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1932, the Solicitor General thereafter filing a statement to the effect that he had declined to join in the petition or in the brief in support. The Commission, in its petition and accompanying brief, pointed out that the Federal Government, through the Bureau of Standards, had not committed itself to the proposition that castile soap might be made of oily and fatty elements other than olive oil, and did not purport to do so; that the Bureau of Standards was without authority under its organic act to commit the Federal Government to any such proposition; that the statements of the Bureau of Standards were not based on evidence in the legal sense; and that the Commission's power to prevent the use of unfair methods of competition in interstate commerce could not be nullified by any action taken by the Bureau of Standards.

Brief in opposition was filed November 19, 1932; and the petition was denied December 5, 1932 (287 U.S. 663).

H. F. McGee, Cincinnati.—This individual, who is now president of the Standard Historical Society, and who, as vice president of the Perpetual Encyclopedia Corporation was one of the respondents in the Commission's case against that corporation, on October 21, 1932, filed with the Sixth Circuit (Cincinnati), his petition to review and set aside the Commission's order insofar as it applied to the sale of his reference book The Standard History of the World. McGee claimed, in his report of compliance to the Commission's order of July 11, 1932, that he had long before severed his connections with the Perpetual Encyclopedia Corporation, and that he had no intention of becoming connected in any way with it or the other concerns named in the Commission's order, or any organization selling or dealing in the encyclopedia sold by the Perpetual Encyclopedia Corporation under the three different titles: Home and School Reference Book, Source Book, and American Reference Library. His position was that the Commission's order, which was directed against various misleading representations and statements, in the sale of popular-priced encyclopedias, did not extend to his activities in the sale of The Standard History of the World.

The contention of the Commission, on the other hand, was that McGee was named in the order to cease and desist both as an officer of the Perpetual Encyclopedia Corporation and as an individual, and that the order prohibited him from indulging in the practices found to to unfair, either in connection with the Perpetual Encyclopedia Corporation or any other corporation, or in his individual capacity.

On April 4, 1933, pursuant to a stipulation between the parties, the court entered an order dismissing the petition for review without costs and without prejudice to either party. The stipulation provided that the cease and desist order in the Perpetual case would not be enforced by the Commission against McGee prior to the entry of the final order by the Commission disposing of another complaint,

entitled "In the Matter of Standard Historical Society et al.," and that, after the entry of the order in the latter proceeding, the Commission would not enforce against McGee such of the terms of the final order in the Perpetual case as either (a) pertained to matters in issue at the trial of the Standard Historical Society proceeding, or (b) shall be embraced within the terms of the final order disposing of the Standard case.

Royal Milling Co., Nashville, etc.-On June 12, 1931, John McGraw and E. A. Glennon, partners, conducting business under the names of Royal Milling Co., Richland Milling Co., and Empire Milling Co., filed with the Sixth Circuit (Cincinnati) a petition to review and set aside the Commission's order. Similar petitions were filed January 6, 1932, by the Tennessee Grain Co., Nashville Roller Mills, Snell Milling Co., State Milling Co., and the Cherokee Mills.

The petitioners in question were all concerns situated at Nashville, Tenn., and selling flour in the Southeastern States; and the findings of the Commission were to the effect that they used the words "Milling" and "Mills" in their corporate or trade names, and represented themselves as manufacturers of flour, when, as a matter of fact, they did not extract flour from wheat, but bought it from concerns actually grinding the wheat, and mixed the flours together by stirring them in what is known as a "batch mixer," in some instances stirring in, with the flour, such substances as salt, soda, and phosphate, so that leavening ingredients would not have to be added later.

The Commission ordered these concerns to cease and desist from the use of the words "Mills," "Milling," and "Manufacturers of Flour," until they actually owned and operated the plants in which the flour, sold by them was ground.

The cases were briefed and argued together, and, on May 4, 1932, were decided against the Commission (58 F. (2d) 581).

On September 23, the Solicitor General, on behalf of the Commission, filed with the Supreme Court a petition for writ of certiorari; it was granted on October 24 (287 U.S. 590). The case was argued January 20, and on February 6, 1933, the Supreme Court handed down its decision reversing the decree of the Sixth Circuit (288 U.S. 212). The court, in its opinion, said:

The business involved is large and the competition among the several concerns substantial; and the use of the enumerated trade names by the respondent tends to divert and does divert business from both the grinders and those blenders who do not use such trade names or an equivalent therefor. Respondents have circulated written and printed circulars among the trade which either directly assert, or are calculated to convey the impression, that their product is composed of flour manufactured by themselves from the wheat. These statements and the use of the trade names under which respondents do business have induced many consumers and dealers to believe that respondents are engaged in grinding from the wheat the product which they put out.

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To sustain the orders of the Commission, three requisites must exist: (1) That the methods used are unfair; (2) that they are methods of competition in interstate commerce; and (3) that a proceeding by the Commission to prevent the use of the methods appears to be in the interest of the public. Upon the first two of these we need take no time, for clearly the methods used were unfair and were methods of competition.

We also are of opinion that it sufficiently appears that the proceeding was in the interest of the public. It is true, as this court held in Federal Trade Comm. v. Klesner, 280 U.S. 19, that mere misrepresentation and confusion on the part of purchasers or even that they have been deceived is not enough. The public interest must be specific and substantial. In that case (p. 28) various ways in which the public interest may be thus involved were pointed out; but the list is not exclusive. If consumers or dealers prefer to purchase a given article because it was made by a particular manufacturer or class of manufacturers, they have a right to do so, and this right cannot be satisfied by imposing upon them an exactly similar article, or one equally as good, but having a different origin. Here the findings of the Commission, supported by evidence, amply disclose that a large number of buyers, comprising consumers and dealers, believe that the price or quality or both are affected to their advantage by the fact that the article is prepared by the original grinder of the grain. The result of respondents' acts is that such purchasers are deceived into purchasing an article which they do not wish or intend to buy, and which they might or might not buy if correctly informed as to its origin. We are of opinion that the purchasing public is entitled to be protected against that species of deception, and that its interest in such protection is specific and substantial.

The court did take the position, however, that the Commission went too far in ordering what amounted to a suppression of the trade names of the companies, saying, in this connection, that:

It will be enough if each respondent be required by modified order to accompany each use of the name or names with an explicit representation that respondent is not a grinder of the grain from which the flour prepared and put out is made, such representation to be fixed as to form and manner by the Commission, upon consideration of the present record and any further evidence which it may conclude to take.

Under date of April 4, the Sixth Circuit, upon the filing of the mandate of the Supreme Court, entered an order setting aside its decree of May 4, 1932, and remanding the cause to the Commission for modification of its order in conformity with the opinion of the Supreme Court. Hearing on this matter has been set for September 18.

White Pine Cases--Pacific Coast States.-Petitions for review of the Commission's orders in a number of these cases were filed with the Ninth Circuit (San Francisco) during January 1932. The concerns involved are situated in California, Oregon, Nevada, Arizona, and New Mexico. They are part of a group of 50 cases in which the Commission issued complaints charging unfair methods of competition by using the phrase "white pine" as part of such trade designations as "California white pine", "Arizona white pine", "New Mexico white pine", and "Western white pine" for a species of

yellow pine known as Pinus ponderosa. Of the 50 complaints, 11 were dismissed before trial or subsequently. Against the remaining 39, orders to cease and desist were entered. Twenty-five companies have elected to abide by the orders.

The Commission's orders are based on findings to the effect that the lumber to which respondents apply the phrase "white pine" is not, as above stated, white pine, but a species of yellow pine; that the latter is inferior for certain important uses; has a higher degree of variableness in such qualities as hardness, weight, density, and color; has a large proportion of sapwood; is less durable when exposed to the weather; has a greater tendency toward shrinking, warping, and twisting, etc.

The Commission further found that respondents' use of the phrase "white pine" was misleading and confusing to the general public, architects and builders, many retail dealers, and to certain millwork manufacturers; and was to the detriment of the public and of competitors selling genuine white pine or selling Pinus ponderosa lumber without designating it as "white pine." Many of these findings were attacked in the petitions filed in court.

The order made by the court in this case, permitting the filing of petitions for review, required the inclusion, in the record to be certified by the Commission, of a copy of the trial examiner's report upon the facts. The Commission moved to amend the order by striking out this requirement, and the court, March 7, 1932, granted this motion (56 F. (2d) 774).

The case was argued on the merits June 24, 1932, and decided against the Commission, April 4, 1933 (64 F. (2d) 618).

The Ninth Circuit, after rather extensive references to the record, said:

It is the conclusion of the court that, viewing the testimony in the light of all the facts of the case, it is insufficient to support findings that petitioners' use of the commercial name "California White Pine" is an unfair method of competition or that its prevention would be in the interest of the public.

A petition for writ of certiorari was docketed with the Supreme Court of the United States on July 3. (No. 240, October term, 1933.) It recited that the Ninth Circuit erred: (1) In reviewing the testimony without reference to the Commission's specific findings of fact, but for the purpose of determining whether the Commission's conclusion that respondents' method of competition is unfair was supported by testimony; (2) in weighing the evidentiary value of nomenclature approved by the Bureau of Standards; (3) in holding that the testimony is insufficient to support the Commission's findings that respondents' use of the commercial name California White Pine "is an unfair method of competition or that its prevention would be in the interest of the public", without having held that any of the

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Commission's specific findings were unsupported by substantial evidence, or that the Commission's findings did not support its orders; (4) in disregarding the provisions of the Federal Trade Commission Act that the Commission's findings of fact shall be conclusive "if supported by testimony"; (5) in holding that the indirect effect of the Commission's order upon the conservation of forests is a relevant consideration in determining whether the proceeding was "to the interest of the public"; and (6) in setting aside the cease and desist orders of the Commission.

TABLES SUMMARIZING WORK OF THE LEGAL DIVISION AND
COURT PROCEEDINGS, 1915-33
TABLE 1.-Preliminary inquiries

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