ANNUAL REPORT OF THEOF THEFEDERALTRADE COMMISSIONFOR THEFISCAL YEAR ENDED JUNE 30, 1924WASHINGTONGOVERNMENT PRINTING OFFICE 1924FEDERAL TRADE COMMISSIONHUSTON THOMPSON, Chairman.VERNON W.VAN FLEET.NELSON B.GASKILL.JOHN F.NUGENT.CHARLES W.HUNT.OTIS B.JOHNSON, Secretary.IICONTENTS.Page.Introduction 1Administrative Division4Personnel 4Fiscal affairs 6Publications 8Docket 9Library 9Quarters 9Legal Division 10Federal Trade Commission Act 10Clayton Act 11Summary 13Methods of competition condemned 15Special legal inquiries 19Gasoline 19Radio 19Procedure and statistics on legal work 20Preliminary inquiries 20Applications for complaints 22Complaints, including orders to cease and desist 24Dismissal of complaints 26Typical complaints 28Monopoly--Radio 28Conspiracy--Farm machinery 29Price fixing--Tobacco 29Price maintenance--Groceries 29Price fixing--Coal 30Misbranding--Soap 30Misbranding--Silver plate 30False advertising--Furniture 30Stifling competition--Stationery 31Photoengravers case 31Austin Nichols & Co.--Groceries 31Motion picture 32Cream of wheat 32Bethlehem-Lackawanna steel merger 32Pittsburgh Coal Co. of Wisconsin 33Corn Products Refining Co.-Table sirup 33Orders to cease and desist 34Typical orders 36United States Steel Corporation 36Minneapolis Chamber of Commerce 40Eastman Kodak Co 41United Typothetae of America 42Roofing material cases 43Pacific States Paper Trade Association 43Encyclopedia 43Underwear 44Process engraving 44Court cases 44Supreme Court 44Juvenile Shoe Co 45Claire Furnace Co 45American Tobacco Co. and P. Lorillard Co 46Grain cases 47Raymond Bros--Clark Co 47United States Circuit Courts of Appeals 48Fox Film Corporation 48United Typothetae of America 50IIIIV CONTENTSLegal Division--Continued.Court cases--Continued.United States Circuit Courts of Appeals--Continued. PageS. E. J. Cox et al50Aluminum case 51Thatcher Manufacturing Co. 52Swift & Co52Armour & Co 53Chicago Portrait Co 53Western Meat Co 54Minneapolis Chamber of Commerce 55ButterickCo 55Occidental Oil Corporation 55Resale he pr ice maintenance in tobacco products 56Pacific States Paper Trade Association 56Utah-Idaho Sugar Co 57Q. R. W. Music Co 58Sealpax Co. Underwear 58Dr. Herman an Heuser--Nonalcoholic beverages59The Pearsall Butter Co 59John Bene & Sons 59National Biscuit and Loose-Wiles Cos. 60Courts of the District of Columbia 61Mannered Coal Co 61ShadeShop 61Legal work of the commission by fiscal years (table) 62Court proceedings upon orders (table) 63Miscellaneous court proceedings, etc. (table) 63Trade practice submittals 65Music Publishers Association 66Subscription Book Publishers Association 68Band Instrument Manufacturers 70Economic Division 75Gasoline 79Cotton trade 80Taxation and tax-exempt income 82Flour milling 84Grain trade 87House furnishings 88Anthracite 90Bread 90Cooperation with Legal Division 91Aid to other branches of the Government 91Senate Committee on Public Lands 91United States Coal Commission 91Inquiries made at request of the Congress, the President, or the Attorney General92 Fertilizer--Pipelines--Gasoline--Sisal hemp 92Anthracite--Bituminous coal 92Newsprint paper--book paper--Flags--Meat packing 93Farmimplements--Milk 93Cotton yarn--Pacific-coast petroleum--Petroleumprices 94Commercial feeds--Sugar--Southern livestock 94Shoe costs amid prices--Tobacco prices 94Tobacco prices--Export grain--House furnishings 95Flour milling--Cotton trade--Fertilizer 95Foreign ownership in petroleum industry 96Cotton trade--Calcium arsenate--Radio 96Bread--Cotton merchandising practices--Food inquiry 97War-time cost findings-Wheat prices 97Gasoline--Raisins--Lumber industry 98Export Trade Division 99Associations under the Webb Export Trade Act 99Provisions of the export trade act 101Provisions of section 6 (h) of the Federal Trade Commission act 102Foreign trade complaints investigated 103Liaison committee representation 104Trading with enemy act 105CONTENTS VEXHIBITSPagel. Federal Trade Commission act 1092. Provisions of the Clayton Act 1153. Export tradeact 1194. Rules of practice before the Federal Trade Commission 1215. National Biscuit ease 1256. B. S. Pearsall case 1317. John Bene & Sons 1348. American Tobacco case 1399. Raymond Bros--Clark Co. case 14210. Fox Film Corporation 14511. Proceedings disposed of during the year 149Orders to cease and desist 149Cases dismissed 18912. Proceedings pending June 30, 1924 195ANNUAL REPORT OF THE FEDERAL TRADE COMMISSIONFOR THE FISCAL YEAR ENDED JUNE 30, 1924INTRODUCTIONTo the Senate and House of Representatives:Pursuant to statute the Federal Trade Commission herewith submits to the Congressits 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 organizedMarch 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 NewJersey; John F. Nugent, of Idaho; and Charles W. Hunt, of Iowa.Mr. Hunt enteredupon duty on June 16, 1924, to succeed Victor Murdock, of Kansas, who resigned asof January 31, 1924.Of the work accomplished during the year special mention is made of : (l) The ordertoceaseanddesistissuedagainsttheUnitedStatesSteelCorporationanditssubsidiaries 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 ofRepresentatives 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 Commissionact, approved September 26, 1914 (38 Stat. 717) ; delegated sections of the ClaytonAct, approved October 15, 1914 (38 Stat. 730); and the export trade act, approvedApril 10, 1918 (40 Stat. 516).The work goes steadily forward.The law of unfair competition is being developedwithresulting clarity in the channels of trade, valuable and pertinent facts relating toeconomic subjects amid business matters are being gathered and published, and theexport trade act having to do with associations engaged solely in export trade is beingadministered.Most pressing is the increasing demand upon the energies of the commission are thefield of unfair competition. To this demand relief to the utmost is afforded, but thefigurestellthestoryofeffortsonlypartiallyeffectivebecauseoflackofmenandmoney.Andthecalendarofcasesundisposedofattheendoftheyeardoesnotdiminish.A 10-years view of the deception, bad faith, fraud, and oppressionl2 ANNUAL REPORT OF THE FEDERAL TRADE COMMISSIONofwhichthebusinessworldandthepubliccomplainteachesthatthecertainandspeedy challenge of this commission to such practices is the effective remedy. But thecommissionmustreportadocketofcasesgrownoldandagenecessitatesreinvestigationbyreasonofchangedconditionsorcustomsandtheunknownwhereabouts some of whom may be dead. Therefore a case grown witnesses, of old notonly 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 wasasked through appropriate agencies, and second, an inquiry respecting flour and breadunder 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 thecall of the President of the United States or an immediate inquiry into the gasolinesituation. The deficiency was refused, but the inquiry was made by delaying currentwork, and the report submitted.The inquiry into the production and distribution of flour and bread, called or by theSenateresolution,whileconsiderablydelayed,isnowunderway.Otherwisetheeconomic work and likewise the work connected with the export trade associations hasbeen normal.Briefly,thecommissionhasbeenengagedduringtheyear,asheretofore,intheprevention of unfair methods of competition in domestic and foreign commerce, in theeliminationofpracticeswhichsubstantiallylessencompetitionortendtocreatemonopoly, 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 industryandforeigntrade.Differentlystated,thecommissionsdutyistosustainthosepracticeswhichsupportthecompetitivesystem,asopposedtomonopoly,infurtherance of the fundamental object of Congress in the enactment of theFederalTrade Commission Act and the Clayton Act. The commission has sought to protect thepublic 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.Theworkfortheyearcoveredtheentirescopeofthetrustproblemandrelatedsubjects.Itreachedfromthesimplestformofunfairmethodsofcompetitiononthrough all phases to the more complex question of trust dissolution. These activitiestouched the whole range of commerce--raw materials, manufacturing, wholesaling,retailing, exporting, manipulation of markets and, as representing the public interest,consumption. The whole trust problemINTRODUCTION3can be approached satisfactorily only by approaching it on the economic as well as thelegal side. Activities in both these fields as disclosed in the report here given registeran advance in an understanding of the matter.While in all its divisions the commission in those activities having to do with thepreservation of competition and the prohibition of unfair methods of competition dealtprimarilywithquestionsarisingintradeinmanufacturedproducts,itmayalsobenoted that many of these matters affected agricultural interests. During the year thecommission made reports for Congress and the same were published on the cottontrade; flour-milling industry ; costs, profits, and margins in the handling of grain; stoveindustry ;and taxation and tax-exempt income. At the request of the President therewas submitted to him a special report on gasoline prices.A comprehensive report onthe radio industry was also prepared for the House of Representatives and published.Among the legal proceedings under way during the year were cases relating to food,fuel, clothing and shelter, etc., i. e., steel (Pittsburgh plus), radio, farm implements,grain,groceries,coal,furniture,foodproducts,lumber,soaps,silverware,silks,woolens, photoengraving, typothetae, tobacco, paper and stationery, motion pictures,etc.The legal proceedings of the commission make frequent and extensive demands onthe economic staff or expert assistance from economists and accountants andalsoforstatisticalandclericalservice.DuringthefiscalyearunderreportprofessionalassistancewasrenderedespeciallyinconnectionwiththePittsburghBasingPointcase,theBethlehem-Midvale-Lackawannasteelmerger,andthecasesrelatingtoanthracite premium prices and quantity discounts on corn products. Clerical assistancewas given in various other cases. In this connection 17 members of the economic staffwere engaged on legal work during the fiscal year.AidtootherbranchesoftheGovernmentwasrenderedbydetailingexpertaccountants to the Senate Committee on Public Lands and Surveys in connection withthe Teapot Dome investigation conducted by that committee. In addition, a number ofstatistical experts and clerks familiar with the coal industry problems were temporarilyassigned to the United States Coal Commission in connection with that commissions inquiry into costs, prices, and profits of coal-mining operators.For the administration of the acts of Congress committed to its care, the commissionhas been organized into four major divisions i.e., administrative, legal, economic, andexport trade--and the work of the year is reported under those captions in the ordergiven.ADMINISTRATIVE DIVISIONThisdivisionconductsthebusinessaffairsofthecommission.Itismadeupofseveral units such as are usually found in Government establishments, the functionsoftheunitsbeinggovernedlargelybygeneralstatutes.Theseunitsarepersonnel,fiscal affairs, publications, docket, mail and files, supplies, stenographic, and library.Theunitsareunderthedirectsupervisionoftheassistantsecretaryofthecommission. The character of work of each is indicated by its designation.PERSONNELUndertheruleofthecommissionprovidingfortherotationoftheofficeofchairman, Commissioner John F. Nugent was chosen chairman for the year beginningDecember1,1923.CommissionerNugentwaivedthechairmanship,andCommissioner Huston Thompson, the next in order of seniority, was chosen chairman.Commissioner Vernon W. Van Fleet was chosen vice chairman for the same period.Commissioner Victor Murdock, of Kansas, resigned, effective January 31, 1924, andto fill the unexpired portion of his term, ending September 25, 1925, the President, onMay 26, 1924, sent to the Senate the nomination of Mr. Charles W. Hunt, of Iowa.This nomination was confirmed by the Senate on May 31, 1924, and Mr. Hunt took theoath of office and entered upon duty on June 16, 1924.On June 30, 1924, there were 309 employees on the pay roll, with a total basic salaryof $742,240 and a bonus of $49 ,660, a grand total of $791,900.Of these employees,181 were under the civil service and 128 held positions excepted by law from the civil-service regulations. Of the total of 309 employees, 160 were administrative employees,clerks, etc.; 90 were lawyers; 30, economists; and 29, accountants. The average salaryofallemployeesonJune30,1924,includingbonus,was$2,562.78.Theaveragesalaryforadministrativeemployeeswas$1,747.50;forlawyers,$3,697.22;foreconomists, $3,425.00; for accountants, $2,675.17. There were 100 women employees.During the year ended June 30, 1924, 40 employees, or 13 per cent, left the serviceof the commission and 31 appointments of a permanent character were made. Thenumber of employees coming under the provisions of the civil service retirement lawwas 178.As of July 1, 1924, the Personnel Classification Board classified the employees.Nine suffered salary reductions in total amount of4ADMINISTRATIVE DIVISION 5$2,080.The Personnel Classification Board did not increase the allocation or salaryofanyemployeeovertheallocationgivenbythecommission,butdecreasedtheallocation of 78 employees.How ever, the rates of salaries paid by the commissiontocertainemployeeswereadjustedtoaccordwiththesalaryratesprovidedintheclassificationact.Thisadjustmentunderthelawoperatedtograntnominalsalaryincreases to 115 employees, a total of $14,580, with a total net increase in the salaryroll as a result of reclassification of $12,500. This represented an increase of 1.58 percent in the employees salary roll. A number of appeals from the boards allocationwere filed both by the commission in behalf of its employees and by the employeesindividually.Thecommissionprotestedtheboardsallocationofeconomistsandaccountants to the clerical, administrative, and fiscal service.These the commissionheld belonged in the professional and scientific service. The commission also protestedthe relatively low allocation given by the board to its legal staff. In all, appeals werefiled by about one-third of the employees. A number of appeals have been granted andfromtimetotimechangesintheallocationsofemployeesarebeingmadebytheClassification Board. These w ill be shown in the next annual report.Atthetimeofthecommissionsorganization,March16,1915,thepersonnelconsisted of 144 persons, these being carried over from the Bureau of Corporations ofthe Department of Commerce. The total number on the rolls on the date of declarationof war against Germany, April 6, 1917, was 198, and the number in the service at thetime of the signing of the armistice, November 11, 1918, was 691. The high-watermark, so far as number of employees is concerned, was on December 9, 1918, whenthere were 710 employees in the service.The turnover in the force in the short period of the history of the commission hasbeen exceptionally high. There have been 2,158 original appointments in a little morethan nine years, and of this number 1,844 have left the service. This means that thecommission has had six times as many employees come and go as it now has on itsrolls.A statement of the personal, including commissioners at the end of each fiscal yearsince the organization of the commission, is given below :June 30, 1915 143 June 30, 1920 418June 30, 1916 224 June 30, 1921 315June 30, 1917 214 June 30, 1922 318 June 30, 1918 663 June 30, 1923 308June 30, 1919 376 June 30, 1924 314This table shows a war-time personnel promptly cut in half after the armistice anda stationary personnel for the past four years.6 ANNUAL REPORT OF THE FEDERAL TRADE COMMISSIONFISCAL AFFAIRSAppropriations available to the commission for the fiscal year ended June 30, 1924,under the executive and sundry civil ad, approved February 13, 1924, amounted to$1,010,000.Thisincludesanitemof$50,000forsalariesofcommissionersand$20,000forprintingandbinding,leaving$940,000forthegeneralworkofthecommission.Expendituresfortheyearplusoutstandingliabilitiesamountedto$979,440.18,whichleftanunexpendedbalanceof$30,559.72.Ofthisamount,$8,563.78represented the unexpended balance of the appropriation provided for the payment ofincreaseofcompensation(bonus);$3,750,unexpendedbalanceofsalariesorcommissionersandsecretary(statutory);and$580.75,unexpendedbalanceofap-propriationorprintingandbinding.Theremainder,$17,665.19,representstheunexpended balance of the lump sum appropriation.Theappropriation,includingunexpendedbalancesofappropriationforpreviousyears, and expenditures, are tabulated below.Appropriations and expendituresAmount Amountavailable expendedFederal Trade Commission, 1924:Salaries, commissioners, secretary $51,000.00 $51,210.10Increase of compensation (bonus) 55,000.00 46,436.22Printing and binding 20,000.0015,451.35All other authorized expenses 880,000.00 842,911.89Total fiscal year 19241,010,000.00 956,049.46Unexpended balances:Federal Trade Commission-1923 22,514.09 20,619.891922 42,001.381.90 Cr..44 1,071,411.47976,710.81It is estimated that the outstanding liabilities of the commission as of June 30, 1924,amount to $23,390.72, payment of which will be made from the unexpended balanceof the appropriations, Federal Trade Commission, 1924.Adetailedanalysisofthecostsofthecommissionisgiveninthefollowingstatement:Statement of costs of the Federal Trade Commission for the fiscal year endedJune 30, 1924Office Field TotalAdministrative $235,972.70$727.38 $236,700.08Economic 195,516.22 11,981.81 207,498.03Legal:Chief counsel 164,245.40 59,731.71 223,981.11Chief examiner 171,149.30 45,301.91 216,451.21Board or review 20,045.91904.90 21,910.81Export trade 11,060.05 2,303.02 13,363.07Trading with the enemy 2,019.01 2,019.05Grand total 800,008.63 120,954.73 920,963.36ADMINISTRATIVE DIVISION 7Detailed statement of costs of the Federal Trade Commission for the fiscal year ended June 30, 1924Item Office FieldAnnual leave $62,975.03Applications for complaints54,711.76$18,069.06Board of review 18,910.74Bread inquiry 2,200.81Briefs248.86California oil4.55Clayton Act, section 7, general investigation157.88Clayton Act, section 8, general investigation Cr. 3.22Coal-trade inquiry 7,965.97 704.72Communications 3,889.15Complaints, formal 154,289.3977,089.09Computing machine work 1,215.24Corporation reports8.13Cotton trade inquiry 31,027.324,108.55Court leave.68Decline in w heat prices 10.23Docket section 15,098.28Economic super vision 14,951.49Equipment4,243.81Export grain inquiry415.82 Cr .50Export trade 9,568.012,303.02Fiscal affairs 9,774.89Flour milling 9,908.47 Cr .59Gasoline inquiry 29,402.286,019.01General administration, commissioners etc 71,326.98 506.22Grain and produce exchange 9,643.12129.13Heat and light104.17House-furnishings investigation 19,997.82 816.74Injunction proceedings against the commission12.25Labor 2,652.66Legal supervision 47,937.47 847.48Library section 7,210.12Lumber8.24Mail and file sect ion 9,968.97Medical attendant 1,281.38Messengers7,891.51Military leave623.37Miscellaneous economic279.85Miscellaneous legal 4.96National wealth inquiry 54,955.863,983.79Paper schedules63.41Personnel section8,038.01Petitions for mandamus 2,025.15Preliminary inquiries 18,847.693,885.53Preliminary work on formal complaints10.89Printing and binding 15,451.35Publications section 12,456.90Purchases and supplies section 4,762.39Radio industry1,412.31 636.00Rents 9,847.98Repairs110.07Services rendered to Coal Commission306.00Services rendered to Department on justice311.00 57.48Services rendered to Federal Real Estate Board3.01Services renderedto Reclassification Commission385.20Services rendered to Senate Committee on Public Lands and Surveys 112.40Sick leave 16,417.92Special briefs250.45Special legal work for the commissioners873.41 215.93Steel659.36Stenographic section 30,915.601,297.05Stock securities (blue sky) 92.30Study of procedure 1,194.88 38.77Supplies 9,585.10Time excused by Executive or commissions order 8,109.94Tobacco situation 104.60Trade practice submittal 210.96 Trading with the enemy 1,693.32 Transportation of things199.05 800, 008.63 120,954.73Total office expenses800,008.63Total cost920,963.36Adjustments.--The following adjustments are made to a count or the difference between the costs and expenditures:8 ANNUAL REPORT OF THE FEDERAL TRADE COMMISSIONTotal cost for the year ended June 30, 1924$920,963.36Less transportation paid 40,198.05New total880,765.31Plus transportation paid 42,143.78New total922,909.09Allotted to the retirement fund 7,365.50Increase of compensation (bonus) 46,463.22Expenditures for the year ended June 30, 1924976,710.81Appropriationsavailabletothecommissionsinceitsorganization,andtheexpenditures for the same period, together with the unexpended balances, are shownin the following table :Year Appropriations Expenditures Balance1915$184,016.23 $90,442.05 $93,574.181916 430,964.08 379,927.41 51,036.671917 567,025.92 472,501.20 94,524.721918 1,608,865.92 142,187.32 156,678.001919 1,753,530.751,522,331.95 231,198.801920 1,305,708.821,120,336.32 185,372.501921 1,032,005.67938,664.69 93,340.981922 1,026,150.54956,632.0169,518.531923 974,480.32970,768.413,711.9119241,010,000.00979,240.1830,559.72PUBLICATIONSThe following publications were issued during the fiscal year ending June 30, 1924:Annual Report for the Fiscal Year ended June 30, 1923 ; November 20, 1923 ; 218 pages.MethodsandOperationsofGrainExporters,VolumeII,Speculation,Competition,andPrices; June 18, 1923; 264 pages.House Furnishings Industry, Volume II, Stoves ; October 1, 1923 ; 187 pages. Grain Trade, Volume IV, Middlemens Profits and Margins, September 26, 1923 ; 215 pages.Radio Industry, December 1, 1923 ; 347 pages.Decisions, Findings and Orders of the Federal Trade Commission, Volume V (May 22, 1922,to February 13, 1923); June 12, 1924 ; 628 pages.Rules of Practice, Amended, February 1, 1924 ; 11 pages. Cotton Trade, Part I, May 5, 1924;280 pages (printed as Senate Document 100).Wheat Flour Milling, May 16, 1924 ; 143 pages (printed as Senate Document 130).Taxation and Tax-exempt Incomes, June 4, 1924; 157 pages (printedas Senate Document148).War-Time Costs and Profits of Steel.CopiesofthesepublicationsmaybepurchasedfromtheSuperintendentofDocuments, Washington, D. C., for nominal sums.During the fiscal year ended June30, 1923, 4,718 copies of report. of the commission were sold by the Superintendentof Documents for $1,265.65. The figures for the fiscal year 1924 are not yet available.ADMINISTRATIVE DIVISION 9DOCKETThis section is somewhat comparable to the office of a clerk of court. In this sectionare kept the documents and records pertaining to the legal work of the commission.These records are reported under the caption, "Legal work," on page 20.LIBRARYThe library has a collection of over 20,000 books, pamphlets, and bound periodicals,devotedlargelytothesubjectsoflaw,economics,andindustries.Inadditionareextensivefilesofclippings,leaflets,etc.Thedistinctivefeaturesoftheeconomiccollection are the files relating to corporation and trade association data and files oftrade periodicals for the more important industries. There is a function peculiar to thecommission's library in the character of the work it performs, and that is in the materialit gathers in the form of pamphlets, corporation reports, association records, currentfinancial and statistical services, catalogues, trade lists, etc., which are not ordinarilyfoundinlibrariesofevenatechnicalcharacter.Thegreateramountisfurnishedgratuitously. This material furnishes a valuable adjunct to the investigatory work andis adapted to furnish leads to examinations rather than to complete and substantiveinformation on the subject matter.The bulk of the law collection consists of the various national and regional reportersystems and the more important reference encyclopedias and reference books that arecommonly found in law libraries. The distinctive feature, however, is a file of recordsand briefs of antitrust cases, which were acquired without expenditure.Careisexercisedtolimittheselectionofbookstosupplyonlythoseneededconstantly and immediately in the commissions work. The commission is far removedfrom other governmental law libraries and the library of the Supreme Court of theUnited States and must have available sufficient volumes to answer the ordinary re-quirements of the legal and economic force. In all other instances use is made of theother libraries in Washington, including the Library of Congress.QUARTERSThe commission is housed in one of the temporary war structures at Twentieth andDStreetsNW.Tofacilitatetrialandinvestigatorywork,andintheinterestofeconomy, small branch offices are maintained at New York City, Chicago, and SanFrancisco. All communications should be addressed to the commission at Washington,D. C.LEGAL DIVISIONUnder this caption is reported the work relating to the prevention of unfair methodsof competition prohibited by section 5 of the Federal Trade Commission act and casesof price discrimination, trying contracts, corporate-stock acquisitions, and interlockingdirectorates arising under sections 2, 3, 7, and 8, respectively of the Clayton Act.To make clear the duties of the commission in this regard, pertinent portions of theacts are quoted. It will be noted that the function of the commission is remedial, notpunitive, and that no power is given to impose any penalty. The commission preventsthe unfair act to protect the public, not to punish the doer of the act.FEDERAL TRADE COMMISSION ACTSection 5, in part, reads:That unfair methods of competition in commerce are hereby declared unlawful.Thecommissionisherebyempoweredanddirectedtopreventpersons,partnerships,orcorporations, except banks, and common carriers subject to the acts to regulate commerce, fromusing unfair methods of competition in commerce.Whomever the commission shall have reason to believe that any such person, partnership, orcorporation has been or is Using any unfair method of competition in commerce, and if it shallappear to the commission that a proceeding by it in respect thereof would be to the interest ofthe public, it shall issue and serve upon such person, partnership, or corporation a complaintstating its charges in that respect, and containing a notice of a hearing upon a day and at a placetherein fixed at least 30 days after the service of said complaint. The person, partnership, orcorporation so complained of shall have the right to appear at the place and time so fixed andshowcausewhyanordershouldnotbeenteredbythecommissionrequiringsuchperson,partnership, or corporation to cease and desist fromthe violation of the law so charged in saidcomplaint.***If upon such hearing the commission shall be of the opinion that the methodof competition in question is prohibited by the act, it shall make a report iii writing, in which itshall state its findings as to the facts, and shall issue and cause to be served on such person,partnership, or corporation an order requiring such person, partnership, or corporation to ceaseand desist from using such method of competition.Ifsuchperson,partnershiporcorporationfailsorneglectstoobeysuchorderofthecommission while the same is in effect, the commission may apply to the circuit court of appealsof the United States for the enforcement of its10LEGAL DIVISION 11order * * *.The court shall have power to make and enter a decree affirming, modifying, orsetting aside the order of the commission.The findings of the commission as to the facts, ifsupported by testimony, shall be conclusive. The judgment and decree of the court shall be final,except that the same shall be subject to review by the Supreme Court upon certiorari as providedin section 240 of the Judicial Code.Any party required by such order of the commission to cease and desist fromusing suchmethod of competition may obtain a review of such an order in said circuit court of appeals byfiling in the court a written petition praying that the order of the commission be set aside.The jurisdiction of the circuit court of appeals of the United States to enforce, set aside, ormodify orders of the commission shall be exclusive.Such proceedings in the circuit court of appeals shall be given precedence over other casespending therein, and shall be in every way expedited.No order of the commission or judgmentof the court to enforce the same shall in any way relieve or absolve any person, partnership, orcorporation from any liability under the antitrust acts.CLAYTON ACTSection 2--Price discriminations :Thatitshallbeunlawfulforanypersonengagedincommerce,inthecourseofsuchcommerce, either directly or indirectly to discriminate in price between different purchasers ofcommodities,whilecommoditiesaresoldforuse,consumption,orresalewithintheUnitedStates or any Territory thereof or the District of Columbia or any insular possession or otherplace under the jurisdiction of the United States, where the effect of such discrimination maybe to substantially lessen competition or tend to create a monopoly in any line of commerce:Provided,Thatnothinghereincontainedshallpreventdiscriminationinpricebetweenpurchasers of commodities on account of differences in the grade, quality, or quantity of thecommoditysold,orthatmakesonlydueallowancefordifferenceinthecostofsellingortransportation, or discrimination in price in the same or different communities made in goodfaith to meet competition: And provided further, That nothing herein contained shall preventpersons engaged in selling goods, wares, or merchandise in commerce from selecting their owncustomers in bona fide transactions and not in restraint of trade.Section 3--Tying contracts :Thatitshallbeunlawfulforanypersonengagedincommerce,inthecourseofsuchcommerce, to lease or make a sale or contract for sale of goods, wares, merchandise, machinery,supplies, or othercommodities, whether patented or unpatented, for use, consumption, or resalewithintheUnitedStatesoranyTerritorythereofortheDistrictofColumbiaoranyinsularpossessionorotherplaceunderthejurisdictionoftheUnitedStates,orfixapricechargedtherefor,ordiscountfrom,orrebateupon,suchprice,onthecondition,agreement,orunderstanding that the lessee or purchaser thereof shall not use or deal in the goods,wares,merchandise, machinery, supplies, or other commodities of a competitor or competitors of thelessororseller,wheretheeffectofsuchlease,sale,orcontractforsaleorsuchcondition,agreement,orunderstandingmaybetosubstantiallylessencompetitionortendtocreateamonopoly in any line of commerce.14948--24----212 ANNUAL REPORT OF THE FEDERAL TRADE COMMISSIONSection 7--Corporate stock acquisitions :That no corporation engaged in commerce shall acquire, directly or indirectly, the whole orany part of the stock or other share capital of another corporation engaged also in commerce,where the effect of such acquisition may be to substantially lessen competition between thecorporation whose stock is so acquired and the corporation making the acquisition, or to restrainsuchcommerceinanysectionorcommunity,ortendtocreateamonopolyofanylineofcommerce.No corporation shall acquire, directly or indirectly, the whole or any part of the stock or othersharecapitaloftwoormorecorporationsengagedincommercewheretheeffectofsuchacquisition, or the use of such stock by the voting or granting of proxies or otherwise, may beto substantially lessen competition between such corporations, or any of them, whose stock orother share capital is so acquired, or to restrain such commerce in any section or community,or tend to create a monopoly of any line of commerce.This section shall not apply to corporations purchasingsuch stock solely for investment andnot using the same by voting or otherwise to bring about, or in attempting to bring about, thesubstantiallesseningofcompetition.Norshallanythingcontainedinthissectionpreventacorporation engaged in commerce from causing the formation of subsidiary corporations for theactual carrying on of their immediate lawful business, or the natural and legitimate branches orextensions thereof, or from owning and holding all or a part of the stock of such subsidiarycorporations, when the effect of such formation is not to substantially lessen competition.Nothing contained in this section shall be held to affect or impair any right heretofore legallyacquired : Provided, That nothing in this section shall be held or construed to authorize or makelawful anything heretoforeprohibited or made illegal by the antitrust laws nor to exempt anyperson from the penal provisions thereof or the civil remedies therein provided.Section 8.--Interlocking directorates :That from and after two years from the date of the approval of this act no person at the sametime shall be a director in any two or more corporations, any one of which has capital, surplus,andundividedprofitsaggregatingmorethan$1,000,000,engagedinwholeorinpartincommerce,otherthanbanks,bankingassociations,trustcompanies,andcommoncarrierssubject to the act to regulate commerce, approved February fourth, eighteen hundred and eighty-seven, if such corporations are or shall have been theretofore, by virtue of their business andlocation of operation, competitors, so that theelimination of competition by agreement betweenthem wouldconstitute a violation of any of the provisions of any of the antitrust laws.Theeligibilityofadirectorundertheforegoingprovisionshallbedeterminedbytheaggregateamount of the capital, surplus, and undivided profits, exclusive of dividends declared but notpaid to stockholders, at the end of the fiscal year ofsaid corporation next preceding the electionof directors, and when a director has been elected in accordance with the provisions of this actit shall be lawful for him to continue as such for one year thereafter.When any person elected or chosen as a director or officer or selected as an employee of anybankorothercorporationsubjecttotheprovisionsofthisactiseligibleatthetimeofhiselection or selection to act for such bank or other corporation in such capacity his eligibility toact in such capacity shall not be affected and he shall not become or be deemed amenable to anyof the provisions hereof by reason of any change in the affairs of such bank or otherLEGAL DIVISION 13corporationfromwhatsoevercause,whetherspecificallyexceptedbyanyoftheprovisionshereof or not, until the expiration of one year from the date of his election or employment.The legal division consists of the chief counsel and staff and the chief examiner and staff. Thechief counsel is the legal adviser to the commission and is charged with the conduct of the trialof cases before the commission and in the courts.The chief examiner conducts the preliminaryinvestigationsandascertainsthefactsinallmattersinvolvingallegedviolationsoflawsenforceablebythecommission,andreportsthefactsandthelawsapplicablethereto.Thisincludes special legal inquiries in response to presidential and congressional action.The chiefexaminers also supervises the corps of examiners, who act in a capacity somewhat similar to thatof masters in chancery, representing the commission in the taking of testimony, the examinationof witnesses, and the submission of evidence under complaints.SUMMARYTo measure the legal work is difficult. Many cases present simple facts representing types,such as misbranding, wee with respect to which the law is established (Winsted Hosiery caseintheSupremeCourt)andreadilyapplied.Iiiothergroups-forinstance,guarantyagainstdecline and price maintenance--the facts are obtained) only after extended inquiry. In still othergroups, such as those of corporate stock acquisition, the facts may be uncontested but the appli-cationofthelawuncertain.Eachgrouppresentsitsseveralproblemsandrequiresdifferenttreatment.One attorney, during the course of a year, may handle a number of cases of falseadvertising or misbranding, while one case involving monopoly, trade restraint, or lessening ofcompetition may require the entire services of not only two ormore trial lawyers but also acorps of experts, account-ants, and statistical clerks or a period of one, two, or perhaps threeyears. In other words, a case may be disposed of upon a stipulation of fact set forth on a fewtyped pages, while another case, such as the steel basing point case, might require the taking of20,000 pages of testimony and the receipt and consideration of approximately 60,000 pages ofexhibits. The foregoing applies to complaint cases handled by the chief counsel. With somevariationthesituationwithrespecttoinformalmattershandledbythechiefexaminerisidentical.This report can best reflect the character and volume of the legal work performed by a simplemethod of arithmetical expression supplemented by the recitation oftypical cases. It can be saidthat under the laws which it administers the commission was called upon during the year tohandle 3,111 separate legal matters relating in14 ANNUAL REPORT OF THE FEDERAL TRADE COMMISSIONlarge part to unfair competition in foreign and domestic trade. It disposed of 2,048 ofsuch matters. This left on hand undisposed of at the end of the fiscal year 1,063 legalmatters.While the figures for 1924 are not comparable in every respect with those of 1923,the 1921 figures correctly register an increase in legal matters handled, disposed of,and left on hand at the close of that year.Of controlling interest, however, is the factthat there was an increase of 17 percent in the number of individual legal matters onhand on June 30, 1924, in excess of the number on hand June 30, 1923.Thus, in legalwork the commission is not only unable to handle the current receipts, during the yearfellconsiderablybehind.Thereasonisaninsufficientstaff.Thattheworkwasdiligently pressed is shown by a substantial increase in the number or matters disposedof, notwithstanding there was no increase in the staff.To conduct the legal work thecommission is limited to a staff of 87 lawyers, of whom 35 were attached to the chiefcounsels office and 52 attached to the chief examiners office.A summary of the legal record for the year reads:Preliminary inquiries.--One hundred and eighty-one preliminary inquiries were onhand at the beginning of the year; 1,584 were received during the year, making a totalof 1,765 on hand. Of these, 1,531 were disposed of and 234 undisposed of at the closeof the year.Applications forcomplaints. --There were 572 applications for complaint pendingat the beginning of the year ; 377 were docketed during the year, and there were 5recessions of previous action, making a total of 954 for disposition during the year.Ofthese,389weredisposedof,143bythedocketingofcomplaintsand246bydismissal of the application, leaving 565 pending at the close of the year.Complaints.--Two hundred and thirty-two complaints were on hand at the beginningof the year; 154 were issued during the year, and there were 6 recessions of previousaction, making a total of 392 no hand during the year.Of these, 128 were disposed ofby the issuance of 92 orders to cease and desist and by the dismissal of 36 complaints.Thus left on hand 264 complaints undisposed of at the end of the year.Court cases.--Thirteen cases were in the courts at the beginning of the fiscal year,and 19 were taken to the courts during the year, making a total of 32.Of these, 10were disposed of, leaving 22 on hand at the end of the year.Tabular statement.--Statistics for the present year and for the entire history of thecommission are inserted on pages 62, 63, and 64.LEGAL DIVISION15Sinceitsorganizationin1915todate,thecommissionhasreceived9,249preliminaryinquiries,docketed3,591applicationsforcomplaints,issued1,197complaints, and 635 orders to cease and desist, and dismissed 298 complaints.Fifty-five of these orders to cease and desist have been taken to courts.METHODS OF COMPETITION CONDEMNEDAmong the unfair methods of competition and Clayton law violations condemnedby the commission and prohibited by orders to cease and desist may be mentioned thefollowing :Misbranding of fabrics and other commodities respecting the materials or ingredientsof which they are composed, their quality, origin, or source.Adulteration of commodities, misrepresenting them as pure or selling them undersuch names and circumstances that the purchaser would be misled into believing themto be pure.Bribery of buyers or other employees of customers and prospective customers tosecure new customers or induce continuation of patronage.Making unduly large contributions of money to associations of customers.Procuring the business or trade secrets of competitors by espionage, by bribing theiremployees, or by similar means.Procuringbreachofcompetitors'contractsforthesaleofproducts1)ymisrepresentation or by other means.Inducingemployeesofcompetitorstoviolatetheircontractsorenticingawayemployees of competitors in such numbers or under such circumstances as to hamperor embarrass them in business.Makingfalseordisparagingstatementsrespectingcompetitors'products,theirbusiness, financial credit, etc.The use of false or mislead lug advertisements.Making vague and indefinite threats of patent-infringement suits against the tradegenerally, the threats being couched in such general language as not to convey a clearidea of the rights alleged to be infringed, but nevertheless causing uneasiness and fearin the trade.Widespread threats to the trade of suits for patent infringement arising front the saleof alleged infringing products of competitors, such threats not being made in goodfaith but for the purpose of intimidating the trade.False claims to patent, trade-mark, or other rights or misrepresent the scope thereof.Intimidation for the purpose of accomplishing enforced dealing by falsely chargingdisloyalty to the Government.Tampering with and misadjusting the machines sold by competitors for the purposeof discrediting themwith purchaser.16 ANNUAL REPORT OF THE FEDERAL TRADE COMMISSIONTradeboycottsorcombinationsoftraderstopreventcertainwholesaleorretaildealers or certain classes of such dealers from procuring goods or goods at the sameterms accorded to the boycotters or conspirators, or to coerce the trade policy of theircompetitors or of manufacturers from whom they buy.Passingoffofproducts,facilities,orbusinessofonemanufacturerordealerforthoseofanotherbyimitationofproduct,dressofgoods,orbysimulationorappropriation of advertising or of corporate or trade names, or of places of business,andpassingoffbyamanufacturerofaninferiorproductforasuperiorproducttheretofore made, advertised, and sold by him.Unauthorized appropriation of the results of a competitors ingenuity, labor, andexpense, thereby avoiding costs otherwise necessarily involved in production.Preventingcompetitorsfromprocuringadvertisingspaceinnewspapersorperiodicals by misrepresenting their standing or other misrepresentation calculated toprejudice advertising mediums against them.Misrepresentation in the sale of stock of corporations. Selling rebuilt machines ofvarious descriptions; rebuilt automobile tires, and old motion-picture films slightlychanged and renamed as and for new products.Harassing competitors by requests not in good faith, for estimates on bills of goods,for catalogues, etc.Giving away of goods in large quantities to hamper and embarrass small competitors,and selling goods at cost to accomplish the same purpose.Sales of goods at cost, coupled with statements misleading the public into the beliefthat they are sold at a profit.Bidding up the prices of raw materials to a point where the business is unprofitablefor the purpose of driving out financially weaker competitors.Theuse by monopolistic concerns of concealed subsidiaries for carrying on theirbusiness, such concerns being held out as not connected with the controlling company.Intentionalappropriationorconvertingtoonesownuseofrawmaterialsofcompetitors by diverting shipments.Giving and offering to give premiums ofunequal value, the particular premiumsreceived to be determined by lot or chance, thus in effect setting up a lottery.Anyandallschemesforcompellingwholesalersandretailerstomaintainresaleprices on products fixed by the manufacturer.Combinationsofcompetitorstoenhanceprices,maintainprices,bringaboutsubstantialuniformityinprices,ortodivideterritoryorbusiness,ortoputacompetitor out of business.LEGAL DIVISION 17Acquiring stock of another corporation or corporations where the effect may be tosubstantially lessen competition, restrain commerce, or tend to create a monopoly.Various schemes to create the impression in the mind of the prospective customerthat he is being offered an opportunity to make a purchase under unusually favorableconditions, when such is not the ease, such as(1) Sales plans in which the sellers usual price is falsely represented as a specialreduced price made available on some pretext, for a limited time or to a limited classonly.(2) The use of the free goods or service device to create the false impression thatsomething is actually being thrown in without charge when as a matter of fact fullycovered by the amount exacted in the transaction taken as a whole.(3) Sales of goods in combination lots only with abnormally low figures assignedtostaplesthepricesofwhicharewellknown,andcorrespondinglyhighlycompensating prices assigned to staples the cost of which is not well known.(4)Saleofordinarycommercialmerchandiseatusualpricesandprofits,aspretended Government war surplus offered at a bargain.(5) Use of misleading trade names calculated to create the impression that a dealeris a manufacturer, selling directly to the consumer, with corresponding savings.(6) Plans ostensibly based on chance, or services to be rendered by the prospectivecustomer, whereby he may be able to secure goods contracted for at particularly lowprices, or without completing all the payments undertaken by him, when as a matterof fact such plans are not carried out as represented and are a mere lure to secure hisbusiness.(7)Useofpretendedexaggeratedretailpricesinconnectionwith,oruponthecontainers of, commodities intended to be sold as bargains at lower figures.(8) Falsely claiming forced sale of stock, with resulting forced price concessions,when as a matter of fact there is mingled with the customary stock inferior goods, andother methods are employed so that as a matter of fact no such concessions are in factaccorded.Seekingtocutofandhampercompetitorsinmarketingtheirproductsthroughdestroying or removing their sales display and advertising mediums.Discriminating in price.Subsidizingpublicofficialsoremployeesthroughemployingthemortheirrelatives under such circumstances as to enlist their interests in situations in whichthey will be called upon by virtue of their official position, to act officially.18 ANNUAL REPORT OF THE FEDERAL TRADE COMMISSIONSuggestingto prospective customers the use of specific, unfair, and dishonorablepractices directed at competitors of the seller.Imitatingstandardcontainerscustomarilyassociatedinthemindofthegeneralpurchasing public with standard weights of the product therein containto sell to saidpublic such commodity inweights less than the aforementioned standard units.Concealing business identity in connection with the marketing of ones product.Misrepresentinginvariouswaystheadvantagestotheprospectivecustomerofdealing with the seller ; such as-(1) Sellers alleged advantages of location or size.(2) False claims of being the authorized distributor of some concern.(3)Allegedendorsementoftheconcernorproductbythegovernmentorbynationally known businesses.(4) False claim by a dealer in domestic products of being an importer, or by a dealerof being a manufacturer, or by a manufacturer of some product of being also therawmaterial entering into said products.(5) False claim of no extra charge for credit.(6)Ofbeingmanufacturersrepresentativeandoutletforsurplusstocksoldatasacrifice, etc.Tying or exclusive contracts, leases or dealings, in which, in consideration of thegrantingofcertainrebatesorrefundstothecustomer,ortherighttousecertainpatented equipment, etc., the customer binds himselfto deal only in the products ofthe seller or lessor.Showing and selling prospective customers articles not conforming t o t h o s eadvertised, in response to inquiries, without so stating.Directmisrepresentationofthecomposition,natureorqualitiesoftheproductoffered and sold.Use by business concerns associated as trade organizations or otherwise of methodswhich result in the observance of uniformprices for the products dealt in by them,with consequent restraint or elimination of competition; such as use of various kindsof so-called standard cost systems, price lists or guides, etc.Securing business through undertakings not carried out and through dishonest andoppressivedevicescalculatedtoentrapandcoercethecustomerorprospectivecustomer, such as-(1) Securingprospectivecustomerssignaturebydeceittoacontractandpromissorynoterepresentedassimplyanorderonapproval,securingagentstodistribute the sellers products through promising to refund the money paid by themshould the product prove unsatisfactory, and through other undertaking not carried out.LEGAL DIVISION 19(2)Securingbusinessbyadvertisingafree-trial"offerproposition,whenasamatter of fact only a money-back opportunity is offered the prospective customer,etc.Giving productsmisleading names so as to give them a value to the purchasingpublic or to a part thereof which they would not other wise possess, such as-(1) Names implying falselythattheparticularproductsso nameswere made forthe Government, or in accordance with its specifications, and of corresponding quality,orareconnectedwithitinsomeway,orinsomewayhavebeenpassedupon,inspected underwritten, or indorsed by it.(2)Thattheyarecomposedinwholeorinpartofingredientsormaterials,respectively containedonly to alimited extent or not at all.(3)That they were made in or came from some locality famous for the quality ofsuch products.(4) That they were made by somewell and favorably known process, when as amatter of fact only made in imitation of and by a substitute for such process.(5) That they have been inspected, passed, or approvedafter meeting the tests ofsome official organization charged withthe duty of making suchtests expertly andisinterestedlyor giving such approval.(6)Thattheyweremadeunderconditionsorcircumstancesconsideredofimportance by a substantialfraction of the general purchasing public, etc.Interfering with established methods of securing supplies indifferent businesses inorder to hamper or obstruct competitors in securing their supplies.SPECIAL LEGAL INQUIRIESThechiefexaminerconductedtwospeciallegalinquiriesduringtheyear,asfollows:Gasoline.--At the direction of thePresident, areportonthe gasoline situation1924, which covered economic and legalphases, was prepare jointly by the chiefexaminer and the chief economist. The chief examiners investigationhad referenceto monopoly, prices, and competitive conditions in the marketing of gasoline.Thegasoline report is more fully covered under the caption of Economic work, page 79.Radio.--Pursuant to House Resolution 548, Sixty-seventh Congress, fourth session,adopted March 3, 1924, an inquiry was conducts and report submitted to the House ofRepresentatives under date of December 1, 1923, with respect to the radio industry.The report covered (a) the ownership of patents covering radio ap-20 ANNUAL REPORT OF THE FEDERAL TRADE COMMISSIONparatus;(b)contracts,leases,oragreementsrespectingthesaleoruseofradioapparatus; (c) contracts, leases, or agreementswith respect to radio communication;and(d)theorganization,practices,etc.,ofhemostimportantcompaniesintheindustry.TheinvestigationshowedthattheRadioCorporationofAmericaisthemostimportant factor in that industry.It has entered into cross-licensing agreements withvariouscompanies which own or control practically all patents covering radio devicesconsidered of importance to the art.These companies include the General ElectricCo.,WestinghouseElectric&ManufacturingCo.,theAmericanTelephone&Telegraph Co., the United Fruit Co., and the Radio Engineering Co. of New York.Itwas also developed that the Radio Corporation of America is the dominant factor inthe communication field.With respect to international communication, it has securedamonopolybyvirtueoftrafficagreementsenteredintowithvariousforeigngovernments and radio concerns.Agreements of this character have been made withMarconis Wireless Telegraph Co. ( Ltd.) covering the British possessions, and theGovernments ofNorway, Germany, France, Poland, Sweden, the Netherlands, Japan,and China.PROCEDURE AND STATISTICS ON LEGAL WORKResponsive to many inquiries, it has been thought well to set forth details of theprocedure upon legal matters.This is done in connection with statistics under topicheadingswhichcarrytheunfaircompetitionandClaytonlawcasesfromtheirinception, through their several steps, to decision in the Supreme Court of the UnitedStates, the end of the process in the final determination of existing law. These topicheadings are (1) preliminary inquiries, (2) applications for complaints, (3) complaints,including orders to cease and desist, and (4) court cases.PRELIMINARY INQUIRIESThese are handled by the chief examiner and his staff.The preliminary inquiry isthe initial approach to the commission in an unfair competition or Clayton law case,and is usually in the form of a letter from the general public, through an individual orcorporation, calling attention to some alleged illegal or harmful practice in foreign ordomestic commerce.In bringing these matters to the commission no formalities orblank forms are required.A letter suffices if it is signed by the complaining party andcontains the name and address of the party complained against and a statement of theLEGAL DIVISION 21nature of the relief sought. It should also transmit all the evidence in the possession ofthecomplainingparty,documentaryorotherwise,toaidintheinquiry.Uponitsreceiptthepreliminaryinquiryisimmediatelyreferredtothechiefexaminer,whocauses the same to be examined for certain necessary jurisdictional elements-the publicinterest, unfair competition, and the interstate-commerce feature.Theexaminationofthepaperssubmittedbytheapplicantissupplementedwhennecessary by correspondenceAt this stage the inquiry is regarded as confidential, towhich no publicity attaches. If the jurisdictional elements are present, and withoutthemthecommissioncannotproceed,andthematterfailsofdispositionbyconferences and correspondence with the chief examiner, the preliminary inquiry isdocketed as a application for the issuance of a complaint.During the year here reported upon the commission was called upon to handle 1,765preliminary inquiries, this number being made up of 181 on hand at the beginning ofthefiscalyearand1,584receivedduringtheyear.Ofthisnumber,1,209weredisposedoftothesatisfactionofthepartiesuponsummaryreviewbythechiefexaminer, at small cost to the Government, and 322 by the docketing of applicationsfor complaints. This left 234 on hand undisposed of at the end of the year.The following table gives a record of the work on preliminary inquiries during theentire history of the commission, from 1915 until 1924, inclusive.Preliminary inquiries1915 1916 1917 1918 1919 1920 1921 1922 1923 1924TotalPending at beginning of year4 12 32 19 29 6161 182 181 588Requests for action from public119 265 462611 843 136 1,070 1,258 1,3131,5848,661Total for disposition 119 269474643 862 1,165 1,131 1,326 1,4951,7659,249Dismissed on summaryreview 3 123289292298 l, 351500731 9311,209 4,727Docketed as applicationsfor complaint 112 134 153332535724563413 383 3223,671Total disposed of 115 257 442624833 1,075 1,063 1,1441,3141,5318,398Pending at end of year 4 12 32 19296168182 181 234 822Thetableshowsasteadyincreaseoffrom119in1915to1,584in1924,oranincrease of 1,924 per cent in 10 years.Thecommissionhasusedvariousmeanstomeettheincreaseinpreliminaryinquiries received, and has increased the force at the command of the chief examinerasfarasitsfundswouldpermit.Ithasmadechangesinprocedurewithaviewtoexpediting the disposition of the inquiries, and in this way has reduced the proportionof preliminary inquiries which are docketed as applications for complaints.Thereducedproportionreferredtohasbeenpossiblebythefactthat,astheestablished precedents grow in number and the field22 ANNUAL REPORT OF THE FEDERAL TRADE COMMISSIONwhich they cover widens, it becomes possible to dispose of more inquiries with lessinvestigation and consideration.Court decisions have also been helpful in this respect.If it is possible to do so, the inquiries are handled without docketing as applicationsfor complaints.APPLICATIONS FOR COMPLAINTSIf,uponexamination,apreliminaryinquiryisfoundtocontainthenecessaryjurisdictional elements, it is docketed as an application for the issuance of a complaint,and this is the second stage in the development of a case. An application for complaintpresent some prima facie indication of violation of law, that is to say, the record beforethe chief examiner in a given preliminary inquiry can not be disposed of by simplecorrespondenceorreferencetoprecedentorcourtdecision,andrequirescompleteinvestigationto ascertain facts to be presented to the commission for its determinationas to whether or not a complaint should issue. The application for complaint, like thepreliminary inquiry, is handled by the chief examiner and is held confidential.The chief examiner assigns each application for complaint to an attorney, whoseduty it is to gather the facts. The first step in the investigation is to present to the partycomplained against a complete statement of matter, withoutidentifying the applicantand to request the party complained against to submit such statements, evidence, anddocuments in defense or explanation of his position as he may desire to be brought tothe attention of the commission. The investigating attorney makes such investigationas the nature of the particular case may require to develop the facts, and thereaftersummarizes his investigation in a final report which is submitted, with the record, tothe chief examiner, with a recommendation either (1) that the application for complaintbe dismissed or (2) that formal complaint issue.The chief examiner passes upon the investigating attorneys reports and indorsesthereon his approval or disapproval andevent complaint is recommended refers theentire file to the board of review. If the recommendation of the investigating attorneyis for dismissal, the file goes direct to the commissioner in charge.The board of review. a sitting board composed of threemembers, reviews the recordand prepares a report, summarizing the evidence, reciting the law applicablethereto,and submitting a recommendation for commission action.Thefileisthenassignedtoacommissioner,whoreviewstheentirerecordandpresents the case to the full commission with his recom-LEGAL DIVISION 23mendationeitherthatacomplaintissueorthattheapplicationforcomplaintbedismissed.A majority vote controls.Duringthe year here reported upon the commission was called upon to handle 954applications for complaint. Of this number 572 were carried over from the previousyear, 377 were docketed during the year, and 5 were rescissions of previous action.Of this total number Of 954 the commission disposed of 389 during the year. Of these246 were dismissed after investigationfor the reason that the facts developed did notcall for the exercise of the remedial powers granted to the commission.One hundredandforty-threeapplicationsforcomplaintsdevelopedfactsbaseduponwhichcomplaints issued. These figures indicate that the commission was able to dispose ofbut 41 per cent of the applicationfor complaints which it was called upon to handleduring the year. In other words, 954 were no hand duringthe year, and at the close oftheyear 565 had not been disposed of. At this rate the commission is about two yearsbehindinthisparticularphaseofitswork.OnJune30,1924,therewere215applications for complaints which had been on hand for an average period of over ninemonths.The following table gives a record of the work on applications for complaints duringthe entire history of the commission, from 1915 until 1924, inclusive :Applications for1915 1916 1917 1918 1919 1920 1921 1922 1923 1924 TotalcomplaintPending at beginning of year0 104 130 188 280 389 554 466 458 572 3,141Applications docketed112 134 153 332 535 724 426 382 416 377 3,591Total for disposition 11 2 238 283 520 8151,111 980 848 874 9496,732Applications dismissed 8 105 79 160 301339 357 287181 2462,063Dismissals rescinded 0 0 0 0 00 0 0 0 55Net dismissals 8 105 79 160 301339 357 287181 2112,058Applications toformal complaint 03 16 80 125220 157 103 121 143 968Total disposed of 8108 95 240 426559 514 390 302 3843,026Pending at end of year 104130 183 280 389554466 458 5725653,706Likethepreliminaryinquiry,theapplicationforcomplaintdockethassteadilyincreased from 112 in 915 to 377 in 1924, an increase of 237 per cent.As the specific charges in applicationsfor complaints for alleged unfair competitionand Clayton Act violations may be of interest, a table has been prepared showing theprincipal charges alleged in applications for complaints docketed during the fiscal year1923 and the fiscal year 1924, together with a statement of the increases and decreasesin the larger items The table follows :24 ANNUAL REPORT OF THE FEDERAL TRADE COMMISSIONCharge 1923 1924 In DecreasecreaseAppropriation of values created by competitors expenditure 9 4 5Bogus independents 6 0 6Boycott 4 0 4Bribery 3 3Combination or conspiracy in restraint of trade 16 19 3Disparagement of competitors goods or business 12 8 4Enticement of competitors employees 4 2 2Espionage l 4 3False and misleading advertising 149 201 52Full- line forcing 5 0 5Interference with competitors source of supply or business 21 14 7Misbranding 68 120 52Misrepresentation41 110 69Passing off of name and goods 48 60 12Price cutting2 2Price fixing 15 12 3Resale price maintenance 66 27 39Sec 2, (Clayton Act (price discrimination) 38 3 35Sec. 3, ( Clayton Act (tying and exclusive contracts) 12 6 6Subsidizing salesman 3 0 3Sec. 7, Clayton Act (corporate mergers) 910 1Threats and a intimidation 6 4 2Violation ofcommissions order 6 0 6Miscellaneous 332310From this it appears that the largest item in both years was false and misleadingadvertising, which showed an increase in 1923-24 over the previous year of 35 percent; then misbranding, whichincreased 761/2 per cent; thenpassing off of name andgoods, with an increase of 25 percent; misrepresentation, which increased 168 per cent; and combination in restraint of trade, on which there was a small increase. The moreimportant items showing a decrease were : Disparagement of competitors goods orbusiness, interference withcompetitors source of supply or business,price fixing,resale-price maintenance, price discrimination, and tying and exclusive contracts.COMPLAINTS, INCLUDING ORDERS TO CEASE AND DESISTThecomplaintisthethirdstageinthedevelopmentofanunfaircompetitionorClaytonActcase.Itisonlyafterthemostcarefulscrutinyofarecordthatthecommission issues a complaint.The commissionmust have, in the language of thestatute, a reason to believe that the law has been violated before complaint issues.Thecomplaint is thespecified statutory means provided to bring a party charged withviolation of law properly before the commission. Unlike the preliminary inquiries andthe application for complaint, the complaint is a public record, and with the issuanceof a complaint the formal docket is set up, which is open for public inspection.Therecord prior to complaint is confidential.A complaint is issued in the name of the commission in the public interest.It namesarespondentandchargesaviolationoflaw,withastatementofthecharges.Itcontains notice of a hearing. Thirty days are allowed the respondent within which tomake LEGAL DIVISION 25answer.The party first complaining to the commission is not a party to the complaintwhenissuedbythecommission.Nordoesthecomplaintseektoadjustmattersbetween parties. It is to prevent unfair methods of competition for the protection of thepublic.Upon the issuance of a complaint, the case is referred to the chief counsel, who ischarged with the trial and the submission of the matter to the commission thereafter.After answer is filed and upon due notice to all parties respondent the case is set downfor the taking of testimony before a trial examiner.After the taking of testimony andthe submission of evidence on behalf of the commission in support of its complaint,and on behalf of the respondent, the trial examiner prepares a report of the facts for theinformationofthecommission,counselforthecommission,andcounselfortherespondent. Exceptions to the trial examiners report may be made by either counselfor the commission or counsel for the respondent. The next step is the filing of briefs,and thereafter the case comes on for final argument before the full com-mission uponthecomplaint,theanswer,thetestimonyandexhibits,theexaminersreports,exceptions thereto, and briefs by opposing counsel. The case is heard and taken underadvisement, and there after the commission reaches a decision either sustaining thecharges in the complaint or dismissing the complaint. If the complaint be dismissed,anorderisissuedrequiringtherespondenttoceaseanddesistfromthepracticesproven under the complaint. If the complaint be dismissed, an order of dismissal isissued.The above procedure is the one followed in contested cases.In other cases anadmission of the matters alleged in the complaint may be made by respondent and astipulationinlieuoftestimonyenteredintobetweenthecommissionandtherespondent, upon whichthe commission makes its findings of facts, which are thebasis of an order to cease and desist.The stipulation, of course, obviates the necessaryforthetakingoftestimonyandthebriefingandargumentofthecase,unlesstherespondent desires to be heard upon the law alone.Complaints to the number of 154 were issued by the commission during the year.Inadditiontothesetherewere232complaintsonhandandundisposedofatthebeginning of the year.To thus must be added 6 rescissions of previous action, makinga total of392 separate complaints requiring the attention of the commission in thefiscal year.During the same period the commission disposed of 128 complaints , 92by the issuance of orders to cease and desist and 36 by dismissal, leaving a total of 264complaints on hand with which to start the fiscal year beginning July 1,1924.Duringtheyearthedismissalofonecomplaintandfiveorderstoceaseanddesistwererescinded.26 ANNUAL REPORT OF THE FEDERAL TRADE COMMISSIONDISMISSAL OF COMPLAINTSUp to June 30, 1924, the commission had dismissed 298 formal complaints. Whilethe reason for the dismissal of a specific complaint is seldom given in the order ofdismissal, a review of dismissed cases may be given in a summarized form, as follows:Controllingcourt decisions71Dismissed without prejudice 42Respondent out of business 29Discontinuance of practice 19Practice as used by respondent not unfair 38Insufficient public interest 11Lack of interstate commerce 23Disposed of by civil litigation 7Faulty pleadings 2Lack of proof 42Miscellaneous 14Seventy-one cases are listed as being dismissed because of controlling decisions.Of this number, 39 were cases held in abeyance until the decision of the SupremeCourtintheBeech-NutPackingCo.case.Therewasreasontobelievethattherespondentsinthesecaseswereguilty,buttherespondentscontendedthat,asthedecision of the Supreme Court constituted in reality new law on the given subject, theyshould be an opportunity to conform their practices in accordance with that courtsdecision.Complying with this request, these cases were dismissed after the Beech-Nutcase, with notice that the commission would cause new investigations to be institutedto ascertain whether the respondents conducted their business in line with the Beech-Nut decision.Those complaints dismissed without prejudice were cases in which it was generallyfound that because of the age of the case or the fact that the practice was not employedextensively or had been discontinued , it was thought best to dismiss without prejudicewiththerighttorenewtheactionintheeventtherespondentcontinuedtheactscomplainedof.Twenty-ninecasesweredismissedbecausewhenorderissuedtherespondents either could not be found or had gone out of business.In this class ofcases evidence was usually available to sustain the charges of the complaint.In 19cases the complaints were dismissed because the practice condemned had been discon-tinuedandin11casesbecauseofinsufficientpublicinterest.Thesewerethelessimportant cases and were dismissed because of the age of the cases and the lack offundswithwhichtoreinvestigatethemoreorlessminormattersinvolvedforthepurposeofascertainingconditionsprevailingatthetimeofdismissal,anditwasdecided that to proceed further would not be in the public interest. Twenty-three caseshave been dismissed for lack of interstate com-LEGAL DIVISION 27merce,becauseitcouldnotbeprovedthattheactscomplainedofweredoneininterstatecommerce,thusleavingthecommissionwithoutjurisdiction.Thosedisposed of because of civil litigation are cases in which the respondent had alreadybeen proceeded against In the courts prior to the commission reaching these cases, butnotpriortotheinstitutionofthecommissionscase.Inthesesevencasestherespondents were successfullyproceeded against in the courts.Theforegoingindicatesthatonlyasmallpercentageofcomplaintshasbeendismissed because the respondents were no found guilty of the practices as charged.In some of those cases noted as being dismissed for lack of proof the commission wasunable to proceed with trial within a reasonable time after the original investigation.Later, when these cases were taken up for trial, it was found that the facts disclosedby the original investigation could not be substantiated, oftentimes by reason of thedisappearance of witness.The number listed as being dismissed for lack of proof arethose in which public announcement was made of the fact.The following table gives a record of the work on complaints, including orders tocease and desist, during the entire history of the commission, form 1915 until 1924,inclusive:Complaint 19151916 19 l 71918l 919 1920 192119221923. 1924 TotalPending at beginning of year0 5 10 85 133 287312 257 232 1,321Complaints issued 5 9154 l 35308177 l 11 144 154 1,197Total for disposition 5 14 164 220441464423401 386 2. 518Complaints dismissed 0 l 7 13 44 3775 87 36 300Dismissals rescinded 0 0 0 0 0 l0 0 1 2Net dismissals 0 1 713 44 3675 8735 298Orders to cease and desist037274110 11691 82 92 640Ordersto cease and desist rescinded0 00000 0 0 55Net orders to cease and desist 037274110 11691 82 87635Total disposed of 0479 87 154 152166 169 122 933Pending at end of year 5 10 85133 287 312 257232 2641,535For the 10-year period this table shows an increase in complaints issued form, 5 in1915 to 154 in 1924.It shows an increase in orders to cease and desist in the sameperiod from 0 in 1915 to 92 in 1924.A complete list of complaints disposed of during the year is found on page 149 anda list of pending cases on page 195.A large majority of he 154 complaints issued during the year charged unfair methodsof competition, as this charge was made in 150 complaints.Violations of The ClaytonAct were charged as follows: In 6 complaints price discrimination was the charge, inviolation of section 2; in 2 complaints tying contracts were charged contrary to section3; 1 complaint charged acquisition of stock of a competing concern, in violation ofsection 7; and 1 complaint alleged interlocking directorates, contrary to section 8 ofthe Clayton 14948--24--328 ANNUAL REPORT OF THE FEDERAL TRADE COMMISSIONAct.In certain of these cases the respondents were also charged with unfair methodsof competition in violation of section 5 of the Federal Trade Commission act.Thecomplaintschargingviolationofsection2oftheClaytonAct-pricediscriminationwere against the Joseph P. Manning Co., International Ice Cream Co. (Inc.), QuakerOats Co., Ralston Co., M C. Peters Mills Co., and Larrowe Milling Co.The complaintagainst the last-named company was dismissed shortly after the close of the fiscal year.The charge of violation of section 3 of the Clayton Act-tying con-, tract-was containedin complaints against Nucoa Butter Co. et al.,M C. Peters Mills Co., and Philip CareyManufacturing Co. et al.Under section 7 of the Clayton Act, complaint was issuedagainsttheHollySugarCorporation.Thecomplaintswhichchargedinterlockingdirectorates,contrarytosection8oftheClaytonAct,wereagainstHollySugarCorporation et a].Without attempting to enumerate all the various forms of unfair methods of competition set out in all the complaints issued during the year, it may be of interestto note that there were allegations in these complaints as follows : Price fixing, combinationtoeffectmonopoly,restrictionofcompetition,falseandmisleadingadvertising,misrepresentation,misbranding,passingoffofgoodsandnames,conspiracies, espionage, bribery, lottery, boycott, cutting off competitors supplies,simulationof trade-marks,enticing of competitors employees, fraud in export trade,intimidation, resale price maintenance, etc.TYPICAL COMPLAINTS Typical complaints issued during the year and still pending are described below :Attention is especially invited to the fact that these complaints are pending, andconsequently the commission has reached no determination as to whether or not thelaw has been violated. The allegations of the complaints set forth the commissionsreason to believe that the law has been violated. As provided by law, the respondentshaveopportunitytomakeanswerandintroduceevidenceindenialoftheallegations. I n most of the cases the respondents have already filed their answersdenying the allegations of the complaints. The cases will only be determined afterevidence has been taken and argument made to the commission.Monopoly--Radio.--Monopoly in radio apparatus and communication is charged inthe complaint directed against the Radio Corporation of America, General ElectricCo.,AmericanTelephone&TelegraphCo.,WesternElectricCo.(Inc.),Westinghouse ElectricLEGAL DIVISION 29&ManufacturingCo.,InternationalRadioTelegraphCo.,UnitedFruitCo.,andWireless Specialty Apparatus Co.The complaint charges : The respondents havecombined and conspired for the purpose and with the effect of restraining competitionand creating a monopoly in the manufacture, purchase, and sale in interstate commerceofradiodevicesandapparatusandotherelectricaldevicesandapparatusandindomestic and transoceanic radio communication and broadcasting.Conspiracy--Farm machinery.--A conspiracy between associations of retail dealersin farm equipment and manufacturers of farm equipment is charged in a complaintdirected to the Eastern Federation Farm Machinery Dealers, its officers members, andothers,atotalofover500respondents,includingtheInternationalHarvesterCo.,Emerson-Brantingham Co., Moline Plow Co. (Inc.) , and Oliver Chilled Plow Works.Unfair methods of competition are charged in that the respondents entered into anunlawfulagreement,understanding,andconspiracytofixandmaintainpricesat.which agricultural implements and farm machinery should be sold in certain territories.Refusaltosell,purchasefrom,orotherwisedealwithotherthanmembersofthefederation is also alleged.Pricefixing--Tobacco.--TheAmericanTobaccoCo.andtheP.LorillardCo.arenamed as respondents in separate complaints issued by the commission during thefiscalyear.IneachcomplaintthereisalsonamedtheNewEnglandTobaccoConference, its officers and members. In these complaints the commission charges therespondents with entering into an agreement, combination, and understanding to fixuniform discounts or prices at which the products of the American Tobacco Co. andthe P. Lorillard Co. shall be sold. It is further alleged that the two tobacco companiesagreed with each and every one of the groups composing the New England TobaccoConference to discontinue and refuse to sell its products to certain members of suchgroups and to competitors of members of the conference.The complaints state that thealleged acts and things done by respondents are all to the prejudice of the public andof respondents competitors and constitute unfair methods of competition.Pricemaintenance--Groceries.--The North Dakota Wholesale Grocers Associationanditsofficersandmembersarenamedinacomplaintissuedbythecommissioncharging unfair methods of competition in the fixing of uniform prices in cooperationwith each other. The complaint recites various methods which it is alleged were usedby the association and its members to carry out its scheme of uniform standard pricefixing and its plan of confining the distribution of groceries and allied products to whatthe association30 ANNUAL REPORT OF THE FEDERAL TRADE COMMISSIONregardsasregularandlegitimatechannelsoftrade;thatis,frommanufacturertowholesaler and from wholesaler to retailer.P rice fixing--Coal.--In the complaint of unfair competition directed to the CaliforniaRetailFuelDealersAssociationetal.,thechargeismadethatcompetitioninthedistribution and sale of coal in the State of California has been unduly obstructed andhindered and consumers of that State have been deprived of the advantages in priceand otherwise which they would have obtained from the natural flow of commerce incoal under the conditions of free competition. The complaint charges that uniformprices were fixed by these respondents in cooperation with one another ; that the distri-butionthroughchannelsotherthanthosedetermineduponbytheassociationwasprevented; that cooperative purchasing associations were prevented from obtainingcoal at wholesale under any conditions, and hence the sale or distribution in interstatecommercewasobstructed.Itischargedthatboycott,threatsofboycott,andothermethodsofintimidationandcoercionwereusedtocompelvendorstorefuseandrefrain from supplying purchasers and dealers with coal.Misbranding--Soap.--J. S. Kirk & Co., of Chicago, are charged with misbrandingcertainoftheirsoapproducts.Thecompanyisamanufacturerofsoapandalliedproducts, and uses the following brand names on seven separate kinds of soap offeredby it for sale to the public--Kirk.s Cocoa Hard Water Castile, Bengal Castile, KirksCocoaStripCastile,PeerlessCocoaCastile,CocoaCastile,CrownCastile, and Floating Castile.The soaps so branded, the complaint alleges, do notcontain any olive oil, as is the case with genuine castile soap, but are made, up withsubstituteoils andfats at a substantially lower cost.Misbranding--Silverplate.--Sheffieldplatefiguresincomplaintsissuedagainstseveral silver plating concerns.The complaint against the Cosmopolitan Silver Co.istypical.Thiscompany,accordingtothecomplaint,manufacturesquantitiesofsilver-platedwareuponwhichitcausestobestampedorimpressedthewordsSheffield,SheffieldPlate,andothersimilardesignationscontainingthewordSheffield.Silver-plated ware so marked by the respondent, the complaint states, isnot manufactured in Sheffield, England, and is not ofa quality superior to silver-plated ware not so stamped or marked.The practice, it is asserted, is confusing andmisleading and creates an undue preference for the firms product to the detriment ofcompetitors who refrain from marking or stamping their products with such terms orsimilar designations.False advertising--Furniture.--To use slogans--for instance , Direct from factoryto you --is questioned as an unfair methodLEGAL DIVISION 31of competition in complaint issued against the Factory-to-You Furniture Store and anumber of other furniture dealers who do not manufacture but purchase the furniturein which they deal from manufacturers and resell to the consuming public.This groupof cases also contains allegations of misbranding woods used in manufacturing thefurniture sold.Stiflingcompetition--Stationery.--ThattheNationalAssociationofStationers&ManufacturersoftheUnitedStateshadengagedindiscouraging,stifling,andsuppressing competition in interstate commerce in the wholesale and retail trade instationery goods, is charged in a complaint issued by the commission April 8, 1924.Otherallegationsarethattheassociationhasunfairlyhamperedandobstructedcompetitors engaged in the stationery business ; that it has enhanced prices; that pricecompetitiononstapleitemshasbeenlargelyeliminated,andthatpricestotheconsumer on such staple items have been greatly and unreasonably advanced.Among the more important of the 232 complaints carried over from the previousyear and in course of trial during the present year may be listed the following :Thephoto-engraverscase--ThePhoto-EngraversClubofChicago.--Complaintagainst was issuedMarch 13, 1918. On November 8, 1922, the commission issued acomplaint against the American Photo-Engravers Association and others, and thesetwocomplaintsarebeingheardjointlybythecommission.Thecomplaintschargeunfair methods of competition in that the respondents conspired and agreed to adoptand maintain a scale of uniform prices for the sale of all photo-engraving products, therespondent unions and their local organizations threatening to call strikes or withdrawunion employees from photo-engraving establishments that would not maintain theuniformscale.Furtherhearingsofthecommissionforthepurposeofreceivingtestimony in these cases are set for the fall of 1924.Austin,Nichols&Co.(Inc.)--Groceries.--Acasestillincourseoftrialisthatgrowing out of a complaint issued against Austin, Nichols & Co. (Inc.), charging thecorporationwithenteringintoanagreementwithWilson&Co.(Inc.)fortheacquisition of the Wilson & Co., Whiteland, Ind., canning plant and control of theFameCanningCo.andWilsonFisheriesCo.,inanticipationofaconsentdecreeresulting from the prosecution of a suit in equity brought by the Attorney General ofthe United States by which decree Wilson & Co. (Inc.) were perpetually enjoined fromengaginginbusinessunrelatedtothemeat-packingindustry.Therespondentischarged with substantially lessening competition be-32 ANNUAL REPORT OF THE FEDERAL TRADE COMMISSIONtween the corporations here mentioned tending to create a monopoly in the grocery andfood-product business. Motion picture.--Stretching now into its second year is the case involving a largeportionofthemotion-pictureindustry.Thecommissionscasehasbeenbroughtagainst the Famous Players Lasky Corporation, Realart Pictures,the Stanley Co. ofAmerica, Stanley Booking Corporation, Black New England Theaters (Inc.), SouthernEnterprises(Inc.),SaengerAmusementCo.,AdolpheZukor,JesseLLasky,JulesMastbaum,Alfred5.Black,StephenA.Lynch,andErnestv.Richards,jr.Thecomplaint charges that the respondents have conspired together to secure control ofand monopolize the motion-picture industry. The means employed, the commissioncharges, have been (a) acquisition of all the corporate stock of Bosworth (Inc.), JesseL. Lasky Feature Play Co. (Inc.), Famous Players Film Co., and Paramount PicturesCorporation ; (b) affiliation with certain independent producers ; (c) the creation andexploitation of the Realart Pictures Corporation, which the respondents held out to thegeneralpublicaswhollyindependentandnotaffiliatedwithorcontrolledbytherespondents ; (d) acquiring the control of numerous theater corporation s operatingmotion-picturetheatersthroughouttheUnitedStates;(e)buildingoracquiringorattempting to acquire by means of coercion or intimidation numeroustheaters for theexhibitionofrespondentsmotionpicturesexclusively;(f)coercingindependentexhibitors to book respondents films. Hearings in this case for receiving testimony areset down as late as November, 1924.Cream of Wheat.--Awaiting briefs is the case against the Cream of Wheat Co. thecomplaint in which the commission issued toward the close of the fiscal year endingJune 30, 1922. A great deal of testimony has been taken and the commissions brief,entailing the digest of the testimony, will be filed early in the fiscal year 1924-25. Thecomplaint recites that the Cream of Wheat Co. has maintained prices and enforced aschedule of uniform prices for the resale Of its cereal food product known as Creamof Wheat. Bethlehem-Lackawanna steel merger.--The Bethlehem Steel Corporation on or aboutOctober 25, 1922, acquired the properties, assets , and businesses of the LackawannaSteelCo.anditssubsidiariesandisacquiringorhasacquiredtheproperties,businesses, and assets of the respondents Midvale Steel & Ordnance Co. and CambriaSteel Co., is the gist of a complaint issued by the commission against the BethlehemSteel Corporation and others. Unfair methods of competition are charged in that therespondentsbyunitingundercommonownershipandmanagement,andtherebyeffecting control of the sale and shipment of a substantially large portion of the ironand steel products originating in their respective territories, tend toLEGAL DIVISION 33substantially lessen potential and actual competition. This case is still in course oftrial.Pittsburgh Coal Co. of Wisconsin--In its case against the Pittsburgh Coal Co. ofWisconsin and others the commission has received all the testimony on behalf of thecommissionandtherespondents,thetrialexaminerhasmadehisreporttothecommission, and the commission now awaits the briefs of the case before setting itdownforfinalargument.Unfairmethodsofcompetitionarechargedinthattherespondent companies, the largest distributors of anthracite and bituminous coal in thenorthwestterritory,whichcomprisestheStatesofMinnesota,Wisconsin,NorthDakota, South Dakota, and parts of Iowa and Nebraska, entered into an agreement andconspiracy among themselves through the respondent association and with others torestrict,restrain,andsuppresscompetitioninthesaleofcoalby(a)abolishingcommissionstojobbers;(b)refrainingfromsolicitingcertainmunicipalbusiness,recognizingsuchbusinessastheprospectofthelocalretaildealer;(c)restrictingcertaincontractswithretaildealerstocoverpublicutilitybusiness;(d)adoptinguniform grading and cost-accounting methods for the standardization of coal sizes andcosts ; (e) refusing to sell to certain dealers not equipped with sheds and scales ; (f)agreeing to uniform methods of accounting with retail dealers; (g) adopting uniformcontracts with retail dealers and large consumers, prohibiting the diversion of coalexceptasauthorizedbythecontract;(h)circulatinglistsofretailerstowhomtherespondents refuse to sell; (i) providing for the standardization and maintenance ofuniform selling prices; (j) discriminating in price between the city of Duluth and thecities of St. Paul and Minneapolis; (k) selling at less than cost ; (l) discriminating inprice between wagon dealers and retail dealers equipped with yards and sheds; (m)arbitrarilyreducingthepriceofcoaltocompelcompetitorstojointherespondentassociation.A large amount of testimony has been taken in this case and the evidence closed.In a short time the case will be presented to the commission for final determination.CornProductsRefiningCo.--Tablesirup.--Tablesirups,suchasKaroandotherbrands in common use, are involved in a case pending before the commission.Sirupsare made by blending glucose with other products. The glucose, together with starch,corn, sugar, corn oil, gluten feeds, and derivatives and combinations thereof, are madefrom maize and Indian corn and are collectively called corn products.These and other related facts were developed in a preliminary inquiry conducted bythecommissionuponthesubjectofguarantyagainstdeclineinpriceinthecorn-products industry. This inquiry34 ANNUAL REPORT OF THE FEDERAL TRADE COMMISSIONcaused the commission to issue a complaint against the respondent charging that priceguaranties on table sirups, as effected by the Corn Products Refining Co., New YorkCity,constituteunfairmethodsofcompetition.TheCornProductsRefiningCo.manufactures and sells both glucose and table sirups.ORDERS TO CEASE AND DESISTThe final expression of the commission in a case is an order upon the respondent tocease and desist a particular practice or practices charged in the complaint. As shownby the table on page 27, the commission during the year here reported upon issued 92separate orders to cease and desist. All of the 92 orders covered violations of section5 of the Federal Trade Commission act relating to unfair methods of competition. Intwo of these violations of section 2 of the Clayton Act--price discriminations-wereenjoined, and in one order violation of section 3 of the Clayton Act--tying contracts--was enjoined. As in past years, the respondents upon whom the orders were issuedhaveinagreatmajorityofcasesacceptedtheordersandfiledreportswiththecommission signifying their compliance with the terms of the orders.O