ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION FOR THE FISCAL YEAR ENDED JUNE 30, 1925 WASHINGTON GOVERNMENT PRINTING OFFICE 1925 CONTENTS Page Introduction 1 Changes in procedure and policies 1 Limitation on congressional inquiries 1 Report by divisions of work 3 Administrative division 3 Personnel 3 Fiscal affairs 5 Publications 7 Docket 8 Library 8 Quarters 8 Legal division 9 Federal Trade Commission act 9 Clayton Act 10 Summary 12 Methods of competition condemned 14 Special legal inquiries 18 Procedure and statistics on legal work 19 Preliminary inquiries 19 Applications for complaints 21 Complaints including orders to cease and desist 23 Dismissal of complaints 24 Representative complaints 27 Allied Chemical & Dye Corporation 29 Midland Steel Products Co 29 Hayes Wheel Co 30 Northwestern Traffic & Service Bureau 30 Abrasive Paper and Cloth Manufacturers’ Exchange 30 National Leather & Shoe Finders’ Association 31 Arkansas Wholesale Grocers’ Association 31 Furniture cases 32 Grand Rapids Furniture Manufacturers Association 32 Misbranding of fabrics cases 33 Irish lace cases 33 Orders to cease and desist 33 Representative orders 35 Pittsburgh Coal Co. of Wisconsin 35 T. M. Sayman Products Co 35 Proctor & Gamble 36 Misrepresentation-Feather beds 36 Missouri-Kansas Wholesale Grocers’ Association 36 Keeler Bros. & Co 37 Misrepresentation in the sale of butter 37 Misleading advertising-Correspondence school 38 Misrepresentation in production of motion pictures 38 False and misleading advertising--Sheffield plate 39 III IV CONTENTS Report by divisions of work--Continued. Legal division-Continued. Page Court cases 39 Supreme Court 40 Claire Furnace Co 40 Grain cases 40 United States circuit courts of appeals 41 Swift case 41 Armour case 42 Western Meat Co 43 Thatcher Manufacturing Co 44 Utah-Idaho Sugar Co 46 Minneapolis Chamber of Commerce 46 Eastman Kodak Co 48 Sealpax Co 49 Q. R. S. Music Co 49 Hills Bros 50 Toledo Pipe Threading Machine Co 51 Chase & Sanborn 51 American Tobacco Co 52 Pacific States Paper Trade Association 52 Pure Silk Hosiery Mills 53 Proctor & Gamble Co 54 John C. Winston Co 54 Chicago Portrait Co 55 S. E. J. Cox 56 Butterick case 57 Dr. Herman Heuser 58 Courts of District of Columbia 58 Mannered Coal Co 58 Shade Shop 59 United States district courts 60 St. Louis Photo Engravers’ Union No.10 60 United States v. Charles C. Butterfield 60 Legal work of the commission by fiscal years (tables 1 to 10) 61 Board of review 65 Trade-practice submittals 67 Engraved-effects printing 68 Use of terms “engraved” and “embossed” 69 Band-instrument manufacturers 70 Anti-hog-cholera serum and virus 73 Dissent of Commissioners Thompson and Nugent 77 Statement of Commissioner Hunt 78 Mending cotton 80 Economic division 81 Anthracite 83 Gasoline 85 Packer consent decree 86 Kitchen furnishings 87 Cotton-merchandising practices 89 War-time profits and costs of steel industry 90 Grain trade 91 Empire Cotton Growing Corporation 92 CONTENTS V Report by divisions of work-Continued. Economic division--Continued. Page Wealth and income 92 Bread and flour 94 Electric power inquiry 94 Grain middlemen’s profits 95 Cooperation with the legal staff 95 Export trade division 96 Operation of the export trade act 96 Section 6 (h) of the Federal Trade Commission act 100 Foreign trade complaints Investigated 105 EXHIBITS 1. New rules on procedure and policies 111 2. Letter to the President requesting opinion from the Attorney General as to legality of conducting certain investigations 112 3. Commissioners Nugent and Thompson’s letter to the President 117 4. Attorney General’s decision 118 5. Letter to Comptroller General as to availability of appropriation for performance of work under certain Senate resolutions 128 6. Comptroller General’s reply 129 7. Wealth, debt, and taxation resolution (S. Res. 451) 131 8. Federal Trade Commission act 132 9. Provisions of the Clayton Act 138 10. Export trade act 142 11. Rules of practice before the Federal Trade Commission 144 12. Proceedings disposed of during the year 148 Orders to cease and desist 148 Cases dismissed 187 13. Proceedings pending July 1, 1925 222 ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION FOR THE FISCAL YEAR ENDED JUNE 30, 1925 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, 1924, to June 30, 1925. The commission was created by an act of Congress approved September 26, 1914, and was organized March 16, 1915. The present is the eleventh annual report to Congress. On June 30, 1925, the commission consisted of Vernon W. Van Fleet, of Indiana, chairman; John F. Nugent, of Idaho, vice chairman; Charles w. Hunt, of Iowa; Huston Thompson, of Colorado and William E. Humphrey, of Washington. CHANGES IN PROCEDURE AND POLICIES On March 17 and April 30, 1925, the commission announced changes in its rules of procedure and policies (see p.111). LIMITATION ON CONGRESSIONAL INQUIRIES The act making appropriations for the Federal Trade Commission, approved March 3, 1925, contained the following provision: That no part of this sum shall be expended for investigations requested by either House of Congress except those requested by concurrent resolution of Congress, but this limitation shall not apply to investigations and reports in connection with alleged violations of the antitrust acts by any corporation. On July 1, 1925, when the appropriations became available for the year, there were before the commission five certain resolutions of the Senate directing investigations and reports with respect to, viz, (a) wealth, debt, and taxation (see p.131); (b) bread and flour (see p. 112); (c) electric power and tobacco (see p.112); (d) trade associations (see p. 114); and (e) cooperative organizations (see p.114). In view of the provisions of the appropriation act above quoted the commission, being in doubt as to its power to proceed with certain of the foregoing mentioned Senate resolutions, requested the President to ask the Attorney General of the United States for an opinion in the matter. Messrs. Nugent and Thompson dissented and addressed a separate letter to the President (see p. 117). The 1 2 ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION commission’s correspondence and the opinion of the Attorney General appear on page 112. The commission also requested an opinion from the Comptroller General of the United States. This correspondence and opinion appear on pages 128 and 129. Work on the inquiry with respect to national wealth, debt, and taxation was definitely discontinued as of June 30, 1925, it being the unanimous opinion of the commission that this resolution was not authorized under the Federal Trade Commission act or the appropriation proviso. Work with respect to the electric-power and tobacco inquiries was not discontinued but was carried forward in usual course, it being the unanimous view of the commission that this resolution was clearly authorized, except the second portion of the electric-power resolution relating to the expenditure of money to control the avenues of publicity on the question of public ownership. As to this portion the commission was of opinion that it was not authorized, and consequently no works was initiated with respect to it. Commissioners Nugent and Thompson dissented. REPORT BY DIVISIONS OF WORK 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). For the administration of these acts the commission has been organized into four major divisions, I. e., administrative, legal, economic, export trade, and the work of the year is reported under those captions in the order given. ADMINISTRATIVE DIVISION This division conducts the business affairs of the commission. It is made up of several units such as are usually found in Government establishments, the functions of the units being governed largely by general statutes. These units are personnel, fiscal affairs, publications, docket, mail and files, supplies, stenographic, and library. The units are under the direct supervision of the assistant secretary of the commission. The character of work of each is indicated by its designation. PERSONNEL During the fiscal year there were several changes in the presidential membership of the commission, The term of office for which Mr. Nelson B. Gaskill was appointed expired September 25, 1924. He was given a recess appointment by the President, effective September 26, 1924, under which appointment he served, until February 24, 1925. The vacancy was filled, by the nomination by the President of Mr. William E Humphrey, of Washington, January 26, 1925, who was confirmed by the Senate February 23, 1925 (calendar day), and took oath of office and entered upon duty February 25, 1925. His appointment is for the term expiring September 25, 1931. Mr. Vernon W. Van Fleet was elected chairman of the commission for the year beginning December 1, 1924, succeeding Mr. Huston Thompson. Mr. John F. Nugent was elected vice chairman for the same period. On June 30, 1925, the total personnel of the Federal Trade Commission was 314, with a total salary of $857,500. Of these employees 175 were under civil service and 139 held excepted positions. Of 66053---25-----2 3 4 ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION the total personnel (314) 160 were administrative employees, 87 attorneys, 32 economists, and 29 accountants. Excluding the commissioners and secretary, the average salary for all employees was $2,604.87. The average salary for administrative employees was $1,746.87; for attorneys, $3,796.55; for economists, $3,535; for ac- countants, $2,737.24. There were 98 women employees.