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[Congressional Record Appendix, 75th Cong., 3d sess., vol. 83, pt. 11, p. 2322]
THE FEDERAL TRADE COMMISSION
EXTENSION OF REMARKS OF HON. HARRY S. TRUMAN, OF MISSOURI, IN THE SENATE
OF THE UNITED STATES, THURSDAY, JUNE 2 (LEGISLATIVE DAY OF WEDNESDAY, APRIL 20), 1938
A RECAPITULATION OF THE WHEELER-LEA AMENDMENT TO THE FEDERAL TRADE ACT
Mr. TRUMAN, Mr. President, I ask unanimous consent to have inserted in the appendix to the Record a recapitulation of the Wheeler-Lea amendment to the Federal Trade Act, and some of the orders of the Federal Trade Commission and their effect on the public welfare, and also some of the functions of the Commission under the Clayton Act.
There being no objection, the statement was ordered to be printed in the Record, as follows:
"The Federal Trade Commission Act, passed nearly a quarter of a century ago, had not been amended until the present session of Congress. Congress passed, and on March 21, last, the President approved, certain amendments embodied in what is generally known as the Wheeler-Lea Act, designed, in the interest of the using and consuming public, to relieve the Commission from the expenditure of time and money necessary to prove competition, where it appears that unfair or deceptive acts or practices have been engaged in. Other provisions of the amending act definitely determine when the Commission's orders to cease and desist become final and establish penalties for their violation thereafter. To better protect the public, more severe penalties are provided for the false advertising of those commodities, the use of which may be injurious to health.
“Enforcing the provisions of the Federal Trade Commission Act is only one of the functions of the Commission. It has jurisdiction also over certain sections of the Clayton Antitrust Act, including an amendment to section 2 of that act, generally referred to as the Robinson-Patman Antiprice Discrimination Act; it administers the Webb-Pomerene Export Trade Act, and is empowered to make investigations the request of the President, the Congress, the Attorney General, or upon its own initiative.
“The Robinson-Patman Act, generally speaking, is directed toward the prohibition of unjustified price discriminations which tend to injure competition or promote monopoly and the elimination of certain unfair trade practices, involving price discriminations, which were considered by Congress to be inherently injurious to competition. Since the effective date of the act, June 19, 1936, the Commission has conducted approximately 500 investigations under this act and has issued 43 formal complaints and entered 16 orders to cease and desist. In most of the cases investigated the members of the industries concerned voluntarily changed their methods of doing business so as to conform to the provisions of this law, making unnecessary any further proceedings by the Commission. Four proceedings which had gone to complaint were dismissed after hearing.
“Respondents in three cases have appealed from Commission orders directing them to cease and desist from violation of the brokerage section of the act. In the only one of these proceedings in which court action has, as yet, been taken, the Commission's order to cease and desist was, on May 2, 1938, affirmed by the United States Circuit Court of Appeals for the Second Circuit in New York.
"A total of 308 complaints, covering all types of cases, was issued by the Commission during the year beginning June 1, 1937. In the same period, the Commission entered 256 orders to cease and desist, and 568 cases were settled by stipulation. The stipulation method of disposing of a case affords the respondent the privilege of signing a statement of fact and an agreement to discontinue the unfair methods of competition alleged.
“Since March 4, 1933, the Commission's orders to cease and desist have been affirmed in the several circuit courts of appeals of the United States in 54 of 57
The three adverse decisions were subsequently set aside by the Supreme Court, and the Supreme Court, in the only case in which it has set aside an order to cease and desist of the Commission during the past 7 years did so by a 5 to 4 decision, which reversed a prior favorable decision by the circuit court of appeals.
"In its two most recent cases before the Supreme Court, decided at the present term, the Commission's action has been approved. In the Standard Education Society case the Court unanimously affirmed the Commission's order directed
against the misleading advertising of reference books; while in the Goodyear Tire & Rubber case, involving price discrimination among purchasers of tires, the Supreme Court reversed a prior decision by the circuit court of appeals holding the controversy between the Commission and the company to be moot, and has remanded the case for determination on the merits.
“During the past 2 years the Commission has issued a number of cease-anddesist orders in cases directed against price fixing and other combinations in restraint of trade. Important cases included in proceedings of this character have involved the following commodities : Building materials and builders' supplies, butter tubs, canned and dried foods, clothing, electrical equipment, furniture, groceries, rayon yarn, rice, school supplies, surgical instruments, and tin plate.
“Important cases of the same character now in course of trial before the Commission involve automobile parts and accessories, cement, optical goods, steel office furniture and equipment, and wooden containers for fruits and vegetables.
"In December 1937 trial of a highly important case, involving the validity of the so-called multiple basing point system, was begun. It is a proceeding against approximately 75 manufacturers of cement, charged with entering into an unlawful combination to eliminate price competition, resulting in increased prices for cement. Testimony is still being taken in this case.
“The Commission conducts trade-practice conferences, in which industries or trade groups are afforded opportunity for voluntary participation in the establishment, subject to the Commission's approval, or trade-practice rules for the elimination or prevention of unfair methods of competition and other illegal practices or trade abuses.
"Trade-practice rules for the following industries have been promulgated by the Commission since June 1, 1937: Concrete burial vault manufacturers, house dress and wash frock manufacturing industry, popular priced dress, manufacturers, toilet brush manufacturers, metal-clad door manufacturing industry, rayon industry, wholesale jewelers, and carbon dioxide manufacturers.
“Rules have been proposed, and are now before the Commission for consideration, for the following industries : Radio receiving set manufacturers, perfume and cosmetic manufacturers, wood-cased lead pencil manufacturers, tomato paste manufacturers, oleomargarine manufacturers, macaroni manufacturers, fur industry, silk, wool, hosiery, ribbon, and linen industries, wholesale stationery industry, paint and varnish brush manufacturers, automobile industry, infants' and children's knitted outerwear industry, baby chick industry, inoculant industry, and putty manufacturing industry. Trade practice conferences for a number of other industries are also under consideration.
“More than 100 general investigations have been made by the Commission, most of which were under resolutions of Congress or at the request of the President.
“The Commission's final report of its investigation of agricultural income and also its report on grapes, fresh fruits, and vegetables, and the first part of its report on its farm implements and machinery inquiry were submitted to the Congress during the present fiscal year.
"On May 1, 1938, acting under a congressional resolution, the Commission began an investigation of the automobile industry. This inquiry will cover policies employed by manufacturers in distributing motor vehicles, accessories, and parts, and the policies of dealers in selling motor vehicles at retail, to the extent that such policies affect the public interest.
“The Commission recently occupied for the first time in its history a permanent public building, the construction of which was begun during the present administration. President Roosevelt, in laying the cornerstone of this building last summer, said that the Commission's ‘record of accomplishments in the interest of fair competition, in prosperous times and when evil days were upon the land, warrants that this body shall have a habitation adequate to its needs and in keeping with the importance of the tasks which it has accomplished and will continue to perform in the protection of American trade.?
“The President further stated that the 'dangers to the country growing out of unfair methods of competition still exist,' and that they make the work of the Commission of vital importance in the country's economic life.”
STEWART, HANFORD & CASLER, INC.,
Rochester, N. Y., February 17, 1940. CHAIRMAN, FEDERAL TRADE COMMISSION,
Washington, D. C. DEAR SIR: If agreeable to your organization, I would appreciate being put upon your mailing list, in order that I may receive releases of the frequent reports of the findings and activities of your body.
As a firm believer of the usage of truth in advertising, I most certainly want to compliment your organization for the very worth-while service you are daily rendering modern business. Sincerely yours,
FREDERICK D. FERRIS.
THE HART MANUFACTURING Co.,
Hartford, Conn., February 19, 1940. Hon. EWIN L. DAVIS, Chairman, Federal Trade Commission,
Washington, D. C. DEAR SIR: We thank you very much for sending to us a copy of your release for the month of December 1939.
We think that your Commission is doing very valuable work in exposing fraudulent advertising and having it stopped. We hope that you will continue your valuable contribution to the welfare of the American people in the work you are doing. Yours very truly,
[From Advestising and Selling, a journal of source ideas and discussion for those engaged
in advertising and marketing]
WHY HYSTERICS OVER THE FTC ?
One of the FTC's standing assignments is to make economic studies for the President and Congress. Last fortnight, it was voted $88,829 to investigate the subject, Methods and Cost of Distribution; this would include the cost and service of national advertising. It is obviously a pertinent topic of wide public interest. Since things still unknown about the distribution of goods could fill a library, any new data turned up by the FTC should be more than welcome.
So we were a little sorry to see how news of the study seized spokesmen in the field with hysterics. Our senior in the field, Printer's Ink, referred to the investigation as an “inquisition”-in its news columns. Editorially, it beat the war drums with : “Advertisers may as well make up their minds that at last they are up against the real thing and prepare for the fight of their lives
And now the firing has started. It will probably be a long and bitter
It looks as if general mobilization should be the order of the day." If this were practice copy for war posters against the Madagascans, it might not leave us quite so stone cold. Because, we are convinced, that instead of girding loins “for the fight of their lives," advertisers should use the time to turn out more and still more efficient advertising.
Why all the war whoops? The “hostile attitude” of the Commission toward advertising is cited. But is it so hostile? Congressman Barton, while inveighing against inner New Dealers, recently stated: “I do not accuse the Federal Trade Commissioners themselves of being antiadvertising or antibusiness.” (And it is the Commissioners, not smart underlings, who would have to 0. K. a crusade against advertising.) John Benson, Four-A president, has found FTC administration of the Wheeler-Lea Act on the whole constructive and reasonable. A profile by a writer close to the Commission, who didn't pull his punches, summed up: “Not a single member harbors radical ideas about the social aspects of advertising." (February issue.)
There's too strong a tendency to expect the Commission to be a sort of booster club for advertising, being very mousey about its deficiencies, and roundly laudatory about its services. That's not the Commission's job. It's an extramural organization charged, among other things, with upholding standards of advertising truthfulness and making economic studies. The field and companies in the field should expect it to say things about them which they won't like. The Commission should be free and have the courage to go after the big as well as the little names when it feels empowered under the law to do so. And both from an immediate and a long-term view it's a good guess that an active, rather than a lax, performance of FTC's job will do advertising a lot more good. If in doubt, see how the FTC is chastening copywriters who give their advertisements a flavor of “baloney" (Check List of FTC Taboos, p. 31).
In the same way, we don't need to raise barricades against an extramural study of advertising and distribution. If it's bolshevistically conducted, Red evidence will doom the study to the ashcan.
We're concerned about all the shooting, because advertising spokesmen go in far too much for self-justification and apology. Too large a percentage of manuscripts that come to our office, and too many articles published in the advertising press use up paper by telling advertisers' reasons for not being ashamed of their business. The subject is worked pretty threadbare in advertising oratory. Rationales and triggerlike reflexes of outrage over criticism suggest a guilt neurosis that ought to be discouraged. There's nothing collectively to be guilty about, and there's nothing cataclysmic going to happen. Last year, when consumers reached a peak of expression and when Wheeler-Lea was functioning full time, advertising volume went up, over 1938, 9.12 percent for magazines, 2.23 percent for newspapers, and 15.87 for radio.
Sorry, but we just can't see the FTC study landscaping Madison Avenue back into a cowpath. We think that advertising can take it.
(The Institute of Consumer Facts of the Pacific Advertising Association, in co
operation with the American Association of Advertising Agencies)
[From the Family Circle]
YOU'VE A REAL FRIEND IN THE FEDERAL TRADE COMMISSION-ITS VIGILANCE IS JUST
ANOTHER REASON WHY YOU CAN DEPEND UPON ADVERTISING AS AN IDEAL BUYING GUIDE
In Washington there is a body of five men known as the Federal Trade Commission.
They supervise the reading of advertisements and radio commercials which run in the United States.
Their object is to protect you, the consumer, from a small minority of businessmen who may not be 'using advertising in your interest.
Their function is just the same as the police force which protects your community from the small minority who do not stay within the law.
When the Federal Trade Commission finds an ad which looks suspicious it investigates fully, and if anything is out of line, cracks down.
Organized advertising is solidly behind the Federal Trade Commission because it knows that 99 percent of advertising is ethical, constructive, and in the consumers' interest.
Organized advertising is just as anxious as you are that people who advertise unethically be brought into line, because their practices reflect. upon the whole profession.
And you'll be glad to know that the Commission finds a comparatively small number of ads upon which action is taken, although each year hundreds of thousands of advertisements pass under the Commission's scrutiny.
WHAT TO DO
With this protection of the Federal Trade Commission plus the voluntary censorship of advertising itself, you more than ever can make advertising your daily buying guide.
But if you do run across an ad which seems to misrepresent, cut it out and send it to the Federal Trade Commission, Washington, D, C., telling them why you think it's against your interest.
Organized advertising will thank you.
[From the New York Post, Thursday, September 14, 1939)
REACTION HELD WORSE PERIL TO BUSINESS THAN RADICALS-RESTORATION OF OPEN
COMPETITION IS VITAL, STUDEBAKER PRESIDENT WARNS Free enterprise is in greater danger from business reactionaries than Communists, Paul G. Hoffman, president of the Studebaker Corp., said today.
Addressing the annual convention of sales finance companies at the Hotel Pennsylvania, he said businessmen were responsible for much of the regulation that has tended to destroy free competition.
Far too often have segments of organized business fought against honest labeling and made fraudulent advertising claims, he declared, while businessmen who opposed the NRA, "a thorough vicious experiment in the Fascist control of business,” were conspicuously few.
GAVE TACIT APPROVAL
Many businessmen, Hoffman said, supported price-fixing legislation and laws to license business and even proposed such laws with the idea of putting some competitors out of business, while the great majority have given tacit consent to these activities by their silence.
“One great agency of the Government is charged with partial responsibility for maintaining open competition and full responsibility for protecting business against unfair competitive attacks,” he continued. "I refer to the Federal Trade Commission which, in my opinion, in its long history has been public friend No. 1. of free competitive enterprise.
"Has business recognized this fact and given its vigorous support to the Commission? Unfortunately, the answer is again, 'No.' Minority groups have attacked the Commission unfairly and there has been resentment of its so-called interference with business which has not been justified.”
REAL JOB MUST BE DONE
Businessmen, he said, have been "too prone to rush to the defense of those reactionaries who were openly opposing or attempting to sabotage the clear right of the worker to join or not to join a union as he chose and to bargain collectively if he so desired."
“To sum it all up as I see the picture, business has a real job to do if it is to play its part in saving free enterprise and in resisting the worker to join or not to join a feudalism,” he concluded. “Those of us who believe in the competitive system must support with all possible vigor every effort of the Government to put competition back into the competitive system.”
[From the Bedding Manufacturer for March 1941]
FEDERAL TRADE COMMISSION HAS IMPRESSIVE RECORD
In checking back the fairly recent activities of the Federal Trade Commission where products of this industry have been concerned, even those of us who think chiefly of the Federal Trade Commission as the perfect example of a governmental agency moving with studied deliberation and caution must admit that the record is impressive.
Right off it is important to remember that the bedding industry is down around one hundred five or six in the scale of importance of the country's industries as gaged by annual sales volume and that practically none of a total of 350 industries is exempt from FTC censure now and then for unfair or unlawful practices of one kind or other. This also recalls that the FTC has a multitude of duties in addition to eyeing trade practices.
Nevertheless the afore-mentioned record shows that many bedding manufacturers have been called to task for such offenses as failing to disclose that a mattress contains used material; for representing, by label or otherwise, that it contains new material when used material is present; for misrepresenting the retail value or price on the label, in advertisements or otherwise; for falsely representing that a mattress has been endorsed or approved by a member of