ANNUAL REPORT OF THE OF THE FEDERAL TRADE COMMISSION FOR THE FISCAL YEAR ENDED JUNE 30, 1924 WASHINGTON GOVERNMENT PRINTING OFFICE 1924 FEDERAL TRADE COMMISSION HUSTON THOMPSON, Chairman. VERNON W. VAN FLEET. NELSON B. GASKILL. JOHN F. NUGENT. CHARLES W. HUNT. OTIS B. JOHNSON, Secretary. II CONTENTS. Page. Introduction 1 Administrative Division 4 Personnel 4 Fiscal affairs 6 Publications 8 Docket 9 Library 9 Quarters 9 Legal Division 10 Federal Trade Commission Act 10 Clayton Act 11 Summary 13 Methods of competition condemned 15 Special legal inquiries 19 Gasoline 19 Radio 19 Procedure and statistics on legal work 20 Preliminary inquiries 20 Applications for complaints 22 Complaints, including orders to cease and desist 24 Dismissal of complaints 26 Typical complaints 28 Monopoly--Radio 28 Conspiracy--Farm machinery 29 Price fixing--Tobacco 29 Price maintenance--Groceries 29 Price fixing--Coal 30 Misbranding--Soap 30 Misbranding--Silver plate 30 False advertising--Furniture 30 Stifling competition--Stationery 31 Photoengravers’ case 31 Austin Nichols & Co.--Groceries 31 Motion picture 32 Cream of wheat 32 Bethlehem-Lackawanna steel merger 32 Pittsburgh Coal Co. of Wisconsin 33 Corn Products Refining Co.-Table sirup 33 Orders to cease and desist 34 Typical orders 36 United States Steel Corporation 36 Minneapolis Chamber of Commerce 40 Eastman Kodak Co 41 United Typothetae of America 42 Roofing material cases 43 Pacific States Paper Trade Association 43 Encyclopedia 43 Underwear 44 Process engraving 44 Court cases 44 Supreme Court 44 Juvenile Shoe Co 45 Claire Furnace Co 45 American Tobacco Co. and P. Lorillard Co 46 Grain cases 47 Raymond Bros--Clark Co 47 United States Circuit Courts of Appeals 48 Fox Film Corporation 48 United Typothetae of America 50 III IV CONTENTS Legal Division--Continued. Court cases--Continued. United States Circuit Courts of Appeals--Continued. Page S. E. J. Cox et al 50 Aluminum case 51 Thatcher Manufacturing Co. 52 Swift & Co 52 Armour & Co 53 Chicago Portrait Co 53 Western Meat Co 54 Minneapolis Chamber of Commerce 55 Butterick Co 55 Occidental Oil Corporation 55 Resale he pr ice maintenance in tobacco products 56 Pacific States Paper Trade Association 56 Utah-Idaho Sugar Co 57 Q. R. W. Music Co 58 Sealpax Co. Underwear 58 Dr. Herman an Heuser--Nonalcoholic beverages 59 The Pearsall Butter Co 59 John Bene & Sons 59 National Biscuit and Loose-Wiles Cos. 60 Courts of the District of Columbia 61 Mannered Coal Co 61 Shade Shop 61 Legal work of the commission by fiscal years (table) 62 Court proceedings upon orders (table) 63 Miscellaneous court proceedings, etc. (table) 63 Trade practice submittals 65 Music Publishers’ Association 66 Subscription Book Publishers’ Association 68 Band Instrument Manufacturers 70 Economic Division 75 Gasoline 79 Cotton trade 80 Taxation and tax-exempt income 82 Flour milling 84 Grain trade 87 House furnishings 88 Anthracite 90 Bread 90 Cooperation with Legal Division 91 Aid to other branches of the Government 91 Senate Committee on Public Lands 91 United States Coal Commission 91 Inquiries made at request of the Congress, the President, or the Attorney General 92 Fertilizer--Pipe lines--Gasoline--Sisal hemp 92 Anthracite--Bituminous coal 92 Newsprint paper--book paper--Flags--Meat packing 93 Farm implements--Milk 93 Cotton yarn--Pacific-coast petroleum--Petroleum prices 94 Commercial feeds--Sugar--Southern livestock 94 Shoe costs amid prices--Tobacco prices 94 Tobacco prices--Export grain--House furnishings 95 Flour milling--Cotton trade--Fertilizer 95 Foreign ownership in petroleum industry 96 Cotton trade--Calcium arsenate--Radio 96 Bread--Cotton merchandising practices--Food inquiry 97 War-time cost findings-Wheat prices 97 Gasoline--Raisins--Lumber industry 98 Export Trade Division 99 Associations under the Webb Export Trade Act 99 Provisions of the export trade act 101 Provisions of section 6 (h) of the Federal Trade Commission act 102 Foreign trade complaints investigated 103 Liaison committee representation 104 Trading with enemy act 105 CONTENTS V EXHIBITS Page l. Federal Trade Commission act 109 2. Provisions of the Clayton Act 115 3. Export trade act 119 4. Rules of practice before the Federal Trade Commission 121 5. National Biscuit ease 125 6. B. S. Pearsall case 131 7. John Bene & Sons 134 8. American Tobacco case 139 9. Raymond Bros--Clark Co. case 142 10. Fox Film Corporation 145 11. Proceedings disposed of during the year 149 Orders to cease and desist 149 Cases dismissed 189 12. Proceedings pending June 30, 1924 195 ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION FOR THE FISCAL YEAR ENDED JUNE 30, 1924 INTRODUCTION To the Senate and House of Representatives: Pursuant to statute the Federal Trade Commission herewith submits to the Congress its annual report for the fiscal year July 1, 1923, to June 30, 1924. The commission, which was created by an act of Congress approved September 26, 1914, was organized March 16, 1915. The present is the tenth annual report to Congress. On June 30, 1924, the commission consisted of Huston Thompson, of Colorado, chairman; Vernon W. Van Fleet, of Indiana, vice chairman; Nelson B. Gaskill, of New Jersey; John F. Nugent, of Idaho; and Charles W. Hunt, of Iowa. Mr. Hunt entered upon duty on June 16, 1924, to succeed Victor Murdock, of Kansas, who resigned as of January 31, 1924. Of the work accomplished during the year special mention is made of : (l) The order to cease and desist issued against the United States Steel Corporation and its subsidiaries requiring discontinuance of the Pittsburgh plus basing point for steel; (2) Report to the President on the Gasoline Situation in 1924; (3) Report to the House of Representatives on the Radio Industry; (4) Report to the Senate on the Cotton Trade, and dealing chiefly with the operations of cotton exchanges and marketing conditions. The commission here reports its administration of the Federal Trade Commission act, approved September 26, 1914 (38 Stat. 717) ; delegated sections of the Clayton Act, approved October 15, 1914 (38 Stat. 730); and the export trade act, approved April 10, 1918 (40 Stat. 516). The work goes steadily forward. The law of unfair competition is being developed with resulting clarity in the channels of trade, valuable and pertinent facts relating to economic subjects amid business matters are being gathered and published, and the export trade act having to do with associations engaged solely in export trade is being administered. Most pressing is the increasing demand upon the energies of the commission are the field of unfair competition. To this demand relief to the utmost is afforded, but the figures tell the story of efforts only partially effective because of lack of men and money. And the calendar of cases undisposed of at the end of the year does not diminish. A 10-years’ view of the deception, bad faith, fraud, and oppression l 2 ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION of which the business world and the public complain teaches that the certain and speedy challenge of this commission to such practices is the effective remedy. But the commission must report a docket of cases grown old and age necessitates reinvestigation by reason of changed conditions or customs and the unknown whereabouts some of whom may be dead. Therefore a case grown witnesses, of old not only adds costs not contemplated, but, more serious, the remedy is postponed or fails. Coming to the economic duties, two precedents are recorded. First, a deficiency was asked through appropriate agencies, and second, an inquiry respecting flour and bread under a Senate resolution could not be commenced because funds were not available, and the Senate was so informed. The request for deficiency appropriation was submitted in order to respond to the call of the President of the United States £or an “immediate” inquiry into the gasoline situation. The deficiency was refused, but the inquiry was made by delaying current work, and the report submitted. The inquiry into the production and distribution of flour and bread, called £or by the Senate resolution, while considerably delayed, is now under way. Otherwise the economic work and likewise the work connected with the export trade associations has been normal. Briefly, the commission has been engaged during the year, as heretofore, in the prevention of unfair methods of competition in domestic and foreign commerce, in the elimination of practices which substantially lessen competition or tend to create monopoly, and in gathering and publishing facts for the information of the President, the Congress, and the public with respect to the economic phases of domestic industry and foreign trade. Differently stated, the commission’s duty is to sustain those practices which support the competitive system, as opposed to monopoly, in furtherance of the fundamental object of Congress in the enactment of the Federal Trade Commission Act and the Clayton Act. The commission has sought to protect the public against those methods described by the Supreme Court in the Grata case as (l) methods opposed to good morals because characterized by deception, bad faith, fraud, or oppression, and/or (2) methods regarded as against public policy because of danger- ous tendency unduly to hinder competition or create monopoly. The work for the year covered the entire scope of the trust problem and related subjects. It reached from the simplest form of unfair methods of competition on through all phases to the more complex question of trust dissolution. These activities touched the whole range of commerce--raw materials, manufacturing, wholesaling, retailing, exporting, manipulation of markets and, as representing the public interest, consumption. The whole trust problem INTRODUCTION 3 can be approached satisfactorily only by approaching it on the economic as well as the legal side. Activities in both these fields as disclosed in the report here given register an advance in an understanding of the matter.