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ANNUAL REPORT
OF THE

FEDERAL

TRADE COMMISSION
FOR THE

FISCAL YEAR ENDED JUNE 30

1946

UNITED STATES
GOVERNMENT PRINTING OFFICE
WASHINGTON: 1946

For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington 25, D.C.

Price 25 cents

FEDERAL TRADE COMMISSION
WILLIAM A. AYRES, Chairman
GARLAND S. FERGUSON
EWIN L. DAVIS
ROBERT E. FREER
LOWELL B. MASON
OTIS B. JOHNSON, Secretary
FEDERAL TRADE COMMISSIONERS--1945-1946
Name
Joseph E. Davies
Edward N. Hurley
William J. Harris
Will H. Parry
George Rublee
William B. Colver
John Franklin Fort
Victor Murdock
Huston Thompson
Nelson B. Gaskill
John Garland Pollard
John F. Nugent
Vernon W. Van Fleet
Charles W. Hunt
William E. Humphrey
Abram F. Myers
Edgar A. McCulloch
Garland 5. Ferguson
Charles H. March
Ewin L. Davis
Raymond B. Stevens
James M. Landis
George C. Mathews
William A. Ayres
Robert E. Freer
Lowell B. Mason

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

Period of service
Mar.16, 1915-Mar. 18,1918
Mar.16, 1915-Jan. 81, 1917
Mar. 16, 1915-May 31, 1918
Mar. 16,1915-Apr. 21, 1917
Mar. 16,1915-May 14, 1916
Mar.16, 1917-Sept. 25, 1920
Mar.16, 1917-Nov. 30, 1919
Sept. 4, 1917-Jan. 31, 1924
Jan.17, 1919-Sept. 25, 1926
Feb. 1, 1920-Feb. 24, 1925.
Mar. 6, 1920-Sept. 25,1921
Jan. 15, 1921-Sept. 25, 1927.
June 26, 1922-July 31, 1926.
June 16, 1924-Sept. 25., 1982.
Feb.25, 1925-Oct. 7, 1983.
Aug. 2, 1926-Jan. 15, 1929.
Feb.11, 1927-Jan. 23, 1983.
Nov.14, 1927.
Feb. 1, 1929-Aug. 28,1945.
May 26,1933.
June 26, 1933-Sept. 25., 1933.
Oct.10, 1932-June 30,1984.
Oct. 27, 1932-June 30,1934.
Aug.23, 1984.
Aug.27, 1985.
Oct.15, 1945.

EXECUTIVE OFFICES OF THE COMMISSION
Pennsylvania Avenue at Sixth Street, Washington 25, D. C.
BRANCH OFFICES
45 Broadway, New York 6
433 West Van Buren Street,
Chicago 7.

55 New Montgomery Street, San
Francisco 5.
447 Federal Office Building,
Seattle 4.
150 Baronne Street, New Orleans 12

1

The Chairmanship rotates annually. Commissioner Fergus on will become Chairman in January 1947.
II

LETTER OF SUBMITTAL
To the Congress Of the United States:
I have the honor to submit herewith the Thirty-second Annual Report of the Federal
Trade Commission for the fiscal year ended June 30, 1946. A limited number of copies
of the report is being printed by the Federal Trade Commission.
By direction of the Commission :
WILLIAM A. AYRES, Chairman.
III

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

Duties of the Commission
President approves reorganization plan
Commission revises rules of practice
Lanham Trade-Mark Act
Summary of legal activities during fiscal year
Proceedings resumed on cases suspended because of war
General investigations
The Commissioners and their duties
Publications of the Commission
Recommendations to Congress
PART I. GENERAL INVESTIGATIONS
International phosphate cartels
Wholesale baking industry, Part I
Wholesale baking industry, Part II
Fish production and distribution, Pacific coast
Resale price maintenance

13
15
17
17
18

PART II. GENERAL LEGAL WORK
Description of procedure
Informal procedure
Procedure upon formal complaints
Provisions of Wheeler-Lea amendment
Legal investigations
Disposition of cases by stipulation
Formal complaints
Orders to cease and desist
Types of unfair methods and practices
Cases in Federal courts
Tabular summary of legal and court work

21
21
22
23
24
28
28
31
37
43
48

PART III. TRADE PRACTICE CONFERENCES
Establishment of trade practice rules for industries
Group I and Group II rules explained
Trade practice conference activities during year
Industry rules and their administration
Types of practices covered in promulgated rules
Informative labeling

51
52
52
54
55
56
V

VI

CONTENTS

PART IV. WOOL PRODUCTS LABELING ACT
Informative labeling for protection of industry and the public

Page
58

PART V. RADIO AND PERIODICAL ADVERTISING
Special procedure provides continuous survey of published and
broadcast matter

61

PART VI. MEDICAL AND SCIENTIFIC OPINIONS
Data is utilized by Commission cases relating to food, drugs, devices,
and cosmetics

65

PART VII. FOREIGN TRADE WORK
Export Trade Act
Current list of associations
Exports in 1945
New associations
Investigations
Report for Senate Small Business Committee
Trade regulation and unfair competition abroad

66
66
68
68
68
70
71

PART VIII. FISCAL AFFAIRS
Appropriation acts providing funds for Commission work
Appropriations and expenditures for fiscal year
Detailed statement of costs for fiscal year
Appropriations and expenditures, 1915-46

73
73
74
75

APPENDIXES
Federal Trade Commission Act
Titles of other acts administered by the Commission
Rules of Practice
Statement of policy
Investigations, 1915-46
Index

76
84
85
101
103
121

ANNUAL REPORT
OF THE

FEDERAL TRADE COMMISSION
FOR THE

FISCAL YEAR ENDED JUNE 30, 1946
INTRODUCTION
DUTIES OF THE COMMISSION
The Federal Trade Commission herewith submits its report for the fiscal year July
1, 1945, to June 30, 1946.
The Commission, an administrative agency of the Federal Government, was
organized March 16, 1915, under the Federal Trade Commission Act, which was
approved September 26, 1914, and amended March 21, 1938.
The duties of the Commission fall into two categories: (1) Legal activities in the
enforcement of the laws it administers and (2) general investigations of economic
conditions in interstate and foreign commerce. Legal activities of the Commission
embrace administration of (1) the Federal Trade Commission Act which declares that
unfair methods of competition and unfair or deceptive acts or practices in commerce
are unlawful ; (2) section 2 of the Clayton Act, as amended by the Robinson-Patman
Act, prohibiting prices and other discriminations, and sections 3, 7, and 8 of the,
Clayton Act dealing with tying and exclusive dealing contracts, acquisitions of capital
stock, interlocking directorates respectively (3) the Export Trade Act, also known as
the Webb-Pomerene Law, which, for the purpose of promoting foreign trade, permits
the organization of associations to engage exclusively in export under stated
restrictions; and (4) the Wool Products Labeling Act of 1939, designed to protect
industry, trade, and the consumer against the evils resulting from the unrevealed
presence of substitutes and mixtures in wool products. In addition, the Lanham TradeMark Act, approved July 5, 1946, to become effective 1 year later, delegated to the
Commission important duties in respect to proceedings looking toward cancellation
of registered trade-marks. (See p. 7 for sections of the act relating to the duties of the
Commission.)
The general investigations arise under section (a), (b), (d), and (h) of the Federal
Trade Commission Act; giving the Commission power:
(a) To gather and compile information concerning, and to investigate from time to time the
organization, business, conduct practices, and management of

1

2

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

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 Commission in such form as the Commission
may prescribe annual or special, or both annual and special, reports or answers in writing to
specific questions, furnishing to the Commission such information as it may require as to the
organization, business, conduct, practices, management, and relation to other corporations,
partnerships, and individuals of the respective corporations filing such reports or answers in
writing. * * *
(d) Upon the direction of the President or either House of Congress1 to investigate and report
the facts relating to any alleged violations of the antitrust acts by any corporation.
(h) To investigate from time to time trade conditions in and with foreign countries where
associations, combinations, or practices of manufacturers, merchants, or traders, or other
conditions, may affect the foreign trade of the United States, and to report to Congress thereon,
and with such recommendations as it deems advisable.

PRESIDENT APPROVES REORGANIZATION PLAN
The Commission during the fiscal year drafted a reorganization plan conforming to
the program approved by President Truman and designed to expand the cooperative
phases of the Commission’s work and to improve and expedite observance of the laws
under its jurisdiction. The reorganization was put into effect August 12, 1946.
On February 15, 1946, the Commission submitted to the President the details and
objectives of the proposed reorganization, which the approved. He forwarded to the
House of Representatives, on May 20, 1946, a message endorsing the plan and
concurring in the Bureau of the Budget’s recommendation that the Commission be
given supplemental appropriation “to accomplish your (the President’s) expressed
objective of strengthening the Commission in order that it may effectively carry out
the mandates of the laws entrusted to its administration.”
In a letter accompanying the President’s message the Director of the Bureau of the
Budget succinctly set forth the major objectives of the plan, reorganization follows.
The proposed program contemplates that the Commission, on its own motion will initiate
investigations and take uniform corrective actions on an industry wide basis rather than through
the present individual company and public complaint procedure. The latter method has been
found to be both slow and inequitable. Under present procedure one company, on the basis of
a complaint, may be investigated and subsequently prohibited from following a particular unfair
practice, leaving competitors of that company free to follow that same practice until such time
as the Commission issues an individual cease and desist order against each company. Under the
proposed program where there is evidence of unfair trade practices existing in an industry all
members of that industry will be investigated and those utilizing unfair methods of competition
will be proceeded against simultaneously petition.
Under the proposed program greater emphasis will be placed on the elimination of unfair
trade practices through cooperative means. In those instances where circumstances permit,
industry members will be given an opportunity to eliminate unfair methods of competition
through stipulation agreements to cease and desist or through the establishment of trade practice
rules. Hereto1

The independent Officers Appropriation Act of 1934 provided that future investigation by
the Commission for Congress must be authorized by concurrent resolution of the two Houses.

Under the Appropriation. Act of 1947, funds appropriated for the Commission are not to be
spent upon any investigation thereafter called for by congressional concurrent resolution “until
funds are appropriated subsequently to the enactment of such resolution to finance the cost of
such investigation.”

PRESIDENT APPROVES REORGANIZATION PLAN

3

fore trade practice conferences have been held only when the Commission received a request
for rules from an industry. The Commission now plans to initiate these conferences on its own
motion where this means of eliminating unfair trade practice(s) appears appropriate. This action
by the Commission should permit more prompt, equitable, and economic settlement of the issues
involved than is otherwise possible.

Subsequently, the House and Senate Appropriations Committees approved the aims
set forth in the program, and the Congress voted a supplemental appropriation.
To effectuate the plan, the Commission reorganized certain of its divisions to
perform the duties assigned to them under the new program, as follows:
Office of General Counsel.--This office consists of a legal staff under the supervision
and direction of a General Counsel; an Associate General Counsel in charge of all
matters in the Federal courts; an Assistant General Counsel; a Chief Trial Counsel in
charge of the preparation of complaints and the trial of all formal cases before the
Commission; and three Assistant Chief Trial Counsel.
The General Counsel is the principal legal officer of the Commission, is responsible
for the general supervision of all legal proceedings before the Commission, has charge
of all Federal court work and may be called upon to advise the Commission on
questions of law arising out of any of the Commission’s work as distinguished from
questions arising out of litigation of formal case before it. He advises the Commission
as to the form and substance of proposed legislation which it may recommend for
enactment by Congress or regarding which committees of Congress may request the
opinion of the Commission.
Neither the General Counsel nor any other attorney in the Office of General Counsel
having to do with the prosecution of a formal complaint participates or advises in the
decision, recommended decision, or agency review of such complaint or of a factually
related complaint, except under the same conditions that are applicable to persons not
connected with the Commission, and which are set forth in the Commission’s
published Rules of Practice (see p. 85).
Office of Legal Investigations.--All legal investigations of the Com mission are
conducted by the staff of its Office of Legal Investigations, which has as its key
personnel a Director, and Associate Director, a Chief Examiner, and four Assistant
Chief Examiners, a Chief of the Radio and Periodical Division and an Assistant Chief.
The Director of the Office of Legal Investigations is responsible for the coordination
of the legal investigational activities of the Commission through the Legal
Investigations Division under the Chief Examiner and the Radio and Periodical
Division under its Chief. The Director also recommends to the Commission the
initiation of industry-wide investigations whenever it appears that uniform corrective
action may be warranted in the public interest and this course of action appears to be
practicable.
The Radio and Periodical Division conducts current and continuing surveys of radio,
newspaper, magazine, mail-order catalog, and circular advertising. It also conducts
investigations by mail. It obtains information through contact letters, examines and

analyzes the same and reports to the Commission through the Director with
appropriate recommendations.

4

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

The Legal Investigations Division, under the Chief Examiner, conducts from
Washington or through one of its several branch offices the Commission’s field
investigations of a legal nature and reports thereon to the Commission through the
Director with appropriate recommendations.
Division of Stipulations.--The Division of Stipulations consists of a Director, an
Assistant Director and a staff of attorney-conferees.
All matters considered appropriate for settlement by stipulation are referred by the
Commission to this Division, which serves upon the proposed respondent a statement
of the allegedly illegal practices the Office of Legal Investigations recommends should
be stopped. The Division of Stipulations takes no part in the investigation of any
matter, its duties being confined solely to the negotiation of stipulation.
When served with a statement of the practices alleged to be illegal, the proposed
respondent may reply by correspondence or, upon his request, may confer with the
Director of the Division of Stipulations, or with a designated attorney-conferee either
in person or through his authorized representative.
If the proposed respondent enters into a satisfactory stipulation to cease and desist
from such practices as the Director of the Division of Stipulations deems in accord
with the Commission’s direction, and to have been sufficiently substantiated by the
investigational records and reports, or by the admissions of the proposed respondent,
the stipulation is submitted to the Commission for its approval. In the event of failure
of the proposed respondent to sign a satisfactory stipulation covering the charges
which the Director considers to have been so substantiated, the Director then reports
the matter to the Commission with recommendation as to what action appears to be
required in the public interest. He may recommend formal complaint or closing of the
matter in whole or in part without prejudice to the right of the Commission to reopen
the case.
Office of Trade Practice Conferences and Wool Act Administration.--Rules for the
elimination and prevention of unfair trade practices on an industry-wide basis are
established by the Commission under its trade practice conference procedure the
requirements for which are set forth in the Commission’s published Rules of Practice
(see page 85). This work is conducted by the Commission through the staff of the
Office of Trade Practice Conferences and Wool Act Administration, which Office also
administers the Wool Products Labeling Act of 1939 and the rules and regulations
issued thereunder. These activities are under the supervision of a Director who is
principal adviser to the Commission in such matters; an Associate Director; and three
Assistant Directors in charge, respectively, of the Rule Making Division the Rule
Administration Division, and the Wool Administration and Inspection Division.
Under this Office the trade practice conference procedure has been expanded in its
usefulness and made available to more industries. Proceedings for establishing trade
practice conference rules are now instituted upon motion of the Commission, as well
as upon application from members of an industry. Before the reorganization, proceedings were authorized only upon request from an industry. In all such proceedings
the principle of cooperation as against formal

PRESIDENT APPROVES REORGANIZATION PLAN

5

procedure is emphasized as a means of curbing unfair competitive methods. The
reorganization enables the Commission more effectively to bring to business and the
public the important advantages of general and simultaneous correction of bad
practices throughout whole industries; to reduce and avoid the necessity of a
multiplicity of adversary legal proceedings and piecemeal corrective action, as well
as affording industries the help and guidance of approved trade practice rules. It also
provides a workable, systematic method for carrying out voluntary compliance with
rules to the fullest extent possible and also affords that flexibility and prompt revision
of rules which is necessary to keep abreast of constantly changing and developing
competitive conditions.
The Office as reorganized likewise effectuates a closer integration of the Wool Act
administration with related trade practice rules in order that unified action and more
adequate coverage of the textile field may be accomplished.
Trial Examiners Division.--The Trial Examiners Division consists of a Chief Trial
Examiner, an Assistant Chief Trial Examiner, and a staff of attorneys designated trial
examiners who are charged with the trial of the issues under the several acts
administered by the Commission. The Division hereafter will function so as to
conform to the principles of the Administrative Procedure Act, approved by the
President June 11, 1946. This act in many particulars involves a departure from the
procedure formerly followed in the trial of cases.
The reorganization affected the Trial Examiners Division to the extent that the work
it formerly performed with respect to the negotiation and preparation of certain types
of stipulations to cease and desist was transferred to the new Division of Stipulations.
Division of Accounts, Statistics, and Economic Reports.--The reorganization did not
materially affect this Division except to change its name from the Division of
Accounts, Statistics, and Economic Investigations to the Division of Accounts,
Statistics, and Economic Reports. The Division’s method of investigations had always
been conducted on industry-wide bases, as contemplated under the reorganization for
legal investigations.
Then work of this Division is in charge of a Director, who also is the Chief
Economist; a Chief Accountant, a Chief Statistician and an Assistant Chief Economist,
who are Assistant Directors of the Division.
The purposes of the general economic surveys conducted by this Division are to
ascertain and report the facts to the President or to the Congress concerning genera
economic conditions, the state of competition and the degree of concentration in a
given industry, together with suggestions for remedial legislation. Such surveys are
made in response to the request of the President, at the direction of the Congress, or
upon the initiative of the Commission, as provided in section 6 of the Federal Trade
Commission Act (see p.1).
As a regular part of its work the Division is called upon to advise and consult with
the Commission’s attorneys and to prepare accounting, economic, and statistical
analyses in connection with legal cases.
Medical Advisory Division.--The reorganization did not materially change this
Division except to assign to it the duty of liaison with cer-

6

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

tain scientific agencies of the Government and of coordinating scientific studies and
investigations to avoid conflict or duplication of work, to promote cooperation and to
acquire scientific advice and assistance for the Commission.
The Division studies and reports on statements or documents in its field which are
before the Commission or its Divisions for consideration and gives scientific opinions
and assistance to the Commission and the personnel of its various Divisions.
Divisions Assigned to Commissioners.--The reorganization plan provides for the
annual rotation among the Commissioners of general supervision over the
Commission’s several offices and divisions and internal organizations. For the period
of July 1, 1946, through March 31, 1947, the assignment of Commissioners to
supervisory charge of offices and divisions is as follows:
Chairman William A. Ayres: Office of General Counsel.
Commissioner Garland S. Ferguson: Division of Accounts, Statistics and Economic
Reports.
Commissioner Ewin L. Davis: Office of Trade Practice Conferences and Wool Act
Administration and Division of Stipulations.
Commissioner Robert E. Freer: Office of Legal Investigations and Medical Advisory
Division.
Commissioner Lowell B. Mason: The Executive Office of the Commission
(Secretary’s Office and the Administrative Divisions), Trial Examiners Division, and
Publication and Procurement Division.
( See p.10 for assignments of Commissioners during fiscal year ended June
30,1946.)
COMMISSION REVISES RULES OF PRACTICE
In order to bring its procedure into conformity with the Administrative Procedure
Act, approved June 11, 1946, the Commission revised its Rules of Practice, effective
July 1, 1946. The stated objective of the act is “to improve the administration of justice
by prescribing fair Administrative procedure.”
On June 26, 1946 , the Commission made the following public announcement
concerning the revised Rules of Practice:
The revisions now made are such as are deemed necessary or desirable in view of the text and
the principles of the Administrative Procedure Act, approved June 11, 1946. The present
revisions have an important limitation in their scope. Sections 7 and 8 of the new act (relating,
respectively, to the conduct of agency hearings and to the making of decisions) do not * * *
become effective until December 11, 1946. The said sections legalize certain procedural
functions which the acts of Congress, as now in effect granting powers to the Federal Trade
Commission, do not legalize. Hence amendments to the Commission’s Rules of Practice, in
addition to those embodied in the rules today released, will later be made. These will implement
said sections 7 and 8 of the new act, insofar as the Commission’s procedure is concerned.
The Commission, in now issuing its revised Rules of Practice, has acted upon the belief that
it is more promotive of the public interest to adopt such rules as are lawful under existing
statutes administered by it and are in harmony with the purposes of the new act, than to withhold
these rules for 6 months in order to make all the revisions of its Rules of Practice, pursuant to
the new statute, at the same time.

The Commission published in the Federal Register of September 11, 1946, a
statement concerning its organization procedure, policy, and rules. This information
was published to conform to the requirements of the Administrative Procedure Act.

LANHAM TRADE-MARK ACT

7

The text of the revised Rules of Practice appears on page 85. Copies of the rules may
be obtained upon application to the Commission.
LANHAM TRADE-MARK ACT
The Lanham Trade-Mark Act (Public Law 489, 79th Cong.), approved by the
President, July 5, 1946, delegates to the Federal Trade Commission certain duties with
respect to the cancellation of trademarks registered with the Patent Office. The act
becomes effective July 5, 1947.
Section 14 of the act provides that-the Federal Trade Commission may apply to cancel on the grounds specified in subsections (
c) and (d) of this section any mark registered on the principal register established by this act, and
the prescribed fee shall not be required.

Under subsections (c) and (d) of section 14, the Commission may apply for
cancellation-(c) at any time if the registered mark becomes the common descriptive name of an article or
substance on which the patent has expired, or has been abandoned or its registration was
obtained fraudulently or contrary to the provisions of section 4 or of subsections (a), (b), or (c)
of section 2 of this act for a registration hereunder, or contrary to similar prohibitory provisions
of said prior acts for a registration thereunder, or if the registered mark has been assigned and
is being used by, or with the permission of, the assignee so as to misrepresent the source of the
goods or services In connection with which the mark is used or if the mark was registered under
the act of March 3, 1881, or the act of February 20, 1905, and has not been published under the
provisions * * * of this act; or
(d) at any time in the case of a certification mark on the ground that the registrant (1) does
not control, or is not able legitimately to exercise control over, the use of such mark, or (2)
engages in the production or marketing of any goods or services to which the mark is applied,
or (3) permits the use of such mark for other purposes than as a certification mark, or (4)
discriminately refuses to certify or to continue to certify the goods or services of any person who
maintains the standards or conditions which such mark certifies.

Subsections (a), (b), and (c) of section 2, referred to above, authorize the
Commission to apply for cancellation of a registered mark if it-(a) Consists of or comprises immoral, deceptive, or scandalous matter ; or matter
which may disparage or falsely suggest a connection with persons, living or dead,
institutions, beliefs, or national symbols, or bring them into contempt, or disrepute.
(b) Consists of or comprises the flag or coat of arms or others insignia of the United
States, or of any State or municipality, or of any foreign nation, or any simulation
thereof.
(c) Consists of or comprises a name, portrait, or signature identifying a particular
living individual except by his written consent, or the name, signature, or portrait of
a deceased President of the United States during the life of his widow, if any, except
by the written consent of the widow.

The act provides further that the Commission may apply for cancellation when
registration of a mark was obtained contrary to the provisions of section 4, which
reads-SEC. 4. Subject to the provisions relating to the registration of trade-marks, so far
as they are applicable, collective and certification marks, including in dictations of
regional origin used in commerce, shall be registrable under this act, in the same
manner and with the same effect as are trade-marks, by persons, and nations, States,
municipalities, and the like, exercising legitimate control over the use of the marks
sought to be registered, even though not possessing an industrial or commercial
establishment, and when registered they shall be entitled to the protection provided
herein in the case of trade-marks,

8

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

except when used so as to represent falsely that the owner or a user thereof makes or
sells the goods or performs the services on or in connection with which such mark is
used * * *.
SUMMARY OF LEGAL ACTIVITIES DURING FISCAL YEAR
The Commission issued 101 formal complaints alleging violations of the laws it
administers; entered 89 orders directing respondents to cease and desist from such
violations ; and accepted 96 stipulations to discontinue unlawful practices, 23
pertaining especially to radio and periodical advertising.
The Commission was a party in 17 cases decided in the United States courts. Results
favorable to the Commission were obtained in 14 cases, 5 in the Supreme Court and
9 in United States Circuit Courts of Appeals. Commission orders to cease and desist
were affirmed by circuit courts of appeals in 9 cases, 1 with modifications. Three petitions for review were withdrawn from circuit courts of appeals by respondents, leaving
Commission orders to cease and desist in effect. The Supreme Court in 5 cases denied
respondents’ pleads for certiorari. A Commission order to cease and desist was
reversed in 1 case in the circuit court of appeals, and the Supreme Court reversed 2
orders and remanded the cases for further proceedings. Three petitions for review of
Commission orders were filed by respondents in circuit courts of appeals.
Trade practice conferences were held for nine industries. Trade practice rules were
approved for promulgation for the artificial limb industry, construction equipment
distributing industry piston ring industry, and wholesale confectionery industry
(Philadelphia trade area);
In the administration of the Wool Products Labeling Act field inspections were made
of several million articles subject to the labeling provisions of the act, covering the
labeling practices of over 5,500 manufacturers, distributors, and other marketers.
The Commission conducted several investigations into the operation of export
associations organized under the Export Trade Act. Investigation of the Phosphate
Export Association was completed, and recommendations for the readjustment of the
business of the association were issued. At the close of the fiscal year, 49 export
associations were registered with the Commission.
PROCEEDINGS RESUMED ON CASES SUSPENDED BECAUSE OF WAR
The suspense of work on many cases because of war conditions was lifted by the
Commission on August 27, 1945. These cases involve a wide range of products
including precision instruments, machinery, chemicals, construction materials and
automobile tire chains. The suspensions had been ordered pursuant to an arrangement
between the War and Navy Departments and the Commission, April 28, 1942,
providing for the postponement of any proceeding at the request of those Departments
when, in the opinion of the Secretary of War and the Secretary of the Navy, their
continuation would seriously interfere with the war effort. On August 17, 1945, the
War Department, and on August 20, 1945, the Navy Department, withdrew their
requests. The Commission thereafter announced the lifting of its suspension of these

matters and proceeded with them as expeditiously as possible.

THE COMMISSIONERS AND THEIR DUTIES

9

GENERAL INVESTIGATIONS
Five general investigations were completed during the fiscal year and reports thereon
were made to Congress under the titles:
Resale Price Maintenance.
Wholesale Raking Industry, Part I--Waste in the Distribution of Bread; and Part II-Costs, Prices, and Profits.
International Phosphate Cartels.
Distribution Methods and Costs, Part IX--Cost of Production and Distribution of
Fish on the Pacific Coast. This investigation was undertaken in cooperation with the
Office of the Coordinator of Fisheries, Department of the Interior.
During its existence the Commission has conducted more than 135 general
investigations and 370 cost studies.2 A majority of these general investigations were
authorized by congressional resolutions, some were conducted pursuant to Presidential
orders, a number were made at the request of other branches of the Government, and
others on the initiative of the Commission. Many of these inquiries have supplied
valuable information bearing on competitive conditions and trends in interstate trade
and industrial development and have shown the need for, and wisdom of, legislative
or other corrective action.
Investigations conducted by the Commission have led, directly or indirectly, to the
enactment of important laws, including the Export Trade Act the Packers and
Stockyards Act , the Securities Act of 1933, the Stock Exchange Act of 1934, the
revised Federal Power Commission Act of 1934, the Public Utilities Holding Company
Act of 1935, the Natural Gas Act of 1938, and the Robinson-Patman Antidiscrimination Act of 1936, which amended section 2, of the Clayton Act.
THE COMMISSIONERS AND THEIR DUTIES
The Federal Trade Commission is composed of five Commissioners appointed by
the President and confirmed by the Senate. Not more than three may belong to the
same political party.
As provided in the Federal Trade Commission Act, the term of office of a
Commissioner is 7 years, dating from the 26th 3 of September last preceding his
appointment, except when he succeeds a Commissioner who relinquishes office prior
to the expiration of his term in which case the act provides that the new member “shall
be appointed only for the unexpired term of the Commissioner whom he shall succeed.” Upon the expiration of his stated term of office, a Commissioner continues to
serve until his successor shall have been appointed and shall have qualified.
As of June 30, 1946, the Commission was composed of the following members:
William A. Ayres, Democrat, of Kansas, Chairman; Garland S. Ferguson, Democrat,
of North Carolina; Ewin L. Davis, Democrat, of Tennessee; Robert E. Freer,
Republican, of Ohio; Lowell B. Mason, Republican, of Illinois.4
The Chairmanship of the Commission rotates annually among its members.
Commissioner Ayres is serving as Chairman during the
2

An alphabetical list and brief of description of the investigations conducted by the
Commission appear in the appendix, beginning at p.103.
3 September 26 marks the anniversary of the approval of the Federal Trade
Commission Act in 1914.

4 Commissioner Mason took office October 15, 1945. He succeeded Commissioner
Charles H. March, who died August 28, 1945.

10

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

calendar year 1946, having succeeded Commissioner Davis. Commissioner Ferguson
will become Chairman in January 1947. Through this method of rotating the
chairmanship, each Commissioner serves as Chairman at least once during his term of
office. The Chairman presides at meetings and signs the more important official papers
and reports at the direction of the Commission.
In addition to the general duties of administering the statutes committed to the
Commission for enforcement, each has supervisory charge of the work of one or more
of the divisions of the Commission. During the 1946 fiscal year Chairman Ayres had
supervisory charge of the Medical Advisory Division and the several Administrative
Divisions; Commissioner Ferguson, of the Trial Examiners Division and the Division
of Trade Practice Conferences; Commissioner Davis, of the Trial and Appellate
Division; Commissioner Freer, of the Radio and Periodical Division and the Division
of Accounts, Statistics and Economic Investigations; and Commissioner Mason, of the
Legal Investigations Division. (See p.6 for assignments of Commissioners for period
from July 1, 1946, through March 31 1947.)
The Secretary of the Commission is its executive officer. Each case coming before
the Commission for consideration is assigned to a Commissioner for examination and
report before it is acted upon by the Commission. The Commissioners meet each work
day for the transaction of business, including the hearing of oral arguments in cases
before the Commission. They usually preside individually at the trade practice
conferences held for industries, perform numerous administrative duties incident to
their position, and direct the work of a staff which, as of June 30, 1946, numbered 513
officials and employees, including attorneys, economists, accountants, and
administrative personnel stationed in Washington and in 5 branch offices. In addition,
34 members of the staff were on military furlough and serving in the armed forces of
the Nation.
PUBLICATIONS OF THE COMMISSION
The Federal Trade Commission Act , section 6 (f) , provides that the Commission
shall have power-to make public from time to time such portions of the information obtained by it
hereunder, except trade secrets and names of customers, as it shall deem expedient to
the public interest ; and to make annual and special reports to the Congress and to
submit therewith recommendations for additional legislation ; and to provide for the
publication of its reports and decisions in such form and manner as may be best
adapted for public information and use.
Publications issued during the fiscal year were:
Annual Report of the Federal Trade Commission for the Fiscal Year Ended June 30,
1945. House Document No. 407, Seventy-ninth Congress, second session, January 11,
1946 ; 116 pages. Available from the Superintendent of Documents, Government

Printing Office, at 25 cents a copy while the supply lasts.

PUBLICATIONS OF THE COMMISSION

11

Trade Practice Rules for the Artificial Limb Industry, April 16, 1946, 14 pages.
Available from Federal Trade Commission without charge while the supply lasts.
International Phosphate Cartels, May 1, 1946; 60 pages. Available from Federal
Trade Commission without charge while the supply lasts.
Resale Price Maintenance, December 13, 1945; 872 pages. Available from the
Superintendent of Documents, Government Printing Office, at $1.50 a copy while the
supply lasts. Summary, 39 pages, available from the Federal Trade Commission
without charge while the supply lasts.
Wholesale Baking Industry, Part I, Waste in the Distribution of Bread, April 18,
1946; 25 pages. Available from the Superintendent of Documents, Government
Printing Office, at 10 cents a copy while the supply lasts.
The publications of the Commission reflect the character and scope of its work and
vary in content and treatment from year to year. Important among them are those
presenting fact-finding studies, reports and recommendations relating to general
business and industrial inquiries. Illustrated by appropriate charts and tables, these
books and pamphlets deal with current developments, possible abuses, and trends in
an industry, and contain scientific and historical background of the subjects discussed.
They have supplied the Congress, the Executive agencies of the Government, and the
public with information not only of specific and general value but of especial value as
respects the need or wisdom of new and important legislation, to which they have
frequently led, as well as to corrective action by the Department of Justice and private
interests affected. The Supreme Court has at times had recourse to them, and many
have been designated for reading in connection with university and college courses in
business administration, economics, and law.
The 38 volumes of Federal Trade Commission Decisions contain (1) the findings
of fact and orders to cease and desist issued by the Commission throughout the years;
(2) the stipulations accepted by the Commission wherein respondents agree to cease
and desist from unlawful practices; and (3) the decisions of the courts in Commission
cases for the different periods covered by the different volumes. They constitute a
permanent and authoritative record of the remedial measures taken by the Commission
to stop violations of the laws it administers. The decisions establish for industry,
business, and the individual the guideposts of fair competitive dealing. They also tell,
case by case, the story of the multiplicity of unlawful practices which have been found
to be detrimental to the public interest and of the accomplishments of the Commission
in the prevention of such practices.
Decisions of the Federal courts reviewing Commission cases also are published from
time to time in separate volumes and may be purchased from the Superintendent of
Documents, Government Printing Office.
The trade practice rules the regulations under the Wool Products Labeling Act, and
the Rules of Practice before the Commission are published in pamphlet form and may
be obtained from the Commission without charge.
721821--46----2

12

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

RECOMMENDATIONS TO CONGRESS
The only specific recommendation for legislation which the Commission has made
in its annual reports for some years past is that section 7 of the Clayton Act be
amended in order to curb more effectively the increasing mergers of competing
corporations under common ownership through acquisition of their stock or assets.
During the current fiscal year a bill to accomplish that purpose (H. R. 4810, 79th
Cong. 2d sess.) was favorably reported by the House Committee on the Judiciary, but
did not reach the floor for discussion before the end of the concluding session of the
Seventy-ninth Congress. The Commission renews its advocacy of the objective
embodied in such bill, an objective which was also supported by the Temporary National Economic Committee. The following chart shows the sharp increase in the
merger movement since the end of the war.

GRAPH
not available

Another recommendation which the Commission desires to make is for such
amendment of the Clayton Act as will give the Commission’s orders to cease and
desist under that act the same sanctions and the same decree of finality that its orders
now have under the Federal Trade Commission Act. Orders issued under the Clayton
Act can now be enforced only by first obtaining court affirmance and a court decree
commanding obedience to the order, and then following this with a contempt
proceeding if the court decree is disobeyed. Prior to the Wheeler-Lea amendment of
the Federal Trade Commission Act in 1938, that was the only method of enforcing
compliance with the Commission’s orders issued under that act, but since that
amendment such orders become final within 60 days unless judicial review is initiated,
and violations of any final order are subject to a specified money penalty, recoverable
by civil penalty suit. There appear to be no substantial reasons why orders under both
acts should not have the same status as to finality and as to penalties for violation.
(Commissioner Mason did not participate in these legislative recommendations.)

PART I. GENERAL INVESTIGATIONS
Reports submitted to Congress during the fiscal year covered International
Phosphate Cartels, May 1, 1946; Wholesale Baking Industry, Part I--Waste in the
Distribution of Bread, April 22, 1946; and Resale Price Maintenance, December 13,
1945.
Two other investigations were completed and the reports transmitted to Congress
soon after the close of the fiscal year. They were Wholesale Baking Industry, Part II-Costs, Prices, and Profits, August 7, 1946, and Distribution Methods and Costs, Part
IX--Cost of Production and Distribution of Fish on the Pacific Coast, July 25, 1946.
The reports are summarized below.
INTERNATIONAL PHOSPHATE CARTELS
For approximately three-quarters of a century the Congress and the public have been
concerned with different aspects of the monopoly problem. International cartel
agreements are one phase of this problem. Public apprehension concerning cartel
operations was intensified when it was disclosed that Germany had used international
cartel agreements to retard scientific developments in the United States and to further
her own preparations for war.
The term “cartel,” which applies to a type of combination in restraint of trade, was
introduced into American usage from Europe, particularly from Germany where it
originated under the name “kartel.” In the United States, cartel types of activities have
flourished under various designations. However, not all such activities have restrained
competition.
A cartel may be defined as a combination in restraint of competition in industry and
trade that is implemented through agreements among enterprises maintaining separate
identities and separate ownerships, stock controls, and managements. From the
viewpoint of operation, cartels may be classified as (1) local, (2) national, (3)
international. The Commission’s study has concentrated on agreements among
international cartels.
United States industries participating in cartels have included producers of
aluminum, alkalies, electric equipment and appliances, fertilizer (phosphates and
potash), petroleum products, steel products, and sulfur.
The report of the Commission on international phosphate cartels shows that as early
as January 20, 1920, less than a year after the organization of Phosphate Export
Association,1 a Webb-Pomerene law export association, negotiations were opened
with the French North African miners for an international cartel agreement to stabilize
the marketing of phosphate rock in Europe. An agreement was not arrived at because
demand exceeded the supply.
1

See p. 68 for recommendations made by the commission for the readjustment of

this association’s business.
13

14

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1940

Negotiations were continued from time to time, and in December 1933 several
international agreements were signed which included Phosphate Export Association
and Florida Hard Rock Association, representing United States producers, and the
French North African group, the Egyptian interests (Italian and British), and the
Pacific Island interests (French and English). The following year an agreement was
signed controlling shipments from the Dutch East Indian Island of Curacao to Europe.
On April 15, 1937, another cartel agreement was entered into involving division of
tonnage for shipment to Japan between a “Low Grade Group” consisting of American,
French North African, and Egyptian producers, and a “Pacific High Grade British
interests producing in Ocean, Nauru, and Christmas Islands, and French interests
producing in Makatea Island.
The so-called French agreement was the basic international phosphate agreement.
It was an agreement between Phosphate Export Association, composed of United
States producers in Florida, and Comptoir des Phosphates D’Algerie et de Tunisie and
Office Cherifien des Phosphates, representing French African producers.
Among other provisions, the agreement allocated European phosphate sales between
the Florida and French African producers in the proportions of 16 and 84 percent,
respectively, up to 4,500,000 metric tons, and in the proportions of 14 percent to the
United States producers and 86 percent to the French African producers when sales
exceeded 4,500,000 metric tons. The agreement was for a 10-year period, to end
December 31, 1943. European prices, except to France, were to be fixed by mutual
agreement. The French Government insisted that French industry and French farmers
should receive the benefit of favorable prices.
It appears that certain articles of the agreement were inserted (1) to protect American
producers should Swift Co. and Ore & Chemical Corp., the latter controlled by
Germany’s Metallgesellschaft, withdraw from Phosphate Export Association; (2) to
protect the Florida companies in the Japanese market and prevent sales by Morocco
producers in Canada and Cuba; and (3) to discourage imports to the United States by
“reserving to the American group full liberty of action in the United States of
America.” This last provision was understood by a member, as stated in a letter, as
meaning:
Naturally, also, the agreement should provide that during its life the French producers will not
Ship their rock to the United States.

For several years prior to 1932, French Morocco producers shipped phosphate rock
to the United States, but during the years 1933 to September 1939, when the cartel
agreement was effective, no shipments were received from Morocco.
Annual exports of phosphate from the United States averaged 849,690 long tons
during the 15-year precartel agreement period, 1 919-33, and averaged 1,100,767 long
tons while the cartel agreement was effective from 1934 to 1938. United States export
price averaged $3.98 per long ton f. o. b. mines for the period 1919-39, compared with
an average of $2.82 for domestic sales of Florida phosphate. During the period of the
cartel agreement the average export price was $4.27 per ton compared with $2.44 f.
o. b. mine for domestic sales.

WHOLESALE BAKING INDUSTRY, PART I

15

The profit per dollar of sales for the seven companies comprising Phosphate Export
Association was 26.62, 23.91, and 25.86 cents, respectively, in 1936, 1937, and 1938,
when the cartel agreement was effective, compared with 19.93, 13.10, and 19.42 cents
in 1939, 1940 ,and 1941, after the agreement became inoperative following the
outbreak of World War II in 1939.
Before payment of Federal income taxes, the net profits of four of the phosphate
mining companies averaged 12.11 percent in 1937 and 12.55 percent in 1938 when the
cartel agreement was effective, de creased to 9.42 percent in 1939 and to 7.46 percent
in 1940, and then increased to 11.95 percent in 1941.
The international phosphate cartel agreements, in which Phosphate Export
Association participated, included a number of typical cartel activities, such as price
fixing by joint action in export markets (except France), allocation of trade on a
percentage basis in markets shared jointly, and elimination of competition in members’
exclusive markets, e. g., Cuba, Canada, and the United States, which were reserved to
United States producers.
WHOLESALE BAKING INDUSTRY, PART I
The report on the Wholesale Baking Industry, Part I--Waste in the Distribution of
Bread was submitted to the President and Congress April 22, 1946.
During the war the Commission was twice requested to make a study of the
wholesale baking industry, first, in 1941, for the Office of Price Administration, and
second, in the last quarter of 1942 for the Director of the Office of Economic
Stabilization. In these inquiries a number of wasteful and uneconomic distribution,
practices were disclosed. For example, it was found that in September 1942, after the
bread industry had announced it was attempting to voluntarily reduce waste resulting
from return of unsold bread, there was still bread destroyed or sold for animal food
sufficient to furnish one third of a 1-pound loaf daily for more than the entire
population of Philadelphia, or of a State with a population exceeding that of South
Carolina. Other uneconomic practices were found to exist.
As a result of the report made to the Economic Stabilizer, the re turn of unsold bread
resulting from so-called consignment selling, furnishing bread racks to certain retailers
free to induce dealers to handle the bread of a particular wholesaler, and other costly
trade practices were forbidden under War Food Order No.1, and delivery service was
reduced under the orders of the Office of Defense Transportation.
Notwithstanding the world shortage of food, particularly of cereals, observance of
War Food Order No.1 was far from complete, particularly on the part of some large
interstate and large local bakeries, especially in the larger markets where they did not
dominate the bread trade, such as the Metropolitan New York area, Cleveland, the
Pacific Coast States and in sections of Texas.
In sections where wholesale bakers observed the prohibition against return of unsold
bread, companies not only conserved human food but increased their profits. In fact,
when the Government increased the

16

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

extraction of flour from wheat to 80 percent, a large baker wrote to his branch plant
managers that:
It has been called to the attention of the Government that had the baking industry lived up to
F. D. O. No. 1, 2 it is possible we would not have had to go to a darker flour in this country.

Even with only imper feet compliance with War Food Order No.1, the savings of w
heat for human consumption were important. Compared with September 1942, when
it appears waste from consignment selling had been reduced to its lowest point through
voluntary effort, the 1945 reduction in return of unsold bread, based upon statistics
obtained from bakeries located in all parts of the country, was 3.18 percent, which
would have resulted in annual savings of 465,138,000 pounds of bread and yeastraised bakery products for the year 1945. As stated in the Commission’s report:
This quantity of bread would be sufficient to supply the 46,467,000 total 1940 population of
England, Scotland, and Wales with a daily ration of one-third pound of bread for 30 days; for
the entire population of France for over 36 days; or a similar ration for the 9,090,000 population
of the Netherlands for 5 months; for the 8,387,000 population of Belgium for 5 ½ months; or
for the 8,887,000 population of Finland for 1 year. This estimate of savings covers bread and
yeast-raised products. Additional savings would have resulted from discontinuing the taking
back of unsold cakes and other sweet goods.

The long-time effect of consignment selling is found in its competitive results. It is
used by financially strong wholesale bakers to establish themselves in new markets to
the competitive detriment of smaller, less financially strong bakers. Consignment
selling, the giving of free goods and premiums, free bread racks, the installation of
counters free in the larger retail outlets, and the practice of selling 20-ounce or even
heavier loaves in new or highly competitive territory, while selling a 1-pound loaf at
the same price in other markets where the sellers were firmly established have
characterized competition in the industry. Smaller and medium sized wholesalers complained of these practices as endangering their existence.
In its report to the President and the Congress, the Commission stated:
In conclusion, then, there are several sound reasons for continuing and strengthening, rather
than relaxing, the waste-preventing provisions of wartime regulations respecting consignment
selling of bakery products that may be summarized as follows:
1. Humanitarian considerations growing out of world-wide need for conservation of foodstuffs
at least until war devastated economies are rehabilitated.
2. Need in the baking industry for such reasonable public assistance and direction, short of
dictatorial control, as may be necessary for the maintenance of fair and equitable competitive
conditions under which small local bakers can compete with units of large bakery consolidations
on the basis of their efficiency in supplying the local market rather than on their relative
financial ability to withstand competitive losses due to wasteful competition in consignment
selling.
3. American consumer interest in the elimination of competitive waste to the end that food

supplies adequate to maintain national health and welfare shall be available both during and
after the present emergency at minimum prices consistent with healthy development and
operation of the wholesale baking industry.
4. Make available to returning veterans a field of useful business in which they may have a
fair chance to develop a profitable and growing business. A skillful small baker can furnish the
public a product equal or superior to that of the
2

Food Distribution Order No.1, originally known as War Food Order No., 1.

FISH PRODUCTION AND DISTRIBUTION, PACIFIC COAST

17

large baker, particularly where the bakery products are trucked considerable distances.
Elimination of competitive waste and unfair and inequitable aspects of consignment selling
as now practiced by the industry contributes materially to all of these sound objectives without
danger to American standards of living or public health with a minimum of inconveniences to
consumers of wholesale bakery products during the present emergency, and can continue to do
so after the emergency is past.
THE REMEDY
The only thing needed to stop waste from the return of unsold bread is to obtain complete
cooperation of wholesale bakery officials, driver salesmen, and retail dealers in the observance
of War Food Order No.1 in the present emergency. It has been suggested by a union official in
a territory in which returned bread was destroyed by being dumped in a river, that the
cooperation of national union officials would be helpful.
It is also suggested that a careful examination of present laws be made by the legislative and
executive branches of the government to determine what legislation, if any, is needed to
permanently eliminate wasteful trade practices and predatory competition which threaten the
existence of many small bakers, foredoom new ventures to failure and promote regional
monopolistic control of the wholesale bread-baking industry.

WHOLESALE BAKING INDUSTRY, PART II
Part II of the report on the Wholesale Baking Industry was in course of preparation
during the fiscal year, but was not transmitted to Congress until August 7, 1946. It
presents information concerning prices and pricing practices in the industry, profits
earned and unit costs of production and distribution. The report compares the details
of production and distribution costs for bread and rolls, other bakery products, and for
all bakery products for two operating periods in 1945, namely, March and September.
Comparisons of costs are also made for these two periods for plants, arranged by
geographical areas. In addition, comparisons of the costs of production and distribution
are made by size groups o f wholesale bakeries and of 1945 costs with the 1942 costs,
the latter compiled in an earlier inquiry for the Director of the Office of Economic
Stabilization.
FISH PRODUCTION AND DISTRIBUTION, PACIFIC COAST
The Commission’s report entitled Distribution Methods and Costs, Part IX--Cost of
Production and Distribution of Fish on the Pacific Coast was not completed in time
for transmission to Congress until shortly after the close of the fiscal year, on July 25,
1946. Similar reports for other areas have been submitted to Congress and represent
an extension of the general investigation of distribution methods and costs for other
important consumer commodities made by the Commission pursuant to authority
conferred upon it by section 6 of the Federal Trade Commission Act.
In April 1944, the Commission was requested by the Office of the Coordinator of

Fisheries of the United States Department of the Interior to conduct a study of the
production and distribution of fishery products in the New England, Middle Atlantic,
Gulf, Pacific, and Great Lakes producing regions. The Coordinator of Fisheries was
charged under Executive Order 9204 with the responsibility for developing and
assuring sustained production of aquatic food supplies essential to the conduct of the
war. The results of this study were

18

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

used by his office as a basis for its policies in administering this order, particularly in
its recommendations to the Office of Price Administration in the, field of price
regulation, and to the War Manpower Commission in the field of manpower and labor.
The details of costs and related information concerning the industry were obtained
for the war years from a representative number of fishing vessels and wholesale and
retail distributors of fish and Seafood in the five regions selected. The field work of
the inquiry was on by the Commission’s staff during May and June, 1944. However,
in the same months of 1945, additional studies were made in the Middle Atlantic and
Pacific coast areas, at the further request of the Office of Coordinator of Fisheries in
April 1945.
Over 200 cost reports, with explanatory comments concerning trends in prices, costs,
and profits for individual producers and distributors concerning their operations during
the years 1941-44 were compiled and forwarded to the Office of the Coordinator of
Fisheries. From these and other data collected in the inquiry, the Commission prepared
the reports covering the New England, Great Lakes, and Pacific coast regions. The first
2 were prepared and published during the fiscal year ended June 30, 1945.
RESALE PRICE MAINTENANCE
The report of the Federal Trade Commission on resale price maintenance,
transmitted to Congress on December 13, 1945, is based on the Commission’s study
of the operation and effects of resale price maintenance contracts in the 45 States
where such a pricing system is legalized. It contains a comparison of resale pricemaintained products in price-maintained and non-price-maintained territories.
The Miller-Tydings Act of 1937 amended the Sherman Act to the extent of
legalizing minimum resale price maintenance agreements or contracts respecting trademarked or otherwise identified goods sold in interstate commerce, provided that the
commodities, affected were resold in any State that had legalized this type of contract
or agreement with respect to resales made within its boundaries. The Miller-Tydings
Act contains a specific prohibition against horizontal agreements. It also amended the
Federal Trade Commission Act by providing that the making of such contracts should
not constitute an unfair method of competition under section 5 of the Federal Trade
Commission Act.
Minimum resale price maintenance was originally advocated by manufacturers of
trade-marked, trade-named, or branded products as a means of eliminating alleged
predatory price competition among retail dealers. The report points out that “leader”
price competition is a form of retail price competition that may be used to eliminate
weaker competitors, but, that as a corrective of the objectionable features of price
competition, resale price maintenance makes no distinction between price competition
that is economically sound and in the public interest and price competition that may
be used to eliminate a competitor.
Both State and Federal resale price maintenance laws are entirely permissive in their

application to manufacturers, and manufacturers in many lines have not named resale
prices for their products. In practice, resale price maintenance serves as a focal point
for dealer

RESALE PRICE MAINTENANCE

19

cooperative effort to bring pressure to bear on manufacturers to place products under
resale price maintenance at prices yielding dealer margins satisfactory to such dealer
organizations.
Manufacturers of staples generally have been reluctant to place their brands under
resale price maintenance, unless competing manufacturers do likewise; manufacturers
whose products sell at prices yielding narrow margins of profit also hesitate to assume
the added expenses of enforcing minimum resale prices; manufacturers of branded
products that are sold by different types of dealers such as chain stores, cash-and-carry
and credit-and-delivery stores generally hesitate to maintain uniform minimum resale
prices for all types of dealers; also, as a rule, manufacturers of such staples as flour,
sugar, nails, the prices of which fluctuate with changes in the prices of raw materials,
have not placed their products under resale price maintenance contracts. Other
important branded manufactured products not placed under resale price contracts
include radios, household electrical appliances, farm machinery, automobiles and
trucks, in the sale of which a used article is often taken in trade.
Where production of staple articles is concentrated in a few manufacturers such
products are often placed under minimum resale price contracts; where such
manufacturers meet strongly organized trade groups of retail dealers, conditions are
especially favorable to the adopt ion of minimum resale price maintenance contracts,
and in turn the legalization of minimum resale price contracts has fostered the
formation and growth of trade association groups both among manufacturers and
retailers.
Placing products under minimum resale price maintenance contracts has been more
extensive with drugs, toilet goods, cosmetics, liquor and sporting goods than in any
other industries covered by the Commission’s survey.
Records of chain stores, department stores, and certain independent merchants
disclosed that they were forced to increase their prices for products when they were
placed under minimum resale price maintenance contracts. Individual druggists,
reporting from memory, on the other hand usually reported some price decreases in the
same territories. While this was happening in the States having minimum resale price
laws, the trend of prices in non-minimum-resale price-territories was downward in all
types of stores. Independent drug, chain, and department stores that were required to
increase prices under minimum resale price maintenance contracts, generally sold at
the minimum prices named in the contracts while independent dealers who reduced
prices generally reduced them towards but not to the minimums named in contracts.
In the food trade, resale price maintenance has had little use outside of Ohio, and
even in that State a relatively small number of manufacturers placed one or more of
their brands under minimum resale price maintenance contracts. In general, the
minimum prices named in contracts were intended to limit only leader merchandising,
and actually were within the range being charged by chain and department stores in
Ohio. Ohio was made the test State by organized retail dealers.
In the hardware trade, resale price maintenance has made somewhat more progress
than has been made in the food trade. In this

20

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

trade it is limited largely to sporting goods and trade-marked or branded specialties.
In the distilled acholic liquor trade many distillers and importers. ha ve been
reluctant to p lace their brands under minimum-resale-price-maintenance contracts
because of the advantage gained by competitors not naming minimum p rices.
Notwithstanding the urging of organized wholesalers and retailers in the tobacco trade,
cigarette manufacturers refused to place their leading brands under resale pricemaintenance contracts. An Ohio State court refused to enforce contracts entered into
between cigarette wholesalers and retailers on the grounds that such contracts were
unlawfully agreed upon, but in New Jersey similar contracts were enforced by State
courts.
In the malt beverage trade, brewers of nationally advertised brands of beer and ale
generally have not entered into minimum-resale- price contracts, but, in a number of
instances, cooperating groups of local brewers and wholesalers entered into such
contracts.
As the result of its investigations in antitrust cases, the conclusion Of the United
States Department of Justice is that the actual effects of resale price maintenance have
been those which are to be expected from price-fixing conspiracies unregulated by
public authority whether or not they enjoy the sanction of law.
The demonstrated effectiveness of purely voluntary resale price maintenance
agreements led the California Legislature initially, fol-lowed by 44 other State
legislatures, to make a single contract entered into between a manufacturer and a retail
dealer binding upon all dealers in a State handling the manufacturer’s product named
in the single contract. In passing the Miller-Tydings Act, the Congress forbade
competitors manufacturers, wholesalers or retailers to agree upon the minimum prices
to be maintained in interstate commerce.
In its conclusions the report states, in part, that-in the absence of effective Government supervision in the public interest, resale price
maintenance, legalized to correct abuses of extreme price competition, is subject to use as a
means of effecting enhancement of prices by secret agreements and restraint of competition by
coercive action on the part of interested cooperating trade groups of manufacturers, wholesalers,
and retailers in such ways and to such an extent as to make it economically unsound and
undesirable in a competitive economy. * * * The Commission believes that the consumer is not
only entitled to competition between rival products but to competition between dealers of a
single product.

PART II. GENERAL LEGAL WORK
DESCRIPTION OF PROCEDURE
A case before the Federal Trade Commission may originate in any one of several
ways: through complaint by a consumer or a competitor; from Federal, State or
municipal sources; or upon observation by the Commission. The Commission itself
may initiate an investigation to determine whether the laws administered by it are
being violated. 1 No formality is required in making application for complaint. A letter
setting forth the facts in detail is sufficient, but it should be accompanied by all
evidence in possession of the complaining party in support of the charges made.
INFORMAL PROCEDURE
Upon receipt of an application for complaint, the Commission through its Legal
Investigations Division or Radio and Periodical Division, as the case may be, considers
the essential jurisdictional elements before deciding whether it shall be docketed.
When docketed, it is assigned to an attorney for the purpose of developing all the
essential facts. The general procedure is to interview the party complained against,
advise him of the charges, and request such information as he may care to furnish in
defense or in justification. It is the policy of the Commission not to disclose the
identity of the complainant. If necessary, competitors of the respondent are
interviewed to determine the effect of the practice from a competitive standpoint.
Often it is desirable to interview consumers and members of the general public to
obtain their assistance in determining whether the practice alleged constitutes an unfair
method of competition or unfair or deceptive act or practice, and also to establish the
existence of the requisite public interest.
After developing all the facts the examining attorney summarizes the evidence in a
report, reviews the law applicable, and recommends the action he believes the
Commission should take. The record is reviewed by the Chief Examiner or the Chief
of the Radio and Periodical Division and, if found to be complete, is submitted, with
a statement of facts together with his conclusions and recommendations, to the
Commission for its consideration.
The Chief Examiner or the Chief of the Radio and Periodical Division may
recommend to the Commission (1) that the case be closed without further action
because of lack of evidence or because the practice does not violate any law
administered by the Commission; (2) disposition of the application by the respondent
signing a stipulation as to the facts and an agreement to cease and desist from the
practices as set forth in the stipulation; or (3) issuance of formal complaint.
If the Commission decides that a formal complaint should issue, the ease is referred
to the Chief Trial Counsel for preparation of the

1

A brief statement of the provisions of these laws appears on p.1.
21

22

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

complaint and trial of the case. Should the Commission permit disposition by
stipulation in lieu of formal complaint, the case is referred to the Director, Division of
Stipulations (formerly to the Chief Trial Examiner or to the Director of the Radio and
Periodical Division) for negotiation of stipulation and submission thereof to the
Commission for approval.
All proceedings prior to issuance of a formal complaint or stipulation are
confidential.
PROCEDURE UPON FORMAL COMPLAINTS
Only after careful consideration of the facts developed by the investigation does the
Commission issue a formal complaint. The complaint and the answer of the respondent
thereto and subsequent proceedings are a public record.
A formal complaint is issued in the name of the Commission acting in the public
interest. It names the respondent, or respondents, alleges a violation of law, and
contains a statement of the charges. The party complaining to the Commission is not
a party to the formal complaint and the complaint does not seek to adjust matters
between parties; rat her, the prime purpose of the proceeding is to prevent, for the
protection fair or dec of the public, those unfair methods of competition and un air or
deceptive acts or practices forbidden by the Federal Trade Commission Act and those
practices within the Commission’s jurisdiction which are prohibited by the Clayton
Act, as amended by the Robinson-Patman Act, the Export Trade Act, and the Wool
Products Labeling Act of 1939.
The rules of practice before the Commission provide that a respondent desiring to
contest the proceeding, within 20 days from service of the complaint shall file answer
admitting or denying each allegation.
Where evidence is to be taken either in a contested case or in one where the
respondent has failed to file answer, the matter is set down for hearing before a trial
where in the United States the Commission being represented by one of its trial
attorneys and the respondent having the privilege of appearing in his own behalf or by
attorney.
After the submission of evidence in support of the complaint and on behalf of the
respondent, the trial examiner prepares a report of the evidence for the information of
the Commission, a copy being 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. There after, the Commission reaches a decision either sustaining the
charges of the complaint or dismissing the complaint, sometimes without prejudice.
If the complaint is sustained by the evidence, the Commission makes its findings as

to the facts and states its conclusion that the law has been violated, and thereupon an
order is issued requiring the respondent to cease and desist from such violation. If the
complaint is dismissed, an appropriate order is entered.

LEGAL INVESTIGATIONS

23

Up to and including the issuance of an order to cease and desist, there is no
difference in procedure whether the case is under the Federal Trade Commission Act,
the Clayton Act, or the Wool Products Labeling Act, but the Clayton Act provides a
procedure for enforcement of cease and desist orders different from the other two acts.
Under the Federal Trade Commission Act and the Wool Products Labeling Act, an
order to cease and desist becomes final 60 days after date of service upon the
respondent, unless within that period the respondent petitions an appropriate United
States circuit court of appeals to review the order. In case of review, the order of the
Com-mission becomes final after affirmance by the circuit court of appeals or by the
Supreme Court of the United States, if taken to that Court on certiorari. Violation of
an order to cease and desist after it shall have become final and while it is in effect
subjects the offender to a civil penalty of not more than $5,000 for each violation,
recoverable by the United States.
Under the Clayton Act, an order to cease and desist does not become final by lapse
of time. The order must be affirmed by a United States circuit court of appeals on
application for review by the respondent or upon petition of the Commission for
enforcement. Thereafter, appropriate contempt proceedings may be brought in the
particular court of appeals for violation of the court order.
Under all three acts, the respondent may apply to a circuit court of appeals for
review of an order and the court has power to affirm, or to affirm after modification,
or to set aside the order. Upon such application by the respondent and crossapplication by the Commission, or upon application by the Commission for
enforcement of an order under the Clayton Act, the court has power to enforce the
order to the extent it is affirmed. In any event, either party may apply to the Supreme
Court for review, by certiorari, of the action of the circuit court of appeals.
PROVISIONS OF WHEELER-LEA AMENDMENT FOR PREVENTING
DISSEMINATION OF FALSE ADVERTISEMENTS
Sections 12 to 15, inclusive, of the Federal Trade Commission Act, which were
added by the Wheeler-Lea Act, approved March 21; 1938, make specific provision for
the prevention of the dissemination of false advertisements of food, drugs, cosmetics,
and devices (meaning devices for use in the diagnosis, prevention, or treatment of
disease). The act as amended also empowers and directs the Commission to prevent
advertisers of food, drugs, devices, or cosmetics which may cause injury when used
under prescribed or customary conditions from disseminating advertisements that fail
affirmatively to reveal that such products are dangerous or that their use under certain
conditions may cause bodily injury.
In addition to the regular proceeding by way of complaint and order to cease and
desist, the Commission may, in a proper case, bring suit in a United States district
court to enjoin the roper case, bring such false advertisements, whenever it has reason
to believe that such a proceeding would be to the interest of the public. These
temporary injunctions remain. in effect until an order to cease and desist has been

24

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

issued and become final, or until the Commission’s complaint is dismissed by the
Commission or set aside by the court on review.
Further, the dissemination of a false advertisement of a food, drug, device, or
cosmetic, where the use of the commodity advertised may be injurious to health or
where the act of disseminating is with intent to defraud or mislead, constitutes a
misdemeanor, and conviction subjects the offender to a fine of not more than $5,000,
or imprisonment of not more than 6 months, or both. Succeeding convictions may
result in a fine of not more than $10,000, or imprisonment of not more than 1 year, or
both.
LEGAL INVESTIGATIONS
INQUIRIES PRIOR TO FORMAL COMPLAINT OR STIPULATION

The Commission makes legal investigation of all applications for complaint
preliminary to instituting formal action for the correction of unfair methods of
competition or other acts or practices violative of the laws it administers.
Investigation of cases in initial stages includes the general preliminary legal
investigating work of the Commission under the several acts and the continuing survey
of radio and periodical advertisements with the object of correcting false and
misleading representations.
Cases thus developed, unless closed without action, progress upon direction of the
Commission to the status of either formal complaint or stipulation to cease and desist.
At the beginning of the fiscal year, in addition to cases pending as the result of the
continuing survey of radio and periodical advertising (see pp. 61 to 64), there were
pending for investigation2 96 preliminary or undocketed cases, and 243 additional
applications of this character were received during the year, making a total of 339 on
hand, of which 207 were investigated. Of the investigated matters, 175 were docketed
for action and 32 closed without docketing because of lack of jurisdiction or other
reasons. There remained 132 preliminary cases of this type pending for investigation
at the end of the fiscal year.
Three hundred and seven applications for complaint which had been docketed
without preliminary investigation were pending for regular investigation at the
beginning of the year. Subsequently, 303 additional cases of this type were received,
making a total of 610 such cases docketed for investigation. Of these, 320 were
investigated and transmitted to the Commission for action, leaving 290 cases of this
character pending for investigation at the close of the year.
During the year, 267 further investigations were made, including inquiries into
alleged violations of cease and desist orders and stipulations, investigations for the
Chief Counsel, and others of a supplemental and special nature. At the end of the year,
167 such matters awaited completion of investigation.
Thus, the staff of the Legal Investigations Division completed 794 investigations
under the laws administered by the Commission, and also disposed of 10,928 pieces
of incoming and outgoing mail, involving varying degrees of research and study.
2

Statistics reported on pp. 61 to 64 and 24 to 28 concerning the legal investigation

work are division records and not the consolidated record of the Commission, and
therefore do not coincide with the figures reported in the tabular summary of the legal
work for the entire Commission appearing on pp.48 and 49.

LEGAL INVESTIGATIONS

25

Price fixing and other trade restraints.--One of the fundamental purposes behind the
passage of the Federal Trade Commission Act in 1914 was the establishment of an
agency to detect and eliminate illegal trade restraints in their incipiency before they
had developed into monopolies. At the beginning of the fiscal year, 56 cases of this
type were either awaiting investigation or being investigated. During the year, 56 new
cases were instituted, making a total of 112 restraint-of-trade matters on the calendar.
In the same period, 58 investigations of this type were completed for consideration and
disposition by the Commission, leaving 54 pending on the active investigational
calendar as of June 80, 1946.
Price fixing continues to be the most frequently recurring charge among the
restraint-of-trade cases, although practically the whole category of trade restraints will
be found among the charges in the cases pending before the Commission during the
fiscal year. These include such practices as conspiracy to boycott or threats of boycott,
coercive practices, collusive bidding, control and limitation of supply, interference
with sources of supply, intimidation full-line forcing and tying contracts, various forms
of basing-point, delivered-price and zoning systems designed to eliminate price
competition, misuse of patents and licensing agreements for monopolistic purposes,
resale p rice maintenance, and selling below cost for the purpose and with the effect
of competitors.
The following general classifications of commodities involved convey an idea of the
widespread nature of the restraint-of-trade investigations: Antifreeze solutions, baby
carriages, batteries, beverages, building materials, chains, chemicals, clay sewer pipe,
cleaning fluids, cosmetics cotton yarn and twine dental supplies, drugs, farm machinery, floor coverings, food products, furniture, gas, glass and glass products, human
hair, lumber paints, paper and paper products, penicillin, plastic products, plumbing
supplies, rubber heels, school supplies, steel, stock feed, tobacco, and yeast.
In addition to the original investigations undertaken during the year, 25 matters were
completed which involved formal docketed cases. These consisted of a variety of
inquiries, many requiring complete investigation to determine whether or not the terms
of the Commission’s cease-and-desist orders were being observed. In the event
violations occurred, evidence was procured in appropriate form to support an action
for enforcement of its order or for civil penalties. Investigations of this nature were
as extensive as those conducted in the original development of a case and, in some
instances, more difficult. At the close of the fiscal year, 3 cases of this nature were
pending on the investigational calendar.
Of the 112 restraint-of-trade investigations in progress during the fiscal year, 4
resulted from applications for complaint filed by Federal, State, or municipal agencies;
2 were submitted by trade associations; 1 came from a labor union; and 29 were
initiated by the Commission on its own motion. The majority, however, continued to
originate as a result of complaints made by individuals and concerns whose business
was being jeopardized by alleged unfair and illegal practices. The group last
mentioned was responsible for 76 of these applications for complaint.
Clayton Act, section 2, as amended by Robinson-Patman Act.--The RobinsonPatman Act, approved June 19, 1936, amended section 2

26

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

of the Clayton Act and restated in more inclusive form the basic principles of
prohibiting price discriminations which injuriously affect competition. It also prohibits
per se certain classes of discrimination which may involve price only indirectly, with
out regard to their competitive effects in specific cases, thus supplementing and
strengthening the previous legislation.
Matters involving possible violations of the act are generally quite complicated. An
effort is made by the Commission in preliminary stages of an investigation to
determine not only whether the practice in question involves prima facie violation of
the act but 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 undertaking cost studies in cooperation with the parties charged with
violations.
Experience in the administration of the act has made it possible for the Commission,
through the development of certain information by preliminary inquiry, more readily
to clear up misunderstandings among complainants as to the scope of the act and its
application to specific situations, as well as to make a more accurate selection for
investigation of matters involving probable violation of law. The Commission has
endeavored, in view of limited funds and personnel, to confine investigations, insofar
as feasible, to matters of substantial importance and to eliminate the expenditure of
time and money in the investigation of those which preliminary inquiry discloses
possess little practical importance.
During the year the Commission instituted field investigations of alleged violations
of the Robinson-Patman Act in 98 cases and completed investigations in 67. At the
beginning of the year, 57 matters were on hand for investigation, and at the close of
year, 88. As in previous years, the administration of the statute touched widely varied
fields of industry and commerce and involved many classes of commodities. The
proceedings of the Commission and the decisions of the courts in Robinson-Patman
Act cases have served as useful guides 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 become the subjects of investigation and in discouraging the inception of such
practices.
Stock acquisitions, mergers, and consolidations.--Section 7 of the Clayton Act
declares unlawful the acquisition by one corporation engaged in commerce of the
capital stock of a competing corporation similarly engaged, or the acquisition by a
holding company of the capital stock of two or more competing corporations, engaged
also in commerce, where the effect of such acquisition in either case may be to
substantially lessen competition between the acquiring and the acquired corporations
or any of them, restrain such commerce in any section or community, or tend to create
a monopoly of any line of commerce. The Commission, however, is without authority
under the statute to prevent the acquisition by one corporation of the property and
assets of a competing corporation or corporations.3 Nor does the statute preclude the
acquisition of capital stock of a competing corporation or corporations for investment
purposes where the stock

3

See recommendations to Congress, p.12.

LEGAL INVESTIGATION

27

is not voted or otherwise used to bring about or attempt to bring about a substantial
lessening of competition.
During the year the Commission gave consideration to two preliminary matters and
three applications for complaint, the commodities involved including building
materials, groceries, upholstery fabrics, evaporated milk, and magazine paper. The two
preliminary matters involving the latter two commodities were under investigation or
consideration at the close of the year. One application for complaint involving
upholstery fabrics, and one complaint involving beer and ale, were disposed of during
the year, the latter after hearings. Two applications were docketed for complaint
during the year. These were pending and in the course of trial at the close of the ear.
One of these matters involved groceries and food products an the other building
materials and fuel. The complaint in the latter matter also charged violation of section
5 of the Federal Trade Commission Act.
Investigations involving food, drugs, devices, and cosmetics.--The Wheeler-Lea
amendment to the Federal Trade Commission Act greatly enlarged the preexisting
need for medical and other scientific and expert opinion and evidence. In aid of this
need the Commission established the Medical Advisory Division. In the administration
of the Wheeler-Lea amendment, special attention is given to therapeutic
representations made concerning, and pharmacological actions of, medicinal
preparations, the use of which might be injurious, and to devices likely to be injurious
to health.
Since enactment of the amendment, the Commission has completed 2,331 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, 132
were completed during the fiscal year. This number includes new cases as well as old
cases reinvestigated to determine whether Commission cease-and-desist orders, and
stipulations executed by advertisers and accepted by the Commission, were being
violated, and whether additional practices not previously prohibited were being carried
on in contravention of the At the close of the year, 205 applications for complaint
respecting alleged false advertising of food, drugs, devices, and cosmetics were under
investigation, 32 of which related to drug and cosmetic preparations and devices
alleged to be injurious to health.
Wool Products Labeling Act.--Investigations of applications for complaint alleging
violations of the Wool Products Labeling Act and of the regulations promulgated
thereunder present many complex problems, particularly to identify accurately the true
fiber content of wool products, the labeling of which is questioned, and to ascertain
whether the false and improper labeling is willful and with intent to violate the
criminal provisions of the law. In many instances the products must be traced through
the various classes of traders handling them in order to determine who is primarily
responsible for the alleged infractions or violations. It is also necessary in most cases
to study and examine the books and records of manufacturers and others to identify
accurately the various constituent fibers, and their

721821--46----3

28

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1940

weights, which actually make up the products under investigation, and frequently
laboratory tests are required.
Violations of the Wool Act generally are coupled with false advertising,
misrepresentation and other unfair or deceptive acts or practices or unfair methods of
competition, necessitating investigations and proceedings under both the Wool
Products Labeling Act and the Federal Trade Commission Act.
Since the effective date of the act, there have been completed 219 field
investigations of applications for complaint involving alleged false and improper
labeling, 43 during the fiscal year.
At the close of the fiscal year, 17 such applications were in process of investigation.
(For details concerning administration and enforcement of the Wool Act, see p.58.)
Investigations under Export Trade Act.--In line with its responsibility of
administering the Export Trade (Webb-Pomerene) Act, the Commission directed the
Legal Investigations Division to make periodic investigations of the organization and
operation of export trade associations organized and functioning under the act, and in
particular to ascertain from time to time whether the associations (a) are artificially or
intentionally enhancing or depressing domestic prices; (b) are used to eliminate
competition in the purchase of raw materials in the United States; (c) are in any way
restraining trade within the United States; and (d) are engaging in unfair methods of
competition in foreign trade.
Preliminary investigations were completed of the activities and operations of five
export trade associations whose members are important producers and distributors of
coated abrasives, railway tires, railway springs, lumber, and textiles. Investigation of
seven other associations was pending at the close of the year. (For further details of
the administration of the Export Trade Act, see p.66.)
DISPOSITION OF CASES BY STIPULATION
Instead of disposing of cases by the formal complaint and trial method, the
Commission under certain circumstances affords respondents the privilege of signing
a statement of fact and an agreement to cease and desist from unfair methods of
competition and unfair or deceptive acts or practices in commerce. The policy of the
Commission with respect to stipulations of this type is set forth in its Statement of
Policy, page 101.
During the fiscal year, 96 stipulations were approved by the Commission, 23
pertaining especially to false claims made in radio find periodical advertising.
FORMAL COMPLAINTS
During the fiscal year the Commission issued 101 formal complain alleging
violations of the laws it administers. Of this total, 80 charged violation of the Federal
Trade Commission Act; 11, violation of the Clayton Act; 4, violation of the Federal
Trade Commission and Clayton Acts; and 6, violation of the Wool Products Labeling
and Federal Trade Commission Acts.

II. COMPLAINTS UNDER WOOL PRODUCTS LABELING ACT

29

I. COMPLAINTS UNDER FEDERAL TRADE COMMISSION ACT
A. ALLEGED COMBINATIONS TO RESTRAIN TRADE AND FIX PRICES
[Complaints referred to are identified by accompanying docket number]

In each of three complaints issued by the Commission a trade association and its
members and officers were charged with combining to fix prices and restrain trade in
the sale of their products. The products involved in these complaints were electrotypes,
stereotypes, and multigraphs (5356); rubber heels and rubber soles (5448); and chain
and chain products (4878, amended). A fourth complaint of this type (5359), directed
against a price-fixing combination in paper-board products, was subsequently
dismissed without prejudice. Complaint 4878 also alleged price discrimination in
violation of the Robinson-Patman Act (see p.30).
The Commission also issued a complaint (5416) charging the respondent with the
unlawful use of patents and so-called license agreements as means of fixing uniform
zone prices for bread wrappers.
Another complaint (5449) charged a trade association and its officers and members,
engaged in the sale of metal lath, with concurrent use of a zoning system of making
delivered price quotations which results in substantial injury to competition.
B. FALSE ADVERTISING AND MISREPRESENTATION

A total of 67 complaints charged false and misleading advertising. They may be
classified broadly as follows, although some involved more than one classification :
Six complaints alleged false and misleading representations with respect to the
therapeutic properties of medicinal preparations, and in some cases the advertisements
also were alleged to be false and misleading because they failed to reveal the potential
danger from the use of the products advertised; 7 charged misrepresentations concerning the properties of cosmetics; 28, misrepresentation as to the origin,
composition, condition, quality, ingredients, or price of the products advertised; 12,
misrepresentation as to results to be obtained through the use of products; 3,
misrepresentation as to business status; 2, disparagement of competitors’ products and
misrepresentation as to quality of respondents’ product; 1, misrepresentation of
correspondence school courses; 7, misrepresentation as to the giving of so-called “free
goods”; and 1, misrepresentation as to connection with Army and Navy.
C. MISCELLANEOUS COMPLAINTS

Complaints issued under this heading alleged such practices as supplying and using
lottery devices to promote the sale of merchandise; misrepresentations with respect to
baby chicks; misrepresentation of puzzle contest to promote the sale of books; misuse
of the name of a nationally known organization to promote sales; and unauthorized use
of the trade-marked name “Who’s Who” in the titles of publications by others than the
owner of such trade-mark.

II. COMPLAINTS UNDER WOOL PRODUCTS LABELING ACT
Six complaints alleged that wool products were misbranded in violation of the Wool
Products Labeling Act of 1939 and the rules and

30

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

regulations promulgated thereunder, in that they were not labeled so as to disclose the
kinds and percentages of the different fibers of which the fabrics were made, including
the respective percentages of wool, reprocessed wool, or reused wool, together with
the identity of the manufacturer or distributor or reseller of the products. Some of these
complaints also charged false and misleading advertising in violation of the Federal
Trade Commission Act (5344, 5345, 5350, 5378,5396,5438).
III. COMPLAINTS UNDER CLAYTON ACT
A. ALLEGED VIOLATION OF SECTION 2 (a) OF CLAYTON ACT AS AMENDED
BY
ROBINSON-PATMAN ACT

Four complaints alleged violation of section 2 (a) which prohibits discrimination in
price when it may have adverse effects on competition. The complaints involved chain
and chain products (4878); millinery (5352, later dismissed) ; jewelry (5446); and
replacement parts for looms (5436). (See below for that portion of complaint 5436
alleging violation of sec. 3 of the Clayton Act.)
B. ALLEGED VIOLATION OF SECTION 2 (c) OF CLAYTON ACT AS AMENDED
BY
ROBINSON-PATMAN ACT

Eight complaints alleged violation of section 2 (c) which prohibits the granting or
acceptance of brokerage fees except for services rendered in connection with the
interstate sale or purchase of merchandise. Four of the complaints (5404, 5420, 5428
and 5432) involved sea food products; 3 (5383, 5365 and 5433), other food products;
and 1 (5370), furs and fur garments.
C. ALLEGED VIOLATION OF SECTION 2 (f) OF CLAYTON ACT AS AMENDED
BY
ROBINSON-PATMAN ACT

A paper manufacturing concern and its subsidiary were charged with violation of
section 2 (f) of the act by knowingly inducing and receiving price discriminations from
sellers of paper and paper products. The complaint alleged that the price
discriminations thus received tend to give the respondents a monopoly and to destroy
or prevent competition between them and their competitors and among the sellers from
whom they purchase (5421).
D. ALLEGED VIOLATION OF SECTION 3 OF THE CLAYTON ACT

A manufacturer of cotton, silk, rayon and other synthetic fiber automatic looms was
charged with having entered into sales contracts with purchasers of his looms whereby
price discounts were allowed in consideration of an agreement by such purchasers to
buy their entire requirements of loom repair and replacement parts from such

manufacturer. This practice was alleged to be a violation of section 3 of the Clayton
Act, which prohibits the negotiation of exclusive-dealing contracts where the effect
may be to substantially lessen competition (5436).
E. ALLEGED VIOLATION OF SECTION 7 OF THE CLAYTON ACT

Two complaints charged corporations with acquiring the capital stock of competing
businesses, in violation of section 7 of the Clayton

I. ORDERS UNDER FEDERAL TRADE COMMISSION ACT

31

Act, which prohibits such acquisitions where the effect may be to substantially lessen
competition, restrain trade, or tend to create a monopoly of any line of commerce. One
complaint involve building materials and fuels (5418); the other, grocery products
(5423).
ORDERS TO CEASE AND DESIST
The Commission during the fiscal year issued 89 orders to cease and desist from the
use of unfair methods of competition and other violations of the laws it administers.
The following cases are illustrative of the orders issued :
I. ORDERS UNDER FEDERAL TRADE COMMISSION ACT
A. PRICE-FIXING AND RESTRAINT-OF-TRADE CASES

Ferro Enamel Corp., Cleveland, Ohio, and others.--Five corporations, which
produce and sell 96 percent of all the raw porcelain enamel manufactured in the United
States, were ordered to cease and desist from entering into or continuing any
conspiracy or planned common course of action to fix prices; to sell at prices
calculated pursuant to any system of equalizing freight with competitors which results
in identical delivered prices at any given destination; to use a classification of
customers in determining prices, discounts or terms of sale; to exchange, either
directly or through an agent, price or discount lists, with the effect of restraining
competition; to adhere to filed or published prices; and to exchange credit information
for the purpose of determining the credit allowed any customer. Stevenson Jordan &
Harrison, Inc., a corporation specializing in the management of trade associations, was
a respondent in the proceeding and was ordered to cease and desist from assisting or
cooperating with the respondent manufacturers in any of their price-fixing practices
(5155). (For that part of the order dealing with sec. 2 (a) of the Clayton Act, see p.35.)
Dip Net Smelt Fisherman’s Association, and others, Kelso, Wash.--This association,
the members of which catch approximately three-fourths of the total smelt production
in the Kelso area, and three wholesale fish companies were ordered to cease and desist
from entering into or carrying out any planned common course of action or agreement
restricting the quantity of fish to be caught; fixing a uniform price for fish caught by
the members; or continuing an agreement whereby the association or its members are
enabled to monopolize the dock or warehouse facilities in Kelso for the handling of
fish (5055).
Northern Kentucky Independent Food Dealers Association, Inc., Covington, Ky., and
others.--Approximately 150 retail grocers in northern Kentucky and their trade
association were ordered to cease and desist from entering into or carrying out any
planned common course of action or agreement to boycott any baking company’s products for the purpose of coercing such company into adopting price or distribution
policies desired by the association (5140).

B. FALSE ADVERTISING OF DRUGS, DEVICES, AND COSMETICS

Frederick A. Clarke, trading as Boncquet Laboratories, Glendale, Calif.--The
respondent, engaged in the sale of a preparation designated variously as Boncquet
Blood Building Tablets, Boncquet Hemo-

32

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

Tabs and Boncquet Tablets, was ordered to cease and desist from representing that his
preparation will regenerate or rebuild the blood, has any therapeutic value in the
treatment of pernicious anemia, contains iron in therapeutic amounts, or will stimulate
the bone marrow to produce red blood corpuscles. The Commission found that the
value of the respondent’s preparation depends upon its liver content and that the liver
substance which is of value is discarded in the respondent’s process of manufacture
(3660).
Charles of the Ritz Distributors Corp., New York.--The respondent, a cosmetic
distributor, was ordered to cease and desist from representing that the use of Charles
of the Ritz Throat Cream will cause the throat to remain smooth, firm, or young
looking (5293).
William M. Stone, trading as Stone Manufacturing Co., Oregon City, Oreg.--The
order in this case directed the respondent to discontinue representing, in connection
with the sale of ozone generating devices, that breathing of atmosphere containing
ozone produces beneficial results or is conducive to health that his devices generate
penetrating rays having therapeutic properties or that they have any therapeutic value;
that ozone in the concentration produced by the devices under usual conditions of use
is a germicide; or that the devices will destroy all odors. The Commission further
ordered that the respondent cease disseminating any advertisement that fails to reveal
that the concentration of ozone should not in any case be allowed to exceed one-half
part of ozone to one million parts of air; that breathing near the devices should be
avoided and that inhalation of excessive amounts of ozone may result in irritation of
the respiratory organs; provided, however, that such advertisement need contain only
the statement “CAUTION: Use and operate only as directed,” if the directions for use
and operation are attached to the device and contain the revelations required by this
paragraph (5307).
Standard Chemical Manufacturing Co., Omaha.--The respondent, a distributor of
poultry and livestock remedies, was ordered to cease and desist from disseminating
false advertisements concerning its preparations. The order expressly forbade
representations that the preparation Standard P-O constitutes a competent and effective
remedy for eradication of tape worms in swine or poultry; that Standard Poultry Pills
constitute a competent and effective remedy for tapeworm infestation of fowls; that
use of Standard Hog Regulator will eliminate the need of worming pigs; that Standard
Dairy Cow Regulator will strengthen cows for milk production or for reproduction, or
will prevent Bang’s disease, abortion, tuberculosis or mastitis (4912).
C. UNFAIR PRACTICES OTHER THAN MISREPRESENTATION OF DRUGS,
DEVICES AND COSMETICS

Benjamin L . Fry, trading as Anti-Co-Rode Laboratories, St. Louis.--The respondent
was ordered to discontinue re p resenting that his product Anti-Co-Rode increases the
life or power of an automotive battery or prevents or dissolves the corrosion on
automotive battery plates. The Commission found that the preparation contains copper
and iron which tend to increase the spontaneous discharge of a lead acid storage

battery, resulting in formation of lead sulphate and actually aggravating conditions it
is represented as improving. The Commission also ordered the respondent to stop
using the word

I. ORDERS UNDER FEDERAL TRADE COMMISSION ACT

33

“Laboratories” as p art of his trade name as it tends to cause the public to erroneously
believe he operates a place devoted to experimental study in connection with the
preparation of his chemical compound ; and to cease using the name “Anti-Co-Rode”
(5286).
Frigid Chemical Corp., and others, Stroudsburg, Pa.--This order prohibited the
respondents from advertising that their antifreeze product is safe for use in the cooling
system of internal combustion engines. The Commission found that the product is
essentially a solution of calcium chloride which causes serious corrosion of the water
pump, radiator, and particularly any aluminum parts such as cylinder heads (5248).
Consumers Home Equipment Co., Detroit, and others.--Use of a deceptive sales plan
to promote the sale of household articles was prohibited by the order in this
proceeding. A typical practice of the respondents was to display a sample of
International Silver and represent that it was being offered at a special low price, when
actually they would deliver an inferior article at a p rice comparable to or higher than
the price usually charged for such merchandise by other retailers. When purchasers
objected, the respondents would attempt to force them to accept and pay for the
merchandise delivered. The Commission ordered the respondents to cease and desist
from employing any sales plan which involves the use of samples of merchandise of
a kind or quality different from that actually delivered; from representing that
merchandise being offered at usual prices is being sold at special or reduced prices;
and from attempting to coerce purchasers to accept merchandise of a kind or quality
different from that ordered (5174).
W. W. in The Western Hemisphere, Inc., and others New York.--Use of the term
“Who’s Who” in the title of biographical reference books sold by the respondents was
prohibited by the order in this case. Among the publications sold by the respondents
were those entitled “Who’s Who in the Clergy,” “Who’s Who in the Law,” and
“Who’s Who in the Western Hemisphere.” The Commission found that a substantial
number of the public believed the books were published by A. N. Marquis Co., which
holds the trade-mark “Who’s Who” and has Published “Who’s Who in America” since
1899, and in that time has built up an outstanding reputation for reliability. The
respondents include in their publications the biographies of many relatively
unimportant persons who had responded to solicitation for the purchase of copies,
while excluding many truly notable persons who should have been included had the
publications been as represented. In addition they represented that the purpose of their
publication “Who’s Who in the Western Hemisphere” was to advance hemisphere
solidarity. The Commission found that the sale of this publication constituted merely
a commercial scheme for the financial benefit of the respondents; that the respondents
are not qualified or equipped to undertake an enterprise of such scope; and that their
activities have been detrimental rather than helpful to a continued friendly interAmerican relationship. The Commission ordered the respondents to cease and desist
from using “Who’s Who” in the title of any publication and from representing that
they are associated with the publisher of “Who’s Who in America” or that their books
are prepared with the same accuracy, reliability, and selectivity as “Who’s Who in
America”.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

from representing that their publications promote inter-American relationship and from
representing as an authoritative book of reference any publication where the inclusion
of a biography is dependent upon the purchase of such publication (5108).
John P. Dowd, trading as Bennettsville Mattress Factory, Bennettsville, S. C.-Engaged in manufacturing and selling mattresses and other bedding, the respondent
attached printed labels to his products stating they were made of new materials. The
Commission found that the products were composed in part from the sweepings from
floors of cotton mills, warehouses or factories and contained a substantial percentage
of oil, dirt, or other foreign matter. The Commission ordered the respondent to cease
and desist from representing that such products are composed of new materials (5024).
II. ORDERS UNDER WOOL PRODUCTS LABELING ACT
This act and the rules and regulations promulgated thereunder provide that woolen
or purported woolen merchandise shall have attached thereto a stamp, tag, label, or
other means of identification showing the kinds and percentages of the different fibers
of which the product is made, including the respective percentages of wool, reprocessed wool, or reused wool the maximum percentage of any nonfibrous loading or
adulterating material used; the name of the manufacturer of the product, or the
manufacturer’s registered identification number and the name of the qualified
distributor or reseller. The label or a proper substitute must be on the article when it
is delivered to the consumer. The following cases are illustrative of the orders issued
:
Peggy Shops, Inc., trading as Karlton Vogue Shop, Philadelphia.--The respondent,
an operator of a women’s retail clothing store, was found to have mutilated or removed
labels from certain garments which were later sold to the general public. These labels
been affixed to the garments by the manufacturers and showed the information
required by the Wool Act and the rules and regulations promulgated thereunder. The
order directed the respondent to cease and desist from such practice (5035).
Globe Trading Co., Inc., Reading, Pa., and others.--In this proceeding the
respondents were ordered to stop misbranding hosiery they sell by failing to attach
thereto labels or tags bearing the information required by the Wool Act and the rules
and regulations issued thereunder. The order also directed the respondents to cease and
desist from certain violations of the Federal Trade Commission Act, such as using the
symbol of the American National Red Cross Society in advertising their hosiery;
representing that their products are approved by the United States Government, have
special health features not found in ordinary hosiery, and are of “first quality” when
such is not the case (5098).
A. Davis & Sons, Inc., New York, and others.--Certain wearing apparel manufactured
and sold by these respondents bore conflicting labels as to their fiber content, the
Commission found. For example, some garments carried tags purporting to contain the
information required by the Wool Act, in addition to such expressions as “New Wool”
and “Pure Wool.” The same garments also bore cloth labels with such terms as “Camel
Fluff” or “Kenpaca.” The Commission

III. ORDERS UNDER THE CLAYTON ACT

35

found that the use on the same garment of a cardboard tag stating that the article is
composed of wool and a cloth label implying that it is made of camel hair or alpaca
hair is confusing, tends to deceive purchasers, and is a violation of the Wool Act. The
Commission ordered the respondents to cease and desist from misbranding wool
products by failing to label them with the information required by the act; and from
representing in any manner that their products are composed of fibers or materials
other than those of which they actually are made (5322).
III. ORDERS UNDER THE CLAYTON ACT
A. VIOLATION OF SECTION 2 (a) OF CLAYTON ACT AS AMENDED BY
ROBINSON-PATMAN ACT

Standard Oil Co. (an Indiana Corporation), Chicago.--The Commission found that
the respondent discriminated in price by selling its gasoline, for resale directly and
indirectly to the purchasing public, to four dealers in the Detroit area at prices
substantially lower than the prices charged its other retailer-purchasers in the same
area; that this discrimination could not be justified on a basis of difference of cost, and
that it tended to lessen, injure and destroy competition among the gasoline retailers in
the area. The Commission ordered the respondent to cease and desist from all such
discriminations, provided that this inhibition shall not prevent price differences of less
than one-half cent per gallon which do not tend to lessen, injure, or destroy
competition among such retailers. The order also prohibited the respondent from
selling gasoline to any jobber or wholesaler at a price lower than the price it charges
its retailer-customers, where such jobber or wholesaler resells to any of its retailcustomers at a price lower than they could obtain from the respondent directly.
On August 9, 1946, the Commission modified the order. The principal difference
between the order as modified and the original order consists of the elimination of
provisos which in two paragraphs of the original order excluded from their terms price
differentials of less than one-half cent per gallon which did not adversely affect
competition. Other changes were made so that the modified order applies more
definitely and specifically to the conditions found to exist in the Detroit trade area.
Still other changes were in the interest of clarity (4389). (Commissioner Mason
dissented.)
John B. Steteson Co., Philadelphia.--This manufacturer of men’s hats was found by
the Commission to have discriminated in price by use of a cumulative quantity
discount schedule whereby it sold to some customers at higher prices than it sold
men’s hats of like grade and quality to others. The discounts varied from 2 percent on
annual purchases of $5,000 to $7,500, up to 8 percent on annual purchases of $200,000
and over. In addition, the company also discriminated between different purchasers by
granting some customers lower prices based upon the total volume of hats sold to all
of their separate branches, although separate delivery was made to their several
branches. The order directed discontinuance of such price discriminations (5172).
(For part of the order dealing with section 2 (d) of the Clayton Act, see p.36.)
Ferro Enamel Corp., Cleveland, Ohio, and others.--Five distributors of raw
porcelain enamel were ordered by the Commission to cease

36

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

and desist from granting varying discounts to their purchasers when the percentage of
the discount allowed was calculated on dollar volume of annual purchases only (5155).
(For part of order dealing with violation of the Federal Trade Commission Act, see
p.31.)
B. VIOLATION OF SECTION 2 (c) OF CLAYTON ACT AS AMENDED BY
ROBINSON-PATMAN ACT

Seventeen orders were directed against violations of the brokerage section of the
Robinson-Patman Act, which prohibits the payment or acceptance of brokerage fees,
except for services rendered, in connection with the interstate sale or purchase of
merchandise.
Food dealers paying unlawful brokerage to buyers.--The respondents in 11 orders
were directed, in connection with the interstate sale of their merchandise, to cease and
desist from paying to any buyer anything of value as a commission, brokerage or other
compensation, or any allowance or discount in lieu thereof, upon purchases made by
such buyer for his own account. The respondents named in such orders, and the
principal commodities they sell, are:
Washington Fish & Oyster Co., Inc., Seattle, sea food products (5228); Phillips Sales
Co., Inc., Cambridge, Md., canned food products (5273);Carl Rubenstein, and others,
Seattle, canned sea food products (5279); Parrott & Co., San Francisco, canned fruits,
vegetables, and other commodities (5284); South Coast Fisheries, Inc., Terminal
Island, Calif., canned sea food products (5285); Southern California Fish Corp.,
Terminal Island, Calif., canned sea food products (5296); Del Mar Canning Co.,
Monterey, Calif., canned sea food products (5297); Hovden Food Products Corp.,
Monterey, Calif., canned sea food products (5303); Sebastian-Stuart Fish Co., Seattle,
canned and fresh fish (5365); California Lima Bean Growers Association, Oxnard,
Calif., lima beans (4939); and E. H. Hamlin Co., Seattle, sea food (5189).
Food dealers accepting unlawful brokerage from sellers.--In eight orders the
following respondents, in connection with their interstate purchases of merchandise,
were directed to cease and desist from accepting from any seller anything of value as
a commission, brokerage or other compensation, or any allowance or discount in lieu
thereof, upon purchases made for their respective accounts :
James V. Blevins, Nashville, Tenn., and others, food products (5333); J. T. Jarrell
Co., Little Rock, Ark., canned fish, fruits, vegetables (4547); C. C. Waddill Co., Inc.,
Norfolk, Va., canned sea food, fruits, vegetables (5270); Haas-Guthman Co.,
Savannah, Ga., food products (5273); Paul Pankey & Co., Birmingham, Ala., canned
fish, fruits, vegetables (5282); William R Hill & Co., Richmond, Va., canned fish
fruits, vegetables (5295); Charles R Allen, Charleston, S. C., and others, food products
(5365); and G. B. Shelton Brokerage Co., Danville, Va., and others, food products and
crystal phosphate (4585).
C. VIOLATION OF SECTION 2 (d) OF CLAYTON ACT AS AMENDED BY
ROBINSON-PATMAN ACT

John B. Stetson Co., Philadelphia.--The respondent company, engaged in the
manufacture and sale of hats, was ordered to cease and desist from paying anything of
value to its customers for advertising

TYPES OF UNFAIR METHODS AND PRACTICES

37

services furnished by such customers without making such allowances available to all
competing customers on proportionally equal terms (5172). (For part of order dealing
with sec. 2 (a) of the Clayton p. 35.)
D. VIOLATION OF SECTION 3 OF CLAYTON ACT

R. B. Semler, Inc., New Canaan, Conn.--The order against this manufacturer and
distributor of Kreml Hair Tonic involved the corporation’s use of exclusive-dealing
contracts which resulted in substantial lessening of competition between the
respondent and its competitors, in violation of section 3 of the Clayton Act. The
Commission ordered the respondent to discontinue selling Kreml on the condition or
agreement that customers who buy it for resale do not handle competing products.
Various practices used by the respondent to enforce such exclusive-dealing
arrangements were prohibited by the order. The Commission also found that certain
advertisements concerning the purported beneficial effects of Kreml were false and
misleading and ordered their discontinuance. The dissemination of such
advertisements was held to be in violation of the Federal Trade Commission Act
(4773).
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. The list is not limited to orders issued during the fiscal year. Because
of s p ace limitation it does not include specific practices outlawed by the Clayton Act
and committed to the Commission’s jurisdiction, namely, various forms of price
discrimination, exclusive and tying-dealing arrangements, competitive stock
acquisition, and certain kinds of competitive interlocking directories.
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 name and circumstances as to deceive the public. An
important part of these include misrepresentation of the therapeutic and corrective
properties of medicinal preparations and devices, and cosmetics, and the false
representation, expressly or by failure to disclose their potential harmfulness, that such
preparations may be safely used.
2. Describing various symptoms and falsely representing that they indicate the
presence of diseases and abnormal conditions which the product advertised will cure
or alleviate.
3. Representing products to have been made in the United States when the
mechanism or movements, in whole or in important part, are of foreign.
4. Bribing or other employees of customers and prospective customers, without the
employer s knowledge or consent, to obtain or hold patronage.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1940

5. Procuring the business or trade secrets of competitors by espionage, or by bribing
their employees, or by similar means.
6. Inducing employees of competitors to violate their contracts and enticing them
away in such numbers or under such circumstances as to hamper or embarrass the
competitors in the conduct of their business.
7. Making false and disparaging statements respecting competitors’ products and
business, in some cases under the guise of ostensibly disinterested and specially
informed sources or through purported scientific, but in fact misleading,
demonstrations or tests.
8. Widespread threats to the trade of suits for patent infringement arising from the
sale by competitors of alleged infringing products, not in good faith but of r the
purpose of intimidating the trade and hindering or stifling competition, and claiming,
without justification, exclusive rights in public names of unpatented products.
9. Conspiring to maintain uniform selling prices, terms and conditions of sale
through the use of a patent-licensing system.
10. Trade boycotts or combinations of traders to prevent certain wholesale or retail
dealers or certain classes of such dealers from procuring goods at the same terms
accorded to the boycotters or conspirators, Or through coercion to influence the trade
policy of their competitors or of manufacturers from whom they buy.
11. Passing off goods for products of competitors through appropriation or
simulation of such competitors’ trade names, labels, dress of goods, or counter-display
catalogs.
12. Selling rebuilt, second-hand, renovated, or old products, or articles made in
whole or in part from used or second-hand materials, as new, by so representing them
or by failing to reveal that they are not new or that second-hand materials have been
used.
13. Buying up supplies for the purpose of hampering competitors and stifling or
eliminating competition.
14. Using concealed subsidiaries, ostensibly independent, to obtain competitive
business otherwise unavailable, and making use of false and misleading
representations, schemes, and practices to obtain representatives and make contacts,
such as pretended puzzle-price contests purportedly offering opportunities to win
handsome prizes, but which are in fact mere “come-on” schemes and devices in which
the seller’s true identity and interest are initially concealed.
15. Selling or distributing punchboards and other lottery devices which are to be or
may be used in the sale of merchandise by lot or chance ; using merchandising
schemes based on lot or chance, or on a pretended contest of skill.
16. Combinations or agreements of competitors to fix, enhance, or depress prices,
maintain prices, bring about substantial uniformity in prices, or divide territory or
business, to cut off or interfere with competitors’ sources of supply, or to close
markets to competitors; or use by trade associations of so-called standard cost systems,
price lists, or guides, or exchange of trade information calculated to bring about these
ends, or otherwise restrain or hinder free competition.
17. Intimidation or coercion of producer or distributor to cause him to organize, join,
or contribute to, or to prevent him from organizing joining, or contributing to,
producers’ cooperative association or other association.

TYPES OF UNFAIR METHODS AND PRACTICES

39

18. 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.
19. Various methods to create the impression. that the customer is being offered an
opportunity to make purchases under unusually favorable conditions when such is not
the case, such devices including-(a) Sales plans in which the seller’s usual price is falsely represented as a special
reduced price for a limited time or to a limited class, or false claim of special terms,
equipment, or other privileges or advantages.
(b) The use of the “free goods” or service device to create the impression that
something is actually being thrown in 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.
(c) Use of misleading trade names calculated to create the impression that a dealer
is a producer or importer selling directly to the consumer, with resultant savings.
(d) Offering of false “bargains” by pretended cutting of a fictitious “regular” price.
(e) Use of false representations that an article offered has been rejected as
nonstandard and is offered at an exceptionally favorable price , or that the number
thereof that may be purchased is limited.
(f) Falsely representing that goods are not being offered as sales in ordinary course,
but are specially priced and offered as a part of a special advertising campaign to
obtain customers, or for some purpose other than the customary profit.
(g) Misrepresenting, or causing dealers to misrepresent, the interest rate of carrying
charge on deferred payments.
20. Using containers ostensibly of the capacity customarily associated by the
purchasing public with standard weights or quantities of the product therein contained,
or using standard containers only partially filled to capacity, so as to make it appear
to the purchaser that he is receiving the standard weight or quantity.
21. Misrepresenting in various ways the necessity or desirability or the advantages
to the prospective customer of dealing with the seller, such as-(a) Misrepresenting seller’s alleged advantages of location or size, or the branches,
domestic or foreign, or the dealer outlets he has.
(b) Making false claim of being the authorized distributor of some concern, or
failing. to disclose the termination of such relationship, in soliciting customers of such
concerns, or of being successor thereto or connected therewith, or of being the pur-

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

chaser of competitor’s business , or falsely representing that competitor’s business has
been discontinued or falsely claiming the right to prospective customer’s special
consideration through such false statements as that the customer’s friends or his
employer have expressed a desire for, or special interest in, con-summation of seller’s
transaction with the customer.
(c) Alleged connection of a concern, organization, association, or institute with, or
endorsement of it or its product or services by, the Government or nationally known
organization, or representation that the use of such product or services is required by
the Government, or that failure to comply with such requirement is subject to penalty.
(d) False claim by a vendor of being an importer, or a technician, or a diagnostician,
or a manufacturer, grower, or nursery-man, or a distiller, or of being a wholesaler,
selling to the consumer at wholesale prices; or by a manufacturer of being also the
manufacturer of the raw material entering into the product, or by an assembler of being
a manufacturer.
(e) Falsely claiming to be a manufacturer’s representative and outlet for surplus
stock sold at a sacrifice.
(f) Falsely representing that the seller owns a laboratory in which the product offered
is analyzed and tested.
(g) Representing that ordinary private commercial seller and business is an
association, or national association, or connected therewith, or sponsored thereby, or
is otherwise connected with noncommercial or professional organizations or
associations, or constitutes an institute, or, in effect that it is altruistic in purpose,
giving work to the unemployed.
(h) Falsely claiming that business is bonded, or misrepresenting its age or history,
or the demand established for its products, or the selection afforded, or the quality or
comparative 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) ranting seals of approval by a magazine to products advertised therein and
misrepresenting thereby that such products have been adequately tested, and
misrepresenting by other means the quality, performance, and characteristics of such
products.
22. Obtaining business through undertakings not carried out and not intended to be
carried out, and through deceptive, dishonest, and oppressive devices calculated to
entrap and coerce the customer or prospective customer, such practices including-(a) Misrepresenting that seller fills orders promptly, ships kind of merchandise
described, and assigns exclusive territorial rights within definite trade areas to
purchasers or prospective purchasers
(b) Obtaining orders on the basis of samples displayed for customer’s selection and
failing or refusing to respect such selection thereafter in filling of orders, or promising
results impossible of fulfillment, or falsely making promises or holding out guaranties,
or the right of return, or results, or refunds, replace-

TYPES OF UNFAIR METHODS AND PRACTICES

41

ments, or reimbursements or special or additional advantages to the prospective
purchaser such as extra credit , or furnishing of supplies or advisory assistance ; or
falsely assuring the purchaser or prospective purchaser that certain special or
exclusively personal favors or advantages are being granted him.
(c) Concealing from prospective purchaser unusual features involved in purchaser’s
commitment, the result of which will be to require 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 a s practice of declining to return original photograph from which
enlargement has been made until purchaser has also entered into commitment for
frame therefor.
(f) Falsely representing earnings or profits of agents, dealers, or purchasers, or the
terms or conditions involved , such as false statement that participation by merchant
in seller’s sales promotion scheme is without cost to merchant, and that territory
assigned an agent, representative, or distributor is new or exclusive.
(g) Obtaining agents or representatives to distribute the seller’s products through
falsely promising to refund the money paid by them should the product prove
unsatisfactory, or promising that the agent would be granted right to exclusive or new
territory, would be given assistance by seller, or would be given special credit or
furnished supplies, or overstating the amount of his earnings or the opportunities
which the employment offers.
(h) Advertising a price for a product as illustrated or described and not including in
such price all charges for equipment or accessories illustrated or described or
necessary for use of the product or customarily included as standard equipment, and
failing to include all charges not specified as extra.
23. Giving products misleading names so as to give them a value to the purchasing
public which they would not otherwise possess, such as names implying falsely that-(a) The products were made for the Government or in accordance with its
specifications and of corresponding quality, or that the advertiser is connected with the
Government in some way, or in some way the products have been passed upon,
inspected, underwritten or endorsed by it; or
(b) They are composed in whole or in part of ingredients or materials which in fact
are present only to a negligible extent or not at all, or that they have qualities or
properties which they do not have; or

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

(c) They were made in or came from some locality famous for equality 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 char ed with the duty of making such tests expertly and
disinterested, or giving such approval; or
(f) They were made under conditions or circumstances considered of importance
by a substantial part of the general purchasing public; or
(g) They were made in a country, or city, or locality considered of importance in
connection with the public taste, preference, or prejudice ; or
(h) They have the usual characteristics or value of a product properly so designated,
as through use of a common, generic name, such as “paint, to designate a product
lacking the necessary ingredients of paint ; or
(I) They are of greater value, durability, and desirability than is the fact, as labeling
rabbit fur as “Beaver”; or
(j)They are designed, sponsored, produced, or approved by the medical profession,
health and welfare associations, hospitals, celebrities, educational institutions and
authorities, such as the use of the letters “M. D.” and the words “Red Cross” and its
insignia and the words “Boy Scout.”
24. Selling below cost or giving products without charge, with intent and effect of
hindering or suppressing competition.
25. Dealing unfairly and dishonestly with foreign purchasers and thereby
discrediting American exporters generally.
26. Coercing and forcing uneconomic and monopolistic reciprocal dealing.
27. Entering into contracts in restraint of trade whereby foreign corporations agree
not to export certain products to the United States in consideration of a domestic
company’s agreement not to export the same commodity, nor to sell to anyone other
than those who agree not to so export the same.
28. Employing various false and misleading representations and practices attributing
to products a standing, merit, and value to the purchasing public, or a part thereof,
which they do not possess, such practices including-(a) Misrepresenting, through salesmen or otherwise, products’ composition, nature,
qualities, results accomplished, safety, value, and earnings or profits to be had
therefrom.
(b) Falsely claiming unique status or advantages, or special merit , therefor, on the
basis of misleading and ill-founded demonstrations or scientific tests, or pretended
widespread tests, or of pretended widespread and critical professional acceptance and
use
(c) Misrepresenting the history or circumstances involved in the making and offer
of the products or the source or origin thereof (foreign or domestic) , or of the
ingredients entering therein, or parts thereof, or the opportunities thought to the buyer
through purchase of the offering, or otherwise misrepresenting scientific or other facts
bearing on the value thereof to the purchaser.

CASES IN FEDERAL COURTS

43

(d) Falsely representing products as legitimate, or prepared in accordance with
Government or official standards or specifications.
(e) Falsely claiming Government or official, or other, acceptance, use, and
endorsement of product, and misrepresenting success and standing thereof through use
of false and misleading endorsements or false and misleading claims with respect
thereto, or otherwise.
(f) Making use of a misleading trade name and representing by other means that the
nature of a business is different than is the fact, such as a collection agency engaged
in tracing alleged delinquent debtors representing itself as being connected with a
Government agency, a delivery system, or in search of missing heirs
(g) Misrepresenting fabrics or garments as to fiber content ; and, in the case of wool
products, failing to attach tags thereto indicating the wool, reused wool, reprocessed
wool or other fibers contained therein, and the name of the manufacturer or qualified
reseller, as required by the Wool Products Labeling Act, or removing or mutilating
tags required to be affixed to the products when they are offered for sale to the public.
29. Failing and refusing to deal justly and fairly with customers in consummating
transactions undertaken through such practices as refusing to correct mistakes in filling
orders or to make promised adjustments or refunds, and retaining, without refund,
goods returned for exchange or adjustment, and enforcing, notwithstanding agents’
alterations, printed terms of purchase contracts and exacting payments in excess of
customers’ commitments.
30. Shipping products at market prices to customers or prospective customers or to
the customers or prospective customers of competitors without an order and then
inducing or attempting by various means to induce the consignees to accept and
purchase such consignments.
31. inducing the shipment and sale of commodities through buyer’s issuance of
fictitious price lists and other printed matter falsely 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 FEDERAL COURTS
COMMISSION ACTIONS IN THE UNITED STATES SUPREME, CIRCUIT,
AND DISTRICT COURTS

During the fiscal year there were pending in the United States courts 38 cases
involving questions arising in connection with the laws administered by the Federal
Trade Commission. In 21 of these cases there were rulings and decisions favorable to
the Commission and in 4 the rulings and decisions were unfavorable. Eighteen of these
cases were fin all concluded, and at the end of the fiscal year 20 were pending.
Nine orders to cease and desist issued by the Commission were affirmed (one with
a modification) by circuit courts of appeals. Two orders to cease and desist were
affirmed by circuit courts of appeals which referred the cases to the Commission for
further action as Special Master. Four petitions to review were dismissed and one
petition for rehearing was denied in circuit courts of appeals. One motion to

721821--46----4

44

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

modify the decree of the circuit court of appeals affirming an order to cease and desist
was denied by that court.
The United States Supreme Court granted certiorari requested by the Commission
in two cases and denied certiorari requested by others in four cases. One circuit court
of appeals judgment setting aside a Commission order to cease and desist was reversed
by the United States Supreme Court.
Two orders to cease and desist were set aside by circuit courts of appeals. One
circuit court of appeals judgment setting aside an order to cease and desist was
affirmed by the United States Supreme Court. One circuit court of appeals judgment
affirming an order to cease and desist was reversed by the United States Supreme
Court.
In addition, five civil penalty suits were pending in United States district courts at
the beginning of the fiscal year, and one additional civil penalty suit was filed during
the fiscal year. None of these cases was decided.
PETITIONS TO REVIEW CEASE AND DESIST ORDERS
Petitions in United States circuit courts of appeals to review cease and desist orders
issued under section 5 of the Federal Trade Commission Act and sections 2 and 3 of
the Clayton Act are summarized below.

(Except where otherwise indicated, eases involve violations of the Federal
Trade Commission Act United States Circuit courts of appeal, are designated
First Circuit (Boston), etc.)
CASES DECIDED BY THE COURTS
A. P. W. Paper Co., Albany, N. Y.--The Supreme Court of the United States affirmed
the Second Circuit (New York) in its decision reversing a Commission order
forbidding the use of the Red Cross words and symbol in connection with the sale of
paper products. The circuit court upheld the right of the A. P. W. Paper Co., as one
that had lawfully used the Red Cross words and symbol prior to 1905, to continue such
use for the same purpose and the same class of goods. The court held that while the
1905 Red Cross Act gives the company the right to continue to use the Red Cross
words and symbol, the Federal Trade Commission Act empowers the Commission to
prevent their use in a deceptive manner; that while the Commission may not absolutely
forbid the use of the Red Cross words and symbol to pre-1905 lawful users thereof, the
Commission may require them to state, so plainly a s to avoid the creation of
misleading inferences by such use, that the goods involved are not sponsored or
approved by or in any manner connected with the American National Red Cross. (On
August 12, 1946, the Commission modified its order to conform with the court’s
decision.)
Elizabeth Arden, Inc., and others, New York.--The Second Circuit (New York)
dismissed a petition to review an order of the Commission prohibiting violation of
section 2 (e) of the Robinson-Patman Act by discrimination in the furnishing of
demonstrator services to retailers, and granted enforcement of the order.
Associated Laboratories, Inc., Long Island City, N. Y.--The Second Circuit (New

York) unanimously affirmed the Commission order proscribing misrepresentation of
benefits to health and figure to be derived from use of “Kelp-A-Malt Tablets.”
S. Buschsbaum & Co., Chicago.--The Seventh Circuit (Chicago) set aside the
Commission order to cease and desist from use of the

CASES IN FEDERAL COURTS

45

term “Elasti-Glass” in the sale of products made of “vinylite” or similar synthetic
resinous compounds. The Supreme Court granted certiorari, vacated the judgment of
the Seventh Circuit, and remanded the case to that court for further consideration.
The Carlay Co. and others, Chicago.--The Seventh Circuit (Chicago) set aside the
Commission’s order to cease and desist which prohibited certain representations in
connection with the sale of a candy product “Ayds , for removal of excess weight. The
court held that the respondent’s advertising representations were justifiable as “mere
puffing or dealer’s talk” upon which no charge of misrepresentation could be based.
Lemuel Firth, and others, Gloucester, Mass.--The First Circuit (Boston), un
agreement of counsel, dismissed the petition for review of the commission order
proscribing restraint of competition in catching and selling fish.
Gulf Oil Corp., Pittsburgh.--The Fifth Circuit (New Orleans) denied a petition for
rehearing on its decision affirming a Commission order forbidding misleading
advertising of insecticides.
Hastings Manufacturing Co., Hastings, Mich.--The Sixth Circuit (Cincinnati)
affirmed the Commission order forbidding various unfair practices resulting in
suppression of competition in the sale of automobile piston rings. The Supreme Court
denied a petition for writ of certiorari. The circuit court held that a dismissal of a proceeding “without prejudice” has been construed as a reservation of a right to reinstate
it; and that ordinarily a judgment or decree without prejudice never works as an
estoppel nor as a former adjudication. The court gave its approval to the holding that
not only are findings of fact conclusive, if supported by evidence of facts proven or
stipulated, but that this applies also to inferences to be drawn from them.
Jack Herzog & Co., New York.--Upon the Commission’s application for enforcement
of an order prohibiting practices in violation of section 2 (c) of the Robinson-Patman
Act, the Second Circuit (New York) entered a decree affirming the order and referred
the case for further action to the Commission as Special Master.
Phil Howe, and others, Seattle, Wash.--The Supreme Court denied a petition for writ
of certiorari to review a decision of the Ninth Circuit( San Francisco) which affirmed
an order to cease and desist from misleading use of the word “Hollywood” in
connection with the sale of cosmetics.
Manhattan Brewing Co., Chicago.--The Seventh Circuit (Chicago) , upon stipulation
of counsel, dismissed a petition to review a Commission order prohibiting misleading
use of the word “Canadian” in the sale of beer and ale not brewed in Canada. (On
April 5,1946, the Commission modified its order so as to permit use of the word
“Canadian” in the brand name when accompanied by a conspicuous and adequate
statement showing the beer was brewed in the United States. (Commissioners Ayres
and Davis dissented from this action.)
The Milk and Ice Cream Can Institute Cleveland and others --The Seventh Circuit
(Chicago) modified a Commission order forbidding a price-fixing combination, by
eliminating one provision. The order as modified was affirmed.
Samuel H. Moss, Inc., New York.--The Second Circuit (New York) denied a motion
to modify the decree which affirmed a Commission order prohibiting discrimination
in the price of made-to-order rubber stamps in violation of section 2 (a) of the
Robinson-Patman Act.

46

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION , 1946

Progress Tailoring Co., and others, Chicago.--The Seventh Circuit (Chicago)
unanimously affirmed the Commission , order forbidding various unfair and deceptive
acts and practices in connection with the sale of men’s clothing. In this case it was the
opinion of the court that advertisements seeking salesmen who might later engage in
furthering interstate commerce are a part of preliminary negotiations leading up to
sales in interstate commerce ; that such negotiations cannot be separated from the final
sale, and are themselves a part of interstate commerce. The court said that to
constitute a sale it is not necessary that the price be money only ; that all interstate
commerce is not the sale of goods, but that every negotiation and dealing between
citizens of different States which contemplates importation into one State from
another, whether it be goods or information, is a transaction in interstate commerce.
In this case the salesman was required by the respondents to sell a certain number of
suits or garments before he would receive a so-called “free” suit for himself.
Savoy Manufacturing Co., New York.--The Second Circuit (New York) unanimously
affirmed a Commission order forbidding the sale of miscellaneous merchandise by
means of lottery devices. The court held that the question of eliminating the word
“Manufacturing” from petitioners’ trade name, or whether some explanatory clause
might be used, such as “distributors only”, was for the Commission to determine. The
Commission found that the word “Manufacturing” in the trade name had the capacity
and tendency to deceive the public and ordered its use discontinued.
Jacob Siegel Co., Philadelphia.--The Third Circuit (Philadelphia) in 1944 affirmed
a Commission order prohibiting the use of the word “Alpacuna” in connection with the
sale of overcoats. The Supreme Court, on March 25, 1946, reversed the Third Circuit,
holding that the Commission had not considered whether the word “Alpacuna” could
be used if properly qualified, so as to satisfy the ends of the Federal Trade
Commission Act and at the same time save the trade name of the petitioner. The
Supreme Court remanded the case and directed further proceedings for that purpose.
Southgate Brokerage Co., Norfolk, Va.--The Fourth Circuit (Richmond, Va.)
reviewed and affirmed a Commission order prohibiting the receipt of certain brokerage
allowances in violation of section 2(c) of the Robinson-Patman Act. The Supreme
Court denied a petition for writ of certiorari. The circuit court held that where a buyer
receives the brokerage allowed his purchasing agent, such buyer receives an
advantage, and a concealed which the buyer who purchases directly from the seller
does not receive; and that it was the purpose of section 2 (c) of the act to forbid this
sort of discrimination.
Judson L Thomson Manufacturing Co., Waltham, Mass.--The First Circuit (Boston)
affirmed a Commission order forbidding violation of section 3 of the Clayton Act.
The Supreme Court denied a petition for writ of certiorari. The petitioner leased rivetsetting machines on the condition that lessees should not use in such machines any
rivets other than those acquired from the petitioner. The First Circuit held that the
Commission properly found that the effect of such restrictive condition in the
petitioner’s leases “has been, is and

CASES IN FEDERAL COURTS

47

may be to substantially lessen competition in the sale of tubular and bifurcated rivets.”
United States Maltsters Association, and others, Chicago.--The Seventh Circuit
(Chicago) affirmed the Commission’s modified order prohibiting fixing and
maintenance of uniform delivered prices in connection with the sale of malt.
L E. Waterman Co., New York.--The Second Circuit (New York) , upon stipulation
of counsel, dismissed a petition to review a Commission order prohibiting false and
misleading advertising in connection with the sale of fountain pens.
David M. Weiss, New York.--The Second Circuit (New York) affirmed a
Commission order directed against violation of section 2 (c) of the Robinson-Patman
Act in connection with the sale of clothing and furs, and upon the Commission’s
application for enforcement of the order referred the case to the Commission as
Special Master for a report as to whether the provisions of the order have been
violated.
CASES PENDING IN THE COURTS
Acme Asbestos Covering and Flooring Co., Chicago, and others.--Sixth Circuit
(Cincinnati), price-fixing combination in insulating materials.
Allied Paper Mills, Kalamazoo , Mich., and others.--Seventh Circuit (Chicago),
combination in restraint of trade in book print and coated paper.
American Association of Law Book Publishers, Rochester, N. Y., and others.-Second Circuit (New York), price-fixing combination in law books and legal
publications.
American Drug Corp., St. Louis.---Eighth Circuit (St. Louis), false and misleading
advertising of medicinal preparation “Sinasiptec” as a cure for sinus trouble.
Nelson C. Brewer, and others, Chicago.--Sixth Circuit (Cincinnati), sale of lottery
devices in interstate commerce.
S. Buchsbaum & Co., Chicago--Seventh Circuit (Chicago), misuse of term “ElastiGlass” to designate or describe merchandise made of “vinylite” or any other similar
synthetic resinous compound.
The Cement Institute, and others, Chicago.--Seventh Circuit (Chicago), Nation-wide
combination to restrain competition in the price of Portland cement through the agreed
use of a multiple basing-point delivered-price system.
Eastman Kodak Co., Rochester, N. Y.--Second Circuit (New York), suppression of
competition by petitioner’s resale-price-maintenance policy.
General Seafoods Corp., Boston, and others.--First Circuit (Boston) advertising and
selling rosefish as “Ocean Perch Fillets.” Jack Herzog &Co New York.-Second Circuit
(New York), on application of the Commission for enforcement of an order banning
price discrimination in violation of section 2 (c) of the Robinson-Patman Act in
connection with the sale of furs. The case is pending before the Commission as Special
Master.
Koret, Inc., New York.--Second Circuit (New York), false and misleading advertising
in the sale of handbags and leather goods.
Morton Salt Co., Chicago.--Seventh Circuit (Chicago), price discrimination in
violation of section 2 (a) of the Robinson-Patman Act,

48

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

National Cree Paper Association of America, Philadelphia, and others.--Seventh
Circuit (Chicago), price-fixing combination in sale of crepe-paper.
Ox’O-Gas Co., New York.--Second Circuit (New York) , misrepresentation of
solution designated “Ox’O”, advertised and sold as capable of increasing the
efficiency of automobile engines.
Parker Pen Co., Janesville, Wis.--Seventh Circuit (Chicago) , mis-representation of
fountain pens through use of statements such as “Guaranteed For Life” and “Life
Guaranteed.”
Rigid Steel Conduit Association, New York, and others.--Seventh Circuit (Chicago),
price-fixing combination.
Scotch Woolen Mills, Chicago.--Seventh Circuit (Chicago), misleading use of the
words “Scotch” and “Mills” in trade name.
United States Steel Corporation, American Bridge Co., Carnegie-Illinois Steel
Corp., American Steel & Wire Co. of New Jersey, and Tennessee Coal, Iron &
Railroad Co.--Third Circuit (Philadelphia and Fifth Circuit (New Orleans) , use of
“Pittsburgh-plus” prices for rolled-steel products in violation of the Clayton and
Federal Trade Commission Acts.
Vacu-Matic Carburetor. Co., Wauwatosa, Wis.--Seventh Circuit (Chicago),
misrepresentations concerning benefits to be derived from use of mechanical device
for attachment to automobile engines.
David M. Weiss, New York.--Second Circuit (New York), on application by the
Commission for enforcement of order directed against price discrimination in the sale
of furs, in violation of section 2 (c) of the Robinson-Patman Act. The case is pending
before the Commission as Special Master.
TABLES SUMMARIZING LEGAL WORK OF THE COMMISSION AND
COURT PROCEEDINGS, 1915-46
TABLE 1.--Applications for complaints
FISCAL YEAR ENDED JUNE 30, 1946
Pending beginning of year
870
Applications docketed
529
Previous action reconsidered :
To complaints
0
Settled by stipulation to cease
and desist
1
Settled by acceptance of TPC
rules
0
Consolidated with other proceedings
l
Dismissed
0
Closed without further proceedings1
0
Total for disposition
1,401
To complaints
94
Settled by stipulation to cease and
desist
85

CUMULATIVE SUMMARY, 1915 TO JUNE 30, 1946
Applications docketed
20,200
Previous action reconsidered:
To complaints
10
Settled by stipulation to Cease
and desist
224
Settled by acceptance of TPC
rules
6
Consolidated with other proceedings
l
Dismissed
81
Closed without further proceedings 1
45
Total for disposition
20,567
To complaints
4,952
Settled by stipulation to cease and
desist
6,546

Settled by acceptance of TPC rules
0
Consolidated with other proceedings 19
Dismissed
0
Closed without further proceedings 1 207
Total disposition during year

405

Pending end of year

Settled by acceptance of TPC rule 97
Consolidated with other proceedings
158
Dismissed
3,863
Closed without further proceedings 13,955

996

Total disposition

19,571

Pending June 30, 1946
996
This classification includes such reasons as death, business or practices discontinued, private
controversy, controlling court decisions, etc.
1

TABULAR SUMMARY OF LEGAL WORK

49

TABLE 2.--Complaints
FISCAL YEAR ENDED JUNE 30, 1945
Pending beginning of year
444
Complaints docketed
101
Previous action reconsidered :
Orders to cease and desist
l
Settled by stipulation to cease and
desist
0
Dismissed
0
Closed without further proceedings1
0
Total for disposition
546
Complaints rescinded
Orders to cease and desist
Settled by stipulation to cease and
desist
Settled by acceptance of TPC rules
Dismissed
Closed without further proceedings 1
Total disposition during year
Pending end of year

CUMULATIVE SUMMARY, 1915 TO
JUNE 30, 1946
Complaints
5,450
Previous action reconsidered:
Orders to cease and desist
67
Settled by stipulation to cease
and desist
l
Dismissed
11
Closed without further proceed
ings1
2
Total for disposition
5,531

0
89

Complaints rescinded
12
Orders to cease and desist
3,835
Settled by stipulation to cease and
desist
64
Settled by acceptance of TPC rules 36
Dismissed
957
Closed without further proceedings 1,204
Total disposition
5,108
Pending June 30, 1946
423

2
5
19
8
123
423

1

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

TABLE 3.--Court proceedings--orders to cease and desist--petitions for review
to circuit courts of appeals
FISCAL YEAR ENDED JUNE 30, 1946
Pending beginning of year
Appealed
Total for disposition
Decisions for Commission
Decisions for others
Petitions withdrawn
Total disposition during year
Pending end of year

27
3
30
9
l
3
13
17

CUMULATIVE SUMMARY, MAR. 16, 1915
TO JUNE 30, 1964
Appealed
367
Decisions for Commission
188
1

Decisions for others1
100
Petitions withdrawn
62
Total disposition
350
Pending June 30, 1946
17
10-YEAR SUMMARY, JULY 1, 1936, TO
JUNE 30, 1946
Pending July 1, 1936
5
Appealed
210
Total for disposition
215
Decisions for Commission
138
Decisions for others
13
Petitions withdrawn
47
Total disposition
198
Pending June 30,1946
17

This table lists a cumulative total of 100 decisions in favor of respondents in Commission cases before
the United States circuit courts of appeals. However, the Grand Rapids furniture (veneer) group (with 25
different docket numbers) was in reality l Case, with 25 different subdivisions. It was tried briefed, and
argued as l Case and was so decided by the court of appeals. The same held true of the curb-pump group
(with 12 different subdivisions), the Royal Milling Co. group (with 6 different subdivisions), and the
White Pine eases (12 subdivisions). In reality, therefore, these 55 docket numbers mean but 4 cases ; and

if cases and not docket numbers are counted, the total decisions in favor of the respondents would be 49.
NOTE : During the fiscal years 1919-1946, 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 of orders issued under the Federal
Trade Commission Act were made unnecessary by amendment of the Federal Trade Commission Act
(Mar.21, 1938) making orders finally effective unless review is sought by respondents with l n 60 days
after service of an order.

50

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946
TABLE 4.--Court proceedings--orders to cease and desist-petitions for review to
the Supreme Court of the United States
FISCAL YEAR ENDED JUNE 30, 1946

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

0
1
6
7
0
2
0
0
5
7
0

CUMULATIVE SUMMARY MAR.16, 1915, to
JUNE 30, 1946
Appealed by Commission
48
Appealed by others
51
Total for disposition
99
Decisions for Commission
29

Decisions for others
15
Petitions withdrawn by Commission 2
Certiorari denied Commission
9
Certiorari denied others
44
Total disposition
99
Pending June 30, 1946
0
10-YEAR SUMMARY, JULY 1, 1936, TO
JUNE 30, 1946
Pending July 1, 1936
Appealed by Commission
Appealed by others
Total for disposition
Decisions for Commission
Decisions for others
Certiorari denied Commission
Certiorari denied others
Total disposition
Pending June 30, 1946

l
5
35
41
5
3
l
32
41
0

TABLE 5.--Court proceedings--mandamus, injunction, etc.--district courts and
circuit courts of appeals
FISCAL YEAR ENDED JUNE 30, 1946
Pending beginning of year
l
Instituted by Commission
0
Instituted by others
0
Total for disposition
1
Decisions for Commission
0
Decisions for others
0
Petitions withdrawn by Commission
0
Petitions withdrawn by others
0
Instituted by Commission
51
Total disposition during year
0
Pending end of year
l
CUMULATIVE SUMMARY, MAR.16, 1915, TO
JUNE 30, 1946
Instituted by Commission
72
Instituted by others
41
Total for disposition
113
Decisions for Commission
82

Decisions for others
18
Petitions withdrawn by Commission 5
Petition s withdrawn by others
7
Total disposition
112
Pending June 30, 1946
l
10-YEAR SUMMARY, JULY 1, 1936, TO
JUNE 30, 1946
Pending July 1, 1936
l
Instituted by others
20
Total for disposition
72
Decisions for Commission
59
Decisions for others
7
Petitions withdrawn by Commission
l
Petitions withdrawn by others
4
Total disposition
71
Pending June 30, 1946
l

TABLE 6.--Court proceedings--mandamus, injunction. etc.-Supreme Court of the
United States
FISCAL YEAR ENDED JUNE 30, 1946
Decisions for Commission
Decisions for others
Pending beginning of year
0
Certiorari denied Commission
Appealed by Commission
l
Certiorari denied others
Appealed by others
0
Total disposition
Total for disposition
l
Pending June 30, 1946
Decisions for Commission
l

3
5
l
4
13
0

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

0
0
0
1
0

CUMULATIVE SUMMARY, MAR. 16, 1915, TO
JUNE 30, 1946
Appealed by Commission
9
Appealed by others
4
Total for disposition
13

10-YEAR SUMMARY, JULY 1, 1936, TO
JUNE 30, 1946
Pending July 1, 1936
0
Appealed by Commission
2
Appealed by others
2
Total for disposition
4
Decisions for Commission
2
Decisions for others
0
Certiorari denied others
2
Total disposition
4
Pending June 30.1946
0

PART III. TRADE PRACTICE CONFERENCES
ESTABLISHMENT OF TRADE PRACTICE RULES FOR INDUSTRIES
An effective and economical method of preventing unfair competitive practices and
the growth of monopolistic restraints and abuses in industry is provided by the
Commission’s trade practice conference procedure. Under this procedure the
cooperation of industry is enlisted and utilized in the public interest to eliminate such
unfair practices and abuses through the establishment of appropriate trade practice
rules. Since industry is dealt with as a unit, industry members are thereby placed on
an equally fair competitive basis.
Trade practice rules are established through conferences of the members of an
industry and upon due hearing and collaboration of the various parties in interest,
including representatives of the purchasing public. The rules, when promulgated, bring
to scrupulous business and the purchasing and consuming public relief and protection
from the harmful practices against which such rules are directed. Utilization of this
cooperative method also results in substantial saving to Government and industry by
avoiding the expense which otherwise might necessarily be incurred in instituting a
multiplicity of compulsory legal proceedings against individual offenders
Trade practice conference procedure.--The procedural steps and requirements
applicable to industry proceedings for the establishment of trade practice rules are
covered in the Commission’s Rules of Practice see p. 85). Trade practice conference
proceedings ma be instituted by the Commission upon its own motion or upon
application therefor whenever such proceedings appear to the Commission to be in the
interest of the public. Any interested party or group in an industry, large or small, may
apply to the Commission for the institution of such proceedings. Prior to the beginning
of proceedings and during the course thereof, members of the Commission’s staff are
available to afford guidance and assistance to industry in working out constructive
solutions of the various competitive problems. As apart of such proceedings, industrywide conferences are held and, before the Commission finally approves rules, public
hearings on proposed rules are had to afford all interested or affected parties
opportunity to present their views, suggestions, or objections, and to appear and be
heard.

51

52

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

GROUP I AND GROUP II RULES EXPLAINED
Trade practice rules appropriate for approval or acceptance by the Commission may
include not only provisions for the elimination of practices which are illegal per se or
are conducive to unfair competitive conditions in industry, but also provisions for
fostering and promoting fair competition in the public interest. The rules as finally
promulgated are classified by the Commission as Group I and Group II rules,
respectively :
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 ll rules.--These rules embrace the wholly voluntary or recommended industry
practices as distinguished from mandatory requirements. No such industry rule is
received by the Commission unless the provision is in harmony with law and the
public interest, and is constructively in support of the maintenance of fair competitive
conditions in the industry.
TRADE PRACTICE CONFERENCE ACTIVITIES DURING YEAR
Trade practice conference work during the fiscal year included the establishment of
additional sets of rules, the advancement of pending and newly instituted proceedings,
and the administration of the large body of existing rules.
New rules approved during fiscal year.--Trade practice conference proceedings
completed during the fiscal year resulted in the establishment of rules for the following
industries: (l) Artificial limb industry ; (2) construction equipment distributing
industry; (3) piston ring industry; and (4) wholesale confectionery industry (Philadelphia trade area) l These four industries have an estimated annual volume of business
of over $700,000,000 in the aggregate. The rules established for such industries are of
the utmost importance from the standpoint of broad public interest.
Rules for artificial limb industry.--The artificial limb industry rules have as their
principal purpose the aiding of some 16,000 members of the American armed forces
who suffered loss of legs or arms in the service of their country during World War II,
as well as some 600,000 other physically handicapped persons in the United States
who use artificial limbs or devices. Rehabilitation of persons who have undergone
amputations, with resulting restoration to a self-supporting and normal way of life, is
largely dependent upon the safety of the industry’s prosthetic devices and upon their
proper fit, alignment, and appearance when put to actual use.
Protection of physically handicapped persons from deceptive trade methods and
monopolistic practices in their purchases of such products
1

With respect to the last three industries named, the rules were not promulgated

until shortly after the close of the fiscal year.

TRADE PRACTICE CONFERENCE ACTIVITIES DURING YEAR

53

is the primary objective of the rules. Various practices which are deceptive or
otherwise unfair or harmful are defined in the rules and provision is made for their
elimination and prevention.
Proceedings to establish rules were instituted by the Commission at the suggestion
of the House Sub-Committee on Aid to the Physically Handicapped and in cooperation
with members of the industry.
The rules for this industry were of material aid to the court in making disposition of
an antitrust case in which 71 members of the industry were found guilty of violating
the Sherman Act and were assessed fines ranging from $200 to $1,500 each. These
fines were suspended in part, and the defendants placed on a year’s probation and
made subject to the special condition that they “conform to the Trade Practice Rules
promulgated by the Federal Trade Commission on April 16, 1946.”
The judgment and order of probation constitute judicial action or recognition of
special significance in support of the value of the trade practice conference work as
an industry-wide means of curbing the growth monopolistic and unfair competitive
methods of business. Likewise, the case concretely illustrates the fact that such rules,
framed through industry conferences, may aid the courts in the framing of orders
against restraints of trade.
The Commission’s administrative and compliance work under the artificial limb
rules will be directed with due regard to the requirements of the probationary order and
with the view of submitting to the court such reports as may be necessary from time
to time respect-in g compliance or violations by the several defendants.
Rules for construction equipment distributing industry.--The trade practice rules
promulgated for the construction equipment distributing industry are also of
considerable public interest. This industry distributes construction machinery and
equipment used in all types of construction work, such as in the building, maintenance,
repair, or demolition of structures buildings, industrial works, pipe lines, transmission
lines, reservoirs, dams, harbor installations, roads, streets, sewers, air fields, canals,
grades, and excavations. Included among such machinery are power shovels,
bulldozers, air compressors, concrete mixers, rock crushers, graders, pile drivers,
excavators, pavers, pumps and conveyors. The industry is most essential to postwar
construction. The rules are directed to the maintenance of high standards of ethical
competition and to the prevention of unfair trade practices, to the end that the industry
and the public may be more adequately protected in harmony with the requirements
of law.
Rules for piston ring industry.--Another important industry for which rules were
approved during the fiscal year is the piston ring industry. Piston rings are an essential
part of internal combustion engines, steam engines, compressors, etc., and the
industry’s progressiveness in making rings conforming to the requirements of newly
designed motors was not only a material factor in producing superior fighting
equipment during the war but is aiding in the promotion of industrial recovery in the
postwar era. In the rules various unfair methods of competition, unfair or deceptive
acts or practices, and other trade evils are listed and proscribed, such as the misuse of
premiums, misbranding, false advertising, exclusive deals with a monopolistic

tendency, commercial bribery, and discriminations in price, service, or facilities.

54

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

Wholesale confectionery industry (Philadelphia trade area)--The rules for this
industry have as their purpose the prevention of unfair trade practices and the
maintenance of fair competitive conditions in the interest of protecting the trade and
the purchasing public. To this end various practices which are deceptive or otherwise
unfair are defined in the rules and provision made therein for their elimination. The
rules cover such practices as misrepresentation in various forms, misbranding,
commercial bribery, inducing breach of contract, defamation of competitors or
disparagement of their products, selling below cost with a monopolistic tendency,
discriminations in price, service, or facilities, and other unfair or harmful practices.
Pending trade practice proceedings.--Trade practice proceedings were likewise
undertaken for other industries and were pending in various stages of progress at the
close of the fiscal year. Concerning some of these, the general industry conferences
had 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 held thereon. In other cases where the proceedings were less advanced,
the necessary preliminary study and consideration. had been undertaken preparatory
to further action. In addition, contacts were established with a number of other industry
groups looking toward the institution of trade practice conference proceedings.
INDUSTRY RULES AND THEIR ADMINISTRATION
Administration of rules.--This work covers the necessary compliance activities,
interpretation of rules, and their application to specific situations arising in various
industries. It relates not only to rules established during the fiscal year, but also to
those promulgated in prior years and still in effect.2 The codified provisions aggregate
many hundreds of rules.
During the fiscal year compliance activities were undertaken to the extent possible
with the limited personnel available for this work.
Correspondence relating to existing rules was conducted, particularly as to effecting
compliance with the provisions and, generally, in affording assistance to industry
members in the proper observance of rules. Members of industries and other interested
parties or groups also conferred with representatives of the Commission in connection
with the operation of rules. In most instances correction or adjustment of alleged
objectionable practices contrary to the rules was effected through cooperative effort.
Results obtained demonstrated a primary objective of the trade practice procedure;
namely, the wholesale elimination of unfair competitive methods or unfair or deceptive
acts or practices, in lieu of the more expensive method of litigation in individual cases.
In the few cases where compulsory proceedings were deemed necessary to bring about
correction, appropriate action was taken.
2 Rules when promulgated for an industry are issued in pamphlet form and are
available to interested parties upon request to the Commission.

TYPES OF PRACTICES COVERED IN PROMULGATED RULES

55

TYPES OF PRACTICES COVERED IN PROMULGATED RULES
Following are illustrations of the variety of subjects covered by 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; commercial bribery in purchasing or selling supplies ; inducing breach of
competitor’s contract; false invoicing; imitation of competitor’s trade-marks, trade
names, etc.; substituting inferior products for those ordered ; 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; unlawful discriminations in price service, or
facilities.
Other subjects embraced in the rules are: Enticing away employees of a competitor;
giving “push money,” “gratuities,” etc., under circumstances involving commercial
bribery, deception, or restraint of trade; use of deceptive or misleading guarantees,
warranties, price quotations, price lists, terms of sale , etc., deception in use of
competitors’ containers; full-line forcing as a monopolistic weapon combination or
conspiracy 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, or 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 “closeouts” 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,” “natural,”
etc., in describing precious stones or their imitations; misuse of term “Crookes” as
applied to sun glasses; misrepresenting kind, quality, thickness, or backing of mirrors;
use of fictitious animal designations in descriptions of furs ; misrepresenting character,
extent or type of business engaged in ; representing retail prices as wholesale; use of
false or deceptive testimonials; use of “blind” advertisements in such manner as to
mislead or deceive.
Subjects covered in other rules include: Misuse of terms “pullorum tested,” “blood
tested,” etc., as applied to baby chicks ; deceptive use of the terms “waterproof,”
“water repellent,” “ dust proof,” or “warp-proof,” as applied to luggage or related
products. false representations respecting tube capacity of radio sets and their range
or receptivity; misuse of such terms as “all-wave,” “world-wave,” “world-wide wave,”
etc.; misuse of words “bristle,” “pure bristle,” etc., in sale of toilet brushes;
representing domestic products as imported, or imported products as domestic; use of
misleading or deceptive representations in procuring sales representatives; use of
deceptive titles or names in selling books under the subscription plan; misusing terms
relating to types of construction or weave of textiles; misuse of terms

56

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

“extra fancy,” “extra select,” “extra quality,” “de luxe,” “choice,” etc., to describe tuna
fish products; misuse of words “lisle cotton,” “cotton lisle,” etc., to describe hosiery
products; deceptive use of terms “hand woven,” “hand loomed,” “hand painted,” and
“hand embroidered,” in describing linen products; and aiding or abetting another in the
use of an unfair trade practice.
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 is closure as to true composition
of paint and varnish brushes, as to imperfect or defective merchandise, as to use of
adulterant or substitute or linseed oil in respect to putty products, as to presence of
metallic weighting in silk or silk products, as to minimum yardage of ribbons , as to
true functions of radio parts and accessories, as to quality, quantity, and size of ripe
olives packed in cans and other opaque containers, and as to latent defects in artificial
limbs or devices.
INFORMATIVE LABELING
Informative labeling constitutes an important subject of trade practice rules
promulgated by the Commission. It is also a primary objective of the Wool Products
Labeling Act (see p.58) Fiber identification, or what is generally referred to as Truth
in Fabrics, enters extensively into such informative labeling work. While consumer
goods containing or purporting to contain wool are subject to Act labeling, similar
fiber identification of other textiles, and informative labeling of various lines of
merchandise outside the field of textiles, are covered by trade practice rules.
The object of informative labeling is twofold: (l) To aid intelligent purchasing and
to prevent deception by informing consumers what they are to receive for their money,
thus enabling them to be in a better position to judge quality and to buy according to
their needs or preferences; and (2) to protect business from the unfair commercial
practices attendant upon the sale of competing articles under conditions of misleading
representations or deceptive concealment of the facts.
Products containing rayon in whole or in part are covered by the rules for the rayon
industry, promulgated October 26, 1937. Those containing silk in whole or in part are
covered by the rules for the silk industry, issued November 4, 1938. Corresponding
rules for linen and part-linen merchandise were promulgated February 1, 1941.
Informative labeling for all types of hosiery is the subject of trade practice rules for the
hosiery industry, issued May 15, 1941. Similar rules covering fur garments and fur
products generally were promulgated June 17, 1938. Informative labeling provisions
on the subject of shrinkage of woven cotton merchandise were put into

INFORMATIVE LABELING

57

effect On June 80, 1938. Other textile provisions are found in the rules promulgated
for the infants’ and children’s knitted outerwear industry, June 28, 1939; uniform
industry, May 18, 1940; and ribbon industry, June 30 1942.
Provisions on the subject of informative labeling are also contained in the sets of
rules promulgated for the following industries on the dates mentioned : Rubber tire,
October 17, 1936; toilet brush manufacturing, December 31, 1937; wholesale jewelry,
March 18, 1938; paint and varnish brush manufacturing, January 14, 1939; putty manufacturing, June 30, 1939; mirror manufacturing, July 19, 1939; curled hair, January
12, l 940; luggage and related products, September 17,1941; sun glasses, December
23 1941; razor and razor blade, June 19, 1945; wood-cased lead pencil, June 29, 1945;
and artificial limb, April 16, 1946.
Rules providing for informative disclosure in advertising and selling also have been
issued for such industries as macaroni, noodles, and related products, July 7, 1938;
tomato paste manufacture, September 3, 1938; sardine, March 5, 1940; and tuna
(revised and extended rules), June 23, 1945.

PART IV. WOOL PRODUCTS LABELING ACT
INFORMATIVE LABELING FOR PROTECTION OF INDUSTRY
AND THE PUBLIC
The Wool Products Labeling Act of 1939 provides, in substance, that purchasers
shall be informed as to the true content of articles which are made or appear to be
made in whole or in part of woolen fiber, and that producers, manufacturers, merchants
and the public generally shall be safeguarded against the deception and unscrupulous
competition arising from misbranding and nondisclosure of content. The act, approved
by the President October 14 1940 and effective July 14, 1941, is enforced and
administered by the Federal Trade Commission.
The fiber content of articles containing, purporting to contain , or represented as
containing “wool,” “reprocessed wool, “ or “reused wool” is required by the act to be
disclosed by appropriate stamp, tag, label, or other means of identification. The act
applies to such articles when manufactured for, or marketed in, “commerce” as defined
by section 2, excepting carpets, rugs, mats, and upholsteries exempted by section 14.
The act requires that the label affixed to the wool product disclose the kind and
percentage of each different fiber contained in such product including the respective
percentages of “wool,” “reprocessed wool,” and “reused wool.” Disclosure of the
maximum percentage of loading and adulterating material, if any, and the name of the
manufacturer of the wool product or the name of the qualified distributor or reseller,
is also to be made on the label. The label, or a proper substitute specified by the
statute, is to remain and be on the merchandise when it is delivered to the consumer.
Products covered by the act include in general all articles of clothing or wearing
apparel, blankets, etc., made or purporting to be made in whole or in part of wool; also
the yarns and fabrics of the wool textile industry and the products of manufacturing
industries using such yarns and fabrics. These products come from approximately 70
industries and are marketed through distributor and dealer outlets estimated to number
in excess of 250,000.
Rules and regulations under Wool Act.--The act authorizes and directs the
Commission to make such rules and regulations as may be necessary and proper for
its administration and enforcement. Comprehensive rules and regulations were issued
by the Commission, effective July 15, 1941. They are published in booklet form and
are available to all concerned. They afford instruction and guidance as to how
manufacturers, distributors, dealers, and others may proceed in various situations and
assure themselves of being within the requirements of the law in its application to
merchandise covered by
58

INFORMATIVE LABELING

59

the act.1 Collaboration of industry members and other interested parties was invited
in the preparation of the rules and regulations. Hearings were held and all concerned
were afforded opportunity to contribute their views and suggestions in arriving at rules
which would be of maximum assistance to business and consonant with law, and
would also afford full protection of the public interest. The cooperation of members
of industry and others was of material assistance to the Commission.
Manufacturers’ registered identification numbers--Under rule 4 of the regulations
the Commission affords manufacturers of wool products residing in the United States
Opportunity to have assigned to them manufacturers’ registered identification
numbers. Such a number may be used upon the manufacturer’s label in lieu of his
name as a means of identifying the manufacturer when the label carries the name of
the dealer or reseller. At the close of the fiscal year, 5,780 registered identification
numbers had been assigned to manufacturers pursuant to their applications filed under
this rule. Numbers may be canceled when the firm goes out of business or changes its
form of organization or for other sufficient reasons. Up to the close of the fiscal year,
a total of 1,327 manufacturers’ registered identification numbers had been canceled.
Continuing guaranties.--For the purpose of protecting distributors, dealers, and other
resellers from the charge of misbranding when relying in good faith upon the
manufacturer’s statement of content, provision is made in section 9 of the act whereby
such protection may b e afforded by a guaranty on the part of the supplier. It may be
either (l) a separate guaranty specifically designating the wool product guaranteed, or
(2) a continuing guaranty filed with the Commission applicable to all products handled
by a guarantor and in such form as the Commission may prescribe. The form
prescribed by the Commission is set forth in rule 33 of the rules and regulations. This
rule also provides for renewal of the continuing guaranties annually and whenever any
change in ownership or management of the guarantor is made. At the close of the fiscal
year, 6,770 continuing guaranties had been properly filed with the Commission. These
have been duly recorded and are maintained as documents open to public inspection.
Enforcement.--In cases of alleged violation requiring corrective action by formal
proceedings, the use of the cease and desist order procedure under the Federal Trade
Commission Act, which is authorized by the Wool Act, has been utilized and proven
adequate and effective without resorting to the supporting peremptory remedies
specifically provided by the Wool Act. Such peremptory remedies are available when
needed and, in cases of deliberate or willful violation, misdemeanor proceedings may
be applied.
Administrative compliance work includes inspections, examinations, and correction
of labeling practices of specific concerns. Inspections of labeling and related matters
during the year concerned over 5,500 manufacturers, distributors, and other marketers
in 172
1 The Commission has issued a publication (W-31) setting forth illustrations, with
explanatory text, of certain forms of labels and tags which are acceptable under the act.
Manufacturers, distributors, dealers and other interested parties may obtain the leaflet
upon request to the Commission.

60

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

cities. Field inspections covered in excess of 10 million articles. Compliance in cases
of improper labeling under the act was effected for the most part through cooperative
effort and voluntary action on the part of the respective concerns involved, thus
avoiding the necessity of resorting to compulsory remedy to protect the public interest.
Relatively few cases have arisen in which voluntary cooperative action has not been
sufficient to effect correction and where it has been necessary to invoke mandatory
processes.2 The administrative compliance work proved both effective and economical
in the large volume of instances arising.
For complaints alleging violations of the Wool Products Labeling Act. see p.29 ;
for Commission orders directed against such violations, see p.34.
2

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.
The survey of advertising was inaugurated by the Commission in 1929 and limited
to magazines and newspapers. Expanded in 1934 to cover radio commercial
continuities, it also has included, since 1939, mail-order catalogs, almanacs and
foreign-language newspapers. Questioned advertisements noted in these surveys form
the bases of prospective cases not previously investigated and also provide a means of
determining whether advertisers are complying with orders and stipulations to
discontinue false and misleading representations.
Where the advertising is determined by the Commission to be false or misleading,
and circumstances warrant, the advertisers are extended the privilege of disposing of
the matters through an informal procedure, more fully explained on page 101, which
permits their executing stipulations to cease and desist from the use of the acts and
practices involved. A large majority of the cases re adjusted in this manner.
In certain cases involving drugs, devices, and cosmetics, the Com-mission negotiates
stipulations inhibiting the publication of advertisements which do not disclose the
potential harmful effects which may be experienced from the use of the products. In
lieu of the publication in the advertising of a full statement of such harmful effects,
these stipulations generally permit the publication of the statement, “CAUTION : Use
Only As Directed,” if and when the directions for use which appear on the label or in
the labeling carry an adequate disclosure of the probable harm.
In cases where advertising agencies have prepared or participated in the preparation
of advertisements found to be false and misleading, they are included as parties to the
stipulation.
The only objective of the Commission’s continuous survey of advertising is to
prevent false and misleading advertisements. It does not undertake to dictate what an
advertiser shall say, but merely indicates what he may not say under the law.
Newspaper and magazine advertising.--It has been found advisable in examining
advertisements in current publications to call for some newspapers and magazines on
a continuous basis due to the persistently questionable character of the advertisements
published. However, as to publications generally, of which there are more than 19,000,
it is physically impossible to survey continuously all advertisements of a doubtful
nature. Also it has been found unnecessary to examine
61

62

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

all the issues of publications of recognized high ethical standard whose publishers
carefully censor copy before acceptance.
Copies of current magazines and newspapers generally 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, 1946, the
Commission procured 1,667 editions of representative newspapers of established
general circulation and 1,033 editions of magazines and farm and trade journals of
interstate distribution. These periodicals included 216 issues of farm journals, 116
issues of trade journals and specialty publications, and 28 issues of domestic foreignlanguage publications.
In these newspapers, magazines, and farm and trade journals, 360,198
advertisements were examined, of which 19,476 were noted as containing
representations that appeared to warrant investigation as to the facts.
Mail-order advertising.--The Commission procured mail-order catalogs and
circulars containing an aggregate of 11,731 pages , examination of which resulted in
384 advertisements being marked as containing possibly false and misleading
representations. Of the 82 mail-order houses included in the survey, 5 had combined
annual sales in excess of $1,831,160,920.
Radio advertising.--The Commission issues calls twice yearly for commercial
continuities from each individual radio station. National and regional networks
respond on a continuous weekly basis, submitting copies of the commercial advertising
parts of all programs wherein linked hook-ups are used involving two or more stations.
Producers of electrical transcription recordings each month submit typed copies of the
commercial portions of all recordings produced by them for radio broadcast. This
material is supplemented by periodic reports from individual stations listing the
identities of recorded commercial transcriptions and related data.
The Commission received copies of 564,408 commercial radio broadcast
continuities and examined 518,061. The continuities received amounted to 1,255,245
typewriter pages and those examined totaled 1,186,724 pages, consisting of 470,980
pages of network script, 697,144 pages of individual station script, and some 18,600
pages of script representing the built-in advertising portions of transcription recording
productions desired for radio broadcast through distribution of multiple pressings of
such recordings to individual stations. An average of 4,547 pages of radio script was
read each working day. From this material 8,399 advertising broadcast statements were
marked for further study as containing representations that might be false or
misleading.
Cooperation of radio and publishing industries.--In general, the Commission has
received the cooperation of the 4 nation-wide network chains, 19 regional network
groups, and transcription producers engaged preparing commercial radio recordings;
and of 868 commercial radio stations, 503 newspaper publishers, and 544 publishers
of magazines, farm journals, and trade publications. It has observed

SURVEY OF PUBLISHED AND BROADCAST MATTER

63

a desire on the part of these broadcasters and publishers to aid in the elimination of
false and misleading advertising.
Sources of radio and periodical cases.--During the fiscal year, 91.5 percent of the
cases handled in the Radio and Periodical Division resulted from the continuous
survey of advertising material as described above and 8.5 percent from complaints by
or information received from other Government agencies, competitors, and members
of the public.
Analysis of questioned advertising.--Analysis of the questioned advertisements,
which were assembled into 915 cases and given legal review, discloses that they
pertained to 952 commodities in the proportions indicated below :
CLASSIFICATION OF PRODUCTS
Commodity
Food, drugs, devices, cosmetics :
Food (human)
Food (animal)
Drugs
Cosmetics
Devices

Percent
2.2
1.4
65.5
14.4
1.8

85.3
Other products :
Specialty and novelty goods
1.3
Automobile, radio, refrigerator, and other equipment
3.7
Home study courses
.4
Tobacco products
.2
Miscellaneous, including apparel, fuels, house furnishings, building materials 9.1
14.7
Total

100.0

Because of the war emergency, attention at the beginning of the fiscal year was
directed principally to the advertising of food , drugs, , devices, cosmetics and rationed
commodities. Upon the termination of hostilities in August 1945, normal activities
were resumed.
Number of cases handled.--During the fiscal year contact letters were sent to
advertisers in 221 cases, and the Commission accepted 23 stipulations involving radio
and periodical advertising, of which 3 were supplemental and l amended.
Cases disposed of by various methods of procedure totaled 122. Of this number 50
were considered settled upon receipt of reports or other evidence showing compliance
with previously negotiated stipulations; 58 were closed without prejudice to the right
of the Commission to reopen if warranted by the facts, 30 of them for lack of jurisdiction or lack of evidence sufficient to establish a violation of law, 20 because of
discontinued practices or insufficient public interest, 7 because of corrective action by
the Post Office Department and l because the proposed respondent was not responsible
for the advertising; 2 were referred to the Chief Counsel and l to the Chief Trial

Examiner for such consideration as was deemed appropriate in connection with
pending cases; and in 11 cases the Commission directed issuance of complaint, 8
because the advertisers had failed to avail themselves of the privilege of stipulation,
and 3 because of violation of previous stipulations. Field investigations were ordered
in 10 cases.
The Commission filed without action 13 applications for complaint, referred 3 to the
Chief Examiner for field investigation and 4 to the Post Office Department.

64

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

At the close of the year 787 cases were pending as compared with 688 at the close
of the previous fiscal year.
Procedure in advertising cases.--If it appears to the Commission that a published
advertisement may be misleading, a contact letter is sent to the advertiser and request
is made for a sample of the product advertised, if this is practicable, and the
quantitative formula if the product is a compound. Representative specimens of all
advertising copy containing all claims made for the product during a 6-month period
also are requested.
Upon receipt of these data, scientific opinions are obtained based upon the sample
and formula. Then a list of the claims that appear to be false or misleading is sent to
the advertiser, together with a statement based upon the scientific opinion theretofore
obtained. The advertiser is invited to submit informally by letter, or in person, or by
counsel any evidence he chooses in support of his claims.
If, after a consideration of all available evidence, including that furnished by the
advertiser, the questioned claims appear not to be false or misleading, the division
reports the matter to the Commission with the recommendation that the case be closed.
If it appears from the weight of the evidence in the investigational files that the
advertising is false and misleading, the matter is referred to the Commission with
recommendation either that complaint issue or that negotiation of an appropriate
stipulation be authorized, provided the advertiser should desire to dispose of it by such
voluntary agreement to cease and desist from the use of the acts and practices
involved.

PART VI. MEDICAL AND SCIENTIFIC OPINIONS
DATA IS UTILIZED BY COMMISSION IN CASES RELATING TO FOOD,
DRUGS, DEVICES, AND COSMETICS
The Medical Advisory Division furnishes the Commission with scientific facts and
opinions concerning the composition of and the advertising claims made for food,
drugs, curative devices, and cosmetics. It arranges for analyses of samples of such
products under investigation and gathers information with respect to their nature.
The division provides medical opinions and scientific information needed in the
preparation of complaints issued and stipulations to cease and desist accepted by the
Commission. During the fiscal year it prepared 228 written medical opinions and in
addition rendered many verbal opinions of the same character. Also, a substantial
amount of time was devoted to assisting the Commission’s legal staff in its preparation
for hearings involving questions of science.
Another duty of the division is to obtain expert witnesses to testify at hearings.
Because of the wide, direct influence of advertising on the public health, many
outstanding experts in the medical sciences are interested in the advertising claims
made for food, drugs, curative devices, and cosmetics. During the year, 35 such
experts served without compensation as Commission witnesses at hearings, their testimony being essential to a determination of the scientific facts involved.
Through the Director of the Medical Advisory Division the Commission maintains
contact with other Governmental agencies concerned with food, drugs, curative
devices, and cosmetics. Included among these are the Food and Drug Administration,
the National Bureau of Standards, the United States Public Health Service, the Bureau
of Animal Industry, and the Agricultural Marketing Service . The Commission extends
cooperation to and receives effective cooperation from these agencies, as well as from
nongovernment clinics, hospitals, and laboratories.
65

PART VII. FOREIGN TRADE WORK
EXPORT TRADE ACT
Under the Export Trade Act (Webb-Pomerene Law) of 1918, cooperative
associations are formed under supervision of the Federal Trade Commission, filing
organization papers and periodic reports covering their operation in export trade.
The law provides that such an association shall be entered into for the sole purpose
of engaging in export trade and must actually so engage; and that there shall be no
restraint of the trade of domestic competitors, artificial or intentional enhancement or
depression of domestic prices, substantial lessening of competition or other restraint
of trade within the United States. Under these conditions, the associations shall not be
deemed in violation of the antitrust laws.
CURRENT LIST OF ASSOCIATIONS
Forty-nine export associations were on file with the Federal Trade Commission at
the close of the fiscal year on June 30, 1946. They were :
American Box Shook Export
Association,
308 Barr Building,
Washington, D.C.
American Hardwood Exporters, Inc.
901 Carondelet Building,
New Orleans.
AMTEA Corp. (American Machine Tool
Export Association) ,
Empire State Building, New York.
American Provisions Export Co.,
% Armour & Co.,
Foreign Sales Department,
Union Stock Yards,
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 Dried Fruit Export
Association,
l Drumm Street,
San Francisco.
California Prune Export
Association,
l Drumm Street,
San Francisco.
California Raisin Export
Association,
l Drumm Street,
San Francisco.
Carbon Black Export, Inc.,
500 Fifth Avenue,
New York.
Copper Exporters, Inc.,
50 Broadway,
New York.
Door Export Co.,
1212 Washington Building,
Tacoma, Wash.
Douglas Fir Export Co.,
530 Henry Building,
Seattle, Wash.
Durex Abrasives Corp.,
63 Wall Street,

New York.
California Alkali Export
Association,
608 Latham Square Building,
Oakland, Calif.
66

Easco Lumber Association,
216 Pine Street,
San Francisco.

CURRENT LIST OF ASSOCIATIONS

67

Electrical Apparatus Export
Association,
70 Pine Street,
New York.

Railway Car Export Corp.
of America,
30 Church Street,
New York.

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

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

Export Screw Association of the
United States,
23 Acorn Street,
Providence, R. I.
Flints Export Agency,
Broad Street,
New York.

Rubber Export Association, The,
1185 East Market Street,
Akron, Ohio.
Steam Locomotive Export
Association, Inc.,
Room 1624,
30 Church Street,
New York.

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

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

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

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

Friction Materials Export
Association, Inc.,
22 East Fortieth Street,
New York.

Textile Export Association of
the United States,
320 Broadway,
New York.

General Milk Co., Inc., Association,
19 Rector Street,
New York.

Typewriter Manufacturers Export
1611 Forty-Fourth Street,
Washington, D. C.

Goodyear Tire & Rubber Export
Co., The,
1144 East Market Street,
Akron, Ohio.

United States Alkali Export
Association, Inc.,
11 Broadway,
New York.

Metal Lath Export Association, The,
Room 1504,
205 East Forty-Second Street,
New York.

United States International Book
Association, Inc.,
27 East Sixty-Seventh Street,
New York.

Motion Picture Export
Association, Inc.,
25 West Forty-Third Street,
New York.
Pacific Forest Industries,
1219 Washington Building,
Tacoma, Wash.
Pacific Fresh Fruit Export
Association,
333 Pine Street,
San Francisco.
Pencil Industry Export
Association,
167 Wayne Street,
Jersey City, N. J.
Pipe Fittings & Valve Export

Universal Dairy Products Co.
80 East Jackson Boulevard,
Chicago.
Walnut Export Sales Co., Inc.,
540 Postal Station Building,
Indianapolis.
Washington Evaporated Apple
Export Association,
709 First Avenue, North,
Yakima, Wash.
Wescosa Lumber Association,
Room 500,
2 Pine Street,
San Francisco.
Wine & Brandy Export Association
of California,
717 Market Street,

Association, The,
347 Madison Avenue,
New York.

San Francisco.

Potash Export Association, Inc.,
420 Lexington Avenue,
New York.

68

Wire Rope Export Trade
Association, The,
c/o Wm. P. Laseter, Chairman,
Room 2006, 19 Rector Street,
New York.

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

EXPORTS IN 1945 TOTAL $94,172,483
Exports by the associations during the calendar year 1945 show a slight increase in
money value over the year before :
1944
$19,445, 263
11,582,586
10,071,372
5,381,425
29,257,770
75,738,416

Metals and metal products
Products of mines and wells
Lumber and wood products
Foodstuffs
Miscellaneous
Total

1945
$16,303,330
20,003,356
8,207,702
9,450,482
40,207,613
94,172,483

The largest increase is found in miscellaneous products, which include chemicals,
abrasives, textiles, rubber products, flints, friction materials, typewriters, books, and
pencils.
NEW ASSOCIATIONS
The Universal Dairy Products Co., Chicago, filed papers with the Commission in
November 1945. It was formed by 11 companies producing dried milk, most of which
are located in the Middle West. Membership has more than doubled since organization
of t he group, and several of the members are cooperatives representing a number of
producers.
The Motion Picture Export Association , New York, filed papers in January 1946.
This group includes eight motion picture producers.
The Railway Car Export Corp. of America, New York and Washington, D. C., filed
papers in June 1946 for the purpose of exporting freight cars and parts, equipment, and
accessories. The association represents seven manufacturers.
INVESTIGATIONS
Several inquiries as to operation of export associations were in progress during the
year, under section 5 of the Export Trade Act.
Summonses and bills of particulars were issued to the Export Screw Association of
the United States on January 3, 1946 (Docket 202-8), and The Pipe Fittings & Valve
Export Association on May 3, 1946 (Docket 202-9).
Hearings were held involving operation of the carbon black, milk, and sulphur
associations (Docket s 202-5, 202-6 and 202-7, respectively) but final reports had not
been made at the close of the year. The electrical apparatus inquiry (Docket 202-4 also
was pending.
The Commission issued its final report, conclusions, and recommendations for
readjustment of the business of Phosphate Export Association (Docket 202-3) on
March 6, 1946. The recommendations provide:

1. That Phosphate Export Association withdraw from and rescind the following agreements
requiring that deductions be made from the quota of American shipments of Florida land pebble
phosphate, stipulated for in said agreements, for shipments of Florida land pebble phosphate
from the United States made by or through American producers who are not members of the
association, to wit:
(a) Agreement between Phosphate Export Association and the North African Group, formed
by the Comptoir des Phosphates d’Algerie et de Tunisie and the office Cherifien des Phosphates;
(b) Agreement between Phosphate Export Association and the Florida Hard Rock Phosphate
Export Association and said North African Group ;

INVESTIGATIONS

69

(c) Agreement between Phosphate Export Association and the Florida Hard Rock Phosphate
Export Association, said North African Group, and Curacao (Mijnmaatschaapij Curacao)
(d) Agreement between Phosphate Export Association and said North African Group and
Societa Egiziana per L’Estrazione ed il Commercio del Fosfati, of Alexandria, Egypt
(commonly known as Kosseir), and Egyptian Phosphate Co., of London, England (commonly
known as Safaga).
2. That Phosphate Export Association withdraw from and rescind any and every
understanding reached in connection with or relating to the agreements specified In paragraph
l above, and any other agreement, which is designed to or intended to have the effect of
deterring, forestalling or preventing the importation of phosphate rock into the United States
from foreign sources, and that said Association refrain from entering into like or similar
understandings in the future.
3. That Phosphate Export Association rescind and cancel any and every inter-member bylaw,
rule, contract or agreement discriminating as between members in their right to withdrawn or
resign from the Association, or restricting or limiting the right of withdrawal or resignation of
any member by requiring that such member’s export trade, after such resignation or withdrawal,
must be handled by or through the Association.
4. That Phosphate Export Association in future cease and desist from selling, handling,
marketing or disposing of Florida pebble land phosphate for the account of or belonging to any
producer who is not a regularly admitted and recognized member of the Association.
5. That Phosphate Export Association rescind and cancel any and every inter-member bylaw,
rule, contract or agreement restricting or limiting, or attempting to restrict or limit, the disposal
or alienation of mineral deposits used or useful for the production of Florida land pebble
phosphate, by requiring any member disposing of or alienating such deposits to make effective
arrangements to impose upon his assignee or successor in ownership the condition that the latter
shall carry out and perform the covenants and agreements of such member with the Association.
6. That Phosphate Export Association rescind and cancel any and every agreement or
understanding restricting or attempting to restrict the use or licensing of any patent designed for
or useful in connection with the mining or processing of Florida land pebble phosphate to the
members of the Association, or fixing or agreeing upon the terms and conditions upon which
licenses for the use of any such patent are granted by the patent holder to the members of said
Association ; and that the said Phosphate Export Association cease and desist in the future from
entering into any negotiations, discussions, or arrangements with reference to the patents or
agreements or licenses relating thereto, above mentioned.
7. That Phosphate Export association cease and desist in the future from discussing,
negotiating concerning, or agreeing upon any plan, arrangement, scheme, understanding or
agreement whereby the production of Florida land pebble phosphate by any American producer
or potential producer, or the sale or marketing thereof In domestic trade is affected, deterred,
forestalled or prevented, or where the purpose or intent is to accomplish any of said results.
8. That Phosphate Export Association in the future deny membership to any and every
applicant who or which is a foreign purchaser of or foreign customer for Florida land pebble
phosphate for foreign consumption or resale, and any representative, agent, affiliate or
subsidiary of any such purchaser or customer, whether such representative, agent, affiliate or
subsidiary is a nonnational of the United States, or otherwise.
9. That Phosphate Export Association cease and desist in the future from discussing,
negotiating concerning, or agreeing with Florida Hard Rock Phosphate Export Association upon
any plan, arrangement, scheme, understanding or agreement whereby said Florida Hard Rock

Phosphate Export Association confines or restricts solely to its members the use of the
Fernandina Terminal, Fernandina, Fla., for the processing or shipping of hard rock phosphates.
10. That Phosphate Export Association cease and desist in the future from discussing,
negotiating concerning or agreeing upon the terms or provisions incorporated into or to be
incorporated into the domestic sales contracts with purchasers used or effectuated by any of its
members in domestic trade in phosphate rock in the United States or any of its possessions.
11. That Phosphate Export Association, in the future, seasonably file with the Commission
all information required by the Export Trade Act to be filed annually, and furnish all information
and documentary evidence requested or required

70

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

by the Commission, pursuant to said act, whether called for by report forms, by questionnaires
or communications, by personal visitation or otherwise.
It is ordered by the Commission that Phosphate Export Association file with the Commission
within 30 days hereof a report stating whether it has elected to comply with the above
recommendations, and if so, the manner in which it has complied.
REPORT FOR SENATE SMALL BUSINESS COMMITTEE

In addition to a more detailed report prepared for the Subcommittee on Foreign
Trade of the Senate Small Business Committee in June 1945 the Commission
presented a supplemental report to the subcommittee in April 1946, which
summarized, as follows, benefits obtained by small business under the Export Trade
Act (Webb-Pomerene law):
The benefits afforded by the act are available, of course, to all business, large or small, but
some are of especial value to small business concerns desiring to engage in export trade. These
potential benefits flow principally from a sharing of the costs of engaging in foreign trade, from
a pooling of resources, and from the ability to present a solid front in export markets.
Through Webb Act associations members may maintain joint sales agencies in export
markets, share the cost of advertising in and developing such markets, and effect substantial
savings in warehousing, in shipping costs, and in the handling of credits and collections. Such
associations may also obtain substantial savings through long-term arrangements for cargo space
and in the placing of insurance and the settlement of claims. They may more effectively handle
settlements under the shifting conditions of foreign exchange and blocked accounts. There are
definite benefits to be derived through the formulation and use of uniform contracts, terms, and
conditions of sale in export markets and in the cooperative pricing of products in such markets
on a basis which eliminates the possibility of foreign purchasers playing one American supplier
against another.
A group of exporters can probably offer through a centralized sales agency a more varied and
complete line of products than a single business unit and also be able to secure and handle larger
orders than a single member might find it practicable to undertake. In numerous commodities
special packaging or processing is needed in export trade, and an association may be able to
maintain special plants for these purposes at strategic locations.
The production of certain types of export goods or the availability of that production for
export purposes is sometimes of a seasonal nature, and the export associations may be able to
warehouse and distribute the products in foreign markets throughout the year and thus alleviate
the pressure of seasonal sales on export prices. The percentage of a member’s production which
goes into export channels might well serve as a cushion In times of domestic distress or aid in
maintaining more even production schedules.
The cooperation of association members in the standardization of their products intended for
export, in the adoption and use of a common brand name or trade-mark, and in the maintenance
of an inspection service may be of substantial value in reducing the possibility of claims, in
creating good will, and in aiding the efforts of their sales representatives. Similarly, the joint
collection and use of current trade information from foreign markets, together with the detailed
information concerning foreign trade laws and customs and the preferences of foreign buyers,
may be of substantial advantage to the small exporter.
The cooperative action thus permitted to American exporters improves their bargaining
position in foreign trade and enables them to cope more successfully with foreign cartels. In the

conduct of foreign trade it needs to be recognized that the elements of distance and differences
in business customs, practices, and national laws all tend to prevent an individual American
producer from dealing face to face with foreign customers in a manner comparable with his
dealings in domestic trade. In the absence of a solid cooperative front among American
exporters of a particular product, this handicap applies to both large and small concerns, but is
felt most by the small concern which has no sales personnel experienced in foreign trade or
representatives abroad to care for its interests.

TRADE REGULATIONS AND UNFAIR COMPETITION ABROAD

71

TRADE REGULATION AND UNFAIR COMPETITION ABROAD
A few of the more important measures regulating trade and industry abroad may be
briefly noted :
Argentina.--Presidential Decree No.19288, August 22, 1945, directed the National
Postwar Council to provide a program for adequate production and distribution of
materials, development of transportation, and decentralization of industry. Decree No
21748, September 14, 1945, established new wholesale and retail prices on certain
necessary products, to correspond with changes in wages. Presidential Decree
No.18290 of 1945 prescribed a 20-percent reduction in agricultural rents. Decree Law
No.8503, March 25, 1946, nationalized the Central Bank ; and Decree Law No. 12596,
May 8, 1946, centralized foreign exchange control in the Bank.
Brazil.--Antitrust Decree Law No.7666 was passed on June 22, 1945, and provided
penalties for a list of offenses against the public interest. The Office of Economic
Coordination created in 1942 was abolished January 1, 1946, its duties being assigned
to other Government agencies. A Central Price Commission was created and prices
frozen at the level of February 15, 1946. An excess-profits decree law was published
on April 11, 1946.
Canada.--The Combines Investigation Commission was transfer-red from the
Department of Labor to the Department of Justice b an Order-in-Council P. C. 6206,
September 25, 1945. The Commission issued a report on Canada and International
Cartels October 10, 1945, with recommendations for a cartel policy. A bill, No.193,
to amend the Combines Investigation Act, was introduced June 5, 1946, the
amendments relating to investigations and court procedure. The National Emergency
Transitional Powers Act passed in December 1945 declared the war at an end and
terminated wartime powers assumed by the Government in 1939 under the War
Measures Act of 1914; but emergency powers were continued to deal with problems
of reconversion.
China.--A Revised Company Act was passed April 12, 1946, and a new set of direct
tax laws on the same date. A supreme economic council has been created to direct and
promote reconstruction and development of China. The council established an import
planning committee to promote foreign trade and direct the distribution and marketing
of imported goods.
Colombia.--Presidential Decree No.2010, August 18, 1945, abolished the National
Price Control Office, but authorized the Department of Commerce and Industries to
adopt measures necessary to control articles of prime necessity. Three decrees issued
March 17, 1946, established further control over prices, distribution, rents, and foreign
trade.
Cuba.--Measures taken by the Government in 1945 to stimulate utilization of
national resources included waiver of import duties on machinery and other equipment
and tax exemptions for new industries in proportion to the amount of native raw
materials used.
Czechoslovakia.--Nationalization of mines and other key industries, the food
industries, joint stock banks, and private insurance companies, was provided in four

decrees on October 24, 1945. Decree No. 109, October 27, 1945, authorized the
Ministry of Industry to direct

72

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

production supply and sales of certain basic commodities. Decree No. 118, October
27, 1945, gave to the Minister of Food authority to regulate and control all matters
concerning nourishment of the people.
France.--Law No 46-827, April 26, 1946, abolished the Central Office for Allotment
of Industrial Products and established temporary control “preceding the return of
economic freedom.” Reorganization of the Direction of Economic Control was
provided in decree No. 46-845, April 29, 1946.
Great Britain.--The Distribution of Industry Act, June 15, 1945, gave to the Board
of Trade wide powers over industrial development. The Department of Overseas Trade
(Dissolution) Order, March 20, 1946 created an Export Promotion Department within
the Board of Trade to take over functions of the former Department of Overseas Trade.
The Board established regional export trade offices throughout Britain, and in April
and May 1946 published a list of 264 “export groups” organized for overseas trade.
Guatemala.--The Price and Supply Coordination Office was abolished on February
18, 1946, and in its place a new Office of Economic Stabilization was created under
the Ministry of Economy to administer the Law of Economic Emergency, decree
No.90 of 1945.
Haiti.--In order to encourage establishment of new industries to prepare agricultural
products for export, decree law No.589, December 2, 1945, granted import and export
duty exemptions. A Small Industries Control Office was established within the
Department of Commerce and National Economy by decree law No.548, October 5,
1945.
Mexico.--A congressional decree, October 1, 1945, restored constitutional rights and
annulled legislation enacted under special emergency powers granted to the Chief
Executive under the War Powers Decree of June 1, 1942. A law to encourage the
development of manufacturing industries, December 31, 1945, provided broad
exemption from import duties and from income, stamp and other Federal taxes, for
periods from 5 to 10 years.
Paraguay.--Decree law No.9926, August 16, 1945, continued in effect with certain
amendments provisions of the war measures law, No.282 of 1939. Decree law No.
11602, January 10, 1946, had much the same purpose as the Mexican law of December
31, 1945, to encourage development of new industries, especially to utilize domestic
raw materials.
Peru.--A National Food and Nutrition Board was established in December 1945 by
law No.10325, to formulate a national plan to achieve maximum production of
foodstuffs needed for domestic consumption.
Salvador.--Decree No.97, June 11, 1945, authorized the Executive to take steps
necessary to prevent the cornering of foodstuffs and other articles of prime necessity,
and consequent rise in prices. The Committee on Economic Coordination was
abolished by legislative decree No.275, December 20, 1945, but the Ministry of
Economy still has authority to superintend the equitable distribution of certain articles.

PART VIII. FISCAL AFFAIRS
APPROPRIATION ACTS PROVIDING FUNDS FOR COMMISSION
WORK
The Independent Offices Appropriation Act, 1946 (Public Law 49, 79th Cong.),
approved May 3, 1945, provided funds for the fiscal year 1946 for the Federal Trade
Commission as follows :
FEDERAL TRADE COMMISSION
For salaries and expenses of the Federal Trade Commission, including personal
services in the District of Columbia; contract stenographic reporting services; supplies
and equipment, lawbooks, books of reference, periodicals, garage rentals; traveling
expenses; newspapers not to exceed $500, foreign postage; not to exceed $4,500 for
deposit in the general fund of the Treasury for cost of penalty mail as required by
section 2 of the act of June 28, 1944 (Public Law 364); and witness fees and mileage
in accordance with section 9 of the Federal Trade Commission Act; $1,897,833, of
which not less than $171,673 shall be available for the enforcement of the Wool
Products Labeling Act: Provided, That no part of the funds appropriated herein for the
Federal Trade Commission shall be expended upon any investigation hereafter
provided by concurrent resolution of the Congress until funds are appropriated
subsequently to the enactment of such resolution to finance the cost of such
investigation.
For all printing and binding for the Federal Trade Commission, $44,000.
In addition to this sum there was appropriated in House Joint Resolution 342,
“Making additional appropriations for the fiscal year 1946 to pay increased
compensation authorized by law to officers and employees of sundry Federal and other
agencies” (Public Law 349, 79th Cong.), for the Federal Trade Commission : “Salaries
and expenses,” $232,000.
APPROPRIATIONS FOR FISCAL YEAR
Appropriations available to the Commission for the fiscal year 1946 under the acts
cited above amounted to $2,173,833. This sum was made up of two items : (l)
$2,129,833 for the general work of the Commission, and (2) $44,000 for printing and
binding.
Appropriations, allotments, expenditures, liabilities, and balances for the fiscal
year ended June 30, 1946
Amount
Amount
Liabilities Expenditures
Balances
available
expended
and liabilities
Federal Trade Commission, 1946
salaries, Commissioners and all
other authorized expenses
$2,119,833.00 $2,076,217.87 $43,244.60 $2,119,462.47 $10,370.53
Printing and binding, Federal Trade
Commission, 1946
44,000.00
7,394.77 27,163.20
34,557.97
9,442.03
Total fiscal year 1946
2,173,833.00 2,083,612.64 70,407.80
2,154,020.44
19,812.56

Unexpended balances:
Federal Trade Commission 1945 - - 104,607.63
Printing and binding, Federal
Trade Commission, 1945
35, 298.62
Working fund, Federal Trade
Commission 1945
3,921.30
Federal Trade Commission, 1944 70,268.12

47,838.17
7,708.17
1,196.99
483.64

5,067.85
27,519.78

52,906.02
35,237.95
1,196.99
483.64

51,701.61
60.67
2,724.31

69,784.48

Printing and binding, Federal
Trade Commission, 1944
10,325.74
8,232.64
8,232.64
2,093.10
Working fund, Federal Trade
Commission, 1944
55,728.72
55,728.72
Federal Trade Commission, 1941
4.30
4.30
Total
2,453,987.43
2,149,072.25
103,005.43 2,252,077.68 201,909.75

73

74

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946
Detailed statement of costs for the fiscal year ended June 30, 1946
Salary
$48,730.08
48,352.17
37,762.56
134,844.81

Commissioners
Office of Commissioners
Office of the Secretary
Total
Administration:
Budget and finance
Legal research and compiling
Library
Mail and files
Personnel supervision and management
Information service
Publication and procurement
Records
Stenographic
Communications
Contract services
Equipment
Rents
Supplies
Transportation of things
Travel expense
Total
Legal:
Preliminary inquiries
Application for complaints
Complaints
Export trade associations
Trade practice conferences
Wool Products Labeling Act
Legal aids to commission
Total

Printing and binding

560.60

20,721.59
13,289.31
15,203.70
23,199.68
28,536.23
18,711.63
69,662.37
46,309.37
65,000.34

300,634.22

129,163.47
380,661.48
670,003.97
26,261.59
24,602.64
147,065.96
26,709.23
1,404,468.34

General investigations:
Resale price maintenance
Export trade study
Cigarette inquiry
Survey of mergers
Wholesale bread baking industry
Special reports for President
House Agriculture Committee
Senate Committee on Agriculture
Total

Travel
$560.60

7,630.90
36,411.88
20,794.73
34,836.42
3,923.43
595.52
3,013.90
107,206.78

110.00
110.00

47.46
16.28
28.37
3,470.03

239.01
3,801.15

134,844.81
300,634.22
1,404,468.34
107,206.78
1,931.72
1,949,085.87

7,630.90
36,459.34
16.28
20,823.10
14.35 38,320.80
3,923.43
595.52
.95
3,253.86
15.30 111,023.23
23,335.58

1,931.72

Summary:
Commissioners and Secretary
Administration
Legal
General investigations
Work for other agencies
Printing and binding
Total

20,721.59
13,289.31
15,203.70
23,199.68
28,536.23
18,711.63
69,662.37
46,309.37
65,000.34
15,668.41 15,668.41
9,955.10 9,955.10
17,283.39 17,283.39
6,496.86 6,496.86
11,833.15 11,833.15
394.45
394.45
110.00
61,631.36 362,375.58

5,631.40
182.12
134,976.99
24,799.36
969.02 406,429.86
38,788.94 17,656.37
726,449.28
971.33
5.91 27,238.83
1,445.00
10.18 26,057.82
19,946.74
116.63 167,129.33
26,709.23
91,582.77 18,940.23 1,514,991.34

23,335.58

Work for other agencies

Other
Total
$9.39
$49,300.07
48,352.17
37,762.56
9.39
135,414.80

1,931.72

560.60
9.39
135,414.80
110.00 61,631.36
362,375.58
91,582.77 18,940.23
1,514,991.34
3,801.15
15.30 111,023.23
1,931.72
23,335.58
23,335.58
96,054.52 103,931.86 2,149,072.25

RECAPITULATION OF COSTS BY DIVISIONS
Commissioners and Secretary
Chief counsel
Accounts, statistics and economic
investigations.
Chief examiner
Trial examiner

$139,707.91
317,898.81
156,385.05
493,566.55
122,377.54

$875.17
$10.57 $140,593.65
19,668.27 5,813.49 413,380.57
4,799.25
27.20 161,211.50
37,947.44 1,186.88 532,700.87
10,863.25
6.06 133, 246.85

Radio and periodical
Medical advisory
Trade practice conferences
Legal aids to commission
Administrative
Printing and binding
Total

123,335.00
25,147.09
162,252.23
28,640.95
309,774.74
1,949,085.87

123,335.00
600.87 1,795.09 27,543.05
21,190.27
125.63 183,568.13
28,640.95
110.00 71,631.36 381,516.10
23,335.58 23,335.58
96,054.52 103,931.86 2,149,072.25

75

APPROPRIATIONS FOR FISCAL YEAR

APPROPRIATIONS AND EXPENDITURES, 1915-46
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
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
1944

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
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
Expenditures
and liabilities
$184,016.23
12,386.76
430,964.08
15,000.00
542,025.92
25,000.00
1,578,865.92
30,000.00
1,693,622.18
14,934.21
1,206, 587.42
28,348.97
938,609.94
37,182.56
952,505.45
22,801.73
952,020.11
22,460.21
990,000.00
20,000.00
990,000.00
20,000.00
990,000.00
18,000.00
980,000.00
17,000.00
967,850.00
16,500.00
1,135,414.83
27,777.69
1,440,971.82
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
2,373,822.00
60,000.00
2,237,705.00
50,250.00
2,040,050.00
43,000.00

$90,442.05
9,504.10
379,927.41
14,997.55
448,890.66
23,610.54
1,412,280.19
11,114.06
1,491,637.39
14,934.21
1,007,593.30
28,348.97
842,991.24
37,182.56
878,120.24
22,801.73
948,293.07
22,400.21
900,020.93
19,419.25
988,082.37
19,866.14
976,957.02
18,000.00
943,881.99
17,000.00
951,965.15
16,500.90
1,131,521.47
27,777.69
1,430,084.17
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
2,296,921.13
42,000.00
2,100,783.09
32,210.75
1,917,307.50
39,848.47

Balance
$93,574.18
2,882.60
51,636.67
2.45
93,135.26
1,389.48
166,585.73
18,885.94
201,984.97
0
198,994.12
0
95,618.70
0
74,385.21
0
3,727.04
0
29,979.07
580.75
1,917.63
133.86
13,042.98
0
36,118.01
0
15,884.85
0
3,893.36
0
10,887.65
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
76,900.87
18,000.00
138,921.91
18,039.25
122,742.50
3,151.55

1945
1946

Lump sum
Printing and binding
Lump sum
Printing and binding
721821--46----6

2,016,070.00
43,000.00
2,129,833.00
44,000.00

1,957,818.31
39,728.72
2,118,404.77
33,044.88

58,251.69
3,271.23
11,428.28
10,955.12

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

in making any investigation, or upon official business in any other places than in the
city of Washington, shall be allowed and paid on the presentation of itemized vouchers
therefor approved by the Commission.
Until otherwise provided by law, the commission may rent suitable offices for its
use.
The Auditor for the State and Other Departments shall receive and examine all
accounts of expenditures of the Commission.2
1 The salary of the secretary is controlled by the provisions of the Classification Act
of 1923, approved March 4, 1923, 42 Stat. 1488.
2 Auditing of accounts was made a duty of the General Accounting Office by the Act
of June 10, 1921, 42 Stat. 24.

76

FEDERAL TRADE COMMISSION ACT

77

SEC. 3. That upon the organization of the Commission and election of its chairman,
the Bureau of Corporations and the offices of Commissioner and Deputy
Commissioner of Corporations shall cease to exist; and all pending investigations and
proceedings of the Bureau of Corporations shall be continued by the Commission.
All clerks and employees of the said bureau shall be transferred to and become
clerks and employees of the Commission at their present grades and salaries. All
records, papers, and property of the said bureau shall become records, papers, and
property of the Commission, and all unexpended funds and appropriations for the use
and maintenance of the said bureau, including any allotment already made to it by the
Secretary of Commerce from the contingent appropriation for the Department of
Commerce for the fiscal year nineteen hundred and fifteen, or from the departmental
printing fund for the fiscal year nineteen hundred and fifteen, shall become funds and
appropriations available to be expended by the Commission in the exercise of the
powers, authority, and duties conferred on it by this Act.
The principal office of the Commission shall be in the city of Washington, but it may
meet and exercise all Its powers at any other place. The Commission may, by one or
more of its members, or by such examiners as it may designate, prosecute any inquiry
necessary to its duties in any part of the United States.
SEC. 4. The words defined in this section shall have the following meaning when
found in this Act, to wit:
“Commerce” means commerce among the several States or with foreign nations, or
in any Territory of the United States or in the District of Columbia, or between any
such Territory and another, or between any such Territory and any State or foreign
nation, or between the District of Columbia and any State or Territory or foreign
nation.
“Corporation” shall be deemed to Include any company, trust, so-called Massachusetts trust, or association, incorporated or unincorporated, which is organized to
carry on business for its own profit or that of its members, and has shares of capital or
capital stock or certificates of interest, and any company, trust, so-called
Massachusetts trust, or association, incorporated or unincorporated, without shares of
capital or capital stock or certificates of interest, except partnerships, which Is
organized to carry on business for its own profit or that of its members.
“Documentary evidence” includes all documents, papers, correspondence, books of
account, and financial and corporate records.
“Acts to regulate commerce” means the Act entitled “An Act to regulate commerce,”
approved February 14, 1887, and all Acts amendatory thereof and supplementary
thereto and the Communications Act of 1934 and all Acts amendatory thereof and
supplementary thereto.
“Antitrust Acts” means the Act entitled “An Act to protect trade and commerce
against unlawful restraints and monopolies,” approved July 2, 1890; also sections 73
to 77, inclusive, of an Act entitled “An Act to reduce taxation, to provide revenue for
the Government, and for other purposes,” approved August 27, 1894; also the Act
entitled “An Act to amend sections 73 and 76 of the Act of August 27, 1894, entitled
‘An Act to reduce taxation, to provide revenue for the Government, and for other
purposes,’” approved February 12, 1913; and also the Act entitled “An Act to
supplement existing laws against unlawful restraints and monopolies, and for other
purposes,” approved October 15, 1914.
Sec. 5. (a) Unfair methods of competition in commerce, and unfair or deceptive acts

or practices in commerce, are hereby declared unlawful.
The Commission Is hereby empowered and directed to prevent persons, partnerships,
or corporations, except banks, common carriers, subject to the Acts to regulate
commerce, air carriers and foreign air carriers subject to the Civil Aeronautics Act of
1938, 3 and persons, partnerships, or corporations subject to the Packers and
Stockyards Act, 1921, except as provided in section 406 (b) of said Act, from using
unfair methods of competition in commerce and unfair or deceptive acts or practices
in commerce.
(b) Whenever the Commission shall have reason to believe that any such person,
partnership, or corporation has been or is using any unfair method of competition or
unfair or deceptive act or practice in commerce, and if it shall
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 1918.”

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

78

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

issue such writs as are ancillary to its jurisdiction or are necessary in its judgment to
prevent injury to the public or to competitors pendente lite. The findings of the
Commission as to the facts, if supported by evidence, shall be conclusive. To the
extent that the order of the Commission is affirmed, the court shall thereupon issue its
own order commanding obedience to the terms of such order of the Commission. If
either party shall apply to the court for leave to adduce additional evidence, and shall
show to the satisfaction of the court that such additional evidence is material and that
there were reasonable grounds for the failure to adduce such evidence in the
proceeding before the Commission, the court may order such additional evidence to
be taken before the Commission and to be adduced upon the hearing in such manner
and upon such
4 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.

FEDERAL TRADE COMMISSION ACT

79

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 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.

80

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

(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 House of Congress to investigate
and report the facts relating to any alleged violations of the antitrust Acts by any
corporation.
(e) Upon the application of the Attorney General to investigate and make
recommendations for the readjustment of the business of any corporation alleged to
be violating the antitrust Acts in order that the corporation may thereafter maintain Its
organization, management, and conduct of business in accordance with law.
(f) To make public from time to time such portions of the information obtained by
it hereunder, except trade secrets and names of customers, as it shall deem expedient
in the public interest ; and to make annual and special reports to the Congress and to
submit therewith recommendations for additional legislation; and to provide for the
publication of its reports and decisions in such form and manner as may be best
adapted for public information and use.
(g) From time to time to classify corporations and to make rules and regulations for
the purpose of carrying out the provisions of this Act.
(h) To investigate, from time to time, trade conditions In and with foreign countries

where associations, combinations, or practices of manufacturers, merchants, or traders,
or other conditions, may affect the foreign trade of the United States, and to report to
Congress thereon, with such recommendations as it deems advisable.
SEC. 7. That In any suit in equity brought by or under the direction of the Attorney
General as provided In the antitrust Acts, the court may, upon the conclusion of the
testimony therein, if it shall be then of opinion that the complainant is entitled to relief,
refer said suit to the commission, as a master in chancery, to ascertain and report an
appropriate form of decree therein. The commission shall proceed upon such notice
to the parties and under such rules of procedure as the court may prescribe, and upon
the coming in of such report such exceptions may be filed and such proceedings had
In relation thereto as upon the report of a master in other equity causes, but the court
may adopt
5

See footnote on p. 2
FEDERAL TRADE COMMISSION ACT

81

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.
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

82

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

willfully make, or cause to be made, any false entry in any account, record, or
memorandum kept by any corporation subject to this Act, or who shall willfully
neglect or fail to make, or cause to be made, full, true, and correct entries in such
accounts, records, or memoranda of all facts and transactions appertaining to the
business of such corporation, or who shall willfully remove out of the jurisdiction of
the United States, or willfully mutilate, alter, or by any other means falsify any
documentary evidence of such corporation, or who shall willfully refuse to submit to
the commission or to any of its authorized agents, for the purpose of inspection and
taking copies, any documentary evidence of such corporation in his possession or
within his control, shall be deemed guilty of an offense against the United States, and
shall be subject, upon conviction in any court of the United States of competent jurisdiction, to a fine of not less than $1,000 nor more than $5,000 or to imprisonment for
a term of not more than three years, or to both such fine and imprisonment.
If any corporation required by this Act to file any annual or special report shall fail
so to do within the time fixed by the commission for filing the same, and such failure
shall continue for thirty days after notice of such default, the corporation shall forfeit
to the United States the sum of $100 for each and every day of the continuance of such
failure, which forfeiture shall be payable into the Treasury of the United States, and
shall be recoverable in a civil suit in the name of the United States brought in the
district where the corporation has its principal office or in any district in which it shall
do business. It shall be the duty of the various district attorneys, under the direction
of the Attorney General of the United States, to prosecute for the recovery of
forfeitures. The costs and expenses of such prosecution shall be paid out of the
appropriation for the expenses of the courts of the United States.
Any officer or employee of the commission who shall make public any information
obtained by the commission without its authority, unless directed by a court, shall be
deemed guilty of a misdemeanor, and, upon conviction thereof, shall be punished by
a fine not exceeding $5,000, or by imprisonment not exceeding one year, or by fine
and imprisonment, in the discretion of the court.
SEC. 11. Nothing contained in this Act shall be construed to prevent or interfere
with the enforcement of the provisions of the antitrust Acts or the Acts to regulate
commerce, nor shall anything contained in the Act be construed to alter, modify, or
repeal the said antitrust Acts or the Acts to regulate commerce or any part or parts
thereof.
SEC. 12. (a) It shall be unlawful for any person, partnership, or corporation to
disseminate, or cause to be disseminated, any false advertisement-(l) By United States mails, or in commerce by any means, for the purpose of
inducing, or which is likely to induce, directly or indirectly, the purchase of food,
drugs, devices, or cosmetics ; or
(2) By any means, for the purposes of inducing, or which is likely to induce
directly or indirectly, the purchase in commerce of food, drugs, devices, or
cosmetics.
(b) The dissemination or the causing to be disseminated of any false advertisement
within the provisions of subsection (a) of this section shall be an unfair or deceptive
act or practice in commerce within the meaning of section 5.
SEC. 13. (a) Whenever the Commission has reason to believe-(l) that any person, partnership, or corporation is engaged in, or is about to engage
in, the dissemination or the causing of the dissemination of any advertisement in
violation of section 12, and

(2) that the enjoining thereof pending the issuance of a complaint by the
Commission under section 5, and until such complaint is dismissed by the
Commission or set aside by the court on review, or the order of the Commission to
cease and desist made thereon has become final within the meaning of section 5,
would be to the interest of the public,
the Commission by any of its attorneys designated by it for such purpose may bring
suit in a district court of the United States or In the United States court of any
Territory, to enjoin the dissemination or the causing of the dissemination of such
advertisement. Upon proper showing a temporary injunction or restraining order shall
be granted without bond. Any such suit shall be brought in the district in which such
person, partnership, or corporation resides or transacts business.

FEDERAL TRADE COMMISSION ACT

83

(b) Whenever it appears to the satisfaction of the court in the case of a news-paper,
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. 6 (a) Any person, partnership, or corporation who violates any provision of
section 12 (a) shall, if the use of the commodity advertised may be injurious to health
because of results from such use under the conditions prescribed in the advertisement
thereof, or under such conditions as are customary or usual, or if such violation is with
intent to defraud or mislead, be guilty of a misdemeanor, and upon conviction shall be
punished by a fine of not more than $5,000 or by imprisonment for not more than six
months, or by both such fine and imprisonment ; except that if the conviction is for a
violation committed after a first conviction of such person, partnership, or corporation,
for any violation of such section, punishment shall be by a fine of not more than
$10,000 or by imprisonment for not more than one year, or by both such fine and
imprisonment : Provided, That for the purposes of this section meats and meat food
products duly inspected, marked, and labeled In accordance with rules and regulations
issued under the Meat Inspection Act approved March 4, 1907, as amended, shall be
conclusively presumed not injurious to health at the time the same leave official
“establishments.”
(b) No publisher, radio-broadcast licensee, or agency or medium for the dissemination of advertising, except the manufacturer, packer, distributor, or seller of the
commodity to which the false advertisement relates, shall be liable under this section
by reason of the dissemination by him of any false advertisement, unless he has
refused on the request or the Commission, to furnish the Commission the name and
post-office address of the manufacturer, packer, distributor, seller, or advertising
agency, residing in the United States, who caused him to disseminate such
advertisement. No advertising agency shall be liable under this section by reason of
the causing by it of the dissemination of any false advertisement, unless it has refused,
on the request of the Commission, to furnish the Commission the name and post-office
address of the manufacturer, packer, distributor, or seller, residing in the United States,
who caused it to cause the dissemination of such advertisement.
SEC. 15. For the purposes of section 12, 13, and 14-(a) The term “false advertisement” means an advertisement, other than labeling,
which is misleading in a material respect ; and In determining whether any
advertisement Is misleading, there shall be taken into account (among other things) not
only representations made or suggested by statement, word, design, device, sound, or
any combination thereof, but also the extent to which the advertisement fails to reveal
facts material in the light of such representations or material with respect to
consequences which may result from the use of the commodity to which the
advertisement relates under the conditions prescribed in said advertisement or, under

such conditions as are customary or usual. No advertisement of a drug shall be deemed
to be false If it is disseminated only to members of the medical profession, contains
no false representations of a material fact, and includes, or is accompanied in each
instance by truthful disclosure of, the formula showing quantitatively each ingredient
of such drug.
(b) The term “food” means (l) articles used for food or drink for man or other
animals, (2) chewing gum, and (3) articles used for components of any such article.
(c) The term “drug” ‘means (l) articles recognized In the official United States
Pharmacopoeia, official Homeopathic Pharmacopoeia of the United States,
Section 5 (b) of the amending Act of 1938 provides :
"Sec. 5 (b) Section 14 of the Federal Trade Commission Act, added to such act by
section 4 of this act, shall take effect on the expiration of sixty days after the date of
the enactment of this act."
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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

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.
OTHER ACTS ADMINISTERED BY THE COMMISSION
In addition to the Federal Trade Commission Act, the Commission also administers
section 2 of the Clayton Act (15 U.S. C., sec. 13), as amended by the Robinson-Patman
Anti-discrimination Act, and sections 3, 7, and 8 of the Clayton Act (15 U.S. C., secs.
14, 18, and 19); the Export Trade Act (15 U.S. C., secs. 61-65) ; the Wool Products
Labeling Act (15 U. S. C., sec. 68); and certain sections of the Trade-Mark Act of
1946 (15 U.S. C., secs. 1051-1072, 1091-1096, and 1111-1127).

RULES OF PRACTICE
RULE I. THE COMMISSION 1

Offices.--The principal office of the Commission is at Washington, D. C.
All communications to the Commission must be addressed to Federal Trade
Commission, Washington 25, D. C., unless otherwise specifically directed.
Branch Offices are maintained at New York, Chicago, San Francisco, Seattle, and
New Orleans.
Their addresses are : Federal Trade Commission, Room 501, 45 Broadway, New York
, N. Y.; Federal Trade Commission, 1118 New Post Office Building, 433 West Van
Buren Street, Chicago, Ill.; Federal Trade Commission, Federal Office Building, Room
133, Civic Center, San Francisco, Calif.; Federal Trade Commission, 447 Federal
Office Building, Seattle, Wash.; Federal Trade Commission, Room 652, Federal
Office Building, 600 South Street, New Orleans, La.
Hours.--Offices are open on each business day from 8: 30 a. m. to 5 p. m.
Sessions.--The Commission may meet and exercise all its powers at any place, and
may, by one or more of its members, or by such examiners as it may designate,
prosecute any inquiry necessary to its duties in any part of the United States.
Sessions of the Commission for hearings will be held as ordered by the Commission.
Sessions of the Commission for the purpose of making orders and for transaction of
other business unless otherwise ordered will be held at the principal office of the
Commission at Pennsylvania Avenue at Sixth Street, Washington, D. C., on each
business day at 10 a. m.
Quorum.--A majority of the members of the Commission shall constitute a quorum
for the transaction of business.
Public information.--All requests, whether for information or otherwise, and
submittals shall be addressed to the principal office of the Commission.
RULE II. THE SECRETARY
The Secretary is the executive officer of the Commission and shall have the legal
custody of its seal, papers, records, and property; and all orders of the Commission
shall be signed by the Secretary or such other person as may be authorized by the
Commission.
RULE III. HEARINGS ON INVESTIGATIONAL
Hearings on investigations other than those arising from formal complaints issued
by the Commission may be referred to a Commis1 A separate statement as to the organization and the formation of the various
divisions of the Federal Trade Commission and as to the general course and method
by which those functions are channeled and determined, in compliance with section
3 (a) of the Administrative Procedure Act, was published in the Federal Register on

September 11, 1946.
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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

sioner or other designated representative of the commission for conducting
conferences or hearings on submitted subjects, giving timely and reasonable notice of
time and place thereof, and making such reports thereon as the Commission may
direct.
Every person compelled to submit data or evidence shall be entitled to retain or, on
payment of lawfully prescribed costs, procure a copy or transcript of thereof, except
that in a non-public investigatory proceeding the witness may for good cause be
limited to inspection of the official of his testimony.
RULE IV. APPLICATIONS FOR COMPLAINT
Any person, partnership, corporation, or association may apply to the Commission
to institute a proceeding in respect to any violation of law over which the Commission
has jurisdiction.
Such application for complaint shall be in writing, signed by or in behalf of the
applicant, and shall contain a short and simple statement of the facts constituting the
alleged violation of law and the name and address of the applicant and of the party
complained of.
RULE V. COMPLAINTS
Whenever the Commission shall have reason to believe that there is a violation of
law over which the Commission has jurisdiction, and in case of violation of the
Federal Trade Commission Act, if it shall appear to the Commission that a proceeding
by it in respect thereof would be to the interest of the public, the Commission shall
issue and serve upon the proper parties a complaint stating its charges and containing
a notice of a hearing upon a day and at the place therein fixed, at least thirty (30) days
after the service of said complaint.
RULE VI. SERVICE
Complaints, orders, and other processes of the Commission, and briefs in support of
the Complaint, will be served by the secretary of the Commission by registered mail,
except when service by other method shall be specifically ordered by the Commission,
by registering and mailing a copy thereof addressed to the person, partnership, or
corporation to be served at his or its principal office or place of business. When
proceeding under the Federal Trade Commission Act service may also be made at the
residence of the person, partnership, or corporation to be served.
When service is not accomplished by registered mail complaints, orders, or other
processes of the Commission, and briefs in support of the complaint may be served by
anyone duly authorized by the Commission, or by any examiner of the Commission,
(a) By delivering a copy of the document to the person to be served, or to a member
of the partnership to be served, or to the 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.

RULE VIII. ANSWERS

87

The return post-office receipt for said complaint, order, or other process or brief
registered and mailed as aforesaid, or the verified return by the person serving such
complaint, order, or other process or brief, setting forth the manner of said service,
shall be proof of the service of the document.
RULE VII. APPEARANCE
Any individual or member of a partnership which is a party to any proceeding before
the Commission may appear for himself, or such partnership upon adequate
identification, and a corporation or association may be represented by a bona fide
officer of such corporation or association upon a showing of adequate authorization
therefor.
A party may also appear by an attorney at law possessing the requisite qualifications,
as hereinafter set forth, to practice before the Commission.
Attorneys at law who are admitted to practice before the Supreme Court of the
United States, or the highest court of any State or Territory of the United States, or the
United States Court of Appeals for the District of Columbia, or the District Court of
the United States for the District of Columbia, may practice before the Commission.
No register of attorneys who may practice before the Commission is maintained. No
application for admission to practice before the Commission is required. A written
notice of appearance on behalf of a specific party or parties in the particular
proceeding should be submitted by attorneys desiring to appear for such specific party
or parties, which notice shall contain a statement that the attorney is eligible under the
provisions of this rule. Any attorney practicing before the Commission or desiring so
to practice may, for good cause shown, be disbarred or suspended from practicing
before the Commission, but only after he has been afforded an opportunity to be heard
in the matter.
No former officer, examiner, attorney, clerk, or other former employee of this
Commission shall appear as attorney or counsel for or represent any party in any
proceeding resulting from any investigation, the files of which came to the personal
attention of such former officer, examiner, attorney, clerk, or other former employee
during the term of his service or employment with the Commission.
RULE VIII. ANSWERS
In case of desire to contest the proceeding the respondent shall, within twenty (20)
days from the service of the complaint, file with the Commission an answer to the
complaint. Such answer shall contain a concise statement of the facts which constitute
the ground of defense. Respondent shall specifically admit or deny or explain each of
the facts alleged in the complaint, unless respondent is without knowledge, in which
case respondent shall so state.
Ten (10) copies of answers shall be furnished. The original of all answers shall be
signed in ink, by the respondent or by his attorney at law. Corporations or associations
shall file answers through a bona fide officer or by an attorney at law. Answers shall
show the office and post-office address of the signer.
Failure of the respondent to file answer within the time above provided and failure

to appear at the time and place fixed for hearing

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

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 XXIV.
RULE IX. INTERVENTION
So far as the responsible conduct of public business shall permit, any interested
person, after leave granted, may appear before the Commission, or its delegated
responsible officer, for the presentation, adjustment, or determination of any issue,
request, or controversy in any proceeding or in connection with any function of the
Commission.
Any person, partnership, corporation, or association desiring to intervene In a
contested proceeding shall make application in writing, setting out the grounds on
which lie or it claims to be interested
The Commission may, by order, permit intervention by counsel or in person to such
extent and upon such terms as it shall deem proper.
RULE X. MOTIONS
Motions before the Commission or the trial examiner shall state briefly the purpose
thereof and all supporting affidavits, records, and other papers, except such as have
been previously filed, shall be filed with such motions and clearly referred to therein.
Motions in any proceeding before a trial examiner which relate to the introduction
or striking of evidence, to matters of procedure, or to any other matters coming within
the scope of the trial examiner’s authority shall be made to the trial examiner and shall
be ruled on by him. All other motions in any proceeding, except as otherwise provided
in these rules, shall be addressed to and shall be ruled on by the Commission, but in
the case of motions to dismiss for alleged failure of proof based upon testimony taken
before a trial examiner, the motion will be referred to the trial examiner for report and
recommendation before a ruling is made by the Commission.
Ten (10) copies of all written motions shall be filed with the Commission.
Prompt notice shall be given of the granting or denial, in whole or in part, of any
written application, petition, or other request of any interested person made in
connection with any formal proceeding. Except in affirming a prior denial or where
the denial is self-explanatory, such notice shall be accompanied by a simple statement
of grounds.

RULE XIII. ADMISSION AS TO FACTS AND DOCUMENTS

89

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 in these rules. A hearing before a trial examiner
shall begin at the course of the hearing shall be regulated by the trail examiner subject
to the provisions of Rule XX.
Applications for continuances and extensions of time should be made prior to the
expiration of time prescribed by these rules.
RULE XII. DOCUMENTS
Filing.--All documents required to be filed with the Commission in any proceeding
shall be filed with the Secretary of the Commission.
Title.--Documents shall clearly show the docket number and title of the proceeding.
Copies.--Documents, other than correspondence, shall be filed in triplicate, except
as otherwise specifically required by these rules.
Form.--Documents not printed shall be typewritten, on one side of paper only; letter
size, eight (8) inches by ten and one-half (10 ½) inches; left margin, one and one-half
(1 1/2) inches; right margin, one (l) inch.
Documents may be printed, in ten (10) or twelve (12) point type, on good, unglazed
paper, of the dimensions and with the margins above specified.
Documents shall be bound at left side only.
The originals of all answers, briefs, motions, and other documents shall be signed
in ink, by the respondent or his duly authorized attorney. Where the respondent is an
individual or a partnership, the originals of said documents shall be signed by said
individual or by one of the partners, or by his or its attorney. Where the respondent is
a corporation, the originals of said documents shall be signed under the corporate
name by a duly authorized official of such corporation, or by its attorney. Where the
respondent is an association, the originals of said documents shall be signed under the
association name for said association by a duly authorized official of such association,
or by its attorney.
One copy of a brief or other document required to be printed shall be signed as the
original.
RULE XIII. ADMISSION AS TO FACTS AND DOCUMENTS
At any time after answer has been filed counsel or parties In any controversy may
serve upon the opposing side a written request for the admission of the genuineness
and authenticity of any relevant documents described in and exhibited with the request
or the admission of the truth of any relevant matters of fact set forth in such
documents.
Copies of the documents shall be delivered with the request unless copies have
already been furnished. Each of the matters on which an admission is so requested
shall be deemed admitted unless, within a period designated within the request, not
less than ten days after service thereof or within such further time as the Commission
or

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

the trial examiner may allow on motion and notice, the party so served serves upon the
party making the request, a sworn statement either denying specifically the matters of
which an admission is requested, or setting forth in detail the reasons why he can
neither truthfully admit nor deny those, matters. Service required hereunder may be
made upon a respondent either by registering and mailing or by delivering a copy of
the documents to be served to the respondent or his attorney, or by leaving a copy at
the principal office or place of business of either. Service upon the attorney supporting
the complaint may be either by registering and mailing or by delivering a copy of the
documents to be served to such attorney.
RULE XIV. TRIAL EXAMINERS
All hearings pursuant to formal complaints shall be presided over by the Commission, a member of the Commission, or by a trial examiner appointed by the
Commission and duly qualified as an examiner or hearing officer within the meaning
of the Administrative Procedure Act. So far as practicable trial examiners shall be
assigned to cases in rotation.
Subject to the published rules of the Commission and within Its authority, officers
presiding at hearings shall have the following powers and duties In all cases to which
they are assigned by the Commission, to wit:
(1) To administer oaths and affirmations.
(2) To rule upon offers of proof and receive relevant evidence.
(3) To regulate the course of the hearings.
(4) To hold conferences for the settlement or simplification of the Issues by consent
of the parties.
(5) To dispose of procedural requests or similar matters.
(6) Within his discretion or upon the direction of the Commission to certify any
question of the Commission for its consideration and disposition
(7) To submit to the Commission his recommended findings, conclusions and form
of order in accordance with rule XXII.
(8) To take any other action authorized consistent with the law and the rules of the
Commission.
Trial examiners shall perform no duties inconsistent with their duties and
responsibilities as such. Save to the extent required for the disposition of ex parte
matters as authorized by law, no trial examiner shall consult any person or party as to
any fact in issue unless upon notice and opportunity for all parties to participate.
Trial examiners shall not be responsible to, or subject to the supervision or direction
of, any officer, employee, or agent engaged in the performance of investigative or
prosecuting functions for the Commission.
The trial examiner is charged with the duty of conducting a fair and impartial
hearing and of maintaining order in form and manner consistent with the dignity of the
Commission. He will note on the record any disregard by counsel of his rulings on
matters of order and procedure and where he deems it necessary shall make special
written report thereof to the Commission. In the event that counsel supporting the
complaint or counsel for any respondent shall be guilty of disrespectful, disorderly, or
contumacious language or conduct in connection with any hearing, the trial examiner
may suspend the proceeding and submit to the Commission his report thereon, together
with his recommendations as to whether any rule should be issued to show cause why
such counsel should not be suspended or disbarred pursuant to Rule VII or subjected

to other appropriate action in re-

RULE XVI. SUBPOENAS

91

spect thereto. A copy of such trial examiner’s report shall be furnished to any counsel
upon whose language or conduct such report is made, and the Commission will take
disciplinary action only after an opportunity for hearing has been accorded such
counsel.
RULE XV. HEARINGS IN ADVERSARY PROCEEDINGS
All hearings pursuant to formal complaint shall be public unless otherwise ordered
by the Commission, and such hearings shall be subject to the following conditions and
requirements
(a) Every party respondent shall have the right of due notice, cross-examination,
presentation of evidence, objection, exception, motion, argument, appeal and all other
fundamental rights.
(b) The taking of evidence and subsequent proceedings shall proceed with all
reasonable diligence and with the least practicable delay.
(c) Not less than five (5) days notice of the time and place of any indefinitely
postponed hearing shall be given to counsel of record or to parties, but In appointing
such hearing due regard shall be had for the convenience and necessity of all parties
or their representatives.
(d) The trial examiner may withdraw from a case when he deems himself
disqualified, or he may be withdrawn by the Commission after timely affidavits
alleging personal bias or other disqualification have been filed and the matter has been
heard by the Commission or by a trial examiner whom It has delegated to Investigate
and report.
(e) Hearings shall be stenographically reported by the official reporter of the
Commission under supervision of the presiding trial examiner. A transcript of said
report shall be a part of the record and the sole official transcript of the proceeding.
Transcripts will be supplied to respondents and to the public by the official reporter
at rates not to exceed the maximum rates fixed by contract between the Commission
and the reporter.
(f) All matters officially noticed by the presiding trial examiner shall appear on the
record.
(g) Changes in the official transcript may be made only when they involve errors
affecting substance and then only in the manner herein provided. No physical changes
shall be made in or upon the official record or copies thereof in the custody of the
Commission. Lists of changes agreed to in writing by opposing counsel may be
incorporated into the record, if and when approved by the trial examiner, at the close
of evidence in support of the complaint, or at the final hearing before the trial
examiner, or at any time thereafter before he files his report, and at no other times. If
any changes are ordered by the trial examiner without such written agreement between
opposing counsel they shall be subject to objection and exception.
RULE XVI. SUBPOENAS

Subpoenas requiring the attendance of witnesses 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.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

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 XVII. 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 XVIII. EVIDENCE
In general.--Counsel supporting the complaint shall have the general burden of proof
and the proponent of any factual proposition shall be required to sustain the burden of
proof with reference thereto. All findings, conclusions, and recommendations by Trial
Examiners shall be based on the greater weight of the evidence. (The Commission
also bases its findings and decisions on the greater weight of the evidence.) The trial
examiner, subject to appeal to the Commission as provided in Rule XX, shall admit
relevant, material and competent evidence, but shall exclude irrelevant, immaterial and
unduly repetitious evidence.
Documentary.--Where relevant and material matter offered in evidence is embraced
in a document containing other matter not material or relevant and not intended to be
put in evidence, such immaterial or irrelevant parts shall be excluded, and shall be
segregated insofar as practicable.
Official notices of facts.--Where any recommended decision of the trial examiner or
any decision of the Commission, or part thereof, rests upon the taking of official notice
of a material fact not appearing in the evidence in the record, any party shall, upon
timely motion, be afforded an opportunity to show the contrary.
Objections.--Objections to evidence shall be in short form, stating the grounds relied
upon, and the transcript shall not include argument or debate thereon except as ordered
by the presiding officer. Rulings on such objections shall appear in the record.
RULE XIX. DEPOSITIONS
The Commission may order evidence to be taken by disposition in any proceeding
or investigation pending at any stage of such proceed-

RULE XX. APPEALS FROM RULINGS OF TRIAL EXAMINERS

93

ing 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 Com-mission 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 1/2) inches; left margin, one and one-half (l ½) inches;
right margin, one (1) inch.
Depositions shall be bound at left side only.
RULE XX. APPEALS TO THE COMMISSION FROM RULINGS OF
TRIAL EXAMINERS
Parties shall not have the right to prosecute appeals from rulings of trial examiners
during the course of hearings unless it be shown that the prompt decision of such
appeal is necessary to prevent undue expenditure of time and expense in the event the
examiner’s rulings were later reversed, or for similar good cause. In all other situations
appeals may be taken to the Commission only as follows:
At the close of the taking of the evidence in any proceeding any party may notify the
trial examiner that he will move the Commission to reverse or modify one or more of
the trial examiner’s rulings to which timely exception has been taken. In such event
the hearings for the reception of evidence in any such case shall not be deemed to have
been concluded until, either the reception of further evidence under direction of the
Commission shall have been completed, or the Commission shall have communicated
its decision that no further evidence shall be taken. If any party shall elect to make
such motion or motions, the same shall be filed within ten (10) days after the tran-

94 ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946
script of the entire record shall be filed. In such motions each exception shall be
separately set out, with exact citations to each portion of the record involved and
references to the principle authorities relied upon. Any matters not thus laid before the
Commission shall be deemed waived.
RULE XXI. ARGUMENTS BEFORE TRIAL EXAMINERS AND
COUNSEL’S
SUGGESTIONS FOR FINDINGS AND ORDERS
When, in the opinion of the trial examiner presiding in any proceeding upon
complaint issued by the Commission, the size of the transcript or the complication or
importance of the issues involved warrants, he may, either of his own motion or at the
request of a party, announce at or before the close of the taking of testimony that he
requests the presentation of, oral argument at a time stated.
Whether oral argument be heard by the trial examiner or not the parties, within such
time not exceeding fifteen (15) days after the closing of the taking of the evidence, as
may be fixed by the trial examiner, shall if they desire, present statements in writing
to the trial examiner setting forth, in concise outline such forms of proposed findings
and conclusions and, if desired, the reasons therefor, and such proposed forms of order
as they may deem requisite in view of the facts, the law and the public interest.
Neither waivers of the right to submit said statements nor the election to file them
shall change the’ time prescribed in rule XXII for the filing of report by the trial
examiner. A copy of any such statement of proposed findings, conclusions, and order
shall be furnished to all other parties by each party submitting the same, shall be
certified to the Commission by the trial examiner, and shall be included in the record
certified to the Commission.
RULE XXII. TRIAL EXAMINER’S REPORT
The trial examiner, as soon as practicable and not later than thirty (30) days after
receipt by him of the complete stenographic transcript of all testimony and all exhibits
in the proceeding, shall make and file his report, consisting of his report upon the facts,
conclusions of fact, conclusions of law, and his recommended order. All such reports
shall be advisory only as the Commission reserves to itself the decision in all cases
brought before it.
Except where he shall have become unavailable to the Commission, the said report
shall be made by the trial examiner who presided at the hearing.
No officer, employee or agent, engaged in the performance of investigative or
prosecuting functions for the Commission in any case shall, in that or a factually
related case, participate or advise as to the findings, conclusions or order to be
recommended by the trial examiner, except as a witness or as counsel in public
proceedings.
The trial examiners’ reports shall become a part of the record.
The trial examiner shall recommend only such findings as he shall deem supported
by the weight of the evidence (including facts of which he may take official notice

pursuant to rule XVIII), and he shall recommend no finding which is not supported by
relevant, reliable, and probative evidence.

RULE XXIV. BRIEFS AND ORAL ARGUMENTS

95

A copy of the trial examiner’s report shall be served upon each party, legal counsel
or other representative, who has appeared pursuant to rule VII.
RULE XXIII. EXCEPTIONS
Any party may, within ten (10) days after receipt of a copy of the trial examiner’s
report, file his exceptions thereto. Exceptions to the trial examiner’s recommended
findings as to the facts and to his recommended conclusions of fact shall specify the
particular statements or parts thereof to which exception is taken; shall designate, by
specific references, the portions of the record relied upon in support of such
exceptions; shall set out specific findings and conclusions of fact proposed in lieu
thereof and may propose findings and conclusions of fact additional to those
recommended by the trial examiner. Except ions to the trial examiner’s recommended
conclusions of law shall be specific, shall briefly cite the statutory provisions or the
principal authorities relied upon, shall set forth conclusions suggested in lieu thereof
and may propose additional conclusions. Exceptions both to recommended findings
and recommended conclusions may if desired include the reasons therefor. Exceptions
to the trial examiners recommended form of order shall specify the portions thereof
excepted to and set forth a form of order suggested in lieu of that recommended by the
trial examiner.
Ten (10) 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 XXIV. BRIEFS AND ORAL ARGUMENTS BEFORE THE
COMMISSION
A. QUESTIONS FOR PRESENTATION

Questions which may be considered and decided by the Commission and presented
include the following:
(1) “Whether the findings and conclusions of fact recommended by the trial
examiner are relevant to the issues and are supported by. substantial probative
evidence and by a preponderance of evidence;
(2) Whether additional findings, not recommended by the trial examiner, should be
made either with or without sending the case back to the trial examiner for the
reception of further evidence ;
(3) Whether the trial examiner was justified in having taken. official notice of any
fact under Rule VIII and whether the Commission should take official notice of any
other fact ;
(4) Whether due process was observed and whether parties are estopped from urging

any irregularity in procedure ;
(5) Whether the facts show a violation of law and of the public interest lawfully
amenable to redress by the Commission and what conclusions of law are justified a
site in the premises; and
(6) Whether an order to cease and desist an order of dismissal, or other order,
should be entered amid issued, and the substance and form thereof.
721821--48----8

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948
B. 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.
In the event permission is granted for filing reply brief in support of the complaint,
it shall be filed within ten (10) days after filing of brief on behalf of respondent. No
further reply brief on behalf of respondent shall be filed.
Number.--Twenty (20) copies of each brief shall be filed.
Contents.--Briefs, except the reply brief in support of the complaint, shall contain,
in the following order:
(a) A concise abstract or statement of the case.
(b) A brief of the argument, exhibiting a clear 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 be supplemented
by an alphabetical list of all cases referred to, with references to pages where
references are cited.
Form.--Briefs shall be printed, multigraphed, or otherwise neatly processed on good
unglazed white paper in type not smaller than ten (10) point doubt 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.
C. ORAL ARGUMENTS

Oral arguments before the Commission shall be had as ordered, on written
application of the chief trial counsel of the Commission, or of the respondent, or of
attorney for respondent, filed within fifteen (15) days after filing of brief on behalf of
respondent.
Appearance of additional counsel in a case will not constitute grounds for enlarging
time for oral argument.

Oral arguments before the Commission shall be reported stenographically unless
otherwise ordered by the Commission.

RULE XXVII. TRADE PRACTICE CONFERENCE PROCEDURE

97

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
(60) day period respondent shall file petition for review in a circuit court of appeals,
the time for filing report of compliance will begin to run de novo from the final
judicial determination ; and provided further, that where the order prevents the use of
a false advertisement of a food, drug, device, or cosmetic, which may be injurious to
health because of results from such use under the conditions prescribed in the
advertisement, or under such conditions as are customary or usual, or if the use of such
advertisement is with intent to defraud or mislead, an interim report stating whether
and how respondents intend to comply shall be filed within ten days.
Within its sound discretion, the Commission require 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 XXVL 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.
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 pro-

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

cedure affords opportunity for voluntary participation by industry groups or other
interested parties in the formulation of rules to pro-vide 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.
(1) 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.
(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 pro-

RULE XXVIII. PUBLIC INFORMATION

99

ceedings 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.
(I) Public hearing on proposed rules.--Be fore 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 promulgate d by official order
of the Commission and published, pursuant to law, in the Federal Register. Said rules
shall become operative thirty (30) days from date of promulgation or at such other time
as may be specified by the Commission. Copies of the final rules shall be made
available at the office of the Commission. Under the procedure of the Commission a
copy of the trade practice rules as promulgated by the Commission is sent to each
member of the industry whose name and address is available, together with an
acceptance form providing opportunity to such member to signify his intention to
observe the rules in the conduct of his business.
(h) Violations.--Complaints as to the use, by any person, corporation or other
organization, of any act, practice or method inhibited by the rules may be made to the
Commission by any person having information thereof. Such complaints, if warranted
by the facts and the law, will receive the attention of the Commission in accordance
with the law. In addition, the Commission may act upon its own motion in proceeding
against the use of any act, practice or method contrary to law.
RULE XXVIII. PUBLIC INFORMATION
The Rules of Practice of the Commission, and such amendments as may be made
thereto, shall be published in the Federal Register and may be obtained from the
Commission upon application.
The findings, conclusions of law, and final orders of the Commission in respective
formal proceedings and a digest of accepted stipulations to desist from unlawful
practices shall be published in the official reports of the Commission.
Trade Practice Conference Rules for respective industries, issued under rule XXVII
hereto, may be obtained upon application to the Commission and shall be published
in the Federal Register.
Information concerning the activities of the Commission will be released from time
to time under the direction or pursuant to the authority of the Commission.
In proceedings instituted by the issuance of formal complaint, the pleadings,
transcript of testimony, exhibits, and all documents received in evidence or made a
part of the record therein shall be available for inspection and copying by the public
at the convenience of the Commission.
Documents, records, and reports made public by the Commission, including
stipulations to cease and desist, certain trade practice conference records, and certain
papers filed under the Wool Products

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

Labeling Act shall be available for inspection and copying at the convenience of the
Commission.
The records and figures of the Commission, and all documents, memoranda,
correspondence, exhibits, and information of whatever nature, other than the
documentary matters above described, coming into the possession or within the
knowledge of the Commission or any of its officers or employees in the discharge of
their official duties, are confidential, and none of such material or information may be
disclosed, divulged; or produced for inspection or copying except under the following
circumstances:
Upon good cause shown, the Commission may by order direct that certain records,
files, papers, or information be disclosed to a particular applicant.
(a) Application by a member of the public for such disclosure shall be in writing,
under oath, setting forth (1) the interest of the applicant in the subject matter; (2) a
description of the specific information, files, documents, or other material inspection
of which is requested; (3) whether copies are desired; and (4) the purpose for which
the information or material, or copies, will be used if the application is granted. Upon
receipt of such an application the Commission will take such action thereupon as it
shall deem expedient in the public interest.
(b) In the event that confidential material is desired for inspection, copying, or use
by some agency of the Federal or a State Government, a request therefor may be made
by the administrative head of such agency. Such requests shall be in writing, and shall
describe the information or material desired its relevancy to the work and function of
such agency and, if the production of documents or records or the taking of copies
thereof is asked, the use which is intended to be made of them. The Commission will
consider and act upon such requests, having due regard to the public interest and
questions of expediency.
In cases in which an officer or employee of the Commission has been lawfully
served with a subpoena duces tecum, material designated herein as confidential shall
be produced only when and as authorized, by the Commission. Services of such a
subpoena shall immediately be reported to the Commission with a statement of all
relevant facts. The Commission will thereupon enter such order or give such instructions as it shall deem advisable in the premises. If the officer or employee so served
has not received instructions from the Commission prior to the return date of the
subpoena, he shall appear in response thereto and respectfully decline to produce the
documents or records subpoenaed (pointing out that he is not permitted to do so under
this rule) , and request a continuance pending action by or instructions from the
Commission. If, notwithstanding, the court or other body orders the production of any
of the material subpoenaed, the officer or employee shall immediately report the facts
to the Commission.

STATEMENT OF POLICY
STATUS OF APPLICANT OR COMPLAINANT
The so-called “applicant” or complaining party has never been regarded as a party
in the strict sense. The Commission acts only in the public interest. It has always been
and now is the rule not to publish or divulge the name of an applicant or complaining
party, and such party has no legal status before the Commission except where allowed
to intervene as provided by the statute.
POLICY AS TO PRIVATE CONTROVERSIES
It is the policy of the Commission not to institute proceedings against alleged unfair
methods of competition or unfair or deceptive acts or practices where the alleged
violation of law is a private controversy redressable in the courts, except where said
practices tend to affect the public. In cases where the alleged injury is one to a
competitor only and is redressable in the courts by an action by the aggrieved
competitor and the interest of the public is not involved, the proceeding will not be
entertained.
SETTLEMENT OF CASES BY TRADE PRACTICE CONFERENCE
AND STIPULATION AGREEMENTS
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 be-fore 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
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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1940

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.
REPORTS OF TRIAL EXAMINERS
The policy of the Commission is that reports of trial examiners on the evidence shall
not be open to public inspection or to publication until after the publication of the
Commission’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.
WOOL PRODUCTS LABELING ACT
In the handling of cases arising under this Act, the practice and procedure of the
Commission will be as provided in cases arising under the Federal Trade Commission
Act.

INVESTIGATIONS BY THE COMMISSION, 1915-46
Since its establishment in 1915, the Federal Trade Commission has conducted
numerous general inquiries which are alphabetically listed and briefly described in the
following pages. 1 They were made at the request of the President, the Congress, the
Attorney General, Government agencies, or on motion of the Commission pursuant to
the Federal Trade Commission Act.
Reports on these inquiries in many instances have been published as Senate or
House documents or as Commission publications. Printed documents, unless indicated
as being out of print, 2 may he purchased from the Superintendent of Documents,
Government Printing Office, Washington, D. C. Processed publications are available
without charge from the Federal Trade Commission while the supply lasts.
Agencies initiating or requesting investigations are indicated in parentheses in the
headings below. For wartime inquiries, 1917-18 and 1941-45, see paragraphs headed
“Wartime.”
Accounting Systems (F. T. C.).--Pointing the way to a general Improvement in
accounting practices, the Commission published Fundamentals of a Cost System for
Manufacturers (H. Doc. 1356, 64th, 31 p., 7/1/16) and A System of Accounts for Retail
Merchants (19 p., o. P., 7115110).
Accounting Systems.--See Distribution Cost Accounting, and Production Cost
Accounting.
Advertising as a Factor in Distribution.--See Distribution Methods and Costs.
Agricultural Implements.--See Farm Implements and Distribution Methods and
Costs.
Agricultural Implements and Machinery (Congress). 3--Prices of farm products
reached record lows in 1932 but prices of many farm implements, machines, and repair
parts maintained high levels resulting in widespread complaints in the next few years.
The Commission investigated the situation (Public Res. 130, 74th, 6/24/36) and,
following submission of its report, Agricultural Implement and Machinery Industry
(H. Doc. 702, 75th, 1,176 p., 6/6/38), the industry made substantial price reductions.
The report criticized certain competitive practices on the part of the dominant
companies which the companies later promised to remedy. It showed, among other
things, that a few major companies had maintained a concentration of control which
resulted In large part from their acquisition of the capital stock or assets of competitors
prior to enactment of the Clayton Antitrust Act in 1914 and thereafter from their
purchase of assets of competitors rather than capital stock. 4 (See also under Farm
Implements and Independent Harvester Co.)
Agricultural Income (Congress).--Investigating a decline in agricultural income
and increases or decreases in the income of corporations manufacturing and
distributing wheat, cotton, tobacco, livestock, milk, and potato products (Public Res.
01, 74th, 8/27/35), and table and juice grapes, fresh fruits and vegetables (Public Res.
112, 74th, 6/20/36), the Commission made recommendations concerning, among other
things, the marketing of commodities covered by the inquiry; corporate consolidations
and mergers;5 unbalanced agricultural
1 The wartime cost-finding inquiries, 1917-1918 (p. 119), include approximately 370

separate investigations.
2 Documents out of print (designated “o. p.”) are available in depository libraries.
3 Inquiries desired by either House of Congress are now undertaken by the
Commission as a result of concurrent resolutions of both Houses. For further
explanation, see footnote on p.2.
4 F. T. C. recommendations that section 7 of the Clayton Act be amended tn declare
unlawful the acquisition of corporate assets under the same conditions that acquisition
of corporate stock has been unlawful since 1914, are discussed in Chain Stores--Final
Report on the Chain Store Investigation (S. Doc. 4, 74th, 12/14/34), p.96 : Summary
Report on Conditions With Respect to the Sale and Distribution of Milk and Dairy
Products (H. Doc. 94, 75th, 1/4/87), p.38; Report of’ the F. T. C. on Agricultural
Income Inquiry, Part I (3/2/37), p.26 : Agricultural Implement and Machinery Industry
(H. Doc. 702, 75th, 6/6/39), p.1038; and F. T. C. Annual Reports : 1938, pp.19 and 29;
1939, p.14; 1940, p. 12; 1941. p. 19; 1942, p.9: 1943, p.9; 1944, p.7; 1945, p. S: 1946,
p.12.
5 See footnote 4, above.
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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

industrial relations; cooperative associations; production financing; transportation; and
terminal markets. Its recommendations for improvement of the Perishable Agricultural
Commodities Act were adopted by Congress in amending that act (Public, 328, 75th)
in 1937. [Report of the F. T. C. on Agricultural Income Inquiry, Part I, Principal
Farm Products, 1,134 p., 3/2/37 (summary, conclusions, and recommendations, S.
Doc. 54, 75th, 40 p.); Part II, Fruits, Vegetables, and Grapes, 906 p., 6/10/37; Part III,
Supplementary Report, 154 p., 11/8/37; and interim reports of 12/26/35 (H. Doc. 380,
74th, 6 p.), and 2/1/37 (S. Doc. 17, Agricultural Prices.--See Price Deflation.
Aluminum Foundries (W. P. B.), Wartime, 1942-43.--Details were obtained for
the War Production Board, at its request, from aluminum foundries throughout the U.
S. covering their operations for May 1942 and their compliance with W. P. B.
Supplementary Orders m-1-d, m-1-c, and m-1-f.
Antifreeze Solutions, Manufacturers of (W. P. B.), Wartime, 1943-44.--War
Production Board Order L-258 of 1/20/43 prohibited production of salt and petroleumbase antifreeze solutions. While production of these products had ceased, great
quantities were reported to be still in the hands of producers and distributors. To
enable W. P. B. to determine what further action should be taken to protect essential
automotive equipment from these solutions, it re quested the Commission to locate
producers’ inventories as of 1/20/43, and to identify all deliveries made from such
inventories to distributors subsequent to that date.
Automobiles.--See Distribution Methods and Costs, and Motor Vehicles.
Bakeries and Bread.--See under Food.
Beet Sugar.--See under Food-Sugar.
Building Materials.--See Distribution Methods and Costs.
Calcium Arsenate (Senate).--High prices of calcium arsenate, a poison used to
destroy the cotton boll weevil (S. Res. 417, 67th, 1/23/23), appeared to be due to
sudden increased demand rather than trade restraints (Calcium Arsenate Industry, S.
Doc. 345, 67th, 21 p., 3/3/23).
Capital Equipment (W. P. B.), Wartime, 1942-43.--For the War Production
Board, a survey was made in connection with Priorities Regulation No.12, as amended
10/3/42, of concerns named by it to determine whether orders had been improperly
operated to secure capital equipment or whether orders that had been operated had
been extended for the purpose of obtaining capital equipment in violation of priorities
regulations.
Cement (Senate).--Inquiry into the cement industry’s competitive conditions and
distributing processes (S. Res. 448, 71st, 2/16/31) showed that rigid application of the
multiple basing-point price system 6 tended to lessen price competition and destroy the
value of sealed bids; concerted activities of manufacturers and dealers strengthened
the system’s price effectiveness; and dealer associations’ practices were designed to
restrict sales to recognized “legitimate” dealers (Cement Industry, S. Doc. 71, 73d, 160
p., 6/9/33).
Chain Stores (Senate).--Practically every phase of chain-store operation was
covered (S. Res. 224, 70th, 5/12/28) , including cooperative chains, chain-store
manufacturing and wholesale business, leaders and loss leaders, private brands, short
weighing and overweighing and sales, costs, profits, wages, special dis-counts and
allowances, and prices and margins of chain and independent grocery and drug
distributors in selected cities. (For subtitles of 33 reports published under the general
title, Chain Stores, 1931-33, see F. T. C. Annual Report, 1941, p. 201.)

In the Final Report on the Chain-Store Investigation (S. Doc. 4, 74th, 110 p., o. p.,
12/14/34), legal remedies available to combat monopolistic tendencies in chain-store
development were discussed. 7 The Commission’s recommendations pointed the way
to subsequent enactment of the Robinson-Patman Act (1936) prohibiting price and
other discriminations, and the Wheeler-Lea Act (1938) which amended the Federal
Trade Commission Act so as to broaden the prohibition of unfair methods of
competition in section 5 to include unfair or deceptive acts or practices in interstate
commerce.
Chromium Processors (W. P. B.), Wartime, 1942-43.--For the War Production
Board, the Commission investigated the transactions of the major chromium
processors to determine the extent to which they were complying with
6 Basing-point systems are also discussed in the published reports listed under “Price
Bases,” “Steel Code,” and “Steel Sheet Piling” herein.
7 See footnote 4, p.103.

INVESTIGATIONS BY THE COMMISSION, 1915-46

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Amendment No. 2 to P B. General Preference Order No. m-18-a, issued 2/4/42. The
investigation was conducted concurrently with a survey of nickel processors.
Cigarette Shortage (F. T. C. and Senate Interstate Commerce Committee
Chairman), Wartime, 1944-45--In response to complaints from the public and a
request from the Chairman of the Senate Interstate Commerce Committee (letter dated
12/1/44), the Commission investigated the cigarette shortage and reported, among
other things, that the scarcity was directly traceable to the large volume of cigarettes
moving to the armed forces and the Allies; that it was not attributable to violations of
laws administered by the Commission; but that certain undesirable practices such as
hoarding and tie-in sales had developed. (Report of the F.T.C. on the Cigarette
Shortage, 33 pages, processed, 2/13/45.)
Coal (Congress and F. T. C.), Wartime, 1917-18, Etc.--From 1916 through the
first World War period and afterward, the Commission at different times investigated
anthracite and bituminous coal prices and the coal industry’s financial condition.
Resulting cost and price reports are believed to have substantially benefited the
consumer. Among the published reports were : Anthracite Coal Prices, preliminary (S
Doc. 19, 65th, 4 p., o. p.5/4/17); Preliminary Report by the F. T. C. on the Production
and Distribution of Bituminous Coal (H. Doc. 152, 65th, 8 p., o. p., 5/19/17);
Anthracite and Bituminous Coal Situation, summary (H. Doc. 193, 65th, 29 p., o. p.,
6/19/17); and Anthracite and Bituminous Coal (S. Doc. 50, 65th, 420 p., o. p., 6/19/17)
--pursuant to S. Res. 217, 64th, 6/22/16; H. Res. 352, 64th, 8/18/16, and S. Res. 51,
65th, 5/1/17; Washington, D. C., Retail Coal Situation (5 p., release, processed, o. p.,
8/11/17)-pursuant to F. T. C. motion ; Investment and Profit in Soft-Coal Mining (two
parts, 5/31/22 and 7/6/22, 218 p., S. Doc. 207, 67th)--pursuant to F. T. C. motion; and
Report of the F. T. C. on Premium Prices of Anthracite (97 p., 7/6/25)-pursuant to F.
T. C. motion.
Coal, Cost of Production (F. T. C.), Wartime 1917-18.--President Wilson fixed
coal prices by Executive order under the Lever Act (1917) on the basis of information
furnished by the Commission. For use of the U.S. Fuel Administration in continuing
price control, the Commission compiled monthly cost production reports, collecting
cost records for 1917-18 for about 99 percent of the anthracite and 95 percent of the
bituminous coal production (Cost Reports of the F. T. C.--Coal, 6/30/19, summarized
for principal coal-producing States or regions: (l) Pennsylvania , bituminous, 103 p.,
o. p.; (2) Pennsylvania, anthracite, 145 p., o. p.; (3) Illinois, bituminous, 127 p. ; (4)
Alabama, Tennessee, and Kentucky, bituminous, 210 p.; (5) Ohio, Indiana, and
Michigan, bituminous, 288 p.; (6) Maryland, West Virginia, and Virginia, bituminous,
286 p. ; and (7) trans-Mississippi States, bituminous, 459 p.).
Coal, Current Monthly Reports (F. T. C.) --The Commission (December 1919)
initiated a system of current monthly returns from the soft coal industry similar to
those compiled during the World War, 1917-18 (Coal-Monthly Reports on Cost of
Production, 4/20/20 to 10/30/20, Nos. 1 to 6, and two quarterly reports with revised
costs, 8/25/20 and 12/6/20, processed, o. p.). An injunction to prevent the calling for
the monthly reports (denied about seven years later) led to their abandonment.
Combed Cotton Yarns.--See Textiles.
Commercial Bribery (F. T. C.)--Investigating the prevalence of bribery of
customers’ employees as a means of obtaining trade, the Com mission published A
Special Report on Commercial Bribery (H. Doc. 1107, 65th, 3 p., o. p., 5/15/18),

recommending legislation striking at this practice ; Commercial Bribery (S. Doc.
unnumbered, 65th, 36 p., o. p., 8/22/18); and Commercial Bribery (S. Doc. 258, 66th,
7 p., o. p., 3/18/20).
Commercial Cooking and Food and Plate Warming Equipment, Manufacturers
of (W. P. B.), Wartime, 1942-43--The commission conducted an investigation for the
War Production Board to determine whether manufacturers of commercial cooking
and plate warming equipment were complying with W. P. B. Limitation Orders L-182
and L-182 as amended 3/2/43 ; Conservation Orders M-126 and m-9-c, as amended
and Priorities Regulation No.1.
Contractors, Prime, Forward Buying Practices of (W. P. B.), Wartime, 194243.--The matter of procurement, use, and inventory stocks of critical materials
involved in the operation of major plants devoting their efforts to war production were
inquired into for the information of the War Production Board. Items such as
accounting, inventory, control, purchase, practices, etc., formed a part of the inquiry.
Cooperation in American Export Trade.--See Foreign Trade.

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Cooperation in Foreign Countries (F. T. C.).--Inquiries made by the Commission
regarding the cooperative movement in 15 European countries resulted in a report,
Cooperation in Foreign Countries (S. Doc. 171, 68th, 202 p., o. p., 11/29/24,
recommending further development of cooperation in the U.S.
Cooperative Marketing (Senate).--This inquiry (S. Res. 34, 69th, 3/17/25) covered
the development of the cooperative movement in the U.S. and illegal interferences
with the formation and operation of cooperatives ; and a comparative study of costs,
prices, and marketing methods (Cooperative Marketing, S. Doc. 95, 70th, 721 p., o.
p., 4/30/28).
Copper.--See Wartime Cost Finding, 1917-18.
Copper Base Alloy Ingot Makers (W. P. B.), Wartime, 1942-43.--This
investigation was designed to ascertain the operations, shipments, and inventories of
copper, copper alloys, copper scrap, and copper base alloy ingot makers and was
conducted for the purpose of determining the extent to which they were complying
with governing W. P. B. Preference and Conservation Orders M-9-a and b, and M-9-c.
Copper, Primary Fabricators of (W. P. B.), Wartime, 194142.--A survey and
inspection of a specified list of companies which used a large percentage of all refinery
copper allocated, and at the same time represented a fair cross-section of the industry,
were made to ascertain the degree of compliance accorded to preference,
supplementary, and conservation orders and regulations of the Director of Priorities,
Office of Production Management (later the War Production Board).
Corporation Reports.--See Industrial Corporation Reports.
Cost Accounting.--See Accounting Systems.
Cost of Living (President) Wartime, 1917-18.--Delegates from the various States
met in Washington, April 30 and May 1, 1917, at the request of the Federal Trade
Commission, and considered the rapid rise of wartime prices and the plans then being
made for the Commission’s general investigation of foodstuffs. [See Foods (President)
, Wartime, 1917-18, herein.] Proceedings of the conference were published (High
Cost of Living, 119 p., o. p.).
Cost of Living (President).--President Roosevelt, in a published letter (11/16/37),
requested the Commission to investigate living costs. The Commission (11/20/37)
adopted a resolution undertaking the inquiry and a few months thereafter submitted a
confidential report to the President.
Costume Jewelry, Manufacturers of (W. P. B.), Wartime, 1943-44.--Because it
appeared that vast quantities of critical metals were being diverted illegally from war
use to the manufacture of costume jewelry and similar items, the War Production
Board requested the Commission to investigate 45 manufacturers to ascertain the facts
concerning their compliance with W. P. B. Orders M-9-a, M-9-b, M-9-c, M-9-c-2, M43, M-38, M-11, M-11-b. M-126, L-81, L-131, and L-131-a, all as amended.
Cotton Industry.--See Textiles.
Cottonseed Industry (House).--Investigating alleged price fixing (H. Res. 439,
69th, 3/2/27) the Commission reported evidence of cooperation among State
associations but no indication that cottonseed crushers or refiners had fixed prices in
violation of the antitrust laws (Cottonseed Industry, H. Doc. 193, 70th, 37 p., 3/5/28).
Cottonseed Industry (Senate) --Two resolutions (S. Res. 136, 10/21/29, and S. Res.
147, 11/2/29/--71st) directed the Commission to determine whether alleged unlawful
combinations of cottonseed oil mill corporations sought to lower and fix prices of
cottonseed and to sell cottonseed meal at a fixed price under boycott threat ; and

whether such corporations acquired control of cotton gins to destroy competitive
markets and depress or control prices paid to seed producers (Investigation of the
Cottonseed Industry, preliminary report, S. Doc. 91, 71st, 4 p., o. p., 2/28/30, and final
report, 207 p., with 11 vols. testimony, S. Doc. 209, 71st, 5/19/33.)
Distribution Cost Accounting (F. T. C.) .--To provide a guide for current
legislation and determine ways for improving accounting. methods, the Commission
studied distribution cost accounting in connection with selling, warehousing, handling,
delivery, credit and collection (Case Studies in Distribution Cost Ac-counting for
Manufacturing and Wholesaling, H. Doc. 287, 77th, 215 p., 6/23/41).
Distribution.--See Foods--Mass Foods Distributors.
Distribution.--See Millinery Distribution.
Distribution Methods and Costs (F. T. C.).--This inquiry into methods and costs
of distributing important consumer commodities (F. T. C. Res., 6/27/40) was
undertaken by the Commission pursuant to authority conferred upon it by

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section 6 of the F. T. C. Act. Eight parts of the F. T. C. Report on Distribution
Methods and Costs were transmitted to Congress and published wider the subtitles ;
Part I. Important Food Products (11/11/43, 223 p.); Part III. Building Materials-Lumber, Paints and Varnishes and Portland Cement (2/19/44, 50 p.); Part IV.
Petroleum Products, Automobiles, Rubber Tires and Tubes, Electrical Household
Appliances, and Agricultural Implements (3/2/44, 189 p.); Part v. Advertising as a
Factor in Distribution (10/30/44, 50 p.); Part VI. Milk Distribution, Prices, Spreads
and Profits (6/18/45, 58 p.) Part VII. Cost of Production and Distribution or Fish in
the Great Lakes Area (6/30/45, 59 p.); Part VIII. Cost of Production and Distribution
of Fish in New England (6/30/45, 118 p.) ; and Part IX. Cost of Production and
Distribution of Fish on the Pacific Coast (7/25/46, 82 p.). The inquiries relating to fish
were conducted in cooperation with the Coordinator of Fisheries, Interior Dept. During
World War II special reports on the distribution of some 20 commodity groups were
made for confidential use of the Office of Price Administration and other war
agencies. (See p. 17 for summary of Part IX.)
Du Pont Investments (F. T. C.).--The Report of the F. T. C. on Du Pont Investments (F. T. C. motion 7/29/27 ; report, 46 p., processed, 2/1/29) discussed reported
acquisitions by E. I. du Pont de Nemours & Co. of U.S. Steel Corp. stock, together
with previously. reported holdings In General Motors Corp.
Electric and Gas Utilities, and Electric Power.--See Power.
Electric Lamp Manufacturers (W. P. B.), Wartime, 1942-43.--At the direction
of the War Production Board, an investigation was made of the activities of
manufacturers of portable electric lamps whose operations were subject to the
restrictions imposed by W. P. B. Limitation and Conservation Orders L-33 and m-9-c.
Electrical Household Appliances.--See Distribution Methods and Costs.
Farm implements (Senate), Wartime, 1917-18.--The Report of the F. T. C. on the
Causes of High Prices of Farm Implements (inquiry under S. Res. 223, 65th, 5/13/18
; report, 713 p., o. p., 5/4/20) disclosed numerous trade combinations for advancing
prices and declared the consent decree for dissolution of International Harvester Co.
to be inadequate. The Commission recommended revision of the decree and the
Department of Justice proceeded to that end.
Feeds, Commercial (Senate).--Seeking to determine whether purported
combinations in restraint of trade existed (S. Res. 140, 66th, 7/31/19), the Commission
found that although some association activities were in restraint of trade, there were
no substantial antitrust law violations (Report of the F. T. C. on Commercial Feeds,
206 p., 3/29/21).
Fertilizer (Senate).--Begun by the Commissioner of Corporations 8 (S Res. 487,
62d, 3/1/13), this inquiry disclosed extensive use of bogus independent fertilizer
companies for competitive purposes (Fertilizer Industry, S. Doc. 551, 64th, 269 p., o.
p., 8/19/16). Agreements for abolition of such unfair competition were reached.
Fertilizer (Senate).--A second fertilizer inquiry (S. Res. 307, 67th, 6/17/22)
developed that active competition generally prevailed In that industry in the U. S.,
although in some foreign countries combinations controlled certain important raw
materials. The Commission recommended improved agricultural credits and more
extended cooperation by farmers in buying fertilizer (Fertilizer Industry, S. Doc. 347,
67th, 87 p., o. p., 3/3/23).
Fertilizer and Related Products (O. P. A.), Wartime, 1942-43.--At the request of
O. P. A. (June 1942), the Commission investigated costs, prices, and profits in the
fertilizer and related products industries. The inquiry developed information with

reference to the operations of 12 phosphate rock mines of 11 companies, and 40 plants
of 24 companies producing sulphuric acid, superphosphate, and mixed fertilizer. One
of the principal requirements of the inquiry was to obtain information concerning
costs, prices, and profits for 103 separate formulas of popular-selling fertilizers during
1941 and 1942.
Fish.--See Distribution Methods and Costs.
Flags (Senate), Wartime; 1917-18.--Unprecedented increases In the prices of U.S.
flags in 1917, due to wartime demand, were investigated (S. Res. 35, 65th, 4/16/17).
The Inquiry was reported in Prices of American Flags (S. Doc. 82, 65th, 6 p., o. p.,
7/26/17).
8 The Commission was created September 26, 1914, up on passage of the Federal
Trade Commission Act, sec. 3 of which provided that “all pending investigations and
proceedings of the Bureau of Corporations [of the Department of Commerce] shall be
continued by the Commission.”

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Flour Milling.--See Food, below.
Food (President) , Wartime, 1917-18.--President Wilson, as a wartime emergency
measure (2/7/17), directed the Commission “to investigate and report the facts relating
to the production, ownership, manufacture, storage, and distribution of foodstuffs” and
“to ascertain the facts bearing on alleged violations of the antitrust acts.” Two major
series of reports related to meat packing and the grain trade with separate inquiries into
flour milling, canned vegetables and fruits, canned salmon, and related matters, as
listed below.
Food (President) Continued--Meat Packing.--Food Investigation-Report of the
F. T. C. on the Meat-Packing Industry was published in six parts: I. Extent and Growth
of Power of the Five Packers in Meat and Other Industries (6/24/19, 2574, p., o. p.);
II. Evidence of Combination Among Packers (11/25/18, 294 p., o. p.); III. Methods of
the Five Packers in Controlling the Meat-Packing Industry (6/28/19, 825 p., o. p.); IV
The Five Large Packers in Produce and Grocery Foods (6/80/19, 390 p., o. p.); v.
Profits of the Packers (6/28/19, 110 p., o. p.); VI. Cost of Growing Beef Animals, Cost
of Fattening Cattle, and Cost of Marketing Live stock (6/30/19, 183 p.,o. p.); and
summary (H. Doc. 1297, 65th, 51 p.,o.p., 7/3/18).
The reports first led to antitrust proceedings against the Big Five Packers, resulting
in a consent decree (Supreme Court of the D. C., 2/27/20, 9 which had substantially the
effect of Federal legislation in restricting their future operations to certain lines of
activity. As a further result of the investigation, Congress enacted the Packers and
Stockyards Act (1921), adopting the Commission’s recommendation that the packers
be divorced from control of the stockyards. (The meat-packing industry is further
referred to under Meat Packing Profit Limitations, p.110).
Food (President) Continued--Grain Trade.--Covering the industry from country
elevator to central market, the Report of the F. T. C. on the Grain Trade was published
in seven parts : I. Country Grain Marketing (9/15/20, 350 p., o. p.); II. Terminal Grain
Markets and Exchanges (9/15/20); 333 p., o. p.); Ill. Terminal Grain Marketing
(12/21/21, 332 p., o. p.); IV. Middlemen’s Profits and Margins (9/26/23, 215 p., o. p.);
v. Future Trading Operations in Grain (9/15/20, 347 p., o. p.); VL Prices of Grain and
Grain Futures (9/10/24, 374 p.); and VII. Effects of Future Trading (6/25/26, 419 p.)
The investigation as reported in Vol. V, and testimony by members of the
Commission’s staff (U.S. Congress House Committee on Agriculture, Future Trading,
hearings, 67th, April 25-May 2, 1921) was an important factor in enactment of the
Grain Futures Act (1921) (Further reference to the grain trade is made under Grain
Elevators, p.109; Grain Exporters, p. 109; and Grain, Wheat Prices, p. 110.)
Food (President) Continued--Bakeries and Flour Milling.--One F. T. C. report
was published by the Food Administration (U. S. Food administration, Report of the
F. T C. on Bakery Business, in U.S., pp. 5-13, o. p., 11/3/17). Other reports were; Food
Investigation, Report of the F. T. C. on Flour Milling and Jobbing (4/4/18, 27 p., o.
p.) and Commercial Wheat Flour Milling (9/15/20, .118 p., o. p.).
Food (President) Continued--Canned Foods 10 Private Car Lines, Wholesale
Food Marketing.--Under the general title Food Investigation were published Report
of the F.T.C., on Canned Foods--General Report, and Canned Vegetables and Fruits
(5/18/18, 103 p., o. p.): Report of the F. T. C on Canned Foods--Canned Salmon
(12/27/18, 83p., o. p.) ;’,Report of the F. T. C. on Private Car Lines, regarding
transportation of meats, fruits, and vegetables (6/27/19, 271 p., o. p.); and Report of
the F. T. C. on Wholesale Marketing of Food (6/30/19,268 p., o. p.), which
recommended that a wholesale dealer in perishable food products should be required

to procure a Federal license and that Federal inspection and standards should be
provided. Provisions in accordance with these recommendations were incorporated in
the Perishable Agricultural Commodities Act (1930).
Food--Biscuits and Crackers, (0. P,. A.), Wartime, 1942-43.--As requested by the
Office of Price Administration, the Commission investigated costs and profits, in the
biscuit and cracker manufacturing industry and submitted its report to that agency
3/25/43. The survey of 43 plants operated by 25 companies
9 The legal history of the consent decree and a summary of divergent economic
interests involved in the question of packer participation In unrelated lines of food
products were set forth by the Commission in Packer Consent Decree (S. Doc. 219,
68th, 44 p., o. p., 2/20/25), prepared pursuant to S. Res. 278, 68th, 12/8/24.
10 In connection with its wartime cost finding inquiries, 1917-18 p. 119 herein, the
Commission published Report of the F. T. C. on Canned Foods,1918--Corn, Peas,
String Beans, Tomatoes, and Salmon (86 p., 11/21/21).

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showed, among other things, that costs were lower and profits higher for the larger
companies than for the smaller ones.
Food--Bread Baking (O. E. S.), Wartime, 1942-43.--This investigation was
requested (10/23/42:) by the Director of the Office of Economic Stabilization and was
conducted to determine what economies could be made in the bread-baking industry
so as to remove the need for a subsidy for wheat, to prevent an increase in bread
prices, or to lower the price of bread to consumers. Essential information on more than
600 representative bakeries’ practices, costs, prices, and profits was developed and
reported to O. E. S (12/29/42). The report also was furnished to the Secretary of
Agriculture and special data gathered in the inquiry was tabulated for O. P. A
Food--Bread Baking (O. P. A), Wartime, 194142.--In the interest of the low
income consumer, for whom it was deemed necessary the price of bread should be held
at a minimum, the Commission investigated costs, prices, and profits of 60
representative bread-baking companies, conveying its findings to O. P. A. (Jan. 1942)
in an unpublished report.
Food--Bread and Flour (Senate).--Reports on this inquiry (S. Res. 163, 68th,
2/26/24) were: Competitive Conditions in Flour Milling (S. Doc. 97, 70th, 140 p., o.
p., 5/3/26); Bakery Combines and. Profits (S. Doc. 212, 69th, 95 p., 2/11/27);
Competition and Profits in Bread. and Flour (S. Doc. 98, 70th, 509 p., 1/11/28); and
Conditions in the Flour Milling Business, supplementary (S. Doc. 96, 72d, 26 p.,
5/28/32).
Food--Wholesale Baking Industry (F. T. C.).--This inquiry (F. T. C. Res., 8/31/45)
resulted in two reports to Congress: Wholesale Baking Industry, Part I--Waste in the
Distribution of Bread (4/22/46, processed, 29 p.) and Wholesale Baking Industry, Part
II--Costs, Prices and Profits (8/7/46). Part I developed facts concerning wasteful and
uneconomic practices in the distribution of bread, including consignment selling which
involves the taking back of unsold bread; furnishing, by gift or loan, bread racks,
stands, fixtures, etc., to induce distributors to handle a given company’s products. It
was found that, although War Food Order No.1 which prohibited these practices was
only partially observed, in 1945 as compared with 1942, the quantity of bread saved
was sufficient to supply the population of England, Scotland, and Wales with a daily
ration of one-third of a loaf for 30 days, the population of France for 86 days, or the
population of Finland for nearly 1 year. The Commission suggested that “a careful
examination of present laws be made by the legislative and executive branches of the
Government to determine what legislation, if any, is needed to permanently eliminate
wasteful trade practices and predatory competition which threaten the existence of
many small bakers, foredoom new ventures to failure and promote regional
monopolistic control of the wholesale bread baking industry.”
Part II presents information concerning prices and pricing practices in the industry,
profits earned, and unit costs of production and distribution. It compares the details of
production and distribution costs for bread and rolls, other bakery products, and for all
bakery products for two operating periods in 1945, March and September.
Comparisons of costs are also made for these two periods for plants arranged by
geographical areas. Comparisons of the costs of production and distribution are made
by size groups of wholesale bakeries. Food-Fish.--See Distribution Methods and Costs.
Food--Flour Milling (Senate).--This study of costs, profits, and other factors (S.
Res. 212, 67th, 1/18/22) was reported in Wheat Flour Milling Industry (S. Doc. 130,

68th, 180 p., o. p., 5 /16/24).
Food-Flour Milling (O. E. S.), Wartime, 1942-43.--Requested by the Director of
the Office of Economic Stabilization, this inquiry covered practices, costs, prices and
profits in the wheat flour milling industry, its purpose being to provide the Director
with facts to determine what economies could be effected in the industry so as to
eliminate the need for a wheat subsidy, without reducing farmers’ returns, or to reduce
bread prices. The report was made to O. E. S and a more detailed report was prepared
for O. P. A.
Food--Grain Elevators (F. T. C.), Wartime, 1917-18.--In view of certain bills
pending before Congress with reference to regulation of the grain trade, the
Commission, in a preliminary report, Profits of Country and Terminal Grain Elevators
(S. Doc. 40, 67th, 12 p., o. p., 6/13/21, presented certain data collected during Its
inquiry into the grain trade ordered by the President.
Food--Grain Exporters (Senate).--The low prices of export wheat in 1921 gave
rise to this inquiry (S. Res 133, 67th, 12/22/21) concerning harmful speculative

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price manipulations on the grain exchanges and alleged conspiracies among country
grain buyers to agree on maximum purchasing prices. The Commission recommended
stricter supervision of exchanges and additional storage facilities for grain not
controlled by grain dealers (Report of the F. T. C. on Methods and Operations of Grain
Exporters, 2 vols., 887 p., 5/16/22 and 6/18/23).
Food--Grain, wheat Prices (President).--An extraordinary decline of wheat prices
was investigated (President Wilson’s directive, 10/12/20) and found to he due chiefly
to abnormal market conditions (Report of the F. T. C. on Wheat Prices for the 1920
Crop, 91 p., 12/13/20).
Food--Important Food Products.--See Distribution Methods and Costs.
Food--Mass Foods Distributors (F. T. C.).--The system of delivering foods to
large chain store warehouses and the older system of delivery to individual retail stores
were compared from an economic viewpoint (F. T. C., Res., 4/20/41).
Food-Meat Packing Profit Limitations (Senate), Wartime, 1917-18.--Following
an inquiry (S. Res. 177, 66th, 9/3/19) involving wartime control of this business as
established by the U.S. Food Administration in 1917-18, the Commission
recommended greater control and lower maximum profits (Maximum Profit Limitation
on Meat Packing Industry, S. Doc. 110, 66th, 179 p., o. p., 9/25/19).
Food--Milk.--See Distribution Methods and Costs.
Food--Milk and Milk Products (Senate), Wartime, 1917-18.--Covering an inquiry
(S. Res. 431, 65th, 3/3/19) into fairness of milk prices to producers and of canned milk
prices to consumers, the Report of the F. T. C. on Milk and Milk Pro ducts 1914-18
(6/6/21, 234 p.) showed a marked concentration of control and questionable practices
many of which later were recognized by the industry as being unfair.
Food--Milk and Dairy Products (House).--Competitive conditions in different
milk-producing areas were investigated (H, Con. Res. 32, 73d, 6/15/34. Results of the
inquiry were published in seven volumes: Report of the F. T. C. on the Sale and.
Distribution of Milk Products, Connecticut and Philadelphia Milk-sheds (H. Doc. 152,
74th, 901 p., 4/5/35); Report of the F. T. C. on the Sale and Distribution of Milk and
Milk Products (Connecticut and Philadelphia milksheds, interim report, H. Doc. 387,
74th, 125 p., 12/31/35); Chicago Sales Area (H. Doc. 451, 74th, 103 p., o. p., 4/15/36);
Boston, Baltimore, Cincinnati, St. Louis (H. Doc. 501, 74th, 243 p., 6/4/36); Twin City
Sales Area (H. Doc. 506, 74th, 71 p., 6/18/36); and New York Milk Sales Area (H. Doc.
95, 75th, 138 p., o. p., 9/30/36). The Commission reported that many of the industry’s
problems could only be dealt with by the States and recommended certain legislation
and procedure, both State and Federal (Summary Report on Conditions With Respect
to the Sale and Distribution of Milk and Dairy Products, H. Doc. 94, 75th, 39 p., o. p.,
1/4/37). Legislation has been enacted in a number of States carrying into effect all or
a portion of the Commission’s recommendations.
Food--Peanut Prices (Senate).--An alleged price-fixing combination of peanut
crushers and mills was Investigated (S. Res. 139, 71st, 10/22/29). The Commission
found that an industry-wide decline in prices of farmers’ stock peanuts during the
business depression was not due to such a combination, although pricing practices of
certain mills tended to impede advancing and to accelerate declining prices (Prices and
Competition Among Peanut Mills, S Doc. 132, 72d, 78 p., 6/30/32).
Food--Raisin Combination (Attorney General).--Investigating allegations of a
combination among California raisin growers (referred to F. T. C. 9/30/19), the
Commission found the enterprise not only organized in restraint of trade but conducted

in a manner threatening financial disaster to the growers. The Commission
recommended changes which the growers adopted (California Associated Raisin Co.,
26 p., processed o. p., 6/8/20).
Food--Southern Livestock Prices (Senate).--Although the low prices of southern
livestock in 1919 gave rise to a belief that discrimination was being practiced, a
Commission investigation (S. Res. 183, 66th, 7/25/19) revealed the alleged
discrimination did not appear to exist (Southern Livestock Prices, S. Doc. 209, 66th,
11 p., o. p., 2/2/20).
Food--Sugar (House).--An extraordinary advance in the price of sugar in 1919 (H.
Res. 150, 66th, 10/1/19) was found to be due chiefly to speculation and hoarding. The
Commission made recommendations for correcting these abuses (Report of the F. T.
C. on Sugar Supply and Prices, 205 p., 11/15/20).
Food--Sugar, Beet (F. T. C.)--Initiated by the Commissioner of Corporations, 11 but
completed by the F. T. C., this inquiry dealt with the cost of growing
11

See footnote 8, p.107.

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beets and the cost of beet-sugar manufacture (Report on the Beet Sugar Industry in the
U.S., H. Doc. 158, 65th, 164 p., o. p., 5/24/17).
Foreign Trade--Antidumping Legislation (F. T. C.).--To develop information for
use of Congress in its consideration of amendments to the antidumping laws, the
Commission studied recognized types of dumping and provisions for preventing the
dumping of goods from foreign countries (Antidumping Legislation and Other Import
Regulations in the United States and Foreign Countries, S Doc. 112, 73rd, 100 p.,
1/11/34 ; supplemental report, 111 p., processed, 6/27/38).
Foreign Trade--Cooperation in American Export Trade (F. T. C.).--This inquiry
related to competitive conditions affecting Americans in international trade. The
Export Trade Act, also known as the Webb-Pomerene law, authorizing the association
of U.S. manufacturers for export trade, was enacted as a result of Commission
recommendations (Cooperation in American Export Trade, 2 vols., 984 p., o. p.,
6/30/16; also summary, S. Doc. 426, 64th, 7 p., o. p., 5/2/16; and conclusions, 1916,
14 p., o. p.).
Foreign Trade--Cotton Growing Corporation (Senate).-The report of an inquiry
(S. Res. 317, 68th, 1/27/25) concerning the development of this British company,
Empire Cotton Growing Corporation (S. Doc. 226, 68th, 30 p., o. p., 2/28/25), showed
there was then little danger of serious competition with the American grower or of a
possibility that the United States would lose Its position as the largest producer of raw
cotton.
Fruit Growers and Shippers (W. P. B.), Wartime, 1943-44.--This investigation
was requested by the War Production Board to determine whether 7 grape growers and
12 grape shippers, all located in California, were in violation of W. P. B. Order L-232
with respect to quotas affecting the use of lugs (wooden shipping containers).
Furnaces, Hot Air, Household (W. P. B.), Wartime, 1943-44--The Commission
made a Nation-wide survey for the War Production Board of the operations of one of
the largest manufacturers in the United States of household hot air furnaces, to
determine whether its practices in selling and servicing domestic heating plants were
In violation of Orders L--79 and P-84, and other applicable regulations and orders of
W. P. B.
Fuse Manufacturers (W. P. B.), Wartime, 1942-43--For the War Production
Board the Commission investigated and reported on the activities of representative
fuse manufacturers whose operations were subject to W. P. B. Limitation Orders L-158 and L--161, as amended.
Gasoline.--See Petroleum.
Glycerin, Users of (W. P. B.), Wartime, 1942-43.--At the request of the War
Production Board, paint and resin manufacturers, tobacco companies, and other large
users of glycerin were investigated to determine whether they had improperly extended
preference ratings to obtain formaldehyde, paraformaldehyde, or
hexamethylenetetramine, to which they were not otherwise entitled.
Grain.--See Food.
Guarantee Against Price Decline (F. T. C.).--Answers to a circular letter
(12/26/19) calling for information and opinions on this subject were published in
Digest of Replies in Response to an Inquiry of the F. T. C. Relative to the Practice of
Giving Guarantee Against Price Decline (68 p., 5/27/20).
House furnishings (Senate).--This inquiry (S. Res. 127, 67th, 1/4/22) resulted in

three volumes showing concerted efforts to effect uniformity of prices in some lines
(Report of the F. T. C. on House furnishing Industries, 1018 p., 1/17/23, 10/1/23, and
10/6/24).
Household Furniture (O. P. A.), Wartime, 1941-42.--Costs, prices, and profits of
67 representative furniture companies were studied to determine whether, and to what
extent, price increases were justified. A study was also made to determine whether
price-fixing agreements existed and whether wholesale price increases resulted from
understandings in restraint of trade. Confidential reports were transmitted to O. P. A.
in Sept.1941.
Independent Harvester Co. (Senate), Wartime, 1917-18.--After investigation (S.
Res. 212, 65th, 3/11/18) of the organization and methods of operation of the company
which had been formed several years before to compete with the “harvester trust,” but
which had passed into receivership, the F. T. C. Report to the Senate on the
Independent Harvester Co. (5 p., release, processed, o. p., 5/15/18) showed the
company’s failure was due to mismanagement and insufficient capital.

112

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

Industrial Corporation Reports (F. T. C.), Wartime, 1941-43.--The Commission
obtained corporation financial reports for 1939 and 1940. It published in combined
form significant economic facts developed in the 1939 series relating to 76 industries
which embraced 780 corporations (Industrial Corporation Reports, 77 vols., incl.
summary, 10/15/40 to 6/30/41, approximately 1,500 pp., processed ; titles listed in F.
T. O. Annual Report, 1941, p.24). In 1939 these corporations had an average total
investment (after deduction of reported appreciation of assets) of more than
$28,000,000,000. The 1940 series, coordinated with wartime work for other
Government agencies, was expanded to cover 4,500 corporations representing
consolidated operations of more than 7,000 corporations operating in 86 principal
strategic materials industries and to provide O. P. A. with approximately 12,000 annual
reports of earlier years and quarterly reports of subsequent operations. The 1940 series
was prepared for the confidential use of war and other agencies of the Government.
Subsequently the reports were made public.
Insignia Manufacturers (W. P. B.), Wartime, 1944-45.--Preliminary studies made
by the War Production Board disclosed the probability that certain insignia
manufacturers had acquired larger quantities of foreign silver than necessary to fill
legitimate orders and diverted the balance to unauthorized uses. In response to W. P.
B.’s request the Commission surveyed the acquisition and use of foreign silver by such
manufacturers to determine the degree of their compliance with Order M-199 and
checked the receipt and use of both domestic and treasury silver, as well as the
manufacture of insignia, as controlled by Orders L-131 and M-9-c.
International Phosphate Cartels (F. T. C.).--The F. T. C. Report on International
Phosphate Cartels (F. T. C. Res., 9/19/44) developed facts with respect to the
practices, arrangements and agreements between domestic phosphate companies and
foreign competitors through international cartels, through which minimum export
prices were fixed. These prices varied from market to market, depending upon
competition, ocean freight rates, and other factors. The agreements established fixed
quotas in each grade, and sales were allocated among members of the Phosphate
Export Association according to their quotas and the grade involved. The report
(processed, 60 p.) was transmitted to Congress 5/1/46.
Jewel Bearings, Consumers of (W. P. B.), Wartime, 1942-43.--For the War
Production Board, users of jewel bearings were investigated to determine the extent
to which they were complying with W. P. B. Conservation Order m-50, which had
been issued to conserve the supply and direct the distribution of jewel bearings and
jewel-bearing material.
Leather and Shoes (F. T. C. and House), Wartime, 1917-18.--General complaint
regarding high prices of shoes led to this inquiry, which is reported in Hide and
Leather Situation, preliminary report (H. Doc. 857, 65th, s p., o. p., 1/23118), and
Report on Leather and Shoe Industries (180 p., 8/21/19). A further study H. Res. 217,
66th, 8/19/19) resulted in the Report of the F. T. C. on Shoe and Leather Costs and
Prices (212 p., 6/10/21).
Lumber-Costs.--See Wartime Cost Finding, 1917-18.
Lumber Trade Associations (Attorney General) .--The Commission’s extensive
survey of lumber manufacturers’ associations (referred to F. T. C. 9/4/19) resulted in
Department of Justice proceedings against certain associations for alleged antitrust law
violations. Documents published were : Report of the F. T. C. on Lumber
Manufacturers’ Trade Associations, incorporating regional reports of 1/10/21, 2/18/21,

6/9/21, and 2/15/22 (150 p., o. p.); Report of the F. T. C. on Western Red. Cedar
Association, Lifetime Post Association, and Western Red Cedarmen’s Information
Bureau (22 p., 1/24/23), also known as Activities of Trade Associations and
Manufacturers of Posts and Poles in the Rocky Mountain and Mississippi Valley
Territory (S. Doc. 293, 67th, o. p.); and Report of the F. T. C. on Northern Hemlock
and Hardwood Manufacturers Association (52 p., 5/7/23).
Lumber Trade Associations (F. T. C.).--Activities of five large associations were
investigated in connection with the Open-Price Associations inquiry (p.113) to bring
down to date the 1919 lumber association inquiry (Chap. VIII of Open-Price Trade
Associations, S. Doc. 220, 70th, 516 p., 2/13/29).
Mass Foods Distributors.--See Food.
Meat-Packing Profit Limitations.--See Food.
Metal--Working Machines, Invoicing and Distribution of (W. P. B.), Wartime,
1942-43.--For the War Production Board an inquiry was made to obtain complete data
from the builders of metal-working machines (including those manufactured by their
subcontractors) such as all nonportable power-driven machines

INVESTIGATIONS BY THE COMMISSION, 1915-46

113

that shape metal by progressively removing chips or by grinding, boning, or lopping
; all nonportable power-driven shears; presses, hammers, bending machines, and other
machines for cutting, trimming, bending, forging, pressing, and forming metal; and all
power-driven measuring and testing machines. Each type and kind of machine was
reported on separately.
Milk.--See Food.
Millinery Distribution (President) .--This inquiry, requested by President
Roosevelt, embraced growth and development of syndicates operating units for retail
millinery distribution, the units consisting of leased departments in department or
specialty stores (Report to the President of the United States on Distribution Met hods
in the Millinery Industry, 65 p., processed, 11/21/39).
Motor Vehicles (Congress).--Investigating (Public Res. 87, 75th, 4/13/38)
distribution and retail sales policies of motor vehicle manufacturers and dealers, the
Commission found, among other things, a high degree of concentration and strong
competition ; that many local dealers’ associations fixed prices and operated used-car
valuation or appraisal bureaus essentially as combinations to re-strict competition ;
that inequities existed in dealer agreements and in certain manufacturers’ treatment of
some dealers ; and that some companies’ car finance plans developed serious abuses
(Motor Vehicle Industry, H. Doc. 468, 76th, 1077 p., 6/5/89). The leading companies
voluntarily adopted a number of the Commission’s recommendations as company
policies.
National Wealth and Income (Senate).--In 1922 the national wealth was estimated
(Inquiry pursuant to S. Res. 451, 67th, 2/28/23) at $353,000,000,000 and the national
Income in 1923 at $70,000,000,000 [National Wealth and Income (S. Doc. 126, 69th,
381 p., o. p., 5/25/26) and Taxation and Tax-Exempt Income (S. Doc. 148, 68th, 144
p., o. p., 6/6/24).)
Nickel Processors (W. P. B.), Wartime, 1942-43.--The Commission was
designated by the War Production Board to investigate the transactions of some 600
nickel processors for the purpose of determining the extent to which they were
complying with W. P. B. Preference Order No. M-6-a, issued 9/30/41, and Conservation Order M-6-b,. issued 1/20/42. The investigation was conducted concurrently
with a survey of chromium processors.
Open-Price Associations (Senate).--An investigation (S. Res. 28, 69th, 3/17/25) to
ascertain the number and names of so-called open-price associations, their importance
in industry and the extent to which members maintained uniform prices, was reported
in Open-Price Trade Associations (S. Doc. 226, 70th, 516 p., 2/13/29).
Packer Consent Decree.--See Food (President) Continued-Meat Packing.
Paint, Varnish, and Lacquer Manufacturers (W. P. B.), Wartime, 1943-44.--The
purpose of this survey was to determine whether the manufacturers covered were in
violation of War Production Board Orders M-139, M-150, M-159, M-246, and M-327
in their acquisition and use of certain chemicals, all subject to W. P. B. allocation used
In the manufacture of paint, varnish, and lacquer. Sales of such -products to determine
their end uses also were investigated.
Paperboard (O. P. A.), Wartime, 1941-42.--Costs, profits, and other financial. data
regarding operations of 68 paperboard mills (O. P. A. request, 11/12/41) for use in
connection with price stabilization work, were transmitted to O. P. A. in a confidential
report (May 1942).
Paper-Book (Senate), Wartime, 1917-18.--This inquiry (S. Res. 269, 64th, 9/7/16)

resulted in proceedings by the Commission against certain manufacturers to prevent
price enhancement and the Commission recommended legislation to repress trade
restraints [Book Paper Industry--A Preliminary Report (S. Doc. 45, 65th, 11 p., o. p.,
6/13/17), and Book Paper Industry--Final Report (S. Doc. 79, 65th, 125 p., o. p.,
8/21/17)].
Paper--Newsprint (Senate), Wartime, 1917-18.--High prices of newsprint (S. Res.
177, 64th, 4/24/16) were shown to have been partly a result of certain newsprint
association activities in restraint of trade. Department of Justice proceedings resulted
in abolishment of the association and indictment of certain manufacturers. The
Commission for several years conducted monthly reporting of production and sales
statistics, and helped provide some substantial relief for smaller publishers. in various
parts of the country. [Newsprint Paper Industry, preliminary (S. Doc. 3, 65th, 12 p.,
o. p.3/3/17); Report of the F. T. C. on the News print, Paper Industry (S. Doc. 49, 65th,
162 p., 6/13/17); and Newsprint Paper Investigation (in response to S. Res. 95, 65th,
6/27/17 ; S. Doc. 61, 65th, 8 p., o. p., 7/10/17)].

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

Paper--Newsprint (Senate).--The question investigated (S. Res. 337, 70th, 2/27/29)
was whether a monopoly. existed among newsprint manufacturers and distributors In
supplying paper to publishers of small dailies and weeklies (Newsprint Paper Industry,
S Doc. 214, 71st, 116 p., 6/30/30).
Paper--Newsprint (Attorney General).--The Commission investigated (inquiry
referred to F. T. C. 1/24/38) the manner in which certain newsprint manufacturers
complied with a consent decree entered against them (11/26/17) by the U.S. District
Court, Southern District of New York.
Peanut Prices.--See Food.
Petroleum Products.--See Distribution Methods and Costs
Petroleum and Petroleum Products, Prices (President and Congress).--At
different times the Commission has studied prices of petroleum and petroleum
products and issued reports thereon as follows: Investigation of the Price of Gasoline,
preliminary (S. Doc. 403, 64th, 15 p., o. p., 4/10/16) and Report on the Price of
Gasoline in 1915 (H. Doc. 74, 65th, 224 p., o. p., 4/11/17)--both pursuant to S. Res.
109, 63d, 6/18/1312 and S. Res. 457, 63d, 9/28/14, which reports dis-cussed high prices
and the Standard Oil companies’ division of marketing territory among themselves, the
Commission suggesting several plans for restoring effective competition ; Advance in
the Prices of Petroleum Products (H. Doc. 801, 66th, 57 p., 6/1/20) --pursuant to H.
Res. 501, 66th, 4/5/20, In which report the Com mission made constructive proposals
to conserve the oil supply ; Letter of Submittal and Summary of Report on: Gasoline
Prices in 1024 (24 p. processed, 6/4/24, and Gong. Record, 2/28/25, p.5158) --pursuant
to request of President Coolidge, 2/7/24 ; Petroleum Industry--Prices, Profits and
Competition (S. Doc. 61, 70th, 360 p., 12/12/27)--pursuant to S. Res. 31, 69th, 6/3/36;
Importation of Foreign Gasoline at Detroit, Mich. (S. Doc. 206, 72d, 3 p., o. p.,
2/27/33)--pursuant to S. Res. 274 72d, 7/16/32; and Gasolines Prices (S. Doc. 178,
73d, 22 p., 5/10/34) --pursuant to S. Res. 166, 73d, 2/2/34.
Petroleum Decree (Attorney General).--The Commission investigated (inquiry
referred to F. T. C. 4/16/36) the manner In which a consent decree entered (9/15/30)
against Standard Oil Co. of California, Inc., and others, restraining them from
monopolistic practices, was being observed, and reported (4/2/87) to the Attorney
General.
Petroleum--Foreign Ownership (Senate).--Inquiry was made (S Res. 311, 67th,
6/29/22) into acquisition of extensive oil interests In the U.S. by the Dutch-Shell
organization, and into discrimination allegedly practiced in foreign countries against
American interests (Report of the F. T. C. on Foreign Owners hip in the Petroleum
Industry. 152 p., o. p., 2/12/23).
Petroleum Pipe Lines (Senate).--Begun by the Bureau of Corporations, 13 this
inquiry (S. Res. 109, 63d, 6/18/13) showed the dominating importance of the pipe lines
of the great midcontinent oil fields and reported practices of the pipe-line companies
which were unfair to small producers (Report on Pipe-Line Trans p oration of
Petroleum, 467 p., o. p., 2/28/16), some of which practices were later remedied by the
Interstate Commerce Commission.
Petroleum--Regional Studies (Senate and F. T. C.).--Reports published were:
Pacific Coast Petroleum Industry (two parts, 4/7/21 and 11/28/21, 538 p.)--pursuant
to 5. Res. 138, 66th, 7/31/19 ; Reports of the F. T. C. on the Petroleum Industry of
Wyoming (54 p., o. p., 1/3/21)--pursuant to F. T. C. motion ; Petroleum Trade in

Wyoming and Montana (S. Doc. 233, 67th, 4 p., 7/13/22)--pursuant to F. T. C. motion,
in which report legislation to remedy existing conditions was recommended ; and
Report of the F. T. C. on Panhandle Crude Petroleum (Texas) (19 p., 2/3/28)--pursuant
to F. T. C. motion, 10/6/26 (in response to requests of producers of crude petroleum).
Potomac Electric Power Co. (Procurement Director, United States Treasury).-A study (2/29/44) of the financial history and operations of this corporation for the
years 1896-1943 was made at the request of the Director of Procurement, United States
Treasury, and the report thereon was introduced into the record in the corporation’s
electric rate case before the District of Columbia Public Utilities Commission.
Power--Electric (Senate).--This inquiry (S. Res. 329, 68th, 2/9/25) resulted in two
reports, the first of which, Electric Power Industry--Control of Power Companies (S.
Doc. 213, 69th, 272 p., 2/21/27, dealt with the organization,
See footnote 8 p. 107.
See footnote 8, p.107. Conditions in one of the mid-continent fields were
discussed by the Bureau of Corporations in Conditions in the Healdton Oil Field
(Oklahoma) (116 p., 3/15/15).
12
13

INVESTIGATIONS BY THE COMMISSION, 1915-46

115

control, and ownership of commercial electric-power companies. It called attention to
the dangerous degree to which pyramiding had been practiced in superposing a series
of holding companies over the underlying operating companies, and was influential in
bringing about the more comprehensive inquiry described under Power--Utility Corps.,
below. Supply of Electrical Equipment and Competitive Conditions (S. Doc. 46, 70th,
282 p., 1/12/28) showed, among other things, the dominating position of General
Electric Co. in the equipment field.
Power--Interstate Transmission (Senate) --Investigation (S. Res. 151, 71st,
11/8/29) was made of the quantity of electric energy transmitted across State lines and
used for development of power or light, or both (Interstate Movement of Electric
Energy, S. Doc. 238, 71st, 134 p., 12/20/30).
Power--Utility Corporations (Electric and Gas Utilities) (Senate).--This
extensive inquiry (S. Res. 83, 70th, 2/15/28 ; Public Res. 46, 73d, 6/1/34 ; and F. T.
C. Act, Sec. 6) embraced the financial set-up of electric and gas utility companies
operating in interstate commerce and of their holding companies and other companies
controlled by the holding companies. The inquiry also dealt with the utilities’ efforts
to influence public opinion with respect to municipal ownership of electric utilities.
The Commission’s reports and recommendations, focusing Congressional attention
upon certain unfair financial practices in connection with the organization of holding
companies and the sale of securities, were among the influences which brought about
enactment of such remedial legislation as the Securities Act (1933), the Public Utility
Holding Company Act (1935), the Federal Power Act (1935), and the Natural Gas Act
(1938).
Public hearings were held on all phases of the inquiry and monthly interim reports
presented hundreds of detailed studies by the Commission’s economists, attorneys,
accountants and other experts, based on examination of 29 holding companies having
$6,108,128,713 total assets ; 70 subholding companies with $5,685,463,201 total
assets ; and 278 operating companies with $7,245,106,464 total assets. The testimony,
exhibits and final reports (Utility Corporations, 8. Doc. 92, 70th) comprised 95
volumes. 14
Price Bases (F. T. C.).--More than 3,500 manufacturers representing practically
every industrial segment furnished data for this study (F. T. C. motion, 7/27/27) of
methods used for computing delivered prices on industrial products and of the actual
and potential influence of such methods on competitive markets and price levels. In
the cement industry the basing-point method 15 was found to have a tendency to
establish unhealthy uniformity of delivered prices and cross-haul or cross-freighting
to be an economic evil (Report of’ the F. T. C. on Price Bases Inquiry, Basing-Point
Formula and Cement Prices, 218 p., 3/26/32). Illustrating the use in a heavy
commodity industry of both a modified zone-price system and a uniform deliveredprice system, the Commission examined price schedules of the more important
manufacturers of range boilers, 1932-36, disclosing that the industry operated under
a zone-price formula, both before and after adoption of its N. R A. code (Study of
Zone-Price Formula in Range Boiler Industry, 5 p., processed, 3/80/36, a summary
based on the complete report which was submitted to Congress but not printed).
Price Deflation (President).--To an inquiry (3/21/21) of President Harding, the
Commission made prompt reply (undated) presenting its views of the causes of a
disproportional decline of agricultural prices compared with consumers’ prices (Letter
of the F. T. C. to the President of’ the U. S., 8 p., o. p.).

Priorities (W. P. B.), Wartime, 1941-45.--Pursuant to Executive orders (January
1942) , W. P. B. designated the Federal Trade Commission as an agency, to conduct
investigations of basic industries to determine the extent and degree to which they
were complying with w. P. B. orders relative to the allocation of sup ply and priority
of delivery of war materials. F. T. C. priorities investigations are listed herein under
the headings, Aluminum, Foundries Using; Antifreeze Solutions, Manufacturers of ;
Capital Equipment; Chromium, Processors of; Commercial Cooking and Food and
Plate Warming Equipment, Manufacturers of; Contractors, Prime Forward Buying
Practices of; Copper Base Alloy Ingot Makers; Copper, Primary Fabricators of;
Costume Jewelry, Manufacturers of; Electric Lamps, Manufacturers of; Fruit Growers
and Shippers; Furnaces, Hot Air, Household; Fuse Manufacturers; Glycerin, Users of;
Insignia ManufacFinal reports were published in 1935 ; a general index in 1937. Some of the
volumes are out of print. For report titles, see F. T. C. Annual Report, 1941, p.221 ;
and for lists of companies investigated, see F. T. C. Annual Reports, 1935, p.21, and
1930, p.36.
15 Basing-point systems are also discussed in the published reports listed under
“Cement,” “Steel Code,” and “Steel Sheet Piling” herein.
14

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

turers; Jewel Bearings, Consumers of; Metal-working Machines, Invoicing and
Distribution of; Nickel, Processors of; Paint, Varnish and Lacquer, Manufacturers of;
Quinine, Manufacturers and Wholesalers of; Silverware, Manufacturers of; Silverware
Manufacturers and Silver Suppliers; Steel Industry; Textile Mills, Cotton; and Tin,
Consumers of. The report on each of these investigations was made directly to W. P.
B
Production Cost Accounting (F. T. C.), Wartime, 1941-42.--This investigation
covered production cost accounting methods and systems used in the bread baking,
paperboard, steel and other industries during wartime.
Profiteering (Senate), Wartime, 1917-18.--Current conditions of profiteering (S.
Res. 255, 65th, 6/10/18) as disclosed by various Commission investigations were
reported In Profiteering (S. Doc. 248, 65th, 20 p., 6/29/18).
Quinine, Manufacturers and wholesalers of (W. P. B.), Wartime, 1942-43.--At
the instance of the War Production Board, Investigation was made to determine
whether requirements of its Conservation Order No. m-131-a, relating to quinine and
other drugs extracted from cinchona bark, were being complied with.
Radio (House).--A comprehensive investigation of the radio indus try (H. Res. 548,
67th, 3/4/23; Report of the F. T. C. on the Radio Industry, 347 p., 12/1/23) contributed
materially to enactment of the Radio Act of 1927 and the succeeding Federal
Communications Act of 1934. The investigation was followed by Com-mission and
Department of Justice proceedings on monopoly charges which culminated in a
consent decree (11/2/32 ; amended 11/2/35).
Rags, Woolen.--See Textiles.
Raisin Combination.--See Food.
Range Boilers.--See Price Bases.
Resale Price Maintenance (F. T. C.).--The question whether a manufacturer of
standard articles, identified by trade-mark or trade practice, should be permitted to fix
by contract the price at which purchasers should resell them, led to the first inquiry,
resulting in a report, Resale Price Maintenance (H. Doc. 1480, 65th, 3 p., o. p.,
12/2/18). Other reports were : A Report on Resale Price Maintenance (H. Doc. 145,
66th, 3 p., 6/30/19, and Resale Price Maintenance (F.T.C. motion, 7/25/27 ; reports,
Part I, H. Doc. 546, 70th, 141 p., o. p., 1/30/29, and Part II, 215 p., 6/22/31).
Resale Price Maintenance (F. T. C.).--The Report of the F T. C. on Resale Price
Maintenance (F. T. C. Res., 4/25/39) was submitted to Congress 12/13/45. The inquiry
developed facts concerning the programs of trade organizations interested in the
extension and enforcement of minimum resale price maintenance contracts, and the
effects of the operation of such contracts upon consumer prices and upon sales
volumes of commodities in both the price-maintained and, non-price-maintained
categories.
Rubber Tires and Tubes.--See Distribution Methods and Costs.
Salaries (Senate).--The Commission investigated (S. Res. 75, 73rd, 5/29/33) salaries
of executives and directors of corporations (other than public utilities) engaged in
interstate commerce, such corporations having more than $1,000,000 capital and assets
and having their securities listed on the New York stock or curb exchanges. The
Report of the F. T. C. on Compensation of Officers and Directors of Certain
Corporations (15 p., processed, 2/26/34) explained the results of the inquiry. 16 The
facts developed focused the attention of Congress on the necessity of requiring listed
corporations to report their salaries.
Silverware Manufacturers (W. P. B.), Wartime, 1942-43.--Silverware

manufacturers were investigated at the request of the War Production Board to determine the extent to which they had compiled with the copper orders, that is, w. P. B
General Preference Order No. m-9-a, Supplemental Order No. m-9-b, and
Conservation Order m-9-c, all as amended.
Silver ware Manufacturers and Silver Suppliers (W. P. B.), Wartime, 1942-43.-The activities of silverware manufacturers and silver suppliers under W. P. B.
Conservation and Limitation Orders m-9-a, b, and e, m-100 and L-140 were
investigated and reported on at the request of the War Production Board.
Sisal Hemp (Senate).--The Commission assisted the Senate Committee on
Agriculture and Forestry in an inquiry (S. Res. 170, 64th, 4/17/16) and advised how
certain quantities of hemp promised by the Mexican sisal trust, might be fairly
distributed among American distributors of binder twine (Mexican Sisal Hemp, S. Doc.
440, 64th, 8 p., o. p., 5/9/16). The Commission’s distribution plan was adopted.
Southern Livestock Prices.--See Food.
16

The salary lists do not appear in the report but are available for inspection.

INVESTIGATIONS BY THE COMMISSION, 1915,46

117

Steel Code and Steel Code as Amended (Senate and President).--The
Commission investigated (S. Res. 166, 73d, 2/2/34) price fixing, price increases, and
other matters (Practices of the Steel Industry Under the Code, S. Doc. 159, 73rd, 79
p., 8/19/34) and the Commission and N. R A. studied the effect of the multiple basingpoint system under the amended code (Report of the F. T. o. to the President in
Response to Executive Order of May 30, 1934, With Respect to the Basing-Point
System in the Steel Industry, 125 p., 11/30/34) 17 The Commission recommended
important code revisions.
Steel Companies, Proposed Merger (Senate).--An inquiry (S. Res. 286, 67th,
5/12/22) into a proposed merger of Bethlehem Steel Corp. and Lackawanna Steel Co.,
and of Midvale Steel & Ordnance Co., Republic Iron & Steel Co., and Inland Steel
Co., resulted in a two-volume report, Merger of Steel and Iron Companies (S. Doc.
208, 67th, 11 p., o. p., 6/5/22 and 9/7/22).
Steel Costs and Profits.--See Wartime Cost Findings, 1917-18.
Steel Coats and Profits (O. P. A.), Wartime, 1942-43.--A report on the Commission ‘ s survey of costs, prices and profits in the steel industry. begun in April 1942 at
the request of O. P. A., was made to that agency. The inquiry covered 29 important
steel-producing companies.
Steel Industry (O. P.M.), Wartime, 1941-42.--This investigation covered practically every steel mill in the country and was conducted for the purpose of
determining the manner in which the priorities and orders promulgated by the Office
of Production Management were being observed, I. e., the technique used in the steel
industry in meeting the requirements of O. P. M. (later the War Production Board)
orders and forms controlling the distribution of pig iron, iron and steel, iron and steel
alloys, and iron and steel scrap.
Steel Sheet Piling--Collusive Bidding (President).--Steel sheet piling prices on
certain Government contracts in New York, North Carolina, and Florida were
investigated (inquiry referred to F. T. C. 11/20/35). The F. T. C. Report to the
President on Steel Sheet Piling (42 p., processed, 6/10/36) demonstrated the existence
of collusive bidding because of a continued adherence to the basing-point system 18
and provisions of the steel industry’s code.
Stock Dividends (Senate).--The Senate requested (S. Res. 304, 69th, 12/22/26) the
names and capitalizations of corporations which had issued stock dividends, and the
amounts thereof, since the Supreme Court decision (3/8/20) holding that such
dividends were not taxable. The same information for an equal period prior to the
decision was also requested. The Commission submitted a list of 10,245 corporations,
pointing out that declaration of stock dividends at the rate prevailing did not appear
to be a result of controlling necessity and seemed questionable as a business policy
(Stock Dividends, S. Doc. 26, 70th, 273 p., 12/5/27).
Sugar.--See Food.
Taxation and Tax--Exempt Income.--See National Wealth and Income.
Temporary National Economic Committee, Studies of the F. T. C.--See F. T. C.
Annual Report, 1941, p.218, for titles.
Textile Mills, Cotton (W. P. B.), Wartime, 1943-44.--For the War Production
Board the Commission conducted a compliance investigation of manufacturers of
cotton yarns, cordage and twine to ascertain whether they were in violation of
Priorities Regulation 1, as amended, by their failure to fill higher rated orders at the
time they filled louver rated orders
Textiles (President).--President Roosevelt (Executive order of 9/26/34) directed an

inquiry into the textile industry’s labor costs, profits, and investment structure to
determine whether increased wages and reduced working hours could be sustained
under prevailing economic conditions. Reports covering the cotton, woolen and
worsted, silk and rayon, and thread, cordage and twine industries, were : Report of the
F. T. C. on Textile Industries, Parts I to VI, 12/31/34 to 6/20/35, 174 p. (Part VI,
financial tabulations, processed, 42 p., o. p.); Report of’ the F. T. C. on the Textile
Industries in 1933 and 1034, Parts I to IV, 8/1/35 to 12/5/35, 129 p.; Parts II and III,
o. p. (Part IV, processed, 21 P ; accompanying tables, processed, 72 p., o. p.); Cotton
Spinning Companies Grouped by Types of Yarn Manufactured During 1933 and 1934,
1/31/36, 20 p., processed, o. p.; Cotton Weaving Companies Grouped by Types of
Woven Goods Manu17 As of the same date the N. R A. published its Report of the National Recovery
Administration on the Operation of the Basing-Point System in the Iron and Steel
Industry (175 p., processed). The basing-point system is also discussed in published
reports listed under “Cement” and “Price-Bases’ herein.
18 See footnote 15, 15 p. 115

118

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1946

factured During 1933 and 1934, 3/24/36, 48 p., processed, o. p.; Textile Industries
manufactured in the First Half of 1935, Parts I to III, 5/22/36 to 8/22/36, 119 p.,
processed; Textile Industries in the Last Half of 1935, Parts I to III, 11/20/36 to
1/6/37,155 p., processed; and Textile Industries in the First Half of 1936, Parts I to III,
1/21/37. to 2/11/37, 163 p., processed.
Textiles--Combed Cotton Yarn s -- High prices of combed cotton yarns led to this
inquiry (H. Res. 451, 66th, 4/5/20) which disclosed that while for several years profits
and prices had advanced, they declined sharply late in 1920 (Report of the F.T.C. On
Combed Cotton Yarn’s, 94 p., o. p., 4/14/21).
Textiles--Cotton Growing Corp oration.--See Foreign Trade.
Textiles--Cotton Merchandising (Senate).--Investigating abuses in handling
consigned cotton (S. Res. 252, 68th, 6/7/24), ‘the Commission made recommendations
designed to correct or alley late existing conditions (Cotton Merchandising Practices,
5. Doc. 194, 68th, 38 p., 1/20/25).
Textiles--Cotton Trade, (Senate)--Investigation (S. Res. 262; 67th, 3/29/22)
involved a decline in cotton prices, 1920-22, as reported In Preliminary Report of the
F. T. C. on the “Cotton Trade (S. Doc. 311, 67th, 28 p., o. p., 2/26/23). After a second
inquiry (S. Res. 429, 67th,, 1/31/28), the Commission recommended certain reforms
In trading practices and particularly in permitting Southern delivery of cotton on New
York futures contracts (The Cotton Trade, incl. testimony, 5. Doc. 100, 68th, 2 vols.,
510 p., o. p., 4/28/24). A subsequent Senate bill (S. 4411, 70th, 5/18/28) provided for
Southern warehouse delivery, but, before any law was enacted, the New York Cotton
Exchange adopted Southern delivery on New York futures contracts (11/16/28 and
2/26/30) in accordance with the Commission’s recommendations.
Textiles--Woolen Rag Trade (F. T. C.), Wartime, 1917-18.--The Report on the
Woolen “Rag ,Trade (90 p., o. p., 6/30/19) contains information gathered during the
World War, 1917-18, at the request of the, War Industries Board, for its use in
regulating the prices of woolen rags employed in the manufacture of clothing.
Tin Consumers (W. P. B.), Wartime, 1942-43.--The principal consumers of tin
were investigated at the in stance of the War Production Board to determine the degree
of their compliance with Conservation Order m-43-a, as amended, and other orders and
regulations issued by the Director of the Division of industry Operation, controlling

the inventories, distribution, and use of the tin supply in the U.S.
Tobacco (Senate).--Inquiry (S. Res. 329, 68th, 2/9/25) into activities of two wellknown companies. disclosed that alleged illegal agreements or conspiracies did not
appear to exist (The American Tobacco Co. and the, Imperial Tobacco Co., 5. Doc. 34,
69th, 129 p., o. p., 12/23/25).
Tobacco Marketing-Leaf (F. T. C.).--Although representative tobacco farmers in
1929 alleged existence of territorial and price agreements among larger manufacturers
to control cured leaf tobacco prices, the Commission found no evidence of price
agreements and recommended production curtailment and improvement of marketing
processes and cooperative relations (Report on Marketing of Leaf Tobacco in the Flue
-Cured Districts of the States of North Carolina and Georgia, 54 p., processed,
5/23/31):
Tobacco Prices (Congress).--Inquiries with respect to a decline of loose-leaf
tobacco prices following the 1919 harvest (H. Res. 533, 66th, 6/3/20) and low tobacco
prices as compared with high prices of manufactured tobacco products (S. Res. 129,
67th, 8/9/21) resulted in the Commission recommending modification of the 1911
decree (dissolving the old tobacco trust) to prohibit permanently the use of common
purchasing agencies by certain companies and to bar their purchasing tobacco under
any but their own names (Report of the F. T. C. on the Tobacco Industry, 162 p., o. p.,
12/11/20, and Prices of Tobacco Products, S. Doc. 121, 67th, 109 p., o. p., 1/17/22).
Trade and Tariffs ‘in South America (President).--Growing out of the First PanAmerican Financial Conference held in Washington, May 24-29, 1915, this inquiry
(referred to F. T. C. 7/22/15) was for the purpose of furnishing necessary information
to the American branch of the International High Commission appointed as a result of
the conference. Customs administration and tariff policy were among subjects
discussed in the Report on Trade and Tariffs in Brazil, Uruguay, Argentina, Chile,
Bolivia, and Peru (246 p., o. p., 6/30116).
Twine.--See Sisal Hemp and Textiles.
Utilities.--See Power.
War Material Contracts (House), Wartime, 1941-42.--At the request of the House
Committee on Naval Affairs, the Commission assigned economic and legal

INVESTIGATIONS BY THE COMMISSION, 1915-46

119

examiners to assist in the Committee’s inquiry into progress of the national defense
program (H. Res. 162, 77th, 4/2/41). The Commission’s examiners were active in field
investigations covering aircraft manufacturers’ cost records and operation, naval air
station construction, materials purchased for use on Government contracts, and
industry expansion financing programs.
Wartime Cost Finding (President), 1917-18.--President Wilson directed the
Commission (7/25/17) to find the costs of production of numerous raw materials and
manufactured products. The inquiry resulted in approximately 370 wartime cost
investigations. At later dates reports on a few of them were published,19 including :
Cost Reports of the F. T. C.--Copper (26 p., o. p., 6/30/19); Report of the F. T. C. on
Wartime Costs and Profits of Southern Pine Lumber Companies (94 p., o. p., 5/1/22);
and Report of the F. T. C. on Wartime Profits and Costs of the Steel Industry (138 p.,
2/18/25). The unpublished reports 20 cover a wide variety of subjects. On the basis of
the costs as found, prices were fixed, or controlled in various degrees, by Government
agencies such as the War and Navy Departments, War Industries Board, Price Fixing
Committee, Fuel Administration, Food Administration, and Department of
Agriculture. The Commission also conducted cost inquiries for the Interior
Department, Tariff Commission, Post Office Department, Railroad Administration,
and other Government departments or agencies. It is estimated that the inquiries helped
to save the country many billions of dollars by checking unjustifiable price advances.
Wartime Inquiries, 1917-18, continued.--Further wartime inquiries of this period
are described herein under the headings : Coal, Coal Reports--Cost of Production, Cost
of Living, Flags, Food, Farm Implements, Independent Harvester Co., Leather and
Shoes, Paper--Book, Paper--Newsprint, Profiteering, and Textiles-Woolen Rag Trade.
Wartime Inquiries, 1941-45.--To aid in the 1941-45 war program, F. T. C. was
called upon by other Government departments, particularly the war agencies, to use
its investigative, legal, accounting, statistical and other services in conducting
investigations. It made cost, price and profit studies; compiled industrial corporation
financial data; investigated compliance by basic industries with W. P. B. priority
orders; and studied methods and costs of distributing important commodities. The
1941-45 wartime investigations are herein listed under the headings : Advertising as
a Factor in Distribution; Cigarette Shortage; Distribution Methods and Costs; Fertilizer
and Related Products; Food-Biscuits and Crackers; Food-Bread Baking; Food--Fish;
Food--Flour Milling; Household Furniture; Industrial Corporation Reports; MetalWorking Machines; Paperboard; Priorities; Production Cost Accounting; Steel Costs
and Profits; and War Material Contracts.
See footnote 10, p. 108.
Approximately 260 of the wartime cost inquiries are listed in the F. T. C. Annual
Reports, 1918, pp. 29-30, and 1919, pp. 38-42 and in World War Activities of the F.
T. C., 1917-18 (69 p., processed. 7/15/40).
19
20

INDEX
[Index does not include names or items in alphabetical lists, tables, or appendixes for names of
export trade associations, see p. 66; for appropriation items, see p.73; and for titles and
summaries of investigations, 1915-46, see p.103.].
Page
Acme Asbestos Covering & Flooring Co
47
Administrative Procedure Act
6
Advertising, false and misleading:
Analysis of
61, 63
Complaints alleging
29
Food drugs, devices, cosmetics
23, 27, 61
Injunctive proceedings involving
23
Mail-order
62
Newspaper and periodical
61
Orders directed against
31
Radio commercial
62
Stipulations relating to
8, 28, 63
Survey of
61
Agricultural Marketing Service, The
65
Allen, Charles R., and others
36
Allied Paper Mills, and others
47
American Association of Law Book Publishers
47
American Bridge Co
48
American Drug Corp
47
American Steel & Wire Co. of New Jersey
48
Anti-Co-Rode Laboratories
32
A. P. W. Paper Co
44
Arden, Elizabeth, Inc
44
Artificial limb industry, trade practice rules for
8, 11, 52
Associated Laboratories, Inc
44
Ayres, William A., Chairman, Federal Trade Commission
6, 9, 10, 45
Bennettsville Mattress Factory
34
Blevins, James V., and others
36
Boncquet Laboratories
31
Brewer, Nelson C., and others
47
Buchsbaum &.Co., S
47
Bureau of Animal Industry, The
65
Bureau of the Budget, The
2
California Lima Bean Growers Association
36
Carlay Co., The
45
Carnegie-Illinois Steel Corp
48
Cement Institute, The, and others
47
Charles of the Ritz Corp
32
Clayton Act:
Complaints issued under
28, 30
Contempt proceedings under
23
Orders issued under
35
Procedure under
22, 23
References to
1, 9, 12, 22, 23, 25, 26, 28, 30, 31, 35, 36, 37, 44, 46, 47, 48
Section 2 (see also Robinson-Patman Act)
1, 9, 25, 30, 35, 36, 45, 46, 47, 48
Section 3
1, 30, 37, 44, 46
Section 7
1, 12, 26, 30
Section 8
1
Complaints, formal
8, 28, 29
Congress of the United States, The
2, 3, 5,9, 10,11,16, 20
Construction equipment distributing industry, trade practice rules for
8, 52, 53
Consumers Home Equipment Co
33
Cost of producing and distributing fish on Pacific coast, investigation of
9, 13, 17
Court cases:
Decided
8, 43, 44
Pending
47

Petitions to review

8, 43, 44
121

122

INDEX

Page
Davis, Edwin L., Commissioner
6, 9,10, 45
Davis & Sons, A., Inc
34
Del Mar Canning Co
36
Department of the Interior, The
17
Department of Justice, The
11, 20
Dip Net Smelt Fisherman’s Association
31
Eastman Kodak Co
47
Export Trade Act (Webb-Pomerene Law) :
Export associations organized under
8, 66
Investigations under
68
Provisions of
66
References to
1, 8, 9, 22, 28, 66, 68, 70
Report to Senate Committee on operation of
70
Federal Power Commission Act of 1934
9
Federal Trade Commission:
Acts administered by
1, 22
Administrative divisions
6
Appropriations, expenditures, and fiscal affairs
73
Cases in Federal courts
8, 43
Chairman
6, 9, 10
Chief economist
5
Chief examiner
3, 4, 21
Chief Radio and Periodical Division
3, 21
Chief trial counsel
3, 21
Chief trial examiner
5, 22
Commissioners
6, 9, 10
Decisions (printed volumes)
11
Director, Division of Accounts, Statistics, and Economic Reports
5
Director, Office of Legal Investigations
3
Director, Office of Trade Practice Conferences and Wool Act Administration
4
Director, Medical Advisory Division
65
Divisions assigned to Commissioners
6, 10
Division of Stipulations
4, 5
Duties
19
Executive office
6
Foreign-trade work
66, 71
General counsel
3
Investigations, general
1, 5, 9, 13
Legal activities
1, 8, 21
Legal investigation
3, 21, 24
Medical Advisory Division
5, 27, 65
Office of General Counsel
3, 6
Office of Legal Investigations
3, 4, 6
Office of Trade Practice Conferences and Wool Act Administration
4, 6
Organized
1
Personnel
10
Procedure, informal
21
Procedure upon formal complaints
22
Proceedings resumed after close of war
8
Publication and Procurement Division
6
Publications
10
Radio and Periodical Division
3, 21, 61
Recommendations to Congress
12
Reorganization plan
2
Rules of practice
3, 6, 11, 22, 51,85
Secretary
6, 10
Statement of policy
28, 101
Stipulations accepted by
8, 28
Trade Practice Conference Division
4
Trial Examiners Division
5, 6
Wool Administration and Inspection Division
4

Federal Trade Commission Act:
Amended
Approved
Civil penalties under
Complaints issued under

1
1
23
8, 28, 29

INDEX

123

Federal Trade Commission Act--Continued
Page
Orders issued under
8, 31
Procedure under
21, 22, 23
References to
1, 5, 9, 10, 12, 18, 22, 23, 25, 27, 28, 30, 31, 44, 73
Section 5
27, 44
Section 6
1, 5, 10
Section 9
73
Section 12
23, 27
Section 15
23
Text of
76
Types of unfair practices in violation of
37
Wheeler-Lea amendment to
12, 23, 27
Ferguson, Garland S., Commissioner
6, 9, 10
Ferro Enamel Corp., and others
31, 35
Firth, Lemuel, and others
45
Food and Drug Administration, the
65
Freer Robert E. Commissioner
6, 9, 10
Frigid Chemical Corp
33
General Seafoods Corp
47
Globe Trading Co., Inc
34
Gulf Oil Corp
45
Haas-Guthman Co
36
Hamlin Co., E. H
36
Hastings Manufacturing Co
45
Herzog & Co., Jack
45, 47
Hill & Co., William R
36
Hovden Food Products Corp
36
Howe, Phil, and others
45
Independent offices appropriation acts
2, 73
International phosphate cartels, investigation of
9, 11, 13
Investigations, general :
Cost of producing and distributing fish on Pacific coast
9, 13, 17
International phosphate cartels
9, 11, 13
Resale price maintenance
9, 11, 13, 18
Wholesale baking industry
11, 13, 15, 17
Jarrell Co., J. T
36
Koret, Inc
47
Lanham Trade-Mark Act
1, 7
Manhattan Brewing Co
45
Mason, Lo well B., Commissioner
6, 9, 10, 12, 35
Milk & Ice Cream Can Institute, the
45
Miller-Tydings Act
18, 20
Morton Salt Co
47
Moss, Samuel H., Inc
45
National Bureau of Standards, the
65
National Crepe Paper Association of America
48
Natural Gas Act of 1938
9
Navy Department, the
8
Northern Kentucky Independent Food Dealers’ Association Inc and others
31
Office of the Coordinator of Fisheries, the
17, 18
Office of Defense Transportation, the
15
Office of Economic Stabilization, the
15, 17
Office of Price Administration, the
15
Orders to cease and desist
8, 31
Ox’O-Gas Co
48
Packers and Stockyards Act, the
9
Pankey & Co., Paul
36

Parker Pen Co
Parrott & Co
Peggy Shops, Inc
Phillips Sales Co., Inc
Phosphate Export Association, investigation of
Piston ring industry, trade-practice rules for
Post Office Department, the
President Truman
President of the United States the
Price-fixing and restraint-of-trade cases

48
36
34
36
8, 68
8, 52, 53
63
2
2, 5, 7,16, 58
25, 29, 31

124

INDEX

Progress Tailoring Co., and others
Public Utilities Holding Company Act of 1935
Resale price maintenance, investigation of
Rigid Steel Conduit Association
Robinson-Patman Act (see also Clayton Act, sec. 2)

Page
46
9
9, 11, 13,18
48
1, 9,
22, 25, 26, 30, 35, 36, 44, 45, 46, 47, 48
36
46
48
36
9
70
36
18, 53
46
36
36
46
32
35
35, 36
8, 28, 63
9
32
8, 23, 43, 44, 45, 46
12
48
46

Rubenstein, Carl, and others
Savoy Manufacturing Co
Scotch Woolen Mills
Sebastian-Stuart Fish Co.
Securities Act of 1933, the
Senate Small Business Committee, the
Shelton Brokerage Co., G.B
Sherman Act, the
Siegel Co., Jacob
South Coast Fisheries, Inc
Southern California Fish Corp
Southgate Brokerage Co
Standard Chemical Manufacturing Co
Standard Oil Co. (Indiana)
Stetson Co., John B
Stipulations to cease and desist
Stock Exchange Act of 1934, the
Stone Manufacturing Co
Supreme Court of the United States, the
Temporary National Economic Committee, the
Tennessee Coal, Iron & Railroad Co
Thomson Manufacturing Co., Judson
Trade practices rules:
Administration of
54
Approved during fiscal year
8, 52
Group land Group II rules explained
52
Informative labeling provisions of
56
Procedure for establishing
4, 51
Purposes of
51
References to
2, 4, 8, 51, 52, 53, 54, 55, 56, 57
Trade practice conferences
8, 51, 52, 54
Types of practices covered by United States circuit courts of appeals
8, 23, 43, 44
United States district courts
23, 44
United States Maltsters Association
47
Unite States Public Health Service, the
65
United States Steel Corp
48
Vacu-Matic Carburetor Co
48
Waddill Co., C. C., Inc
36
War Department, the
8
Washington Fish & Oyster Co., Inc.
36
Waterman Co., L. E
47
Webb-Pomerene law. See under Export Trade Act.
Weiss David M
47, 48
Wheeler-Lea amendment:
Approved
23
Injunctive procedure and penalties under
23, 24
Investigations under
27
Provisions contained
23
References to
12, 23, 27
Wholesale baking industry, investigation of
9, 11, 13, 15, 17
Wholesale confectionery industry (Philadelphia trade area), trade-practice
rules for
8, 52, 54
Wool Products Labeling Act:
Administration of
58
Approved
58
Civil penalties under
23
Complaints issued under
28, 29

Effective date of
Enforcement of
Investigations under

58
59
27

INDEX

125

Wool Products Labeling Act--Continued
Page
Orders issued under
34
Procedure under
22, 23
Provisions of
58
References to
1, 4, 5, 8,11, 22, 23, 27, 28, 29, 34, 58, 59
Section 2
58
Section 9
59
Section 14
58
W. W. in the Western Hemisphere, Inc., and others
33