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ANNUAL REPORT
OF THE

FEDERAL

TRADE COMMISSION
FOR THE
FISCAL YEAR ENDED JUNE 30

1941

UNITED STATES
GOVERNMENT PRINTING OFFICE
WASHINGTON: 1941

For sale by the Superintendent of Documents, Washington, D. C. . . . . Price 25 cents (paper)

FEDERAL TRADE COMMISSION
CHARLES H. MARCH, Chairman 1
GARLAND S. FERGUSON
EWIN L. DAVIS
WILLIAM A. AYRES
ROBERT E. FREER
OTIS B. JOHNSON, Secretary
FEDERAL TRADE COMMISSIONERS--1915-41
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

Period of service

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

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
433 West Van Buren Street,

55 New Montgomery Street,
San Francisco

Chicago
1

801 Federal Building, Seattle
321 Federal Office Building, New Orleans

Chairmanship rotates annually. Commissioner Ayres will become Chairman in January 1943.

II

LETTER OF SUBMITTAL
To the Congress of the United States:
I have the honor to submit herewith the Twenty-Seventh Annual Report of the
Federal Trade Commission for the fiscal year ended June 30, 1941.
By direction of the Commission:
CHARLES H. MARCH, Chairman.
III.

CONTENTS
INTRODUCTION
Page
Duties of the Commission
General legal activities
Trade practice conference procedure
Wool Products Labeling Act
General investigations
National defense activities
Work for congressional committees
Temporary National Economic Committee
The Commissioners and their duties
How the Commission’s work is handled
Publications of the Commission
Recommendations

3
4
7
7
8
10
11
11
12
13
15
19

PART I. GENERAL INVESTIGATIONS
Corporation reports
Distribution cost accounting
Distribution methods and costs
Resale price maintenance
Furniture prices, costs and profits
Mass food distributors

23
25
26
27
27
27

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

31
Facing p. 31
35
41
43
49
82
89
106

PART III. TRADE PRACTICE CONFERENCES
Purposes of Trade Practice Conference procedure
Trade Practice Conference activities during the year
Industry rules in effect and their administration
Types of practices covered in approved rules
Group I and Group II rules defined

117
118
119
120
122

PART IV. WOOL PRODUCTS LABELING ACT
Commission begins administration of new law designed to protect the
consuming public

125

V

VI

CONTENTS
PART V. RADIO AND PERIODICAL ADVERTISING
Page

Special procedure provides continuous survey of published and broadcast
matter

131

PART VI. MEDICAL ADVISORY SERVICE
Furnishes opinions in cases concerning advertisement of food, drugs,
devices, and cosmetics

141

PART VII. FOREIGN TRADE WORK
The Export Trade Act
Exports in 1940 total $307,354,000
45 associations operate under the act
Trust laws and unfair competition abroad

145
146
146
147

PART VIII. FISCAL AFFAIRS
Appropriation act providing funds for Commission work
Appropriations and expenditures for fiscal year
Appropriations and expenditures, 1915-1941

161
161
163

APPENDIXES
Federal Trade Commission Act
Clayton Act
Robinson-Patman Act
Export Trade Act
Wool Products Labeling Act of 1939
Sherman Act
Millard Tydings Act
Rules of practice
Statement of policy
Investigations, 1915-1941
Index

167
175
180
181
182
187
188
188
198
199
223

INTRODUCTION
DUTIES OF THE COMMISSION
GENERAL LEGAL ACTIVITIES
TRADE PRACTICE CONFERENCE PROCEDURE
WOOL PRODUCTS LABELING ACT
GENERAL INVESTIGATIONS
NATIONAL DEFENSE ACTIVITIES
WORK FOR CONGRESSIONAL COMMITTEES
TEMPORARY NATIONAL ECONOMIC COMMITTEE
THE COMMISSIONERS AND THEIR DUTIES
HOW THE COMMISSION’S WORK IS HANDLED
PUBLICATIONS OF THE COMMISSION
RECOMMENDATIONS
1

ANNUAL REPORT
OF THE

FEDERAL TRADE COMMISSION
FOR THE

FISCAL YEAR ENDED JUNE 30, 1941
INTRODUCTION
DUTIES OF THE COMMISSION
The Federal Trade Commission herewith submits its report for the fiscal year July
1, 1940, to June 30, 1941, Organized March 16, 1915, under the Federal Trade
Commission Act, approved September 26, 1914, which was amended March 21, 1938,
the Commission is an administrative agency of the Federal Government.
In performing its functions, the Commission’s duties fall into two categories: (1)
Legal activities in enforcement of the laws it administers, and (2) general
investigations of economic conditions in domestic industry and interstate and foreign
commerce.
Legal activities1 have to do with (1) prevention and correction of unfair methods of
competition and unfair or deceptive acts or practices, in accordance with the Federal
Trade Commission Act, in which it is declared that unfair methods of competition and
unfair or deceptive acts or practices in commerce are unlawful; (2) administration of
section 2 of the Clayton Act, as amended by the Robinson-Patman Act, dealing with
price and other discriminations, and sections 3, 7, and 8 of the Clayton Act dealing
with tying and exclusive dealing contracts, acquisitions of capital stock, and
interlocking directorates, respectively, and (3) administration of the Webb-Pomerene
or Export Trade Act, for the promotion of foreign trade by permitting the organization
of associations to engage exclusively in export trade and granting such associations
exemption from the Sherman Antitrust Act under certain well-defined restrictions,
including the
1 Concerning special and limited fields excepted from the Commission’s jurisdiction, see second
paragraph of sec. 5 of the Federal Trade Commission Act, p. 168, and sec. 11 of the Clayton Act, p.178.

3

4

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

provision that such associations are not to be in restraint of trade within the United
States. A new statute, The Wool Products Labeling Act, effective July 14, 1941, is also
administered by the Commission.
The Commission’s general investigations arise chiefly under section 6 (a), (b), and
(d) of the Federal Trade Commission Act, giving the Commission power:
(a) To gather and compile information concerning, and to investigate from time to time the
organization, business, conduct, practices, and management of any corporation engaged in
commerce, excepting banks and common carriers * * *, and Its relation to other corporations
and to individuals, associations, and partnerships.
(b) To require, by general or special orders, corporations engaged in commerce, excepting
banks, and common carriers * * * to file with the com-mission in such form as the commission
may prescribe annual or special, or both annual and special, reports or answers in writing to
specific questions, furnishing to the commission such information as it may require as to the
organization, business, conduct, practices, management, and relation to other corporations,
partnerships, and individuals of the respective corporations filing such reports or answers in
writing. * * *
*
*
*
*
*
*
*
(d) Upon the direction of the President or either House of Congress2 to investigate and report
the facts relating to any alleged violations of the antitrust Acts by any corporation.

GENERAL LEGAL ACTIVITIES
Upon authority of the acts Which it administers, the Commission, during the fiscal
year ended June 30, 1941, continued to direct its efforts to the prevention and
elimination of unlawful practices prohibited by those statutes.
Cases before the Commission.--The Commission, after preliminary investigation,
during the fiscal year disposed of approximately 1,850 matters which were in a
preliminary stage, either by docketing as applications for complaints, by progression
to the status of formal complaint, by acceptance from the respondents of stipulations
to cease and desist from the practices involved, by consolidation with other
proceedings, or by closing the matters.
During the year, the commission accepted a total of 532 stipulations to cease and
desist various practices, executed by parties against whom informal proceedings had
been instituted. Of these, 234 pertained especially to misleading radio and periodical
advertising matter.
2

An investigation under section 6 (d), when requested by Congress, is now undertaken by the
Commission as a result of a concurrent resolution of both Houses, in conformity with the Independent
Offices Appropriation Act approved June 16,1933.

GENERAL LEGAL ACTIVITIES

5

The Commission issued 357 complaints against companies, associations, or
individuals, alleging various forms of unfair competition or unfair, deceptive, or other
unlawful acts or practices, as compared with 331 complaints docketed during the last
preceding fiscal year. These included 11 cases of alleged combination to fix and
maintain prices, 6 cases of alleged combination and conspiracy in restraint of trade,
219 complaints charging misleading representation in advertisements, labels and
otherwise, and 57 complaints alleging violation of the Clayton Act. The Commission
entered 348 orders to cease and desist from the use of unfair competition and other law
violations which had been alleged in complaints and which were found to have been
engaged in by the respondents, as compared with 282 such orders issued during the
last preceding fiscal year.
Cases before the Federal courts.--In those Commission cases which were pending
during the year in the Federal courts, results favorable to the Commission were
obtained in 40 cases, while adverse decisions were rendered in only 2 matters. Two of
the 40 proceedings resulting favorably to the Commission were before the Supreme
Court of the United States, 26 were before the United States circuit courts of appeals
(in 3 of which cases the Commission’s orders were modified and affirmed as
modified), and 12 were before United States district courts. The cases in the Supreme
Court and the circuit courts of appeals pertained to the review of Commission orders
to cease and desist while those in the district courts were injunctive proceedings. (See
below.) Petitions by respondents for review of Commission orders in 7 cases were
dismissed by the circuit courts of appeals. As to the two matters adversely decided, a
Commission order was set aside in one case in a circuit court of appeals, and the
Supreme Court in another case affirmed a decision of a circuit court of appeals
reversing a Commission order.
Among the court cases were proceedings in which the circuit courts affirmed
Commission orders prohibiting misleading advertisement of so-called 6 percent
installment plans for the purchase of automobiles; unlawful cooperation by six
California lumber associations to control lumber distribution; unauthorized use of a
well known trade name by a chain organization selling radio sets; agreements in
restraint of trade in the sale of candy bars to the vending machine trade by two of the
largest chocolate candy bar manufacturers and the three largest vending machine
operators, and price-fixing agreements among a group of southern manufacturers of
fruit and vegetable containers, The circuit courts also sustained the Commission in its
fifth proceeding to prevent the payment or receipt of brokerage fees or allowances in
violation of the Robinson-

6

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Patman Act and fined another respondent $500 for violation of a court decree
enforcing a Commission order based on the brokerage provision of that act. In two
proceedings concerning so-called “style piracy” in women’s apparel the Commission’s
orders were affirmed by the Supreme Court. In a case against a Chicago candy
company the Supreme Court, by a 5-to-3 decision, set aside the Commission’s order
prohibiting the intrastate sale of lottery assortments of candy which injuriously affect
interstate commerce.
Injunctive proceedings.--The injunction cases in the United States district courts, as
above mentioned, were instituted to stop the false advertisement of certain products
alleged to be detrimental to public welfare, pending issuance of the Commission’s
complaints and its final disposition thereof. Under the Federal Trade Commission Act,
the Commission concluded 12 suits for injunctive relief from false advertising. All of
the injunctions sought were granted. The products involved in these cases were either
medicinal preparations or devices alleged to be dangerous to public health. (For
details, see p.102.)
Civil penalties.--Under the authority of the Federal Trade Commission Act, the
Commission certified the facts concerning 9 alleged violations of cease and desist
orders to the Attorney General. The Government had collected, or was collecting, at
the close of the fiscal year, $12,290 in civil penalties from 10 defendants whose cases
had been determined during the fiscal year. (For details, see p. 105.)
Foreign trade work.--Forty-five export trade associations were organized and
operating under the Export Trade (Webb-Pomerene) Act and had their papers on file
with the Commission at the close of the fiscal year. Exports by Webb law groups in
1940 totaled more than $307,350,000 which was about $70,000,000 more than in
1939, the increase having been due largely to a greater shipment of metal products.
The associations report that experience during the last year emphasized the advantages
to be gained by group action in export trade. As a central organization, the Webb law
association was enabled to keep abreast of the situation resulting from swiftly moving
events in Europe, and to carry on the increasingly complicated business of accepting
orders, allocating them among its members, and giving valuable assistance in the effort
to ship goods abroad.
Radio and periodical advertising.--The Commission examined about 377,800
newspaper, magazine, and other periodical advertisements and more than 871,900
commercial radio broadcast continuities, of which more than 25,000 advertisements
and over 24,500 continuities were marked for further study as containing
representations that might be false Or misleading. Questionnaires concerning pos-

WOOL PRODUCTS LABELING ACT

7

sibly misleading representations in advertising were sent to advertisers in 374 cases
and to advertising agencies in 19 cases. The Commission accepted from advertisers
and other 234 stipulations to cease certain representations in radio and periodical
advertising matter.
Medical advisory service.--The Commission maintains a Medical Advisory Service
consisting of a medical director and two medical assistants, who perform advisory
services in matters pertaining to the validity of claims made in cases embracing the
advertisement of food, drugs, devices, and cosmetics instituted under the Federal
Trade Commission Act.
TRADE PRACTICE CONFERENCE PROCEDURE
The trade practice conference work of the Commission is concerned with the holding
of industry conferences and the establishment and observance of fair trade practice
rules. Under such procedure various practices in an industry which are deemed to be
harmful or unfair are examined into and rules provided for their elimination, to the end
that the business of such industry may be conducted under free and fair competitive
conditions and that the public, as well as the industry, may be protected from such
harmful and unfair acts. By means of this procedure members of an industry are
afforded opportunity and a practical method for joint action in cooperation with the
Commission in a definite, supervised program to eliminate unfair and unlawful
methods of competition and other trade abuses, and to receive official guidance and
help in self-correction and voluntary endeavor to maintain competitive practices in
their industry on a high plane of ethics and fairness.
Industry trade practice rules promulgated during the fiscal year, together with those
remaining in effect from prior years, form in the aggregate a codified body of trade
practice provisions and business ethics constituting a valuable guide to industry and
an effective influence in maintaining the conduct of business on principles of fair
competition.
WOOL PRODUCTS LABELING ACT
The Federal Trade Commission is the administrative and enforcement agency of the
Wool Products Labeling Act, an informative labeling statute which became effective
July 14, 1941. As stated in its title, this act is designed “to protect producers,
manufacturers, distributors, and consumers from the unrevealed presence of substitutes
and mixtures in spun, woven, knitted, felted, or otherwise manufactured wool
products, and for other purposes.” The Commission is authorized thereunder to issue
rules and regulations for the admin-

8

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

istration and enforcement of the act. Such regulations have been promulgated thereby
affording those subject to the requirements of the act full information as to the manner
and form of compliance.
A primary objective of the act is the protection of the consumer and the safeguarding
of fair practices in merchandising against the evils which flow from concealment of
material content. The act undertakes to bring to the public, to business, and to all
concerned, a substantial measure of the benefits of informative labeling.
The act and rules and regulations thereunder require that a wool product, unless
exempt under the provisions of the act, shall be labeled clearly to show by percentages
its fiber content, exclusive of ornamentation not exceeding 5 percent, when introduced,
manufactured for introduction, or sold, transported, or distributed in commerce, as the
term “commerce” is defined therein. If nonfibrous loading, filling, or adulterating
matter is contained in the product, the percentage of such must also be disclosed.
A wool product is defined as any product, or any portion of a product, which
contains, purports to contain, or in any way is represented as containing “wool,”
“reprocessed wool,” or “reused wool.” The percentage of “wool,” “reprocessed wool,”
and “reused wool” must be specified and the percentage of each other fiber
constituting 5 percent or more of the total fiber weight of the wool product must also
be specifically stated. The aggregate of fibers present in a proportion of less than 5
percent is also to be stated.
In addition to the required content information, the label must show the name of the
manufacturer of the wool product, or the name of the wholesaler, jobber, or other
person subject to section 3 of the act with respect to such product, or the name of a
dealer or reseller of the product together with the manufacturer’s registered
identification number as provided in Rule 4.
Violations, constituting “misbranding” under the act, are subject to correction by
cease and desist order of the Commission, entered after hearing in required legal
proceeding. Misdemeanor proceedings in respect of willful violations are provided for;
also injunctive and libel actions in court where necessary to protect the public.
Manufacturers of wool products are required to maintain proper records showing the
content as required by the act of all wool products made by them.
GENERAL INVESTIGATIONS
Commission general investigations initiated or in progress during the fiscal year
related to (1) corporation reports, (2) distribution cost accounting, (3) distribution
methods and costs, (4) resale price maintenance, (5) furniture prices, costs and profits,
and (6) mass food distributors.

GENERAL INVESTIGATION

9

Corporation reports.--A Commission order entered in May 1940 required
approximately 900 corporations to file financial reports covering their 1939 operations
and statements of their financial position as at the close of their 1938 and 1939
business years. During the fiscal year, reports on 76 industry groups were prepared
covering the combined operations of 780 corporations having total sales aggregating
$24,932,624,668, which amount represented almost 64 percent of the total value of
products as reported by the United States Bureau of the Census.
Distribution cost accounting.--The Commission investigated the functions of
distribution cost accounting and submitted to Congress a report entitled Case Studies
in Distribution Cost Accounting for Manufacturing and Wholesaling, which has been
printed as House Document No.287, Seventy-seventh Congress, first session.
Distribution methods and costs.--This inquiry was undertaken to develop
information respecting the methods and practices used and the costs incurred in
distribution by manufacturers, wholesalers and retailers of numerous types of
commodities, with special attention to trade usages, practices, charges, laws and
barriers to trade that affect distribution costs. The study was in progress at the close
of the fiscal year.
Resale price maintenance.--This inquiry developed facts concerning the effects of
resale price maintenance on the interests of manufacturers, Wholesalers, retailers, and
consumers of price maintained and competing non-price-maintained articles. A report
on the investigation was in course of preparation at the close of the fiscal year.
Furniture prices, costs and profits.--Shortly prior to the close of the fiscal year, the
Commission, at the request of the Administrator of the Office of Price Administration,
directed an immediate investigation of recently increased furniture prices, in the
interest of the national defense program.
Mass food distributors --An inquiry in progress at the close of the fiscal year had as
its purpose a comparison of (1) the savings in costs of selling and delivering certain
foods in large quantities, particularly when delivered to the buyer’s warehouse, and (2)
the concessions in price made to the buyer on such sales.
COMMISSION INVESTIGATIONS, 1915-41
Approximately 115 general inquiries or studies have been conducted during the
Commission’s existence. Most of them have been made pursuant to Congressional
resolutions, although many have been conducted pursuant to Presidential orders, a
number at the request of other branches of the Government, and others on the
Commission’s initiative. Many of these inquiries have supplied valuable information
bearing on competitive conditions and trends in

10

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

interstate trade and industrial development and have shown the need for, and wisdom
of, legislation or other corrective action.
NATIONAL DEFENSE ACTIVITIES
During the first World War the Federal Trade Commission was the cost and fact
finding agency of the Government. Approximately 370 investigations of wartime costs,
prices, and profits were made, covering such basic commodities as coal, steel and iron,
building materials, cotton textiles and others. (See p.221.)
During the present defense emergency, the Commission is being called upon to
perform the same relative duties as in 1917-18. Prior to the close of the fiscal year the
Commission was called on for accounting assistance for the Office of Production
Management, and an accounting inquiry of the house furniture industry was begun for
the Office of Price Administration.
Subsequent to the close of the fiscal year additional duties of the Commission in
connection with the national defense program included an investigation of price
increases in the bread and bakery industries ; the collection and auditing of quarterly
and annual reports for a large number of corporations for the Office of Price Administration and other agencies; and an investigation in connection with priorities orders
in the steel industry as requested by the Office of Production Management.
The Chairman of the Federal Trade Commission is a member of the Price
Administration Committee of the Office of Price Administration, and is the
Commission’s representative in its continuing relationships with the Economic
Defense Board, established by the President, July 30, 1941, under the chairmanship
of Vice President Wallace for “developing and coordinating policies, plans, and programs designed to protect and strengthen the international economic relations of the
United States in the interest of national defense.” The Commission placed its staff of
accountants, economists, and statisticians at the disposal of the Economic Defense
Board to make studies and investigations required by the Board.
In response to a request received in September 1941 from the Bureau of Industrial
Conservation of the Office of Production Management, the Chairman of the
Commission is serving as a member of that agency which is carrying on an intensive
“War Against Waste”. The Chairman of the Commission is also a member of a
committee for the development and utilization of the country’s present and future
petroleum resources and facilities of which committee the Petroleum Coordinator for
National Defense is Chairman.
Late in the fiscal year, members of the Commission’s staff were serving on the
following committees of the Advisory Commission

TEMPORARY NATIONAL ECONOMIC COMMITTEE

11

to the Council of National Defense: Inter-Departmental Conference Committee on
National Food Resources; Sub-Committee of Inter-Departmental Conference
Committee on Planning and Procedure; Fruit and Vegetables Committee ; Tobacco
Committee; and Food Distribution Committee.
WORK FOR CONGRESSIONAL COMMITTEES
The various committees of the House and Senate frequently refer bills to the
Commission for comment and legal opinion. The Commission prepares such comment
and opinion and endeavors to furnish the Congress as informative and accurate reports
as possible. At the close of the fiscal year, three of the Commission’s accountants were
temporarily assisting the House Naval Affairs Committee.
TEMPORARY NATIONAL ECONOMIC COMMITTEE
The program of the Temporary National Economic Committee continued into the
fiscal year 1940-41, the work of the staff during the early months having been devoted
to preparation for later hearings. In accordance with Committee policies, 43 research
studies Were prepared under the auspices of the various cooperating departments and
agencies and submitted to a reading committee appointed by the Committee Chairman.
The Federal Trade Commission has contributed four of these monographs:
No. 13--Relative Efficiency of Large, Medium- sized, and Small Business.
No. 34--Control of Unfair Competitive Practices through Trade Practice
Conference Procedure of the Federal Trade Commission.
No. 36--Reports of the Federal Trade Commission. No. 42--The Basing Point
Problem.
In concluding the work of the Temporary National Economic Committee, public
sessions for the consideration of recommendations were held during the period January
15, 1941, to March 11, 1941. On February 15, 1941, the Commission presented
recommendations bearing on sections 7 and 11 of the Clayton Act whereby
corporations about to bring under single control more than a given percentage of the
national output of any commodity, formerly produced by more than one enterprise,
would be required to register, at least 30 days in advance, with the Federal Trade
Commission, a copy of their plans to establish such control, and to make available to
the Department of Justice and the Commission any information rela423272--42----2

12

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

tive to such plans. The Chief Counsel and Chief Examiner of the Commission
explained the functions of the Commission dealing with unlawful restraints of trade.
At this meeting the Assistant Attorney General recommended that, at the request of the
Attorney General, the Federal Trade Commission or any member, as an aid to the
court, be authorized to hear evidence and make findings of fact and conclusions of law
in any pending antitrust proceeding.
On March 1, 1941, the Commission presented before the Temporary National
Economic Committee the drafts of four bills: (1) amending section 7 of the Clayton
Act so as to make acquisition of assets unlawful, as well as stock; (2) providing for the
registration of corporations contemplating mergers; (3) relating to trade-barrier
legislation which interferes with the flow of commerce between States; and (4) relating
to appointment of the Commission by a court as master in chancery in proceedings
brought under the antitrust laws by the Attorney General.
The Economic Adviser to the Commission, who was director of the Temporary
National Economic Committee studies undertaken by the Commission, presented an
analysis and appraisal of the present-day economy, stressing the need for the
continuance of the doctrine of free and fair competition and closer regulation of
monopolistic practices.
On March 31, 1941, the Temporary National Economic Committee concluded its
assignment, after 2 years and 9 months of service.
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.”
Upon the expiration of his term of office, a Commissioner continues to serve until his
successor has been appointed and has qualified.
As of June 30, 1941, the Commission was composed of the following members:
Charles H. March, Republican, of Minnesota, Chairman; Garland S. Ferguson,
Democrat, of North Carolina; Ewin L. Davis, Democrat, of Tennessee; William A.
Ayres, Democrat, of

HOW THE COMMISSION’S WORK IS HANDLED

13

Kansas, and Robert E. Freer, Republican, of Ohio. Commissioner Ayres will become
Chairman in January 1942.
Each December the Commission designates one of its members to serve as Chairman
during the ensuing calendar year. Commissioner March was chosen Chairman for the
calendar year 1941, succeeding Commissioner Davis. 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 and signs the more important
official papers and reports at the direction of the Commission. 3
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 March has
supervisory charge of the Chief Examiner’s Division; Commissioner Ferguson, of the
Chief Trial Examiner’s Division and the Trade Practice Conference Division;
Commissioner Davis of the Chief Counsel’s Division; Commissioner Ayres, of the
Administrative Division and the Medical Advisory Division, and Commissioner Freer
of the Economic Division and the Radio and Periodical Division. The Commission has
a Secretary, who is its executive officer.
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 its
jurisdiction are acted upon by the Commission as a whole. The Commissioners meet
for the consideration and disposal of such matters every business day. They have
administrative charge of the work of a staff which, as of June 30, 1941, numbered 694
officials and employees including attorneys, economists, accountants, and
administrative personnel engaged in Washington, and in 5 branch offices. The
Commissioners hear oral arguments in the cases before the Commission ; usually
preside individually at trade practice conferences held for industries in various parts
of the country, and have numerous other administrative duties incident to their
position.
HOW THE COMMISSION’S WORK IS HANDLED

The various activities of the Federal Trade Commission may be classified generally
under the headings: legal, economic, and administrative.
The legal work of the Commission is under the direction of its Chief Counsel, its
Chief Examiner, its Chief Trial Examiner, the
3 Duties of the chairman in connection with the national defense activities of the Commission are set
forth on p.10.

14

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Director of its Radio and Periodical Division, and its Director of Trade Practice
Conferences.
The Chief Counsel acts as legal adviser to the Commission, supervises its legal
proceedings against respondents charged With violations of the acts administered by
the Commission, has charge of the trial of cases before the Commission and in the
courts, and supervises the foreign trade work of the Commission as conducted
pursuant to the Export Trade Act.
The Chief Examiner has charge of legal investigations of applications for complaint
alleging violations of the laws over which the Commission has jurisdiction, except as
to probable violations which come under the observation of the Radio and Periodical
Division as hereinafter explained. When the Commission undertakes general
investigations at the direction of the President or Congress, or upon application of the
Attorney General, or upon its own initiative, as provided in section 6 of the Federal
Trade Commission Act, the Chief Examiner supervises such of these investigations as
are primarily of a legal nature.
Members of the Chief Trial Examiner’s Division preside at hearings for the
reception of evidence in formal proceedings and in certain of the general investigations
which are conducted by Executive direction, or pursuant to congressional resolutions,
or upon the Commission’s initiative, or at the request of the Attorney General. Other
members of the division, who have no other function, arrange settlements by
stipulation of applications for complaint, subject to the approval of the Commission.
The Division of Trade Practice Conferences conducts activities relative to the
formulation and approval of trade practice rules, the holding of industry conferences
in respect thereto , the administration and enforcement of such rules which have
received Commission approval and are in effect, and other staff duties incident to the
trade practice conference procedure.
This division is also charged with the general administration of the Wool Products
Labeling Act and the rules and regulations thereunder. This act, approved by the
President October 14, 1940, became effective July 14, 1941, and is an act “to protect
producers, manufacturers, distributors, and consumers from the unrevealed presence
of substitutes and mixtures in spun, woven, knitted, felted, or otherwise manufactured
wool products, and for other purposes” (See p.125).
The Radio and Periodical Division conducts preliminary office investigations in
cases involving allegations of false and misleading advertising. Such cases usually
result from the division’s continuing examination of radio and periodical advertising,
and, in a majority of instances, are disposed of by stipulation.

PUBLICATIONS OF THE COMMISSION

15

The Medical Advisory Division furnishes to the Commission or any of its branches
professional opinions in matters pertaining to the validity of claims made by
advertisers of food, drugs, cosmetics, and devices in connection with cases instituted
under the advertising provisions of the Federal Trade Commission Act.
The Economic Division, under the Chief Economist, conducts those general
inquiries of the Commission which are primarily of an economic nature, such as the
inquiries into distribution cost accounting and furniture prices. The Economic Division
cooperates with the legal divisions with respect to the cost accounting work for the
Robinson-Patman Act cases.
The Commission has on its staff an economic adviser. This official for the past 3
years has assisted the Commission in directing the studies assigned to it by the
Temporary National Economic Committee. With the expiration of that work on April
4, 1941, he has resumed full advisory service in connection with economic problems
of the Commission.
Responsible directly to the Assistant Secretaries 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: Budget and
Finance , Personnel, Docket, Publications, Library, Mail and Files, Legal Research and
Compiling, Supply and Service, and Stenographic.
The Commission has access to the laboratories, libraries, and other facilities of
Federal Government agencies, to any of which it may refer matters for scientific
opinions or information. The Commission also obtains , when necessary, medical and
other scientific information and opinions from nongovernment hospitals, clinics, and
laboratories.
The Commission maintains branch offices in New York, Chicago, New Orleans, San
Francisco, and Seattle.
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. Important among such documents are those
presenting fact-finding studies, reports, and recommendations relating to general
business and industrial inquiries. Illustrated by appropriate charts, tables , and
statistics, these books and pamphlets deal with current developments, possible abuses,
and trends in an industry, and contain scientific and historical background. They have
supplied economists, students of business and government, the Congress, and the
public with information not only of general interest but of great value as

16

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

respects the need or wisdom of new and important legislation, to which they have
frequently led, as well as to corrective action by the Department of Justice and private
interests affected. The Supreme Court has at times had recourse to them, and many 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 in book form in the Federal
Trade Commission Decisions, contain interesting and important material regarding
business and industry. They tell, case by case, the story of unfair competition, unfair
or deceptive acts or practices, price discriminations, exclusive-dealing contracts, and
capital-stock 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 publishes a monthly summary of work reporting current progress
in its various activities.
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 of the Commission for the fiscal year ended June 30, 1941, were:
Annual Report of the Federal Trade Commission for the Fiscal year ended June 30,
1940. House Document No.10, Seventy-seventh Congress, first session, January 3,
1941.
Case Studies in Distribution Cost Accounting for Manufacturing and Wholesaling.
House Document No. 287, Seventy-seventh Congress, first session, June 23, 1941.
World War Activities of the Federal Trade Commission, 1917-18. July 15, 1940.
The Federal Trade Commission--Its Duties and Procedure. August 1940.
Federal Trade Commission Rules, Policy and Acts , February 4, 1941, and May 2,
1941.
Federal Trade Commission Decisions, Volume 30, December 1, 1939-May 31, 1940;
Volume 31, June 1, 1940--November 30, 1940.
Rules and Regulations under the Wool Products Labeling Act of 1939, May 24,
1941.
Trade practice rules for the following industries: Resistance Welder Manufacturing
Industry, August 16, 1940 ; Subscription and

PUBLICATIONS OF THE COMMISSION

17

Mail Order Book Publishing Industry, September 3, 1940; Linen Industry, February
1, 1941; Hosiery Industry, May 15, 1941.
Industrial corporation reports concerning the following industries were published:
Aircraft Manufacturing Corporations, October 15, 1940.
Cigarette and Tobacco Products Manufacturing Corporations, October 15, 1940.
Bread and Bakery Products Manufacturing Corporations, October 22, 1940.
Lead and Zinc Producing and Manufacturing Corporations, October 22, 1940.
Food Specialty Manufacturing Corporations, October 29, 1940.
Agricultural Machinery and Tractor Manufacturing Corporations, October 29,
1940.
Automobile Parts and Accessories Manufacturing Corporations, November 5, 1940.
Corn Products Manufacturing Corporations, November 5, 1940.
Glass and Glassware Manufacturing Corporations, November 12, 1940.
Coke-Oven Products Manufacturing Corporations, November 18, 1940.
Biscuit and Cracker Manufacturing Corporations, November 26, 1940.
Steel Castings Manufacturing Corporations, November 26, 1940.
Heating and Cooking Apparatus (except electric) Manufacturing Corporations,
December 3, 1940.
Rubber Products Manufacturing Corporations, December 3, 1940.
Beet Sugar Refining Corporations, December 10, 1940.
Domestic Laundry Equipment Manufacturing Corporations, December 10, 1940.
Motor Vehicle Manufacturing Corporations, December 17, 1940.
Railroad Equipment Manufacturing Corporations, December 17, 1940.
Clay Products (other than pottery) Manufacturing Corporations, December 24,
1940.
Rayon and Allied Products Manufacturing Corporations, December 24, 1940.
Cane Sugar Refining Corporations, December 31, 1940.
Machine Tool Manufacturing Corporations, December 31, 1940.
Copper Producing and Manufacturing Corporations, January 14, 1941.
Milk and Milk Products Corporations, January 14, 1941.
Men’s, Youths’ and Boys’ Clothing Manufacturing Corporations, January 21, 1941.

18

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Tin Can and Tinware Manufacturing Corporations, January 21, 1941.
Beverage (nonalcoholic) Manufacturing Corporations, January 28, 1941.
Paint and Varnish Manufacturing Corporations, January 28, 1941.
Knit Goods Manufacturing Corporations, February 4, 1941.
Saw, File, and Hand Tool Manufacturing Corporations, February 4, 1941.
Leather Boot and Shoe Manufacturing Corporations, February 11, 1941.
Engine, Turbine, Water Wheel, and Windmill Manufacturing Corporations, February
11, 1941.
Petroleum Producing and Refining Corporations, February 18,1941.
Confectionery Manufacturing Corporations, February 18, 1941.
Business Machines and Typewriter Manufacturing Corporations, February 25, 1941.
Match Manufacturing Corporations, February 25, 1941.
Electrical Machinery and Apparatus Manufacturing Corporations, March 4, 1941.
Fruit and Vegetable Canning Corporations, March 4, 1941.
Firearm and Ammunition Manufacturing Corporations, March 11, 1941.
Paper and Pulp Manufacturing Corporations, March 11, 1941.
Chemicals (industrial) Manufacturing Corporations, March 18, 1941.
Cotton Textiles Manufacturing Corporations, March 18, 1941.
Gypsum and Asbestos Products and Roof Coating (except Paint) Manufacturing
Corporations, March 25, 1941.
Refrigeration Equipment and Air-Conditioning Unit Manufacturing Corporations,
March 25, 1941.
Machine-Tool Accessory and Machinists’ Precision Tool Manufacturing
Corporations, April 1, 1941.
Radio and Phonograph Manufacturing Corporations, April 1, 1941.
Fertilizer Manufacturing Corporations, April 8, 1941.
Wool Carpet and Rug Manufacturing Corporations, April 8, 1941.
Machinery (not elsewhere classified) Manufacturing Corporations, April 15, 1941.
Steel Works and Rolling Mill Products Manufacturing Corporations, April 15, 1941.
Hardware Manufacturing Corporations, April 22, 1941.
Woolen and Worsted Manufacturing Corporations, April 22, 1941.
Cereal Preparations Manufacturing Corporations, April 29, 1941.

RECOMMENDATIONS

19

Gray-Iron and Malleable-Iron Castings Manufacturing Corporations, April 29,
1941.
Silverware and Plated Ware Manufacturing Corporations, May 6, 1941.
Soap, Cottonseed Products, and Cooking Fats Manufacturing Corporations, May
6, 1941.
Book and Magazine Publishing Corporations, May 13, 1941.
Malt Beverage Brewing Corporations, May 16, 1941.
Perfume and Cosmetic Manufacturing Corporations, May 20, 1941.
Pump, Pumping Equipment and Air Compressor Manufacturing Corporations, May
20, 1941.
Bolt, Nut, Rivet and Screw-Machine Products Manufacturing Corporations, May 27,
1941.
Plumbers’ Supplies Manufacturing Corporations, May 27, 1941.
Distilled Liquors Manufacturing Corporations, June 3, 1941.
Furniture Manufacturing Corporations, June 3, 1941.
Lumber and Timber Products Corporations, June 3, 1941.
Cranes; Dredging, Excavating and Road-Building Machinery Manufacturing
Corporations, June 10, 1941.
Tanned, Curried, and Finished Leather Manufacturing Corporations, June 10, 1941.
Cement Manufacturing Corporations, June 10, 1941.
Men’s and Boys’ Cotton, Leather and Miscellaneous Garment Manufacturing
Corporations, June 17, 1941.
Textile Machinery and Sewing Machine Manufacturing Corporations, June 17,
1941.
Hat and Cap Manufacturing Corporations, June 17, 1941.
Shipbuilding Corporations, June 17, 1941.
Drugs and Medicines Manufacturing Corporations, June 24,1941.
Flour Milling Corporations, June 24, 1941.
Silk Manufacturing Corporations, June 24, 1941.
Textile Dyeing and Finishing (except woolen and worsted) Corporations, June 24,
1941.
Industrial Corporation Reports for 1939, Summary by Industry Groups, June 30,
1941.
RECOMMENDATIONS
In its last preceding annual report the Commission reiterated its frequently made
recommendations for an amendment of section 7 of the Clayton Act. The substance of
such recommendations was that the acquisition of corporate assets should be declared
unlawful under the same conditions that acquisition of corporate stock had been unlawful ever since 1914. Attention was called to the endorsement of that
recommendation by the Temporary National Economic Com-

20

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

mittee in its preliminary report to the United States Senate, also, to the Committee’s
recognition that the concentration of economic power reflected in corporate
consolidations and otherwise threatens fundamental alterations in our economic
structure.
Since then the Temporary National Economic Committee has made its final report
and recommendations. It concluded that the process of corporate merger and
consolidation “has contributed in major part toward the elimination of competition”
and that failure to prohibit acquisition of corporate assets affords “a convenient way
of circumventing the obvious intention of the law.” Accordingly, the Committee again
and unanimously urged amendatory legislation of the character recommended by the
Commission. For similar reasons the Commission once more recommends such
legislation.
In its final report the Temporary National Economic Committee proposed that
acquisition of assets of competing corporations over a certain size be forbidden
without prior Governmental approval to insure that the purpose and probable result of
such acquisition would be in the public interest. It further proposed that the burden of
demonstrating such a purpose and result should be upon the proponents of the merger.
The Commission is strongly in accord with the principle of thus limiting future
expansion of the evil.
The Temporary National Economic Committee also stated:
So great a proportion of all national savings and all national wealth have fallen under the
control of a few organized enterprises that the opportunity of those individuals who will
constitute the next generation will be completely foreclosed unless, by common consent of
leadership In business and government, we undertake to reverse the trends responsible for the
present crises.

The Commission makes these recommendations as part of that “common consent of
leadership in business and government” to which the Committee referred and as part
of the undertaking “to reverse the trends responsible for the present crises.”

PART I. GENERAL INVESTIGATIONS
CORPORATION REPORTS
DISTRIBUTION COST ACCOUNTING
DISTRIBUTION METHODS AND COSTS
RESALE PRICE MAINTENANCE (1939)
FURNITURE PRICES, COSTS, AND PROFITS
MASS FOOD DISTRIBUTORS
21

PART I. GENERAL INVESTIGATIONS
CORPORATION REPORTS
This project, which was conducted in accordance with powers of the Federal Trade
Commission as expressly provided in section 6 of its organic act, was initiated on May
27, 1940, when the Commission entered an order requiring about 900 individual
corporations to file financial reports covering their 1939 operations and statements of
their financial position as at the end of their 1938 and 1939 business years.
The plan for this project, which the Commission has for many years regarded as one
of great benefit to the national economy, particularly in times of national emergency,
was developed in cooperation with the Division of Statistical Standards of the
Executive Office of the President, the Securities and Exchange Commission, and other
Federal agencies.
More fully stated, the purpose of the project is to collect and compile in combined
statements, by industries, for publication, information regarding business conditions
and financial results obtained periodically from representative corporations in each of
a large number of important industries. The Commission believes that the published
summaries will be of increasing value to the Government in showing the trends of
industrial activity, as well as to managers of corporations, stockholders, lenders of
capital, and the general public.1
During the fiscal year, reports on 76 industry groups were prepared covering the
combined operations of 780 corporations having total sales aggregating
$24,932,624,668, which amount represented nearly 64 percent of the total value of
product as reported by the United States Bureau of the Census. These 780 corporations
had an aggregate average investment in 1939 of $28,138,000,000.
These reports showed the average rate of return for each of the industry groups and
the range of returns for different companies included in each group, the total sales, the
proportion sold in the domestic and export markets, and the proportion of each dollar
of sales represented by the cost of materials, production wages and salaries,
depreciation and obsolescence, finished goods purchased for resale, miscellaneous
costs, the gross margin on sales, and the expenses of selling, advertising, taxes,
research and development, and administrative and general office expense. There was
also shown for each group the net profit from manufacturing and trading.
The 76 industry groups, the number of corporations included in each group, their
total sales, and the percent of their sales to the United States Bureau of the Census
value of product, are as follows:
1

Summaries of Industrial corporation reports published during the fiscal year are listed on p.17.

23

24

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
Industry group

Number of
corporaTotal sales
tions included

Percent of
sales to
Census
value of
products

Agricultural machinery and tractor
9
$529,356,946
6 94.0
Aircraft
9
255,004,218
1 91.0
Automobile parts and accessories
19
563,770,843
6 27.0
Beet sugar
5
103,.939,719
6 97.0
Beverage (nonalcoholic)
6
131,197,584
6 47.0
Biscuit and cracker
4
154,719,550
6 74.0
Bolt. nut rivet and screw-machine products
7
69,260.279
41.5
Book and magazine publishing
11
189,594,386
1 27.0
Bread and bakery products
7
202,301,826
17.0
Business machines and typewriter
10
230,822,193
(7)
Cane sugar refining
7
274,762,877
71.5
Cement
17
88,237,374
46.0
Cereal preparations
8
160,759,718
99.0
Chemicals (Industrial)
13
878,405,853
(7)
Cigarette and tobacco products
6
2 1,047,390,892
6 82.0
Clay products (other than pottery)
6
36,800,291
79.0
Coke-oven products
4
114,565,346
1 33.5
Confectionery
12
197,467,021
43.0
Copper producing and manufacturing
6
409,247,345
65.0
Corn products
5
109,996,726
92.0
Cotton textiles
34
451,073,196
39.0
Cranes; dredging, excavating and road-building machinery 12
77,135,231
55.0
Distilled liquors
6
2 290,699,253
(7)
Domestic laundry equipment
8
34,939,181
6 50.0
Drugs and medicines
23
470,800,985
(7)
Electrical machinery and apparatus
19
805,335,939
6 50.0
Engine, turbine, water wheel, and windmill
7
44,986,187
6 23.0
Fertilizer
6
76,250,353
41.1
Firearm and ammunition
4
30,607,560
65.0
Flour milling
9
4 315,099,410
5 48.5
Food specialties
4
270,797,816
(7)
Fruit and vegetable canning
10
266,403,196
45.0
Furniture
15
78,200,007
12.5
Glass and glassware
8
261,420,053
6 67.5
Gray-iron and malleable-iron castings
4
48,734,907
19.0
Gypsum and asbestos products and roof coating (except
paint)
12
271,752,881
(7)
Hardware
14
88,057,476
57.0
Hat and cap
5
30,261,761
38.0
Heating and cooking apparatus (except electric
8
152,478.026
6 35.0
Knit goods
19
135,774,316
6 21.0
Lead and zinc producing and manufacturing
6
190,985,924
6 52.0
Leather boot and shoe
16
332,940,474
6 44.0
Lumber and timber products
31
132,060,369
19.0
Machine tools
8
79,045,896
36.0
Machine-tool accessory y and machinists’ precision tool
7
42,525,947
34.0
Machinery (not elsewhere classified)
14
218,778,286
6 23.0
Malt. beverage brewing
21
2 233,496,279
6 30.0
Matches
7
42,545,990
(7)
Men’s and boys’ cotton, leather, and miscellaneous
garments
19
86,313,794
18.0
Men’s, youths’ and boys’ clothing
10
85,807,045
6 15.0
Milk and milk products
12
806,887,761
1 70.0
Motor vehicles
8
2,974,366,192
6 96.0
Paint and varnish
9
155,515,913
36.0
Paper and pulp
16
425,487,261
6 35.0
Perfume and cosmetics
9
29,679,607
20.0
Petroleum producing and refining
13
3,632,257,441
(7)
Plumbers’ supplies
8
156,861,914
(7)
Pump, pumping equipment and air compressor
4
33,713,334
6 17.0
Radio and phonograph
7
208,263,235
75.5
Railroad equipment
11
160,711,439
6 39.0
Rayon and allied products
7
144,748,524
59.0
Refrigeration equipment and air-conditioning units
5
54,597,303
20.0
Rubber products
6
757,165,918
6 86.0
Saw, file, and hand tool
6
29,056,199
28.0
Shipbuilding
5
126,076,616
38.5
Silk
5
30,681,869
32.0
Silverware and plated ware
8
41,920,328
67.0
Soap, cottonseed products and cooking fats
10
458,167,504
70.0
Steel castings
6
53,089,769
1 39.0
Steel works and rolling mill products
10
2,254.238,365
83.0
Tanned, curried, and finished leather
16
124,353,953
36.0
Textile dyeing and finishing (except woolen and worsted) 19
100,960,709
34.0
Textile machinery and sewing machines
12
145,207,455
(7)
Tin can and tinware
4
302,657,213
81.0
Wool carpet and rug
7
77,785,525
55.0

Woolen and worsted
Total
1 Census comparison not used in FTC report.
2 Includes sales tax revenue stamps.
3 Excludes sales tax revenue stamps.
4 Fiscal yea

22
253,864,596
35.0
780
24,932,624,668
63.7
5 Calendar year.
6 1937 Census of Manufactures.
7 Over 100 percent.

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

25

DISTRIBUTION COST ACCOUNTING
(ACCOUNTING METHODS AND PRACTICES)
On August 9, 1939, the Federal Trade Commission, pursuant to section 6 of its
organic act, directed an inquiry into the accounting methods of business in order to
ascertain how these may better serve the needs of business management and the public,
to provide legislative bodies the basis for guidance in the enactment and revision of
legislation, and to make more effective the administration of existing legislation.
Because of the breadth of the general accounting field and the present timeliness of a
study devoted specially to distribution cost accounting, the scope of the inquiry was
restricted to the latter field.
The Commission’s report on the inquiry entitled Case Studies in Distribution Cost
Accounting for Manufacturing and Wholesaling, was sent to the Congress on June 23,
1941, and printed as House Document No.287, Seventy-seventh Congress, first
session.
Distribution cost accounting is of comparatively recent date. It is still a developing
field and is becoming increasingly important as the part played by the distributing
functions in the Nation’s total economy becomes more significant.
The report on case studies points out that both business and the Government are
interested in sound methods of ascertaining distribution costs: Business, because of the
aid such methods give in the proper conduct of its operations; Government, because
of the responsibility it has of administering such laws as the State and Federal antidiscrimination acts.
Distribution cost accounting is concerned with the costs of such distribution
functions as selling and sales promotion, warehousing, handling and delivery, credit
and collection activities, and all other office, supervising and administrative activities
necessary to the proper functioning of the distribution processes.
Distribution costs may be found for sales according to the various classifications of
sales, that is, by commodities, sales territories, distribution channels, size of order,
volume of sales, method of delivery, terms of sales, etc.; depending upon the cost
information needed.
When distribution costs are separately incurred and recorded as regards two or more
members of a sales classification, for example, two or more commodities, such costs
need only be accumulated by a process of addition. When, however, such costs are
jointly incurred, a sound method of allocation Or apportionment must be found before
such costs, together with those separately incurred, can be accumulated to arrive at the
total distribution costs for any one member of a sales classification.

26

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

A Sound method of allocating joint cost may be based upon an analysis of the
service or function for which the cost is incurred; and it is with such an analysis of
each of the principal functions of distribution enumerated above and the methods of
allocation based thereon that the report on case studies is chiefly concerned.
The report concludes:
In respect to distribution cost accounting, greater uniformity within a single Industry than now
exists would seem possible and desirable. For each Industry guiding principles could well be
formulated, a standard classification of accounts be set up, considerable uniformity of
procedures be worked out, and suggested forms be devised. These things undoubtedly should
be done insofar as practicable.
Even for Industry as a whole there is room In a broad way for such standardization of forms,
procedures, and accounting terminology in distribution cost accounting as would greatly
facilitate the work of the professional accountant, would benefit each Individual industry and
would aid the public, by comparisons that would then be possible, to a better understanding of
the relative position of each industry as to the several items of distribution costs, such as selling,
advertising, storage, and delivery.
It is therefore recommended that, both in the interest of business and In the interest of the
Commission, particularly In Its administration of the Robinson-Patman Act, further study be
made In the field of distribution cost accounting. It would seem especially desirable that
conferences be held with other Industry groups, such as that for which the Commission was host
in the early summer of 1940 when some 25 representatives of the wholesale drug trade, the
accounting profession, and government agencies met at the offices of the Commission in an allday discussion of accounting methods and forms in which the subject of distribution cost
accounting received special attention. * * * The Commission stands ready to provide facilities
for and to sponsor similar conferences of other trade or industry groups, together with all
interested branches of the government, to the end that such groups respectively may find
practicable methods of ascertaining their distribution costs and to the further end that uniformity
may be established insofar as practicable.

DISTRIBUTION METHODS AND COSTS
This inquiry, initiated by a resolution of the Commission adopted June 27, 1940,
under authority of Section 6 of the Federal Trade Commission Act, was undertaken to
develop information respecting the methods and practices used and the costs incurred
in distribution by manufacturers, wholesalers, and retailers of numerous types of
commodities. The resolution directed that special attention be given to trade usages,
practices, charges, laws, and barriers to trade that affect distribution costs. The
following are the commodities included in the study: Automobiles, petroleum
products, especially gasoline and lubricating oils, automobile tires and tubes, farm
machinery, electric household appliances, carpets and rugs, women’s dresses, coats
and hosiery, men’s and boys’ suits and overcoats, men’s shirts and collars, men’s work
clothing, meats (fresh, cured, and

MASS FOOD DISTRIBUTORS

27

canned), fresh milk and dairy products, canned fruits and vegetables, flour and flour
mixes, crackers and cookies, packaged cereals, coffee, sugar, structural steel, cement,
lumber, and paints and varnishes, The study had not been completed at the close of the
fiscal year, 1940-41.
RESALE PRICE MAINTENANCE
On April 25, 1939, the Commission, by resolution under authority of Section 6 of
the Federal Trade Commission Act, directed its Economic Division to make inquiry
respecting the effects of resale price maintenance on the interests of manufacturers,
wholesalers, retailers, and consumers of price maintained and competing non-pricemaintained articles. A report on the investigation was in the course of preparation at
the close of the fiscal year.
FURNITURE PRICES, COSTS, AND PROFITS
Shortly before the close of the fiscal year 1940-41, the Commission, at the request
of the Administrator of the Office of Price Administration, directed an immediate
investigation of the legal and accounting aspects of a situation resulting from an
increase in furniture prices in recent months. Pointing out that “The prevention of
unwarranted price increases is * * * vital to the defense program of the United
States,” the Administrator asked the Commission “to undertake a quick check of
prices, costs, and profits in the furniture industry” so as to determine whether and to
what extent the recent increases were justified. The investigation was in process of
organization at the close of the fiscal year.
MASS FOOD DISTRIBUTORS
A Commission resolution of April 29, 1941, authorized an inquiry the purpose of
which is to present a comparison of (1) the Savings in costs of selling and delivering
certain foods in large quantities, particularly when delivered to the buyer’s warehouse,
and (2) the concessions in price made to the buyer on such sales. The inquiry was in
progress at the close of the fiscal year 1940-41.
423272---41-----3

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

29

PART II. GENERAL LEGAL WORK
DESCRIPTION OF PROCEDURE
(SEE CHART OPPOSITE THIS PAGE)

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 whether the laws administered by it are being
violated. 1
No formality is required in making application for complaint. A letter setting forth
the facts in detail is sufficient, but it should be accompanied by all evidence in
possession of the complaining party in support of the charges made.
INFORMAL PROCEDURE
When an application for complaint is received, the Commission considers the
essential jurisdictional elements. 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 application is assigned interviews the party
complained against and advises such party of the charges and requests the sub-mission
of such information as the party may care to submit in defense or in justification. It is
the Commission’s policy not to disclose the identity of the complainant. If necessary,
competitors of the respondent are interviewed to determine the effect of the practice
from a competitive standpoint. It is often desirable to interview consumers and
members of the general public to assist in determining whether the practice alleged
constitutes an unfair method of competition or unfair or deceptive act or practice and
also to establish the existence of the requisite public interest.
After developing the facts from all available sources, the examining attorney
summarizes the evidence in a report, reviews the law
1

For a brief statement of the provisions of these laws see p.1. Full texts of the acts appear in the
appendixes.

31

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

applicable thereto, and makes recommendations as to what action he believes the
Commission should take.
The record is then reviewed by the Chief Examiner and, if found to be complete, is
submitted, with a statement of facts, and conclusions and recommendations, to the
Commission for its consideration.
If a published or broadcast advertisement coming under the observation of the Radio
and Periodical Division appears to be misleading, it is investigated by that division and
report and recommendation are made to the Commission under the procedure more
fully explained on page 136.
The Chief Examiner or the Director of the Radio and Periodical Division 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 the administration of which is committed to the Commission; (2) settlement
of the application upon the Signing by the respondent of a stipulation as to the facts
and an agreement to cease and desist from the unlawful practices as set forth in the
stipulation; or (3) issuance of formal complaint.
If, after consideration of the entire file, the Commission decides that formal
complaint should issue, the case is referred to the Chief Counsel for preparation of the
complaint and trial of the case. Or, if the Commission should permit disposition by
stipulation, the case is referred to the Chief Trial Examiner or the Director of the
Radio and Periodical Division for its negotiation and submission to the Commission
for approval.
All proceedings prior to issuance of formal complaint or publication of a stipulation
are confidential.
FORMAL PROCEDURE
Only after careful consideration of the facts developed by the investigation does the
Commission issue a formal complaint. The complaint and the answer of the respondent
thereto and subsequent proceedings are a public record.
A complaint is issued in the name of the Commission acting in the public interest.
It names the respondent, or respondents, alleges a violation of law, and contains a
statement of the charges. The party complaining to the Commission is not a party to
the formal complaint 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 and unfair or
deceptive acts or practices forbidden by the Federal Trade Commission Act and those

DESCRIPTION OF PROCEDURE

33

practices within the Commission’s jurisdiction, which are prohibited by the Clayton
Act (as amended by the Robinson-Patman Act) and by the Export Trade Act.
The Commission’s rules of practice provide that in case the respondent desires to
contest the proceedings he shall, within 20 days from service of the complaint file
answer thereto admitting or denying each allegation thereof. They also specify a form
of answer for use should the respondent decide to admit all the facts alleged.
Under these rules, “Failure of the respondent to file answer within the time * * *
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.”
Where evidence is to be taken, either in a contested case or where the respondent has
failed to file answer, the matter is set down for hearing before a member of the
Commission’s staff of trial examiners, who may sit anywhere in the United States, the
Commission being represented by one of its stair of attorneys and the respondent
having the privilege of appearing in his own behalf or by attorney. Hearings consume
varying periods of time, depending upon the nature of the charge and the number and
availability of the witnesses examined.
After the submission of evidence in support of the complaint, and then on behalf of
the respondent, the trial examiner prepares a report of the evidence for the information
of the Commission, copy of which is furnished counsel for the Commission and
counsel for the respondent. Exceptions to the trial examiner’s report may be taken by
either counsel.
Briefs may be filed within a stated time after the trial examiner’s report is made, and,
in the discretion of the Commission, upon the written application of the attorneys for
the Commission or for the respondent, oral argument may be had before the
Commission. Thereafter the Commission reaches a decision either sustaining the
charges of the complaint, or dismissing the complaint, or closing the case without
prejudice.
If the complaint is sustained, the Commission makes its findings as to the facts and
states its conclusion that the law has been violated, and thereupon an order is issued
requiring the respondent to cease and desist from such violation.
If the complaint is dismissed or the case closed, an appropriate order is entered;
sometimes such order of dismissal or closing is accompanied by a written opinion,
although more often reasons for the action appear only in the order.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Up to and including the issuance of an order to cease and desist, there is no
difference in procedure whether the case is under the Federal Trade Commission Act,
or under the Clayton Act, but each act provides a different procedure for enforcement
of cease and desist orders.
Under the Federal Trade Commission Act, an order to cease and desist becomes final
60 days after date of service thereof upon the respondent, unless within that period the
respondent petitions an appropriate United States Circuit Court of Appeals to review
the order. In case of such a review, the Commission’s order becomes final after
affirmance by the Circuit Court of Appeals or by the Supreme Court of the United
States, if taken to that court. Violation of an order to cease and desist after the same
shall have become final and while it is in effect subjects the offender to a civil penalty
of not more than $5,000 for each violation, recoverable by the United States.
Under the Clayton Act an order to cease and desist does not become final, in the
sense that its violation subjects the violator to a penalty, until the United States Circuit
Court of Appeals shall have issued its order commanding obedience, on the application
or cross-application of the Commission for enforcement.
Under the Clayton Act an order to cease and desist does not be- Appeals for a review
of an order, and either upon the application of the Commission for enforcement or of
the respondent for review, the court has power to affirm, or affirm as modified, and to
enforce to the extent affirmed, or to set aside, the order. Also, under both acts, either
party may apply to the Supreme Court for review, by certiorari, of the action of the
Circuit Court of Appeals.
PROVISIONS FOR PREVENTING DISSEMINATION OF FALSE
ADVERTISEMENTS

The Federal Trade Commission Act contains provisions for the prevention of the
dissemination of false advertisements concerning food, drugs, devices (meaning
devices for use in the diagnosis, prevention, or treatment of disease), and cosmetics.
In addition to the regular proceeding by way of complaint and order to cease and
desist, the Commission may, in a proper case, bring suit in a United States District
Court to enjoin the dissemination of such false advertisements pending issuance and
final disposition of the Commission complaint.
Further, the dissemination of such a false advertisement, where the use of the
commodity advertised may be injurious to health or where it is published with intent
to defraud or mislead, constitutes a misdemeanor and conviction subjects the offender
to a fine of not more than $5,000, or imprisonment of not more than 6 months, or both.
Succeeding convictions may result in a fine of not more than $10,000, or imprisonment
of not more than 1 year, or both,

LEGAL INVESTIGATION

35

LEGAL INVESTIGATION
INQUIRIES PRIOR TO FORMAL COMPLAINT OR STIPULATION

The legal investigational work of the Commission embraces the investigation of all
applications for complaint preliminary to formal action for the correction of unfair
methods of competition or other acts or practices violative of the laws administered
by the Commission.
During the fiscal year ended June 30, 1941, the Commission dis posed of 485
preliminary inquiries which had been docketed and 1,364 applications for complaint,
or a total of 1,849 informally docketed matters.
Investigation of cases in preliminary stages includes (1) the general preliminary legal
investigating work of the Commission under the several acts as conducted by its legal
investigating division, supervised by its Chief Examiner, and (2) the continuing survey
of radio and periodical advertisements by its Radio and Periodical Division with the
objective of correcting false and misleading representations, supervised by the Director
of that division.
Cases developed by the two divisions, unless closed without action, progress upon
order of the Commission to the status either of formal complaint or stipulation.2 Cases
designated for complaint pass to the Chief Counsel of the Commission for trial or
other disposition. Those cases investigated by the legal investigating division which
the Commission designates for stipulation are forwarded to the Chief Trial Examiner
for negotiation of stipulation while cases investigated by the Radio and Periodical
Division and ordered stipulated are returned by the Commission to that division for
negotiation of stipulation under a special procedure more fully described at p.136.
The general legal investigational work conducted for the Commission under
supervision of its Chief Examiner is delegated to a staff of attorneys specially trained
as examiners who operate either from the Commission’s executive offices in
Washington or from any of its five branch offices in New York, Chicago, New
Orleans, San Francisco and Seattle.
At the beginning of the fiscal year, July 1, 1940, there were pending for investigation
in the legal investigating division 3 449 preliminary or undocketed cases. Four hundred
forty-two additional applications of this character were received during the year,
making
See chart showing general legal procedure, facing p.31.
Statistics hereinafter reported on pp.36, 37, and 39-41 concerning the general legal investigational
work of the Commission during the fiscal year are the records of the legal investigating division and not
the consolidated record of the Commission, and therefore do not coincide with the figures reported in the
tabular summary of legal work for the entire Commission appearing on pp. 106-108.
2

3

36

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

a total of 891 on hand, of which 614 were investigated. As a result, 407 of the
investigated matters were docketed and transmitted to the Commission for action and
207 closed without docketing because of lack of jurisdiction or other reasons. This left
277 preliminary cases of this type pending for investigation at the end of the fiscal
year, June 30, 1941.
Six hundred fifty-eight applications for complaint, which had been docketed without
preliminary investigation, were pending for regular investigation by the Chief
Examiner’s Division at the year’s beginning. Subsequently, 626 additional cases of
this type were received, making a total of 1,284 such eases docketed for investigation.
Of these, 732 were investigated and transmitted to the Commission for action, leaving
552 cases of this character pending for investigation at the year’s close.
During the year 670 further investigations included (1) inquiries into alleged
violations of cease and desist orders and stipulations, (2) investigations for the Chief
Counsel, and (3) others of a supplemental nature. At the end of the year 247 such
matters awaited completion of investigation.
Thus, during the year, the Commission’s legal investigation staff completed 2,016
investigations. It also disposed of 22,569 pieces of incoming and outgoing mail,
requiring varying degrees of research and study.
The Chief Examiner conducts supplemental field investigations (1) in matters
originating with the Commission’s Radio and Periodical Division; (2) where additional
evidence is necessary in connection with the trial of a formal complaint; (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 practices, is not being observed in good faith.
CLAYTON ACT, SECTION 2, AS AMENDED BY THE ROBINSON-PATMAN ACT

The Robinson-Patman Act, approved on June 19, 1936, is an amendment to section
2 of the Clayton Act, and restates in more inclusive form the basic principle of
prohibiting price discriminations which injuriously affect competition. It also prohibits
per se certain classes of discriminations which may involve price only indirectly,
without regard to their competitive effects in specific cases, thus supplementing and
strengthening the previous legislation.
Matters involving possible violations of this act are generally quite complicated. An
effort is made, in the preliminary stages of an investigation, to determine not only
whether the practice in question

LEGAL INVESTIGATION

37

involves prima facie violation of the act, but also whether the defenses available under
the act are present in the particular matter. This frequently necessitates the checking
of competitive prices and pricing policies and of undertaking cost studies in
cooperation with the parties charged with violations. The Complications of this work
continue to require special attention and more exhaustive investigations than are
necessary for some of the other classes of Commission cases.
Members of the public, through the cooperative efforts of the Commission, have
become more familiar with the act, its scope and objectives. Experience in the
administration of the act has made it possible through the development of certain
information by preliminary inquiry more readily to clear up misunderstandings among
the public as to the scope of the act and its application to specific situations, as well
as to make a more accurate selection for investigation of matters involving probable
merit. There has been an increasing effort, in view of limited funds and personnel
available, to confine investigations, insofar as feasible, to matters of substantial
importance, and to eliminate the expenditure of time and money in the investigation
of matters which preliminary inquiry discloses to be of little practical importance and
in which further procedure would serve no public interest.
During the year ended June 30, 1941, the Commission, through its legal
investigational division, instituted field investigations of alleged violations of this
statute in 79 cases and completed such investigations in 145 cases. At the beginning
of the year there had been 230 such matters on hand for investigation, and at the close
of the year 164. As in previous years, the administration of the statute has touched
widely varied fields of industry and commerce and involved many classes of
commodities. Frequently, an investigation of one member of an industry requires
similar investigations of other members of the same industry, in order to accomplish
equitable and effective correction. The proceedings of the Commission and the
decisions of the Courts on these proceedings have served as useful sign posts for
members of industries in determining their pricing and distribution policies. It is
apparent that these guides have been beneficial both in effecting the voluntary
elimination of unlawful or doubtful practices before they became the subjects of
investigation, and in discouraging the inception of such practices.
CLAYTON ACT, SECTION 3

This section makes it unlawful to lease, sell or contract to sell commodities, or fix
a price charged therefor, or discount from, or rebate upon, such price, on condition that
the lessee or purchaser shall not

38

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

use or deal in the commodities of a competitor of the lessor or seller, where the effect
may be substantially to lessen competition or tend to create a monopoly in any line of
commerce. The investigations and proceedings under section 3 of the Clayton Act
continue to be of substantial importance.
STOCK ACQUISITIONS, MERGERS AND CONSOLIDATIONS

Under section 7 of the Clayton Act, it is declared unlawful for any corporation
engaged in commerce to 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 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.
Authority to enforce compliance with Section 7 of the Clayton Act is vested in the
Federal Trade Commission where applicable to all character of business other than that
concerning common carriers subject to the jurisdiction of the Interstate Commerce
Commission and Federal Communications Commission, air carriers subject to the
jurisdiction of the Civil Aeronautics Authority, and banks and trust companies subject
to the jurisdiction of the Federal Reserve Board.
During the fiscal year the Commission considered 10 preliminary matters of
acquisition, merger or consolidation under section 7 of the Clayton Act, 5 of which
had been pending at the beginning of the year. These matters involved corporations
engaged in the manufacture and sale of quebracho extract (a material used in the
tanning of leather); decorative lighting equipment; compressed gases; the compressing
and storage of cotton; the production and sale of sheet music; the designing, sale and
erection of coke ovens for the recovery of by-products of coke; and the factorage and
refining of sugar. Seven of these matters were disposed of by the Commission during
the year, four having been closed because investigation failed to indicate violation of
law. One was docketed as an application for complaint and two were placed on the
suspense calendar for future consideration. Three informal matters were pending at the
close of the year.
No complaints charging violation of Section 7 of the Clayton Act were issued or
disposed of during the year.
PRICE FIXING AND OTHER TRADE RESTRAINTS

One of the fundamental purposes behind the passage of the Federal Trade
Commission Act in 1914 was to establish an agency which would detect and eliminate
illegal trade restraints in their incip-

LEGAL INVESTIGATION

39

iency, before they developed into monopolies. The importance of this phase of the
Commission’s work is indicated by the fact that at the beginning of the fiscal year, July
1, 1940, its calendar included 118 cases of this type, either awaiting investigation or
in the process of being investigated. During the year, 91 new cases were instituted,
making a total of 209 restraint-of-trade cases on its calendar during the fiscal year.
During the same period, 122 investigations of this type were completed by the legal
investigation staff and the files were forwarded to the Commission for its
consideration and disposition, leaving 87 cases pending on the Commission’s active
investigational calendar as of June 30, 1941.
Price fixing continues to be the most frequently recurring charge among the
restraint-of-trade cases, although the whole category of trade restraints will be found
among the charges in the cases pending before the Commission during the last year.
These include such practices as conspiracy to boycott or threats of boycott;
interference with sources of supply and with distributing outlets; threats of
infringement suits not made in good faith; sales below cost for the purpose of injuring
competitors; collusive bidding; intimidation of competitors or potential competitors;
coercive practices; espionage; operation of bogus independents; commercial bribery;
allocation of territory among ostensible competitors; and a variety of other methods
of competition which have been condemned as unfair by both the Commission and the
courts.
The following general classifications of commodities involved are given to convey
an idea of the widespread nature of the restraint-of-trade investigations: Aeronautical
equipment and supplies; agricultural supplies; automotive equipment and supplies;
beauty and barber supplies; beverages; bottle tops; clothing, cloth, notions, etc.;
confectionery; construction materials and supplies; containers; dental equipment and
appliances; drugs, chemicals, and pharmaceuticals; electrical equipment and
appliances; fertilizers; flaxseed; food products; footwear and accessories; fuel; golf
clubs and equipment; hospital and surgical supplies; household wares, furnishings, and
equipment; ice; lumber and lumber products; machinery, tools, and equipment; metal
and metal products; minerals and mineral fibers; office supplies and equipment; paint,
varnish, etc.; paper and paper products; photographic supplies and optical goods; plans
and blueprints; printing and engraving; publications; razors and accessories; restaurant
equipment and supplies; rubber and rubber products; silverware; technical instruments
and parts; textile fabrics; tobacco; vegetable fibers; Vegetable oil; vending machines;
and vitrified products.

40

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

In addition to the original investigations undertaken during the year, there have been
31 matters completed which involved formal docketed cases. These were referred to
the legal investigating division on recommendation of the Chief Counsel or directly
by the Commission for supplemental work, and consisted of a variety of matters, many
of which required complete investigation to determine whether or not cease and desist
orders previously issued by the Commission were being violated. Investigations of this
nature are as extensive as those made in the original development of a case and in
some instances more difficult. At the close of the fiscal year there were 4 cases of this
nature pending on the investigational calendar.
Of the 209 restraint-of-trade investigations which were active during the last fiscal
year, 27 resulted from applications for complaint filed by governmental agencies
(Federal, State, or municipal), and 35 were initiated by the Commission on its own
motion. A few applications for complaint came from various miscellaneous sources,
but the majority continued to come from individuals and concerns whose business was
being jeopardized by the alleged unfair and illegal practices against which complaint
was made. The group last mentioned was responsible for 139 of the applications for
complaint filed with the Commission.
FIELD INVESTIGATIONS OF CASES INVOLVING FOOD, DRUGS, DEVICES,
AND
COSMETICS

The Wheeler-Lea amendment to the Federal Trade Commission Act of March 21,
1938, greatly enlarged the preexisting need for medical and other scientific and expert
opinion and evidence. This was met in part by the establishment within the
Commission of a Medical Advisory Division (see p.141). Also in conducting field
investigations the Chief Examiner’s Division has covered a wide range of public and
private sources of expert knowledge. Full use has been made by the Commission of the
facilities offered by other departments of the Government and Federal agencies including the United States Public Health Service, the National Bureau of Standards, the
Food and Drug Administration, and the Department of Agriculture’s bureaus relating
to agricultural chemistry, entomology, plant industry, animal industry, dairy industry,
and home economics. In addition, assistance has been received from State, municipal,
and commercial laboratories and clinics and various medical and other scientific
bodies throughout the country and willing and valuable cooperation from individual
members of the medical profession and other scientists. Samples and formulas of
medicines and other commodities have been obtained and submitted to

LEGAL INVESTIGATION

41

these various agencies for analysis and expert opinion to assist in determining the
accuracy or otherwise of claims made by advertisers. Special attention has been given
to therapeutic representations made concerning, and pharmacological actions of,
medicinal preparations, the use of which might be injurious to the user. Similarly
consideration has been given to devices also likely to be injurious to health.
Since enactment of this amendatory legislation the legal investigational division has
completed 1,412 field investigations of alleged violations of section 12 of the Federal
Trade Commission Act, which relates to false advertising of food, drugs, devices, and
cosmetics. Of these, 421 were completed during the fiscal year ended June 30, 1941.
This number included new cases as well as old cases reinvestigated to determine
whether or not Commission cease and desist orders, and stipulations executed by
advertisers and accepted by the Commission, were being violated, and whether
additional practices not previously prohibited were being carried on in contravention
of the law.
The legal investigational division had under investigation at the year’s close a total
of 192 applications for complaint respecting alleged false advertising of foods, drugs,
devices, and cosmetics. Of this number, 22 applications had to do with drug and
cosmetic preparations and devices alleged to be injurious to the health of users.
DISPOSITION OF CASES BY STIPULATION
PROCEDURE AFFORDS OPPORTUNITY FOR DISPOSING OF SOME CASES
BY AGREEMENT TO DISCONTINUE UNFAIR PRACTICES

Under certain circumstances the Commission, instead of disposing of cases by
formal complaint and trial, affords the respondent the privilege of disposition by
signing a statement of fact and an agreement to discontinue the unfair practice.
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 contends that the facts are other than the investigation discloses, then the
matter is not subject to stipulation and the proper procedure is to try the issue by the
complaint procedure.
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 cessation of the unlawful practice. It is a simplified
procedure and saves both the Government and the respondent the expense incident to
trial of a complaint.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Often it appears that a violation occurs through ignorance or misunderstanding, and
that the attention of the offender has only to be called to such violation to induce
discontinuance of the practice. The Commission, instead of issuing a formal complaint,
grants the respondent an opportunity to sign a statement of facts disclosed by the
investigation and an agreement to cease and desist from the unlawful practice. If such
stipulation is signed, further action is suspended; if it is not signed, the case goes to
trial.
Where signed stipulations are approved and accepted by the Commission, the public
interest is deemed satisfied without issuance of formal complaint. Stipulations are not
permitted in cases where a fraudulent business is concerned, where a legitimate
business is conducted in a fraudulent manner, or where the circumstances are such that
there is reason to believe that an agreement entered into with the concern involved will
not be kept; neither are they permitted where there is violation of section 14 of the
Federal Trade Commission Act involving false advertisement of dangerous food,
drugs, curative devices, or cosmetics, or where violation of the Clayton Act, or the
criminal sections of the Sherman Act, or of any other statute, is believed to have
occurred. The Commission reserves the right in all cases, for any reasons which it
regards as sufficient, to refuse to extend the privilege of stipulation.
All stipulations are for the public record.
Unfair trade practices discontinued as a result of stipulations comprise a wide variety
of misleading representations 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.
A total of 532 stipulations in which various individuals, firms, and corporations
agreed to cease and desist from unlawful practices were approved by the Commission
during the fiscal year ended June 30, 1941. These included 298 general cases and 234
cases pertaining specially to radio and periodical advertising matter (See p.136).
COMPLAINTS
ALLEGED VIOLATIONS OF FEDERAL TRADE COMMISSION ACT, AND OF
CLAYTON ACT AS AMENDED BY ROBINSON-PATMAN ACT

During the fiscal year ended June 30, 1941, the Commission issued complaints
charging violation of the acts it administers, as follows:
Federal Trade Commission Act
Clayton Act
Total

Complaints
300
57
357

COMPLAINTS UNDER FEDERAL TRADE COMMISSION ACT

43

I. COMPLAINTS UNDER THE FEDERAL TRADE COMMISSION ACT
A. SUPPRESSION OF PRICE COMPETITION AND OTHER ALLIED
RESTRAINTS
OF TRADE
(Complaints referred to are identified by docket numbers. Full text of any complaint may be obtained upon
application to the Federal Trade Commission, Washington)

1. COMBINATIONS TO FIX AND MAINTAIN PRICES

Eleven complaints were issued charging combination and conspiracy in restrain of
trade among members of certain industries to fix minimum prices and maximum
discounts from list at which their products were to be sold. A brief description of the
complaints follows:
Plate glass distributors and contractors.--This complaint charges a group of nine
glazing distributors and contractors in the New Orleans area with fixing and
maintaining prices at which glass is sold to the retail trade and consumers in that area.
(For further details see order to cease and desist, p.75.) (4304.)
Salt producers association.--The complaint charges a salt producers association, 20
salt producers, and a business management and engineering corporation, with entering
into a combination and conspiracy to suppress and eliminate price competition in the
sale of salt, by fixing and maintaining uniform prices, terms and conditions of sale,
establishing a national system of zones to aid in the fixing of such prices, and agreeing
to curtail production of salt. It was alleged that, pursuant to agreement, they exchanged
price lists, invoices, and other similar information in connection with such fixing of
prices, discounts, terms and conditions of sale. (4320.)
Association of manufacturers of office supplies.--A trade association representing
practically all manufacturers of pins, paper clips, and fasteners, and five representative
manufacturers, were charged with entering into a combination and conspiracy to fix
and maintain prices and prevent competition in the sale of such office supplies. (4351.)
Association of wire rope manufacturers.--A trade association, and 16 member
companies controlling 95 percent of the country’s production of wire rope, were
charged with combination and conspiracy to eliminate price competition by fixing and
maintaining uniform delivered prices, terms and conditions, in the sale of wire rope
in the United States. The complaint alleges that the respondents maintain a zone
system, whereby identical delivered prices are calculated to prevent competition; that
the respondents, pursuant to agreement, require distributors of their products to resell
them according to a fixed formula; that they agree as to the definition of what
constitutes a recognized distributor and will not sell a distributor who is considered as
not coming within the definition. (4443.)

423272--41----4

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Statistical bureau and manufacturers of milk bottle caps.--An organization known
as a statistical bureau and 12 manufacturers representing more than 75 percent of the
total business of the paper disc milk bottle cap industry, were charged with a
Conspiracy to prevent price competition and to restrain trade, by arranging fixed
minimum prices and maintaining uniform prices and discounts and other conditions
of sale, to dairies and other consumers. It Was alleged that the respondents, in carrying
out their conspiracy, exchanged copies of invoices Showing prices, discounts and
terms of sale. (4448.)
Associations of steel conduit manufacturers and distributors.--Three trade
associations and their officers and members were charged with entering into a
combination and conspiracy to suppress price competition in the sale of rigid steel
conduit by fixing and maintaining delivered prices based on a price basing point
system whereby delivered price quotations of the various manufacturers and sellers
have been uniform and identical at any given destination. (4452.)
Manufacturer and wholesalers of beauty parlor and barber supplies.--A New York
manufacturer and three Washington, D.C., wholesalers and jobbers of beauty parlor
and barber supplies were charged with entering into an agreement and conspiracy to
restrain competition by fixing prices in Washington and nearby areas of Virginia and
Maryland. (4470.)
Shippers and jobbers of spinach.--Four Walla Walla, Wash., shippers, four Chicago
jobbers, and a Minneapolis broker operating through a Chicago branch, were charged
with conspiracy to fix prices in connection with the sale of broadleaf spinach, a
distinctive variety grown exclusively in the Walla Walla region and handled only by
the respondent shippers. It was alleged that by agreement all of the respondent shippers
send their pack of this type of spinach to the respondent jobbers exclusively through
the respondent broker-age firm, and the respondent jobbers fix the prices to dealers in
Chicago, resulting in a monopolization of such business and enhancing the retail price
of the products in Chicago and the surrounding area. (4487.)
Institute of tag manufacturers.--A trade organization and 31 member companies
engaged in the manufacture and sale of tags, pin tickets, and similar marking devices,
representing a majority of the manufacturers of such products, were charged with
entering into a combination and conspiracy to restrict and eliminate price competition
of such products by fixing and maintaining uniform prices, terms and conditions of
sale for their products. (4496.)
Club of commercial printing companies.--A trade organization and 14 member
commercial printing companies in Charlotte, N. C., were charged with entering into
and carrying out a combination and con-

COMPLAINTS UNDER THE FEDERAL TRADE COMMISSION ACT 45

spiracy to suppress competition by fixing and maintaining uniform prices and
discounts in the interstate sale of printed products. (4517.)
Law book publishers and distributors.--Twenty-eight leading publishers and
distributors of law books were charged with engaging in a combination to suppress and
restrain competition by entering into agreements to fix and establish prices, terms,
conditions, and discounts governing the sale and resale of law books and other legal
publications. (4526.)
2. AGREEMENTS IN RESTRAINT OF TRADE, BOYCOTT AND REFUSAL TO
SELL

Six complaints were issued charging combination and conspiracy in restraint of
trade, among members of certain industries. Methods used were boycott and
interference with the sources of supply of competitors. -A brief description of the
complaints follow:
Producers and distributors of lecithin.--Seven American and foreign producers and
distributors of lecithin, a natural Organic substance used in the manufacture of food,
candy, rubber, leather, and petroleum products, were charged with combination and
conspiracy to suppress competition by the American group confining their business to
the United States, its possessions, and Canada, and the foreign concerns engaging in
business elsewhere. Other alleged practices included the assignment of patent rights,
joint management; entering into exclusive dealing contracts, disparagement of the
products of competitors and certain misrepresentations of their own products as well
as those of competitors. (For further details see order to cease and desist, p.76.)
(4173.)
Associated fur coat and trimming manufacturers.--A trade association and its
members were charged with combining and conspiring to binder and suppress
competition in the sale and distribution of fur coats and trimmings by establishing
uniform discounts, refusing to sell or deliver their products on memorandum or
consignment, and refusing to accept return of any products sold on memorandum or
consignment, except in accordance with uniform arrangements. Compliance was
alleged to have been enforced by means of fines, suspensions and expulsions from the
association. (4308.)
Candy and tobacco jobbers association.--A trade association and its officers and
members were charged with entering into a combination and agreement to restrain
trade in the sale of candy, tobacco, and groceries in the Detroit area by agreeing among
themselves as to who should enter or remain in such business, refusing to sell to those
not so selected, and persuading and forcing jobbers, wholesalers and suppliers located
in adjacent cities to refrain from making or soliciting sales in the Detroit area. (4321.)

46

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Association of cigarette vending machine distributors and operators.--A trade
association and five constituent associations composed of operators of automatic
cigarette vending machines, their officers and directors, were charged with combining
and conspiring to restrain competition by establishing in the members of such
associations a monopoly in the operation of such machines. Among the methods
alleged to have been used were: establishing the members of the respondent
associations as a preferred class to whom only sales of the machines would be made;
interfering with efforts of their competitors to purchase or otherwise obtain machines;
and compelling manufacturers and distributors, by boycott and otherwise, to refrain
from furnishing machines to their competitors. (4388.)
Manufacturers and distributors of food service equipment.--Various members of the
food service equipment industry, comprising representatives of 75 or 80 of the
country’s leading dealers and manufacturers, were charged with entering into
combinations and agreements to restrict competition in this industry by requiring all
manufacturers of certain food service equipment to sell their products through association members and not directly to ultimate consumers, including hotels, restaurants,
chain stores, and similar users. (4433.)
Coal mine operators and distributors.--A coal mining company of Pennsylvania and
three coal dealers in Providence, R. I., were charged with entering into an agreement
to control the sale of a certain type of coal in the Providence area by confining sales
exclusively to the three dealers, the dealers designating one or more other anthracite
coal dealers to whom the mining company should not sell. (4468.)
B. FALSE ADVERTISING AND MISREPRESENTATION

A total of 219 complaints issued during the fiscal year ended June 30, 1941, charged
false and misleading representations in advertisements and labels, and otherwise. They
may be classified broadly as follows:
Ninety-six complaints alleged false and misleading representations as to the
therapeutic value of various medicinal and food preparations and devices; 22 alleged
misrepresentations as to the potency, performance, or results to be obtained by the use
of various products; 22 charged misrepresentation as to composition, quality,
ingredients, construction, or condition, including alleged misrepresentation of old
products for new; 14 alleged that products were represented as possessing quality or
qualities they did not have or as being made of material of a different character from
that of which they actually were composed, the latter classification embracing
principally leather goods, furs, and steel blades. Eighteen complaints alleged passing
off of domestic products as imported or of imported products as

COMPLAINTS UNDER THE FEDERAL TRADE COMMISSION ACT 47

domestic or of domestic products as manufactured in a locality nationally famous for
the particular product. Nine of these involved the use of names simulating the names
of oriental rugs to designate rugs made in this country by machinery. Eleven
complaints charged misrepresentation of correspondence schools or home-study
courses.
Nine complaints alleged misrepresentation as to business status, such as business
connections, and size and extent of plant or business. This category also included the
representation by distributors that they were producers. Nine complaints alleged use
of fictitious price markings, or value, including in some instances also alleged
misrepresentation as to the character of the product. Other complaints alleged
misrepresentation of methods of doing business, value of coupons, and conditions
under which coupons were redeemed; disparagement of competitor’s product; the
misrepresentation that the advertised product had been tested and approved by
nationally known laboratories; intimidation by the false representation that a
competitor’s product was an infringement of copyright; misrepresentation of terms and
conditions of purchase; of merchandise as gratuitous; of financial returns to agents; of
profits to purchasers or representatives, equipment used, value of product and services
to be rendered; misrepresentation through use of the term “free samples” and
misrepresentation that the regular and usual selling price was a specially reduced price
for a limited time; misrepresentation of the quantity of product by the use of oversize
containers; misrepresentation through use of the name “University Press” that a
business was owned by a university and operated a printing establishment; misrepresentation of character of business by the use of misleading trade names; of certain
products as being exclusive, limited or restricted; misrepresentation by the
appropriation and use of trade names of competitors, or nationally known
manufacturers; and false representation of price, of guarantees and of ownership and
operation of laboratories.
C. MISCELLANEOUS COMPLAINTS

Lotteries or gift enterprises.--Sixty-six complaints charged either that manufacturers
of, or dealers in, food products, wearing apparel, novelty merchandise, and various
other articles of merchandise so packed or assembled their products that sales thereof
were to be made by means of a game of chance or lottery, or that they supplied dealers
with lottery devices for use in the sale of such merchandise to the public. Most of the
complaints charged the sale of either candy or novelty merchandise.
Alleged misleading use of names of nationally known organizations.--Another
complaint was against a publishing corporation, its subsidiary and its officers, alleging,
among other things, that the

48

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

respondents, through their salesmen, represented that they were connected with, and
that their books were published and sold by, a nationally known scientific institution
and a nationally known patriotic organization; that the entire profits derived from the
sale of the books accrued to the scientific institution and patriotic organization; that
their sale was limited to a Small number of selected individuals in each community;
and that the patriotic organization maintained a lobby in Washington, D. C., for the
purpose of combating anti-American and subversive organizations. The complaint
further alleged that in truth the books were not published and sold by the scientific
institution and patriotic organization, and these organizations did not receive all the
profits from their sale but only a royalty; that their sale was not limited to a few
selected individuals in each community; and that the patriotic organization did not
maintain a lobby for the purpose of combating un-American activities. It was also
charged that the use of certain words in the corporate name of the subsidiary
respondent in itself constituted false and misleading representations in that it simulated
the name of a nationally known scientific institution. (4465.)
Alleged unfair practices involving sale of water-colored photographic enlargements
and miniatures as “paintings” and “oil paintings.”--A complaint was issued against
70 respondents charging, among other things, that they, pursuant to various
understandings, agreements, combinations, and conspiracies, visited prospective customers in various parts of the country to sell the respondents’ products, ma king
various representations, among which were that they were engaged as advertising
agents of an association of artists and that their products were “paintings,” “handpainted portraits” or “polychrome portraits” worth $30 or a like amount. The
complaint alleged that the respondents were not and never had been an art association
but conducted a business enterprise; that the pictures sold by them were not portraits
or paintings but cheap, quickly made photographic enlargements; and that the
respondents’ primary object was the sale of picture frames at exorbitant prices. (4522.)
Alleged endorsement of product by fictitious disinterested agency.--A complaint
issued against a manufacturer and distributor of mattresses charged, among other
things, that the respondent entered into an arrangement with an advertising or mailing
agency by which the latter mailed to prospective purchasers advertising matter
endorsing and recommending the respondent’s mattresses, such advertising matter
having been prepared and subscribed as if coming from good housekeeping and other
women’s clubs, which were in fact non-existent. (4483.)

ORDERS TO CEASE AND DESIST

49

II. COMPLAINTS UNDER THE CLAYTON ACT
A. VIOLATION OF SECTION 2 (a) OF CLAYTON ACT AS AMENDED BY
ROBINSON-PATMAN ACT

Eleven complaints were issued which charged the sale of various commodities of
like grade and quality to some buyers at different prices from those charged other
buyers. The complaints alleged that the effect of such discriminations in price may be
substantially to lessen competition or tend to create a monopoly in commerce, or to
injure, destroy, or prevent competition with persons who either grant or knowingly
receive the benefit of such discrimination, or with customers of either of them. Two
of such complaints involve salt, one hardware, one yeast, four oil products, one rubber
stamps, one automobile parts, and one textiles.
B. VIOLATION OF SECTION 2 (c) OF CLAYTON ACT AS AMENDED BY
ROBINSON-PATMAN ACT

A total of forty-three complaints issued during the year charged violations of section
2 (c), commonly referred to as the brokerage section. Fourteen of these complaints
were directed to sellers of merchandise alleged to be granting brokerage to buyers or
intermediaries acting in fact for such buyers. Ten of the complaints were directed at
the practices of field brokers accepting brokerage, on their own purchases or passing
on brokerage to buyers, and in some instances, against both practices. Eight complaints
were directed at the practices of resident commission buyers in New York City alleged
to be engaged in the purchasing of furs and other goods and accepting brokerage from
the sellers while acting in fact for the buyers.
Five complaints issued under this section charged wholesalers with receiving
brokerage on their own purchases. Five complaints alleged the existence of dummy
brokerage setups, and one complaint was directed at the practice of a merchandise
broker accepting brokerage on his purchases. Most of these complaints have been
disposed of and are referred to under the section relating to orders to cease and desist
(pp.80, 81).
C. VIOLATION OF SECTION 2 (d) OF CLAYTON ACT AS AMENDED BY
ROBINSON-PATMAN ACT

One complaint charged a manufacturer of nurses’ uniforms with the granting of
advertising allowances to certain customers while not granting such allowances to
other competing customers on proportionately equal terms. (4335.)
ORDERS TO CEASE AND DESIST
UNFAIR TRADE PRACTICES PROHIBITED IN 346 CASES

The Commission issued 348 orders to cease and desist from the use of unfair
methods of competition and other violations of law during

50

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

the fiscal year ended June 30, 1941, as compared with 282 issued during the last
preceding fiscal year. Two of the 348 orders were rescinded, additional pleadings were
filed, and subsequently another order to cease and desist was entered in each of the 2
cases, making a total of 348 orders issued in 346 cases. One company was respondent
In 2 separate proceedings, and orders were issued in each case, although the name
appears only once in the following list:
LIST OF RESPONDENTS
Respondent
Acme Premium Supply Corporation
Lottery: miscellaneous merchandise.
Actino Laboratories, Inc., and others
Passing off used competing equipment as new
equipment: orthoptic instruments.
Air Conditioning Textiles, Inc
Misrepresenting results effected: soap.
Air Conditioning Training Corporation, and others
Misrepresenting instruction offered, cost of tuition,
availability of positions, prospective earnings of students,
and association with members of the Air Conditioning and
Refrigeration Industry: correspondence school (air
conditioning and refrigeration).
Algren Manufacturing Co., Inc
Misrepresenting gold content: wrist watch buckles.
Allen Candy Co., W. C., Inc
Lottery: candy.
Allred Brothers Candy Co
Lottery: candy.
Altman Neckwear Corporation
Passing off merchandise not made by American Indians,
as Indian handicraft; misrepresenting silk content and
failing to disclose rayon content: neckties.
American Brokerage Co., Inc
Price discrimination: food products.
American Cord & Webbing Co
Misrepresenting silk and linen content and failing to
disclose rayon content; falsely representing that all of the
respondent’s merchandise is dyed with “vat dyes” and that
the color is impervious to the effects of sunlight: tape for
Venetian blinds.
American Crayon Co
Price discrimination: educational supplies.
American Drug & Chemical Co
Misrepresenting therapeutic value: medicinal
preparations.
American Hair & Felt Co., and others
Misrepresenting hair content; unduly disparaging
competing products: rug underlays.

Location
St. Louis.
Chicago.

New York.
Youngstown, Ohio.

New York.
Portland, Oreg.
Charlotte, N. C.
New York,

Roanoke, Va.
New York.

Sandusky, Ohio.
Minneapolis

Chicago.

51

ORDERS TO CEASE AND DESIST
Respondent
American Lead Pencil Co., and others
Combining in restraint of trade: typewriter erasers.
American Lecithin Co., Inc., and others
Combining in restraint of trade; falsely claiming
merchandise has been endorsed by an agency of the
Federal Government; unduly disparaging competing
products: lecithin.
American Maize-Products Co
Price discrimination: corn products.
American Medicinal Products, Inc., and others
Misrepresenting results effected and failing to disclose
harmful potentialities: flesh-reducing compounds.
American Plicrench Corporation
Misrepresenting financial returns to agents: tools.
Anheuser-Busch, Inc
Price discrimination: corn products.
Apex Lamp Works
Misrepresenting results and economies effected: lamp
reflectors.
Arlington Sales Co
Lottery: miscellaneous merchandise.
Arnold Shoe Co., M. N
Using the word “alligator” to designate leather other
than that made from alligator hide, and to describe certain
leather finishes without a statement to the effect that the
word refers to the “finish” only: shoes.
Art-Web Manufacturing Co., Inc., and others
Passing off domestic merchandise as imported
merchandise: wearing apparel.
Associated News Photographic Service, Inc., and others
Private photographers claiming to be press
photographers: photographic prints.
Associates Sales Agency
Lottery: miscellaneous merchandise.
Atlantic Commission Co
Price discrimination: fruits and vegetables.
Atlas Health Appliance Co
Misrepresenting therapeutic value and failing to disclose
harmful potentialities: diathermy devices.
Augusta Knitting Corporation
Misrepresenting silk and wool content: knitted wear.
Automatic Radio Manufacturing Co., Inc., and others
Appropriating a favorably known name to designate the
respondents’ merchandise: radios and radio parts.

Location
Hoboken, N.J.
Elmhurst, Long Island,
N.Y.

New York.
Los Angeles.

Chicago.
St. Louis.
Brooklyn, N. Y.

Kansas City, Mo.
South Weymouth, Mass.

Brooklyn, N. Y.

New York.

Birmingham, Ala.
New York.
Los Angeles.

Utica, N. Y.
Boston.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Respondent
Badger-Brodhead Cheese Co., and others
Combining in restraint of trade: dairy products.
Bauer & Black
Misrepresenting therapeutic value: devices and
medicinal preparations for treatment of the feet.
Basic Foods, Inc., and others
Misrepresenting therapeutic value; using the word
“doctor” or an abbreviation thereof in referring to a person
who is not a doctor of medicine or to a product that was
neither formulated nor approved by a doctor of medicine:
medicinal and health food products.
Becker Cloak Co., Inc
Passing off textile fabrics as peltries of fur bearing
animals or as fur fabrics made from the wool of lambs of
the Karakul breed; passing off domestic merchandise as
imported merchandise as imported merchandise: wearing
apparel.
Beeman’s Laboratory, Inc., and others
Misrepresenting therapeutics value and failing to
disclose harmful potentialities: medicinal preparations.
Belfast Packing Co Belfast, Maine.
Price discrimination: canned sardines.
Bell & Co., Inc
Misrepresenting therapeutic value: medicinal
preparations.
Bellamy, Ethel, Inc
Misrepresenting results effected: cosmetics.
Bemporad & Co., R. F., Inc., and others
Using words and scenes suggestive of China and the
Orient to designate merchandise not made therein and not
possessing the true characteristics of Oriental merchandise;
using the word “reproductions” to designate rugs that are
not true counterparts of the type of rug simulated; passing
off hooked rugs made elsewhere than in America, as
American-made rugs: rugs.
Benton Announcements, Inc
Passing off process printing as engraving: printed
stationery.
Bernard & Co., J. E., Inc
Passing off reconditioned merchandise as new
merchandise: spark plugs.
Bierhaus & Sons, E
Lottery: candy.
Binney and Smith Co
Price discrimination: educational supplies.
Blanchard, Jane, Dr
Misrepresenting therapeutic value and failing to disclose
harmful potentialities; falsely representing that the
respondent is a doctor of medicine: medicinal preparations.

Location
Monroe, Wis.
Boston.

Somerset, Pa.

New York.

Atlanta.

Orangeburg, N. Y.

Nutley, N.J.
New York.

Buffalo.

New York.

Vincennes, Ind.
New York.
Pittsburgh.

53

ORDERS TO CEASE AND DESIST
Respondent
Blue Ribbon Candy Co., Inc., and others
Lottery: candy.
Booth Fisheries Corporation
Price discrimination: canned sardines.
Bounds & Co., George A
Price discrimination: canned vegetables.
Bowe & Hartman
Misrepresenting therapeutic value: medicinal
preparations
Brewster, Jefferson R., and others
Misrepresenting therapeutic value and falsely claiming
a laboratory is maintained: medicinal preparations.
Briarwood Corporation
Lottery: cigarettes and smoking pipes.
Brown, Wallace, Inc
Mailing unordered, invoiced merchandise upon receipt
of request for certain advertised free samples: greeting
cards.
Burry Biscuit Corporation, and others
Slack filling of containers: bakery products.
Burtley Co
Misrepresenting results effected: an ointment designed
to facilitate weight reducing.
Butler & Co., A. S
Passing off reconditioned merchandise as new
merchandise: fruit jars.
Camp, J. H., and others
Misrepresenting therapeutic value: medicinal
preparations.
Canadian Fur Trappers Corporation, and others
Passing off an American retail organization as a
Canadian fur-trapping organization; passing off inferior
skins as “Seal,” “Beaver,” “Broadtail,” etc.: furs.
Candymasters, Inc
Lottery: candy.
Capital Drug Co
Misrepresenting therapeutic value and failing to disclose
harmful potentialities: medicinal preparations.
Capitol Building Supply Co., and others
Combining in restraint of trade: building materials.
Carlton Mills Co., Inc
Passing off textile fabrics as peltries of fur bearing
animals or as fur fabrics made from the wool of lambs of
the Karakul breed; failing to disclose rayon content:
fabrics.
Carter Sales Co
Misrepresenting therapeutic value and failing to disclose
harmful potentialities: a treatment for alcoholism.

Location
Harlingen, Tex.
Chicago.
Salisbury, Md.
Toledo.

Nashville.

Cleveland.
New York.

Elizabeth, N. J.
New York.

Chicago.

Ravenswood, W. Va.

New York.

Minneapolis.
Roanoke, Va.

Milwaukee.
Philadelphia.

Los Angeles.

54

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Respondent
Location
Case & Sons Cutlery Co., W. R
Bradford, Pa.
Using words suggestive of The Boy Scouts of America
to designate merchandise that is not standard equipment of
the members of that organization: pocket knives.
Certane Co., and others
Los Angeles.
Misrepresenting therapeutic value: hygienic preparations
and appliances.
Cherry Co., A. T., and others
Dayton, Ohio.
Marking up: soap.
Cherry Specialty Co
Chicago.
Lottery: candy.
Cheshill Manufacturing Co
New York.
Distributor claiming to be manufacturer and falsely
claiming certain patents are held or pending: chain locks.
Chicago Thermo-Magnetic Cushion Co., and others
Chicago.
Misrepresenting therapeutic value: electrified cushions.
Chilton Greetings Co
Boston.
Mailing unordered, invoiced merchandise upon receipt
of request for certain advertised free samples: greeting
cards.
Clark, Wallace G., and others
Dallas.
Misrepresenting results effected: dentifrices.
Claro Laboratories, Inc., and others
South Bend, Ind.
Misrepresenting results effected and failing to disclose
harmful potentialities: depilatories.
Clayton Candy Co
Phenix City, Ala.
Lottery: candy.
Clito Co
San Antonio.
Misrepresenting therapeutic value and failing to disclose
harmful potentialities: medicinal preparations.
Coal Carburetor Co., and others
New Brunswick, N. J.
Misrepresenting results effected; falsely representing
products have been endorsed by an agency of the Federal
Government or by public health authorities: coal-saving
devices.
Cohen’s Cut Rate Drug Store, and others
Charleston, W. Va.
Misrepresenting therapeutic value and failing to disclose
harmful potentialities: medicinal preparations.
Cohn, Julian S
New York.
Distributor claiming to be manufacturer: handkerchiefs.
Colonial Drug Co., and others
Tulsa, Okla.
Misrepresenting therapeutic value: medicinal preparations.
Colonial Knife Co., Inc
Providence, R. I.
Using words and picturizations suggestive of The Boy
Scouts of America to designate merchandise that is not
standard equipment of the members of that organization:
pocket knives.

55

ORDERS TO CEASE AND DESIST
Respondent
Consolidated Book Publishers, Inc
Passing off a commercial enterprise as an educational
foundation; passing off a revised, reprinted edition of a
1932 English dictionary as a modern American edition
printed from new plates; misrepresenting cost, size, and
binding of the respondent’s encyclopedia; falsely claiming
that the publications have been sponsored by educational
or beneficent institutions: encyclopedias and dictionaries.
Consolidated Sign Letter Co., Inc
Misrepresenting gold content; passing off merchandise
composed of lead and tinfoil, as silver; metal signs.
Consumers Bureau of Standards
Passing off a commercial enterprise as an impartial,
nonprofit organization adequately equipped for making
scientific tests; inducing manufacturers and distributors to
purchase or lend financial aid to the respondent’s
publications by threatening or implying that they or their
products will be unfavorably listed therein: publications
containing reports appraising or classifying merchandise
and services.
Corn Underwear, Ralph, Inc
Misrepresenting silk content and failing to disclose
rayon content; distributor claiming to be manufacturer:
wearing apparel.
Crazy Water Co., and others
Misrepresenting therapeutic value: mineral water.
Crook-Wallace Co
Lottery: candy.
Cumberland Candy Co., and others
Lottery: candy.
Cup & Container Institute, Inc., and others
Combining in restraint of trade: paper dishes.
Curtis Industries, Helene
Distributor claiming to be manufacturer; misrepresenting
results effected; representing a device that registers
temperature, as a thermostatic device: permanent waving
appliances.
D. D. D. Corporation
Misrepresenting therapeutic value: medicinal
preparations.
Deniston Co
Misrepresenting efficacy and superiority over
competing products: roofing nails.
Diamond Candy Co
Lottery: candy.
Diamond Cap Co
Passing off reconditioned merchandise as new merchandise: caps.

Location
Chicago.

Do.

New York.

Do.

Mineral Wells, Tex.
Vincennes, Ind.
Fayetteville, N. C.
New York.
Chicago.

Batavia, Ill.

Chicago.

Charlotte, N. C.
Philadelphia.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Respondent
Location
Dixie Candy Co., Inc
Charlotte, N. C.
Lottery: candy.
Douglas Candy Co
St. Joseph, Mo.
Lottery: candy.
Drucquer & Sons
Berkeley, Calif.
Passing off a domestic organization and domestic merchandise as a foreign organization and
foreign-made merchandise: tobacco products.
Eastern Premium House, Inc
New York.
Lottery: miscellaneous merchandise.
Eaula Candy Co
Columbia, S. C.
Lottery: candy and novelty merchandise.
Edwin Cigar Co., Inc., and others
New York.
Misrepresenting quality and prices; distributor claiming
to be manufacturer; designating as Havana cigars without
using the words “Blended with Havana” in immediate
conjunction there with, cigars composed of Cuban tobacco
in substantial part only; using words suggestive of England
to designate a domestic organization and passing off
domestic merchandise as imported merchandise: tobacco
products, books, and miscellaneous merchandise.
Electrical Laboratories, Co., Inc
Do.
Misrepresenting results effected: radio apparatus.
Electrolysis Associates, Inc., and others
Do.
Misrepresenting results effected and failing to disclose
harmful potentialities: a device for the electrolytic removal
of superfluous hair by self-application.
Elite Specialties, Inc., and others
Indianapolis.
Misrepresenting financial returns to purchasers; falsely
representing that the respondents furnish purchasers
exclusive locations and sales territory and refund money or
resell merchandise in case of dissatisfaction: nuts and nut
display warmers.
Ely & Walker Dry Goods Co
St. Louis.
Misrepresenting wool and camel’s hair content and
failing to disclose rayon content: wearing apparel.
Empire Monument Co
Atlanta.
Passing off cast stone as natural marble or granite;
misrepresenting durability: monuments.
Empire State Candy Co
Athens, Ga.
Lottery: candy.
Empire Style Designers League, Inc., and others
New York.
Combining in restraint of trade: designs and patterns for
fur coats.
Erie Laboratories, Inc., and others
Cleveland.
Misrepresenting therapeutic value and failing to disclose
harmful potentialities: medicinal preparations.

57

ORDERS TO CEASE AND DESIST
Respondent
Ethel’s Candy & Sales Co., Inc
Lottery: candy.
Eucozone Laboratories, Inc., and others
Misrepresenting therapeutic value: antiseptic oil.
Evans Novelty Co., and others
Lottery: miscellaneous merchandise.
Fairfacts Co
Distributor claiming to be manufacturer: porcelain
bathroom accessories.
Farmers Vaccine & Supply Co
Misrepresenting results effected: cattle vaccine.
Fink & Co., Inc
Misrepresenting therapeutic value and results effected:
medicinal preparations and cosmetics.
Firestone Tire & Rubber Co
Misrepresenting percentages of savings in connection
with special sales; quoting enhanced prices as regular
prices: automobile tires and tubes.
Frank & Co., S. M., Inc., and others
Lottery: miscellaneous merchandise.
Fredmorr, Inc., and others
Lottery: miscellaneous merchandise.
Fresh Grown Preserve Corporation, and others
Passing off a product containing less than 45 pounds of
fruit to 55 pounds of sugar, as a preserve: imitation
preserves.
Frey Co., Parker T., and others
Price discrimination: food products.
Friedman & Sons, S., and others
Misrepresenting cashmere content: knitting yarns.
Fulton Co., John J
Misrepresenting therapeutic value: medicinal
preparations.
G-H-R Electric Dilator Co., and others
Misrepresenting therapeutic value: electric dilators and
electric hygienic devices.
Gemson, Harry
Misrepresenting camel’s hair content: fabrics.
General Grocer Co
Price discrimination: food products.
General Merchandise Co
Lottery: miscellaneous merchandise.
General Motors Corporation, and others
Misrepresenting prices by featuring the cost of a lowpriced car or one without standard equipment in
conjunction with the description or picturization of a fully
equipped and/or a higher priced car; quoting as a retail
price one that does not include all incidental charges
except transportation and failing to direct attention to
additional tax charges in connection therewith:
automobiles.

Location
Atlanta.
Detroit.
Chicago.
Trenton, N. J.

Kansas City, Mo.
New York.

Akron, Ohio.

New York.
Do.
Lyndhurst, N, J.

Philadelphia.
New York.
San Francisco.

Grand Rapids.

New York.
St. Louis.
Milwaukee.
Detroit.

58

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Respondent
George, Nick A., and others
Misrepresenting therapeutic value medicinal
preparations.
Gland Estemeter Corporation, and others
Misrepresenting efficacy: diagnostic machines.
Gluck & Co., Joseph, Inc
Using words and picturizations suggestive of the Orient
to designate merchandise not made therein and not
possessing the true characteristics of Oriental merchandise:
rugs.
Gly-Cas Medicine Co., and others
Misrepresenting therapeutic value: medicinal
preparations.
Gold Star Novelty House
Lottery: miscellaneous merchandise.
Goodrich Co., B. F
Misrepresenting percentages of savings in connection
with special sales; quoting enhanced prices as regular
prices: automobile tires and tubes.
Goodyear Tire & Rubber Co
Misrepresenting percentages of savings in connection
with special sales; quoting enhanced prices as regular
prices: automobile tires and tubes.
Gordon Foods, Inc
Lottery: nuts.
Gordon-Gordon, Ltd., and others
Misrepresenting results effected; using the word “food”
to designate merchandise that has no nourishing qualities;
representing that face powder containing orris root will
irritate the skin of users not allergic to orris root:
cosmetics.
Grand Rapids Exchange, Inc., and others
Dealer claiming to be manufacturer; representing that
Grand Rapids merchandise is handled exclusively:
furniture.
Group Sales Corporation
Passing off surplus stock, samples, and seconds as new
merchandise from nationally known manufacturers: silk
and rayon fabrics.
H & D Sales Co., and others
Lottery: miscellaneous merchandise.
H. & L Candy Co
Lottery: Candy.
Hagn Co., Joseph
Lottery: miscellaneous merchandise.
Hall & Ruckel, Inc

Location
Casper, Wyo.

Chicago.
New York.

Muncie, Ind.

New York.
Akron, Ohio.

Do.

Atlanta.
Chicago.

Brooklyn, N. Y.

New York.

Knoxville.
Marshville, N. C,
Chicago.
Brooklyn, N. Y.

Misrepresenting results effected and failing to disclose harmful potentialities: depilatories.

ORDERS TO CEASE AND DESIST

59

Respondent
Location
Hall, E. W
St. Louis.
Misrepresenting therapeutic value: medicinal preparations.
Hamilton Ross Factories, Inc
Chicago.
Distributor claiming to be manufacturer; misrepresenting silver content: cutlery, china, glass,
and silver plated ware.
Hardwood Charcoal Co., and others
Memphis.
Combining in restraint of trade: hardwood charcoal.
Harrison Candies, Helen, Inc
Chicago.
Lottery: candy.
Hartig Drug Co., and others
Dubuque, Iowa.
Misrepresenting therapeutic value and failing to disclose
harmful potentialities: medicinal preparations.
Health Ray Manufacturing Co., Inc
Deep River, Conn.
Misrepresenting therapeutic value and failing to disclose
harmful potentialities: health lamps.
Hearst Magazines, Inc
New York.
Using or authorizing the use of emblems of approval or
merit on merchandise which has not been tested by the
respondent to determine whether advertised claims are
justified; representing that all merchandise advertised in
the respondent’s publications is guaranteed by the
respondent, without specifying the limitations of the
guaranty: emblems and guaranties implying investigation
and approval of commodities and services.
Hills Brothers Co., and others
Do.
Combining in restraint of trade: dates.
Hoffman, L
Do.
Passing off imitation or split leather products tooled in
artificial gold, as leather and top grain leather tooled in
genuine gold leaf; using picturizations of superior,
competing merchandise as representative of the
respondent’s merchandise: desk pads.
Holmes Packing Corporation
Eastport, Maine.
Price discrimination: canned sardines.
Holtz, Jacob, and others
New York.
Lottery: miscellaneous merchandise.
Hoosier Candy Sales Co
Indianapolis.
Lottery: Candy.
Home Diathermy Co., Inc
New York.
Misrepresenting therapeutic value: diathermy devices.
House of Crane
Indianapolis.
Lottery: tobacco products, candy, and miscellaneous
merchandise.
423272--41----5

60

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Respondent
Location
House of Royalsun
New York.
Misrepresenting silk and wool content and failing to
disclose rayon content; misrepresenting staff and
equipment: fabrics and knitting yarns.
Howard Sales Co., and others
Newark, N. J.
Misrepresenting gold content; quoting enhanced prices
as regular prices; representing that products are repaired
free, when charges are made in excess of those for
handling, postage, and insurance: pencils and fountain
pens.
Hubinger Co
Keokuk, Iowa.
Price discrimination: corn products.
Husco Manufacturing Co., and others
Atlanta.
Lottery: miscellaneous merchandise.
Hy-Phen Corporation
Matoaka, W. Va.
Misrepresenting therapeutic value: medicinal preparations.
Hy-Test Cement Co
Philadelphia.
Violating established rules by disclosing the identity of
the respondent’s product in connection with a research
investigation conducted by the U.S. Bureau of Standards,
and using a report of an agency of the Federal Government
or an employee thereof, for publicity purposes: masonry
cement.
Ideal Candy Novelties Co., Inc., and others
Brooklyn, N. Y.
Lottery: candy and miscellaneous merchandise.
Imperial Knife Co., Inc Providence, RI.
Using words and picturizations suggestive of The Boy
Scouts of America to designate merchandise that is not
standard equipment of the members of that organization:
pocket knives.
Industrial Plants Corporation
New York.
Misrepresenting nickel content: pliers and wrenches.
Interstate Bakeries Corporation, and others
Kansas City, Mo.
Combining in restraint of trade: bakery products.
Interwoven Stocking Co
New Brunswick, N. J.
Passing of domestic merchandise as imported
merchandise: hosiery.
Jacobs Candy Co., Inc
New Orleans.
Lottery: candy.
Johnston Co., Robert A
Milwaukee.
Lottery: candy.
Jones & Co., Howard E., and others
Baltimore.
Price discrimination: food products.
Jonesport Packing Co
West Jonesport, Maine.
Price discrimination: canned sardines.
Jordan Stevens Co
Minneapolis.
Lottery: coffee.

61

ORDERS TO CEASE AND DESIST
Respondent
Junior League Lingerie, Inc
Using the words “Junior League” in trade name of a
commercial enterprise not sponsored by the “Association
of Junior Leagues of America, Inc.”: wearing apparel.
Kant-Slip Manufacturing Co
Misrepresenting results effected: belt dressing.
Kastor & Bros., Adolph, Inc
Using words and picturizations suggestive of The Boy
Scouts of America to designate merchandise that is not
standard equipment of the members of that organization:
pocket and sheath knives.
Kongo Chemical Co., Inc
Misrepresenting results effected and failing to disclose
harmful potentialities: preparations for straightening the
hair.
Kuhn Remedy Co
Misrepresenting therapeutic value and failing to disclose
harmful potentialities; using the word “Remedy” in trade
name and to designate preparations that do not constitute
cures: medicinal preparations.
Lambert Pharmacal Co St. Louis.
Price discrimination: antiseptic mouth washes.
Lay & Co., H. W., Inc
Lottery: nuts.
Lessing Hat Co., Inc., and others
Passing off reconditioned merchandise as new
merchandise: hats.
Loughran, Tommy
Misrepresenting results effected: correspondence school
(physical culture).
Lo-Well Pencil Co., and others
Misrepresenting quality and prices of merchandise and
value of premiums offered to induce its purchase: pencils
and miscellaneous merchandise offered as premiums.
Luxor, Ltd
Discriminating in the services furnished customers:
cosmetics.
M & M Bag & Suit Case Co
Passing off buffalo leather as walrus leather: luggage.
Maf Hat Works, Inc., and others Newark, N. J.
Representing that products made in whole or in part
from used merchandise are new or are composed of new
materials: hats.
Macher Watch & Jewelry Co., and others New York.
Retail dealer claiming to be wholesale dealer; Passing
off nonprecious stones as precious stones: jewelry,
silverware, and electrical appliances.

Location
New York.

Chicago.
New York.

Do.

Chicago.

Atlanta.
New York.

Philadelphia.

New York.

Chicago.

Jersey City, N. J.

62

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Respondent
Machiasport Canning Co
Price discrimination: canned sardines.
Mahler Co., D. J., Inc East
Misrepresenting results effected and failing to disclose
harmful potentialities: devices for the electrolytic removal
of superfluous hair by self-application.
Manchester Silver Co., and others
Quoting enhanced prices as regular prices; distributing
to dealers price lists quoting enhanced prices, for use in
promoting “special sales”: silverware.
Maple Lawn Poultry Farm, and others
Passing off chicks from eggs produced by flocks that
have not been culled or blood-tested, as products of
healthy, blood-tested, culled flocks supervised by the
respondents: baby chicks.
Marlborough Sales Co., Inc., and others
Marking up; simulating trade dress of competing
products; slack filling of containers; falsely representing
that merchandise is manufactured under the supervision of
someone possessing special knowledge of dental hygiene
and pharmacology: dentifrices and cosmetics.
May’s Cut Rate Drug Co
Misrepresenting therapeutic value and failing to disclose
harmful. potentialities: medicinal preparations.
May’s Cut Rate Drug Co. of Charleston
Misrepresenting therapeutic value and failing to disclose
harmful potentialities: medicinal preparations.
McAfee Candy Co., and others
Lottery: candy.
Meadors Manufacturing Co
Lottery: candy and nuts.
Mendoza Fur Dyeing Works, Inc
Passing off domestic designs and merchandise as
imported designs and merchandise; passing off an award
for the imitation of certain furs, as an award indicating
superiority in a competitive display of fur garments: dyed
and processed furs and patterns for fur garments.
Merrick National Co., and others
Lottery: candy.
Meyers Co., M. J. & H. J., Inc
Simulating trade name and trade dress of competing
merchandise; passing off merchandise made elsewhere
than in England, as English merchandise: tablesauce.

Location
Machiasport, Maine.
Providence, R. I.

Providence, R. I.

McAlisterville, Pa.

New York.

Clarksburg, W. Va.

Charleston, W. Va.

Macon, Ga.
Greenville, S. C.
New York.

Minneapolis.
New York.

63

ORDERS TO CEASE AND DESIST
Respondent
Michigan Merchandising Co
Misrepresenting financial returns and services required
of agents; exacting payment for merchandise furnished
agents, under the guise of holding a sum of money as a
temporary bond; misrepresenting manufacturer and
guaranties on merchandise: electric water heaters.
Middle West Supply Co., and others
Using the words “premium,” “prize,” or “free” to
designate merchandise that is given in return for services
or money; quoting enhanced prices as regular prices:
flower seeds and cosmetics.
Miller Drug Co
Misrepresenting results effected and failing to disclose
harmful potentialities: flesh reducing compounds.
Minetree Brokerage Co
Price discrimination: food products.
Modern Hat Works
Representing that products made in whole or in part
from used merchandise are new or are composed of new
materials: hats.
Monarch China Co
Distributor claiming to be manufacturer; quoting regular
prices as reduced prices; displaying as samples,
merchandise superior to that furnished: earthenware.
Morris & Co., Philip, Ltd., Inc
Passing off domestic merchandise as imported
merchandise; falsely representing factories or warehouses
are operated in foreign cities: cigarettes.
Muller & Co., E. B., and others
Price discrimination; selling below cost where
suppression of competition or creation of a monopoly may
result; representing color that is produced by artificial
coloring agents is achieved by the method of roasting;
unduly disparaging competing products: chicory.
National Converters Institute, and others
Combining in restraint of trade: cellulose products.
National Distributors, and others
A private enterprise claiming to be functioning under the
direction of the Federal Government and to be selling
merchandise the use of which is compulsory: income tax
accounting systems.
National Institute, Inc., and others
Misrepresenting availability of positions, prospective
earnings of students, and association with Diesel engine
manufacturers: correspondence school (Diesel engines).

Location
Pontiac, Mich.

St. Charles, Ill.

Rochester, N. Y.

Poplar Bluff, Mo.
Jersey City, N. J.

Atlanta.

New York.

Port Huron, Mich.

Chicago.
Mt. Rainier, Md.

Muncie, Ind.

64

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Respondent
Location
National Premium Co., and others
Chicago.
Lottery: miscellaneous merchandise.
National Proprietaries, Inc
Do.
Misrepresenting therapeutic value and failing to disclose
harmful potentialities: medicinal preparations.
National Standard Parts Association, and others
Detroit.
Combining in restraint of trade: automobile accessories.
Neo-Vim Co., and others
Columbus, Ohio.
Misrepresenting therapeutic value and results effected:
medicinal preparations and dentifrices.
New Method File Grinders, Inc., and others
Chicago.
Passing off reconditioned merchandise as new
undamaged merchandise or as new merchandise that has
been damaged: files.
New York Premium Novelty Co
New York.
Lottery: miscellaneous merchandise.
North Lubec Manufacturing & Canning Co
North. Lubec, Maine.
Price discrimination: canned sardines.
Novelty Premium Co
Philadelphia
Lottery: miscellaneous merchandise.
Nu-Way Manufacturing Co
Des Moines.
Representing that an article has been approved. by
Underwriters Laboratories, when no such approval has
been given or only a part of the product has been so
approved; misrepresenting prices and financial returns to
agents; representing as free, merchandise that is given in
return for money or service: electric water heaters.
Omega Electrolysis Institute, and others
New York.
Misrepresenting results effected and failing to disclose
harmful potentialities: devices for the electrolytic removal
of superfluous hair by self-application.
Park, Philip R., Inc
San Pedro, Calif.
Misrepresenting therapeutic value: medicinal preparations.
Parr Sales Co
Vidalia, Ga.
Price discrimination: food products.
Pascal Co., Inc
Seattle.
Misrepresenting therapeutic value and failing to disclose
harmful potentialities: medicinal preparations.
Patent Specialties Co
New York.
Misrepresenting construction and efficacy; using the
word “free” to designate merchandise regularly included in
a combination offer: electric welding devices and welding
supplies.
Peacock Canning Co., R. J
Lubec, Maine.
Price discrimination: canned sardines.
Pelican State Candy Co., and others
New Orleans.
Lottery: candy.

ORDERS TO CEASE AND DESIST

65

Respondent
Location
Pemick & Ford, Ltd., Inc
New York.
Price discrimination: corn products.
Petalskin Toiletries, Inc
Do.
Misrepresenting composition and results effected:
cosmetics.
Peterson Core Oil & Mfg. Co., and others
Chicago.
Misrepresenting plant and facilities and falsely
representing that branch offices are maintained in various
cities: core oil.
Pharmacal Co., J. R
Chester, Pa.
Misrepresenting therapeutic value; representing that
products have been approved by leading health authorities:
medicinal preparations.
Phillips Card Co
Newton, Mass.
Mailing unordered, invoiced merchandise upon receipt
of request for certain advertised free samples: greeting
cards.
Phillips Chemical Co., Charles H
New York.
Misrepresenting ingredients and results effected:
cosmetics.
Piccadilly Hosiery Mills, and others
Philadelphia.
Distributor claiming to be manufacturer: hosiery.
Pierre Chemical Co., Dr
Chicago.
Misrepresenting therapeutic value: medicinal preparations.
Pine Hill Lime & Stone Co., and others
Pine Hill, Ky.
Combining in restraint of trade; collusive bidding;
establishing and maintaining a basing point system:
chemical, building, and agricultural lime.
Pioneer Specialty Co., and others
Brooklyn, N. Y.
Lottery; distributor claiming to be manufacturer: candy.
Pittsburgh Cut Rate Drug Co
McKeesport, Pa.
Misrepresenting therapeutic value and failing to disclose
harmful potentialities: medicinal preparations.
Pittsburgh Plate Glass Co., and others
Memphis.
Combining in restraint of trade: glass.
Plat-Num Perl Laboratories
New York.
Misrepresenting results effected: cosmetics.
Plomb Tool Co
Los Angeles.
Lottery: tools.
Popper & Klein, and others
New York.
Passing off imported merchandise as domestic
merchandise: microscope cover glasses.
Premium Candy Co
Fayetteville, N. C.
Lottery: candy.
Primfit Textile Co
Cincinnati.
Distributor claiming to be manufacturer; falsely claiming
that certain of the respondent’s merchandise is the original
garterless sock: men’s hosiery.

66

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Respondent
Primrose House, Inc., and others
Misrepresenting results effected: cosmetics.
Progressive Medical Co., and others
Misrepresenting therapeutic value and failing to disclose
harmful potentialities: medicinal preparations and weight
reducing compounds.
Pronto File Corporation
Quoting regular prices as reduced prices: steel filing
cabinets.
Prostex Co
Misrepresenting therapeutic value: medicinal
preparations.
Purex Corporation, Ltd
Misrepresenting results effected and quantity necessary
for am adequate solution: disinfectants and germicides.
Queen City Candy Co., Inc
Lottery: candy.
R. E. Engineers
Misrepresenting results effected: devices alleged to
augment radio tubes.
Rabhor Corporation
Misrepresenting silk content and failing to disclose
rayon content: wearing apparel.
Ramsdell Packing Co
Price discrimination: canned sardines.
Raphael, Sol, Inc
Using words and picturizations suggestive of China and
the Orient to designate merchandise not made therein and
not possessing the characteristics of Oriental merchandise:
rugs.
Reaburn & Co., C. G
Price discrimination: food products.
Reed’s Cut-Rate Store, and others
Misrepresenting therapeutic value and failing to disclose
harmful potentialities: medicinal preparations.
Reliable Sales Service Co
Distributing lottery devices: sales promotion cards.
Reliance Jacket Co Minneapolis.
Lottery: wearing apparel and miscellaneous merchandise.
Reva Co
Misrepresenting results effected and failing to disclose
harmful potentialities: hair dyes.
Revigator Corporation, and others
Misrepresenting results effected: preparations and
devices for treating the hair.
Rex Merchandise Corporation of America, and others
Marking up: cosmetics.
Roberts & Co., Thomas Philadelphia.
Price discrimination: food products.

Location
New York.
Chicago.

New York.

Miami, Okla.

Southgate, Calif.

Charlotte, N. C.
Cincinnati.

New York.

Rockland, Maine.
New York.

Roanoke, Va.
Clarksburg, W. Va.

Philadelphia.

Chicago.

Cleveland.

New York.

67

ORDERS TO CEASE AND DESIST
Respondent
Robinson & Co., W. E., Inc
Price discrimination: food products.
Robinson Clay Product Co. of New York, and others
Combining in restraint of trade: building materials and
vitrified sewer pipe.
Royal River Packing Corporation
Price discrimination: canned sardines.
Ru-Ex Co
Misrepresenting therapeutic value and failing to disclose
harmful potentialities: medicinal preparations.
Ruff & Son, H. M
Price discrimination: food products.
Ruth Gowns, Inc
Failing to disclose rayon content: wearing apparel.
S & K Sales, Inc
Lottery: miscellaneous merchandise.
Sales Promoting Co
Lottery: miscellaneous merchandise.
San Pedro Fish Exchange, and others
Combining in restraint of trade: sea food.
Sanders Manufacturing Co
Lottery: miscellaneous merchandise.
Scholl Manufacturing Co., Inc
Misrepresenting therapeutic value: devices for treating
the feet.
Schrade Cutlery Co
Using words and picturizations suggestive of The Boy
Scouts of America to designate merchandise that is not
standard equipment of the members of that organization:
pocket knives.
Schutter Candy Co
Lottery: candy.
Scientific Manufacturing Co., Inc., and others
Unduly disparaging aluminum ware: pamphlets treating
of the allegedly harmful effects of food cooked in
aluminum ware.
Seaboard Packing Co
Price discrimination: canned sardines.
Seaboard Paint & Varnish Co
Passing off reconditioned merchandise as new
merchandise; quoting enhanced prices as regular prices:
paint.
Sears, Roebuck & Co
Misrepresenting percentages of savings in connection
with special sales; quoting enhanced prices as regular
prices: automobile tires and tubes.

Location
Bel Air, Md.
New York.

Yarmouth, Maine.
St. Paul.

York, Pa.
New York.
St. Louis.
New York.
San Pedro, Calif.
Nashville.
Chicago.

Walden, N. Y.

Chicago.
Scranton, Pa.

Lubec, Maine.
Brooklyn, N. Y.

Chicago.

Sekov Corporation, and others
Misrepresenting therapeutic value and failing to disclose
harmful potentialities: flesh reducing compounds.

Hollywood, Calif.

68

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Respondent
Shapiro Felt Rug Co., and others
Representing that products made in whole or in part
from used merchandise are new or are composed of new
materials: novelty hats and caps.
Shaving Powder Co
Representing the use of a depilatory as a new method of
shaving; misrepresenting results effected and failing to
disclose harmful potentialities: depilatories.
Shepherd, Imogene, Ltd
Misrepresenting results effected; representing that the
“Vitamin E” content and a fictitious so-called “Vitamin F”
content are introduced into the system by absorption from
the skin: cosmetics.
Sherry’s Cut Rate Drug Co., Inc
Misrepresenting therapeutic value and failing to disclose
harmful potentialities: medicinal preparations.
Siegel & Alenikoff, and others
Passing off textile fabrics as peltries of fur-bearing
animals or as fur fabrics made from the wool of lambs of
the Karakul breed; passing off domestic merchandise as
imported merchandise: wearing apparel.
Siegel-Kahn Co., Inc., and others
Distributor claiming to be manufacturer; misrepresenting
wool content and failing to disclose rayon content; using
the term “Doctor” of “Dr.” to designate merchandise not
designed or approved by a doctor of medicine: wearing
apparel.
Simmon’s Cut Rate Drug Store
Misrepresenting therapeutic value and failing to disclose
harmful potentialities: medicinal preparations.
Silver & Co., William
Price discrimination: food products.
Silver Service Corporation, and others
Misleading representations: Sales promotion plan
involving so-ca lied puzzle contests, and silverware for use
in conjunction therewith.
Singer Fur Co., Frank L
Failing to pay trappers and dealers on delivery, the
enhanced prices quoted: raw furs.
Sisk & Son, Albert W
Price discrimination: food products.
Smoke Conditioner Co
Misrepresenting results effected: cigarette holders.
Sohn & Co., Inc., and others
Passing off reconditioned merchandise as new
merchandise: mattresses.

Location
Newark, N. J.

Savannah.

Chicago.

Bluefield, W. Va.

New York.

Do.

Canandaigua, N. Y.

Aberdeen, Md.
Chicago.

Peekskill, N. Y.

Preston, Md.
New York.
Chicago.

69

ORDERS TO CEASE AND DESIST
Respondent
Sohn Bros
Passing off reconditioned merchandise as new
merchandise: mattresses.
Somersville Manufacturing Co., and others
Misrepresenting camel’s hair content: fabrics.
Sorbol Co., and others
Misrepresenting therapeutic value and failing to disclose
harmful potentialities: medicinal preparations.
Southern Sales Co
Lottery: candy.
Spors Co
Misrepresenting therapeutic value of medicinal
preparations; misrepresenting efficacy of an electric water
heater and a preparation alleged to make hosiery and
lingerie “run-proof”; mis-representing the quality of
fountain pens and the percentage of profit in their resale:
medicinal preparations and miscellaneous merchandise.
Stallman & Son, C. H., Inc.
Lottery: candy and miscellaneous merchandise.
Stephenson Laboratories Trust, and others
Misrepresenting sufficiency of course and financial
returns to students and falsely claiming a laboratory is
maintained: correspondence school (a system of foot
correction and the designing and manufacturing of arch
supports).
Stinson Canning Co., and others
Price discrimination: canned sardines.
Stromberg Ignition Co
Misrepresenting results effected: appropriating name of
favorably known firm to designate the respondent’s
merchandise; falsely representing that devices have been
approved by a recognized association of automobile
engineers: gasoline saving devices.
Sun Cut Rate Store
Misrepresenting therapeutic value and failing to disclose
harmful potentialities: medicinal preparations.
Sunset Packing Co
Price discrimination: canned sardines.
Tarlton Candy Co., J. T
Lottery: candy.
Taylor Co., J. M., Inc., and others
Lottery: miscellaneous merchandise.
Thomas Brothers
Lottery: candy and salted nuts.
Thompson Co., Robert J
Lottery: wearing apparel.

Location
Do.

Somersville, Conn.
Mechanicsburg, Ohio.

Dunn, N. C.
Le Center, Minn.

York, Pa.
Boston.

Prospect Harbor, Maine.
Detroit.

Huntington, W. Va.

West Pembroke, Maine.
Marshville, N. C.
New York.
Portland, Oreg.
Philadelphia.

70

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Respondent
Thomsen-King & Co., Inc., and others
Lottery; distributing merchandise by means of a puzzle
contest wherein the receipt of prizes is conditioned on the
sale of merchandise rather than the solution of the puzzle:
cosmetics and miscellaneous merchandise.
Thorp & Co., J. H., Inc
Passing off merchandise that does not retain its original
color when washed or exposed to sunlight as sunfast,
tubfast, or fadeless: fabrics.
Thyrole Products Co
Misrepresenting results effected and failing to disclose
harmful potentialities: flesh reducing compounds.
Tracey Co., John J
Passing off domestic merchandise as imported
merchandise: soap.
Trading Sales Co
Lottery: miscellaneous merchandise.
Trinidad Creamery Co
Lottery: butter.
Trippe Manufacturing Co., and others
Misrepresenting efficacy; falsely representing that
merchandise has been purchased or used officially by an
agency of the Federal Government: auxiliary automobile
lights.
Trudeau Candies, Inc
Lottery: candy.
U.S. Air Seal, Inc
Misrepresenting results effected: automobile accessory
compound designed to prevent blow-outs in tires.
U. S. Drug & Sales Co., and others
Misrepresenting therapeutic value and failing to disclose
harmful potentialities: a treatment for alcoholism.
Union Fountain Pen Co., and others
Misrepresenting gold content and passing off regular
merchandise as custom-built merchandise; marking up;
representing all repairs will be made without cost when a
charge is made for such service: fountain pens.
Union Sardine Co
Price discrimination: canned sardines.
Union Starch & Refining Co., and others
Price discrimination: corn products.
United Factories, Inc
Misrepresenting efficacy and guaranties; using the word
“free” to designate merchandise that is given in return for
services or money: oil burners.

Location
Chicago.

New York.

Philadelphia.

Chicago.

New York.
Trinidad, Colo.
Chicago.

St. Paul.
Niles, Ohio.

Denver.

New York.

Lubec, Maine.
Columbus, Ind.
Kansas City, Mo.

71

ORDERS TO CEASE AND DESIST
Respondent
United Sales Co., and others
Passing off tinted enlargements of photographs as
paintings; misrepresenting prices and conditions of sale;
representing that the respondents’ business is operating
under the sanction of the United States Supreme Court:
picture frames and tinted enlargements of photographs.
United Soap Co
Marking up; passing off domestic merchandise as
imported merchandise and merchandise having no
medicinal properties as medicated merchandise; using a
variety of trade names to designate merchandise made by
the same formula: soap.
United States Marble & Granite Co
Misrepresenting quality and durability; falsely
representing that the respondent has posted a “Gold Bond
Guarantee” and that purchasers are protected thereby:
marble and granite monuments.
Universal Industries, Inc., and others
Misrepresenting the cost of merchandise to retail
merchants, the financial returns, and the value of the
premiums; using the word “free”’ to designate merchandise
that is given in return for services or money: sales
promotion plans and silverware and cameras distributed as
premiums in connection therewith.
University Press
Distributor claiming to be printer; using the term
“University Press” to designate a commercial enterprise
not connected with any institution of learning: school
books.
Unruh Brokerage Co., C. F
Price discrimination: food products.
Utica Cutlery Co
Using words and picturizations suggestive of The Boy
Scouts of America to designate merchandise that is not
standard equipment of the members of that organization:
pocket knives.
Vendol Co
Misrepresenting therapeutic value: medicinal
preparations.
Vera, Madame, and others
Misrepresenting results effected; quoting regular prices
as reduced prices: a treatment for the hair.
Victoria Chemical Co., and others
Misrepresenting therapeutic value and failing to disclose
harmful potentialities: medicinal preparations.

Location
Los Angeles.

Seattle.

Oneco, Fla.

Chicago.

Des Moines.

Kinsale, Va.
Utica, N. Y.

Baltimore.

Bridgeport, Conn.

Newark, N. J.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Respondent
Vitaphore Appliances, Inc
Misrepresenting therapeutic value: electric heating and
massaging devices.
Von Schrader Manufacturing Co
Misrepresenting results effected and financial returns to
purchasers: electric carpet-washing machines.
Vonnegut Hardware Co
Price discrimination: automatic fire exit devices.
Vulcan Lamp Works, Inc
Passing off imported merchandise as domestic
merchandise: electric light bulbs.
Wain’s Laboratory, Inc
Misrepresenting therapeutic value and failing to disclose
harmful potentialities: medicinal preparations.
Walton Training Bureau
Misrepresenting prospective earnings of students,
frequency of examinations, and availability of positions,
and misrepresenting the respondent’s relations with the
United States Civil Service Commission: correspondence
school (coaching for civil service examinations).
Wan, Fong
Misrepresenting therapeutic value: medicinal herbs.
Weaver Real Estate Appraisal Training Service
Misrepresenting prices, availability of positions,
prospective earnings of students, and adequacy of course
in qualifying students as government appraisers:
correspondence school (real estate appraisal).
Weissman, Fred P., Inc
Misrepresenting camel’s-hair content: wearing apparel.
Wellworth Sales Co
Lottery: miscellaneous merchandise.
Western Auto Supply Co
Misrepresenting percentages of savings in connection
with special sales; quoting enhanced prices as regular
prices: automobile tires and tubes.
Western Novelty Co
Passing off nonprecious stones, made elsewhere than in
Alaska, as Alaskan diamonds: jewelry.
White King Soap Co
Misrepresenting results effected: soap.
Wholesale Liquor Distributors’ Association of Northern
California Inc. And others
Combining in restraint of trade: spirituous beverages.

Location
Sound Bend, Ind.

Racine, Wis.

Indianapolis.
Harrison, N. J.

Hollywood, Calif.

Passaic, N. J.

Oakland, Calif.
Kansas City, Mo.

New York.
Do.
Kansas City, Mo.

Portland, Oreg.

Los Angeles.
San Francisco.

ORDERS UNDER FEDERAL TRADE COMMISSION ACT
Respondent
Winter & Co., J. C., Inc
Passing off machine-made merchandise as hand-made
merchandise; quoting regular prices as reduced prices:
cigars.
Witol, Inc., and others
Misrepresenting results effected; quoting regular
prices as reduced prices in effect for a limited time only:
cosmetics.
Wood & Hyde Co
Passing off merchandise made from sheepskin, as
kidskin merchandise: gloves.
Worthmore Sales Promotion Service, Inc
Misrepresenting financial returns to agents: cigarette
package holders.
York Cone Co
Lottery: candy.
Zeen Chemical Co
Misrepresenting results effected; representing that is
product is nonexplosive without specifying that this its
conditioned on its being kept away from fire: dry cleaning
fluid.
Zone Co., and others
Misrepresenting therapeutic value: medicinal
preparations.

73

Location
Red Lion, Pa.

New York.

Gloversville, N. Y.

Chicago.

York, Pa.
Cleveland.

Chicago.

Illustrative of the orders to cease and desist issued during the fiscal year ended June
30, 1941, are the cases briefly described as follows:
I. ORDERS UNDER THE FEDERAL TRADE COMMISSION ACT
COMBINATIONS TO FIX PRICES AND RESTRAIN TRADE

National Standard Parts Association, Detroit, and four other similar trade
associations.--An order was issued restraining the above named trade association of
manufacturers and jobbers of automobile parts and accessories from attempting,
pursuant to agreement with its members, to eliminate price competition and maintain
retail prices suggested by its membership; and restraining all the respondent
associations from preventing, through agreement with their respective members, the
establishment of new and additional competitors by causing their members to boycott
manufacturers who continue to sell to dealers not designated by their respective
associations. (2942.)
Pine Hill Lime & Stone Co., Pine Hill, Ky., and others.--A number of firms
producing the major part of lime produced in the southeastern United States, were
ordered to cease and desist from fixing and maintaining, by agreement, uniform

delivered prices on such products. Commission findings were that the respondents’
system

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

operated by their use of basing points, all delivered price quotations having been
calculated as though shipments had been made by rail from a single point or points
having a common freight rate to destination. Various practices used for the purpose
and with the effect of fixing and maintaining uniform delivered prices on the respondents’ products were included in the prohibitions of the order. (3591.)
Capitol Building Supply Co., Milwaukee, and others.--Certain dealers in building
supplies located in Milwaukee, were ordered to cease and desist from establishing and
maintaining, by agreement, the prices, terms, and conditions for the sale of building
supplies; from interfering with their competitors’ efforts to purchase and obtain
supplies; and from boycotting or threatening to boycott manufacturers and sellers of
such supplies, who sold or shipped to competitors of the respondents. (3631.)
Hardwood Charcoal Co., Memphis, and others.--Two exclusive selling agents for
companies producing hardwood charcoal by the distillation method, and certain
independent producers, were ordered to cease and desist from fixing and maintaining,
by agreement, identical or uniform resale prices; and the agents were ordered also to
cease and desist from agreeing; to allocate the territory in which each was to sell
exclusively; to limit reciprocally the quantities they were to sell; to refuse to solicit the
customers of each other; and to limit the number of distributors or dealers to whom
each would sell. Two respondent producers were ordered to cease and desist from
agreeing with each other to fill orders for one another in bags or receptacles upon
which the trade-mark, trade name, or other trade identification of the seller appeared
without a statement thereon that the contents thereof were packed for the seller.
(3670.)
National Converters Institute, and others, Chicago.--A trade association composed
of corporations representing approximately 90 percent of the output and sale of
transparent cellulose sheets and rolls, and such constituent members, were ordered to
cease and desist from fixing or maintaining, by agreement, prices at which such
products were sold, and from using the trade association as a means for carrying out
such a purpose. (3897.)
Robinson Clay Product Co., of New York, New York City, and others.--A number of
concerns engaged in the purchase and sale of builders’ supply materials, including
vitrified pipe, in Rochester, N. Y., and the adjacent sales area, were ordered to cease
and desist from entering into agreements to fix and maintain uniform or minimum
delivered prices, terms, discounts and conditions of sale; from inducing or coercing
members of the industry to conform to the uniform or minimum delivered prices, and
from holding meetings

ORDERS UNDER FEDERAL TRADE COMMISSION ACT

75

among themselves or with any organization or association created by them, or some
of them, to devise means of exerting influence to fix, establish or maintain prices.
(4034).
Cup and Container Institute, Inc., New York, and others.--Certain corporate
respondents controlling more than 60 percent of the output of paper drinking cups and
paper food containers, were ordered to cease and desist from fixing and maintaining,
by agreement, uniform or minimum prices on such products. They and the Cup and
Container Institute, Inc., a trade association for the manufacturers of such products,
were further ordered to cease and desist from employing the institute as a means or
method for carrying out any agreement to fix and maintain such prices. (4036.)
Badger-Brodhead Cheese Co., Monroe, Wis., and others.--Three dealers in foreign
types of cheese, together with the companies of which they are subsidiaries, were
ordered to cease and desist from fixing and maintaining, by agreement, the prices
offered to be paid for Swiss and Limburger cheese. (4071.)
Empire Style Designers League, Inc., New York, and others.--A membership
corporation composed of firms engaged in the creation of styles and the designing and
making of patterns for women’s fur coats and the trading or copying of such patterns,
together with such firms, were ordered to cease and desist from arranging for, and
fixing or adhering by agreement to, the uniform prices at which such patterns were to
be sold, and from publishing or causing the publication of the fixed prices. (4136.)
American Lead Pencil Co., Hoboken, N.J., and others.--Six corporations constituting
substantially all the manufacturers of rubber typewriter erasers were ordered to cease
and desist from fixing and maintaining, by agreement, uniform prices, terms or
conditions at which such products were to be sold. (4170.)
Pittsburgh Plate Glass Co., Memphis, and others.--Certain glass distributors and
glazing contractors, who represent a substantial proportion of such businesses in the
New Orleans trade area, were ordered to cease and desist from entering into or
carrying out agreements for establishing or maintaining the prices at which glass is
sold and glazing contracts made, and from apportioning, or attempting to apportion,
the glazing contracting business within that trade area. (4304.)
COMBINATION IN RESTRAINT OF TRADE, BOYCOTT, REFUSAL TO SELL

Interstate Bakeries Corporation, Kansas City, Mo., and others.--Several baking
companies and a local union to which drivers of bakery trucks belong, together with
the officers thereof, were ordered to cease and desist from entering into or carrying out
any agreement
423272--41----6

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

which has for its purpose or effect the prevention of any bakery, dealer, or route man
from purchasing bakery products in the trade area in and around Sioux City, Iowa.
(3900.)
Wholesale Liquor Distributors’ Association of Northern, California, Inc., and
others, San Francisco.--A wholesale liquor distributors’ association, together with its
officers, directors, and membership, composed of distillers and distributors, were
ordered to cease and desist from entering into any agreement which has for its purpose
or effect the prevention or hindering of any wholesaler, jobber, or dealer in such
products from obtaining them from the sellers thereof; and from maintaining specified
standard or minimum resale prices, discounts or mark-ups. (4093.)
Hills Brothers Co., New York, and others.--Three importers handling dates grown
in the Kingdom of Iraq (dates from Iraq comprised approximately 83 percent of those
sold and consumed in the United States in a recent 5-year period), were ordered to
cease and desist from entering into or carrying out an agreement to restrain or hinder
competition in trade and commerce between and among the States of the United States
and, between and among the United States and foreign countries, to limit the number
of parties engaged in the importation of such dates into the United States, or to restrict
date importations into this country. (4105.)
American Lecithin Co., Inc., Elmhurst, Long Island, N. Y., and others.--The
Commission ordered several American companies, which either produced or sold
lecithin (a natural organic substance used in the manufacture of food, candy, rubber,
leather, and petroleum products) and two European producers of this substance, among
all of whom competition in the United States had previously existed, to cease and
desist from carrying out an agreement whereby the domestic producers were to refrain
from competing with the American Lecithin Co., a new corporation. to which all of the
American companies and the European producers had assigned their respective patents
and in which each received stock and had a share in the management, and whereby the
European producers promised not to export this product to the United States and the
American producers not to export to Europe. (4173.)
MISREPRESENTATION BY THE US E OF FICTITIOUS TRADE NAME

Associated News Photographic Service, Inc., and others, New York, were required
to cease and desist using the word “News” or any similar word in the corporate name
of the Associated News Photographic Service, Inc., to designate or describe a business
which is principally that of selling photographs to persons whose pictures they take,
and from representing or implying to any prospective

ORDERS UNDER FEDERAL TRADE COMMISSION ACT

77

customer that the respondents are news or press photographers or that any photograph
solicited is for press or publicity purposes, unless such photograph is actually for
immediate news or press use. (3561.)
MISREPRESENTING NATURE OF BUSINESS AND TERMS AND CONDITIONS
UNDER WHICH SALES ARE MADE

Thomsen-King & Co., Inc., Chicago, and Winship Corporation, Des Moines, and 37
other respondents --The order directs the respondents, acting individually or in
concert, in connection with a contest in which the purchase or sale of cosmetics or
other articles is essential to participation in any awards, to cease disseminating
advertisements which represent, directly or by implication, that the contest is confined
to solution of a picture puzzle involving only skill without expenditure of money or
work; to cease representing that they are giving away substantial sums of money Or
merchandise as prizes to a certain limited number of persons as an introductory or
advertising offer, through a contest, when the conduct of such so-called contest in fact
constitutes their usual course of business, and to cease representing that offers made
to individual contestants are exclusive to the persons addressed or that such persons
have been granted an exclusive advantage in a contest, and that the giving of a certain
order for goods and the payment of a specified amount therefor will assure the
contestant addressed of obtaining a money prize or other award, when such are not the
facts. (3998.)

MISREPRESENTING RUGS AS ORIENTALS AND CHINESE
ORIENTALS
Sol. Raphael, Inc., Joseph Gluck & Co., Inc.,. and R. F. Bemporad & Co., Inc., all
of New York (in three separate proceedings) were found to be dealers in rugs, among
others rugs resembling Oriental rugs and appearance. The orders to cease and desist
prohibited the use of names indicative of Chinese origin to describe rugs not in fact
made in China and not possessing all the essential characteristics and structure of
Chinese Oriental rugs; and the use of names indicative of the Orient as descriptive of
rugs not in fact made in the Orient and not possessing all the essential characteristics
and structure of Oriental rugs. (4205, 4221, 4238.)
MISLEADING PRACTICES IN THE ISSUANCE OF GUARANTIES AND SEALS
OF
APPROVAL AND PUBLICATION OF EXAGGERATED CLAIMS FOR
PRODUCTS
AND SERVICES ADVERTISED.

Hearst Magazines, Inc., New York.--The respondent, engaged for a number of years
in the publication, sale, and distribution of the magazine “Good Housekeeping,” had

been charged (see Annual

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Report, 1940, p 43) with the use of misleading practices and misrepresentation in the
issuance by it of guaranties and seals or emblems of approval, published in its own and
other publications, and in the publication of exaggerated claims concerning products
advertised in “Good Housekeeping.” Order to cease and desist has been issued
prohibiting the respondent from representing that the claims made for products,
services or other commercial offerings described in its advertising are true when any
representation or claim contained in such advertisements is not in fact true; from using
or authorizing or allowing others to use its seals, emblems, or other insignia which
represent that any food, drug, cosmetic, or therapeutic device has been tested, or tested
and approved, unless such product has in fact been adequately and thoroughly tested
in such manner as to assure, at the time such product is sold to the consuming public,
the quality, nature, and properties of such product in relation to the intended usage
thereof and the fulfillment of the claims made therefor in connection with the use of
such seal, insignia, or representation; from using or authorizing or allowing others to
use its seals, emblems, or other insignia which represent that any mechanical device,
or article of household equipment, or any product other than a food, drug, cosmetic,
or therapeutic device, has been tested, or tested and approved, unless and until such
product has been adequately and thoroughly tested in such manner as reasonably to
assure, at the time of its sale to the consuming public, its quality, nature and properties
in relation to the intended usage and fulfillment of material claims; from representing,
directly or by implication, or authorizing or allowing others to represent, that any
product, service, or other commercial offering advertised by it or for which the
respondent has authorized the use of any seal, emblem, or other insignia, is guaranteed
by the respondent, unless such guaranty is without limitation, or if limited, unless all
limitations upon such guaranty are clearly, conspicuously and explicitly stated in
immediate conjunction with all such representations of guaranty. It is further provided
that the provisions of the order to cease and desist are not to be construed to prohibit
the use of the word “recommended” on any seal, emblem, or other insignia when the
product with respect to which such seal, emblem or other insignia is used has in fact
been adequately and thoroughly tested by the respondent in such a manner as
reasonably to assure the quality, nature, and properties of such product in relation to
its intended usage and the fulfillment of the material claims made in connection
therewith, and when the form of such seal, emblem, or other insignia is readily
distinguishable by the consuming public from any seal, emblem, or other insignia
bearing any guaranty. (3872.)

ORDERS UNDER FEDERAL TRADE COMMISSION ACT

79

MISREPRESENTING KNIVES TO BE BOY SCOUT KNIVES

Adolph Kastor & Bros., Inc., New York, Imperial Knife Co., Inc., Providence, R. I.,
Colonial Knife Co., Inc., Providence, R. I., Utica Cutlery Co., Utica, N. Y., Schrade
Cutlery Co., Walden, N. Y., and W. R. Case & Sons Cutlery Co., Bradford, Pa.--These
respondents are manufacturers and distributors of knives, among others, knives
resembling in general appearance the knife designed and adopted as official equipment
by the Boy Scouts of America. Adolph Kastor & Bros., Inc., were ordered to cease and
desist from using the word “Scout” or “Boy Scout,” or “Scouting,” or Boy Scout
emblems, or scenes of outdoor life in which appear boys in Boy Scout uniforms, in
marking such knives or their containers or in advertising them. The other respondents
named were found only to be using the word “Scout” and were ordered to cease the
use of that word, or a word of similar import, in marking or designating such knives,
or otherwise representing that their knives were sponsored, endorsed or approved by
the Boy Scouts of America organization. (3466, 4115, 4116, 4117, 4118, 4119.)
SALE OF RECONDITIONED SPARK PLUGS WITHOUT MARKING THEM
RECONDITIONED

J. E. Bernard & Co., Inc., New York, was ordered to cease and desist from selling
or offering for sale to others for resale to the public, used and reconditioned spark
plugs unless the words “Used” or “Second-Hand” or “Reconditioned,” or some other
Word or words of similar meaning, were permanently stamped thereon in such manner
as to be clearly legible after installation, the cartoons or containers in which they were
offered for sale or sold to be similarly marked. (3534.)
REPRESENTING MATTRESSES MADE OF USED MATERIALS AS NEW

Sohn & Co., Inc., and others, Chicago, manufacturer and distributor of mattresses,
and Benjamin Sohn, Morris Sohn and Isadore Sohn, officers and directors in control
of its business activities, and Arthur Sohn and Carl Sohn, trading as Sohn Bros., were
ordered to cease and desist from representing that mattresses which were composed,
in whole or in part, of old, used, discarded or second-hand materials were new
mattresses or made of new materials, and from failing to affix to such mattresses in a
permanent and secure and conspicuous manner, a tag or label revealing that they are,
in whole or part, made of such used materials. (4072, 4073.)
MISLEADING ADVERTISEMENTS CONCERNING MEDICINAL
PREPARATIONS

During the fiscal year the Commission issued a substantial number of orders to cease
and desist from false and misleading advertise-

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

ments concerning the therapeutic value of various medicinal preparations and devices.
Some of these cases were of such nature that injunctive action was taken to stop the
advertising practices involved, pending issuance of the Commission’s complaint (see
p.102).
SALES METHODS INVOLVING LOTTERY SCHEMES, INCLUDING THE
MANUFACTURE AND SALE OF THE DEVICES FOR CONDUCTING THEM

The Commission continued to proceed against various persons, firms and
corporations for the use of lottery schemes and devices in connection with the sale and
distribution of their merchandise. Many orders to cease and desist prohibiting such
practice were issued. The principal devices so used were push and pull cards and
punch boards.
II. ORDERS UNDER THE CLAYTON ACT

(Section 2, as amended by the Robinson-Patman Act)
Atlantic Commission Co., New York, in purchasing commodities in interstate
commerce, was ordered to cease and desist from making purchases for its own account
at a, so-called net price or any other price which reflects in whole or in part brokerage
currently being paid by sellers to their brokers; from accepting from sellers any socalled quantity discounts and payments representing or reflecting brokerage currently
being paid by sellers to their brokers; and from accepting from sellers in any manner
or form whatever anything of value as a commission, brokerage or other compensation,
or any allowance or discount in lieu thereof upon purchases of commodities made for
the respondent’s own account. (3344.)
Luxor, Ltd., Chicago, in connection with the sale of toilet articles and cosmetics, was
ordered to cease and desist from furnishing any such commodities packaged in
containers of a certain size and style unless all purchasers competing in the resale of
such commodities are accorded the facility of packaging in containers of like size and
style, on proportionally equal terms. (3736.)
Lambert Pharmacal Co., St. Louis, in connection with the sale of “Listerine” and
allied products, was ordered to cease and desist from granting compensation to
customers for services or facilities’ furnished by or through such customers in
connection with the handling, sale, or offering for sale, of the respondent’s products,
unless such payments are made available on proportionally equal terms to all buyers
from the respondent who are competitively engaged one with another. (3749).
Anheuser-Busch, Inc., St. Louis, Penick & Ford, Ltd., Inc., New York, Hubinger Co.,
Keokuk, Iowa, Union Starch & Refining Co. and Union Sales Corporation, Columbus,
Ind., and American Maize Products Co., New York; in connection with the sale of corn
sirup,

ORDERS UNDER THE CLAYTON ACT

81

were ordered to cease and desist from discriminating in price, which discriminations
(except in the case of the American Maize-Products Co.) resulted principally from the
practice of charging freight from Chicago to the customer’s location, regardless of the
fact that the shipments originated in cities other than Chicago. The order to the
American Maize-Products Co., whose plant is in Chicago, was directed at
discriminations which arose from charging different prices based upon the sizes of the
containers in which the sirup was purchased, and at the practice of selling to some
purchasers at the former and lower price after the announcement of an increase in price
of such sirup, while selling such sirup to other and competing purchasers at the new
and higher price. The order in the Hubinger case included both practices. Prohibition
of discriminations arising by reason of size of containers was included in the Union
order. (3798, 3802, 3801, 3804, and 3805.)
American Crayon Co., Sandusky, Ohio, and Binney & Smith Co., New York, in
connection with the sale of crayons and educational supplies, were ordered to cease
and desist from the practice of granting compensation to some customers, which
compensation was not made available on proportionally equal terms to all buyers who
were competitors of such customers, and also from the practice of discriminating in
price by reason of differences in classification of customers competitively engaged one
with another. (4142 and 4143.)
Maine sardine packers.--Thirteen firms, in connection with the sale of sardines, were
ordered to cease and desist from violating the brokerage section of the act. (4355,
4356, 4357, 4358, 4359,4360,4361, 4362, 4410, 4411, 4412, 4413, and 4414.)
Field brokers and others.--Eleven. firms located in the “Tri-State” area of Maryland,
Virginia, and Delaware, engaged principally in the canning of tomatoes and other
vegetables, were ordered to cease and desist from violations of the brokerage section
of the act. (4215, 4275, 4282, 4283, 4284, 4290, 4292, 4294, 4298, 4303, and 4340.)
Individuals operating the Parr Sales Co., Vidalia, Ga., and the Minetree Brokerage
Co., Poplar Bluff, Mo., were ordered to cease and desist from obtaining brokerages,
or allowances in lieu thereof, on purchases made by them through these controlled
intermediary or dummy brokerage houses. (4233 and 4285.)
E. B. Muller & Co., Port Huron, Mich., and Heinz. Franck Sons, Inc., Flushing,
N.Y., owned and controlled by David McMorran and Charlotte H. McMorran,
manufacturing distributors of granulated chicory, were found by the Commission to
have had a practical monopoly in the distribution of chicory prior to 1930, at which
time R. E. Schanzer, Inc., established a competitive plant. Findings were that the
respondents had begun a definite and active campaign to

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

harass, injure, and if possible, eliminate, this new competitor in the field, by various
methods.
The Commission ordered the respondents to cease and desist from certain
disparagements of the products of their competitors, false representations regarding
artificial coloring of chicory, and from selling or offering to sell granulated chicory at
a price less than the cost thereof to the respondents with the purpose or intent, and
where the effect may be, to injure, suppress, or stifle competition or tend to create a
monopoly in the production or sale of such products, in violation of the Federal Trade
Commission Act.
The Commission further ordered the respondents, in connection with the sale of
granulated chicory in commerce, to cease and desist from discriminating in the price
of products of like grade and quality, as among purchasers from either or both of them,
where the differences in price are not justified by differences in the cost of
manufacture, sale, or delivery resulting from differing methods or quantities in which
such products are sold or delivered: (a) by selling any material quantity of such
products to purchasers in one or more general trade areas at prices different from those
to purchasers in any other general trade area; and (b) by selling such products to some
purchasers in any general trade area at prices materially different from those charged
other purchasers in the same general trade area, all in violation of the Clayton Act as
amended by the Robinson-Patman Act. (3224.)
TYPES OF UNFAIR METHODS AND PRACTICES
TYPICAL METHODS AND PRACTICES CONDEMNED IN ORDERS TO CEASE
AND DESIST

The following list illustrates unfair methods of competition and unfair or deceptive
acts and practices condemned by the Commission from time to time in its orders to
cease and desist. This list is not limited to orders issued during the last fiscal year. It
does not include Specific practices outlawed by the Clayton Act and committed to the
Commission’s jurisdiction, namely, various forms of price discrimination, exclusive
and tying dealing arrangements, competitive stock acquisition, and certain kinds of
competitive interlocking directorates.
1. The use of false or misleading advertising concerning, and the misbranding of,
commodities, respecting the materials or ingredients of which they are composed, their
quality, purity, Origin, source, attributes, or properties, or nature of manufacture, and
selling them under such names and circumstances as to deceive the public. An
important part of these included misrepresentation of the therapeutic

TYPES OF UNFAIR METHODS AND PRACTICES

83

and corrective properties of medicinal preparations and devices, and cosmetics, and
the false representation, expressly or by failure to disclose their potential harmfulness,
that such preparations may be safely used.
2. Representing products to have been made in the United States when the
mechanism or movements, in whole or in important part, were of foreign origin.
3. Bribing buyers or other employees of Customers and prospective customers,
without the employer’s knowledge or consent, to secure or hold patronage.
4. Procuring the business or trade secrets of competitors by espionage, or by bribing
their employees, or by similar means.
5. Inducing employees of competitors to violate their contracts and enticing them
away in such numbers or under such circumstances as to hamper or embarrass the
competitors in the conduct of their business.
6. Making false and disparaging statements respecting competitors’ products and
business, in some cases under the guise of ostensibly disinterested and specially
informed sources or through purported scientific, but in fact misleading,
demonstrations or tests.
7. Widespread threats to the trade of suits for patent infringement arising from the
sale by competitors of alleged infringing products, not in good faith but for the purpose
of intimidating the trade and hindering or stifling competition; and claiming, without
justification, exclusive rights in public names of unpatented products.
8. Trade boycotts or combinations of traders to prevent certain wholesale or retail
dealers or certain classes of such dealers from procuring goods at the same terms
accorded to the boycotters or conspirators, or to coerce the trade policy of their
competitors or of manufacturers from whom they buy.
9. Passing off goods for products of competitors through appropriation or simulation
of such competitors’ trade names, labels, dress of goods, or counter-display catalogs,
etc.
10. Selling rebuilt, second-hand, renovated, or old products, or articles made in
whole or in part from used or second-hand materials, as new, by so representing them
or by failing to reveal that they were not new or that second-hand materials were used.
11. Buying up supplies for the purpose of hampering competitors and stifling or
eliminating competition.
12. Using concealed subsidiaries, ostensibly independent, to obtain competitive
business otherwise unavailable, and making use of false and misleading
representations, schemes, and practices to obtain representatives and make contacts,
such as pretended puzzle-prize contests purportedly offering opportunities to win
handsome prizes, but

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in fact mere “come-on” schemes and devices in which the seller’s true identity and
interest are initially concealed.
13. Using merchandising schemes based on lot or chance, or on a pretended contest
of skill.
14. Compelling resale price maintenance by cooperating with others in the use of
schemes and practices for compelling wholesalers and retailers to maintain resale
prices fixed by a manufacturer or distributor for resale of his product.
15. Combinations or agreements of competitors to fix, enhance, or depress prices,
maintain prices, bring about substantial uniformity in prices, or to divide territory or
business, to cut off or interfere with competitors’ sources of supply, or to close
markets to competitors; or for use by trade associations of so-called standard cost
Systems, price lists, or guides, or exchange of trade information calculated to bring
about these ends, or otherwise restrain or hinder free competition.
16. Intimidation or coercion of producer or distributor to cause him to organize, join,
or contribute to, or to prevent him from organizing, joining, or contributing to,
producers’ cooperative association, or other association, advertising agency, or
publisher.
17. Aiding, assisting, Or abetting unfair practice, misrepresentation, and deception,
and furnishing means or instrumentalities therefor, and combining and conspiring to
offer or sell products by chance or by deceptive methods, through such practices as
supplying dealers with lottery devices, or selling to dealers, and assisting them in conducting, contest schemes as a part of which pretended credit slips or certificates are
issued to contestants, when in fact the price of the goods has been marked up to absorb
the face value of the credit slip, and the supplying of emblems or devices to conceal
marks of country of origin of goods, or otherwise to misbrand goods as to country of
origin.
18. Various schemes to create the impression that the customer is being offered an
opportunity to make purchases under unusually favorable conditions when such is not
the case, such schemes including-(a) Sales plans in which the seller’s usual price is falsely represented as a special
reduced price for a limited time or to a limited class, or false claim of special terms,
equipments, or other privileges or advantages.
(b) The use of the “free goods” or service device to create the impression that
something is actually being thrown in without charge, when it is fully covered by the
amount exacted in the transaction as a whole, or by services to be rendered by the
recipient.

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85

(c) Use of misleading trade names calculated to created the impression that a
dealer is a producer or importer, selling directly to the consumer, with resultant
savings.
(d) Offering of false “ by pretended cutting of a fictitious “regular” price.
(e) Use of false representation that article offered has been rejected as
nonstandard and is offered at an exceptionally favorable price, or that the number
thereof that may be purchased is limited.
(f) Falsely representing that the goods are not being offered as sales in ordinary
course, but are specially priced and offered as a part of a special advertising
campaign to obtain customers or for some purpose other than the customary profit.
(g) Misrepresenting, or causing dealers to misrepresent, the interest rate or
carrying charge on deferred payments.
19. Using containers ostensibly of the capacity customarily associated by the
purchasing public with standard weights or quantities of the product therein contained,
or using standard containers only partially filled to capacity, so as to make it appear
to the purchaser that he is receiving the standard weight or quantity.
20. Misrepresenting in various ways the necessity or desirability or the advantages
to the prospective customer of dealing with the seller, such as-(a) Misrepresenting seller’s alleged advantages of location or size, or the
branches, domestic or foreign, or the dealer outlets he has.
(b) Making false claim of being the authorized distributor of some concern, or
failing to disclose the termination of such a relationship, in soliciting customers of
such concerns, or of being successor thereto or connected therewith, or of being the
purchaser of competitor’s business, or falsely representing that it has been
discontinued, or falsely claiming the right to prospective customer’s special
consideration, through such false statements as that the customer’s friends or his
employer have expressed a desire for, or special interest in, consummation of seller’s
transaction with the customer.
(c) Alleged connection of a concern, organization, association or institute with,
or endorsement of it or its product or services by, the Government or nationally
known organizations, or representation that the use of such product or services is
required by the Government.
(d) False claim by a vendor of being an importer, or a technician, or a
diagnostician, or a manufacturer, grower, or nurseryman, or of being a wholesaler,
selling to the consumer

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

at wholesale prices, or by a manufacturer of being also the manufacturer of the raw
material entering into the product, or by an assembler of being a manufacturer.
(e) Falsely claiming to be a manufacturer’s representative and outlet for surplus
stock sold at a sacrifice.
(f) Falsely representing that the seller owns a laboratory in which product offered
is analyzed and tested.
(g) Representing that ordinary private commercial seller and business is an
association, or national association, or connected therewith, or sponsored thereby,
or is otherwise connected with noncommercial or professional organizations or
associations, or constitutes an institute, or, in effect that it is altruistic in purpose,
giving work to the unemployed.
(h) Falsely claiming that business is bonded or misrepresenting its age or history,
or the demand established for its products, or the selection afforded, or the quality
or comparative value of its goods, or the personnel or staff or personages presently
or theretofore associated with such business or the products thereof.
(I) Claiming falsely or misleadingly patent, trade-mark, or other special and
exclusive rights.
(j) Misrepresentation by the publisher of the advertisers’ products as compared
with competing products, services or other commercial offering, by the issuance of
seals of approval or other insignia of pretended tests, inquiries, investigations or
guaranties, or by the publication of exaggerated claims.
21. Obtaining business through undertakings not carried out, and not intended to be
carried out, and through deceptive, dishonest, and oppressive devices calculated to
entrap and coerce the customer or prospective customer, such practices including-(a) Misrepresenting that seller fills orders promptly, ships kind of merchandise
described, assigns exclusive territorial rights within definite trade areas to
purchasers of prospective purchasers.
(b) Obtaining orders on the basis of samples displayed for customer’s selection
and failing or refusing to respect such selection thereafter in filling of orders, or
promising results impossible of fulfillment, or falsely making promises or holding
out guarantees, Or the right of return, or results, or refunds, replacements, or
reimbursements, or special or additional advantages to the prospective purchaser
such as extra credit, or furnishing of supplies or advisory assistance; falsely assuring
the purchaser or prospective purchaser that certain special or exclusively personal
favors or advantages are being granted him.

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87

(c) Concealing from prospective purchaser unusual features involved in
purchaser’s commitment, the result of which will be to require of purchaser further
expenditure in order to obtain benefit of commitment and expenditure already made,
such as failure to reveal peculiar or nonstandard shape of portrait or photographic
enlargement, so as to make securing of frame there-for from sources other than seller
difficult and impracticable, if not impossible.
(d) Obtaining by deceit prospective customer’s signature to a contract and
promissory note represented as simply an order on approval.
(e) Making use of improper and coercive practices as means of exacting
additional commitments from purchasers, through such practices as unlawfully
withholding from purchaser property of latter lent to seller incident to carrying out
of original commitment, such as practice of declining to return original photograph
from which enlargement has been made until purchaser has also entered into
commitment for frame therefor.
(f) Falsely representing earnings or profits of agents, dealers, or purchasers, or the
terms or conditions involved, such as false statement that participation by merchant
in seller’s sales promotion scheme is without cost to merchant, and that territory
assigned an agent, representative, or distributor is new or exclusive.
(g) Obtaining agents or representatives to distribute the seller’s products, through
promising to refund the money paid by them should the product prove
unsatisfactory, that the agent was granted right to exclusive or new territory, would
be given assistance by seller, or would be given special credit or furnished supplies,
or overstating the amount of his earnings or the opportunities which the employment
offered.
(h) Advertising a price for a product as illustrated or described and not including
in such price all charges for equipment or accessories illustrated or described or
necessary for use of the product or customarily included as standard equipment, and
failing to include all charges not specified as extra.
22. Giving products misleading names so as to give them a value to the purchasing
public which they would not otherwise possess, such as names implying falsely that-(a) The products were made for the Government or in accordance with its
specifications and of corresponding quality, or that the advertiser is connected with
the Government in some way, or in some way the products have been passed upon,
inspected, underwritten, or endorsed by it; or

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

(b) They are composed in whole or in part of ingredients or materials, which in
fact are contained only to a negligible extent or not at all, or that they have qualities
or properties which they do not have; or
(c) They were made in or came from some locality famous for the quality of such
products, or are of national reputation; or
(d) They were made by some well and favorably known process; or
(e) They have been inspected, passed, or approved after meeting the tests of some
official organization charged with the duty of making such tests expertly and
disinterestedly, or giving such approval; or
(f) They were made under conditions or circumstances considered of importance
by a substantial part of the general purchasing public; or
(g) They were made in a country, or city, or locality, considered of importance in
connection with the public taste, preference, or prejudice; or
(h) They have the usual characteristics or value of a product properly so
designated, as through use of a common, generic name, such as “paint,” to designate
a product lacking the necessary ingredients of paint.
23. Selling below cost or giving product without charge, with intent and effect of
hindering or suppressing competition.
24. Dealing unfairly and dishonestly with foreign purchasers and thereby
discrediting American exporters generally.
25. Coercing and forcing uneconomic and monopolistic reciprocal dealing.
26. Entering into contracts in restraint of trade whereby foreign corporations agree
not to export certain products into the United States in consideration of a domestic
company’s agreement not to export the same commodity, nor to sell to anyone other
than those who agree not to so export the same.
27. Employing various false and misleading representations and practices attributing
to products a standing, merit, and value to the purchasing public, or a part thereof,
which they do not possess, such practices including-(a) Misrepresenting, through salesmen or otherwise, products’ composition,
nature, qualities, results accomplished, safety, value, and earnings or profits to be
had therefrom.
(b) Claiming falsely unique status or advantages, or special merit therefor, on the
basis of misleading and ill-founded demon-

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89

strations or scientific tests, or pretended widespread tests, or of pretended
widespread and critical professional acceptance and use.
(c) Misrepresenting the history or circumstances involved in the making and offer
of the products or the source or origin thereof (foreign or domestic) or of the
ingredients entering therein, or parts thereof, or the opportunities brought to the
buyer through purchase of the offering, or otherwise misrepresenting scientific or
other facts bearing on the value thereof to the purchaser.
(d) Falsely representing products as legitimate, or prepared in accordance with
Government or official standards or specifications
(e) Falsely claiming Government or official, or other, acceptance, use, and
endorsement of product, and misrepresenting success and standing thereof through
use of false and misleading endorsements or false and misleading claims with
respect thereto, or otherwise.
28. Failing and refusing to deal justly and fairly with customers in consummating
transactions undertaken, through such practices as refusing to correct mistakes in
filling orders, or to make promised adjustments or refunds, and retaining, without
refund, goods returned for exchange or adjustment, and enforcing, notwithstanding
agents’ alterations, printed terms of purchase contracts, and exacting payments in
excess of customers’ commitments.
29. Shipping products at market prices to customers or prospective customers or to
the customers or prospective customers of competitors without an order and then
inducing or attempting by various means to induce the consignees to accept and
purchase such consignments.
30. Inducing the shipment and sale of commodities through buyer’s issuance of
fictitious price lists and other printed matter falsely representing rising market
conditions and demand, and leading seller to ship under the belief that he would
receive prices higher than the buyer intended to or did pay.
CASES IN THE FEDERAL COURTS
COMMISSION ACTIONS IN THE UNITED STATES SUPREME, CIRCUIT, AND
DISTRICT COURTS

Federal Trade Commission cases pending in the United States courts during or at the
close of the fiscal year ended June 30, 1941, are reviewed in the pages immediately
following.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

During the year, results favorable to the Commission were obtained in 40 cases, of
which two were before the Supreme Court of the United States, 26 were before the
United States circuit courts of appeals, and 12 were before United States district
courts. A commission order was set aside in one case in the circuit court of appeals,
and the Supreme Court in another case affirmed a decision of a circuit court of appeals
reversing a Commission order.
Cases in the Supreme Court in which the Commission’s orders were affirmed
involved the Millinery Creators’ Guild and others, and the Fashion Originators Guild
of America, Inc., and others, both of New York. In both instances the Court
unanimously sustained decisions by the Circuit Court of Appeals for the Second
Circuit.
Cases in the circuit courts of appeals in which the Commission’s orders were
affirmed (in three cases with modifications) were: Fashion Originators Guild of
America, Inc., and others, Parfums Corday, Inc., Quality Bakers of America and
others, and Gimbel Brothers, Inc., all of New York; Modern Hat Works, Jersey City,
N.J.; Pep Boys-Manny, Moe and Jack, Inc., Philadelphia; Hershey Chocolate
Corporation, Hershey, Pa.; Mentho-Mulsion, Inc., and others, Atlanta; Standard
Container Manufacturers’ Association, Inc., and others, Jacksonville, Fla.; General
Motors Corporation and General Motors Sales Corporation, Detroit; Ford Motor Co.,
Dearborn, Mich.; Monica M. Rock, Milwaukee; Kidder Oil Co., La Crosse, Wis.;
Perma-Maid Co., Cincinnati; Chester L. Thomas, trading as Thomas Quilt Factories,
Denver; George G. Neff, Miami, Okla.; California Lumbermen’s Council and others,
Fresno, Calif.; and Adah Alberty, Los Angeles, Calif.
Petitions for review of Commission orders involving Chanel, Inc., Peter Sanders and
others, trading as the Perfect Recondition Spark Plug Co., and Saks & Co., all of New
York; Yardley of London, Inc., Union City, N.J.; McKinley-Roosevelt College of Arts
and Sciences, Chicago; Albert T. Cherry, trading as A. T. Cherry Co. and as Atco Soap
Co., Dayton, Ohio; and the Liquor Trades Stabilization Bureau, Inc., San Francisco,
were dismissed by the circuit courts of appeals. A case concerning the Biddle
Purchasing Co., New York, was disposed of by a consent decree adjudging the
company in contempt for violating a former decree of the circuit court of appeals and
imposing a fine of $500.
The Commission successfully opposed a motion made in a circuit court of appeals
to strike a modified order issued by it in conformity with the court’s decree in a case
involving the California Rice Industry.
(For proceedings in injunction and for collection of civil penalties, see pp.102, 105.)

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91

PETITIONS TO REVIEW CEASE AND DESIST ORDERS
Petitions in the United States circuit courts of appeals to review cease and desist
orders issued under authority of sections 5 of the Federal Trade Commission Act and
section 2 of the Clayton Act are summarized below:

(Except where otherwise indicated, cases involve violations of the Federal
Trade Commission Act. United States Circuit Courts of Appeals are designated
First Circuit (Boston), etc.)
Adah Alberty, Los Angeles.--The Ninth Circuit (San Francisco) affirmed the
Commission’s order against misrepresentations concerning the therapeutic Value of
health foods and other preparations.
Concerning the petitioner’s complaint that the Commission rejected the testimony
of experts adhering to the homeopathic school of medicine, and thus made an arbitrary
choice between schools of healing which are equally recognized under the law, the
court said (118 F. 2d 669, 670):
“Actually, the Commission admitted the testimony of experts who were, and experts who were
not, adherents of the homeopathic School of medicine. The Commission’s findings are
Supported in part by the testimony of experts adhering to the homeopathic school, in part by the
testimony of other experts. Conflicts in the testimony were for the Commission, not this Court,
to resolve.
* * * We cannot say that, in resolving such conflicts, the Commission acted arbitrarily.

Petition for rehearing was denied.4
Albert Lane, Berkeley, Calif., petitioned the Ninth Circuit (San Francisco) for a
review of a Commission order against false claims by a consumers’ research
organization. Among other misrepresentations, the petitioner claimed affiliation with
the United States Government, the Mellon Institute of Industrial Research, and the
Massachusetts Institute of Technology. At the end of the fiscal year the case awaited
certification and printing of the record.
Associated News Photographic Service, Inc. and others, New York.--Petition was
filed with the Second Circuit (New York) for review of an order forbidding the use of
the word “News” in the corporate. name to designate a business principally that of
selling photographic prints. The Commission found that the petitioners are
professional photographers, do not operate as the photographic department or agency
of any newspaper or news agency, and that through the use of the word “News” they
conveyed the impression that they had such newspaper connection. At the year’s close,
the case awaited certification and printing of the transcript.
Automobile financing: Ford Motor Co., Dearborn, Mich.; General Motors Sales
Corporation, Detroit, and General Motors Acceptance Corporation, New York.-During the year two decisions

4

A petition for writ of certiorari was denied October 13, 1941.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

were handed down affirming orders directed against misleading advertising of the socalled 6 percent installment plan for purchasing automobiles. The Commission found
that the term “6 percent”, when used in connection with monthly payments, was
understood by the public to mean 6 percent simple interest per annum computed on
declining balances, but actually the plan resulted in approximately 111/2 percent
interest.
In the General Motors case, the Second Circuit (New York) affirmed the
Commission’s order (114 F. 2d 33).
The Court said in part:
It may be that there was no intention to mislead and that only the careless or the incompetent
could be misled. But if tile Commission, having discretion to deal with these matters, thinks It
best to insist upon a form of advertising clear enough so that, in the words of the prophet Isaiah,
“wayfaring men, though fools, shall not err therein,” It is not for the courts to revise their
Judgment.

Certiorari was denied (312 U.S. 682).
In upholding the Commission’s order in the Ford case (120 F. 2d 175), the Sixth
Circuit (Cincinnati) observed:
The average individual does not make, and often is incapable of making, minute calculations
to determine the cost of property purchased on the deferred payment plan. Mechanization,
industrialization, and urbanization have transformed the structure of our society and raised to
the proportions of a major social problem, the protection of the installment purchaser against
his own ignorance and the pressure of his need.

The company’s petition for rehearing was denied.
Benton Announcements, Inc., Buffalo, N. Y.--A petition for review in this case was
filed with the Second Circuit (New York). The case involves the misrepresentation of
stationery products as being “engraved,” when in fact they were found not to be in this
category. At the close of the year the case awaited printing of the record.
Biddle Purchasing Co., New York.--Alleging violation of the 1938 decreed of the
Second Circuit (New York) affirming the Commission’s order directed against the
receipt of brokerage or allowances, as such, contrary to section 2 (e) of the Clayton
Act (Robinson-Patman Act), the Commission filed with that Court its petition in aid
of the enforcement of the decree. Thereafter the company filed an amended answer and
submitted the matter to the Court for final determination, it having agreed not to
contest the allegations of the petition for enforcement. The Court adjudged the
company to have violated the decree and imposed a fine of $500. (Another brokerage
case in the courts during the fiscal year was that of Quality Bakers of America, and
others, p.99.)
California Lumbermen’s Council and others (Fresno, Calif., etc.) .--The Ninth
Circuit (San Francisco) affirmed the Commis-

CASES IN THE FEDERAL COURTS

93

sion’s order in this case (15 F. 2d 178). The order was against six associations of retail
lumber dealers in California, found to have cooperated in the primary objective of
controlling and confining distribution exclusively through the members of their dealer
associations, and preventing direct sales by manufacturers and wholesalers to
nonmembers, including State and other political subdivisions. Petitions for rehearing
and for certiorari (312 U. S. 709) were denied.
California Rice Industry, an association, its officers and members, San Francisco,
filed with the Ninth Circuit (San Francisco) a petition initiating proceedings to have
the Commission’s modified cease and desist order (issued in compliance with the
Court’s decree) “made correct.” The petition was dismissed without prejudice. The
Commission order prohibited an unlawful agreement to fix and maintain prices of rice
and rice products, and other policies and practices in restraint of competition.
Albert T. Cherry, trading as A. T. Cherry Co. and as Atco Soap Co., Dayton, Ohio.-Petition for review of the Commission’s order was filed with the Sixth Circuit
(Cincinnati), but dismissed upon motion of the petitioner (121 F. (2d) 451). The case
involved the misbranding and fictitious pricing of soap.
D. D. D. Corporation, Batavia, Ill.--The corporation, engaged in the manufacture
and distribution of a medicinal preparation known as “D. D. D. Prescription,”
petitioned the Seventh Circuit (Chicago) for review of the Commission’s order, which
was that the petitioner cease representing that its preparation was a cure or remedy for
eczema, blotches, pimples, athlete’s foot, rashes, hives, insect bites, and ivy and oak
poisoning. The Commission found that the properties of the product were limited to
those of an antipruritic, antiseptic and astringent, with possible mild germicidal
properties. At the chose of the fiscal year, the case awaited certification and printing
of the record.
Educators Association, Inc., and others, New York.--The Commission reported to
the Second Circuit (New York) the failure of negotiations between the Commission
and the association as suggested by the Court, to modify the corporate and trade names
involved so as to do away with their tendency to create a false impression that the
association was an organization of educators instead of a private business enterprise
for profit. (See Annual Report for 1940, p.84). Thereupon the Court modified the
order in specific terms (118 F. 2d 562).
Fashion Originators Guild of America, Inc., and others, New York.--The Supreme
Court affirmed (312 U.S. 457) the Second Circuit (New York) (114 F. 2d 80; for
further details, see Annual Reports for 1939, pp.101-102, and 1940, p.85), upholding
the Commis-

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

sion’s cease and desist order, which involved the legality of a combination designed
to prevent so-called “style piracy” in women’s dresses. In its opinion, the Court said:
If the purpose and practice of the combination of garment manufacturers and their affiliates
runs counter to the public policy declared in the Sherman and Clayton Acts, the Federal Trade
Commission has the power to suppress it as an unfair method of competition. * * * And, as
previously pointed out, it was the object of tile Federal Trade Commission Act to reach not
merely in their fruition but also in their incipiency combinations which could lead to these and
other trade restraints and practices deemed undesirable.

As the result of this decision, consent decrees were entered by the Sixth and Seventh
Circuits (Detroit and Chicago), affirming the Commission’s orders against The J. L.
Hudson Co., Detroit, and Mandel Brothers, Inc., and Marshall Field & Co., Chicago.
(See Millinery Creators’ Guild, Inc., and others, p.97 for similar case.)
Fresh Grown Preserve Corporation and others, Lyndhurst, N. J., etc., petitioned the
Second Circuit (New York) for a review of an order against the alleged
misrepresentation of certain products as “preserves.” The Commission found that such
products did not contain the 45 percent of fruit and 55 percent of sugar necessary to
entitle them to this designation. As of June 30, 1941, the case awaited printing of the
transcript.
Gimbel Brothers, Inc., New York.--The Second Circuit (New York) handed down a
decision modifying and affirming tile Com mission’s order in this case (116 F. 2d
578). The proceeding arose out of the petitioner’s purchase and subsequent sale as
“woolens” of a job-lot of fabrics, a large part of which were mixtures of wool and
other materials. The Commission found that this misrepresentation had a tendency to
deceive the public and unfairly to divert interstate trade from the petitioner’s
competitors. The Court did not sustain the Commission’s provisos requiring, in the
case of fabrics composed only partly of wool, the use of words describing each
constituent fiber in the order of its predominance by weight, and when any particular
fiber named was not present in a substantial amount by weight, a statement of its
percentage. The Court described these provisos as “burdensome.” It held, however,
among other things:
We think it plain that soliciting the purchase. of goods by advertisement is a method of
competition; If the advertisement contains false representations, it is an unfair method of
competition. * * * Whether or not the advertiser knows the representations to be false, the
deception of purchasers and the diversion of trade from competitors is the same. The purpose
of the statute is protection of the public, not punishment of a wrongdoer. * * * Hence a
deliberate effort to deceive is not necessary to make out a case of “using unfair methods of
competition” within the prohibitions of the statute.

CASES IN THE FEDERAL COURTS

95

Hershey Chocolate Corporation, Hershey, Pa.; Peter Cailler Kohler Swiss
Chocolate Co., Inc., Fulton, N.Y.; Lamont, Corliss & Co., New York; Sanitary
Automatic Candy Corporation, New York; Berlo Vending Co., Philadelphia; and
Confection Cabinet Co., Newark, N. J.--These companies include two of the largest
chocolate candy-bar manufacturers, a sales, corporation, and the three largest vendingmachine operators. They petitioned the Third Circuit (Philadelphia) to review an order
against restraint-of-trade agreements in the sale of candy bars to the vending-machine
trade. The Court unanimously affirmed the order (121 F. (2d) 968) and, with respect
to the petitioners’ contentions of lack of public interest and discontinuance of the
practices proscribed, the Court said:
There can be no question about public interest where there is a clear tendency to monopoly.
*
*
*
*
*
*
*
The Commission would have no power at all If it lost jurisdiction every time a competitor
baited an unfair practice just as the Commission was about to act. The practice may have been
discontinued but without the Commission’s order It could be Immediately resumed.

(For further details, see Annual Reports for 1939, p.104, and 1940, p.87).
Adolph Kastor & Bros. Inc., New York, petitioned the Second Circuit (New York)
to review an order involving false claims that the petitioner’s knives had the approval
of the Boy Scouts of America. On June 30, 1941, the case awaited printing of the
transcript.
Kidder Oil Co., La Crosse, Wis.--This case concerns misleading representations in
the sale of a colloidal-graphite lubricant designated as “Koatsal,” the use of which was
claimed to make it possible to run an automobile “an amazing distance without oil in
the crankcase, without damage to any part,” etc. The Seventh Circuit (Chicago)
modified the Commission’s order so as to make it applicable “only as to the
representations concerning ‘Koatsal’ when the same is used as a lubricant in a motor
operated under ‘full-film’ conditions” (117 Fed. 2d 892). The company’s petition for
rehearing was denied. (For further details, see Annual Report for 1940, p.88.)
George H. Lee Co., Omaha.--The Eighth Circuit (St. Louis) vacated the
Commission’s order in this proceeding (113 F. 2d 583), under the doctrine of res
judicata, holding that the Commission was estopped because of a prior decision by a
district court involving the same subject matter, the efficacy of “Gizzard Capsules,”
a remedy for worms in poultry. The Commission s petition for rehearing was denied.
Liquor Trades Stabilization Bureau, Inc., San Francisco.--Petition for review was
filed in the Ninth Circuit (San Francisco). The

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Commission’s order was directed against a combination in restraint of trade in
spirituous liquors. Among the specific practices for-bidden were price-fixing, resaleprice maintenance, coercion, boycott, espionage, refusal to sell, cutting off of
competitors’ supplies, and threats. The proceeding later was dismissed (121 F. (2d)
455).
Lottery cases, Chicago, New York, Milwaukee, Minneapolis, St. Joseph, Mo.,
Macon, Ga., Birmingham, Ala.--Nine cases involving lottery methods in the sale of
candy and other articles of merchandise were determined or were pending in the
Federal courts during the fiscal year, as follows:
In Bunte Brothers, Inc., Chicago, the Supreme Court, by a 5 to 3 decision (312 U.
S. 349), affirmed the Seventh Circuit (Chicago) setting aside the Commission’s order
prohibiting the intrastate sale of lottery assortments of candy which injuriously affect
interstate commerce. The Court held that:
To read “unfair methods of competition in [interstate] commerce “ as though It meant “unfair
methods of competition in any way affecting interstate commerce”, requires, in view of all the
relevant considerations, much clearer manifestation of intention than Congress has furnished.

(For further details, see the Commission’s Annual Report for 1940, p.82.)
Eight petitions for review of orders proscribing various lottery practices in the sale
of candy and other merchandise, were docketed during the fiscal year. In the Seventh
Circuit (Chicago) were the petitions of Benjamin Jaffe, trading as National Premium
Co. and King Sales Co., Chicago; David Kritzik, doing business as General
Merchandise Co., Milwaukee, the commodities involved being candy and novelty
merchandise; and Mitchell A. Bazelon and Jacob L. Bazelon, trading as Evans Novelty
Co. and Premium Sales Co., Chicago. Both cases, at the year’s close, awaited
certification and printing of the transcript. In the Fifth Circuit (New Orleans) were the
petitions of Robert C. Bundy, trading under his name and as Jackson Sales Co.,
Birmingham, Ala.,. and Joe B. Hill and C. 0. McAfee, trading as McAfee Candy Co.
and Liberty Candy Co., Macon, Ga. At the year’s close, both cases awaited printing
of the record. In the Second Circuit (New York) was the petition of Alexander Weiler
and Lilly Greens pan Weiler, trading as New York Premium Novelty Co., New York,
and in the Eighth Circuit (St.Louis), that of Candymasters, Inc., Minneapolis, and
Douglas Candy Co., St. Joseph, Mo.
Caroline R. Macher and Robert J. Macher, trading as Macher Watch and Jewelry
Co. and Wholesale Watch and Jewelry Co., New. York, petitioned the Second Circuit
(New York) for review of an order directed against false claims as to their status as
wholesalers

CASES IN THE FEDERAL COURTS

97

of jewelry. At the year’s close, the case awaited certification and printing of the
transcript.
McKinley-Roosevelt College of Arts and Sciences, Chicago.--The Seventh Circuit
(Chicago), on motion of the Commission, dismissed the petition for review filed by
this concern in June 1940, for the reason that it had taken no action to perfect its
appeal. The Commission’s order prohibited the use of the words “College” and “University” in the petitioner’s corporate or trade names, and the use of symbols indicating
academic degrees after the names of faculty members when the degrees so indicated
were not the result of study pursued at recognized colleges or universities. The entire
business was found to have been carried on in a Chicago apartment, and lacked all
requirements with respect to equipment and educational facilities which would entitle
it to be classified as a college or university.
Mentho-Mulsion, Inc. and others, Atlanta.--The Fifth Circuit (New Orleans), on
joint motion of the parties, entered a decree affirming and commanding. obedience to
the Commission’s order prohibiting misrepresentations concerning the efficacy of
cough and cold medicines , sold by the petitioner.
Millinery Creators’ Guild, Inc., and others, New York.--The Supreme Court (312 U.
S. 469) unanimously affirmed the Second Circuit (New York) (109 F. 2d 175; for
further details see Annual Reports for 1939, p.105, and 1940, p.89), upholding the
Commission’s cease and desist order concerning the legality of a combination
designed to prevent so-called “style piracy in women s hats. The affirmance was on
the authority of the decision in the case of Fashion Originators Guild of America. (See
p.93.)
Modern Hat Works, Jersey City, N. J.--A petition for review was filed with the Third
Circuit (Philadelphia) . On joint motion of the parties, the case was disposed of by a
consent decree. The petitioner was engaged in the manufacture of men’s and boys’.
hats from felts obtained from old, worn, and previously used hat bodies. The order
prohibited representations that hats, composed in whole or in part of used or secondhand materials, are new or composed of new materials, by failure to permanently and
legibly stamp on the sweat bands a statement that the hats are composed of secondhand
or used materials.
Moretrench Corporation, Rockaway, N. J.--The petition for re-view was filed in the
Second Circuit (New York) in 1939, to review a commission order prohibiting the
disparagement of competitive products such as well points, pumps, and equipment
used in drawing water from wet soil during excavation work. Brief for the petitioner
was filed and at the year’s close the case awaited the Commission’s brief.

98

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

George G. Neff, Miami, Okla., doing business as Prostex Co., filed petition for
review with the Fourth Circuit (Richmond) . The order directed the petitioner, in
connection with the sale of “Glantex,” a medicinal preparatory, to cease representing
that it would “cure, or serve as a safe, competent treatment for, prostatitis, cystitis,
urethritis, sugar diabetes, dropsy, illio-colitis, gastritis, malaria, inflammation of the
bladder, acute indigestion, ptomaine poisoning, rheumatism, backaches, leg aches, or
worn-out or run-down feeling.” In affirming the order (117 F. 2d 495), the Court said:
The actual question now presented is whether the testimony of the six experts who testified
for the Commission can be considered substantial evidence in view of their lack of actual
experience in the use of the petitioner’s preparation, as compared with the conflicting statements
of doctors who had administered Glantex to their patients. We think that the evidence is
sufficient to support the Commission’s finding. All of the experts were well qualified to speak
upon the subject; and their opinions, though based only upon their general medical and
pharmacological knowledge, constituted substantial evidence tending to show that the
representations of the petitioner were not justified.

Pep Boys--Manny, Moe, and Jack, Inc., Philadelphia, engaged in the sale of radio
receiving sets, tubes, and other radio parts, petitioned the Third Circuit (Philadelphia)
for review of an order prohibiting the unfair use of the name “Remington” in
connection with the advertising and sale of radio receiving sets. The Court affirmed
the order and directed the entry of a decree of enforcement (122 F. 2d 158). The Court
said, in part:
The record shows there are about 50 different radio manufacturers making radio sets, tubes,
and parts; that it is a competitive industry. Therefore, when the petitioner took an extensively
advertised and well-known name and placed It upon its radio receiving sets, it did so because
the name had, in Its opinion, certain intangible qualities which would promote sales, and we
must conclude that It was selected because of contemplated advantage by lessening or otherwise injuring the business of present or potential rivals.

Perfume cases--New York, Wilmington, Del., and Union City, N. J.--Eight cases
involving false and misleading advertising in the sale of perfumes and kindred
products were determined or pending in the Federal courts during the fiscal year. The
Commission ordered the several petitioners to cease representing, through the use of
terms, symbols, or picturizations indicative of French or other foreign origin, that their
products, compounded in the United States from imported ingredients, were made in
France or other foreign country. The orders provided that the countries of origin might
be stated when immediately accompanied by explanation that the products were
compounded in the United States. The cases were: Second Circuit (New York) ,
Establissments Rigaud, Inc. (and E. Fougera & Co.) New York; Chanel, Inc., New
York; Parfums

CASES IN THE FEDERAL COURTS

99

Corday, Inc., New York; and Yardley of London, Inc., Union City, N. J.; Third Circuit
(Philadelphia) , Coty, Inc., Wilmington, Del., and Coty Sales Corporation, New York,
in a joint petition. In the case of Yardley of London, Inc., in the Second Circuit, the
petition was withdrawn upon stipulation of the parties, after a report showing
compliance with the order had been filed with the Commission. The petition of
Chanel, Inc., was likewise dismissed without prejudice by stipulation of the parties
after a report had been filed showing compliance. In the proceeding of Parfums
Corday, Inc., the Court affirmed the Commission’s order (120 F. 2d 808) on authority
of Fioret Sales Co., Inc., V. F. T. C. (100 F. 2d 358). (For further details, see Annual
Report for 1939, p.102).
Perma-Maid Co., Cincinnati.--The Sixth Circuit (Cincinnati) handed down a
decision affirming and enforcing the Commission’s order (121 F. 2d 282). The order
directed the company, a manufacturer of steel cooking utensils, to cease making
representations calculated to lead customers to believe that the consumption of food
prepared or keep in aluminum utensils would cause ulcers, cancerous growth, and
various other ailments and diseases. With reference to the company’s insistence that
it was endeavoring, by instructions and otherwise, to restrain its agents from making
such representations, the Court said:
The order in no wise injures petitioner and will be an effective aid to it in its efforts to put a
stop to the unfair practices.

(For another case concerning similar practice, see Scientific Manufacturing Co.,
p.100.)
Quality Bakers of America, and others, New York.--The order in this case was
sustained by the First Circuit (Boston) (114 Fed. 2d 393). It is the fifth proceeding in
which orders of the Commission to prevent the payment or receipt of brokerage fees
or allowances, in violation of Section 2 (c) of the Clayton Act (Robinson-Patman Act)
, have been affirmed. There have been no reversals.
In passing upon the questions of law involved, the Court held that Section 2 (c)
prohibits allowances of brokerage by the buyer direct to the seller or by the seller
direct to the buyer, and prohibits payment of brokerage by either buyer or seller to an
agent or intermediary acting for or in behalf of or subject to the direct or indirect
control of the other. (Another brokerage case is that of the Biddle Purchasing Co.,
p.92.)
The Rabhor Co., Inc., New York, petitioned the Second Circuit (New York) to
review a Commission order directed against misleading advertising as to the nature
and quality of men’s suiting fabrics. As of June 30, 1941, the case awaited certification
and printing of the transcript.

100

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Raladam Co., Detroit.--The Commission’s order, reviewed by the Sixth Circuit
(Cincinnati), is directed against unwarranted claims with respect to a desiccated
thyroid preparation known as “Marmola,” advertised extensively as a weight-reducing
agent. At the year’s close the case awaited decision of the Court.
Monica M. Rock, Milwaukee.--The Seventh Circuit (Chicago) affirmed an order (117
F. 2d 680) under the terms of which the petitioner, individually and as executrix of the
estate of Dr. Arthur A. Rock, is directed to discontinue representations that her method
of treatment is a scientific, efficacious, safe, and proper treatment for goiter, regardless
of the variety, form or stage of progression.
Saks & Co., New York.--On stipulation of the parties, the petition for review was
dismissed by the Second Circuit (New York). The Commission subsequently modified
its order in certain particulars.
The Commission order as modified is directed against misrepresentations as to the
quality, age, style, and value of women’s wearing apparel; for example, representing
as new, coats made in whole or in part of old furs; and using such terms as “Satin” or
“Crepe” to describe fabrics not composed wholly of silk. The order provides, however,
that when such terms are used to designate the type of weave or finish. they must be
qualified by words showing the materials from which such products are made.
Peter Sanders and others, New York.--Peter Sanders and Harry Sanders, doing
business as the Perfect Recondition Spark Plug Co., and Samuel Sanders, doing
business as The Ace Auto Supply Co., New York, petitioned the Second Circuit (New
York) to review an order directing them to cease and desist from selling used and reconditioned spark plugs unless the word “Used” or “Secondhand” or “Reconditioned”
is permanently stamped or fixed on each plug in a color in contrast to the surface to
which applied and so as to be clearly legible to the purchaser after installation, and the
boxes, cartons, or other containers in which such spark plugs are sold or offered for
sale are similarly marked. Thereafter, the petition was withdrawn and the proceeding
dismissed.
Scientific Manufacturing Co., Scranton, Pa.--This corporation and Howard J. Force,
is president and owner, petitioned the Third Circuit (Philadelphia) for review of the
Commission’s order to cease and desist. The findings were to the effect that the
petitioners published pamphlets devoted to an exposition of the claimed dangers in the
use of aluminum utensils for the preparation and storage of food, I e., the causing of
cancer, Bright’s disease, diabetes, liver trouble, indigestion, constipation, ulcers,
carbuncles, nervousness, and death from poisoning. At the close of the fiscal year, the
case awaited certification and printing of the transcript. (For another case concerning
similar practice, see Perma-Maid Co., p.99.)

CASES IN THE FEDERAL COURTS

101

Standard Container Manufacturers’ Association, Inc., and others, Jacksonville,
Fla.--The Fifth Circuit (New Orleans) affirmed the Commission’s order after a slight
modification in the interest of clarity.
This trade association and its members, Georgia and Florida concerns, engaged in
the manufacture and sale of wooden containers used in packaging fruits and
vegetables, were ordered to cease entering into agreements to fix and maintain uniform
prices, terms and conditions of sale, to curtail production, etc. In its opinion (119 F.
2d 262), the Court said:
In the beginning it must be stated that petitioner’s contention that action under agreement to
raise prices is not in itself an unfair practice, that it must also appear that prices are unreasonably
affected by the action, will not stand up under the authorities. It is settled law that it is not for
those, who, by concert, artificially raise prices, to determine what point is within and what
beyond the bounds of reason. The law prohibits price-fixing agreements, and all kinds of
agreements to regulate the effect of free and fair competition.

(For similar case, see The Stevenson Corporation, below.)
The Stevenson Corporation, and Stevenson, Jordan & Harrison, New York.--These
concerns, both engaged in business management and engineering, petitioned the
Second Circuit (New York) for review of a Commission order directing them to cease
and desist from entering into, carrying out, or aiding or abetting in the carrying out, of
agreements or combinations for the purpose or with the effect of restraining or
eliminating competition in the purchase or sale of wooden containers used in the
packaging of fruit and vegetables. Except for the filing of certified transcript with the
Second Circuit (New York), this case remained in statu quo during the fiscal year. It
awaits printing of the transcript. (For similar case, see Standard Container
Manufacturers’ Association, Inc., and others, above.)
Chester L. Thomas, Denver, trading as Thomas Quilt Factories.--The Tenth Circuit
(Denver), upon petition for review, unanimously affirmed the order in this case and
directed the enforcement thereof (116 F. 2d 347). The order was based upon findings
to the effect that the petitioner, in the sale of feather quilts, misrepresented the usual,
normal retail price of his products. During the course of its opinion, the Court said:
That many purchasers were misled and deceived into believing that the quilts were being
offered at one-half the regular price, and were thereby induced to purchase, cannot be doubted.
The representation that an article is offered at one-half the regular price is a potent factor in
effecting sales. Undoubtedly, it resulted in drawing customers to Thomas and away from sellers
of down quilts, with whom he was admittedly in competition. No doubt, a substantial portion
of the public was misled by the circulars and other advertising matter and it follows that the
public had an interest in stopping the practice as wrongful.

102

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

United States Steel Corporation, American Bridge Co., Carnegie-Illinois Steel
Corporation, American Steel & Wire Co. of New Jersey, and Tennessee Coal, Iron &
Railroad Co.--These corporations, in 1938, petitioned the Third Circuit (Philadelphia)
to review an order directed against “Pittsburgh plus” prices for rolled-steel products,
in violation of section 2 (the price-discrimination section) of the Clayton Act, and of
section 5 of the Federal Trade Commission Act. A separate petition was filed with the
Fifth Circuit (New Orleans) by the Tennessee Coal, Iron & Railroad Co. By stipulation
of the parties, the judgment and decree of the Fifth Circuit may be made in conformity
with the decision of the Third Circuit or of the Supreme Court. Further proceedings
were suspended until October 5, 1942. (For further details, see Annual Reports for
1938, pp. 90-91; 1939, p.109; and 1940, p.94.)
INJUNCTIVE PROCEEDINGS UNDER THE FEDERAL TRADE COMMISSION
ACT

Since enactment of the Wheeler-Lea amendment to the Federal Trade Commission
Act, March 21, 1938, the Commission has obtained 35 preliminary injunctions in the
United States District Courts restraining the dissemination of false advertisements of
various products pending the determination of the Commission proceedings against the
advertisers.
Thirty-three of these cases concerned drug products and devices which were of a
dangerous nature and injurious to health when used Or taken under the conditions
prescribed or under customary or usual conditions. These products included
abortifacient, emmenagogue, aphrodisiacs, electrolysis machines for the removal of
superfluous hair, short-wave diathermic devices and so-called cures for obesity and
dipsomania.
By invoking the injunctive procedure provided in section 13 of the amended Act, the
Commission is effectively attacking a serious menace to public health. The result has
been to cause the advertisers to discontinue not only the dissemination of offensive
advertisements but in many instances also the sale of the injurious products.
Actions brought by the Commission in the United States District Courts under this
section and concluded during the fiscal year ended June 30, 1941, are listed below.
The decrees prohibit, pending issuance and final disposition of the Commission’s
complaint, the dissemination of advertisements representing the products as safe and
competent treatments for illnesses specified and of advertisements which fail to reveal
that such preparations, if used under the conditions prescribed in the advertisements
or under customary or usual conditions, might result in serious injury to the health of
the user.

CASES IN THE FEDERAL COURTS

103

Seven of the twelve suits had to do with the advertisement of drugs represented as
being safe, scientific, and competent treatments for the relief of delayed menstruation.
These cases are:
Howard Deckelbaum, trading as Sun Cut Rate Store, Huntington, W. Va.-Preparations advertised were known as “Harmless Prescription Capsules,” “Special
Prescription Capsules” and “Prescription Female Capsules-Double Strength” and
“Triple Strength,” The United States District Court for the Southern District of West
Virginia granted a temporary restraining order and rule to show cause. Thereafter it
issued a preliminary injunction which was followed by the Commission’s complaint
and order to cease and desist.
Lenard Gotlieb, trading as Reed’s Cut Rate Store and Fountain Cut Rate Store,
Clarksburg, W. Va.--Preparations advertised were known as “Prescription Female
Capsules,” “Lady Lydia Capsules,” “Prescription Female Capsules-Double Strength”
and “Triple Strength,” “Lady Lydia Capsules-Double Strength” and “Triple Strength.”
The United States District Court for the Northern District of West Virginia granted a
temporary restraining order and rule to show cause. Thereafter it issued its preliminary
injunction, which was followed by the Commission’s complaint and order to cease and
desist.
Rene P. Balditt, trading as Clito Co., San Antonio, Tex.--Preparation advertised was
known as “Clito Emmenagogue Capsules.” The United States District Court for the
Western District of Texas issued its temporary restraining order and rule to show
cause. Thereafter it issued a preliminary injunction, which was followed by the Commission’s complaint and order to cease and desist.
Max Caplan, trading as Capital Drug Co., Roanoke, Va., and Sherry’s Cut Rate
Drug Co., Inc., Blue field, W. Va.--In each case the preparation advertised was known
as “Mrs. Bee Femo Caps.” The United States District Court for the Western District
of Virginia and the United States District Court for the Southern District of West
Virginia, respectively, issued temporary restraining orders and rules to show cause.
Thereafter preliminary injunctions were issued, followed by the Commission’s
complaint and order to cease and desist in each case.
Erie Laboratories, Inc., trading as Mack Pharmacal Co., and Allied Pharmacal Co.,
trading as Erie Laboratories, Inc., Cleveland.--Preparations advertised are known as
“Mrs. Bee Femo Caps,” “Femo Caps,” and “Bee Caps.” The United States District
Court for the Northern District of Ohio issued a temporary restraining order and rule
to show cause. Thereafter it issued a preliminary injunction, followed by the
Commission’s complaint and order to cease and desist.

104

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Charles Shrader, trading as Queen Chemical Co., Mt. Lebanon, Pa.--The
preparation advertised was known as “Queen Brand Capsules.” The United States
District Court for the Western District of Pennsylvania issued a temporary restraining
order and rule to show cause. Thereafter it issued a preliminary injunction. The
Commission’s complaint had not issued at the close of the year.
D. J. Mahler, Inc., East Providence, R. I.--The advertisement was of an electrical
device for the removal of superfluous hair, which was known as “Mahler Electrolysis
Apparatus” and “Mahler Method.” The United States District Court for the District of
Rhode Island granted a temporary restraining order and issued a rule to show cause.
Thereafter it issued its preliminary injunction, which was followed by the
Commission’s complaint and order to cease and desist.
Julius Miller and Jessie Miller, trading as Miller Drug Co., Rochester, N. Y.--The
preparation advertised, containing as its principal ingredient desiccated thyroid extract
and represented as being a safe and scientific treatment for obesity, was known as
“Belite Reducers” and “Miller’s Reducing Prescription.” The United States District
Court for the Western District of New York issued a temporary restraining order and
a rule to show cause. Thereafter it issued a preliminary injunction, which was followed
by the Commission’s complaint and order to cease and desist.
Three of the suits involved the advertisement of short-wave diathermy machines
which were recommended to the lay public for self-application as a cure or treatment
of self-diagnosed diseases and ailments, as follows:
United Diathermy, Inc., New York.--The device or method advertised was known as
“United Short-Wave Diathermy.” The United States District Court for the Southern
District of New York issued a temporary restraining order and rule to show cause.
Thereafter the Court issued a preliminary injunction which was followed by the
Commission’s complaint, pending at the close of the year.
Noland B. Stadley, trading as Sterling Appliance Company, Los Angeles.--The
device or method advertised was known as the “Sterling Short-Wave Diathermy.” The
United States District Court for the Southern District of California granted a temporary
restraining order and rule to show cause. Thereafter it issued a preliminary injunction.
The Commission’s complaint had not issued at the close of the year.
George S. Mogilner and James Walker, trading as Merit Health Appliance Co., Los
Angeles.--The device or method advertised was known as “Merit Short-Wave
Diathermy.” The United States Dis-

CASES IN THE FEDERAL COURTS

105

trict Court for the Southern District of California granted a temporary restraining order
and rule to show cause. Thereafter it issued a preliminary injunction. The
Commission’s complaint had not issued at the close of the year.
CIVIL PENALTIES UNDER THE FEDERAL TRADE COMMISSION ACT

Acting under the authority of Section 16 of the Federal Trade Com-mission Act, the
Commission during the current fiscal year certified the facts concerning 9 alleged
violations of its cease and desist orders to the Attorney General. Trial of most of these
cases was pending at the close of the year. However, 10 cases which had been certified
to the Attorney General during the preceding year were disposed of and civil penalties
in the sum of $12,290 were collected or were in the process of collection at the end of
the year. The cases disposed of during the current year were:
United States against George E. McKewen, and others, trading as Herbal Medicine
Co., and Natex Co., Baltimore.--United States District Court for the District of
Maryland; judgment entered for $100.
United States against J. H. Casey, Portland, Oreg.--United States District Court for
the District of Oregon; judgment entered for $40.
United States against Plantation Chocolate Co., Inc., Philadelphia.--United States
District Court for the Eastern District of Pennsylvania; judgment entered for $600.
United States against The Perfect Manufacturing Co., Inc., trading as Kar-Nu Co.,
Cincinnati.--United States District Court for the Southern District of Ohio; judgment
entered for $1,000.
United States against The Chesapeake Distilling & Distributing Co., Baltimore.-United States District Court for the District of Maryland; judgment entered for $100.
United States against Mutual Printing Co., Chicago.--United States District Court
for the Northern District of Illinois; judgment entered for $1,500.
United States against Montebello Distillers, Inc., Baltimore.--United States District
Court for the District of Maryland; judgment entered for $100.
United States against Mells Manufacturing Co., Brooklyn, N.Y.--United States
District Court for the Eastern District of New York; judgment entered for $600.
United States against Joseph A. Piuma, Los Angeles.--United States District Court
for the Southern District of California; judgment entered for $3,250.
In addition to the above, settlement was made in one case by payment of a penalty
of $5,000 prior to the institution of suit.

106

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

TABLES SUMMARIZING WORK OF THE LEGAL DIVISIONS AND
COURT PROCEEDINGS, 1915-41
TABLE 1.--Preliminary inquiries
1915 1916 1917 1918 1919
Pending beginning of year
0
4
12
32
19
Instituted during year
119 265 462 611 843
Total for disposition
119 269 474 643 862
Consolidated with other proceedings 0
0
0
0
0
Closed after investigation
3
123 289 292 298
Docketed as applications for complaint 112 134 153 332 535
Total disposition during year
115
257 442 624 833
Pending end of year
4
12
32
19
29

1920
29
1,107
1,136
0
351
724
1,075
61

1922
68
1,223
1,291
0
731
413
1,144
147

1923
147
1,234
1,381
0
897
382
1,279
102

1924
Pending beginning of year
102
Instituted during year
1,568
Total for disposition
1,670
Consolidated with other proceedings 0
Closed after investigation
1,157
Docketed as applications for complaint 322
Total disposition during year
1,479
Pending end of year
191

1929 1930 1931
224 260 409
1,469 1,505 1,380
1,693 1,765 1,789
0
0
0
1,049 1,060 1,150
384 296 332
1,433 1,356 1,482
260 409 307

1932
307
1,659
1,966
0
1,319
224
1,543
423

1925
191
1,612
1,803
0
1,270
357
1,627
176

1926
176
1,483
1,659
0
1,075
286
1,361
298

1927
298
1,265
1,563
0
942
293
1,235
328

1928
328
1,331
1,659
0
1,153
282
1,435
224

1921
61
1,070
1,131
0
500
563
1,063
68

1933 1934 1935 1936 1937 1938 1939 1940 1941
Pen ding beginning of year
423 478 760 185 111 152 116 130 195
Instituted during year
1,593 2,151 847 837 899 527 433 648 411
Total for disposition
2,016 2,629 1,607 1,022 1,010
679
549
778 800
Consolidated with other proceedings 0
0
0
0
0
0
4
15
7
Closed after investigation
1,274 1,597 935 624 583
453 379 519 400
Docketed as applications for complaint 264 272 487 287 275
110
36
49
78
Total disposition during year
1,538 1,869 1,422 911 858
563 419 583 485
Pending end of year
478
760 185 111 152
116 130 195
121
CUMULATIVE SUMMARY-TO JUNE 30, 1941
Inquiries instituted
Consolidated with other proceedings
Closed after investigation
Docketed as applications for complaint
Total disposition
Pending June 30,1941

28,552
26
20,423
7,982
28,431
121

TABULAR SUMMARY OF LEGAL WORK

107

TABLE 2.--Applications for complaints
1915 1916 1917 1918 1919 1920 1921 1922 1923
0
104
130
188
280
389
554
112
134
153
332
535
724
426

Pending beginning of year
Applications docketed
Rescissions:
To complaints
0
0
Settled by stipulation to cease and
desist
0
0
Settled by acceptance of TPC rules
0
0
Consolidated with other proceedings 0
0
Dismissed for lack of merit
0
0
Closed for other reasons 1
0
0
Total for disposition
112
238
To complaints
0
3
Settled by stipulation to cease and desist 0 0
0
Settled by acceptance of TPC rules
0
0
Consolidated with other proceedings
0
0
Dismissed for lack of merit
8
105
Closed for other reasons’
0
0
Total disposition during year
8 108
Pending end of year
104
130

0

0

0

0

0

467
382

458
416

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
8
0
0
0
0
0
0
0
283
520
815 1,113
980
854
880
16
80
125
220
156
104
121
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
79
160
301
339
357
292
187
0
0
0
0
0
0
0
95
240
426
559
513
396
308
188
280
389
554
467
458
572

1924 1925 1926 1927 1928 1929 1930 1931 1932
Pending beginning of year
572
565
488
420
457
530
843
753
754
Applications docketed
377
340
273
292
334
679
535
511
878
Rescissions:
To com plaints
0
0
0
0
0
0
2
2
0
Settled by stipulation to cease and
desist
1
1
1
0
2
2
3
5
3
Settled by acceptance of TPC rules
0
0
0
0
0
1
3
2
0
Consolidated with other proceedings 0
0
0
0
0
0
0
0
0
Dismissed for lack of merit
4
3
4
0
0
0
3
4
1
Closed for other reasons 1
0
0
0
0
0
0
0
0
0
Total for disposition
954
909
766
712
793 1,212 1,389
1,277
1,138
To complaints
143
118
57
45
58
100
171
110
90
Settled by stipulation to cease and desist 3
5
102
80
68
118
275
203
332
Settled by acceptance of TPC rules
0
0
2
3
19
17
32
5
8
Consolidated with other proceedings
0
0
0
0
0
0
0
0
0
Dismissed for lack of merit
243
298
185
127
118
134
158
205
268
Closed for other reasons
1
0
0
0
0
0
0
0
0
Total disposition during year
389
421
346
255
263
369
636
523
696
Pending end of year
565
488
420
457
530
843
753
754
440
1933 1934 1935 1936 1937 1938 1939 1940 1941
Pending beginning of year
440
476
469
634
685
964
1,190 1,269 1,421
Applications docketed
404
376
913
1,221 1,477 1,402
1,257 1,396 1,339
Rescissions:
To complaints
3
0
0
0
3
0
0
0
0
Settled by stipulation to cease and
desist
3
4
10
18
27
35
44
45
14
Settled by acceptance of TPC rules
0
0
0
0
0
0
0
0
0
Consolidated with other proceedings 0
0
0
0
0
0
0
0
0
Dismissed for lack of merit
0
3
1
12
12
14
5
1
3
Closed for other reasons 1
0
0
1
3
1
9
5
10
8
Total for disposition
850
859 1,394
1,888
2,205
2,424
2,501 2,721 2,785
To complaints
52
98
259
382
290
310
371
329
332
Settled by stipulation to cease and
desist
181
201
357
544
614
564
466
563
498
Settled by acceptance of TPC rules
3
0
1
0
0
4
0
5
0
Consolidated with other proceedings 0
0
0
0
0
0
26
37
21
Dismissed for lack of merit
138
91
66
4
0
0
0
0
0
Closed for other reasons 1
0
0
77
273
337
356
369
360
513
Total disposition during year
374
390
760 1,203
1,241 1,234 1,232
1,300 1,364
Pending end of year
476
469
634
685
964 1,190
1,269
1,421 1,421
423272--41----8

108

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
CUMULATIVE SUMMARY-TO JUNE 30, 1941

Applications docketed
Rescissions:
To complaints
Settled by stipulations to cease and desist
Settled by acceptance of TPC rules
Consolidated with other proceedings
Dismissed for lack of merit
Closed for other reasons 1
Total for disposition
To complaints
Settled by stipulations to cease and desist
Settled by acceptance of TPC rules
Consolidated with other proceedings
Dismissed for lack of merit
Closed for other reasons 1
Total disposition
Pending June 30, 1941

16,718
10
218
6
0
81
37
17,070
4,140
5,174
97
84
3,863
2,291
15,649
1,421

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

TABLE 3.--Complaints
Pending beginning of year
Complaint docketed
Orders to cease and desist
Settled by stipulations to cease and
desist
Settled by acceptance of TPC rules
Dismissed for lack of merit
Closed for other reasons 1
Total for disposition
Complaints rescinded
Orders to cease and desist
Settled by stipulations to cease and
desist
Settled by acceptance of TPC rules
Dismissed for lack of merit
Closed for other reasons 1
Total disposition during year
Pending end of year

0
0
0

1915 1916 1917 1918 1919 1920 1921 1922 1923
0
5
10
86 133
286 312
5
9 154 135
308
177
111
0
0
0
0
0
1
0

0
0

0
0
0

0
0
0
0

0
5
0
0
0

0
0

0
0
0

0
0
14 164 221
0
0
3
71
0
0
1

0
0
5

0
0
0

0
0
0

0
0
0

0
0
0

0
4
10

0
441
0
75

0
1

0
465
0
111

0
88
133

0
0
44
0
155
286

0
0

0
153
312

0
0
1

0
402
0
91

0
0
37

0

0

0
423
0
116

0
0
13

0
78
86

0

0
0

0
0
7

0

257
144
0

0
0
82

0
0
75
0
166
257

0
0
88
0
170
232

1924 1925 1926 1927 1928 1929 1930 1931 1932
Pending beginning of year
232
264
220
152
147
136
198
275
225
Complaint docketed
154
132
62
76
64
149
172
110
92
Orders to cease and desist
5
0
0
1
1
0
0
0
1
Settled by stipulations to cease and
desist
0
0
0
0
0
0
0
0
0
Settled by acceptance of TPC rules
0
0
0
0
0
0
0
0
0
Dismissed for lack of merit
1
0
0
1
0
0
0
0
0
Closed for other reasons 1
0
0
0
0
0
0
0
0
0
Total for disposition
392 396 282 230
212 285
370
385
318
Complaints rescinded
0
0
0
0
0
0
3
2
1
Orders to cease and desist
92
73
44
52
48
67
48
108
63
Settled by stipulations to cease and
desist
0
6
3
1
3
3
3
0
1
Settled by acceptance of TPC rules
0
0
0
5
5
1
0
1
0
Dismissed for lack of merit
36
97
83
25
20
16
41
49
45

Closed for other reasons 1
Total disposition during year
Pending end of year

0
128
264

0
176
220

0
130
152

0
83
147

0
76
136

0
87
198

0
95
275

0
160
225

0
110
208

109

TABULAR SUMMARY OF LEGAL WORK
TABLE 3.--Complaints--Continued
1933
Pending beginning of year
208
Complaints docketed
53
Rescissions:
Orders to cease and desist
0
Settled by stipulations to cease and
desist
0
Settled by acceptance of TPC rules 0
Dismissed for lack of merit
0
Closed for other reasons 1
0
Total for disposition
261
Complaints rescinded
3
Orders to cease and desist
66
Settled by stipulations to cease and
desist
1
Settled by acceptance of TPC rules
6
Dismissed for lack of merit
41
Closed for other reasons 1
0
Total disposition during year
117
Pending end of year
144

1934 1935 1936 1937 1938 1939 1940 1941
144 115 218 419 358 392 442 458
97 280 386 296 305 370 331 357
0

1

12

10

8

3

7

2

0
0
0
0
241
0
111

0
0
0
0
396
0
126

0
0
0
0
616
0
161

0
0
0
0
725
3
296

0
0
0
0
671
0
245

0
0
0
1
766
0
288

0
0
6
0
786
0
282

0
0
0
0
817
0
348

2
0
12
1
126
115

1
0
38
13
178
218

1
0
19
16
197
419

17
0
13
38
367
358

5
0
13
16
279
392

4
0
12
20
324
442

1
4
20
21
328
458

2
1
32
24
407
410

CUMULATIVE SUMMARY-TO JUNE 30, 1941
Complaints
Rescissions:
Orders to cease and desist
Settled by stipulations to cease and desist
Settled by acceptance of TPC rules
Dismissed for lack of merit
Closed for other reasons 1
Total for disposition
Com plaints rescinded
Orders to cease and desist
Settled by stipulations to cease and desist
Settled by acceptance of TPC rules
Dismissed for lack of merit
Closed for other reasons 1
Total disposition
Pending June 30, 1941

4,529
52
0
0
10
1
4,592
12
3,067
54
23
877
149
4,182
410

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

TABLE 4.--Court proceedings--orders to cease and desist-petitions for review--lower courts
1919 1920 1921 1922 1923 1924 1925 1926
Pending beginning of year
Appealed
Total for disposition
Decisions for Commission
Decisions for others
Petitions withdrawn
Total disposition during year
Pending end of year

0
4
4
1
1
0
2
2

2
9
11
0
3
0
3
8

8
18
26
1
11
1
13
13

13
5
18
4
5
0
9
9

9
5
14
5
4
1
10
4

4
15
19
1
4
0
5
14

14
6
20
6
3
2
11
9

9
5
14
5
1
0
6
8

110

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

TABLE 4.--Court proceedings--orders to cease and desist-petitions for review--lower courts--Continued

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

1927 1928 1929 1930 1931 1932 1933 1934
8
3
3
35
3
8
15
2
4
4
34
1
10
22
3
1
12
7
37
36
13
30
18
3
4
3
1
4
3
1
2
2
2
1
1
26
1
11
13
0
3
0
0
3
1
3
1
0
9
4
2
33
5
15
10
2
3
3
35
3
8
15
2
1

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

1935 1936 1937 1938 1939 1940 1941
1
3
5
3
27
31
27
5
6
2
29
25
22
23
6
9
7
32
52
53
50
3
4
3
3
15
17
19
0
0
0
0
2
2
1
0
0
1
2
4
7
7
3
4
4
5
21
26
27
3
5
3
27
31
27
23

CUMULATIVE SUMMARY--TO JUNE 30, 1941
Appealed
Decisions for Commission
Decisions for others
Petitions withdrawn
Total disposition
Pending June 30, 1941

258
107
1 92
36
235
23

1 This table lists a cumulative total of 92 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 curb
pump (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 in favor of the respondents would
be 41.
NOTE.--During the period 1919-38, inclusive, 58 petitions by the Commission for enforcement of
orders to cease and desist were passed upon by courts. Of these proceedings, 54 were decided in favor of
the Commission; 4 in favor of adversaries. Petitions for enforcement were subsequently made unnecessary
by amendment of the Federal Trade Commission Act making orders finally effective unless review is
sought by respondents within 60 days after service of an order.

TABLE 5.--Court proceedings--orders to cease and desist--petitions for review Supreme
Court of the United States

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

1919 1920 1921 1922 1923 1924 1925 1926
0
0
1
3
3
1
0
4
0
2
2
4
5
0
5
2
0
0
0
0
2
1
1
3
0
2
3
7
10
2
6
9
0
0
0
2
0
0
0
0

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

1
0
0
0
1
1

0
0
0
0
0
3

0
0
2
0
4
3

5
1
1
2
9
1

1
0
0
1
2
0

0
0
1
1
2
4

0
0
2
1
3
6

TABULAR SUMMARY OF LEGAL WORK

111

TABLE 5.--Court proceedings--order to cease and desist-petitions for review-Supreme Court of the United States--Continued
1927 1928 1929 1930 1931 1932 1933 1934
Pending beginning of year
6
1
0
1
0
0
0
1
Appealed by Commission
1
0
0
1
1
0
8
12
Appealed by others
1
0
2
0
0
1
0
1
Total for disposition
8
1
2
2
1
1
8
14
Decisions for Commission
3
0
0
0
0
0
6
13
Decisions for others
2
0
0
1
1
0
0
1
Petitions withdrawn by Commission
0
0
0
1
0
0
0
0
Certiorari denied Commission
1
0
0
0
0
0
1
0
Certiorari denied others
1
1
1
0
0
1
0
0
Total disposition during year
7
1
1
2
1
1
7
14
Pending end of year
1
0
1
0
0
0
1
0

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

1935 1930 1937 1938 1939 1940 1941
0
0
1
0
0
1
1
0
0
0
0
1
1
0
0
4
0
2
1
10
5
0
4
1
2
2
12
6
0
0
0
0
0
0
2
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
3
1
2
1
10
2
0
3
1
2
1
11
5
0
1
0
0
1
1
1

CUMULATIVE SUMMARY--TO JUNE 30, 1941
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 June 30, 1941

45
34
79
26
13
2
9
28
78
1

TABLE 6.-Court proceedings--mandamus, injunction, etc.--lower courts

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

1919 1920 1921 1922 1923 1924 1925 1926
0
1
4
5
6
4
4
4
1
2
0
3
5
0
1
0
1
2
2
3
0
0
0
1
2
5
6
11
11
4
5
5
1
0
1
3
0
0
0
0
0
1
0
1
7
0
0
0
0
0
0
0
0
0
1
1
0
0
0
1
0
0
0
0
1
1
1
5
7
0
1
1

Pending end of year

1

4

5

6

4

4

4

4

112

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
TABLE 6.-Court proceedings--mandamus, injunction, etc.-lower courts--Con.

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

1927 1928 1929 1930 1931 1932 1933 1934
4
5
3
2
1
1
2
1
1
0
2
0
1
0
1
0
1
2
1
2
0
2
0
2
6
7
6
4
2
3
3
3
1
1
4
1
1
1
2
2
0
1
0
1
0
0
0
0
0
2
0
0
0
0
0
0
0
0
0
1
0
0
0
1
1
4
4
3
1
1
2
3
5
3
2
1
1
2
1
0

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

1935 1936 1937 1938 1939 1940 1941
0
0
1
0
1
5
2
0
4
2
5
11
14
14
0
1
1
1
2
4
1
0
5
4
6
14
23
17
0
4
3
2
8
20
16
0
0
0
3
1
1
0
0
0
0
0
0
0
0
0
0
1
0
0
0
1
0
4
4
5
9
21
17
0
1
0
1
5
2
0

CUMULATIVE SUMMARY--TO JUNE 30, 1941
Instituted by Commission
Instituted by others
Total instituted
Decisions for Commission
Decisions for others
Petitions withdrawn by Commission
Petitions withdrawn by others
Total disposition
Pending June 30,1941

67
29
96
71
16
4
5
96
0

TABLE 7.--Court proceedings--mandamus, injunction, etc.--Supreme Court of the United States

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

1919 1920 1921 1922 1923 1924 1925 1926
0
0
0
0
0
6
4
1
0
0
0
0
6
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
6
6
4
1
0
0
0
0
0
0
0
0
0
0
0
0
0
2
3
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
2
3
0
0
0
0
0
6
4
1
1

TABULAR SUMMARY OF LEGAL WORK

113

TABLE 7.--Court proceedings-mandamus, injunction, etc.-Supreme Court or the
United States--Continued

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

1927 1928 1929 1930 1931 1932 1933 1934
1
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
1
0
0
0
1
2
0
0
1
0
0
0
1
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
1
0
0
0
1
2
0
0
1
0
0
0
1
0
0
0
0
0
0
0
0

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

1935 1936 1937 1938 1939 1940 1941
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
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
1
0
0
0
0
0
0
0
0
0

CUMULATIVE SUMMARY--TO JUNE 30,1941
Appealed by Commission
Appealed by others
Total appealed
Decisions for Commission
Decisions for others
Certiorari denied Commission
Certiorari denied others
Total disposition
Pending June 30, 1941

8
2
10
2
5
1
2
10
0

PART III. TRADE PRACTICE CONFERENCES
PURPOSES OF TRADE PRACTICE CONFERENCE PROCEDURE
TRADE PRACTICE CONFERENCE ACTIVITIES DURING THE YEAR
INDUSTRY RULES IN EFFECT AND THEIR ADMINISTRATION
TYPES OF PRACTICES COVERED IN APPROVED RULES
GROUP I AND GROUP II RULES DEFINED
115

PART III. TRADE PRACTICE CONFERENCES
PURPOSES OF THE TRADE PRACTICE CONFERENCE PROCEDURE

The trade practice conference procedure has for its purpose the establishment, by the
Commission, of trade practice rules for the protection of industry, trade, and the
purchasing public against unfair competitive practices. Under this procedure
conferences are conducted for industries and effective means are made available for
industry groups or other interested or affected parties to participate voluntarily with
the Commission in making provision for the elimination of trade abuses. Thus
cooperative action among business competitors within the law and with the aid of
Commission supervision may properly be taken to end unfair trade practices. Through
such conference procedure the forces for good in an industry are more effectively
organized and directed. Consumer representatives are likewise afforded means under
the procedure for participating in the establishment and carrying out of rules in the
interest of the public.
The different competitive practices or methods, which under the statutes and the
various decisions of the courts or the Commission are considered to fall within the
inhibitions of the law, are clarified and listed in the form of specific rules applicable
to the particular conditions existing in the industry concerned. Such clarification and
codification of legal requirements and the organization of cooperative endeavor under
supervision of the Commission in the elimination of undesirable practices and the
maintenance of fair competitive conditions is vastly important to industry, to the
public, and to the Government. It leads to the wholesale elimination and abandonment
of unfair and illegal methods of competition, thereby bringing to legitimate business
and the purchasing and consuming public relief and protection from harmful
exploitation and the waste and burdens of such methods. Such voluntary cooperation
in the elimination of harmful practices also results in substantial saving to the
Government and to business in the expense which otherwise might necessarily be
incurred in instituting a multiplicity of compulsory legal proceedings against
individual offenders to require cessation of the illegal practices in question.
Rules appropriate for the Commission’s approval or sanction may include not only
provisions for the prevention of practices which are illegal per Se, or are contrary to
the general public interest, but also provisions for fostering and promoting practices
which are
117

118

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

designed to aid fair competition and to elevate the standards of business ethics in
harmony with public policy.
Trade Practice Conference Division.--This division is charged with the duty of
conducting the various activities relative to the formulation and approval of trade.
practice rules, the holding of industry conferences in such matters, the administration
and observance of promulgated rules, and all other staff duties incident to the trade
practice conference procedure. Such division is also charged with the general
administration of the Wool Products Labeling Act and the Rules and Regulations
which have been promulgated thereunder. (See p.125.)
Procedure for establishing industry rules.--The procedural steps and requirements
applicable to industry proceedings for the establishment of trade practice rules,
including the filing of application, the holding of industry conferences and public
hearings, and the promulgation of industry rules, are covered in the Commission’s
Rules of Practice. (See Rule XXVII, p.196, et seq.)
In respect of such industry proceedings for trade practice rules, preliminary meetings
are held by the members of the Commission’s staff with trade committees, industry
members, or other parties of interest, affording such guidance and help as will
contribute to a full understanding of the proceeding and its objects; also providing a
cooperative working out of constructive solutions for the several competitive problems
to be treated. These meetings are followed in course of the proceeding by industrywide conferences, hearings, and final promulgation of rules.
TRADE PRACTICE CONFERENCE ACTIVITIES DURING THE YEAR

The trade practice conference work divides into two general categories, (1) the
activities for establishing and promulgating new rules for different industries, and (2)
the administration of existing rules promulgated during the current and previous years.
In the first division are proceedings currently concluded as well as those pending in
various stages of advancement.
New rules promulgated during the fiscal year.--Aside from the various pending
cases, trade practice conference proceedings completed during the fiscal year resulted
in the establishment of representative sets of rules for the following industries: (1)
Resistance Welder Manufacturing Industry; (2) Tuna Industry; (3) Subscription and
Mail-Order Book Publishing Industry; (4) Linen Industry; (5) Hosiery Industry; and
(6) Beauty and Barber Equipment and Supplies Industry. (With respect to the rules for
the last-named industry, final action by the Commission was taken during the fiscal
year but the rules were not formally issued until after

PURPOSES OF TRADE PRACTICE. CONFERENCE PROCEDURE

119

the close of the year.) The industries above listed represent approximately a billion
dollars in annual sales volume with thousands of manufacturing and marketing units.
Their rules collectively constitute a noteworthy set of commercial guides in the interest
of fair competition in business and consumer protection. The linen and hosiery rules
in particular signify notable advances in collaboration of industry and the Government
for the benefit of the public and wholesome business practices.
Pending industry trade practice proceedings for establishment of rules.--In addition
to industries for which rules have been promulgated, trade practice proceedings were
under way for other industries and at the close of the fiscal year were pending in
different stages of development. Among these active proceedings are included industries which are large and national in scope. In some of the proceedings pending, the
general industry conferences had already been assembled and held for the purpose of
considering and formulating proposed rules. In some instances the proposed rules had
been released by the Commission and public hearings thereon held. In other cases in
which the proceedings were not so far advanced, the necessary preliminary study and
consideration had been undertaken preparatory to further action in accordance with the
applicable rules of procedure.
Besides the various industries for which the Commission had approved trade
practice rules or for which proceedings had been instituted and were pending at the
close of the year, many other groups have contacted the Commission regarding the
holding of trade practice conferences for their industries. These industry contacts, and
the number of proceedings already applied for, are indicative of the growing
appreciation on the part of industry and the public of the value of the trade practice
conference procedure in maintaining fair competitive conditions in the public interest.
INDUSTRY RULES IN EFFECT AND THEIR ADMINISTRATION

Rules in effect.--Trade practice rules which are in effect for various industries
number many hundreds. For example, the last 50 industries for which trade practice
conference proceedings had been held have a total of 865 rules, of which 755 are in
group I and 110 in group II. The types of trade practices hereinafter listed are illustrative of the different kinds covered in the rules for these 50 industries. 1
1 Rules when promulgated for an industry are issued in pamphlet form and are available upon request
made to the Commission. A 1-volume compilation of the various sets of rules promulgated for different
industries from September 1, 1935, to August 31, 1939, may be purchased from the Superintendent of
Documents, Government Printing Office, Washington, D. C. (287 pp.).

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Administration of rules.--This work covers the necessary compliance activities,
interpretation of rules, and their application to specific situations arising from time to
time in different industries, and the general administrative duties in respect to such
activities. Such work concerns not only those rules promulgated during the current
fiscal year, but also those promulgated in prior years and remaining in effect. A large
volume of correspondence was conducted through-out the year in regard to existing
rules, particularly as affecting compliance with the provisions, and in general for
assistance to industry members in the proper application and observance of rules in
order to promote the use of fair practices and the protection of the public interest.
Numerous informal conferences were had with members of industries and other
interested parties or groups. In a great majority of matters received during the fiscal
year involving objectionable practices under the rules, correction or adjustment was
brought about through the cooperation of the various parties concerned. There was
widespread compliance with approved rules on the part of members of industry and
this constructive and cooperative attitude has greatly lessened the need for resorting
to the compulsory processes of the law in the prevention of unfair trade practices. The
results demonstrated a primary objective of trade practice rules, namely, the wholesale
elimination of unfair competitive practices without the expense of litigation. In cases
where the compulsory procedure of the Commission appeared necessary to protect the
public interest, action to that end was initiated.
Regarding the observance of trade practice conference rules, periodic surveys are
conducted by the Commission, and those made during the fiscal year revealed marked
improvement in competitive conditions in different industries operating under rules,
It was apparent that the best interests of the public and of business were being served
with substantial benefit as a consequence of the operation of fair trade practice rules.
TYPES OF PRACTICES COVERED IN APPROVED RULES

The following are illustrative of the great variety of subjects covered under trade
practice rules now in effect: Misbranding; misrepresentation in various forms,
including false or misleading advertising; deceptive packaging; defamation of
competitors or disparagement of their products; impersonation or misrepresentation
to obtain competitor’s trade secrets; harassment of competitors by circulation, in bad
faith, of threats of infringement suits; price discriminations to injure, prevent, or
destroy competition; discriminations and harmful practices in matters of rebates,
refunds, discounts, credits, brokerage, commissions, services, promotional allowances,
etc.; commercial

PURPOSES OF TRADE PRACTICE CONFERENCE PROCEDURE

121

bribery; inducing breach of competitor’s contract; false invoicing; imitation of
competitor’s trade-marks, trade names, brands, labels, etc.; substitution and “passing
off”; deceptive use of so-called “free goods” deals; lottery schemes; use of
consignment distribution to close competitors’ trade outlets; use of deceptive types of
containers simulating standard and generally recognized types; use of deceptive
depictions (photographs, engravings, cuts, etc.) in describing industry products; selling
below cost with the purpose and effect of suppressing competition, restraining trade,
or creating a monopoly; and use of “loss leaders” as a deceptive or monopolistic
practice.
Other subjects embraced in the rules are: Enticing away employees of a competitor;
use of misleading guarantees, price quotations, price lists, terms of sale, etc.; full-line
forcing as a monopolistic weapon; combinations or conspiracies to fix prices, suppress
competition, or restrain trade; unfair bidding methods; misrepresentation as to possible
earnings or opportunities afforded on completion of correspondence school courses;
as to Government connection with, or endorsement of, any school, or respecting any
training or services offered by such school; falsely representing offers as “special” or
“limited”; deceptive sales of regular lines as “close-outs” to induce belief bargains are
available; representing products as conforming to recognized industry standards when
such is not the fact; misuse of such words or terms as “perfect,” “perfect cut,”
“commercially perfect,” “real,” “genuine,” “natural,” etc., in describing precious
stones or their imitations; misrepresenting kind, quality, thickness, or backing of
mirrors; use of fictitious animal designations in description of furs; misrepresenting
character, extent, or type of business engaged in; representing retail prices as
wholesale; use of false and deceptive testimonials; misuse of terms “pullorum tested,”
“blood tested,” etc., as applied to sale of baby chicks; false representations respecting
tube capacity of radio sets and their range or receptivity; misuse of such terms as “allwave,” “world-wave,” “world-wide wave,” etc.; misuse of words or terms “bristle,”
“pure bristle,” etc., in sale of toilet brushes; deceptive use of “help wanted” or other
employment columns in publications; interfering with competitors’ right of purchase
or sale; representing domestic products as imported, or imported products as domestic;
use of misleading or deceptive representations in procuring sales representatives; of
deceptive titles or names in selling books under the subscription plan; misusing terms
relating to types of construction or weave of textiles; misuse of terms “Extra Fancy,”
“Extra Select,” “Extra Quality,” “De Luxe,” “Choice,” etc., to describe tuna fish
products; of the words or terms “lisle cotton,” “cotton lisle,” “crepe,” etc., to describe
hosiery products; deceptive use of terms “hand spun,” “hand woven,”

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

“hand loomed,” “hand printed,” “hand embroidered,” and similar representations, in
describing linen products; and various other forms of misrepresentation, including
false or misleading advertising and deceptive labeling respecting the quantity, quality,
grade, size, material, content, composition, origin, use, manufacture, preparation, or
distribution of any industry product; aiding or abetting another in the use of an unfair
trade practice.
Various other rules provide for disclosure of fiber content and proper marking of
textile merchandise made of rayon, silk, or linen, or of two or more fibers containing
either rayon, silk, or linen; disclosure as to remaining shrinkage in so-called preshrunk
merchandise; disclosure of fact that apparently new products are not new, but are
second-hand, rebuilt, or renovated; disclosure that products are artificial or imitations
and not real or genuine; disclosure of country of origin of imported products;
prevention of marketing of substandard or imitation products as and for the standard
or genuine, and the specification of minimum requirements for standard or genuine
products; proper nomenclature for industry products; disclosure as to true composition
of paint and varnish brushes; as to imperfect or defective merchandise; as to use of
adulterant or substitute for linseed oil in respect to putty products; as to presence of
metallic weighting in silk or silk products; as to minimum yardage of ribbons; as to
true functions of radio parts and accessories; as to quality, quantity, and size of ripe
olives as packed in cans and other opaque containers; and many other unfair methods
of competition and unfair or deceptive acts or practices in commerce.
GROUP I AND GROUP II RULES DEFINED

Trade practice rules, as finally promulgated, are classified by the Commission as
group I and group II rules, respectively.
Group I rules.--The unfair trade practices which are embraced in group I rules are
considered to be unfair methods of competition, unfair or deceptive acts or practices,
or other illegal practices, prohibited under laws administered by the Federal Trade
Commission, as construed in the decisions of the Commission or the courts; and
appropriate proceedings in the public interest will be taken by the Commission to
prevent the use, by any person, partnership, corporation, or other organization subject
to its jurisdiction, of such unlawful practices in commerce.
Group II rules embrace the wholly voluntary or recommended industry practices as
distinguished from compulsory requirements. No such industry rule is received by the
Commission unless the provision is in harmony with law and the public interest, and
is constructively in support of the maintenance of fair competitive conditions in the
industry.

PART IV. WOOL PRODUCTS LABELING ACT
COMMISSION BEGINS ADMINISTRATION OF NEW LAW
DESIGNED TO PROTECT THE
CONSUMING PUBLIC

123

423272--41----9

PART IV. WOOL PRODUCTS LABELING ACT
COMMISSION BEGINS ADMINISTRATION OF NEW LAW DESIGNED TO
PROTECT THE CONSUMING PUBLIC

Passage of the “Wool Products Labeling Act of 1939” early in the fiscal year marked
a new development in the field of consumer protection and promotion of fair
competitive practice.
Approved by the President on October 14, 1940, to become effective 9 months later,
the act provides for the labeling of wool products to disclose their true composition in
the interest of protecting the consuming public, industry and trade against the evils
resulting from the concealment of this information.
The act designates the Federal Trade Commission as the administrative and
enforcement agency. The Commission’s Division of Trade Practice Conferences has
been assigned the various duties incident to the general administration of the statute
and the rules and regulations thereunder.
Following the passage of the act the work of assisting industry in making necessary
preparations to meet the requirements of the law were undertaken.
Wool Act rules and regulations.--The Wool Products Labeling Act authorized and
directed the Commission to make such rules and regulations under and in pursuance
of the terms of the act as might be necessary and proper for its administration and
enforcement. In carrying out this statutory direction, the Commission adopted a procedure whereby industry members and other parties in interest were afforded
opportunity to contribute their views and suggestions in arriving at rules which would
be of the maximum assistance to industry amid trade and be in consonance with the
law, and also afford full protection of the public interest.
Accordingly, the Commission, on the basis of its preliminary studies, prepared a
draft of suggested rules which it released to all interested or affected parties affording
them a period for study and inviting them to submit their suggestions and to be heard.
Such hearing was held on April 2, 1941, and pursuant to the public notice relating
thereto many industry groups and persons concerned submitted suggestions and views,
all of which were carefully studied and considered by the Commission in arriving at
the final draft of rules and regulations. After such full consideration these were
publicly announced on May 24, 1941. They were made available in advance of the
effective date of the act in order that members of industry and trade might
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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

have the benefit of their provisions in preparing for compliance with the act when it
became effective. Such rules and regulations were accordingly made effective on July
15, 1941. The rules and regulations are comprehensive and provide for those parties
subject to the act full instructions and guidance as to how they may proceed in various
situations and assure themselves that they are within the requirements of the law.
Besides extensive circulation of the rules and regulations through private prints of
industry organizations and other groups, the Commission, up to September 1, 1941,
had supplied 26,000 copies of the official rules and regulations to members of industry
and trade having a need therefor.
Manufacturers’ registered identification numbers.--Rule 4 of the rules and
regulations provides for the assignment by the Commission of manufacturers’
registered identification numbers to manufacturers of wool products residing in the
United States, upon application of the manufacturer therefor, such number to be used
by the manufacturer in lieu of his name on the label affixed to the wool product,
subject to the conditions established by the Commission. This rule was formulated in
order to assist industry and trade by making available the means whereby the name of
the retailer or other distributor not subject to section 3 of the act might be used on the
label if accompanied by the manufacturer’s registered identification number, without
the necessity of placing thereon the manufacturer’s name.
Pursuant to applications filed under this rule, more than 3,700 manufacturers’
registered identification numbers have been issued to domestic manufacturers of wool
products.1
Continuing guaranties.-Provision is made in section 9 whereby a dealer or other
person subject to the act may avoid guilt thereunder by establishing a guaranty
received in good faith, signed by and containing the name and address of the person
residing in the United States by whom the wool product guaranteed was manufactured,
or from whom it was received, that such wool product was not misbranded under the
provisions of the act. This section further pro vides that such guaranty may be either
(1) a separate guaranty specifically designating the wool product guaranteed, or (2) a
continuing guaranty filed with the Commission applicable to all products handled by
a guarantor in such form as the Commission might prescribe. The form prescribed by
the Commission is set forth in Rule 33 of the rules and regulations. Many hundreds of
such guarantees have been filed. A public record of continuing guaranties on file with
the Commission is maintained, such record being open for inspection by interested
parties.
1

Figure given is as of August 30, 1941.

WOOL PRODUCTS LABELING ACT

127

Enforcement.--The Commission has announced that in general its usual procedure
will be employed in the enforcement of this statute. Such procedure, long established
and repeatedly sanctioned by the courts, is primarily preventive rather than punitive.
Under the terms of the act and the procedure of the Commission there is assured fair
and impartial treatment, with full opportunity for hearing and court review. The
Commission’s announced policy is to effect compliance through voluntary cooperation
wherever this is possible and consistent with the public interest.
While the act did not go into effect until shortly after the close of the fiscal year,
extensive preparation for placing it in operation had been made during the year with
every indication that effective compliance steps were being taken throughout the
country by manufacturers, distributors, and dealers subject to the act.
During the 9 months period between the enactment and effective date of the statute,
a large volume of correspondence was handled in advising and assisting those subject
to its provisions. This involved many questions of the application of the act and the
rules and regulations to specific problems and questions presented by members of
industry or otherwise arising in the action necessary on the part of manufacturers and
merchants to properly mark their wool products and to bring their business practices
into harmony with the requirements of the law.
The Wool Act, a protection to business and the public.--The act as stated in its title
is to protect producers, manufacturers, distributors, and consumers from the
unrevealed presence of substitutes and mixtures in spun, woven, knitted, felted, or
otherwise manufactured wool products. Provision is made for disclosure of fiber
content, of loading and adulterating materials and of name through which the
responsible manufacturer or distributor may be ascertained. When woolen or purported
woolen fabric, clothing and other articles coming within the scope of the act are
introduced into or sold in “commerce,” the stamp, tag, label, or mark of identification
affixed to the product shall disclose the percentages of “wool,” “reprocessed wool,”
“reused wool,” and of other fibers of which the article is made. Such label or mark, or
a proper substitute therefor, is to remain on the merchandise until it reaches the
ultimate purchaser.
Protection of the consumer, and safeguarding of fair practices in merchandise, are
primary objectives. The law is directed against the evils of nondisclosure of content,
of misinformation and mis-branding, of irresponsible labeling, with the purpose of
eliminating the economic waste, the harmful exploitation, and the unfair competitive
effects of such evils. A long-felt need in this regard is supplied by this statute to
scrupulous business and to the purchasing public.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

In substantial measure the act brings to the public, to business, and to all concerned,
the benefits of informative labeling, or what is commonly referred to as “Truth in
Fabrics.” Woolen clothing, and woolen products generally, to which the act applies,
are essentials affecting the entire population. That honesty and fair dealing in the
distribution of these commodities should obtain is necessarily a matter of large
importance to the general welfare.

PART V. RADIO AND PERIODICAL ADVERTISING
SPECIAL PROCEDURE PROVIDES CONTINUOUS SURVEY OF PUBLISHED
AND BROADCAST MATTER

129

PART V. RADIO AND PERIODICAL ADVERTISING
SPECIAL PROCEDURE PROVIDES CONTINUOUS SURVEY OF PUBLISHED
AND BROADCAST MATTER

The Commission maintains its Radio and Periodical Division to provide a direct and
expeditious handling of certain cases involving false and misleading advertising,
violative of the provisions of the Federal Trade Commission Act.
Advertisers, publishers, broadcasting stations, and advertising agencies are accorded
the privilege of dealing directly with the Director of the Division, with a view to
reaching an agreement in such cases as are appropriate for negotiating a stipulation,
thereby disposing of the issues involved and obviating the necessity of formal trial.
By this procedure the advertisers are afforded an opportunity informally to present
for consideration such evidence relating to the advertising claims questioned by the
Commission as they may care to submit, with a view to determining whether or not a
revision of their advertising is required, and to stipulate the discontinuance of any
representations which, after a consideration of all the evidence, are determined to be
false or misleading. The results obtained through this procedure are effective in
promptly eliminating false and misleading statements; and the expense of litigation is
saved by both the advertisers and the Government.
The survey of advertising was inaugurated by the Commission in 1929 and was
limited to advertising appearing in magazines and newspapers. It was expanded in
1934 to include commercial continuities broadcast by radio and in 1939 to include
mail order catalogs, almanacs and foreign language newspapers. Questioned advertisements noted in these surveys provide current specimens which are checked with
existing advertising cases as to their compliance with orders of the Commission and
stipulations accepted from advertisers, and also form the bases of prospective cases not
previously investigated.
Apparent and probable misrepresentations detected through this survey are carefully
investigated. In those cases where, upon consideration of the evidence developed by
investigation, the advertising is determined by the Commission to be false or
misleading and circumstances so warrant, the advertisers are extended the privilege of
131

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

disposing of the matters through an informal procedure, more fully explained on page
41, which permits their executing stipulations by which they agree to cease and desist
from the use of the acts and practices involved. A large majority of the cases are
adjusted in this manner. In those cases where this informal procedure is not applicable
or does not result in the elimination of the misleading claims, and the facts so warrant,
formal procedure is instituted. (See p.32.)
In November 1940, the Commission authorized the negotiation of stipulations in
certain cases involving the advertising of drugs and cosmetics wherein the
advertisement is considered false because it fails to disclose possible harmful effects
from the use of the product under the conditions prescribed in the advertisement or
under such conditions as are customary or usual. This authorization applies only to
products that are potentially dangerous and not to those products which are inherently
dangerous or where injury is probable.
Stipulations are also negotiated with advertising agencies who have prepared and
disseminated false and misleading advertisements for food, drugs, devices or
cosmetics, as well as with the advertisers on whose behalf the agencies acted.
In this phase of the Commission activity, its only objective is to prevent false and
misleading advertisements. It does not undertake to dictate what an advertiser shall
say, but merely indicates what he may not say under the law.
The Commission believes that its work in this field contributes substantially to the
improvement that has been evident in recent years in the character of all advertising.
News paper and magazine advertising.--In examining advertisements in current
publications, it has been found advisable to call for some newspapers and magazines
on a continuous basis, due to the persistently questionable character of the
advertisements published. However, as to publications generally, of which there are
some 21,500, it is physically impossible to survey continuously all advertisements of
a doubtful nature; also, it has been found unnecessary to examine all the issues of
publications of recognized high ethical standard whose publishers carefully censor all
copy before acceptance.
Generally, copies of current magazines and newspapers are procured on a staggered
monthly basis, at an average rate of three times yearly for each publication, the
frequency of the calls for each publication depending upon its circulation and the
character of its advertisements.
Through such systematic calls during the fiscal year ended June 30, 1941, the
Commission procured 1,831 editions of representative newspapers of established
general circulation and 1,824 editions of

RADIO AND PERIODICAL ADVERTISING

133

magazines and farm and trade journals of interstate distribution representing a
combined reported circulation of 148,425,809.
Among these periodicals were included 296 issues of farm journals having a
combined circulation of 17,778,421; 154 issues of trade journals and specialty
publications with a combined circulation of 2,589,-123; and foreign language
publications having a circulation of 1,179,836.
In the aforementioned newspapers, magazines, farm and trade journals 377,764
advertisements were examined of which 25,022 were noted as containing
representations that appeared to be false or misleading.
Almanac advertising.--As supplemental to its review of periodical advertising, the
Commission examines almanacs of wide distribution which are used as advertising
media for distributors of drugs, devices, and other commodities sold for the treatment
of various ailments. This survey during the fiscal year covered the examination of
1,414 advertisements, resulting in 289 being set aside as warranting further
investigation.
Mail-order advertising.--During the fiscal year the Commission procured catalogs
and circulars containing an aggregate of 20,238 pages, being distributed periodically
and seasonably by mail-order companies. Of the 54 mail-order houses included in the
survey, 5 had combined annual sales in excess of $1,303,737,420. In the examination
of these 20,238 pages of advertising, 467 advertisements were marked as containing
possibly false and misleading representations. A wide variety of commodities
(including food, drugs, devices, and cosmetics) is included in this questioned
advertising.
Radio advertising.--The Commission, in its systematic review of radio advertising,
issues calls to individual radio stations, generally at the rate of 4 times yearly for each
station. However, the frequency of calls to such individual broadcasters is varied from
time to time, dependent principally upon transmittal power, the service radius or area
of specific stations, and the advertising record of certain types of stations, as disclosed
in analyses of previous advertising reviews.
National and regional networks respond on a continuous. weekly basis, submitting
copies of commercial continuities for all programs wherein linked hook-ups are used
involving two or more stations.
Producers of electrical transcription recordings submit monthly typed copies of the
commercial portions of all recordings produced by them for radio broadcast. This
material is supplemented by periodic reports from individual stations listing the
programs of recorded commercial transcriptions and other data.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

During the fiscal year ended June 30, 1941, the Commission received 857,890 copies
of commercial radio broadcast continuities, amounting to 1,737,181 pages of
typewritten script. These comprised 1,197,199 pages of individual station script,
529,820 pages of network script, and 10,162 pages of commercial recorded script.
The staff examined 871,909 commercial radio broadcast continuities, amounting to
1,749,557 pages of typewritten script. These comprised 519,640 pages of network
script, 1,219,950 pages of individual station script, and 9,967. pages of script
representing the built-in commercial portions of transcription recording productions
destined for radio broadcast, through distribution of multiple pressings of such
recordings to individual stations. An average of 5,755 pages of radio script were read
each working day. From this material 24,535 commercial broadcasts were marked for
further study as containing representations that might he false or misleading.
Cooperation of radio and publishing industries.--In general, the Commission has
received the helpful cooperation of the 3 Nationwide network chains, 13 active
regional networks, and transcription producers engaged in preparing commercial radio
recordings, in addition to that of some 781 active commercial radio stations, 491 newspaper publishers, and 533 publishers of magazines, farm journals, and trade
publications, and has observed an interested desire on the part of such broadcasters and
publishers to aid in the elimination of false and misleading advertising.
Source of radio and periodical cases.--Examination of current newspaper, magazine,
radio, and direct mail-order house advertising, in the manner described, has provided
the basis for 75.4 percent of the cases arising from radio broadcasts and published
advertisements, initiated through the Radio and Periodical Division during the fiscal
year ended June 30, 1941. Information received from other sources, including
information from other divisions of the Commission, and from other Government
agencies, formed the basis of the remainder of the division’s work.
In directing its attention to the principal sources and areas of questionable
advertising campaigns, the Commission has been guided by special analyses made
from time to time, which disclose the origin of questioned newspaper and radio
advertising proportionately as to population centers.
Analysis of questioned advertising.--An analysis of the questioned advertisements
which were assembled by cases and given legal review, discloses that they pertained
to 2,839 commodities in the proportions indicated below:

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RADIO AND PERIODICAL ADVERTISING
CLASSIFICATION OF PRODUCTS
Commodity
Food, drugs, devices, and cosmetics:
Food (human)
Food (animal)
Drugs
Cosmetics
Devices

Percent
12.7
3.6
33.0
13.5
2.5
65.3

Other products:
Specialty and novelty goods
Automobile, radio, refrigerator, and other equipment
Home study courses
Tobacco products
Gasoline and lubricants
Poultry and livestock supplies and equipment, including
hatchery products, etc.
Miscellaneous, including apparel, coal and oil fuels, house
furnishings and kitchen supplies, specialty building materials, etc.
Total

10.2
3.7
1.9
1.2
.9
1.1
15.7
34.7
100.0

In the item of drug preparations listed above, a substantial proportion of the related
advertising contained possible misrepresentations or representations which
encompassed possibly injurious results to the public and for that reason were given
preferred attention.
Number of cases handled.--During the fiscal year the Commission sent
questionnaires to advertisers in 374 cases and to advertising agencies in 19 cases, and
accepted 234 stipulations pertaining to radio and periodical advertising. Of these, 19
stipulations (8 relating to drugs and 11 to hair dyes) contained agreements to publish
appropriate warnings in advertisements as to the potential harm that might result from
the use of the products in question.
A total of 605 cases were disposed of by the various methods of procedure. Of this
number 222 cases were considered settled upon receipt of reports showing compliance
with previously negotiated stipulations. The remaining 383 were closed without
prejudice to the right of the Commission to reopen if warranted by the facts: 221 of
them for lack of jurisdiction or lack of evidence sufficient to establish a violation of
law, 143 because of discontinued business and practices, or insufficient public interest,
12 because of fraud orders issued by the Post Office Department against the
advertisers, and 7 because the Post Office Department had accepted from the parties
concerned affidavits of discontinuance of business.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

In addition, the Commission in 23 cases ordered issuance of complaint: in 11
instances where advertisers failed to stipulate; in 5 cases in which the advertiser was
not given the opportunity to stipulate because of gross deception, and in 7 involving
violation of the terms of existing stipulations previously accepted and approved. In 27
cases field investigations were ordered, including 5 wherein it appeared that
application for injunction or criminal proceedings might be warranted. Also, 3 cases
were referred to other governmental agencies as concerning matters more
appropriately coming within their jurisdiction.
Nine hundred seventy-nine radio and periodical cases were pending on July 1, 1940,
and 779 were pending on June 30, 1941.
Commission has access to scientific services.--In addition to receiving scientific
advice from its Medical Advisory Division the Commission receives effective
cooperation from other agencies of the Government. It has access to the laboratories,
libraries, and other facilities of Federal Government agencies, including the National
Bureau of Standards, United States Public Health Service, the Food and Drug
Administration, and the Bureau of Home Economics and Bureau of Animal Industry
of the Department of Agriculture, to any of which it may refer a matter for scientific
opinion.
When necessary, the Commission obtains medical and other scientific information
and opinions from nongovernmental 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.
Procedure in advertising cases.--If it appears that a published or broadcast
advertisement coming to the Commission’s attention may be misleading, a
questionnaire is sent to the advertiser, and request is made for a sample of the product
advertised, if this is practicable, and the quantitative formula, if the product is a
compound. Copies of all advertisements published or commercial continuities
broadcast during a specific period are also requested, together with copies of all
booklets, folders, circulars, form letters, and other advertising literature used.
Upon receipt of these data, the sample and formula are referred to the Commission’s
Medical Advisory Division or to an appropriate technical agency of the Government
for a scientific opinion. Upon receipt of the opinion, a list of such claims as then
appear to be false or misleading is sent to the advertiser, along with pertinent portions
of the opinion. The advertiser is extended the privilege of submitting evidence in
support of his claims; he may answer by letter

RADIO AND PERIODICAL ADVERTISING

137

or, upon his request, may confer with the Commission’s Radio and Periodical Division
in person or through counsel.
If, after a consideration of all available evidence at hand including that furnished by
the advertiser, the questioned claims appear to be true, the division reports the matter
to the Commission with the recommendation that the case be closed.
If it appears from the weight of the evidence before it that the advertising is false or
misleading, the division refers the matter to the Commission with recommendation
either that complaint issue or the case be returned to the division for negotiation of a
stipulation, provided it is one appropriate for stipulation procedure and the advertiser
desires to dispose of it by such voluntary agreement to cease and desist from the use
of the acts and practices involved.
If the Commission so authorizes, the division prepared a stipulation and forwards it
to the advertiser for execution. Should he object to any of its provisions, he may
discuss them by mail or in person. If and when he agrees upon the terms of the
stipulation and signs and returns it, the matter is again reported to the Commission
with recommendation that the stipulation be accepted and the case closed without
prejudice to the right of the Commission to reopen the matter at any time the facts so
warrant. If the Commission accepts and approves the stipulation, the advertiser is required to submit within 60 days from the date of acceptance a report in writing
showing the manner and form in which he has complied and is complying with the
provisions of his agreement.

PART VI. MEDICAL ADVISORY SERVICE
FURNISHES OPINIONS IN CASES CONCERNING ADVERTISEMENT OF
FOOD, DRUGS, DEVICES, AND COSMETICS
139

PART VI. MEDICAL ADVISORY SERVICE
FURNISHES OPINIONS IN CASES CONCERNING ADVERTISEMENT OF FOOD,
DRUGS, DEVICES, AND COSMETICS

The Commission has a medical adviser for consultation in connection with cases
involving the validity of claims made in the advertisement of food, drugs, devices, and
cosmetics.
Shortly after the passage of the Wheeler-Lea amendment to the Federal Trade
Commission Act in 1938, the Surgeon General of the United States Public Health
Service assigned to the Commission an experienced medical officer to perform this
type of service, which is available to all branches of the Commission. In November
1940, the services of the medical advisor were required by the Public Health Service
and he was recalled for duty in that bureau. It became necessary for the Commission
to provide the entire personnel for the Medical Advisory Service, and it appointed a
medical adviser as a member of the Commission’s staff.
Through its medical adviser the Commission maintains contact with other
Government agencies concerned with food, drugs, devices, and cosmetics. These
include the Food and Drug Administration, the National Bureau of Standards, and the
United States Public Health Service.
141

PART VII. FOREIGN-TRADE WORK
THE EXPORT TRADE ACT
EXPORTS IN 1940 TOTAL $307,354,000
45 ASSOCIATIONS OPERATE UNDER THE ACT
TRUST LAWS AND UNFAIR COMPETITION ABROAD
143

PART VII. FOREIGN-TRADE WORK
The Commission is charged with administration of the Export Trade Act (WebbPomerene law) and inquiries under section 6 (h) of the Federal Trade Commission Act,
the latter of which directs investigation of trade conditions in and with foreign
countries where associations, combinations or practices of merchants and traders may
affect the foreign trade of this country.
THE EXPORT TRADE ACT

The Export Trade Act, in operation since 1918, provides for export associations or
cooperative groups engaged solely in export trade, and requires such organizations to
file with the Commission copies of their organization papers and agreements, annual
reports, and such other information as the Commission shall require concerning their
operation.
The associations report that experience during the past year emphasized the
advantages to be gained by group action in export trade. Events moved so swiftly in
Europe that by the time orders had been placed, goods made, and shipment begun,
some countries no longer existed as political entities. Recapture or diversion of
shipments to other ports was effected in some instances when foreign ports were
closed while the goods were en route. As a central organization, the Webb law
association was enabled to keep abreast of the situation from day to day, to carry on
the increasingly complicated business of accepting orders, allocating them among the
members, preparing documents, obtaining navicerts where required, and of keying
these activities with the reservation of cargo space and expiration dates of letters of
credit and import licenses being obtained by customers.
When it became impossible to ship to Europe, an effort was made to increase exports
to South America, which was in some cases made possible because European goods
were not reaching the Latin American markets, Shipments were controlled so that
foreign markets were not glutted by too much tonnage movement at one time. Suitable
deliveries were made possible in connection with large orders by splitting tonnage
between members of an association. Some associations effected economies by
handling sales through a single unit instead of having foreign sales representatives for
each company. Uniformity in sales terms, especially as to terms of payment, centralized handling of inquiries, and arrangement for cargo space and insurance, are cited
as advantages obtained by the groups.
145

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Looking into the future, the associations feel that there will be more highly effective
combinations of foreign buyers to deal with, as well as foreign government-controlled
cartels, and that it will be more necessary than ever to meet these changed conditions
by organized effort on the part of American exporters. With the return to world peace,
the possibilities of trade in each market must be explored anew, and the expense
entailed can best be borne by cooperative effort. (This suggestion is made by an
association that includes a number of mills and its members will be in a position to
share this item of expense.)
EXPORTS IN 1940 TOTAL $307,354,000

Exports by Webb law associations in 1940 reached a higher total than in 1939, due
largely to an increase in shipments of metal products:
1939
Metals and metal products, including iron and steel, metal
lath, pipe fittings and valves, screws, rail-way equipment,
and electrical apparatus
$134, 950, 000
Products of mines and wells, Including phosphate
rock, potash, sulphur, and carbon black
18,750,000
Lumber and wood products, including pine, fir,
redwood, hardwood, walnut, plywood, shooks, and
wood naval stores
6,590,000
Food products, including canned milk, meat, rice,
sugar, and fruit
20,010,000
Miscellaneous manufactures, including paper, abrasives, chemicals, textiles, rubber, glass, and
pencils
56,760,000
237,060,000

1940

$207,498,000
16,587,000

7,884,000
12,297,000

63,088,000
307,354,000

45 ASSOCIATIONS OPERATE UNDER THE ACT

The 45 export associations filing papers with the Commission at the end of the fiscal
year, June 30, 1941, were:
American Box Shook Export Association, 308 Barr Building, Washington, D. C.
American Hardwood Exporters, Inc.,
602 Carondelet Building, New Orleans.
American Provisions Export Co., 80 East
Jackson Boulevard, Chicago.
American Soda Pulp Export Association, 230 Park Avenue, New York.
American Spring Manufacturers Export Association, 30 Church Street,
New York.

American Tire Manufacturers Export
Association, 30 Church Street, New
York.
California Alkali Export Association,
530 West 6th Street, Los Angeles.
California Dried Fruit Export Association, 1 Drumm Street, San Francisco.
California Prune Export Association,
1 Drumm Street, San Francisco.
California Raisin Export Association,
1 Drumm Street, San Francisco.

FOREIGN-TRADE WORK
California Rice Exporters, 351 California Street, San Francisco.
Carbon Black Export, Inc., 500 5th
Avenue, New York.
Cement Export Co., Inc., The, c/o M. S.
Ackerman, Treasurer, 150 Broadway,
New York.
Copper Exporters, Inc., 50 Broadway,
New York.
Douglas Fir Export Co., 1125 Henry
Building, Seattle.
Durex Abrasives Corporation, 63 Wall
Street, New York.
Electrical Apparatus Export Association, 7 Pine Street, New York.
Electrical Export Corporation, 122
East 51st Street, New York.
Export Screw Association of the
United States, 23 Acorn Street,
Providence, R. I.
Flints Export Agency, 50 Broad Street,
New York.
Florida Hard Rock Phosphate Export
Association, 1403 Savannah Bank &
Trust Building, Savannah, Ga.
General Milk Co., Inc., 19 Rector Street,
New York.
Goodyear Tire & Rubber Export Co.,
The, 1144 East Market Street, Akron,
Ohio.
International Wood Naval Stores Export Corporation, Gulfport, Miss.
Metal Lath Export Association, The, 55
West 42d Street, New York.
Northwest Dried Fruit Export Association, 306 Title & Trust Building,
Portland, Oreg.
Pacific Forest Industries, Washington
Building, Tacoma, Wash.
Pacific Fresh Fruit Export Association, 333 Pine Street, San Francisco.

147

Pencil Industry Export Association,
703 East 13th Street, New York.
Phosphate Export Association, Room
1609, 393 7th Avenue, New York.
Pipe Fittings & Valve Export Associ
ation, The, 1421 Chestnut Street,
Philadelphia.
Plate Glass Export Corporation, 2000
Grant Building, Pittsburgh.
Potash Export Association, Inc., c/o
Fred N. Oliver, Secretary, 110 East
42d Street, New York.
Redwood Export Co., 405 Montgomery
Street, San Francisco.
Rice Export Association, 1103 Queen
& Crescent Building, New Orleans.
Rubber Export Association, The, Room
202, 19 Goodyear Avenue, Akron,
Ohio.
Shook Exporters Association, Box 5188,
Memphis, Tenn.
Signal Export Association, Room 2048,
420 Lexington Avenue, New York.
Steel Export Association of America,
The, 75 West 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.
Walnut Export Sales Co., Inc., 12th
Street and Kaw River, Kansas City,
Kans.
Walworth International Co., 60 East 42d
Street, New York.
Washington Evaporated Apple Export
Association, 709 North 1st Avenue,
Yakima, Wash.

TRUST LAWS AND UNFAIR COMPETITION ABROAD

Under section 6 (h) of the Federal Trade Commission Act, the Commission follows
developments in trust laws and regulation of competition abroad. The Annual Report
for 1940 covered preparedness and defense laws passed prior to and immediately after
the beginning of the European war in 1939. Subsequent measures for regulation of
industry and trade to meet war conditions have affected production and trade in all
parts of the world.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Production in some lines has been materially increased for war purposes; in others
manufacture of less essential goods has been limited. Priority orders for defense and
control of foreign trade to assure adequate supply at home, have been necessary.
Defense organization calls for concentration and financial assistance under
Government regulation; in some countries rigid control has been adopted. Efforts to
prevent inflation and undue price increase have led to price control measures.
Trade and industrial regulation in 27 countries or dominions are reviewed briefly as
follows:
Argentina.--A decree of November 6, 1940, created a Foreign Affairs Council to
meet the increasing number of political and economic problems resulting from the
world crisis. A Shipping Commission was created by decree in March 1941 to study,
report, and advise on shipping problems. A Promotional Corporation was set up in
April 1941 to undertake foreign market surveys.
Australia.--Under the National Security Act of 1939, orders have been issued for
monetary control and regulation of prices, supplies, and capital issues. Full support has
been given to Britain and large quantities of produce shipped for British use. The rates
of bounty payments to cotton growers were raised in 1940. A new wheat stabilization
measure was passed in November 1940. Farmers marketed all wheat through the
Government which also bought the entire wool clip. The Commonwealth Prices
Commissioner declared prices on practically all essential products and services,
including transportation and wages; increases were permitted only as necessary to
meet higher production costs.
Belgium.--Under German occupation, decrees issued in September 1940 gave to the
Minister of Economic Affairs power to regulate production and distribution of
essential products through a central office created for each industry. New plants may
not be opened without special permit. A National Corporation for Agriculture and the
Foodstuffs Trade was created by decree on August 27, 1940, with authority to regulate
production and manufacture; create, suspend, or suppress groups; regulate qualities
and merchandising methods; and impose fees, taxes and fines.
Brazil.--An Economic Defense Commission and a Production and Supply Control
Commission have power to control production, prices, and distribution of foodstuffs,
consumption goods and raw materials. There are also control offices or institutes for
specific commodities. A National Pine Institute was established in 1941 to regulate
production of pine wood, fix prices, establish export quotas, provide drying plants and
warehouses, and promote the building of sawmills. A Maritime Commission was
created by decree law in

FOREIGN-TRADE WORK

149

March 1941 to organize the schedules of vessels, distribute tonnage, fix rates and
subsidize the service.
Canada.--An Order in Council on July 2, 1940, provided for a Wartime Industries
Control Board and appointment of controllers for the major industries, under the
Minister of Munitions and Supply. Controllers have been appointed for steel, metals
production, timber, and for ship construction and repairs.
The Wartime Prices and Trade Board, established in 1939 as a protective measure
against undue price increases, profiteering and hoarding of the necessities of life,
includes the Commissioner of Tariff, the Combines Investigation Commissioner, the
Director of Marketing Services in the Department of Agriculture, and other appointed
members. Its personnel is drawn largely from already existing offices, and its
investigations are conducted by the Combines Investigation Commission, the Royal
Mounted Police, the Weights and Measures Branch of the Department of Trade and
Commerce, the Bureau of Statistics, Tariff Board and Fuel Board. Products under
control include wool, sugar, hides and leather, coal, animal and vegetable oils, as well
as rentals, with an administrator and a technical advisor for each of these industries.
The Wool Administrator, for instance, assembles and checks the requirements of
Canadian mills, passes them on to the Wool Control authorities in England, Australia
and New Zealand, and when necessary apportions the materials available to the mills.
Under increased authority in 1940, he may buy, sell, and store wool, process it, fix
prices, ration supplies, license dealers, and license exports and imports. The Rental
Administrator has cooperated with provincial committees to meet local problems,
chiefly in areas where military or wartime expansion caused housing shortage.
Alleged price-fixing by coal dealers was referred by the Wartime Prices and Trade
Board to the Combines Investigation Commission in 1940; conditions were said to
have been corrected after hearings by the Commissioner. In May 1941, the Board
warned bakers against joint action to increase the price of bread. The board has
investigated a number of complaints of hoarding and profiteering. Prices fixed on
butter were discontinued in January 1941, when the Dairy Products Board was given
authority to set minimum butter prices, determine storage amounts, and buy and sell
for export. An Animal Feedstuffs Committee cooperated with the Department of
Agriculture in alleviating the farmers’ feed problems. As to milk, the board decided
not to duplicate the work of provincial authorities.
Budget Resolutions in June 1940, provided that no person should take advantage of
the new 10 percent War Exchange Tax to increase prices by more than the actual
increase in costs entailed thereby.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

The Wartime Prices and Trade Board was directed to enforce that provision and in
1940 conducted inquiries into the price of more than 80 items affected by the tax. In
December 1940, the Board was charged with the responsibility of protecting the public
from persons who might take advantage of important prohibitions and excise taxes
imposed by Parliament on December 2, 1940.
Two cases were in the courts during the year involving combinations in restraint of
trade. Judgment was rendered by the Court of Appeal for Ontario in May 1941, against
manufacturers of fiberboard shipping containers; 19 companies and one individual
were convicted and fines were imposed totaling $161,500. Prosecution of a tobacco
combine was pending in an Alberta court.
An Army Defense Act and a Navy Defense Act passed on June 22, 1940, included
provisions for contracts entered into by the army and navy. Work of the former War
Supply Board was taken over by the Department of Munitions and Supply under the
National Resources Mobilization Act of June 21, 1940. A War Contracts Depreciation
Board was created by Order in Council on August 27; 1940. A Wartime Requirements
Board was established by Order in Council on November 16, 1940, to speed up war
projects.
A National Labor Supply Council was created by Order in Council June 19, 1940,
and the wartime wages policy was set forth in an Order in Council December 16, 1940.
Except in certain special situations, the highest wage rates established either during
the period of greatest prosperity, 1926-29, or at any time thereafter, may be maintained
but not increased. Such wages may be supplemented by a separate cost of living bonus
to protect the worker from increases in the cost of basic necessities.
Under an Order in Council effective May 5, 1941, an Export Permit Branch was
created in the Department of Trade and Commerce to centralize the export control and
issuance of all permits. The War Exchange Conservation Act effective on December
2, 1940, set forth agricultural and industrial products for which imports from nonsterling countries are prohibited; another group may be imported only under license;
and for a third group duties on imports from the United Kingdom were removed.
A Special Products Board was established on April 15, 1941, for regulation of
agricultural products other than those already handled by the Bacon Board and the
Dairy Products Board, which are to be shipped to the British Ministry of Food. The
Canadian wheat program calls for limited purchases by the Wheat Board, bonuses paid
for lessened acreage, continuance of the processing tax on flour, and construction of
new storage facilities for wheat.

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151

Colombia.--Decrees 1154 to 1157, June 18, 1940, cover a program for development
of agriculture, manufacture and transportation facilities, and provisions for financing
the plan which is made possible by negotiation of a loan from the Export-Import Bank
of the United States, refunding of the internal debt at lower rates of interest, and the
issuance of bonds. The Government proposes to survey and exploit native products,
foodstuffs, medicinal products and raw vegetable, animal, and mineral materials.
Cuba.--Under the Cuban Constitution published in July 1940, the Government may
grant exclusive manufacturing rights, termed “patents of industrial introduction” for
the purpose of encouraging new factories and enlargement of existing plants. A
patentee will be given for 15 years the sole right to manufacture, prepare or process
for consumption or exportation articles that at that time are not produced or prepared
in the national territory or the average production of which during the last five years
has been less than 15 percent of the national consumption during that period.
Denmark.--Following German occupation of Denmark, in April 1940, a number of
crisis laws were passed on May 28, 1940, including an act under which the Ministry
of Commerce was given extended authority to require the production of books,
accounts and files of commercial establishments, and to control and regulate prices.
Prior to this time increased prices had been allowed if they were based upon
replacement cost. Under the new law prices may be increased only if justified by a
calculation of actual cost plus customary profits.
France.--In German occupied France a new constitution was adopted in July 1940,
followed by various measures under which the Government was reorganized. A Law
for the Control of Industrial Production, August 16, 1940, and decrees thereunder,
required the formation of committees in each industry and trade, to function under the
Minister for Industrial Production and Labor, to control production, standardize
products to be sold, acquire raw materials, and regulate competitive conditions. All
groups, syndicates and trade organizations are subject to control by the committees;
some have already been dissolved and replaced by new organizations under
Government direction.
Each industry is to be organized. In textiles, for instance, a decree published on
October 30, 1940, provided for a General Committee for the Organization of the
Textile Industry, to be governed by a General Director, who is authorized to make all
decisions concerning any branch of the industry, to apply such technical, economic,
and social measures as he may deem necessary for the employment and proper
utilization of the industry, and to represent the industry in

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

all of its dealings with public and private organizations, French or foreign.
A Central Bureau for the Allocation of Industrial Products was established by law
on September 10, 1940, to issue regulations as to acquisition, allocation, stocking, sale
and consumption of each of the products under control. Producers will be required to
sell to specified buyers, and consumers required to purchase from specified suppliers.
Directors may determine what products may be bought and sold, what stocks may be
accumulated or disposed of, and may impose rules for transportation of the goods and
levy taxes for establishing an equalized price.
A law dated December 7, 1940, directed reorganization of French agriculture on a
corporate basis. All peanuts, landowners, and agricultural laborers are to be grouped
into regional corporations under Government control. Farm benefits, insurance and
cooperative functions will be centralized and directed.
Decree laws of December 6, 1940, and March 5, 1941, created central committees
ill each of the French colonies and directed each of the committees to prepare
programs of production and exportation of colonial products, and to propose rules for
control of enterprises in the colonies.
Germany.--An Ordinance on Price Fixing, dated November 23, 1940, became
effective on March 12, 1941. All price agreements among producers or distributors,
resale price maintenance agreements, and agreements affecting the calculation of cost
on Government contracts, must be approved by the Price Commissioner, who may
make his approval subject to other conditions, such as a requirement for modern
equipment or rationalization in the industry, or maintenance of a fixed price over a
period. Price, as covered in the ordinance, includes mark-up, charges for conversion,
payment and delivery terms, and any other terms affecting prices directly or indirectly.
Collusive bidding on Government contracts is forbidden, and all agreements or
recommendations for bidding on such contracts must be approved by the Price
Commissioner or the authorities in charge of the Government contracts.
In some industries complete reorganization has been directed by the Government;
this is true of coal in which a newly formed Reich Coal Association will be under
control of a Reich Coal Board. A new oil cartel will function as a holding company
with monopoly of German foreign oil business. The cartel system or the newly formed
trade groups will doubtless be extended to include the occupied areas. An illustration
is found in the German cement cartel organized by order of the Minister of National
Economy in October 1940; its

FOREIGN-TRADE WORK

153

activities were extended in 1941 by agreement with producers in Belgium, Holland,
Bohemia, Moravia, and Slovakia.
Great Britain.--Under war control acts, numerous orders have been issued during the
year, including Ministry of Supply Orders in industries subjected to control for war
production, Ministry of Food orders in control of foodstuffs, price orders under the
Prices of Goods Act, limitation of supplies orders in industries where domestic consumption of less essential products is limited, and export and import control orders by
the Board of Trade.
Of first importance were orders for the production of war materials. Rationing was
extended from foodstuffs to clothing and footwear, and Government subsidies granted
in an effort to prevent undue increases in the price of essentials, such as bread, meat,
milk, and bacon. Exports were encouraged, to pay for imports. As an example, the
Wool Control Order, 1940, required farmers and other wool owners to sell and deliver
to the Ministry of Supply all wool clipped in the Kingdom during 1940, at fixed prices,
which included a substantial element of subsidy. A wool export corporation was
formed and a levy of one-tenth of 1 percent imposed on purchases of wool sold for
processing in the Kingdom, the proceeds to be used for promoting exports by the
corporation. The domestic civilian consumption of textiles was restricted in order to
assure the filling of export orders. The Government was the sole importer of raw wool
and purchased the entire clip from the provinces. It was also the sole importer of raw
cotton. The Cotton Controller and the Cotton Board created under the Cotton Industry
Act of 1940, operated in cooperation with the Government-sponsored cotton export
corporation.
The Board of Trade presented in 1941 a new plan for concentration of industrial
plants, the closing of some factories in order that others may operate on full-time
schedule. A new War Damage Act, 1941, provided for compulsory insurance on plant,
machinery, and business equipment; as well as on movable machinery, crops,
livestock, and produce valued at more than £1,000; and optional insurance on personal
and household effects.
Hungary.--A decree on January 12, 1941, limited the amount of food that may be
stored by a household or farmer, surplus supplies to be confiscated, and offenders
punished by fines and imprisonment.
Italy.--Rigid control has been exercised over syndicates and corporations to assure
the organization and discipline of productive activities. Under a Royal Decree on
December 27, 1940, the Ministry of Corporations may purchase or requisition any
industrial supplies, regulate the distribution of raw materials to industrial plants, direct

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

the distribution of finished products, and control all activities of industry and
commerce, rationing the use of goods produced. A similar measure tightened control
of agricultural production and distribution; heavy penalties are imposed on farmers
withholding their goods from compulsory storage.
Japan.--After resignation of the Cabinet in July 1940, the new Government approved
a number of plans for reorganization and more rigid control of industry and trade. A
materials mobilization plan provided for replenishment of war materials, development
of resources and industries in China and Manchuria, expansion of domestic industrial
capacity, encouragement of export trade to increase imports, and an adequate supply
of daily necessities. An import corporation in each industry will handle purchase and
distribution of imported materials needed for manufacture of goods to be exported, and
an export corporation will handle export sales, distribute orders, and establish standard
prices. A decree on July 6, 1940, restricted the manufacture of a wide range of luxury
and nonessential goods. Centralized control of production and sales has been effected
for rice, cotton piece goods, electric power, shipping, machinery, and oil. The Price
Policy Council of the Cabinet presented new plans for price control; more than 20,000
articles were affected by price control in 1940. A new Mobilization Law, 1941,
extended control over labor, wages, commodities, capital, land and buildings, patent
rights, and inventions.
Latvia.--After accession to the Soviet Union in July 1940, the Latvian Parliament
voted to nationalize all banks, large industrial concerns, transport, and large
agricultural estates, the land to be distributed for cultivation by the peasants. All
foreign trade will be controlled by central Soviet authorities at Moscow.
Lithuania.--After accession to the Soviet Union in July 1940, the Lithuanian
Ministerial Council took similar action to that in Latvia, for nationalization of banks
and industries. All precious metals and jewels were taken over by the State.
Mexico.--A law in March 1941 created a National Distributing and Controlling Co.,
Ltd., to fix prices of articles of prime necessity or raw materials for the production of
such articles; regulate storage, transport, grading and financing of the goods; and to
grant subsidies for exportation and importation. An Industrial Registration Act in May
1941 required registration and reports by industrial firms, including statements on
invested capital, maximum annual productive capacity, principal consuming markets,
nationality of owners, and information concerning workers.
Netherlands.--German occupation of the Netherlands resulted in reorganization of
the industrial system. Rijksbureaux similar to

FOREIGN-TRADE WORK

155

the Reichsburos of Germany have been formed, and trade groups resembling German
Reichsgruppen, with a Central Commission for the Organization of Trade and
Industry. A Price Deputy with complete control of prices in the Netherlands was set
up by decree in November 1940. All of these offices are under German control, and
the Reichskommissar has authority to appoint all higher officials, provincial governors,
burgomasters, and police officials. Principal cities have German commissioners.
Shipping has been transferred to German ports. Laborers have been sent to Germany.
Food, clothing, and textiles are distributed on a ration basis.
New Zealand.--Under the Emergency Regulations Act of 1939, and regulations in
1940, the Government has power to control all materials and producing plants, to
acquire, use, and dispose of private property of all kinds, and to suspend or modify
contracts. Price increases must be approved by the Price Investigation Tribunal. New
regulations were issued in December 1940 for control of licensed industries under the
Industrial Efficiency Act.
Panama.--A Pharmaceutical Law, April 7, 1941, provided for a Commission to take
over the licensing of patent medicines, and prohibited advertising and sales promotion
of any kind which include false, exaggerated, or misleading statements; violations to
be punishable by fine, confiscation, and revocation of license. A Price Control Board
was created in 1941 to stabilize the price of foodstuffs.
Paraguay.--Under a new Constitution in July 1940, the State will regulate national
economic life to prevent monopolization of consumption goods and artificial price
fixing. A decree on January 18, 1941, fixed wholesale and retail prices of foodstuffs
and other articles of prime necessity; and a decree on February 10, 1941, prohibited
increase in the price of imports. The Department of Industries and Commerce was
directed to establish a basis for sales prices on imported goods, to include the delivered
cost, an equitable profit, and the exchange rate. Under a decree in February 1941, the
entire cotton crop will be purchased and disposed of by the Government through the
Agricultural Bank. A decree law in June 1940 amended the mining law and declared
that all deposits of minerals, oil, and gas belong to the nation, development to be
undertaken only by the Executive Power, either directly or by concession. Only
nationals may obtain concessions.
Rumania.--Legislation in March 1940 abrogated provisions of the Cartel Act of
1937, and gave to the Ministry of National Economy broad power over industrial
production and prices, through commissions representing the industries; and to the
Ministry of Labor, authority to prescribe working conditions.
423272--41----11

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Bessarabia and Northern Bukovina became a part of the U.S.S.R. in August 1940.
A Soviet decree on August 15 directed nationalization of banks and other credit
institutions, railroad, bus, and water transport, industrial enterprises, electric stations,
trading agencies, schools and hospitals, hotels, larger apartment houses, and dwellings,
the owner of which have left the country as refugees. Land will also be nationalized,
including farms, forests, metals, and mineral deposits.
In January 1941, a military regime was set up in Rumania and the principal
industries brought under military control.
Spain.--A law dated December 8, 1940, provided for national syndicates for control
of all producers and distributors in Spain, to be developed under the control,
leadership, and direction of the National Delegation of Syndicates and the National
Syndicalist Centers, which control labor. Nationalization of railways was effected
under a law dated January 24, 1941.
Switzerland.--Wartime control centers in a Federal Department of Public Economy
which comprises the War Food Supply Office, the War Industry and Labor Office, the
War Transportation Office, the War Trade Office for Imports and Exports, and the
War Social Service Office. The department is authorized to create war economy
syndicates or cooperative organizations, to deal with importation, exportation, storage,
transportation, domestic production, distribution, and the use of commodities
designated by the department. All firms in an industry may be required to join one of
the syndicates, and a number have been formed to handle foodstuffs, feedstuffs, seed,
fertilizers, fuels, textiles, metals, hides, leather, boots and shoes, rubber, chemicals,
paper, and timber. The department is also authorized to make the establishment of new
business and industrial enterprise subject to permit. The Federal Price Control Bureau
has been concerned chiefly with control of prices of foodstuffs, rents, and other living
expenses. Retail sales of food, fuel, textiles, soap and washing powders, and leather
shoes, are under ration.
Turkey.--An emergency decree on May 31, 1940, authorized the Ministry of
Commerce to fix the maximum prices of such articles and goods on the domestic
market as it may deem necessary, through a price control commission in each
provincial center. The National Defense Law, 1940, authorized the Government to
purchase domestic and foreign products, and to sell, distribute, ship, and make collection therefor. A Government corporation to import, export, buy, and sell all kinds of
food supplies was created by ordinance in February 1941.
Union of Socialist Soviet Republics.--The Soviet Union has acquired territory in
Finland, Lithuania, Latvia, Esthonia, and a part of Rumania, and has set up appropriate
control therefor.

FOREIGN-TRADE WORK

157

A decree on September 6, 1940, directed a new People’s Commissariat for
Government Control, responsible for expenditures and advances to Governmental,
cooperative, and other socialized organizations, institutions and enterprises. Decrees
dated October 2 and 8, 1940, provided for training of a continual supply of new
workers in Federal enterprises, such as mines, factories, transportation systems, and
on the collective farms. A Federal labor reserve will be created and trained workers
will be mobilized as soldiers of industry. Professional and skilled workers, as well as
laborers, will be transferred from one plant or industry to another as they may be
needed; it is forbidden by law for skilled men to leave a plant without Government
permit.
The Resettlement Commission has continued its work, moving thousands of families
from isolated areas into collective farm centers or village communes.
Union of South Africa.--The War Measures Act, 1940, gave to the Governor General
power to make regulations for the maintenance of public order and to control situations
arising as a result of war. The Commandeering Law, 1940, authorized the Government
to take possession in time of war, of buildings, supplies and transportation facilities
necessary for defense. A Moratorium Act, No.29, of 1940, was passed for the benefit
of volunteers in military, service.
The entire South African wool clip in 1940 was purchased by the British
Government at an agreed price. The Mealie (Corn) Industry Control Board granted a
supplementary payment or bounty to corn producers in order to distribute surplus
profits on corn transactions during the 1939-40 season. The Tobacco Industry Control
Board recommended curtailment of production of tobacco, and use of the land for
other crops. Under a law of May 15, 1940, an Industrial Development Corporation was
created by the Government to encourage expansion and assist in financing industrial
undertakings.

PART VIII. FISCAL AFFAIRS
ACT PROVIDING FUNDS FOR COMMISSION WORK
APPROPRIATIONS AND EXPENDITURES FOR FISCAL YEAR
APPROPRIATIONS AND EXPENDITURES, 1915-41
159

PART VIII. FISCAL AFFAIRS
APPROPRIATION ACT PROVIDING FUNDS FOR COMMISSION WORK

The Independent Offices Appropriation Act, 1941 (Public, No. 459, 76th Congress),
app roved April 18, 1940, provided funds for the fiscal year 1941 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;
$2,240,000: Provided, That the Commission may procure supplies and services without regard
to section 3709 of the Revised Statues (41 U. S. C. 5) when the aggregate amount involved does
not exceed $50: Provided further, That no part of the funds appropriated herein for the Federal
Trade Commission shall be expended upon any Investigation hereafter provided by concurrent
resolution of the Congress until funds are appropriated subsequently to the enactment of such
resolution to finance the cost of such Investigation.
For all printing and binding for the Federal Trade Commission, $60,000.
Total, Federal Trade Commission, $2,300,000.
APPROPRIATIONS AND EXPENDITURES FOR FISCAL YEAR

Appropriations available to the Commission for the fiscal year ended June 30, 1941,
under the Independent Offices Appropriation Act approved April 18, 1940, amounted
to $2,300,000. This sum is made up of three separate items: (1) $50,000 for salaries
of the Commissioners, (2) $2,190,000 for the general work of the Commission, and (3)
$60,000 for printing and binding.
161

162

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
Appropriations, allotments, expenditures, liabilities, and balances for the fiscal
year ended June 30, 1941
Amount
available

Amount
expended Liabilities

Expenditures
and
Balances
liabilities

Federal Trade Commission 1941-salaries, Commissioners and all
other authorized expenses
$2,240,000.00 $2,119,267.93 $47,988.31 $2,167,256.24 $72,743.78
Printing and binding, Federal Trade
Commission, 1941
60,000.00 15, 421.87 43, 578.13
59,000.00 1,000.00
Total fiscal year 1941
2,300,000.00 2,134,689.80 91,566.44 2,226, 256.24 73,743.76
Unexpended balances.
Federal Trade Commission 1940 141,066.46
68,965.19 1,592.91 70,558.10 70,508.36
Printing and binding, Federal Trade
Commission 1940
36,040.00
36,040.00
36,040.00
Federal Trade Commission 1939 88,192.66
1,506.00
107.30 1,613.30
86,579.36
Federal Trade Commission 1938
1 8.15
1 6.90
1 6.90
1 1.25
Federal Trade Commission 1937
89.01
87.75
87.75
1.26
Federal Trade Commission 1936
5.44
5.44
5.44
Federal Trade Commission 1935
47.32
47.32
47.32
Federal Trade Commission 1932-33
152.89
1 52.89
1 52.89
Federal Trade Commission 1932 1 200.00
1 200.00
1 200.00
Federal Trade Commission 1921
1 34.00
1 34.00
1 34.00
Total
2,565,145.85 2,241,047.71 93,266.65 2,334,314.36 230,831.49
1 Denotes red figure.
Detailed statement of costs for the fiscal year ending June 30, 1941

Commissioners
Attorneys to Commissioners
Clerks to Commissioners
Messengers to Commissioners
Total
Administration:
Office of the secretary
Accounts and Personnel Section
Detail: Other Government agencies
Docket Section
Hospital
Labor
Legal Research and Compiling
Library Section
Mall and Files Section
Messengers
In formation service
Publications section
Stenographic section
Supply and Service section
Communications
Contract service
Equipment
Miscellaneous
Repairs
Supplies
Transportation of things
Witness fees
Total
Legal:
Application for complaints
Complaints
Detail Other Government agencies
Expert trade

Salary
$49,999.20
18,979.35
15,229.00
5,861.57
90,069.12

Travel
expense
$266.74
26.10

292.84

40,991.69
30,915.62
204.28
51,512.48
2,067.61
2,580.07
13,638.02
18,263.51
18,498.46
18,049.60
15,227.53
44,854.21
112,533.05
19,797.47

389,133.60
370,615.99
37,823.37
614,141.69
55,981.59
1,290.35
102.05
6,975.55

Other
Total
$50,265.94
19,005.45
15,229.00
5,861.57
90,361.98
40,991.69
30,915.62
204.28
51,512.48
2,067.61
2,580.07
13,638.02
18,263.51
18,498.46
18,049.66
15,227.53
44,854.21
$118.00 112,651.05
19,797.47
12,102.87 12,102.87
358.38
358.38
44,414.14 44,414.14
233.40
233.40
4,296.98 4,296.98
41,016.34 41,016.34
1,202.46 1,202.46
2,358.60 2,358.60
106,101.17 495,234.77

4,449.66 412,889.02
15,016.66 685,139.94
1,392.40
6,975.55

Preliminary inquiries
Trade Practice Conferences
Total

198,835.91
83,729.90
1,275,589.39

14,096.17
680.36
108,683.54

1,429.24 214,361.32
84,410.26
20,895.56 1,405,168.49

FISCAL AFFAIRS

163

Detailed statement of costs for the fiscal year ending June 30, 1941--Continued
Travel
Salary
expense
Other
Total
General investigations:
Accounting methods and practices
$29,636.39
$275.95
$29,912.34
Detail: Other Government agencies.
8,344.64
8,344.64
Industrial corporation financial reports
62,245.67
62,245.67
Methods and costs of distribution
69,743.50
2,021.19
$82.73
71,847.42
Motor-vehicle investigation
1 50.17
1 50.17
Price Administration and Civilian Supply
136.33
136.33
Resale price maintenance investigation (1939) 7,735.45
752.23
6.50
8,494.18
Temporary National Economic Committee
17,870.31
19.90
17,890.21
Total
195,662.12
3,069.27
89.23 198,820.62
Printing and binding
51,461.87
51,461.87
Summary:
Commissioners
90,069.12
292.84
90,361.96
Administration
389,133.60
106,101.17 495,234.77
Legal
1,275,589.39
108,683.54 20,895.56 1,405,168.49
General investigations
195,662.12
3,069.27
89.23 198,820.62
Printing and binding
51,461.87
51,461.87
Total
1,950,454.23
112,045.65 178,547.83 2,241.047.71
1 Denotes red figures.
Recapilation of costs by divisions
Travel
Salary
expense
Other
Total
Administrative
$491,484.60
$523.35 $103,624.57 $595,632.52
Economic
227,466.62
3,676.79 231,143.41
Chief Counsel
371,841.57
32,714.27
11,153.38 415,709.22
Chief Examiner
508,059.02
58,751.70
12,268.26 579,078.98
Radio and Periodical
141,745.98
45.72
39.75 141,831.45
Trial Examiner
111,492.47
15,448.58
126,941.05
Trade Practice Conference
77,935.47
560.83
78,496.30
Medical Advisory
15,419.69
324.41
15,744.10
Temporary National Economic Committee
5,008.81
5,008.81
Total
1,950,454.23
112,045.65 127,085.96 2.189,585.84

APPROPRIATIONS AND EXPENDITURES, 1915-41

Appropriations available to the Commission since its organization and expenditures
for the same period, together with the unexpended balances, are:
Year

1915
1916
1917
1918
1919
1920
1921

Nature of appropriations

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

Appropriations
and liabilities
$184,016.23
12,386.76
430,964.08
15,000.00
542,025.92
25,000.00
1,578,865.92
30,000.00
1,693,622.18
14,934.21
1,206, 587.42
28,348.97
938,609.94
37,182.56

Expenditures
Balance
$90,442.05
9,504.10
379,927.41
14,997.55
448,890.66
23,610.54
1,412,280.19
11,114.06
1,491,637.39
14,934.21
1,007,593.30
28,348.97
842,991.24
37,182.56

$93,574.18
2,882.60
51,636.67
2.45
93,135.26
1,389.48
166,585.73
18,885.94
201,984.97
0
198,994.12
0
95,618.70
0

1922

Lump sum
Printing and binding

952,505.45
22,801.73

878,120.24
22,801.73

74,385.21
0

164
Year

1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
1940
1941

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
Nature of appropriations

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

Appropriations
and liabilities
952,020.11
22,460.21
990,000.00
20,000.00
990,000.00
20,000.00
990,000.00
18,000.00
980,000.00
17,000.00
967,850.00
16,500.00
1,135,414.83
27,777.69
1,440,971.82
35,363.58
1,932,857.81
39,858.73
1,808,097.19
30,000.00
1,421,714.70
30,000.00
1,273,763.49
40,250.00
2,063,398.01
34,000.00
1,998,665.58
36,800.00
1,895,571.94
43,353.95
1,950,000.00
46,000.00
2,236,795.00
46,700.00
2,285,500.00
60,000.00
2,240,000.00
60,000.00

Expenditures
Balance
948,293.07
22,400.21
900,020.93
19,419.25
988,082.37
19,866.14
976,957.02
18,000.00
943,881.99
17,000.00
951,965.15
16,500.90
1,131,521.47
27,777.69
1,430,084.17
35,363.58
1,808,463.35
39, 858.73
1,749,484.00
30,000.00
1,378,973.14
20,000.00
1,273,006.38
40,250.00
1,922,313.34
34,000.00
1,788,729.76
32,996.05
1,850,673.82
43,353.95
1,895,519.47
46,000.00
2,150,474.40
46,709.00
2,214,889.07
60,000.00
2,167,256.24
59,000.00

3,727.04
0
29,979.07
580.75
1,917.63
133.86
13,042.98
0
36,118.01
0
15,884.85
0
3,893.36
0
10,887.65
0
124,454.46
0
58,612.59
42,741.56
10,000.00
157.11
0
141,084.67
0
209,935.82
3,803.95
44,898.12
0
54,480.35
0
86,320.60
0
70,610.93
0
72,743.76
1,000.00

APPENDIXES
FEDERAL TRADE COMMISSION ACT
CLAYTON ACT
ROBINSON-PATMAN ACT
EXPORT TRADE ACT
WOOL PRODUCTS LABELING ACT OF 1939
SHERMAN ACT
MILLER-TYDINGS ACT
RULES OF PRACTICE
STATEMENT OF POLICY
INVESTIGATIONS, 1915-1941
165

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

use.
The Auditor for the State and Other Departments shall receive and examine all
accounts of expenditures of the Commission. 2
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
1 The salary of the secretary is controlled by the provisions of the Classification Act of 1923, approved
March --49-, 1923, 42 Stat. 1488.
2 Auditing of accounts was made a duty of the General Accounting Office by the Act of June 10, 1921,
42 Stat. 24.

167

168

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

investigations and proceedings of the Bureau of Corporations shall be continued by the
Commission.
All clerks and employees of the said bureau shall be transferred to and become
clerks and employees of the Commission at their present grades and salaries. All
records, papers, and property of the said bureau shall become records, papers, and
property of the Commission, and all unexpended funds and appropriations for the use
and maintenance of the said bureau, including any allotment already made to it by the
Secretary of Commerce from the contingent appropriation for the Department of
Commerce for the fiscal year nineteen hundred and fifteen, or from the departmental
printing fund for the fiscal year nineteen hundred and fifteen, shall become funds and
appropriations available to be expended by the Commission in the exercise of the
powers, authority, and duties conferred on it by this Act.
The principal office of the Commission shall be in the city of Washington, but it may
meet and exercise all Its powers at any other place. The Commission may, by one or
more of its members, or by such examiners as it may designate, prosecute any inquiry
necessary to its duties in any part of the United States.
SEC. 4. The words defined in this section shall have the following meaning when
found in this Act, to wit:
“Commerce” means commerce among the several States or with foreign nations, or
in any Territory of the United States or in the District of Columbia, or between any
such Territory and another, or between any such Territory and any State or foreign
nation, or between the District of Columbia and any State or Territory or foreign
nation.
“Corporation” shall be deemed to Include any company, trust, so-called Massachusetts trust, or association, incorporated or unincorporated, which is organized to
carry on business for its own profit or that of its members, and has shares of capital or
capital stock or certificates of interest, and any company, trust, so-called
Massachusetts trust, or association, incorporated or unincorporated, without shares of
capital or capital stock or certificates of interest, except partnerships, which is
organized to carry on business for its own profit or that of its members.
“Documentary evidence” includes all documents, papers, correspondence, books of
account, and financial and corporate records.
“Acts to regulate commerce” means the Act entitled “An Act to regulate commerce,”
approved February 14, 1887, and all Acts amendatory thereof and supplementary
thereto and the Communications Act of 1934 and all Acts amendatory thereof and
supplementary thereto.
“Antitrust Acts” means the Act entitled “An Act to protect trade and commerce
against unlawful restraints and monopolies,” approved July 2, 1890; also sections 73
to 77, inclusive, of an Act entitled “An Act to reduce taxation, to provide revenue for
the Government, and for other purposes,” approved August 27, 1894; also the Act
entitled “An Act to amend sections 73 and 76 of the Act of August 27, 1894, entitled
‘An Act to reduce taxation, to provide revenue for the Government, and for other
purposes,’” approved February 12, 1913; and also the Act entitled “An Act to
supplement existing laws against unlawful restraints and monopolies, and for other
purposes,” approved October 15, 1914.
Sec. 5. (a) Unfair methods of competition in commerce, and unfair or deceptive acts
or practices in commerce, are hereby declared unlawful.

The Commission Is hereby empowered and directed to prevent persons, partnerships,
or corporations, except banks, common carriers, subject to the Acts to regulate
commerce, air carriers and foreign air carriers subject to the Civil Aeronautics Act of
1938, 3 and persons, partnerships, or corporations subject to the Packers and
Stockyards Act, 1921, except as provided in section 406 (b) of said Act, from using
unfair methods of competition in commerce and unfair or deceptive acts or practices
in commerce.
(b) Whenever the Commission shall have reason to believe that any such person,
partnership, or corporation has been or is using any unfair method of com petition or
unfair or deceptive act or practice in commerce, and if it shall appear to the
Commission that a proceeding by it in respect thereof would be to the interest of the
public, it shall issue and serve upon such person, partnership, or corporation a
complaint stating Its charges in that respect
3 By subsection (f), Section 1107 of the “Civil Aeronautics Act of 1938,” approved June 23, 1938,
Public No.706, 75th Congress, Ch. 601, 3d Sess., S. 3845, 52 Stat. 1028, Section 5 (a) of the Federal
Trade Commission Act was amended by inserting before the words "and persons” (and following the
words “to regulate commerce”), the following: “air carriers and foreign air carriers subject to the Civil
Aeronautics Act of 1938.”

FEDERAL TRADE COMMISSION ACT

169

and containing a notice of a hearing upon a day and at a place therein fixed at least
thirty days after the service of said complaint. The person, partnership, or corporation
so complained of shall have the right to appear at the place and time so fixed and show
cause why an order should not be entered by the Commission requiring such person,
partnership, or corporation to cease and desist from the violation of the law so charged
in said complaint. Any person, partnership, or corporation may make application, and
upon good cause shown may be allowed by the Commission to intervene and appear
In said proceeding by counsel or in person. The testimony In any such proceeding shall
be reduced to writing and filed in the office of the Commission. If upon such hearing
the Commission shall be of the opinion that the method of competition or the act or
practice in question is prohibited by this Act, it shall make a report in writing in which
It shall state Its findings as to the facts and shall issue and cause to be served on such
person, partnership, or corporation an order requiring such person, partnership, or
corporation to cease and desist from using such method of competition or such act or
practice. Until the expiration of the time allowed for filing a petition for review, if no
such petition has been duly filed within such time, or, if a petition for review has been
filed within such time then until the transcript of the record in the proceeding has been
filed in a circuit court of appeals of the United States, as hereinafter provided, the
Commission may at any time, upon such notice and in such manner as it shall deem
proper, modify or set aside, in whole or in part, any report or any order made or issued
by it under this section. After the expiration of the time allowed for filing a petition
for review, if no such petition has been duly filed within such time, the Commission
may at any time, after notice and opportunity for bearing, reopen and alter, modify, or
set aside, in whole or in part, any report or order made or issued by it under this
section, whenever In the opinion of the Commission conditions of fact or of law have
so changed as to require such action or if the public interest shall so require : Provided,
however, That the said person, partnership, or corporation may, within sixty days after
service upon him or it of said report or order entered after such a reopening, obtain a
review thereof in the appropriate circuit court of appeals of the United States, in the
manner provided in subsection (c) of this section.
(c) Any person, partnership, or corporation required by an order of the Commission
to cease and desist from using any method of competition or act or practice may obtain
a review of such order in the circuit court of appeals of the United States, within any
circuit where the method of competition or the act or practice in question was used or
where such person, partnership, or corporation resides or carries on business, by filing
in the court, within sixty days 4 from the date of the service of such order, a written
petition praying that the order of the Commission be set aside. A copy of such petition
shall be forthwith served upon the Commission, and thereupon the Commission
forthwith shall certify and file in the court a transcript of the entire record in the
proceeding, including all the evidence taken and the report and order of the
Commission. Upon such filing of the petition and transcript the court shall have
jurisdiction of the proceeding and of the question determined therein, and shall have
power to make and enter upon the pleadings, evidence, and proceedings set forth in
such transcript a decree affirming, modifying, or setting aside the order of the
Commission, and enforcing the same to the extent that such order is affirmed, and to
issue such writs as are ancillary to its jurisdiction or are necessary in its judgment to

prevent injury to the public or to competitors pendente lite. The findings of the
Commission as to the facts, if supported by evidence, shall be conclusive. To the
extent that the order of the Commission is affirmed, the court shall thereupon issue its
own order commanding obedience to the terms of such order of the Commission. If
either party shall apply to the court for leave to adduce additional evidence, and shall
show to the satisfaction of the court that such additional evidence is material and that
there were reasonable grounds for the failure to adduce such evidence in the
proceeding before the Commission, the court may order such additional evidence to
be taken before the Commission and to be adduced upon the hearing in
Section 5 (a) of the amending Act of 1938 provides :
SEC. 5. (a) In case of an order by the Federal Trade Commission to cease and desist, served on or
before the date of enactment of this Act, the sixty-day period referred to In section s (C) of the Federal
Trade Commission Act, as amended by this Act, shall begin on the date of the enactment of this Act.
4

170
ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
such manner and upon such terms and conditions as to the court may seem proper. The
Commission may modify its findings as to the facts, or make new findings, by reason
of the additional evidence so taken, and it shall file such modified or new findings,
which, if supported by evidence, shall be conclusive, and its recommendation, if any,
for the modification or setting aside of its original order, with the return of such
additional evidence. The judgment and decree of the court shall be final, except that
the same shall be subject to review by the Supreme Court upon certiorari, as provided
in section 240 of the Judicial Code.
(d) The jurisdiction of the circuit court of appeals of the United States to affirm,
enforce, modify, or set aside orders of the Commission shall be exclusive.
(e) Such proceedings in the circuit court of appeals shall be given precedence over
other cases pending therein, and shall be in every way expedited. No order of the
Commission or judgment of court to enforce the same shall in any wise relieve or
absolve any person, partnership, or corporation from any liability under the Antitrust
Acts.
(f) Complaints, orders, and other processes of the Commission under this section
may be served by anyone duly authorized by the Commission, either (a) by delivering
a copy thereof to the person to be served, or to a member of the partnership to be
served, or the president, secretary, or other executive officer or a director of the
corporation to be served; or (b) by leaving a copy thereof at the residence or the
principal office or place of business of such person, partnership, or corporation; or (c)
by registering; and mailing a copy thereof addressed to such person, partnership, or
corporation at his or its residence or principal office or place of business. The verified
return by the person so serving said complaint, order, or other process setting forth the
manner of said service shall be proof of the same, and the return post office receipt for
said complaint, order, or other process registered and mailed as aforesaid shall be
proof of the service of the same.
(g) An order of the Commission to cease and desist shall become final-(1) Upon the expiration of the time allowed for filing a petition for review, if no
such petition has been duly filed within such time; but the Commission may thereafter
modify or set aside its order to the extent provided in the last sentence of subsection
(b) ; or
(2) Upon the expiration of the time allowed for filing a petition for certiorari, if
the order of the Commission has been affirmed, or the petition for review dismissed
by the circuit court of appeals, and no petition for certiorari has been duly filed; or
(3) Upon the denial of a petition for certiorari, if the order of the Com-mission has
been affirmed or the petition for review dismissed by the circuit court of appeals; or
(4) Upon the expiration of thirty days from the date of issuance of the mandate of
the Supreme Court, if such Court directs that the order of the Commission be
affirmed or the petition for review dismissed.
(h) If the Supreme Court directs that the order of the Commission be modified or set
aside, the order of the Commission rendered in accordance with the mandate of the
Supreme Court shall become final upon the expiration of thirty days from the time it
was rendered, unless within such thirty days either party has instituted proceedings to
have such order corrected to accord with the mandate, in which event the order of the
Commission shall become final when so corrected.
(I) If the order of the Commission is modified or set aside by the circuit court of

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

FEDERAL TRADE COMMISSION ACT

171

the order of the Commission rendered upon such rehearing shall become final in the
same manner as though no prior order of the Commission has been rendered.
(k) As used in this section the term “mandate,” in case a mandate has been recalled
prior to the expiration of thirty days from the date of issuance thereof, means the final
mandate.
(l) Any person, partnership, or corporation who violates an order of the Commission
to cease and desist after it has become final, and while such order is in effect, shall
forfeit and pay to the United States a civil penalty of not more than $5,000 for each
violation, which shall accrue to the United States and may be recovered in a civil
action brought by the United States.
Sec. 6. That the commission shall also have power-(a) To gather and compile information concerning, and to investigate 5 from time to
time the organization, business, conduct, practices, and management of any
corporation engaged in commerce, excepting banks and common carriers subject to the
Act to regulate commerce, and its relation to other corporations and to individuals,
associations, and partnerships.
(b) To require, by general or special orders, corporations engaged in commerce,
excepting banks, and common carriers subject to the Act to regulate commerce, or any
class of them, or any of them, respectively, to file with the commission in such form
as the commission may prescribe annual or special, or both annual and special, reports
or answers in writing to specific questions, furnishing to the commission such
information as it may require as to the organization, business, conduct, practices,
management, and relation to other corporations, partnerships, and individuals of the
respective corporations filing such reports or answers in writing. Such reports and
answers shall be made under oath, or otherwise, as the commission may prescribe, and
shall be filed with the commission within such reasonable period as the commission
may prescribe, unless additional time be granted in any case by the commission.
(c) Whenever a final decree has been entered against any defendant corporation in
any suit brought by the United States to prevent and restrain any violation of the
antitrust Acts, to make investigation, upon its own initiative, of the manner in which
the decree has been or is being carried out, and upon the application of the Attorney
General it shall be its duty to make such investigation. It shall transmit to the Attorney
General a report embodying its findings and recommendations as a result of any such
investigation and the report shall be made public in the discretion of the commission.
(d) Upon the direction of the President or either 6 House of Congress to investigate
and report the facts relating to any alleged violations of the antitrust Acts by any
corporation.
(e) Upon the application of the Attorney General to investigate and make
recommendations for the readjustment of the business of any corporation alleged to
be violating the antitrust Acts in order that the corporation may thereafter maintain Its
organization, management, and conduct of business in accordance with law.
(f) To make public from time to time such portions of the information obtained by
it hereunder, except trade secrets and names of customers, as it shall deem expedient
in the public interest ; and to make annual and special reports to the Congress and to
submit therewith recommendations for additional legislation; and to provide for the
publication of its reports and decisions in such form and manner as may be best
adapted for public information and use.
(g) From time to time to classify corporations and to make rules and regulations for

the purpose of carrying out the provisions of this Act.
(h) To investigate, from time to time, trade conditions In and with foreign countries
where associations, combinations, or practices of manufacturers, merchants, or traders,
or other conditions, may affect the foreign trade of the United States, and to report to
Congress thereon, with such recommendations as it deems advisable.
SEC. 7. That In any suit in equity brought by or under the direction of the Attorney
General as provided In the antitrust Acts, the court may, upon the
5 Public, No. 78, 73d Cong., approved June 19, 1933, making appropriations for the fiscal year ending
June 30, 1934, for the “Executive Office and sundry independent executive bureaus, boards, commission,”
ect., made the appropriations for the Commission contingent upon the provisions (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.”
6 See footnote p. 4

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION ACT
conclusion of the testimony therein, if it shall be then of opinion that the complainant
is entitled to relief, refer said suit to the commission, as a master in chancery, to
ascertain and report an appropriate form of decree therein. The Commission shall
proceed upon such notice to the parties and under such rules of procedure as the court
may prescribe, and upon the coming in of such report such exceptions may be filed and
such proceedings had In relation thereto as upon the report of a master in other equity
causes, but the court may adopt or reject such report, in whole or in part, and enter
such decree as the nature of the case may in its judgment require.
SEC. 8. That the several departments and bureaus of the Government when directed
by the President shall furnish the commission, upon Its request, all records, papers, and
information in their possession relating to any corporation subject to any of the
provisions of this Act, and shall detail from time to time such officials and employees
to the commission as he may direct.
SEC. 9. That for the purposes of this Act the commission, or its duly authorized
agent or agents, shall at all reasonable times have access to, for the purpose of
examination, and the right to copy any documentary evidence of any corporation being
investigated or proceeded against; and the commission shall have power to require by
subpoena the attendance and testimony of witnesses and the production of all such
documentary evidence relating to any matter under investigation. Any member of the
commission may sign subpoenas, and members and examiners of the commission may
administer oaths and affirmations, examine witnesses, and receive evidence.
Such attendance of witnesses, and the production of such documentary evidence,
may be required from any place in the United States, at any designated place of
hearing. And in case of disobedience to a subpoena the commission may invoke the
aid of any court of the United States in requiring the attendance and testimony of
witnesses and the production of documentary evidence.
Any of the district courts of the United States within the jurisdiction of which such
inquiry is carried on may, in case of contumacy or refusal to obey a subpoena issued
to any corporation or other person, issue an order requiring such corporation or other
person to appear before the commission, or to produce documentary evidence if so
ordered, or to give evidence touching the matter in question ; and any failure to obey
such order of the court may be punished by such court as a contempt thereof.
Upon the application of the Attorney General of the United States, at the request of
the commission, the district courts of the Untied States shall have jurisdiction to issue
writs of mandamus commanding any person or corporation to comply with the
provisions of this Act or any order of the commission made In pursuance thereof.
The commission may order testimony to be taken by deposition in any proceeding
or investigation pending under this Act at any stage of such proceeding or
investigation. Such depositions may be taken before any person designated by the
commission and having power to administer oaths. Such testimony shall be reduced
to writing by the person taking the deposition, or under his direction, and shall then be
subscribed by the deponent. Any person may be compelled to appear and depose and
to produce documentary evidence in the same manner as witnesses may be compelled
to appear and testify and produce documentary evidence before the commission as
hereinbefore provided.
Witnesses summoned before the commission shall be paid the same fees and mileage
that are paid witnesses in the courts of the United States, and witnesses whose
depositions are taken, and the persons taking the same shall severally be entitled to the

same fees as are paid for like services in the courts of the United States.
No person shall be excused from attending and testifying or from producing
documentary evidence before the commission or in obedience to the subpoena of the
commission on the ground or for the reason that the testimony or evidence,
documentary or otherwise, required of him may tend to criminate him or subject him
to a penalty or forfeiture. But no natural person shall be prosecuted or subjected to any
penalty or forfeiture for or on account of any transaction, matter, or thing concerning
which he may testify, or produce evidence, documentary or otherwise, before the
commission in obedience to a subpoena issued by it ; Provided, That no natural person
so testifying shall be exempt from prosecution and punishment for perjury committed
in so testifying.

FEDERAL TRADE COMMISSION ACT

173

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 tile jurisdiction of
the United States, or willfully mutilate, alter, or by any other means falsify any
documentary evidence of such corporation, or who shall willfully refuse to submit to
the commission or to any of its authorized agents, for the purpose of inspection and
taking copies, any documentary evidence of such corporation in his possession or
within his control, shall be deemed guilty of an offense against the United States, and
shall be subject, upon conviction in any court of the United States of competent jurisdiction, to a fine of not less than $1,000 nor more than $5,000 or to imprisonment for
a term of not more than three years, or to both such fine and imprisonment.
If any corporation required by this Act to file any annual or special report shall fail
so to do within the time fixed by the commission for filing the same, and such failure
shall continue for thirty days after notice of such default, the corporation shall forfeit
to the United States the sum of $100 for each and every day of the continuance of such
failure, which forfeiture shall be payable into the Treasury of the United States, and
shall be recoverable in a civil suit in the name of the United States brought in the
district where the corporation has its principal office or in any district in which it shall
do business. It shall be the duty of the various district attorneys, under the direction
of the Attorney General of the United States, to prosecute for the recovery of
forfeitures. The costs and expenses of such prosecution shall be paid out of the
appropriation for the expenses of the courts of the United States.
Any officer or employee of the commission who shall make public any information
obtained by the commission without its authority, unless directed by a court, shall be
deemed guilty of a misdemeanor, and, upon conviction thereof, shall be punished by
a fine not exceeding $5,000, or by imprisonment not exceeding one year, or by fine
and imprisonment, in the discretion of the court.
SEC. 11. Nothing contained in this Act shall be construed to prevent or interfere
with the enforcement of the provisions of the antitrust Acts or the Acts to regulate
commerce, nor shall anything contained in the Act be construed to alter, modify, or
repeal the said antitrust Acts or the Acts to regulate commerce or any part or parts
thereof.
SEC. 12. (a) It shall be unlawful for any person, partnership, or corporation to
disseminate, or cause to be disseminated, any false advertisement-(l) By United States mails, or in commerce by any means, for the purpose of
inducing, or which is likely to induce, directly or indirectly, the purchase of food,
drugs, devices, or cosmetics ; or

(2) By any means, for the purposes of inducing, or which is likely to induce
directly or indirectly, the purchase in commerce of food, drugs, devices, or cosmetics.
(b) The dissemination or the causing to be disseminated of any false advertisement
within the provisions of subsection (a) of this section shall be an unfair or deceptive
act or practice in commerce within the meaning of section 5.
SEC. 13. (a) Whenever the Commission has reason to believe-(l) that any person, partnership, or corporation is engaged in, or is about to engage
in, the dissemination or the causing of the dissemination of any advertisement in
violation of section 12, and
(2) that the enjoining thereof pending the issuance of a complaint by the
Commission under section 5, and until such complaint is dismissed by the Commission
or set aside by the court on review, or the order of the Commission to cease and desist
made thereon has become final within the meaning of section 5, would be to the
interest of the public,
174
ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1945
the Commission by any of its attorneys designated by it for such purpose may bring
suit in a district court of the United States or In the United States court of any
Territory, to enjoin the dissemination or the causing of the dissemination of such
advertisement. Upon proper showing a temporary injunction or restraining order shall
be granted without bond. Any such suit shall be brought in the district in which such
person, partnership, or corporation resides or transacts business.
(b) Whenever it appears to the satisfaction of the court in the case of a newspaper,
magazine, periodical, or other publication, published at regular intervals-(l) that restraining the dissemination of a false advertisement in any particular
issue of such publication would delay the delivery of such issue after the regular time
therefor, and
(2) that such delay would be due to the method by which the manufacture and
distribution of such publication is customarily conducted by the publisher in
accordance with sound business practice, and not to any method or device adopted for
the evasion of this section or to prevent or delay the issuance of an injunction or
restraining order with respect to such false advertisement or any other advertisement.
the court shall exclude such Issue from the operation of the restraining order or
injunction.
Sec. 14. 7 (a) Any person, partnership, or corporation who violates any provision of
section 12 (a) shall, if the use of the commodity advertised may be injurious to health
because of results from such use under the conditions prescribed in the advertisement
thereof, or under such conditions as are customary or usual, or if such violation is with
intent to defraud or mislead, be guilty of a misdemeanor, and upon conviction shall be
punished by a fine of not more than $5,000 or by imprisonment for not more than six
months, or by both such fine and imprisonment; except that if the conviction is for a
violation committed after a first conviction of such person, partnership, or corporation,
for any violation of such section, punishment shall be by a fine of not more than
$10,000 or by imprisonment for not more than one year, or by both such fine and
imprisonment : Provided, That for the purposes of this section meats and meat food
products duly inspected, marked, and labeled In accordance with rules and regulations
issued under the Meat Inspection Act approved March 4, 1907, as amended, shall be
conclusively presumed not injurious to health at the time the same leave official
“establishments.”

(b) No publisher, radio-broadcast licensee, or agency or medium for the dissemination of advertising, except the manufacturer, packer, distributor, or seller of the
commodity to which the false advertisement relates, shall be liable under this section
by reason of the dissemination by him of any false advertisement, unless he has
refused on the request or the Commission, to furnish the Commission the name and
post-office address of the manufacturer, packer, distributor, seller, or advertising
agency, residing in the United States, who caused him to disseminate such
advertisement. No advertising agency shall be liable under this section by reason of
the causing by it of the dissemination of any false advertisement, unless it has refused,
on the request of the Commission, to furnish the Commission the name and post-office
address of the manufacturer, packer, distributor, or seller, residing in the United States,
who caused it to cause the dissemination of such advertisement.
SEC. 15. For the purposes of section 12, 13, and 14-(a) The term “false advertisement” means an advertisement, other than labeling,
which is misleading in a material respect ; and In determining whether any
advertisement Is misleading, there shall be taken into account (among other things) not
only representations made or suggested by statement, word, design, device, sound, or
any combination thereof, but also the extent to which the advertisement fails to reveal
facts material in the light of such representations or material with respect to
consequences which may result from the use of the commodity to which the
advertisement relates under the conditions prescribed in said advertisement or, under
such conditions as are customary or usual. No advertisement of a drug shall be deemed
to be false if it is disSection 5 (b) of the amending Act of 1938 provides :
Sec. 5 (b) Section 14 of the Federal Trade Commission Act, added to such Act by section 4 of this Act,
shall take effect on the expiration of sixty days after the date of the enactment of this Act.
7

FEDERAL TRADE COMMISSION ACT

175

seminated only to members of the medical profession, contains no false representations
of a material fact, and includes, or is accompanied in each instance by truthful
disclosure of, the formula showing quantitatively each ingredient of such drug.
(b) The term “food” means (l) articles used for food or drink for man or other
animals, (2) chewing gum, and (3) articles used for components of any such article.
(c) The term “drug” ‘means (l) articles recognized in the official United States
Pharmacopoeia, official Homeopathic Pharmacopoeia of the United States, or official
National Formulary, or any supplement to any of them ; and (2) articles Intended for
use In the diagnosis, cure, mitigation, treatment, or prevention of disease In man or
other animals ; and (3) articles (other than food) intended to affect the structure or any
function of the body of man or other animals ; and (4) articles intended for use as a
component of any article specified in clause (l), (2) , or (3); but does not Include
devices or their components, parts, or accessories.
(d) The term “device” (except when used in subsection (a) of this section) means
instruments, apparatus, and contrivances, including their parts and accessories,
intended (l) for use In the diagnosis, cure, mitigation, treatment, or prevention of
disease in man or other animals ; or (2) to affect the structure or any function of the
body of man or other animals.
(e) The term “cosmetic” means (l) articles to be rubbed, poured, sprinkled, or
sprayed on, introduced into, or otherwise applied to the human body or any part
thereof intended for cleansing, beautifying, promoting attractiveness, or altering the
appearance, and (2) articles intended for use as a component of any such articles;
except that such term shall not include soap.
Sec. 16. Whenever the Federal Trade Commission has reason to believe that any
person, partnership, or corporation is liable to a penalty under section 14 or under
subsection (l) of section 5, It shall certify the facts to the Attorney General, whose duty
it shall be to cause appropriate proceedings to be brought for the enforcement of the
provisions of such section or subsection.
SEC. 17. If any provision of this Act, or the application thereof to any person,
partnership, corporation, or circumstance, Is held invalid, the remainder of the Act and
the application of such provision to any other person, partnership, corporation, or
circumstance shall not be affected thereby.
SEC. 18. This Act may be cited as the “Federal Trade Commission Act.”
Original act approved September 26, 1914.
Amended act approved March 21, 1938.
SECTIONS OF THE CLAYTON ACT ADMINISTERED
BY THE FEDERAL TRADE COMMISSION
(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 twentyseventh, 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

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

or other place under the Jurisdiction of the United States: Provided, That nothing In
this Act contained shall apply to the Philippine Islands.
The word “person” or “persons” wherever used in this Act shall be deemed to
include corporations and associations existing under or authorized by the laws of either
the United States the laws of any of the Territories, the laws of any State; or the laws
of any foreign country.
SEC. 2. 1 (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 in June, 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 foregoing
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 per-sons 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 prima-facie case thus made by showing Justification shall be upon the
person charged with a violation of this section, and unless justification sh all be
affirmatively shown, the Commission is authorized to issue an order terminating 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
1 This section of the Clayton Act contains the provisions of the Robinson-Patman Anti-Discrimination
Act. approved June 19, 1936. amending Section 2 of the original Clayton Act, approved October 15, 1914.
For certain exemptions from the provisions of the later act concerning cooperatives and purchases for their
own use by schools, colleges, universities, public libraries, churches, hospitals, and charitable institutions
not operated for profit, see the later act as published at p.181.

CLAYTON ACT

177

or commodities manufactured, sold, or offered for sale by such person, unless such
payment or consideration is available on proportionately 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. 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 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

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

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 Civil Aeronautics Authority where applicable to air
carriers and foreign air carriers subject to the Civil Aeronautics Act of 1938 2; in the
Federal Reserve 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
2 By subsection (g) of Section 1107 of the “Civil Aeronautics Act of 1938,” approved June 23, 1938.
Public, No. 706, 75th Congress. Ch. 601. 3d Sess., S. 3845, 52 Stat. 1028, Section 11 of the Act of
October 15, 1914, the Clayton Act. was amended hy inserting after the word “energy’ (in the tenth line
from the beginning of the paragraph, rending “communication or radio transmission of energy:”). the
following: “in the Civil Aeronautics Authority where applicable to air carriers and foreign air carriers
subject to the Civil Aeronautics Act of 1938:” and by inserting after the word “commission” wherever it
appears in that section a comma and the word “authority,”.

CLAYTON ACT

179

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.
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 set180
ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
ting forth the manner of said service shall be proof of the same, and the return postoffice receipt for said complaint, order, or other process registered and mailed as
aforesaid shall be proof of the service of the same.
*
*
*
*
*
*
*
Original act approved October 15, 1941.
ROBINSON-PATMAN ANTI-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” (etc.,
as published on p. 176 as the text of sec. 2, namely, subparagraphs (a) to (f), inclusive,
ending with the words “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 amendatory 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 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, he fined not more than $5,000 or imprisoned not more than one year, or both.

ROBINSON-PATMAN ANTI-DISCRIMINATION ACT 181

SEC. 4. 1 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, 1036.
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” wherever
used in this Act mean solely trade or commerce in goods, wares, or merchandise
exported, or in the course of being exported from the United States or any Territory
thereof to any foreign nation; but the words “export trade” shall not be deemed to
include the production, manufacture, or selling for consumption or for resale, within
the United States or any Territory thereof, of such goods, wares, or merchandise, or
any act in the course of such production, manufacture, or selling for consumption or
for resale.
That the words “trade within the United States” wherever used in this Act mean
trade or commerce among the several States or in any Territory of the United States,
or in the District of Columbia, or between any such Territory and another, or between
any such Territory or Territories and any State or States or the District of Columbia,
or between the District of Columbia and any State or States.
That the word “Association” wherever used In this Act means any corporation or
combination, by contract or otherwise, of two or more persons, partnerships, or
corporations.
SEC. 2. That nothing contained in the Act entitled “An Act to protect trade and
commerce against unlawful restraints and monopolies,” approved July second,
eighteen hundred and ninety, shall be construed as declaring to be illegal an
association entered into for the sole purpose of engaging in export trade and actually
engaged solely in such export trade, or an agreement made or act done in the course
of export trade by such association, provided such association, agreement, or act Is not
in restraint of trade within the United States, and is not in restraint of the export trade
of any domestic competitor of such association: And provided further, That such
association does not, either in the United States or elsewhere, enter 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.
1 By Public. No.550, 75th Congress, Chapter 283. Third Session (H. R. 8148), approved May 26, 1938.
it was further provided “That nothing in the Act approved June 19, 1936 (Public, Number 692. Seventyfourth Congress, second session), known as the Robinson-Patman Anti-Discrimination Act. shall apply
to purchases of their supplies for their own use by schools, colleges, universities, public libraries,
churches, hospitals, and charitable institutions not operated for profit.”

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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.
WOOL PRODUCTS LABELING ACT OF 1939

(Public, No.850, 76th Gong., Ch. 871, 3d Sess., S. 162)
AN ACT To protect producers, manufacturers, distributors, and consumers from the
unrevealed presence of substitutes and mixtures in spun, woven, knitted, felted, or
otherwise manufactured wool products, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United States of
America in Congress assembled, That this Act may be cited as the “Wool Products
Labeling Act of 1939.”
DEFINITIONS
SEC. 2. As used in this Act-(a) The term “person” means an individual, partnership, corporation, association, or
any other form of business enterprise, plural or singular, as the case demands.

WOOL PRODUCTS LABELING ACT

183

(b) The term “wool” means the fiber from the fleece of the sheep or lamb or hair of
the Angora or Cashmere goat (and may include the so-called specialty fibers from the
hair of the camel, alpaca, llama, and vicuna) which has never been reclaimed from any
woven or felted wool product.
(c) The term “reprocessed wool” means the resulting fiber when wool has been
woven or felted into a wool product which, without ever having been utilized in any
way by the ultimate consumer, subsequently has been made into a fibrous state.
(d) The term reused wool” means the resulting fiber when wool or re-processed
wool has been spun, woven, knitted, or felted into a wool product which, after having
been used in any way by the ultimate consumer, subsequently has been made into a
fibrous state.
(e) The term “wool product means any product, or any portion of a product, which
contains, purports to contain, or in any way is represented as containing wool,
reprocessed wool, or reused wool.
(f) The term “Commission” means the Federal Trade Commission.
(g) The term “Federal Trade Commission Act” means the Act of Congress entitled
“An Act to create a Federal Trade Commission, to define Its powers and duties, and
for other purposes,” approved September 26, 1914, as amended, and the Federal Trade
Commission Act approved March 21, 1938.
(h) The term “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.
(I) The term “Territory” includes the insular possessions of the United States and
also any Territory of the United States.
SEC. 3. The introduction, or manufacture for introduction, into commerce, or the
sale, transportation, or distribution, In commerce, of any wool product which is
misbranded within the meaning of this Act or the rules and regulations hereunder, Is
unlawful and shall be an unfair method of competition, and an unfair and deceptive act
or practice, in commerce under the Federal Trade Commission Act; and any person
who shall manufacture or deliver for shipment or ship or sell or offer for sale In
commerce, any such wool product which is misbranded within the meaning of this Act
and the rules and regulations hereunder is guilty of an unfair method of competition,
and an unfair and deceptive act or practice, in commerce within the meaning of the
Federal Trade Commission Act.
This section shall not apply-(a) To any common carrier or contract carrier In respect to a wool product shipped
or delivered for shipment in commerce In the ordinary course of its business; or
(b) To any person manufacturing, delivering for shipment, shipping, selling, or
offering for sale, for exportation from the United States to any foreign country a wool
product branded In accordance with the specifications of the purchaser and in
accordance with the laws of such country.
MISBRANDED WOOL PRODUCTS
SEC. 4. (a) A wool product shall be misbranded--

(1) If it is falsely or deceptively stamped, tagged, labeled, or otherwise identified.
(2) If a stamp, tag, label, or other means of identification, or substitute therefor under
section 5, is not on or affixed to the wool product and does not show-(A) the percentage Of the total fiber weight of the wool product, exclusive of
ornamentation not exceeding 5 per centum of said total fiber weight, of (1) wool; (2)
reprocessed wool; (3) reused wool; (4) each fiber other than wool if said percentage
by Weight of such fiber Is 5 per centum or more; and (5) the aggregate of all other
fibers: Provided, That deviation of the fiber contents of the wool product from
percentages stated on the stamp, tag, label, or other means of identification, shall not
be misbranding under this section if the person charged with misbranding proves such
deviation resulted from unavoidable variations in manufacture and despite the exercise
of due care to make accurate the statements on such stamp, tag, label, or other means
of identification.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

(B) the maximum percentage of the total weight of the wool product, of any
nonfibrous loading, filling, or adulterating matter.
(C) the name of the manufacturer of the wool product and/or the name of one or
more persons subject to section 3 with respect to such wool product.
(3) In the case of a wool product containing a fiber other than wool, if the
percentages by weight of the wool contents thereof are not shown in words and figures
plainly legible.
(4) In the case of a wool product represented as wool, if the percentages by weight
of the wool content thereof are not shown in words and figures plainly legible, or if the
total fiber weight of such wool product if not 100 per centum wool exclusive of
ornamentation not exceeding 5 per centum of such total fiber weight.
(b) In addition to information required in this section, the stamp, tag, label, or other
means of identification, or substitute therefor under section 5, may contain other
information not violating the provisions of this Act or the rules and regulations of the
Commission.
(c) If any person subject to section 3 with respect to a wool product finds or has
reasonable cause to believe its stamp, tag, label, or other means of identification, or
substitute therefor under section 5, does not contain the information required by this
Act, he may replace same with a substitute containing the information so required.
(d) This section shall not be construed as requiring designation on garments or
articles of apparel of fiber content of any linings, paddings, stiffening, trimmings, or
facings, except those concerning which express or implied representations of fiber
content are customarily made, nor as requiring designation of fiber content of products
which have an insignificant or inconsequential textile content: Provided, That if any
such article or product purports to contain or in any manner is represented as
containing wool, this section shall be applicable thereto and the information required
shall be separately set forth and segregated.
The Commission, after giving due notice and opportunity to be heard to interested
persons, may determine and publicly announce the classes of such articles concerning
which express or implied representations of fiber content are customarily made, and
those products which have an insignificant or inconsequential textile content.
AFFIXING OF STAMP, TAG, LABEL, OR OTHER IDENTIFICATION
SEC. 5. Any person manufacturing for introduction, or first introducing into
commerce a wool product shall affix thereto the stamp, tag, label, or other means of
identification required by this Act, and the same, or substitutes therefor containing
identical information with respect to content of the wool product or any other products
contained therein in an amount of 5 per centum or more by weight and other
information required under section 4, shall be and remain affixed to such wool
product, whether it remains in its original state or is contained In garments or other
articles made in whole or in part therefrom, until sold to the consumer: Provided, That
the name of the manufacturer of the wool product need not appear on the substitute
stamp, tag, or label If the name of the person who affixes the substitute appears
thereon.
Any person who shall cause or participate in the removal or mutilation of any stamp,
tag, label, or other means of identification affixed to a wool product with intent to
violate the provision of this Act, is guilty of an unfair method of competition, and an
unfair and deceptive act or practice, in commerce within the meaning of the Federal

Trade Commission Act.
ENFORCEMENT OF THE ACT
SEC. 6. (a) Except as otherwise specifically provided herein, this Act shall be
enforced by the Federal Trade Commission under rules, regulations, and procedure
provided for in the Federal Trade Commission Act.
The Commission is authorized and directed to prevent any person from violating the
provisions of this Act in the same manner, by the same means, and with the same
jurisdiction, powers, and duties as though all applicable terms and provisions of the
Federal Trade Commission Act were incorporated into and made a part of this Act; and
any such person violating the provisions of this Act shall be subject to the penalties
and entitled to the privileges and immunities provided in said Federal Trade
Commission Act, in the same manner, by

WOOL PRODUCTS LABELING ACT

185

the same means, and with the same jurisdiction, powers, and duties as though the
applicable terms and provisions of the said Federal Trade Commission Act were
incorporated into and made a part of this Act.
The Commission is authorized and directed to make rules and regulations for the
manner and form of disclosing information required by this Act, and for segregation
of such information for different portions of a wool product as may be necessary to
avoid deception or confusion and to make such further rules and regulations under and
in pursuance of the terms of this Act as may be necessary and proper for
administration and enforcement.
The Commission is also authorized to cause inspections, analyses, tests, and
examinations to be made of any wool products subject to this Act; and to cooperate
with any department or agency of the Government, with any State, Territory, or
possession, or with the District of Columbia: or with any department, agency, or
political subdivision thereof; or with any person.
(b) Every manufacturer of wool products shall maintain proper records showing the
fiber content as required by this Act of all wool products made by him, and shall
preserve such records for at least three years.
The neglect or refusal to maintain and so preserve such records is unlawful, and any
such manufacturer who neglects or refuses to maintain and so preserve such records
shall forfeit to the United States the sum of $100 for each day of such failure, which
shall accrue to the United States and be recoverable in a civil action.
CONDEMNATION; AND INJUNCTION PROCEEDINGS
SEC. 7. (a) Any wool products shall be liable to be proceeded against in the district
court of the United States for the district in which found, and to be seized for
confiscation by process of libel for condemnation, if the Com-mission has reasonable
cause to believe such wool products are being manufactured or held for shipment, or
shipped, or held for sale or exchange after shipment, in commerce in violation of the
provisions of this Act, and if after notice from the Commission the provisions of this
Act with respect to said products are not shown to be complied with. Proceedings in
such libel cases shall conform as nearly as may be to suits in rem in admiralty, and
may be brought by the Commission.
If such wool products are condemned by the court, they shall be disposed of, in the
discretion of the court, by destruction; by sale; by delivery to the owner or claimant
thereof upon payment of legal costs and charges and upon execution of good and
sufficient bond to the effect that such wool products will not be disposed of until
properly stamped, tagged, labeled, or otherwise identified under the provisions of this
Act; or by such charitable disposition as the court may deem proper. If such wool
products are disposed of by sale, the proceeds, less legal costs and charges, shall be
paid Into the Treasury of the United States.
(b) Whenever the Commission has reason to believe that-(1) Any person is violating, or is about to violate, sections 3, 5, 8, or 9 of this Act,
and that
(2) It would be to the public interest to enjoin such violation until complaint is
issued by the Commission under the Federal Trade Commission Act and such
complaint dismissed by the Commission or set aside by the court on review, or until
order to cease and desist made thereon by the Commission has become final within the
meaning of the Federal Trade Commission Act.

the Commission may bring suit in the district court of the United States or in the
United States court of any Territory, for the district or Territory in which such person
resides or transacts business, to enjoin such violation, and upon proper showing a
temporary injunction or restraining order shall be granted without bond.
EXCLUSION OF MISBRANDED WOOL PRODUCTS
SEC. 8. All wool products imported into the United States, except those made more
than twenty years prior to such importation, shall be stamped, tagged, labeled, or
otherwise identified in accordance with the provisions of this Act, and all invoices of
such wool products required under the Act of June 17, 1930 (c. 497, title IV, 46 Stat.
719), shall set forth, in addition to the matter therein specified, the information with
respect to said wool products required under the provisions of this Act, which
information shall be in the invoices prior to their certification under said Act of June
17, 1930.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

The falsification of, or failure to set forth, said information in said invoices, or the falsification
or perjury of the consignee’s declaration provided for in said Act of June 17, 1930, insofar as
it relates to said information, shall be an unfair method of competition, and an unfair and
deceptive act, or practice, In commerce under the Federal Trade Commission Act; and any
person who falsifies, or fails to set forth, said information in said invoices, or who falsifies or
perjures said consignee’s declaration in so far as it relates to said Information, may thenceforth
be prohibited by the Commission from importing, or participating in the importation of, any
wool products into the United States except upon filing bond with the Secretary of the Treasury
in a sum double the value of said wool products and any duty thereon, conditioned upon
compliance with the provisions of this Act.
A verified statement from the manufacturer or producer of such wool products showing their
fiber content as required under the provisions of this Act may be required under regulations
prescribed by the Secretary of the Treasury.
GUARANTY
SEC. 9. (a) No person shall be guilty under section 3 if he establishes a guaranty received in
good faith signed by and containing the name and address of the person residing in the United
States by whom the wool product guaranteed was manufactured and/or from whom it was
received, that said wool product is not misbranded under the provisions of this Act.
Said guaranty shall be either (1) a separate guaranty specifically designating the wool product
guaranteed, in which case it may be on the Invoice or other paper relating to said wool product;
or (2) a continuing guaranty filed with the Commission applicable to all wool products handled
by a guarantor in such form as the Commission by rules and regulations may prescribe.
(b) Any person who furnishes a false guaranty, except a person relying upon a guaranty to the
same effect received in good faith signed by and containing the name and address of the person
residing in the United States by whom the wool product guaranteed was manufactured and/or
from whom it was received, with reason to believe the wool product falsely guaranteed may he
introduced, sold, transported, or distributed in commerce, is guilty of an unfair method of
competition, and an unfair and deceptive act or practice, in commerce within the meaning of the
Federal Trade Commission Act.
CRIMINAL PENALTY
SEC. 10. Any person who willfully violates sections 3, 5, 8, or 9 (b) of this Act shall be guilty
of a misdemeanor and upon conviction shall be fined not more than $5,000, or be imprisoned
not more than one year, or both, in the discretion of the court: Provided, That nothing herein
shall limit other provisions of this Act.
Whenever the Commission has reason to believe any person is guilty of a misdemeanor under
this section, it shall certify all pertinent facts to the Attorney General, whose duty it shall be to
cause appropriate proceedings to be brought for the enforcement of the provisions of this section
against such person.
APPLICATION OF EXISTING LAWS
SEC. 11. The provisions of this Act shall be held to be in addition to, and not in substitution
for or limitation of, the provisions of any other Act of the United States.
EFFECTIVE DATE
SEC. 12. This Act shall take effect nine months after the date of its passage.

SEPARABILITY CLAUSE
SEC. 13. If any provision of this Act, or the application thereof to any person, partnership,
corporation, or circumstance is held invalid, the remainder of the Act and the application of such
provision to any other person, partnership, corporation, or circumstance shall not be affected
thereby.
EXCEPTIONS
SEC. 14. None of the provisions of this Act shall be construed to apply to the manufacture,
delivery for shipment, shipment, sale, or offering for sale any

SHERMAN ACT

187

carpets, rugs, mats, or upholsteries, nor to any person manufacturing, delivering for
shipment, shipping, selling, or offering for sale any carpets, rugs, mats, or upholsteries.
Approved, October 14, 1940.
SHERMAN ACT1
(U. S. C., Title 15, Sec. 1)
AN ACT To protect trade and commerce against unlawful restraints and
monopolies
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, contracts or agreements prescribing minimum prices 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 is to be trans-ported for such) resale,
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 prices 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.
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 convicted 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. 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 in 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 2 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 com1 Published as amended by Miller-Tydings Act (Pub., No.314, 75th Cong.. H. R. 7472. approved Aug.
17, 1937).
2 Act of Mar. 3, 1911, c. 231, 36 Stat 1167, abolishes the courts referred to, and confers their powers upon the
district courts.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

plained 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 in 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 18 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 in 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 he 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 3 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 three-fold 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.
MILLER-TYDINGS ACT
(Approved August 17, 1937, as a rider to the District of Columbia revenue act)
SECTION 1 of the act entitled “An act to protect trade and commerce against
unlawful restraints and monopolies,” approved July 2, 1890 [the Sherman Act], is
amended to read [see Sherman Act, sec. 1, p.187]
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, 548 Federal Office

Building, San Francisco, Calif.; Federal Trade Commission, 801 Federal Building,
Seattle, Wash.; Federal Trade Commission, 321 Federal Office Building, New
Orleans, La.
Hours.-Offices are open on each business day, except Saturday, from 9 a. m. to 4:
30 Pm., 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.
3

see footnote on p.187.

RULES OF PRACTICES

189

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 is the executive officer of the Commission and shall have the legal
custody of its seal, papers, records, and property; and all orders of the Commission
shall be signed by the Secretary or such other person as may be authorized by the
Commission.
RULE III. 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. When proceeding under the Federal Trade
Commission Act service may also be made at the residence of the person, partnership,
or corporation to be served.
The return post-office receipt for said complaint, order, or other process or brief
registered and mailed as aforesaid, or the verified return by the person serving such
complaint, order, or other process or brief, setting forth the manner of said service,
shall be proof of the service of the document.
RULE 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.
190
ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION
No former officer, examiner, attorney, clerk, or other former employee of this
Commission shall appear as attorney or counsel for or represent any party in any
proceeding resulting from any investigation, the files of which came to the personal
attention of such former officer, examiner, attorney, clerk, or other former employee
during the term of his service or employment with the Commission.
RULE V. INTERVENTION
Any person, partnership, corporation, or association desiring to intervene in a
contested proceeding shall make application in writing, setting out the grounds on
which lie or it claims to be interested
The Commission may, by order, permit intervention by counsel or in person to such
extent and upon such terms as it shall deem proper.
RULE VI. DOCUMENTS
Filing.--All documents required to be filed with the Commission in any proceeding
shall be filed with the Secretary of the Commission.
Title.--Documents shall clearly show the docket number and title of the proceeding.
Copies.--Documents, other than correspondence, shall be filed in triplicate, except
as otherwise specifically required by these rules.
Form.--Documents not printed shall be typewritten, on one side of paper only; letter
size, eight (8) inches by ten and one-half (10 ½) inches; left margin, one and one-half
(11/2) inches; right margin, one (l) inch.
Documents may be printed, in ten (10) or twelve (12) point type, on good, unglazed
paper, of the dimensions and with the margins above specified.
Documents shall be bound at left side only.
The originals of all answers, briefs, motions, and other documents shall be signed
in ink, by the respondent or his duly authorized attorney. Where the respondent is an
individual or a partnership, the originals of said documents shall be signed by said
individual or by one of the partners, or by his or its attorney. Where the respondent is
a corporation, the originals of said documents shall be signed under the corporate
name by a duly authorized official of such corporation, or by its attorney. Where the
respondent is an association, the originals of said documents shall be signed under the
association name for said association by a duly authorized official of such association,
or by its attorney.
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 VII. APPLICATIONS FOR COMPLAINT
Any person, partnership, corporation, or association may apply to the Commission
to institute a proceeding in respect to any violation of law over which the Commission
has jurisdiction.
Such application for complaint shall be in writing, signed by or in behalf of the
applicant, and shall contain a short and simple statement of the facts constituting the
alleged violation of law and the name and address of the applicant and of the party
complained of.
RULE VIII. COMPLAINTS
Whenever the Commission shall have reason to believe that there is a violation of
law over which the Commission has jurisdiction, and in case of violation of the
Federal Trade Commission Act, if it shall appear to the Commission that a proceeding
by it in respect thereof would be to the interest of the public, the Commission shall
issue and serve upon the proper parties a complaint stating its charges and containing
a notice of a hearing upon a day and at the place therein fixed, at least thirty (30) days
after the service of said complaint.
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

RULES OF PRACTICE

191

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 allegations of fact set forth in the complaint and
not to contest the facts, the answer may consist of a statement that respondent admits all the
material allegations of fact charged in the complaint to be true. Respondent by such answer shall
be deemed to have waived a hearing on the allegations of fact set forth in said complaint and to
have authorized the Commission, without further evidence, or other intervening procedure, to
find such facts to be true.
Contemporaneously with the filing of such answer the respondent may give notice in writing
that he desires to be heard on the question may give notice in writing that he desires to be heard
on the question as to whether the admitted facts constitute the violation of law charged in the
complaint. Pursuant to such notice, the respondent my file a brief, directed solely to that
question, in accordance with the rule XXIII.
RULE X. MOTIONS
Motions before the Commission or the trial examiner shall state briefly the purpose thereof
and all supporting affidavits, records, and other papers, except such as have been previously
filed, shall be filed with such motions and clearly referred to therein.
Motions in any proceeding before a trial examiner which relate to the introduction or striking
of evidence, to matters of procedure, or to any other matters coming within the scope of the trial
examiner’s authority shall be made to the trial examiner and shall be ruled on by him. All other
motions in any proceeding, except as otherwise provided in these rules, shall be addressed to
and shall be ruled on by the Commission, but in the case of motions to dismiss for alleged
failure of proof based upon testimony taken before a trial examiner, the motion will be referred
to the trial examiner for report and recommendation before a ruling is made by the Commission.
RULE XI. CONTINUANCE AND EXTENSION OF TIME
Except as otherwise expressly provided by law, the Commission, for cause shown, may extend
any time limits prescribed for filing any papers, and may continue or adjourn any hearings. A
hearing before a trial examiner shall begin at the time and place ordered by the Commission, but
thereafter may be adjourned from time to time by the trial examiner or the Commission.
Applications for continuances and extensions of time should be made prior to the expiration
of time prescribed by these rules.
RULE XII. 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.
Hearings shall be stenographically reported by the official reporter of the Commission and
a transcript thereof shall be made which shall be a part of the record of the proceeding. The
record so made shall be the sole official record. Transcripts will be supplied to a respondent or
respondents and to the public by the official reporter at rates not to exceed the maximum rates
fixed by contract between the Commission and the reporter.

Upon the joining of issue in a proceeding upon complaint issued by the Commission, the
taking of evidence 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 hearing before the
Commission, a Commissioner, or a trial examiner, shall be given by the Commission to counsel
of record or to parties.
RULE XIII. HEARINGS ON INVESTIGATIONS
When a matter for investigation is referred to a single Commissioner, or examiner, for
examination or report, such Commissioner, or examiner, if author-

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

ized by the Commission, may conduct or hold conferences or hearings thereon, 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 shall be public, unless otherwise ordered by the Commission.
RULE XIV. TRIAL EXAMINERS
When evidence is to be taken in a proceeding upon complaint issued by the
Commission, a trial examiner may 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 may from time to time be adjourned.
The trial examiner is charged with the duty of conducting a fair and impartial
hearing and of maintaining order in form and manner consistent with the dignity of the
Commission. He will note on the record any disregard by counsel of his rulings on
matters of order and procedure and where he deems it necessary shall make special
written report thereof to the Commission. In the event that counsel supporting the
complaint or counsel for any respondent shall be guilty of disrespectful, disorderly, or
contumacious language or conduct In connection with any hearing, the trial examiner
may suspend the proceeding and submit to the Commission his report thereon, together
with his recommendations as to whether any rule should be issued to show cause why
such counsel should not be suspended or disbarred pursuant to Rule VII or subjected
to other appropriate action in respect thereto. A copy of such trial examiner’s report
shall be furnished to any counsel upon whose language or conduct such report Is made,
and the Commission will take disciplinary action only after an opportunity for hearing
has been accorded such counsel.
RULE XV. SUBPOENAS
Subpoenas requiring the attendance of witnesses from any place in the United States,
at any designated place of hearing, may be issued by the presiding trial examiner or a
member of the Commission. Application therefor may be made either to the Secretary
of to the presiding trial examiner.
Subpoenas for the production of the documentary evidence will be issued only upon
application in writing to the Commission. The application must specify, as exactly as
possible the documents desired, and show their competence, relevancy, and
materiality. The application by a respondent shall be verified by oath or affirmation.
RULE XVI. WITNESSES
Witnesses at formal hearings shall be examined orally. Witnesses summoned in
support of the complaint shall be paid the same fees and mileage as are paid witnesses
in the courts of the United States.
Witnesses whose depositions are taken, and the persons taking such depositions,
shall severally be entitled to the same fees as are paid for like services In the courts of

the United States.
Witness fees and mileage, and fees for depositions, shall be paid by the party at
whose instance witnesses appear.
RULE XVII. 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 evidence before a trial examiner, a Commissioner, or the
Commission, shall be in short form, stating the grounds of objections relied upon, and
the transcript shall not include argument or debate thereon except as ordered by the
trial examiner, a Commissioner, or the Commission. Rulings on such objections shall
be part of the transcript.

RULES OF PRACTICE

193

RULE XIX. DEPOSITIONS
The Commission may order evidence to be taken by disposition 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 deposition S hall be taken except after at least five (5)
days’ notice to the parties within the United States, and fifteen (15) days’ notice when
deposition is to be taken elsewhere.
Any party desiring to take the deposition of a 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
bef ore 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 b y 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 (8)
inches by ten and one-half (10 ½) inches; left margin, one and one-half (l ½) inches;
right margin, one (1) inch.
Depositions shall be bound at left side only.
RULE XIX. ADMISSION OF FACTS AND OF GENUINENESS OF
DOCUMENTS
At any time after answer has been filed counsel or parties In any controversy may
serve upon the opposing side a written request for the admission of the genuineness
and authenticity of any relevant documents described in and exhibited with the request
or the admission of the truth of any relevant matters of fact set forth in such
documents.
Copies of the documents shall be delivered with the request unless copies have
already been furnished. Each of the matters on which an admission is so requested
shall be deemed admitted unless, within a period designated within the request, not
less than ten days after service thereof or within such further time as the Commission
or the trial examiner may allow on motion and notice, the party so served serves upon
the party making the request, a sworn statement either denying specifically the matters

of which an admission is requested, or setting forth in detail the reasons why he can
neither truthfully admit nor deny those, matters. Service required hereunder may be
made upon a respondent either by registering and mailing or by delivering a copy of
the documents to be served to the respondent or his attorney, or by leaving a copy at
the principal office or place of business of either. Service upon the attorney supporting
the complaint may be either by registering and mailing or by delivering a copy of the
documents to be served to such attorney.
RULE XX. TRIAL EXAMINER’S REPORT
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
evidence.
A copy of such report shall forthwith be served upon each attorney for the
Commission, upon each attorney for respondents, and upon each respondent not
represented by counsel.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

The trial examiners’ reports is not a report or finding of the Commission. Such
report is advisory only and is not binding upon the Commission.
RULE XXI. EXCEPTIONS
Attorneys or other persons served with a copy of the report of the trial examiner,
within ten (10) days after receipt of such copy of report, file, in writing, their
exception, if any, to the report.
They shall specify the particular part 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.
A copy of such exceptions shall forthwith be served upon each of the other attorneys
and respondents who were served with a copy of the trial examiner’s report.
If exceptions are to be argued, they shall be argued at the time of final argument
upon the merits.
RULE XXII. 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 of evidence, announce to
attorneys for the Commission and for respondents that the trial examiner will receive
within such time as he shall fix, a statement in writing from attorneys for the
Commission and attorneys for respondents setting forth, in concise outline, the
contentions of each as to the facts proved in the proceeding. The time so fixed shall
not change the times limited in Rule XX for filing report by the trial examiner or Rule
XXIII for the filing of briefs.
Copy of any such statements shall be furnished to opposing counsel by the party
filing the statement, but such statements are not to be argued before the trial examiner,
and are not a part of the record of the proceeding.
RULE XXIII. BRIEFS
Filing.--Any party to a proceeding may file a brief with the Secretary of the
Commission, in support of his contentions, within the time limits fixed by these rules.
Briefs not filed on or before the time fixed in the rules will be received 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 shall be filed by the attorney supporting the complaint within
twenty (20) days after service upon him of a 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.
Where respondent shall have filed an answer admitting all material allegations of
fact, the time so limited shall begin to run at the time of filing such answer.
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 in support of the complaint, shall contain,
in the following order:
(a) A concise abstract or statement of the case.
(b) A brief of the argument, exhibiting a clear statements 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

RULES OF PRACTICE

195

be supplemented by an alphabetical list of all cases referred to, with references to
pages where references are cited.
Reply briefs.--Reply brief in support of the complaint shall be filed only with
permission of the Commission, and shall be strictly in answer to brief on behalf of
respondent.
No further reply breif on behalf of respondent shall be filed.
Form.--Briefs shall be printed, multigraphed, or otherwise neatly processed on good
unglazed white paper in type not smaller than ten (10) point double leaded, citations
and quotations single leaded; footnotes not less than eight (8) point leaded. Type page
shall not be more than twenty-nine: (29) picas wide by approximately forty-eight (48)
picas deep and trimmed page shall be seven (7) inches by ten (10) inches, with an
inside margin of not less than one (1) inch.
Signing.--At least one copy of each brief shall be signed in ink, by the respondent
or his duly authorized attorney, as prescribed in Rule XII.
RULE XXIV. ORAL ARGUMENTS
Oral arguments before the Commission shall be had as ordered, on written
application of the chief trial counsel of the Commission, or of the respondent, or of
attorney for respondent, filed within fifteen (15) days after filing of brief on behalf of
respondent.
Appearance of additional counsel in a case will not constitute grounds for enlarging
time for oral argument.
RULE XXV. REPORTS SHOWING COMPLIANCE WITH ORDERS AND WITH
STIPULATIONS
In every case where an order to cease and desist is issued by the Commission for the
purpose of preventing violations of law and in every instance where the Commission
approves and accepts a stipulation in which a party agrees to cease and desist from the
unlawful methods, acts , or practices involved, the respondents named in such orders
and the parties so stipulating shall file with the Commission, within sixty days of the
service of such order and within sixty days of the approval of such stipulation, a report,
in writing, setting forth in detail the manner and form in which they have complied
with said order or with said stipulation ; provided, however, that if within the said
sixty (00) day period respondent shall file petition for review in a circuit court of
appeals, the time for filing report of compliance will begin to run de novo from the
final judicial determination ; and provided further, that where the order prevents the
use of a false advertisement of a food, drug, device, or cosmetic, which may be injurious to health because of results from such use under the conditions prescribed in
the advertisement, or under such conditions as are customary or usual, or if the use of
such advertisement is with intent to defraud or mislead, an interim report stating
whether and how respondents intend to comply shall be filed within ten days.
Within its sound discretion, the Commission requires any respondent upon whom
such order has been served may and any party entering into such stipulation, to file
with the Commission, from time to time thereafter, further reports in writing, setting
forth in detail the manner and form in which they are complying with said order or
with said stipulation.
Reports of compliance shall be signed in ink by respondents or by the parties

stipulating.
RULE XXVI. REOPENING PROCEEDINGS
In any case where an order to cease and desist or an order dismissing a proceeding
has been issued by the Commission , the Commission may (a) in the case of an order
to cease and desist , at anytime until the transcript of the record in the proceeding has
been filed in a circuit court of appeals of the United States upon a petition for review
or enforcement, or after the expiration of the statutory time for filing of a petition for
review where no such petition has been filed, or (b) in the case of an order dismissing
a proceeding at any time thereafter, give reasonable notice to all respondents and to
all intervenors, if any, of a hearing as to whether the said proceeding should be reopened. If after said hearing the Commission shall have reason to believe that
conditions of fact or of law have so changed since the said order was made as to
require, or that the public interest requires, the reopening of such proceeding, the
Commission will issue an order for the reopening of the same.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

RULE XXVII. TRADE PRACTICE CONFERENCE PROCEDURE
(a) Purpose.--The trade practice conference procedure has for its purpose the
establishment, by the Commission, of trade practice rules in the interest of industry
and the purchasing. public. This procedure affords opportunity for voluntary
participation by industry groups or other interested parties in the formulation of rules
to provide for elimination or prevention of unfair methods of competition, unfair or
deceptive acts or practices and other illegal trade practices. They may also include
provisions to foster and promote fair competitive conditions and to establish standards
of ethical business practices in harmony with public policy. No provision or rule,
however, may be approved by the Commission which sanctions a practice contrary to
law or which may aid or abet a practice contrary to law.
(b) When authorized.--Trade practice conference proceedings may be authorized by
the Commission upon its own motion or upon application therefor whenever such
proceedings appear to the Commission to be in the interest of the public. In authorizing
proceedings, the Commission may consider whether such proceedings appear to have
possibilities (1) of constructively advancing the best interests of industry on sound
competitive principles in consonance with public policy, or (2) of bringing about more
adequate or equitable observance of laws under which the Commission has
jurisdiction, or (3) of otherwise protecting or advancing the public interest.
(c) Application.--Application for a trade practice conference may be filed with the
Commission by any interested pers on, party or group. Such application shall be in
writing and be signed by the applicant or the duly authorized representative of the
applicant or group desiring such conference. The following information, to the extent
known to the applicant, shall be furnished with such application or in a supplement
thereto:
(1) A brief description of the industry, trade, or subject to be treated.
(2) The kind and character of the products involved.
(3) The size or extent and the divisions of the industry or trade groups concerned.
(4) The estimated total annual volume of production or sales of the commodities
involved.
(5) List of membership of the industry or trade groups concerned in the matter.
(6) A brief statement of the acts, practices, methods of competition or other trade
practices desired to be considered, or drafts of suggests d trade practice rules.
(7) Evidence of authority to so act, where the application is signed by a person or
organization acting in behalf of orders.
(d) Informal discussions with members of the Commission’s staff.--Any interested
person or group may, upon request, be granted opportunity to confer in respect to any
proposed trade practice conference with the Commission’s trade practice conference
division, either prior or subsequent to the filing of any such application. They may also
submit any pertinent data or information which they desire to have considered. Such
submission shall be made during such period of time as the Commission or its duly
authorized official may designate.
(e) Industry conferences.--Reasonable public notice of the time and place of any
such authorized conference shall be issued by the Commission. A member of the
Commission or of its staff shall have charge of the conference and shall conduct the
conference pursuant to direction of the Commission and in such manner as will

facilitate the proceeding and afford appropriate consideration of matters properly
coming before the conference. A transcript of the conference proceedings shall be
made, which, together with all rules resolutions, modifications, amendments or other
matters offered, shall be filed in the office of the Commission and submitted for its
consideration.
(f) Public hearing on proposed rules.--Before final approval by the Commission of
rules for an industry, and upon such reasonable public notice as to the Commission
seems appropriate, further opportunity shall be afforded by the Commission to all
interested persons, corporations or other organizations, including consumers, to submit
in writing relevant suggestions or objections and to appear and be heard at a
designated time and place.
(g) Promulgation of rules.--When trade practice rules shall have been finally
approved and received by the Commission, they shall be promulgated by official

RULES OF PRACTICE

197

order of the Commission and published, pursuant to law, in the Federal Register. Said
rules shall become operative thirty (30) days from date of promulgation or at such
other time as may be specified by the Commission. Copies of the final rules shall be
made available at the office of the Commission. Under the procedure of the
Commission a copy of the trade practice rules as promulgated by the Commission is
sent to each member of t he industry whose name and address is available, together
with an acceptance form providing Opportunity to such member to signify his
intention to observe the rules in the conduct of his business.
(h) Violations.--Complaints as to the use, by any person, corporation or other
organization, of any act, practice or method inhibited by the rules may be made to the
Commission by any person having in-formation thereof. Such complaints, if warranted
by the facts and the law, will receive the attention of the Commission in accordance
with the law. In addition, the Commission may act upon its own motion in proceeding
against the use of any act, practice or method contrary to law.

STATEMENT OF POLICY
STATUS OF APPLICANT OR COMPLAINANT
The so-called “applicant” or complaining party has never been regarded as a party
in the strict sense. The Commission acts only in the public interest. It has always been
and now is the rule not to publish or divulge the name of an applicant or complaining
party, and such party has no legal status before the Commission except where allowed
to intervene as provided by the statute.
POLICY AS TO PRIVATE CONTROVERSIES
It is the policy of the Commission not to institute proceedings against alleged unfair
methods of competition or unfair or deceptive acts or practices where the alleged
violation of law is a private controversy redressable in the courts, except where said
practices tend to affect the public. In cases where the alleged injury is one to a
competitor only and is redressable in the courts by an action by the aggrieved
competitor and the interest of the public is not involved, the proceeding will not be
entertained.
SETTLEMENT OF CASES BY STIPULATION
Whenever the Commission Shall have reason to believe that any person has been or
is using unfair methods of competition or unfair or deceptive acts or practices in
commerce, and that the interest of the public will be served by so doing, it may
withhold Service of complaint and extend to the person opportunity to execute a
stipulation satisfactory to the Commission, in which the person, after admitting the
material facts, promises and agrees to cease and desist from and not to resume such
unfair methods of competition or unfair or deceptive acts or practices. All such
stipulations shall be matters of public record, and shall be admissible as evidence of
prior use of the unfair methods of competition or unfair or deceptive acts or practices
involved in any subsequent proceeding against such person before the Commission.
It is not the policy of the Commission to thus dispose of matters involving intent to
defraud or mislead; false advertisement of food, drugs, devices, or cosmetics which are
inherently dangerous or where injury is probable; suppression or restraint of
competition through conspiracy or monopolistic practices; violations of the Clayton
Act; violations of the Wool Products Labeling Act of 1939 or the rules promulgated
thereunder; or where the Commission is of the opinion that such procedure will not be
effective in preventing continued use of the unlawful method, act, or practice. The
Commission reserves the right in all cases, for any reasons which it regards as
sufficient, to withhold this privilege.
WOOL PRODUCTS LABELING ACT
In the handling of cases before the Commission arising under this act, the practice

and procedure of the Commission, insofar as applicable, will be as provided in cases
arising under the Federal Trade Commission Act.
REPORTS OF TRIAL EXAMINERS
The policy of the Commission is that reports of trial examiners shall not be open to
public inspection or to publication until after the publication of the Corn-mission’s
decisions in the cases in which such reports are made. During this time they are open
only to the Commission, to counsel and to parties respondent in such cases.
198
INVESTIGATIONS BY THE COMMISSION, 1915-41
Since its establishment in 1915, the Federal Trade Commission has conducted
numerous general inquiries which are alphabetically listed and briefly described in the
following pages under more than 115 different headings. 1 They were made at the
request of the President, the Congress, the Attorney General, establishments such as
the War Production Board, the Office of Price Administration, or other Government
agencies, or on motion of the Commission pursuant to the Federal Trade Commission
Act.
Published reports of the Commission in connection with these inquiries are also
listed, including the Senate and House document members for those of the reports that
were ordered printed by Congress. Publications not designated by such document
members were published as Commission reports. Although available in reference
libraries, many of the publications mentioned are now out of print and are so
designated herein. Those available my be attained from the Superintendent of
Documents, Government Printing Office, Washington, D. C.
Accounting Methods and Practices.--See Distribution Cost Accounting.
Accounting Systems.--This inquiry was made on motion of the Commission, with
a view to improving accounting practices, and led to the publication in 1916 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).
Agricultural Implement and Machinery Industry.--Adoption of the resolution
authorizing this inquiry [Pub. Res. No.130 (S. J. Res. No. 277), Seventy-fourth
Congress, second session, approved June 24, 1936] was a result of widespread
complaints in 1936 and prior years concerning the disparity between prices of farm
products, which, in 1932, reached record lows, and the prices of many farm
implements and machines and their repair parts, which had been maintained at a high
level. The report showed that a concentration of control in the hands of a few large
companies had resulted largely from acquisition of the capital stock or of the assets of
competitors prior to enactment of the Clayton Act and thereafter In the purchase of
assets of competitors rather than in the purchase of their capital stock. The
Commission recommended amendment of section 7 of the Clayton Act as related on
pages 19 and 29 of its annual report for 1938. The report, Agricultural Implement and
Machinery Industry, was submitted to Congress June 6, 1938. In two parts and
subsequently printed in one volume as House Document No.702, Seventy-fifth
Congress, third session (1,176 pages). (See also Farm Implements and independent
Harvester.)

Agricultural Income.--Public Resolution No.61, Seventy-fourth Congress, approved August 27, 1935, called for an Inquiry with respect to “principal farm
products,” such as wheat, cotton, tobacco, livestock, milk, and potatoes. This
resolution was amended by Public Resolution No.112, Seventy-fourth Congress,
approved June 20, 1936, extending the investigation to “table and juice grapes, fresh
fruits and vegetables.” The chief topics to be 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
1

199

The Wartime Cost Finding inquiry (see p. 221), included approximately 370 cost investigations.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

which cooperative agencies had entered into the processing and marketing of such
farm products.
Five reports were submitted to Congress: (1) Interim Report of the Federal Trade
Commission on the Agricultural Income Inquiry, December 26, 1935, printed as House
Document No.380, Seventy-fourth 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)
Agricultural Income Inquiry, Part I, Principal Farm Products, March 2, 1937, of
which the first two chapters, (1) summary, and (2) conclusions and recommendations,
were first printed as Senate Document No. 54, Seventy-fifth Congress, first session (40
pages), the complete report (1,134 pages) later being printed by the Commission; (4)
Part II, Fruits, Vegetables and Grapes, June 10, 1937, printed by the Commission
(906 pages), and Part III, Supplementary Report, November 8, 1937, printed by the
Commission (154 pages). (See also Price Deflation.)
Automobiles.--See Motor Vehicle Industry.
Bakeries.--On the basis of President Wilson’s order of February 7, 1917, calling for
a general inquiry relating to foodstuffs, the Commission investigated the cost of bread
and other related factors, and made a brief report to the United States Food
Administration, November 3, 1917. With other data the report was printed by that
Administration as United States Food Administration, Report of the Federal Trade
Commission on Bakery Business in United States, (pp. 5-13, out of print). (See Bread
and Flour, Flour Milling, and Food Investigation.)
Bread and Flour.--Senate Resolution No. 163, Sixty-eighth Congress, first session,
adopted February 16, 1924, directed the Commission to investigate the production,
distribution, transportation, and sale of flour and bread, showing costs, prices, and
profits at each stage of the 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. Reports were:
Competitive Conditions in Flour Milling, submitted May 3, 1926, and printed as
Senate Document No. 97, Seventieth Congress, first session (140 pages) ; Bakery
Combines and Pro fits, submitted February 11.1927, and printed as Senate Document
No.212, Sixty-ninth Congress, second session (95 pages) ; and Competition and Profits
in Bread and Flour, submitted January 11, 1928, and printed as Senate Document No.
98, Seventieth Congress, first session (509 pages). A supplementary report, Conditions
in the Flour Milling Business, covering data withheld during court proceedings
(Millers’ National Federation against Federal Trade Commission) was submitted 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.--The high prices of calcium arsenate, a poison used to destroy
the cotton boll weevil, led to this inquiry, which was made pursuant to Senate
Resolution No. 417, Sixty-seventh Congress, fourth session, adopted January 23, 1923.
It appeared that the cause of such prices was the sudden increase in demand rather than
any restraints of trade. The report, Calcium Arsenate Industry, was submitted to the
Senate March 3, 1923, and printed as Senate Document No.345, Sixty-seventh
Congress, fourth session (21 pages).

Cement Industry.--In response to Senate Resolution No.448, Seventy-first
Congress, third session, adopted February 16, 1931, the Commission investigated
competitive conditions and distributing processes in the cement industry to determine
the existence, if any, of unfair trade practices or violations of the antitrust laws, and
submitted its report, Cement Industry, to the Senate, June 9, 1933. Printed as Senate
Document No. 71, Seventy-third Congress, first session (160 pages), 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 in activities
which strengthened the system’s price effectiveness ; that dealers’ associations had
engaged in practices designed to restrict sales to those recognized as legitimate dealers
by the associations, and that such practices also tended to control sales terms. The
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. (See Price Bases and
Steel Investigations herein for further reference to basing-point systems.)

INVESTIGATIONS, 1915-1941

201

Chain Stores.--This inquiry was made pursuant to Senate Resolution No.224,
Seventieth Congress, first session, adopted May 12, 1928. 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, and the existence of any 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 almost every phase of chain-store operation.
Subtitles 1 of the chain-store reports, their dates of submittal, and the document
numbers under which they were printed, are as follows:
Cooperative Grocery Chains, July 13,
1931, Senate Document No.12, Seventysecond Congress, first session (199
pages).
Wholesale Business of Retail Chains,
December 22, 1931, Senate Document
No. 29, Seventy-second Congress, first
session (38 pages).
Sources of Chain-Store Merchandise,
December 22, 1931, Senate Document
No. 30, Seventy-second Congress, first
session (76 pages).
Scope of the Chain-Store Inquiry,
December 22, 1931, Senate Document
No. 31, Seventy-second Congress, first
session (33 pages).
Chain-Store Leaders and Loss Leaders, January 15, 1932, Senate Docu
ment No. 51, Seventy-second Congress,
first session (57 pages).
Cooperative Drug and Hardware Grocery,
Chains, April 18, 1932, Senate Document No. 82, Seventy-second Congress
first session (28 pages).
Growth and Development of Chain
Stores, June 11, 1932, Senate Document No.100, Seventy-second Congress,
first session (81 pages).
Chain-Store Private Brands, Septemher 26, 1932, Senate Document No.142,
Seventy-second Congress, second session, (126 pages).
Short Weighing and Over Weighing
in Chain and Independent Grocery
Stores, December 15, 1932, Senate Document No.153, Seventy-second Congress,
second session (42 pages).
Sizes of Stores of Retail Chains, December 21, 1932, Senate Document No.
156, Seventy-second Congress, second
session (50 pages).
Quality, of Canned Vegetables and
Fruits (Under Brands of Manufacturers, Chains, and Other Distributors),
January 13, 1933, Senate Document No.

Gross Profit and Average Sales per
Store of Retail Chains, February 2,
1933, Senate Document No. 178,
Seventy-second Congress, second session
(75 pages).
Chain-Store Manufacturing, April 5,
1933, Senate Document No.13, Seventythird Congress, first session (129
pages).
Sales, Costs and Prof fits of Retail
Chains, April 22, 1933, Senate Docu ment No. 40, Seventy-third Congress,
first session (120 pages).
Prices and Margins of Chain and
Independent Distributors, Washington,
D. C.--Grocery, May 15, 1933, Senate
Document No. 62, Seventy-third Congress, first session (98 pages).
Prices and Margins of Chain and Independent Distributors, Memphis-June 8, 1933, Senate Document
No. 69, Seventy third Congress, first
session (44 pages)
Prices and Margins of Chain and
Independent Distributors, Detroit-Grocery, June 22, 1933, Senate Document No. 81, Seventy-third Congress,
second session (42 pages).
Prices and Margins of Chain and In
dependent Distributors, Cincinnati--Groccery, November 12, 1933, Senate Document No. 88, Seventy-third Congress,
second session (50 pages).
Prices and Margins of Chain and Independent Distributors, CincinnatiDrug, December 30, 1933, Senate Document No. 95, Seventy-third Congress,
second session (43 pages).
Prices and Margins of Chain and Independent Distributors, Detroit-Drug,
December 30, 1933, Senate Document
No. 96, Seventy-third Congress, second
session (51 pages).
Prices and Margins of Chain and
Independent Distributors, MemphisDrug, December 30, 1933, Senate Docu

170, Seventy-second Congress, second
session (53 pages).

ment No. 97, Seventy-third Congress,
second session (40 pages).

1 The Commission published Chain Store System of Marketing and Distribution (Progress Report), May
12, 1930, printed as S. Doc. No.146, 71st Cong., 2d sess. (6 pp.).

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Prices and Margins of Chain and Independent Distributors, Washington,
D. C-Drug, December 30, 1933, Senate
Document No. 98, Seventy-third Congress, second session (40 pages).
Chain-Store Wages, July 15, 1933, Senate
Senate Document No. 82, Seventythird Congress, second session (116
pages).
Chain-Store Advertising, October 14,
1933, Senate Document No.84, Seventythird Congress, second session (89
pages).
Chain-Store Price Policies, October 20,
1933, Senate Document No.85, Seventythird Congress, second session (146
pages).
Special Discounts and Allowances to
Chain and Independent Distributors-Tobacco Trade, October 26, 1933, Senate
Document No. 86, Seventy-third Congress, second session (118 pages).
Special Discounts and Allowances to
Chain and Independent Distributors-Grocery Trade, November 14, 1933, Senate Document No. 89, Seventy-third
Congress, second session (44 pages).
Special Discounts and allowances to
Chain and In dependent Distributors--

Drug Trade, November 24, 1933, Senate
Document No. 94, Seventy-third Congress, second session (98 pages).
Invested Capital and Rates of Return
of Retail Chains, October 29, 1933,
Document No.87, Seventy-third
Congress, second session (142 pages).
Service Features in Chain Stores,
November 20, 1933, Senate Document
No.91, Seventy-third Congress, second
session (67 pages).
The Chain Store in the Small Town,
November 22, 1933, Senate Document
No.93, Seventy-third Congress, second
session (112 pages).
Miscellaneous Financial Results of
Retail Chains, December 31, 1933,
Senate Document No. 99, Seventy-third
Congress, second session (93 pages).
State Distribution of Chain Stores,
1913-28, November 16, 1933, Senate
Document No. 130, Seventy-third Congress, second session (55 pages).
Final Report on the Chain-Store
Investigation, December 14, 1934, Sen
ate Document No. 4, Seventy-fourth
Congress, first session (110 pages, out
of print).

Coal, Anthracite and Bituminous.--In response to Senate Resolution No.217, Sixty-fourth
Congress, first session, adopted June 22, 1916, and Senate Resolution No.51, Sixty-fifth
Congress, first session, adopted May 1, 1917, the Commission investigated a rapid advance in
the prices of anthracite at the mines, as compared with costs, and the overcharging of anthracite
jobbers and dealers. Current reports of operators’ and retailers’ selling prices were obtained, and
this was believed to have substantially benefited the consumer. A preliminary report, Anthracite
Coal Prices, submitted to Congress May 4, 1917, was printed as Senate Document No.19, Sixtyfifth Congress, first session (4 pages, out of print) ; the general report and summary, Anthracite
and Bituminous Coal, submitted to Congress June 19, 1917, was printed as a Commission
publication and as Senate Document No.50, Sixty-fifth Congress, first session (420 pages, out
of print) ; and the summary, under the title Anthracite and Bituminous Coal Situation, dated
June 19, 1917, was printed separately as House Document No. 193, Sixty-fifth Congress, first
session (29 pages, out of print).
Coal, Anthracite.--This inquiry, made on motion of the Commission, dealt with premium
prices of anthracite coal charged by certain mine operators ; the premium prices and gross
profits of wholesalers In the latter part of 1923 and early in 1924 ; 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 was submitted to Congress
July 6, 1925, and printed (97 pages).
Coal, Bituminous.--House Resolution No.352, Sixty-fourth Congress, first session, adopted
August 18, 1916, called for an Investigation of the alleged depressed condition of the coal
industry. Subsequent to adoption of the resolution there was a marked advance In prices, and
the Commission, In a preliminary report, suggested various measures for Insuring a more
adequate supply at reasonable prices. The Preliminary Report by the Federal Trade Commission
on the Production and Distribution of Bituminous Coal was submitted to the House on May 19,
1917, and printed as House Document No. 152, 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 submitted to Congress in the belief
that the Information would be of timely value in the consideration of pending legislation
regarding the coal trade. The data covered the years 1916 to 1921, inclusive. Reports were
submitted to Congress in two parts under the title Investment and Profit in Soft-Coal Mining.
Part

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I. Summary and Conclusions was submitted May 31, 1922, and Part II. Explanatory and
Statistical Material Supporting Part I, July 6, 1922. They were published by the Commission
In one volume (222 pages), and by the Senate in two volumes as Senate Document No.207,
Sixty-seventh Congress, second session (Part I, 10 pages, and Part II, 208 pages).
Coal Reports--Cost of Production.--President Wilson, prior to passage of the Lever Act in
August 1917, called upon the Commission 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. After
the war this information was summarized for the principal coal-producing States or regions in
a series of reports dated June 30, 1919, and printed under the titles: Cost Reports of the Federal
Trade Com mission--Coal . No. 1. Pennsylvania--Bituminous (103 pages) ; No. 2.
Pennsylvania--Anthracite (145 pages, out of print) ; No. 3. Illinois--Bituminous (127 pages) ;
No. 4. Alabama, Tennessee, and Kentucky-Bituminous (210 pages) ; No. 5, Ohio, Indiana, and
Michigan-Bituminous (288 pages); No. 6, Maryland, West Virginia, and Virginia-Bituminous
(286 pages) ; and No. 7. Trans-Mississippi States--Bituminous (459 pages) . (See also WarTime Cost Finding.)
Coal--Current Monthly Reports.--In December 1919, the Commission, provided with a
special appropriation by Congress, initiated a system of current monthly returns from the softcoal industry somewhat similar to those required from coal-producing companies during the
World War. An injunction to prevent the Commission from calling for such reports (denied
about 7 years later) led to their abandonment. Reports of the results were published in monthly
bulletins beginning with Federal Trade Commission, Bulletin No. 1--Bituminous Coal-Preliminary January, 1920, Costs, published April 20, 1920 ; and continuing with Bulletin No.
2--Preliminary February, 1920, Costs, May 24, 1920 ; Bulletin No. 3--Preliminary March,
1920, Costs. June 25, 1920 ; Bulletin No. 4--Preliminary April, 1920, Costs, July 26, 1920 ;
Bulletin No. 5--Preliminary May, 1920, Costs, August 25, 1920 ; Bulletin. No. 6--Preliminary
June, 1920, Costs, October 30, 1920 ; Federal Trade Commission, Bituminous Coal--Quarterly
Report No. 1, Revised Costs--First Quarter of 1920, August 25, 1920 ; and Quarterly Report
No. 2, Revised Costs--Second Quarter of 1920, December 6, 1920. (Processed, all out of print.)
Coal--Retail Situation.--An inquiry was made on motion of the Commission into the retail coal
situation In Washington, D. C. A release was issued August 11, 1917, entitled Washington, D.
C., Retail Coal Situation (5 pages, processed, out of print).
Commercial Bribery.--On motion of the Commission an inquiry was made Into the
prevalence of bribery of employees of customers as a method of obtaining trade. A Special
Report on Commercial Bribery, containing recommendations for legislation striking at this
practice, was submitted to congress on May 15, 1918. and printed as House Document No.1107
Sixty-fifth Congress, second session (3 pages, out of print) . The Commission also reported on
this subject In a letter of August 22, 1918. to Senator Duncan U. Fletcher, of Florida, which was
printed under the title Commercial Bribery, as a Senate document (unnumbered) . Sixty-fifth
Congress, second session (36 pages, out of print). On March 18, 1920, the Commission
submitted to the Senate a report entitled Commercial Bribery, which was printed as Senate
Document No.258, Sixty-sixth Congress, second session (7 pages, out of print).
Cooperation in American Export Trade.--See Foreign Trade--Cooperation In American

Export Trade.
Cooperation in Foreign Countries.--This Investigation, Initiated on motion of the
Commission, involved inquiries made by the Commission regarding the cooperative movement
in 15 European countries. The report, Cooperation in Foreign Countries, containing
recommendations for further development of cooperation in the United States, was submitted
to the Senate November 29, 1924, and printed as Senate Document No.171, Sixty-eighth
Congress, second session (202 pages, out of print).
Cooperative Marketing.--This inquiry was made pursuant to Senate Resolution No. 34,
Sixty-ninth Congress, special session, adopted March 17, 1925.
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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 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 submitted to the Senate April 30, 1928, and printed as
Senate Document No.95, Seventieth Congress, first session (721 pages, out of print).
Copper.--This inquiry was a part of the wartime work done at the direction of President
Wilson in 1917 and 1918. 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 Cost Reports of the Federal Trade Commission-Cop per (26 pages, issued June 30, 1919). (See also War-time Cost Finding.)
Corporation Reports.--A Commission resolution adopted December 12, 1939, authorized
the periodic collection of annual or special reports of corporations engaged in interstate
commerce except banks and common carriers, in accordance with the Commission’s powers
conferred by Section 6 of the Federal Trade Commission Act.
The reports were published at frequent intervals, the first appearing during October 1940.
They have presented significant facts regarding business conditions and financial results of the
more important corporations operating in many industries, without disclosing the business
statistics of any individual corporation. As of June 30, 1941, the Commission had prepared 76
industrial corporation reports covering 1939 operations. These reports included the combined
operations of 780 corporations with an average total investment, after deduction of reported
appreciation of assets, aggregating $28,138,187,401 ; with total sales amounting to
$24,932,624,668 ; and a combined current net profit, after deduction of interest and all taxes,
amounting to $2,127,475,966. The aggregate sales for the 780 corporations represented
approximately 63.7 percent of the total value of products shown by the reports of the Bureau
of the Census for the corresponding industry groups.
Cost Accounting.--See Distribution Cost Accounting and Accounting Systems.
Cost of Living.--At the direction of President Wilson, the Commission called a conference
on April 30, 1917, to consider the rapid rise of war-time prices. Official delegates of the various
States were invited. The proceedings, entitled High Cost of Living, were printed (119 pages,
out of print).
Cost of Living.--President Roosevelt, in a published letter dated November 16, 1937,
requested the Commission to investigate living costs. A resolution of the Commission,
concerning its undertaking of the investigation, was adopted November 20, 1937. A few months
thereafter the Commission submitted to the President a confidential report on the inquiry.
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 submitted to the Senate January
20, 1925, and printed, as Senate Document No.194, Sixty-eighth Congress, second session (38
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.--Senate Resolution No.136, Seventy-first Congress, first session,
adopted October 21, 1929, and Senate Resolution 147, Seventy-first Congress, first session,
adopted November 2, 1929, directed the Commission to investigate certain practices of
corporations operating cottonseed-oil mills. The purpose was to determine the existence of
unlawful combinations seeking to lower and fix prices of cottonseed and seeking to sell
cottonseed 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

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the purpose of destroying competitive markets as well as for depressing or controlling prices
paid to seed producers. A preliminary report, Investigation of the Cottonseed Industry, was
submitted to the Senate February 28, 1930, and printed as Senate Document No. 91, Seventyfirst Congress, second session (4 pages, out of print). The final report (207 pages) was
submitted to the Senate on May 19, 1933. This report and 12 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, Cotton Trade,
discussed especially the causes of the decline in cotton prices during the period 1920-22. The
report was submitted to Congress February 26, 1923, and printed as Senate Document No.311,
Sixty-seventh Congress, fourth session (28 pages, out of print).
Cotton Trade.--An inquiry made pursuant to Senate Resolution No. 429, Sixty-seventh
Congress, fourth session, adopted January 31, 1923, was combined with the cotton trade inquiry
mentioned above. The Commission recommended that Congress enact legislation providing for
some form of southern warehouse delivery on New York contacts, and as part of such 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. On June 28, 1924, the special
warehouse committee of the New York Cotton Exchange adopted the Commission’s recommendations with reference to the southern delivery on New York contracts, including the
contiguous grade contract. Entitled The Cotton Trade, the Commission report containing both
the report and the transcript of hearings was submitted to the Senate April 28, 1924, and printed
in 2 volumes as Senate Document No. 100, Sixty-eighth Congress, first session (Part I, 280
pages, and Part II, 230 pages, both out of print).
Distribution Cost Accounting.--In August 1939, the Commission directed an inquiry into
the accounting methods of business in order to ascertain how these may better serve the needs
of business management and the public, to provide legislative bodies a basis for guidance in the
enactment and revision of legislation, and to make more effective the administration of existing
legislation
The Commission made a special study of distribution cost accounting, which is concerned
with the costs of such distribution functions as selling and sales promotion, warehousing,
handling and delivery, credit and collection activities and all other office, supervising and
administrative activities necessary to the proper functioning of the distribution processes.
A report by the Commission on Case Studies in Distribution Cost Accounting for
Manufacturing and Wholesaling, was transmitted to Congress on June 23, 1941, and printed as
House Document No. 287, Seventy-seventh Congress, first session.
Distribution Methods and Costs.--This inquiry, authorized under a Commission resolution
dated June 27, 1940, was undertaken to develop information respecting the methods and
practices used and the costs incurred in distribution, with special attention to trade usages, trade
barriers, laws, charges and other factors that affect the cost of distributing various types of
manufactured goods. The study was in progress at the end of the fiscal year 1940-41.
Du Pont Investments.--Pursuant to its motion of July 29, 1927, the Commission Investigated
reported acquisitions by E. I. du Pont de Nemours & Co., of stock of the United States Steel
Corporation, together with previously reported holdings in General Motors Corporation. The
purpose was to ascertain the facts and their probable economic consequences. The Report of
the Federal Trade Commission on Du Pont Investments (43 pages), together with views of

Commissioner William E. Humphrey on the resolution and on the report (3 pages), were issued
February 1, 1929, In processed form.
Electric and Gas Utilities.--See Electric Power below, Interstate Power Transmission, and
Utility Corporations.
Electric Power--Tills inquiry, made pursuant to Senate Resolution No.329, Sixty-eighth
Congress, second session, adopted February 9, 1925, resulted in two reports on the control of
the electric-power industry. The first dealt with the organization, control, and ownership of
commercial electric-power companies, and showed, incidentally, the dangerous degrees to which
pyramiding had been

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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 electrical equipment was shown. These reports were submitted to the Senate February
21, 1927, and January 12, 1928. Electric Power Industry--Control of Power Companies was
printed as Senate Document No. 213, Sixty-ninth Congress, second session (272 pages), and
Supply of Electrical Equipment and Competitive Conditions as Senate Document No.46,
Seventieth Congress, first session (282 pages). (See, also, Interstate Power Transmission, and
Utility Corporations.)
Farm Implements.--The high prices of farm Implements and machinery led to this inquiry
which was made pursuant to Senate Resolution No.223, Sixty-fifth Congress, second session,
adopted May 13,1918. The report 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 was submitted to the Senate
May 4, 1920, and printed as a Commission publication under the title, Report of the Federal
Trade Commission on the Causes of High Prices of Farm Implements (713 pages, out of print).
Farm Implements and Machinery Industry.--See Agricultural Implements and Machinery,
and Independent Harvestor Co.
Farm Products.--See Agricultural Income.
Feeds.--Pursuant to Senate Resolution No. 140, Sixty-sixth Congress, first session, adopted
July 31, 1919, this inquiry was conducted for the purpose of discovering whether there were any
combinations or restraints of trade in the commercial feeds business. Although some association
activities in restraint of trade were disclosed, no important violations of the antitrust laws were
found. The report was submitted to the Senate March 29, 1921, and printed as a Commission
publication under the title, Report of the Federal Trade Commission on Commercial Feeds (206
pages).
Fertilizer.--Begun by the Commissioner of Corporations pursuant to Senate Resolution
No.487, Sixty-second Congress, third session, adopted March 1, 1913, this investigation
disclosed the extensive use of bogus independent fertilizer companies for purposes of
competition. However, through conferences held with the principal manufacturers, agreements
were reached for the abolition of such unfair competition. The report, Fertilizer Industry, was
submitted by the Federal Trade Commission 1 to the Senate August 19, 1916, and printed as
Senate Document No.551, Sixty-fourth Congress, first session (269 pages, out of print).
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 a more extended cooperative action
in the purchase of fertilizer by farmers. The report, Fertilizer Industry, was submitted to the
Senate March 3, 1923, and printed as Senate Document No.347 Sixty-seventh Congress, fourth
session (87 pages, out of print).
Flags.--Unprecedented increases In the prices of the United States Flag due to the wartime
demand were investigated by the Commission pursuant to Senate Resolution No. 35, Sixty-fifth
Congress, first session, adopted April 16, 1917. The report, Prices of American Flags, was
submitted to the Senate July 26, 1917, and printed as Senate Document No.82, Sixty-fifth
Congress, first session (6 pages, out of print).
Flour Milling.--Senate Resolution No.212, Sixty-seventh Congress, second session, adopted

January 18, 1922, authorized an Inquiry into practices of the flour-milling industry. The report
on the inquiry 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 sizes of flour packages. The report,
Wheat Flour Milling industry, was submitted to the Senate May 16, 1924, and printed as Senate
Document No. 130, Sixty-eighth Congress, first
1 The Commission was created September 26, 1914, upon passage of the Federal Trade Commission
Act Section 3 of which provided that “all pending investigations and proceedings of the Bureau of
Corporations shall be continued by the Commission.”

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session (130 pages, 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 concerning 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 paragraphs below.)
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. The report,
Commercial Wheat Flour Milling, was submitted to Congress September 15, 1920, and printed
(118 pages, out of print). (See also Bakeries, Bread, and Flour Milling.)
Food Investigation-Flour Milling and Jobbing.--In connection with the food Inquiry
ordered by President Wilson as of February 7, 1917, the Commission on April 4, 1918,
submitted 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.)
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 submitted to the President, May 18, 1918, and entitled Food Investigation. Report
of the Federal Trade Commission on Canned Foods. General Report and Canned Vegetables
and Fruits (103 pages, out of print), and the other submitted 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 wartime 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, entitled Report of the Federal Trade Commission on
Canned Foods, 1918. Corn, Peas, String Beans, Tomatoes, and Salmon (86 pages). (See also
Wartime Cost Finding.)
Food Investigation-Grain Elevators.--In connection with the inquiry Into the grain trade
ordered by President Wilson in October 1920, as described under Grain-Wheat Prices, the
Commission, in a letter dated June 13, 1921, submitted 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 which were submitted as follows: I. Country Grain Marketing (350
pages), September 15, 1920; II. 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, out of print), September 26, 1923; V. Future
Trading Operations in Grain (347 pages, 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 on 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

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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 stockyards, 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.) 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. The 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), June 24, 1919 (574 pages); Part II, Evidence of Combination
Among Packers, November 25, 1918 294 pages, out of print); Part III, Methods of the Five
Packers in Control-ling the Meat-Packing Industry, June 28, 1919 (325 pages, out of print);
Part IV. The Five Large Packers in Produce and Grocery Foods, June 30, 1919 (390 pages);
Part V, Profits of the Packers, June 28, 1919 (110 pages); and Part VI, Cost of Growing Beef
Animals, Cost of Fattening Cattle, and Cost of Marketing Live Stock, 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 to the President, dated
July 3, 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 necessary therefor and the private
control or public regulation thereof. The report, Food Investigation, Report of true Federal
Trade Commission on the Wholesale Marketing of Food, was submitted to the President June
30, 1919 and printed (268 pages, out of print) .
Food Investigation--Private Car Lines.--This inquiry also was undertaken as a part of the
food investigation ordered by President Wilson on February 7, 1917. It comprised chiefly an
examination of livestock car lines and refrigerator car lines, both for meats and for fruits and
vegetables, including a study of the effect on competition of the ownership of such facilities.
Certain remedial measures were recommended. The report, Food Investigation, Report of the
Federal Trade Commission on Private Car Lines, was submitted to the President June 27, 1919,
and printed (271 pages).
Foreign Trade--Antidumping Legislation.--Early in 1933, when amendments to the
antidumping laws were under consideration by Congress, this inquiry was begin on motion of
the Commission, under authority of 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
might 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. The report Antidumping Legislation and Other Import Regulations in the United
States and Foreign Countries, dated January 11, 1934, was printed as Senate Document No.112,
Seventy-third Congress, second session (100 pages) . In June 1938 the Commission presented
to Congress its Supplemental Report on Antidumping Legislation and Other Import Regulations
in the United States and Foreign Countries, which brought to date the material in the report
mentioned above. A summary of the supplemental report (4 pages, processed), and later the
complete report (111 pages, processed), dated June 27, 1938, were made available.
Foreign Trade-Cooperation in American Export Trade.--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 many other nations In foreign
trade by reason of their superior facilities and more effective organizations. The WebbPomerene Act authorizing the association of manufacturers for export trade was enacted as a
direct result of the recommendations embodied in the report. Submitted to Congress June 30,
1916, the report was printed 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). The

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209

summary was submitted May 2, 1916, and printed as Senate Document No. 426, Sixty-fourth
Congress, first session (7 pages, out of print). The concluding chapter was printed separately by
the Commission in 1916 (14 pages, out of print).
Foreign Trade--Cotton Growing Corporation.--Made pursuant to Senate Resolution
No.317, Sixty-eighth Congress, second session, adopted January 27, 1925, this inquiry
concerned the development, methods, and activities of the Empire Cotton Growing Corporation,
a British company. World cotton production and consumption were discussed and it was
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, Empire Cot ton Growing
Corporation, was submitted to the Senate February 28, 1925, and printed as Senate. Document
No. 226, Sixty-eighth Congress, second session (30 pages, out of print).
Fruits and Vegetables.--See Agricultural Income.
Furniture Prices, Costs, and Profits.--Upon the request of the Administrator of the Office
of Price Administration as contained in a letter of June 27, 1941 to the Chairman of the Federal
Trade Commission, the Commission undertook an Immediate investigation of legal and
accounting aspects of a recent increase in furniture prices to determine, in tile interest of the
national defense program, whether and to what extent the increases were justified. (See also
House Furnishings.)
Gasoline.--See also Petroleum Reports.
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
submitted its preliminary report, Investigation of the Price of Gasoline, April 10, 1916, which
was printed as Senate Document No.403, Sixty-fourth Congress, first session (15 pages, out of
print). The Commission submitted its Report on the Price of Gasoline in 1915 (224 pages) on
April 11, 1917, which was printed by the Commission and as House Document No.74, Sixtyfifth Congress, first session (224 pages). The high prices of petroleum products and how the
various Standard Oil companies had continued to maintain a division of marketing territory
among themselves were discussed. The Commission suggested several plans for restoring
effective competition in the oil industry.
Gasoline.--Pursuant to President Coolidge’s request of February 7, 1024, the Commission
Investigated tile sharp advance in gasoline prices, reporting in the form of Its Letter of Submittal
and Summary of Report on Gasoline Prices in 1924, dated June 4, 1924 (processed, 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.
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. The complaints alleged that there had
been price discrimination due to zoning divisions in which different retail prices prevailed. The
Commission submitted Its report to the Senate February 27, 1933, In the form of a letter which
was printed under the title Importation of Foreign Gasoline at Detroit, Mich., Senate Document
No. 206, Seventy-second Congress, second Session (3 pages).
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 avenge 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, Gasoline Prices, was submitted to the Senate
May 10, 1934, and 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

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and conspiracies among country grain buyers to agree on maximum prices for grain purchased.
Legislation for a stricter supervision of grain exchanges was recommended, together with certain
changes in their rules. The Commission also recommended governmental action looking to
additional storage facilities for grain uncontrolled by grain dealers. Reports submitted to the
Senate were: Report of the Federal Trade Commission on Methods and Operations of Grain
Exporters, Vol. I, Interrelations and Profits (123 pages), May 16, 1922, and Vol. II,
Speculation, Competition, and Prices (264 pages), June 18, 1923. (See Food Investigation:
Grain Elevators and Grain Trade.)
Grain--Wheat Prices.--An extraordinary decline of wheat prices in the summer and autumn
of 1920 resulted on October 12, 1920 in President Wilson ‘s directing the Commission to
inquire into the reasons. The reasons for the decline were found chiefly in abnormal market
conditions, including certain arbitrary methods pursued by the grain-purchasing departments of
foreign governments. The resulting Report of the Federal Trade Commission on Wheat Prices
for the 1920 Crop (91 pages), was submitted to the President December 13, 1920. (See Food
Investigation: Grain Elevators, and Food Investigation: 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, Digest of Replies * * * Relative to the Practice of Giving Guarantee
Against Price Decline, was published as of May 27, 1920 (68 pages).
House Furnishings.--Pursuant to Senate Resolution No. 127, Sixty-seventh Congress, second
session, adopted January 4, 1922, the Commission investigated the high prices for house
furnishing goods which had prevailed since 1920, as compared to the price declines in other
lines. Three reports showing that there had been conspiracies to inflate the prices of several
kinds of household furnishings, were submitted to the Senate and printed: Report of the Federal
Trade Commission on House Furnishing Industries, Vol. I, Household Furniture, submitted
January 17, 1923 (484 pages); Vol. II Household Stores, submitted October 1, 1923 (187
pages); and Vol. III. Kitchen Furnishings and Domestic Appliances, submitted October 6. 1924
(347 pages). A summary of Volume I was printed in 1923. (See also Furniture Prices, Costs,
and Profits).
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. The
summary was submitted as a report to the Senate, May 15, 1918. entitled Federal Trade
Commission Report to the Senate on the Independent Harvester Co. (processed, 5 pages, out
of print). (See also Agricultural Implements and Machinery, and 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 development 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, Interstate Movement of Electric Energy,
was submitted to the Senate December 20, 1930, and printed as Senate Document No. 238,
Seventy-first Congress, third session (134 pages), including interim reports of December 9,
1929, and March 10, June 11, and September 19, 1930. (See also Electric Power and Utility
Corporations.)
Leather and Shoes.--General complaint regarding the high prices of shoes led to this inquiry
which was made on motion of the Commission. A preliminary report. Hide and Leather

Situation, was submitted to the House of Representatives January 23, 1918, and printed as
House Document No.857. Sixty-fifth Congress, second session (5 pages, out of print) . The
Commission’s Report on Leather and Shoe Industries (180 pages), dealing with the costs and
prices of leather and shoes. was submitted to Congress August 21,1919.
Leather and Shoes--A further study of leather and shoe costs and prices was made pursuant
to House Resolution No. 217, Sixty-sixth Congress, first session, adopted August 19, 1919. The
Report of the Federal Trade Commission on Shoe and Leather Costs and Prices and a summary
were submitted to the House June 10, 1921, and printed (212 pages).

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Lumber--Costs.--The wartime 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 the Report of the Federal Trade Commission on WarTime Costs and Profits of Southern Pine Lumber Companies, submitted to Congress May 1,
1922, and printed (94 pages, out of print). (See also War-Time Cost Finding.)
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. In consequence of the Commission’s findings and recommendations, the
Department of Justice proceeded against certain of these associations for violations of the
antitrust laws. The information obtained in the investigation was presented in a series of
published Commission 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. The Report of the Federal Trade Commission on Lumber Manufacturers’ Trade
Associations, incorporating reports of January 10, 1921 (Part I. Preliminary Survey of Lumber
Manufacturers’ National and Regional Trade Associations) ; February 18, 1921 (Part II. Southern Pine Association of New Orleans, La.) ; June 9, 1921 (Part III. Douglas Fir Lumber
Manufacturers’ and Loggers’ Associations) ; and February 15, 1922 (Part IV. Western Pine
Manufacturers’ Association), was printed (150 pages,. out of print) . On January 24, 1923, the
Commission submitted to Congress and the Attorney General the Report of the Federal Trade
Commission on Western Red Cedar Association, Lifetime Post Association, and Western, Red
Cedarmen’s information Bureau, which was printed as a Commission publication (22 pages),
and as Senate Document No.293, Sixty-seventh Congress, fourth session, under the title
Activities of Trade Associations and Manufacturers of Posts and Poles in the Rocky Mountain
and Mississippi Valley Territory (22 pages, out of print). The Report of the Federal Trade
Commission on Northern Hemlock and Hardwood Manufacturers Association, was submitted
to Congress on May 7, 1923 and printed as a Commission publication (52 pages).
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 191920 (see next paragraph above), was conducted on motion of the Commission in conjunction with
the inquiry into open-price associations. (See Open-Price Associations.) The report on the
lumber trade associations comprises chapter VIII of Open-Price Trade Associations, submitted
to the Senate February 13, 1929, and printed as Senate Document No. 226, Seventieth Congress,
second session (516 pages).
Mass Food Distributors.--This inquiry was undertaken in accordance with a Commission
resolution adopted April 29, 1941. Its purpose is to present a comparison of (1) savings in costs
of selling and delivering certain foods in large quantities, particularly when delivered to the
buyer’s warehouse, and (2) the concessions in price made to the buyer on such sales.
Meat--Packing Profit Limitation s.--Made pursuant to Senate Resolution No. 177, Sixtysixth Congress, first session, adopted September 3, 1919, this inquiry concerned the system of
wartime 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, Maximum Profit Limitation on Meat-Packing Industry, was
submitted to the Senate August 24, 1919, and subsequently published as Senate Document
No.110, Sixty-sixth Congress, first session (179 pages, out of print). (See also Food
Investigation: Meat Packing.)
Milk--Canned.--Pursuant to Senate Resolution No.431, Sixty-fifth Congress, third session,
adopted March 3, 1919, an inquiry was made into the milk indus-try. Among the subjects

investigated were the fairness of milk prices to producers and of canned milk prices to
consumers. and whether they were affected by fraudulent or discriminatory practices. The
report showed a marked concentration of control in the industry and questionable practices by
butter manufacturers in the buying and handling of cream, many of which practices have since
been recognized as unfair by line trade itself. The Report of the Federal Trade Commission on
Milk and Milk Products, 1914-18, was submitted to the Senate June 6, 1921, together with a
summary. Both were printed (234 pages and 19 pages, respectively).

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Milk and Dairy Products.--This inquiry into conditions with respect to the sale and
distribution of milk and other dairy products was made pursuant to House Concurrent
Resolution No. 32, Seventy-third Congress, second session, adopted June 15, 1934. The titles
of seven reports issued are: Report of the Federal Trade Commission on the Sale and
Distribution of Milk Products, Connecticut and Philadelphia Milksheds, submitted April 5,
1935, and printed with testimony as House Document No. 152, Seventy-fourth Congress, first
session (901 pages), and without testimony as a Commission publication (105 pages); Report
of the Federal Trade Commission on the Sale and Distribution of Milk and Milk Products
(Connecticut and Philadelphia), interim report submitted December 31, 1935, and printed as
House Document No. 387, Seventy-fourth Congress, second session ( 125 pages); Chicago
Sales Area, submitted April 15, 1936, and printed as House Document No. 451, Seventy-fourth
Congress, second session (103 pages); Boston, Baltimore, Cincinnati, St. Louis, submitted June
4, 1936, and printed as House Document No.501, Seventy-fourth Congress, second session (243
pages); Twin City Sales Area, submitted June 13, 1936, and printed as House Document No.
506, Seventy-fourth Congress, second session (71 pages); New York Milk Sales Area, submitted
September 30, 1930, and printed as House Document No.95, Seventy-fifth Congress, first
session (138 pages, out of print); and Summary Report on Conditions with Respect to the Sale
and Distribution of Milk and Dairy Products, submitted January 4, 1937, and printed as House
Document No.94, Seventy-fifth Congress, first session (39 pages).
Millinery Industry.--President Roosevelt requested that an investigation be made of
distribution methods in the millinery industry. Among the factors assigned for Investigation were
the growth and development of syndicates or organizations operating a number of units for the
retail distribution of millinery, the units consisting of leased millinery departments in department
stores or specialty stores. The Report to the President of the United States on Distribution
Methods in the Millinery Industry was issued November 21, 1939, and processed as a
Commission publication (65 pages).
Motor--Vehicle Industry--In response to Public Resolution No.87, Seventy-fifth Congress,
third session, approved by President Roosevelt on April 13, 1938, the Commission investigated
“the policies employed by manufacturers in distributing motor vehicles, accessories, and parts,
and the policies of dealers in selling motor vehicles at retail, as these policies affect the public
interest”; the extent of concentration of control and of monopoly, and the extent, if any, to which
fraudulent practices were employed, or the Federal antitrust laws violated. The report, Motor
Vehicle Industry, was submitted to Congress June 5, 1939, and printed as House Document
No.468, Seventy-sixth Congress, first session (1,077 pages) . The summary chapter, Motor
Vehicle Industry, Summary and Conclusions, was processed for distribution (24 pages).
National Wealth and Income.--This inquiry was made pursuant to Senate Resolution No.
451, Sixty-seventh Congress, fourth session, adopted February 28, 1923, 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 Taxable and Tax Exempt 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 their distribution among various classes were
also shown. The report, National, Wealth and Income, was submitted 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 to wholesalers and retailers were maintained among members. The report, Open Price
Trade Associations, was submitted to the Senate February 13, 1929, and printed as Senate
Document No.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

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213

in the question of packer participation in unrelated lines. The report, Packer Consent Decree,
recommended the enforcement of the decree against the Big Five packing companies. It was
submitted to the Senate February 20, 1925, and printed as Senate Document No.219, Sixtyeighth Congress, second session (44 pages, out of print). (See also Food Investigation--Meat
Packing and Meat-Packing Profit Limitations.)
Paper--Book.--Made pursuant to Senate Resolution No.269, Sixty-fourth Congress, first
session, adopted September 7, 1916, this inquiry 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. A report, Book Paper Industry--A Preliminary
Report, was submitted to the Senate June 13, 1917, and printed as Senate Document No. 45,
Sixty-fifth Congress, first session (11 pages, out of print), and Book Paper Industry--A Final
Report, was submitted to the Senate August 21, 1917, and printed as Senate Document No. 79,
Sixty-fifth Congress, first session (125 pages)
Paper--Newsprint.--A sharp advice in prices of newsprint resulted in an inquiry made
pursuant to Senate Resolution No.177, Sixty-forth Congress, first session, adopted April 24,
1916. The reports of the Commission showed that these high prices had been partly the result
of certain newsprint association activities which 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 Paper Industry,
submitted March 3, 1917, was printed as Senate Document No. 3, Sixty-fifth Congress, special
session (12 pages, out of print) . The Report of the Federal Trade Commission on the Newsprint
Paper Industry, was submitted to the Senate June 13, 1917, and printed ins Senate Document
No. 49, Sixty-fifth Congress, first session (162 pages). 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, pursuant to Senate
Resolution No.95, Sixty-fifth Congress, first session, an additional brief report, Newsprint Paper
Investigation, was submitted to the Senate and printed as Senate Document No. 61, Sixty-fifth
Congress, first session (8 pages, out of print).
Paper--Newsprint.--An inquiry was made pursuant to Senate Resolution No. 37, Seventieth
Congress, second session, adopted February 27, 1929. The question was whether there existed
a monopoly among manufacturers and distributors of newsprint paper in the supplying of paper
to publishers of small daily and weekly newspapers. The report, Newsprint Paper Industry, was
submitted to the Senate June 30, 19:)’0, and printed as Senate Document No.214, Seventy-first
Congress, special session (116 pages) .
Paper--Newsprint.--This inquiry was undertaken in response to the Attorney General’s
request of January 24, 1938, that the Commission investigate the manner in which certain
newsprint manufacturers had complied with a consent decree entered against them on November
26, 1917, by the United Sates District Court for the Southern District of New York, and further
that it determine whether there had been any violations of the antitrust laws which were not
prohibited by the decree.
Peanut Prices.--The Commission, pursuant to Senate Resolution No. 139, Seventy-first
Congress, first session, adopted October 22, 1929, 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,

Prices and Competition Among Peanut Mills. was submitted to the Senate June 30, 1932, and
printed as Senate Document No. 132. Seventy-second Congress, first session (78 pages).
Petroleum.--See also Gasoline Reports.
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 request of the Attorney
General made April 16. 1936. the Commission conducted an Investigation of determine the
manner in which a consent decree entered September 15, 1930, In the case of the United States

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against the Standard Oil Co. of California, Inc., and others, had been or was being observed. The
decree in question perpetually enjoined and restrained 7 major oil companies, 12 Independent
oil companies, and 1 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 submitted its report
to the Attorney General on April 2, 1937.
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, and alleged discrimination
practiced against Americans in foreign countries, caused this inquiry which developed the
situation in a manner to promote greater participation in reciprocity. The Report of the Federal
Trade Commission on Foreign Ownership in the Petroleum Industry was submitted to the
Senate February 12, 1923, and printed (152 pages).
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 the influences affecting the movements of gasoline and other products and 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 oil companies to raise
or depress prices of refined products. The report, Petroleum Industry--Prices, Profits, and
Competition, was submitted to the Senate December 12, 1927, and printed as Senate Document
No. 61, Seventieth Congress, first session (360 pages).
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
No. 138, Sixty-sixth Congress, first session, adopted July 31, 1919. The Inquiry disclosed that
several of the companies were fixing prices. Reports were submit ed to the Senate, April 7 and
November 26, 1921, respectively, each with a summary, and printed under the title Pacific
Coast Petroleum Industry: Part I, Production, Ownership and Pro fits (276 pages) and Part II,
Prices and Competitive Conditions (262 pages).
Petroleum-Panhandle.--Conditions In the Panhandle (Texas) oil fields were investigated on
a motion of the Commission entered October 6, 1926, and in response to requests of crudepetroleum producers. The inquiry developed that a complained of reduction in prices late in
1926 had been due in large part to difficulties of handling and expenses of marketing this oil
because of its peculiar physical properties. The Report of the Federal Trade Commission on
Panhandle Crude Petroleum was submitted to the Senate on February 3, 1928, and printed (19
pages).
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 on Pipe-Line Transportation of Petroleum, which was submitted to
the Senate February 28 1916, and printed (467 pages, out of print), showed the dominating
importance of the pipe lines of the great midcontinent oil fields. It also pointed out that the pipeline companies, which were controlled by a few large oil companies, charged excessively high
rates for transporting petroleum, and evaded their duties as common carriers by Insisting on
unreasonably large shipments, to the detriment of the numerous small producers. A volume
entitled Letter of Submittal and Summary and, Conclusions of the Report of the Federal Trade
Commission on Pipe-Line Transportation of Petroleum was submitted February 28, 1916, and
printed (27 pages, out of print).

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,
Advance in the Prices of Petroleum Products, was submitted to the House June 1, 1920, and
printed as House Document No.801, Sixty-sixth Congress, second session (57 pages).
Petroleum--Wyoming.--Complaints of several important producing companies In the Salt
Creek oil field led to this investigation, which was made on

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motion of the Commission. The Report of the Federal Trade Commission on the Petroleum
industry of Wyoming, submitted to Congress January 3, 1921, and printed, covered the
production, pipe-line transportation, refining, and wholesale marketing of crude petroleum and
petroleum production in the State of Wyoming (54 pages, out of print).
Petroleum--Wyoming and Montana.--As a result of this inquiry, made on motion of the
Commission, a special report was prepared inviting the attention of Congress to conditions
existing in the petroleum trade in Wyoming and Montana and recommending remedial
legislation. The report, Petroleum Trade in Wyoming and Montana, was submitted to Congress
on July 13, 1922, and printed as Senate Document No. 233, Sixty-seventh Congress, second
session (4 pages).
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 on industrial products and of
determine 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 be 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, was submitted to Congress on March 26, 1932, and printed (218
pages). A report, Study of Zone-Price Formula in Range Boiler industry, dated March 30, 1936,
was processed for distribution by the Commission (5 pages). (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 consumer’s prices. The report was printed under the title
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 current conditions of profiteering as
disclosed by various inquiries of the Commission, and submitted to the Senate on June 29, 1918.
Entitled Profiteering. it was printed as Senate Document No.248, Sixty-fifth Congress, second
session (20 pages, out of print).
Radio.--This inquiry was made pursuant to House Resolution No. 548, Sixty-seventh
Congress, fourth session, adopted March 4, 1923. 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. The Report of the Federal Trade Commission on the Radio,
Industry was submitted to the House, December 1, 1923, and painted (347 pages).
Raisin Combination.--Allegations of a combination among raisin growers in 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. The report, in the form of a letter entitled California
Associated Raisin Co., was made to the Attorney General, June 8, 1920 (processed, 26 pages,
out of print).
Resale Price Maintenance.--The question whether a manufacturer of standard articles,
identified by trade-mark or trade practice, should be permitted to fix by contract the price at
which the purchasers could resell them, led to this inquiry which was made on motion of the
Commission. The Commission recommended to Congress the enactment of legislation
permitting resale-price maintenance under certain conditions. The report, Resale Price
Maintenance, submitted to the House of Representatives, December 2, 1918, was in the form
of a letter to

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Congress, printed as House Document No.1480, Sixty-fifth Congress, third session (3 pages,
out of print).
Resale Price Maintenance.--A Report on Resale Price Maintenance 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 motion of the Commission 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, and prices, and the purpose and results of price cutting. Part I of the
report, Resale Price Maintenance, was submitted to Congress January 30, 1929, and printed as
House Document No.546, Seventieth Congress, second session (141 pages, out of print); Part
II (final), was submitted on June 22, 1931,. and printed (215 pages).
Resale Price Maintenance.--This inquiry developed facts concerning the effects of resale
price maintenance on the interests of manufacturers, wholesalers, retailers, and consumers of
price maintained and competing non-price-maintained articles. A report on the investigation
was in course of preparation at the close of the fiscal year, 1940-41.
Salaries Inquiry.--This inquiry was made pursuant to Senate Resolution No. 75, Seventythird Congress, first session, adopted May 29, 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, the securities of which 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 list of salaries, and entitled Report of the Federal Trade Commission on
Compensation of officers and Directors of Certain Corporations (issued in processed form, 15
pages) was submitted 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 mind 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, Mecan Sisal Hemp. was submitted 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, Southern Livestock Prices, was
submitted to the Senate February 2, 1920, and printed as Senate Document No. 209, Sixty-sixth
Congress, second session (11 pages, out of print).
Steel Code Inquiry.--Senate Resolution No.166, Seventy-third Congress, second session,
adopted February 2, 1934, 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 nuder 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 the cease and desist order
issued some years before by the Commission against the basing-point

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217

system in the “Pittsburgh Plus” case. The report, Practices of the Steel Industry Under the
Code, was submitted 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 President Roosevelt on May 30, 1934.
Steel Code as Amended.--An Executive Order of President Roosevelt, dated May 30, 1934,
directed the Commission and the National Recovery Administration to undertake a joint study
of the effect of the multiple basing-point system under 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 natural 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 BasingPoint System in the Steel Industry, was submitted to the President on November 30, 1934, and
printed (125 pages). 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.
As of March 15, 1935, there was published in processed form the Summary of Report of the
Federal Trade Commission to the President * * * in re: Iron and Steel Industry’s BasingPoint System (9 pages, out of print). On the same day the National Recovery Administration
published 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, processed,
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 regarding the purpose and probable effects of the proposed
merger were submitted to the Senate June 5, 1922, and September 7, 1922, respectively, both
entitled Merger of Steel and Iron Companies. They were printed as Senate Document No. 208,
Sixty-seventh Congress, second session, Part I (9 pages), and Part II (2 pages) (both out of
print).
Steel Industry--Costs and Profits.--Pursuant to an order of President Wilson, dated July 25,
1917, the Commission, in 1917 and 1918, investigated the costs and profits of the steel Industry
during the World War and reported to the President. Several years after conclusion of the
inquiry certain data in regard thereto were compiled by the Commission in the Report of the
Federal Trade Commission on Wartime Profits and Costs of the Steel Industry, submitted to
Congress February 18, 1925, and printed (138 pages). (See also Wartime cost finding.)
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 was entitled Federal Trade
Commission Report to the President on Steel Sheet Piling (processed, 42 pages).
Stock Dividends.--Senate Resolution No.304, Sixty-ninth Congress, second session, adopted
December 22, 1926, 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 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, Stock
Dividends, contains a list of 10,245 such corporations and a brief discussion. The report points
out that the declaration of stock dividends at 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

218

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

as a business policy. The report was submitted to the Senate on December 5, 1927, and printed
as Senate Document No.26, Seventieth Congress, first session (273 pages).
Sugar.--An extraordinary advance in the price of sugar in 1919 led to the investigation, which
was made pursuant to House Resolution No.150, Sixty sixth Congress, first session, adopted
October 1, 1919. 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 of the Federal Trade Commission on Sugar Supply and Prices was
submitted to the House, November 15, 1920, and printed (205 pages).
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 on The Beet
Sugar Industry in the United States was submitted to Congress, May 24, 1917 (164 pages, 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, Taxation and TaxExempt Income, was submitted 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.)
Temporary National Economic Committee Studies of the Federal Trade Commission.-These studies were made pursuant to Public Resolution No. 113, Seventy-fifth Congress,
approved June 16, 1938, on recommendation of the President for the establishment of a
Temporary Economic Commission. The work of the Committee was directed to questions
regarding the “concentration of economic power in and financial control over production and
distribution of goods and services” with a view to determining the causes of such concentration
and control and their effects on prices, employment, profits, and consumption. In addition to
presenting witnesses at hearings for the Temporary National Economic Committee (Parts 5, 5a,
6, 7, 16, and 26), the Federal Trade Commission prepared the following four monographs as a
part of the TNEC Investigation of Concentration of Economic Power series: No. 13, Relative
Efficiency of Large, Medium Sized, and, Small Business; No. 34, Control of Unfair Competitive
Practices Through Trade Practice Conference Procedure of the Federal Trade Commission;
No. 36, Reports of the Federal Trade Commission; and No.42, The Basing Point Problem. The
monographs were printed and are available at the office of the Superintendent of Documents,
Washington.
Textiles--Combed Cotton Yarns.--House Resolution No.451, Sixty-sixth Congress, second
session, adopted April 5, 1920, called. upon the Commission 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 that 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 was submitted to the
House April 14, 1921, and printed (94 pages).
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 forwarded to approximately 2,600 textile
manufacturing companies. Material for immediate comparable results was transmitted by 765
concerns having an aggregate investment of almost $1,200,000,000. The following reports were
printed, except where hereinafter designated as processed:

INVESTIGATIONS, 1915-1941

219

Report of the Federal Trade Commission on Textile Industries.-- Part I. Investment and Profit,
December 31, 1934 (26 pages) ; Part II. The Cotton and Textile Industry, March 8, 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 Industries, February 18, 1935 (14 pages), and 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, 1934, and for July-August 1934 (24 tables), June 20, 1935. (Processed, out
of print.)
Report of the Federal Trade Commission on the Textile Industries in 1933 and 1934--Part
1. The Cotton Textile Industry, August 1, 1935 (34 pages); Part II. The Woolen and Worsted
Textile Industry, September 25, 1935 (30 pages, processed); Part III. The Silk and Rayon
Textile Industry, November 29, 1935 (44 pages, processed); Part IV. Thread, Cordage, and
Twine Industries, December 5, 1935 (21 pages, processed); Cotton Weaving Companies
Grouped by Types of Woven Goods Manufactured During 1933 and 1934, March 24, 1936 (46
tables, processed, out of print), and Cotton Weaving companies Grouped by Types of Yarn
Manufactured During 1933 and 1934, January 31, 1936 (18 tables, processed, out of print).
Textile Industries in the First Half of 1935.--Part I. The Cotton Textile Industry, Including
Thread, Cordage, and Twine, May 22, 1936 (42 pages, processed); Part II. The Woolen and
Worsted Textile Industry, July 20, 1936 (29 pages, processed), and Part III. The Silk and Rayon
Textile Industry, August 22, 1936 (48 pages, processed).
Textile Industries Last 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), and Part III. The Silk and
Rayon Textile Industry, January 6, 1937 (46 pages, processed).
Textile Industries in the First Half of 1936.--Part 1. 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), and 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 World 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
on the Woolen Rag Trade was submitted to Congress, June 30, 1919, and printed (90 pages).
Tobacco.--This inquiry was made pursuant to Senate Resolution No. 329, Sixty-eighth
Congress, second session, adopted February 9, 1925. The reports 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, The American Tobacco Co. and the Imperial Tobacco Co., was
submitted December 23, 1925, to President Coolidge, 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 production curtailment, improved marketing processes, a
standardized system of grading, and greater co operation 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 Districts of the States of North
Carolina and Georgia was released May 23, 1931 (54 pages processed).
Tobacco Prices.--This inquiry was made pursuant to House Resolution No. 533, Sixty-sixth
Congress, second session, adopted June 3, 1920. The resolution

220

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

asked for an investigation of the cause of the decline of loose-leaf tobacco prices following the
harvesting of the 1919 crop. The report attributed the decline in prices of some grades of
tobacco to a combination of 3 factors: (1) a lessening of foreign purchases due to unfavorable
exchange rates and the contraction of domestic credits, resulting in unfavorable financial
condition; (2) an increase In quantity of low grades for domestic absorption due to crop
conditions and falling foreign markets, and (3) purchasing methods of large buyers. The
Commission recommended that the decree of 1911 dissolving the old Tobacco Trust be
modified to prohibit permanently the use of common purchasing agencies by certain of the
tobacco companies and to prohibit their purchasing tobacco under any but their own names. A
better system of grading tobacco was also recommended. The Report of the Federal Trade
Commission on the Tobacco industry, was submitted to the House, December 11.1920, and
printed (162 pages).
Tobacco Prices.--This inquiry was made pursuant to Senate Resolution No. 129, Sixtyseventh Congress, first session, adopted August 9, 1921. Among the subjects investigated were
the low prices of leaf tobacco and the high prices of manufactured tobacco products. From
evidence gathered it was alleged that several large companies were engaged in conspiracies with
their customers, the jobbers, to enhance the selling prices of tobacco. Proceedings were
instituted by the Commission. In its report, the Commission renewed the recommendations for
prohibiting the use by certain of the tobacco companies of common purchasing agencies and
their purchasing of tobacco under any but their own names, as made In the report of December
11, 1920 (see next paragraph above). The report, Prices of Tobacco Products, was submitted
to the Senate, January 17, 1922, and printed as a Commission document and as Senate
Document No.121, Sixty-seventh Congress, second session (109 pages, out of print).
Trade and Tariffs in South America.-- Authorized by President Wilson as of July 22, 1915,
this inquiry 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 in 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 which was submitted to the
President under date of June 30, 1916, and printed (246 pages, out of print).
Utility Corporations.--This inquiry, also known as the Electric and Gas Utilities
investigation, was made pursuant (1) to Senate Resolution No. 83, Seventieth Congress, first
session, adopted February 15, 1928, (2) Public Resolution No.46, also known as Senate Joint
Resolution No.115, Seventy-third Congress, second session, adopted June 1, 1934, and (3) to
section 6 of the Federal Trade Commission Act.
Senate Resolution No. 83 directed the Commission to investigate the growth of the capital
assets and liabilities of public-utility corporations doing an inter-state business In 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 controlled 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 therefor, 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 1936.
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.

INVESTIGATIONS, 1915-1941

221

The final and summary volumes, their subtitles (omitting certain routine designations), dates
of submittal 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 Opera ting
Companies, September 15, 1934 (618 pages).
No. 71.-A. Efforts by Associations and Agencies of Electric and Gas Utilities to Influence
Public Opinion, December 12, 1934 (486 pages).
No. 71--B, Index of Association Publicity and Propaganda and Index of Names in Parts 1 to
20, Inclusive, and Accompanying Exhibit Volumes, November 27, 1934 (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 of Federal
Legislation, Conclusions, and Recommendations and Legal Studies in Support Thereof, January
28, 1935 (218 pages).
No. 77-A, Index of Testimony in Parts 21 to 45, Numerical List of Exhibits, Index of Exhibits,
Index to Record on Company Publicity and Propaganda--Parts 21 to 45, inclusive, May 16,
1935 (840 pages).
No. 81-A, Publicity and Propaganda Activities by Utilities Groups and Companies, With
Index, November 14, 1935 (570 pages).
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 (final report) (617 pages).
No. 84-B, Legal Appendixes to Final Report (No. 84-A * * *), December 31, 1935 (118
pages).
No. 84-C, Economic Appendixes to Final Report (No. 84-A * * *), December 31, 1935 (126
pages).
No. 84-D, General Index to Parts £1 to 84-C, Inclusive, August 12, 1937 (1,360 pages).
A list of the companies investigated and the volume numbers of the reports concerning them
is printed in 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.
Wartime Cost Finding.--This series of cost Inquiries was ordered by President Wilson as
of July 25, 1917. They include investigations made by the Federal Trade Commission during
the World War (1917-18) into the costs of numerous products, such as coal, steel and iron,
lumber, petroleum, cotton textiles, locomotives, leather, canned and fresh foods, copper and
other nonferrous materials. sand and gravel, surgical instruments, tobacco, electrical machinery,
asbestos, fiber and gypsum wallboard, brick and fire clay, and chemicals and allied products.
Altogether there were approximately 370 wartime cost investigations.
On the basis of the costs thus found prices were fixed, or controlled in various degrees, by
such Government agencies as Food Administration, Fuel Administration, Price Fixing
Committee, War Industries Board, War Department, Navy Department and Department of
Agriculture. The Commission also conducted a great number of cost inquiries at the request of
other agencies, such as Interior Department, Tariff Commission, Council of National Defense,

Post Office Department, Shipping Board, Emergency Fleet Corporation and Railroad
Administration.
It has been estimated that the results of these inquiries helped to save the country many
billions of dollars by checking unjustifiable price advances. Lists of the more important of these
cost inquiries, reports on which have not been printed or otherwise published, are given in the
Commission’s annual reports for 1918 and 1919. Subsequent to the World War, a number of
reports dealing with costs and profits were published, based on these wartime 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, see page 50; of export trade associations, see page 140; for
summaries relating to trust laws and competitive conditions -in 27 named foreign countries or dominions,
see page 147; for appropriation items, see page 162; and for titles and summaries of general investigations,
1915-41, see page 199]

Page
Accounting methods and practices investigation
25
Ace Auto Supply Co., New York
100
Advertising, false and misleading
Complaints alleging
5, 46
Food, drugs, devices, cosmetics
7, 34, 40, 41, 42, 102, 135, 141
Injunctive proceedings
6
Radio and periodical
4, 6, 13, 14, 32, 35, 131
Alberty, Adah, Los Angeles, Calif
90, 91
Allied Pharmacal Co., trading as Erie Laboratories, Inc., Cleveland
103
American Bridge Co
102
American Crayon Co., Sandusky, Ohio
81
American Lead Pencil Co., Hoboken, N. J
75
American Lecithin Co., Inc., Elmhurst, Long Island, N. Y
76
American Maize-Products Co., New York
80
American Steel & Wire Co. of New Jersey
102
Anheuser-Busch, Inc., St. Louis
80
Assistant Attorney General of the United States
12
Associated News Photographic Service, Inc., New York
76, 91
Atlantic Commission Co., New York
80
Attorney General of the United States
6, 12, 105
Automobile financing
91
Ayres, William A., Commissioner
12, 13
Badger-Brodhead Cheese Co., Monroe, Wis
75
Bazelon, Mitchell and Jacob L., trading as Evans Novelty Co. and Premium Sales
Co., Chicago
96
Beauty and barber equipment and supplies industry
118
Bemporad & Co., R. F., Inc., New York
77
Benton Announcements, Inc., Buffalo, N. Y
92
Berlo Vending Co., Philadelphia
95
Bernard & Co., J. E., Inc., New York
79
Biddle Purchasing Co., New York
90, 92
Binney & Smith Co., New York
81
“Boy Scout,” use of term to describe knives
79, 95
Bundy, Robert C., trading as Jackson Sales Co., Birmingham, Ala
96
Bunte Brothers, Inc., Chicago
96
California lumber associations
5
California Lumbermen’s Council, Fresno, Calif
90, 92
California rice industry, San Francisco
90, 93
Candymasters, Inc., Minneapolis
96
Capital Drug Co., Roanoke, Va
103
Capitol Building Supply Co., Milwaukee
74
Carnegie-Illinois Steel Corporation
102
Case & Sons Cutlery Co., W. R., Bradford, Pa
79
223

224

INDEX

Page
Chanel, Inc., New York
90, 98
Cherry, Albert T., trading as A. T. Cherry Co. and as Atco Soap Co., Dayton, Ohio 90, 93
Civil Aeronautics Authority
38
Civil penalties
6, 105
Clayton Act (see Robinson-Patman Act)
5, 33, 34, 42, 175
Section 2
3, 36, 49, 80, 81, 82, 92, 99, 102
Section 3
3, 37
Section 7
3, 11, 12, 19, 38
Section 8
3
Section 11
3, 11
Clito Co., San Antonio, Tex
103
Colonial Knife Co., Inc., Providence, R. I
79
Complaints, formal
5, 32, 38, 42, 43, 49
Confection Cabinet Co., Newark, N.J
95
Congress
4, 11, 14, 25
Corn sirup cases
80
Corporation reports investigation
9, 23
Coty, Inc., Wilmington, Del
99
Coty Sales Corporation, New York
99
Council of National Defense, Advisory Commission to
10,11
Court cases
5, 89
Cup and Container Institute, Inc., New York
75
D. D. D. Corporation, Batavia, Ill
93
Davis, Ewin L., Commissioner
12, 13
Department of Agriculture
40
Department of Agriculture, Bureau of Animal Industry
136
Department of Agriculture, Bureau of Home Economics
136
Department of Justice
11, 16
Distribution cost accounting investigation
9, 25
Distribution methods and costs investigation
9, 26
Douglas Candy Co., St. Joseph, Mo
96
Economic Defense Board
10
Educators Association, Inc., New York
93
Empire Style Designers League, Inc., New York
75
Erie Laboratories, Inc., trading as Mack Pharmacal Co., Cleveland
103
Establishments Rigaud, Inc. (and E. Fougera & Co.), New York
98
Executive Office of the President, Division of Statistical Standards of
23
Export Trade Act (Webb-Pomerene Act)
3, 6, 14, 33, 145, 181
Fashion Originators Guild of America, Inc., New York
90, 93
Federal Communications Commission
38
Federal Reserve Board
38
Federal Trade Commission:
Administrative division and units
13
Appropriations
161
Assistant secretaries
15
Branch offices
15, 35
Chairman
10, 12, 13
Chief counsel
12, 13, 14, 32, 35, 36, 40
Chief examiner
12, 13, 14, 31, 32, 35, 36, 40
Chief trial examiner
13, 14, 32, 35
Commissioners
12, 13, 161
Decisions (printed volumes)
16

INDEX

225

Federal Trade Commission-Continued.
Page
Economic adviser to
12, 15
Economic division or Chief Economist
13, 15, 27
Functions of
3
General legal activities
4, 31
Medical advisory service
7, 13, 15, 40, 136, 141
National defense activities
10, 27
Publications
15
Radio and periodical division
13, 14, 32, 35, 36, 131, 134, 137
Recommendations
19
Rules of practice
16, 33, 118, 188
Secretary
13
Statement of policy
198
Trade Practice Conference division
13, 14, 118, 125
Work for Congressional committees
10
Work for Temporary National Economic Committee
10
Federal Trade Commission Act
3, 6, 7, 12, 32, 34, 167
Civil penalties under
6, 105
Injunctive proceedings under
6, 102
Section 5
3, 102
Section 6
4, 14, 16, 23, 25, 26, 27, 145, 147
Section 9
161
Section 12
41
Section 13
102
Section 14
42
Section 16
105
Wheeler-Lea amendment to
40, 102, 141
Ferguson, Garland S., Commissioner
12, 13
Floret Sales Co., Inc., v F. T. C
99
Food and Drug Administration
40, 136, 141
Ford Motor Co., Dearborn, Mich
90, 91
Foreign Trade Work (see Export Trade Act)
6, 145
Franck Sons, Heinr., Inc., Flushing, N. Y
81
Freer, Robert E., Commissioner
13
Fresh Grown Preserve Corporation, Lyndhurst, N.J
94
Furniture prices, costs and profits investigation
9, 27
General Merchandise Co., Milwaukee
96
General Motors Acceptance Corporation, New York
91
General Motors Corporation and General Motors Sales Corporation, Detroit
90, 91
Gimbel Brothers, Inc., New York
90, 94
Gluck & Co., Joseph, Inc., New York
77
Good Housekeeping Magazine
77
Gotlieb, Lenard, trading as Reed’s Cut Rate Store and Fountain Cut Rate
Store, Clarksburg, W. Va
103
Hardwood Charcoal Co., Memphis, Tenn
74
Hearst Magazines, Inc., New York
77
Hershey Chocolate Corporation, Hershey, Pa
90, 95
Hill, Joe B., and C. O. McAfee, trading as McAfee Candy Co. and Liberty
Candy Co., Macon, Ga
96
Hills Brothers Co., New York
76
Hosiery Industry
118
House Document No.287, 77th Cong
9, 16, 25
House Naval Affairs Committee
11

226

INDEX

Page
Hubinger Co., Keokuk, Iowa
80
Hudson Co., The J. L., Detroit
94
Imperial Knife Co., Inc., Providence, R. I
79
Independent Offices Appropriation Acts:
Approved June 16, 1933
4
Approved April 18, 1940
161
Injunctive proceedings
6, 102
Inter-Departmental Conference Committee on National Food Resources
11
Interstate Bakeries Corporation, Kansas City, Mo
75
Interstate Commerce Commission
38
Intrastate sales
6, 96
Investigations
4, 8, 9, 10, 23, 199
Jaffe, Benjamin, trading as National Premium Co. and King Sales Co., Chicago
96
Kastor & Bros., Adolph, Inc., New York
79, 95
Kidder Oil Co., La Crosse, Wis
90, 95
Lambert Pharmacal Co., St. Louis
80
Lamont, Corliss & Co., New York
95
Lane, Albert, Berkeley, Calif
91
Lee Co., Geo. H., Omaha, Nebr
95
Linen industry
118
Liquor Trades Stabilization Bureau, Inc., San Francisco
90, 95
Lottery cases
6, 47, 96
Luxor, Ltd., Chicago
80
Macher, Carolina R., and Robert J., trading as Macher Watch and Jewelry
Co. and Wholesale Watch and Jewelry Co., New York
96
Mahler, Inc., D. J., East Providence, R. I
104
Mandel Brothers, Inc., Chicago
94
March, Charles H., Chairman, Federal Trade Commission
12, 13
Marshall Field & Co., Chicago
94
Mass food distributors investigation
9, 27
McKinley-Roosevelt College of Arts and Sciences, Chicago
90, 97
Mentho-Mulsion, Inc., Atlanta
90, 97
Merit Health Appliance Co., Los Angeles
104
Miller Drug Co., Rochester, N. Y
104
Miller-Tydings Act
188
Millinery Creators’ Guild, New York
90, 97
Minetree Brokerage Co., Poplar Bluff, Mo
81
Modern Hat Works, Jersey City, N.J
90, 97
Moretrench Corporation, Rockaway, N. J
97
Muller & Co., E. B., Port Huron, Mich
81
National Bureau of Standards
40, 136, 141
National Converters Institute, Chicago
74
National Standard Parts Association, Detroit
73
Neff, George G., trading as Prostex Co., Miami, Okla
90, 98
New York Premium Novelty Co., New York
96
Office of Price Administration
10, 27
Office of Production Management
10
Orders to cease and desist
5, 33, 34, 40, 49
Parfums Corday, Inc., New York
90, 98
Parr Sales Co., Vidalla, Ga
81
Penick & Ford, Ltd., Inc., New York
80

Pep Boys-Manny, Moe and Jack, Inc., Philadelphia

90, 98

INDEX

227

Page
Perfect Recondition Spark Plug Co., New York
90, 100
Perfume cases
98
Perma-Maid Co., Cincinnati
90, 99
Peter Cailler Kohler Swiss Chocolate Co., Inc., Fulton, N. Y
95
Petroleum Coordinator for National Defense
10
Pine Hill Lime & Stone Co., Pine Hill, Ky
73
Pittsburgh Plate Glass Co., Memphis, Tenn
75
“Pittsburgh plus” prices
102
Post Office Department
135
President of the United States
4, 9, 10, 12, 14, 125
Price fixing cases
5, 38, 43, 73
Quality Bakers of America, New York
90, 99
Queen Chemical Co., Mount Lebanon, Pa
104
Rabhor Co., Inc., The, New York
99
Raladam Co., Detroit
100
Raphael, Sol., Inc., New York
77
Resale price maintenance investigation
9, 27
Resistance welder manufacturing industry
118
Restraint of trade cases
5, 38, 40, 45, 73, 75
Robinson Clay Product Co., of New York. New York City
74
Robinson-Patman Act (see Clayton Act)
3, 5, 33, 36, 49, 80, 81, 82, 92, 99, 180
Rock, Monica M., Milwaukee
90, 100
Saks & Co., New York
90, 100
Sanitary Automatic Candy Corporation, New York
95
Schirade Cutlery Co., Walden, N. Y
79
Scientific Manufacturing Co., Scranton, Pa
100
Securities and Exchange Commission
23
Sherman Act
3, 42, 187
Sherry’s Cut Rate Drug Co., Inc., Bluefield, W. Va
103
Sohn & Co., Inc., Chicago
79
Standard Container Manufacturers’ Association, Inc., Jacksonville, Fla
90, 101
Sterling Appliance Co., Los Angeles
104
Stevenson Corporation, The New York
101
Stevenson, Jordan & Harrison, New York
101
Stipulations
4, 7, 14, 32, 36, 41
Subscription and mail-order book publishing industry
118
Sun Cut Rate Store, Huntington, W. Va
103
Supreme Court of the United States
5, 6, 16, 34, 90, 93, 96, 97, 102
Surgeon General of the United States Public Health Service
141
Temporary National Economic Committee
11, 15, 19, 20
Tennessee Coal, Iron & Railroad Co
102
Thomas Quilt Factories, Denver
90, 101
Thomsen-King & Co., Inc., Chicago
77
Trade practice conference procedure
7, 117
Trust laws and unfair competition abroad
147
“Truth In Fabrics”
128
Tuna industry
118
Union Starch & Refining Co. and Union Sales Corporation, Columbus, Ind
80
United Diathenny, Inc., New York
104
United States against J. H. Casey, Portland Oreg
105
United States against The Chesapeake Distilling & Distributing Co., Baltimore
105

228

INDEX

Page
United States against George E. McKewen, and others, trading as Herbal
Medicine Co., and Natex Co., Baltimore
105
United States against Mells Manufacturing Co., Brooklyn, N. Y
105
United States against Montebello Distillers, Inc., Baltimore
105
United States against Mutual Printing Co., Chicago
105
United States against The Perfect Manufacturing Co., Inc., trading as Kar-Nu Co.,
Cincinnati
105
United States against Joseph H. Piuma, Los Angeles
105
United States against Plantation Chocolate Co., Inc., Philadelphia
105
United States Bureau of The Census
23
United States Circuit Courts of Appeals
5, 34, 90, 91
First Circuit, Boston
99
Second Circuit, New York
90-101
Third Circuit, Philadelphia
95, 97-100
Fourth Circuit, Richmond, Va
98
Fifth Circuit, New Orleans
96, 97, 101, 102
Sixth Circuit, Cincinnati
93, 94, 99,100
Seventh Circuit, Chicago
93-97, 100
Eighth Circuit, St. Louis
95, 96
Ninth Circuit, San Francisco
91-93, 95
Tenth Circuit, Denver
101
United States District Courts
5, 6, 102
California, Southern District of
104, 105
Illinois, Northern District of
105
Maryland, District of
105
New York, Eastern District of
105
New York, Southern District of
104
New York, Western District of
104
Ohio, Northern District of
103
Ohio, Southern District of
105
Oregon, District of
105
Pennsylvania, Eastern District of
105
Pennsylvania, Western District of
104
Rhode Island, District of
104
Texas, Western District of
103
Virginia, Western District of
103
West Virginia, Northern District of
103
West Virginia, Southern District of
103
United States Public Health Service
40, 136, 141
United States Senate
20
United States Steel Corporation
102
Utica Cutlery Co., Utica, N. Y
79
Vice President of the United States
10
“War Against Waste”
10
Wartime costs, prices, and profits
10, 220
Webb-Pomerene Act (see Export Trade Act).
Wheeler-Lea Act (see Federal Trade Commission Act).
Wholesale Liquor Distributors’ Association of Northern California, Inc., San Francisco 76
Winship Corporation, Des Moines
77
Wool Products Labeling Act
4, 7, 14, 16, 118, 125, 182
Yardley of London, Inc., Union City, N. J
90, 99