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Annual
Report
of the

FEDERAL
TRADE
COMMISSION
For the Fiscal Year Ended
June 30, 1954

For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, 25, D. C. - Price 35 cents (paper cover)

Federal Trade Commission
EDWARD F. HOWREY, Chairman
LOWELL B. MASON
JAMES M. MEAD
JOHN W. GWYNNE
ROBERT T. SECREST 1
ROBERT M. PARRISH, Secretary
ALEX. AKERMAN, Jr., Executive Director
DAVID C. MURCHISON, Legal Adviser
and Assistant to the Chairman
____________
1

II

Took office September 26, 1954.

EXECUTIVE OFFICES OF THE FEDERAL TRADE COMMISSION
Pennsylvania Avenue at Sixth Street Northwest,
Washington 25, D.C.
Branch Offices
Room 104, Federal Trade Commission
Building, Washington 25, D. C.
Room 2904, U. S. Courthouse, Foley
Square, New York 7, N. Y.
Room 1310, 266 West
Boulevard, Chicago 6, Ill.

Room 413, Masonic Temple Building,
333 St. Charles Street, New Orleans
12, La.
Room 811, U. S. Courthouse, Seattle 4,
Wash.

Jackson
Room 1128, Standard Building, 1370
Ontario Street, Cleveland 13, Ohio.

Room 133, Federal Office Building, Civic
Center, San Francisco 2, Calif.
Field Offices for Wool, Fur, and Flammable Fabrics
Room 2904, U. S. Courthouse, Foley
Square, New York 7, N. Y.
Room 401, U. S. Appraisers Stores
Building, 408 Atlantic Avenue,
Boston l0, Mass.
Room 1310, 226 West
Boulevard, Chicago 6, Ill.

Room 133, Federal Office Build Civic
Center, San Francisco 2, Calif.
Room 202, 1031 South Broadway, Los
Angeles 14, Calif.
Room 1128, Standard Building, 1370
Ontario Street, Cleveland 13, Ohio.

Jackson
Room 3030-A, U. S. Courthouse, Ninth
and Market Streets, Philadelphia, Pa.

Room 1003-C, U. S. Court and Custom
House, 12th and Market Streets, St.
Louis 1, Mo.

Lullwater Building, 441 West Peachtree
Street, Atlanta, Ga.

Room 1606, 1114 Commerce Street,
Dallas 2, Tex.

III

Letter of Transmittal
FEDERAL TRADE COMMISSION
Washington, D. C.
To the Congress of the United States:
I have the honor to transmit herewith the Fortieth Annual Report of the Federal Trade
Commission, for the fiscal year ended June 30, 1954.
By direction of the Commission.
EDWARD F. HOWREY, Chairman.
THE PRESIDENT OF THE SENATE.
THE SPEAKER OF THE HOUSE OF REPRESENTATIVES.
V

CONTENTS
Chapter

Page

1. Improvements in Administration _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 1

Return to First Principles _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Increased Compliance and Enforcement _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Reorganization of Commission _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Overlapping Activities _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

1
4
7
8

2. Protecting the Competitive System—Basic Function of
the Commission _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Statutory Authority _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Commission Membership _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Staff Reorganization and Operational Changes _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

10
10
18
18

3. Investigation _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Monopoly Practices _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Deceptive Practices _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Wool, Fur and Flammable Fabric Acts Administration _ _ _ _ _ _ _ _ _ _ _ _ _
Accounting Services in Legal Case Work _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Scientific Advisory Services _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Insurance _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

21
22
24
25
26
26
26

4. Litigation Before the Commission _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 28
Formal Complaints Issued—Examples _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 29
Cease and Desist Order Cases—Examples _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 33
5. Cease arid Desist Order Compliance _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Attention to Old Orders _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Antimonopoly Compliance Cases _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Deceptive Practice Compliance Cases _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Advertising Task Force _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Compliance Cases in Federal Courts _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

40
40
41
42
42
42

6. Court Proceedings _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Antimonopoly Cases _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Deceptive Practice Cases _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Other Court Cases _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

44
44
46
50

7. Cooperation with Industry _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Trade Practice Conferences _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Stipulations _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Export Trade Act Administration _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

52
52
57
59
VII

Chapter

Page

8. Economic and Statistical Reports _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Assistance in Legal Case Work _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Mergers and Acquisitions _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Statistical Analysis _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Financial Reports _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Economic Reports _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

61
61
62
63
63
64

9. Special Statutory Function _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 72
Defense Production Act and Small Business Act Operations _ _ _ _ _ _ _ _ _ 72
10.

Appropriations and Financial Obligations _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 74

Appendixes
Roster of Commissioners, 1915 to date _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 76
Statutes Pertaining to the Commission _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 77
General Investigations by the Commission (1915 et seq.) _ _ _ _ _ _ _ _ _ _ _ 78
VIII

Chapter One

IMPROVEMENTS IN
ADMINISTRATION
Fiscal year 1954 was a year of substantial progress and of marked improvement in the
operations of the Commission. Its program consisted of efforts to return to first principles,
plans to accelerate compliance and enforcement, a full-fledged attack on delay in the
casework and procedures of the Commission, and a study of agency overlap and duplication
of activity.
A review of few of the developments that have taken place with reference to these
problems is believed warranted.
RETURN TO FIRST PRINCIPLES
In creating the Federal Trade Commission, the Congress had two principal ideas in mind:
First, to create a body of experts competent to deal with complex competitive practices "by
reason of information, experience, and careful study of business and economic conditions'';
and, second, to authorize this body of experts to deal with unfair competitive methods in their
incipient stages. The action was to be prophylactic; the purpose was prevention of diseased
business conditions.
While the Sherman Act of 1890 constituted a substantial first step toward the alleviation
of the deficiencies of private remedies in the antitrust field, there remained a general climate
of doubt, particularly in the Congress, that the Sherman Act and the judicial process provided
the complete solution in an America emerging from an agricultural economy. It was believed
that the administrative process— in the form of a trade commission—would be well suited
to deal with the difficult problems of industries and markets, problems with respect to which
Congress was unsuited to deal and which it considered too burdensome for the court to solve
without assistance.
The Commission has sought to gear itself to the responsibilities originally contemplated
by the Congress.
1. First and foremost, the decisional work of the Commission is believed to be ample
evidence of a return to first principles.
2. The Commission has been hard-hitting and effective where the circumstances required
it, particularly in the hard-core" type of case.
1

During the fiscal year 1954, the Commission has issued 104 cease-and desist orders. It is
noteworthy that of these more were issued in the antimonopoly field during fiscal year 1954
than in any preceding fiscal year since 1946.
The magnitude of some of these orders is indicated by one cease and desist order that
terminated a restraint of trade combination among 350 distributors of electronic equipment.
Another involved the entire salmon industry of Alaska and brought to an end a long standing
price-fixing combination among canners and fisherman unions. A number of orders to cease
and desist were issued under section 3 of the Clayton Act; these required the discontinuance
of exclusive dealing arrangements in the hearing aid, hog serum and motorcycle industries.
Numerous other orders prohibited false labeling of wool and fur products, false and
misleading advertising of “food plans,” and misrepresentations with reference to sewing
machines and other consumer appliances.
During the same period of time the Commission issued 123 complaints. This included
more antimonopoly complaints than in any of the four preceding fiscal years.
Illustrative of the antimonopoly complaints were those against members of the iron and
steel scrap industry alleging restraint of trade in both domestic and foreign commerce;
against price-fixing agreements among building material manufacturers and among paint and
wall-paper dealers; and against unlawful price discrimination in the sale of petroleum gas
used by farmers and rural residents for cooking and heating.
Complaints in the deceptive practice field ran the entire gamut of consumer goods, from
food and drugs to clothing and home appliances.
3.The economic and marketing work of the Commission is of primary concern if the
administrative process is to furnish the broad factual base in the complex field of antitrust
law that Congress originally intended. Almost every antitrust case presents economic and
marketing problems. Legal procedures are employed, it is true, but primarily for the purpose
of resolving relevant economic question. For this reason, the Commission’s Bureau of
Economics has been and is being revitalized. Its economists are working closely with its
investigators and trial lawyers. Primary emphasis is being placed upon those practices hat
have significance in the market place; that have or are likely to have some economic
consequence.
The Commission issued two economic reports, one on Changes in Concentration in
Manufacturing, and the other on Coffee Prices. Both have been well received. The coffee
report has been described as one of the best economic studies ever published by a
governmental agency.
2

4. The Commission has not further extended the per se doctrine. Except where the
courts and Congress have directed otherwise, the Commission determines competitive effects
by examination, analysis and evaluation of relevant market facts.
5. Another key in the effort to effectuate a return to first principles lies in the
improvements that have taken place in the fact-finding and decisional work of the
Commission and its hearing examiners.
On May 11, 1954, on the recommendation of Chairman Howrey, the Commission adopted
the following program:
(a) The hearing examiner should issue findings and conclusions and his reasons therefor
in every case, whether they be favorable or adverse to the allegations of the complaint. He
should abandon formal and legalistic “findings” and adopt instead narrative and descriptive
reports.
(b)
The form and content of the order to cease and desist, which is part of the initial
decision, should be improved.
The prohibitions of the order should deal with the specific issues and should be so clear
that respondents will have no doubt as to what is expected of them. The exact practice found
to be illegal should be expressly prohibited, as well as such other practices as may be
necessary to assure adequate relief.
(c) Except in rare cases, the Commission, on review or appeal, should not issue new or
separate findings.
Where the Commission disagrees with some of the findings in the initial decision, it is
the purpose of an opinion t point that out, to explain why the Commission differs, and to
order the findings modified accordingly. Since the Commission, under the statute, has the
ultimate fact finding responsibility, the opinion should, or course, expressly adopt the
findings and conclusions of the hearing examiner as modified.
(d)
The Commission should write an opinion in every case.
It is hoped that as a result of this action future published decisions will not only constitute
the authentic public record of what was done in a particular case but will also afford a
collection of precedents by which its handling of future cases can be forecast. Fact finding
is the heart of the Commission’s work. Narrative and descriptive reports will provide a longneeded degree of certainty in this complex field of the law.
6. The Commission has adopted the view that it should proceed against “hard-core,”
predatory violations of the antitrust laws. It is believed that it should not deplete its limited
resources on fringe issues having no practical benefit. In this connection, it is believed that
the Sherman Act, the Federal Trade Commission Act and the Clayton Act, with it RobinsonPatman amendment, can be success3

fully administered as interrelated expressions of national antitrust policy—not as separate and
conflicting statutes.
7. To assure a proper functioning of the Commission as a quasijudicial agency, a number
of steps have been taken to increase the authority of the hearing examiners who, as the triers
of fact, are of key importance in the administrative process. In the Eastman Kodak case, for
instance, the Commission ruled that examiners are qualified to entertain a preliminary motion
to dismiss on the ground that the complaint fails to state a cause of action.
Presently the Commission is engaged in a comprehensive study of its rules of practice.
On the basis of this study, it is fair to expect that the Commission will be able to revise its
rules and thus to improve its administrative procedures. Such revisions will, it is expected,
include recommendations of the President's Conference on Administrative Procedure to
increase the authority of hearing examiners. This will lend greater substance to the spirit and
purpose of the Administrative Procedure Act.

INCREASED COMPLIANCE AND ENFORCEMENT
Several steps have been taken to accelerate and make more effective the Commission's
compliance and enforcement work. These include:
8. In November of 1953, Chairman Howrey announced the appointment of members of
the Commission's Advisory Committee on Cost Justification. The purpose of this committee,
which consists of outstanding specialists in the field of distribution cost accounting, is to
ascertain the feasibility of developing standards of proof and procedures for costing for
adoption by the Commission as guides to businessmen desiring to comply with the RobinsonPatman Act. The work of this committee should result in a strengthening of the
administration of the Act and result in wider compliance with its provisions.
9. The investigative work of the Commission has been improved and expanded. All of
the Commission’s work, its successes and failures, depends primarily upon the facts which
are developed by investigators in the field. The attorneys engaged in this work had received
neither the recognition nor the support necessary for effective results. A number of steps
have been taken to assure improvement, including the establishment of a separate Bureau of
Investigation.
In addition to is usual casework, this bureau will, on occasion, make industry wide
investigations. Typical of these was the nation-wide investigation of the advertising claims
of concerns selling health, accident, and hospitalization insurance. This was the first
investigation of its kind that had ever been conducted by a law en4

forcement agency.1 The public interest in this project, like the coffee study, has been great.
10.
In September of 1953, a special staff committee was appointed to study the
agency's procedures for obtaining compliance. On the basis of this committee's work, the
Commission adopted in June a broad-scale compliance program. This will include, as a first
step, a systematic and selective review of over 4,000 cease-and-desist orders, 8,000
stipulations under 2,000 trade practice rules. Other steps include:
(a) Closer coordination between the general investigative staff and the staffs primarily
responsible for compliance with orders, stipulation s and trade practice rules.
(b)
More frequent use of procedures for requiring the filing of special follow-up
reports “showing the manner and form of compliance with cease-and-desist orders.”
(c) Use of a more informative letter of notification to respondents under orders and
parties to stipulations concerning the action taken in receiving and filing their reports of
compliance.
(d)
A more effective program for enlisting the cooperation of industry members to
effect industrywide observance of trade practice rules.
On August 3, a task force was appointed to screen current national and regional
advertising, so as to determine whether advertisers are in compliance with outstanding
orders, stipulations and trade practice rules. The task force is comprised of personnel with
legal training. Previous advertising surveys were conducted by nonlegal personnel.
These measures will serve to stimulate compliance with existing orders. It would seem
useless for the Commission to enter orders unless it sees to it that they are obeyed, either
voluntarily or through appropriate enforcement proceedings against those who deliberately
or willfully ignore them.
Failure to obtain compliance constitutes a waste of public money, has a demoralizing
effect on competitors and members of the public who have been injured and tends to
encourage a disregard of antitrust and trade regulation laws, oftentimes to the direct
detriment of small businessmen trying to enter or remain in a highly competitive market.
11. On May 12, 1951, Chairman Howrey indicated in a public statement that the
Commission's trade practice conference rules would, in appropriate instances, be backed up
by investigations and formal action. On that date, he announced the Commission's plan to
effectuate a cooperative program designed to bring about prompt compliance with the rules
in the Cosmetics Industry. In the future, one of the
_______________
1

By March 1955, 28 complaints had been issued against companies engaged in the advertising and sale of this
type of insurance.

5

purposes of the trade practice rules will be to ferret out and pinpoint the willful violator.
12. To expedite compliance and enforcement in formal cases, the Commission adopted
in May a new rule of practice permitting a more extensive use of consent orders. This new
rule was recommended by Chairman Howrey for the primary purpose of reducing expense
and delay. The new rule—
(a) Eliminates the previous requirement that consent settlements contain findings of fact.
(b) Permits disposition of a case by consent at any stage of the proceeding.
(c) Allows settlement of a case as to some or all of the issues or as to some or all of the
respondents.
(d) Authorizes hearing examiners to accept or reject stipulations containing proposed
consent orders, with acceptance subject to Commission review and with rejection subject to
appeal to the Commission.
Under the new rule, the only admission required of respondents is that of jurisdiction.
Respondents must agree, however, that the complaint may be used in construing the terms
of the order; that the order shall have the same force and effect as if entered after a full
hearing; and that the order may be modified or set aside in the same manner as other orders.
The rule further provides for the respondents to waive the entry of findings of fact and
conclusions of law, as well as further procedural steps before the hearing examiner or the
Commission, and also their right to contest in the courts the validity of the order. Judicious
use of the consent order procedure results in obtaining a binding, equally comprehensive and
restrictive cease-and-desist order without the delay and expense incident to protracted
litigation.
13. On December 11,1953, the Commission adopted a policy to provide fuller protection
of the public against unfair and deceptive practices through increased cooperation with
officials of State governments. Under this policy, the Commission regularly refers to St ate
authorities matters it closes for lack of the jurisdictional prerequisite of interstate commerce.
14. The consultative function of the Commission had not in recent years received
sufficient emphasis. Before the enactment of the Federal Trade Commission Act, both
political parties, the Congress and the President, envisaged a trade commission which would,
as part of the administrative process, provide solutions to many complex competitive
problems through consultation. It is believed that the new Bureau of Consultation, which was
established on July 1,1954, will revitalize this intended program. The new Bureau includes,
in addition to the Divisions of Trade Practice Conferences and Stipulations, a Division of
Small Business. The establishment of the latter Divi6

sion was considered important in order to make the facilities of the Commission readily
accessible to small business concerns. Among other things, the division will advise small
businessmen with respect to laws administered by the Commission, explain to them the
method by which complaints are initiated, inform them of the status of investigations in
which they are interested, and otherwise expedite small business matters through the
Commission.

REORGANIZATION
15.
One of the most significant events during the fiscal year was the reorganization
of the Commission. Its significance depends in no small measure upon the frequent criticism,
all too often valid, that the Commission's operations and procedures over the years have been
marked by delays.
Shortly after taking office in April 1953, Chairman Howrey stated that every effort would
be made to eliminate such delays. The reorganization, based upon an objective survey by an
outside firm of management consultants, is designed to achieve this end. Measures have now
been placed in effect to eliminate more than 50 percent of. the procedural steps formerly
taken with the Commission in the internal processing of its work.
The new organization of the Commission represents a major change in both concept and
structure. By contrast, it is much simpler than the old organization and should promote more
economical use of manpower. With well selected personnel in key positions, the
organization should develop a high level of administrative efficiency, enabling the
Commission to fulfill its responsibilities with greater dispatch and less cost.
All investigative activities will be centered in a newly formed Bureau of Investigation,
all trial work in a new Bureau of Litigation, and voluntary compliance procedures in a
Bureau of Consultation. Thus the Commission will no longer enjoy the luxury of two
separate trial and investigative staffs. The integrated staffs should prove more economical
and provide the basis for a more effective administration of antimonopoly and trade
regulation statutes.
Probably one of the greatest causes of delay in the past was the fact that responsibility for
a case was not centered in any particular individual. Responsibility was reassigned to
conform to various stages of the development of a case, with no one attorney remaining
continuously responsible. To correct this shortcoming, and also to furnish a smooth
coordination of trial and investigative activities in keeping with the principles outlined by the
first Hoover Commission, provision has been made for the appointment of project attorneys
in
7

the Bureau of Investigation. These attorneys will supervise a case through its entire course
and will be responsible for any unnecessary delay.
The project attorney is envisaged as being analogous to the solicitor in the British
practice. The solicitor is responsible to his client through all phases of a case, although he
may, from time to time, bring into the case additional assistance in the form of economists,
accountants, barristers and the like. Like the solicitor, the work of the project attorney will
not cease with the conclusion of the investigation; he will accompany the case into the
litigation stage and assist the trial attorney with respect to the facts. It is believed that, if
delay is to be eliminated, this feature of the reorganization will be more helpful than any
other.
16. One of the most important accomplishments in the effort to eliminate delay has been
the reduction in the backlog of cases pending before the Commission for decision. It has been
the custom, at the first of each month, for the Secretary to report at the conference table the
cases which have rested on individual Commissioners' desks for 30 days or more.
In the period since early 1953, the Commission has reduced by almost five times the
number of cases pending more than 30 days.
The Commission has also become more expeditious in disposing of informal matters
brought before it by the staff. The backlog of recommendations for complaints, for example,
has been reduced by more than 10 times—until at the end of the fiscal year this work is
virtually current.

OVERLAPPING, ACTIVITIES
17.
Some mention should be made of the steps taken to improve the relationships
existing between the Commission and other agencies of the Government. The Commission
doubts that there is justification for noncumulative remedies being sought by more than one
agency against the same person, at the same time, for the same thing.
An excellent working arrangement is in effect with the Antitrust Division of the
Department of Justice. Matters of mutual concern are discussed at frequent intervals, so that
the great volume of work of the two agencies is in no way inconsistent.
In the field of food, drug, and cosmetics, a very promising interagency agreement has
been executed, designed to correlate the work of the Commission and the Food and Drug
Administration in such a way as to eliminate overlapping activities and duplication of effort.
This agreement became effective at the end of the fiscal year.
8

Similar liaison arrangements, although less formal, have been made with other agencies,
including the Bureau of Standards, the Post Office Department and the Patent Office.
These are some of the events that have taken place during fiscal year 1954 at the
Commission. It is believed that they have been constructive and in the public interest.
338945–55—2

9

Chapter Two

PROTECTING THE COMPETITIVE
SYSTEM —BASIC FUNCTION
OF THE COMMISSION

STATUTORY AUTHORITY
The Federal Trade Commission is composed of five Commissioners appointed by the
President and confirmed by the Senate, of whom no more than three may be of the same
political party. The Commission is charged with the responsibility for administering and
enforcing laws in the field of antitrust and trade regulation. They deal with prevention of
monopoly, restraints of trade, and unfair trade practices. The Commission also has the duty
of investigating and reporting economic problems and corporate activity, particularly in
relation to the antitrust laws and in aid of legislation. A primary purpose of the laws which
the Commission administers is to protect competition in our private enterprise economy.
These statutes are briefly described below.
The Federal Trade Commission Act of 1914, including the Wheeler-Lea Act Amendments
of 1938
This legislation confers upon the Commission two broad functions. Under the first, the
Commission, subject to certain exceptions, is "empowered and directed to prevent persons,
partnerships, or corporations,1 * * * from using unfair methods of competition in commerce
and unfair or deceptive acts or practices in commerce," which are declared by the statute to
be unlawful. The Commission is given power to investigate, to hear cases and to make
determination of practices falling within this proscription.
Whenever deemed necessary in the public interest to resort to mandatory proceedings, the
Commission is authorized to issue complaints
_____________
1

Excepted from the jurisdiction of the Commission under such section are "banks, common carriers subject to
the acts to regulate commerce, air carriers and foreign air carriers subject to the Civil Aeronautics Administration Act
of 1938, and persons, partnerships, or corporations subject to the Packers ad Stockyards Act, 1921, except as provided
in section 406 (b) of said act. * * *" Specific exemption from such provision against unfair methods of competition and
unfair or deceptive acts or practices in commerce is provided for resale price maintenance contracts or agreements
coming within the Federal Fair Trade Act approved July 14, 1952 (15 U. S. C. 47), also known as the McGuire Act.

10

against persons, partnerships, or corporations within its jurisdiction which it has reason to
believe have been or are using any such unlawful methods, acts, or practices in commerce.
If, upon due proceeding and hearing, the Commission finds that the practices in question
violate the act, it is empowered to issue a cease and desist order against the offending party
or parties. Such an order may be appealed from the Commission to a United States court of
appeals, which is authorized to review the proceeding; and to affirm, enforce, modify, or set
aside the Commission's order. Thereafter, the case may be taken to the Supreme Court of the
United States upon writ of certiorari.
Originally, the cease and desist orders issued under the Federal Trade Commission Act
were enforceable only by the appellate court through contempt proceedings, after its action
had transformed tho order into a decree of the court. The 1938 Wheeler-Lea amendments
provided for a civil penalty action in the United States district court for violation of such final
cease-and-desist orders. Under this provision the orders become final either through
affirmance by the Court of Appeals or at the end of 60 days in the event no appeal is taken.
If the order is violated after becoming final, a civil penalty suit may be instituted by the
United States. Such an action is brought by the Attorney General at the request of the
Commission, and the district court is authorized to impose civil penalties up to $5,000 for
each offense. Under an amendment enacted in 1950, each day of a continuing violation may
be treated as a separate offense.2
The Wheeler-Lea amendments also conferred special authority upon the Commission for
the control of false advertising of foods, drugs, cosmetics and curative or corrective devices.
For such purposes the term "false advertisement" is defined to mean "an advertisement, other
than labeling, which is misleading in a material respect; 3 * * *." The term also is employed
in section 4 of the Oleomargarine Act to any representations or suggestions that
oleomargarine is a dairy product. In cases of this type, jurisdiction of the Commission may
be grounded in use of the United States mails as well as interstate commerce. When
necessary for protection of the public interest, the Commission is authorized to obtain
temporary inductions against the false advertising of foods, drugs, cosmetics or curative
devices, pending completion of the cease and desist order proceedings. Where the commodity
advertised is injurious to health, or where the advertising is with intent to defraud or mislead,
criminal prosecution may also be had with maximum penalties of a $5,000 fine and 6 months'
imprisonment, or double this fine and imprisonment in case of second offenses. The
Commission is authorized to certify
____________
2
3

Amendment contained in the Oleomargarine Act (64 Stat. 20).
See. 15, Federal Trade Commission Act.

11

the facts to the Attorney General for prosecution whenever it has reason to believe any
person, partnership or corporation is liable under the criminal provision.
The second broad category of functions conferred upon the Commission under the
Federal Trade Commission Act consists of the powers conferred by section 6. This section
empowers the Commission 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, except banks and common carriers subject to the Act to
regulate commerce, and its relation to other corporations and to individuals, associations, and
partnerships." The Commission also is empowered to require such corporations to furnish
information and to the annual and special reports. When directed by the President or
Congress, the Commission is authorized to investigate and report facts relating to any alleged
violations of the antitrust acts by corporations; to investigate for the Attorney General, or on
the Commission's own initiative, the manner in which antitrust decrees against corporations
are being carried out; and further, upon application of the Attorney General, to recommend
readjustments of the business of corporations alleged to be in violation of the antitrust acts
in order to brig the conduct of such business into accord with the requirements of law.
The Commission is further empowered 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 make reports thereon to Congress with recommendations. Under those
section 6 powers of investigation and reporting, the Commission serves the executive and
legislative branches of the Government, particularly in antitrust problems and in aid of
legislation.
Section 7 confers authority upon the Commission to act as a master in chancery upon
reference from the court to ascertain and report an appropriate form of antitrust decree in
equity suits brought by or at the direction of the Attorney General.
The act confers visitorial powers upon the Commission, including specifically the right
of access to documentary evidence of corporations, the right to issue subpenas, examine
witnesses, and require the production of testimony and documentary evidence, and the power
to make rules and regulations to carry out provisions of the act.
The Clayton Act 4
This antitrust law was enacted in 1914. It designates the Federal Trade Commission as
an enforcing agency for the provisions of sec_________________
1

12

Approved October 15, 1914 (38 Stat. 730).

tions 2, 3, 7, and 8. Procedures are prescribed in section 11 by which, upon complaint and
due hearing, corrective action may be applied by the Commission in the form of a cease and
desist order or, in merger cases in order of divestiture.
Section 2 of the Clayton Act, amended by the Robinson-Patman Act—Discriminatory
Pricing.5—Subject to specified justification and defenses, this section provides that it shall
be illegal to discriminate in price between different purchasers of commodities of like grade
and quality sold for use, consumption, or resale within the United States, were the effect of
the discrimination "may be substantially to lessen competition or tend to create a monopoly
in any line of commerce, or to injure, destroy, or prevent competition with any person who
either grants or knowingly receives the benefits of such discrimination, or with customers of
either of them."
Exception is provided for differentials which make only due allowance for differences
in cost of manufacture, sale, or delivery resulting from the differing methods or quantities
in which the commodities are sold or delivered. Selection of customers in bona fide
transactions and not in restraint of trade are not prohibited. The section, as amended, also
specifies exceptions respecting sales necessitated by market conditions, disposition on
account of deterioration of perishable goods; obsolescence of seasonal goods; distress sales
under court process, or sales in good faith in discontinuance of business in the goods
concerned. A defense to a charge of discrimination is also specified in regard to sales "made
in good faith to meet an equally low price of a competitor, or the services or facilities
furnished by a competitor."
Quantity-Limit Provision.—This is also contained in section 2 of the amended Clayton
Act. It confers authority upon the Commission, after due investigation and hearing of all
interested parties, to fix and establish quantity limits as to particular commodities or classes
of commodities "where it finds that available purchasers in greater quantities are so few as
to render differentials on account thereof unjustly discriminatory or promotive of monopoly
in any line of commerce."
Brokerages, Commissions, Proportionally Unequal Terms or Facilities.— The RobinsonPatman Act also forbids the payment of certain brokerages and commissions except for
services rendered to the party making the payment, as well as forbidding the payment by
manufacturers or sellers for or the furnishing of services or facilities to dealers or resellers
in connection with the processing, handling, sale, or offering for sale of the products or
commodities sold, unless such payments or the services or facilities furnished are made
available to all competing customers on proportionally equal terms
_________________
5

Approved June 19,1936 (49 Stat. 1526).

13

Inducement of Discrimination.—Another provision of the Robinson-Patman Act makes
it unlawful for any person n the course of commerce ''knowingly to induce or receive" an
illegally discriminatory
price.
Tying or Exclusive Dealing Contracts.—Section 3 of the Clayton Act prohibits the lease
or sale in the course of commerce of goods, wares, merchandise, machinery, supplies or other
commodities, for use, consumption or resale within the jurisdiction of the United States on
the condition, agreement or understanding that the lessee or purchaser shall not use or deal
in the goods, wares, merchandise, machinery, supplies, or other commodities of competitors
of the lessor or seller, here the effect thereof "may be to substantially lessen competition or
tend to create a monopoly in any line of commerce."
Anti-Merger Law.—This statute, approved December 29, 1950,6 is in the form of a
revision and restatement of section 7 of the original Clayton Act. It is specific legislation on
the subject of suppression of competition through the merger or consolidation of
corporations. Such conduct is prohibited, whether brought about by the direct or indirect
acquisition of either stock or assets of the acquired corporation, where the effect of the
acquisition or merger may be substantially to lessen competition or tend to create a monopoly
in any line of commerce in any section of the country. Certain exceptions are provided,
including; cases in which the stock is purchased solely for investment and not used for voting
or otherwise to bring about or attempt to bring about the substantial lessening of
competition. The Commission is designated as having enforcement responsibility applicable
to commercial enterprises generally but not including specific businesses which are under
the regulatory authority of other agencies, such as banks and common carriers.
Interlocking of Corporate Directorates.—Section 8 of the Clayton Act prohibits a person
from serving, at the same time as a director of two or more corporations, any one of which
has capital, surplus, or undivided profits aggregating more than $1,000,000, when such
corporations are or have been competitors under the conditions prescribed, so that the
elimination of competition would constitute a violation of any provisions of the antitrust
laws.
Specifically excluded from the jurisdiction of the Federal Trade Commission under this
as well as other sections of the Clayton Act are certain types of commercial enterprises
subject to other regulatory authority, such as common carriers, air carriers, banks, banking
associations and trust companies.
________________
6

14

64 Stat. 1125.

The Webb-Pomerene Export Trade Act of 1918 7
This law authorizes limited cooperative activity among American exporters for the
purpose of promoting export trade. Associations engaged solely in export trade are afforded
exemption from the Sherman Act within certain strict boundaries set out in the act. To qualify
for such exemption, an association must file with the Commission copies of its association
papers or articles of incorporation and a complete description of ifs organizational structure,
and bring this information up to date yearly. The Commission may require submission of
additional information relating to the association's business activities at any time. A
continuing surveillance of association activities is maintained by the Commission's Division
of Export Trade.
Whenever the Commission concludes that an association is not operating within the limits
of the antitrust exemption provided by the act, it may make recommendations to the
association for readjustment of its practices. Upon failure of an association to comply with
such recommendations, the Commission will refer the matter to the Attorney General for
appropriate action.
The act also extends the prohibitions of the Federal Trade Commission Act to unfair
methods of competition used in export trade against export competitors even though the acts
are done outside the territorial jurisdiction of the United States.
Wool Products Labeling Act and Fur Products Labeling Act 8
These laws constitute specific labeling legislation for maintaining the integrity of
competition and protection of the buying public against confusion and deception.
Violations are classed as unfair methods of competition and unfair or deceptive acts or
practices, within the Federal Trade Commission Act. Informative labeling of wool products
and fur products is required. Labels on wool products are required to reveal the respective
percentages of “wool”, "reprocessed wool," "reused wool" and other constituents of wearing
apparel and other articles containing, or purporting to contain woolen fiber in whole or in
part. Labels on fur products, as well as the advertising and invoicing, are required to disclose
to purchasers the true name of the animal from which the fur came. For this purpose, an
official Fur Products Name Guide has been prepared by the Commission. Other significant
information also is required to be disclosed in the label informing the pur____________
7
8

40 Stat. 516.
Approved, respectively, October 14, 1940, 54 Stat. 1128, and August 8, 1951, 65 Stat. 175.

15

chaser whether the fur article is dyed, bleached, damaged, secondhand, or pieced. The
country of origin of foreign furs must likewise be disclosed.
The Commission is specifically authorized to inspect and make tests of the merchandise
covered, and to issue rules and regulations which have the force and effect of law. When
necessary in the public interest, the Commission may resort to court proceedings for
condemnation of goods seized as violative, and may apply for temporary injunctions pending
completion of cease-and-desist order proceedings against; alleged offenders. Suits to collect
civil penalties for violation of the Commission's final orders are also available in cases under
these acts. For willful violations, misdemeanor prosecutions may be brought by the United
States, and fines of up to $5,000 or 1 year's imprisonment, or both, imposed by the court.
Manufacturers and distributors may issue guaranties of having properly labeled their
merchandise. Members of the trade may use such guaranties as a defense to charges of
misbranding where the particular guaranty in question was relied upon in good faith. Forms
of guaranties are prescribed by the Commission.
Flammable Fabrics Act, approved June 30, 1953, effective July 1, 19549
The purpose of this statute is to afford the public protection from wearing apparel made
of fabrics which are so highly flammable as to be dangerous. In the past, such fabrics have
brought death or severe injury to many people.
A flammability test method is prescribed and apparel or fabrics which fail the tests are
considered dangerously inflammable. It is forbidden by statute to introduce or place such
merchandise on the market. In its administration of this act, the Federal Trade Commission
is authorized to issue rules and regulations, to conduct tests, and to male investigations and
inspections. The Commission is authorized to use its power under the Federal Trade
Commission Act,' including the cease-and-desist; order process, in carrying out its
responsibilities for enforcing the act. Offending goods found in the market may be seized and
condemned through district court action brought by the Commission. Pending completion of
proceedings for issuance of a cease-and-desist order against an alleged violator, the
Commission may apply to the court for temporary injunction. Suits for violation of a final
cease-and-desist order may be brought; to recover civil penalties up to $5,000 for each
offense.
____________
9

16

67 Stat. 111.

Manufacturers and distributors may guarantee their merchandise as having passed
reasonable and representative tests for flammability. Members of the trade who rely in good
faith upon these guaranties are afforded certain protection against prosecution. Willful
violations of the act, whether in placing; prohibited products on the market or in issuing a
false guaranty, may be prosecuted by the Government as misdemeanors. Upon conviction,
fines up to $5,000 or 1 year's imprisonment, or both, may be imposed by the court.
Regulation of Insurance—Public Law 15, 79th Congress 10
This act was passed by Congress after the Supreme Court had ruled that the insurance
business is subject to Federal jurisdiction under the commerce clause of the Constitution.11
Under this statute, the Federal Trade Commission and the Clayton Acts apply to the
business of insurance to the extent that it is not regulated by State law.
Lanham Trade Mark Act, approved July 5, 1946 12
This authorizes the Commission to proceed before the Patent Office for cancellation of
certain trade-marks improperly registered or improperly used in competition, as provided in
section 14 of this act.
Defense Production Act of 195013 and Small Business Act of 195314
The former statute authorizes the Commission to make surveys at the request of the
Attorney General to determine any factors which may tend to eliminate competition, create
or strengthen monopolies, injure small business, or otherwise promote undue concentration
of economic power in the course of administration of the Defense Production Act of 1950.
The Chairman of the Commission, as provided in section 708, also is consulted regarding
voluntary industry agreements and programs which tile President is authorized to utilize to
further the objectives of the act. Similar consultative responsibilities rest upon the Chairman
of the Commission under section 217 of the Small Business Act. After agreements and
programs have been subjected to this consultative review and have received official sanction,
those participating are afforded immunity from the antitrust laws and the Federal Trade
Commission Act.
__________
10

448.

Approved March 9, 1945, 59 Stat. 33. Effective June 30, 1948, see amendment approved July 25, 1947, 61 Stat.

11

United States v. Southeastern Underwriters Association, 332 U. S. 533, June 5, 1944.
60 Stat. 427.
64 Stat. 798.
67 Stat. 232.

12
13
14

17

Other Laws
The Federal Trade Commission is also affected by other laws, including the
Administrative Procedure Act and the Veterans' Readjustment Act.

COMMISSIONERS
At the end of the fiscal year, June 30,1954, the membership of the Commission was as
follows:
Edward F. Howrey, Chairman, of Virginia, Republican.
Lowell B. Mason, of Illinois, Republican.
James M. Mead, of New York, Democrat.
Albert A. Calretta,l5 of Virginia, Democrat.
John W. Gwynne, of Iowa, Republican.

STAFF REORGANIZATION AND OPERATIONAL
CHANGES
On May 20,1954, major changes in the organization and working procedures of the
Commission, to become effective July 1,1954, were announced. (Organization Chart on p.
20). These changes represented the first step in carrying out a reorganization plan
recommended by an independent firm of management consultants. The survey was
authorized by the Bureau of the Budget on October 9, 1953, as part of a program of
management improvement to be carried out under Executive Order 10484. The management
firm thereafter made an intensive management survey of the Commission organization and
procedures.
The report and recommendations were adopted, with some exceptions, by the
Commission on March 18, 1954.
The reorganization is based on functional lines of authority. Investigative activities are
centered in a nevly formed Bureau of Investigation, trial work in a Bureau of Litigation and
voluntary consultative procedures in a new Bureau of Consultation.
The reorganization also sets up control procedure and provides for close supervision of
field office investigative activities. Provision was made for the appointment of project
attorneys in the Bureau of Investigation to supervise cases through entire course to enable
top management to focus responsibility. Previously, responsibility for a case had been
reassigned at various stages of its development, with no one attorney remaining continuously
accountable.
Field offices have been integrated into the Bureau of Investigation. Previoisly, although
the vast majority of field personnel were assigned
___________________
15

Mr. Carretta was succeeded by Hon. Robert T. Secrest, of Ohio, Democrat, who took offlce Septemer 26, 1954.

18

to antimonopoly case work, the field ofIices were administratively responsible to the Director
of Antideceptive Practices.
Procedures are being streamlined. The management survey had pointed out that reviews
vere compounded upon reviews as Commission procedures had developed during its 40 years
of existence. Approximately half the procedural steps have been eliminated.
A system for time reports for professional personnel has been installed. Through this
system, total hours devoted to each case and hours spent in any particular activity can be
determined. Periodic reports are rmade on the status of cases as they proceed through the
Commission.
Field office territories were defined and an additional office was installed at Cleveland,
Ohio. The Division of Small Business was added in the nevly formed Bureau of
Consultation. Among other things, this Division undertook to:
Advise small businessmen on laws administered by tho Commission; explain to small
businessmen the method of initiating complaints which they may wish to make regarding
practices of their competitors and inform small businessrmen of status of investigations in
which they are interested.
Major objectives of the reorganization vere as follows:
1. Simplification of the form of organization.
2. Grouping of related functions for most effective administration.
3. Provision for clear-cut centers of responsibility and control.
4. Development of the best use of manpower.
5. Strengthening of various segments of the organization in accordance with present
and probable future needs as dictated by estimated workload.

OPERATIONS IN FISCAL YEAR 1954
The several activities of the Commission during the fiscal year are summarized in the
following chapters.
19

FEDERAL TRADE COMMISSION
ORGANIZATION OF STAFF FUNCTIONS
ORGANIZATIONAL CHART -- SEE IMAGE
NUMBER OF EMPLOYEES AS OF JUNE 30, 1954-JULY 1, 1954
20

Chapter Three

INVESTIGATION
Gathering and analysis of varied facts is required as a basis for administrative and
corrective action by the commission under the laws which it administers. Therefore,
investigations, particularly of alleged violations, form an essential part of the Commission’s
work. In addition, special investigations are undertaken to survey problems affecting
competition or involving possible violations or the antitrust laws.
Investigations normally develop: (a) From complaints received from businessmen,
consumers, trade groups, Members of Congress, and from other Government agencies, State
or Federal; or (b) through systematic observation and analysis of trade and market conditions
by the Commission’s own staff.
These investigations seek the facts and their proper interpretation on: Alleged unfair
methods of competition or unfair or deceptive acts or practices in violation of the Federal
Trade Commission Act, alleged discriminatory practices in violation of section 2 of the
Clayton Act, alleged exclusive dealing or tying arrangements in violation of section 3 of the
Clayton Act, and alleged illegal mergers in violation of section 7 of the Clayton Act. Other
investigational work grows out of the Commission’s administration of the Export Trade Act,
the Flammable Fabrics Act, section * of the Clayton Act, and section 14 of the Trade Mark
Act.
Matters presented for investigation are first subjected to thorough screening in order to
weed out those lacking in jurisdictional or other essential elements, and to permit maximum
use of the Commission’s staff on matters of maximum importance from the standpoint of
public interest;
Throughout the investigations, economic, marketing and accounting data from the
Commission’s records and technical and scientific advice from the staff and from other
Government agencies are used. In addition, contact is made with the party complained
against so that he may be advised of the charges, and to obtain information within his
possession. Frequently it is also necessary to interview competitors or the proposed
respondent as well as the general public to find out whether
21

the charges are well founded, and whether public interest warrants further action regarding
the case.
Also, the investigative processes are utilized in the Commission's program for obtaining
compliance with cease and desist orders, stipulations, trade practice conference rules, and in
connection with pending litigation.
Law-enforcement investigational work carried on during fiscal 1954 is summarized below
under the general headings: ( a ) Investigations of Monopolistic Practices; (b) Investigations
of Deceptive Practices; (c) Administration of the Wool, Fur Products Labeling and
Flammable Fabrics Acts; (d) Advisory Services Furnished By The Division of Accounting;
(e) Advisory Services Furnished By The Division of Scientific Opinions; and (f) Insurance.
(a) Investigations of Monopolistic Practices
Investigations pending on July 1, 1953 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Entered for investigation during the year _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Completed during the year _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Investigations pending on June 30, 1954 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

741
320
580
481

Under section 5 of the Federal Trade Commission Act, the Commission investigated
allegations of such unfair practices as price fixing by agreement, collusive bidding, boycott,
conspiracy to control production and limit supplies, interference with sources of supply,
refusal to sell, and selling below cost with the intent and effect of injuring competition.
Products involved included coal, paper products, phonograph records, gasoline, building
materials, steel products, wallpaper, dress patterns, and food products. There were 114 of
such monopolistic practice matters completed during fiscal 1954.
Numerous important investigations were also conducted under section 2 of the Clayton
Act as amended by the Robinson-Patman Act.
Experience in the administration of this section has made it possible for the Commission,
through the development of information by preliminary investigational 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 of matters
which involve probable violation of law. The Commission has endeavored to confine its
investigations to matters of substantial importance, eliminating the expenditure of time and
money on other matters after preliminary inquiry.
During the year, investigations were completed in 104 matters involving alleged
violations of the various subsections of section 2 of the Clayton Act. Among the commodities
involved were plate glass,
22

gasoline, milk, typewriters, citrus fruit, rubber products, canned goods, bakery products and
household appliances.
Investigations also were made of exclusive dealing and tying arrangements under section
of the Clayton Act. These related to such products as liquefied petroleum gas, roller bearings,
dairy products, automotive parts and supplies, and toys. During the year, 22 such
investigations were completed.
Also, of considerable importance were the investigations made, under section 7 of the
Clayton Act, as amended in December 1950. This act provides, with certain qualifications,
that no corporation shall acquire the capital stock or assets of another corporation where the
effect may be substantially to lessen competition or tend to create monopoly. Acquisitions
and mergers in industrial and commercial fields continued at a rapid rate and covered a wide
range of industries and products. During the year, 331 investigations of such activities were
completed. Products involved included textiles, chemicals, steel products, automobiles,
household utensils, plumbing supplies, paper products, flour, and furniture.
Six trade-mark investigations were conducted to obtain information from which a
determination could be made concerning the advisability of proceeding against proposed
respondents for the cancellation of trade-marks pursuant to the authority conferred upon the
Commission by section 14 of the Lanham Trade Mark Act of 1946.
Included in the total of completed matters was an extensive investigation of the optical
manufacturing and distributing industry undertaken upon the request of the Attorney General
of the United States to determine whether certain defendants were complying with a court
decree enjoining violations of the Sherman Act.
Also included was an investigation of some 20 manufacturers of automotive parts which
was requested by the Government Operations Subcommittee of the Committee on
Expenditures in the Executive Departments (now known as the Committee on Government
Operations) of the House of Representatives. Among the practices considered were alleged
concert of action in refusing to bid in response to Government invitations, and discrimination
in prices between original equipment manufacturers and parts distributors, jobbers, and
dealers.
During the fiscal year, the loyal investigating branch of the Commission contributed
extensively to tile Commission's general inquiry regarding the substantial and sudden
increase in retail coffee prices. A 523-page report entitled, "Economic Report of tile
Investigation of Coffee Prices" became available July 30, 1954. (For further reference
thereto, see p. 68 et seq.)
23

(b) Investigations of Deceptive Practices
Complaint letters received _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 2,631
Preliminary inquiries completed _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 2,592
Investigations completed _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 1,193
Assurances of discontinuance accepted _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 328

Investigations in this field are a basic part of the Commission's work directed toward
protecting consumers and businessmen from deceptive and unfair practices in commerce.
Typical practices are false and misleading advertising, and misbranding of merchandise.
The more important deceptive practice investigations completed during the year are
reflected in formal complaints issued and cease-and-desist stipulations accepted. Every
complaint and every stipulation is necessarily preceded by an investigation to develop facts
upon which corrective action can be based.
The investigations encompass not only initial violations of the laws administered by the
Commission, but also matters of compliance with previously issued cease-and-desist orders.
Forty of the deceptive practice investigations completed during the fiscal year involved
compliance with previously issued orders, looking to the institution of civil penalty
proceedings where warranted.
Investigations in the deceptive practices field are frequently brought to conclusion by
reason of prompt and voluntary discontinuance of questioned practices, where this method
of disposition affords assurances against resumption and adequate protection of the public
interest. These dispositions, where they can be appropriately effected, result in substantial
savings to the Government through avoiding the expense of further investigation or litigation.
A total of 328 deceptive practice matters were so disposed of during the year. Some of the
commodities involved in these cases were: Frozen foods, vitamin preparations, laxatives,
cold tablets, rupture trusses, agricultural insecticides, shoes and other wearing apparel, home
freezers and other household appliances, furniture, rugs, simulated leather products, and
correspondence courses. The practices corrected by this means included failure to disclose
dangerous flammability of product and the precautions to be observed in use of household
cleaning preparations.
Under sections 12-15 of the Federal Trade Commission Act, directed particularly at;
preventing false advertising of food, drugs, medical devices and cosmetics, a total of 399
investigations were completed during the year, including 14 cases in which oleomargarine
was allegedly advertised as a dairy product.
Some 773 additional investigations were completed under section 5 of the Federal Trade
Commission Act. These involved general false advertising or misbranding, or other unfair
or deceptive acts or practices, respecting a wide variety of commodities.
24

The total number of deceptive practice investigations completed during the year was
1,193.
The 2,592 preliminary inquiries also completed during the year represent the results of
initial correspondence and screening to determine which of the matters presented were of a
nature to require full investigation.
A total of 985 deceptive practice matters were pending for investigation at the year end.
(c) Administration of Wool, Fur and Flammable Fabrics Acts
Flammable
Fabrics Act
Commercial establishments cowered in compliance
inspection and industry counseling work _ _ _ _ _ _ _ _ _ _
Products inspected (sampling methods used on wool
products) _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Number of fur advertisements examined for advertising
deficiencies _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Informal matters involving questioned practices in which
compliance was effected administratively _ _ _ _ _ _ _ _ _
Opinions and interpretations rendered under each act and
regulations _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Registered identification numbers issued _ _ _ _ _ _ _ _ _ _
Continuing guarantees accepted for Public Register _ _ _ _

Wool Act

Fur Act

________

5,998

2,571

________

12,563,264

551,372

________

_______

12,993

________

6,399

3,446

1,298
________
70

3,121
585
1,446

2,525
309
978

The Wool Products Labeling Act and the Fur Products Labeling Act known respectively
as the "Truth-in-Fabrics" and "Truth-in-Furs" laws, and the recently effective Flammable
Fabrics Act, may be regarded as more directly in the field of consumer legislation. The
foregoing table summarizes administrative activities under these laws during the fiscal year.
Work under these statutes, which is similar in purpose and requirements, has been integrated
as far as possible in an effort to minimize costs of administration.
The Wool Products Labeling Act (effective 1941) and the Fur Products Labeling Act
(effective 1952) provide for mandatory labeling of wool and fur products to disclose certain
important buying information about their composition and processing. Truthful invoicing of
furs and fur products also is mandatory under the Fur Act and all advertising of furs and fur
products likewise must conform with the disclosure requirements of the act and regulations.
The Flammable Fabrics Act (effective July 1, 1954) was designed by Congress to protect
the consuming public from wearing apparel which might prove dangerously flammable. It
prohibits outright the marketing of wearing apparel and fabrics sold or intended for this
purpose which do not meet the prescribed tests for flammability provided in the legislation.
Pamphlets, releases, and forms covering the application and administration of these acts
of Congress have been published by the Commission, including copies of the respective sets
of regulations.

338945–55—3

25

(d) Accounting Services Furnished in Legal Case Work
Accounting services were furnished in the investigation of 32 legal cases during the fiscal
year.
The work on legal cases consisted of accounting analyses and studies of the pricing
policies of respondents or proposed respondents, to ascertain evidence of alleged illegal price
discrimination or alleged illegal price fixing. Extensive accounting services also were
rendered in connection with the Commission's economic, financial, and statistical activities.
Data also were prepared for the Advisory Committee on Cost Justification, which is
exploring the problem of arriving at standards for determining distribution costs.
(c) Advisory Scientific Opinions Furnished in Legal Case Work
The Division of Scientific Opinions furnishes scientific facts and opinions concerning the
composition and efficacy of foods, drugs, medical devices, cosmetics, and other commodities
where questions of science arise concerning advertising claims. Arrangements are made to
analyze and test samples of products under investigation and to gather information with
respect to their composition, nature, effectiveness and safety.
(f ) Insurance
Under Public Law 15, 79th Congress, the Federal Trade Commission Act and the Clayton
Act are applicable to insurance to the extent such business is not regulated by State law.
Activities of the Commission with respect to insurance involve the maintenance of close
liaison with State insurance authorities in order to effect the maximum of mutual aid and
cooperation between the State and Federal Governments.
Under its resolution of December 15, 1953, the Commission launched a nationwide
investigation of the conduct and practices of companies engaged in the solicitation and sale
of accident and health insurance in commerce. Although not concluded by the end of the
fiscal year, a large part of the inquiry had been completed.
The question of legal propriety of much of the advertising in the health and accident
insurance field had become a matter of great concern to the public. The sale as well as
advertising promotions of health and accident insurance had shown tremendous growth in
recent years. Total premium payments in 1953 for such insurance amounted to more than $3
billion. Of this total, over $1 billion in
____________________
1

Complaints against 28 mayor health, accident, and hospitalization insurance companies have been issued since
the end of the fiscal year, while the inquiry was still in progress.

26

annual premiums were received by companies selling policies on an individual, nongroup
basis, and ir this field especially advertising was widely used. Approximately 25 million
persons had purchased individual policies. Twenty-five years before, only 50 companies were
writing accident and health insurance by June 30, 1954, there were over 900 companies in
the business.
The Commission's investigation in this field proceeded with excellent support from the
insurance commissioners of the several States.
27

Chapter Four

LITIGATION BEFORE THE
COMMISSION
Litigation before the Commission arises in cases which, after investigation, require
mandatory legal proceedings to effect correction of violations of law by persons, partnerships
or corporations. A formal statutory complaint stating the charges against the respondent
forms the initial pleading in such cases. Issues are usually drawn by answer to the charges,
which are subject to trial unless consent settlement is arrived at, followed by hearings and
decision by a hearing examiner and by the Commission itself.
Such litigation before the Commission embraces the entire field of trade regulations
within the Commission's jurisdiction, including (l) all proceedings involving monopolistic
practices arising out of violations of the Federal Trade Commission Act and sections 2, 3,
7, and 8 of the Clayton Antitrust Act, as amended by the Robinson-Patman Act and the
antimerger law of December 29, 1950 and (2) all proceedings involving false and misleading
advertising and unfair and deceptive acts or practices under sections 5, 12 and 15 of the
Federal Trade Commission Act, including violations of the Wool Products Labeling Act, the
Fur Products Labeling Act and the new Flammable Fabrics Act. Such litigation also
embraces formal complaint cases respecting the business of insurance as limited by the
provisions of Public Law 15, 79th Congress.
During the fiscal year, the number of cases of litigation begun or concluded before the
Commission were as follows:
Antimonopoly
cases
Formal complaints issued _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Orders to cease and desist _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Orders dismissing complaints _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Other dispositions _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Deceptive
practice
cases

30
24
10
4

93
80
13
1

Total

123
104
23
5

This record of complaints and orders issued during the year has not been equaled in recent
years.
28

Typical examples of cases litigated during or pending at the close of the year follow

CASES OF FORMAL COMPLAINTS ISSUED IN FISCAL 1954
Docket 6183, Casket Manufacturers Association of America, and others. Complaint issued
February 19, 1954
According to this complaint, the Casket Manufacturers Association of America and its
approximately 160 members, who, on the basis of reliable estimates, account for at least 80
percent of the productive capacity of the casket industry, have entered into a combination.
in restraint of trade (1) to fix prices (2) to limit the unit production and sale of funeral caskets
(3) to expand production and sale of higher priced caskets while curtailing the production
of lower priced caskets and 4) to fix suggested resale casket prices.
The commodity involved is one which of course must be purchased for the use of
practically every individual regardless of financial means or status in life. Conservative
estimates compute the annual wholesale sales of the industry to be in excess of $131,000,000
and the annual retail sales to be in excess of $350,000,000. The necessity of preserving for
the public the benefits accruing from fair and unrestrained competition in such a vast
business forms a basis for the corrective action instituted.
Docket 6156, Luria Brothers and Company, Inc., and others. Original complaint issued
January 19, 1954, and amended and supplemental complaint issued July 13,1954
The statutory complaint as amended and supplemented was issued following an extensive
investigation into (1) the extent of concentration and control in the distribution of iron and
steel scrap (2) how the channeling of scrap may have been restricted and the effect of any
restrictions upon the amount available (3) sources and prices of scrap available for the
production of steel (4) the existence, if any, of exclusive dealing areas in the industry (5)
whether there were oppressive practices by dominant companies in domestic and foreign
markets and (6) the effects of mergers that have taken place.
The complaint alleges the use of a variety of unfair methods of competition by the
dominant scrap brokers and a number of companies engaged in the manufacture of steel
products. It also charges certain scrap brokers, and an exporter, with conspiring in restraint
of export trade, and charges the dominant broker with effecting unlawful mergers. If, upon
due proceedings, they allege oppressive restraints upon free and open competition in the iron
and steel scrap
29

industry are established as charged, action will be taken to remove them, thus according an
important contribution to the soundness and health of the Nation's economy with respect to
this vital raw material.
Docket 6225, Barnes Metal Products Company, and others. Com plaint issued June 29, 1954
This complaint alleges that a number of firms including steel manufacturers engaged in
the manufacture and distribution of "rain goods" are involved in a combination and
conspiracy to fix prices and restrain trade. Twenty manufacturers are named respondents. The
term "rain goods" is used to describe metal rain carrying and drainage equipment utilized in
the construction and maintenance of buildings of all types, kinds, and sizes. The complaint
states that respondent manufacturers sell more than 50 percent of the dollar volume of rain
goods produced in the United States, and that they are engaged in unlawfully fixing prices
by conspiring and combining to maintain uniform prices, discounts, terms and conditions of
sale involving a uniform system of price zones, standard list prices and discount differentials.
The complaint concludes that these practices have promoted and contributed to suppression,
elimination and prevention of price competition in the sale of "rain goods" in violation of the
Federal Trade Commission Act. Acts and practices of the type charged, if established in the
further proceedings, may involve serious effects upon the national economy generally, and
the building industry in particular.
Docket 6227, Warren Petroleum Corporation, and others. Complaint issued June 30, 1954
The complaint charged that the Warren Petroleum Corporation, with a volume of business
amounting to $123,552,915 in 1952, had engaged in unlawful price discrimination in the sale
and distribution of liquefied petroleum gas and that among the effects of the discriminations
are substantial injury to competition and a tendency to create a monopoly in the interstate sale
of liquefied petroleum gas. The objective of this proceeding was to prohibit the continuation
of any unlawful discriminatory practices which may be found to exist. The liquefied
petroleum gas industry has been a significant factor in the economy of the United States for
about twenty years. It was reported in effect that from a meager beginning of only 222,641
gallons marketed in 1922, the first year for which the Bureau of Mines published statistics,
the volume of liquefied petroleum gas consumed annually in the country multiplied more
than 19,000 times in the succeeding 30 years to reach 4,250,000,000 gallons sold for all
purposes in 1952.
30

Docket 6224, Brooklyn Paint and Wallpaper Dealers, Inc., and others. Complaint issued June
29, 1954
The Commission instituted a proceeding in which nearly 200 paint and wallpaper dealers
in the metropolitan New York area were charged with combination and conspiracy in
restraint of trade. Under the complaint, it was charged the respondents have combined and
agreed to hinder and restrain competition in the interstate sale and distribution of paint and
wallpaper through the offices of a trade association in acting to boycott manufacturers and
other suppliers who disregard requests of respondents that such manufacturers discontinue
sales to certain competitors of respondents.
Docket 6180, Crown Zellerbach Corporation. Complaint issued February 15, 1954
The Commission, proceeding under section 7 of the Clayton Act, as amended, issued a
complaint against the Crown Zellerbach Corporation of California. With assets of
$243,000,000 Crown is one of the largest manufacturers of pulp and paper in the world and
the largest manufacturer of kraft papers and paper products in the Western States. The
complaint alleged that Crown acquired the assets (valued at over $15,000,000) of St. Helens
Pulp and Paper Company, one of its two principal competitors in the sale of kraft papers and
paper products in the Western States. According to the complaint, Crown's sales of kraft
papers and paper products accounted for approximately 50 percent, St. Helens' sales
accounted for approximately 20 percent, and that the only other important competitor,
Longview Fiber Company, had sales accounting for approximately 15 percent of the total
sales of such products in the three Pacific Coast States.
One of the principal results of this acquisition alleged in the complaint was that the paper
jobbers and paper converters in the Pacific Coast States are limited in most instances for their
supply of kraft papers to one or more of these three companies. Kraft papers and paper
products are used in almost every industry, and the object of the suit was to correct any
unlawful conditions which might be found under the allegations of the complaint.
Docket 6159, Ed Hamilton Furs, Inc., and others. Complaint issued February 2,1954
Misrepresentation in the sale of fur products at retail was charged in a Commission
complaint issued on February 2, 1954, against this corporation and other respondents. The
complaint was the first issued under the Fur Products Labeling Act since it became effective
in August 1952. It also charged false and misleading advertising and
31

other deceptive practices in violation of the Federal Trade Commission Act.1
Among other things, the complaint charged failure to disclose on labels or in
advertisements or invoices the name of the animal producing the fur, in accordance with the
Commission's rules and regulations the name of the country of origin of imported furs the
fact that the products contained used fur that products were second-hand that products
contained bleached, dyed or otherwise artificially colored fur or were composed in whole or
in substantial parts of paws, tails, bellies or waste fur. Various forms of price representation,
including fictitious pricing, were also charged.
Docket 6126, E. F. Drew & Company, Inc. Complaint issued October 26, 1953
This is one of several complaints that were brought under the 1950 amendment to section
15 of the Federal Trade Commission Act specifically prohibiting advertisements in which
representations are "made or suggested" that oleomargarine is a dairy product.
The complaint against the E. F. Drew & Company charged that the use of the words
"Farm Queen" is a trade name for the Drew Company’s oleomargarine constituted a
representation or suggestion that the product is a dairy product. Advertising claims
challenged by the complaint also included such expressions as "country-fresh," "dairy sweet,"
"the same day-to-day freshness which characterize our other dairy products'' and "churned
to delicate sweet creamy goodness." Such terms as these, according to the complaint, "have
long been used in connection with dairy products and have become firmly associated in the
minds of many members of the purchasing public with dairy products."
Docket 6203, Holland Furnace Company. Complaint issued May 4, 1954
Holland Furnace Company was charged in a Commission complaint with unfair and
deceptive practices in the sale of furnaces, heating equipment, and parts. The complaint
charged that Holland&, salesmen and servicemen had obtained entry to homes sometimes
by falsely representing themselves as Government inspectors, inspectors or representatives
of gas or utility companies or heating engineers, and had dismantled furnaces without the
owner's permission and then have refused to reassemble the m. These actions, according to
the complaint, had been accompanied by false claims that furnaces made by com___________
1

On August 26, 1954, the Commission accepted an order consented to by the respondents which was an exact
duplicate of the order asked by the Commission in its complaint.

32

petitors are defective, not repairable, dangerous to use or that the manufacturer was out of
business and repair parts were unobtainable.
It was alleged that these practices had the capacity and tendency to mislead a substantial
portion of the purchasing public and had caused many owners of furnaces and heating
equipment made by Holland's competitors to become dissatisfied with and afraid of
continuing to use such equipment, to discard such equipment and parts before the completion
of a useful life.
Docket 6168, Evis Manufacturing Co., and others. Complaint issued February 5,1954
Advertising claims that the Evis Water Conditioner, a metal device, "makes hard water
feel, taste and act softer," giving it a "silky, smooth quality" for hair, bath, dishes, laundry
and car wash, without the use of chemicals, were charged in this complaint to be false,
misleading, and deceptive. The complaint listed as false and misleading the company’s
representations that the product was made of a specially processed cast metal and has a
catalytic effect on water passing through it which changed its physical behavior in many
beneficial ways; solved hard water problems causing "hard water to become soft"; removed
and reduced unpleasant odors and flavors in water, making it taste better and improving the
taste of coffee and other foods; removed grease from drains and prevented and removed
scales from boilers, water heaters, pipes, shower nozzles, and other parts of the water system.
Examples of Cases in Which Orders To Cease and Desist Were Issued in Fiscal 1954
Docket 6090, National Electronic Distributors Association, Inc., and others. Order issued
December 4, 1953 (Consent Settlement)
The Commission entered an order to cease and desist terminating a trade restraining
combination among 350 wholesale distributors of electronic equipment and supplies. The
Commission's findings of facts were to the effect that the prohibited practices furthered a
combination and conspiracy among the members of the National Electronic Distributors
Association. The practices were described as restrictive, compulsive, and coercive and
prejudicial to the public as well as to the competitors of members of the National Electronic
Distributors Association. The Commission also found that the prohibited practices had a
dangerous tendency to hinder competition and create a monopoly.
33

Docket 5965, Anchor Serum Company. Order issued February 16, 1954
The Commission ordered Anchor Serum Company, one of the largest producers of
anticholera hog serum, to cease and desist from using so-called full requirements contracts
between itself and its customers in violation of section 3 of the Clayton Act. It is believed
this action will substantially benefit the public as well as every farmer who raises hogs. The
Commission found that Anchor had tied up numerous large purchasers of such products,
including the Iowa Farm Serum Company, the Illinois Farm Bureau Serum Association, and
the Missouri Farmers Association, Inc., by full requirements contracts under which the
contracting buyers agreed to purchase all of their requirements of such products from
Anchor. These provisions in the contracts were ordered eliminated by the Commission. In
view of the fact that Iowa, Illinois, and Missouri constitute the largest hog-producing States
in the United States and that the purchasers named are the largest buyers of serum and that
the purchasers named are the largest buyers of serum and virus within such states, it appeared
that a vast potential market had been foreclosed by Anchor to its competitors by such
practices. The entry of the Commission's order to cease and desist would open this market
to smaller serum producers.
Docket 5655, Dictograph Products, Inc. Order issued September 24, 1953
The Commission issued an order requiring Dictograph Products, Inc., from continuing
the use of exclusive dealing arrangements in violation of section 3 of the Clayton Act. The
Commission's findings in this matter disclosed that Dictograph had foreclosed approximately
220 independently owned and operated hearing aid dealers throughout the United States by
means of contracts requiring these dealers to handle only products purchased from
Dictograph. The Commission also found Dictograph to be one of the largest manufacturers
of hearing aids in the United States, and that it had foreclosed a substantial market to its
competitors by means of exclusive dealing arrangements. The importance of this decision
lies not only in the fact that. a substantial potential market was reopened to competing
manufacturers of hearing aids, but also that the dealers themselves were freed to stock and
sell whatever products they desired in order to serve an estimated 10 to 15 million people in
the United. States who were hard-of-hearing.
In addition to the Dictograph proceeding, the Commission issued complaints against two
other manufacturers of hearing aids charging the use of similar practices.
34

Docket 5698., Harley-Davidson Motor Company. Order issued June 29, 1954
Proceedings were concluded by the issuance of an order by the Commission requiring the
Harley-Davidson Motor Company to discontinue exclusive dealing contracts in violation of
section 3 of the Clayton Act. Harley-Davidson was found by the Commission to be the
largest manufacturer of motorcycles and related vehicles in the United States, selling over
$10,000,000 worth of its products to its dealers throughout the United States. The order
required Harley-Davidson to cease and desist from entering into any contracts or agreements
in selling its products whereby dealers or distributors were prohibited from handling or
selling any similar product of a competitor. The importance of this decision was
demonstrated by the fact that the respondent had approximately 700 motorcycle dealers
throughout the United States under such restrictive contractual arrangements. The entry of
the cease-and-desist order by the Commission again reopened this large market of
independent dealers to competitors of Harley-Davidson Motor Company, both in the
motorcycle vehicle field and in the parts and accessories field.
Docket 6141, Alaska Salmon Industry, Inc., and others. Order issued April 9,1954. (Consent
Settlement)
An order terminating a combination in restraint of trade in a multi-million dollar Alaska
salmon industry was directed against 41 canning companies, their trade association, Alaska
Salmon Industry, Inc., of Seattle, Washington, its managing director, and 8 unions.
Respondent canners were packing well in excess of 50 percent of the total volume of salmon
products in Alaska. The 1952 pack was 3,250,000 cases and had a wholesale value of
approximately $95,000,000.
The complaint, issued on November 12, 1953, charged the respondents with an agreed
and concerted course of action to restrain competition in the sale and distribution of salmon.
The Commission found that the unlawful practices had been carried out by means of two
separate agreements to fix the purchase price of raw salmon, the first among the canning
companies acting through their trade association and its managing director, and the second
between the canning companies and the unions.
Docket 5956, Natural Foods Institute, and others. Order issued October 20, 1953
This proceeding involved false and misleading advertising of the therapeutic properties
of food and drug preparations as well as representations for purported curative devices and
so-called health books.
35

The Commission, in an order issued pursuant to section 5 of the Federal Trade Commission
Act, forbidding such practices, held that the treatment described in the book "The Grape
Cure" would not relieve or cure cancer. Among other claims prohibited as false by the order
are: That Chic Tablets were a reducing formula and would reduce weight that Papain Tablets
were an effective treatment for indigestion; that Papaya Pulp does not contain sugar and is
a valuable food for diabetics; that Alfalfa Tea produces muscle, bone or hair to any
significant degree that Dr. Gaymont's Yogourt Culture is an effective treatment for stomach
ulcers or colitis that red beet juice builds red blood or red corpuscles or tones up the blood
to any significant degree that celery juice has any therapeutic value in the treatment of
arthritis or rheumatic conditions that Oster Stim-U-Lax Junior or the NFI Vibrator stimulates
the circulation of the blood through the body or that the consumption of fruit and vegetable
juices prepared in the "Juicer" device will assure health, vigor or charm.
Docket 5958, d-Con Company, Inc., and others. Order issued July 17, 1953
The Commission affirmed in part the order of the hearing examiner directing this
company in connection with its offering for sale of "d-Con" or "d-Con Mouse Prufe," a
rodenticide, to cease and desist representing among other things (1) That either of the
preparations is safe or may be used without danger to human beings or domestic or farm
animals unless qualified by the words "when used as directed" or other words of like
meaning or (2) that either of the preparations contains. a special attractant that is more
successful or alluring than all other rodenticide baits or regular feeds.
Docket 6093, Garden Research Laboratories, Inc., and others. Order issued November
13,1953
Respondents' advertising claimed that a chemical fertilizer called "RX-15" was developed
as a result of atomic research and contained radioactive materials and that it was
recommended particularly for the small backyard gardener because it was cleaner and more
easily applied. Among other things, the Commission's order prohibited misrepresentation of
the origin, composition or effectiveness of the product.
Docket 6072, Infra Insulation, Inc., and others. Order issued August 3, 1953. (Consent
Settlement)
Infra Insulation, Inc., consented to an order whereby it would refrain from using
misleading advertising claims about the insulating
36

factors of the insulating material it sold. Under terms of the settlement, respondents agreed,
among other things, not to represent directly or by implication that the relative insulating
effects of their reflective insulation as compared with mass insulation were indicated solely
by the magnitudes of the surface radiation coefficient of the respective materials; that the
conductance values of their insulation were lower than they are in fact; or that significantly
more ventilation was required in all installation of mass insulation than in installation in
which their product was employed. The respondents also agreed to refrain from making any
false or disparaging statements with respect to the insulating products of any competitor.
Docket 6036, National Blind Industries, Inc. Order issued October 20, 1953
Misrepresentation in the sale of luminous house numbers and woven articles, such as
table and place mats, was prohibited in an order issued by the Commission against the
respondent. The order was directed against representations that the respondents had facilities
for training or that they trained blind persons or that contributions received from the public
were used to train or rehabilitate the blind. The order further prohibited use of the corporate
or trade name "National Blind Industries" or any other term substantially similar to the name
"National Industries for the Blind," which is a nonprofit institute.
Docket 6140, George’s Radio and Television Co., Inc., and others. Order issued December
28, 1953. (Consent Settlement)
George's Radio and Television Company was charged in a Commission complaint issued
November 4, 1953, with false and misleading advertising of home freezers and television
sets. On December 28, 1953, the Commission entered an order prohibiting false and
misleading advertising of such home freezers and television sets. The order forbade claims
that participants in a food purchasing plan could buy food at wholesale prices or from a
wholesaler that overall monetary savings could be effected through the general use of frozen
foods in place of corresponding foods in other forms; that substantial overall. reductions in
food costs would be effected through participation in a food-purchasing plan or that net
monetary savings could bo effected through the use of freezers unless the cost of operation,
maintenance and depreciation and, where applicable, the cost of credit were taken into
account. Other practices ordered discontinued were "bait advertising" and other
misrepresentations in the sale of television sets. The order prohibited the unqualified use of
such terms as “brand new" to describe television sets which were not of the cur37

rent year's model. Such terms could be used according to the order only if the year in which
the sets were current models were disclosed.
Docket 5943, Tractor Training Service, and others. Order issued May 3, 1954
In an order directed against Tractor Training Service, a company engaged in the sale of
a correspondence course on diesel engines and service equipment, the Commission
prohibited, among other things, representations that there was a great demand for individuals
completing the respondent's course of study on diesel engines or that their employment as
diesel mechanics, service men, or in similar positions, would be assured that the respondent's
working arrangements or other contracts with diesel engine manufacturers assured
employment to individuals completing the course that students were afforded "on-the-job
training" or "part-time employment" for which they were to be paid or from misrepresenting
the earnings of individuals completing the course.
Docket 6102, Charles Antell Co., Inc., and others. Order issued December 18, 1953
The order issued by the Commission in this case prohibited false and misleading
advertising of Charles Antell Formula No. 9, Charles Antell Shampoo and Hexachlorophene
Soap. This order affected the advertising program of Charles Antell amounting to
approximately $8,000,000 annually. Among other things the order forbade claims that
Formula No. 9 would prevent baldness or loss of hair; restricted claims concerning its lanolin
content; banned advertisements representing that the hormone content of Charles Antell
Shampoo had any cleansing action on the hair; prohibited misrepresentation of the
effectiveness of Hexachlorophene Soap; and outlawed misrepresentations of regular prices
as "reduced prices."
Docket 6105, Charles Samuel Bernstein. Order issued October 6, 1953
The Commission affirmed an initial decision of the hearing examiner which found that
contrary to representations, the publication "American Labor Digest" was not a regularly
issued magazine; that it had no subscribers; and was not for sale on newsstands; and that it
was not supported by any labor organization. The examiner also found that the
advertisements in the publication were obtained through deceptive practices and that
respondent had required or demanded payment for advertisements which were not authorized
or approved. The Commission's order required that these practices be stopped.
38

In addition to the above examples of orders issued in the fiscal year, two partners trading
as Fisher & DeRitis (Docket 5944) were, on September 23, 1953, convicted of violation of
the Wool Products Labeling Act in connection with the sale of so-called "torch sweaters"
which were made of brushed rayon but were represented as being made of wool. This, a
criminal case, was brought under section 10 of the Wool Products Labeling Act. The
proceeding was instituted by the United States Attorney's Office after referral by the
Commission, which had previously ordered the parties to stop representing that sweaters and
other garments made of brushed rayon were made of camel's hair or any other type of wool.
39

Chapter Five

CEASE-AND-DESIST ORDER COMPLIANCE
This work of the Commission constitutes a crucial phase of the application of its
mandatory law-enforcement powers. In 1947, a special division under the General Counsel
was established to obtain compliance with orders to cease and desist, and to enforce such
orders by initiating appropriate proceedings in the Federal courts when voluntary compliance
could not be obtained.
During the fiscal year, steps were taken to revitalize this program to achieve an adequacy
of the service commensurate with its importance. The program involved a follow-up of each
cease-and-desist order issued by the Commission. These orders require the filing of a report
of compliance stating in detail how objectionable business activities have been adjusted and
revised to meet requirements of the order and the law.
When respondents do not voluntarily comply, civil suits are brought in the various United
States district courts, seeking penalties for violations of the orders as provided by the statute.
In Clayton Act cases, where there is no provision for the institution of penalty suits, once the
order has been affirmed and enforced by one of the courts of appeals, proceedings for
contempt are initiated for violations of court decrees.
Since the division was established, civil penalty judgments aggregating $222,000 have
been obtained.

ATTENTION TO OLD ORDERS
Before the division was established approximately 4,000 cease-and-desist orders were
issued by the Commission. Prior to fiscal year 1954, the division focused its attention entirely
on initial compliance with current orders and occasional complaints of violations of old
orders—the latter being insignificant in number. There was no information on whether
approximately 4,000 old cease-and-desist orders were being obeyed. A substantial number
of these were directed against evils found in many of the country's most vital industries, such
as industrywide price fixing, restraint of trade, and discriminatory
40

practices violative of law. No investigation or examination had been made into the current
state of compliance with such orders.
A basic function of the Commission—the stopping of monopolistic evils in their
incipiency and adequate regulation and preservation of competition—cannot be achieved to
any satisfactory degree, other than by systematic and intelligent attention to full compliance
with its orders to cease and desist. Accordingly, on June 10, 1954, the Commission approved
the recommendations of a special committee, appointed September 1953, calling for
systematic and selective review screening and proper enforcement. It proposed to give
highest priority to compliance work. This survey has been begun and a pattern established
for screening procedures to coordinate necessary attention, not only to these orders, but to
some 8,000 stipulations and 190 sets of trade practice conference rules, to assure uniformity
in the requirements imposed on respondents. Supplemental reports of compliance on old
orders were being requested at a rate of approximately 100 a month.
During the fiscal year 1954, attention was given to 857 compliance matters: "Matters"
consist of (a) reports of compliance for processing (b) complaints of alleged violations of
orders (c) conference and opinions regarding compliance and (d) initiating and processing
preliminary inquiries into compliance.

ANTIMONOPOLY COMPLIANCE CASES
During the year, 249 reports of compliance with orders against restraint of trade,
monopolistic tendencies, and discriminatory practices were processed. Illustrative of their
variety and scope was one relating to bakery packaged food products, terminating price
discrimination by the largest manufacturer, whose production represents about 50 percent of
the entire output in the industry another relating to canned Alaska salmon, prohibiting pricefixing activities among 41 canning companies, their trade association and 8 labor unions
whose membership included salmon fishermen another relating to dental supplies, directed
against a conspiracy in restraint of trade among a trade association and its 144 members who
controlled 75 percent of the Nation's production and distribution of such supplies another
relating to iron and steel products, prohibiting price-fixing and discriminatory practices in
the sale and distribution of steel on the part of 90 manufacturers involving virtually the total
steel output of the United Stales another relating to portland cement, directed against a trade
association and 74 cement manufacturers accounting for three-fourths of the total capacity
in the industry who were engaged in an industrywide price-fixing conspiracy and another
relating to clay sewer pipe, terminating a price-fixing combination among 17 manu338945–55—4

41

facturers who operate 25 plants, or about one-third of such plants operating in the United
States, for the manufacture and distribution of clay sewer pipe, an important item in modern
building construction and community development.
DECEPTIVE PRACTICE COMPLIANCE CASES
During the year 344 reports of compliance were processed in cases dealing with practices
found to be false, misleading and deceptive. Also, 174 complaints of violation of orders were
reviewed and appropriate action taken. Orders relating to wool products, lotteries, medicinal
preparations, correspondence schools and household appliances were among those receiving
consideration.
ADVERTISING TASK FORCE
To facilitate checking up on compliance with orders, stipulations and rules relating to
advertising, a special "task force" of attorneys was designated. The mission of this unit was
to examine national and regional advertising by respondents subject to orders, stipulations,
and rules.
COMPLIANCE CASES IN FEDERAL COURTS
During the year one penalty complaint was filed in U. S. v.Coradio, Inc., et al. (D. C. N.
J.). The complaint charged violations of an order prohibiting misrepresentations in the
interstate sale of coin-operated radios for use in hotels and other public establishments.
Civil penalty suits concluded during the year were:
(1) U. S. v. Westville Oil and Manufacturing, Inc. (N. D. Ind.). Judgment entered July
24,1953, for $1,750 for violation of an order requiring an affirmative disclosure that motor
oil sold by defendant previously had been used.
(2) U.S. v. Shapiro Felt Rug Company, et al. (D.C.N.J.). Judgment of $1,200 entered
December 28, 1953, for violation of an order requiring defendant to disclose that millinery
products were made of previously used materials.
(3) U. S. v. National Titanium Company (S. D. Calif.). Judgment of $4,000 entered March
18, 1954, for violation of an order requiring proper labeling and advertising of paint
containing used materials
(4) U. S. v. Shelbrooke Coats, et al. (S. D. N. Y.). Judgment of $1,000 entered February
2, 1954, for failure to keep records as provided by the Wool Products Labeling Act and entry
of a mandatory injunction compelling the keeping of such records.
42

(5) U. S. v. Lady Carole Coats, Inc., et al. (S. D. N. Y.). Judgment of $1,000 entered
February 4, 1954, for failure to keep records as provided by the Wool Products Labeling Act
and the entry of a mandatory injunction compelling the keeping of such records.
There were pending in the various United States District Courts as of June 30, 1954, civil
penalty suits in the following cases based on the alleged violations indicated:
(1) U. S. v. Standard Education Society, et al. (N. D. Ill.). Violation of an order
prohibiting false representations of encyclopedias.
(2) U. S. v. United Diathermy, Inc. (S. D. N. Y.). Violation of an order prohibiting
misrepresentations the therapeutic benefits of a diathermy device.
(3) U. S. v. Purofied Down Products Corp., et al (E. D. N. Y.). Violation of an order
requiring labeling disclosure of used or second-hand feathers contained in pillows.
(4) U. S. v. Edward Towenthal (N. D. Ill.). Violation of an order directed against the use
of misleading "skip trace" materials for obtaining credit information concerning alleged
delinquent debtors.
(5) .U. S. v. Coradio, Inc., et al. (D. C. N. J.), supra.
43

Chapter Six

COURT PROCEEDINGS

Tho court proceedings reported in this chapter are cases in the Federal courts to which
the Federal Trade Commission was a party. For the most part, these proceedings arise upon
appeal from Commission cease-and-desist orders. Cases decided or pending in court during
the fiscal year, arranged under the respective classifications of antimonopoly and deceptive
practice cases, are set out below. Other special court proceedings are also listed.
1. ANTIMONOPOLY CASES IN FEDERAL COURTS
In the United States Courts of Appeals
Ten antimonopoly proceedings were pending at the beginning of the fiscal year, all in
United States courts of appeals. Two were disposed of, two were instituted as new petitions
for review, with a total of 10 such cases remaining pending at the close of the fiscal yaer.
Decisions
Gamble-Skogmo, Inc., Minneapolis, Minn. The United States Court of Appeals for the
Eighth Circuit (St. Louis) set aside an order prohibiting the use of exclusive-dealing contracts
in the sale of merchandise in violation of section 3 of the Clayton Act and remanded the case
to the Commission for further proceedings. The decision did not deal with the merits of the
order but was based upon procedural grounds, the court holding that where the hearing
examiner who presided at the reception of evidence becomes unavailable to the Commission
it is violative of section (c) of the Administrative Procedure Act for a substitute examiner
to make the recommended decision if substantial questions of witness credibility are
involved.
Standard Oil Company of Indiana, Chicago, Ill. Subsequent to the remand of this case by
the Supreme Court, the Commission made findings that the price discriminations involved
were not made in good faith to meet equally low prices of competitors, and entered a
modified order. Thereafter, on March 31, 1963, the Commission submitted the original and
supplemental record to the United States Court of appeals for the Seventh Circuit (Chicago),
requesting that
44

the case be placed on the calendar for rebriefing and reargument. By its order of May 19,
1953, the court accepted jurisdiction, but on January 18, 1954, vacated the prior order,
holding that it was without jurisdiction to enter that order and could acquire jurisdiction only
pursuant to section 11 of the Clayton Act.
Pending Cases
Anchor Serum Company, 1 South St. Joseph, Mo. Pending in the United States Court of
Appeals for the Seventh Circuit (Chicago) on petition to review and set aside an order
prohibiting the use of exclusive-dealing contracts in the sale of hog-cholera serum and virus
in violation of section 3 of the Clayton Act as amended.
Automatic Canteen Company of America, Chicago, Ill. Pursuant to mandate of the
Supreme, Court, the United States Court of Appeals for the Seventh Circuit (Chicago)
remanded this case to the Commission for such -further action as might be open under the
opinion of the Supreme Court reversing the Commission's order as to Count II of the
complaint, which charged knowingly inducing price discriminations in the purchase of
confectionery products.
Chain Institute, Inc., et al., Chicago, Ill. Pending in the United States Court of Appeals
for the Eighth Circuit (St. Louis) on petition to review and set aside an order prohibiting
price fixing and certain related practices in the sale of chain and chain products in violation
of section of the Federal Trade Commission Act. At the close of the year petitioners had
pending before the court a motion for remand to the Commission on procedural grounds.
Dictograph Products, lc., Jamaica, N. Y. Pending in the United States Court of Appeals
for the Second Circuit (New York) on petition to review and set aside an order prohibiting
the use of exclusive-dealing contracts, and certain related and supplementary practices in the
sale of hearing aids in violation of section 3 of the Clayton Act and section 5 of the Federal
Trade Commission Act.
Gamble-Skogmo, Inc., Minneapolis, Minn., supra. On remand to the Commission for
further proceedings.
National Lead Company, New York, N. Y.; Anaconda Copper Mining Company and
International Smelting and Refining Company, New York, N. Y.; Eagle-Picher Company and
Eagle-Picher Sales Company, Cincinnati, Ohio; The Sherwin-Williams Company, Cleveland,
Ohio. Pending in the United States Court of Appeals for the Seventh Circuit on separate
petitions (consolidated by the court for hearing) to review and set aside an order prohibiting,
pursuant to section 5 of the Federal Trade Commission Act, price fixing and re__________
1

On December 17, 1954, the Court of Appeals affirmed the Commission's order.

45

lated practices by the several companies and prohibiting further acquisitions of competitors
by National Lead Company and also prohibiting each company, individually from
discriminating in price in violation of section 2 of the Clayton Act, all with respect to lead
pigments.
Whitey & Company, Seattle, Wash. Pending in the United States Court of Appeals for
the Ninth Circuit on application by the Commission for enforcement of its order prohibiting
the payment of brokerage in violation of section 2 (c) of the Clayton Act. The order was
affirmed by the court and the case remanded to the Commission to act as special master and
take evidence on the question of violation, and report to the court.

2. DECEPTIVE-PRACTICE CASES IN FEDERAL COURTS
In the Supreme Court
At the beginning of the fiscal year, petitions for writs of certiorari in two deceptive
practice proceedings were pending in the Supreme Court, and four such petitions were filed
during the year. In three of these cases, the petitions were by Universal Manufacturing
Company, et al., Chicago, Ill.; Bernice Feitler, et al., Chicago, Ill.; and U. S. Printing &
Novelty Company, New York, N. Y., respectively, seeking review of decisions affirming
Commission orders in lottery cases. All were denied, and petitions for rehearing in the two
first named were also filed and denied. The petition of Book-of-the-Month Club, Inc., New
York, N. Y., was withdrawn. Two of the petitions were on behalf of the Commission: The
first, in the Carter Products, Inc., case (post) was granted, the decision of the United States
Court of Appeals for the Ninth Circuit (San Francisco) setting aside the Commission's order
was vacated, the decision ordered amended, and the case remanded to the Commission and
the second, seeking review of the decision of the United States Court of Appeals for the
Seventh Circuit (Chicago) which modified the Commission's order in the Rhodes Pharmacal
Company case (post), is pending.
In the United States Courts of Appeals
Seventeen deceptive practice eases were pending in United States courts of appeals at the
beginning of the fiscal year, 9 new petitions to review and set aside Commission orders
prohibiting unfair or deceptive practices were filed during the year, and 13 such proceedings
were concluded. Of those decided, 4 orders were affirmed and enforced without change, 3
were modified and affirmed, 2 were dismissed for lack of prosecution, 2 were dismissed on
preliminary motions, 1 was remanded to the Commission for further proceedings, and
another
46

was remanded on motion of the Commission. In addition, the Commission joined in one and
consented to another motion for modification of final decrees in two "free goods" cases
previously affirmed by the courts. One of these motions was granted by the court, and the
other was pending at the end of the fiscal year.
Decisions
Cases in which the Commission's orders were affirmed and enforced without change are:
American Tack Company, New York, N. Y. Second Circuit (New York). Failure to reveal
foreign origin of thumbtacks.
Directory Publishing Corporation, et al., New York, N. Y. Second Circuit (New York).
False and misleading representations in the sale of a classified business directory.
Standard Distributors, Inc., Chicago, Ill. Second Circuit (New York). Misrepresentation
as to prices, quality as compared to samples, and being a "new" encyclopedia. Petition for
rehearing filed by petitioner was denied.
William F. Koch, et al., Grosse Point Park, Mich. Sixth Circuit (Cincinnati). False
advertisements of medicinal products as a cure for cancer and other serious diseases.
The cases in which Commission orders to cease and desist were, after modification,
affirmed and enforced are:
Prima Products, Inc., et al., New York, N. Y. Second Circuit (New York). False and
misleading advertising of "Aquella," a product offered for waterproofing purposes. The court
deleted one paragraph of the order regarding claims concerning use of "Aquella" on the
Maginot Line.
Rhodes Pharmacal Company, Chicago, Ill. Seventh Circuit (Chicago). False
advertisements of "Imdrin," a medicinal product offered for arthritic and rheumatic
conditions. The court modified the order to cease and desist, materially changing its scope.
Petition for rehearing by the Commission was denied, and thereafter petition for writ of
certiorari was filed and is now pending in the Supreme Court.
Fred Schambach, New York, N. Y. District of Columbia Circuit (Washington). Sale of
merchandise lottery devices, sale of merchandise by means of lottery devices, misleading use
of the word "free,” and false representations as to price. Petitioners abandoned their attack
on all parts of the order except that respecting the sale of lottery devices, as to which they
stipulated the same order might be entered as was entered by the court in the case of U. S.
Printing & Novelty Company, also involving lottery devices. The court made the same
modification as was made in that case.
47

Four cases were dismissed by United States courts of appeals, as follows:
Bostwick Laboratories, Inc., Bridgeport, Conn. Second Circuit (New York). False and
misleading advertising of insecticides. Petitioner failed to prosecute his appeal, and the
matter was dismissed.
Infra-Insulation, Inc., et al,., New York, N. Y. District of Columbia Circuit (Washington).
Disparagement of competitive products and false and misleading representations in the sale
of reflective aluminum insulation. Petitioners had settled the proceeding before the
Commission by agreeing to a consent order to cease and desist. The Commission filed motion
to dismiss the petition to review, and petitioners by stipulation agreed to the dismissal.
Harry Augen (Graphited Lubricants Company) and Livingston Automotive Supply
Company, Inc,., et al., both of Brooklyn, N. Y., Second Circuit (New York). These were
separate petitions to review an order to cease and desist issued against a number of
respondents in Tungsten Contact Manufacturing Company, et al., involving alleged passing
off of automobile ignition points as products of well-known suppliers. The Commission
moved the court to vacate the order to cease and desist in these matters and to remand them
to the Commission for further consideration. The court vacated the order, but denied remand.
Two cases were remanded by United States courts of appeals, as follows:
Philip Morris & Co., Ltd., Inc., New York, N. Y. District of Columbia Circuit
(Washington). False and misleading advertising claims concerning "Philip Morris" cigarettes.
The court granted motion of the Commission to set aside the order to cease and desist and
remand the proceeding for reconsideration and such disposition as is warranted by the facts,
the law, and the public interest and, pursuant to this remand, hearings were held by the
Commission.
The New Library of World Literature, Inc., et al., New York, N. Y. Second Circuit (New
York). Misrepresentation through failure to disclose abridgment or change of title of reprints
of previously published books. Though agreeing as to deceptiveness of the practice, the Court
held that portion of the order respecting placement of the disclosure not supported by
necessary evidence and findings, and reversed the order and remanded the cause to the
Commission for further proceedings.
Progress Tailoring Company, et al., Chicago, Ill. The Commission and petitioner joined
in a motion to the Seventh Circuit (Chicago) to modify the final decree to accord with the
Commission's new "free goods" policy as delineated in the Walter J. Black case. The court
granted the motion and modified the decree accordingly.
48

Pending Cases
American Tack Company, New York, N. Y. Second Circuit (New York), supra. Awaiting
expiration of time during which petitioner may apply for writ of certiorari.
Astor Industries, Inc., et al., New York, N. Y. Second Circuit (New York). Failure to
disclose foreign origin of sewing machine heads and unfair and deceptive practices in the use
of brand or trade
name.
Carter Products, lnc., New York, N. Y. Ninth Circuit (San Francisco), supra. Following
remand, the Commission reopened this proceeding for the taking of further testimony
pursuant to the remand.
Dolcin Corporation, et al., New York, N. Y. District of Columbia Circuit (Washington).
False advertisements of "Dolcin," a medicinal product offered for arthritic and rheumatic
conditions.
Doris Stavitch, et al. (Personal Drug Company), New York, N. Y. Second Circuit (New
York). False advertisements of drug products "Quick-Kaps' and "D-Lay Capsules."
James H. Sewell (Burns Cuboid Company), Santa Ana, Calif. Ninth Circuit (San
Francisco). False advertisements of "Cuboids," a device for insertion in shoes for relief of
various foot conditions.
Joseph Rosenblum, et al. (Modern Manner Clothes), New York, N. Y. Second Circuit
(New York). Pending on motion to vacate the final decree in accord with the Commission's
new "free goods" policy as delineated in Walter J. Black case.
Marlene's, Inc., et al., Chicago, Ill. Seventh Circuit (Chicago). False and misleading
advertisements of a weight-reducing tablet designated "Mynex."
The New American Library of World Literature, Inc., et al., New York, N. Y. Second
Circuit (New York), supra. Pending on remand from the court.
Philip Morris & Co., Ltd., Inc., New York, N. Y. District of Columbia Circuit
(Washington), supra. Pending on remand from the court.
Perry Halseth (Perry Sales Company), Chicago, Ill. Seventh Circuit. Sale of merchandise
by means of lottery devices.
Seymour Sales Company, et al., Chicago, Ill. District of Columbia Circuit. Sale of
merchandise by lottery methods and of merchandise lottery devices in interstate commerce.
Standard Distributors, Inc., Chicago, Ill. Second Circuit (New York), supra. Pending
expiration of period within which petition for certiorari may be filed.
Tractor Training Service Circuit (San Francisco). False and misleading representations
in advertis49

ing in correspondence study course in diesel engines and heavy equipment.
In the United States District Courts
Two suits were pending in a United States district court at the beginning of the fiscal year,
and three others were filed in such courts during the year. Three of these suits were
dismissed for lack of jurisdiction, and two remained pending at the close of the year:
Elip Distributing Corporation, Baldwin, Long Island. United States District Court for the
Eastern District of New York. Suit against the Commission and the Federal Security Agency,
jointly, to prevent institution of proceedings against "Elip," a drug product sold as a remedy
for hemorrhoids. Dismissed for lack of jurisdiction.
Guy Noel, et al. United States District Court for the District of Columbia. Petitioners in
six proceedings involving sale of lottery devices in interstate commerce filed suit to restrain
the Commission from enforcing orders against them which had been affirmed by various
United States courts of appeals, and in three of which certiorari had been denied by the
Supreme Court. Dismissed for lack of jurisdiction.
Reubin Berkowitz, et al. United States District Court for the District of Columbia. Suit
by petitioners in the same six proceedings as in the Noel matter filed under the Declaratory
Judgments Act seeking a determination that the Commission's orders against them do not
apply to blank punch boards and push cards. Pending on a motion to dismiss.
Oliver W. Toll, Washington, D. C. United States District Court for the District of
Columbia. Civil action for discovery against the Civil Service Commission and the Federal
Trade Commission. Dismissed on merits.

3. OTHER COURT CASES
Quantity-Limit Cases. Actions challenging the validity of the Commission's QuantityLimit Rule 203-1 were remanded for trial to the United States District Court for the District
of Columbia by a decision of the United States Court of Appeals for the District of Columbia
reversing the district court, which had entered orders of dismissal. The rule filed the
maximum quantity of replacement tires and tubes upon which cost justification may be based
under section 2 (a) of the Clayton Act. Plaintiffs, which included the principal tire
manufacturers, sought declaratory judgments and injunctions restraining the Commission
from enforcing the rule. The cases, which were consolidated for trial, were to be heard when
they were reached on the calendar of the district court.
50

F.T.C. v. Mahler's, Inc., et al. On April 3, 1954, the United States District Court for the
District of Rhode Island denied an application filed by the Commission seeking a temporary
injunction to restrain of certain alleged false advertisements of Mahler's, Inc., of Providence,
R. I., pending final determination of the Commission's cease-and-desist order proceeding.
The advertising in question was disseminated in the sale of an electrolysis device for the
removal of superfluous hair from the human body. The court action for temporary injunction
pendente lite was brought by the Commission in the public interest under section 13 of the
Federal Trade Commission Act.
NOTE.—For suits brought by the United States to assess civil penalties for violation of Federal Trade
Commission cease-and-desist orders, see compliance matters on page 42.

51

Chapter Seven

COOPERATION WITH INDUSTRY
AIDING BUSINESS TO AVOID UNFAIR COMPETITIVE
METHODS
Extensive services are provided by the Commission to aid and guide business in avoiding
and preventing the use of methods, practices or arrangements which violate the laws
administered by the Commission. These services undertake to encourage, as far as
practicable, proper voluntary action on the part of business to keep its own house in order by
preventing the inception or growth of trade practices harmful to the public interest.
During the fiscal year, these services continued to be performed through the
Commission's Bureau of Industry Cooperation, including its industry Trade Practice
Conference proceedings and the stipulation work.1 Under the industry conference procedure,
rules of fair-trade practices are established by the Commission for respective industries.
Through the stipulation procedure, agreements to cease and desist are negotiated on a
voluntary basis to effect correction of alleged unfair practices in specific cases where
protection of the public interest may be fully achieved without the necessity of formal
litigation.

TRADE PRACTICE CONFERENCES
The Commission's trade practice procedure for industry is an established, successful, and
economical method of preventing and eliminating unfair trade practices.
To obtain maximum voluntary observance of law on an industrywide basis, trade practice
conference proceedings are conducted by the Commission for industries in cooperation with
their members.
______________
1

On July 1, 1954, the "Bureau of Industry Cooperation" became the "Bureau of Consultation" and a new Division,
namely, the Division of Small Business, was created. The functions of the new Bureau have been stated by Chairman
Howrey to be "(1) to act in a cooperative and consultative capacity to business, particularly small business, (2) to give
informal advice on all kinds of matters involving the laws administered by the Commission, and (3) to seek voluntary
compliance with such laws by means of conferences, informal hearings, and other types of informal procedures."
Responsibilities of the Division of Small Business are, in general, to afford consultative service to small-business men
respecting their compliance with laws administered by the Commission, and to see that they obtain the protection and

relief encompassed within the objectives of the Federal Trade Commission Act, the Clayton Act, and other statutes
administered by the Commission.

52

These culminate after hearing and consideration in the establishment of trade practice rules
clarifying the requirements of laws administered by the Commission. Rules are revised or
supplemented when necessary for accuracy of interpretation of legal requirements and
adequacy of coverage of practices engaged in, or likely to be engaged in, by the industry
members. For those industries already having rules in operation, effort is made to maintain
the highest possible voluntary observance of the rules by the industry members.
Members of an industry work with the Commission in formulating trade practice rules,
in publicizing those promulgated, in effecting their revision or supplementation, and in
bringing to the Commission's attention instances of their violation.
The rules give guidance on how legal requirements concerning practices of the particular
industry can be met by the members.
Procedure
The method for conducting trade practice conference proceedings for industries is set
forth in Rule XVIII of the Commission's Rules of Practice. The Commission's policy for
settlement of cases upon promulgation of trade practice rules for industries is set forth in the
Federal Register of August 29, 1947.
Trade practice conference proceedings for an industry may be started by the Commission
upon its own motion, or in response to an application by a member, group of members, or
trade association of the industry, or an application by any other interested person, party, or
group. The great majority of proceedings culminating in rules have been started in response
to applications.
The Commission, in granting applications, wants to be sure the establishment of trade
practice rules for the industry will clarify the requirements of statutes administered by the
Commission, and will prevent substantially those practices by industry members which
violated them. Unless considered by the Commission to be in the public interest, and a
constructive force in the industry, the proceeding is not authorized.
When a trade practice conference proceeding is authorized by the Commission for an
industry, a conference is scheduled in a city convenient to the majority of the industry
members. Due notice of the time and place of the conference is published in the Federal
Register and invitations to attend ad participate in the conference proceedings are mailed to
all known members of the industry. Any member or group of members may propose a rule
or rules, and all members are given opportunity to discuss and recommend changes in any
of the proposed rules. Additional conference sessions may be held.
53

After the conference, the Commission's staff studies the industry recommendations and
relevant information, and submits for Commission consideration a draft of proposed rules
which, if considered by the Commission to be in appropriate form, are released for public
hearings. Notice of the time and place of such hearing is published in the Federal Register
and mailed to known industry members, with a copy of the proposed rules. Copies of the
proposed rules are also made available to other interested persons, including consumers.
After the hearing, and after considering the entire matter, the Commission may approve
and direct the promulgation of trade practice rules for tire industry. The rules become
effective on a specified day, usually 30 days after the date of promulgation, and are
published in the Federal Register. Copies are sent to each member of the industry
accompanied by an acceptance card which the member may use to signify his intent to
comply with the rules in his business.
Trade practice rules promulgated for an industry may be wholly of the Group 1:
classification, or may also include rules of the Group II classification. Rules of the Group
I classification bear the following headnote:
GROUP I
The unfair trade practices embraced in the Group I rules herein are considered to be unfair methods of
competition, unfair or deceptive acts or practices, or other illegal practices, prohibited under laws
administered by the Federal Trade Commission; and appropriate proceedings in the public interest will be
taken by the Commission to prevent the use, by any person, partnership, corporation, or other organization
subject to its jurisdiction, of such unlawful practices in commerce.

Rules of Group II classification bear a headnote reading as follows:
GROUP II
Compliance with trade practice provisions embraced in Group II rules is considered to be conducive to
sound business methods and is to be encouraged and promoted individually or through voluntary cooperation
exercised in accordance with the existing law. Nonobservance of such rules does not per se constitute
violation of law. Where, however, the practice of not complying with any Group II rules is followed in a
manner as to result in unfair methods of competition or unfair or deceptive acts or practices in commerce,
corrective proceedings in respect thereto may be instituted by the Commission as in the case of violation of
Group I rules.

The Commission will not accept or promulgate any rule that sanctions, or tends to
sanction, any practice which is contrary to law, which may aid or abet illegal conduct, or
which it considers to be not fully consonant with the public interest.
54

Conference Proceedings
Number pending July l, 1953 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 30
New proceedings instituted _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 30
_____

Total pending proceedings _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 60
Disposition effected (July 1, 1953, to June 30, 1954):
Closed _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 5
New industries for which trade practice rules were promulgated _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 4
Industries for which trade practice rules were revised and promulgated _ _ _ _ _ _ _ _ _ _ _ _ _ _ 2
____
Total proceedings disposed of _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Total trade practice proceedings pending June 30, 1954 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Formal trade practice conferences held _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Formal public hearings held _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Informal conferences held _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

11
49
10
13
497

The Commission, during the fiscal year ending June 30,1954, promulgated sets of trade
practice conference rules for the Industrial Bag and Cover Industry, Hearing Aid Industry
(revision), Millinery Industry, Portrait Photograph Industry, Cedar Chest Manufacturing
Industry (revision), and Photoengraving Industry of the Southeastern States.
Included among the 60 pending proceedings which were advanced during the year are
those for the Wholesale Plumbing and Heating Industry, Orthopedic Appliance Industry,
Chemical Soil Conditioner Industry, Radio and Television Industry, Nursery Industry,
Tobacco Smoking Pipe and Holder Industry, Watch Attachment Industry, Athletic Goods
Industry, Medium and Low-Priced Jewelry Industry, Diamond Industry Waterproof Paper
Industry, and Fire Extinguishing Industry.
Administration of Trade Practice Conference Rules
The Commission maintains close liaison with industries for which trade practice rules
have been established and put into effect. It endeavors to obtain the highest degree of
voluntary and industrywide compliance with the Group I provisions. Subject to exceptions
specified in the Commissions published Policy Statement, it handles complaints of rule
infractions received from competitors, consumers, or others. and effects needed correction
expeditiously and informally
when this is possible. When not possible, the matter is referred for appropriate mandatory
action under the law.
A summary of rule compliance work performed during the fiscal year under the trade
practice rules for the more than 170 industries then in effect follows:
55

Compliance matters pending July 1, 1953 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 203
New compliance matters initiated during year _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 697
____
Total for disposition _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 900
Dispose of during year _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 722
____
Pending June 30, 1954 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 178

The disposition of 722 compliance matters during the year was accomplished mostly
through cooperative compliance.
The rules for a number of industries received special administration and compliance
attention. Included in such group were the following:
PEARL, CULTURED PEARL AND IMITATION PEARL INDUSTRY: Fictitious
pricing of cultured pearls and the failure of importers to label imitation pearls as to foreign
origin are among the unfair practices in this industry which the Commission undertook to
eliminate through administrative compliance activities.
LUGGAGE AND RELATED PRODUCTS INDUSTRY: The voluntary corrective
procedures under rules were successful in curbing deceptive claims that split leather is top
grain leather, and in securing disclosure, where necessary, that products resembling leather
are actually composed of plastics.
JEWELRY INDUSTRY: Deceptive practices which were subject to considerable
Commission attention in this industry include the following: Misuse of the term "gold" to
describe products not plated or otherwise composed of gold; failure to disclose gold content
of products plated with gold; misuse of the word "perfect" to describe .diamonds;
misrepresentation as to "origin" of jewelry products; misrepresenting synthetic or simulated
stones as natural stones; and misuse of the word “pearl" to describe simulated or synthetic
pearls. Such practices were, to a very satisfactory extent, abandoned by industry members
as a result of the Commissions administrative efforts.
WATCH DESIGNATION RULES: Through administrative action the Commission
succeeded in curtailing to a large extent; false representations that watches are "shockproof"
and false and misleading claims as to "waterproof" watches.
MASONRY WATERPROOFING RULES: The Commission continued during the year
its constant administrative efforts to prevent misrepresentation in the advertising, labeling
and promotional literature of members of this industry respecting the efficacy of their
products to provide water impermeability. Prompt correction of many such claims was
accomplished through correspondence and office conferences. Through consultation with
staff members of the Commission concerning advertising material of industry members
being prepare d for dissemination, changes were effected, thus preventing rude violation,
56

Stipulations
The stipulation procedure provides an informal settlement of cases before complaint.
Under this procedure, persons charged with law violation are afforded an opportunity to
present information pertinent to the charges and to enter into an agreement to discontinue
those practices shown by the facts to be unlawful. Thus, through voluntary. cooperative
action, the statutory objective is accomplished quickly and without the need for formal
litigation.
Stipulation Procedure
When a case is referred for stipulation negotiations, the respondent is notified and given
statement of the allege d unlawful acts or practices in question. He is asked to reply within
a specified time. He may reply in writing or confer with a Commission representative, either
in person or through counsel or other authorized representation (106 conferences were held
during the fiscal year).
If, as result of correspondence or conference, a stipulation is negotiated, it is submitted
to the Commission for approval. The stipulation becomes effective upon approval by the
Commission and is a matter of public record. In the event of failure to negotiate satisfactory
stipulation, the file is forwarded for further appropriate action.
Within sixty days after notice of approval of a stipulation, the parties to it are required
to file with the Commission a report in writing setting forth in detail how they have complied
with the stipulation. Within its discretion, the Commission may require any party to a
stipulation to file future reports on his compliance with the stipulation.
Disposition of Cases in Fiscal 1954
Closed on basis of approved stipulations _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 70
Closed without stipulations _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 19
Directed issuance of complaint _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 5
Referred for further investigation or other attention _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 7
Rejected stipulation _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 1
Rescinded stipulation _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 1

Total _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 103
Practices Covered by Stipulations
Among the wide range of practices covered by stipulations approved during the fiscal
year were the following:
A manufacturer of oleomargarine agreed to discontinue advertising it to suggest a dairy
product.
338945—55 -—5
57

A manufacturer of contact lenses agreed to stop representing that anyone who requires
glasses can be fitted with such lenses and that they are safer and cost no more than
conventional eyeglasses.
An advertiser of an antiacid d stipulated to discontinue claims that the preparation cures
stomach ulcer.
Another seller of a drug product having aspirin as its principal active ingredient agreed
not to advertise the product as an effective treatment for any kind of arthritis or rheumatism.
A manufacturer of arch supports agreed to refrain from advertising its product as being
useful in cases of varicose veins.
A manufacturer of sun lamps agreed to stop representing that such lamps help build
resistance to colds.
Another stipulation signed by a manufacturer of a dairy spray provided for
discontinuance of claims that the spray destroys flies for an entire season.
A retail seller of surplus merchandise and other articles agreed to refrain from using the
;ord "Army" to describe blankets not procured from or produce d for the United States Army.
Four manufacturers of wool products agreed to label such products accurately; as to the
percentage of wool and other constituent fibers.
Two manufacturers of contour chairs entered into stipulations providing for
discontinuing claims that their chairs have any beneficial effect on posture or afford
anatomically correct support in all cases.
An importer of Japanese binoculars stipulated to discontinue representing that such
binoculars are the equal of or superior to the best American-made binoculars.
Three sellers of hair and scalp preparations stipulated that they would not, in the future
represent that their products prevent baldness, stop falling hair or cure dandruff.
An importer of sewing machines agreed to disclose the country of origin of such foreignmade machines.
Two publishers of abridged editions of books agreed to disclose clearly and
conspicuously, that such books are abridged.
Stipulation Compliance
Reports of compliance with stipulations submitted by stipulating parties are carefully
reviewed. When a report does not show full compliance with the stipulation, or a stipulation
violation is otherwise detected, steps are taken promptly to effect correction. During the year
reports of compliance were received and filed or other appropriate action taken in 149
stipulation compliance matters.
In addition, a systematic survey of approved stipulations was undertaken during the fiscal
year to determine whether parties to stipulations approved during past years were complying
with their agree58

ments and, if not, to initiate prompt corrective action This survey which was a part of the
Commission’s integrated compliance program, began to produce constructive results by the
close of the year.

EXPORT TRADE ACT ADMINISTRATION
This phase of the Commission consists largely in encouraging business to take proper
advantage of the law for promoting exports.
During the fiscal year, a complete reevaluation was undertaken of the Commission’s
administrative responsibilities under the Webb-Pomerene Export Trade Act. It was
determined that less than minimum response was being given to the congressional mandate
and a comprehensive program of adjustment was begun.
The Act adapts the antitrust laws to the special situation of American export trade; that
is, it adjusts then to that area in which our unique philosophy of free competition must
coexist with the different philosophies of foreign nations. The statute extends the general
jurisdiction of the Commission under the Federal Trade Commission Act to incidents of
export trade occurring outside the territorial jurisdiction, and it permits qualified export
associations to operate with a limited immunity from the Sherman and Clayton Acts. By the
terms of the Act the privileges accorded these special export groups are conditioned upon
their voluntary submission to close supervision by the Commission.
The staff component charged with responsibility for the day-to-day administration of the
Act was transferred to the Office of General Counsel during tile last month of the year. This
change was made to place the Division of Export Trade in a position to act as adviser to the
Commission on matters rising within the provisions of the Act and center the general foreign
trade interest of the Commission during this era of renewed emptlasis. The proficiencies of
the reglar investigative, trial, and ecoomic components of the Commissions staff would be
coordinated by this small division rather than duplicated within it and would be utilized
under the special procedures of the Act to stress prompt informal guidance of associations,
backed by a readiness to invoke the formal antitrust laws.
The program to revitalize the Commission’s functions under the Export Trade Act was
in the beginning stages a t the close of the year, but headway has been made in certain areas.
A pattern of close cooperation with the Department of Justice had been initiated and utilized.
Encouragement for this special liaison was found in the Supreme Court’s decision in 1945
in U. S. Alkali Export Ass’n v. United States, 325 U.S. 196. Like advances had been made
to the Departments of Commerce and State and had met with initial success.
59

A routine of continuous surveillance of the major business practices of the associations had
been begun in accordance with the intent of Congress, and at the close of the year the files
on about one-fourth of the associations had been brought up to date.
At the end of the fiscal year, 41 export associations were operating under the Act,
including 453 member companies throughout the United States.
The associations have reported the following exports:
1952
Metals and metal products _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Products of mines and wells _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Lumber and wood products _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Foodstuffs _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Miscellaneous (including paper, rubber, textiles, motion pictures, pencils,
scientific instruments, cerium, and typewriters) _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Total _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

60

1953

$32,270,831
19,465,614
12,095,662
72,277,798

$34,514,538
16,988,102
6,498,570
108,454,676

434,565,343
___________
570,675,248

379,261,949
___________
545,717,835

Chapter Eight

ECONOMIC AND
STATISTICAL REPORTS
This activity of the Commission consists of three kinds: First, assistance in the
development,
investigation, and trial of the Commissions antimonopoly cases; second, the preparation of
quarterly summaries of balance sheet and income statement data of United States
corporations; and third, the preparation of reports on public questions having to do with
competition and monopoly for submission to Congress or the Executive.

ASSISTANCE IN LEGAL CASE WORK
The Commission sought to bring economics to bear on antimonopoly cases much more
than in the p est. Such assistance may be provide d at four successive levels:
1. Initiation of cases.—Economic criteria are relevant as to whether particular complaints
should. be investigated, the relative importance to be attributed to different cases, the amount
of business affected, the seriousness of the economic impact of the alleged violation, and the
likelihood that What could be done about; it will be effective.
2. Development of a theory of the case.—Complex cases may be pen dent upon an
acceptable economic theory as well as upon a valid legal theory. This necessarily raises the
question as to the type of remedy desired and the economic consequences of such remedy.
Questions of this type cannot adequately be covered by legal analysis alone.
3. Investigation.—Careful and proper adjudication of restraint of trade and Clayton Act
cases requires the development of statistical and marketing information. Economic analyses
can contribute to the planning of the investigation as well as to its actual conduct, and thus
prevent serious deficiencies in the work.
4. Decision.—Economic analysis to evaluate the facts may be relevant at either or both
of two states: (a) In determining whether a complaint should issue and, if so, on what theory’
and (b) after trial, in formulating the findings and determining the scope of the order.
The relevant economic and marketing factors vary from case to case. The market, the
industry, and the type of violation
61

involved form the frame of reference. The tests in a merger case under amended section 7
of the Clayton Act might be quite different from those in a restraint of trade case brought
under section of the Federal Trade Commission Act.
Competition which the antitrust laws seek to preserve cannot be defined in terms of
absolute or perfect competition. It is recognized that the public policy of the antitrust laws
is governed by the reality that imperfect competition exists in most competitive markets. This
concept is referred to as "workable" or "effective" competition. Various tests, standards, and
criteria have been suggested for determining whether competitive conditions in a particular
market comply with the requirements of the antitrust laws.
During the fiscal year, attention was given to carrying out the above-stated objective of
the Commission and as a result economic analysis was utilized in a greater number of
antimonopoly cases than in the past. Among these were the following:
1. A group of 24 cases involving manufacturer’s cooperative advertising in the women’s
apparel industry were considered for the economic effects of the practice in view of its
general prevalence in the industry. The economic analysis revealed numerous instances
wherein advertising allowances were not ordered to all customers on an equal basis.
2. Two cases concerning alcoholic beverage manufacturers were submitted to economic
analysis to determine whether the actions of the companies, through mergers and
acquisitions, had the effect of promoting a monopolistic position in the industry, and whether
the companies had hindered unduly the operations of competitors by restricting their access
to sources of supply. The economic analysis showed that although the companies did not hold
a monopoly in the strictest technical sense, their acquisitions substantially reduce d the
competition potentialities of the industry. Not only had active competitors been absorbed an
d potential competitors foreclosed from idle productive facilities, but new firms lad not
entered the market because of the difficulty in gaining access to a segment of the market.
3. The economic staff worked with the Commissions attorneys in the development of the
theory and the investigation in a case concerning monopolistic practice, in the iron and steel
scrap industry. Economists and attorneys teamed to lay out a plan for field investigation and
collection of data through questionnaires, for analysis of the information obtained, and for
preparing testimony to be used il trying the case.
Mergers and acquisitions.— Arrangements were made for the Commissions Bureau of
Economics to take initial responsibility for development of merger and acquisition cases
brought under amended
62

section 7 of the Clayton Act. The Bureau was to review mergers and acquisitions which came
to its attention and make preliminary analyses of such actions when it appealed there would
be a lessening of competition. It also makes recommendations to the Bureau of Investigation
for further action, such as further investigation or recommendation for issuance of formal
complaint. After consultation between the two Bureaus and a decision being reached that the
acquisitions or merger would be likely to impede competition, an attorney and an economist,
working together under the direction of a project attorney, developed the theory of the case
and carried forward the investigation and trial.
An excellent example of this procedure in practice during the year was a case involving
acquisition by a large paper company of one of its two significant competitors. The alleged
effect of The acquisition may be substantially to lessen competition or to tend to create a
monopoly. The legal and economic staffs of the Commission have worked closely together
at each step in the development of this case, including the theory of the case, the field
investigation, and the market survey investigation. Both staffs will continue to work together
in preparation of materials for pretrial conference and trial, and in preparing the trial brief.
Included in the economic aspects of this case has been a marketing survey of the area served
by these two companies in an effort to determine tile degree of dependence of buyers of the
relevant products upon the acquiring company, both before and after purchase of its
competitor. This-`was tile first time tile Commission hld used the survey technique to
determine injury to competition caused by mergers and acquisitions.
Statistical analysis.—Statistical analysis was used in Commission cases in the preparation
and trial of both antimonopoly and deceptive practice cases.
Typical example of such assistance was a deceptive-practice case in which the respondent
introduced statistical evidence in support of the claims of the effectiveness of a drug. The
evidence was such that its reliability could not be easily evaluated by other than a highly
trained statistician. In this instance, the statistical staff evaluated the evidence to determine
its degree of reliability and to reveal biases that appeared in the data, assisted in the crossexamination of statisticians acting as witnesses for the respondent, and provided expert
witness testimony for the Commission.
In the market survey made in connection with the coarse-paper case mentioned
previously, the statistical staff assisted in planning the survey and in preparing detailed plans
for tabulation of the data.
Financial Reports.—The Commission’s financial reporting in statistical form was carried
on as a service function for the entire Federal
63

Government in cooperation with the Securities and Exchange Commission. A report,
published quarterly, provides estimates for 46 items of income, expense, assets, liabilities,
and stockholders equity for all United States manufacturing corporations. The data are
broken down into seven asset sizes of manufacturing corporations and 23 groups of
manufacturing industries.
The data provided in this series of reports were used extensively throughout the
Government as a basis for administrative decisions and formulation of policy, as well as
being utilized by industry executives:
1. To measure efficiency by comparing a company’s operating results with the average
performance of companies in the sane line of business;
2. To determine whether to undertake new ventures by comparing the profitability of
various types of business activity;
3. To ascertain the most; profitable industries in which to invest; and
4. As a guide to the relative movement of sales and profits in order to reduce
controversies in wage negotiations.
During the year, effort was made to improve the quality and usefulness of the estimates.
One part of this program was to carry out an intensive follow-up of a sample of
nonrespondents in the industries which had the lowest; response rates. Although the overall
response rate for this program was unusually high, certain biases might have been introduced
into the estimates by assuming nonrespondents are like respodents. Indications were that the
financial characteristics of the two groups are substantially different. Intensified follow-up
of nonresiondents made it possible to evaluate and eliminate these biases. Also increased
effort was devoted to improving the overall response rate.
Another refinement of the statistical estimates Noms the improvement of the computation
of the sampling error for each of the thousand estimates for: financial items made each
quarter. The sampling error, which may be expressed as a percent of the estimate, provides
a measure of the precision which is limited by the sample size of the estimate and enables the
user to determine whether it is sufficiently accurate for his purpose.
Economic reports.—The Commissions economic reports are prepared under the authority
of section 6 of the Federal Trade Commission Act which broadly authorizes the Commission
to require reports and answers in writing to specific questions and to investigate business
organization and conduct and to make public reports on its own motion, upon the application
of the Attorney General, or upon the direction of the President or the Congress. During the
fiscal year 1954, the; following two economic reports were published:
64

Comparison of prewar and postwar profit rates.—The sixth in the series of reports
comparing prewar and rates of return, after taxes, for identical companies in 25 industrial
groups was published on March 31, 1954. This report compared profit rates for the years
1947-52 with the prewar year 1940.
The report shows that profits in relation to stockholders’ investment were higher in 1952
than in the prewar year 1940 in 14 of the 25 industries; but returns were lower in 1952 than
in 1951 for 23 of the 25 industry groups.
A comparison of the level of profitability of the four largest companies in a industry with
the rates of return for all other reporting companies in that industry is contained in the report.
During the postwar period, returns of the larger firms in each industry were generally higher
than those of he smaller firms included in the report. In 15 of the industries, the large firms
tended to show a higher profit rate during the 1947-52 period than the smaller reporting
firms.
An outstanding characteristic of the industrial groupings of the 516 corporations studied
was the continuation into the postwar period of the relationship of profitability which existed
between the largest and smallest companies during the prewar period. If the larger
corporations were more profitable than the smaller firms in the prewar period, they continued
to be more profitable in the postwar period, and if the reverse were true in the prewar period,
it continued to be true in the latter period.
Changes in concentration in manufacturing.—During the year, the Commission
completed and published an additional report in its series on concentration in American
industry, entitled Changes in Concentration in Manufacturing, 1935 to 1947 and 1950. The
report offered aid(a) to measure changes which have taken place in the level of concentration
during the last decade and a half, (b) to provide a base against which future changes in
concentration can be measured, (c) to analyze the association of certain variables with
changes in concentration. The Commission was not concerned in this report with an analysis
of concentration, i.e., whether any particular level of concentration has desirable or
undesirable effects upon economy.
The report was based upon statistics gartered by other agencies of other purposes. Fifteen
years before, the National Resources Committee had reported on the basis of many different
criteria the 1935 percentage position of the 200 largest manufacturing companies. The
opportunity to develop comparable data for 1950 came as a result of a survey of
manufacturing made by the Federal Trade Commission, chiefly for other purposes. Both
studies used the definitions of industries and of value of product or shipments in
contemporary use by other agencies in the collection of statistics on an establishment basis.
65

The 1950 data for individual industries prepared for the Commission by the Bureau of the
Census, and the 1947 data were prepared by the same agency for the Committee on. the
Judiciary of the House of Representatives. Changes in the definition of industries were found
not to affect appreciably the measures of concentration in manufacturing as a whole, but they
did rule out comparisons for the individual industries affected.
With the available data, it was possible to measure changes in concentration between
1935 and 1947 in 114 industries; and between 1935 and 1950 in 30 industries. There were
16 industries with 1050 .shipments exceeding $500 million for which the position of the four
leading employers n 1950 can be compared with that in 1935.
The findings for these industries are as follows:
Percentage of all employees
in the industry
1950
Cigarettes _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Tires and inner tubes _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Tin cans and other tinware _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Synthetic fibers _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Cane sugar refining _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Photographic equipment _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Blast furnaces _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Shortening and cooking oils _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Petroleum refining _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Pulpmills _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Structural and ornamental iron and steel products _ _ _ _ _ _ _ _ _
Malt liquors _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Boiler shop products _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Leather tanning and finishing _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Paperboard boxes _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Prepared animal feeds _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Increase
or decrease

1935
81
78
77
76
69
61
60
56
40
29
20
19
19
18
12
10

90
79
70
75
64
80
58
67
38
24
25
9
19
19
9
15

-9
-1
+7
+1
+5
-19
+2
-11
+2
+5
-5
-10
0
-1
+3
-5

Among the industries for which the report contrasts the 1935 and 1947 share of the value
of shipments made by the four leading shippers, there are seven additional industries with
1950 shipments exceeding $500 million. For these seven industries, the figures are as
follows:
Percentage of the value of
all shipments in the inindustry
1947

Soap and glycerin _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Distilled liquors _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Cottonseed oil mills _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Cement, hydraulic _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Flour and meal _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Confectionery products _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Bottled soft drinks _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

79
75
43
30
29
17
10

1935

Increase
or decrease

74
51
33
30
29
13
9

+5
+24
+10
0
0
+4
+1

The report includes case studies of six industries with substantial increases in concentration.
The former were malt beverages, distilled
66

liquors, cooperage, metal barrels, cottonseed-oil mills and window shades. The industries
studied in which concentration declined were the cutting tools, jigs and fixtures industry, the
products of purchased glass industry, the abrasive products industry, the margarine industry,
the needles, pins and fasteners industry and the motorcycles and bicycles industry.
This report is the latest published in the Commission’s series of economic reports bearing
directly or indirectly upon the concentration of American industry. Different measures may
be used to ascertain the degree of concentration—assets, plant establishments, number of
employees, and so forth. It has been the Commission’s intent to prepare reports which will
outline and analyze the degree of concentration. using all available measures.
Previous to the fiscal year 1954, six reports in the foregoing series on concentration have
been published as follows:
1. The concentration of productive facilities, 1947—Total manufacturing and 26 selected
industries (1947).—This report showed that 46 percent of the total net capital assets of all
manufacturing corporations in the United States in 1947 was concentrated in the 113 largest
man-ufacturers.
2. The present trend of corporate mergers and acquisitions (1947 ) .— This report was
indirectly related to the measurement of concentration in that it shows that during 1940-46,
1,800 formerly independent competitive firms in manufacturing and mining industries had
disappeared as 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
textile and apparel— all predominantly small-business fields.
3. The merger movement: A summary report (1948).—This report called attention to
certain loopholes in the Clayton Act which permitted corporations to purchase the assets
rather than (or in addition to) the stock of competing firms, thereby increasing the degree of
concentration by the larger companies.
4. The divergence between plant and company concentration, 1947 (1950).— divergence
between plant and company concentration was measured in this report for each of 340
manufacturing industries.
5. Interlocking directorates (1950).—This report summarized the interlocking
relationships among directors of 1,000 large manufacturing corporations, and the interlocking
directorates between these corporations and a selected list of banks, investment trusts,
insurance companies, railroad, public utilities, and distributive enterprises.
6. A list 1,000 large manufacturing companies, their subsidiaries and affiliated, 1948
(1951).—Of the 1,000 largest manufacturing corporations which publish financial
statements, the report showed the
67

percentage of stock interest held by the corporations in each of their subsidiaries and
affiliates.
In addition to these reports on concentration, the Commissions economic staff was at the
years end working on another report touching concentration scheduled for publication during
fiscal 1965. This report was designed to provide more precise information on corporate
industry patterns of production. The report will be based on the 1950 operations of the 1,000
largest manufacturing corporations and will have three main topics:
1. The general position of the largest manufacturing companies.
2. Concentration of production in particular fields of manufacture.
3. The diversity of the activities of the largest manufacturing companies.
Tabulations will show diversity of manufacturing activities of the largest companies,
concentration of production in particular areas, and comparisons of the position of the
largest manufacturing companies.
Coffee price investigation.—At the end of the year, the Commission was preparing for
publication the results of its investigation of coffee prices.l This study was initiated in
January 1954, and was designed to determine why green coffee prices had increased fron
$0.58 to $0.96½ between December 1953 and April 1964, and the corresponding increase
in average retail roasted coffee prices from $0.91 to $1.18, with popular brands increasing
to $1.32.
The Commission assigned a team of economists, attorneys, attorney-investigators
statisticians and accountants to devote full time to this investigation. The Bureau of the
Census assisted in preliminary tabulations, and assistance and consultation were furnished
throughout the investigation by the Department of State and the Department of Agriculture,
particularly by members of the Commodity Exchange Authority and the Foreign Agriculture
Service.
Findings.—Upon the investigation the Commission reported that the specific causes for
the price spiral and the continuing high prices were as follows:2
________________
1

The report, entitled Economic Report on the Investigation of Coffee Prices, was published under date of July 30,
1954. Copies may be obtained from the Superintendent of Documents, Government Printing Office, Washington, D. C.,
532 pp. $2.00.
2
Because the opportunities to check quickly the quantitative accuracy of a particular market and analysis with
subsequent market developments are exceedingly rare, it should be pointed out that events in the coffee market
immediately following the completion of the Commissions investigation validated with an unusual degree of accuracy
the conclusion presented in the Commissions coffee report. One of the principal conclusions reached by the Commission
was that supply and demand of green coffee would have been about balanced at a price of 66 cents to 71 cents per pound
rather than at the price of about 96 cents, which was reached in April 1954. Within 7 weeks after the results of the
Commission’s coffee investigation were made public, the price of green coffee had fallen from 96 cents to 69 cents per
pound, or almost midway of the 66 cents to 71 cents range estimated by the Commission.

68

(1) The inadequacy of present crop reporting systems in coffee-growing countries which
permitted other forces to operate on price.
(2) Activities in the New York Coffee and Sugar Exchange, including operations of
private Brazilian speculative interests which produced an upward price spiral.
(3) American speculation and abnormal buying for inventory by United States importers
and large roasters.
(4) Imperfections in the domestic coffee market, with the concentrated state of the coffeeroasting industry placing considerable power in the hands of a few large roasters to influence
price.
(5)The restrictive contract used in futures trading on the New York Coffee and Sugar
Exchange with the result that the coffee futures market is unusually “thin” and restricted, and
hence unduly maneuverable and subject to wider price swings under abnormal speculative
and commercial trading than are consistent with the actual conditions of supply and demand.
(6) Amplification of the sudden and unreasonable price fluctuations intrinsic in a “thin
market” by the failure of the Exchange to institute proper safeguards followed bb regulated
exchanges and to prevent trading abuses and irregularities.
In addition, the report refers to the Brazilian Government decree of December 2, 1953,
advancing the loan rate on coffee from 1,200 cruzeiros per bag to 1,500 cruzeiros per bag.
This event, in a market which was already nervously reflecting higher prices as a result of
downward estimates in the 1954-55 crop, together with the heavy trading in futures by
Brazilian nationals on the New York Coffee Exchange and the accumulation of green coffee
inventories in the United States, appeared to have precipitated the upward spiral of coffee
prices. The downward adjustment of price in the spring of 1954 was brought to an end when
the Brazilian Government announced its new minimum export price of $0.87 per pound. The
price of green coffee in the spot and futures market remained in the neighborhood of Brazil’s
minimum export price after that date, falling whenever the minimum export price was
reduced.
The Commission’s investigation found that the July 1953 frost in Brazil, which had been
advanced as a basic reason for the price increase, had in fact no significant effect on the
1953-54 crop, but did reduce the prospective crop for 1954-55. It would, therefore, be
normal to expect higher prices during the closing months of the 1953-54 crop year, to meet
the anticipated deficiency in the 1954-55 crop. However, the Commission found the price
rise was far in excess of what might have been expected under the competitive laws of supply
and demand—greater than was necessary to accomplish the carryover.
69

It also found that the price spiral could not be explained in terms of increased world
demand. For the several years previously, per capita consumption in the United States had
declined in the face of rising prices, a fact; offset by increased consumption in Western
Europe. However, the study showed that per capita consumption in Europe had just about
regained its pre-World War II level, and unlikely thereafter that it could increase sufficiently
to offset the reduction in United States consumption that would result from current high
prices. On the contrary, nearly all We`,tern European countries except Western Germany
anticipated reductions in consumption following the price increases.
As result of this investigation, the Commission recommended Congress enact legislation
designed to remedy the following market imperfections:
(1) The narrowness of the futures contract.
(2) The inadequacies of basic marketing information.
(3) The trading irregularities, consisting of unpoliced passouts, ex-pit transactions, and
breaches of broker-customer confidential relationships.
It was further recommended that Congress appraise the adequacy of margin requirements
against the facts developed in the report.
In view of the complexities of the codee market, however, it was recommendLed that
Congress take action in providing these rermedies only after appropriate committee hearings
at which representatives of the coffee trade, the New York Coffee and Sugar Exchange, and
the Commodity Exchange Authority be heard.
On the matter of contracts, there appeared to be no unanimity of opinion, or even an
overwhelming majority opinion, in the coffee trade that any particular contract yet devised
would incorporate the features necessary for the desired broadening of the basis of trade.
Coffee, because of its taste and other attributes, is a heterogeneous commodity. Hence, while
the contract can easily be broadened much study will be required before it can be broadened
enough to create properly competitive futures market. Nevertheless, the adoption of a
satisfactory contract should be made mandatory. The contract must be made attractive to the
entire trade, and if conflicts exist the needs of those who use the exchange for hedging should
be preferred over those who use it for speculation.
Moreover, since coffee is produced outside the political jurisdiction of the United States,
an adequate crop reporting system requires cooperation by the coffee-producing countries.
The fundamental problem of inadequate and sometimes misleading market information
cannot be easily or unilaterally solved. As a first step, it was recommended that the Congress
provide for increases in the staffs of United
70

States agricultural reporting officers stationed at embassies in the principal coffee-producing
countries.
Aside from new legislation certain of the irregularities and restraints might perhaps be
remedied through Federal Trade Commission or judicial action which is receiving
consideration.
In conclusion, the report points out that while removal of the market restraints,
imperfections, and irregularities would probably prevent in the future such excessive coffee
price movements as the price spiral of 1953-54, such action would not make the coffee
market freely competitive. The supplies of coffee, and the price at which these supplies move
to market, are affected by minimum export prices, domestic price supports, exchange
regulations, and other policy measures of the coffee-growing countries. However, these
patently lie beyond the judicial and legislative powers of the United States Government.
71

Chapter Nine

SPECIAL STATUTORY FUNCTION
DEFENSE PRODUCTION ACT AND SMALL BUSINESS ACT
OF 1953
Under section 708 of the Defense Production Act of 1950, the President is authorized to
consult with representatives of industry, business, fintncing, agriculture, labor, and other
interests, with a view to encouraging voluntary agreements and programs to further the
objectives of the act. It is further provided that no act, or omission to act, if requested by the
resident pursuant to a voluntary agreement or program approved thereunder and found by the
President to be in the public interest as contributing to the national defense, shall be
construed to be within the prohibitions of the antitrust lasts or the Federal Trade Commission
Act. Copies of such requests must be furnished to the Attorney General and the Chairman
of the Federal Trade Commission. In authorizing the President to delegate to certain officials
his authority under section 708 (b) relating to exemptions from the antitrust laws and the
Federal Trade Commission Act, the statute provides that such officials must consult with the
At;torney General an d the Chairman of the Federal Trade Commission before making any
request or finding under the exemption proviso.
When defense agencies have matters coming within the scope of section 708 of the
Defense Production Act, copies of the restrictive proposals are submitted to the Attorney
General and the Chairman of the Federal Trade Commission. Through interagency staff
consultation, the matters involved are explored and a basis is established for the clearance
provided in the act.. Before such clearance is granted, the matters are examined with the
view, so far as possible, without interference with the defense effort, of minimizing factors
which may tend to eliminate competition, create or strengthen monopolies, injure small
business, or otherwise promote undue concentration of economic power.
72

Under provisions similar to section 708 of the Defense Production Act, production pools
of small business and voluntary agreements and programs are subject to similar requirements
for consultation and clearance by the Chairman of the Federal Trade Commission under
section 217 of the Small Business Act of 1953. All small business pools and voluntary
agreements or programs coming within the scope of the State sections of these statutes were
processed promptly and cleared as presented to the Chairman by the respective sponsoring
agency.
At the close of the fiscal year, 57 industry programs and agreements were in effect under
the Defense Production Act or the Small Business Act of 1953.
338945–5—6

73

Chapter Ten

APPROPRIATIONS AND
FINANCIAL OBLIGATIONS
FUNDS AVAILABLE FOR FISCAL YEAR
Funds appropriated to the Commission for fiscal year 1954 amounted to $4,053,800
(Public 176, 83d Cong.), approved July 31, 1953.

OBLIGATIONS BY ACTIVITIES FISCAL YEAR 1954
1. Antimonopoly:
Investigation and litigation _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ $1,545,397
Economic. and financial _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 326,487
2. Deceptive practices:
Investigation and litigation _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 1,039,549
Trade practice conferences _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 218,951
Wool, fur, and flammable fabrics enforcement _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 268,368
Lanham Act and insurance _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 34,103
3. Executive direction and management _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 363,256
4. Administration _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 249,855

Total _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 4,095,966

OBLIGATION BY OBJECTS, FISCAL YEAR 1954
Personal services _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ $3,763,512
Travel _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 120,906
Transportation of things _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 545
Communication services _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 46,692
Rents and utility services _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 13,438
Printing and reproduction _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 10,644
Other contractual services _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 40,650
Supplies and materials _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 41,564
Equipment _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 7,950
Refunds, awards, and indemnities _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 87
Total _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 4,045,966

74

SETTLEMENTS MADE UNDER FEDERAL TORT CLAIMS
ACT
In reference to section 404 of the Federal Tort Claims Act, the following report, is made:
During the fiscal year 1954 the Commission paid no claims nor were any claims pending.

APPROPRIATIONS AND OBLIGATIONS
Appropriations available to the Commission for the past 3 fiscal years and obligations for
the same period, together with the unobligated balances, are shown in the table below. The
table also lists the number of employees as of June 30 of each year.

Year
1952
1953
1954

Number
of employees
672
642
596

Nature of appropriations

Appropriations

Obligations

Balance

Lump sum(including printing and binding)-_ _ _ _ _do _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _do _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

$4,314,400
4,178,800
4,053,800

$4,310,567.02
4,172,166.79
4,045,966.21

$3,832.98
6,633.21
7,833.79

75

APPENDIXES
Federal Trade Commissioners— 1915–54
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
John Carson
James M. Mead
Stephen J. Spingarn
Albert A Carretta
Edward F. Howrey
John W. Gwynne
Robert T. Secrest
76

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
Michigan
New York
New York
Virginia
Virginia
Iowa
Ohio

Period of service

Mar. 16, 1915–Mar. 18, 1918
Mar. 16, 1915–Jan. 31, 1917
Mar. 16, 1915–May 31, 1918
Mar. 16, 1915–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–Nov. 15, 1949
Feb. 1, 1929–Aug. 28, 1945
May 26, 1933–Oct. 23, 1949
June 26,1933–Sept. 26, 1933
Oct. 10, 1933–June 30, 1934
Oct. 27, 1933–June 30, 1934
Aug. 23, 1934–Feb. 17, 1952
Aug. 27, 1935–Dec. 31, 1948
Oct. 15, 1945–.
Sept. 28, 1949–Mar. 31, 1953
Nov. 16, 1949–.
Oct. 25, 1950–Sept. 25, 1953
June 18, 1952–Sept. 25, 1954
April 1, 1953–Mar. 18, 1918
Sept. 26, 1953–.
Sept. 26, 1954–.

Statutes Pertaining to the Federal Trade Commission
The authority and powers of the Federal Trade Commission in the main are drawn from tbe following
statutes:
1. Federal Trade Commission Act, aproved September 26, 1914 (38 Stat. 717), and subsequently
amended as indicated below.
2. Clayton Act, sections 2, 3, 7, 8 ard 11, approved October 15, 1914 (38 Stat. 730, 731, 732), amended
as indicated below.
3. Webb-Pomerene Export Trade Act, approved April 10, 1918 (40 Stat. 516).
4. Wheeler-Lea Act, approved March 21, 1938 (52 Stat. 111), amending the Federal Trade Commission
Act.
5. Robinson-Patman Act, approved June 19, 1936, and amendment thereto approved May 26, 1938 (49
Stat. 1526; 52 Stat. 446), revising and exteriding section 2 of the Clayton Act.
6. Wool Products Labeling Act of 1939, approved October 14, 1940 (54 Stat. 1128) .
7. Public Law 15, 79th Congress, approved March 9, 1945, "An Act to express the intent of thc Congress
with reference to the regulation of the business of insurance" (59 Stat. 33).
8. Lanham Trade Mark Act, approved July 5, 1946 (60 Stat. 427).
9. Oleomargarine Act, approved March 16, 1950, amending Section 5 of the Federal Trade Commission
Act respecting civil penalties, and section 15 respecting misleading advertisement of oleomargarine or
margarine (64 Stat. 20).
10.Public Law 899, 81st Congress, approved December 29, 1950, the so-called antimerger legislation,
amending and extending section 7 of the Clayton Act (64 Stat. 1125).
11. Fur Products Labeling Act, approved August 8, 1951 (65 Stat. 175).
12. Flammable Fabrics Act, approved June 30, 1953 (67 Stat. 111), and amendment approved August

23, 1954 (68 Stat. 770).
77

General Investigations by the Commission,
since 1915
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. 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.
Investigations, the results of which have been published, are listed below. Following this listing are
unpublished investigations conducted by the Commission.
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/l/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
________________
1

The wartime cost-finding inquiries, 1917-18 (p. 196), include approximately 370 separate investigations.
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.
2

78

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 recommendations 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 Pubic, 328, 75th) in 1937. [Report of the F. T. C. on
Agriculture Income Inquiry, Part I, Principal Farm Products, 1,134 p., 3/2/37 (summary, conclusions, and
recommendations, S. Doc. 54, 75th, 40 p.); Part II, Fruits, Vegetables, and Grapes, 906 p. 6/10/37; Part III,
Supplementary Report, 154 p., 11/8/37; and interim reports of 12/26/35 (H. Doc. 380, 74th, 6 p.), and 2/1/37
(S. Doc. 17, 75th, 16 p.)]
Agricultural Prices. —See Price Deflation.
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., op 3/3/23).
Cartels.—See paragraphs headed Copper Industry, International Phosphate Cartels, Sulphur Industry,
International Electrical Equipment Cartel, International Steel Cartels, Fertilizer (F. T. C.), International
Petroleum Cartels, and International Alkali 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 la,sing-point price system tended

to lessen price cornpetition and destroy the value of sealed bids; concerted activities of manufacturers and
dealers strengthened the systems price effectiveness; and dealer associations practices were designed to
restrict sales to recognized "legitimate" dealers (Cement Inlustry, 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 discounts
and allowances, and prices and margins of chain and independent grocery anl drug distributors in selected
cities. (For subtitles of 33 reports published
_______________
4

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 (3/2/37), p. 26; Agricultural Implement and Machinery
Industry (H. Doc. 702, 75th, 6/6/39), p. 1038; The Present Trend of Corporate Mergers and Acquisitions 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. 12; 1941, p. 19; 1942, p. 9; 1943, p. 9; 1944, p. 7; 1945, p. 8; 1946, p. 12; 1947, p. 12; and 1948, p. 11.
5
See footnote 4 above.
6
Basing-point systems are also discussed in the published reports listed herein under "Price Bases," "Steel Code,"
and "Steel Sheet Pillng."

79

under the general title, Chain Stores, 1931–33, see F. T. C. Annual Report, 1941, p. 201.)
In the Final Report Investigation (S. Doc. 4, 79th, 110 p., o. p., 12/14/34), legal remedies available to
combat monopolistic tendencies in chain-store developnent were discussed.7 The Commission’s
recommendations pointed the way to subsequent enactment of the Robinson-Patman Act (1936) prohibiting
price and other discriminations, and the Wheeler-Lea Act (1938) which amended the Federal Trade
Commission Act so as to broaden the prohibition of unfair methods of competition in section 5 to include
unfair or deceptive acts or practices in interstate commerce.
Cigarette Shortage (F. T. C. and Senate Interstate Commerce Committee Chairman), Wartime, 194445.—In response to complaints from the pubic 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 t;he scarcity was directly traceable t;o the large volune of cigarettes moving to the
armed forces and the Allies; that it was not attributablc 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 though the first World War period
snd afterward, the Commission at different tines investigated anthracite and bituminous coal prices and 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); Prcliminary Report by the F. T. C. on the Production, and Distribution of Bituminous Coal
(H. Doc. 152, 85th, 8p., 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 2/22/16; H. Res. 352, 64th, 8/18/16, and S. Res. 51, 65th, 5/1/17);
Washington, D.C., Retail Coal Situation (5p., 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 coalproducing States or regions: (1) Pennsylvania, bituminous, 103 p., o. p.; (2) Pennsylvania, anthracite, 145
p., o. p.; (2) Illinois, bituminous, 127p., o.p.; (4) Alabama, Tennessee, and Kentucky, bituminous, 210 p., o.
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
_____________________
7

80

See footnote 4, p. 79.

prevent the calling for the monthly reports (denied about 7 years later) led to their abandonment.
Coffee (F.T.C.).—In its 1954 Economic Report of the Investigation of Coffee Prices, the Commission
reported that the coffee price spiral of 1953-54 “cannot be explained in terms of the competitive laws of
supply and demand.” The report lists and discusses six major factors responsible for the price spiral, and
recommends Congressional action to correct some of the “market imperfections” and “irregularities” found.
(523 pp., 7/30/54.)
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.258,
66th, 7p., o.p., 3/18/20).
Concentration in Manufacturing, Changes in, 1935 to 1947 and 1950 (F.T.C.).—This 153-page report
shows that, on the basis of a study of the top 200 companies, concentration in American manufacturing was
2.8 percentage points higher in 1950 than in 1935. The report explores the reasons for the changes in
recorded concentration in individual industries.
Concentration of Productive Facilities (F.T.C.).—In a study of the extent of concentration of economic
power, the Commission reported that 46 percent of the total net capital assets of all manufacturing
corporations in the United States in 1947 was concentrated in the 113 largest manufacturers. The report is
entitled The Concentration of Productive Facilities, 1947 —Total Manufacturing and 26 Selected Industries
(96 p.). See also Divergence between Plant and Company Concentration.
Control of Iron Ore (F.T.C.).—A study of the concentration of iron ore supplies covers the sources and
consumption of iron ore in 1948, an estimate of reserves available to major companies and an analysis of
effect of possible shortage on big and small companies. The Control of Iron Ore (1952).
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), report, Cooperation in Foreign Countries (S. Doc. 171, 68th, 202 p.,

o.p., 11/29/24), recommending further development of cooperation in the United States.
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 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 ore 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.”
81

Corporation Reports.—See Quarterly 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., o. 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.).
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 refineries had fixed prices in violation of the antitrust laws (Cotton seed 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
colorations 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 (lnvestigation of the Cottonseed Industry, preliminary
report, S. Doc. 91, 71st, 4 p.,o.p., 2/28/30, and final report, 207 p., o. 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 was
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 Accounting
for Manufacturing and Wholesaling, H. Doc. 287, 77th, 215 p.,o. p., 6/23/41 ).
Distribution.—See Millinery Distribution.
Distribution of Steel Consumption.—A study to determine the distribution of steel in a time of shortage,
when control over distribution rests with the producers. (1949-1950) The results of the study were
transmitted to the Subcommittee on Monopoly of the Senate Select Committee on Small Business and
published as a committee print. (20p) 3/31/52.
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 subtitles :Part I, Important Food
Products (11/11/43, 223 p., o. p ); Part III, Building Materials —Lumber, Paints and Varnishes, and Portland
Cement (2/19/44,
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50 p.,o.p.); Part IV, Petroleum Products, Automobiles, Rubber Tires and Tubes, Electrical Household
Appliances, and Agricultural Implements (3/2/44, 189 p., o.p.); Part V, Advertising as a Factor in
Distribution (10/30/44, 50 p.); Part VI, Milk Distribution, Prices, Spreads and Profits (6/18/45, 58 p.); Part
VII, Cost of Production and Distribution 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, 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 Department. 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.
Divergence Between Plant and Company Concentration (F.T.C.).—In this 1950 report, the Commission
measured the divergence between plant and company concentration for each of 340 manufacturing industries.
The Divergence between Plant and Company Concentration, 1947 (162 p.) See also Concentration of
Productive Facilities.
DuPont Investments (F.T.C.).—The Report of the F.T.C. on DuPont Investments (F.T.C. motion 7/29/27;
report, 46 p., o.p. processed, 2/1/29) discussed reported acquisition by E.I. du Pont de Nemours & Co. of
U.S. Steel Corp. stock, together weigh previously reported holdings in General Motors Corp.
Electric and Gas Utilities, and Electric Power.—See Power.
together with previously reported holdings in General Motors Corp.
Farm Implements (Senate), Wartime, 1917-18.—The Report of the F. T'. C. on the Causes of High Prices
of Farm Implements (inquiry under S. Res. 223, 65th, 5/13/18; report, 713 p., o. p., 5/4/20) disclosed
numerous trade combinations for advancing prices and declared the consent decree for dissolution of
International Harvester Co. to be inadequate. The Commission recommended revision of the decree and the
Department of Justice proceeded to that end.
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.
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). Agreement 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).
_____________
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."

83

Fertilizer (F. T. C.).—The Commission's 1940 report on The Fertilizer Industry (100 p.) is concerned
primarily with restrictions and wastes which interfere with the supply of plant food materials in the quantities
needed and at prices low enough to facilitate maintenance of soil fertility. The Nation's resources of nitrogen,
phosphate and potash are discussed, and the inter-relationships of producers and mixers are reviewed. The
report also summarizes available information concerning cartel control of nitrogen, phosphates, and potash.
Fish.—See Distribution Methods and Costs.
Flags (Senate), Wartime, 1917-18.—Unprecedented increases in the prices of U. S. flags in 1917, clue
to wartime demand, were investigated (S. Res. 35, 65th, 4/10/17). The inquiry was reported in Prices of
American Flags (S. Doc. 82, 65th, 6 p, o. 1., 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 MeatPacking 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, 300 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 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 Litigation, p. 150.)
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 as 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 Margins (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 reported in vol.
V, and testimony by members of the Commission's staff ( U. S. Congress House Committee on Agriculture,
Future Trading, hearings, 67th, April 25-May 2, 1921) was an important factor in enactment of the Grain
Futures Act
____________
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.

84

(1921). (Further reference to the gain trade is made under Grain Elevators, Grain Exporters, and Grain
Wheat Prices, p. 149.)
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 United States,
pp. 5-13, o.p., 1133/17). 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 (9/15/10, 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, 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 (6/27/19, 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—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., 5/3/276; Competition and Profits in Bread
and Flour (S. Doc. 98, 70th, 509 o., o.p., 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 bead: 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
_____________
10

In connection width its wartime cost finding inquiries, 1917 - 18, p. 96 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).

85

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 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 retorted, 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 of the FlourMilling 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 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.
Food—Meat Packing Profit Limitation (Senate), Wartime, 1917-18.—Following an inquiry (S. Res. 177,
66th, 9/3/19) involving wartime control of this business as established by the U. S. Food Administration in
1917-18, the Commission recommended greater control and lower maximum profits ( Maximum Profit
Limitation on Meat Packing Industry, S. Doc. 110, 66th, 179 p., o. p. 9/25/19 ) .
Food—Milk.—See Distribution Methods and Costs.
Food—Milk and Milk Products (Senate), Wartime, 1917-18.—Covering an inquiry (S. Res,. 431, 65th,
3/3/19) into fairness of milk prices to producers ad of conned-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. 39, 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 Milkshed,
(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,
86

o. p., 9/30/36). The Commission reported that many of the industry's problems could be dealt with only by
the Stats 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., l/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 a 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, 132, 72d, 78 p., o. p., 6/30/32).
Food—Raisin Combination (Attorney General).—Investigating allegations of a combination among
California raisin growers (referred to F. T. C. 9/30/19), the Commission found the enterprise not only
organized in restraint of trade but conducted in a manner threatening financial disaster to the growers. The
Commission recommended changes which the growers adopted (California Associated Raisin Co., 26 p.,
processed, o.p., 6/8/20).
Food—Southern Livestock Prices (Senate).—Although the low prices of southern livestock in 1919 gave
rise to a belief that discrimination was being practiced, a Commission investigation (S. Res. 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,
10/1/13) 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., o. 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, 1/11/34 p., o. p., processed, 6/27/38 ) .
Foreign Trade—Cooperation in American Export Trade (F. T. C.).—This inquiry related to competitive
conditions affecting Americans in international trade. The Export Trade Act, also known as the WebbPomerene 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,
1/28/25) 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.
_________
11

See footnote 8, p. 83

87

Gasoline.—See Petroleum.
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).
Housefurnishings (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 Housefrunishing
Industries, 1018 p., o. p., 1/17/23, 10/1/23, and 10/6/24 ) .
Independent Harvester Co. (Senate), Wartime, 1917-18.—After investigation (S. Res. 212, 65th, 3/11/18)
of the organization and methods of operation of the company which had been formed several years before
to compete with the "harvester trust," but which had passed into receivership, the F. T. C. Report to the
Senate on the Independent Harvester Co. (5 p., release, processed, o. p., 5/15/18) showed the company's
failure was due to mismanagement and insufficient capital.
Interlocking Directorates (F. T. C.).—This 1950 report on Interlocking Directorates summarizes the
interlocking relationships among directors of the 1,000 largest manufacturing corporations. It also covers the
interlocking directorates between these corporations and a selected list of banks, investment trusts, insurance
companies, railroads, public utilities, and distributive enterprises.
International Alkali Cartels (F. T. C.).—In a report (1950) on International Cartels in the Alkali Industry,
the Commission discussed the nature, extent, and effect of international agreements concerning baking soda,
soda ash, and caustic soda to which organized groups of American and European alkali producers were
parties from 1924 until 1946.
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.
International Petroleum Cartel.—A staff study of the activities of the seven major oil companies in
relation to control over the international oil industry. Staff Report to the Federal Trade Commission
submitted to the Subcommittee on Monopoly of the Select Committee on Small Business, U. S. Senate
Committee print No. 6, 82d Cong.—2d sess. 378 p., 1952.
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
88

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 field 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. (International Steel Cartels (1948),115 p., also 12 p. processed summary.)
Iron Ore.—See Control of Iron Ore.
Large Manufacturing Companies (F. T. C.).—This 1951 report, entitled A List of 1,000 Large
Manufacturing Companies, Their Subsidiaries and Affiliates, 1948, shows for each of the 1,000 largest
manufacturing corporations which publish financial statements the percentage of stock interest held by the
corporation in each of its subsidiaries and affiliates. The parent corporations are grouped in 21 major
industries and ranked as to size on the basis of their total assets in 1948, 223 p., 6/1/51.
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., 8/21/10). 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).
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., 3/4/19) 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 1/10/2l, 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 thc F. T. C. on Northern Hemlock and
Hardwood Manufacturers Association (52 p., o p., 5/7/23).
Lumber Trade Association (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., o. p., 2/13/29).
Meat-Packing Profit Limitations.—See Food
Mergers (F. T. C.).—In its 1948 report entitled The Merger Movement: A Summary Report (134 p., o.
p., also 7 p. processed summary) the legal history of the antimerger provisions of the Clayton Act is
reviewed. The report called attention to the loophole in the Clayton Act which permitted 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.'' (See also Corporate Merger.)
89
338945–55—7

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).
Monopolisti;c Practices and Small Business.— study by the staff of the Commission on the effect of
certain monopolistic practices on small business, requested by the Subcommittee on Monopoly of the Senate
Select Commitlee on Small Business. The results were transmitted to the Subcommittee and published as
a committee print by Select Committee on Small Business, U. S. Senate, 82d Cong. (88 p. 3/31/52).
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 flxed prices and
operated used-car valuation or appraisal bureaus essentially as combinations to restrict competition; that
inequities existed in dealer agreements and in certain manfacturers' treatment of some deniers; nud that some
companies' car finance plans developed serious abuses (Motor Vehicle Industry, H. Doc. 468, 76th, 1077 p.,
o. p., (6/5/39). The leading companies voluntarily adopted a number of the Commission's recommendations
as company policies.
National Health 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-Exempt Income (S.
Doc. 148, 68th, 144 p., o. p., 6/6/24) ].
Open-Price Associations (Senate).—An investigation ( S. Res. 28, 69th, 3/17/25) to asccrtain the number
and names of so-called open-price associations, their importance in industry and the extent to which members
maintained uniform prices, was reported in Open-Price Trade Associations (S. Doc. 226, 70th, 516 p., o. p.,
2/13/29).
Packer Consent Decree.—See Food (President) Continued—Meat Packing.
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 enhancenent and the
Commission recommended legislation to repress trade restraints Book Paper Industry— A Preliminary
Report (S. Doc. 45, 65th, 111., o. p., 6/13/17), and Book Paper Industry—Final Report (S. Doc. 79, 65th, 125
p., o. p., 8/21/17)].
Paper—Newsprint (Senate), Wartime, 1917-18.—High prices of newsprint (S. Res. 177,64th, 4/24/16)
were shown to have been partly a result of certain newsprint association activities in restraint of trade.
Department of .Justice Proeeedings resultcd 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 publiishers 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 Papcr 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
90

distributors in supplying paper to publishers of small dailies and weeklies (Newsprint Paper Industry, S. Doc.
214, 71st, 116 p., o. p., 6/30/30).
Petroleum.—See International Petroleum Cartel.
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 tire 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. Rec., 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—Foreign Ownership (Senate).—Inquiry was made ( S. Res. 311, 67th, 6/29/22 ) into
acquisition of extension 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 lines of the great midcontinent oil fields and reported practices of the pipeline
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., o.p.)—pursuant t S. Res. 138, 66th, 7/31/19; Reports of the
F.T.C. on the 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) (19p., 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.
__________
12

See footnote 8, p. 83.
See footnote 8, p. 83. Conditions in one of the midcontinent fields were discussed by the Bureau of Corporations
in Conditions in the Healdton Oil Field (Oklahoma) (116 p., 3/15/15).
13

91

Power—Electric (Senate).—This inquiry (S. Res. 329, 68th, 2/g/25) resulted ln 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 superimposlng 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 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-hauling 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 n modified zone-price system and a
uniform delivered-price 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).
___________________
14

Final reports were published in 1935; a general index in 1937. Some of the volumes are out of print. For report
titles, see F. T. C. Annual Report, 1941, p. 221; and for lists of companies investigated, see F. T. C. Annual Reports,
1935, p. 21, and 1936, p. 36;.
15
Basing-point systems are also discussed in the published reports listed under "Cement," "Steel Code," and "Steel
Sheet Piling" herein.

92

Price Deflation (President).—To an inquiry (3/21/21) of President Harding, the Commission made
prompt reply (undated) presenting its views of the causes of a disproportional decline of agricultural prices
compared with consumers' prices (Letter of the F. T. C. to the President of the U. S., 8 p., o. P.).
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).
Quarterly Financial Reports United States Manufacturing Corporations (F. T. C. and S. E. C.).—This
1947-53 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
Exchange 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 nonregistered corporations. The sample has
been designed so that the two sets of data can be combined to provide estimates for 21 major industry groups
(increased to 23 major groups in 1951) as well as the aggregate for all manufacturing corporations. The
Quarterly Financial Reports formerly were known as Industrial Corporation Reports.
Quarterly Financial Report, United States Retail and Wholesale Corporation.—This presents estimates
of the income statements and balance sheets for the total operations of United States wholesale trade
corporations (merchant wholesalers only) and retail trade corporations, for various industrial segments of
retailing and merchant wholesaling, and for different sizes of business in retailing and merchant wholesaling.
These estimates are for the year 1950 and each of the four quarters of 1951. There were compiled from
financial statements received from individual corporations.
Quarterly Financial Report, Five Manufacturing Industries, 1947-51.—This presents averages of the
quarterly income statements and balance sheets for the total operations of representative samples of
manufacturing corporations (with average annual sales within a specified range) in specific industries and
in a specific geographical region.
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 Textiles.
Raisin Combination.—See Food.
Range Boilers.—See Price Bases.
Rates of Return in Selected Industries (F. T. C.).— comparison of the prewar (World War II) and postwar
rates of return on stockholders' investments a£ter taxes for more than 500 identical manufacturing
corporations. The present report, published annually, covers the years 1940 and 1947-52, includes 25 selected
manufacturing industries.
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.
93

1480, 65th, 3 p., o. p., 12/2/18). Other reports were: A Report on Resale Price Maintenance (Doc. 145, 66th,
3 p., o. 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., o. p., 6/22/31). The Report of the F. T. C. on Resale Price
Maintenance, o. p., 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 nonprice-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, 2/20/34) 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.
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 basing-point system under the amended code (Report of the F. T. C. to the President in Response
to Executive Order of May 30,1984, 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, 11 p., o. p., (6/5/22 and 9/7/22).
Steel Costs and Profits.—See Wartime Cost Findings, 1917-18.
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 o. p.) demonstrated the
existence of collusive bidding because of a continued adherence to the basing-point system18 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
_____________
16

The salary lists do not appear in the report but are available tor inspection.
As of the same date, the N. R. A. published its Report of the National Recovery Administration on the Operation
of the Basing-Point System in the Iron and Steel Industry (175 p., processed). The basing-point system is also discussed
in published reports listed under "Cement" and "Price Bases" herein.
18
See footnote 15, p. 92.
17

94

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.
Textiles (President).—President Roosevelt (Executive Order of 9/26/34) directed an inquiry into the
textile industry's labor costs, profits, and investment structure to determine whether increased wages and
reduced working hours could be sustained under prevailing economic conditions. Reports covering the
cotton, woolen and worsted, silk and rayon, and thread, cordage and twine industries were: Report of the F.
T. C. on Textile Industries, Parts I to VI, 12/31/34 to 6/20/35, 174 p.,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 into the Last 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.
Textiles—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 Yarns, 94 p., o. p., 4/14/21).
Textiles—Cotton Growing Corporation.—See Foreign Trade.
Textiles—Cotton Merchandising (Senate).—Investigating abuses in handling consigned cotton (S. Res.
252, 68th, 6/7/24), the Commission made recommendations designed to correct or alleviate existing
conditions (Cotton Merchandising Practices, S. Doc. 194, 68th, 38 p., o. p., 1/20/25).
Textiles—Cotton Trade (Senate).—Investigation (S. Res. 262, 67th, 3/29/22) involved a decline in cotton
prices, 1920-22, as reported in Preliminary Report of the F. T. C. on the Cotton Trade (S. Doc. 311, 67th,
28 p., o. p., 2/26/23). After a second inquiry (S. Res. 429, 67th, 1/31/23), 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 Commission's recommendations.
Textiles—Woolen Rag Trade (F. T. C.), Wartime, 1917-18.—The Report on the Woolen. Ray Trade (90
p., o. p., 6/30/19) contains information gathered during
95

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.
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., 12/25/25).
Tobacco Marketing—Leaf (F. T. C.).—Although representative tobacco farmers in 1929 alleged
existence of territorial and price agreements among larger manufacturers to control cured leaf tobacco prices,
the Commission found no evidence of price agreements and recommended production curtailment and
improvement of marketing processes and cooperative relations (Report on Marketing of Leaf Tobacco in the
Flue-Cured Districts of the States of North Carolina and Georgia, 54 p., o. 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, 102 p., o. p., 12/11,/20, and Prices of Tobacco Products, S.
Doc. 121, 67th, 109 p., o. p., 1/17/22).
Trade and Tariffs in South America (President).—Growing out of the First Pan-American 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, China, Bolivia, and Peru (246
p., o. p., 6/30/16).
Twine.—See Sisal Hemp and Textiles.
Utilities.—See Power.
Wartime Cost Finding (President), 1917-18.—President Wilson directed the Commission (7/25/17) to
find the costs of production of numerous raw materials and manufactured products. The inquiry resulted in
approximately 370 wartime cost investigations. At later dates reports on a few of them were published,19
including: Cost Reports of the F. T. C.—Copper (26 p., o. p., 6/30/19); Report of the F. T. C. on Wartime
Costs and Profits of Southern Pine Lumber Companies (94 p., /o. p., 5/1/22); and Report of the F. T. C. on
Wartime Profits and Costs of the Steel Industry (138 p., o. 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 un justifiable 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 on Wartime Costs and Profits for Manufacturing
Corporations, 1941 to
_________________
19

See footnote 10, p. 85.
Approximately 260 of the wartime cost inquiries are listed in the F. T. C. Annual Reports, 1918, pp. 29-30, and
1919, pp. 38-42, and in World War II Activities of the F. T. C., 1917-18 (69 p., processed, 7/15/40).
20

96

1945 (30 p., processed, with 10 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 1940.
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.

The following are unpublished investigations by the Commission for the use of
other government agencies:
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.—For Production Board Order L258 of 1/20/43 prohibited production of salt and petroleum-base 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.
Capital Equipment (W. P. B.), Wartime, 1942-43.—For the War Production Board, a survey was made
in connection with Priorities Regulation No. 12, as amended 10/3742, of concerns named by it to determine
whether orders had been improperly related to secure capital equipment or whether orders that had been
rerated had been extended for the purpose of obtaining capital equipment in violation of priorities
regulations.
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.
Commercial Cooking and Food and Plate Warming Equipment, Manufacturers of (W. P. B.), Wartime,
1942-43.— The Commission conducted an investigation for the War Production Board to determine whether
manufacturers of commercial cooking and plate warming equipment were complying with W. P. B.
Limitation Orders L-182 and L-182 as amended 3/2/43; Conservation Orders M-126 and M-9-o, as amended;
and Priorities Regulation No. 1.
Contractors, Prime, Forward Buying Practices of (W. P.B.), Wartime, 1942-43.—The matter of
procurement, use, and inventory of 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.
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 comply97

ing with governing W. P. B. Preference and Conservation Orders M-9-a and b, and M-9-c.
Copper, Primary Fabricators of (W. P. B.), Wartime, 1941-42.—A survey and inspection of a specified
list of companies which used a large percentage of all refinery copper allocated, and at the same time
represented a fair cross-section of the industry, were made to ascertain the degree of compliance accorded
to preference, supplementary, and conservation orders and regulations of the Director of Priorities, Office
of Production Management (later the War Production Board ) .
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 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, M-43,
M-38, M-11, M-11-b, M-126, L-81, L-31, and L-131-a, all as amended.
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.
Fertilizer and Related Products (O. P. A.), Wartime, 1942-43.—At the request of O. P. A. (June 1942),
the Commission investigated costs, prices, and profits in the fertilizer and related products industries. The
inquiry developed information with reference to the operations of 12 phosphate rock mines of 11 companies,
and 40 plants of 24 companies producing sulphuric acid, superphosphate, and mixed fertilizer. One of the
principal requirements of the inquiry was to obtain information concerning costs, prices, and profits for 103
separate formulas of popular-selling fertilizers during 1941 and 1942.
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 3/5/43. 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. P. A.
Food—Bread Baking (O. P. A.), Wartime, 1941-42.—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.
98

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.
Fruit Growers and Shippers (W. P. B.), Wartime, 1943-44.—This investigation was requested by the War
Production Board to determine whether 7 grape growers and 12 grape shippers, all located in California, were
in violation of W. P. B. Order L-232 with respect to quotas affecting the use of lugs (wooden shipping
containers).
Furnaces, Hot Air, Household (W. P. B.), Wartime, 1943-44.—The Commission made a Nation-wide
survey for the War Production Board of the operations of one of the largest manufacturers in the United
States of household hot air furnaces, to determine whether its practices in selling and servicing domestic
heating plants were in violation of Orders L-79 and P-84, and other applicable regulations and orders of W.
P,. B.
Fuse Manufacturers (W. P. B.), Wartime, 1942-43.—For the War Production Board the Commission
investigated and reported on the activities of representative fuse manufacturers whose operations were
subject to W. P. B. Limitation Orders L-158 and L-161, as amended.
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.
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.
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.
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-9c.
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.
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 powerdriven shears, presses, hammers, bending ma99

chines, 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.
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.
Optical Decree (Attorney General).—The Commission investigated (inquiry referred to F.T.C. 8/12/52)
the manner in which an antitrust consent decree entered (Sept. 1948) against the American Optical Company
and others, restraining them from discriminatory and monopolistic practices, was being observed, and report
(2/10/54) to the Attorney General.
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 M139, 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 63 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—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.
Petroleum Decree (Attorney General).—The Commission investigated ( inquiry referred to F. T. C.
4/16/36) the manner in which a consent decree entered (9/15/30) against Standard Oil Co. of California, Inc.,
and others, restraining them from monopolistic practices, was being observed, and reported (4/2/37) to the
Attorney General.
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 supply 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, Manufactures of; Electric Lamps, Manufacturers of; 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.
Quinine, Manufacturers and Wholesalers of (W. P. B.), Wartime, 1942-43.— At the instance of the War
Production Board, investigation was made to deter100

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.
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 kind complied with the
copper orders, that is, W. P. B. General Preference Order No. M-9-a, Supplemental Order No. M-b, and
Conservation Order m-9-c, 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 arid 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.
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. P. M.), Wartime, 1941-42.—This investigation covered practically every steel mill in
the country and was conducted for the purpose of determining the manner in which the priorities and orders
promulgated by the Office of Production Management were being observed. i. e., the technique used in the
steel industry in meeting the requirements of O. P. M. (later the War Production Board) orders and forms
controlling the distribution of pig iron, iron and steel, iron and steel alloys, and iron and steel scrap.
Textile Mills, Cotton (W. P. B.), Wartime, 1943-44.—For the War Production Board the Commission
conducted a compliance investigation of manufacturers of cotton yarns, cordage, and twine to ascertain
whether they were in violation of Priorities Regulation 1, as amended, by their failure to fill higher rated
orders at the time they filled lower rated orders.
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.
War Materials 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 Inquiries, 1941-45.—To aid in the 1941-45 war program, F. T. C. was called upon by other
Government departments, particularly the war agencies, to use its investigative, legal, accounting, statistical
and other services in conducting investigations. It made cost, price, and profit studies; compiled industrial
corporation financial data; investigated compliance by basic industries with W.W. II. priority orders; and
studied methods and costs of dis101

tributing 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.

102

U. S. GOVERNMENT PRINTING OFFICE: 1955


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102