Federal Trade Commission

Pennsylvania Avenue at Sixth Street NW.
EXecutive 6800, Branch 1

Chairman Edwin L. Davis
     Garland S. Ferguson      William A. Ayres
     Charles H. March      Robert E. Freer
Secretary Otis B. Johnson
Assistant to the Chairman and Public Relations Director M.A. White
Chief Counsel William T. Kelley
Assistant Chief Counsel Richard P. Whiteley
Assistant Chief Counsel Walter B. Wooden
Assistant Chief Counsel Joseph J. Smith, Jr.
Chief Examiner James A. Horton
Assistant Chief Examiner Ishmael Burton
Assistant Chief Examiner Joseph E. Sheehy
Assistant Chief Examiner Donald B. Gatling
Chief Trial Examiner Web Woodfill
Assistant Chief Trial Examiner F.C. Baggarly
Director, Trade Practice Conferences Henry Miller
Director, Radio and Periodical Division PGad B. Morehouse
Assistant Director, Radio and Periodical Division William F. Davidson
Director, Export Trade Office Allen C. Phelps
Assistant Director, Export Trade Office Ellen L. Love
Director, Division of General Investigations William H. England
Chief Accountant Arthur E. Lundvall
Chief Statistician Roger E. Barnes
Director, Medical Advisory Division Dr. J.J. Durrett
Assistant Secretary A.N. Ross
Assistant Secretary William L. Haigh
Chief, Budget and Finance Division Huber Frear
Chief, Division of Personnel Supervision and Management Edna B. Nye
Chief, Publication and Procurement Division H.B. Stamm
Chief, Records Division J.W. Karsner
Chief, Legal Research and Compiling Division Richard S. Ely
Librarian Madge E. Harkness
Chief, Mail and Files Section David T. Burgh

Creation and Authority.--The Federal Trade Commission was created as an administrative agency by the Federal Trade Commission Act of September 26, 1914 (38 Stat. 717; U.S.C. 41-51). The Federal Trade Commission Act, originally enacted to prevent price-fixing agreements, boycotts, combinations in restraint of trade, and other unfair methods of competition, was amended March 21, 1938, by the Wheeler-Lea Act (52 Stat. 111; 15 U.S.C. 41, 44-45, 52-58), broadening the jurisdiction of the Commission over the false advertisement of food, drugs, cosmetics, and devices, and conferring upon it jurisdiction over unfair and deceptive acts and practices. Section 5 of the act, as thus amended, empowers and directs the Commission "to prevent persons, partnerships, or corporations, except banks, common


carriers subject to the acts to regulate commerce, air carriers, and foreign air carriers subject to the Civil Aeronautics Act of 1938 (52 Stat. 973; 15 U.S.C. 21, 45; 39 U.S.C. 481, 488; 46 U..C. 891y; 49 U.S.C. 401-681; 50 U.S.C. 151), and persons, partnerships, or corporations subject to the Packers and Stockyards Act, 1921 (42 Stat. 159; 7 U.S.C. 181-229), except as provided in section 406 (b) of said act, from using unfair methods of competition in commerce and unfair or deceptive acts or practices in commerce." Under section 6 of the act the Commission is authorized to "gather and compile information concerning, and to investigate from time to time the organization, business, conduct, practices, and management of any corporation engaged in commerce, excepting banks and common carriers subject to the Act to regulate commerce, and its relation to other corporations and to individuals, associations, and partnerships."

Other legislation delegated further duties to the Commission. The Clayton Act (38 Stat. 730; 28 U.S.C. 381-90) was approved October 15, 1914, "to supplement existing laws against unlawful restraints and monopolies. . . ." This act, enacted to prevent unlawful price discriminations, tying contracts, stock acquisitions, and interlocking directorates, was amended June 19, 1936, by the Robinson-Patman Act (49 Stat. 1526; 15 U.S.C. 13-13b, 21a), enlarging the Commission's jurisdiction over unlawful price and related discriminations. The Webb-Pomerene Export Trade Act (40 Stat. 516; 15 U.S.C. 61-65), of April 10, 1918, authorized, subject to safeguards in the interests of domestic trade and competitors, associations composed of two or more persons, partnerships, or corporations engaged solely in export trade, and extended the prohibitions against unfair methods of competition and the remedies provided for enforcement contained in the Federal Trade Commission Act to unfair methods of competition used in export trade against competitors engaged in export trade.

The Wool Products Labeling Act of 1939 *54 Stat. 1128), as approved by the President October 14, 1940, became effective July 14, 1941. As indicated by its title, it is an act "to protect producers, manufacturers, distributors, and consumers from the unrevealed presence of substitutes and mixtures in spun, woven, knitted, felted, or otherwise manufactured wool products, and for other purposes." Wool products coming under the act are required to be labeled to reveal their true fiber content and, in accordance with defined classifications, to show the percentage of "wool," "reprocessed wool," "reused wool," and other fiber contained in the product; also to reveal the percentage of any nonfibrous loading, filling, or adulterating matter which may be present. Misbranding, embracing deceptive labeling and failure to label properly, is prohibited.

The administration of the act is committed to the Commission, which is authorized to make rules and regulations to carry out the provisions. In case of violation, the Commission is authorized, through its regular procedure (issuance of complaints, taking of testimony, etc.)_, to issue cease-and-desist orders. Where appropriate, it may also apply to the court for injunction, and likewise for condemnation of merchandise misbranded under the terms of the act. Willful violations are punishable as misdemeanors and may be reported to the Attorney General. Provision is also made for the exclusion of imports not meeting the requirements of the act.


Purpose.--The general purpose of the Commission is threefold: (1) to promote free and fair competition in interstate trade in the interest of the public through prevention of price-fixing agreements, boycotts, combinations in restraint of trade, unlawful price discriminations, and other unfair methods of competition and unfair or deceptive acts and practices including false advertising; (2) to safeguard life and health of the consuming public by preventing the dissemination of false advertisements of food, drugs, cosmetics, and devices; and (3) to make available to the President, the Congress, and the public factual data concerning economic and business conditions as a basis for remedial legislation where needed, and for the guidance and protection of the public.

Organization.--The Commission is composed of five members, with the chairmanship rotating annually. Each member is appointed by the President with the approval of the Senate for a term of 7 years, and not more than three of the members may be of the same political party. A Secretary, appointed by the Commission, is the executive officer.

The administration of the laws vested with the Commission has necessitated the classification of its work into three general groups: legal; economic, statistical, and accounting; and administrative. The legal work is carried on under the direction of the Chief Counsel, the Chief Examiner, the Chief Trial Examiner, the Director of Trade Practice Conferences, and the Director of the Radio and Periodical Division. The economic, statistical, and accounting work is carried on under the direction of the Director, Division of General Investigations. The administrative activities are under the executive direction of the Secretary.


Prevention of Unfair Competition.--Under section 5 of the Federal Trade Commission Act, the Commission is charged with preventing unfair methods of competition and unfair or deceptive acts or practices in commerce, in the interest of the public. In connection with this, as well as with most of its other functions, the Commission conducts investigations, issues complaints, hold hearings, and enters cease-and-desist orders in cases of proved violations.

Provision is made for appeal to the Circuit Courts of Appeals of the United States to modify or set aside orders of the Commission. Provision is likewise made for orders to cease and desist issued by the Commission under authority of the Federal Trade Commission Act, becoming final within 60 days, unless previously appealed. Violation of the cease-and-desist orders issued under the Federal Trade Commission Act, after such orders have become final, subjects the violator to civil penalities in suits instituted by the Attorney General.

Prevention of Deceptive Practices.--Under the Wheeler-Lea Act, amending the Federal Trade Commission Act, the Commission is charged with preventing unfair methods of competition and unfair or deceptive acts or practices in commerce. The dissemination, or the causing to be disseminated, of any false advertisements of food, drugs, devices, or cosmetics is specifically prohibited as an unfair or deceptive


act or practice in commerce within the meaning of section 5 of the Federal Trade Commission Act.

In addition, whenever the Commission has reason to believe that anyone is disseminating or is about to engage in the dissemination of any false advertisements of a food, drug, device, or cosmetic, and that the enjoining thereof pending the issuance of the Commission's complaint and the final disposition thereof would be to the interest of the public, the Commission is directed and empowered to bring injunction suits in the appropriate United States district courts enjoining the dissemination of such false advertisements. Whenever any false advertisement of a food, drug, device, or cosmetic is disseminated in violation of the act and the use of the commodity advertised may be injurious to health, or whenever intent to defraud or mislead is present, and the Commission has reason to believe the violator is liable to penalty, the Commission is directed to certify such facts to the Attorney General for the institution of a criminal penalty suit in addition to the other remedies provided.

Stipulation Procedure.--Through an informal procedure known as the stipulation procedure, the Commission also greatly expedites, in appropriate cases, its corrective process against the employment of unfair methods of competition and the use of unfair or deceptive acts or practices in interstate commerce. These stipulations contain admissions as to the facts and voluntary agreements by proposed respondents to cease and desist from unlawful practices.

Price Discrimination.--The Commission administers those provisions of the Robinson-Patman Act which amend the antidiscrimination inhibitions of section 2 of the Clayton Act. Discriminations in price not justified by savings in cost, nor otherwise justifiable under the act, are forbidden where the effect of such discrimination may be substantially to lessen competition.

Certain unfair practices in the form of allowances not available proportionally to competing customers and brokerage allowances to intermediaries actin in fact for, or controlled by, the buyers are prohibited, as is the furnishing of or contracting to furnish services or facilities in connection with the processing of goods not accorded to all purchasers on proportionally equal terms. Purchasers who knowingly receive forbidden discriminatory benefits are also proceeded against.

Exclusive Dealing Arrangements.--It is a function of the Commission, under section 3 of the Clayton Act, to prevent a lease or sale of commodities, or the fixing of a price, or discount from or rebate upon such price, on the condition, agreement, or understanding that the lessee or purchaser shall not use or deal in the commodities of a competitor where the effect of such lease or sale, or such condition, agreement, or understanding may be substantially to lessen competition or tend to create a monopoly in any line of commerce.

Investigations.--Section 6 of the Federal Trade Commission Act empowers the Commission to conduct investigations of a special or general character upon its own initiative, or upon the direction of the President, the Congress, or upon application of the Attorney General.

The Commission is authorized, also, under section 6, to require corporations engaged in interstate commerce to file annual or special


reports furnishing such information as the Commission may require as to the organization, business, conduct, practices, management, and relation to other corporations, partnerships, and individuals.

Foreign Trade Investigations.--The Commission is charged, under section 6 of the Federal Trade Commission Act, with investigating trade conditions in and with foreign countries where associations, combinations, or practices of manufacturers, merchants or traders, or other conditions, may affect the foreign trade of the United States. Under this authority the Commission reports to Congress thereon with such recommendations as it deems advisable.

Export Trade.--The Commission administers and enforces the Webb-Pomerene Export Trade Act, which provides that the antitrust laws shall not be construed to prohibit the organization and operation of export associations filing documents and reports with the Commission, subject to certain safeguards in protection of interstate and foreign commerce.

Antitrust Suits.--Under section 7 of the Federal Trade Commission Act, in equity antitrust suits brought by or under the direction of the Attorney General, the Commission, if called upon by the court, is to act as a master in chancery and report an appropriate form of decree.

Corporate Stock Acquisitions.--Section 7 of the Clayton Act charges the Commission with the preventing of unlawful corporate stock acquisitions. This section prohibits any corporation from acquiring, directly or indirectly, capital stock in any similar corporation where the effect of such acquisition may be substantially to lessen competition between the two corporations, or to restrain commerce in any section or community, or tend to create a monopoly of any line of commerce. Interlocking Directorates.--The Commission is charged with preventing unlawful directorates as defined in section 8 of the Clayton ACt. This section prohibits any director from serving on the boards of two or more corporations then or theretofore in competition by virtue of business and location, so that elimination of competition by agreement would violate the antitrust laws, provided any one of the corporations has capital, surplus, and undivided profits aggregating more the $1,000,000.

Trade Practice Rules.--The Commission, through its trade practice conferences, utilizes the voluntary cooperation of industry members to aid in the promulgation of trade practice rules for an industry which define and prohibit practices therein deemed to be unfair or deceptive.

There may also be included in the rules provisions for otherwise fostering and promoting fair, competitive conditions and ethical standards of business conduct in harmony with public interest.

Wool Labeling.--Inspection of woolen merchandise; the recording of continuing guaranties; issuance of manufacturers' registered identification numbers; compliance work; and numerous other activities in the administration and enforcement of such labeling legislation also form a substantial part of the Commission's statutory functions.


War Activities

Authority.--Sections 5 and 6 and other provisions of the Federal Trade Commission ACt (38 Stat. 717; 15 U.S.C. 41-51; 52 Stat. 111; 15 U.S.C. 41, 44-45, 52-58); the Wool Products Labeling Act of 1939 (54 Stat. 1128; 15 U.S.C. 68-68j); and Executive Orders 8734 of April 11, 1941; 8839 of July 30, 1941; 9024 of January 16, 1942; and 9040 of January 24, 1942.

Conservation and Protection of the Public Health and Public Economy.--Under section 5 and other provisions of the Federal Trade Commission Act, the Commission is striving to protect business and the public from unfair and oppressive practices; restrain the unscrupulous; prevent advertisements of drugs, cosmetics, and food which injure health; prevent deception, fraud, and collusion; and thereby, in this critical time, conserve the health and well-being of the American purchasing and consuming public.

Cooperation With Other Agencies.--The staff of the Federal Trade Commission has been concerned also with special war work, including work for the Office of Price Administration, the War Production Board, the Office of Economic Stabilization, the War and Navy Departments, the Office of Economic Warfare,1 the Office of Censorship, and others. It has made thousands of reports, furnished numerous industrial studies, carried on priorities and related investigations in key and basic industries, and examined and checked periodical, radio, and other advertising, all in the interest of the war effort.

Costs, Profits, Prices, and Industrial War Data.--The Commission ascertains costs, profits, and prices in different industries for use by war agencies, in determining commodity prices to be paid by the Government and the consuming public. Its work in the foregoing category includes special cost studies, cost of distribution studies, and collection and compilation of financial reports. It has furnished corporation industry reports, coordinated with wartime work, on a large number of the principal industries to various Government establishments, including the Office of Price Administration, the War Production Board, the Office of Economic Stabilization, the Office of Economic Warfare,1 the Departments of Commerce and Labor, the Federal Reserve Board, and numerous bureaus of the War and Navy Departments.

War Priorities and Related Work.--The Commission has been designated by the War Production Board, in pursuance of Executive Orders 9024 of January 16, 1942, and 9040 of January 24, 1942, as an agency to conduct investigations for the purpose of enabling the Board to determine the degree of compliance accorded its priority orders and regulations. It makes extensive and Nation-wide investigations of basic industries, processes and processors, and possible collusive and unlawful practices for the Board.

War Contracts, Investigations and Studies.--Investigations concerning purchasing and inventory practices of numerous prime Army-


Navy contracts have been made for the War Production Board. The Commission has assisted, at the request of the Naval Affairs Committee of the House, the Committee in its inquiry into the progress of the War Program through investigating the awarding of contracts and various matters pertaining thereto, and the carrying out thereof. It has made studies of such matters as methods of control of materials purchased for Government contracts, distribution of labor costs due to overtime and bonus payments, distribution of overhead, and patent licenses and cartel agreements in connection with the manufacture of scientific instruments and other products for the Navy.

Periodical and Radio Surveys.--Incident to its continuous survey of radio, periodical, and newspaper advertising, the Commission is cooperating closely with the War Production Board. In analyzing, summarizing, and noting matter of wartime consequence, it examines a large number of domestic newspapers in European and Oriental languages. Wool Products Labeling.--The Wool Products Labeling Act of 1939 requires the truthful and informative labeling of all woolen or part woolen clothing and such woolen essentials as blankets and bedding, and its provisions are supplying the consumer with protection during the war against the unrevealed presence of substitute fibers.

Fair Trade Practices in Wartime.--Through its trade practice conference procedure, the Commission provides a means for the establishment of trade practice rules having for their purpose the maintenance of free and fair competition and consumer protection with respect, particularly, to the present wartime conditions.

Branch Offices--Federal Trade Commission
Office Attorney in Charge Address
New York City 6 Rolf H. Kielland 45 Broadway
Chicago 7 William F. Dinnen 433 West Van Buren Street
San Francisco 5 Clarence T. Sadler Sharon Building, 55 New Montgomery Street
Seattle 4 Henry M. White 801 Federal Building
New Orleans 12 Herbert L. Propst 1107 Pere Marquette Building
Washington, D.C. Headquarters Harry A. Babcock Pennsylvania Avenue at Sixth Street NW


Ewin L. Davis


Table of Contents


1. Absorbed by Foreign Economic Administration.

Transcribed and formatted for HTML by Patrick Clancey, HyperWar Foundation