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ANNUAL REPORT
OF THE

FEDERAL

TRADE COMMISSION
FOR THE

FISCAL YEAR ENDED JUNE 30

1948

UNITED STATES
GOVERNMENT PRINTING OFFICE
WASHINGTON : 1949

FEDERAL TRADE COMMISSION
ROBERT E. FREER, Chairman
GARLAND S. FERGUSON
EWIN L. DAVIS
WILLIAM A. AYRES
LOWELL B MASON
OTIS B. JOHNSON, Secretary
FEDERAL TRADE COMMISSIONERS--1915-48
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 S 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. 31, 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, 1932.
Feb.25, 1925-Oct. 7,1933.
Aug. 2, 1926-Jan. 15, 1929.
Feb.11, 1927-Jan. 23, 1933.
Nov.14, 1927.
Feb. 1, 1929-Aug. 28,1945.
May 26, 1933.
June 26, 1933-Sept. 25, 1933.
Oct.10, 1933-June 30, 1934.
Oct.27, 1933-June 30, 1934.
Aug.23, 1934.
Aug.27, 1935.
Oct.15, 1945.

EXECUTIVE OFFICES OF THE COMMISSION
Pennsylvania Avenue at Sixth Street, Washington 25, D. C.
BRANCH OFFICES
Room 501, 45 Broadway, New
133 Federal Office Building, Civic
York 6.
Center, San Francisco 2.
1118 New Post Office Building,
447 Federal Office Building,
433 West Van Buren Street,
Seattle 4.
Chicago 7.
1031 Federal Office Building, 600 South Street, New Orleans -12.

II

LETTER OF SUBMITTAL
To the Congress of the United States :
I have the honor to submit herewith the Thirty-fourth Annual Report of the Federal
Trade Commission for the fiscal year ended June 30, 1948. A limited number of
Copies of the report is being printed by the Federal Trade Commission.
By direction of the Commission :
ROBERT E. FREER, Chairman.
III

CONTENTS
INTRODUCTION
Page
1
3
4
6
8
8
9
11
12

Acts administered by Commission
Industry-wide elimination of unlawful practices
Staff organization
Summary of legal activities
General investigations
The Commissioners and their duties
Publications of the Commission
Recommendations to Congress
Minority recommendations to Congress
PART I. GENERAL INVESTIGATIONS
The merger movement--a summary report
International steel cartels
International electrical equipment cartel
Manufacture and distribution of farm implements
Industrial financial reports

16
22
23
25
27

PART II. GENERAL LEGAL WORK
Description of procedure
Procedure upon applications for complaint
Procedure upon formal complaints
Provisions of Wheeler-Lea amendment
Legal investigations
Survey of radio and periodical advertising
Disposition of cases by stipulation
Formal complaints
Orders to cease and desist
Cases in Federal courts
Tabular summary of legal and court Work

29
29
30
32
32
37
40
41
43
48
50

PART III. SETTLEMENT OF CASES BY STIPULATION
Corrective action through informal conferences

53

PART IV. TRADE PRACTICE CONFERENCES
Establishment and administration of trade practice rules for industries
Group I and Group II rules explained
Conference and rule making activities during year
Pending trade practice proceedings
Administration of rules
Types of practices covered in promulgated rules
Informative labeling

55
56
56
58
58
59
62

V

VI

CONTENTS
PART V. WOOL PRODUCTS LABELING ACT

Informative labeling for protection of industry and the public

Page
63

PART VI. MEDICAL AND SCIENTIFIC OPINIONS
Data used in cases relating to food, drugs, devices, and cosmetics

66

PART VII. FOREIGN TRADE WORK
Export Trade Act
Associations operating under the act
New associations
Exports in 1947
Inquiries and recommendations
Trust laws and trade regulations abroad

67
67
69
69
69
70

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, 1915-48

75
75
76
78

APPENDIXES
Federal Trade Commission Act
Titles of other acts administered by the Commission
Types of unfair methods and practices
Rules of practice
Statement of policy
Investigations, 1915-48
Index

79
87
87
95
113
118
137

ANNUAL REPORT
OF THE

FEDERAL TRADE COMMISSION
FOR THE

FISCAL YEAR ENDED JUNE 30, 1948
INTRODUCTION
ACTS ADMINISTERED BY THE COMMISSION
The Federal Trade Commission herewith submits its report for the fiscal year July
1, 1947, to June 30, 1948.
The Federal Trade Commission is one of the oldest administrative agencies of the
Federal Government. It was organized March -16, 1915 ,pursuant to the Federal Trade
Commission Act, which was approved September 26, 1914. A bipartisan agency, it
consists of five members, who are appointed for 7-year terms by the President with the
advice and consent of the Senate. Not more than three of them may be members of the
same political party.
Under the terms of its organic act, as well as four other statutes committed to its
jurisdiction, the Commission devotes itself to activities designed to foster the
successful operation, in the public interest, of the American economic system of free
competitive enterprise. To this end, it seeks to prevent the use in interstate commerce
of “unfair methods of competition and unfair or deceptive acts or practices.” In
addition, it administers other statutes passed by the Congress to supplement the
antitrust laws and to provide specific protection to the consuming public. Its duties fall
into two general categories :
(1) legal activities in the enforcement of the laws it administers and
(2) general investigations of economic conditions in interstate and foreign
commerce.
The Federal Trade Commission was established in response to the need
demonstrated in the early 1900's for an administrative body to deal with trade practices
on a continuing and preventive basis. Passage in 19-14 of the Federal Trade
Commission Act, as well as the Clayton Antitrust Act, certain sections of which are
administered by the Commission, was intended to provide an effective supplemental
means of carrying out the public policy expressed in the Sherman Antitrust Act of
1890. It was the purpose of these laws to stop monopolistic and other unfair practices
in their incipiency.
As originally enacted, the Federal Trade Commission Act declared “unfair methods
of to be unlawful and directed the Commission to take action against persons or
corporations believed to be engaged in such practices. The action to be taken by the
Commission was prophylactic in nature, not punitive.

1

2

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

On the basis of the general legislative standard laid down in the act, the exact
meaning and application of which must be arrived at by what has been described as
“the gradual process of judicial inclusion and exclusion,” the Commission has acted
in the public interest to prohibit practices Which, in the words of the Supreme Court,
were “regarded as opposed to good morals because characterized by deception bad
faith, fraud, or oppression, or as against public policy because of their dangerous
tendency unduly to hinder competition or create monopoly.”
Twenty-three years after its passage, the Federal Trade Commission Act was
amended on March 21, 1938, when the Wheeler-Lea Act was a p proved, making
unlawful not only “unfair methods of competition” but also “unfair or deceptive acts
or practices in commerce.” One of the principal purposes of the amendment was make
it unnecessary for the Commission to offer evidence to establish injury to an actual or
potential competitor. Injury to the public was now sufficient to warrant Commission
action.
Under other provisions of the Wheeler-Lea Act, the Commission’s jurisdiction over
false advertising of foods, drugs, cosmetics, and curative devices was strengthened and
broadened. The general effect of the amendment was to give a greater measure of
protection to the consuming public and to make more effective the orders issued by the
Commission.
The Commission is also empowered, under its basic statute, to make general
economic investigations, to submit the resulting reports to the Congress or to the
President, and to make recommendations for remedial legislation where needed.
Publication of such reports has resulted in voluntary changes in the conduct of
business in many industries to correct uneconomic or otherwise harmful trade practices
spotlighted by the Commission’s investigation.
Other statutes, besides the Federal Trade Commission Act, administered in whole
or in part by the Commission are the Clayton Act, the Webb-Pomerene Export Trade
Act, the Wool Products Labeling Act, and certain sections of the Lanham Trade-Mark
Act In the administration of these acts, the principal responsibilities of the Commission
are:
(l) To promote free and fair competition in interstate commerce in the interest of the
public through prevention of price-fixing agreements, boycotts, combinations in
restraint of trade, other unfair methods of competition, and unfair and deceptive acts
and practices (Federal Trade Commission Act sec. 5) .
(2) To safeguard the consuming public by preventing the dissemination of false or
deceptive advertisements of foods, drugs, cosmetics , and devices (Federal Trade
Commission Act, specs. 12 to 15).
(3) To prevent certain unlawful price and other discriminations, exclusive-dealing
and tying contracts and arrangements, acquisitions of the stock of competitors, and
interlocking directorate s (Clayton Act, secs. 2,3,7, and 8).
(4) To protect producers, manufacturers, distributors, and consumers from the
unrevealed presence of substitutes and mixtures in manufactured wool products (Wool
Products Labeling Act of 1939).

ELIMINATION OF UNLAWFUL PRACTICES

3

(5) To supervise the registration and operation of associations of American exporters
engaged solely in export trade (Export Trade Act) .
(6) To apply for cancellation of registered trade-marks which are deceptive,
immoral, or scandalous, or which have been obtained fraudulently, or Which are in
violation of other provisions of the Lanham Trade-Mark Act (Lanham Trade-Mark Act
of 1946).
(7) To gather and make available to the President, the Congress, and the public,
factual data concerning economic and business conditions as a basis for remedial
legislation where needed, and for the guidance and protection of the public (Federal
Trade Commission Act, sec. 6).
INDUSTRY-WIDE ELIMINATION OF UNLAWFUL PRACTICES
For many years the Commission has sought to encourage voluntary compliance with
the laws which it administers. It has utilized individual stipulation-agreements and
conferences with whole industries and has otherwise cooperated with businessmen to
inform and guide them with respect to the scope and meaning of the laws within its
jurisdiction. A cooperative procedure similar to trade-practice conferences was first
used by the Commission in about 1919; a Trade Practice Conference Division was
established in 1926; and the present active list of trade-practice conference rules
covers about 160 industries.
These procedures to encourage more general observance of the laws administered
by the Commission were given increased impetus under the reorganization plan placed
in effect during the previous fiscal year. Designed to permit more prompt, equitable,
and economical settlement of the issues involved than is otherwise possible, the program developed under this plan calls for emphasis upon simultaneous industry-wide
action and expansion of the cooperative phases of the Commission’s work. With
greater emphasis placed on the use of cooperative means, industry members are given
an opportunity, where circumstances permit, to eliminate unfair methods of
competition or unfair or deceptive practices through stipulation-agreements to cease
and desist, or through the establishment of trade practice rules. The Commission holds
trade practice conferences either upon its own motion or upon request from an industry
where such a proceeding appears an appropriate means of eliminating unfair trade
practices.
Cases are not disposed of, however, by voluntary agreement, either through trade
practice conference proceedings or through stipulation-agreements, where there are
involved violations of the Clayton Act, combination or collective action in restraint of
trade, or practices which are fraudulent or inherently dangerous to health. (The Commission’s policy in such matters is set forth at p.113.)
During the fiscal year 1948, the program was continued, with indus-investigations
conducted among automobile dealers in New York City and the District of Columbia,
and in the following industries : Cast iron soil pipe, cheese, simulated and cultured
pearls, floor Wax products shampoo and scalp preparations, wallpaper cleaning
preparations, crib and carriage mattresses, and orthopedic or “health”

4

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

shoes. Trade practice rules were established for the watch case, office machine
marketing, wholesale confectionery, and hand knitting yarn industries. Under the
stipulation procedure, 99 voluntary agreements to cease and desist from unlawful
practices were accepted by the Commission.
STAFF ORGANIZATION
The Commission’s staff organization at the close of the fiscal year included the
following Operating bureaus and divisions :
Office of the General Counsel.--The General Counsel is the principal legal officer
of the Commission, advising the Commission on questions of law, policy, and
procedure arising in connection with litigation before the agency in the Federal courts,
or in connection with legislative and a wide variety of other matters. Grouped under
the General Counsel are the Division of Appellate Proceedings, the Division of
Compliance, and the Division of Trade-Marks. These divisions, in the order named,
(l) represent the Commission in all proceedings in the Federal courts, (2) coordinate
all matters relating to enforcement of orders to cease and desist, and (3) prepare
applications for cancellation of registered trade-marks that are in violation of the
Lanham Trade-Mark Act of 1946.
Bureau of Litigation.--The function of preparing, trying, briefing, and arguing
complaints in litigated cases is a prosecuting function which is performed by a staff
of attorneys who work under the super vision of the Chief Trial Counsel and four
Assistant Chief Trial Counsels. Neither they nor any of the attorneys performing this
function in a particular case or in a factually related one participate or advise in the
decision of such a case except under the same conditions that are applicable to
attorneys representing the respondent, which conditions are set forth in the
Commission ‘ s published Rules of Practice. (See p.107.)
The Division of Antimonopoly Trials tries Clayton Antitrust Act and other restraintof-trade cases. The Division of Deceptive Practices Trials tries other formal cases,
including those involving false and misleading advertising, improper labeling of wool
products, and other unfair and deceptive practices. The Division of Export Trade tries
cases arising under the Webb-Pomerene Export Trade Act and otherwise administers
the provisions of that statute.
Bureau of Legal Investigation.--The legal investigational activities of the
Commission are conducted through its Bureau of Legal Investigation, the active
operating units being the Division of Radio and Periodical Advertising and the
Division of Field Investigation. The Director of the Bureau of Legal Investigation is
responsible for the coordination of the legal investigational activities so there will be
no conflict or duplication of work between the operating divisions attached to his
office. He also is responsible for the initiation, through the Commission, of industrywide investigations whenever it appears that simultaneous action against all members
of an industry is warranted in the public interest and this type of treatment appears
practicable.

Bureau of Stipulations.--All matters considered appropriate for settlement by the
Commission’s stipulation procedure are referred

STAFF ORGANIZATION

5

to the Bureau of Stipulations for the negotiation of agreements to cease and desist from
unlawful practices. The bureau takes no part in the investigation or prosecution of any
matter. It consists of a Director, an Assistant Director, and a staff of attorneyconferees.
Bureau of Trade Practice Conferences and Wool Act Administration.--Trade
practice conference proceedings are conducted by the Commission through the Bureau
of Trade Practice Conferences and Wool Act Administration which also administers
the Wool Products Labeling Act. These activities are under the supervision of a Director, an Associate Director, and three Assistant Directors who are in charge of the
following : Division of Rule Making, Division of Rule Administration, and Division
of Wool Act Administration and Inspection.
Bureau of Trial Examiners.--Members of the Bureau of Trial Examiners are
designated to preside at hearings in connection with the trial of formal complaints
issued by the Commission. The Trial Examiner in charge of such a hearing takes
testimony and receives evidence submitted in support of, as well as in opposition to,
the allegations of the complaint. He rules upon the admissibility of testimony and
exhibits and otherwise conducts hearings in accordance with the Administrative
Procedure Act and the Commission’s Rules of Practice. After closing of the record for
the receipt of testimony and other evidence and after counsel for both sides have been
afforded opportunity to submit interlocutory proposals, the Trial Examiner makes his
recommended decision. his recommended decision includes a statement of his
findings and conclusions upon all the material issues of fact, law or discretion
presented on the record, together with the reasons supporting it, and a recommended
order.
Bureau of Industrial Economics.--The Bureau of Industrial Economics acts as a
general economic staff in obtaining and analyzing the economic information used by
the Commission in developing its antimonopoly programs. It renders economic and
services to the legal staff in the investigation and trial of antimonopoly cases and in
the enforcement of the Commission’s orders in such cases. The bureau performs those
statutory functions of the Commission which relate to general economic surveys and
investi gations (as distinguished from legal investigations arising out of charges of
violation of the law) of the practices and policies of corporations in interstate
commerce. It prepares economic and financial reports. The work of the bureau is in
charge of a Director who is also Chief Economist. The Assistant Chief Economist, the
Chief Accountant, and the Chief Statistician supervise the three divisions.
The Division of Economics conducts general economic surveys and investigations
for the purpose of ascertaining the competitive practices, the nature and significance
of monopolistic arrangements, and the degree of concentration in a given industry, and
for the purpose of reporting on general economic conditions within the field of the
Commission’s jurisdiction. It assembles and analyzes economic information needed
in the development of an antimonopoly program. In addition it provides economic
assistance at all stages in the preparation and conduct of legal cases, including the
evaluation, from an economic viewpoint, of pricing policies and distribution practices

6

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

in relation to the legal issues of collusive price-fixing and monopoly controls.
Economic information in connection with trade practice conference proceedings is
likewise furnished by this division.
Accounting services in connection with the investigation and trial of cases, as well
as in connection with general economic investigations, are performed by the Division
of Accounting. It prepares cost and price studies and its staff members act as witnesses
in cases arising under the Clayton Antitrust Act and the Federal Trade Commission
Act. It also prepares the financial and cost data in general economic investigations.
The Division of Statistics and Financial Reports collects, summarizes, and analyzes
the financial operating statements of American manufacturing corporations. On the
basis of these data, it prepares quarterly reports on the financial position and operating
results of the Nation’s manufacturing industries.
Bureau of Medical Opinions.--The Bureau of Medical Opinions is charged with the
duty of supplying scientific information and opinions to the Commission and its
various bureaus, particularly with respect to foods, drugs, devices, cosmetics,
insecticides, and chemicals. It arranges for the analysis or testing of such commodities,
secures expert scientific witnesses where necessary, and otherwise works closely with
the Commission’s investigators and trial attorneys in matters pertaining to science.
Through the Director, the Commission maintains liaison with other Government
agencies concerned with scientific matters.
Executive Office.--The Secretary of the Commission serves as its Executive Officer
and is responsible for the administrative management of the agency. He signs all
orders of the Commission and is legal custodian of its seal, papers, records, and
property.
Bureau of Administration.--The Bureau of Administration pro-vides administrative
services to the Commission and its operating bureaus through the following divisions:
Budget and Planning; Personnel; Legal Records; Economic and Administrative
Records; Services and Supplies; Library; and Legal Research, Compiling, and
Publication.
SUMMARY OF LEGAL ACTIVITIES DURING FISCAL YEAR
The Commission issued 70 formal complaints alleging violations of the laws it
administers; entered 73 orders directing respondents to cease and desist from such
violations; and accepted 99 stipulations to discontinue unlawful practices.
Cases in the Supreme Court of the United States and in circuit courts of appeals in
which the Commission was a party totaled 20. Rulings favorable to the Commission
were obtained in two cases in the Supreme Court and in six cases in circuit courts of
appeals, while three cases were dismissed by stipulation. There were no decisions
adverse to the Commission. As the fiscal year closed, there were nine cases pending
in circuit courts of appeals, none in the Supreme Court.
Other court proceedings pending at the end of the year included four civil penalty
suits involving violations of orders to cease and desist,. and two complaints seeking

mandatory injunctions and re-

SUMMARY OF LEGAL ACTIVITIES DURING FISCAL YEAR

7

covery of forfeitures in connection with the failure of two corporations to file special
reports under sections 6 (a) and (b) of the Federal Trade Commission Act. These cases
were brought in. United States district courts at the direction of the Attorney General,
acting on the request of the Commission.
Trade practice rules were promulgated for the watch case, office machine marketing,
wholesale confectionery, and hand knitting yarn industries. Additional activities
included the issuance of proposed rules for four other industries and the holding of
seven formal trade practice conferences and an equal number of public hearings in
connection with these and other proceedings.
Administration of the Wool Products Labeling Act included field inspections of
more than 23 million articles subject to the provisions of the act. These activities
concerned the labeling practices of nearly 9,000 manufacturers, distributors, and other
dealers in wool products,
The Commission conducted several investigations into the operations of export
associations organized under the Export Trade Act. Investigation of General Milk Co.,
Inc., was completed, and recommendations for the readjustment of its business were
issued. There were 51 export associations registered with the Commission at the close
of the fiscal year.
The Commission also instituted work in connection with the Trade-Mark Act of
1946. This statute, which became effective July 5 , 1947 , authorizes the Federal Trade
Commission to petition the Commissioner of Patents to cancel, upon specified
grounds, the registration of trade-marks registered in the Patent Office. Grounds upon
which such action may be taken include circumstances constituting fraudulent
procurement, illegal use of the mark after registration, and circumstances where the
mark has become the common descriptive name for an article or process on which the
patent has expired.
During the fiscal year 1948, all registrations and republication issued by the Patent
Office have been studied for deceptiveness in connection with the goods to which
applied. Those involving the sale of medicines and therapeutic devices have been
referred to the Director of the Bureau of Medical Opinions for opinion as to claims
appearing in the required statement of use. A number of registrations have been
referred to the Bureau of Legal Investigation for investigation of deceptive
circumstances.
Investigations of the circumstances surrounding the use of approximately 70
registrations have been initiated by the Commission where information indicates that
the registrants did not possess the statutory requirements for trade-mark registrations.
Several trade-mark registrations for articles or processes covered by expired patents
where information indicates that the registered marks may have become the common
descriptive name of the article or process were receiving consideration at the end of
the year.
As the year closed the Commission also had under way a study of State legislation
pertaining to insurance, in preparation for the enforcement, in the interstate insurance
business, of the Federal Trade Commission Act and the Clayton Act. This action was

necessitated by a Supreme Court decision holding that the business of insurance, when
conducted across State lines; was subject to Federal antitrust

8

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

laws, and by congressional legislation providing that after June 30, 1948, the Federal
Trade Commission Act and the Clayton Act, as well as the Sherman Act, should be
applicable to interstate insurance business to the extent that such business is not
regulated by State law.
GENERAL INVESTIGATIONS
The Commission completed four general investigations during the fiscal year and
transmitted the resulting reports to Congress, as follows :
(l) The Merger Movement: A Summary Report.
(2) International Steel Cartels.
(3) International Electrical Equipment Cartel.
(4) Manufacture and Distribution of Farm Implements.
In addition, the Commission, in a joint project with the Securities and Exchange
Commission, issued a series of Industrial Financial Reports, based on the financial
operating statements of approximately 8,500 manufacturing corporations. Reports
were issued for each quarter of 1947, and the reports for the first two quarters of 1948
were in preparation at the close of fiscal year.
During its existence the Commission has conducted nearly 150 general
investigations and 370 cost studies.
1 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 five members of the Federal Trade Commission are appointed by the President
with the advice and consent of the Senate. The law provides that not more than three
of them may belong to the same political party.
Under the provisions of the Commission’s organic act, the term of a Commissioner
is 7 years, dating from the 26th of September 2 last preceding his appointment, except
when he succeeds a Commissioner who relinquishes office prior to the expiration of
his term. In such a case, the statute provides that the new member shall be appointed
only for the unexpired term of the Commissioner whom he succeeds. Upon

1 An alphabetical list and brief description of the investigations conducted by the Commission appear
in the appendix, beginning at p. 118.
2 September 26 marks the anniversary of the approval of the Federal Trade Commission Act in 1914.

PUBLICATIONS OF THE COMMISSION

9

the expiration of his term of office, a Commissioner continues to serve until the
appointment and qualification of his successor.
Members of the Commission as of June 30, 1948, were Robert E. Freer, Republican,
of Ohio, Chairman; Garland S. Ferguson, Democrat of North Carolina; Ewin L Davis,
Democrat, of Tennessee; William A. Ayres, Democrat, of Kansas; and Lowell B.
Mason, Republican, of Illinois.
At the end of each calendar year, the Commission elects one of its members to serve
as chairman during the ensuing year. Under the policy of rotating the chairmanship
annually, each Commissioner serves as chairman at least once during his 7-year term
of office. Commissioner Freer is serving as chairman during the calendar year 1948,
having succeeded Commissioner Ferguson.
In addition to the general duties of administering the statutes committed to the
Commission for enforcement, each Commissioner has supervisory charge of the work
of one or more of the bureaus of the Commission. This supervision is rotated among
the Commissioners on an annual basis. The following assignments of Commissioners
were effective during part of the fiscal year and continued through December 31,1948
:
Chairman Freer : Executive Office, Bureau of Administration, Bureau of Trial
Examiners, Office of Assistant to the Chairman, and Special Legal Assistants to the
Commission.
Commissioner Ferguson: Office of General Counsel and Bureau of Litigation.
Commissioner Davis: Bureau of Industrial Economics.
Commissioner Ayres: Bureau of Legal Investigation and Bureau of Medical
Opinions.
Commissioner Mason: Bureau of Trade Practice Conferences and Wool Act
Administration and Bureau of Stipulations.
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 workday 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 positions, and direct the work of the staff of
some 600 employees, including attorneys, economists, accountants, statisticians, and
administrative personnel stationed in Washington and in branch offices in New York,
Chicago, San Francisco, Seattle, and New Orleans.
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 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.

10

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

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 indus trial 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 42 volumes of Federal Trade Commission Decisions contain (l) the findings of
fact and orders to cease and desist or of dismissal issued by the Commission; (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. 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.
Trade practice rules, the Wool Products Labeling Act and the regulations thereunder,
and the Rules of Practice before the Commission are published in pamphlet form and
may be obtained from the Commission without charge.
The following publications were issued during the fiscal year :
Annual Report of the Federal Trade Commission for the Fiscal Year Ended June 30,
1947. House Document No. 459, Eightieth Congress, second session, January 19,
1948; 145 pages. Available from the Superintendent of Documents, Government
Printing Office, at 30 cents a copy while the supply lasts.
Trade Practice Rules for the following indus tries: Watch Case Industry, January
30, 1948, 17 pages.; Office Machine Marketing Industry, February 26, 1948, 15 pages;
Wholesale Confectionery Industry, April 2, 1948, 9 pages and Knitting Yarn Industry,
June 18, 1948, 11 pages. All rules available from the Federal Trade Commission
without charge while the supply lasts.
The Merger Movement: A Summary Report, 1948; 134 pages. Available from the
Superintendent of Documents, Government Printing Office, at $1 a copy while the
supply lasts. A processed summary

RECOMMENDATIONS TO CONGRESS

11

is available from the Federal Trade Commission without charge while the supply lasts.
International Steel Cartels, 1948; 115 pages. Available from the Superintendent of
Documents, Government Printing Office, at 25 cents a copy while the supply lasts. A
processed summary is available from the Federal Trade Commission without charge
while the supply lasts.
Manufacture and Distribution of Farm Implements, 1948; 160 pages. Available from
the Superintendent of Documents, Government Printing Office, at 40 cents a copy
while the supply lasts. A processed summary is available from the Federal Trade
Commission while the supply lasts.
International Electrical Equipment Cartel, 1948; 107 pages. Available from the
Superintendent of Documents, Government Printing Office, at 25 a copy while the
supply lasts. A processed summary is available from the Federal Trade Commission
while the supply lasts.
Wartime Costs and Profits for Manufacturing Corporations, 1941 to 1945, October
6, 1947; 136 pages. Copies available from the Federal Trade Commission without cost
while the supply lasts.
Rules, Policy, Organization, and Acts, March 9, 1948; 214 pages. Copies are
available from the Federal Trade Commission without cost.
Quarterly Industrial Financial Report Series for All U.S. Manufacturing
Corporations, first, second, third, and fourth quarters of 1947 and first quarter of 1948.
Copies are available from the Federal Trade Commission and the Securities and
Exchange Commission without cost while the supply lasts.
RECOMMENDATIONS TO CONGRESS
In the Annual Report of the Federal Trade Commission for the fiscal year ending
June 30, 1947, the Commission stated that on March 4,1947, it had addressed to the
Congress a special report pursuant to the statutory direction contained in section 6 (f)
of the Federal Trade Commission Act that it recommend to Congress additional
legislation. This report pointed out the recent increase in the trend toward corporate
acquisitions and mergers and recommended to the Congress that section 7 of the
Clayton Act be amended to prevent acquisition of physical assets as well as corporate
stock where the effect may be substantially to lessen competition in interstate
commerce. On June 30, 1948, the Commission transmitted to the Congress a further
report on the merger movement which pointed out that as a result of the rising number
of mergers, more than 2,450 manufacturing and mining companies which had been
independent had been absorbed since 1940 and that these firms had held assets of
about 5.2 billion dollars, or more than 5 percent of the total assets of all manufacturing
corporations. In this report the Commission renewed its recommendation for the
amendment of section 7 of the Clayton Act. Similar recommendations have been made
to the Congress in the Commission’s Annual Reports for many years.
813610--49----2

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

A bill embodying the substance of the Commission’s recommendations for
amendment of section 7 of the Clayton Act was introduced by Representative
Kefauver in the Eightieth Congress (H. R 3736, 80th Cong.) and favorably reported
to the House of Representatives by the Committee on the Judiciary (H. Rept. No.596).
Senator O’Mahoney introduced a bill in the Senate (S. 104, 80th Cong.) , which
though not amended to conform to the House bill (H. R 3736, 80th Cong.) had the
same objectives. A subcommittee voted to recommend passage of the O’Mahoney bill,
but it was never reported out of the full committee. The Commission renews its
recommendation that legislation be enacted which will enable the Commission to deal
effectively with this problem of curbing corporate mergers and acquisitions which are
inimical to the public interest.
(The charts facing this page illustrate the trend of the corporate merger movement
during the period 1919 to 1948.)
The Commission also renew for consideration of the Congress the recommendation
that the Clayton Act be amended to provide that orders to cease and desist entered
thereunder shall become final in the same manner as do similar orders to cease and
desist under the Federal Trade Commission Act.
As enacted in 1914, the Federal Trade Commission Act provided that orders to cease
and desist should become final only after affirmance in one of the circuit courts of
appeals and following a decree of the court embodying the Commission’s order. There
were no penalties provided for violation of orders to cease and desist and the could
only be enforced finally by way of criminal contempt proceedings in the circuit courts
for violation of court orders.
In the Wheeler-Lea Act of 1938, section 5 of the Federal Trade Commission Act was
amended to provide that orders to cease and desist under that act shall become final
at the expiration of 60 days from service of the order unless appeal is taken to the
courts. Thereafter violations of final orders to cease and desist are subject to civil
penalty proceedings brought by the Attorney General in the United States district
courts.
There appears to be no substantial reason why orders under the Clayton Act should
not have the same status as to finality and as to penalties for violation as similar orders
under the Federal Trade Commission Act.
MINORITY RECOMMENDATIONS
Commissioner Mason submits individually the following minority proposals :
In the greatest and most complex economy in the world it is necessary that we have
a capable and efficient quasi-judicial agency to prevent unfair practices in commerce.
But administrative agencies diminish their effectiveness when they claim powers in
excess of those that can be justified under a democratic form of Government. In a
manner of speaking, they price themselves out of the market. This overzealousness
puts ammunition in the hands of those who would destroy administrative law.
In my opinion, the following recommendations strengthen the administrative
enforcement of the Federal Trade Commission Act. I

MINORITY RECOMMENDATIONS

13

believe they will renew the public confidence, and create general acceptance of and
agreement with Commission orders and a cooperative attitude on the part of business.
I recommend :
l. That Congress broaden the scope of appellate court review of Commission orders.
Congress recently did this on tax matters. 1
The Commission has always intended to prove its cases by a greater weight of the
evidence. Even those who would maintain the status quo of Commission procedure
subscribe to this principle. There would thus seem to be no objection to amending the
law to provide for judicial review on that basis.
Without altering the Commission ‘ s normal procedure, such an act would silence
many of the criticisms now leveled at Commission action and would increase public
acceptance of its orders;
The Administrative Procedure Act , recently passed, has already raised the quality
of our trial examiners’ procedures without materially changing the modus operandi.
There is every reason to believe the quality and efficiency of Commission proceedings
can be raised if Congress includes the Federal Trade Commission as another agency
whose findings of fact may be under the closer scrutiny of the courts.
2. The Supreme Court recently held that an order of the Commission would be
sustained on a finding of “reasonable possibility” of injury to competition. I do not
believe this Commission would care to follow the “possibility” rule. To me, it is
repugnant to democratic processes. As long as the courts have indicated Congress gave
us that power, I think Congress ought to take it away from us.
3. The Commission announced in a statement of policy dated October 12, 1948, that
knowing or conscious parallel action will be viewed as illegal. To me, this means that
two competitors knowingly selling at the same price may be successfully prosecuted.
In my opinion, similar prices may result from competition as well as from conspiracy.
The rule should be limited by Congress to the latter cases.
4. The present confusion of the law resulting from the recent orders and opinions in
the Cement, the Rigid Conduit, Steel, Corn Products and Salt cases Is such that
producers in many cases impose hidden price raises on the public. They do this on the
grounds that they want to be certain they are not violating the law as to freight ab
sorption in t lie above cases. The cumulative effect of these decisions has given
validity to the excuse for moving toward an exclusive f. o. b. mill basis. I believe this
passing on to the distributor of a cost which in many cases has been heretofore
absorbed by the producer, creates unwarranted price raises in the consumer market.
Congress should determine whether this hidden price raise effected through f. o. b.
mill selling should be required, or whether a seller should legally be permitted to
absorb freight systematically to meet competitors’ prices.
5. The courts’ approval of the Federal Trade Commission decision in the Morton
Salt case for all practical purposes eliminates the right to give quantity discounts
except in so-called trading items where the purchase price fluctuates in each
transaction. I call thus
1 Effective September 1,1948, amending sec. 1141 (a) of the Internal Revenue Code
by adoption of sec. 36 of the new Judicial Code.

14

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

to the attention of Congress for such action as it may wish to take to preserve the
economies of mass production and distribution.
I wish to repeat my recommendations contained in the Commission’s annual report
for the fiscal year ended June 30, 1947.
In my opinion, there are new and compelling reasons for recommending to Congress
that trade practice conference procedure be given a statutory foundation more specific
than the implied authority of the Federal Trade Commission Act. Aside from the
efficacy of trade practice conference procedure as an instrumentality to effect a reign
of law in commerce, such procedures would, in my opinion, bring businessmen and
their trade associations into closer cooperation with Government. The development
of such cooperation in peace-time would contribute significantly to nation al defense
planning. The past conflict demonstrated that the production of munitions and supplies
was hopelessly foundered at the beginning of the war effort until those men in private
industry who were the experts in each line of commerce were bodily lifted from the
desks of private industry to Government war production offices. The hiatus between
an enemy attack and all-out production of war equipment could be greatly shortened
if there were developed under the trade practice conference procedure a closer
cooperation between representatives of industry, such as trade associations, and the
representatives of Government.

PART I. GENERAL INVESTIGATIONS
During the fiscal year 1948 the Commission completed the following reports which
presented the results of general investigations :
The Merger Movement: A Summary Report.
International Steel Cartels.
International Electrical Equipment Cartel.
Manufacture and Distribution of Farm Implements.
In addition, the Commission, in a joint project with the Securities and Exchange
Commission, issued a series of Industrial Financial Reports based on the financial
operating statements of approximately 8,500 manufacturing corporations. These
reports were issued for each of the quarters of 1947, and reports for the first two
quarters of 1948 were in preparation at the close of the fiscal year. There is a threefold significance to the financial reports project : (l) The reports provide for the first
time a relatively current record of the profitability and general financial status of
corporations in manufacturing as a whole and in the major manufacturing industries.
(2) The 8,500 firms reporting under this program have been selected in such a way as
to constitute a scientific sample which yields results that are representative of the
nation’s manufacturing corporations.
(3) For the first time current financial data are now obtained which are representative
not only of the large companies but also of the Nation’s medium-sized and smaller
manufacturing corporations.
The Commission also presented extensive economic data on mergers and
acquisitions before a subcommittee of the Senate Judiciary Committee which was
considering the proposed amendment of section 7 of the Clayton Act to give the
Commission power to prevent acquisitions of assets generally similar to its present
power over acquisitions of stock.
Perhaps the most important feature of the Commission’s economic work during the
fiscal year was the greater integration of economic analysis with the legal work of the
Commission. This integration had two aspects : First, exploratory investigations and
analyses designed to provide an economic basis for the development of the
Commission’s antimonopoly program and, second, a substantial increase in the
economic and accounting services rendered to the legal staff in the investigation and
trial of antimonopoly cases and in the enforcement of antimonopoly orders. This latter
development was due largely to the increased emphasis placed by the Supreme Court
on economic considerations in antimonopoly cases. Although the Commission has
continued its work of conducting general investigations for use by Congress and the
general public, the greater part of its economic personnel during the fiscal year 1948
was engaged in preparing economic analyses for the antimonopoly program and for
specific legal cases.

15
813610--49----3

16

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

THE MERGER MOVEMENT--A SUMMARY REPORT
In its new report entitled “The Merger Movement: A Summary Report,” the
Commission again called attention to the loophole in the Clayton Act which permits
corporations to purchase the assets rather than (or in addition to) the stock of
competing firms, thereby evading the original intent of Congress “to arrest the creation
of * * * monopolies in their incipiency.” 1
In addition to renewing its recommendation that the loophole be closed, the
Commission’s report presented an extensive review of the legal history of the antimerger provisions of the Clayton Act and the various court decisions which have
rendered section 7 a “virtual nullity.” Specific examples are offered to illustrate how
the existence of the loophole places a premium upon the attainment of monopolistic
ends by the completely final method of consolidation, as against the more vulnerable
method of conspiracies among independent firms. Legislation now pending before
Congress to amend the act is dis-cussed, and an economic analysis is made of the
current merger movement. This movement, under way since 1940, has already resulted
in the disappearance of more than 2,450 formerly independent manufacturing and
mining companies. These firms held assets aggregating some 5.2 billion dollars, or
more than 5 percent of the total assets of all manufacturing corporations in the country.
LEGAL HISTORY
The report points out that it was the great consolidation movement of 1897-1905
which formed the economic background leading to the passage of the Clayton Act. At
that time the prevailing g method of forming combinations was through the purchase
or exchange of the capital stock of competitors. Thus Congress, in attempting to
prevent the creation of monopolies in their incipiency, prohibited the common and
usual practice of forming monopolistic combinations through stock purchases.
Following the passage of the Clayton Act, however, corporations soon found that the
law could be circumvented by either of two methods. A corporation could purchase
stock control of a competitor and then utilize such control to acquire the assets of the
firm ; or assets could be purchased in the first instance without bothering to acquire
the stock at all.
There has never been any doubt that the purchase of assets without the transfer of
stock being involved is legal under the Clayton Act. It is for this reason that many
large corporations have adopted the policy of purchasing assets whenever interstate
commerce (and thus the Federal law) is involved, and of making stock acquisitions
only when the transaction is confined within the b orders of a single state and has no
effect on interstate commerce.
Under the other alternative, the acquiring company may buy the stock first. Then,
if the Commission takes action against the stock acquisition, the company may follow
this purchase with the acquisition of assets before the Commission can enter its order
of divestiture.
1

Senate Committee on the Judiciary, S. Rpt. 695, 63rd Cong., 2d sess.. June 22,

1914, to accompany H. R. 15657, p.1.

THE MERGER MOVEMENT--A SUMMARY REPORT

17

This producer was specifically approved by Supreme Court decisions beginning in
the middle 1920's. However, this route of avoidance is important only in those cases
in which the acquisition of assets is not feasible unless the stock can be purchased
first. Thus , even if this route were closed , there would still be left open the much
more important method of acquiring the assets without purchasing the stock at all.
PENDING LEGISLATION
Since 1945 legislation has been pending in both the Senate and House of
Representatives to amend section 7 of the Clayton Act. These bills, introduced in both
the Seventy-ninth (Democratic) and the Eightieth (Republican) Congresses, have been
the subject of extensive hearings, but have failed to reach the floor of either House for
consideration. The House bill has twice been approved by both the subcommittee and
the full Committee on the Judiciary. In the Eightieth Congress the Senate bill was
approved on May 17, 1948, by a subcommittee of the Senate Judiciary Committee.
IMPORTANCE OF THE AMENDMENT TO ANTITRUST POLICY
Not only does the loophole in the Clayton Act permit the continued growth of
monopoly and concentration of economic power through mergers and acquisitions, but
in the process the fundamental objective of the antitrust laws is plainly circumvented.
Both the Sherman Act and the Federal Trade Commission Act condemn attempts to
restrain trade by means of mutual understanding or agreement among competitors ; but
if the same objective is achieved through the purchase of physical property it is lawful,
in the absence of monopoly, and the antitrust agencies are powerless to act. This
weakness in the law encourages the achievement of monopolistic goals through the
more enduring process of corporate consolidation while discouraging the more
vulnerable method of achieving the same ends by means of conspiracies among
independent firms. Thus the paradox is presented that the more effective is the
enforcement of the law against collusion among competitors, the greater is the
incentive to achieve the same objectives through purchase, consolidation, and merger.
Recent examples of the use of the merger-escape loophole to defeat the purposes of
the antitrust laws are provided by such industries as cement , salt, white lead, fire
extinguishers, and book paper.
Climaxing an extensive period of investigation and litigation, dating from 1937, the
Supreme Court on April 26, 1948, issued a sweeping affirmation of the Commission’s
findings and order in the Cement Institute case, ruling that the cement industry’s longestablished basing-point system (resulting in identical delivered prices at any given
destination) was a collusive price-fixing device which violated both the Federal Trade
Commission Act and the Clayton Act. The Court agreed with the Commission that this
collusive pricing system not only constituted an “unfair method of competition,” but
also involved unlawful price discrimination.
When the Commission’s complaint was issued in 1937, there existed a relatively

high degree of concentration in the industry, with the 5 largest companies accounting
for 39 percent of the Nation’s cement-

18

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

producing capacity, and the 10 largest, 55 percent. Principally as a result of the
mergers which have taken place since the Commission entered its order, the degree of
concentration has been increased significantly. By 1945 the largest 5 companies
controlled about 44 percent and the 10 largest over 60 percent of the industry’s
capacity. Moreover, because of the regional character of cement marketing (which
results from the importance of freight in the delivered cost), the increase in
concentration has been considerably greater in a number of important regions.
The action by the Supreme Court in upholding the Commission’s order against the
cement industry will obviously be nullified insofar as the relationships between the
acquired and acquiring firms are concerned, since there will no longer be any occasion
for the acquired firms to conspire with their new owners in order to put the basingpoint system, or any other pricing practice, into effect. Other examples cited in the
report in which legal actions against conspiracies have been followed by acquisition
and merger include the pipe, salt, white lead, and book paper industries.
CURRENT TREND OF THE MERGER MOVEMENT
The sharp upward movement in mergers and acquisitions has been most pronounced
during the last 3 years. In this respect t he present trend has closely followed the
pattern established after World War I. Immediately at the end of both wars, merger
activity increased sharply, the post-World War I movement extending through 1919,
1920, and the early part of 1921, until it was interrupted by the post-war depression.
Again in the middle 1920's, when prosperous conditions had returned, the trend took
on new force, reaching all-time heights in 1928 and 1929.
In much the same manner, merger activity turned sharply upward with the end of
World War II and has continued at a relatively high level through 1947. In the final
quarter of 1947, more mergers and acquisitions were reported than in any fourth
quarter since 1930--with the single exception of 1945.
The recent merger movement has extended to virtually all phases of manufacturing
and mining, but has been most conspicuous in such industries as food and beverages,
textile and apparel, and chemicals (including drugs) . Together, these three groups
accounted for over one-third of the total number of acquisitions. Other industries in
which numerous acquisitions have taken place are nonelectrical machinery, petroleum
and transportation equipment. In the aggregate, these six industrial groups accounted
for nearly three-fifths of all the mergers and acquisitions for the entire period 1940-47.
The new peak of mergers and acquisitions which developed as the war drew to a close
has, of course, risen from the plateau of economic concentration which already
prevailed in this country.
As in earlier periods, high corporate profits have fed the merger movement. This was
true of the great consolidation movement of 1897-1905, the post-World War I
movement, and the period of the late 1920's. It is no less true at the present time. Not
only do profits provide the financial wherewithal with which to effect mergers, but,
more than that, they exert a powerful pressure on business to

THE MERGER MOVEMENT--A SUMMARY REPORT

19

expand : both internally, by building new plant and equipment, and externally, by
absorbing existing concerns. At the end of June 1947, the 78 largest manufacturing
corporations had sufficient net working capital to buy up the assets of some 50,000
manufacturing corporations of less than 1 million dollars in assets each, representing
more than 90 percent of all manufacturing corporations in the United States.
MERGERS AND ECONOMIC CONCENTRATION
As contrasted to European countries, in which business combinations have readily
taken the form of cartels and loose-knit associations of independent businesses, such
combinations in the United States have generally taken the form of the giant
corporation, with its typical divorce between ownership and control, its tight
centralization of power in the corporate management, its large financial resources, its
community of interest with other corporate and financial groups, and its tendency to
acquire greater and still greater economic power.
The rise of these great corporations has resulted from two types of expansioninternal and external growth. The former, which is sometimes referred to as “natural”
growth, occurs through the building of new facilities or the expansion of existing
properties financed out of retained earnings, loans the sale of securities, or similar
means. To the extent that such expansion takes place more rapidly in large than in
small enterprises, economic concentration is obviously in creased. External growth-with which the report is concerned-takes place through the integration of existing firms
by means of acquisition, merger, or consolidation, and through the creation of other
types of combinations such as trusts and holding companies. To the extent that this
process takes the form of the creation of new large enterprises out of existent smaller
concerns or the buying up of small concerns by larger enterprises, concentration is, of
course, increased.
The report notes that there has been a widespread tendency to under-estimate the
importance of external expansion and to attribute nearly all of the increase in
economic concentration to internal growth. Although it is impossible to measure with
precision the extent to which growth in industry as a whole has resulted from external
expansion, the Commission has made a study of the growth of the major companies
in the steel industry, covering the period 1915-45. Constituting the foundation of the
Nation’s immense metal-working economy and often considered the “bellwether” of
American enterprise, the steel industry affords a concrete example of the importance
of external growth in the rise of big business in America. During the period 1915-45
(which does not include the formation of the U.S. Steel Corp. in 1901) 8 major steel
companies acquired some 153 other firms, and approximately one-fourth of the overall growth of these major steel companies was due to external expansion. The
estimates of the extent to which long-term growth (following the formation of the
original companies) has been due to external expansion were substantially higher in
some instances, amounting to as much as one-third in the case of Bethlehem Steel
Corp., and two-thirds in the case of Republic Steel Corp.

20

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

The importance of external expansion in promoting concentration has never been
more clearly revealed than in the acquisition movement that is taking place at the
present time--a movement which is strengthening the position of big business in
several ways. In the first place, several of the industries in which “small business” is
traditional have been affected. The two leading industries, in terms of number of
acquisitions, have been textile and apparel, and food and kindred products-both
predominantly small business fields. Moreover, in certain small business industries
(notably steel drums, tight cooper-age, and wines) virtually all or a substantial part of
the industry has been taken over by big corporations. Finally, the outstanding characteristic of the movement has been that of large corporations buying out small
companies. Thus, the preponderant number of firms have been acquired by the very
largest corporations. Nearly one-third (30 percent) of the companies merged since
1940 have been absorbed by corporations with assets exceeding 50 million dollars.
Another 40 percent of the total have been taken over by corporations with assets
ranging from 5 million dollars to 49 million dollars. Thus, more than 70 percent of the
total number of firms acquired during this period have been absorbed by larger
corporations with assets of over 5 million dollars. At the other end of the scale, the
distinctly small firms, those with less than 1 million dollars of assets, have made only
11 percent of the acquisitions.
Fully 93 percent of all the firms bought out since 1940 held assets of less than 5
million dollars, and 71 percent had assets of less than 1 million dollars. On the other
hand, only 4 percent of the total number of acquired firms had assets of over 10
million dollars.
Of the Nation’s 200 largest manufacturing corporations, 123 have made corporate
acquisitions since 1940, accounting, in the aggregate, for approximately 27 percent of
all the firms bought up. Some 33 of the top 200 corporations have bought out an
average of more than 5 companies each, and 13 have purchased more than 10
companies each.
The evidence thus points clearly to the conclusion that, insofar as its impact on
concentration is concerned, the outstanding characteristic of the current merger
movement has been the absorption of smaller, independent enterprises by larger
concerns.
TYPES OF MERGER ACTIVITY
The report points out that mergers and acquisitions take a wide variety of different
and sometimes opposite directions, which have traditionally been designated as
“horizontal,” “vertical,” and “conglomerate.” Horizontal acquisitions are those in
roughly similar lines of production ; vertical acquisitions are those in which the
purchase represents a movement either forward or backward in the production process
; and conglomerate acquisitions are those in which there is no discernible relationship
in the nature of business between the purchasing and the acquired firms.
A break-down of the more than 2,000 mergers and acquisitions which took place
during 1940-47 indicates that more than 60 per cent of all acquisitions were of the
horizontal type. Approximately 20 percent were conglomerate acquisitions, and the

remainder were of

THE MERGER MOVEMENT-A SUMMARY REPORT

21

the vertical type. In this latter group, the “backward” type pre-dominated, reflecting
the efforts of many fabricators to gain control of critical materials, components, parts,
etc. On the other hand, a number of important “basic materials” producers reached
forward into the production process to take over fabricators.
Horizontal acquisitions predominated throughout the industrial structure,
representing the most important type of merger activity in each of the major
manufacturing and mining groups, ranging from nearly 90 percent of the total in
mining to slightly less than 50 percent in primary metals. Conglomerate acquisitions
also were widespread, and were particularly prominent in such diversified industries
as beverages, nonelectrical machinery, fabricated metals, transportation equipment
(including aircraft) , and drugs and medicines.
Outstanding recent examples of horizontal mergers combining direct competitors
have involved such products as wallpaper, canned milk, wooden containers, slide
fasteners, oxygen and acetylene gases, and paint. Horizontal acquisitions have also
involved combinations of producers of “substitute” products, such as the acquisition
of fiber can producers by tin can manufacturers. A third type of horizontal acquisition
has taken the form of the acquisition of a large number of independent, small
businesses engaged in essentially “local market” operations, in such fields as dairy
products and bread. Because of their similarity to the spread of chain stores throughout
the country, mergers of this type have been referred to as “chain” acquisitions.
As an example of “forward” vertical acquisitions, the report presents an extensive
discussion of the movement of large steel producers into various fabricating fields, a
movement which in some fields has proceeded so far as to result in the almost
complete disappearance of what have been regarded as typical “small business”
industries.
The “backward” vertical acquisition of basic material producers has also had the
effect of “drying up” the supplies of materials, components, parts, etc., available for
small business. Outstanding examples of this type of merger have been purchases by
machinery manufacturers of producers of tool and die shop products, metal stampings,
screw machine products, etc.; purchase of iron and steel foundries on the part of
automobile manufacturers; acquisitions of producers of pulp (as well as large stands
of timber) by large paper companies; and purchases of a wide variety of manufacturing
enterprises, including meat packers, cheese factories, etc., by chain stores.
The new wave of acquisitions in the textile industry has moved both “forward” and
“backward” in what the report designates as “two-way” vertical acquisitions. On the
one hand, manufacturers of gray goods have expanded “forward” into the finishing
operations while, on the other hand, the various factors (including converters, selling
agents, dry-goods wholesalers, etc.) engaged in the latter stages of the industry have
moved “backward” into the, gray goods field.
As examples of the extremes to which conglomerate acquisitions have gone, the
report points out that aircraft producers have acquired firms producing such widely
diversified products as movie equipment, radios, agricultural equipment, and burial
caskets, while

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

drug firms have expanded into such fields as baby foods, baking mixes, waxes and
polishes, dyes, paints, and insecticides.
The report concludes that the ultimate significance of this loophole in the law lies
in the question of the public interest. It closes with these words:
No great stretch of the imagination is required to foresee that if nothing is done to
check the growth in concentration, either the giant corporations will ultimately take
over the country, or the Government will be impelled to step in and impose some form
of direct regulation in the public interest. In either event, collectivism will have
triumphed over free enterprise, and the theory of competition will have been relegated
to the limbo of well-intentioned but ineffective ideals. This is a warning which the
Commission has repeated time and again, and one which some of those who have the
most to gain by the preservation of competition seem determined to ignore.
The Commission believes that the economic forces, on which it has been basing its
warnings, require that a definite choice be made. Either this country is going down the
road to collectivism or it must stand and fight for competition as the protector of all
that is embodied in free enterprise.
Crucial in that fight must be some effective means of preventing giant corporations
from steadily increasing their power at the expense of small business. Therein lies the
real significance of the proposed amendment to the Clayton Act, for without it the rise
in economic concentration cannot be checked nor can the opportunity for a resurgence
of effective competition be preserved.
INTERNATIONAL CARTELS
During the fiscal year 1947, the Commission published studies of the operation of
international cartels in the copper and sulphur industries. To those studies there have
been added during the past year reports on cartels in the steel and electrical equipment
industries.
The term “cartel” applies to a type of combination in restraint of price competition
and production which 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 (l) local,
(2) national, or (3) international. The Commission ‘ s studies have concentrated on
agreements among international cartels involving the export trade of the United States,
particularly in those types of industries in which cartels can be especially effective,
namely, those in which there is a high degree of concentration and control.
INTERNATIONAL STEEL CARTELS
Numerous cartel agreements relating to steel were adopted between World War I and
World War II. Certain American companies participated in these agreements, which
were both national and international in scope. The international agreements allotted
quotas to the different national groups, fixed prices in the export trade, and established
reserved and unreserved areas.
These restrictive agreements were of two general classes : (l) Agreements relating
to specific classes of steel products, such as steel rails, wire rods, wire products,

structural shapes, merchant bars, steel pipe (tubular products), tinplate, etc.; and (2)
general agreements , embracing all steel products.
In Europe international agreements of the latter class sometimes attempted to
restrain competition both in domestic and international markets by limiting the total
tonnage of crude steel to be produced, and by assigning to each national group a fixed
tonnage quota.

INTERNATIONAL CARTELS

23

The Steel Export Association of America was organized on April 21, 1928, as a
Webb-Pomerene Export Association. Its organizers were the United States Steel
Products Co. and the Bethlehem Steel Export Co., export subsidiaries of United States
Steel Corp. and Bethlehem Steel Corp., respectively. By December 31, 1928, 10 other
heading steel companies had been admitted to “limited membership.” The Steel Export
Association of America began active participation in international steel cartels, or
“competitors,” as early as July 26, 1928, when it became a member of the so-called
Two-Party Oil-Country Goods Agreement. Up to the outbreak of World War II, when
all international steel agreements were suspended, the Steel Export Association was
an active participant in at least 21 out of 25 international steel commodity cartels. In
addition, the Steel Export Association actively cooperated with a general, world-wide
policy-making cartel including, as participants, the British Federation of Steel
Industries and Entente Internationals de l’Aciers, the Continental European steel cartel.
This participation followed an understanding arrived at in December 1937.
The International Railmakers Association, formed in 1925, and joined in 1929 by the
American group, was a fairly typical “individual product” steel cartel. One of the main
objectives of this cartel was to assign to each national group definite percentage quotas
which included the total exports from each country both by cartel members and
nonmembers. The export markets for the world were divided into “reserved areas” and
“unreserved areas.” A reserved area was one into which only companies belonging to
a particular national group were permitted to sell steel rails. For example, export sales
in Cuba and the Republic of Panama were reserved for the American group, unless it
had equaled or exceeded its export quota.
In unreserved areas the cartel management committee fixed the minimum prices to
apply to all export orders, except in case of competition from nonmembers, in which
case the price was fixed by the committee. Whenever, in order to prevent a nonmember
from obtaining an order, a cartel member was directed to offer a price lower than the
cartel figure, he was compensated for the difference out of the cartel reserve fund.
Thus, the steel rail cartel was so operated that it united the combined financial
resources of the members against nonmembers to eliminate price competition from the
world’s steel export market.
It would appear that at least in some respects the cartel agreement worked against
long-run interests of the American producers. For example, while the Steel Export
Association of America limited the sales by its members in the internal markets of
European member groups, it avoided the imposition of like restrictions in the cartel
agreements with other nations respecting imports into the United States-apparently for
the purpose of complying with the provisions of the Webb-Pomerene Export Act.
INTERNATIONAL ELECTRICAL EQUIPMENT CARTEL
The high degree of economic concentration in the electrical equipment industry,
which exists in each of the important industrial nations, has been particularly
conducive to the establishment of effec-

24

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

tive international cartels. As early as 1923, the two leading American companies
produced 72 percent of all types of large power equipment made in this country, with
the degree of control ranging from 58 percent in the case of direct-current generators
to 96 percent for railway motors. Similarly, in the other important electrical equipment
producing countries of Europe and in Japan, three or four interests generally
dominated the industry in each country.
In 1928 the Federal Trade Commission called attention to the eco-nomic importance
and significance of patent agreements between the dominant domestic and foreign
electric equipment companies, stating :
Not only is direct foreign competition in the United States eliminated, but the possibilities that
other manufacturers will obtain the right to use important foreign patents, trade secrets, and
manufacturing information and experience is also forestalled to the extent that the contracts give
exclusive rights in America to the two large companies from whom they must be obtained if they
are to be used by any other American company.

A world-wide international cartel in the electric equipment export market was
executed December 13, 1930, with the adoption of the International Notification and
Compensation Agreement. It included as members the principal British, German, and
Swiss electrical equipment manufacturers. Export subsidiaries of General Electric and
Westinghouse tentatively became members, but when they were advised by counsel
that the execution of the cartel agreement in this manner probably constituted a
violation of the antitrust laws, there was organized on February 4, 1931, a WebbPomerene Export Association known as the Electrical Apparatus Export Association.
Its original members were International General Electric Co. and Westinghouse
Electrical International Co. Later, other manufacturers of widely diversified types of
electrical apparatus and appliances were admitted to membership in various
commodity sections organized within the parent association.
The primary functions performed by the Electrical Apparatus Export Association
were those of allocating the export business among its members and of agreeing on the
prices to be charged for export shipments. The association also served as the agency
which agreements and understandings were entered into with foreign cartel members.
In practice the export business of the members was conducted by the member
companies, themselves, except in those cases where two or more American companies
contacted the same foreign project. In such cases, agreement was reached through the
association as to (a) which company should make the sale, or (b) the proportion
allotted to each company, and (c) the sale price.
The “section” agreements typically included an agreement respecting export prices.
In the case of electrical appliances, such as refrigerators, ranges, or washing machines,
where rival manufacturers maintained different prices in the United States, no attempt
was made to establish uniform export prices. However, each member was supposed
to furnish his price lists to every other member, and each member was required to
adhere to his listed prices until the lapse of a specified time after he had notified the
association “supervisor” of a price change.

MANUFACTURE AND DISTRIBUTION OF FARM IMPLEMENTS

25

Many of the agreements on items other than electrical appliances provided for
uniformity of export prices, which were based either on domestic price lists, subject
to agreed modifications to cover packing for export and transportation to port of
shipment, or on agreed discounts from the domestic price lists.
MANUFACTURE AND DISTRIBUTION OF FARM IMPLEMENTS
In addition to the reports on mergers and cartels the Commission also completed a
report on the production and distribution policies of large manufacturers of farm
machinery, bringing down to 1947 information respecting a number of important
developments and trends in the industry discussed in earlier reports of the
Commission.
CONCENTRATION IN MANUFACTURE
As background for study of the effects of production and distribution policies, the
report traces the steps by which the principal manufacturers of farm implements have
grown to their present positions of size and leadership as manufacturers of long lines.
Briefly, each of the seven largest companies began as manufacturers of a single line
of implements. From these beginnings, each principal company has grown in size and
length of line manufactured, largely through acquisitions and consolidations of
previously existing companies. Thus International Harvester Co. was formed in 1902
as a consolidation of previously existing manufacturers of harvesting machinery, and
subsequently added other lines, both by acquiring other companies and by itself
developing new types of machines. John Deere started as a manufacturer of steel plows
and tillage implements, to which it subsequently added--largely by the purchase of
other companies--farm wagons, hay tools, manure spreaders, corn shellers, chilled
plows, grain drills, gasoline engines, potato machinery, threshers, and deep tillage
implements.
Allis-Chalmers , the most recently developed company of the “Big Three,” originally
made no farm implements. It entered the agricultural field with a tractor in 1915, and
since that time has strengthened its position and lengthened its line by acquiring
companies making, respectively, tractors, plows and tillage implements , threshers,
clover hullers, and deep tillage implements. J. I. Case Co. originally manufactured only
threshers, to which it has added, by acquisition, haying, harvesting, threshing, and
planting machines. Oliver Corp., originally founded to manufacture chilled p lows, has
added, by company acquisitions, lines of tractors, feed grinders, potato machinery,
threshers, hay presses, corn huskers, and seeding machines. Minneapolis-Moline,
originally a manufacturer of plow, tillage, and hay implements, has acquired other
companies making tractors, threshers, wagons, and seeding machines. Massey-Harris,
Ltd., the Canadian parent company of Massey-Harris Co. (Del.) , originally
manufactured plows and bay rakes, to which it added, by acquisitions, such lines as
wagons, manure spreaders, harvesting and haying machines, plows, and tillage
implements.

26

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

POSTWAR PRODUCTION POLICIES
As early as 1944 farm machinery manufacturers began planning to increase
production to supply the backlog of farm demand growing out of restricted wartime
production and a total farm income in 1945 that was nearly twice that of 1929.
Producing capacity was modernized and increased, and plans were made to put new
machines, and new models of older types, into production. However, shortages of
steel, copper, and lead., together with labor troubles and other factors, prevented full
attainment of production plans for 2 years after the termination of hostilities. Inability
to obtain some kinds of materials, such as steel sheets and shapes, often prevented
completion of machines actually in process. One large company was unable up to
March 1947 to complete even a pilot lot of an entirely new machine, and another, after
retooling at large cost, stated in January 1947 that it had the factories, men, and
Capacity, but could not obtain the necessary raw materials to attain its production
plans for the year 1947. This situation continued into 1948, especially for the smaller
companies Notwithstanding these limiting factors, however, the industry actually
produced more machines of many types in 1946 and 1947 than were produced in any
prewar year, without, however, satisfying the demand.
DISTRIBUTION OF FARM IMPLEMENTS
The farm-implement industry provides a striking illustration of two of the end results
of economic concentration. The first is the decrease in the number and importance of
independent producers, as one manufacturer after another is bought up by the larger
companies. The second is the increased control exercised by the large producers over
the activities of independent distributors. The large farm implement manufacturers
have practically eliminated the farm machinery wholesaler by establishing their, own
branch-house distribution to serve independent retailers. Moreover, they have
strengthened their control over the retailer by the use of annually renewable retail
dealer franchise contracts.
A farm-machinery dealer exists by virtue of a dealer-franchise contract, the value of
which increases with the length and popularity of the manufacturer’s line in the
dealer’s territory. The possession of a contract with any particular dealer, however, is
not equally important to the manufacturer , who operates in accordance with broad
policies to which the dealer must conform. The application of these policies through
the manufacturer’s interpretation of the dealer contract has given rise to many
complaints by dealers. Two principal contentions are (l) that the contracts formulated
by manufacturers inadequately define the rights and obligations of the parties, and (2)
that the contracts are lacking in mutuality.
The Commission’s inquiries point to the conclusion that not all dealer complaints
are well-founded and that some are baseless. There are however, a sufficient number
of instances of well-founded complaint to indicate that undue pressures and inequities
often exist in the distribution of farm machinery. Their nature and extent varies as
between different companies, and even as between different branch

INDUSTRIAL FINANCIAL REPORTS

27

house territories of the same company. Inequities most often are applied in the form
of requirements not definitely stated in dealer contracts as to what constitutes the sales
display, service equipment, and selling organization and effort required to represent
satisfactorily the contracting manufacturer’s line. The long-line manufacturer may also
express dissatisfaction because the dealer handles products made by others.
The pressures applied may, but do not necessarily, involve unfair methods of
competition or deceptive acts or practices in commerce subject to correction under
existing law.
Although a few States have enacted specific legislation designed to deal with this
same problem in the motor-vehicle industry no adequate solution to the problem in the
various fields in which it exists has yet been developed.
INDUSTRIAL FINANCIAL REPORTS
Quarterly industrial financial reports, showing estimates of aggregate financial data
for all American manufacturing corporations, have been made by the Federal Trade
Commission in cooperation with the Securities and Exchange Commission for the last
two calendar years. The purpose of these reports is to provide accurate current
information as to the financial characteristics and operating results of American
manufacturing industries without disclosing the individual figures of any particular
corporation. The reports present composite financial statements which disclose the
relationship between investments, sales, costs, and profits.
The quarterly reports provide a current barometer of conditions in the economy and
its various industry segments and should be of increasing value to business and
Government in showing the financial trend of industrial activities. From these reports
it is possible to determine (l) the general financial situation of manufacturing corporations ; (2) the trend in manufacturing operations ; and (3) variations which may
occur in the economic position and operating results of various industries or of
corporations of different sizes. Those concerned with the problems of small business
use the reports as a primary source of information.
For illustration, the report for the fourth quarter of 1947 showed that the small size
classes of corporations experienced a sharp drop in profits during this quarter in
comparison to the third quarter of 1947, while corporations in the larger size classes
reflected an increase in profits. A further analysis of this sharp drop in the profit
margins on sales of the small manufacturing corporations, particularly those with
assets of less than $250,000, revealed that the decline occurred in all of the industry
groups except “rubber” and “motor vehicles and parts.” It was further noted that the
decline was sharper in foods, printing and p publishing, chemicals, fabricated metal
products, furniture, apparel, and miscellaneous specialties industries.
Although there was marked decline in the profits of the small corporations, the overall industry groups--including large-size corporations-showed profits that compared
favorably with those for the third quarter of 1947. This trend was further supported by
the

28

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

estimates for the first quarter of 1948 which, in spite of some increase in profit
margins for these small manufacturing corporations , indicated that the profits of the
small concerns were only about one-half of the rate of profit shown for the first three
quarters of 1947.
The reports provide an important source of information for the internal operations
of the Federal Trade Commission as well as for a number of other Government
agencies.
Prior to the war, pursuant to section 6 of the Federal Trade Commission Act, the
Commission collected and analyzed the financial operating statements of corporations
in a number of industries and published summaries of the results. Discontinued during
the war, when similar work was performed by the Office of Price Administration, the
project was resumed early in 1947 after the President, by Executive order, had
transferred the financial reporting function back to the Federal Trade Commission.
The plan for resumption of this work was carefully developed after intensive work
by an interagency committee on financial statistics representing nine Government
agencies. This committee operated under the direction of the Bureau of the Budget as
provided for by the Federal Reports Act of 1942 and requested advice from the Industry Advisory Council on Government Reports and the Advisory Council representing
labor organizations.
The interagency committee recommended a program of quarterly and annual
financial reports, assigning the work jointly to the Federal Trade Commission and the
Securities and Exchange Commission. The Securities and Exchange Commission is
responsible for the collection and compilation of information from corporations with
securities listed on a national stock exchange and the Federal Trade Commission is
responsible for the collection of information from a sufficient number of nonlisted
corporations so as to effectively round out a representative sample for determining
current national estimates for all industrial manufacturing groups.
The annual report phase of this work, which involves a larger sample and additional
details as to costs and expenses, has not been inaugurated because the required funds
have not been made available. The annual financial reports, when and if resumed, will
provide information needed to construct an “index of concentration” for each of the
Nation’s major manufacturing industries. This index would show the current changes
which take place in the level of concentration. Development of such an index was the
second recommendation contained in the staff report of the Monopoly Subcommittee
of the House Small Business Committee, published in 1946.

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.
PROCEDURE UPON APPLICATIONS FOR COMPLAINT
Upon receipt of an application for complaint, the Commission through its Bureau of
Legal considers the essential jurisdictional elements before deciding whether it shall
be docketed for investigation. When docketed, it is assigned to the Chief of the
Division of Radio and Periodical Advertising or the Chief of the Division of Field
Investigation, depending upon the type of investigation to be made. Cases requiring
field investigations are assigned to the Division of Field Investigation ; other matters
as more fully set out on pages 37 to 40 are assigned to the Division of Radio and
Periodical Advertising. The matter is thereafter assigned to an attorney for the purpose
of developing all the essential facts.
The general procedure in matters requiring field investigations is to interview the
party complained against, advise him of the charges and request such information as
lie may care to furnish in defense or in justification. It is the policy of the Commission
not to disclose the identity of the complainant. Where necessary, competitors of the
respondent are interviewed to determine the effect of the practice from a competitive
standpoint. O£ten it is desirable to interview consumers and members of the general
public to obtain their assistance in determining whether the practice constitutes an
unfair method of competition or an 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 files a report summarizing the
evidence, reviewing the applicable law, and recoin-mending the action he believes the
Commission should take. The record is then reviewed by the Chief of the Division of
Radio and Periodical Advertising or the Chief of the Division of Field Investigation.
If found to be complete, the file is submitted to the Commission through the Director
of the Bureau of Legal Investigation, accompanied by a statement setting forth the
facts as well as the
1

A brief statement of the provisions of these laws appears on pp. 2 and 3.
29

30

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

division chief’s conclusions and recommendations. The Director attaches his
endorsement or submits to the Commission a separate memorandum in which he may
set forth his disagreement with the recommendations of the division chief.
The Chief of the Division of Radio and Periodical Advertising or the Chief of the
Division of Field Investigation may recommend to the Commission (l) Issuance of a
formal complaint ; (2) negotiation of a stipulation agreement in which the respondent
agrees to cease and desist from the practices challenged as unlawful; or (3) closing of
the case.
If the Commission decides that a formal complaint should issue, the case is referred
to the Bureau of Litigation for preparation of the complaint and trial of the case.
Should the Commission permit disposition by stipulation, the case is referred to the
Bureau of Stipulations.
All proceedings prior to issuance of a formal complaint or acceptance of a
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, together with subsequent proceedings, are matters of 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 ; rather, the prime purpose of the proceeding is to prevent , for the
protection of the public, those unfair methods of competition and unfair or deceptive
acts or practices forbidden by the Federal Trade Commission Act and those 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.
Upon request made within 15 days from service of the complaint , any respondent
shall be afforded an opportunity to submit offers of settlement or proposals of
adjustment where time, the nature of the proceeding and the public interest permit, and
due consideration shall be given to them.
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
examiner, which hearing, with due regard to the convenience and necessity of all
parties, may be held anywhere in the United States, the Commission’s complaint being
supported by one of its trial attorneys and the respondent having the privilege of
appearing in his own behalf or by attorney.

PROCEDURE ON FORMAL COMPLAINTS

31

After the submission of evidence in support of the complaint and on behalf of the
respondent, the trial examiner prepares and files a recommended decision which
includes a statement of (l) findings and conclusions, as well as the reasons or basis
therefor, upon all the material issues of fact, law, or discretion presented on the record;
and (2) an appropriate order. Exceptions to the trial examiner’s recommended decision
may be taken by either counsel.
Briefs may be filed within a stated time after the trial examiner’s recommended
decision is made and, in the discretion of the Commission, upon the written application
of the attorney for the respondent or the attorney supporting the complaint, oral
argument may be had before the Commission. Thereafter, the Commission reaches a
decision either sustaining the charges of the complaint or dismissing the complaint,
sometimes without prejudice to its right to reopen the proceeding or to take such other
action as circumstances may warrant.
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.
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
Commission 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.
813610--49----4

32

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

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, ap p roved 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 dissemination of 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
issued and has 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 elimination of unfair methods of
competition or other acts or practices violative of the laws it administers. Its Bureau
of Legal Investigation performs all legal investigating work under the various statutes
committed to the Commission’s jurisdiction, and conducts a continuing survey of radio
and periodical advertisements to detect 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.37 to 40), there were
pending for investigation2 140 prelimiStatistics reported on pp.32 to 40 concerning the legal investigation work are
division records and not the consolidated record of the Commission and therefore do
2

not coincide with the figures reported in the tabular summary of the legal work for the
entire Com mission appearing on pp.50-52.

LEGAL INVESTIGATIONS

33

nary or undocketed cases. Forty-eight additional applications of this character were
received during the year, making a total of 188 on hand, of which 142 were
investigated. Of the investigated matters 118 were docketed for action, and 24 were
closed without docketing because of lack of jurisdiction or for other reasons. There
remained 46 preliminary cases of this type pending for investigation at the end of the
fiscal year.
Three hundred and sixty-four applications for complaint which had been docketed
without preliminary investigation were pending for regular investigation at the be
ginning of the year. Subsequently 385 additional cases of this type were received,
making a total of 749 such cases docketed for investigation. Of these, 341 were
investigated and transmitted to the Commission for action, leaving 408 cases of this
character pending for investigation at the close of the year.
In addition, 165 supplemental or special investigations were made , including
inquiries into alleged violations of cease-and-desist orders and stipulations and
investigations for the Chief Trial Counsel. At the end of the year, 152 such matters
awaited completion of investigation.
Aside from matters handled as the result of the continuing survey of radio and
periodical advertising and others of the same type not requiring field investigations,
the Bureau of Legal Investigation completed 901 investigations under the laws
administered by the Commission, including those made in connection with industrywide inquiries among automobile dealers in New York and the District of Columbia
and in the cast-iron soil-pipe and cheese industries. There were also disposed of in
connection with the legal work of the Commission 16,447 pieces of incoming and
outgoing mail relating to matters of complaints and inquiries involving varying degrees
of research and study.
Price-fixing and other trade restraints.--Investigation of trade practices which, if
carried to fruition, would result in monopoly or have a tendency toward that end,
constitutes an important segment of the work of the Bureau of Legal Investigation. At
the beginning of this fiscal year, 127 cases of this type were either awaiting
investigation or being investigated. During the year, 108 additional cases were
instituted, making a total of 235 restraint-of-trade matters on the calendar. One
hundred and eleven investigations of this type were completed for consideration and
disposition by the Commission, leaving 124 such cases pending on the active
investigational calendar as of June 30, 1948.
Practically the whole category of trade restraints will be found among the charges
in the matters receiving attention of the Commission during the fiscal year. These
comprise such practices as p rice-fixing, conspiracy to boycott or threats of boycott,
coercion, collusive bidding, control and limitation of supply, interference with sources
of supply of competitors, 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 price maintenance, and selling below cost with the intent and effect of injuring
competitors. Of these, price-fixing continues to be the most frequently recurring
charge.

34

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION , 1948

The following general classifications of commodities involved convey an idea of the
widespread nature of the restraint-of-trade investigations : Building materials, costume
jewelry, law books, nails, Ethyl Glycol, paper, chains, women’s sportswear, laundry,
kapok, railroad car seals, soybeans and soybean products, brick, metal lath, refrigeration units, pharmaceuticals, ice cream and other dairy products, electrical appliances,
toys, fish, motor generator welders, tung oil, cottonseed, cheese, pipe nipples, pipe
fittings, pipe, textiles, looms, shuttles , dental supplies, conveyor chains, and
paperboard.
Included in the above figures are 19 completed matters involving formal docketed
cases. Some were to bring up to date investigations of complaints which had not yet
been tried, but for the most part they consisted of complete investigations to determine
whether the terms of Commission cease-and-desist orders had been violated. Where
violations of orders were found, evidence was obtained in appropriate form to support
civil penalty actions. Such investigations are equally extensive with those conducted
in original cases. Seventeen cases of this character were pending at the close of the
fiscal year.
Of the 235 restraint-of-trade investigations in progress during the fiscal year, 13
resulted from applications for complaint filed by Federal, State, or municipal agencies;
20 were submitted by trade associations; 1 by a labor union; and 60 were initiated by
the Commission on its own motion. Most of the other cases originated as a result of
complaints made by individuals and concerns whose business was being jeopardized
by allegedly unfair and illegal practices.
On Act, section 2, as amended by Robinson-Patman Act.--The Robinson-Patman
Act, approved June 19, 1936, amended section 2 of the Clayton Act and restated in
more inclusive form the basic prohibitions against price discriminations which
injuriously affect competition. It also prohibits certain types of other discriminations
without regard to their competitive effects in specific cases.
An effort is made by the Commission in preliminary stages of an investigation under
the Robinson-Patman Act to determine not only whether the practice in question
involves prima facie violation of the statute but whether the defenses available
thereunder are present. This frequently necessitates surveys of competitive prices and
pricing policies, as well as 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 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. In view of limited funds and personnel, the Commission has
endeavored to confine investigations to matters of substantial importance and to
eliminate the expenditure of time and money in the investigation of those which
possess little practical importance.
At the beginning of the year there were on hand for investigation 95 matters
involving the Robinson-Patman Act. The Commission instituted during the year field
investigations in 100 additional matters involving alleged violations of that act. At the

close of the year 159

LEGAL INVESTIGATIONS

35

matters were pending. Among them were 8 formal cases and 60 cases being
investigated in connection with industry-wide inquiries involving manufacturers of
battery chargers and of machine knives for paper-cutting machines.
During the year 96 investigations in connection with 36 Robinson-Patman Act
matters were completed. 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 RobinsonPatman 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.
Clayton Act, section 3.--This section of the act has reference to exclusive-dealing
contracts made upon condition that the buyer or lessee will not deal in the goods,
wares, or merchandise of a competitor. There were 22 such cases awaiting
investigation at the beginning of the fiscal year. Twelve additional cases were
instituted, making a total of 34 on hand. Eighteen investigations of this type were completed for consideration and disposition by the Commission, leaving 16 pending on the
active investigational calendar.
The following commodities were involved in these investigations : pressure cookers,
corn products, riveting machines and rivets, motors and belting leather, and
automobiles.
Included in the above figures are 11 completed matters which involved formal
docketed cases. No cases of this type were pending at the close of the fiscal year.
Of the 34 exclusive-dealing contract investigations in progress during the fiscal year,
some of the applications for complaint were filed by trade associations, some by
newspaper companies, and others by the Commission on its own motion. The greatest
number , however, resulted from complaints made by individuals, companies, and corporations alleging unfair practices which jeopardized their businesses.
Stock acquisitions, mergers, and consolidations.--The Commission and the
Department of Justice are invested with concurrent jurisdiction to restrain violation of
the Clayton Act. Section 7 of the act prohibits the direct or indirect acquisition by one
corporation engaged in commerce of the stock or other share capital of another corporation engaged also in commerce, or the acquisition by a holding company of the
stock or share capital of two or more corporations engaged in commerce, where the
effect of such acquisitions, or the use of such stock, may be to substantially lessen
competition between the acquiring and the acquired corporations, to restrain such
commerce in any section or community, or to tend to create a monopoly of any line of
commerce. The formation of subsidiary corporations for the actual carrying on of the
immediate lawful business of the acquiring corporation and the acquisition of the
capital stock thereof is excepted from the prohibition. The purchase of capital stock

solely for investment purposes, where the stock is not voted or otherwise used to bring
about substantial lessening of competition, is also excepted. Neither

36

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

the acquisition of the property and assets of competing corporations nor the merger of
the assets and businesses of competing corporations is prohibited by the statute, and
the courts have held that the Commission is without authority to prevent such
acquisitions or mergers notwithstanding their effect on competition and commerce or
their tendency to create a monopoly.
There were six matters of this type pending at the beginning of the fiscal year 1948.
One application for complaint was received and two matters were completed leaving
five pending at the end of the year. The commodities involved were distillery products
and plumbing pottery.
Investigations involving food, drugs, devices, and cosmetics.--In the administration
of the Wheeler-Lea amendment to the Federal Trade Commission Act, special
attention is given to representations concerning medicinal preparations and therapeutic
devices, the use of which might be injurious to health.
Since enactment of the amendment, the Commission has completed 2,623 field
investigations of alleged violations of section 12 of the act, which relates to false
advertising of food, drugs, devices, and cosmetics. Of these, 194 were completed
during the fiscal year. This number includes new cases as well as old cases
reinvestigated to determine whether orders and stipulation-agreements to cease and
desist were being violated, and whether additional practices not previously prohibited
were being carried on in contravention of the law.
At the close of the year, 113 applications for complaint respecting allegedly false
advertising of food, drugs, devices, and cosmetics were under investigation.
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. It is necessary 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 violations. It is also necessary in most cases to
examine the records of manufacturers and others to identify accurately the various
constituent fibers and to determine their weights in the products under investigation.
Frequently laboratory tests are required.
Violations of the Wool Act generally are coupled with other unfair methods of
competition or unfair and deceptive practices, such as false advertising and
misrepresentation. Investigation and proceedings under both the Wool Act and the
Federal Trade Commission Act are required in these cases.
Since the effective date of the act--July 14, 1941--there have been completed 248
field investigations of applications for complaint involving alleged violations of the
Wool Products Labeling Act. Of these, 14 were completed during the 1948 fiscal year.
Eight such applications were in the process of investigation as the year ended.3

3

For additional work under the Wool Act and the regulations, see p. 68.

SURVEY OF RADIO AND PERIODICAL ADVERTISING

37

Export Trade Act.--In its administration of the Export Trade (Webb-Pomerene) Act,
the Commission directed the Legal Investigations Division to investigate the
organization and operation of certain export-trade associations organized and
functioning under the act, and in particular to ascertain whether they (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; or (d) are engaging in unfair methods of
competition in foreign trade.
Preliminary investigations were completed of the activities and operations of one
export-trade association whose members are important producers and distributors of
rubber. Investigations of three other associations were pending at the close of the year.
These involved producers and distributors of alkali and lumber. 4
Industry investigations.--Continuing the policy established 2 years ago, the
Commission directed that investigations be conducted on an industry-wide scale when
practicable. Such investigations may be authorized by the Commission when it appears
that there exist in an industry practices that may call f or corrective action under any
of the laws administered by the Commission. The purpose is to avoid , as far as
possible, widely separated actions which might place some members of an industry in
an unfair or disadvantageous position. Industry-wide investigations may terminate in
a trade-practice conference, the simultaneous negotiation of stipulations, or in separate
proceedings brought simultaneously against each member of an industry using the
allegedly unlawful practice or method.
Six industry investigations were pending at the beginning of the fiscal year 1948;
three were instituted during the year; and four were completed, leaving five pending
as of June 30, 1948. The completed investigations covered the individual activities of
77 different concerns, as follows :
Number of
companies
Industry :
investigated
Cast iron soil pipe
35
Automobile dealers, New York
19
Automobile dealers, District of Columbia
21
Cheese
2
Total
77
SURVEY OF RADIO AND PERIODICAL ADVERTISING
Through its Division of Radio and Periodical Advertising, the Commission conducts
expeditious investigations of certain cases involving false and misleading advertising
violative of the Federal Trade Commission Act, as well as other types of cases not
requiring field investigations, including certain industry-wide investigations.
The survey of advertising was inaugurated by the Commission in 1929. At that time
it was limited to magazines and newspapers. Expanded in 1934 to cover radio

commercial continuities, it also has included, since 1939, mail-order catalogs and
foreign-language news4

For further details of the administration of the Export Trade Act, see p.67.

38

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

papers, and early in 1948 it was extended to include commercial television broadcasts.
Questioned advertisements noted in these surveys form the bases of prospective
investigations, 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 53, which
permits their executing stipulations to cease and desist from the use of the acts and
practices involved. A large majority of the cases are adjusted in this manner.
In matters involving advertising, the investigations cover the practices of all
advertising agencies which participated in the preparation of the advertisements to
determine whether they should be joined as parties in any corrective action by the
Commission.
The only objective of the Commission’s continuous survey of advertising is to
prevent the dissemination of false and misleading advertising representations. 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
20,000, it is physically impossible to survey continuously all advertisements of a
doubtful nature. Also, it has been found unnecessary to examine all the issues of
publications of recognized high ethical standard whose publishers require that
advertising copy be censored 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, the Commission procured 1,619
editions of representative newspapers of established general circulation and 1,173
editions of magazines and farm and trade journals of interstate distribution. These
periodicals included 249 issues of farm journals, 159 issues of trade journals and
specialty publications, and 10 issues of domestic foreign-language publications.
In these newspapers, magazines, and farm and trade journals, 308,-544
advertisements were examined, of which 11,119 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 12,903 pages, examination of which resulted in
325 advertisements being marked as containing possibly false and misleading
representations. Of the 50 mail-order houses included in the survey, 5 had combined
annual sales in excess of $3,365,117,524.

SURVEY OF RADIO AND PERIODICAL ADVERTISING

39

Radio advertising.--The Commission has issued calls for commercial continuities
from each individual radio station three times yearly since January 1, 1947. 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 748,284 commercial radio broadcast
continuities and examined 643, 604. The continuities received amounted to 1,580,543
typewritten pages, and those examined totaled 1,423,515 pages, consisting of 538,950
pages of network script , 852,165 pages of individual station script, and some 32,400
pages of script representing the built-in advertising portions of transcription recording
productions destined for radio broadcast through distribution of multiple pressings of
such recordings to individual stations. An average of 5,582 pages of radio script was
read each working day. From this material 8,819 advertising broadcast statements were
marked for further study as containing representations that might be false or
misleading.
Television advertising.--Mounting public interest as reflected in the accelerated sales
of television receiving equipment, the actual operation of 28 television stations in
highly populated metropolitan areas, and the issuance of 109 construction permits for
additional stations, provided ample reason for the Commission’s attention to this type
of advertising. Therefore, during the first quarter of the calendar year 1948, the
Commission initiated its coverage of television advertising.
Arrangements have been made to receive from television networks, as rapidly as
they go into operation, weekly submittals of advertising script used during the course
of network telecasts. In addition, individual television stations are scheduled to furnish
four times yearly their commercial script on a “sampling” staggered basis for specified
15-day broadcast periods.
To assure expanding coverage as new television stations go into operation, contacts
have been made with persons and companies authorized to construct television
stations, and to proposed network groups, acquainting them with work of the
Commission as it pertains to broadcast periods.
Cooperation of radio and publishing industries.--In general, the Commission has
received the cooperation of the 4 Nation-wide network chains, 16 regional network
groups, and transcription producers en-gaged in preparing commercial radio
recordings; and of 1,244 commercial radio stations, 497 newspaper publishers, and 436
publishers of magazines, farm journals, and trade publications. It has observed a desire
on the part of these broadcasters and publishers to aid in the elimination of false and
misleading advertising.
Number of cases handled.--At the close of the year 572 cases were p ending, as
compared with 630 at the close of the previous fiscal year. During the fiscal year, 390
investigations were completed, and 332 new

40

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

investigations were initiated, 140 of which originated through the division’s continuing
survey of advertising, 46 through letters of complaint, and 146 by reference from the
Commission. Settlement by stipulation was recommended in 43 cases; issuance of
complaint in 2 eases.
Correspondence handled by the division during the year totaled 3,180 incoming
pieces of mail and 9,175 outgoing pieces.
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. The
advertiser is invited to submit informally by letter, in person, or by counsel evidence
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, through the
Director of the Bureau of Legal Investigation, with a recommendation either that
complaint issue or that negotiation of an appropriate stipulation-agreement to cease
and desist be authorized.
Industry-wide investigations.--During the year , the Commission, through its
Division of Radio and Periodical Advertising, completed industry-wide investigations
of the simulated and cultured pearl industry, dealing with the advertising and
promotional practices of 122 separate companies; and of the floor wax products
industry, involving 107 manufacturers and distributors of floor wax. The division also
completed a survey of advertising and promotional practices of manufacturers and
distributors of 127 shampoos and scalp preparations.
At the close of the year, the division was conducting industry-wide investigations
with respect to the advertising of manufacturers and distributors of wallpaper cleaning
preparations, involving 18 companies; manufacturers and distributors of crib and
carriage mattresses, involving 42 companies; and manufacturers and distributors of socalled orthopedic or “health” shoes involving 94 companies.
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 opportunity of
signing a statement of facts and an agreement to cease and desist from most types of
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. (See p.113.)

I. COMPLAINTS UNDER FEDERAL TRADE COMMISSION ACT 41

During the fiscal year the Commission approved 99 stipulations. (See p. 53 for report
of Bureau of Stipulations.)
FORMAL COMPLAINTS
During the fiscal year the Commission issued 70 formal complaints alleging
violations of the laws it administers and reopened 1 case. Of these 71 cases, 53
charged violation of the Federal Trade Commission Act; 14 , violation of the Clayton
Act; 1, violation of the Federal Trade Commission and Clayton Acts; and 3, violation
of the Wool Products Labeling and Federal Trade Commission Acts.
I. COMPLAINTS UNDER FEDERAL TRADE COMMISSION ACT
A. PRICE-FIXING COMBINATIONS AND RESTRAINT-OF-TRADE
PRACTICES
[Complaints referred to are identified by accompanying docket numbers]
In each of six complaints issued by the Commission competing manufacturers and
sales organizations were charged with combining, through their trade associations and
otherwise, to fix p rices and re-strain trade in the sale of their products. The products
involved were steel (5508); bobbins (5543); coupons and tickets (5532); ply-wood
(5529); fir doors (5528); and rubber heels and accessories (5527).
In complaint 5508, the American Iron & Steel Institute and 101 corporations
controlling more than 95 percent of all the steel produced and sold in the United States
were charged with combining and conspiring to promote and maintain monopolistic
and noncompetitive prices and conditions in connection with the sale of their products.
The complaint alleged that , among other unlawful practices, they collusively
maintained a uniform basing-point, delivered-pricing system by which their price
offers to purchasers at any given point were matched.
Another complaint (5531) charged a manufacturer of pressure cookers and canners
with use of coercive practices to enforce exclusive dealing contracts. Violation of
section 3 of the Clayton Act was also alleged in this complaint.
B. FALSE ADVERTISING AND MISREPRESENTATION

A total of 47 complaints charged false and misleading advertising. The majority may
be classified broadly as follows, although some involved more than one classification:
Seven complaints alleged false and misleading representations with respect to the
therapeutic properties of medicinal preparations and devices, and in some cases the
advertisements also were alleged to be false and misleading because they failed to
reveal the potential danger in the use of the advertised products; five charged
misrepresentation with regard to the results to be obtained; seven, misrepresentations
as to origin, composition, condition, quality, ingredients, or price; two,

misrepresentations in connection with the sale of correspondence school courses; four,
misrepresentations in connection with so-called special offers or “free” goods; two ,
misleading use of trade name; one, misrepresentations concerning a so-called
university as to size, status, and

42

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

advantages; and one misrepresentations as to demand, public acceptance, and terms
of sale for an intercommunication device.
C. MISCELLANEOUS COMPLAINTS

Complaints issued under this heading alleged such practices as supplying and using
lottery devices to promote the sale of merchandise; misrepresenting the demand for
and guarantee on certain goods; the use of special “push money” sales schemes and
disparagement of competitors’ products; and misrepresentation in connection with the
sale of magazines.
II. COMPLAINTS UNDER WOOL PRODUCTS LABELING ACT
Three complaints alleged that wool products were misbranded in violation of the
Wool Products Labeling Act of 1939 and the rules and regulations promulgated
thereunder, in that they were not so labeled 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 (5506, 5510, and 5518). One
of these also charged false and misleading advertising in violation of the Federal Trade
Commission Act.
III. COMPLAINTS UNDER CLAYTON ANTITRUST ACT
A. VIOLATION OF SECTION 2(a) OF CLAYTON ACT, AS AMENDED BY
ROBINSON-PATMAN ACT

Thirteen complaints alleged violation of section 2 (a), which prohibits discrimination
in price when it may have adverse effects on competition. Ten of these involved
confectionery products (5544 through 5553), while the others concerned rubber stamps
(5516 and 5517) and a degreasing solvent (5526).
D. VIOLATION OF SECTION 2 (f) OF CLAYTON ACT, AS AMENDED BY
ROBINSON-PATMAN ACT

Eleven complaints alleged violation of section 2 (c) , which prohibits, in connection
with the interstate sale or purchase of merchandise, the granting by a seller or
acceptance by a buyer of brokerage fees on purchases made for the buyer’s own
account. Ten of these involved confectionery products (5544 through 5553), and one,
dried fruits (5534).
C. VIOLATION OF SECTIONS 2 (d) AND 2 (e) OF CLAYTON ACT, AS
AMENDED BY ROBINSON-PATMAN ACT

In 10 complaints (5544 through 5553), respondents engaged in the manufacture and

sale of candy and confectionery products were charged with granting to certain
customers discounts for alleged services and facilities rendered or benefits conferred,
without making the same privilege available on proportionally equal terms to other
competing customers. These acts and practices were alleged to be in violation of
section 2 (d). Respondents were also charged with vio-

I. ORDERS UNDER FEDERAL TRADE COMMISSION ACT

43

lating section 2 (e) by furnishing certain services and facilities to favored customers
without making them available on proportionally equal terms to other competing
customers.
D. VIOLATION OF SECTION 3 OF CLAYTON ACT

A manufacturer of pressure cookers and canners was charged with making sales
contracts on the condition, agreement, and understanding that purchasers should not
use or deal in competitive products (5531). Violation of the Federal Trade Commission
Act was also alleged in this complaint.
ORDERS TO CEASE AND DESIST
The Commission during the fiscal year issued 73 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

Sheffield Farms Co., Inc., New York.--This respondent, one of the largest distributors
of milk in the United States, was ordered to cease and desist from unfair competitive
practices in connection with its purchase of milk products from organizations of milk
producers. The order forbids the corporation to dominate or control any association of
milk producers organized for the purpose of selling to the respondent, in any form or
in any amount, the milk produced by members of the association, when, the object or
the effect or such domination or control is to cause the association, or its officials, to
act solely in the interest of or for the benefit of the respondent and to the detriment of
the association. Attempts to dominate or control such an organization, together with
specified practices tending toward such a result, are also prohibited by the order
(4647).
Minneapolis -Honeywell Regulator Co., Minneapolis --This company, one of the
largest manufacturers of automatic temperature controls in the United States, was
ordered to cease and desist from practices which unlawfully tend to restrain, trade and
create a monopoly. Among the practices prohibited were “tying” and exclusive-dealing
contracts and patent-licensing agreements requiring that unpatented controls be
purchased from Minneapolis-Honeywell or sold only at prices established by it (4920).
(For that part of the order dealing with sec. 2 (a) of the Clayton Act, see p.45; for that
part of the order dealing with Sec. 3 of the Clayton Act, see p.47,.)
Six orders to cease and desist from engaging in any combination or conspiracy to fix
prices and restrain competition were issued against various groups of manufacturers,
trade associations, and others. The respondents and pro ducts involved were :
American Refractories Institute, St. Louis, and others (4900), refractory products; The
Rubber Manufacturers Association, Inc., New York, and others (5448), rubber heels
and soles; Structural Clay Products, Inc., Washington, and

44

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

others (5467), glazed facing the; Structural Clay Products, Inc., Washington, and
others (5468), Sand-struck brick; Master Engravers Guild, Paterson, N. J., and others
(5088), engravings and etchings used in the textile industry; and Pure Carbonic, Inc.,
New York, and others (5143), solid and liquid carbon dioxide.
B. FALSE ADVERTISING OF FOOD. DRUGS, DEVICES, AND COSMETICS

American Dietaids Co., Inc., Yonkers, N. Y., and others.--In this case the respondents
were ordered to discontinue false advertising of 10 vitamin, medicinal and food
preparations. In addition, the order requires that advertisements containing
representations as to the effectiveness of some of the preparations in the treatment of
certain symptoms must affirmatively disclose that the value of the products is limited
to those cases in which the symptoms are due to certain specified conditions, and that
such symptoms frequently arise because of other conditions for which the preparations
will be ineffective (5070).
United Diathermy, Inc., Philadelphia.--Respondent was ordered to cease and desist
from advertising a diathermy device unless the advertisements clearly reveal. that its
unsupervised use by laymen is not safe. Advertisements of the device must disclose
that it is not safe to use unless competent medical authority has determined that its use
is indicated and has prescribed the frequency of treatments, and the user has been
trained in its use (4952).
M. A. Clemens (formerly trading as Clark’s Drugs & Sundries) , Los Angeles.-Respondent was ordered to cease and desist from disseminating any advertisements
of male and female sex hormone preparations which fail to reveal that their
unsupervised use by unskilled persons may result in serious injury (4968).
C. MISREPRESENTATION OF PRODUCTS OTHER THAN FOOD, DRUGS,
DEVICES, AND COSMETICS

Sorbtex Foundation, Inc., Richmond, Va.--This respondent was ordered to cease and
desist from representing that its chemical solution “Sorbtex” makes towels more
absorbent, increases the dryability of towels, or causes towels to dry faster unless such
representations be limited to towels prior to laundering. Other provisions of the order
prohibit representations that effects produced by use of the product are permanent; that
it remains in the fabric of towels after repeated laundering; and that it increases the
tensile strength of towels (4989).
The Staffin Johns Co., Chicago.--The copartners composing this firm were ordered
to cease and desist from representing that they are the world’s largest manufacturers
of baby bedding or from misrepresenting in any manner their size or production
capacity. They are also required to stop claiming that their mattresses are
recommended or prescribed by doctors or are manufactured under medical supervision
(5120).
Blackstone College of Law, Inc., Chicago, and others.--This correspondence school
was ordered to stop misrepresenting its status as an educational institution, its courses
of instruction, and the number and qualification of its instructors. Representations
forbidden by the order are to the effect that Blackstone is a large law school; that

ORDERS UNDER THE CLAYTON ANTITRUST ACT 45

it has a faculty of many well-known and scholarly instructors; that its methods of
teaching or courses of instruction are comparable with those used by leading resident
law schools; that it is a recognized or standard law school; or that it has been approved
or given any rating by the Association of American Law Schools. Holding that the
manner in which “purported degrees” are granted constitutes “an imposition and fraud
upon the public and upon the Nation’s educational system,” the Commission ordered
the respondents to stop issuing diplomas or degrees, other than so-called honorary
degrees, unless the recipients have actually completed satisfactorily a regularly prescribed course of study under competent supervision. The respondents are also
directed to stop “conferring or granting so-called honorary degrees where the sole or
primary basis for such action is the payment by the recipient of a monetary
consideration” (4929).
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 non-fibrous loading
or adulterating material used; the name of the manufacturer or qualified distributor of
the product, or the manufacturers registered identification number and the name of the
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 :
Brooks Clothes, Pittsburgh.--The copartners in this retail clothing store were found
to have mutilated or removed labels from certain garments which were later sold to the
general public. These labels had been affixed by the manufacturers and contained the
requisite information. The order requires the respondents to refrain from such practices
and to stop selling woolen products which are misbranded because of the absence of
the required labels (5518).
Harry Bank & Son, Philadelphia, and others.--The respondents in this case--one a
manufacturer, the other a retailer of men’s trousers--were ordered to cease and desist
£rom misbranding the products by failing to label them with the required information
(5510).
III. ORDERS UNDER THE CLAYTON ANTITRUST ACT
A. VIOLATIONS OF SECTION 2(a) OF CLAYTON ACT, AS AMENDED BY
ROBINSON-PATMAN ACT

Minneapolis-Honeywell Regulator Co., Minneapolis.--This respondent was ordered
to cease and desist from discriminating in price between competing purchasers of
automatic temperature controls and other furnace controls of like grade and quality,
when the differences in price are not justified by differences in the cost of manufacture
sale, or delivery resulting from differing methods or quantities in which such products

are sold or delivered (4920). (For that part of

46

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

the order dealing with sec. 3 of the Clayton Act, see p.47; for that part of the order
dealing with sec. 5 of the Federal Trade Commission Act see p.43.)
Unity Stamp Co., Inc., New York.--This respondent was ordered to cease and desist
from discriminating in the price of rubber stamps of like grade and quality by selling
them to some purchasers at prices materially different from those charged other
competing customers (5048).
Two manufacturers of candy and confectionery products were ordered to cease and
desist from discriminating in the price of confectionery products of like quality and
grade (where the price differences are not justified by cost differences) by selling to
some purchasers at prices different from those charged other competing customers.
These respondents were : Walter H. Johnson Candy Co., Chicago (4677), and The
Curtis Candy Co., Chicago (4556 and 4673). (For part of the latter order dealing with
sec. 3 of the Clayton Act, seep. 47; sec. 2 (d), see below; sec. 2(e), see p.47; and sec.
2 (f), see p.47.)
B. VIOLATION OF SECTION 2(c) OF CLAYTON ACT AS AMENDED BY
ROBINSON-PATMAN ACT

Five orders were directed against violations of the brokerage section of the
Robinson-Patman Act, which prohibits, in connection with transactions in interstate
commerce, the payment by a seller or acceptance by a buyer of brokerage fees or other
compensation in lieu thereof on purchases made by such a buyer in his own behalf or
by an agent or other intermediary acting for him or subject to his control.
Food dealers paying unlawful brokerage to buyers.--The respondents in three orders
were directed, in connection with the interstate sale of seafood products, 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 b
such buyer for his own account. The respondents named in the orders are : New
England Fish Co., Seattle (5471); Ketchikan Packing Co., Ketchikan, Alaska, and
others (5164); Columbia River Packers Association , Inc ., Astoria, Oreg. (5033).
Dealers accepting unlawful brokerage from sellers.--The following two respondents,
in connection with the interstate purchase 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 : Jesse C. Stewart Co. and others, Pittsburgh (5494);
Gevertz Buying Corp. and others, New York (5501).
C. VIOLATION OF SECTIONS 2(d) AND 2(e) OF CLAYTON ACT. AS AMENDED
BY ROBINSON-PATMAN ACT

The Curtiss Candy Co., Chicago.--This manufacturer of candy and confectionery
products was ordered to cease and desist from paying certain purchasers for
advertising or promotion services or facilities without making such payment available

to competing purchasers on proportionally equal terms. This practice was found to be
in violation of section 2 (d).

III. ORDERS UNDER THE CLAYTON ANTITRUST ACT

47

The company was also ordered to cease and desist from furnishing services and
facilities to some customers when such services or facilities are not accorded on
proportionally equal terms to other competing purchasers. These practices were found
to be in violation of section 2 (e) (4556 and 4673). (For part of the order dealing with
sec. 2 (a) , see p.46; Sec. 2 (f) , see below; sec. 3, see below.)
D. VIOLATION OF SECTION 2 (f) OF CLAYTON ACT. AS AMENDED BY
ROBINSON-PATMAN ACT

The Curtiss Candy Co., Chicago.--The order in this case directed that the
respondent, in connection with the purchase of glucose used in the manufacture of its
candy, cease and desist from knowingly inducing and receiving from any seller any
discrimination in price, either directly or through discounts or allowances made by
such means as booking practices or extension of delivery time (4556 and 4673). (For
that part of the order dealing with sec. 2 (a) , see p.46; sec. 2 (d) , seep. 46; sec. 2 (e)
, see above; and sec. 3, see below.)
E. VIOLATION OF SECTION 3 OF CLAYTON ACT

Minneapolis-Honeywell Regulator Co., Minneapolis.--The Commission ordered this
manufacturer of automatic temperature controls to cease and desist from selling or
contracting to sell primary controls on the condition, agreement, or understanding that
the purchaser shall not use with them any limit controls or thermostats other than those
acquired from the respondent or from some source authorized by the respondent
(4920). (For part of the order dealing with sec. 5 of the Federal Trade Commission
Act , see p.43; for part of the order dealing with sec. 2 (a) of the Clayton Act, seep.
45.)
The Curtiss Candy Co., Chicago.--The Commission ordered the respondent to cease
and desist from selling or contracting to sell candy products on the condition,
agreement, or understanding that purchasers shall not use or deal in competitive
products, and from enforcing or continuing in operation or effect any condition, agreement, or understanding in connection with any existing contract of sale which is to the
effect that the purchaser will deal in and sell only candy products supplied by the
respondent (4556 and 4673). (For part of the order dealing with sees. 2 (a) , 2 (d), 2
(e), and 2 (f) of the Clayton Act , see pp.46 and 47, respectively.)
CASES IN FEDERAL COURTS
COMMISSION ACTIONS IN THE UNITED STATES SUPREME, CIRCUIT, AND
DISTRICT COURTS

During the fiscal year there were 20 eases in the United States Supreme Court and
circuit courts of appeals in which the Commission was a party.
Rulings favorable to the Commission were obtained in six cases in circuit courts of

appeals and in two cases in the Supreme Court. Three cases in circuit courts of appeals
were dismissed by stipulation. There were no decisions adverse to the Commission
during the fiscal year.
In each of two cases in which circuit courts of appeals approved Commission
actions, the Commission’s orders to cease and desist were
813610--49----5

48

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

dismissed as to one petitioner. In one of the cases in the Supreme Court the
Commission’s order was slightly modified.
At the end of the fiscal year there were no cases pending in the Supreme Court, but
nine petitions to review cease-and-desist orders were pending in circuit courts of
appeals.
One writ of certiorari was granted to the Commission; by the Supreme Court; none
was granted to others. Six petitions to review Commission orders to cease and desist
were filed in circuit courts of appeals.
Although one petition for rehearing filed by the Commission in a circuit court of
appeals was denied, that court was later reversed by the Supreme Court. The Supreme
Court denied one petition for rehearing on a decision in that court favorable to the
Commission. Three petitions for rehearings in circuit courts of appeals to reverse
decisions affirming Commission orders were denied.
Four civil penalty involving violations of orders to cease and desist, were pending
in United States district courts at the end of the fiscal year.
Two proceedings were brought by the Attorney General at the Commission’s request
in the United States District Court for the Northern District of Illinois, seeking
mandatory injunctions to compel two corporations to file special reports under section
6 (a) and (b) of the Federal Trade Commission Act, and also judgments of $100 for
each day they have failed to file the reports. A petition to review a similar order
requiring a special report was filed in a circuit court of appeals by another corporation.
These three matters were pending as the fiscal year ended.
PETITIONS TO REVIEW CEASE AND DESIST ORDERS
Cases in United States circuit courts of appeals and in the Supreme Court involving
Commission cease and desist orders are summarized below. (Except where otherwise
indicated, cases involve violation of the Federal Trade Commission Act. Circuit courts
of appeals are designated as First Circuit (Boston), etc.)
CASES DECIDED BY THE COURTS
Allied Paper Mills, Kalamazoo, Mich., and others.--The Seventh Circuit (Chicago)
affirmed the Commission’s order prohibiting a combination in restraint of trade in the
sale of book print and coated paper, except as to Consolidated Water Power & Paper
Co.
Amasia Importing Corp., New York.--The Second Circuit (New York) dismissed the
petition to review in accordance with stipulation of counsel. This case involved
charges of misrepresentation of women’s girdles.
American Association of Law Book Publishers, Rochester, N. Y., and others.--The
Second Circuit (New York) affirmed the Commission’s order against a price-fixing
combination in the sale of lawbooks and legal publications, except as to Frank
Shepherd Co. A petition for rehearing was denied.

A. P. W. Paper Co., Inc., Albany, N. Y.--This case was remanded to the Commission
during the previous fiscal year for modification of its order banning use of the Red
Cross name and symbol in the sale of toilet tissue and paper towels. During the fiscal
year 1948, the

PETITION TO REVIEW CEASE AND DESIST ORDERS

49

modified order, permitting qualified use of the Red Cross name and symbol, was
submitted to the Second Circuit (New York) and was affirmed.
The Cement Institute, Chicago, and others.--The Supreme Court of the United States
reversed the Seventh Circuit (Chicago) and affirmed the Commission’s order to cease
and desist from a Nationwide combination and conspiracy to restrain price competition
in the sale of Portland cement and to discriminate in price through the agreed use of
a multiple basing-point, delivered-price system and other collusive practices. Petitions
for rehearing were denied.
Consumers Home Equipment Co. and others, Detroit.--The Sixth Circuit
(Cincinnati) affirmed the Commission’s order prohibiting false and misleading
representations as to silverware, mattresses, and other household goods.
Morton Salt Co., Chicago.--The Seventh Circuit (Chicago) denied the Commission’s
petition for rehearing. The Supreme Court granted a writ of certiorari, reversed the
Seventh Circuit and affirmed the Commission’s order against p rice discrimination in
the sale of salt in violation of section 2 (a) of the Robinson-Patman Act.
Ox’O-Gas Co., New York.--The Second Circuit (New York) dismissed the petition
to review in accordance with stipulation of counsel. This case involved
misrepresentation in connection with the sale of gasoline and gasoline intensifiers.
Edward P. Paul & Co., New York.--The United States Court of Appeals for the
District of Columbia affirmed the Commission’s order forbidding false and misleading
advertising of lamps, dishes, and other articles. A petition for rehearing was denied.
Scotch Woolen Mills, Chicago.--The Seventh Circuit (Chicago) modified the
Commission ‘ s order to cease and desist and dismissed the petition for review in
accordance with stipulation of counsel. The charge was misrepresentation of the
petitioner’s business status and of the place of origin of men’s clothing.
Triangle Conduit & Cable Co., Elmhurst, N. Y., and others (Rigid Steel Conduit
Association).--The Seventh Circuit (Chicago) affirmed the Commission’s order against
a price-fixing combination in the sale of rigid steel conduit, involving the use, among
other matters, of a basing-point, delivered-price system. A petition for rehearing was
denied.
CASES PENDING IN THE COURTS
Alberty Food Products, and others, Hollywood, Calif.--United States Court of
Appeals for the District of Columbia, misrepresenting the therapeutic properties of
food and drug products.
Canute Co., Milwaukee--Seventh Circuit (Chicago), false and misleading advertising
of Canute Water, a hair dye.
Decker Products Co. and others, Pelham, N. Y.--United States Court of Appeals for
the District of Columbia, false and misleading advertising of “Vacudex,” a device
represented to save gasoline.
Elgin Razor Corp., Chicago, and others.--Seventh Circuit (Chicago), false and
misleading advertising in sale of razors, clocks, and other merchandise. (Petition for

review filed by Jack Galter and others.)
Hillman Periodicals, Inc., and others, New York.--Second Circuit (New York) ,
misrepresentation in the sale of books.

50

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

Minneapolis-Honeywell Regulator Co., Minneapolis, Minn--Seventh Circuit
(Chicago) , sales practices which tend to restrain trade and to create a monopoly in e
sale of automatic temperature controls in violation of the Federal Trade Commission
Act and sections 2 (a) and 3 of the Clayton Act.
Standard Oil Co. (an Indiana corporation), Chicago.--Seventh Circuit (Chicago) ,
price discrimination in the sale of gasoline in violation of the Clayton Act.
Tag Manufacturers Institute, New York, and others.--First Circuit (Boston),
conspiracy to fix prices and otherwise restrain competition in sale of tags and tag
products.
United States Steel Corp., New York, and others.--Third Circuit (Philadelphia) and
Fifth Circuit (New Orleans), use of “Pittsburgh-plus” basing-point system of fixing
prices for rolled-steel products in alleged violation of the Clayton Act and the Federal
Trade Commission Act.
PENDING CASES INVOLVING SPECIAL ORDERS OF THE COMMISSION

The following cases involve orders issued by the Commission under sections 6 (a)
and (b) of the Federal Trade Commission Act :
Morton Salt Co., Chicago, and International Salt Co., Scranton, Pa.--United States
District Court, Northern District of ILLINOIS (Chicago) ‘ initiated by the Attorney
General at the Commission’s request seeking mandatory injunctions and forfeitures
of $100 per day for failure to file special reports.
General Foods Corp., New York.--Seventh Circuit (Chicago), petition for review of
order requiring a special report, and for interim stay of proceedings before the
Commission.
TABLES SUMMARIZING LEGAL WORK OF THE COMMISSION AND
COURT PROCEEDINGS, 1915-48
TABLE 1.--Applications for complaints
FISCAL YEAR ENDED JUNE 30, 1948
TO JUNE 30, 1948
Pending beginning of year
1,140
Applications s docketed
884
Previous action reconsidered :
To complaints
0
Settled by stipulation to cease
and desist
15
Settled by acceptance of TPC
rules
6
Consolidated with other proceedings
0
Dismissed
0
Closed without further proceed
ings 1
0
22,172
Total for disposition
2, 045

Applications docketed
21,783
Previous action reconsidered :
To complaints
10
Settled by stipulation to cease
and desist
240
Settled by acceptance of TPC
rules
12
Consolidated with other proceedings
1
Dismissed
8
1
Closed without further proceed
ings 1
45
Total for disposition

5,059
To complaints

To complaints
Settled by stipulation to cease and

66

CUMULATIVE SUMMARY, 1915

Settled by stipulation to cease and
desist
99
97
Settled by acceptance of TPC rules 0
proceedings 180
Consolidated with other proceedings
8
Dismissed
0
Closed without further proceedings 1
494
Total disposition during year
667
Pending end of year
1,378

desist
6,773
Settled by acceptance of TPC rules
Consolidated with other
Dismissed
3,863
Closed without further proceed4
,
ings 1
Total disposition
20,794
Pending June 30, 1948
1,378

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

51

TABLES SUMMARIZING LEGAL WORK, 1915-48
TABLE 2.-Complaints
FISCAL YEAR ENDED JUNE 30, 1948

CUMULATIVE SUMMARY, 1915 TO JUNE 30, 1948

Pending beginning of year
Complaints docketed
Previous action reconsidered :
Orders to cease and desist
Settled by stipulation to cease
and desist
Dismissed
Closed without further proceedings
Total for disposition

Complaints
Previous action reconsidered :
Orders to cease and desist
Settled by stipulation to cease
and desist
Dismissed
Closed without further proceedings
Total for disposition

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

392
70
1
0
0
0
463
0
73
9
2
34
25
143
320

5,573
70
1
12
12
5,658

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
Pending June 30, 1948

12
3,964
75
40
1,009
238
5,338
320

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, 1948
Pending beginning of year
Appealed
Resubmitted (remand)
Total for disposition
Decisions for Commission
Decisions for others
Petitions withdrawn
Cases remanded to Commission
Total disposition during year
Pending end of year

11
6
1
18
6
0
3
0
9
9

CUMULATIVE SUMMARY, 1915 TO JUNE 30, 1948
Appealed
381
Resubmitted (remand)
1
Total for disposition
382
Decisions for Commission
Decisions for others 1
Petitions withdrawn
Cases remanded to Commission
Total disposition
Pending June 30, 1948

200
103
68
2
373
9

1 This table lists a cumulative total of 103 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 1 case, with 25 different subdivisions. It was tried, briefed, and argued as 1 case and was so
decided by the court of appeals. The same held true of the curb-pump group (with 12 different subdivisions) , the
Royal Milling Co. group (with 6 different subdivisions), and the White Pine cases (12 subdivisions). In reality,
therefore, these 55 docket numbers mean but 4 cases ; and, if cases and not docket numbers are counted, the total
decisions in favor of the respondents would be 52.
NOTE.--During the fiscal years 1919-48, inclusive, 60 petitions by the Commission for enforcement of orders to
cease and desist were passed upon by courts. Of these proceedings, 56 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 within 60 days after service of an order.
TABLE 4.--Court proceedings--orders to cease and desist--petit ions for review to
the Supreme Court of the United States
FISCAL YEAR ENDED JUNE 30, 1948
Pending beginning of year
Appealed by Commission
Appealed by others

CUMULATIVE SUMMARY, 1915 TO JUNE 30, 1948
1
1
0

Appealed by Commission
Appealed by others
Total for disposition

50
55
105

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

2
Decisions for Commission
Decisions for others
Petitions withdrawn by Commission
Certiorari denied Commission
Certiorari denied others
Total disposition
Pending June 30, 1948

2
0
0
0
0
2

31
15
2
9
48
105
0

0

52 ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION , 1948
TABLE 5.--Court proceedings--madamus, injunction, etc.--district courts and
circuit courts of appeals
FISCAL YEAR ENDED JUNE 30, 1948

CUMULATIVE SUMMARY, 1915 TO JUNE 30, 1948

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

0
2
1
3

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

0
0
0
0
0
0
3

Instituted by Commission
Instituted by others
Total for disposition

74
43
117

Decisions for Commission
Decisions for others
Petitions withdrawn by Commission
Petitions withdrawn by others
Cases remanded to Commission
Total disposition
Pending June 30, 1948

83
18
5
7
1
114
3

TABLE 6.---Court proceedings--mandamus, injunction, etc.--Supreme Court of
the United States
FISCAL YEAR ENDED JUNE 30, 1948

CUMULATIVE SUMMARY, 1915 TO JUNE 30, 1948

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

0
0
0
0

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

0
0
0
0
0
0

Appealed by Commission
Appealed by others
Total for disposition

9
4
13

Decisions for Commission
Decisions for others
Certiorari denied Commission
Certiorari denied others
Total disposition
Pending June 30, 1948

3
5
1
4
13
0

PART III. SETTLEMENT OF CASES BY STIPULATION

CORRECTIVE ACTION THROUGH INFORMAL CONFERENCES
Through its Bureau of Stipulations, the Commission affords businessmen an
opportunity to settle by agreement, without the necessity of formal adversary
proceedings, certain types of cases 1 involving unfair methods of competition or unfair
or deceptive practices.
To this bureau, consisting of a Director, an Assistant Director, a staff of attorney
conferees, and a small clerical force, the Commission refers all cases considered
appropriate for settlement by Stipulation. The bureau takes no part in the investigation
or prosecution of any matter. Instead, its procedure is to serve upon the proposed
respondent in any case so referred a statement of the practices which the Bureau of
Legal Investigation recommends should be discontinued as being violative of law. The
proposed respondent may reply by letter or confer in person or through an authorized
representative with the Director of the Bureau of Stipulations or with a designated
attorney-conferee. Usually these conferences are presided over by an attorneyconferee. Participants in these informal hearings, besides the proposed respondent and
his representatives include one or more representatives of the Bureau of Legal
investigation and any other interested bureaus. Through frank, informal, and thorough
discussion of the facts and the issues involved, amicable settlements may be reached
whereby unfair and deceptive practices are eliminated in the public interest on a
cooperative basis. As to charges deemed to have been substantially proved, a
stipulation of facts and agreement to cease and desist from the practices in question
is forthwith drafted, signed, and presented to the Commission for its consideration in
settlement of the case. Or this informal hearing may result in a recommendation for
closing the case in whole or in part, or for such other action as appears to be in
accordance with law and the public interest.
Whenever it appears in the course of negotiations for a stipulation that the practices
charged are generally in use in the industry involved, the bureau recommends the
institution of investigations on an industry-wide basis. The objective is to provide
uniform and concurrent voluntary corrective action, if any action is indicated,
applicable to all the members of the various industries, so that all may be placed on an
equal competitive basis.
The Bureau of Stipulations is also charged with the duty of obtaining from parties
who have entered into voluntary agreements to cease and desist reports showing in
detail the manner and form of their compliance.
During the fiscal year, upon the recommendation of the bureau, the Commission
disposed of 231 cases as follows :
1 The policy of the Commission with respect to disposition of cases by stipulation is set forth in its
Statement of Policy on p. 113.

53

54

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948
Accepted executed stipulations
Closed without prejudice
Referred for further investigation
Directed issuance of complaints
Placed on suspense
Total

1

152
53
13
12
1
231

1

This figure includes 53 amendment stipulations.

A recapitulation of the bureau’s work during the fiscal year follows :
Cases pending June 30, 1947
Cases referred to bureau during fiscal year
Total for disposition
Cases disposed of during fiscal year
Balance

1

88
263
351
231
120

1 11 additional stipulations were negotiated and accepted by the Commission, which were not wholly
dispositive of the cases in which the stipulations were obtained, but which cases were completed and
disposed of so far as the Bureau of stipulations is concerned, and are therefore no longer pending. With
this adjustment, cases pending in the bureau July 1, 1948, totaled 109.

PART IV. TRADE PRACTICE CONFERENCES
ESTABLISHMENT AND ADMINISTRATION OF TRADE PRACTICE
RULES FOR INDUSTRIES
Trade practice conferences provide a means whereby members of an industry may
cooperate with the Commission in the establishment of rules for the prevention on an
industry-wide basis of unfair competitive practices.1 Rules promulgated under this
procedure define and catalog unfair methods of competition and other unlawful business practices. In the establishment of these rules, industry members and other
interested and affected parties, including consumer representatives, are given full
opportunity to express their views regarding the proposed rules, including opportunity
to be heard at public hearings.
Being industry-wide in scope, conference proceedings serve to place all industry
members on a fair and equal competitive basis. The procedure provides a common
ground upon which competitors may meet and freely discuss practices which are unfair
or harmful or otherwise contrary to the public interest. It thus becomes possible for
members of an industry voluntarily to abandon condemned and questionable practices
in an atmosphere of mutual understanding and confidence. Through cooperative
action, observance of the law is effectuated in a wide area of business activity, with
resulting economies in the cost of law enforcement both to Government and to
industry.
The work of administering promulgated rules is directed to the maintenance of active
cooperation between the industry and the Commission in promoting voluntary
observance of the rules and in ascertaining new industry situations which may require
amendment of the rules or other action. Industry members are afforded guidance
designed to assure business conduct in accordance with law.
Trade practice conference procedure.--The procedural requirements applicable to
proceedings for establishment of trade practice rules are covered in the Commission’s
Rules of Practice. (See p.109.) Trade practice conference proceedings may be
instituted by the Commission upon its own motion or upon application by an industry
whenever this action appears to the Commission to be in the public interest. Any
interested party or group in an industry, large or small, may apply to the Commission
for the institution of such proceedings. When a conference is authorized, industry
representatives are invited to meet together to discuss proposed rules.
At all stages of the proceedings, members of the staff are available to aid industry
representatives in working out constructive solutions of problems encountered in
conforming trade practices to the law.
1

The Commission policy with respect to settlement of cases by means of this procedure is set forth at

p.113.

55

56

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

Before promulgation of trade practice rules, public hearings are held to give all
interested or affected parties or groups, including members of the general public,
opportunity to present their views, suggestions, or objections.
GROUP I AND GROUP II RULES EXPLAINED
The public as well as honest business is entitled to the benefits which flow from fair
competition. Trade practice rules may include not only provisions for the elimination
of practices which are illegal per se or conducive to unfair competitive conditions in
the industry, but also provisions for fostering and promoting fair competition in the
public interest. The Commission classifies promulgated rules as group I and group II
rules, respectively.
Group I rules.--Rules in this category embrace trade practices considered illegal
under laws administered by the Commission, as construed in the decisions of the
Commission and the courts, and include unfair methods of competition and unfair or
deceptive acts and practices. The Commission is empowered to take appropriate action
in the public interest to prevent the use of these unlawful practices in commerce by any
person, partnership, corporation, or other organization subject to its jurisdiction.
Group II rules.--These rules are wholly voluntary as distinguished from the
mandatory requirements expressed in group I rules. They embrace industry practices
to be encouraged as promotive of fair competition, or condemned as being conducive
to unfair competitive conditions although not per se illegal. The Commission will not
accept for promulgation such an industry rule unless the provision is in harmony with
law and the public interest.
CONFERENCE AND RULE MAKING ACTIVITIES DURING YEAR
Besides conference proceedings resulting in the promulgation of rules for four
industries during the fiscal year, proposed rules for four other industries were released
and public hearings held thereon. Formal trade practice conferences were held for five
other industries. In all, seven formal conferences and a like number of public hearings
were held. Other pending and newly instituted proceedings progressed to various
stages of completion by the end of the fiscal year. In addition, practices of other
industries were surveyed, and informal preliminary conferences were held with
industry representatives looking toward the initiation of conference proceedings.
Trade practice rules, specifically applicable to the problems of each industry
concerned and covering a wide variety of practices, were promulgated for four
industries which have an estimated annual volume of business aggregating more than
a billion dollars. These rules are summarized below :
Rules for the watch case industry.--Defining and inhibiting various trade practices
as unfair, these rules include comprehensive specification s for the proper marking of
watch cases to reveal their true metal composition so that purchasers may be correctly
informed and deception prevented. The rules provide that the precious metal content

of watch cases represented as being composed of or coated with gold

CONFERENCE AND RULE MAKING ACTIVITIES DURING YEAR 57

or gold alloy is not to fall below a specified minimum fineness. Cases made of alloys
which do not meet this minimum are to bear markings disclosing the deficiency.
Purchasers may also learn from the mark whether the watch case is made of precious
metal throughout or merely “filled,” “plated,” or otherwise “coated” with precious
metal. Other provisions define proper use of such terms as “gold filled,” “rolled gold
plate,” and “gold electroplate.”
Additional rules cover such proscribed practices as fictitious pricing; deception as
to foreign origin of product; misrepresentation of character of business; imitation of
trade-marks and trade names; use of misleading or warranties; misuse of certain
significant words and phases; use of lottery schemes; commercial bribery; deceptive
selling of used, refinished, or second-hand products; false invoicing; full-line forcing;
unlawful discriminations in prices, rebates, discounts or allowances; and various types
of false advertising and deceptive selling.
Rules for the office machine marketing industry.--Members of this industry engage
in the marketing of typewriters , stenotype machines, bookkeeping machines, adding
machines, addressing machines, calculating machines, duplicating machines,
autographing registers, and dictating machines, as well as other mechanical devices
used in the performance of or training for office work. In addition to defining
practices which are to be avoided as unfair, the rules contain minimum specifications
for the proper use of such terms as “demonstrator,” “factory rebuilt” “rebuilt,”
“reconditioned,” and “overhauled” as applied to typewriters. They include inhibitions
against the sale of typewriters as “new” when they have been utilized as demonstrators
or otherwise used to such an extent as to make it improper to classify them as new.
These and other provisions afford specific guidance, on an officially recognized basis,
for eliminating misunderstanding, confusion, deception, and unfair methods of
competition.
Rules for the wholesale confectionery industry.--This industry consists of some
8,000 wholesalers engaged in the sale and distribution of candy, chewing gum, and
related confectionery products. Rules for this industry are designed to prevent such
unfair practices as use of lottery schemes; imitation of trade-marks and trade names
; misuse of the word “free” ; misrepresentation as to character of business ; deception
through failure to differentiate between wholesale and retail transactions; deception
as to available supply of advertised merchandise ; false invoicing; coercing purchase
of one product as a pre-requisite to the purchase of other products; combination or
coercion to fix prices, suppress competition, or restrain trade ; and prohibited
discrimination in prices, discounts , or allowances.
Rules for the hand knitting yarn industry.--These rules are directed to the
maintenance of free and fair competition and the elimination of unfair or deceptive
practices and other trade abuses in an industry whose annual volume of sales at retail
prices exceeds $40,000,000. Of special public interest are provisions inhibiting
misrepresentation as to weight and measure and specifying the maximum amount of
absorbed moisture which may be included in the declared weight of consumer units
of yarn. Other rules afford guidance as to the use of such terms as “Zephyr,” “Tweed,”

“Crepe,” “Cashmere,” “Mohair,”

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

and “Angora,” as descriptive of yarn, and call for proper disclosure of fiber or material
content. Additional inhibitions relate to such practices as commercial bribery; unfair
consignment distribution; exclusive dealing; imitation or simulation of trade-marks and
trade names of; defamation of competitors or disparagement of their products ; and
illegal discrimination.
PENDING TRADE PRACTICE PROCEEDINGS
Pending conference proceedings in which public hearings were held during the year
relate to the following industries : fountain and mechanical pencil, baby chick,
rendering, and hosiery. Industries for which trade practice conferences were held
during the year include the following: rayon, nylon, and silk converting, fountain pen
and mechanical pencil, fine and wrapping paper distributing, water resistant fabrics
and apparel, trade pamphlet binding, and handkerchief.
In other conference proceedings--some initiated upon industry application and others
upon the Commission’s own motion-such preliminary steps as studying and surveying
industry practices, holding informal conferences with representatives of various
industry groups, and conducting the necessary correspondence, had been undertaken
preparatory to formal conferences.
ADMINISTRATION OF RULES
At the close of the fiscal year there were under administration promulgated rules for
over 160 industries, com p rising some 2,500 separate rule provisions. Rule
administration embraces all cooperative compliance activities, including interpretation
of the rules in their application to diversified industry situations. During the fiscal
year, activities in this field were conducted to the extent possible with the personnel
available. The results are reflected in many instances in which unfair practices have
been eliminated through cooperative effort without resort to compulsory proceedings.
In addition to general rule administration, several industries received special
consideration.
Luggage and related pro ducts industry.--Some 50 firms engaged in the
manufacture, sale, or distribution of small leather goods, such as billfolds, key cases,
and coin purses, were afforded opportunity to correct voluntarily labeling which were
contrary to the industry rules. The results achieved demonstrate a primary objective
of trade-practice proceedings; that is, the wholesale elimination of unfair competitive
practices by voluntary action.
Hosiery industry.--These rules are of an active type requiring constant
administration. Among other hosiery matters handled during the year was the question
presented by the industry respecting the propriety of applying the term “gauge” to
circular-knit or seamless hose. This necessitated a conference-hearing to consider the
interpretation of the rule in question, and what amendment, if any, was required. The
inquiry entailed considerable research, correspondence; and some field investigation.

TYPES OF PRACTICES COVERED IN PROMULGATED RULES 59

Radio receiving set manufacturing industry.--A special problem in this industry
concerned the reported use by several industry members of various types of sales
promotional plans under conditions condemned as unfair in the industry rules. These
members were advised of the objectionable features of their sales promotional plans
and were afforded the opportunity of voluntarily discontinuing them In every instance
observance of the requirements was accomplished expeditiously without resort to
litigation.
Watch rules (respecting use of such designations as “waterproof,” “shockproof,”
and “nonmagnetic") -- Special consideration was also given to problems arising under
these rules. Through cooperative compliance activities, the advertising and marking
practices of industry members were substantially improved during the year, particularly with regard to use of the terms “waterproof,” “watertight,” “moistureproof,”
“shockproof,” “shock protected,” and “nonmagnetic” as applied to watches, watch
cases, and watch movements.
Artificial limb industry.--These rules have as their principal objective the protection
of some 600,000 physically handicapped persons in the United States against the
harmful effects of deceptive trade methods and monopolistic practices in the sale of
artificial limbs or other prosthetic devices. A survey of the promotional literature of
industry members was completed during this fiscal year to determine the degree of
compliance with rules inhibiting misrepresentation and deceptive sales methods. This
survey was followed by corrective action wherever necessary to obtain full observance
of the rules.
Masonry waterproofing products industry.--Advertising and labeling practices in
thus industry were examined, and cooperative compliance with the rules was brought
about through informal conferences and correspondence. Exaggerated and deceptive
claims as to the effectiveness of industry products were among the unfair trade
practices corrected through this administrative compliance work.
Other industry rules receiving special attention.--Other rules receiving special
attention during the fiscal year include those for the following industries : Fur,
household fabric dye, linen, musical instrument and accessories, rayon, shrinkage of
woven cotton yard goods, watch case, and wholesale jewelry.
TYPES OF PRACTICES COVERED IN PROMULGATED RULES
The following are illustrative of the variety of subjects covered by trade practice
rules now in effect
Misrepresentation in various forms, including false or misleading advertising;
misbranding; 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 or trade names;
substituting inferior products for those ordered; lottery schemes; use of consignment
distribution to close competitor’s trade outlets; enticing away employees of a
competitor; giving “push money” or gratuities under circumstances involving
commercial bribery, deception, or restraint of trade; full-line forcing as a monopolistic
weapon; combination or conspiracy to fix prices, suppress competition, or restrain
trade; unfair bidding methods ; discriminations in price, services, or facilities, such

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION , 1948

discrimination effected through rebates, refunds, discounts, credits, returns, or other
means; prohibited brokerage or commissions; making advertising or promotional
allowances or furnishing services or facilities without according them to all customers
on proportionally equal terms; and aiding or abetting another in the use of unfair trade
practices.
Other subjects covered in the rules are : Use of slack-filled or short-weight
containers, or those of odd size simulating standard and generally recognized types;
use of deceptive photographs or engravings in describing industry products; use of
false or misleading guarantees, warranties, price quotations, price lists, or terms of
sale; misrepresentation as to possible earnings or opportunities afforded on completion
of correspondence school courses, or as to Government connection with, or
indorsement of, any school or the training or services offered; falsely representing
offers as “special” or “limited” ; misrepresenting regular lines of merchandise as
“close-outs” to induce belief that bargains are available ; misrepresenting products as
conforming to recognized industry standards ; 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 ; misrepresentation
as to installment sales contracts, their terms and conditions; representing retail prices
as wholesale, or deception through failure to differentiate between wholesale and retail
transactions ; use of false or misleading testimonials, guar-an tees, or warranties ; use
of “blind” advertisements in such manner as to mislead or deceive ; 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 book s under the subscription plan; false representations respecting
tube capacity of radio sets and their range or receptivity; and short weight, short
measure, and misrepresentation as to quantity or linear measure of hand knitting yarn.
The rules also cover the following : Misuse of terms such as “perfect,” “perfect cut,”
“commercially perfect,” “real,” “genuine,” or “natural” in describing precious stones
or their imitations ; deceptive use of word “Crookes” as applied to sun glasses ;
improper use of terms “pullorum tested” and “blood tested” as applied to baby chicks;
misuse of words “all fabric,” “all purpose,” “fast,” “fadeless,” “fade-proof,”
“unfadeable,” “sunfast,” or “wash-fast” as descriptive of products of the household
fabric dye industry ; deceptive use of such terms as “all-wave,” “world-wave,” or
“world-wide wave” with reference to radio receiving sets ; improper use of words
“bristle” and “pure bristle” in the sale of toilet brushes ; misuse of terms “extra fancy,”
“extra select,” “extra quality,” “deluxe,” or “choice” to describe tuna-fish products ;
improper use of words “lisle cotton” or “cotton lisle” as applied to hosiery products
; deceptive use of terms “hand woven,” “hand loomed,” “hand printed,” and “hand
embroidered” in describing linen products ; misuse of term “waterproof” as applied
to watches, watch cases, or watch movements, or to luggage or related products, or to
masonry waterproofing products, or of the expression “water resistant” to describe
watches, watch cases, or watch movements or masonry waterproofing products, or of
the words “water repellent”

TYPES OF PRACTICES COVERED IN PROMULGATED RULES

61

as descriptive of watches, watch cases, or watch movements, or of luggage or related
products ; improper use of terms “water tight,” “moistureproof,” or “water sealed” as
applied to watches, watch cases, or watch movements, or to masonry waterproofing
products; misuse of terms “vaporproof,” “dampproof,” “dampproofing,” “dampresistant,” “weatherproof,” “weatherproofing,” “perpetual,” “everlasting,” “eternal,”
“permanent,” or “permanently” to describe products of the masonry waterproofing
industry ; deceptive use of words “water protected,” “shockproof,” “shock protected,”
“shock absorbing,” “shock resistant,” “unconditionally shock resistant,” “jarproof,”
“nonmagnetic,” or “antimagnetic” in referring to watches, watch cases, or watch
movements ; misuse of words “dustproof” or “warp-proof” as applied to luggage and
related products ; misuse of terms “new,” “demonstrator,” “factory rebuilt,” “rebuilt,”
“remanufactured,” “reconditioned,” and “overhauled” as descriptive of typewriters;
misuse of words “zephyr,” “tweed,” “crepe,” “cashmere,” “mohair,” “angora rabbit,”
and “angora rabbit hair” as applied to hand knitting yarns; and improper use of terms
“rolled gold plate,” “gold plated,” “plate,” “plated,” “gold fill ed,” “gold
electroplated,” “gold electroplate,” gold,” “karat gold,” “karat,” “carat,” “sterling,”
“sterling silver,” “silver,” “solid silver,” “sterline,” “duragold,” “dirigold,”
“noblegold,” “goldine,” and “miragold” in connection with watch cases.
Subjects embraced in other rules include : Exclusive or preemptive deals to eliminate
or suppress competition ; improper use of demonstrators and payment of “spiffs” or
“push money” in the sale of industry products; deceptive concealment of name of
sponsor and other pertinent information respecting product offered for sale ;
persuading distributors to refrain from submitting independent bids and price
quotations to buyers; coercing adherence to published rental rates or trade-in values
; furnishing property on condition of exclusive right to service the same ; deception of
customers of competitors as to identity ; and prejudicing competitors’ relationships
with their agents.
In addition, there are rules providing for disclosure of fiber content of textile
merchandise made of rayon, or of two or more fibers containing either rayon, silk or
linen ; disclosure as to remaining shrinkage in so-called preshrunk merchandise ;
disclosure that apparently new products are not new, but are secondhand, used, 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 standard or genuine, and the specification of
minimum requirements for standard or genuine products ; proper nomenclature for
industry products ; disclosure as to true composition of paint and varnish brushes, as
to imperfect or defective merchandise, as to use of adulterant or substitute for linseed
oil in respect to putty products, as to presence of metallic weighting in silk or silk
products, as to minimum yardage of ribbons, as to true functions of radio parts and
accessories, as to quality, quantity, and size of ripe olives packed in cans and other
opaque containers, as to latent defects in artificial limbs or devices, as to price charged
for so-called premiums in sale of piston rings, as to use and application of masonry
waterproofing products, and as to true metal composition of watch cases.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

INFORMATIVE LABELING
Informative labeling enters extensively into the work of the Commission under tradepractice conference rules. Fiber identification, or what is generally referred to as
“Truth in Fabrics,” forms a large part of informative labeling work. While consumer
goods containing or purporting to contain wool are subject to Wool Act labeling,
similar fiber identification of other textiles under certain circumstances , 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.
The value of such labeling is widely recognized as a necessary and effective
preventive of confusion or deception of the public and of unfair competitive
conditions.
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 effect on June
30, 1938. Other textile provisions are found in the rules promulgated for 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 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, 1940; luggage and related products, September 17, 1941 sunglass,
December 23, 1941; razor and razor blade, June 19, 1945; wood-cased lead pencil,
June 29, 1945; artificial limb, April 16, 1946; masonry waterproofing; August 31,
1946; household fabric dye, May 29, 1947; watch case, January 30, 1948; office
machine marketing, February 26, 1948; and hand knitting yarn, June 18, 1948.
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 manufacturing, September 3, 1938 ; sardine, March 5, 1940; and tuna
(revised and extended rules) , June 23, 1945.

PART V. 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, approve d 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 or other identification mark disclose the kind and
percentage of each different fiber contained in the 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 a qualified distributor or reseller,
must also appear on the label. The label, or a proper substitute specified by the statute,
is to remain on the merchandise when it is delivered to the consumer.
Products covered by the act include wearing apparel and blankets , the yarns and
fabrics of the wool textile industry and the products of manufacturing industries using
these yarns and fabrics. These products come from approximately 100 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
may be obtained upon application to the Commission. 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
813610--49----6
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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

to merchandise covered by 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, consonant with law, which would be of maximum
assistance to business and also would afford full protection of the public interest.
Manufacturers’ registered identification numbers.--Under rule 4 of the regulations
manufacturers of wool products residing in the United States may have assigned to
them registered identification numbers. Such a number may be used upon the
manufacturer’s label instead 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,
6,823 registered identification numbers had been assigned, an increase of 584 over the
preceding fiscal year. 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 1,916 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 for a
guaranty on the part of’ the supplier. It may be either (1) a separate guaranty
specifically designating the wool product guaranteed, or (2) a continuing guaranty
applicable to all products handled by a guarantor. Continuing guaranties must be filed
with the Commission in the form prescribed by rule 33 of the rules and regulations.
This rule also provides for renewal of the continuing guaranties annually or whenever
any change in ownership or management of the guarantor is made. At the close of the
fiscal year, 8,671 continuing guaranties had been properly filed with the Commission,
as against 7,552 at the end of the fiscal year 1947. 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 prescribed in the Federal
Trade Commission Act, which is also authorized by the Wool Act, has proved
adequate. The supporting peremptory remedies specifically provided by the Wool Act
are available when needed, however, and, in cases of deliberate or willful violation,
misdemeanor proceedings may be applied.
Administrative compliance work includes inspection, examination , and correction
of in practices of specific concerns. Inspections of labeling and related matters during
the year concerned 8,966 manufacturers, distributors, and other dealers in wool
products. Field inspections covered more than 23 million articles. During the preceding fiscal year, field inspections totaled 8,322 and covered more than 18 million
articles.
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.

INFORMATIVE LABELING

65

Cases of improper labeling under the act were handled for the most part through
cooperative voluntary action without resort to compulsory proceedings. Relatively few
cases heave arisen in which it has been necessary to invoke mandatory processes.2
Administrative compliance work has proved an effective and economical method of
protecting the public interest in this field.
2 For complaints alleging violations of the wool Products Labeling Act ,see p.42 ; for Commission
orders directed against such violations, see, p.45.

PART VI. BUREAU OF MEDICAL OPINIONS
DATA USED IN CASES RELATING TO FOOD, DRUGS, DEVICES AND
COSMETICS
The Bureau of Medical Opinions furnishes the Commission with scientific facts and
opinions concerning the composition and efficacy of food, drugs, curative devices,
cosmetics, and other commodities in relation to questioned advertising claims. It
arranges for analyses of samples of products under investigation and gathers
information with respect to their nature.
The Bureau provides medical opinions and scientific information required in the
preparation of formal complaints and the negotiation of stipulation agreements. During
the fiscal year it prepared 225 written opinions and presented many oral opinions. A
substantial amount of time was devoted to assisting the Commission’s staff in
connection with hearings involving questions of science, and to obtaining expert
scientific witnesses whose testimony was essential to the determination of scientific
questions. Thirty-six such experts served as witnesses during the year.
The Commission directed that attention be given to questions involving economic
poisons such as insecticides, fungicides, rodenticides, and herbicides. To insure
coordinated and effective action in this field, the Director of the Bureau of Trade
Practice Conferences and Wool Act Administration and the Director of the Bureau of
Medical Opinions were designated liaison officers to represent the Commission in all
official contacts with the Insecticide Division, Livestock Branch, Production and
Marketing Administration of the Department of Agriculture, relative to economic
poisons. Thus has resulted in a cooperative arrangement which provides the
Commission with needed scientific information and assistance, particularly with
respect to new economic poisons, and effectively coordinates the work of the two
agencies.
The Director of the Bureau of Medical Opinions continues as the Commission’s
liaison officer with the Food and Drug Administration.
66

PART VII. FOREIGN TRADE WORK
EXPORT TRADE ACT
The Export Trade Act, commonly referred to as the Webb-Pomerene Law, is
administered by the Commission. Under this act, cooperatives or associations engaged
solely in export trade are granted exemption from the antitrust laws under specified
conditions.
Export associations are required to file with the Commission copies of their
organization papers, periodic reports on their operations, and such other information
as may be requested from time to time. If the Commission has reason to believe that
an association is not operating in accordance with law, an investigation may be made
and recommendations issued for readjustment of the association’s business.
The law prohibits restraint of the trade of a domestic competitor of the association,
artificial enhancement or depression of prices within the United States and substantial
lessening of competition or other restraint of trade in this country.
ASSOCIATIONS OPERATING UNDER THE ACT
At the close of the fiscal year, the following 51 export associations were registered
with the Commission:
American Hardwood Exporters, Inc.,
706 International Building,
New Orleans.

American Tire Manufacturers Export
Association,
30 Church Street,
New York.

AMTEA Corp. (American Machine Tool
Export Association),
30 Church Street, 608
New York.

California Alkali Export Association,
Latham Square Building,
Oakland, Calif.

American Phonograph Cooperative,
Ltd.,
134 North La Salle Street,
Chicago.

California Dried Fruit Export Association,
1Drumm Street,
San Francisco.

American Provisions Export Co.,
c/o Armour & Co.,
Foreign Sales Department,
Union Stock Yards,
Chicago.

California Prune Export Association,
1 Drumm Street,
San Francisco.

American Soda Pulp Export Association,
230 Park Avenue,
New York.
American Spring Manufacturers Export

California Rice Exporters,
351 California Street,
San Francisco.
Carbon Black Export, Inc.,
500 Fifth Avenue,
New York

Association,
50 Church Street,
New York.

Citrus Corporation of America,
Box 231, Lake Wales, Fla.
67

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION , 1948

Door Export Co.,
Washington Building,
Tacoma, Wash.

Pacific Fresh Fruit Export Association,
333 Pine Street,
San Francisco.

Douglas Fir Export Co.,
530 Henry Building,
Seattle.

Pencil Industry Export Association,
167 Wayne Street,
Jersey City, N. J.

Durex Abrasives Corp.,
63 Wall Street,
New York.

Pipe Fittings & Valve Export Association, The
347 Madison Avenue,
New York.

Easco Lumber Association,
216 Pine Street,
San Francisco.
Electrical Export Corp.,
122 East Fifty-first Street,
New York.
Electrical Manufacturers Export Association,
70 Pine Street,
New York.
Export Screw Association of the United
States,
21 Stevens Street,
Providence, R. I.
Flints Export Agency,
50 Broad Street,
New York.
Florida Hard Rock Phosphate Export
Association,
318 East Main Street,
Lakeland, Fla.
Flour Millers Export Association,
859 National Press Building,
Washington, D. C.
Friction Materials Export Association,
Inc,
c/o Johns-Manville International Corp.,
22 East Fortieth Street,
New York.
General Milk Sales, Inc.,
19 Rector Street,
New York.
Goodyear Tire & Rubber Export Co.,
The,
1144 East Market Street,
Akron, Ohio.
Maine Sardine Packers’ Export Association,
Eastport, Maine.
Metal Lath Export Association, The
205 East Forty-second Street,
New York.
Motion Picture Export Association, Inc.,
546 Fifth Avenue,

Potash Export Association, Inc.,
420 Lexington Avenue,
New York.
Railway Car Export Corp. of America,
1025 Connecticut Avenue,
Washington, D. C.
Redwood Export Co.,
405 Montgomery Street,
San Francisco.
Rubber Export Association, The,
1185 East Market Street,
Akron, Ohio.
Steam Locomotive Export Association,
Inc.,
30 Church Street,
New York.
Sulphur Export Corporation,
420 Lexington Avenue,
New York.
Texas Rice Export Association,
407 Jensen Drive,
Houston, Tex.
Textile Export Association of the
United States,
271 Church Street,
New York.
Typewriter Manufacturers Export Association,
1611 Forty-fourth Street,
Washington, D. C.
United States Alkali Export Association ,
11 Broadway,
New York.
United States Scientific Export Association, Inc.,
50 Broadway,
New York.
Universal Dairy Products Co.,
80 East Jackson Boulevard,
Chicago.
Walnut Export Sales Co., Inc.,
540 Postal Station Building,
Indianapolis.

New York.
Pacific Forest Industries,
1219 Washington Building,
Tacoma, Wash.

Washington Evaporated Apple Export
Association,
709 First Avenue, North,
Yakima, Wash.

ASSOCIATIONS OPERATING UNDER ACT
Wescosa Lumber Association,
2 Pine Street,
San Francisco.
Wine & Brandy Export Association of
California,
717 Market Street,
San Francisco.

69

Wire Rope Export Trade Association,
The,
19 Rector Street,
New York.
Wood Naval Stores Export Association,
Gulfport, Miss.

NEW ASSOCIATIONS
Four new export associations were formed during the fiscal year ending June 30
1948:
Electrical Manufacturers Export Association, New York, formed in July 1947,
includes some companies that were members of Electrical Apparatus Export
Association, which was dissolved in June 1947. The new group comprises the
International General Electric Co., Inc., Westinghouse Electric International Co.,
Electric Service Manufacturing Co., Goodman Manufacturing Co., Jeffrey
Manufacturing Co., Line Material Co., and Ohio Brass Co.
Wood Naval Stores Export Association, Gulfport, Miss., formed in July 1947,
includes six producers of wood naval stores : Alabama Naval Stores Co., Continental
Turpentine and Rosin Corp., Delta Pine Products Corp., Dixie Pine Products Co., Inc.,
Gulf Naval Stores Co. , and the Southern Naval Stores Division of Leach Bros., Inc.
California Rice Exporters, San Francisco, formed in October 1947, includes eight
companies in California: Cal-Oro Rice Growers, Inc., Capital Rice Mills, M. D. Green
Rice Milling Co., C. E. Grosjean Rice Milling Co., Producers Rice Milling Co., Rice
Growers Association of California, Rosenberg Bros. & Co., and Woodland Rice Co.
General Milk Sales, Inc., New York, formed in March 1948, replaced General Milk
Co., Inc., which had formerly operated under the act, and includes the same
membership: Carnation Co. and Pet Milk Co.
EXPORTS IN 1947 TOTAL $1,083,788,921
Exports by the associations in 1947 showed a substantial increase over 1946 in all
lines except metals :
Metals and metal products
Products of mines and wells
Lumber and wood products
Foodstuffs
Miscellaneous
Total

1946
$93,435,947
29,320,916
9,636,851
131,623,782
58,579,728
322,597,224

1947
$59,904,442
38,043,675
18,951,866
233,969,556
732,919,382
1,083,788,921

INQUIRIES AND RECOMMENDATIONS
Several inquiries as to the operation of certain export associations were in progress
during the fiscal year:
Hearings have been held in reference to the operation of Carbon Black Export, Inc
. (Docket 202-5) and The Pipe Fittings & Valve Export Association (Docket 202-9),
and the cases are now awaiting final action. The final report on Pacific Forest
Industries (Docket 202-1), a reopened inquiry, is also pending.

70

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

The inquiry involving Electrical Apparatus Export Association (Docket 202-204)
was dismissed in July 1947 after dissolution of the association in June of that year.
After formal hearings, the Commission issued recommendations on September 10,
1947, for the readjustment of the business of General Milk Co., Inc; (Docket 202-207).
The Commission ruled that General Milk, while operating under the provisions of
the Export Trade Act, should hold no stock or other beneficial interest in companies
engaged in the manufacture of milk products in foreign countries or in the sale of milk
products of non-American origin . It recommended that the corporation divest itself
of the stock it owns in such foreign enterprises and to rescind all existing agreements
growing out of its affiliations with such companies or, in the alternative, withdraw as
an export trade association qualifying under the provisions of the statute.
General Milk Co. complied with the recommendations by withdrawing as an
association operating under the act. A new association, General Milk Sales, Inc., which
will not have investments in foreign plants, was formed.
TRUST LAWS AND TRADE REGULATION ABROAD
Under section 6 (h) of the Federal Trade Commission Act, the Commission compiles
information as to trust laws, unfair competition, and regulation of trade and industry
in foreign countries. A few of the more important measures are noted :
Argentina.--A National Economic Council was created by decree in July 1947 as
part of the President’s 5-year plan. The plan includes an intensive industrialization
program to foster industries necessary for national economy or defense. A law passed
on June 13, 1947, also a part of the plan, created a corporation to develop the steel
industry with Government subscription for 90 percent of the capital.
Australia.--Nationalization of the Australian banks was effected by a law dated
November 27, 1947.
Bolivia.--A Board of Industrial Development, created by decree in January 1948,
will advise the Government on industrial policy, direct and supervise industrial
production, and handle questions relating to production of raw materials, their prices,
and their utilization in national industries.
Brazil.--A law granting tax exemption to new industries for 5 years was passed by
the State of Para in December 1947. The term may be extended to encourage industries
food products. Under the new import and export licensing law of February 1948, 75
percent of Brazil’s dollars will be applied to purchase of goods of prime necessity, 20
percent for less urgently needed goods, and 5 percent for luxuries.
Canada.--The Combines Investigation Commission issued a report in April 1948
charging an unlawful combination in the manufacture, distribution, and sale of optical
goods. As a result of a prior investigation by the Commission, criminal proceedings
against manufacturers and distributors of dental supplies were started in January 1948
in the Ontario Supreme Court. An informal report on an alleged combine in newsprint
manufacture was made in 1947. Other investi-

INQUIRIES AND RECOMMENDATIONS

71

gations by the Commission during the year involved radio sets and tubes, small arms
ammunition, building materials, and household supplies.
An extensive decontrol measure was made effective in September 1947, confining
price ceilings to a small number of key or very scarce items. Consumer rationing was
ended in November 1947.
Chile.--The price control campaign initiated in August 1947 continued into 1948
under the direction of a Price and Supply Control Board assisted by provincial
committees. A National Foreign Trade Council, created by decree in December 1947,
is the official foreign trade licensing bureau.
Colombia.--A decree in May 1948 froze salaries and wages in any type of
professional, industrial, commercial, or agricultural activity to rates being paid on
April 8.
Czechoslovakia.--A land reform measure in March 1948 provided for confiscation
of land holdings in excess of 50 hectares (125 acres). Foreign trade will be
nationalized and it is proposed to extend the nationalization of industry to cover all
undertakings employing more than 50 persons.
Denmark.--In 1947 price controls and the subsidy program were continued, and the
rationing system was extended.
Dominican Republic.--An emergency law in March 1948 gave the President
extraordinary powers to regulate by decree the importation, exportation, distribution,
sale, consumption, and rationing of certain essential products including foodstuffs; and
to control hours of work in agricultural, industrial, and commercial enterprises. Under
the law, congressional approval is not necessary.
Ecuador.--The emergency foreign exchange law of June 5, 1947, created a
Department of Exchange in the Central Bank of Ecuador to control foreign trade, and
provided for three lists of importable merchandise; essential, useful, and luxury.
France.--After reports by the Economic Council on the price-wage situation, a new
price-control law was passed in February 1948. In March, price reductions were
announced amounting to from 2 to 10 percent on essential products that affect the
workers’ cost of living.
Great Britain.--At the end of the war, committees termed “Working Parties” were
set up in 17 of the most important consumer goods industries. Reports of these groups
recommended permanent bodies to be made up of representatives of employers,
workers, and independent members, to be known as Development Councils. The
Industrial Organization Development Act passed in 1947 authorized certain ministers
to issue orders establishing Development Councils in the various industries to improve
or develop their service. A Cotton Industry Development Council was set up under an
order effective in April 1948.- Other councils are to be created for the pottery, wool,
hosiery, furniture, jewelry, and silverware industries. Working Party reports were
completed in 1947 for the hand-blown glassware industry and for the cutlery industry;
and in 1948 for the china clay, clothing, and carpet industries.
The Town and Country Planning Act for development and use of land was passed
in August 1947. Under the Agriculture Act, passed

72

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

also in August 1947, the Government announced an expansion program to increase
output through central planning. The Overseas Development Act, passed in February
1948, created the Colonial Development Corp. and the Overseas Food Corp. to finance
and promote the development of overseas resources. Legislation for nationalization
of electric utilities in Britain was passed in August 1947. The Transport Act, under
which the inland transportation system was taken over by the Government on January
1 1948 was also passed in August. A bill for nationalization of the gas industry now
under consideration by Parliament, would complete Government control of fuel. (The
Coal Nationalization Act was passed in July 1946.)
Prices are still under Government control, and rationing is still in effect. A Prices
Standstill Order in February 1948, effective on March 15, fixed manufacturers’ prices
on a large number of products at the level of prices charged during December 1947 and
January 1948.- Profits of wholesalers were restricted at different levels. A further
price freeze for an extended list of manufactured goods was effected in May 1948.
A monopoly (inquiry and control) bill introduced in March 1948 would create a
Commission to make investigations under direction of the Board of Trade and report
on alleged restrictions in the supply, processing, or export of goods.
In August 1947 the President of the Board of Trade appointed a committee to inquire
into the practice of resale price maintenance, the fixing of minimum wholesale and
retail prices or margins of producers, and the consequent effects upon the supply,
distribution, and consumption of goods; and to report as to whether any steps to prevent or regulate the continuance of these practices are desirable.
Guatemala.--The Law of Industrial Development, passed in December 1947,
provided for establishment and development of industries which will facilitate the
more effective stabilization of national resources, and granted tax exemption to
industries that manufacture or prepare necessary products and use only raw materials
of the country. An Executive Resolution in November 1947 created the Directorate
General of National Economy, which will be charged with such Government controls
as have been retained over exports, imports, and price and distribution of commodities
in short supply.
Hungary.--A 3-year plan has been introduced involving imposition of Government
control; in almost every field of economic activity. Nationalization of industry was
extended by a law affecting banks, passed in November 1947, and an amendment to
the nationalization law, dated January 1948, which extends supervisory powers of the
Minister of Finance. The Government is claiming control of all enterprises in which
the nationalized banks have 20 percent interest or more.
Iceland.--An anti-inflation law, passed in December 1947, increased taxes and
reduced p rice levels.
International.--An International Conference on Trade and Employment, meeting at
Havana, Cuba, drafted the Havana Charter for an International Trade Organization. It
was signed March 24, 1948, by representatives of 53 countries, including the United
States, and now

INQUIRIES AND RECOMMENDATIONS

73

awaits ratification. The charter covers employment and economic activity, economic
development and reconstruction, commercial policy, restrictive business practices, and
intergovernmental commodity agreements, such as the proposed International Wheat
Agreement which was opened for signature on March 6, 1948. This agreement is now
pending before the United States Senate.
An International Organization of American States was created by a charter signed
by representatives of 21 Western Hemisphere republics at an Inter-American
conference in Bogota, Colombia, on April 30, 1948.- The Pan American Union will
serve as the central and permanent organ of the new organization.
Iran.--The Government’s 7-year plan includes development schemes for agriculture
and irrigation, industry, public health, roads and rail-ways, posts and telegraphs.
Italy.--The Government that took office in June 1947 was pledged to adopt antiinflationary measures, including control of credit, a system of differential rationing of
foodstuffs; plans for production of cereals, land reclamation, irrigation, and other
improvements. Capital of the Italian Industrial Reconstruction Institute has been increased to further nationalization of industries.
Japan.--The Enterprise Reconstruction and Reorganization law, passed in December
1947, provided for breaking up larger Japanese corporations into smaller units.
Mexico.--New industrial enterprises may be given 5-year exemption from taxes if the
Federal district in which the plant is proposed shall so determine.
Pakistan.--The newly created State of Pakistan, which was a part of India, has made
wide plans for development of natural resources and for Government control of factory
location, allocation of materials, determination of industrial projects, and fair labor
standards.-For this purpose an Industrial Finance Corporation, a Development Board,
and a Planning Advisory Board will be set up.
Peru.--A 4-year plan presented by the President in July 1947 included plans for the
development of agriculture, mining and industry. Foreign trade will be regulated by
the National Council of Foreign Commerce.
Rumania.--A law passed in April 1947 granted sweeping power to a reorganized
Ministry of Industry and Commerce. The Industrial Offices Act of May 1947
authorized close regulation by Government offices of every phase of industry and
trade, including production, distribution, domestic and foreign trade, prices, wages,
profits, investments, and credits.
South Africa, Union of.--The report of the Distribution Costs Commission in 1947
covered a study of expenses and services and margins and profits of distributors.- It
recommended further investigation of advertising practices and encouragement and
supervision of cooperatives. As to price agreements and monopolistic practices, the
report said the Commission “does not consider that the Union should follow the
example of the United States of America in its prohibitory legislation. * * * It should
not seek to disturb arrangements which on investigation prove to have effected
savings, provided these savings accrue to the benefit of buyers as well as sellers.

74

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

Switzerland.--A voluntary stabilization program was adopted by the principal labor,
employers’ and other economic organizations in February 1948. Under the program,
wages and prices prevailing at the beginning of the year are to be frozen until October
31, 1948.
Sweden.--Reports of the Cartel Register maintained by the Monopoly Investigation
Bureau list 185 cartel agreements filed with the Bureau since the Register was created
in 1946, including manufacturers’ cartels controlling prices, production, the selection
of customers and agents, commissions, discounts, and other sales and delivery terms;
agreements on farm produce by farmers’ organizations and retailers; and agreements
controlling the Opening or expansion of whole-sale and retail firms and stores for sale
of foodstuffs.
Venezuela.--Under a new constitution, adopted in July 1947, the economic life of the
nation will be planned and regulated by a Council of National Economy. It will be
representative of capital, labor, the liberal professions, and the State. Retail prices
and, in some cases, wholesale prices and prices to producers, are fixed by a National
Supply Commission under the Ministry of Development.
Yugoslavia.--The process of nationalization continues, with a decree in February
1948 effecting complete nationalization of the wholesale agricultural trade. Practically
all trade and industry are now in the hands of the Government.

PART VIII. FISCAL AFFAIRS
APPROPRIATION ACTS PROVIDING FUNDS FOR COMMISSION
WORK
The Independent Offices Appropriation Act, 1948 (Public Law 269, 80th Cong.),
approved July 30, 1947, provided funds for the fiscal year 1948 for the Federal Trade
Commission as follows :
FEDERAL TRADE COMMISSION
Salaries and expenses.--For necessary expenses, including personal services in the District
of Columbia; health service program as authorized by act of August 8, 1946 (Public Law 658);
payment of claims determined and settled pursuant to part 2 of the Federal Tort Claims Act (act
of August 2, 1946, Public Law 601); contract stenographic reporting services; newspapers not
to exceed $500; not to exceed $8,000 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; and purchase of one passenger
motor vehicle; $2,900,120, of which not less than $228,695 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.
Printing and binding.--For all printing and binding for the Federal Trade Commission,
$55,000.

APPROPRIATIONS FOR FISCAL YEAR
Funds appropriated to the Commission for the fiscal year 1948 as cited above
amounted to $2,955,120.00. In addition the Commission received $14,879.72
reimbursement for work performed for other Government agencies, making a total
available of $2969,999.72. This sum was made up of two items : (l) $2,914,999.72 for
the general work of the Commission, and (2) $55,000 for printing and binding.
Appropriations, allotments, expenditures, liabilities, and balances for the fiscal

year ended June 30, 1948
Amount
available
Federal Trade Commission 1948-salaries,
Commissioners and all other authorized
expenses
$8,432.99
Printing and binding, Federal Trade Commission, 1948
7,068.80
Total fiscal year 1948
15,501.79
Unexpended balances:
Federal Trade Commission, 1947
67,762.50
Printing and binding, Federal Trade

Amount
expended

Liabilities

Expenditures
and liaBalance
bilities

$2,914,999.72 $2,859,057.97 $47,508.70 $2,900,566.73

55,000.00

17,344.00

30,587.20

47,931.20

2,969,999.72 2,870,401.97 78,095.96 2,954,497.93

235,956.06

104,910.32 3,283.24

168,193.56

Commission, 1947
15,885.85
Transfer from Office of Price Adminis
tration, 1947
27,795.46
Federal Trade Commission, 1946
11,428.23
Printing and binding, Federal Trade
Commission, 1946
10,955.12
Total
149,328.95

40,453.37 13,098.40 10,869.12

24,567.52

39,290.07 10,430.31 1,064.30

11,494.61

11,449.50

21.27

24,384.75

13,429.03

3,321,533.47 3,078,891.90

21.27

13,429.63
93,312.62 3,172,204.52

75

76

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948
Detailed statement of costs for the fiscal year ending June 30, 1948

Commissioners
Office of Commissioners
Office of the Secretary
Total
Administration:
Budget and Planning
Library
Personnel
Stenographic
Information Service
Legal Research and Publications
Legal Records
Economic and Administrative Records
Services and Supplies
Communications
Contract Services
Equipment
Rents
Supplies
Transportation of things
Travel Expense
Refunds, Awards, and Indemnities
Total
Legal:
Preliminary inquiries
Application for complaints
Complaints
Export trade associations
Trade practice conferences
Wool Products Labeling Act
Stipulations
Legal aids to Commission
Industry wide investigations
Total

Salary
$51,922.35
73,920.99
39,616.85
165,460.19

1,316.76

52, 465.81
17,376.70
30,593.95
133,391.89
20.291.57
41,821.58
63,456.75
14,686.35
82,288.89

456,373.49

103,312.18
488,230.53
829,112.07
37,703.32
118,489.01
206,755.72
78,562.02
18,809.37
32,543.13
1,913,517.35

General investigations:
Accounting work unlawful practices
96,079.37
Export trade study
4,687.80
Study of production and distribution
policies
19,281.16
Financial reporting program
122,319.10
Study of the steel situation for Senate Com
mittee on Small Business
3,806.29
Current analysis reports
5,435.45
Study of cost of manufacture of stamped en
velopes for Post Office Department
9,382.20
Joint Congressional Committee on Housing. 3,557.14
Study of the size and efficiency of manufacturing enterprises
495.20
Reports on hearings to amend the Clayton
Act.
8,260.73
Study of price levels
23,697.69
Total
297,002.13
Printing and binding
Summary:
Commissioners and Secretary
Administration
Legal
General investigations
Printing and binding

Travel
$1,316.76

165,460.19
456,373.49
1,913,517.35
297,002.13

124.50

2,413.97
28,710.71
37,789.91
703.10
1,125.70
25,605.77

1,642.37
97,991.53

1,136.20

18.57
815.91

Other
Total
$53,242.48
73,920.99
39,616.85
3.37 166,780.32

$3.37

52, 465.81
17,376.70
30,593.95
133,391.89
20,291.57
41,821.58
63,456.75
14,686.35
82,288.89
23,313.64
23,313.64
12,504.72
12,504.72
23,817.27
23,817.27
7,330.40
7,330.40
19,864.26
19,864.26
547.17
547.17
124.50
124.50
50.00
50.00
87,427.46 543,925.45

21.27
105,747.42
629.39
517,570.63
5,564.52
872,466.50
4.03
38,410.45
7.23
119,621.94
195.62
232,557.12
78,562.02
18,809.37
14.89
34,200.39
6,436.96 2,017,945.84

34.83

97,250.40
4,687.80

19,299.73
4,833.49 127,968.50
3,806.29
5,435.45

1,207.56
405.02

10,589.76
3,962.16
495.20

310.34
3,893.60

4.21
4,872.53
44,472.03

8,260.73
24,012.24
305,768.26
44,472.03

1,316.76
3.37
166,780.32
124.50 87,427.46
543,925.45
97,991.53 6,436.96
2,017,945.84
3,893.60 4,872.53
305,768.26
44,472.03
44,472.03

Total

2,832,153.16

103,326.39 143,212.35

3,078,891.90

77

APPROPRIATIONS FOR FISCAL YEAR

Detailed statement of costs for the fiscal year ending June 30, 1948-Continued
RECAPITULATION OF COSTS, BY DIVISION

Commissioners and Secretary
General Counsel
Bureau of Litigation
Bureau of Industrial Economies
Bureau of Legal Investigations
Bureau of Hearing Examiners
Bureau of Medical Opinions
Bureau of Trade Practice Conferences and Wool
Act Administration
Bureau of Stipulations
Legal Aids to Commission
Bureau of Administration
Printing and binding

Salary
$165,460.19
118,703.96
373,675.94
297,508.68
778,645.69
188,595.45
31,347.78
325,244.73
78,562.02
18,809.37
455,799.35

Travel
Other
$1,316.76
$3.37
5,836.97 309.97
15,843.31 896.24
3,877.63 4,871.23
38,232.55 817.16
10,816.28
11.73
546.92 4,200.30
26,731.47

202.86

Total
$166,780.32
124,850.90
390,415.49
356,257.54
817,695.49
199,423.46
36,095.00

352,179.06
78,562.02
18,809.37
124.50 87,427.46
543,351.31
44,472.03
44,472.03
2,832,353.16 103,326.39 143, 212.35 3,078,891.90

78

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

APPROPRIATIONS AND EXPENDITURES, 1915--48
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
1945
1946
1947

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
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
2,016,070.00
43,000.00
2,129,833.00
44,000.00
2,925,120.00
50,000.00

$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
1,957,818.31
39,728.72
2,118,404.77
33,044.88
2,826,817.64
33,902.35

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
58,251.69
3,271.23
11,428.28
10,955.12
98,302.36
16,097.65

1948

Lump sum
Printing and binding

2,915,596.92
55,000.00

2,898,884.76
53,957.43

16,912.16
1,042.57

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.
1 The salary of the secretary is controlled by the provisions of the Classification Act of 1923,
approved March --49-, 1923, 42 Stat. 1488.
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The Auditor for the State and Other Departments shall receive and examine all
accounts of expenditures of the Commission. 2
SEC. 3. That upon the organization of the Commission and election of its chairman,
the Bureau of Corporations and the offices of Commissioner and Deputy
Commissioner of Corporations shall cease to exist; and all pending investigations and
proceedings of the Bureau of Corporations shall be continued by the Commission.
All clerks and employees of the said bureau shall be transferred to and become
clerks and employees of the Commission at their present grades and salaries. All
records, papers, and property of the said bureau shall become records, papers, and
property of the Commission, and all unexpended funds and appropriations for the use
and maintenance of the said bureau, including any allotment already made to it by the
Secretary of Commerce from the contingent appropriation for the Department of
Commerce for the fiscal year nineteen hundred and fifteen, or 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, prose-cute 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)
2 Auditing of accounts was made a duty of the General Accounting Office by the Act of June
10, 1921, 42 Stat. 24.
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 ] persons”
(and following the words “to regulate commerce”) , the following: “air carriers and foreign air
carriers subject to the Civil Aeronautics Act of 1918.”

FEDERAL TRADE COMMISSION ACT

81

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 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
Section 5 (a) of the amending Act of 1938 provides :
SEC. 5. (a) In case of an order by the Federal Trade Commission to cease and desist, served
on or before the date of enactment of this Act, the sixty-day period referred to In section s (C)
of the Federal Trade Commission Act, as amended by this Act, shall begin on the date of the
enactment of this Act.
4

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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 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 Commission 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

FEDERAL TRADE COMMISSION ACT

83

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.
(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 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 either5 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.
5 The Independent Offices Appropriation Act of 1984 provided that future investigations by
the Commission for Congress must be authorized by concurrent resolution of the two Houses.
Under the Appropriation Act of 1950, 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.”

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(g) From time to time to classify corporations and to make rules and regulations for
the purpose of carrying out the provisions of this Act.
(h) To investigate, from time to time, trade conditions In and with foreign countries
where associations, combinations, or practices of manufacturers, merchants, or traders,
or other conditions, may affect the foreign trade of the United States, and to report to
Congress thereon, with such recommendations as it deems advisable.
SEC. 7. That In any suit in equity brought by or under the direction of the Attorney
General as provided In the antitrust Acts, the court may, upon the conclusion of the
testimony therein, if it shall be then of opinion that the complainant is entitled to relief,
refer said suit to the commission, as a master in chancery, to ascertain and report an
appropriate form of decree therein. The commission shall proceed upon such notice
to the parties and under such rules of procedure as the court may prescribe, and upon
the coming in of such report such exceptions may be filed and such proceedings had
In relation thereto as upon the report of a master in other equity causes, but the court
may adopt or reject such report, in whole or in part, and enter such decree as the nature
of the case may in its judgment require.
SEC. 8. That the several departments and bureaus of the Government when directed
by the President shall furnish the commission, upon Its request, all records, papers, and
information in their possession relating to any corporation subject to any of the
provisions of this Act, and shall detail from time to time such officials and employees
to the commission as he may direct.
SEC. 9. That for the purposes of this Act the commission, or its duly authorized
agent or agents, shall at all reasonable times have access to, for the purpose of
examination, and the right to copy any documentary evidence of any corporation being
investigated or proceeded against; and the commission shall 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.

FEDERAL TRADE COMMISSION ACT

85

No person shall be excused from attending and testifying or from producing
documentary evidence before the commission or in obedience to the subpoena of the
commission on the ground or for the reason that the testimony or evidence,
documentary or otherwise, required of him may tend to criminate him or subject him
to a penalty or forfeiture. But no natural person shall be prosecuted or subjected to any
penalty or forfeiture for or on account of any transaction, matter, or thing concerning
which he may testify, or produce evidence, documentary or otherwise, before the
commission in obedience to a subpoena issued by it ; Provided, That no natural person
so testifying shall be exempt from prosecution and punishment for perjury committed
in so testifying.
Sec. 10. That any person who shall neglect or refuse to attend and testify, or to
answer any lawful inquiry, or to produce documentary evidence, if in his power to do
so, in obedience to the subpoena or lawful requirement of the commission, shall be
guilty of an offense and upon conviction thereof by a court of competent jurisdiction
shall be punished by a fine of not less than $1,000 nor more than $5,000, or by
imprisonment for not more than one year, or by both such fine and imprisonment.
Any person who shall willfully make, or cause to be made, any false entry or
statement of fact in any report required to be made under this Act, or who shall
willfully make, or cause to be made, any false entry in any account, record, or
memorandum kept by any corporation subject to this Act, or who shall willfully
neglect or fail to make, or cause to be made, full, true, and correct entries in such
accounts, records, or memoranda of all facts and transactions appertaining to the
business of such corporation, or who shall willfully remove out of the jurisdiction of
the United States, or willfully mutilate, alter, or by any other means falsify any
documentary evidence of such corporation, or who shall willfully refuse to submit to
the commission or to 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.

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(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.
(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.
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.
6

OTHER ACTS ADMINISTERED BY THE COMMISSION 87

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, 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).
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 lim-

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ited to orders issued during the fiscal year. Because of space 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 directorates.
1. The use of false or misleading advertising concerning, and the misbranding of,
commodities, respecting the materials or ingredients of which they are composed, their
quality, purity, origin, source, attributes, or properties, or nature of manufacture, and
selling them under such 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 origin.
4. Bribing buyers or other employees of customers and prospective customers,
without employers’ knowledge or consent, to obtain or hold patronage.
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 for 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,

TYPES OF UNFAIR METHODS AND PRACTICES

89

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-prize 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 punch-boards 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 market
to competitors ; or use by trade associations of so-called standard cost system, 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.
18. Aiding, assisting, or abetting unfair practice, misrepresentation, and deception,
and furnishing means of 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.

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(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 concern, or of being successor thereto or connected therewith, or of being
the purchaser 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, consummation of seller’s transaction with the customer.
(c) Alleged connection of a concern, organization, association, or institute with,
or endorsement of it or its product or services by, the Government or nationally
known 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 nurseryman, 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.

TYPES OF UNFAIR METHODS AND PRACTICES

93

(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) Granting 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, replacements, or
reimbursements or special or additional advantages to the prospective purchasers
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 therefor 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.

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(e) Making use of improper and coercive practices as means of exacting additional
commitments from purchasers, through such practices as unlawfully withholding
from purchaser property of latter lent to seller incident to carrying out of original
commitment, such as practice of declining to return original photograph from which
enlargement has been made until purchaser has also entered into commitment for
frame therefor
(f) Falsely representing earnings or profits of agents, dealers, or purchasers, or the
terms or conditions involved, such as false statement that participation by merchant
in seller’s sales promotion scheme Is without cost to merchant, and that territory
assigned an agent, representative, or distributor is new or exclusive.
(g) Obtaining agents or representatives to distribute the seller’s products through
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
(c) They were made in or came from some locality famous for the quality of such
products, or are of national reputation; or
(d) They were made by some well and favorably known process; or
(e) They have been inspected, passed, or approved after meeting the tests of some
official organization charged with the duty of making such tests expertly and
disinterestedly, or giving such approval; or
(f) They were made under conditions or circumstances considered of importance
by a substantial part of the general purchasing public; or
(g) They were made in a country, or city, or locality considered of importance in
connection with the public taste, preference, or prejudice; or

TYPES OF UNFAIR METHODS AND PRACTICES

93

(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;
(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 letters “M. D.” and the words “Red
Cross” and its insignia and 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 there-for, 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 brought to the buyer
through purchase of the offering, or otherwise misrepresenting scientific or other facts
bearing on the value thereof to the purchaser.
(d) Falsely representing products as legitimate, or prepared in accordance with
Government or official standards or specifications.
(e) Falsely claiming Government or official or other acceptance, use, and
endorsement of product, and misrepresenting success and standing thereof through use
of false and misleading endorsements or false and misleading claims with respect
thereto, or otherwise.
(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 to be a delivery system, an
organization in search of missing heirs, or one connected with a

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

Government agency.
(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 identity 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.

RULES OF PRACTICE1
RULE I. THE COMMISSION

Offices.--The principal office of the Commission is at Washington, D. C.
All communications to the Commission must be addressed to Federal Trade
Commission, Washington 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 7, Ill.; Federal Trade Commission, Federal Office Building,
Room 133, Civic Center, San Francisco 2, Calif.; Federal Trade Commission, 447
Federal Office Building, Seattle 4, Wash.; Federal Trade Commission, Room 652,
Federal Office Building, 600 South Street, New Orleans 12, 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,

1 The rules of practice which follow are published as amended by the Commission
on September 2, 1947, and promulgated through the Federal Register for September
10, 1947, and then effective.

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RULE III. INVESTIGATIONAL HEARINGS
Investigational hearings, as distinguished from formal hearings in adversary
proceedings, shall be held only as ordered by the Commission and shall be held before
the Commission, one or more of its members, or a duly designated representative for
the purpose of hearing the testimony of witnesses and receiving documents and other
data relating to subjects within the investigational jurisdiction of the Commission.
Unless otherwise ordered by the Commission, such hearings shall be public. Hearings
shall be stenographically reported and a transcript thereof shall be made which shall
be a part of the record of the investigation.
Every person required to attend and testify or submit documents or other data shall
be entitled to retain or, on payment of lawfully prescribed costs, procure a copy or
transcript of such person’s testimony or documents produced.
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.
Upon request made within 15 days after service of the complaint, any party shall be
afforded opportunity for the submission of facts, arguments, offers of settlement, or
proposals of adjustment where time, the nature of the proceeding, and the public
interest permit, and due consideration shall be given to the same. Such submission
shall be in writing. The filing of such request shall not operate to delay the filing of the
answer.
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

VII. APPEARANCE

97

service may also be made at the residence of the person, partnership, or corporation
to be served.
When service is not accomplished by registered mail complaints, orders, or other
processes of the Commission, and briefs in support of the complaint may be served by
anyone duly authorized by the Commission, or by any examiner of the Commission,
(a) By delivering a copy of the document to the person to be served, or to a member
of the partnership to be served, or to the president, secretary, or other executive officer
or a director of the corporation to be served; or
(b) By leaving a copy thereof at the principal office or place of business of such
person, partnership, or corporation. When proceeding under the Federal Trade
Commission Act service may also be made at the residence of the person, partnership,
or corporation to be served.
The return post-office receipt for said complaint, order, or other process or brief
registered and mailed as aforesaid, or the verified return by the person serving such
complaint, order, or other process or brief, setting forth the manner of said service,
shall be proof of the service of the document.
RULE 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.

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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 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. Such answer will constitute a waiver of any hearing as to the facts alleged in the
complaint and the Commission may proceed to make its findings as to the facts and
conclusions based upon such answer and enter its order disposing of the matter without
any intervening procedure. The respondent may, however, reserve in such answer the
right to other intervening procedure, including a hearing upon proposed conclusions
of fact or law, in which event he may, in accordance with Rule XXIV, file his brief
directed solely to the questions reserved.
Requests for leave to withdraw an answer and file a substitute or amended answer
made prior to the appointment of a trial examiner shall be addressed to the
Commission, and if made subsequent to such appointment shall be addressed to and
ruled upon by the trial examiner subject to the provisions of Rule XX.
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.

X. MOTIONS

99

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 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 1/2) inches; left margin, one and one-half
(11/2) inches; right margin, one (l) inch.
Documents may be printed, in ten (10) or twelve (12) point type, on good, unglazed
paper, of the dimensions and with the margins above specified.
Documents shall be bound at left side only.

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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 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 issue subpoenas authorized by law.

XV. HEARINGS IN ADVERSARY PROCEEDINGS

101

(3) To rule upon offers of proof and receive relevant evidence.
(4) To take or cause depositions to be taken whenever the ends of justice would be
served thereby.
(5) To regulate the course of the hearings.
(6) To hold conferences for the settlement or simplification of the Issues by consent
of the parties.
(7) To dispose of procedural requests or similar matters.
(8) To make and submit to the Commission a recommended decision as provided
by Rule XXII.
(9) To certify questions to the Commission for its determination.
(10) To take any other action authorized by Commission rule consistent with the
Administrative Procedure Act.
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 respect thereto. A copy of such trial examiner’s report
shall be furnished to any counsel upon whose language or conduct such report Is made,
and the Commission will take disciplinary action only after an opportunity for hearing
has been accorded such counsel.
RULE XV. 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

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

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) 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 or the production of documentary
evidence 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 presiding trial examiner or to the Commission.
Application for subpoenas for the production of documentary evidence shall be made
in writing to the presiding trial examiner or to the Commission. The application must
have reasonable scope and specify as exactly as possible the documents desired, and
show their general relevancy. The application shall be verified by oath or affirmation.
An appeal may be taken to the Commission by the parties from the presiding trial
examiner’s denial of a motion to quash or refusal to issue a subpoena for the
production of documentary evidence.
RULE XVII. WITNESSES AND FEES
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.

XVII. WITNESS AND FEES

103

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. 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
For good and exceptional cause the testimony of any witness may be taken In any
case whether at issue or not, by deposition de bene esse or, prior to the pendency of
a case, according to the common usage in Chancery. Depositions may be taken orally
or upon interrogatories before any person having power to administer oaths and who
has been duly designated by the Commission or the presiding trial examiner.
Unless notice be waived, no deposition shall be taken except after at least five (5)
days written 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 wit ness shall make application in
writing to the Commission or the presiding trial examiner setting out the reasons why
such deposition should be taken, the character of the deposition. the time when, the
place where, and the name and post office address of the person before whom such
deposition is to be taken, the name and post office address of each witness, and the
subject matter concerning which the witness is expected to testify. If good and
exceptional cause be shown, an order containing such instruction will be made and
served upon the parties.
Upon application granted, such deposition may be taken before a person having
power to administer oaths other than the person designated in the notice, provided
reasonable written notice of such change is given the opposing party. Each witness so
testifying shall be duly sworn and the adverse party shall have the right to cross
examine such witnesses. The questions propounded to the witnesses and the

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

answers thereto shall be reduced to writing, and, in the presence of the officer taking
the deposition, read to the witness and subscribed by the witness and certified in usual
form by said officer. Thereafter the said officer shall forward said deposition with
three copies thereof, in an envelope under seal, endorsed with the title of the case, and
addressed to the Commission at its office in Washington, D. C. If in a pending case,
such sealed deposition shall immediately be forwarded to the presiding trial examiner
and at a time of hearing read in evidence subject to such objections to the questions
and answers as were noted at the time of taking the deposition or as would be valid
were the witness personally present at such hearing.
RULE XX. APPEALS TO THE COMMISSION FROM RULINGS
OF TRIAL EXAMINERS
Except as provided for in rule XVI, parties shall not have the right to prose cute
interlocutory appeals from rulings of a trial examiner during the time the proceeding
is pending before him unless it be shown to the Commission that the prompt decision
of such appeal is necessary to prevent unusual delay and expense.
Motions for reconsideration and reversal of previous rulings may be made before the
trial examiner at the termination of the reception of evidence. In such motions each
exception shall be separately set out, with exact citations to each portion of the record
involved and references to the principal authorities relied upon. The trial examiner
shall rule upon each exception. An appeal may be taken to the Commission from any
adverse ruling on any such motion and the record relating thereto shall be certified to
the Commission. Notice of such appeal shall be made on the record when the rulings
are made and thereupon the trial examiner shall fix a time, not exceeding fifteen (15)
days unless the necessity for further time shall clearly appear, for filing the appeal and
a like time for filing the answer. Pending Commission decision and action upon such
appeal the case shall remain open. Any such matters not thus laid before the Commission shall be deemed waived.
RULE XXI. PROPOSED FINDINGS AND CONCLUSIONS BEFORE
TRIAL EXAMINER
At the close of the reception of evidence before the trial examiner in all formal
proceedings, or within a reasonable time thereafter to be fixed by the trial examiner,
parties may file for consideration by the trial examiner their proposed findings and
conclusions, together with their reasons therefor. Such proposals shall be in writing
and shall contain exact references to the record and authorities relied on. Copies
thereof shall be furnished all parties, and three copies, including the signed original,
shall be filed with the Commission.
Oral argument may be allowed at the discretion of the trial examiner. The record
shall show the ruling on each such proposal. Exceptions to such rulings shall be
subject to appeal under Rule XXIII only.

XXII. TRIAL EXAMINER’S RECOMMENDED DECISION

105

RULE XXII. TRIAL EXAMINER’S RECOMMENDED DECISION
IN ADVERSARY PROCEEDINGS
The trial examiner, as soon as practicable and within thirty (30) days after receipt
of the complete transcript and all exhibits in adversary proceedings, shall make and
file a recommended decision which shall become a part of the record and include a
statement of (l) findings and conclusions, as well as the reasons or basis therefor, upon
all the material issues of fact, law, or discretion presented on the record; and (2) an
appropriate order.
In cases in which the issues of fact are to be determined upon complaint and
admission answer or stipulation of facts, no recommended decision will be made if
waived by respondent, but in any case where evidence has been taken and must be
considered in the decision thereof, a recommended decision will be made regardless
of any waiver by the parties.
Except where he shall have become unavailable to the Commission, the
recommended decision 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, and no party respondent or his agent or
counsel in any case shall, in that or a factually related case, participate or advise in the
recommended decision of the trial examiner, except as a witness or as counsel in
public proceedings.
All findings, conclusions and orders recommended by the trial examiner shall be
based upon the whole record and supported by reliable, probative and substantial
evidence (including facts of which he may take official notice). No findings shall be
recommended except such as he deems supported by the greater weight of the evidence
At any time prior to the filing of his recommended decision the trial examiner may,
for good cause shown, reopen the case for the reception of further evidence.
A copy of the trial examiner’ s recommended decision shall be served upon each
party, 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
recommended decision, file with the Commission exceptions to any part thereof and
to the trial examiner’s failure to include proposed findings and conclusions requested
under Rule XXI. Each exception shall specify the portions of the record and the
authorities relied on to sustain each point.
Ten (10) copies of the exceptions shall be filed. All exceptions and rulings thereon
shall become part of the record.
A copy of such exceptions shall forthwith be furnished the trial examiner and a copy
served upon each of the parties and counsel who were served with a copy of the trial
examiner’s recommended decision.
If exceptions are to be argued, they shall be argued at the time of final argument

upon the merits, except as otherwise provided in Rule XX.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION

RULE XXIV. BRIEFS AND ORAL ARGUMENTS BEFORE
THE COMMISSION
A. QUESTIONS FOR PRESENTATION
Questions which may be presented for consideration and decision by the
Commission on final hearing include the following :
(l) Whether the findings and conclusions recommended by the trial examiner are
relevant and material to the issues and are supported by reliable, probative, and
substantial evidence and by the greater weight of the evidence;
(2) Whether additional findings and conclusions, not recommended by the trial
examiner, should be made either with or without sending the case hack 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 and whether the Commission should take official notice of any other fact;
(4) Whether due process was observed and whether there was any prejudicial
irregularity in procedure or prejudicial error in the rulings of the trial examiner;
(5) Whether the facts show a violation of law amenable to redress by the
Commission and what conclusions of law are justified and requisite in the premises;
and
(6) Whether an order to cease and desist, an order of dismissal, or other order,
should be entered and issued, and the substance and form thereof.
B. BRIEFS
Filing.--Any party to a proceeding may file a brief 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.
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 recommended decision 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 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 statement of the points of fact or law
to be discussed, with references to the pages of the record and the authorities relied

upon in support of each point.

XXV. COMMISSION’S ADJUNCTION

107

The exceptions, if any, to the recommended decision of the trial examiner may also
be included in the brief.
Index--Briefs comprising more than ten (10) pages shall contain on their top
flyleaves 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 double leaded, citations
and quotations single leaded; footnotes not less than eight (8) point single 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 (l) inch.
Length.--Unless leave be granted, briefs shall not exceed seventy-five (75) printed
pages.
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.
Oral arguments before the Commission shall be reported stenographically unless
otherwise ordered by the Commission.
RULE XXV. COMMISSION’S ADJUDICATION
Upon submittal of a case to the Commission for final decision on the merits the
Commission will consider the whole record, including the recommended decision of
the trial examiner and the exceptions thereto, will resolve all questions of fact by what
it deems to be the greater weight of the evidence thereon, will make its decision stating
the reasons or basis therefor and enter an appropriate order, and wherever it decides
that an order to cease and desist should be entered will also make, as provided by law,
a report in writing stating its findings as to the facts. As authorized under the various
statutes defining its powers and duties the Commission adjudicates all formal
proceedings brought before It and as authorized under the Administrative Procedure
Act reserves such adjudications exclusively to itself.
No officer, employee or agent, engaged in the performance of investigative or
prosecuting functions for the Commission, and no party respondent or his agent or
counsel In any case shall, in that or a factually related case, participate or advise in the
decision of the Commission, except as a witness or as counsel in public proceedings.

108 ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1949
RULE XXVI. 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 may require any respondent upon
whom such order has been served 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 XXVII. REOPENING OF PROCEEDINGS
In any case where an order to cease and desist has been issued by the Commission
it may, upon notice to the parties, modify or set aside, in whole or in part, Its report of
findings as to the facts or order in such manner as it may deem proper at any time prior
to expiration of the time allowed for filing a petition for review or prior to the filing
of the transcript of record in the proceeding in a Circuit Court of Appeals of the United
States pursuant to a petition for review or for enforcement of such order.
In any case where an order to cease and desist issued by the Commission has become
final by reason of court affirmance or expiration of the statutory period for court
review without a petition for such review having been filed, the Commission may at
any time after reasonable notice and opportunity for hearing as to whether changed
conditions of fact or of law or the public interest so require, reopen and alter, modify
or set aside in whole or in part its report of findings as to the facts or order therein
whenever in the opinion of the Commission, after such hearing, such action is required
by said changed conditions or by the public interest.

XXVIII. TRADE PRACTICE CONFERENCE PROCEDURE

109

In any case where an order dismissing a formal complaint of the Commission has
been entered the Commission may, upon reasonable notice to the parties and
opportunity for a hearing as to whether said proceeding should be reopened, issue an
order reopening the same whenever, in the opinion of the Commission, changed
conditions of fact or of law or the public interest so require.
RULE XXVIII. TRADE PRACTICE CONFERENCE PROCEDURE
(a) Purpose.--The trade practice conference procedure has for its purpose the
establishment, by the Commission, of trade practice rules in the interest of industry
and the purchasing public. This procedure affords opportunity for voluntary
participation by industry groups or other interested parties in the formulation of rules
to provide for elimination or prevention of unfair methods of competition, unfair or
deceptive acts or practices, and other illegal trade practices. They may also include
provisions to foster and promote fair competitive conditions and to establish standards
of ethical business practices in harmony with public policy. No provision or rule,
however, may be approved by the Commission which sanctions a practice contrary to
law or which may aid or abet a practice contrary to law.
(b) When authorized.--Trade practice conference proceedings may be authorized by
the Commission upon its own motion or upon application therefor whenever such
proceedings appear to the Commission to be in the interest of the public. In authorizing
proceedings, the Commission may consider whether such proceedings appear to have
possibilities (l) 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 person, 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 :
(l) 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 suggested trade practice rules.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1949

(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
office, 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.--Public notice of the time and place of any such authorized
conference shall be issued by the Commission. A member of the Commission or of its
staff shall have charge of the conference and shall conduct the conference pursuant to
direction of the Commission and in such manner as will facilitate the proceeding and
afford appropriate consideration of matters properly coming before the conference. A
transcript of the conference proceedings shall be made, which, together with all rules,
resolutions, modifications, amendments or other matters offered, shall be filed in the
office of the Commission and submitted for its consideration.
(f) Public hearing on proposed rules.--Before final approval by the Commission of
rules for an industry, and upon public notice, further opportunity shall be afforded by
the Commission to all interested persons, corporations or other organizations,
including consumers, to submit in writing relevant suggestions or objections and to
appear and be heard at a designated time and place.
(g) Promulgation of rules.--When trade practice rules shall have been finally
approved and received by the Commission, they shall be promulgated by official 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.
(i) Amendment of rules.--Trade Practice rules may be amended or rescinded by the
Commission upon its own motion or upon application filed with it by any interested
person, party or group. Such application shall be in writing, signed by the applicant or
his duly authorized representative, and shall set forth the reasons for the requested
action.

XXX. PROCEDURE FOR ESTABLISHING QUANTITY LIMITS

111

RULE XXIX. 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
XXVIII 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 Labeling Act, shall be available for inspection
and copying at the convenience of the Commission.
The records and files 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 action thereon, having due
regard to statutory restrictions, its rules of practice, and 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 request 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

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made of them. The Commission will consider and act upon such requests, having due
regard to statutory restrictions, its rules of practice, and the public interest.
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. Service of such
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 l
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
Upon the promulgation of trade practice conference rules for an industry, an
examination will be made of all charges of law violations by members of that industry
then pending before the Commission which have not reached the formal stage through
the issuance of complaint. In those instances in which the pending charges are
adequately covered by the trade practice conference rules, and which are not excluded
by the exceptions hereinafter stated, the Commission will consider the advisability of
closing the matters without prejudice to reopening whenever that action appears to be
warranted. In such instances consideration will be given to whether or not a proposed
respondent has subscribed to the trade practice conference rules for his industry, to
whether or not there is adequate reason to believe that he is in fact complying with
such rules and will continue to do so, and to whether or not the public interest or the
applicable statute requires any further proceedings.
Upon the promulgation of trade practice conference rules for an industry, formal
complaints which have not then been adjudicated and

1 The statement of policy which follows with the exception of “Cooperation With
Other Agencies” is published as amended and added to on August 19, 1947, and
promulgated through the Federal Register for August 29, 1947.

For exception referred to see footnote on p.117.
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in which the charges are adequately covered by such rules, and which are not excluded
by the exceptions hereinafter stated, may be brought directly before the Commission
on motion to suspend without prejudice to the Commission’s right to resume the
proceeding. In considering such motions the Commission will be guided by factors
similar to those outlined above with respect to informal matters.
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, in
instances which are not excluded by the exceptions hereinafter stated, withhold service
of complaint and extend to the person opportunity to execute a stipulation satisfactory
to the Commission, in which the person, after admitting the material facts, promises
and agrees to cease and desist from and not to resume such unfair methods of
competition or unfair or deceptive acts or practices. All such stipulations shall be
matters of public record, and shall be admissible as evidence of prior use of the unfair
methods of competition or unfair or deceptive acts or practices involved in any
subsequent proceeding against such person before the Commission.
It is the policy of the Commission to utilize the trade practice conference and
stipulation procedures to encourage widespread observance of the law by enlisting the
cooperation of members of industries and informing them more fully of the
requirements of the law, so that wherever consistently possible the Commission may
avoid the need for adversary proceedings against persons who, through
misunderstanding or carelessness, may violate the law unintentionally. But it is not the
policy of the Commission to grant the privilege of settling cases through trade practice
conference or stipulation agreements to persons who have violated the law where such
violations involve intent to defraud or mislead; false advertisement of foods, drugs,
devices or cosmetics which are inherently dangerous or where injury is probable;
suppression or restraint of competition through conspiracy or monopolistic practices;
or violations of the Clayton Act; nor will the privilege be granted where the
Commission is of the opinion that such procedure will not be effective in preventing
continued use of the unlawful methods, acts or practices. The Commission reserves the
right in all cases to withhold the privilege of settlement by trade practice conference
or stipulation agreements. When in connection with an industry-wide investigation
informal matters of whatever nature are docketed against individual members of that
industry, from which the promulgation of trade practice conference rules ensues
covering the questioned practices, and which are subscribed to and accepted by the
affected members of the industry, the Commission will give careful consideration to
whether or not the public interest requires further investigation of such informal
matters.
Explanatory statement.--The Commission has long had a public statement of policy
governing the settlement of informal cases by stipulation agreements. There has been
no comparable generally published statement of policy with respect to trade practice
conference agreements. Under its present program, the Commission may institute trade
practice conferences on its own initiative. When it appears

SETTLEMENT OF CASES

115

that questionable practices are so prevalent in an industry that they may be more
effectively and expeditiously reached by trade practice conference than by individual
proceedings, the Commission may utilize that procedure in dealing with the over-all
problem. In those situations it is necessary, after the promulgation of trade practice
conference rules, to determine what further action should be taken in pending informal
cases relating to the same parties and practices, as well as to determine the extent to
which pending formal matters may have been affected.
It is the desire of the Commission to inform the public on these matters, but to avoid
commitments which may abrogate its statutory procedures or frustrate the
effectiveness of its corrective processes. To this end the Commission has formulated
a statement of policy concerning the scope and effect of its trade practice conference
procedure insofar as it may affect the settlement of pending matters before it, and it
has reappraised its policy with respect to the settlement of cases by stipulation
agreements.
For many years the Commission has sought to encourage voluntary compliance with
the laws which it administers. It has utilized individual stipulation agreements and
conferences with whole industries and has otherwise cooperated with businessmen to
inform and guide them with respect to the scope and meaning of the laws within its
jurisdiction. A cooperative procedure similar to trade practice conferences was first
used by the Commission In about 1919; the Trade Practice Conference Division was
established in 1926; and the present active list of trade practice conference rules covers
about 160 industries.
It has long been the Commission ‘s practice in certain instances where proper
circumstances are present to dispose of pending matters upon acceptance by the
affected parties of trade practice rules for their industry covering the charges in such
matters. This practice was specifically limited In 1936 when the Commission
determined that whenever an application for trade practice conference is received from
an industry, some or all of whose members are respondents in proceedings before the
Commission involving alleged violations of the Clayton Act or combinations or
conspiracies in restraint of trade in violation of the Federal Trade Commission Act,
such proceedings will have to go forward without regard to the trade practice
conference procedure.
The cooperative procedures, however, require a constant vigilance to avoid the
dangers inherent in them. Their use should never be permitted as an easy escape for
wilful violators of the laws administered by the Commission or as a means for
avoiding or delaying the effectiveness of the Commission’s corrective action. These
considerations have governed the Commission’s policy with respect to the settlement
of pending matters by trade practice conference or stipulation agreements.
Trade practice conference rules have no force of law in themselves. Violations of
those rules are not proceeded against directly. The Commission can proceed only on
a charge of violation of the law upon which the rules are based. Their purpose is to
express the requirements of the statutes and decisions in terms which may be
understood by the members of particular industries and in lan-

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guage addressed to their problems and practices. An agreement by a member of an
industry to abide by the rules is an expression of intention to abide by the basic law.
It is manifestly difficult to draft a statement of policy on a broad basis which does
not afford an evasive device to the wilful violator while seeking to avoid unduly harsh
treatment of the unintentional or casual violator. Any statement of policy must,
therefore, depend for its effectiveness upon the consistent and sound judgment of the
Commission In applying it in individual instances. But no statement of policy should
be so broad as to constitute an invitation to reluctant or recalcitrant respondents to
avail themselves of informal settlements for the purpose of delaying or defeating
effective action. It should invite only those who desire in good faith to correct
unlawful practices on a cooperative and voluntary basis. The object of the Commission
is to correct--not to punish. But there must be a reasonable assurance that any
cooperative procedure will be effective and provide full freedom to institute such
further proceedings as are or may become necessary in the public interest.
Conspiracies and monopolistic practices are, with few exceptions, deliberately
engaged in for the purpose of restraining competition and ordinarily with knowledge
of their illegality. Since good faith is ordinarily lacking in such violations, it cannot
be expected to be present in agreements by the conspirators to discontinue and not
resume the violations. Violations of this type are frequently also criminal violations
of the Sherman Act, and the settlement of such violations by informal agreement may
impair the rights of private litigants or compromise the enforcement of that act by the
Department of Justice. When conspirators are discovered, or when they are on the
verge of being discovered, they would doubtless be glad to make use of the
Commission’s trade practice conference or stipulation procedure as a protection
against the more rigorous procedure provided by the antitrust laws.
Trade practice conference rules may include rules against restraints of trade and
against violations of the Clayton Act. Insofar as such rules may be informative to and
followed by members of the affected industries, they have a substantial value. They
should not be accepted, however, as a basis for the settlement of cases in which the
Commission has reason to believe that such violations have occurred.
COOPERATION WITH OTHER AGENCIES 1
In the exercise of its jurisdiction with respect to practices and commodities
concerning which other Federal agencies also have functions, it is the established
policy of the Commission to cooperate with such agencies to avoid unnecessary
overlapping or possible conflict of effort.
It is the policy of the Commission not to institute proceedings in matters such as the
labeling or branding of commodities where
1 The statement is published as amended by the Commission on March 2, 1948, and
promulgated through the Federal Register for March 9, 1948.

STATEMENT OF POLICY

117

the subject matter of the questioned portion of the labeling or branding used is, by
specific legislation, made a direct responsibility of another Federal agency.
In proceedings involving false advertisements of food, drugs, cosmetics, and devices
as defined in section 15 of the Federal Trade Commission Act, account Is taken of the
labeling requirements of the Food and Drug Administration In any corrective action
applied to the advertising. In the case of advertisements of food, drugs, cosmetics, or
devices which are false because of failure to reveal facts material with respect to the
consequences which may result from the use of the commodity, it is the policy of the
Commission to proceed only when the resulting dangers may be serious or the public
health may be impaired, and in such cases to require that appropriate disclosure of the
facts be made in the advertising.

INVESTIGATIONS BY THE COMMISSION, 1915-48
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 be 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.
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., o. p., 7/1/16) and A System of-Accounts for
Retail Merchants (19 p., o. p., 7/15/16).
Accounting Systems.--See Distribution 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.
61, 74th, 8/27/35), and table and juice grapes, fresh fruits and vegetables (Public Res.
112, 74th, 6/20/36), the Commission made recommendation

1 The wartime cost-finding inquiries, 1917-1918 (p. 135), 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.
83.
4 F. T. C. recommendations that section 7 of the Clayton Act be amended to 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/ 37), p. 38;
Report of the F. T. C. on Agricultural Income Inquiry, Part I (3/1/37), p. 26; Agricultural
Implement and Machinery Industry (H. Doc. 702, 75th, 6/6/39), p.1038; The Present Trend of
Corporate Mergers (3/7/47); The Merger Movement: A Summary Report (1948); and F. T. C.
Annual Reports : 1938, pp.19 and 29; 1939, p.14; 1940, p. 11; 1941, p.19; 1942, p.9; 1943, p.9;
1944, p. 7; 1945, p.8; 1948, p.12; 1947, p.11; and 1948, p.11.

118

INVESTIGATIONS BY THE COMMISSION, 1915-48

119

tions concerning, among other things, the marketing of commodities covered by the
inquiry : corporate consolidations and mergers; 5 unbalanced agricultural-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 in come 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, 75th, 16 p.)].
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 requested 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, 194243.--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
related to secure capital equipment or whether orders that had been related had been
extended for the purpose of obtaining capital equipment in violation of priorities
regulations.
Cartels.--See paragraphs headed Copper Industry, International Phosphate Cartels,
Sulphur Industry, International Electrical Equipment Cartel, and Inter national Steel
Cartels.
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 scaled 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., o. 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 recommendation5 See footnote 4, p.118.
6 Basing-point systems are also discussed in the published reports listed herein under “Price
Bases,” “Steel Code,” and “Steel Sheet Piling.”
7 See footnote 4, p.118.

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tions pointed the way to subsequent enactment of the Robinson-Patman Act (1986)
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 Amendment
No.2 to W. P. B. General Preference Order No, m-18a, 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., o. p., S. Doc. 207, 65th)--pursuant to F. T. C.
motion ; and Report of the F. T. C. on Premium Prices of Anthracite (97 p., o. 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., o. p. ; (6) Maryland, West Virginia, and Virginia,
bituminous, 286 p., o. p. ; and (7) trans-Mississippi States, bituminous, 459 p., o. 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 Commission 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
INVESTIGATIONS BY THE COMMISSION, 1915-48

121

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 was
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.
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 Industry (F. T. C.).--The Commission ‘s report on The Copper Industry,
transmitted to Congress (3/11/47), was in two parts : Part I-The Copper Industry of the
United, States and, International Copper Cartels, and Part II-Concentration and
Control By the Three Dominant Companies. The Commission reported that “The
copper situation is particularly serious, not only because of the concentration of
control of the are reserves and of the productive capacity, but also because the
domestic supply is inadequate to meet the demands of high level national production

and employment. Furthermore, the production of foreign copper, on which the United
States will become increasingly dependent, is like wise dominated by a few corporate
groups which in the past have operated cooperatively in cartels to regulate production
and prices.”
Copper, Primary Fabricators of (W. P. B.), Wartime, 1941-42.--A survey and of
a specified list of companies which used a large percentage of all 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 Financial Reports.
Corporate Mergers and Acquisitions (F. T. C.).--To determine the impact on the
Nation’s economy of corporate mergers and acquisitions, the Commission made a
study of the merger movement for the years 1940-46, inclusive. The results of the
study were transmitted to Congress in a report entitled The Present Trend of Corporate
Mergers and Acquisitions (23 p., 3/7/47), which showed, among other things, that
during the period covered, more than 1,800 formerly independent competitive firms
in manufacturing and mining industries alone had disappeared as a result of mergers
or acquisitions, and that more than one third of the total number of acquisitions
occurred in only three industries, food, nonelectrical machinery, and textiles and
apparel--all predominantly “small business” fields. (See also Mergers.)
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.).

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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., o. p., 6/23/41).
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 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 under the sub-titles : Part I, Important
Food Pro ducts (11/11/43, 223 p., o. p.); Part III, Building Materials--Lumber, Paints
and, Varnishes and Portland Cement (2/19/44, 50 p., o. p.); Part IV, Petroleum
Products, Automobiles, Rubber Tires and Tubes, Electrical Household Appliances,
and Implements (3/2/44, 189 p., o. p.); Part V, Advertising as a Factor in Distribution
(10/30/44, 50 p., o. p.); Part VI, Milk Distribution, Prices, Spreads and Profits
(6/18/45, 58 p.); Part VII, Cost of Production and Distribution of 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.

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 acquisition 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

INVESTIGATIONS BY THE COMMISSION, 1915-4 8

123

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 proc ceded to that end.
Farm Implements (F. T. C.).--A 1948 report on the Manufacture and Distribution
of Farm Implements (160 p., also 8 p. processed summary) concerns the production
and distribution policies of large manufacturers of farm machinery. The report
includes information respecting important developments and trends in the industry. A
summary of the report appears at p.25.
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 violations (Report of the F. T. C. on Commercial Feeds,
206 p., o. 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 com panics, 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).
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, 574 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, 325 p., o. p.); IV. The
Five Large Packers in Produce and Grocery Foods (6/30/19, 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 Livestock (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
8 The Commission was created September 26, 1914, upon 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.”
9 The legal history of the consent decree and a summary of divergent economic interests
involved in the question of packers 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.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

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 Limitation, p.126.)
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.); III. Terminal Grain Marketing
(12/21/21, 332 p., o. p.); IV. Middlemen’s Profits and Mar gins (9/26/23, 215 p., o. p.);
V. Future Trading Operations in Grain (9/15/20, 347 p., o. p.); VI. Prices of Grain and
Grain Futures (9/10/24, 374 p., o. p.); and VII. Effects of Future Trading (6/25/26, 419
p., o. p.). The investigation as re ported 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, Grain Exporters, and Grain Wheat Prices, p.125.)
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, 83 p., 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 (O. 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 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 were tabulated for O. PA.
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., o. p.,
10 In connection with its wartime cost finding inquiries, 1917-18, p.135 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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125

1/11/28); and Conditions in the Flour Milling Business, supplementary (S. Doc. 96,
72d, 26 p., o. 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, 137 p.). 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 36
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, 130 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--Flour-Milling Industry, Growth and Concentration in (F. T. C.).--The
Commission’s study showed that there has been a progressive increase in the size of
flour mill operations and a progressive decrease in the number of flour-milling
establishments. Nevertheless, the Commission reported, there is a lesser degree of
concentration in the flour-milling industry than in many other important industries.
The results of the study were presented to Congress in a report on the Growth and
Concentration in the Flour-Milling Industry (6/2/47).
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 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., 387 p., o. 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 be due chiefly
to abnormal market conditions (Report of the F. T. C. on Wheat Prices for the 1920
Crop, 91 p., o. p., 12/13/20).
Food--Important Food Products.--See Distribution Methods and Costs.
126 ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948
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. Dec. 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 Products 1914-18
(6/6/21, 234 p., o. 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 Milksheds (H. Doc. 152,
74th, 901 p., o. 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., o. 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., o. p.,
6/4/36); Twin City Sales Area (H. Doc. 506, 74th, 71 p., o. p., 6/13/36); 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 be dealt with only 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., o. p., 0/30/32).
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. 133, 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 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, 73d, 100 p., o.
p., 1/11/34; supplemental report, 111 p., o. p., processed., 6/27/38).
11

See footnote 8, p.123.

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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, 1942-44.--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 L158 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.
Grain Exchange Actions (F. T. C. and Chairman of Senate Committee on
Agriculture and Forestry).--The Commission’s report on Economic Effects of Grain
Exchange Actions Affecting Futures Trading During the First Six Months of 1946 (85
p., 2/4/47) presents results of a special study made at the request of the then Chairman
of the Senate Committee on Agriculture and Forestry. The report reviews the factors
which made it impossible, during the first half of 1946, for futures trading to be
conducted in the usual manner on the Chicago, Kansas City and Minneapolis grain
exchanges under existing conditions of Government price control and severe
restrictions on the movement of short supplies of free grain in the cash market. The
report also discusses the economic effects of emergency actions taken by the
exchanges on the interests trading in futures, and suggests, among other things, that
both the Commodity Exchange Act and the U.S. Warehouse Act “should be so
amplified and coordinated, or even combined, as to make effective the type and scope
of regulation over futures trading contemplated by the Congress in enacting the

Commodity Exchange Act.”
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., o. 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., o. 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.
813610--49----10

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

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 in sufficient capital.
Industrial Financial Reports (F. T. C. and S. E. C.).--This (1947 and 1948) series
of reports is intended to meet the general needs of the Government and the public for
current reliable corporation financial data. The reports show the aggregate estimates
for American manufacturing corporations as derived from reports collected by the
Federal Trade Commission and the Securities and Ex-change Commission. This work
is based upon resumption by F. T. C. of its prewar financial reporting function and
continuation by S. E. C. of its current responsibilities for collection of financial
information from corporations with securities registered on a national exchange. F. T.
C. obtains comparable information from a carefully selected sample of small, medium
size and large non-registered corporations; The sample has been designed so that the
two sets of data can be combined to provide estimates for 21 major industry groups as
well as the aggregate for all manufacturing corporations. The Industrial Financial
Reports formerly were known as Industrial Corporation Reports. A summary of the
report appears at p.27.
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 Electrical Equipment Cartel (F. T. C.).--In its 1948 report on this
subject (107 p., also 10 p. processed summary) the Commission points out the high
degree of economic concentration in the electrical equipment industry which exists in
each of the important industrial nations. A summary of the report appears at p.23.
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.
International Steel Cartels (F. T. C.).--A report to Congress concerning numerous
cartel agreements relating to steel which were adopted between World War I and
World War II. Certain American companies participated in these agreements, which
were both national and international in scope. The international agreements allotted
quotas to the different national groups, fixed prices in the export trade, and established
reserved and unreserved areas. A summary of the report appears at p.22.
(International Steel Cartels (1948), 115 p., also 12 p. processed summary.)

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, 5 p., o. p., 1/23/18), and
Report on Leather and Shoe Industries (180 p., o. 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., o. p., 6/10/21).

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129

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.; o. 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., o. 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 to bring down to
date the 1919 lumber association inquiry (Chap. VIII of Open Price Trade
associations, S Doc. 226, 70th, 516 p., 243/29).
Meat-Packing Profit Limitations.--See Food.
Mergers (F. T. C.).--In its 1948 report entitled The Merger Movement: A Summary
Report, (134 p., also 7 p. processed summary) the legal history of the anti-merger
provisions of the Clayton Act is reviewed. The report calls attention to the loophole
in the Clayton Act which permits corporations to purchase the assets rather than (or
in addition to) the stock of competing firms, thereby evading the original intent of
Congress “to arrest the creation of . . . monopolies in their incipiency.” A summary
of the report appears at p.16. (See also Corporate Mergers.)
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 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 Methods
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 restrict 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., 6/5/39). The leading companies
voluntarily adopted a number of the Com-mission’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 association, their im-

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 194 8

portance 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. . allocations,
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.,
643/17), 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 Newsprint Paper Industry (S. Doc. 49, 65th)
162 p., o. 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)].
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, 6/18/13 12 and S. Res 457, 63d, 9/28/14, which reports discussed 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., o. p., 6/1/20)--pursuant to

H. Res. 501, 66th, 4/5/20, in which report the Commission made constructive
proposals to conserve the oil supply ; Letter of Submittal and Summary of Report on
Gasoline Prices in 1924 (24 p. processed, 6/4/24, and Cong. Record, 2/28/25, p.
5158)--pursuant to request of President Coolidge, 2/7/24 Petroleum Industry--Prices,
Profits and Competitions (S. Doc. 61, 70th, 360 p., o. 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 Gasoline Prices (S.
Doc. 178, 73d, 22 p., o. 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
12

See footnote 8, p.123.

INVESTIGATIONS BY THE COMMISSION, 1915-48

131

(9/15/30) against Standard Oil Co. of California, Inc., and others, restraining them
from monopolistic practices, was being observed, and reported (4/2/37) 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 Ownership 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 Transportation 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
S. Res. 138, 66th, 7/31/19; Reports of the F. T. C. on the Petroleum Industry of
Wyoming p., o. p., 1/3/21)--pursuant to F. T. C. motion ; Petroleum Trade in Wyoming
and Montana (S. Doc. 233, 67th, 4 p., o. 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., o. 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., o. p., 2/21/27) dealt with the organization, control, and
ownership of commercial electric-power companies. It called attention to the
dangerous degree to which pyramiding had been practiced in super-posing 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., o. 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., o. 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
13 See footnote 8, p.123. 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).

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

total assets. The testimony, exhibits and final reports (Utility Corporations, S. 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., o. 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, 3/30/36, 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 E. 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; Fruit Growers
and Shippers ; Furnaces, Hot Air, Household ; Fuse Manufacturers ; Glycerin, Users
of ; Insignia Manufacturers; 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.
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., o. 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 deter-mine .
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 industry (H. Res. 548,
67th, 3/4/23 ; Report of the F. T. C. on the Radio Industry, 347 p., o. 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 Commission

and Department of Justice proceedings on monopoly charges which culminated in a
consent decree (11/2/32; amended 11/2/35).
Rags, Woolen.--See Textile.
Raisin Combination.--See Food.
Range Boilers.--See Price Bases.
Rates of Return in Selected Industries (F. T. C.).--A comparison of the prewar
(World War II) and postwar rates of return on stockholders’ investments after taxes
for more than 500 identical manufacturing corporations. The study, covering the years
1940 and 1947, includes 25 selected manufacturing industries. (7 p., processed.)
14 Final reports were published in 1935 ; a general index In 1987. Some of the volumes are
out o f 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 1936, p.36.
15 Basing-point systems are also discussed in the published reports listed under “Cement,”
‘”Steel Code,” and “Steel Sheet Piling” herein.

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133

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). 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, 73d, 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 complied 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.
Silverware 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 c, 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.
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, 73d, 79 p., o. p.,
3/19/34) and the Commission and N. R. A. studied the effect of the multiple basingpoint system under the amended code (Report of the F. T. C. 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., o. 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, 11p., o. p., 6/5/22 and 9/7/22).
Steel Costs and Profits.--See Wartime Cost Findings, 1917-18.
Steel Costs 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. PM.), Wartime, 1941-42.--This investigation covered practically every steel mill in the country and was conducted for the purpose of
16 The salary lists do not appear in the report but are available for inspection.
17 As of the same date in 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.

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ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

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., o. p., 12/5/27).
Sugar.--See Food.
Sulphur Industry (F. T. C.).--In its report to Congress on The Sulphur Industry and
International Cartels (6/16/47), the Commission stated that the operations of all four
producers constituting the American sulphur industry generally have been highly
profitable, and that the indications are that foreign cartel agreements entered into by
Sulphur Export Corp., an export association organized under the Webb-Pomerene
Law, have added to the profitability of the U.S. industry. On 2/7/47, after hearings, the
Commission recommended that Sulphur Export Corp. readjust its business to conform
to law.
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, 1942-44.--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 lower rated orders.
Textile (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., o. p. (Part VI,
financial tabulations, processed, 42 p., o. p.); Report of the F. T. C. on the Textile
Industries in 1933 and 1934, Parts I to IV, 8/1/35 to 12/5/35, 129 p., o. p. ; Parts II and
III, o. p. (Part IV, processed, 21 p., o. 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 Manufactured During 1933 and 1934, 3/24/36, 48 p.,

processed, o. p. ; Textile Industries in the First Half of 1935, Parts I to III, 5/22/36 to
8/22/36, 119 p., processed, o. p.; Textile Industries in the Last Half of 1935, Parts I to
III, 11/20/36 to 1/6/37, 155 p., processed, o. p. ; and Textile Industries in the First Half
of 1936, Parts I to III, 1/21/37 to 2/11/37, 163 p., processed, o. p.
Textile--Combed Cotton Yarns.--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 Yarns, 94 p., o. p., 4/14/21).
Textile--Cotton Growing Corporation.--See Foreign Trade.
Textile--Cotton Merchandising (Senate).--Investigating abuses in handling
consigned cotton (S. Res. 252, 68th, 6/7/24), the Commission made recommendations
designed to correct or alleviate existing conditions (Cotton Merchandising Practices,
S. Doc. 194, 68th, 38 p., o. p., 1/20/25).
18 See footnote 15, p.132.

INVESTIGATIONS BY THE COMMISSION, 1915-48

135

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 Cot ton Trade (S. Doc. 311, 67th, 28 p., o. p., 2/26/23). After a second
inquiry (S. Res. 429, 67th, 1/31/23) , 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, S. 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 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 instance 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, 2/9/25) into activities of two well known
companies disclosed that alleged illegal agreements or conspiracies did not appear to
exist. (The American Tobacco Co. and the Imperial Tobacco Co., S. 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 FlueCured 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, 5. 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., 6/30/16).
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 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' 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
19

See footnote 10, p.124.

136

ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1948

(94 p., o. p., 5/1/22); and Report of the F. T. O. 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 Costs and Profits (F. T. C.).--Cost and profit information for 4,107
identical companies for the period 1941-45 is contained in a Commission report (1948)
on Wartime Costs and Profits for Manufacturing Corporations, 1941 to 1945 (30 p.,
processed, with 106 p. appendix) , Compilation of the information contained in the
report was begun by the Office of Price Administration prior to the transfer of the
financial reporting function of that agency to the Federal Trade Commission in
December 1946.
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 indus tries 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 Financial Reports
; Metal-Working Machines ; Paperboard ; Priorities ; Steel Costs and Profits ; and War
Material Contracts.
Approximately 280 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).
20

INDEX
[Index does not include names or items In alphabetical lists, tables, or appendixes. For
names of export trade associations, see p.67 ; for appropriation items, see p.75 ; and
for titles and summaries of investigations, 1915-48, see p.118.]
Page
Administrative Procedure Act
5, 13
Advertising, false and misleading:
Complaints alleging
41
Criminal penalties
32
Food, drugs, devices, cosmetics
2, 6, 32, 36, 66
Injunctive proceedings involving
32
Mail-order
38
Newspaper and periodical
38
Orders directed against
44
Procedure in cases involving
40
Radio commercial
39
Stipulations relating to
38
Survey of
37
Television
39
Alberty Food Products
49
Allied Paper Mills
48
Amasia Importing Corp
48
American Association of Law Book Publishers
48
American Dietaids Co., Inc
44
American Iron and Steel Institute
41
American Refractories Institute
43
A P. W. Paper Co., Inc
48
Artificial limb industry, trade practice rules for
59
Attorney General of the United States
7, 12, 50
Automobile dealers, New York City and District of Columbia, investigation of 3, 37
Ayres, William A., Commissioner
9
Baby chick industry, trade practice conference proceedings for
58
Bank, Harry & Son
45
Blackstone College of Law, Inc
44
Brooks Clothes
45
California Rice Exporters
69
Canute Co
49
Carbon Black Export, Inc
69
Cartels, international
22
Cast iron soil pipe industry, investigation of
3, 37
Cement Institute, The
17, 49
Cheese industry, investigation of
3, 37
Clayton Act :
Amendments proposed
11, 15, 16
Application to insurance business
7
Complaints issued under
42
Contempt proceedings under
31
Orders issued under
45
Procedure under
30
Section 2 (see also Robinson-Patman Act)
2, 8, 34, 42, 45, 49,

50
Section 3
Section 7
Section 8

2, 35, 43, 47
2, 11, 15, 16, 35
2
137

138

INDEX

Page
Clemens, M A
44
Columbia River Packers Association, Inc
46
Commissioner of Patents
7
Committee on the Judiciary, House of Representatives
12, 17
Committee on the Judiciary, Senate
16, 17
Complaints, formal
6, 30, 41
Confectionery wholesalers (see under Wholesale confectionery industry) .
Congress of the United States
1, 2, 3, 8, 9, 11,13, 16, 17
Consumers Home Equipment Co
49
Court cases :
Civil penalty suits
6, 31, 48
Decided
6, 47
Pending
6, 49
Petitions to review
48
Curtiss Candy Co., The
46, 47
Davis, Ewin L. Commissioner
9
Decker Products Co
49
Electrical A p paratus Export Association
69, 70
Electrical Manufacturers Export Association
69
Elgin Razor Corp
49
Export Trade Act :
Export associations operating under
67
Export associations organized during year
69
Inquiries and recommendations under
69
Provisions of
3, 67
Fabrics and apparel, water resistant (see under Water resistant) .
Federal Power Commission Act of 1934
8
Federal Reports Act of 1942
28
Federal Trade Commission :
Accounting, Division of
6
Acts administered by
1, 2
Administration, Bureau of
6
Antimonopoly Trials; Division of
4
Appellate Proceedings, Division of
4
Appropriations, expenditures, and fiscal affairs
75
Cases in Federal courts
48
Chairman
9
Commissioners
9
Compliance, Division of
4
Deceptive Practice Trials, Division of
4
Duties of
1, 2
Economics, Division of
5
Executive Office
6
Export Trade, Division of
4
Field Investigation, Division of
4
Foreign trade work
67
General Counsel, Office of
4
Industrial Economics, Bureau of
5
Investigations, general
1, 3, 5, 8, 15
Investigations, industry-wide
3, 4
Legal activities
1, 6, 29
Legal Investigation, Bureau of
4, 29, 32
Litigation, Bureau of
4
Medical Opinions, Bureau of
6, 66
Organized
1
Personnel
9
Policy, Statement of
113
Procedure upon application for complaint
29
Procedure upon formal complaints
30
Publications
9

Radio and Periodical Advertising, Division of
Recommendations to Congress
Reorganization plan
Rule Administration, Division of

4, 29, 30, 37
11
3
5

INDEX

139

Federal Trade Commission--Continued
Page
Rule Making, Division or
5
Rules of practice
95
Secretary
6
Staff organization
4
Statistics and Financial Reports, Division of
6
Stipulations, Bureau of
4, 53
Trade-Marks, Division of
4, 7
Trade Practice Conferences and Wool Act Administration, Bureau of
5, 55
Trial Examiners, Bureau of
5
Wool Act Administration and Inspection, Division of
5, 63
Federal Trade Commission Act:
Amended
2
Applicable to insurance business
7
Approved
l
Civil penalties under
6, 31, 48
Complaints issued under
41
Orders to cease and desist issued under
43
Procedure under
30
Section 5
2, 41
Section 6
3, 7, 9, 28, 50
Sections 12-15, inclusive
2, 32
Text of
79
Types of unfair practices in violation of
87
Wheeler-Lea amendment to
2, 32, 36
Ferguson, Garland S., Commissioner
9
Fine and wrapping paper distributing industry, trade practice conference for
58
Floor wax products industry, investigation of
3, 40
Food and Drug Administration
66
Fountain pen and mechanical pencil industry, trade practice conference proceedings for
58
Freer, Robert E., Commissioner
9
General Foods Corp
50
General Milk Co., Inc
69, 70
General Milk Sales, Inc
69, 70
Gevertz Buying Corp
46
Hand knitting yarn industry, trade practice rules for
4, 7, 10, 57
Handkerchief industry, trade practice conference for
58
Hillman Periodicals, Inc
49
Hosiery industry, trade practice conference proceeding for
58
Industrial Financial Reports
8, 11, 15,27
Insurance
7
International Salt Co
50
Investigations, general :
International Electrical Equipment Cartel
8, 11, 23
International Steel Cartels
8, 11, 22
Manufacture and Distribution of Farm Implements
8, 11, 25
Merger Movement, The: A Summary Report
8, 10, 16
Investigations, industry-wide :
Automobile dealers, New York City and District of Columbia
3, 37
Cast-iron soil pipe
3, 37
Cheese
3, 37
Floor wax products
3, 40
Mattresses , crib or carriage
3, 40
Pearls, simulated and cultured
3, 40
Shampoo and scalp preparations
3, 40
Shoes, orthopedic or “health”
3, 40
Wall paper cleaning preparations
3, 40
Johnson, Walter H., Candy Co
46
Justice, Department of
10, 35
Ketchikan Packing Co
46
Labeling, informative
62, 63

140

INDEX

Page
Lanham Act (see under Trade-Mark Act).
Luggage and related products industry, trade practice rules for
58
Mason, Lowell B., Commissioner
9, 12
Masonry waterproofing products industry, trade practice rules for
59
Master Engravers Guild, Inc
44
Mattresses, crib and carriage, industry-wide investigation of
3, 40
Merger movement
8, 10, 11, 15, 16
Minneapolis-Honeywell Regulator Co
43, 45, 47
Morton Salt Co
49, 50
Natural Gas Act of 1938
8
New England Fish Co
46
Office machine marketing industry, trade practice rules for
4, 7, 10, 57
Orders to cease and desist
6, 10, 31, 43
Ox’O-Gas Co
9
Pacific Forest Industries
69
Packers and Stockyards Act
8
Paper (see under Fine and wrapping paper) .
Patent Office
7
Paul Edward P. & Co
49
Pearls cultured and simulated, industry-wide investigation of
3, 40
Pipe Fittings & Valve Export Association
69
President of the United States
1, 13, 8, 28
Price-fixing
2, 33, 41, 43
Public Utilities Holding Company Act of 1935
8
Pure Carbonic, Inc 44
Radio receiving set manufacturing industry, trade practice rules for
59
Rayon, nylon, and silk converting industry, trade practice conference for
58
Rendering industry, trade practice conference proceeding for
58
Restraint of trade
2, 33, 41,43
Rigid Steel Conduit Association
49
Robinson-Patman Act (see also Clayton Act, sec. 2)
2, 8, 34, 42, 45, 49, 50
Rubber Manufacturers Association, Inc., The
43
Scotch Woolen Mills
49
Securities Act of 1933
8
Securities and Exchange Commission
15, 27, 28
Senate, United States
1, 12, 17
Shampoo and scalp preparations, investigation of
3, 40
Sheffield Farms Co., Inc
43
Sherman Act
1, 8
Shoes, orthopedic or “health,” industry-wide investigation of
3, 40
Small Business Committee, House of Representatives
28
Sorbtex Foundation Inc
44
Staffin Johns Co., The
44
Standard Oil Co. (Ind.)
50
Stewart, Jesse C. Co
46
Stipulations to cease and desist
3, 4, 6, 10, 53
Stock Exchange Act of 1934
8
Structural Clay Products, Inc
43, 44
Supreme Court of the United States,
6, 10, 15, 17, 18
Tag Manufacturers Institute
50
Trade-Mark Act of 1946
3, 4, 7
Trade pamphlet binding industry, trade practice conference for
58
Trade practice rules :
Administration of
58
Conferences for establishment of
55, 56
Group I and group II rules explained
56
Informative labeling provisions of
62
Procedure for establishing
55
Promulgated during year
4, 7, 56
Purposes of
3, 55
Types of practices covered by
59

Triangle Conduit & Cable Co
United Diathermy; Inc
United States Steel Corp

49
44
50

INDEX
Unity Stamp Co., Inc
Wallpaper cleaning preparations industry, investigation of
Watch case industry, trade practice rules for
Watches, trade practice rules concerning
Water-resistant fabrics and apparel, trade practice conference for
Webb-Pomerene Law. (See Export Trade Act.)
Wheeler-Lea amendment (see also Federal Trade Commission Act)
Wholesale confectionery industry, trade practice rules for
Wood Naval Stores Export Association
Wool Products Labeling Act:
Administration of
Approved
Civil penalties under
Complaints issued under
Effective date of
Enforcement of
Investigations under
Orders issued under
Procedure under
Provisions of
Rules and regulations under
Section 2
Section 9
Section 14
Yarn (see under Hand knitting yarn industry).

141
Page
46
3, 40
4, 7, 10, 56
59
58
2, 32, 36
4, 7, 10, 57
69
7, 63
63
31
42
63
64
36
45
30
2, 63
63
63
64
63