sion and order to cease and desist, the two opinions of the United States Circuit Court of Appeals for the Third Circuit, and briefs filed by petitioner and counsel for the Commission.

One witness, I think Mr. Hugo Mock, of the New York bar, stated that his criticism of the Commission's procedure is not that it has been too harsh or too strict in protecting the public, but that it has been too slow, and he cited three cases, the Philippine Mahogany, the Arden case, and some cosmetic cases, a group of cases, as supporting his belief in that respect. He claimed that the Philippine Mahogany case had been pending for some 19 or 20 years, I think.

The facts are that the original Philippine mahogany case was disposed of a number of years ago. I will not go into the details of it, because it is a long story, but there was a period of 7 years when there were no proceedings pending. There was a further period of 4 years during the recent war when the proceedings in the reopened case were suspended by the Commission for the very good reason that the Philippine Government, being a party to the proceeding, or rather, appearing as amicus curiae, it was not proper that those proceedings should go forward during the war when the Philippine Government could not present its viewpoints fully. A good part of the time therefore, there were no proceedings pending.

I would like, with the permission of the committee, to file a brief statement about these three cases which will show the facts with respect to the time consumed in the trial of them.

(The three cases referred to are as follows:)

A statement was made by one witness that the controversy over the term "Philippine mahogany" has been pending before the Federal Trade Commission and the courts for 21 years. This litigation has been the most protracted in the history of the Commission but the course taken has been unavoidable. The litigation has followed the course outlined below:

A group of complaints was issued in 1925 against concerns using the term "Philippine mahogany" for their Philippine hardwoods. After a trial orders requiring the companies to cease and desist from using the term "mahogany" in any form, were issued on July 19, 1926 (10 F. T. C. 300, 312). Petitions for review were filed in three circuit courts of appeals in 1927. The Commission's orders were affirmed (26 F. 2d 340) and the Supreme Court, on October 15, 1928, denied writ of certiorari (278 U. S. 245).

The controversy was not pending before either the Commission or the courts thereafter for more than 2 years.

In February 1931, however, at the request of certain Philippine lumber producing companies the controversy was reopened by the Commission through the issuance of complaints against a group of new producing respondents. The outcome. in November 1931, was the dismissal of this group of complaints upon a stipulation, received from each company, that it would not use the word "mahogany" for its Philippine hardwoods without using with it the word "Philippine" (15 F. T. C. 439). The Commission believed that the prefix "Philippine" would distinguish the Philippine woods from mahogany and thus prevent deception of the buying public.

For over 7 years, from November 1931 to January 3, 1939, this controversy was not pending either before the Commission or the courts. During the said period, however, three events of importance as to the use of the term in question occurred:

(1) The Supreme Court. in the White Pine cases (291 U. S. 67) clarified the "secondary meaning” doctrine, a princinle equally applicable to the controversy over "mahogany" and to that over "white pine"; and, in the opinion of some members of the Commission, created a serious doubt as to the soundness of the Commission's dismissal of the second group of cases;

(2) The Congress amended the Federal Trade Commission Act (see 15 U. S. C. A., sec. 45) so as expressly to empower the reopening of Federal Trade Commission orders in all cases where either a change in the law or a change

in the facts or the requirements of the public interest shall, in the Commission's opinion, make it needful to reopen ; and

(3) Facts brought to the attention of the Commission led a majority to believe it probable that, although the producing companies were using the term “Philippine mahogany," the retailers of furniture were eliminating the prefix "Philippine" and were selling their Philippine hardwood merchandise simply as "mahogany"; and that the public were deceived despite the said stipulations and dismissal orders.

Accordingly, on January 3, 1939, the Commission reopened the second group of cases, caused additional evidence to be taken, and the cases were briefed and argued before the Commission.

Before a decision could be rendered the war began at Pearl Harbor and Japanese occupation of the Philippine Islands followed. The Commission believed these proceedings should be suspended during the occupation period for obvious reasons. Indeed, during that time no Philippine woods could be imported under any term. This group of cases has recently been reargued and is now pending before the Commission for decision.

MEMORANDUM WITH REFERENCE TO ELIZABETH ARDEN CASE WHICH IS MENTIONED IN STATEMENT OF MR. HUGO MOCK

This case is one of seven which the Commission instituted against various cosmetic manufacturers for carrying on the so-called demonstrator practices. Proceedings were commenced in this case on May 15, 1937, by formal complaint charging the corporate respondent with violations of sections 2 (a), (e), and (d) of the Robinson-Patman Act. In addition to the contention that the socalled demonstrator practices were violative of the Robinson-Patman Act, complaint likewise charged this respondent with allowing discriminatory discounts as prohibited by the Robinson-Patman Act.

Hearings were not started immediately in this particular case since there were pending at that time the other cosmetic cases involving the same issues, and hearings had already been started when the complaint was issued in the instant case.

The hearings in these other cosmetic cases had been delayed because after their inception it became apparent that to get the necessary cost figures from respondents' books by the question and answer method would cause an interminable delay; therefore it was agreed that the respondents employ certified public accountants to compile figures from the respondents' books. Adjournment was then taken sine die. This necessitated the cessation of the hearings until the middle of 1938.

Subsequent to the hearings in these other cosmetic cases, the Federal Trade Commission Act was amended in 1938 by including unfair or deceptive acts or practices with unfair methods of competition under section 5 of said act. This resulted in the issuing of amended and supplemental complaints in the instant case and in the other cosmetic cases by including allegations of violation of section 5 of the Federal Trade Commission Act.

Following the issuing of these supplemental and amended complaints, stipulation was entered into with counsel for all of the respondents whereby hearings were to be held only with reference to alleged violations of section 5 of the Federal Trade Commission Act. Insofar as the charges in the complaint related to alleged violations of the Robinson-Patman Act, it was agreed between counsel for the Commission and for all of the respondents that an attempt would be made to dispose of this issue by means of stipulation, it being the feeling of the respondents that such a stipulation could be entered into and thereby save the respondents the expense necessitated by holding of numerous additional hearings regarding this phase of the case.

Following these agreements, consolidated hearings were then held in all of the cases during the summer and fall of 1939 in various cities. Innumerable conferences were involved with the attorneys of all the respondents in a further attempt to dispose of the Robinson-Patman features of the various complaints. Such negotiations failed, whereupon hearings were again resumed in November 1940 in all the cases and were continued until March 1942.

Shortly thereafter the Commission's attorneys who had had charge of these cases entered into the armed forces of the United States. This necessitated the cases being assigned to another attorney. The transcripts of the hearings of

these various cases contained many thousands of pages of testimony, with which the new attorney for the Commission had to familiarize himself.

The brief of the attorney for the Commission was filed with the Commission in November 1942 and that of the respondent in January 1943. The case was argued before the Commission in April 1943.

The questions involved in determining to what extent the provisions of the Robinson-Patman Act applied to the "demonstrator practices," had to be decided for the first time by the Commission in the instant case. This necessitated the construing of various words in the Robinson-Patman Act. And the Commission gave much time, thought, and effort to the problem before finally issuing its order in 1944.

With reference to the other cosmetic cases, since, generally speaking, they involved the same problem as is presented in the instant case, it was decided that an opinion from a circuit court of appeals should be secured in the Arden case before proceeding with the briefing and arguments in the other cosmetic cases. Obviously this was done as a matter of practical expediency.

DOCKET 1329-ARMAND & CO., INC., ET AL.

June 27, 1925: Complaint issued.

August 31, 1925: Answer filed.

November 30, 1928: Motion to dismiss filed.

January 14, 1929: Order denying respondent motion to dismiss.

February 18, 1929: Hearing, Louisville, Ky. Thereafter hearings held at various places until January 1930 when Commission case closed.

January 5, 1931: Hearing, respondents' case. Completed January 9, 1931.
May 22, 1931: Trial examiner's order closing testimony.

June 24, 1931: Respondent's exceptions filed.
July 23, 1931: Commission's exceptions filed.
October 26, 1931: Commission's brief filed.
February 29, 1932: Respondent's brief filed.
March 23, 1932: Final argument.

January 27, 1933: Order to cease and desist. except Armand Co.)

October 8, 1934: Petition to review filed.
June 7, 1935: Case argued before CAA.

(Dismissed as to all respondents

July 8, 1935: Court's decree affirming Commission's order.

July 16, 1935: Order extending time for filing application for rehearing to July 23, 1935.

July 23, 1935: Petition for rehearing filed.

August 2, 1935: Petition for rehearing denied.

November 1, 1935: Petition for writ of certiorari filed.

December 9, 1935: Writ of certiorari denied.

January 11, 1936: Petition for rule to show cause why order vacating or modifying decree of court of July 9, 1935, should not be entered, and for stay of proceeding pending determination on petition, filed.

March 16, 1936: Case argued.

March 25, 1936: Petition for rule to show cause denied.

Thereafter, petition for reargument of motion to vacate filed.

May 11, 1936: Petitioner's notice of motion for reargument of motion to vacate court decree filed.

July 2, 1936: Motion for reargument denied (CCA).

October 1, 1936: Petition for writ of certiorari to review court order of July 2, 1936, denying motion for reargument of motion to vacate or modify. November 16, 1936: Petition for writ of certiorari denied.

December 10, 1936: Petition for rehearing of petition for writ of certiorari to review court order of July 2, 1936, denying motion for reargument. December 14, 1936: Denied.

Mr. WHITELEY. Before my closing statement I want to read or cite to the committee two statements, one of them made in a recent book by Mark Sullivan, the well known commentator, certainly not a New Deal Democrat, with respect to the condition that existed at the beginning of this century which resulted in the passage of the Federal Trade Commission Act and the other by the then President of the United States, afterward Chief Justice, a very distinguished citizen,

and the only one who has ever held those two positions at the head of both the executive and judicial branches of the Government, at different times, of course.

In volume 2 of Our Times-America Finding Herself, by Mark Sullivan, at page 111 appears the following statement:

The patent-medicine manufacturers made an art of describing the symptoms of diseases in such a way as to terrorize the reader of their pamphlets and advertisements into believing he had one or more of the ailments they pretended to cure; and in describing their cure-alls in terms to convey the conviction of hope.

President Taft, in his message to Congress June 21, 1911, Fortyeighth Congressional Record, part 12, page 675, made the following statement:

Fraudulent misrepresentations of the curative value of nostrums not only opérate to defraud purchasers but are a distinct menace to the public health. There are none so credulous as sufferers from disease. The need is urgent for legislation which will prevent the raising of false hopes of speedy cures of serious ailments by misstatements of facts as to worthless mixtures on which the sick will rely while their diseases progress unchecked.

As the result of such opinions and of similar ones held by our legislative and political leaders of the advertising that was going on unchecked, the Federal Trade Commission Act was passed in 1914 to supplement the pure food law then on the statute books.

Later, in 1938, there were amendments passed by the Congress to both acts, the purpose and the effect of which was to strengthen both the Federal Trade Commission Act and the Food, Drug and Cosmetics Act.

And I think those amendments materially strengthened both acts. I think the pending amendments would materially weaken the Federal Trade Commission Act. And if similar legislation were passed amending the Food and Drug Act, it would seriously weaken that act.

It seems to me that the witnesses appearing in support of the pending bill have laid too much emphasis upon the effect the bill would have upon respondents charged with violations of the Federal Trade Commission Act, and have had too little concern with the effect the amendments would have upon competitors and the general public. Indeed, one witness, the general counsel for Johnson & Johnson, manufacturers of surgical dressings, speaks critically of what he terms the Commission's rule in the following language:

The commission's rule with respect to false and deceptive acts and practices is whether the careless, the ignorant, the illiterate, or the foreign-born will be misled, whether a trade-mark has the tendency or capaicity to mislead the careless, the ignorant, the illiterate, or the foreign-born. It is not a rule for the wary, or the intelligent, or even the average man.

The witness does too much honor to the Federal Trade Commission when he credits it with the authorship of this rule. As far back as 1910, before the Federal Trade Commission came into existence, in an unfair competition case between Florence Manufacturing Co. and J. C. Dowd & Co., for infringement of complainant's registered trademark, the Circuit Court of Appeals for the Second Circuit made the following statement:

It is so easy for the honest businessman, who wishes to sell his goods upon their merits, to select from the entire material universe, which is before him,

symbols, marks, and coverings which by no possibility can cause confusion between his goods and those of competitors, that the courts look with suspicion upon one who, in dressing his goods for the market, approaches so near to his successful rival that the public may fail to distinguish between them. The law is not made for the protection of experts, but for the public-that vast multitude which includes the ignorant, the unthinking, and the credulous, who, in making purchases, do not stop to analyze, but are governed by appearances and general impressions (Florence Manufacturing Company v. J. C. Dowd & Co., 178 F. 73, 75). This statement of the law has been cited with approval in many of the Commission's cases beginning with the case of Federal Trade Commission v. Balme (23 F. (2) 615 (decided in 1928)).

Much the same principle was laid down by the Supreme Court of the United States in Federal Trade Commission v. Standard Education Society, et al. (302 U. S. 112), in which that court said:

The fact that a false statement may be obviously false to those who are trained and experienced does not change its character, nor take away its power to deceive others less experienced. There is no duty resting upon a citizen to suspect the honesty of those with whom he transacts business. Laws are made to protect the trusting as well as the supicious. The best element of business has long since decided that honesty should govern competitive enterprises, and that the rule of caveat emptor should not be relied upon to reward fraud and deception.

It is the duty of the Federal Trade Commission to act in the public interest and to see that the general public and competitors are protected against that small segment of manufacturers and vendors who engage in unfair methods of competition or unfair acts or practices. It is the duty of the Commisison to proceed against monopolies, restraints of trade, price discriminations, and similar violatons of law in the interest of the honest competitors of such violators. It is the duty of the Commission to proceed against those who falsely represent their goods and wares, those who falsely advertise food, drugs, and therapeutic devices, in the interest of health as well as the pocketbook of the consuming public.

The provisions of this bill would, in my opinion, seriously weaken the provisions of the Federal Trade Commission Act, particularly the provisions of the Wheeler-Lea Act, upon which a subcommittee of the House Committee on Interstate and Foreign Commerce, under the guidance of the chairman of your full committee, and with the assistance and full cooperation of the author of this bill, who was also a member of the subcommittee, labored for many weeks so arduously and successfully. The Wheeler-Lea Act was designed to enable the Federal Trade Commission more fully to protect the health of that large section of the public which has to depend largely upon proprietary remedies. The Commission appreciates the value of and the necessity of such remedies, but it has a serious responsibility to see that the advertising of such remedies is not false, deceptive, or misleading, and to see that a small percentage of the manufacturers and vendors of such remedies be not permitted to take advantage of the consuming public, however gullible or ignorant or credulous the persons deceived may be.

I feel that the pending amendments are not only inadvisable but would be a definite handicap to the Commission in accomplishing the purposes that this committee and the Congress desire accomplished. Mr. SADOWSKI. Thank you, Mr. Whiteley.

Are there any questions?