Trade Commission v. Keppel, 291 U. S.
304; Walter H. Johnson Candy Co. v. Federal Trade Commission, [78 F. (2d) 717); and
Hofeller v. Federal Trade Commission, [82 F. (2d) 647]. Many questions of fact and law are
raised by respondents, but most of them were decided adversely to respondents’ contentions in
the cases just cited. They contend that section 5 of the Act violates the Federal constitutional
,mandate of separation of governmental functions, and the due process clause. We think there
is no merit in this contention.
*
*
*
*
*
*
*
It is further contended by certain of the respondents that the court failed to find that they had
discontinued the manufacture and sale of the chance assortments on August 1, 1934.
Discontinuance or abandonment is no defense to the order, for, if true, it would be no guaranty
that the challenged acts will not be renewed.
*
*
*
*
*
*
*
Respondents further contend that the orders of the Commission seek to control the method of
retail sale of candies in intrastate commerce, and for that reason they, together with the Act
under which they were promulgated, are invalid under the ruling in the Schecter case. The
orders, however, are expressly limited to interstate commerce and they do not apply to any
intrastate business in which any of the respondents may be engaged.
*
*
*
*
*
*
*

The four respondents, September 25, 1936, petitioned the Supreme Court for writs
of certiorari to review the decision of the Seventh Circuit. Brief, on behalf of the
Commission, in opposition to the an ting of the writs, was filed October 22, and the
petition was denied November 9, 1936 (299 U. S. 590).
At the beginning of the fiscal year, there was pending in the Supreme Court of the
United States a petition for certiorari filed by Robert Hofeller, an individual trading
as Bob Hofeller Candy Company, Chicago. Hofeller sought a review of the decision
of the Seventh Circuit of March 25, 1936 (82 F. (2d) 647), unanimously affirming the
Commission’s order. Brief, on behalf of the Commission, in opposition to the petition,
was filed August 7. Hofeller’s petition was denied October 12, 1936 (299 U.S. 557).

CASES IN THE FEDERAL COURTS

73

On October 3,1936, the Commission filed with the Seventh Circuit an application
for enforcement of its order directed against George Ziegler Company, Milwaukee.
The Court, February 18, 1937, entered its decree affirming the order and commanding
obedience thereto.
On November 18, 1936, the Commission filed with the Eighth Circuit (St. Louis) an
application for enforcement of its order directed against F. A. Martoccio Co., a
corporation, in its own name and right, and trading as Hollywood Candy Co.,
Minneapolis. The case was argued December 14, 1936, and the Commission’s order
unanimously affirmed January 23,1937 (87 F (2d) 561). The Court concluded its
opinion with the following language:
We conclude that this case is ruled by the Keppel case (291 U. S. 304). We so conclude since
we construe the Keppel case to determine that a method of sale which employs the element of
chance as an essential feature is against public interest because it is in the nature of a gambling
game and that such a method is unfair competition because it places competitors in the position
where they must unwillingly adopt such method or run the risk of losing business if they refrain
from so doing. Since we are unable to distinguish, in essentials, the situation ‘in this case from
the one presented in the Keppel case, the enforcement of the order of the Commission here
involved will be ordered and the petition to set aside the order will be denied.

The company’s petition for rehearing was denied February 12. On March 30, 1937,
it filed with the Supreme Court a petition for writ of certiorari. The Commission’s
brief in opposition was filed April 21, and the petition was denied May 3, 1937.
The effort of the Sifers Confection Co., Kansas City, Mo., to modify the degree of
the Eighth Circuit of June 4,1936, affirming the Commission ‘s order (84 F. (2d) 999),
proved unsuccessful, its motion to that effect having been denied January 23,1937.
The Commission, May 27,1937, docketed with the Second Circuit (New York) an
application for enforcement of its cease and desist order directed against Leader
Novelty Candy Co., Brooklyn.
Chicago Silk Co., Chicago .--At the beginning of the fiscal year, July 1, 1936, there
was pending in the Seventh Circuit (Chicago) a petition by Chicago Silk Co. to review
and set aside the Commission’s cease and desist order issued against it. The order had
prohibited the interstate sale, by means of lottery methods (use of punch cards or push
cards), of hosiery or lingerie. After briefs had been filed, the case was argued on the
merits, April 22, 1937, and decided unanimously in favor of the Commission, June 24,
1937. The Court said, in the course of its opinion (90 F. (2d) 689):
We assume that the question which petitioner seeks to raise is that the facts as found by the
Commission do not constitute an unfair method of competition. With this position we are unable
to agree. We gather from petitioner’s brief that it should not be he ld accountable for any
consequences which result from the activity which it originates. It is claimed, for instance, that
there can be no

74

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

harm in the mailing of the punch cards; that whether they are used for disposing of merchandise
by chance is one to be determined by the recipient of such cards and that, inasmuch as the cards
are furnished free, petitioner is not engaged in a lottery or in disposing of its merchandise by
chance. There is no merit in such contention. The petitioner originated and set in operation the
scheme or device in question. Moreover, it sent through the mail specific instructions for the
operation of the plan and reaped the benefits from its execution.

Electro-Thermal Co., Steubenville, Ohio.--This concern, September 18, 1936,
docketed with the Ninth Circuit (San Francisco) its petition for review of the
Commission’s cease and desist order, which prohibited certain alleged
misrepresentations concerning an electrical device for the treatment of prostatic and
other ailments. After the printing of the transcript, briefs were filed by both parties and
the case set for argument on July 16, 1937. 3
Evans Fur Co. and Kent Fur Co., Chicago.--The Commission, November 27, 1936,
filed with the Seventh Circuit (Chicago) an application for enforcement of its cease
and desist order prohibiting these corporations from advertising and representing in
any manner that they were manufacturers of the fur garments sold by them or implying
that purchasers of their products saved the middleman’s profit, and similar
misrepresentations.
After the case had been docketed, the respondents stipulated with the Commission
that they would, in the future, scrupulously obey all terms of the order. The
Commission, considering the circumstances, and believing that the public interest
would be adequately protected, consented to withdraw its proceeding. Accordingly,
on January 4, 1937, the Court, on joint motion of the parties, entered an order
dismissing the application for enforcement, “without prejudice to the right of said
Federal Trade Commission, at its option and in its discretion, at any time or times
hereafter, to file in this Court or other Court, said petition or a like petition, or such
petition or papers as said Commission may elect, or to do such other acts as said
Commission shall deem to be in the public interest” (88 F. (2d) 1008).
Goodyear Tire & Rubber Co., Akron, Ohio.--A petition of the Goodyear Tire &
Rubber Co. to review and set aside the Commission’s order to cease and desist as
issued March 5, 1936, was pending at the beginning of the last fiscal year in the Sixth
Circuit (Cincinnati). This Commission order had directed the respondent company, its
subsidiaries, and their officers and agents, to cease and desist from discriminating in
price between Sears, Roebuck & Co. and the Goodyear company’s retail-dealer
customers, by selling automobile tires to Sears, Roebuck & Co. at net realized prices
lower than those at which the Goodyear company sold the same sizes of tires of
comparable grade and quality to individual tire dealers or other purchasers. A printed
condensation of the record was filed with the Court, March 31,1937, and briefs
3 The matter was argued July 16, 1937, and decided unanimously in favor of the Commission, July 19.

CASES IN THE FEDERAL COURTS

75

for the petitioner and the Com mission were filed April 26 and May 24, 1937,
respectively. On motion of the Goodyear company, argument was postponed until the
October, 1937, term.
James Kelley, New York.--The Commission, July 23, 1936, filed with the Second
Circuit (New York) an application for enforcement of its order directed against this
respondent, an individual with headquarters in New York, and engaged in a mail-order
jobbing business in fountain pens, pencils, and specialties. The order, based on
findings supported by evidence, forbade Kelley from making certain mis
representations in connection with his business, for example, that he manufactured the
products he sold, that he conducted the business of a large mail-order concern, that
purchasers of his articles saved the middleman’s profit, that his pen points were tipped
with iridium and were made of 14-carat gold, and that his fountain pens were worth
as much as $8 and $10. After argument, the Court, February 3, 1937, affirmed the
Commission’s order from the bench. There was no opinion [87 F. (2d) 1004].
Maisel Trading Post, Inc., Albuquerque, N. Mex.--The Tenth Circuit (Denver), July
21, 1936 (84 F. (2d) 768), denied the Commission’s motion for interpretation of the
Court’s order of August 28, 1935 (79 F. (2d) 127), modifying the Commission’s cease
and desist order in this case, with the object of eliminating certain misunderstandings
which had arisen. The Commission’s order was originally affirmed on May 1, 1935
(77 F. (2d) 246). It prohibited description of silver jewelry products made partly by
machinery as “Indian” or “Indian-made”, unless it was shown in such description
whether the products so described had been rolled, pressed, or partly ornamented by
machinery.
National Association of Counter Freezer Manufacturers, Chicago.--This case was
pending in the United States Court of Appeals for the District of Columbia at the
beginning of the fiscal year. An appeal had been made from a decision entered by the
Supreme Court of the District of Columbia, March 20, 1936, denying petition for writ
of mandamus sought by this association and its members. Such a writ was to have
compelled the Commission to take jurisdiction of certain allegations originally made
in its complaint against the International Association of Ice Cream Manufacturers, and
subsequently stricken out, on motion of a respondent. Brief for the appellants and the
Commission were filed September 9 and October 3, 1936, respectively, and the case
set for argument on November 10. On November 5 1936, without notice to the
Commission, the appellants dismissed their appeal.
National Biscuit Co., New York.--The United States District Court for the Southern
District of New York (New York City), February 16, 1937, upheld the Commission
in its petition for writ of mandamus
14070---37-----6

76

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

(filed September 2, 1936) to require the National Biscuit Co. to supply certain data
required by the Commission in connection with its Agricultural Income Investigation.
The Commission based its demand for the information on a Joint Congressional
Resolution authorizing an investigation with respect to agricultural income and the
financial and economic conditions of agricultural producers generally, to enable
Congress “to consider whether new legislation should be enacted or existing
legislation amended on any of the subjects referred to.” (For details of this
investigation, see p.19.)
In concluding its opinion (18 F. (Supp.) 667) the Court said:
Certainly burdens on interstate commerce, monopolies and taxation referred to in the Joint
Resolution, are subjects under the control of the Congress and upon which it is entitled to
information. It is true that the facts requested do include some information regarding
respondent’s activities that are not solely interstate, but the presumption is that the Congress
intends to make use of all the facts obtained in aid of legislation affecting interstate commerce
only. In the judgment of the Congress the information requested does directly relate to interstate
commerce and lack of such relation is not so clearly nonexistent as to justify the court in saying
to the contrary. This is a matter for the Congress to decide, at least in the first instance.

National Silver Co., New York.--In a unanimous decision entered March 1, 1937, the
Second Circuit (New York) affirmed the Commission s cease and desist order in this
case. The matter was argued February 3,1937. The proceeding originated July 29,
1936, when the company docketed its petition to review and set aside the
Commission’s order, which, in connection with the offering for sale and sale by the
petitioner of its silverware m interstate commerce, prohibited representations, “through
the use of the term ‘sectional overlay’, or any term, word or phrase of like import or
meaning, in advertisements or printed matter, or in stamping or branding of its said
silverware, or in any other manner whatsoever, that said silverware has extra deposits
of silver at the points of wear, when such is not the case.
The Court said (88 F. (2d) 425):
On this record, it is established that the petitioner, who sells silverware in interstate
commerce, caused its silver known as the “Martha Washington” pattern to be manufactured with
all pieces stamped “sectional overlay”. Its sets are known as staples and ornamental pieces. Its
staples were in fact overlaid, but its ornamentals were not. Letters and words stamped on
ornamental pieces which are not overlaid tend to mislead purchasers. Buyers testified to being
so misled. If a purchaser is induced to purchase because petitioner’s product is represented as
sectionally overlaid, that violates Section 5 even if the purchaser did not lose actual value or
quality by reason of the false representation. * * * Indeed, even where the purchaser benefits
by the deception, it is misleading * * * Clearly this proceeding is in the public interest and well
within the
requirement of the Act.

Pacific States Paper Trade Association, and others, San Francisco and points in

California, Washington, Oregon and Utah.--Fines totaling

CASES IN THE FEDERAL COURTS

77

$10,000 were imposed by the Ninth Circuit (San Francisco), March 17, 1937, upon the
Pacific States Paper Trade Association and certain of its member companies, including
the Zellerbach Paper Co., Blake, Moffitt & Towne, and others, for violation of a
decree of that Court entered upon mandate of the Supreme Court of the United States
(88 F. (2d) 1009).
The case originated upon a complaint of the Federal Trade Com mission, terminating
in a cease and desist order which ultimately was affirmed by the Supreme Court of the
United States (273 U.S. 52).
Imposition of the fines was the outcome of a petition filed by the Commission, May
21,1936, for a rule requiring the several respondents to show cause why they should
not be adjudged in contempt for disobeying the Court’s decree affirming the
Commission’s cease and desist order against price-fixing agreements in the sale of
paper and paper products in interstate commerce. The Court’s rule was issued June
8,1936. The respondents filed with the Court a stipulation in which they admitted
violation of the decree, and threw themselves on the mercy of the Court. The
respondents include large companies on the Pacific Coast engaged in the manufacture
and sale of paper and paper products.
Real Products Corporation and Realflex Products Corporation, Brooklyn.--The
Commission, December 10,1936, applied to the Second Circuit (New York) for
enforcement of its order directing these two corporations to cease and desist from
certain unfair methods of competition in interstate commerce.
The Commission’s findings were to the effect that these concerns made extensive
use of the word “Champion” in advertising and labeling automotive and metal
specialties, including spark-plug cable sets, manufactured and sold by them, and that
this practice deceived and misled the retail trade and purchasing public, by creating the
impression that these products were made by the well-known Champion Spark Plug
Co., Toledo, Ohio. The result, according to findings, was diversion of trade to the
respondents from those of their competitors which did not indulge in such methods.
The case was argued on the merits May 11, 1937, and decided unanimously in favor
of the Commission on June 7, 1937. The Court, in its opinion (90 F. (2d.) 617, 619)
said:
The use of an identical name for kindred products necessarily was deceptive to the public and
indicated a purpose to use it unfairly in competition.
*
*
*
*
*
*
*
Nor is it necessary that the product misrepresented be inferior or harmful to the public. The
deceptive misrepresentation suffices.
*
*
*
*
*
*
*
The principle of the Raladam case, supra, that potential competitors are equally to be
protected with actual competitors, is an integral part of the law of unfair competition. All
persons are free to enter the trade at any time and are therefore potential competitors.
*
*
*
*
*
*
*

78

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Finally, it is not material that respondents have copyrighted the box label “Champion Spark Plug
Set.” A copyright is not a license to engage in unfair competition.

Standard Education Society and others, Chicago.--The Commission filed with the
Second Circuit (New York), January 20, 1936, an application for enforcement of its
cease and desist order against the respondents Standard Education Society, Standard
Encyclopedia Corporation, H. M. Stanford, W. H. Ward, and A. J. Greener, all of
Chicago, and engaged in the sale and distribution, in interstate commerce, of
encyclopedias or reference works, so-called extension services, and works of fiction.
The order (in effect since 1931) was directed against misleading advertisements and
representations as to the date of printing, prices, and methods of sale and distribution
of respondents’ publications, and editorial services, testimonials and recommendations
rendered or received in connection therewith.
The respondents’ motion to dismiss as to the individual respondents was overruled,
June 8, 1936.
The case was argued on the merits November 12, and the Court, December 14, 1936,
in part affirmed, and in certain particulars reversed, the Commission’s order. The
Court, in referring to the wide latitude given to the Commission in protecting the
unwary buyer (86 F. (2d) 692), said:
Its powers are not confined to such practices as would be unlawful before it acted; they are
more than procedural; its duty, in part, at any rate, is to discover and make explicit those
unexpressed standards of fair dealing which the conscience of the community may progressively
develop.

On March 19, 1937, the Commission petitioned the Supreme Court of the United
States for a writ of certiorari, presenting the question: “Are false representations to
prospective purchasers of sets of books that they were to receive the books free and
pay only for loose-leaf annual supplements so obviously false that they do not amount
to an unfair method of competition within the meaning of Section 5 of the Federal
Trade Commission Act?”
The Supreme Court granted the Commission’s petition on April 26, 1937, and the
case was scheduled for argument at the subsequent October term.

TABULAR SUMMARY OF LEGAL WORK

79

TABLES SUMMARIZING WORK OF THE LEGAL DIVISIONS AND COURT PROCEEDINGS, 1915-1937
TABLE 1.--Preliminary inquiries
1915 1916 1917 1918 1919 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937
Pending beginning of year0 4 12
32 19
29
61
68 147 102 191 176 298 328 224 260 409 307 423 478 760 185 111
Instituted during year 119 265 482 611
843 1,107 1,070 1,223 1,284 1,568 1,612 1,483 1,265 1,331 1,469 1,605 1,380 1,650 1,593 2,151 847 837 899
Total for disposition 119 269 474
643 862 1,136 1,131 1,291 1,381 1,670 1,303 1,659 1,503 1,659 1,693 1,765 1,789 1,965 2,016 2,629 1,607 1,022 1,010
Consolidated with other proceedings 0
0
0
0
0
0
0
0
0 0
0
0
0
0
0
0
0
0
0
0
0
0
0
Closed after investigation 3
123 289 292 298 351 500 731 897 1,157 1,270 1,075 912 1,153 1,049 1,060 1,150 1,319 1,274 1,597 935 624 583
Docketed as applications for complaints 112 134 153 332 535 724 503 413 382 322 357 286 293
282 384 296 332 224 264 272
487 237 275
Total disposition during year 115 257 442 624 833 1,075 1,063 1,144 1,279 1,479 1,627 1,361 1,235 1,435 1,433 1,356 1,482 1,543 1,518 1,849 1,422
911 858
Pending end of year 4 12
32 19
29
61
68 147
102 191 176 298 328
224 260 409 307 423 478 760
185
111 152

CUMULATIVE SUMMARY TO JUNE 30,1937
Inquiries instituted
Closed after investigation
Docketed as Applications for Complaints
Total disposition
Pending June 30, 1937

26,533
18,672
7,709
26,381
152

80

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
TABLE 2.--Applications for complaints

1915

1916

1917

1918

1919

1920

1921

1922

1923

1924

1925

1926

1927

1928

1929

1930

1931

1932

1933

1934

1935

1936

1937

Pending beginning of year
0 104 130 188 280 389 554 467 458 572 5665
488 420 457 530 843 753 754 440 476 469 634 685
Complaints docketed
112 134 153 332 535 724 426 382 416 337 340 273 292 334 679 535 511 378 404 376 913 1,221 1,477
Rescissions:
To complaints
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
2
2
0
3
0
0 0
3
Settled by stipulations to cease
and desist C.T.E. 1
0
0
0
0
0
0
0
0
0
1
1
1
0
2
2
3
5
3
3
1 6
6
9
Settled by stipulations to cease
and desist S.B.I. 1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
3
4 12 18
Settled by acceptance of T. P.C.
rules
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
3
2
0
0
0
0
0
0
Consolidated with other proceedings
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Dismissed for lack of merit
0
0
0
0
0
0
0
5
6
4
3
4
0
0
0
3
4
1
0
3
1 12 12
Closed for other reasons
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
3
3
Total for disposition
112 238 283 520 515 1,113 980 854 880 954 909 766 712 793 1,212 1,389 1,277 1,136 850
859 1,394 1,888 2,205
To complaints
0
3 16 80 125 220
Settled by stipulations to cease and de
sist--C.T.E. 1
0
0
0
0
0
0
Settled by stipulations to cease and de
sist--S.B.I. 1
0
0
0
0
0
0
Settled by acceptance of T.P.C. rules
0
0
0
0
0
0
Consolidated with other proceedings
0
0
0
0
0
0
Dismissed for lack of merit
0
8 105 79 160
Closed for other reasons: 1
0
0
0
0
0
0
Total disposition during year
8 108 95 240 426 559
Pending end of year
104 130 188 280 389 554

156 104 121 143 118 57
0

0

0

3

45

5 102 80

0
0
0
0
0
0
0
0
0
0
0
0
2 3
0
0
0
0
0
0
0
301 339 357 292 187 243 298
0
0
0
0
0
0
0
513 396 308 389 421 346 255
467 458 572 656 488 420 457

58 100 171 110 90

52

98 259 382 290

68 118 244 160 123 96 111 228 301 252
0
19
0
185
0
263
530

0
17
0
127
0
369
843

31 43 209 85 90 129 243 362
32
5
6
3
0
1
0
0
0
0
0
0
0
0
0
0
118 134 158 205 268 138 91 66
0
0
0
0
0 77 273 337
636 523 696 374 390 760 1,203 1,241
753 754 440 476 469 634 685 694

4

TABULAR SUMMARY OF LEGAL WORK

81

CUMULATIVE SUMMARY TO JUNE 30, 1937
Applications docketed
Rescissions:
To complaints
Settled by stipulations to cease and desist--C. T. E
Settled by stipulations to cease and desist-S. B. I
Settled by acceptance of T. P.C. rules
Dismissed for lack of merit
Closed for other reasons 2
Total for disposition
To complaints 2,798
Settled by stipulations to cease and desist-C. T. E
Settled by stipulations to cease and desist-B. B. I
Settled by acceptance of T P. C. rules
Dismissed for lack of merit
Closed for other reasons 2
Total disposition
Pending June 30, 1937

11,324
10
43
37
6
58
5
11,483

1,891
1,192
88
3,863
687
10,519
964

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

82

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
TABLE 3.--Complaints

1915

1916

1917

1918

1919

1920

Pending beginning of year
Complaints docketed
Rescissions:
Orders to cease and desist
Settled by stipulations to cease
and desist
Settled by acceptance of T. P.C.
rules
Dismissed for lack of merit
Closed for other reasons
Total for disposition
Complaints rescinded
Orders to cease and desist
Settled by stipulations to cease and de
sist
Settled by acceptance of T.P.C. rules
Dismissed for lack of merit
Closed for other reasons:
Total disposition during year
Pending end of year

1921

1922

1923

1924

1925

1926

1927

1928

1929

1930

1931

1932

1933

1984

1935

1936

0
0

0
5

5 10 86 133 286 312 257 232 264 220 152 147 136 198 275 225 208 144 115 218 419
9 154 135 308 177 111 144 154 132 62 76 64 149 172 110 92 53 97 280 386 296

0

0

0

0

0

0

1

0

0

5

0

0

1

1

0

0

0

1

0

0

1

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0
0
0

0
0
0
5

0

0
0

0
3

0
0
0
0
0
5

0
0
0
0
4
10

0
0
0
0
0

12 10
0

0

0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
1
1
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
14 164 221 441 415 423 402 392 396 282 230 212 285 370 385 318 261 241 396 616 725
0
71

0
0
0
75 111 116

0
91

0
82

0
92

0
73

0
44

0
52

0
48

0
67

0
3
48 108

2
83

1937

1
3
0
0
0
56 111 126 161 296

0
0
0
0
0
0
0
6
3
1
3
3
3
0
1
1
2
1
1 17
0
0
0
0
0
0
0
0
0
5
5
1
0
1
0
6
0
0
0 0
1
7 13 44 37 75 88 36 97 83 25 20 16 41 49 45 41 12 38 19
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1 13 16 38
78 88 155 153 166 170 128 176 130 83 76 87 95 160 110 117 126 178 197 367
86 133 286 312 257 232 264 220 152 147 136 198 275 225 208 144 115 218 419 358

0

3

13

TABULAR SUMMARY OF LEGAL WORK

83

CUMULATIVE SUMMARY TO JUNE 30, 1937
Complaint
Rescissions:
Orders to cease and desist:
Contest
Consent
Settled by stipulations to CEASE and desist
Settled by acceptance of TPC rules
Dismissed for lack or merit
Closed for other reasons

3,166

12
18
0
0
4
0
3,200

Complaints rescinded
Orders to cease and desist:
Contest
Consent
Settled by stipulations to cease and desist
Settled by acceptance or TPC rules
Dismissed for lack or merit
Closed for other reasons
Total disposition
Pending June 30, 1937

12
1,276
627
42
18
798
69
2,842
358

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

84

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
TABLE 4.--Court proceedings--Orders to cease and desist--Petitions for review--Lower courts

1919 1920 1921 1922 1923
Pending beginning of year
Appealed
Total for disposition
Decisions for Commission
Decisions for others
Petitions withdrawn
Total disposition during year
Pending end of year

1924
0
4
4
1
1
0
2
2

1925
2
9
11
0
3
0
3
8

1926 1927 1928 1929 1930
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
8

1931 1932 1933 1934 1935 1938 1937
8
8 85
3
8 15
2
1
8
4 34
1 10 22
3
1
5
8
7 37 38 13 30 18
3
6
9
3
1
4
3
1
2
2
3
4
1
1 28
1 11 13
0
0
0
0
0
3
1
8
1
0
0
0
1
2 33
5 15 16
2
3
4
3 35
3
8 15
2
1
3
5

8
2
7
3
0
1
4
3

CUMULATIVE SUMMARY-TO JUNE 30, 1937
Appealed
Decision for Commission
Decisions for others
Petitions withdrawn
Total disposition
Pending June 30, 1937

159
53
87
16
156
3

This table lists a cumulative total of 89 decisions in favor of the respondents in Commission cases
before the United States Circuit Courts of Appeals. However, the Grand Rapids furniture (veneer) group
(with 25 different docket numbers) was in reality 1 case, with 25 different subdivisions. It was tried,
briefed, and argued, as 1 case and was so decided by the court of appeals. The same held true of the curbpump group (with 12 different subdivisions), the Royal Milling Co. group (with 6 different
subdivisions), and the White Pine cases (12 subdivisions). In reality, therefore, these 55 docket numbers
mean but 4 cases; and, if cases and not docket numbers are counted, the total of decisions favor of the
respondents would be 36.

TABULAR SUMMARY OF LEGAL WORK

85

TABLE 5.--Court proceedings--Orders to cease and desist-Petitions for review--Supreme Court of the United States
1919

1920

1921

1922

1923

1924

1925

1926

1927

1928

1929

1930

1931

1932

1933

1934

1935

1936

1937

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

0
0
0
0

0
2
0
2

1
2
0
3

3
4
0
7

3
5
2
10

1
0
1
2

0
5
1
6

4
2
3
9

6
1
1
8

1
0
0
1

0
0
2
2

1
1
0
2

0
1
0
1

0
0
1
1

0
8
0
8

1
12
1
14

0
0
0
0

0
0
4
4

1
0
0
1

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

0
0
0
0
0
0
0

0
1
0
0
0
l
l

0
0
0
0
0
0
3

2
0
0
2
0
4
3

0
5
1
1
2
9
l

0
1
0
0
1
2
0

0
0
0
1
1
2
4

0
0
0
2
1
3
6

3
2
0
1
1
7
1

0
0
0
0
1
1
0

0
0
0
0
1
1
1

0
1
1
0
0
2
0

0
1
0
0
0
1
0

0
0
0
0
1
1
0

0
0
0
1
0
7
l

13
1
0
0
0
14
0

0
0
0
0
0
0
0

0
0
0
0
3
3
1

0
0
0
0
1
1
0

CUMULATIVE SUMMARY--TO JUNE 30, 1937
Appealed by Commission
Appealed by others
Total appealed
Decisions for Commission
Decisions for others
Petitions withdrawn by Commission
Certiorari denied Commission
Certiorari denied others
Total disposition
Pending Jun, 30,1937

43
16
59
24
12
2
8
13
59
0

86

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
TABLE 6.--Court proceedings--Order to cease and desist--Petitions for enforcement--Lower Courts

1919

1920

1921

1922

1922

1924

1925

1925

1927

1928

1929

1930

1931

1932

1933

1934

1935

1936

1937

Pending beginning of year
Appealed
Total for disposition

0
0
0

0
0
0

0
0
0

0
0
0

0
1
1

0
1
4

1
1
2

0
3
3

2
2
4

3
3
6

2
9
11

5
4
9

3
3
6

2
0
2

1
2
3

2
3
5

2
6
8

2
12
14

5
9
14

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

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

1
0
0
1
0

0
0
0
0
1

2
0
0
2
0

0
1
0
1
2

0
0
1
1
3

1
1
2
4
2

5
0
0
6
5

4
1
1
6
3

4
0
0
4
2

0
1
0
1
1

0
0
1
1
2

3
0
0
3
2

4
0
2
6
2

8
0
1
9
5

12
0
1
13
1

CUMULATIVE SUMMARY--TO JUNE 30, 1937
Appealed
Decisions for Commission
Decisions for others
Petitions withdrawn
Total dispositions
Pending June 30, 1937

59
43
4
10
57
2

TABULAR SUMMARY OF LEGAL WORK

87

TABLE 7.--Court proceedings--Orders to Cease and desist--Petitions for enforcement--Supreme Court of the United States
1919

1920

1921

1922

1923

1924

1925

1926

1927

1928

1929

1930

1931

1932

1933

1934

1935

1936

1937

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

0
0
0
0

0
0
0
0

0
0
0
0

0
0
0
0

0
0
0
0

0
0
0
0

0
0
0
0

0
0
1
1

1
0
0
1

0
0
1
1

0
1
0
1

1
0
1
2

0
0
0
0

0
0
0
0

0
0
0
0

0
0
0
0

0
0
0
0

0
0
0
0

0
0
6
6

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

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
1

0
1
0
1
0

0
0
1
1
0

0
0
0
0
1

0
1
1
2
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
5
5
1

CUMULATIVE SUMMARY--TO JUNE 30, 1937
Appealed by Commission
Appealed by others
Total appealed
Decisions for Commission
Decisions for others
Certiorari denied others
Total disposition
Pending June 30, 1937

1
9
10
0
2
7
9
1

88

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
TABLE 8.--Court proceedings--Miscellaneous--Lower courts

1919

1920

1921

1922

1922 1924

1925

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

0
1

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

1
0

2

1
1

1925

1927

1928

1929

1930

1931

1932

1933

1934

1935

1936

1937

1
2
1
5

4
0
2
8

5
3
2
11

6
5
3
11

4
0
0
4

4
1
0
5

4
0
0
5

4
1
1
6

5
0
1
7

3
2
2
6

2
0
1
4

1
1
2
2

1
0
0
3

2
1
2
3

1
0
0
3

0
0
2
0

0
4
0
5

1
2
1
4

0
1
0
0
1
4

1
0
0
0
1
5

3
1
0
0
5
0

0
7
0
1
7
4

0
0
0
0
0
4

0
0
0
0
1
4

0
0
1
0
1
4

1
0
1
0
1
5

1
1
0
0
4
3

4
0
2
0
4
2

1
1
0
0
3
1

1
0
0
1
1
1

1
0
0
0
1
2

2
0
0
0
2
1

2
0
0
0
3
0

0
0
0
1
0
0

4
0
0
0
4
1

3
0
0
0
4
0

CUMULATIVE SUMMARY--TO JUNE 30, 1919-37
Appealed by Commission
Appealed by other
Total appealed

23
21

Decisions for Commission
Decisions for other
Petitions withdrawn by Commission
Petitions withdrawn by others
Total disposition
Total June 30, 1937

25
11
4
4

44

44
0

1

0
1

TABULAR SUMMARY OF LEGAL WORK

89

TABLE 9.--Court proceedings--Mandamus, injunction, etc.--Supreme Court of the United States
1919 1920 1921 1922
Pending beginning of year
Appealed by Commission
Appealed by others
Total for disposition

1923

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

1924

1925
0
0
0
0
0
0
0
0
0
0

1926 1927 1928 1929 1930 1931
0
0
0
0
6
4
1
1
0
0
0
6
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
6
6
4
1
2

1932
0
0
0
0

0
0
0
0

0
0
0
0
0
0

0
0
0
0
0
0

0
0
0
0
0
0

0
0
0
0
0
0

0
0
0
0
0
0

0
0
0
0
0
6

0
2
0
0
2
4

0
3
0
0
3
1

0
0
0
0
0
1

1
0
1
0
2
0

1933 1934
0
0
0
0
0
0
1
0
0
0
0
1
1
0

0
0
0
0
0
0

1935 1936
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0

0
0
0
0
0
0

1937
0
0
0
0

0
0
0
0

0
0
0
0

0
0
0
0
0
0

0
0
0
0
0
0

0
0
0
0
0
0

0
0
0
1
1
0

CUMULATIVE SUMMARY TO JUNE 30, 1938
Appealed by Commission
Appealed by others
Total appealed
Decisions for Commission
Decision for others
Certiorari denied Commission
Certiorari denied others
Total disposition
Pending June 30, 1937

7
2
9
1
5
1
2
9
0

PART III. TRADE-PRACTICE CONFERENCES
ACTIVITIES UNDER TRADE CONFERENCE PROCEDURE
SALES OF INDUSTRIES ADOPTING RULES EXCEED BILLION DOLLARS
BENEFITS DERIVED FROM TRADE PRACTICE RULES
HISTORY AND PURPOSE OF PROCEDURE
OUTLINE OF TRADE CONFERENCE PROCEDURE
GROUP I AND GROUP II RULES
91

PART III. TRADE-PRACTICE CONFERENCES
ACTIVITIES UNDER TRADE PRACTICE CONFERENCE PROCEDURE

The constantly growing interest in this phase of the Commission’s work is evidenced
by the many industries which, during the fiscal year, sought this method of eliminating
various unfair methods of competition and destructive trade practices. Among factors
which account for the growth and success of this activity are an increasingly better
understanding on the part of industry of the purpose of the Commission’s trade
practice conference procedure and of the benefits derived and economies effected
through the substitution, where feasible, of voluntary cooperation through adoption of
and adherence to trade practice conference rules in lieu of the compulsory legal
processes for the correction of unfair practices.
During the fiscal year, trade practice conference proceedings advanced to the stage
of promulgation of rules for the following industries or groups: (1) Paper drinking
straw manufacturers; (2) buff and polishing wheel manufacturers; (3) cotton
converting industry (embracing the following industry branches: clothiers’ linings
other than all cotton; corset, brassiere, and allied trade fabrics; all-cotton clothiers’
linings; converted curtain and drapery fabrics; shirting fabrics; wash goods fabrics;
interlinings, and bleached goods); (4) flat glass manufacturers and distributors; (5)
juvenile wheel goods manufacturers; (6) ladies’ handbag manufacturers; (7) preserve
manufacturers; (8) rubber tire industry; (9) private home study schools; (10) school
supplies an equipment distributors; (11) mirror manufacturers; (12) covered button and
buckle manufacturers; (13) tubular pipings and trimmings manufacturers, and (14) wet
ground mica industry. Final action was also taken by the Commission on the trade
practice rules for the concrete burial vault manufacturing industry, which rules,
however, were not promulgated until after the close of the fiscal period.
SALES OF INDUSTRIES ADOPTING RULES EXCEED BILLION DOLLARS

The value of annual sales by the approximately 100,000 persons, firms or
corporations comprising the memberships of the above indus tries is estimated at well
over a billion dollars.
Prior to final action by the Commission on the rules proposed for an industry, such
rules are made public, and for a 15-day period thereafter all interested or affected
parties are given the opportunity of
93

94

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

presenting to the Commission their suggestions or objections, if any, with respect to
the proposed rules. Rules as promulgated by the Commission are sent to all members
of the industries concerned, accompanied by acceptance blanks which they are
requested to sign and return to the Commission.
With respect to applications filed with the Commission for trade practice rules, and
regarding which proceedings are pending before the Commission in various stages of
progress, the regular procedure was followed in making public the proposed rules for
the following industries in order that the Commission might be informed of any
objections to such rules before proceeding to their final consideration: (1) Radio
receiving set manufacturers; (2) toilet brush manufacturers; (3) gasoline pump
manufacturers; (4) perfume and cosmetic manufacturers; (5) carbon dioxide
manufacturers; (6) Douglas fir plywood manufacturers; (7) fertilizer industry, and (8)
wholesale jewelers.
In order to assist industries applying to the Commission to sponsor trade practice
conferences, it is necessary that considerable research be conducted with reference to
the character or nature of such industries, and particularly as to existing unfair
competitive conditions therein. With such information available, the Commission has
a better understanding of an industry’s objectives and is thereby enabled to render
assistance towards improvement of business conditions. In many instances these
studies require considerable time and work on the part of members of the staff,
especially where an industry is large and of a complex nature.
In addition to public hearings and formal trade practice conferences, there have been
held informal conferences with representatives of numerous industries affecting
pending applications or with respect to other phases of this work.
BENEFITS DERIVED FROM TRADE PRACTICE RULES

In accordance with procedure established by the Commission to ascertain the manner
in which trade practice rules are being observed, inquiry was made of those industries
for which rules had been in effect for six months. Inquiry was also made as to benefits
accruing to members of the various industries as a result of the operation of their rules.
Generally, the conditions reported emphasize the value to industry of the trade
practice conference procedure.
HISTORY AND PURPOSE OF TRADE PRACTICE CONFERENCE PROCEDURE

The trade practice conference is a logical development of the efforts of the Federal
Trade Commission, in cooperation with industry, to protect the public from the use of
unfair methods of competition in commerce and to raise the standards of business
practices.

TRADE-PRACTICE CONFERENCES

95

The Division of Trade Practice Conferences, created by the Commission, April 19,
1926, is charged with coordinating and facilitating the work incident to holding trade
practice conferences and of encouraging cooperation between business as a whole and
the Commission in serving the public interest. As early as 1919, the Commission held
conferences with industry for the purpose of eliminating unfair methods of competition
and trade abuses.
The trade practice conference procedure affords a means whereby representatives
of an industry may voluntarily assemble and, under the auspices of the Federal Trade
Commission, consider prevailing unfair trade practices and collectively agree upon and
provide for their abandonment. By this method all members of an industry may be
placed simultaneously on an equally fair competitive basis and large savings effected
through cooperative and voluntary self-correction. Under this procedure. a business
or industry takes the initiative in establishing its own rules of business conduct, subject
to approval by the Commission. Through these conferences the same results are
achieved as by issuance of formal complaints by the Commission, but without bringing
charges or employing any compulsory process. The procedure is predicated on the
theory that the primary concern of the Federal Trade Commission is the public interest.
Its importance to the public consists in bringing widespread relief from the harmful
effects of unfair methods of competition which relief otherwise might not be
accomplished in years, and in the saving of public funds which necessarily would be
spent in conducting the trials of many cases.
OUTLINE OF TRADE PRACTICE CONFERENCE PROCEDURE

The first requisite of trade practice conference is an expression of desire on the part
of a substantial majority of the members of an industry to. eliminate unfair methods
of competition and trade abuses and to improve competitive conditions. The procedure
is as follows:
I. Method of applying for a trade practice conference.--Be fore authorizing a trade
practice conference, the Commission assures itself that the holding of such conference
is desirable and to the best interests of the industry and the public. An application, in
the form of a petition or informal communication, should contain the following
information:
1. A brief description of the business for which the conference is intended, and a
statement as to the products manufactured or the commodities distributed. In order that
the size and extent of the industry’s operations may be taken into consideration, the
approximate annual volume of production, value of sales and the capitalization of the
entire industry membership should be stated. This data should include the total number
of units engaged in the industry.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION.

2. The authority of the person or persons making the application must also be shown.
If the application is made by an association executive, a resolution showing the action
of the association should be submitted, together with a statement indicating the
percentage of the entire industry represented by the association membership, which
may be given on the basis of volume of business; or numerically, or both. If the
application is presented by an unorganized group, the percentage of the whole industry
represented by the group applying for the conference should be stated.
3. The application should show whether the conference is intended for all branches
of the industry, or is to be limited to a particular branch or branches thereof. If the
resolutions. to be adopted by manufacturers, for example, are confined to practices
which do not materially affect distributors, there would be no particular reason for
including distributors. However, if the proposed action involves distribution, the
distributors should be included.
4. The application should set out the various unfair methods of competition, trade
abuses, and uneconomic and unethical practices alleged to exist in the industry at the
time the application is filed and which the industry desires to eliminate through the
medium of a trade practice conference. Discussion at the conference is not limited,
how-ever, to the particular subjects thus proposed, as the conference itself constitutes
an open forum wherein any practice existing in the industry may be brought forward
as a proper subject for consideration. Any resolutions submitted by a committee or
member of an industry prior to a trade practice conference are tentative and their
introduction does not prohibit other members of the industry from presenting new or
additional resolutions.
If possible, the application should be accompanied by a complete and accurate list
of the names and addresses of all members of the industry, or such list should be
furnished shortly after the application is filed. These names should be divided or
symbolized to indicate the types of concerns intended to be covered by the conference,
that is, manufacturers, distributors, and so forth. Membership of the association
presenting the application should also be shown.
II. Procedure following authorization by the Commission.--After a conference has
been authorized by the Commission, a time and place are arranged and a commissioner
or member of the Commission’s staff is designated to preside. Anyone engaged in the
industry for which the conference is authorized may participate. At such conference,
resolutions are introduced, discussed, and, if necessary, amended before adoption.
Following receipt of the official transcript of the conference proceedings, the rules
adopted by the industry are transmitted to the Commission for its consideration. Prior
to final action thereon,

TRADE-PRACTICE CONFERENCES

97

the rules are released by the Commission for a 15-day period upon public notice
whereby all interested or affected parties have the opportunity of presenting to the
Commission their suggestions or objections, if any. Thereafter, and upon full
consideration of the entire matter, the Commission proceeds to final consideration of
the rules. The procedure requires that a copy of the rules, as promulgated by the
Commission, be sent to each member of the industry whose name and address are
available, together with an acceptance card providing opportunity to such member to
signify his acceptance and willingness to observe the rules in the conduct of his
business.
After rules have been approved for an industry, the Commission retains an active
interest in their observance, and to that end a survey of the industry is made by the
Commission, when the rules have been in effect for six months. This is to ascertain not
only the manner in which such rules are being observed, but also the benefits being
derived by those who adopted them.
GROUP I AND GROUP 11 RULES

Rules approved by the Commission which relate to illegal practices are designated
as Group I rules. Other rules adopted by an industry, and received by the Commission
as expressions of the industry, are placed in Group II.
Explanation of Group I rules.--The unfair trade practices embraced in Group I rules
are considered to be unfair methods of competition or other illegal practices within the
decisions of the Federal Trade Commission or the courts, and appropriate proceedings
in the public interest will be taken by the Commission to prevent the use of such
unlawful practices in or directly affecting interstate commerce.
Explanation of Group II rules.--The trade practices embraced in Group II rules do
not, in and of themselves, constitute violations of law. They are considered by the
industry either to be unethical, uneconomic, or otherwise objectionable; or to be
conducive to sound business methods which the industry desires to encourage and promote. Such rules, when they conform to the foregoing specifications and are not
violative of law, will be received by the Commission, but their observance must
depend upon and be accomplished through the cooperation of the members of the
industry concerned, such observance being exercised in accordance with existing law.
Where, however, such practices are used in such manner as to become unfair methods
of competition in commerce or a violation of any law over which the Commission has
jurisdiction, appropriate proceedings will be instituted by the Commission as in the
case of violation of Group I rules.

PART IV. SPECIAL PROCEDURE IN CERTAIN TYPES OF
ADVERTISING CASES
NEWSPAPER, MAGAZINE AND RADIO ADVERTISING
99

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

False and misleading advertising matter as published in newspapers and magazines
and as broadcast over the radio is surveyed and scrutinized by a special board set up
by the Federal Trade Commission in 1929. This board, known as the Special Board
of Investigation, consists of three Commission attorneys designated to conduct
hearings and specialize in this class of cases.
Misrepresentation of commodities sold in interstate commerce is a type of unfair
competition with which the Commission has dealt under authority of the Federal Trade
Commission Act since its organization. By 1929, it had become apparent that
misrepresentation embodied in false and misleading advertising in the periodical field
was of such volume that it should receive specialized attention from the Commission.
Since that time the Commission, through its special board, on the alert for misleading
representations, has reviewed the advertising columns of newspapers and magazines,
and, since 1934, commercial advertising continuities broadcast by radio, and also has
received from the public complaints of false and misleading advertising. Each
misrepresentation so noted and each complaint received from the public has been
carefully investigated, and, where the facts have warranted, and informal procedure
has not resulted in the prompt elimination of misleading claims and representations,
formal procedure has been instituted. While many orders have been issued requiring
the respondents to cease and desist from advertising practices complained of, in a
majority of cases the matters have been adjusted by the respondents signing
stipulations to abandon the unfair practices.
The Commission believes its work in this field has contributed to the substantial
improvement which ha s occurred in recent years in the character of advertising.
Newspaper and magazine advertising.--In reviewing advertisements in current
publications, the Commission, through its special board, has found it advisable to call
for some periodicals on a continuous basis, due to the persistently questionable
character of the advertisements published. However, as to publications generally, of
which there are some 20,000, it is physically impossible to review, continuously, all
advertisements of a doubtful nature; also, it has been found unnecessary to review all
the issues of publications of recognized high
101

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

ethical standard where the publishers themselves carefully censor all copy before
acceptance.
With this situation in mind, the Commission has found it of material value to procure
periodicals in cognate groups as to type or class, volume of circulation, and character
of field of distribution, such as agricultural, fiction, informational, motion picture,
trade, sales promotion, and the like. Advertisements of similar character, purpose and
appeal are thus assembled and reviewed to advantage in a related manner.
Through periodical calls for magazines and newspapers during the fiscal year just
closed, the Commission procured 474 editions of representative newspapers of
established general circulation and 1,014 editions of magazines of interstate
distribution, representing a combined circulation of 112,170,622.
During the last fiscal year, the Commission examined 136,639 advertisements
appearing in the aforementioned newspapers and magazines and noted 22,662 as
containing allegations that appeared to be false or misleading. These 22,662
advertisements formed the basis of 2,317 prospective cases.
The Commission now has developed from its newspaper and magazine review data,
analyses showing the sources of the greatest volume of false and misleading
advertisements, segregated as to fiction, motion picture, scientific information, home
and women magazine groups, and so forth. In addition, similar data have accumulated
with respect to key newspapers of general interstate distribution.
Radio advertising.--The Commission began the review of advertising copy broadcast
over the radio at the beginning of the fiscal year 1934-35. At the outset, the
Commission, through the Special Board of Investigation, made a survey of all
commercial continuities, covering the broadcasts of all radio stations during July,
1934. The volume of returns received and the character of the announcements
indicated that a satisfactory continuous scrutiny of current broadcasts could be
maintained with a limited force and at relatively small expense, by adopting a plan of
grouping the stations for certain specific periods.
Consequently, beginning with September, 1934, calls have been issued to individual
radio stations at the rate of four times yearly for each station, according to their
licensed power and location in the five radio zones established by the Federal
Communications Commission. These returns cover specified 15-day periods.
National and regional networks, however, respond on a continuous weekly basis,
submitting copies of commercial continuities for all programs wherein linked hook-ups
are used involving two or more affiliated or member stations.
Producers of electrical-transcription recordings submit regularly monthly returns of
typed copies of the commercial portions of all recordings manufactured by them for
radio broadcast. As the actual

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103

broadcast of a commercial recording is not always known to the manufacturer of an
article being advertised, the Commission’s knowledge of current transcription
programs is supplemented by special reports from individual stations from time to
time, listing the programs of recorded transcriptions with essential data as to the names
of the advertisers, and the articles sponsored.
The combined material received furnishes representative and specific data on the
character of current radio advertising which has proven of great value in the efforts to
prevent false and misleading. representations.
During the fiscal year ended June 30, 1937, the Commission received copies of
439,393 commercial broadcasts by individual radio stations. and 30,983 commercial
broadcasts by networks, or chain originating key stations. The broadcasts from the
independent stations averaged 1 ½ pages each and from the networks 10 pages each.
The special board and its staff read and marked about 959,264 pages of typewritten
copies during the year, or an average of 3,145 pages every working day. From this
material, 24,558 commercial. broadcasts were marked for further study as containing
representations that may have been false or misleading. These were assembled in
1,275 prospective cases for further review and procedure in instances that appeared to
require it.
From data now accumulated as a result of the first three years’ systematic review of
radio advertising, the Commission is in a position. to ascertain the sources of the more
objectionable examples of broad cast advertising, and to take action where necessary.
The Commission is receiving the helpful cooperation of the 620 active commercial
radio stations and of newspaper and magazine publishers generally, and notes a desire
on the part of broadcasters and publishers to aid in the elimination of false and
misleading advertising.
In its examination of advertising, the Commission’s only purpose is to prevent false
and misleading representations. It does not undertake to dictate what an advertiser
shall say, but rather indicates what he may not say under the law. Jurisdiction is
limited to cases which have a public interest as distinguished from a mere private
controversy, and which involve practices held to be unfair to competitors in interstate
commerce.
Procedure in advertising cases.--If a periodical or radio advertisement appears on
its face to be misleading, the Commission sends a questionnaire to the advertiser,
requesting a sample of his product, if; this is practicable, and a quantitative formula,
if the product is a compound, and also requests copies of all advertisements published
during the year, together with copies of all booklets, folders, circulars, form letters,
and other advertising literature used. Upon receipt of this data, the claims, sample, and
formula are referred to an appro-

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

priate technical agency of the Government for scientific opinion. Upon receipt of this
opinion, the advertising is carefully studied, and a list of numbered excerpts made that
appear to require justification or explanation. A copy of this numbered list and a copy
of the opinions received are sent to the advertiser, who may then submit such evidence
as he thinks may justify or explain the representations in his advertising.
An advertiser may answer by correspondence, or upon request, may confer in person
with the special board. If the advertiser justifies the representations that have been
questioned, the board reports the matter to the Commission with a recommendation
that the case be closed without prejudice to the right of the Commission to reopen it
should it become necessary. If he is unable to justify any material statement in his
advertising which the board has reason to believe is false or misleading, the board
reports the matter to the Commission with a recommendation that the case be
docketed, and the entire matter referred back to the board for negotiation of a
stipulation or agreement to abandon the unfair representations. alleged, provided the
advertiser desires to dispose of the matter in that way.
If the Commission approves such recommendation, the board then prepares a
stipulation and forwards it to the advertiser for execution. If the advertiser objects to
any of the provisions of the stipulation, he may negotiate further by mail or in person,
and when a stipulation has been finally agreed to and signed by the advertiser, the
matter is again reported to the Commission with recommendation that the stipulation
be accepted and the case closed.
Experience has shown that the elimination of unfair methods of competition can be
accomplished not only by cease and desist orders but by stipulation. Not only is the
stipulation method effective and speedy, but it is inexpensive for both the Government
and the respondent.
Number of cases handled.--During the last fiscal year the Commission, through its
special board, sent questionnaires to advertisers in 836 cases, negotiated 346
stipulations, and settled and closed by its various methods of procedure a total of 814
cases. The board recommended that complaints be issued in 12 cases for failure to
execute stipulations and in 43 cases for violating stipulations. In several cases the
board recommended that complaints be issued without giving the advertisers an
opportunity to stipulate because of gross deception or danger to the public involved
in the practices in which they were engaged.
In 294 cases the board recommended filing the assembled data and closing the cases
without prejudice to the right of the Commission to reopen them at any time the facts
warranted. Several cases were closed because them Post Office Department had
issued fraud orders against the respondents concerned. Others were closed because the

NEWSPAPER, MAGAZINE, AND RADIO ADVERTISING

105

parties respondent had discontinued advertising or selling without intent to resume,
and others because the advertisers were able to justify their claims.
At the beginning of the fiscal year, 284 cases were pending before the special board.
At the end of the year, 306 cases were pending.
Commission has access to scientific services.--Effective cooperation continued
throughout the year with other departments of the Government. The Commission has
access to the laboratories, libraries, and other facilities of various agencies of the
Federal Government, including the Bureau of Standards, the Public Health Service,
and the Food and Drug Administration of the Department of Agriculture, to any of
which it may refer a matter for scientific opinion. In addition, the Commission, when
necessary, obtains medical and other scientific information and opinions from nongovernment hospitals, clinics and laboratories. Such material and cooperation are often
particularly helpful in enabling the Commission to reach sound and fair conclusions
with respect to scientific and technical questions which come before it, and especially
so in connection with much of the work of the Special Board.

PART V. FOREIGN-TRADE WORK
ADMINISTRATION OF EXPORT TRADE ACT
ASSOCIATION EXPORTS INCREASE IN 1936
ASSOCIATIONS OPERATING UNDER THE ACT
ADVANTAGES OBTAINED BY EXPORTERS IN 1936
TRUST LAWS AND UNFAIR COMPETITION ABROAD
107

PART V. FOREIGN-TRADE WORK
ADMINISTRATION OF THE EXPORT TRADE ACT

Foreign trade work of the Commission includes administration of the Export Trade
Act, commonly known as the “Webb-Pomerene law”, and inquiries made under section
6 (h) of the Federal Trade Commission Act, which empowers the Commission to
investigate trade conditions in and with foreign countries. This work is handled by the
export trade section of the legal division.
The Export Trade Act, passed by Congress in 1918, grants exemption from the
antitrust laws to export combines or associations which are required to file with the
Commission copies of their organization papers, annual reports, and such other
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 conduct inquiries
and make recommendations for readjustment of a business. Should an association fail
to comply with the recommendations, the matter may be referred to the Attorney
General for further action.
Such an association must be solely engaged in export trade; and the law provides
that it shall not restrain the export trade of a domestic competitor; artificially or
intentionally enhance or depress prices within the United States of commodities of the
class exported by the association; substantially lessen competition or otherwise
restrain trade within the United States.
EXPORTS INCREASE IN 1936
Reports of associations filing papers under the Export Trade Act show an upswing
in exports for the year 1936, due to improved conditions abroad, a lessening of trade
restrictions in foreign countries, and strong association effort to increase sales in spite
of foreign competition,
Total exports for that year amounted to $149,296,525, and exceeded by
approximately $11,600,000 the associations’ exports in 1935, in spite of the fact that
two of the largest groups, exporting petroleum, were dissolved in 1936.
109

110

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
Association exports for the years 1935 and 1936
1935

Metals and metal products, including iron and steel products,
copper, metal lath machinery, railway equipment, pipes and
valves, and electrical equipment
$20,250,000
Products of mines and wells, crude sulphur, phosphate rock,
petroleum, and carbon black
55,875,000
Lumber and wood products, pine, fir, redwood, walnut, hardwood,
plywood, barrel and box shooks, tool handles, and wood
naval stores
9,450,000
Foodstuffs, such as milk, meat, sugar, flour and fruit
16,500,000
Other manufactured goods, rubber, paper, textiles, glass, cement,
abrasives, and chemicals
35,610,000
Totals
137,685,000

1936

$40,507,335
40,780,283

8,533,374
21,250,433
38,225,100
149,296,525

FORTY-FIVE ASSOCIATIONS OPERATING UNDER THE EXPORT TRADE
ACT

New Associations organized under the Export Trade Act during the fiscal year ended
June 30, 1937, were: California Alkali Export Association, comprising three member
companies in California, with headquarters in Los Angeles; Pacific Fresh Fruit Export
Association, comprising nine member companies in California and Washington, with
headquarters in San Francisco ; and Scrap Export Associates of America, comprising
three member companies in New York and Pennsylvania, with headquarters in New
York City.
At the end of the fiscal year, 45 export trade associations were on file with the
Federal Trade Commission, as follows:
American Box shook Export Association, Barr Building, Washington, D. C.
American Hardwood Exporters, Inc.,
Queen & Crescent Building, New Orleans.
American Locomotive Sales Corporation, 30 Church Street, New York.
American Paper Export, Inc., 75
West Street, New York.
American Provisions Export Co.,
80 East Jackson Boulevard, Chicago.
American Soda Pulp Export Association, 230 Park Avenue, New York.
American Spring Manufacturers Export Association, 30 Church Street,
New York.
American Tire Manufacturers Export Association, 80 Church Street,
New York.
California Alkali Export Association,
523 West Sixth Street, Los Angeles.
California Dried Fruit Export Association 1 Drumm Street, San Francisco.
California Prune Export Association,
1 Drumm Street, San Francisco.

Cement Export Co., Inc., 150 Broadway, New York City.
Copper Exporters, Inc., 50 Broadway, New York.
Douglas Fir Export Co., Henry
Building, Seattle, Wash.
Durex Abrasives Corporation, 63
Wall Street, New York.
Electrical Apparatus Export Association, 70 Pine Street, New York.
Export Screw Association of the
United States, 23 Acorn Street, Providence, R. I.
Florida Hard Rock Phosphate Export Association, Savannah Bank &
Trust Building, Savannah, Ga.
General Milk Co., Inc., 19 Rector
Street, New York.
Goodyear Tire & Rubber Export Co.,
1144 East Market Street, Akron, Ohio.
Grapefruit Distributors, Inc,, Daven
port, Fla.
Inter-America Exporters, Inc., 11
Broadway, New York.

Carbon Black Export, Inc., 500 Fifth
Avenue, New York.

Metal Lath Export Association, 47
West 34th Street, New York.

FOREIGN-TRADE WORK
Northwest Dried Fruit Export Association, Title & Trust Building, Portland, Ore.
Pacific Flour Export Co., care of
Fisher Flouring Mills Co., Seattle,
Wash.
Pacific Forest Industries, Tacoma
Building, Tacoma, Wash.
Pacific Fresh Fruit Export Association, 451 California Street, San Francisco.
Phosphate Export Association, 393
Seventh Avenue, New York.
Pipe Fittings & Valve Export Association, 1421 Chestnut Street, Philadelphia.
Plate Glass Export Corporation,
Grant Building, Pittsburgh.
Redwood Export Co., 405 Montgomery Street, San Francisco.
Rubber Export Association, 19 Goodyear Avenue, Akron, Ohio.
Scrap Export Associates of America,
350 Fifth Avenue, New York.

111

Shook Exporters Association, Stahlman Building, Nashville, Tenn.
Signal Export Association, 74 Trinity
Place, New York.
Steel Export Association of America,
75 West Street, New York.
Sugar Export Corporation, 120 Wall
Street, New York.
Sulphur Export Corporation, 420
Lexington Avenue, New York.
Textile Export Association of the
United States, 40 Worth Street, New
York.
United States Alkali Export Association, Inc., 11 Broadway, New York.
United States Handle Export Co.,
Piqua, Ohio.
Walnut Export Sales Co., Inc., 12th
Street & Kaw River, Kansas City, Kans.
Walworth International Co., 60 East
42nd Street, New York.
Wood Naval Stores Export Association, 1220 Delaware Trust Building,
Wilmington, Del.

ADVANTAGES OBTAINED BY EXPORTERS IN 1936

Associations operating under the law represent mills, mines, factories and processing
plants in all parts of the country. Shipments are made to all parts of the world.
The export association presents a united front to foreign competition; it concentrates
and simplifies the problem of sales, makes for economy in operation, and generally
builds up the prestige of American goods abroad. An association may adopt uniform
sales terms as to price, credit, shipping dates, packing requirements, and other details
of shipment. Complaints of foreign buyers against American shippers may be reduced
through a centralized inspection service and an adjustment department. An arbitration
board lessens legal expense.
Cooperative purchase of cargo space was especially helpful during the maritime
strike tie-up of 1936. The pooling of orders makes it possible to complete large sales
contracts over a longer period of shipment than could be handled by one company
alone. Standardization of products and improvement in quality, have been effected
through cooperative effort. Foreign buyers show more confidence in dealing with a
large group of exporters than with a single company less known to the trade. The
association is in a position to obtain current information for dissemination among the
members as to market conditions abroad, tariffs, shipping requirements, tax regulations
and exchange restrictions.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Exports were somewhat lessened in 1936 by labor disturbances, notably the
maritime strike on the West Coast which delayed shipments and resulted in some
cancellation of orders. There are still high duties and import quota plans in some
countries abroad, although associations report that reciprocal tariff agreements
negotiated by the United States have served to lessen these restrictions. Revaluation
of gold-block currencies at lower levels gave foreign competitors an advantage. The
policy of some countries to increase production to the point of becoming selfsustaining in time of war has led to changes in producing areas. Manufacturing plants
have been built in the Orient, much effort has been spent in the development of
substitute products in Europe, and the cultivation of grain and other foodstuffs has
been encouraged abroad. These changes must be met and new markets developed to
take the place of old. The Webb-Pomerene law offers a method under which the
expense and effort of developing new markets may be divided among a number of
exporters, for the benefit of all.
TRUST LAWS AND UNFAIR COMPETITION IN FOREIGN COUNTRIES

In accordance with Section 6 (11) of the Federal Trade Commission Act, directing
inquiries as to trade conditions in and with foreign countries, the Commission notes
the following measures involving trust laws and unfair competition abroad:
Argentina.--Recent legislation authorized Government purchase and destruction of
vineyards in order to reduce the production of wine grapes. An executive decree of
August 7,1936, provided for appointment of a commission to study plans and present
recommendations for agricultural laws and policies. A national wool institute was
created by decree of June 10, 1936, to promote production and regulate prices. Under
an executive decree on July 20, 1936, all imports and exports of petroleum must be
handled by a Government-controlled agency with authority to allocate markets and to
operate a monopoly for sale of petroleum in the Federal Capital.
Australia.--Decision of the Privy Council at London in July, 1936, invalidating the
Dried Fruit Control Act, seriously affected the commonwealth plans for production
control. Government aid to agriculture had been effected for some years through
bounties and marketing schemes. Domestic prices were maintained above export
prices, and the difference paid to exporters, control having been administered by
commonwealth export control boards working in cooperation with control boards in
the producing States. The Privy Council held the dried fruit control to be in violation
of Section 92 of the Commonwealth Constitution which insures free trade between the
Australian States (James V. Commonwealth of Australia.). Thereafter amendments
were proposed to make Section 92 inapplicable to marketing laws, and to permit laws
regulating aviation, the Commonwealth Air

TRUST LAWS & UNFAIR COMPETITION IN FOREIGN COUNTRIES

113

Navigation Act having been held invalid by the High Court of Australia. But the
proposed Constitutional amendments were rejected by the States in 1937. Section 7
of the Industries Preservation Act, which provides for freight dumping duties, was
amended, December 7,1936.
Austria.--Increased prices in raw materials and semi-finished goods have led to an
increase in retail prices, and a demand for governmental price fixing for necessaries.
A price commissary has been appointed to receive claims and provide official hearings
for disputes between producers, manufacturers, dealers and consumers.
Bolivia.--The Price and Profits Control Decree of June 20, 1936, provided that
establishments dealing in articles of basic necessity be limited to a maximum profit of
12 percent, and other firms to a maximum commercial profit of 20 percent. Stocks will
be inventoried, actual costs of prime necessities computed, and selling prices fixed by
inspectors of the permanent fiscal commission. A decree dated August 20,1936,
required that any inhabitant who participates in any way in the production and
distribution of wealth be required to join a syndicate operating under a national bureau
of syndicates. An executive decree of December 21, 1936, created a Government
petroleum monopoly.
Canada.--Judgments were rendered by the Privy Council in London, January 28,
1937, on a number of Canadian laws. The Farmers Creditors Arrangement Act was
upheld by the council, as was section 498A of the criminal code which provides
penalties for the granting of discriminatory discounts, rebates and allowances. The
Dominion Trade and Industry Commission Act was upheld in part, but no appeal was
taken from decision of the Supreme Court of Canada which had held invalid Section
14 providing for price regulation and production control by the Dominion
Government. The Natural Products Marketing Act which had provided for agricultural
agreements, the Employment and Social Insurance Act, the Minimum Wages Act,
Limitation of Hours of Work Act, and the Weekly-Day-of-Rest-in-Seven Act, were
held invalid, and beyond the power of the Dominion Parliament under the British
North America Act which reserves to the provinces control of trade and industry
within their borders.
The Combines Investigation Act, 1923, was amended on April 10, 1937; the law will
now be administered by a commissioner under the Minister of Labor. A report was
made by a Royal commission, dated February 3, 1937, on importation and distribution
of anthracite coal in the Dominion. The anti-dumping provisions of the Customs Tariff
Act were amended in 1937.
China.--In December, 1936, a national foodstuffs distribution and transportation
bureau was opened at Shanghai, to put foodstuffs

114

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

under national control and to effect an adjustment between supply and demand in order
to prevent local shortage and speculation in price.
Colombia.--Under an act approved in 1936, the Government may acquire utilities
that are considered of public and social interest. A new land ownership law effective
on December 30, 1936, provided that all rural lands shall revert to the State unless
continuous possession or economic exploitation is shown for ten years.
Czechoslovakia.--In order to forestall an increase in prices after devaluation of the
crown, a decree issued in October, 1936, directed local authorities to watch the prices
of daily necessities, raw materials, intermediates, and other production materials, and
to report to a newly created price advisory board in case of unwarranted price increase,
speculative buying, curtailment of production, and any measures tending to increase
prices or result in profiteering.
A decree dated July 23, 1936, provided for organization of all textile producers into
a syndicate, under regulation of a board authorized to issue licenses and determine
problems of production and distribution. A decree dated July 8, 1936, amended the
National Defense Law of May 13, 1936, defining war industries and providing strict
control for all of the industries and trades named therein. The wheat monopoly law
was extended to June 30,1940. Compulsory labor exchanges were introduced in
October, 1936; strikes and lockouts are not permitted.
France.--The Price Control Act, passed on August 19, 1936, provided for
governmental committees to survey wholesale and retail prices, determine a normal
spread between cost and sales price, and to prohibit unjustified increase in price. The
Monetary Act of October 3, 1936, included a provision against alteration of the price
level. A decree of November 25 provided for a bureau to make inquiries and
recommendations toward a reduction in production costs. A law passed February 15,
1937, declared illegal all price increases on foodstuffs, merchandise, and services of
prime necessity, above the level of August 1, 1936, unless justified by a rise in the
price of raw materials or an increase in service charges. A national price surveillance
committee was provided to fix prices, in agreement with wholesalers and retailers.
A decree issued on July 1, 1937, forbade an increase in prices or service charges
above those in effect on June 28, 1937.
The Coal Act, passed on August 18, 1936, empowers the Minister of Mines to fix
the prices of coal and to grant subsidies to mines that are inadequately exploited. A
national wheat board was created by a law, August 15, 1936, to control production, fix
prices, apportion sales to millers, provide credit, and grant export subsidies when
necessary. The Board will have a monopoly of the import and export trade in wheat,
flour and cereals. The Export Credit Insurance Law was amended August 25. Other
laws passed in 1936 provided aid and

TRUST LAWS & UNFAIR COMPETITION IN FOREIGN COUNTRIES

115

credit for small sized commercial and industrial enterprises, gave temporary assistance
to agricultural projects, and authorized delay in payments by merchants, industrialists
and artisans. The 40-hour week was established in 1936, and a law dated December
31, supplemented by a decree on January 16, 1937, provided that all collective labor
disputes in commerce and industry must be submitted to conciliation and arbitration.
A national committee has been appointed to assist in enforcing orders to restrict to
specified regions the production of wines bearing certain regional names, and to
prohibit the shipment of such wines without an official certificate.
Germany.--An administrative order, July 7,1936, directed coordination of the
regional economic chambers with the so-called “groups” of business; a reduction in
fees required for compulsory membership of business firms in the groups; and the
creation of special courts of honor connected with the regional economic chambers,
and a central court of honor connected with the Reich economic chamber.
Under the second 4-year plan proclaimed in September, 1936, further efforts will be
made to make Germany independent of foreign supplies of industrial raw materials
A decree issued on October 23, 1936, named six business groups that will participate
in the plan, representing production of raw materials, distribution of raw materials,
labor, agricultural production, prices, and foreign exchange. An order issued by the
Minister of Economics, November 12, set out the Government plan for compulsory
organization of industry.
In September, 1936, warnings were issued with respect to advances in the price of
food or rentals. Enticement of employees of a competitor by offering higher wages,
was denounced as an unfair method of competition. In October a new price
commissioner was appointed, with authority to fix just prices for goods and services
of all kinds. Several orders were issued prohibiting price increases in specific industries, and on November 26 two decrees were issued, with an executive order on
November 30, prohibiting any increase in the price of commodities and services,
including rents, above the level of October 18, 1936. These orders did not apply to
foreign trade which is under special rules issued by the import control boards.
Under a decree dated January 26, 1937, all private stocks of platinum, silver, copper,
lead, tin, nickel or zinc, must be delivered to a governmental board for sale at prices
and under terms fixed by the board. The Government has effected a plan for control
of the supply of skilled labor; work books are now required and a worker must obtain
a permit before he may change his occupation. The Reich has divested itself of a
number of participations in private enterprise undertaken during the depression.
A law dated September 30, 1936, authorized monopoly control of domestic
production and importation of agricultural products to be named by further ordinances.

116

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

A law dated January 26, 1937, designed to prevent absentee ownership and
speculative sales, requires official approval for sale or transfer of all agricultural
property in excess of 2 hectares (5 acres).
Two new Stock Company Laws were passed on January 30, 1937. In November,
1936, the foreign exchange board announced that steps would be taken toward
confiscation of foreign securities, and on November 19 a decree was issued under
which securities to be named from time to time by the board should be delivered for
confiscation, to the foreign exchange bank. The law against economic sabotage, passed
in December, 1936, provided capital punishment for persons who, in violation of
exchange regulations, leave their property abroad or transfer it to parties abroad.
Great Britain.--A proposed enabling act to provide self-government in industry was
introduced in the British Parliament during the past session but failed to pass.
Regulation has been effected through the Coal Mines Act and the Cotton Spinning
Industries Act, and some voluntary schemes toward dismantling of inefficient plants
have been attempted through the reconstruction levy in the flour milling and ship
building industries.
Report of the Food Council to the Board of Trade, dated June 26, 1936, reviewed the
schemes in operation for fixing maximum prices of bread, and 4 further report on
December 3, 1936, covered the pigs and bacon marketing schemes. Report of the Milk
Reorganization Commission on the progress of the milk marketing boards, was presented in December, 1936; and recommendations were made for creation of a
permanent milk commission with authority to fix prices, disburse government
subsidies and direct the operation of milk marketing boards. A Marketing of Eggs Act
was passed in northern Ireland in 1936.
The Petroleum Transfer of Licenses Act of July 14, 1936, amends the Petroleum
Consolidation Act of 1928. The Key Industries Duties Act was extended for ten years
from August 19, 1936.
Greece.--A committee was appointed in 1936 to present a plan for organization of
production and economic development. The finance minister suggested a corporative
system under which each branch of production should be united in a federation under
State supervision, to determine all questions concerning trade, industry and agriculture.
Hungary.--A decree issued on December 19, 1936, provided that a price control
committee shall supervise regularly the prices of staple goods, domestic and imported.
The president of the committee may require reports as to the prices at which goods are
sold; if these are deemed unjustifiably high, certain penalties may be imposed, favor
granted regarding taxation and duties may be withdrawn, the firm may be excluded
from public bids, its license may be revoked, or other means taken against the
enterprise.

TRUST LAWS & UNFAIR COMPETITION IN FOREIGN COUNTRIES

117

India.--Amendments to the Indian Companies Act, effective on January 15, 1937,
further safeguard the interests of shareholders.
International.--A sugar agreement was entered into in London in May, 1937, to be
administered by an international sugar council. Basic export quotas were fixed for cane
and beet sugar producers representing almost 90 percent of the world’s output; and the
contracting parties agreed not to increase their production during the five years
beginning September 1,1937.
An international coffee conference held at Bogota, Colombia, in October, 1936,
resulted in establishment of a Pan American coffee bureau in New York. Surplus
stocks will be impounded. Further conferences were scheduled for 1937. In November,
1936, the international tea committee fixed the export quota for the year beginning
April 1,1937, at 82 ½ percent.
A revised tin restriction agreement was ratified on January 5, 1937, effective for five
years. Producers of iron and steel, in Great Britain, Germany, Austria, Czechoslovakia,
Hungary, Italy, Poland, Rumania, Sweden and Yugoslavia, are parties to an
international scrap iron convention signed in the spring of 1937, under which a central
office at London will purchase for all of the members according to quotas allotted and
under uniform terms. Producers of cement in Great Britain, Belgium, Germany,
France, Netherlands, Yugoslavia and Scandinavian countries entered into an
agreement in 1937 which deals with production quotas and determination of prices.
An international cartel regulating prices and terms of sale for sodium chlorate, was
entered into on March 2,1937, by producers in Czechoslovakia, France, Italy,
Switzerland, Germany and Sweden. The international nitrate cartel expired on June 30,
1930, due to withdrawal of the Chilean producers, and a European cartel comprising
producers of synthetic nitrogen was established.
The reciprocal tariff agreement entered into by the United States with Nicaragua on
March 11, 1936, became effective, October 1,1936; that with Finland dated May
18,1936, was made effective, November 2, 1936. Further agreements were negotiated
with Costa Rica on November 28, 1936, effective August 2, 1937; and with El
Salvador on February 19,1937, effective March 31,1937.
Italy.--Since devaluation, the policy of the government has been to prevent price
increase and generally to peg prices at the level of September, 1936; but in order to
permit necessary adjustments, a Royal ordinance dated October 7, 1936, provided for
fixing of a maximum price by a central committee comprising government officials
and representatives of employers’ and employees’ federations.
Japan.--Under an Imperial ordinance of July 3,1936, the Law for Control of
Important Industries was extended for a second five years from August 11, 1936. Plans
of the Central Raw Silk Association

118

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

include control of production, price fling, consolidation of plants, restriction of
speculation, financial aid, and international agreements for distribution and sale.
Latvia.--The Law of Industry and Craft, of July 11,1936, supplemented by an act of
January 7, 1937, required all industrial enterprises (except electric power
undertakings) which are not owned and controlled by the State, to obtain a license
from the Ministry of Finance, or in the case of dairies and abattoirs, from the Ministry
of Agriculture. Conditions under which licenses will be issued may establish complete
control of industrial production. A law dated January 20,1937, established a central
organization which will have monopoly rights in the purchase and sale of wool, raw
hides and skins, and undressed furs. A law of January 23, 1937, provided for a central
union to combine all consumers’ cooperatives, and to assist the Government in
agricultural plans.
Lithuania.--A law dated August 14, 1936, subjected exports to license requirements.
A law passed on April 23, 1937, effective September 1, required the registration of all
commercial and industrial enterprises for the purpose of regulating commerce and
industry, preventing wilful bankruptcies, unfair competition, and violation of tax
measures.
Mexico.--A law passed August, 1936, required that merchants and industrialists shall
be registered and organized into a confederation of chambers of commerce and
industry. The Expropriation Law dated November 25, 1936, lists a number of
enterprises that shall be deemed public utilities and therefore subject to expropriation
proceedings.
Netherlands.--Following currency depreciation in 1936, an Emergency Price Control
Law was passed, authorizing the Minister of Commerce to prescribe maximum prices
for the wholesale and retail trade and for some services. Prices and rents may not be
increased, and large stores of goods may not be accumulated, without governmental
sanction. A constitutional amendment bill proposed in 1936, would authorize creation
of public bodies for the regulation of industry, trade and the professions. Laws have
also been proposed to change emergency or crisis measures into permanent laws.
New Zealand.--The Industrial Efficiency Act of October 29,1936, gave to the
Government wide powers of control over industry and trade. Part 1 provided for a
bureau of industry to investigate and report as to organization of industries, their
capitalization, the rendering of assistance by way of subsidies, loans, grants, tariff
concessions, embargoes, and other means; the adoption of uniform methods of
accounting and costing; standardization of products, processes or materials; the
training of workers; marketing and distribution of products and the purchase of raw
materials; and any matters relating to employment. Part 2 of the law provided for
industrial plans to be prescribed by the Minister of Industries and Commerce, upon
advice

TRUST LAWS & UNFAIR COMPETITION IN FOREIGN COUNTRIES

119

of the Bureau of Industry. Part 3 covered registration and licensing of such industries
as may be named by the minister. Part 4 required consideration and report by the
Bureau on Applications for Loans under the State Advances Corporation Act of 1936
and on grants and loans under the Employment Promotion Act of 1936. Upon recommendation of the bureau, orders-in-council may be issued by the Governor-General
covering: the registration of persons and firms and the licensing of industries; reports
to be required of industrial firms; fixation of prices or rates for any class of goods or
services; rates of royalties, fees, discounts, rebates, concessions, or considerations of
any kind in respect of goods or services or in respect of any patent or proprietary
rights; the control of production by fixing of quotas or otherwise; and the
standardization and simplification of materials, processes and products.
A number of semi-private organizations have been completely nationalized,
including the railways, the reserve bank, and the mortgage corporation. The Industrial
Conciliation and Arbitration Law was amended on June 8, 1936, to include
compulsory features.
Under the Primary Products Marketing Act of 1936, the government has assumed
control of agricultural and dairy products. The Minister of Marketing buys the produce
from the farmer at a guaranteed price for the whole season and markets it with the aid
of professional distributors at a fixed price. If export sales are not made at figures high
enough to cover the guaranteed price to producers, the deficit is met by the
Government.
Paraguay.--A new Department of Industries and Monopolies under the Minister of
Agriculture, to study questions of industrial development, tariff protection, and the
possibility of Government monopolies, was created by Presidential decree on
September 15, 1936. A decree law passed as a health measure on June 15, 1936,
provided for regulation of production, transportation and sale of food, pharmaceutical
and beauty products.
Peru.--A Presidential decree dated July 16,1936, established governmental control
of medicinal products, drugs and pharmaceutical specialties which are declared to be
of prime necessity and therefore subject to the same regulatory measures as staple
foodstuffs.
Poland.--A Government commissioner has been appointed to control prices of
certain necessary commodities, including food, clothing, oil, coal, iron and bricks. A
Presidential decree effective on September 22, 1936, lists certain properties which are
destined for compulsory sale to the State Agrarian Bank.
Portugal.--A decree dated May 15, 1937, provided for appointment of a committee
which shall organize the cotton industry, regulate imports of raw cotton, establish
conditions under which importers shall engage in business, and encourage production
of cotton in the Portuguese colonies.

120

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Rumania.--A law dated April 29, 1936, provided for a Supreme Economic Council
representing agriculture, commerce, industry, labor and Government officials, for
study and investigation of problems regarding foreign commerce, the valorization of
agricultural products, the regulation of labor, and other economic, financial and social
problems. The council will also make recommendations for the negotiation of trade
conventions.
Spain.--A decree dated December 2, 1936, prescribed regulations for the exportation
of national products of Spain. Export permits will be required, and if the value
declared by the exporter is considered too low the Ministry of Finance may take
possession of the goods, paying for them the price at which they were declared.
Three decrees in Catalonia dated October 27,1936, provide for socialization of large
industries and land holdings, organization of municipalities into social economic units,
and division of the State into nine economic areas. A plan has been offered for a
central bank to impound the gains of profitable enterprise and extend credit or
compensate other industries for their losses.
Switzerland.--A decree effective on July 1, 1936, gives to the Federal Price Control
Office the power to check price movements deemed harmful to producers or
consumers. A pure food ordinance dated May 28, 1936, provided for regulation of the
sale of foodstuffs, laying down standards of purity, and applying also to certain
chemicals in the manufacture of clothing, cosmetics and toilet preparations.
Turkey.--Under a law dated June 9, 1936, all exporters are placed under license.
Venezuela.--A new constitution adopted July 21, 1936, restates the power of the
Government to legislate for the entire country on many matters listed therein. The
Government reserves control of salt deposits, unoccupied lands and products thereof,
pearl oyster beds, and mines.

FISCAL AFFAIRS
ACTS PROVIDING FUNDS FOR COMMISSION WORK
APPROPRIATIONS AND EXPENDITURES
121

FISCAL AFFAIRS
APPROPRIATION ACTS PROVIDING FUNDS FOR COMMISSION WORK

The Independent Offices Appropriation Act, 1937 (Public, No.479, 74th Cong.),
approved March 19, 1936, provided funds for the fiscal year 1937 for the Federal
Trade Commission as follows:
For five commissioners, and for all other authorized expenditures of the Federal
Trade Commission in performing the duties imposed by law or in pursuance of law,
including secretary to the Commission and other personal services, contract
stenographic reporting services; supplies and equipment, law books, books of
reference, periodicals, garage rentals, traveling expenses, including not to exceed $900
for expenses of attendance, when specifically authorized by the Commission, at
meetings concerned with the work of the Federal Trade Commission, for newspapers
and press clippings not to exceed $600, foreign postage, and witness fees and mileage
in accordance with section 9 of the Federal Trade Commission Act; $1,407,000:
Provided, That the Commission may procure supplies and services without regard to
section 3709 of the Revised Statutes (U. S. C., title 41, sec. 5) when the aggregate
amount involved does not exceed $50.
For all printing and binding for the Federal Trade Commission, $32,000.
Total, Federal Trade Commission, $1,439,000.
The Second Deficiency Appropriation Act, fiscal year 1935 (Public, No.260, 74th
Cong.), approved August 12, 1935, provided as follows:
Salaries and expenses.--For an additional amount for the Federal Trade Commission,
including the same objects specified under this head in the Independent Offices Act,
1936 (including $4,000 for printing and binding), $200,000 to remain available until
December 31, 1936. Balance available for fiscal year 1937, $102,425.89.
The First Deficiency Appropriation Act, fiscal year 1936, approved June 22, 1936,
provided as follows:
Salaries and expenses.--For an additional amount for five commissioners, and for
all other authorized expenditures of the Federal Trade Commission in performing the
duties imposed by law or in pursuance of law, including the same objects specified
under this head in the Independent Offices Appropriation Act, 1937, $100,000.
123
14070---37-----9

124

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Public Resolution, No.28, 75th Congress, 1st session, approved May 14, 1937,
provided as follows:
Salaries and expenses.--For an additional amount for five commissioners, and for
all other authorized expenditures of the Federal Trade Commission in performing the
duties imposed by law or in pursuance of law, including the same objects specified
under this head in the Independent Offices Appropriation Act, 1937, $299,000.
Printing and binding.--For an additional amount for all printing binding for the
Federal Trade Commission, fiscal year 1937, $7,500.
APPROPRIATIONS AND EXPENDITURES

Appropriations available to the Commission for the fiscal year ended June 30, 1937;
under the Independent Offices Act approved March 49, 1936, $1,439,000; under the
Second Deficiency Act approved August 12, 1935; $102,425.89; under the First
Deficiency Act approved June 22,1936, $100,000; under Public Resolution No.28,
approved May 14, 1937, $297,500; in all, $1,938,925.89. This sum was made up of
three separate items: (1) $50,000 for salaries of the Commissioners, (2) $1,845,571.94
for the general work of the Commission, and (3) $43,353.95 for printing and binding.
Appropriations, allotments, expenditures, liabilities and balances
Amount
available

Amount
expended

Liabilities

Expenditures and
liabilities

Balance

Federal Trade Commission 1937,
Salaries Commissioners and all
other authorized expenses
$1,797,000.00 $1,684,496.20 $67,712.14 $1,752,208.84 $44,791.66
Printing and binding, Federal Trade
Commission 1937
39,500.00
39,500.00
39,500.00
Federal Trade Commission, 1936,
Dec.31, 1936
98,571.94
98,443.48
22.00
98,465.48
106.46
Printing and binding, Federal Trade
Commission, Dec. 31, 1936
8,853.95
3,853.95
3,853.95
Total Fiscal Year 1937
1,938,925.89 1,826,293.63 67,734.14 1,894,027.77 44,898.12
Unexpended balances:
National Industrial Recovery
Federal Trade Commission.
1933-1937
.15
.15
Federal Trade Commission, 1936 15,263.28
15,197.02
Printing and binding, Federal
Trade Commission, 1936
9,800.37
9,800.37
Federal Trade Commission.
1935-1936
925.91
769.73
Working fund, F. T. C. N. B. A.
(N.I.R.)
1 58.68
1 58.68
Federal Trade Commission, 1935 2,340.71
145.65
Total
1,967,197.61 1,852,147.00
1

Credit.

8.20

.15
15,205.22

58.06

9,800.37
144.00

913.73

12.18

58.68
145.68
2,195.03
67,886.84 1,920,034.24 47,163.39
1

125

APPROPRIATIONS AND EXPENDITURES
Detailed statements of costs for the fiscal year ending June 30, 1937
Salary
Commissioners
Clerks to Commissioners
Messengers to Commissioners
Total

$49,999.20
14,651.75
5,699.58
70,350.53

Administration:
Office of secretary
Accounts and Personnel section
Docket section
Hospital
Labor
Library section
Mail & File section
Messenger service
Public relations
Publications section
Purchases and supplies section
Stenographic sect on
Communications
Court charge
Equipment
Miscellaneous
Rents
Repairs
Reporting service
Supplies
Transportation of things
Witness fees
Total
Legal:
Application for complaints
Complaints
Export trade
Preliminary inquiries
Robinson-Patman Act
Trade practice conferences
Total
General investigations:
Income
Fruits and vegetables
Farm machinery
Milk investigation
Petroleum decree, 1936
Power & Gas
Price bases
Textile
Total
Printing and binding
Total
Summary:
Commissioners
Administration
Legal
General investigation
Printing and binding
Total

29,055.49
29,481.36
42,583.59
1,805.61
3,135.50
12,501.11
17,886.28
19,060.42
17,866.83
34,044.53
15,933.37
114,740.50

338,094.59

Travel
expenses
$817.90

37.65

44.85

82.50

71,951.29
5,657.37
165,982.64 31,175.13
56,610.14
4,654.28
6,660.82
5.84
30,294.91 11,527.03
11,471.79
9.50
5,115.04
64.65
27,289.86
250.30
378,377.49
53,404.10

70,350.53
817.90
338,094.59
82.50
812,186.39 81,317.64
378,377.49 53,404.10
135,622.14

Total
$50,817.10
14,651.75
5,699.58
71,168.48

817.90

194,385.46 25,887.36
257,980.93 38,818.33
7,189.44
3.76
225,023. 98 10,175.58
70,159.62
4,948.01
57,446.96
1,484.60
812,186.39 81,317.64

1,599,009.00

Other

29,055.49
20,481.36
42,583.59
1,805.61
3,135.50
12,538.76
17,886.28
19,060.42
17,911.68
34,044.53
15,933.37
114,740.50
$9,309.61
9,309.61
4.09
4.09
8,425.04
8,425.04
524.58
524.58
2,167.76
2,167.76
3,361.70
3,361.70
7,373.37
7,373.37
26,289.87
26,289.87
878.72
878.72
2,641.25
2,641.25
60,975.97 399,153.06

247.53 220,520.35
502.22 297,301.48
7,193.20
1,114.34 236,313.90
140.00
75,247.63
58,931.56
2,004.09 895,508.12

80.00
77,718.66
951.95 201,109.72
93.93
61,388.35
6,666.66
256.50
42,078.44
11,482.29
5,179.69
27,540.16
1,382.38 433,163.97
48,341.85
43,341.85
48,341.85
43,341.85

71,168.43
60,975.97
399,153.06
2,004.09 895,508.12
1,382.38 433,163.97
48,341.85
43,341.85
107,704.29 1,842,335.43

RECAPITULATION OF COSTS BY DIVISIONS
Administrative
Economic

$418,715.27
323,288.88

$900.40
40,805.42

$93,545.41
1,126.57

$513,161.08
365,220.87

Chief Counsel
Chief Examiner
Special board of investigation
Trial Examiner
Trade practice conferences
Total

219,455.61
433,765.41
85,230.70
66,746.50
51,806.63
1,599,009.00

24,005.02
56,427.64
1.60
11,997.46
1,484.60
135,622.14

10,355.58
2,507.01
169.72

253,816.21
492,700.06
85,402.02
78,743.96
53,291.23
107,704.29 1,842,335.43

126

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

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

Appropriations

Expendi
tures

Balance

Year

Appropriations

Expenditures

Balance

1915
1916
1917
1918
1919
1920
1921
1922
1923
1924
1925
1926

$184,016.23 $90,442.05
$93,574.18 1927
$997,000.00
$960,654.71
$36,345.29
430,964.08
379,927.41
51,036.67 1928
984,350.00
972,966.64
11,383.96
567,025.92
472,501.20
94,524.72 1929
1,163,192.62 1,169,459.76
3,732.77
1,608,865.92 1,462,187.32 156,678.60 1930
1,495,821.69 1,494,619.69
1,202.00
1,753, 530.75 1,522,331.95 231,198.50 1931
1,863,348.42 1,861,971.72
1,376.70
1,305,708.82 1,120,301.32 186,407.80 1932
1,817.382.49 1,778,427.88
38,954.61
1,032,005.67
938,659.69
93,345.98 3933
1,426,714.70 1,393,427.90
33,286.80
1,026,150.54
956,116.50
70,034.04 1934
1,314,013.49 1,313,614.33
399.16
974,480.32
970, 119.66 4,360.66 1935
2,097,397.01 1,956,313.34
141,083.67
1,010,000.00
977,018.28
32,981.72 1936
2,035,466.58 1,821, 725.81 213,739.77
1,010,000.00 1,008,998.80
1,001.20 1937
1,938,925.89 1,894,027.77
44,898.12
1,008,000.00
996,745.58
11,254.42

APPENDIXES
FEDERAL TRADE COMMISSION ACT
CLAYTON ACT
ROBINSON-PATMAN ANTI-PRICE DISCRIMINATION ACT
EXPORT TRADE ACT
SHERMAN ACT
TYDINGS-MILLER ACT
RULES OF PRACTICE
INVESTIGATIONS, 1915-37
127

FEDERAL TRADE COMMISSION ACT 1
(15 U.S. C., Secs. 41-58)
AN ACT To create a Federal Trade Commission, to define its powers and duties, and for
other purposes
Be it enacted by the Senate and House of Representatives of the United States of America in
Congress assembled, That a commission is hereby created and established, to be known as the
Federal Trade Commission (hereinafter referred to as the Commission) , which shall be
composed of five commissioners, who shall be appointed by the President, by and with the
advice and consent of the Senate. Not more than three of the commissioners shall be members
of the same political party. The first commissioners appointed shall continue in office for terms
of three, four, five, six, and seven years, respectively, from the date of the taking effect of this
Act, the term of each to be designated by the President, but their successors shall be appointed
for terms of seven years, except that any person chosen to fill a vacancy shall be appointed only
for the unexpired term of the commissioner whom he shall succeed : Provided, however, That
upon the expiration of his term of office a commissioner shall continue to serve until his
successor shall have been appointed and shall have qualified. The Commission shall choose a
chairman from Its own membership. No commissioner shall engage in any other business,
vocation, or employment. Any commissioner may be removed by the President for Inefficiency,
neglect of duty, or malfeasance in office. A vacancy in the Commission shall not impair the right
of the remaining commissioners to exercise all the powers of the Commission.
The Commission shall have an official seal, which shall be judicially noticed.
SEC. 2. That each commissioner shall receive a salary of $10,000 a year, payable in the same
manner as the salaries of the judges of the courts of the United States. The commission shall
appoint secretary who shall receive a salary of $5,000 a year, payable in like manner, and it
shall have authority to employ and fix the compensation of such attorneys, special experts,
examiners, clerks, and other employees as it may from time to time find necessary for the proper
performance of its duties and as may be from time to time appropriated for by Congress.
With the exception of the secretary, a clerk to each commissioner, the attorneys, and such
special experts and examiners as the Commission may from time to time find necessary for the
conduct of its work, all employees of the commission shall be a part of the classified civil
service, and shall enter the service under such rules and regulations as may be prescribed by the
Commission and by the Civil Service Commission.
All of the expenses of the Commission, including all necessary expenses for transportation
incurred by the commissioners or by their employees under their orders, in making any
investigation, or upon official business in any other places than in the city of Washington, shall
be allowed and paid on the presentation of itemized vouchers therefor approved by the
Commission.
Until otherwise provided by law, the commission may rent suitable offices for its use.
The Auditor for the State and Other Departments shall receive and examine all accounts of
expenditures of the Commission. 2
SEC. 3. That upon the organization of the Commission and election of its chairman, the
Bureau of Corporations and the offices of Commissioner and Deputy Commissioner of
Corporations shall cease to exist; and all pending investigations and proceedings of the Bureau
of Corporations shall be continued by the Commission.
All clerks and employees of the said bureau shall be transferred to and become clerks and
employees of the Commission at their present grades and salaries. All records, papers, and
property of the said bureau shall become records, papers, and property of the Commission, and
all unexpended funds and appropriations for the use and maintenance of the said bureau,
including any allotment already made to it by the Secretary of Commerce from the contingent
appropriation for the Department of Commerce for the fiscal year nineteen hundred and fifteen,
or

1 The Jurisdiction of the Commission is limited by the Packers and Stockyards-Act, 1921,
approved Aug. 15, 1921, ch. 64, 42 stat. 159 [amended by an act approved August 14, 1935,
Public No. 272 (49 Stat. 648) to include live poultry dealers and handlers as therein specified],
sec. 406(7 U.S. C. A. 227) of said Act providing that “on and after the enactment of this Act and
so long as it retains in effect the Federal Trade Commission shall have no power or jurisdiction
so far as relating to any matter which by this Act is made subject to the Jurisdiction of the
Secretary of Agriculture] except in cases in which, before the enactment of this Act, complaint
has been served under sec.5 of the Act entitled ‘An Act to create a Federal Trade Commission,
to define its powers and duties, and for other purposes’, approved sept.26, 1914, or under sec.
11 of the Act entitled ‘An Act to supplement. existing laws against unlawful restraints and
monopolies, and for other’, approved Oct.15, 1914, and except when the Secretary of
Agriculture, in the exercise of his duties hereunder, shall request of the said Federal Trade
Commission that it make investigations and report in any case.”
129

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

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 Territory and any State or foreign nation, or between the District
of Columbia and any State or Territory or foreign nation.
“Corporation” shall be deemed to Include any company, trust, so-called Massachusetts trust,
or association, incorporated or unincorporated, which is organized to carry on business for its
own profit or that of its members, and has shares of capital or capital stock or certificates of
interest, and any company, trust, so-called Massachusetts trust, or association, incorporated or
unincorporated, without shares of capital or capital stock or certificates of interest, except
partnerships, which Is organized to carry on business for its own profit or that of its members.
“Documentary evidence” includes all documents, papers, correspondence, books of account,
and financial and corporate records.
“Acts to regulate commerce” means the Act entitled “An Act to regulate commerce,”
approved February 14, 1887, and all Acts amendatory thereof and supplementary thereto and
the Communications Act of 1934 and all Acts amendatory thereof and supplementary thereto.
“Antitrust Acts” means the Act entitled “An Act to protect trade and commerce against
unlawful restraints and monopolies,” approved July 2, 1890; also sections 73 to 77, inclusive,
of an Act entitled “An Act to reduce taxation, to provide revenue for the Government, and for
other purposes,” approved August 27, 1894; also the Act entitled “An Act to amend sections 73
and 76 of the Act of August 27, 1894, entitled ‘An Act to reduce taxation, to provide revenue
for the Government, and for other purposes,’” approved February 12, 1913; and also the Act
entitled “An Act to supplement existing laws against unlawful restraints and monopolies, and
for other purposes,” approved October 15, 1914.
Sec. 5. That unfair methods of competition in commerce are hereby declared unlawful.
The Commission is hereby empowered and directed to prevent persons, partnerships, or
corporations, except banks, common carriers, subject to the acts to regulate commerce, from
using unfair methods of competition in commerce and unfair or deceptive acts or practices in
commerce.
Whenever the commission shall have reason to believe that any such person, partnership, or
corporation has been or is using any unfair method of competition in commerce, and if it shall
appear to the commission that a proceeding by it in respect thereof would be to the interest of
the public, it shall issue and serve upon such person, partnership, or corporation a complaint
stating its charges in that respect, and containing a notice of a hearing upon a day and at a place
therein fixed at least thirty days after the service of said complaint. The person, partnership, or
corporation so complained of shall have the right to appear at the place and time so fixed and
show cause why an order should not be entered by the commission requiring such person,
partnership, or corporation to cease and desist from the violation of the law so charged in said
complaint. Any person, partnership, or corporation may make application, and upon good cause
shown may be allowed by the commission to intervene and appear in said proceeding by counsel
or in person. The testimony in any such proceeding shall be reduced to writing and filed in the
office of the commission. upon such hearing the commission shall be of the opinion that the
method of competition in question is prohibited by this Act, it shall make a report in writing in

which it shall state its findings as to the facts, and shall issue and cause to be served on such
person, partnership, or corporation an order requiring such person, partnership, or corporation
to cease and desist from using such method of competition. Until a transcript of the record in
such hearing shall have been filed in a circuit court of appeals of the United States, as
hereinafter provided, the commission may at any time, upon such notice and in such manner as
it shall deem proper, modify or set aside, in whole or in part, any report or any order made or
issued by it under this section.
If such person, partnership, or corporation fails or neglects to obey such order of the
commission while the same is in effect, the commission may apply to the circuit court of appeals
of the United States, within any circuit where

FEDERAL TRADE COMMISSION ACT

131

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

(b) To require, by general or special orders, corporations engaged in commerce, excepting
banks and common carriers subject to the act to regulate 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 cor-

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

porations, partnerships, and individuals of the respective corporations filing such reports or
answers in writing. Such reports and answers shall be made under oath, or otherwise, as the
commission may prescribe, and shall be filed with the commission within such reasonable period
as the commission may prescribe, unless additional time be granted in any case by the
commission.
(c) Whenever a final decree has been entered against any defendant corporation in any suit
brought by the United States to prevent and restrain any violation of the antitrust acts, to make
investigation, upon its own initiative, of the manner in which the decree has been or is being
carried out, and upon the application of the Attorney General, it shall be its duty to make such
investigation. It shall transmit to the Attorney General a, report embodying its findings and
recommendations as a result of any such investigation, and the report shall be made public in
the discretion of the commission.
(d) Upon the direction of the President or either House of Congress to investigate and report
the facts relating to any alleged violations of the antitrust acts y any corporation.2
(e) Upon the application of the Attorney General to investigate and make recommendations
for the readjustment of the business of any corporation alleged to be violating the antitrust acts
in order that the corporation may thereafter maintain its organization, management, and conduct
of business in accordance with law. from time to time such portions of the information obtained
publicly it hereunder, except trade secrets and names of customers, as it shall deem expedient
in the public interest; and to make annual and special reports to the Congress and to submit
therewith recommendations for additional legislation and to provide for the publication of its
reports and decisions in such form and manner as may be best adapted for public information
and use.
(f) From time to time to classify corporations and to make rules and regulations for the
purpose of carrying out the provisions of this act.
(h) To investigate, from time to time, trade conditions in and with foreign countries. where
associations, combinations, or practices of manufacturers, merchants, or traders, or other
conditions, may affect the foreign trade of the United States, and to report to Congress thereon,
with such recommendations as It deems advisable.
SEC. 7. That in any suit in equity brought by or under the direction of the Attorney General
as provided in the antitrust acts, the court may, upon the conclusion of the testimony therein, if
it shall be then of opinion that the complainant is entitled to relief, refer said suit to the
commission, as a master in chancery, to ascertain and report an appropriate form of decree
therein. The commission shall proceed upon such notice to the parties and under such rules of
procedure as the court may prescribe, and upon the. coming in of such report such exceptions
may be filed and such proceedings had in relation thereto as upon the report of a matter in other
equity causes, but the court may adopt or reject such report, in whole or in part, and enter such
decree as the nature of the ca se may in its judgment require.
SEC. 8. That the several departments and bureaus of the Government when directed by the
President shall furnish the commission, upon its request, all records, papers, and information in
their possession relating to any corporation subject to any of the provisions of this act, and shall
detail from time to time such officials and employees to the commission as he may direct.
SEC. 9. That for the purposes of this act the commission, or its duly authorized agent or
agents, shall at all reasonable times have access to, for the purpose of examination, and the right
to copy any documentary evidence of any corporation being investigated or proceeded against;
and the commission shall have power to require by subpoena the attendance and testimony of
witnesses and the production of all such documentary evidence relating to any matter under
investigation. Any member of the commission may sign subpoenas, and members and examiners
of the commission may administer oaths and affirmations, examine witnesses, and receive
evidence.

Such attendance of witnesses, and the production of such documentary evidence, may be
required from any place in the United States, at any designated place of hearing. And in case
of disobedience to a subpoena the commission may invoke the aid of any court of the United
States in requiring the attendance and testimony of witnesses and the production of documentary
evidence.
2 Public, No 78 73d Cong., approved June 16, 1933, making appropriations for the fiscal year
ending June 30, 1934, for the “Executive Office and sundry independent executive bureaus,
boards, commissions”, etc., made the appropriation for the Commission contingent upon the
provision (48 Stat. 291; 15 U.S. C. A., sec. 46a) that “thereafter no new investigations shall be
initiated by the Commission as the result of a legislative resolution, except the same be e
concurrent resolution of the two Houses of Congress.”

FEDERAL TRADE COMMISSION ACT

133

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

an offense against the United States, and shall be subject, upon conviction in any court of the
United States of competent jurisdiction, to a fine of not less than $1,000 nor more than $5,000,
or to imprisonment for a term of not more than three years, or to both such fine and
imprisonment.
If any corporation required by this act to file any annual or special report shall fail so to do
within the time fixed by the commission for filing the same, and such failure shall continue for
thirty days after notice of such default, the corporation shall forfeit to the United States the sum
of $100 for each and every day of the continuance of such failure, which forfeiture shall be
payable into the Treasury of the United States, and shall be recoverable in a 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

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

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

SECTIONS OF THE CLAYTON ACT ADMINISTERED
BY THE FEDERAL TRADE COMMISSION 1
(U.S.C., Title 15, Sec. 12)
AN ACT To supplement existing laws against unlawful restraints and monopolies, and for
other purposes
Be it enacted by the Senate and House of Representatives of the United States Of America in
Congress assembled, That “antitrust laws,” as used herein, includes the Act entitled “An Act to
protect trade and commerce against unlawful restrains and monopolies,” approved July second,
eighteen hundred and ninety: sections seventy-three to seventy-seven, inclusive, of an Act
entitled, “An Act to reduce taxation, to provide revenue for the Government, and for other
purposes,” of August twenty-seventh, eighteen hundred and ninety-four; an Act entitled “An Act
to amend sections seventy-three and seventy-six of the Act of August twenty-seventh, eighteen
hundred and ninety-four, entitled ‘An Act to reduce taxation, to provide revenue for the
Government, and for other purposes,’” approved February twelfth, nineteen hundred and
thirteen; and also this Act.
“Commerce,” as used herein, means trade or commerce among the several States and with
foreign nations, or between the District of Columbia or any Territory of the United States and
any State, Territory, or foreign nation, or between any insular possessions or other places under
the Jurisdiction of the United States, or between any such possession or place and any State or
Territory of the United States or the District of Columbia or any foreign nation, or within the
District of Columbia or any Territory or any insular possession or other place under the
Jurisdiction of the United States: Provided, That nothing In this Act contained shall apply to the
Philippine Islands.
The word “person” or “persons” wherever used in this Act shall be deemed to include
corporations and associations existing under or authorized by the laws of either the United States
the laws of any of the Territories, the laws of any State; or the laws of any foreign country.
*
*
*
*
*
*
*
SEC. 3. That it shall be unlawful for any person engaged in commerce, in the course of such
commerce, to lease or make a sale or contract for sale of goods, wares, merchandise, machinery,
supplies or other commodities, whether patented or unpatented, for use, consumption, or resale
within the United States or any Territory thereof or the District of Columbia or any insular
possession or other place under the jurisdiction of the United States, or fix a price charged
therefor, or discount from, or rebate upon, such price, on the condition, agreement, or

understanding that the lessee or purchaser thereof shall not use or deal in the goods, wares,
merchandise, machinery, supplies or other commodities of a competitor or competitors of the
lessor or seller, where the effect of such lease, sale, or contract for sale or such condition,
agreement, or understanding may be to substantially lessen competition or tend to create a
monopoly in any line of commerce.
*
*
*
*
*
*
*
SEC. 7. That no corporation engaged in commerce shall acquire, directly or indirectly, the
whole or any part of the stock or other share capital of another corporation engaged also in
commerce, where the effect of such acquisition may
1 For text of sec.2 of the Clayton act as amended by the Robinson-Patman Anti-Discrimination
Act, approved June 19, 1936, see text of the Robinson-Patman Act, p.137, which comprises the
amendment.

CLAYTON ACT

135

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

of the provisions hereof by reason of any change in the affairs of such bank or other corporation
from whatsoever cause, whether specifically excepted by any of the provisions hereof or not,
until the expiration of one year from the date of his election or employment.
*
*
*
*
*
SEC. 11. That authority to enforce compliance with sections two, three, seven, and eight of
this Act by the persons respectively subject thereto is hereby vested: in the Interstate Commerce
Commission where applicable to common carriers subject to the Interstate Commerce Act, as
amended; in the Federal Communications Commission where applicable to common carriers
engaged in wire or radio communication or radio transmission of energy; in the Federal Reserve

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Board where applicable to banks, banking associations, and trust companies; and in the Federal
Trade Commission where applicable to all other character of commerce, to be exercised as
follows:
Whenever the commission, authority, or board vested with jurisdiction thereof shall have
reason to believe that any person is violating or has violated any of the provisions of sections
two, three, seven, and eight of this Act, it shall issue and serve upon such person a complaint
stating its charges in that respect, and containing a notice of a hearing upon a day and at a place
therein fixed at least thirty days after the service of said complaint. The person so complained
of shall have the right to appear at the place and time so fixed and show cause why an order
should not be entered by the commission, authority, or board requiring such person to cease and
desist from the violation of the law so charged in said complaint. Any person may make
application, and upon good cause shown, may be allowed by the commission, authority, or
board, to intervene and appear in said proceeding by counsel or in person. The testimony in any
such proceeding shall be reduced to writing and filed in the office of the commission, authority,
or board. If upon such bearing the commission, authority, or board, as the case may be, shall
be of the opinion that any of the provisions of said sections have been or are being violated, it
shall make a report In writing in which it shall state its findings as to the facts, and shall issue
and cause to be served on such person an order requiring such person to cease and desist from
such violations, and divest itself of the stock held or rid itself of the directors chosen contrary
to the provisions of sections seven and eight of this Act, if any there be, in the manner and
within the time fixed by said order. Until a transcript of the record in such hearing shall have
been filed in a circuit court of appeals of the United States, as hereinafter provided, the
commission, authority, or board may at any time, upon such notice and in such manner as it shall
deem proper, modify or set aside in whole or in part, any report. or any order made or issued by
it under this section.
If such person fails or neglects to obey such order of the commission, authority, or board
while the same is in effect, the commission, authority, or board may apply to the circuit court
of appeals of the United States, within any circuit where the violation complained of was or is
being committed or where such person resides or carries on business, for the enforcement of its
order, and shall certify and file with its application a transcript of the entire record in the
proceeding, including all the testimony taken and the report and order of the commission,
authority, or board. Upon such filing of the application and transcript the court shall cause notice
thereof to be served upon such person, and thereupon shall have jurisdiction of the proceeding
and of the question determined therein, and shall have power to make and enter upon the
pleadings, testimony, and proceedings set forth in such transcript a decree affirming, modifying,
or setting aside the order of the commission, authority, or board. The findings of the
commission, authority, or board as to the facts, if supported by testimony, shall be conclusive.
If either party shall apply to the court for leave to adduce additional evidence, and shall show
to the satisfaction of the court that such additional evidence is material and that there were
reasonable grounds for the failure to adduce such evidence in the proceeding before the
commission, authority, or board, the court may order such additional evidence to be taken before
the commission, authority, or board and to be adduced upon the hearing in such manner and
upon such terms and conditions as to the court may seem proper. The commission, authority,
or board may modify its findings as to the facts, or make new findings, by reason of the
additional evidence so taken, and it shall file such modified or new findings, which, if supported
by testimony, shall be conclusive, and its recommendations, if any, for the modification or
setting aside of its original order, with the return of such additional evidence. The judgment and
decree of the court shall be final, except that the same shall be subject to review by the Supreme
Court upon certiorari as provided in section two hundred and forty of the Judicial Code.

Any party required by such order of the commission, authority, or board to cease and desist
from a violation charged may obtain a review of such order in said circuit court of appeals by
filing in the court a written petition praying that the order of the commission, authority, or board
be set aside. A copy of such petition shall be forthwith served upon the commission, authority,
or board, and thereupon the commission, authority, or board forthwith shall certify and file in
the court a transcript of the record as hereinbefore provided. Upon the filing of the transcript the
court shall have the same jurisdiction to affirm, set aside, or modify the order of the commission,
authority, or board as in the case of an application by the commission, authority, or board for
the enforcement of its order, and the findings of the commission, authority, or board as to the
facts, if supported by testimony, shall in like manner be conclusive.
The Jurisdiction of the circuit court of appeals of the United States to enforce, set aside, or
modify orders of the commission, authority, or board shall be exclusive.

ROBINSON-PATMAN ANTI-PRICE DISCRIMINATION ACT

137

Such proceedings in the circuit court of appeals shall be given precedence over other cases
pending therein, and shall be in every way expedited. No order of the commission, authority,
or board or the judgment of the court to enforce the same shall in any wise relieve or absolve
any person from any liability under the antitrust Acts.
Complaints, orders, and other processes of the commission, authority, or board under this
section may be served by anyone duly authorized by the commission, authority, or board, either
(a) by delivering a copy thereof to the person to be served, or to a member of the partnership
to be served, or to the president, secretary, or other executive officer or a director of the
corporation to be served; or (b) by leaving a copy thereof at the principal office or place of
business of such person; or (c) by registering and mailing a copy thereof addressed to such
person at his principal office or place of business. The verified return by the person so serving
said complaint, order, or other process setting forth the manner of said service shall be proof of
the same, and the return post-office receipt for said complaint, order, or other process registered
and mailed as aforesaid shall be proof of the service of the same.
*
*
*
*
*
*
*
Original act approved October 15, 1941.

ROBINSON-PATMAN ANTI-PRICE DISCRIMINATION ACT
(U. S. C., Title 15, Sec. 13, as amended)
AN ACT To amend section 2 of the Act entitled “An Act to supplement existing laws against
unlawful restraints and monopolies, and for other purposes”, approved October 15, 1914, as
amended (U. S. C., title 15, sec. 13), and for other purposes.
Be it enacted by the Senate and House of Representatives of the United States of America in
Congress assembled, That section 2 of the Act entitled “An Act to supplement existing laws
against unlawful restraints and monopolies, and for other purposes”, approved October 15,
1914, as amended (U. S. C., title 15, sec. 13), is amended to read as follows:
“SEC. 2. (a) That it shall be unlawful for any person engaged in commerce in the course of
such commerce, either directly or indirectly, to discriminate in price between different
purchasers of commodities of like grade and quality, where either or any of the purchases
involved in such discrimination are in commerce, where such 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,
and where the effect of such discrimination may be substantially to lessen competition. or tend
to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with
any person who either grants or knowingly receives the benefit of such discrimination, or with
customers of either of them: Provided, That nothing herein contained shall prevent differentials
which make only due allowance for differences in the cost of manufacture, sale, or delivery
resulting from the differing methods or quantities in which such commodities are to such
purchasers sold or delivered: Provided, however, That the Federal Trade Commission may, after
due investigation and hearing to all interested parties, fix and establish quantity limits, and revise
the same as it finds necessary, as to particular commodities or classes of commodities, where
it finds that available purchasers in greater quantities are so few as to render differentials on
account thereof unjustly discriminatory or promotive of monopoly in any line of commerce; and
the fore going shall then not be construed to permit differentials based on differences in
quantities greater than those so fixed and established: 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: And

provided further, That nothing herein contained shall prevent price changes from time to time
where in response to changing conditions affecting the market for or the marketability of the
goods concerned, such as but not limited to actual or imminent deterioration of perishable
goods, obsolescence of seasonal goods, distress sales under court process, or sales in good faith
in discontinuance of business in the goods concerned.
“(b) Upon proof being made, at any hearing on a complaint under this section, that there has
been discrimination in price or services or facilities furnished, the burden of rebutting the primafacie case thus made by showing justification shall be upon the person charged with a violation
of this section, and unless justification shall be affirmatively shown, the commission is
authorized to issue an order ter-

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

minating the discrimination: Provided, however, That nothing herein contained shall prevent a
seller rebutting the prima-facie case thus made by showing that his lower price or the furnishing
of services or facilities to any purchaser or purchasers was made in good faith to meet an equally
low price of a competitor, or the services or facilities furnished by a competitor.
“(c) That it shall be unlawful for any person engaged in commerce, in the course of such
commerce, to pay or grant, or to receive or accept, anything of value as a commission,
brokerage, or other compensation, or any allowance or discount in lieu thereof, except for
services rendered in connection with the sale or purchase of goods, wares, or merchandise,
either to the other party to such transaction or to an agent, representative, or other intermediary
therein where such intermediary is acting in fact for or in behalf, or is subject to the direct or
indirect control, of any party to such transaction other than the person by whom such
compensation is so granted or paid.
“(d) That it shall be unlawful for any person engaged in commerce to pay or contract for the
payment of anything of value to or for the benefit of a customer of such person in the course of
such commerce as compensation or in consideration for any services or facilities furnished by
or through such customer in connection with the processing, handling, sale, or offering for sale
of any products or commodities manufactured, sold, or offered for sale by such person, unless
such payment or consideration is available on proportionally equal terms to all other customers
competing in the distribution of such products or commodities.
“(e) That it shall be unlawful for any person to discriminate in favor of one purchaser against
another purchaser or purchasers of a commodity bought for resale, with or without processing,
by contracting to furnish or furnishing, or by contributing to the furnishing of, any services or
facilities connected with the processing, handling, sale, or offering for sale of such commodity
so purchased upon terms not accorded to all purchasers on proportionally equal terms.
“(f) That it shall be unlawful for any person engaged in commerce, in the course of such
commerce, knowingly to induce or receive a discrimination in price which is prohibited by this
section.”
SEC. 2 That nothing herein contained shall affect rights of action arising, or litigation
pending, or orders of the Federal Trade Commission issued and in effect or pending on review,
based on section 2 of said act of October 15, 1914, prior to the effective date of this amendatory
act: Provided, That where, prior to the effective date of this amendatory act, the Federal Trade
Commission has issued an order requiring any person to cease and desist from a violation of
section 2 of said act of October 15, 1914, and such order is pending on review or is in effect,
either as issued or as affirmed or modified by a court of competent jurisdiction, and the
Commission shall have reason to believe that such person has committed, used, or carried on
since the effective date of this mandatory act, or is committing, using, or carrying on any act,
practice, or method in violation of any of the provisions of said section 2 as amended by this act;
it may reopen such original proceeding and may issue and serve upon such person its complaint,
supplementary to the original complaint, stating its charges in that respect. Thereupon the same
proceedings shall be had upon such supplementary complaint as provided in section 11 of said
act of October 15, 1914. If upon such hearing the commission shall be of the opinion that any
act, practice, or method charged in said supplementary complaint has been committed, used, or
carried on since the effective date of this amendatory act, or is being committed, used, or carried
on in violation of said section 2 as amended 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 serve upon such person its order
modifying or amending its original order to include any additional violations of law so found.
Thereafter the provisions of section 11 of said act of October 15, 1914, as to review and

enforcement of orders of the commission shall in all things apply to such modified or amended
order. If upon review as provided in said section 11, the court shall set aside such modified or
amended order, the original order shall not be affected thereby, but it shall be and remain in
force and effect as fully and to the same extent as if such supplementary proceedings had not
been taken.
SEC. 3. It shall be unlawful for any person engaged in commerce, in the course of such
commerce, to be a party to, or assist in, any transaction of sale, or contract to sell, which
discriminates to his knowledge against competitors of the purchaser, in that, any discount,
rebate, allowance, or advertising service charge is granted to the purchaser over and above any
discount, rebate, allowance or advertising service charge available at the time of such transaction
to said competitors in respect of a sale of goods of like grade, quality, and quantity; to sell, or
contract to sell, goods in any part of the United States at prices lower than

EXPORT TRADE ACT

139

those exacted by said person elsewhere in the United States for the purpose of destroying
competition or eliminating a competitor in such part of the United States; or, to sell, or contract
to sell, goods at unreasonably low prices for the purpose of destroying competition or
eliminating a competitor.
Any person violating any of the provisions of this section shall, upon conviction thereof, be
fined not more than $5,000 or imprisoned not more than one year, or both.
SEC. 4. Nothing in this act shall prevent a cooperative association from returning to its
members, producers, or consumers the whole, or any part of the net earnings or surplus resulting
from its trading operations, in proportion to their purchases or sales from, to, or through the
association.
Approved, June 19, 1936.

EXPORT TRADE ACT
(U. S. C., Title 15, Sec. 61)
An Act to promote export trade, and for other purposes
SEC. 1. Be it enacted by the Senate and House of Representatives of the United States of
America in Congress assembled, That the words “export trade” whereever used in this Act mean
solely trade or commerce in goods, wares, or merchandise exported, or in the course of being
exported from the United States or any Territory thereof to any foreign nation; but the words
“export trade” shall not be deemed to include the production, manufacture, or selling for
consumption or for resale, within the United States or any Territory thereof, of such goods,
wares, or merchandise, or any act in the course of such production, manufacture, or selling for
consumption or for resale.
That the words “trade within the United States” wherever used in this Act mean trade or
commerce among the several States or in any Territory of the United States, or in the District
of Columbia, or between any such Territory and another, or between any such Territory or
Territories and any State or States or the District of Columbia, or between the District of
Columbia and any State or States.
That the word “Association” wherever used In this Act means any corporation or combination,
by contract or otherwise, of two or more persons, partnerships, or corporations.
SEC. 2. That nothing contained in the Act entitled “An Act to protect trade and commerce
against unlawful restraints and monopolies,” approved July second, eighteen hundred and
ninety, shall be construed as declaring to be illegal an association entered into for the sole
purpose of engaging in export trade and actually engaged solely in such export trade, or an
agreement made or act done in the course of export trade by such association, provided such
association, agreement, or act Is not in restraint of trade within the United States, and is not in
restraint of the export trade of any domestic competitor of such association: And provided
further, That such association does not, either in the United States or elsewhere, enter info any
agreement, understanding, or conspiracy, or do any act which artificially or intentionally
enhances or depresses prices within the United States of commodities of the class exported by
such association, or which substantially lessens competition within the United States or
otherwise restrains trade therein.
SEC. 3. That nothing contained in section seven of the Act entitled “An Act to supplement
existing laws against unlawful restraints and monopolies, and for other purposes”, approved
October fifteenth, nineteen hundred and fourteen, shall be construed to forbid the acquisition

or ownership by any corporation of the whole or any part of the stock or other capital of any
corporation organized solely for the purpose of engaging in export trade, and actually engaged
solely in such export trade, unless the effect of such acquisition or ownership may be to restrain
trade or substantially lessen competition within the United States.
SEC. 4. That the prohibition against “unfair methods of competition” and the remedies
provided for enforcing said prohibition contained in the Art entitled “An Act to create a Federal
Trade Commission, to define its powers and duties, and for other purposes”, approved
September twenty-sixth, nineteen hundred and fourteen, shall be construed as extending to
unfair methods of competition used in export trade against competitors engaged in export trade,
even though the acts constituting such unfair methods are done without the territorial jurisdiction
of the United States.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

SEC. 5. That every association now engaged solely” in export trade, within sixty days after
the passage of this Act, and every association entered into hereafter which engages solely In
export trade, within thirty days after its creation, shall file with the Federal Trade Commission
a verified written statement setting forth the location of its offices or places of business and 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 commission may require as to its organization, business, conduct, practices, management,
and relation to other associations, corporations, partnerships, and individuals. Any association
which shall fail so to do shall not have the benefit of the provisions of section two and section
three of this Act, and It shall also forfeit to the United States the sum of $100 for each and every
day of the continuance of such failure, which forfeiture shall be payable into the Treasury of the
United States, and shall be recoverable in a civil suit in the name of the United States brought
in the district where the association has its principal office, or in any district in which it shall do
business. It shall be the duty of the various district attorneys, under the direction of the Attorney
General of the United States, to prosecute for the recovery of the forfeiture. The costs and
expenses of such prosecution shall be paid out of the appropriation for the expenses of the courts
of the United States.
Whenever the Federal Trade Commission shall have reason to believe that an association or
any agreement made or act done by such association is in restraint of trade within the United
States or in restraint of the export trade of any domestic competitor of such association, or that
an association either in the United States or elsewhere has entered into any agreement,
understanding, or conspiracy, or done any act which artificially or intentionally enhances or
depresses prices within the United States of commodities of the class exported by such
association, or which substantially lessens competition within the United States or otherwise
restrains trade therein, it shall summon such association, its officers, and agents to appear before
it, and thereafter conduct an. investigation into the alleged violations of law. Upon investigation,
if It shall conclude that the law has been violated, it may make to such association
recommendations for the readjustment of its business, in order that it may thereafter maintain
its organization and management and conduct its business in accordance with law. If such
association fails to comply with the recommendations of the Federal Trade Commission, said
commission shall refer its findings and recommendations to the Attorney General of the United
States for such action thereon as he may deem proper.
For the purpose of enforcing these provisions the Federal Trade Commission shall have all
the powers, so far as applicable, given it in “An Act to create a Federal Trade Commission, to
define its powers and duties, and for other purposes.”
Approved, April 10, 1918.

SHERMAN ACT
(U.S.C., Title 15, Sec. 1)
SECTION 1. Every contract, combination the form of trust or otherwise, conspiracy, in

restraint of trade or commerce among the several States, or with foreign nations, is hereby
declared to be illegal. Every person who shall make any such contract or engage in any such
combination or conspiracy, shall be deemed guilty of a misdemeanor, and, on conviction
thereof, shall be punished by fine not exceeding five thousand dollars, or by imprisonment not
exceeding one year, or by both said punishments, in the discretion of the court.
SEC. 2. Every person who shall monopolize, or attempt to monopolize, or combine or
conspire with any other person or persons, to monopolize any part of the. trade or commerce
among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor, and,
on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by
imprisonment not exceeding one year, or by both said punishments, in the discretion of the
court.

TYDINGS-MILLER ACT

141

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

TYDINGS-MILLER ACT
AN ACT To provide additional revenue for the District of Columbia, and for other purposes
TITLE VIII--AMENDMENT TO THE ANTITRUST LAWS

Section 1 of the act entitled “An act to protect trade and commerce against unlawful restraints
and monopolies”, approved July 2, 1890, is amended to read as follows:
“SECTION 1. Every contract, combination in the form of trust or otherwise, or conspiracy,
in restraint of trade or commerce among the several States, or with foreign nations, is hereby
declared to be illegal: Provided, That nothing herein contained shall render illegal, con tracts
or agreements prescribing minimum p rices for the resale of a commodity which bears, or the
label or container of which bears, the trade mark, brand, or name of the producer or distributor
of such commodity and which is in free and open competition with commodities of the same
general class produced or distributed by others, when contracts or agreements of that description
are lawful as applied to intrastate transactions, under any statute, law, or public policy now or
hereafter in effect in any State, Territory, or the District of Columbia in which such resale is to
be made, or to which the commodity

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

is to be transported for such re sale, and the making of such contracts or agreements shall not
be an unfair method of competition under section 5, as amended and supplemented, of the act
entitled ‘An act to create a Federal Trade Commission, to define its powers and duties, and for
other purposes’, approved September 26, 1914: Provided further, That the preceding proviso
shall not make lawful any contract or agreement, providing for the establishment or maintenance
of minimum resale p rices on any commodity herein involved, between manufacturers, or
between producers, or between wholesalers, or between brokers, or between factors, or between
retailers, or between persons, firms, or corporations in competition with each other. Every
person who shall make any contract or engage in any combination or conspiracy hereby declared
to be illegal shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be
punished by fine not exceeding $5,000, or by imprisonment not exceeding one year, or by both
said punishments, in the discretion of the court.”
Approved, August 17, 1937.
RULES OF PRACTICE
RULE I. THE COMMISSION
Offices.--The principal office of the Commission is at Washington, D. C.
All communications to the Commission must be addressed to: Federal Trade Commission,
Washington, D. C., unless otherwise specifically directed.
Branch offices are maintained at New York, Chicago, San Francisco, Seattle, and New
Orleans.
Their addresses are: Federal Trade Commission, room 509, 45 Broadway, New York, N. Y.;
Federal Trade Commission, 1118 New Post Office Building, 433 West Van Buren Street,
Chicago, Ill.; Federal Trade Commission, 707 Flatiron Building 544 Market Street, San
Francisco, Calif.; Federal Trade Commission, 801 Federal Building, Seattle, Wash.
Hours.--Offices are open on each business day, except Saturday, from 9 a. m. to 4: 30 p. m.,
and on Saturdays from 9 a. m. to 1 p.m.
Sessions.--The Commission may meet and exercise all its powers at any place, and may, by
one or more of its members, or by such examiners as It may designate, prosecute any inquiry
necessary to its duties in any part of the United States.
Sessions of the Commission for hearings will be held as ordered by the Commission.
Sessions of the Commission for the purpose of making orders and for transaction of other
business unless otherwise ordered will be held at the principal office of the Commission at
Pennsylvania Avenue at Sixth Street, Washington, D. C., on each business day at 10 a. m.
Quorum.--A majority of the members of the Commission shall constitute a quorum for the
transaction of business.
RULE II. THE SECRETARY
The Secretary shall sign all orders of the Commission.
RULE III. SERVICE
Complaints, orders, and other processes of the Commission, and briefs in support of the
Complaint, will be served by the secretary of the Commission by registered mail, except when
service by other method shall be specifically ordered by the Commission, by registering and
mailing a copy thereof addressed to the person, partnership, or corporation to be served at his
or its principal office or place of business. When proceeding under the Federal Trade
Commission Act service may also be made at the residence of the person, partnership, or corporation to be served.
When service is not accomplished by registered mail complaints, orders, or other processes
of the Commission, and briefs in support of the complaint may be served by anyone duly

authorized by the Commission, or by any examiner of the Commission,-(a) By delivering a copy of the document to the person to be served, or to a member of the
partnership to be served, or to the president, secretary, or other executive officer or a director
of the corporation to be served; or
(b) By leaving a copy thereof at the principal office or place of business of such person,
partnership, or corporation.
The return post-office receipt for said complaint, order, or other process or brief registered
and mailed as aforesaid, or the verified return by the person serving such complaint, order, or
other process or brief, setting forth the manner of said service, shall be proof of the service of
the document.

RULES OF PRACTICE

143

RULE IV. APPEARANCE
Any individual or member of a partnership which is a party to any proceeding before the
Commission may appear for himself, or such partnership upon adequate identification, and a
corporation or association may be represented by a bona fide officer of such corporation or
association upon a showing of adequate authorization therefor.
A party may also appear by an attorney at law possessing the requisite qualifications, as
hereinafter set forth, to practice before the Commission.
Attorneys at law who are admitted to practice before the Supreme Court of the United States,
or the highest court of any State or Territory of the United States, or the United States Court of
Appeals for the District of Columbia, or the District Court of the United States for the District
of Columbia, may practice before the Commission.
No register of attorneys who may practice before the Commission is maintained. No
application for admission to practice before the Commission is required. A written notice of
appearance on behalf of a specific party or parties in the particular proceeding should be
submitted by attorneys desiring to appear for such specific party or parties, which notice shall
contain a statement that the attorney is eligible under the provisions of this rule. Any attorney
practicing before the Commission or desiring so to practice may, for good cause shown, be
disbarred or suspended from practicing before the Commission, but only after he has been
afforded an opportunity to be heard in the matter.
RULE V. DOCUMENTS
Filing.--All documents required to be filed with the Commission in any proceeding shall be
filed with the Secretary of the Commission.
Title.--Documents shall clearly show the docket number and title of the proceeding.
Copies.--Documents, other than correspondence, shall be filed in triplicate, except as
otherwise specifically required by these rules.
Form.--Documents not printed shall be typewritten, on one side of paper only; letter size,
eight and one-half (8 ½) inches by ten and one-half (10 ½) inches; left margin, one and one-half
(1 ½) inches; right margin, one (l) inch.
Documents may be printed, in ten (10) or twelve (12) point type, on good, unglazed paper,
of the dimensions and with the margins above specified.
Documents shall be bound at left side only.
The originals of all answers, briefs, motions, and other documents shall be signed in ink, by
the respondent or his duly authorized attorney. Where the respondent is an individual or a
partnership, the originals of said documents shall be signed by said individual or by one of the
partners, or by his or its attorney. Where the respondent is a corporation, the originals of said
documents shall be signed under the corporate name by a duly authorized official of such
corporation, or by its attorney. Where the respondent is an association, the originals of said
documents shall be signed under the association name for said association by a duly authorized
official of such association, or by its attorney.
Answers shall be signed in quadruplicate. One copy of a brief or other document required to
be printed shall be signed as the original.
RULE VI. 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 for complaint shall be in writing, signed by or in behalf of the applicant and
shall contain a short and simple statement of the facts constituting the alleged violation of ]aw

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 made either on its own motion or upon application, 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 80 days after the service of said complaint.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
RULE IX. ANSWERS

In case of desire to contest the proceeding the respondent shall, within twenty (20) days from
the service of the complaint, file with the Commission an answer to the complaint. Such answer
shall contain a concise statement of the facts which constitute the ground of defense. Respondent
shall specifically admit or deny or explain each of the facts alleged in the complaint, unless
respondent is without knowledge, in which case respondent shall so state.
Four copies of answers shall be furnished. All answers shall be signed in ink, by the
respondent or by his attorney at law. Corporations or associations shall file answers through a
bona fide officer or by an attorney at law. Answers shall show the office and post-office address
of the signer.
Failure of the respondent to file answer within the time above provided and failure to appear
at the time and place fixed for hearing shall be deemed to authorize the Commission, without
further notice to respondent, to proceed In regular course on the charges set forth in the
complaint.
If respondent desires to waive hearing on the charges set forth the complaint and not to
contest the proceeding, the answer may consist of a statement that respondent admits all the
material allegations of the complaint to be true. Any such answer shall be deemed to waive a
hearing thereon, and to authorize the Commission, without trial and without further evidence,
or other intervening procedure, to make, enter, issue, and serve up on respondent:
(a) In cases arising under section 5 of the act of Congress approved September 26, 1914,
entitled “An act to create a Federal Trade Commission, to define its powers and duties, and for
other purposes “ (the Federal Trade Commission Act), or under sections 2 and 3 of the act of
Congress approved October 15, 1914, entitled “An act to supplement existing laws against
unlawful restraints and monopolies, and for other purpose” (the Clayton Act,) or under section
2 of the aforesaid Clayton Act as amended by “An act to amend section 2 of the act entitled ‘An
act to supplement existing laws against unlawful restraints and monopolies, and for other
purposes’ approved October 15, 1914, as amended (U.S. C., title 15, sec. 13), and for other
purposes”, approved June 19, 1936 (the Robinson-Patman Act), findings of fact and an order
to cease and desist from the violations of law charged in the complaint
(b) In cases arising under section 7 of the said act of Congress approved October 15, 1914
(the Clayton Act), findings of fact and an order to cease and desist from the violations of law
charged in the complaint and to divest itself of the stock found to be held contrary to the
provisions of said section 7 of said Clayton Act;
(c) In cases arising under section 8 of the said act of Congress approved October 15, 1914 (the
Clayton Act), findings of fact and an order to cease and desist from the violation of law charged
in the complaint and to rid itself of the directors found to have been chosen contrary to the
provisions of said section 8 of said Clayton Act.
RULE VIII. 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 the same proceeding, shall be filed with such motion and
plainly referred to therein.
Three copies of the motion shall be filed.
RULE IX. CONTINUANCES AND EXTENSIONS OF TIME
The Commission may, its discretion, grant continuances, or, on good cause shown, in writing,
extend time fixed these rules.

Applications for continuances and extensions of time prescribed by these rules should be
made prior to the expiration of time so prescribed.
RULE X. INTERVENTION
Any person, partnership, corporation, or association desiring to intervene in a contested
proceeding shall maker 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.

RULES OF PRACTICE

145

RULE XI. HEARINGS ON COMPLAINTS
All hearings before the Commission or trial examiners on complaints issued by the
Commission shall be public, unless otherwise ordered by the Commission.
Upon the joining of issue in a proceeding upon complaint issued by the Commission, the
examination of witnesses therein shall proceed with all reasonable diligence and with the least
practicable delay.
Not less than five (5) days notice of the time and place of the initial examination of witnesses
before the Commission, a Commissioner, or an examiner, shall be given by the Commission to
counsel or parties.
RULE XII. HEARINGS ON INVESTIGATIONS
When a matter for investigation is referred to a single Commissioner, or examiner, for
examination or report, such Commissioner, or examiner, 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 chief counsel, or such attorney as shall be designated by him, or by the Commissioner,
or by the Commission, shall attend such hearings and prosecute the investigation, which
hearings shall be public, unless otherwise ordered by the Commission.
RULE XIII. TRIAL EXAMINERS
Duties.--When evidence is to be taken in a proceeding upon complaint issued by the
Commission, a trial examiner shall be designated for that purpose by the Commission.
It shall be the duty of the trial examiner to complete the taking of evidence with all due
dispatch.
The trial examiner shall state the place, day, and hour to which the taking of evidence ma y
from time to time be adjourned.
Reports.--The trial examiner shall, within fifteen (15) days after receipt by him of the
complete stenographic transcript of all testimony in a proceeding, make his Report upon the
Facts.
He shall forthwith serve a copy of the report upon each attorney for the Commission, upon
each attorney for respondents, and upon each respondent not represented by counsel.
The report of the trial examiner is not a decision, finding, or ruling of the Commission. It is
not a part of the record of the proceeding, and is not a public document.
The Commission’s findings as to the facts are based upon the record.
RULE XIV. EXCEPTIONS
Attorneys or other persons served with a copy of the report of the trial examiner may, with in
ten (10) days after receipt of such copy of report, file, in writing, their exceptions, if any, to the
report.
They shall specify the particular part or parts of the report to which exception is made, and
the exceptions shall include any additional facts which the person filing the exception may deem
proper.
Citations to the record shall be made in support of the exceptions.
Seven (7) copies of the exceptions, signed, in ink, shall be filed.
If exceptions are to be argued, they shall be argued at the time of final argument upon the
merits.

Exceptions are not a part of the record of the proceeding.
RULE XV. STATEMENTS OF FACTS
When, in the opinion of the trial examiner engaged in taking evidence in any proceeding upon
complaint issued by the Commission, the size of the transcript, or complication or importance
of the issues involved warrants, he may, of his own motion, or at the request of counsel, at the
close of taking evidence, announce to attorneys for the Commission and for respondents that the
trial examiner will receive, within five (5) days after the closing of the taking of evidence, and
not later, a statement, in writing, one by attorneys for the Commission and one by attorneys for
the respondents, setting forth, in terse outline, the contentions of each as to the facts proved in
the proceeding.
Statements of facts are not to be exchanged between counsel, and are not to be argued before
the trial examiner.
Statements of facts are not a part of the record of the proceeding.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
RULE XVI. SUBPOENAS

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 issued by a member of the
Commission upon his own motion, will be issued only upon application in writing. The
application must be verified, and must specify, as exactly as possible, the documents desired and
the facts to be proved by them.
RULE XVII. WITNESSES
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.
Witnesses summoned by the Commission shall be paid the same fees and mileage as are paid
witnesses in the courts of the United States.
Witnesses whose depositions are taken, and the persons taking such depositions, shall
severally be entitled to the same fees as are paid for like services in the courts of the United
States.
Witness fees and mileage, and fees for depositions, shall be paid by the party at whose
instance witnesses appear.
RULE XVIII. DEPOSITIONS
The Commission may order evidence to be taken by deposition in any proceeding or
investigation pending at any stage of such proceeding or investigation. Such depositions may
be taken before any person designated by the Commission and having power to administer oaths.
Unless notice be waived, no de position shall be taken except after at least five (5) days’
notice to the parties within the United States, and fifteen (15) days’ notice when the deposition
is to be taken elsewhere.
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 time and place and the person
before whom the deposition is to be taken, so specified in the Commission’s order, may or may
not be the same as those named in said application to the Commission.
The testimony of the witness shall be reduced to writing by the officer before whom the
deposition is taken, or under his direction, after which the deposition shall be subscribed by the
witness and certified in usual form by the officer. After the deposition has been so certified, it
shall, together with three additional copies thereof made by such officer or under his direction,
be forwarded by such officer under seal in an envelope addressed to the Commission at its office
in Washington, D. C. Such deposition, unless otherwise ordered by the Commission for good
cause shown, shall be filed in the record in said proceeding and a copy thereof supplied to the
party upon whose application said deposition was taken, or his attorney.
Depositions shall be typewritten, on one side of paper only; letter size, eight and one-half (8

½ ) inches by ten and one-half (10 ½) inches; left margin one and one-half (1 ½ inches; right
margin, one (1) inch.
Depositions shall be bound at left side only
RULE XIX. EVIDENCE
Documentary.--Where relevant and material matter offered in evidence is embraced in a
document containing other matter not material or relevant and not intended to be put in
evidence, such immaterial or irrelevant parts shall be excluded, and shall be segregated insofar
as practicable.
Objections.--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.

RULES OF PRACTICE

147

RULE XX. BRIEFS
Filing.--All briefs must be filed with the secretary of the Commission within the time limits
fixed by these rules.
Briefs tendered after expiration of the times fixed will be filed only by special permission of
the Commission.
Appearance of additional counsel in a case will not constitute grounds for extending time for
filing briefs.
Time.--Opening brief in support of the complaint shall be filed by the trial attorney of the
Commission within twenty (20) days after service upon him of copy of the report of the trial
examiner.
Brief on behalf of respondent shall be filed within twenty (20) days after service upon
respondent or respondent’s attorney of copy of brief in support of the complaint.
Reply briefs in support of the complaint, if any, shall be filed within ten (10) days after filing
of brief on behalf of respondent.
Number.--Twenty (20) copies of each brief shall be filed.
Contents.--Briefs, except the reply brief on behalf of the Commission shall contain, in the
following order:
(a) A concise abstract or statement of the case;
(b) A brief of the argument, exhibiting a clear statement of the points of fact or law to be
discussed, with references to the pages of the record and the authorities relied upon in support
of each point;
(c) The exceptions, if any, to the report of the trial examiner.
Index.--Briefs comprising more than ten (10) pages shall contain on their top fly leaves a
subject index with page references. The subject index shall be supplemented by an alphabetical
list of all cases referred to, with references to page s where references are cited.
Reply briefs.--Reply brief in support of the complaint shall be filed only when recommended
by the chief counsel, and shall be strictly in answer to brief on behalf of respondent.
No reply brief on behalf of respondent shall be filed.
Form.--Briefs on behalf of respondent shall be printed in ten (10) or twelve (12) point type;
on good, unglazed paper, size eight and one-half (8 ½) by ten and one-half (101/2) inches; left
margin of one and one-half (11/2) inches, right margin of one (1) inch; with double-leaded text
and single-leaded citations.
RULE XXI.--ORAL ARGUMENT
Oral arguments shall be had only as ordered by the Commission, on written application of the
chief counsel of the Commission, or of the respondent, or of attorney for respondent, filed within
fifteen (15) days after filing of brief on behalf of respondent.
Appearance of additional counsel in a case will not constitute grounds for extending time for
oral argument.
RULE XXII.--REPORTS SHOWING COMPLIANCE WITH ORDERS
In every case where an order is issued by the Commission for the purpose of preventing
violations of the law, the respondent or respondents therein named shall file with the
Commission, within the time specified in said order, a report, in writing, setting forth in detail
the manner and form in which respondent or respondents have complied with the said order of
the Commission. Within its sound discretion the Commission may require any such respondent
or respondents, from time to time thereafter, to file further reports in writing, setting forth in

detail the manner and form in which they are complying with the said order.
Reports of compliance shall be signed, in ink, by respondent or attorney for respondent.
RULE XXIII.--REOPENING PROCEEDINGS
In any case where an order to cease and desist, an order dismissing a complaint, or other order
disposing of a proceeding has been issued by the Commission, the Commission may, at any time
within ninety (90) days after entry of such order, for good cause shown, in writing, and on notice
to the parties, reopen the case for such further proceeding as to the Commission may seem
proper.

INVESTIGATIONS BY THE COMMISSION, 1915-37
DESCRIPTIONS OF GENERAL INQUIRIES INCLUDING TITLES OF PUBLISHED
REPORTS
General investigations of the Federal Trade Commission are described in the following
paragraphs de voted to the more than 100 inquiries undertaken at the request of the Congress,
the President, the Attorney General, other departmental heads, and on motion of the Commission
in pursuance of certain provisions of its organic act.
Published reports of the Commission in connection with these inquiries are also listed,
including the Senate and House Document numbers for those of the reports that were ordered
printed by the Congress. Publications not designated by such document numbers were published
as Commission reports. Many of these publications are now out of print and are so listed.
Accounting Systems.--This inquiry was made on motion of the Commission, with a view to
improving accounting practices, and led to the publication of two reports, entitled Fundamentals
of a cost System for Manufacturers (31 pages). and A System of Accounts for Retail Merchants
(19 pages, out of print), both published in 1916.
Agricultural Income.--This inquiry was made pursuant to Senate Joint Resolution No.9,
Seventy-fourth Congress, first session (Public Resolution No.61, Seventy-fourth Congress,
approved Au gust 27, 1935, as amended by Public Resolution No.86, Seventy-fourth Congress,
and by Public Resolution No. 112 Seventy-fourth Congress). The first resolution called for an
inquiry with respect to the "principal farm products” and the last one with respect to “table and
juice grapes, fresh fruits and vegetables.’” The chief topics covered were: the decline in
agricultural income, the increases or decreases in the income of principal corporations engaged
in the manufacture and distribution of principal farm products; the proportion of total consumer
cost of such products represented by proceeds to the farmers, manufacturers, and distributors;
the financial position of the aforementioned principal corporations, including assets, investment
and rates of return; the salaries of officers of such corporations; the concentration of control of
major farm products, the methods used for obtaining such control, and the extent to which unfair
methods were employed in handling farm products, such methods including any combinations,
monopolies and price fixing. The resolution also required an inquiry into the extent to which
cooperative agencies had entered into the processing and marketing of such farm products.
Four reports were issued: (1) Interim Report of the Federal Trade Commission on the
Agricultural Income Inquiry, December 26, 1935, printed as House Document No.380, Seventyfourth Congress, second session (6 pages); (2) Fruits and Vegetables-Agricultural Income
Inquiry (interim report), February 1, 1937 printed as Senate Document No. 17, Seventy-fifth
Congress, first session (16 pages); (3) Principal Farm Products--Agricultural Income Inquiry,
March 2, 1937 (2,584 typewritten pages, exclusive of summary and appendixes) of which the
first two chapters were printed, namely, (a) summary and (b) conclusions and recommendations,
as Senate Document No. 54 Seventy-fifth Congress, first session (40 pages); and (4) Fresh
Fruits and Vegetables, Agricultural Income Inquiry, June 10, 1937 (1,966 typewritten pages,
exclusive of appendixes) of which a mimeographed release of 11 pages was issued on June 10,
1937, describing the contents. The principal reports, though not printed, are a public record, and
may be examined at the offices of the Commission.
Bakeries.--At the request of the United States Food Administration the Commission made a
brief report on the cost of bread and other related factors, which was printed, with other data by
the Food Administration, November 1917, and entitled United States Food Administration,

Report of the Federal Trade Commission on Bakery Business in United States (pages 5-13), (out
of print).
Bread and Flour.--This inquiry was made pursuant to Senate Resolution No. 163, Sixtyeighth Congress, fit session, February 16, 1924. This resolution directed the Commission to
investigate the production, distribution, transportation) and sale of flour and bread, showing
costs, prices, and profits at each stage
149

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

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 showed, among other things.
that wholesale baking in recent years had been generally profitable. It disclosed also pricecutting wars by big baker y combines and subsequent price-fixing agreements. Reports were
issued entitled Competitive Conditions in Flour Milling (140 pages) printed as Senate Document
No.97, Seventieth Congress, first session, Bakery Combines and Profits (95 pages), printed as
Senate Document No.212, Sixty-ninth Congress, second session, and Com petition and Profits
in Bread and Flour (509 printed as Senate Document No.98, Seventieth Congress, first session,
May 3, 1926, February 11, 1927, and January 11, 1928, respectively. A supplementary report
covering data withheld during court proceedings (Millers’ National Federation against Federal
Trade Commission) entitled Conditions in the Flour Milling Business, was transmitted to the
Senate May 28, 1932, and printed as Senate Document No.96, Seventy-second Congress, first
session (26 pages). (See also Bakeries, Flour Milling, and Food Investigation.)
Calcium Arsenate.--This inquiry was made pursuant to Senate Resolution No. 417, Sixtyseventh Congress, fourth session, January 23, 1923. The high prices of calcium arsenate, a
poison used to destroy the cotton boll weevil, led to this Inquiry from which it appeared that the
cause was due to the sudden increase in demand rather than to any restraints of trade. The report,
entitled Calcium Arsenate Industry, was transmitted to the Senate March 3,1923, and printed
as Senate, Document No.345, Sixty-seventh fourth session. (21 pages.)
Cement Industry.--This inquiry was made pursuant to Senate Resolution No. 448, Seventyfirst Congress, fourth session, February 16, 1931. This resolution instructed the Commission to
investigate competitive conditions and distributing processes in the cement industry to determine
the existence, if any, of unfair trade practices or violations of the anti-trust laws. The report
indicated that rigid application of the multiple basing-point price system, universally used in the
industry, tended to lessen price competition and destroy the value of sealed bids; that
manufacturers in concert with dealer organizations had engaged inactivities which strengthened
the system’s price effectiveness and that dealer’s associations had engaged in practices designed
to restrict sales to those recognized as legitimate dealers by the associations. It was indicated
such practices also tended to control sales terms. This report reiterated certain findings and
conclusions of the Commission’s earlier report on the cement industry made as a part of the
price bases inquiry. Entitled Cement Industry, the report was transmitted to the Senate June 9,
1933, and printed as Senate Document No.71, Seventy-third Congress, first session (160 pages).
(See also Price Bases and Steel Investigations.)
Chain Stores.--This inquiry was made pursuant to Senate Resolution No.224, Seventieth
Congress, first session, May 12, 1928. Under the resolution the Commission was directed to
ascertain the advantages and disadvantages of chain store distribution as compared with other
types of distribution and how far the increase in the former system depended upon quantity
prices and whether or not such quantity prices were in violation of law and what legislation, if
any, should be enacted regarding them. The resolution also called for a report upon the extent
to which practices of the chain stores had tended to monopoly or concentration of control, the
existence of unfair methods, and agreements in restraint of trade. The factual data, submitted in
33 separate reports published as Senate documents under the general title Chain- Stores,
contained detailed statistical analyses of nearly all phases of chain-store operations.
Subtitles of the chain store reports, their dates of issue, and the document numbers under
which they were printed are as follows:
Cooperative Grocery Chains, 199 pages,
Scope of the Chain-Store Inquiry,
33
July 13, 1931, Senate Document No.12,
pages, December 22, 1931, Senate
Seventy-second Congress, first session.
Document No.31, Seventy-second Con-

Wholesale Business of Retail Chains,
38 pages, December 22, 1931, Senate
Leaders,
Document No.29, Seventy-second Congress, first session
Sources of Chain-Store Merchandise,
76 pages, December 22, 1931, Senate
Senate
Document No.30, Seventy-second Congress, first session.

gress, first session.
Chain-Store Leaders and Loss
57 pages, January 15, 1932, Senate
Document No.51, Seventy-second Congress, first session.
Cooperative Drug and Hardware
Chains, 28 pages, April 18, 1932,
Document No. 82, Seventy-second Congress, first session.

INVESTIGATIONS OF 1915-37
Growth and Development of Chain
Stores, 81 pages, June 11, 193 , Senate
Document No. 100, Seventy-second
Congress, first session.
Chain-Store Private Brands, 126 pages,
September 26, 1932, Senate Document
No. 142, Seventy-second Congress,
second session.
Short Weighing and Over Weighing in
Chain and Independent Grocery Stores,
42 pages, December 15 1932, Senate
Document No. 153, Seventy-second
Congress, second session.
Sizes of Stores of Retail Chains, 50
pages, December 21, 1932, Senate
Document No. 156, Seventy-second
Congress, second session.
Quality of Canned Vegetables and
Fruits (Under Brands of Manufacturers
Chains, and Other Distributors), 53
pages, January 13, 1933, Senate Document No.170, Seventy-second Congress,
second session.
Gross Profit and Average Sale per
Store of Retail Chains, 75 pages, February 2, 1933, Senate Document No.178,
Seventy-second Congress, second session.
Chain-Store Manufacturing, 129 pages,
April 5, 1933, Senate Document No.13,
Seventy-third Congress first session.
Sales, Costs, and Profits of Retail
Chains, 120 pages, April 22, 1933, Senate
Document No. 40, Seventy -third Congress, first session.
Prices and Margins of Chain and Inde
pendent Distributors, Washington, D. C.,
Grocery, 98 pages, May 15, 1933, Senate
Document No. 62, Seventy-third Congress, first session.
Prices and Margins of Chain and
Independent Distributors, Memphis-Grocery, 43 pages, June 8, 1933, Senate
Document No. 69, Seventy-third Congress, first session.
Prices and Margins of Chain and
Independent Distributors, Detroit Grocery, 42 pages, June 22, 1933, Senate
Document No. 81, Seventy-third Congress, second session.
Prices and Mar gl ns of Chain and
Independent Distributors, CincinnatiGrocery, 50 pages, November 12,1933,
Senate Document No. 88, SeventyCongress, second session.
Prices and Margins of Chain and
Independent Distributors, CincinnatiDrug, 43 pages. December 30, 1933,
Senate Document No. 95, Seventythird Congress, second session.
Prices and Margins of Chain and
Independent Distributors, Detroit--Drug,
51 pages, December 30, 1933, Senate

151

Document No.96, Seventy-third Congress, second session.
Prices and Margins of Chain and
independent Distributors, Memphis-Drug, 40 pages, December 30, 1933,
Senate Document No. 97, Seventythird Congress, second session.
Prices and Margins of Chain and
Independent Distributors, Washington,
D. C.-Drug 40 pages December 30,
1933, Senate Document No. 98, Seventythird Congress, second session.
Chain-Store Wages, 116 pages, July
15, 1933, Senate Document No. 82,
Seventy-third Congress, second session.
Chain-Store Advertising, 89 pages
October 14,1933, Senate Document N.
84, Seventy-third Congress, second
session.
Chain-Store Price Policies, 146 pages,
October 20, 1933, Senate Document No.
85, Seventy-third Congress, second
session.
Special Discounts and Allowances to
Chain and Independent Distributors-Tobacco Trade 118 pages October 26,
1933, Senate Document No. 86, Sev
enty -third Congress, second session.
Special Discounts and Allowances to
Chain and Independent DistributorsGrocery Trade, 44 pages, November 14,
1933, Senate Document No. 89, Seventy-third Congress, second session.
Special Discounts and Allowances to
Chain and Independent Distributors
Drug Trade, 98 pages, November 24,
1933, Senate Document No. 94, Seventythird Congress, second session.
Invested Capital and Rates of Return of
Retail Chains, 142 pages, October 29,
1933, Senate Document No.87, Seventythird Congress, second session.
Service Features in Chain Stores, 67
pages, November 20, 1933, Senate
Document No.91, Seventy-third Congress, second session.
The Chain Store in the Small Town,
112 pages, November 22, 1933, Senate
Document No. 93, Seventy-third Congress, second session.
Miscellaneous Financial Results of
Retail Chains 93 pages, December 31,
1933 Senate Document No.99, Seventy-third
third Congress, second session.
State Distribution of Chain Stores,
1913-28, 55 pages, November 16,1933,
Senate Document No. 130, Seventythird Congress, second session.
Final Report on the Chain-Store Investigation, 110 pages, December 14,
1934, Senate Document No.4, Seventy
fourth Congress, first session.

Coal, Anthracite.--This investigation was conducted pursuant to Senate Resolution No.217,
Sixty-fourth Congress, first session, June 22, 1916, and Senate Resolution No. 51, Sixty-fifth

Congress, first session, May 1, 1917. A rapid advance in the prices of anthracite at the mines,
compared with costs, and the overcharging of anthracite jobbers and dealers, were disclosed in
the inquiry in response to these resolutions. Current reports of operators’ and retailers selling

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

prices were obtained, and this was believed to have substantially benefited the consumer.
Reports were transmitted to the Senate May 4, 1917, and June 20, 1917.
Coal, Anthracite.--This inquiry was made on motion of the Commission, and dealt with
premium prices of anthracite coal charged by certain mine operators and the premium prices and
gross profits of wholesalers in the latter part of 1923 and early in 1924. The report discussed
also the development of the anthracite combination and the results of the Government’s efforts
to dissolve it. The Report of the Federal Trade Commission on Premium Prices of Anthracite
(97 pages), dated July 6, 1925, was transmitted to Congress and printed.
Coal--Anthracite and Bituminous.--This inquiry was made pursuant to House Resolution
No. 352, Sixty-fourth Congress, first session; Senate Resolution No. 217, Sixty-fourth Congress,
first session, and Senate Resolution No.51, Sixty-fifth Congress, first session. The original
problems of the investigation were altered by entrance of the country into the World War and
were treated accordingly. The report, entitled Report of the Federal Trade Commission on
Anthracite and Bituminous Coal, consisting of a summary and a general report, was submitted
to Congress June 19, 1917, and printed (420 pages) as a Commission publication and as Senate
Document No.50, Sixty-fifth Congress, first session (out of print). The summary was also
submitted to Congress separately and printed as House Document No. 193, Sixty-fifth Congress,
first session (29 pages out of print).
Coal, Bituminous.--This inquiry was made pursuant to House Resolution No. 852, Sixtyfourth Congress, first session, adopted August 18, 1916. The resolution called for an
investigation of the alleged depressed condition of the industry, but subsequent to Its adoption
there was a marked advance in coal prices, and the Commission, in a preliminary report,
suggested various measures for insuring a more adequate supply at reasonable prices. This
report, entitled Preliminary Report by the Federal Trade Commission on the Production and
Distribution of Bituminous Coal was printed as House Document No.1.92, Sixty-fifth Congress,
first session (8 pages, out of print).
Coal, Bituminous.--An inquiry was made on motion of the Commission. The reports on
investment and profit In soft-coal mining were prepared and transmitted to Congress in the
belief that the information would be of timely value in consideration of pending legislation
regarding the coal trade. The data cover the years 1916 to 1921, inclusive. Reports were issued
in two parts, dated May 31, 1922, and July 6, 1922, but printed in one volume, entitled
Investment and Profit in Soft Coal Mining. Part L Summary and Conclusions; Part II.
Explanatory and Statistical Material Supporting Part l (222 pages).
Coal Reports--Cost of Production.--This inquiry was made at the direction of President
Wilson. Before the passage of the Lever Act in August 1917, the Commission was called upon
by the President to furnish information to be used by him in fixing coal prices under that act. On
the basis of the Information furnished the prices of coal were fixed by Executive order. The
work of the Commission In determining the cost of production of coal was continued by
obtaining monthly reports. This information was compiled for use of the United States Fuel
Administration in continuing the control of prices. Detailed cost records were collected from
January 1917, through December 1918, for about 99 percent of the anthracite tonnage
production and for about 95 percent of the bituminous coal production. This information was
summarized, after the war, in a series of reports for the principal coal producing States or
regions, which were all dated June 30, 1919, and printed as follows: Cost Reports of the Federal
Trade Commission-Coal. No.1. Pennsylvania--Bituminous (103 pages). No.2. PennsylvaniaAnthracite (145 pages, out of prints). No.3. Illinois--Bituminous (127 pages). No.4. Alabama,
Tennessee, and Kentucky-Bituminous (210 pages). No.5. Ohio, Indiana, and MichiganBituminous (288 pages). No.6. Maryland, West Virginia, and Virginia-Bituminous (208 pages).
No. 7. Trans-Mississippi States--Bituminous (359 pages). (See also War-Time Cost Finding.)

Coal--Current Monthly Reports.--In December 1919, provided with a special appropriation
by Congress, the Commission initiated a system of current monthly returns from the soft-coal
industry somewhat similar to those required from coal-producing companies during the war. An
injunction to prevent the Commission from calling for such reports (denied about 7 years later)
led to their abandonment. Mimeographed reports of the results were published monthly
regarding operations from January to June, inclusive, 1920, as follows: Bulletin No.1 (January
1920 costs), April 20, 1920 ; Bulletin No. 2 (February 1920 costs), May 24, 1920 ; Bulletin
No.8 (March 1920 costs) June 25, 1920 ; Bulletin No.4 (April 1920 costs), July 26, 1920 ;
Bulletin No. 5 (May 1920 costs), August 25, 1920 ; Quarterly Report No.1 (revised costs-First
Quarter of 1920), August 25, 1920 ; Quarterly Report No. 2 (revised costs-Second Quarter of
1920), December 6, 1920.

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Coal--Retail Situation.--An inquiry was made on motion of the Commission into the retail
coal situation in Washington, D. C., and a typewritten report was issued on August 11, 1917,
entitled Washington, D. C., Retail Coal Situation (5 pages).
Commercial Bribery.--An inquiry made on motion of the Commission Into the prevalence
of bribery of employees of customers as a method of obtaining trade was described in a special
report to Congress, dated May 15, 1918, entitled Special Report on Commercial Bribery,
printed as House Document No.1107, Sixty-fifth Congress, second session (3 pages, out of
print). The report contained recommendations for legislation striking at this practice. On August
22, 1918, a letter from the Commission to Senator Duncan U. Fletcher of Florida, in the nature
of a report, discussed this subject and was printed under the title Commercial Bribery, as Senate
Document (unnumbered), Sixty-fifth Congress, second session (36 pages, out of print). On
March 18, 1920, a brief report was transmitted to the Senate by the Commission, on its own
motion, entitled Commercial Bribery, which was printed as Senate Document No.258, Sixtysixth Congress, second session (7 pages, out of print).
Cooperation in Foreign Countries.--This investigation was initiated on motion of the
Commission. The subsequent report on this subject was the result of inquiries made by the
Commission regarding the cooperative movement in 15 European countries. It contained
recommendations for further developments of cooperation in the United States. The report,
dated December 2, 1924, was entitled Cooperation in Foreign Countries (202 pages, out of
print), and was printed as a Senate Document.
Cooperative Marketing.--This inquiry was made pursuant to Senate Resolution No.34,
Sixty-ninth Congress, special session, adopted March 17, 1925. It covered the development of
the cooperative movement in the United States and illegal interferences with the formation and
operation of cooperatives. The report included also a study of comparative costs, prices, and
marketing practices as between cooperative marketing organizations and other types of
marketers and distributors handling farm products. Entitled Cooperative Marketing, the report
was transmitted to the Senate April 30, 1938, and printed as Senate Document No.95, Seventieth
Congress, first session (721 pages, out of print).
Copper.--This inquiry was a part of the war-time work done at the direction of President
Wilson. One Of the first products for which the Government established a definite maximum
price during the World War was copper. The information upon which the price was fixed was
primarily the cost findings of the Federal Trade Commission, and a summary of this cost
information was printed in the report entitled Cost Reports of the Federal Trade Commission-Copper (26 pages, issued June 30, 1919). (See also War-time Cost Finding.)
Cost of Living.--At the outbreak of the World War, the rapid rise of prices led the
Commission, at the direction of President Wilson, to call a conference on April 30, 1917, to
which official delegates of the various States were invited. The proceedings, entitled The High
Cost of Living, were subsequently printed (119 pages, out of print).
Cotton Merchandising.--This inquiry was made pursuant to Senate Resolution No. 252,
Sixty-eighth Congress, first session, adopted June 7, 1924. The report discussed abuses in
handling consigned cotton and made recommendations designed to correct or alleviate existing
conditions. The report, Cotton Merchandising Practices, was transmitted to the Senate January
20, 1925, and printed, as Senate Document No.194, Sixty-eighth Congress, second session (88
pages).
Cottonseed Industry.--An inquiry was made pursuant to House Resolution No.439, Sixtyninth Congress, second session, adopted March 2, 1927. Alleged fixing of the 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 in violation of the antitrust laws by those engaged in crushing or refining
cottonseed. One of the main causes of dissatisfaction to both the producer of cottonseed and
those engaged in its purchase and manufacture was found to have been a lack of a uniform
system of grading. The report, Cottonseed Industry, was submitted to the House March 5, 1928,
and printed as House Document No.193, Seventieth Congress, first session (37 pages) .
Cottonseed Industry.--An inquiry was made pursuant to Senate Resolution No. 136,
Seventy-first Congress, first session, adopted October 21, 1929, and Sen-ate Resolution 147,
Seventy-first Congress, first session, adopted November 2, 1929. These resolutions instructed
the Commission to investigate practices of corporations operating cottonseed-oil mills to
determine the existence of unlawful combinations seeking to lower and fix prices of cottonseed,
and seeking to sell cottonseed

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meal at a fixed price under boycott threat. The Commission was also directed to determine
whether such corporations were acquiring control of cotton gins for the purpose of destroying
competitive markets as well as for depressing or controlling prices paid to seed producers. The
final report (207 pages) was submitted to the Senate on May 19, 1933. Thus report and twelve
volumes covering hearings during the course of the investigation were printed as Senate
Document No. 209, Seventy-first Congress, second session, under the general title, Investigation
of Cottonseed Industry.
Cotton Trade.--An inquiry was made pursuant to Senate Resolution No. 262, Sixty-seventh
Congress, second session, adopted March 29, 1922. A preliminary report discussed especially
the causes of the decline in cotton prices during the period 1922. A report entitled Cotton trade-A preliminary report (28 pages, out of print) was transmitted February 26, 1923 (See next
paragraph.)
Cotton Trade.--An inquiry was made pursuant to Senate Resolution No.429, Sixty-seventh
Congress, fourth session, adopted January 31, 1923. The inquiry in response to this second
resolution on the cotton trade was combined with the one mentioned above and resulted in a
report which was sent to the Senate in April 1924. This report recommended that Congress enact
legislation providing for some form of southern warehouse delivery on New York contracts, and
as a part of such a delivery system the adoption of a future contract which would require that not
more than three adjacent or contiguous grades should be delivered on any single contract. The
Commission also recommended a 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. A report entitled The Cotton Trade, printed
in two volumes, contained, respectively, the report and the transcript of hearings. It was
transmitted to the Senate April 28, 1924, and printed as Senate Document No.100, Sixty-eighth
Congress, first session (510 pages, out of print).
Du Pont Investments.--This inquiry was made on motion of the Commission of July 29,
1927. The reported acquisitions of E. I. du Pont de Nemours & Co., of the stock of the United
States Steel Corporation, together with previously re ported holdings in General Motors
Corporation, caused an inquiry into these relations with a view to ascertaining the facts and their
probable economic consequences. The report, entitled Report of the Federal Trade Commission
on Du Pont Investments, was mimeographed (43 pages), together with views of Commissioner
William E Humphrey on the resolution and on the report (3 pages).
Electric and Gas Utilities.--See Electric Power, Interstate Power Transmission, and Utility
Corporations.
Electric Power.--This inquiry was made pursuant to Senate Resolution No.329, Sixty-eighth
Congress, second session, adopted February 9, 1925. Two reports on the control of the electricpower industry were made pursuant to this resolution. The first dealt with the organization,
control, and ownership of commercial electric-power companies, and showed, incidentally, the
dangerous degree to which pyramiding had been practiced 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. in the field of electric equipment was clearly brought out.
These reports, entitled Electric Power Industry-Control of Power Companies (272 pages),
printed as Senate Document No. 213 Sixty-ninth Congress, second session (out of print), and
Supply of Electrical Equipment and Competitive Conditions (282 pages), printed as Senate
Document No.46, Seventieth Congress, first session, were transmitted to the Senate February

21., 1927, and January 12, 1928, respectively. (See also Interstate Power Transmission and
Utility Corporations.)
Farm Implements.--This inquiry was made pursuant to Senate Resolution No. 223, Sixtyfifth Congress, second session, adopted May 13, 1918. The high prices of farm implements and
machinery led to this inquiry, which disclosed that there were numerous trade combinations to
advance prices and that the consent decree for the dissolution of the International Harvester Co.
was inadequate. The Commission recommended a revision of the decree and the Department
of Justice proceeded against the company to that end. The report, entitled Report of the Federal
Trade Commission on the Causes of High Prices of Farm Implements (713 pages, out of print),
was transmitted to the Senate May 4, 1920. (See Agricultural Implements and Machinery, and
Independent Harvester.)

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Farm Implements and Machinery.--This inquiry was made pursuant to Senate Joint
Resolution No. 277, Seventy-fourth Congress, second session (Public Resolution No.130,
Seventy-fourth Congress), approved June 24, 1936. It called for an investigation to determine
whether there had been recently any conspiracy in unlawful restraint of trade or unfair methods
of competition in the manufacture or sale of agricultural implements and machinery, the extent
of concentration and control in the industry, the costs, prices and profits of manufacturers and
distributors, the methods and price margins of dealers, and the course of prices of farm
machinery and of other similar machinery, since 1914. This investigation is pending.
Farm Products.--See Agricultural Income.
Feeds.--This inquiry was made pursuant to Senate Resolution No.140, Sixty-sixth Congress,
first session, adopted July 31, 1919. Its purpose was to discover whether there were any
combinations or restraints of trade in that business; and, though it disclosed some association
activities in restraint of trade, it found no important violation of the antitrust laws. Certain minor
abuses in the trade were eliminated. The Report of the Federal Trade Commission on
Commercial Feeds (206 pages), was transmitted to the Senate March 29, 1921, and printed.
Fertilizer.--An inquiry was made pursuant to Senate Resolution No.487, Sixty-second
Congress, third session, adopted March 1, 1913. Begun by the Commissioner of Corporations,
the investigation disclosed the extensive use of bogus independent fertilizer companies for
purposes of competition, but through conferences with the principal manufacturers agreements
were reached for the abolition of such unfair competition. A report, entitled Fertilizer Industry
(269 pages) was transmitted by the Federal Trade Commission to the Senate August 19, 1916,
and printed us Senate Document No.551, Sixty-fourth Congress, first session.
Fertilizer.--An inquiry made pursuant to Senate Resolution No.307, Sixty-seventh Congress,
second session, adopted June 17, 1922, developed that active competition generally prevailed
in the fertilizer industry in this country, though in certain foreign countries combinations
controlled 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. The report, entitled Fertilizer Industry (87 pages), was
transmitted to the Senate March 3, 1923, and printed as Senate Document No.347. Sixty-seventh
Congress, fourth session.
Flags.--This inquiry, made pursuant to Senate Resolution No.35, Sixty-fifth Congress, first
session, adopted April 16, 1917, resulted from unprecedented increases in the prices of
American flags due to the war-time demand. A report entitled Prices of American Flags, printed
as Senate Document No.82, Sixty-fifth Congress, first session (6 pages, out of print), was
transmitted to the Senate, July 26, 1917.
Flour Milling.--An inquiry into the flour-milling industry was made pursuant to Senate
Resolution No.212, Sixty-seventh Congress, second session, adopted January 18, 1922. A report
on the inquiry 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 of the miller and consumer arising from an excessive and confusing variety in the
sales of flour packages. A report, entitled Wheat Flour Milling Industry (130 pages), was
transmitted to the Senate May 16, 1924, and printed as Senate Document No. 130, Sixty-eighth
Congress, first session (out of print). (See also Bakeries, Bread, and Food Investigation.)
Food Investigation.--This inquiry was made pursuant to an order of President Wilson dated
February 7, 1917. The general food investigation, undertaken with a special appropriation of
Congress, resulted in two major series of reports, namely, meat packing and the grain trade, both
described elsewhere in this list. In addition separate inquiries were made into flour milling,
canned vegetables and fruits, and canned salmon. (See Food Investigation: Flour Milling, Grain
Trade, Meat Packing, Food-Canning, Private Car Lines, and Wholesale Marketing of Food.)

Food Investigation--Flour Milling.--This inquiry was begun pursuant to the order of
President Wilson dated February 7, 1917, but was continued as a separate inquiry. A report
entitled Commercial Wheat Flour Milling was issued on September 15, 1920 (118 pages). (See
also Bakeries, Bread, and Flour Milling.)
Food Investigation--Flour Milling and Jobbing.--In connection with the food Inquiry
ordered by President Wilson, the Commission on April 4, 1918, issued a report entitled Food
Investigation, Report of the Federal Trade Commission on Flour Milling and Jobbing (27
pages, out of print). (See also Bakeries, Bread, and Flour Milling.)

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Food Investigation--Food Canning.--As a part of the general food investigation ordered by
President Wilson in 1917, the Commission made a study of canned foods, and published two
reports, one May 15, 1918, entitled Food Investigation. Report or the Federal Trade
Commission on Canned Foods. General Report and Canned Vegetables and Fruits (103 pages,
out of print) and another December 27, 1918, entitled Food Investigation. Report of the Federal
Trade Commission on Canned Foods. Canned Salmon (83 pages). Also, the Commission, in
connection with its general war-time cost finding activity, obtained a large amount of cost data
for use of the War and Navy Departments, including data on canned foods. A volume was
published November 21, 1921, in accordance with section 6 (f) of the Federal Trade
Commission Act, and entitled Report of the Federal Trade Commission on Canned Foods,
1918. Corn, Peas, String Beans, Tomatoes and Salmon (86 pages).
Food Investigation--Grain Elevators.--In connection with the Inquiry into the grain trade
ordered by President Wilson as elsewhere described, the Commission, In a letter dated June 13,
1921, transmitted to the Senate, on its own motion, in accordance with section 6 of the Federal
Trade Commission Act, its report, Profits of Country and Terminal Grain Elevators, a
Preliminary Report. This was printed as Senate Document No.40, Sixty-seventh Congress, first
session (12 pages, out of print). (See also Grain Exporters and Grain-Wheat Prices.)
Food Investigation--Grain Trade.--Made pursuant to the direction of President Wilson
dated February 7, 1917, this investigation covered the grain trade generally from the country
elevator to the central markets, and included an extensive statistical analysis of the trading in
cash, grain, and future contracts used as recorded in the books of commission men, brokers, and
others. The Commission recommended that the quotations of the various grain exchanges should
be made up and published on a more uniform basis and that railroads should be required to
operate public elevators for the convenience of their shippers or that there should be
governmental operation of storage elevators to permit small dealers to compete more nearly on
an equality with the large elevator merchandisers. The Report of the Federal Trade Commission
on the Grain Trade was printed in seven volumes, as follows: I. Country Grain Marketing (350
pages), September 15, 1920; IL Terminal Grain Markets and Exchanges (333 pages) September
15, 1920; III. Terminal Grain Marketing (332 pages), December 21, 1921; IV. Middlemen’s
Profits and Margins (215 pages), September 26, 1923; V. Future Trading Operations in Grain
(347 page, out of print), September 15, 1920; VI. Prices of Grain and Grain Futures (374
pages), September 10, 1924; VII, Effects of Future Trading (419 pages), June 25, 1926 (See
also Grain Exporters and Grain-Wheat Prices.)
Food Investigation-Meat Packing.--As a part of the food inquiry ordered by President
Wilson as of February 7, 1917, a comprehensive inquiry was made into the meat-packing
industry. Evidence was obtained of a combination among meat packers and of various unfair
methods of competition. It also was developed that they were rapidly extending their operations
into various unrelated lines of food products such as fruits, and dairy products. As a result of the
Inquiry, the Commission recommended divorcing the meat packers from the control of the
stockyard., a recommendation subsequently adopted by Congress in enacting the Packers and
Stockyards Act, and also recommended restricting their operations in the unrelated lines, which
was included in the provisions of a consent decree enjoining them from engaging in such
merchandising. (See Packer Consent Decree below.) Six reports were Issued as a result of this
inquiry, the sixth having been prepared by the Department of Agriculture which cooperated with
the Commission in making a study of the costs of raising and marketing cattle for slaughter.
These six reports submitted to the President were: Food Investigation. Report of the Federal
Trade Commission on the Meat-Packing Industry. Summary and Part I (Extent and Growth of
Power of the Five Packers in Meat and Other Industries), submitted June 24, 1919 (574 pages);
Part II, Evidence or Combination Among Packers, submitted November 25, 1918 (290 pages);

Part III. Methods of the Five Packers in Controlling the Meat Packing Industry, submitted June
28, 1919 (325 pages, out of print); Part IV. The Five Large Packers in Produce and Grocery
Foods, submitted June 30, 1919 (390 pages) ; Part V. Profits or the Packers, submitted June
28, 1919 (110 pages): and Part VI Cost of Growing Beef Animals, Cost of Fattening Cattle, and
Cost or Marketing Live Stock, submitted June 30, 1919 (183 pages). The summary was also
printed separately by the Commission and as House Document 1297, Sixty-fifth Congress,
second session, with a letter of transmittal of the President, dated September 24, 1918. (See also
Meat Packing Profit Limitations and Packer Consent Decree.)
Food Investigation--Wholesale Marketing.--Undertaken as a part of the food Inquiry
ordered by President Wilson as of February 7, 1917, this inquiry consisted of an examination
of the methods of marketing, including especially the facilities

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necessary therefor and the private control or public regulation thereof. The printed report, Food
Investigation, Report of the Federal Trade Commission on the Wholesale Marketing of Food
(268 pages, out of print), was dated June 30, 1919
Food Investigation--Private Car Lines.--This inquiry also was undertaken as a part of the
food investigation ordered by President Wilson as of February 7, 1917. It comprised chiefly an
examination of livestock car lines and refrigerator ear lines, both for meats and for fruits and
vegetables, including a study of the effect of the ownership of such facilities on competition.
Certain remedial measures were recommended. The report entitled Food Investigation, Report
of the Federal Trade Commission on Private Car Lines (271 pages), was dated June 27, 1919.
and printed.
Foreign Trade--Antidumping Legislation.--The inquiry was begun in the spring of 1933,
on motion of the Commission, when amendments to the antidumping laws of this country were
under consideration by Congress. Authority for this study is found In sections 5 and 6 (h) of the
Federal Trade Commission Act. The several recognized types of dumping--(1) real or ordinary
dumping, (2) bounty dumping, (3) freight dumping, (4) dumping of materials, (5) consignment
dumping, (6) exchange dumping, and (7) social dumping, were studied, as well as certain
general provisions which may be used to prevent the dumping of goods from foreign countries.
International action in suppression of dumping was briefly mentioned, and the legislation of
each country was studied separately. A report entitled Antidumping Legislation and Other
Import Regulations in the United States and Foreign Countries, was ordered printed on January
11, 1934, as Senate Document No.112, Seventy-third Congress, second session (100 pages).
Foreign Trade--Cooperation in American Export Trade.--This inquiry was made on
motion of the Commission. An extensive investigation was undertaken of competitive conditions
affecting Americans in international trade. The report disclosed the marked advantages of
various 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
trade was enacted as a direct result of the recommendations embodied in the report. The report
was issued as of June 30, 1916, under the general title Cooperation in American Export Trade,
in two volumes: Part I. Summary and Report (387 pages), Part II. Exhibits (597 pages) (both
out of print).
Foreign Trade--Cotton Growing Corporation.--This inquiry was made pursuant to Senate
Resolution No.317, Sixty-eighth Congress, second session, adopted January 27, 1925, and
concerned the development, methods, and activities of the Empire Cotton Growing Corporation,
a British company. The report discussed world cotton production and consumption and
concluded that there was then little danger of serious competition to the American cotton grower
and that it would be many years before there would be a possibility that the United States would
lose its position as the largest producer of raw cotton. The report, entitled Empire Cotton
Growing Corporation (30 pages) was transmitted to the Senate February 28, 1925, and printed
as Senate Document No.226, Sixty-eighth Congress, second session (out of print).
Fruits and Vegetables.--See Agricultural Income.
Gasoline.--Pursuant to the direction of the President, February 7, 1924, the Commission made
an investigation of the sharp advance in gasoline prices, reporting in the form of a Letter of
Submittal and Summary of Report on Gasoline Prices in 1924, dated June 4, 1924 (typewritten
or mimeographed copy, 24 pages). It was referred by the President to the Attorney General and
reprinted in the Congressional Record of February 28, 1925, beginning on page 5158. (See also
Petroleum Decree Investigation.)
Gasoline.--Pursuant to Senate Resolution No.109. Sixty-third Congress, first session, adopted

June 18, 1913, and Senate Resolution No.457, Sixty-third Congress, second session, adopted
September 28, 1914, the Commission investigated gasoline prices for the year 1915 and
published its Report on the Price of Gasoline in 1915 (224 pages) as of April 11, 1917, in which
were discussed the high prices of petroleum products and 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. A
preliminary report was issued April 10, 1916, Investigation of the Price of Gasoline, and

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printed as Senate Document No.403, Sixty-fourth Congress, first session (15 pages, out of print).
Gasoline Importation.--This inquiry, made pursuant to Senate Resolution No. 274, Seventysecond Congress, first session, adopted July 16, 1932, had its inception in complaints filed
against four major oil companies operating In Detroit, alleging price discrimination due to
zoning divisions in which different retail prices prevailed. The Commission transmitted its
report to the Senate February 27, 1933, in the form of a letter entitled Importation of Foreign
Gasoline at Detroit, Mich. (3 pages), printed as Senate Document No.206, Seventy-second
Congress, second session.
Gasoline Prices.--This inquiry was made pursuant to Senate Resolution No. 166, Seventythird Congress, second session, adopted February 2, 1934. The Commission investigated the
causes and effects of increased gasoline prices during the 6-month period preceding the
resolution’s adoption. The report revealed an average price increase of 2 cents about the time
of the effective date, September 2, 1933, of the petroleum code. Following subsequent declines
the average net increase was 1.04 cents. The report submitted May 10, 1934, entitled Gasoline
Prices, was printed as Senate Document No. 178, Seventy-third Congress, second session (22
pages).
Grain Exporters.--The low prices of export wheat gave rise to this inquiry, which was made
pursuant to Senate Resolution No.133, Sixty-seventh Congress, second session, adopted
December 22, 1921. The study developed facts regarding extensive and harmful speculative
manipulations 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 were 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. Reports, entitled Report of the Federal Trade Commission on
Methods and Operations of Grain Exporters, Vol. I, Interrelations and Profits (123 pages), and
Vol. II, Speculation, Com-petition, and Prices (264 pages), were transmitted to the Senate May
16, 1922, and June 18, 1923, respectively. (See Food Investigation: Grain Elevators and Grain
Trade.)
Grain--Wheat Prices.--The extraordinary decline of wheat prices in the summer and autumn
of 1920 led to a direction of President Wilson (as of October 12, 1920) to inquire into the
reasons. These were found chiefly in abnormal market conditions, including certain arbitrary
methods pursued by the grain-purchasing departments of foreign governments. The resulting
report, entitled Report of the Federal Trade Commission on Wheat Prices for the 1920 Crop (91
pages), was transmitted to the President December 13, 1920. (See Food Investigation: Grain
Elevators and Grain Trade.)
Guarantee Against Price Decline.--The Commission, in 1919, made an inquiry into the
practice of guarantee against price decline through a circular letter calling for information and
opinions. The report, entitled Digest of Replies * * * Relative to the Practice of Giving
Guarantee Against Price Decline, was published May 27, 1920 (60 pages).
House Furnishings.--Pursuant to Senate Resolution No.127, Sixty-seventh Congress, second
session, adopted January 4, 1922, the Commission investigated the alleged high prices for house
furnishing goods which had prevailed since 1920, as compared to the price declines in other
lines. Three reports were issued showing that in respect to several kinds of household
furnishings there had been conspiracies to inflate the prices of such goods. These reports,
entitled Report of the Federal Trade Commission on House Furnishing Industries, Vol. I. House
hold Furniture (484 pages), Vol. II, Household Stoves (187 pages) and Vol. II, Kitchen
Furnishings and Domestic Appliances (347 pages), were transmitted to the Senate, January 17,
1923, October 1, 1923, and October 6, 1924, respectively. A summary of Volume I was printed

in 1923.
Independent Harvester Co.--This inquiry was made pursuant to Senate Resolution No.212,
Sixty-fifth Congress, second session, adopted March 11, 1918, calling for an investigation of
the organization and methods of operation of the company which had been formed several years
before to compete with the “Harvester trust.” The company passed Into receivership and the
report disclosed that mismanagement and insufficient capital brought about its failure. A summary, entitled Federal Trade Commission Report to the Senate on the Independent Harvester
Co. (mimeographed, 5 pages, out of print), was transmitted to the Senate May 15, 1918. (See
also Farm Implements.)
Interstate Power Transmission.--This inquiry was made pursuant to Senate Resolution No.
151, Seventy-first Congress, first session, adopted November 8, 1929, which called for
ascertainment of the quantity of electric energy used for develop-

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ment of power or light, or both, generated in any State and transmitted across State lines, or
between points within the same State but through any place outside thereof. The report, entitled
Interstate Movement of Electric Energy, was printed as Senate Document No.238, Seventy-first
Congress, third session (134 pages), and transmitted to the Senate December 20, 1930. Interim
reports had been issued as of December 9, 1929, March 10, June 11, and September 19, 1930.
(See also Electric Power and Utility Corporations.)
Leather and Shoes.--This inquiry was made on motion of the Commission, on account of
general complaint regarding the high prices of shoes, and dealt chiefly with the costs and prices
of heather and shoes. A report, entitled Report on Leather and Shoe Industries (180 pages), was
published August 21, 1919. Previously, as of January 23, 1918, the Commission had issued Hide
and Leather Situation. A Preliminary Report to the “Report on Leather and Shoe Industries.”
(Out of print.)
Leather and Shoes.--Under this inquiry, made pursuant to House Resolution No.217, Sixtysixth Congress, first session, adopted August 19, 1919, a further study of leather and shoe costs
and prices was conducted. The report, entitled Report of the Federal Trade Commission on Shoe
and Leather Costs and Prices (212 pages), and a summary were printed and transmitted to the
House, June 10, 1921.
Lumber--Costs.--The war-time examination of lumber costs authorized by President Wilson
as of July 25, 1917, resulted in an accumulation of information which led the Commission to
compile certain reports among which was one titled Report of the Federal Trade Commission
on War-Time Costs and Profits of Southern Pine Lumber Companies, transmitted to Congress
May 1, 1922 (94 pages).
Lumber Trade Associations.--Pursuant to request of the Attorney General dated September
4, 1919, an extensive survey was made of lumber manufacturers’ associations throughout the
United States. The information obtained was presented in a series of published 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. A report was printed entitled Report of
the Federal Trade Commission on Lumber Manufacturers’ Trade Associations, Incorporating
Reports of January 10, 1921 (Preliminary Survey of Lumber Manufacturers’ National and
Regional Trade Associations) ; February 18, 1921 (Southern Pine Association of New Orleans,
La.) ; June 9, 1921 (Douglas Fir Lumber Manufacturers’ amid Loggers’ Associations) ; and
February 15, 1922 (Western Pine Manufacturers’ Association of Portland, Oreg.) (150 pages,
out of print). On May 7, 1923, a further report was made, entitled Report of the Federal Trade
Commission on Northern Hem lock and Hardwood Manufacturers’ Association (52 pages).
Further information on these associations was developed in connection with the inquiry into
open price associations. (See Open Price Associations.) On January 24, 1923, a report was
made on three additional associations, entitled Activities of Trade Associations and
Manufacturers of Posts and Poles in the Rocky Mountains and Mississippi Valley Territory (22
pages). The three associations were: Western Red Cedar Association, Lifetime Post Association,
and Western Red Cedar Men’s Information Bureau.
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, was conducted on motion of the Commission in conjunction with the inquiry into
open-price associations. Transmitted February 13, 1929. (See Open-Price Associations.)
Meat-Packing Profit Limitations.--This inquiry was made pursuant to Senate Resolution
No.177, Sixty-sixth Congress, first session, adopted September 3, 1919, and had to do with the

system of war-time control established by the United States Food Administration. Certain
changes were recommended by the Commission, including more complete control of the
business and lower maximum profits. The report, entitled Maximum Profit Limitation on MeatPacking Industry (179 pages), on September 25, 1919, was ordered by the Senate to be printed
and was published as Senate Document No.110, Sixty-sixth Congress, first session. (See also
Food Investigation: Meat Packing.)
Milk--Canned.--An inquiry was made into the milk industry pursuant to Senate Resolution
No.431, Sixty-fifth Congress, third session, adopted March 3, 1919. The investigation of the
fairness of milk prices to producers and of canned milk prices to consumers, and whether they
were affected by fraudulent or dis criminatory 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 practices have since been recognized as unfair by the trade

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itself. The report, entitled Report of the Federal Trade Commission on Milk and Milk Products,
1914-1918 (234 pages), was transmitted to the Senate June 6 1921, with a summary.
Milk Investigation.--This inquiry was made pursuant to House Concurrent Resolution No.32,
Seventy-third Congress, second session, adopted June 15, 1934, concerning questionable trade
practices in the milk industry and alleged monopolistic tendencies in the control of milk supply.
The titles of seven reports issued are as follows: Report of the Federal Trade Commission on
the Sale and Distribution of Milk and Milk Products, Connecticut and Philadelphia Milksheds,
dated April 5, 1935, and printed as House Document No.152, Seventy-fourth Congress, first
session (105 pages); Connecticut and Philadelphia Milksheds, dated December 81, 1935, and
printed as House Document No.387, Seventy-fourth Congress, second session (125 pages);
Chicago Sales Area, dated April 15, 1936, and printed as House Document No.451, Seventyfourth Congress, second session (103 pages) ; Boston, Baltimore, Cincinnati and St. Louis,
dated June 4, 1936, and printed as House Document No.501, Seventy-fourth Congress, second
session (243 pages); Twin Cities Sales Area, dated June 15, 1936, and printed as House
Document No.506, Seventy-fourth Congress, second session (90 pages); New York Milk Sales
Area, dated September 30, 1936, and printed as House Document No.95, Seventy-fifth
Congress, first session (138 pages) ; and Summary Report on Conditions with Respect to the
Sale and Distribution of Milk and Dairy Products, dated January 4, 1937, and printed as House
Document No.94, Seventy-fifth Congress, first session.
National Wealth and Income.--This inquiry was made pursuant to Senate Resolution
No.451, Sixty-Seventh Congress, fourth session, adopted February 28, 1023, calling for a
comprehensive inquiry into national wealth and income and specially indicating for investigation
the problem of tax exemption and the increase in Federal and State taxes (for reference to which
see Taxation and Tax Exempt income). In the report devoted to national wealth and income, the
national wealth was estimated to have been $353,000,000,000 in 1922 and the national income
to have been $70,000,000,000 in 1923. The nature of the wealth and income and its distribution
among various classes were also given. The report on National Wealth and Income was
transmitted to the Senate May 25, 1926, and printed as Senate Document No. 126, Sixty-ninth
Congress, first session (381 pages).
Open Price Associations.--This inquiry was made pursuant to Senate Resolution No.28,
Sixty-ninth Congress, special session, adopted March 17, 1925, calling for an investigation to
ascertain the number and names of so-called open-price associations, their importance in the
industry, and the nature of their activities, with particular regard to the extent to which uniform
prices were maintained among members to wholesalers and retailers. A report, entitled Open
Price Trade Associations, was transmitted to the Senate February 13, 1929, and printed as
Senate Document 226, Seventieth Congress, second session (516 pages). (See also Lumber
Trade Associations.)
Packer Consent Decree.--Pursuant to Senate Resolution No.278, Sixty-eighth Congress,
second session, adopted December 8, 1924, a report was made reviewing the legal history of the
consent decree and the efforts made to modify or vacate it. A summary was given of the
divergent economic interests involved in the question of packer participation in unrelated lines.
The report, entitled Packer Consent Decree, recommended the enforcement of the decree
against the Big Five packing companies. it was transmitted to the Senate February 20, 1925,
and printed as Senate Document No.219, Sixty-eighth Congress, second session (44 pages, out
of print). (See also Food Investigation--Meat Packing and Meat-Packing Profit Limitations.)
Paper--Book.--This inquiry, made pursuant to Senate Resolution No.269, Sixty-fourth
Congress, first session, adopted September 7, 1916, was begun that year, shortly following the
newsprint inquiry. (See below.) It had a similar origin and it disclosed similar restraints of trade,

resulting in proceedings by the Commission against the manufacturers involved therein to
prevent enhancement of prices. The Commission also recommended legislative action to repress
restraints of trade by certain associations. Reports were transmitted to the Senate June 13, 1917,
and August 21, 1917, entitled, respectively, Book Paper Industry--A Preliminary Report (11
pages), Senate Document No.45, Sixty-fifth Congress, first session (out of print), and Book
Paper Industry--A Final Report (125 pages), Senate Document No.79, Sixty-fifth Congress, first
session.
Paper--Newsprint.--This inquiry, made pursuant to Senate Resolution No. 177, Sixty-fourth
Congress, first session, adopted April 24, 1916, resulted from a sharp advance in prices of
newsprint. The reports of the Commission showed that these high prices had been partly the
result of certain newsprint association activities which

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161

were in restraint of trade. Through] the aid of the Commission, distribution of a considerable
quantity of paper to needy publishers was obtained at comparatively reasonable prices. The
Department of Justice instituted proceedings in consequence of which the association was
abolished and certain newsprint manufacturers indicted. A letter to the Senate from the
Commission entitled Newsprint Pa per Industry, transmitted March 3, 1917, was printed as
Senate Document No. 3, Sixty-fifth Congress, special session. The report, entitled Report of the
Federal Trade Commission on the Newsprint Paper Industry (162 pages), was transmitted to
the Senate June 13, 1917, and printed. Following this inquiry the Commission established a
system of monthly reporting of current figures dealing with production, stocks, sales, and the
like, which was continued for several years. On July 10, 1917, an additional brief report was
submitted to the Senate pursuant to Senate Resolution No.95, Sixty-fifth Congress, first session,
entitled Newsprint Paper Investigation, which was printed as Senate Document No.61, Sixtyfifth Congress, first session (8 pages, out of print).
Paper--Newsprint.--An inquiry was made pursuant to Senate Resolution No. 337, Seventieth
Congress, second session, adopted February 27, 1929. The question was whether there existed
an alleged monopoly among manufacturers and distributors of newsprint paper in the supplying
of paper to publishers of small daily and weekly newspapers. A report, Newsprint Paper
Industry, was transmitted to the Senate July 3, 1930, and printed as Senate Document No. 214,
Seventy-first Congress, special session (116 pages).
Peanut Prices.--This inquiry was made pursuant to Senate Resolution No.193, Seventy-first
Congress, first session, adopted October 22, 1929. The Commission sought data concerning an
alleged combination of peanut crushers and mills for price fixing purposes in violation of the
antitrust laws, as well as information with respect to an alleged arbitrary decrease in prices. The
report, entitled Prices and Competition Among Peanut Mills, was transmitted to the Senate June
30, 1932, and printed as Senate Document No.132, Seventy-second Congress, first session (78
pages).
Petroleum Decree Investigation.--Pursuant to duty imposed upon and the power granted to
it under Section 6 (c) of the Federal Trade Commission Act, and at the req nest of the Attorney
General made April 16, 1936, the Commission conducted an investigation to determine the
manner in which a consent decree entered September 15, 1930, in the case of the United States
against the Standard Oil Company of California, Inc., and others, had been or was being
observed. The decree in question perpetually enjoined and restrained seven major oil
companies, twelve independent oil companies, and one individual, operating primarily on the
Pacific Coast, from conspiring to monopolize and restrain interstate trade and commerce in the
manufacture, transportation, or sale of gasoline in violation of the Sherman Antitrust Act. The
Commission transmitted its report to the Attorney-General on April 2, 1937. It was not made
public by the Commission.
Petroleum--Foreign Ownership.--This inquiry was made pursuant to Senate Resolution No.
311, Sixty-seventh Congress, second session, adopted June 29, 1922. The acquisition of
extensive oil interests in this country by the Dutch-Shell concern, amid alleged discrimination
practiced against Americans in foreign countries, caused this inquiry which] developed the
situation in a manner to promote greater reciprocity on the part of foreign governments. The
report, entitled Report of the Federal Trade Commission on Foreign Ownership in the
Petroleum Industry (152 pages), was transmitted to the Senate February 12, 1923.
Petroleum Industry.--This inquiry was made pursuant to Senate Resolution No.31, Sixtyninth Congress, first session, adopted June 3, 1926. A comprehensive study covered 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 evidence was found of any understanding; agreement, or manipulation among the large d
companies to raise or depress prices of refined products. A report, entitled Petroleum IndustryPrices, Profits, and Competition (360 pages), was transmitted to the Senate December 12,1927,
amid printed as Senate Document No.61, Seventieth Congress, first session.
Petroleum, Pacific Coast.--The great increase in the prices of gasoline, fuel oil, and other
petroleum products on the Pacific coast led to this inquiry, made pursuant to Senate Resolution
138. Sixty-sixth Congress, first session, adopted July 31, 1919. It disclosed that several of the
companies were fixing prices. Reports entitled Pacific Coast Petroleum Industry: Part I.
Production, Ownership and Profits (270 pages) and Part II. Prices and Competitive Conditions
(262 pages),

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

were transmitted to the Senate April 7, 1921, and November 26, 1921, respectively, each with
a summary.
Petroleum--Panhandle.--This inquiry into conditions In the Panhandle (Texas) oil fields was
made on a motion of the Commission of October 0, 1926, find in response to requests of crudepetroleum producers. The reduction of prices late in 1926 as complained of was largely a result
of difficulties of handling and expenses of marketing this oil because of peculiar physical
properties, according to the report, which was entitled Report of the Federal Trade Com mission
On Panhandle Crude Petroleum (19 pages), issued as of February 3, 1928.
Petroleum--Pipe Lines.--This inquiry, made pursuant to Senate Resolution No. 109, Sixtythird Congress, first session, adopted June 18, 1913, was begun by the former Bureau of
Corporations. The report, entitled Report on Pipe-Line Transportation of Petroleum (467
pages, out of print), which was transmitted to the Senate February 28, 1916, showed the
dominating importance of the pipe lines of the great midcontinent oil fields. It also pointed out
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.
Petroleum Prices--1920.--Pursuant to House Resolution No.501, Sixty-sixth Congress,
second session, adopted April 5, 1920, a brief Inquiry was made into the high prices of
petroleum products. The report 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. The report,
entitled Advance in the Prices of Petroleum Products (57 pages), was transmitted to the House
June 1, 1920, and printed as House Document No. 801, Sixty-sixth Congress, second session.
Petroleum--Wyoming.--This inquiry was made on motion of the Commission. Complaints
of several important producing companies in the Salt Creek oil field led to the investigation. The
report covered the production, pipe-line transportation, refining, and wholesale marketing of
crude petroleum and petroleum products in the State of Wyoming. The report, entitled Report
of the Federal Trade Com mission on the Petroleum Industry of Wyoming (54 pages, out of
print), which was issued January 3, 1921,
Petroleum--Wyoming and Montana.--This inquiry, made on motion of the Commission,
resulted in a special report directing the attention of Congress to conditions existing in the
petroleum trade in Wyoming and Montana. Remedial legislation was recommended by the
Commission. The report, entitled Petroleum Trade in Wyoming and Montana (4 pages), was
dated July 13, 1922, and printed.
Power and Gas Utilities.--See Electric Power, Interstate Power Transmission, and Utility
Corporations.
Price Bases.--This inquiry was made on motion of the Commission of July 27, 1927, for the
purposes of studying methods In use to compute delivered prices {,n industrial products and of
determining what actual and potential influences such methods might have on competitive
markets and price levels. The study also included factors which determined the methods used.
This survey extended to more than 3,500 reporting manufacturers representing practically every
industrial segment. Inquiry into conditions in the cement industry revealed that the basing-point
system contributed to imperfect price competition and tended to establish an unhealthy
uniformity of delivered prices from the competitive standpoint together with a lack of price
flexibility over variable periods of time. Cross-haul or cross-freighting was found to be one of
the cement industry’s economic evils and to he generally admitted as such by the industry itself.
The first report, Report of the Federal Trade Commission on Price Bases Inquiry, Basing-point

Formula and Cement Prices (218 pages), was submitted to Congress on March 26,1932, and
printed. A mimeographed report, entitled, Study of Zone-Price Formula in Range Boiler
Industry, was issued March 30, 1936. (See Steel Code Inquiry, Steel Code as Amended, and
Cement Industry.)
Price Deflation.--To an inquiry of President Harding dated March 21, 1921, the Commission
made immediate reply (undated) giving its views of the causes of the disproportional decline of
agricultural prices compared with consumers’ prices. This was entitled Letter of the Federal
Trade Commission to the President of the United States (8 pages, out of print).
Profiteering.--This report was made in response to Senate Resolution No. 255, Sixty-fifth
Congress, second session, adopted June 10, 1918, on the then current conditions of profiteering
as disclosed by various inquiries of the Commission, and transmitted to the Senate on June 29,
1918. It was printed wider the title of Profiteering as Senate Document No.248, Sixty-fifth
Congress, second session (20 pages, out of print).

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163

Radio.--This inquiry was made pursuant to House Resolution No.548, Sixty-seventh
Congress, fourth session, adopted March 4, 1923. As a result of this investigation, It was found
that a large number of patents were owned by and cross-licensed among a number of large
companies. At the conclusion of the investigation, the Commission instituted proceedings
against these companies charging a monopoly of the radio field. A report entitled Report of the
Federal Trade Commission on the Radio Industry (347 pages), was transmitted to the House,
December 1, 1923, and printed.
Raisin Combination.--Allegations of a combination among raisin growers m California were
referred to the Commission for examination by the Attorney General as of September 30, 1919,
pursuant to the Federal Trade Commission Act. The Commission found that the enterprise was
not only organized in restraint of trade but was being conducted in a manner that was threatening
financial disaster to the growers. The Commission recommended changes to conform to the law.
These were adopted by the raisin growers. A report in the form of a letter entitled California
Associated Raisin Co., was made to the Attorney General June 8, 1920 (28 pages, typewritten).
Resale Price Maintenance.--This report was made on motion of the Commission. The
question whether a manufacturer of standard articles, identified by trade mark or trade practice,
should be permitted to fix by contract the price at which the purchasers could resell them, led
to this inquiry. The Commission recommended to Congress the enactment of legislation
permitting resale-price maintenance under certain conditions. The report, dated December 2,
1918, was in the form of a letter to Congress, printed as House Document No.1480, Sixty-fifth
Congress, third session (3 pages, out of print).
Resale Price Maintenance.--A report was made on motion of the Commission in the form
of a letter addressed to Congress, June 30, 1919, and was printed as House Document No.145,
Sixty-sixth Congress, first session (3 pages, out of print).
Resale Price Maintenance.--This inquiry was made on notion of the Com mission of July
25, 1927. The study was conducted from the point of view of the economic advantages or
disadvantages of resale price maintenance to the manufacturer, distributor, and consumer, the
effects on costs, profits, amid prices, and the purpose and results of price cutting. Part I of the
report. Resale Price Maintenance, was transmitted to Congress January 30, 1929, and printed
as House Document No.546, Seventieth Congress, second session (141 pages, out of print); Part
II (final, 215 pages) was transmitted on June 22, 1931, and printed.
Salaries Inquiry.--This inquiry was made pursuant to Senate Resolution No 75, Seventy-third
Congress, first session, adopted May 21), 1933, which directed that an inquiry be made by the
Commission concerning the salaries of executive officers and directors of corporations engaged
in interstate commerce (other than public utilities corporations) having capital and assets of
more than a million dollars, whose securities were listed on the New York Stock Exchange or
the New York Curb Exchange. The investigation was confined to the 5-year period 1928-32, and
was necessarily limited to a comparatively small proportion of corporations. coming within the
Commission’s jurisdiction. A statement explaining the report, but not containing the lists of
salaries, amid entitled Report of the Federal Trade Commission on Compensation of Officers
and Directors of Certain Corporations, was issued in mimeographed form (15 pages). It was
transmitted to Congress, February 26, 1934, together with copies of the lists of officers and
salaries (a public record).
Sisal Hemp.--This inquiry was made pursuant to Senate Resolution No.170, Sixty-fourth
Congress, first session, adopted April 17, 1916, 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. The report entitled Mexican Sisal Hemp, was transmitted to the Senate May 9, 1916,
and printed as Senate Document No. 440, Sixty-fourth Congress, first session (8 pages out of
print).
Southern Livestock Prices.--This inquiry was made pursuant to Senate Resolution No.133,
Sixty-sixth Congress, first session, adopted July 25, 1919. The low prices of southern livestock,
which gave rise to the belief that discrimination was being practiced, were investigated, but the
alleged discrimination did not appear to exist. The report, entitled Southern Livestock Prices,
was transmitted to the Senate February 2, 1920, and printed as Senate Document No. 209, Sixtysixth Congress, second session (11 pages).
Steel Code Inquiry.--This inquiry was made pursuant to Senate Resolution No.166, Seventythird Congress, second session, adopted February 2, 1934. The resolu-

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tion directed the Commission to investigate and report upon certain practices of the steel
Industry with particular reference to price fixing, the increased prices of steel products, and
“other such matters as would give a full presentation of the facts touching the industry since it
went under the National Recovery Administration code.” The inquiry centered largely upon
alleged collusive activities of steel producers in fixing identical delivered prices and eliminating
competition under the code, the effects of the multiple basing-point system incorporated in the
code, composition of the delivered selling prices which the code imposed, the influence of
various code restrictions on competition, and a general analysis of price increases attributable
to the organized efforts of the industry. The Commission found that adherence to the code
required violation by certain producers of a cease and desist order issued some years before by
the Commission against the basing-point system in what is known as the “Pittsburgh Plus” case.
The report, entitled Practices of the Steel Industry Under the Code, was transmitted to the
Senate on March 19, 1934, and printed as Senate Document No.159, Seventy-third Congress,
second session (79 pages). Certain modifications of the steel code were approved by the
President on May 30, 1934.
Steel Code as Amended.--This inquiry was made pursuant to Executive order of President
Roosevelt dated May 30, 1934. This order directed the Commission and the National Recovery
Administration to undertake a point study of the effect of the multiple basing-point system other
the amended steel code, particularly within the realm of the system’s influence on prices to
consumers, effects of the system in either permitting or encouraging price fixing, or “providing
unfair competitive advantages for producers, or disadvantages for consumers not based on
immaterial causes.” The order called for “recommendations for revisions of the code.” The
Report of the Federal Trade Commission to the President in Response to Executive Order of
May 30, 1934, with Respect to the Basing Point System in the Steel Industry (125, pages), was
transmitted to the President on November 30, 1934, and printed. it recommended code revisions
eliminating provisions giving sanction to the multiple basing-point system provisions in aid of
price fixing and those relating to regulation of production and new capacity. It found that the
multiple basing-point system not only permitted and encouraged price fixing but that it was price
fixing. It found also that the system did provide unfair competitive advantages for producers
and disadvantages for consumers not based on natural causes.
On March 15, 1935, there was Issued in mimeograph form the Summary of Report of the
Federal Trade Commission to the President * * *. In re: Iron and Steel Industry’s Basing
Point System (9 pages, out of print). On the same day the National Recovery Administration
issued its Summary of the Report of the National Industrial Recovery Board to the President
on the Operation of the Basing Point System in the Iron and Steel Industry (7 pages,
mimeographed, not obtainable from the Federal Trade Commission).
Steel Companies, Proposed Merger.--Pursuant to Senate Resolution No.286, Sixty-seventh
Congress, second session, adopted May 12, 1922, the Commission was requested to inquire into
a proposed merger of steel companies, namely, of the Bethlehem Steel Corporation and the
Lackawanna Steel Co., and of the Midvale Steel & Ordnance Co., Republic Iron & Steel Co.,
and Inland Steel Co. Two reports were made, June 5, 1922. and September 7, 1922, both
entitled Merger of Steel and Iron Companies, regarding the purpose and probable effects of the
proposed merger, which were printed as Senate Document No.208. Sixty-seventh Congress,
second session, part 1, and as Senate Document No. 208, Sixty-seventh Congress, second
session, part 2 (9 pages and 2 pages, respectively, both out of print).
Steel Industry--Costs and Profits.--Inquiry into the costs and profits of the steel industry
during the war was made pursuant to the order of President Wilson dated July 25, 1917, and
after its conclusion certain data In regard thereto were compiled by the Commission in a report
entitled Report of the Federal Trade Commission on War-The Profits and Costs of the Steel

Industry (138 pages), which was sent to Congress February 18, 1925.
Steel Sheet Piling--(Collusive Bidding) .--In response to a direction of President Roosevelt
dated November 20,1935, to investigate the prices of steel sheet piling on certain Government
contracts in New York, North Carolina, and Florida, the Commission, as of June 10, 1936, made
a report demonstrating the existence of collusive bidding because of a continued adherence to
the basing point system and other provisions of the code. The report (mimeographed) was
entitled Federal Trade Commission Report to the President on Steel Sheet Piling (42 pages).
Stock Dividends.--This inquiry was made pursuant to Senate Resolution No. 304, Sixty-ninth
Congress, second session, adopted December 22, 1926. This resolution called for a list of the
names and capitalizations of those corporations which had issued stock dividends, together with
the amount of such stock dividends, since

INVESTIGATIONS OF 1915-17

165

the decision of the Supreme Court, March 8, 1920, holding that stock dividends were not
taxable. The same information for an equal period prior to that decision was called for. The
report, entitled Stock Dividends, contains a list of 10,245 such corporations and a brief
discussion. The report points out that the declaration of stock dividends a t the rate prevailing
for a few years preceding the date of its publication did not appear to be the result of any
controlling necessity and seemed to be of questionable advantage as a business policy. The
report was transmitted to the Senate on December 5, 1927, and printed as Senate Document
No.26, Seventieth Congress, first session (273 pages).
Sugar.--This inquiry was made pursuant to House Resolution No.150, Sixty-sixth Congress,
first session, adopted October 1, 1919. The extraordinary advance m the price of sugar in 1919
led to the investigation. The price advance was found to have been due chiefly to speculation
and hoarding in sugar. Certain recommendations were made for legislative action to correct
these abuses. The report, entitled Report of the Federal Trade Commission on Sugar Supply and
Prices (205 pages), was transmitted to the House, November 15,-1920, and printed.
Sugar-Beet.--This inquiry was initiated by the Commissioner of Corporations at the direction
of the Secretary of Commerce, but was completed by the Federal Trade Commission. It dealt
with the cost of growing beets and the cost of beet-sugar manufacture. The report, entitled
Report on The Beet Sugar Industry in the United States (164 pages), was published May 24,
1917 (out of print).
Taxation and Tax Exempt Income.--This inquiry was made pursuant to Senate Resolution
No.451, Sixty-seventh Congress, fourth session, adopted February 28, 1923. The resolution was
directed chiefly to a study of national wealth and income. A separate report, entitled Taxation
and Tax Exempt Income, was transmitted to the Senate on June 6, 1924, and printed as Senate
Document No. 148, Sixty-eighth Congress, first session (144 pages, out of print). (See National
Wealth and Income.)
Textiles--Combed Cotton Yarns.--This inquiry was made pursuant to House Resolution
No.451, Sixty-sixth Congress, second session, adopted April 5, 1920 The Commission was
called upon to investigate the high prices of combed cotton yarn. The inquiry disclosed that
there had been an unusual advance in price and that the profits in the industry had been
extraordinarily large for several years, but at the end of 1920 the prices of combed yarns, like
other cotton textile products, showed a sharp decline. The Report of the Federal Trade
Commission on Combed Cotton Yarns (94 pages), was transmitted to the House April 14, 1921,
and printed.
Textile Industry--This inquiry was directed by an Executive order of President Roosevelt
dated September 26, 1934, instructing the Commission to inquire into the industry’s labor costs,
profits, and Investment structure to determine whether increased wages and reduced working
hours could be sustained under prevailing economic conditions. The order also established The
Textile Labor Relations Board and directed the Department of Labor to report on actual hours
of employment In the industry, employees’ earnings, and general working conditions.
Conditions prevailing in the 20 months preceding the 1934 textile strike were first studied.
These were divided into three 6-month periods and a 2-month period-January-June, 1933, before
National Recovery Administration codes became effective; July-December 1933, covering their
effective dates; January-June 1934, while codes were functioning; and July-August 1934, the
60-day period prior to the strike. Due to the desirability of an early report, essential information
was obtained by means of a comprehensive schedule, subscribed to under oath and forwarded
to approximately 2,600 textile manufacturing companies. Material for immediate comparable
results was transmitted by 765 concerns, with an aggregate investment of almost
$1,200,000,000. The following reports were issued (and printed, except where hereinafter
designated as processed):

Report of the Federal Trade Commission on Textile Industries:
Part I. Investment and Profit, December 31, 1934 (26 pages).
Part II. The Cotton Textile Industry, March 6, 1935 (34 pages).
Part III. The Woolen and Worsted Textile Industry, January 1935 (21 pages).
Part IV. The Silk and Rayon Textile Industry, February 1935 (37 pages).
Part V. Thread, Cordage, and Twine Industry, February 18, 1935 (14 pages).
Part VI. Tabulations Showing Financial and Operating Results for Textile Companies
According to Rates of Return on Investment, Rates of Net Profit or Loss on Sales, and Amount
of Investment (Six-Month Periods from January 1, 1933, to June 30, 1914, and for July-August
1934), (24 tables), June 20, 1935. Processed.
Report of the Federal Trade Commission on the Textile Industries in 1933 and 1934:
Part I. The Cotton Industry, August 1, 1935 (34 pages).

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Part II. The Woolen and Worsted Textile Industry, September 25, 1935 (31 pages, processed).
Part III. The Silk and Rayon Textile Industry, November 29, 1935 (45 pages, processed).
Part IV. --Thread, Cordage and Twine Industries, December 5, 1935 (21 pages, processed).
Cotton Weaving Com panics Grouped by Types of Woven Goods Manufactured During 1933
and 1934 (46 tables, processed).
Cotton Spinning Companies Grouped by Types of Yarn Manufactured During 1933 and 1934
(18 tables, processed).
Textile Industries in the First Half of 1935:
Part I. The Cotton Textile Industry, Including Thread, Cordage and Twine, Hay 22, 1936,
(52 pages, processed).
Part II. The Woolen and Worsted Textile Industry, July 20, 1936 (40 pages processed).
Part III. The Silk and Rayon Textile Industry, August 22, 1936 (47 pages, processed).
Textile Industries in the Lost Half of 1935:
Part I. The Cotton Textile Industry, including Thread, Cordage and Twine, November 20,
1936 (66 pages, processed).
Part II. The Woolen and Worsted Textile Industry, December 21, 1936 (42 pages, processed).
Part III. The Silk and Rayon Textile Industry, January 6, 1937 (46 pages, processed).
Textile Industries in the First Half of 1936:
Part I, The Cotton Textile Industry, Including Thread, Cordage and Twine, January 21, 1937
(74 pages, processed).
Part II. The Woolen and Worsted Textile Industry, January 29, 1937 (47 pages, processed).
Part III. The Silk and Rayon Textile Industry, February 11, 1937 (42 pages, processed).
Textiles--Woolen Rag Trade.--This report was published on motion of the Commission, and
contains certain information gathered during the war, at the request of the War Industries Board,
for its use in regulating the prices of woolen rags used for making clothing. The report, entitled
Report on the Woolen Rag Trade (90 pages), was printed as of June 30, 1919.
Tobacco.--This inquiry was made pursuant to Senate Resolution No. 329, Sixty-eighth
Congress, second session, adopted February 9, 1925. The report on the 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, entitled The American Tobacco Co. and the Imperial Tobacco Co.,
was transmitted December 23, 1925, to the President, who sent it to the Senate. It was printed
as Senate Document No.34, Sixty-ninth Congress, first session (129 pages, out of print).
Tobacco Marketing--Leaf.--This inquiry, made on motion of the Commission in 1929, was
instituted upon complaint of representative groups of North Carolina tobacco farmers charging
the existence of territorial and price agreements among larger manufacturers to control cured
leaf tobacco prices. In 1929 the price to growers was approximately 25 percent below cost of
production. The inquiry was broadened to include the entire flue-cured belt, extending from
southern Virginia through north central Florida. The Commission found no evidence of price
agreements. It recommended curtailing production, improved marketing processes, a
standardized system of grading, and greater cooperation between manufacturers and growers.
It also recommended enactment of legislation similar to the Cotton Standardization Act, which
would make mandatory existing classification under the Tobacco Stocks and Standards Act. The
Report on Marketing of Leaf Tobacco in the Flue-Cured District of the States of North Carolina
and Georgia (54 pages, mimeographed), was released May 23, 1931.
Tobacco Prices.--This inquiry was made pursuant to House Resolution No 533, Sixty-sixth
Congress, second session, adopted June 3, 1020. The unfavorable relationship between the

prices of leaf tobacco and the selling prices of tobacco products 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 that proceedings be instituted in the matter of alleged violations of the existing decree.
Better systems of grading tobacco were also recommended by the Commission. The Report of
the Federal Trade Commission on the Tobacco Industry (162 pages), was transmitted to the
House, December 11, 1920, and printed.

INVESTIGATIONS OF 1915-37

167

Tobacco Prices.--This inquiry was made pursuant to Senate Resolution No. 129, Sixtyseventh Congress, first session, adopted August 9, 1921. Among the subjects of investigation
were the low prices of leaf tobacco and the high prices of tobacco products. It was alleged 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 were
instituted by the Commission. The report, entitled Prices of Tobacco Products (109 pages), was
transmitted to the Senate, January 17, 1922, and printed.
Trade and Tariffs in South America.--This inquiry, directed by President Wilson as of July
22 1915, was an outgrowth of the First Pan American Financial Conference which met in
Washington, May 24-29, 1915. The immediate purpose of the inquiry was to furnish the
American branch of the International High Commission, appointed as a result of this financial
conference, with information to assist m the deliberations of that commission. Customs
administration and related matters, including tariff policy, were discussed in the Report on Trade
and Tariffs in Brazil, Uruguay, Argentina, Chile. Bolivia, and Peru (246 pages, out of print),
which was transmitted to the President under date of June 30, 1916.
Utility Corporations.--This inquiry was made pursuant to (1) Senate Resolution No.83,
Seventieth Congress, first session, adopted February 15, 1928, (2) Senate Joint Resolution
No.115, Seventy-third Congress, second session, adopted June 1, 1934, and to (3) section 6 of
the Federal Trade Commission Act. The former resolution directed the Commission to
investigate the growth of the capital assets and liabilities of public utility corporations doing an
interstate business m electrical energy or gas, and of their holding companies and other
companies controlled by such holding companies, the method of issuing securities, the value
received, the commissions paid, and so forth, the extent to which holding companies control
financial, engineering, construction, or management corporations and their corporate
interrelations with such companies and their operating utility companies, the services furnished
and the fees received there-for, the earnings and expenses of all such companies, the value or
detriment to the public of such holding companies, and what remedial legislation should be
adopted ; also the efforts of such companies, directly or indirectly, to influence public opinion
with respect to municipal ownership of electric utilities, or to influence the elections of certain
Federal officers or United States Senators. The second resolution directed the Commission to
conclude the investigation and submit its final report in January 1036.
During the investigation monthly interim reports presented many hundreds of detailed reports
by Commission accountants, attorneys, engineers, economists and statisticians, based on
examination of corporation accounts and other records. These data and the oral testimony of the
experts and other witnesses are included in 84 printed volumes which, with 11 summary, final,
index and appendix volumes, or a total of 95 were published as Senate Document No.92,
Seventieth Congress, first session, under the general title, Utility Corporations. Several of the
earlier published volumes are out of print.
The final and summary volumes, their sub-titles (omitting certain routine designations), dates
of Issue and numbers of pages, are as follows: No. 69-A, Compilation of Proposals and Views
for and Against Federal Incorporation or Licensing of Corporations and Compilation of State
Constitutional, Statutory, and Case Law Concerning Corporations, With Particular Attention
to Public Utility Holding and Operating Companies, September 21, 1934, 618 pages ; No. 71-A,
Efforts by Associations and Agencies of Electric and Gas Utilities to In fluence Public Opinion,
December 12, 1934, 480 pages ; No. 71-B, Index of Association Publicity and Propaganda and
Index of Named in Parts 1 to 20, Inclusive, and Accompanying Exhibit Volumes, 1935, 545
pages ; No. 72-A, Economic, Financial and Corporate Phases of Holding and Operating
Companies of Electric and Gas Utilities, June 17, 1935, 882 pages ; No. 73-A, Holding and

Operating Companies of Electric and Gas Utilities--Survey of State Laws and Regulations,
Present Extent of Federal Regulation and the Need or Federal Legislation, Conclusions and
Recommendations and Legal Studies in Support Thereof, January 18, 1935, 218 pages ; No. 81A, Publicity and Propaganda Activities by Utilities Groups and Companies, With Index,
November 14, 1935, 570 pages ; and (final report) No. 84-A, Economic, Corporate, Operating
and Financial Phases of the Natural-Gas Producing Pipe-Line, and Utility Industries, with
Conclusions and Recommendations, December 31, 1935, 617 pages.
A list of the companies investigated and the volume numbers of the reports concerning them
are printed m the Commission’s annual reports for 1935 and 1936, beginning at pages 21 and
36, respectively. During the Investigation, the Commission’s accountants, engineers, and
economists examined 29 holding companies having total assets of $6,108,128,713 ; 70
subholding companies with total assets of $5,685,463,201, and 278 operating companies with
total assets of $7,245,106,464.

168

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

War-time Cost Finding.--This series of cost inquiries was ordered by President Wilson as
of July 25, 1917. The numerous cost investigations made by the Federal Trade Commission
during the World War into the coal, steel, lumber, petroleum, cotton-textile, locomotive, leather,
canned foods, and copper industries, and scores of other important industries, on the basis of
which prices were fixed by the Food Administration, the War Industries Board, and purchasing
departments such as the Army, Navy, Shipping Board, and Railroad Administration, were all
done under the President’s special direction, and it has been estimated that they helped to save
the country many billions of dollars by checking unjustifiable price advances. Lists of most of
the reports prepared for this purpose (not printed or otherwise published) are given in the annual
reports of the Com mission for the years 1918 and 1919. Subsequent to the war a number of
reports dealing with costs and profits was published based on these war-the inquiries. (See Coal
Reports-Cost of Production, Copper. Food Investigation--Food Canning, Lumber--Costs, and
Steel Industry--Costs and Profits).

INDEX
[Index does not include names or items In alphabetical lists, tables or appendixes. For names
of respondents in orders to cease and desist, m pages 52-58; of export trade associations, see
pages 110-111; of foreign countries and various acts and references listed under “Trust Laws
and Unfair Competition in Foreign Countries”, see pages 112-120; for appropriation items, see
pages 123-126; and for “Investigations of the Commission, 1915-1937” and various references
thereunder, see pages 147-168]
Advertising, false and misleading:
Page
Complaints alleging
46, 47
Special procedure in certain types of
4, 6, 40, 41, 43,101
Agricultural Adjustment Administration
23
Agriculture, Department of
23
Agricultural Income Investigation
9, 12, 14, 15, 19, 23, 29, 69, 76
Alaska Packers’ Association, San Francisco
61
Allis-Chalmers Manufacturing co
59
American Army & Navy Stores, Washington, D.C.
69
American Fruit Growers, Inc
25
American Stores co., Philadelphia
64
Appropriations of the commission
4, 123, 126
Armand co., Des Moines, Iowa
69, 70
Army & Navy Trading co., Washington, D.C.
69
Association of American Railroads
26
Atlantic Commission Co
25
Attorney General
3, 9, 10, 12, 33, 109
Automobile parts and accessories, cases involving
45, 51, 52
Ayres, William A., Chairman, Federal Trade Commission
10, 11
Basing point system
4, 5, 50
Bernheim Distilling Co., Louisville, Ky
42
Binderup v. Pathe Exchange
71
Bird Floor Covering Sales Corporation, East Walpole, Mass
49
Bird & Son, Inc., East Walpole, Mass
49
Blake, Moffitt& Towne
77
Blueprint and tracing paper manufacturers
44
Bonita Co., Fond du Lac, Wis
69, 72
Borden Co
28
Bousfield Wooden Ware Co., Minneapolis
59
Bureau of Standards
12, 105
B utter Tub Manufacturers’ Council
60
Butterick Publishing Co
69, 70
Cabinet committee on textiles
32
California Alkali Export Association, Los Angeles
110
California Fruit Growers’ Exchange
24
California Packing Corporation, San Francisco
61
Cast Iron Soil Pipe Producers
45, 50
Chalk and crayon manufacturers
44
Champion Spark Plug Co., Toledo, Ohio
77
Chicago Silk Co., Chicago
69, 73
Clayton Act:
Cases arising under section 7
41, 42, 44, 52
Complaints under section 3
51, 52
Proposed Amendment to section 7
15, 22, 28, 29
References to
3, 5, 6, 8, 37, 39, 45, 65
Text of
134

169

170

INDEX

Page
Colonial Steel Co
42
Complaints:
Number issued
5, 6, 43, 44, 82
Procedure under
38, 39
Under F. T. C. Act
44-47
Under Clayton and Robinson-Patman Acts
48-52
Conde Nast Publications, Inc., New York
60
Congress
3, 9, 13, 15, 28, 29
(See also House Concurrent Resolution, House Document, House of Representatives,
Public, Public Resolution, Senate, and Senate Document.)
Consolidations and mergers
41
Court proceedings:
Cases in the Federal Courts
5, 68
Tabular Summary
84
Creamery Package Manufacturing Co., Chicago
59
Dairymen’s League Cooperative Association, Inc., New York
27
Danahy-Faxon Stores, Inc., Buffalo
64
Davis, Ewin L., Commissioner
11
Disparagement of competitors or their products
47, 61
Duncombe, Tyrell H., Highland Park, Mich
62
Eisner Grocery Co., Champaign, Ill
64
Electro-Thermal Co., Steubenville, Ohio
74
Elgin Butter Tub Co., Elgin, Ill
59
Elliott Co
59
Encinal Terminals, Alameda, Calif
61
Evans Fur Co., Chicago
69, 74
Executive order:
Of September 26,1934
31
Export Trade Act:
Administration of by the Commission
109-112
Associations formed under
110-111
References to
3, 5, 6, 37, 39, 109-112
Text of
139
Trust laws and unfair competition abroad
112-120
Farm Credit Act of 1933
23
Farm implements and machinery investigation
10, 29
Federal Anti-Racketeering Act
25, 26
Federal Communications Commission
37
Federal Reserve Board
37
Federal Trade Commission:
Accounts and personnel
12
Administrative Division
11, 12, 125
Advertising cases, special procedure in
4, 6, 11, 40, 41, 43, 101, 125
Appropriations
4, 123, 126
Assistant to the Chairman
12
Assistant Secretary
12
Branch offices
41
Chief Counsel’s division
11, 38, 125
Chief Examiner’s division
11, 12, 37, 38, 40, 41, 125
Chief Trial Examiner’s division
11, 12, 39, 125
Commissioners
10, 11, 125
Disbursing office
12
Docket section
12

INDEX

171

Federal Trade Commission-Continued.
Page
Economic work
4, 12, 125
Fiscal affairs
123-126
Foreign trade work
4, 12, 109-120
Functions of
3
General investigations of
9
Hospital
12
Legal work
3, 4, 13, 37-89, 125
Library
12
Mails and files
12
New building
14, 15
Publications
12, 13
Public relation. and editorial service
12
Recommendations of
15, 21, 26, 28, 29
Rules of practice
142
Secretary
11
Stenographic section
12
Stipulation procedure
4, 38, 41, 42
Supplies section
12
Trade practice conference division
9, 11, 38, 93, 125
Federal Trade Commission Act:
Amendment to section 5 proposed
15
References to
3, 9, 10,
12, 14, 29, 33, 37, 39, 43, 44, 45, 46, 49, 52, 76,78, 101, 109, 112, 123
Text of
128
Ferguson, Garland S., Vice Chairman, Federal Trade Commission
11
First Deficiency Appropriation Act, 1936
123, 124
First National Stores, Inc., Somerville, Mass
64
Fisher Grocery Co., Springfield, Ill
64
Florida Citrus Exchange
24
Food Display Machine Corporation, Chicago
64
Food and Drug Administration
12, 165
Foreign trade work. (See Export Trade Act.)
Foster-Wheeler Corporation
59
Freer, Robert E., Commissioner
11
Fresh fruits and vegetables investigation
10, 12, 13, 23
General Electric Co
45, 58
Golf ball manufacturers
46, 49
Goodyear Tire & Rubber Co., Akron, Ohio
74
Great Atlantic & Pacific Tea Co
24
Hofeller Candy Co., Chicago
69, 72
Holloway & Co., M. J., Chicago
69, 72
Hollywood Hat Co., Inc., New York
48
House Concurrent Resolution No.32, 73d Congress, 2d session
26
House Document:
No. 94; 75th Congress, 1st session
13
No.95, 75th Congress, 1st session
13
No.380, 74th Congress, 2d session
19
House of Representatives, Interstate and Foreign Commerce Committee
15
Hull, Cordell, Secretary of State
32
Independent Offices Appropriation Act, 1936
124
Independent Offices Appropriation Act, 1937
123, 124
Ingersoll-Rand Co
59
International Association of Ice Cream Manufacturers
75

172

INDEX

International Circulation Co., Inc., New York
Interstate Commerce Act
Interstate Commerce Commission
Investigations by the Commission, 1915-37
Johnson Candy Co., Walter H., v. F. T. C
Justice, Department of
Kelley, James, New York
Kent Fur Co., Chicago
Keppel & Brother, F. T. C., v
Kraft-Phoenix Cheese Corporation, Chicago
Kroger Grocery & Baking Co., Cincinnati
Labor Advisory Board
Lake Wales Citrus Growers’ Association
Land O’Lakes Creameries, Inc., Minneapolis
LaSalle Extension University, Chicago
Leader Novelty Candy Co., Brooklyn
Legal work of the Commission
I,,oft, Inc., Long Island City, N.Y.
Lotteries or gift enterprises
MacFadden Publications, Inc., New York
March, Charles H., Commissioner
Marconi Radio Corporation, New York
Martoeclo Co., F. A. (Hollywood Candy Co.), Minneapolis
McLean & Son, A., Chicago
Meisel Trading Post, Inc., Albuquerque, N. Mex
Menasha Wooden Ware Corporation
Metal Window Products Manufacturers
Midwest Distributors, Inc
Midwest Mills, Inc
Milk and dairy products investigation
Millinery Quality Guild, Inc., New York
Miller-Tydings Act
Montgomery Ward & Co., Chicago
Munsey Co., Frank A., New York
Mutual Orange Distributors
Nash-Finch Co
National Association of Counter Freezer Manufacturers, Chicago
National Biscuit Co., New York
National Dairy Products Corporation
National Electrical Manufacturers’ Association
National Silver Co., New York
National Tea Co., Chicago
Navy Department
Orders to cease and desist:
Number issued
Representative cases
Pacific Fresh Fruit Export Association, San Francisco
Pacific States Paper Trade Association, San Francisco
Fender Grocery Co., David, Norfolk, Va
Perishable Agricultural Commodities Act
Perkins, Frances, Secretary of Labor
Petroleum Decree Investigation
Pictorial Review, New York

Page
71
7, 26
26, 37
168
72
7, 13, 26, 41
69, 75
69, 74
72, 73
48
64
33
24
60
63
73
3, 4,13, 37-89
61
47, 63, 72
71
11
61
69, 73
69, 72
75
59
44
71
69
10, 12, 13, 26
60
141
49
71
24
25
75
5, 69, 75
28
59
62, 69, 76
64
70
5, 39, 40, 41, 52, 84
52-65
110
89, 76
64
26
32
10, 12, 33
71

INDEX

173

Page
Post Office Department
104
President of the United States:
Lays cornerstone of new Commission building
14
References to
3, 9, 10, 29, 32
Price discrimination. (See Robinson-Patman Act.)
Prices, combinations to fix and maintain
44, 58-61
Procon Grocery Service Co., Inc., New York
64
Public:
No.260, 74th Congress
123
No.479, 74th Congress
123
Publications of the Commission
12, 13, 147-166
Public Resolution:
No.61, 74th Congress 1st session
19, 23
No. 86, 74th Congress, 2d session
19
No.112, 74th Congress, 2d session
23
No.130, 74th Congress, 2d session
29
No.28, 75th Congress, 1st session
124
Queen Anne Candy Co., Hammond, Ind
69, 72
Queen Anne Candy Co., Seattle, Wash
63
Radio advertising
102
Radio brands, imitation of
61
Raladam case
77
Raymond Brothers-Clark Co., F. T. C. v
71
Real Products Corporation, Brooklyn
69, 77
Recommendations of the Commission
15, 21, 26, 28, 29
Resale prices
14, 46
Revised statutes (U.S. C., title 41, sec. 5)
123
Rice Millers’ Association
44
Rivet manufacturers
45
Robinson-Patman Act:
Administration of
6, 14
Alleged price discriminations In violation of
48-50
Brokerage section, alleged violation of
50-51
Closing of case involving
64
References to
3, 5, 25, 31, 39, 43, 44, 45, 65
Text of
137
Roper, Daniel C., Secretary of Commerce
32
Ross Heater & Manufacturing Co
59
Safeway Stores, Inc., Oakland, Calif
64
Schenley Distillers Corporation, New York City
42
Scrap Export Associates of America, New York
110
Sears, Roebuck & Co., Chicago
74
Second Deficiency Appropriation Act, 1935
123, 124
Secretary of Agriculture
26
Senate 1077
15
Senate Document:
No.17, 75th Congress, 1st session
13, 23
No.33, 75th Congress, 1st session
14
No.54, 75th Congress, 1st session
14, 15
No.58, 75th Congress, 1st session
14
Sheffield Producers’ Cooperative Association, New York
27
Sherman Act
33, 140
Sifers Confection Co., Kansas City, Mo
73

174

INDEX

Page
S. M. News Co., Inc., New York
71
Southern Grocery Stores, Inc., Atlanta
64
Standard Education Society
69, 78
Standard Encyclopedia Corporation
78
Standard Oil Co. of California, Inc
33
Steiden Stores, Inc., Louisville, Ky
64
Sterling Products, Inc., New York City
42
Stipulations:
Number issued
43, 80
References to
4, 38, 42
Storey City Butter Tub Co., Storey City, Iowa
59
Street & Smith Publications, Inc., New York
71
Supreme Court, District of Columbia
76
Supreme Court of the United States
5, 13, 22, 40, 68, 69, 72, 73, 77, 78
Textile industries investigation
10, 12, 14, 31
Trade practice conferences
8, 93
Tri-way Produce Co
25
Turbine generator & condenser manufacturers
45
Tydings-Miller Act
141
Unfair methods of competition:
In foreign countries
112-120
Types of
66
United States Circuit Courts of Appeals:
References to
5, 40, 68
Second circuit, New York
70, 71, 73, 75, 76, 77, 78
Sixth circuit, Cincinnati
74
Seventh circuit, Chicago
72, 73, 74
Eighth circuit, St. Louis
78
Ninth circuit, San Francisco
74, 77
Tenth circuit, Denver
75
United States Court of Appeals, District of Columbia
69, 75
United States District Courts:
References to
5, 68
Southern District of New York
75
United States Public Health Service
12, 28, 106
United States Supreme Court
5, 13, 22, 40, 68, 69, 72, 73, 77, 78
Vanadium-Alloys Steel Co., Latrobe, Pa
42
Vogue magazine
60
Wallace, Henry A., Secretary of Agriculture
32
War Department
70
Water Gate Valve and Hydrant Manufacturers
45, 68
Watkins Co. R. L., Inc
42
Webb-Pomerene Act. (See Export Trade Act.)
Wesco Foods Co
25
Westinghouse Electric & Manufacturing Co
58, 59
Wheeler Manufacturing Co., C. H
59
Window-glass manufacturers
46, 49
Wisconsin Butter Tub Co., Marshfield, Wis
59
Worthington Pump & Machinery Corporation
59
Zellerbach Paper Co
77
Ziegler Co., Geo., Milwaukee
69