ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION FOR THE FISCAL YEAR ENDED JUNE 30, 1920 WASHINGTON GOVERNMENT PRINTING OFFICE 1920 FEDERAL TRADE COMMISSION. VICTOR MURDOCK, Chairman. HUSTON THOMPSON. WILLIAM B. COLVER. NELSON B GASKILL. JOHN GARLAND POLLARD. J.P. YODER, Secretary. CONTENTS. Page. Summary 5 Administrative Division 9 Quarters 13 Personnel 13 Appropriations and expenditures 18 Publications Issued 23 Economic Division 25 Coal 26 Steel 28 Cotton textiles 29 Paper 30 Petroleum 30 Farm machinery 31 Leather and shoes 32 Grain trade 33 Lumber 34 Flour 35 Animal feeds 36 Sugar 36 Milk 37 Meat 38 Marketing of perishable foods 39 Southern live-stock prices 40 Canned foods 41 Tobacco 42 Legal Division 43 Trade practice submittal 43 Gratz decision 47 Coal and steel cases 48 Commercial bribery 52 Procedure of the Commission 54 Methods of competition condemned 56 Export Trade Division 63 Summary of the export trade act 65 Statements to be filed by export associations 66 Associations which have filed papers during the fiscal year 67 Extraterritorial Jurisdiction of the export trade act 68 Cooperation with other Government departments 69 Foreign Trade Series No.1 70 Enemy Trade Division 71 Patents 71 Trade-marks and copyrights 74 EXHIBITS. 1. Federal Trade Commission act 77 2. Provisions of the Clayton Act which concern the Federal Trade Commission 83 3. Rules of practice 87 4. Extracts from trading with the enemy act 91 5. First report from export associations 103 6. Annual report from export associations 106 7. Webb-Pomerene law 108 8. Proceedings pending and disposed of 111 9. California Association Raisin Co 183 3 ANNUAL REPORT, FISCAL YEAR 1919-1920. SUMMARY. WASHINGTON, September 16, 1920. To the Senate and House of Representatives: In compliance with the statute the Federal Trade Commission herewith submits to the Congress its annual report for the fiscal year ended June 30, 1920. During the year, John Franklin Fort, of New Jersey, a member of the Commission, resigned. Nelson B. Gaskill, of New Jersey, was appointed to succeed him. John Garland Pollard, of Virginia,. was appointed to fill the vacancy created by the resignation of Joseph E. Davies, of Wisconsin. The personnel of the Commission on June 30, 1920, therefore, consisted of Victor Murdock, of Kansas (chairman); Huston Thompson, of Colorado . William B. Colver, of Minnesota, Nelson B. Gaskill, of New Jersey; John Garland Pollard, of Virginia. The Federal Trade Commission was organized March 16, 1915. During the war the attention and energies of the Commission were diverted to a considerable degree to work in aid of the war-making branches of the Government. During this fiscal year many tasks, interrupted by war work, were resumed and brought to completion, and reduction in the staff was made. The Commission promptly reduced its personnel upon the signing of the armistice, making total reductions of nearly 50 per cent in numbers. The work of the Commission is divided into two major parts-the work of economic inquiry, formerly prosecuted by the Bureau of Corporations, of which the Federal Trade Commission is the successor, and the legal proceedings, which it is directed to carry forward by its organic act and by the Clayton law. Besides these two major divisions the Commission is charged, first, under the terms of the trading-with-the- enemy law, with the issuance of licenses under patents owned by alien enemies and the supervision of licensees operating under licenses granted by the Federal Trade Commission, and, second, with the administration of certain sections of the act to promote export trade. During the year the economic studies which have been made have been many and varied and are set forth in detail hereafter. It is proper to state here , however, that while these economic inquiries 5 6 ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION. may be inaugurated by the Commission on its own initiative or made at the direction of the President, they are more frequently undertaken by direction of the United States Senate or the House of Representatives, or both. Among such inquiries were those pertaining to petroleum, farm machinery, leather and shoes, animal feeds, flour, sugar, milk, combed cotton yarns, canned goods, tobacco, and Southern livestock prices. During the fiscal year the Economic Division also continued the work of compiling for publication cost data in certain basic indus-tries, notably coal, which data had been collected for the use of governmental agencies during the war, and the publication of which was of interest to the public and industry. Publication was made of later volumes of the inquiry into the meat-packing industry, also of the wholesale marketing of foods, private car lines, and the woolen rag trade. In addition, the Commission, through its Economic Division, projected current periodic reports on fundamental industries, as coal and steel. The usefulness of such reports in basic industries, in making public production costs in detail and sales realization, in meeting natural problems currently, appears undeniable. It was believed that the publication of information of basic industries, without identification of individual concerns, was essential in furnishing an index of conditions which would enlighten the public and industry, basic and otherwise. Therefore an effort was made by the Commission to select representative basic industries and by a wholly impartial compilation of the current history and development of these industries, be able to show to any one the truth in the current situation. The work of the Commission, in this matter, and the matter of the suits which have hampered the collection of such information are treated at length in the body of the report. The Economic Division has continued its periodic reports of statistics of the paper industry. Other cost investigations were conducted which are enumerated elsewhere in the report. In the Legal Division of the Commission, the docket shows for the fiscal year a large increase in the number of applications for the issuance of complaints alleging the use of unfair methods in competition received by the Commission. Nearly 2,000 such applications have been received. These applications have been docketed by the Commission and most of them have been acted upon by the Commission, after investigation, either by dismissal or by the issuance of a formal complaint. In this work the Commission touches every phase of trade. The procedure of the Commission, the number and nature of the cases handled by the Commission, and the dis- SUMMARY. 7 position of the cases are given in detail in the body of the report. Explanation of the “trade practice submittal” through which the Commission is undertaking to inform itself of practices in trade, as viewed by trade itself, is also given . Other important actions of the Commission in controverted trade practices are set forth. The report of the Commission to the Attorney General in the case of the California Raisin Association case is given. (Exhibit 9.) During the year the work of the Commission reached a point where through final disposition of a large number of cases, it was possible for the Commission's orders and the law under which it works to become the subject of review in the courts. This phase of the matter is treated later in this report. The division of the Commission which administers the export-trade law has now on file the papers of 43 associations, comprising approximately 732 concerns, distributed over 43 States of the United States. The products and commodities exported by these associations is given hereafter in detail, together with an account of the operations under this law, and the work of the Commission in administering it and its cooperation with other agencies of the Government. In the Enemy Trade Division, the Commission has administered the patents, trade- marks, and copyrights owned or controlled by enemies or allies of enemies, which came under its jurisdiction during the war. During the year the Commission exercised supervision over the licenses issued. Under the operation of these licenses $188,957.61 was turned over to the Alien Property Custodian as directed by law. ADMINISTRATIVE DIVISION. The sections in this division are the ones generally adopted in all Federal Government departments and establishments to care for the business end of the work, and changes in arrangement and functions are less liable to occur in this than in the other divisions of the Commission where the character of the work is continually varying according to the demands made upon them through the several sources of direction that govern their scope and activities. For these reasons there has not been any material change in the management, organization, and procedure of this division; all of its functions are largely governed by general statutes and orders applicable to all work of this character wheresoever situate in the Government service; and in carrying into effect the activities of this branch of the Commission’s work every endeavor is made to use a business sense that is not clouded with so-called “red tape” and yet have all operations comply strictly with the statutory requirements. The sections in this division are: Auditor’s office and disbursing clerk, having charge of the fiscal affairs. Chief clerk's office, in charge of building and quarters, purchase of supplies and equipment, supervision of the messenger, mechanical, and laboring forces. Personnel section, in charge of all matters relating to appointments, promotions, demotions, transfers, changes in designation, and the relationship between this Commission and the Civil Service Commission. Mail and files section, where the receipt and distribution of the mail takes place and where all the papers and records of the Commission except those of the docket section are finally receivable and cared for.